20440CIRC
C)
♦_ O'
CWm-
2011040111 Received: 7/12/2011 9:18:09 AM
Recorded: 07/12/2011 09:23:06 AM Filed &
Recorded in Official Records of Larry Crane.
PULASKI COUNTY CIRCUIT /COUNTY CLERK
Fees $145.00
ORDINANCE NO. 20,440
RDINANCE TO AUTHORIZE THE ISSUANCE AND SALE OF
:R REFUNDING REVENUE BONDS; TO PROVIDE FOR THE
4 PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE BONDS;
5 TO PRESCRIBE OTHER MATTERS RELATING THERETO; AND
6 DECLARING AN EMERGENCY.
7
8 WHEREAS, the City of Little Rock, Arkansas (the "City ") owns a sewer system (the
9 "System "), which is operated by the Sanitary Sewer Committee of the City (the "Committee ");
10 and
11 WHEREAS, pursuant to Ordinance No. 18,557, adopted September 4, 2001 (the "2001
12 Ordinance "), the City has issued its Sewer Refunding and Construction Revenue Bonds, Series
13 2001 in the outs,anding principal amount of $18,375,000 (the "Refunded Bonds "); and
14 WHEREAS, in order to achieve debt service savings, the Committee and the Board of
15 Directors of the City have determined that it is in the best interest of the City to refund the
16 Refunded Bonds: and
17 WHEREAS, the City can obtain the necessary funds to accomplish the refunding of the
18 Refunded Bonds (the "Refunding "), fund a debt service reserve and pay costs of issuing bonds
19 by issuing its Sewer Refunding Revenue Bonds, Series 2011 (the "bonds "), and by appropriating
20 funds of the City held pursuant to the 2001 Ordinance; and
21 WHEREAS, the City and the Committee have made arrangements for the sale of the bonds
22 to Morgan Keegan & Company, Inc. and Crews & Associates, Inc. (the "Purchasers "), at a price
23 of $17,944,507.40 (equal to the principal amount thereof plus net original issue premium of
24 $428,582.40 and less underwriter's discount of $159,075) plus accrued interest (the "Purchase
25 Price "), pursuant to a Bond Purchase Agreement between the City and the Purchasers (the
26 "Agreement ") which has been presented to and is before this meeting; and
27 WHEREAS, the Preliminary Official Statement dated May 25, 2011, offering the bonds for
28 sale (the "Preliminary Official Statement ") has been presented to and is before this meeting; and
29 WHEREAS, the Continuing Disclosure Agreement between the City and Regions Bank,
30 Little Rock, Arkansas, as Dissemination Agent (the "Disclosure Agreement "), providing for the
PAGE 1 OF 271
1 ongoing disclosure obligations of the City with respect to the bonds has been presented to and is
2 before this meeting; and
3 WHEREAS, in addition to the Refunded Bonds, the City has outstanding (a) its Sewer
4 Revenue Bond, Series 1990 (the "Series 1990 Bond "), authorized by Ordinance No. 15,966,
5 adopted November 20, 1990 (the "1990 Ordinance "); (b) its Sewer Revenue Bond, Series 1991
6 (the "Series 1991 Bond "), authorized by Ordinance No. 16,030, adopted April 2, 1991 (the
7 "1991 Ordinance "); (c) its Sewer Revenue Bond, Series 1996 (the "Series 1996 Bond "),
8 authorized by Ordinance No. 17,097, adopted January 16, 1996 (the "1996 Ordinance "); (d) its
9 Sewer Revenue Bond, Series 1999 (the "Series 1999 Bond "), authorized by Ordinance No.
10 18,067, adopted July 20, 1 999 (the "1999 Ordinance "); (e) its Sewer Revenue Bond, Series
11 2004A (the "Series 2004A Bond "), authorized by Ordinance No. 19,006, adopted December 16,
12 2003 (the "2004A Ordinance "); (f) its Sewer Revenue Bond, Series 2004B (the "Series 2004B
13 Bond "), authorized by Ordinance 19,007, adopted December 16, 2003 (the "2004B Ordinance ");
14 (g) its Sewer Revenue Bond, Series 2004C (the "Series 2004C Bond "), authorized by Ordinance
15 No. 19,229, adopted November 1, 2004 (the "2004C Ordinance "); (h) its Sewer Refunding and
16 Construction Revenue Bonds, Series 2005 (the "Series 2005 Bonds "), authorized by Ordinance
17 19,307, adopted April 19, 2005 (the "2005 Ordinance "); (i) its Sewer Construction Revenue
18 Bonds, Series 2007A (the "Series 2007A Bonds ") authorized by Ordinance No. 19,746, adopted
19 May 15, 2007 (the "2007A Ordinance "); 0) its Sewer Revenue Bond, Series 2007B (the "Series
20 2007B Bond "), authorized by Ordinance No. 19,769, adopted June 19, 2007 (the "2007B
21 Ordinance "); (k) its Sewer Construction Revenue Bonds, Series 2007C (the "Series 2007C
22 Bonds "), authorized by Ordinance No. 19,814, adopted September 18, 2007 (the "2007C
23 Ordinance "); (1) its Sewer Revenue Bonds, Series 2008 (the "Series 2008 Bonds "), authorized by
24 Ordinance No. 20,046, adopted November 18, 2008 (the "2008 Ordinance "); (m) its Sewer
25 Revenue Bond, Series 2009A (the "Series 2009A Bond "), authorized by Ordinance No. 20,074,
26 adopted March 10, 2009 (the "2009A Ordinance "); and (n) its Sewer Revenue Bonds, Series
27 2009B (the "Series 2009B Bonds ") authorized by Ordinance No. 20,186, adopted November 3,
28 2009 (the "2009B Ordinance "); and
29 WHEREAS, the coverage tests in the 2005 Ordinance, the 2007A Ordinance, the 2007C
30 Ordinance, the 2008 Ordinance, and the 2009B Ordinance for securing the bonds with a lien on
31 the net revenues of the System on a parity of security with the Series 2005 Bonds, the Series
[PAGE 2 OF 27]
1 2007A Bonds, the Series 2007C Bonds, the Series 2008 Bonds and the Series 2009B Bonds
2 (collectively, the "Parity Bonds ") have been or will be satisfied; and
3 WHEREAS, the coverage tests in the 1990 Ordinance, the 1991 Ordinance, the 1996
4 Ordinance, the 1999 Ordinance, the 2004A Ordinance, the 2004B Ordinance, the 2004C
5 Ordinance, the 2007B Ordinance and the 2009A Ordinance for securing the bonds with a lien on
6 the net revenues of the System prior to the lien on System revenues in favor of the Series 1990
7 Bond, the Series 1991 Bond, the Series 1996 Bond, the Series 1999 Bond, the Series 2004A
8 Bond, the Series 2004B Bond, the Series 2004C Bond, the Series 2007B Bond and the Series
9 2009A Bond (collectively, the "Subordinate Bonds ") have been or will be satisfied;
10 NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF DIRECTORS OF
11 THE CITY OF LITTLE ROCK, ARKANSAS:
12 Section 1. The Refunding is hereby authorized. The Mayor and other officials of the City
13 are hereby authorized to take, or cause to be taken, all action necessary to accomplish the
14 Refunding and to execute all required contracts. The Refunded Bonds shall be called for
15 redemption on August 1, 2011.
16 Section 2. All moneys in the 2001 Sewer Revenue Bond Fund established by the 2001
17 Ordinance are hereby appropriated and shall be used as necessary for the accomplishment of the
18 Refunding, with any balance to be deposited into the 2011 Bond Fund (hereinafter identified).
19 Section 3. The sale of the bonds to the Purchasers at the Purchase Price pursuant to the
20 Agreement is hereby confirmed and approved. The Mayor's approval and execution of the
21 Agreement on June 2, 2011 is hereby ratified, approved and confirmed, and the Mayor is hereby
22 authorized to take all action required on the part of the City to fulfill its obligations under the
23 Agreement.
24 Section 4. The Preliminary Official Statement is hereby approved and the previous use of the
25 Preliminary Official Statement by the Purchasers in connection with the offer and sale of the
26 bonds is hereby in all respects authorized and approved, and the Mayor be, and he is hereby
27 authorized and directed, for and on behalf of the City, to execute the Preliminary Official
28 Statement and the final Official Statement as set forth in the Agreement.
29 Section 5. The Disclosure Agreement, in substantially the form submitted to this meeting, is
30 hereby approved, and the Mayor is hereby authorized and directed to execute and deliver the
31 Disclosure Agreement on behalf of the City. The Mayor and the CEO are each authorized and
[PAGE 3 OF 271
I directed to take all action required on the part of the City to fulfill the City's obligations under
2 the Disclosure Agreement.
3 Section 6. Under the authority of the Constitution and laws of the State of Arkansas (the
4 "State "), including particularly Title 14, Chapter 164, Subchapter 4, and Title 14, Chapter 235,
5 Subchapter 2 of the Arkansas Code of 1987 Annotated, City of Little Rock, Arkansas Sewer
6 Refunding Revenue Bonds, Series 2011, are hereby authorized and ordered issued in the
7 principal amount of $17,675,000 for the purpose of accomplishing the Refunding, funding a debt
8 service reserve, and paying expenses of issuing the bonds. The bonds shall bear interest at the
9 rates and shall mature on February 1 and August 1 in the years and in the amounts as follows:
10
11
12 The bonds shall be dated July 1, 2011 and shall be issuable only as fully registered bonds,
13 without coupons, in the denomination of $5,000 or any integral multiple thereof. Unless the City
14 shall otherwise direct, the bonds shall be numbered from R -1 upward in order of issuance. Each
15 bond shall be assigned a CUSIP number.
16 The bonds shall be registered initially in the name of Cede & Co., as nominee for the
17 Depository Trust Company ( "DTC "), which shall be considered to be the registered owner of the
18 bonds for all purposes under this Ordinance, including, without limitation, payment by the City
19 of the principal of, redemption price, premium, if any, and interest on the bonds, and the receipt
20 of notices and the exercise of rights of registered owners. There shall be one certificated,
21 typewritten bond for each stated maturity date which shall be immobilized in the custody of DTC
22 with the beneficial owners having no right to receive the bonds in the form of physical securities
23 or certificates. DTC and its participants shall be responsible for maintenance of records of the
[PAGE 4 OF 27]
Principal
Interest
Principal
Interest
Date
Amount
Rate
Date
Amount
Rate
02/01/2012
$230,000
2.000%
08/01/2017
$830,000
3.000%
08/01/2012
280,000
2.000
02/01/2018
845,000
3.000
02/01/2013
285,000
3.000
08/01/2018
855,000
3.000
08/01/2013
290,000
3.000
02/01/2019
975,000
3.000
02/01/2014
525,000
3.000
08/01/2019
990,000
3.500
08/01/2014
540,000
3.000
02/01/2020
1,110,000
5.000
02/01/2015
785,000
2.000
08/01/2020
1,140,000
5.000
08/01/2015
790,000
2.250
02/01/2021
1,160,000
3.250
02/01/2016
800,000
2.250
08/01/2021
1,190,000
3.250
08/01/2016
810,000
2.250
02/01/2022
1,205,000
3.500
02/01/2017
815,000
3.000
08/01/2022
1,225,000
3.500
11
12 The bonds shall be dated July 1, 2011 and shall be issuable only as fully registered bonds,
13 without coupons, in the denomination of $5,000 or any integral multiple thereof. Unless the City
14 shall otherwise direct, the bonds shall be numbered from R -1 upward in order of issuance. Each
15 bond shall be assigned a CUSIP number.
16 The bonds shall be registered initially in the name of Cede & Co., as nominee for the
17 Depository Trust Company ( "DTC "), which shall be considered to be the registered owner of the
18 bonds for all purposes under this Ordinance, including, without limitation, payment by the City
19 of the principal of, redemption price, premium, if any, and interest on the bonds, and the receipt
20 of notices and the exercise of rights of registered owners. There shall be one certificated,
21 typewritten bond for each stated maturity date which shall be immobilized in the custody of DTC
22 with the beneficial owners having no right to receive the bonds in the form of physical securities
23 or certificates. DTC and its participants shall be responsible for maintenance of records of the
[PAGE 4 OF 27]
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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 shall 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 any portion thereof are registered in the name of Cede & Co. (or a substitute nominee)
and held by DTC. Notwithstanding such execution and delivery of the Representation Letter, the
terms thereof shall not in any way limit the provisions of this Section or in any other way impose
upon the City any obligation whatsoever with respect to persons having interests in the bonds
other than the registered owners, as shown on the registration books kept by the Trustee. The
Trustee shall take all action necessary for all representations of the City in the Representation
Letter with respect to the Trustee to at all times be complied with.
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
[PAGE 5 OF 271
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bonds; provided that neither the Trustee nor the City may assume any obligations to such
securities depository or beneficial owners of the bonds that are inconsistent with their obligations
to any registered owner under this Ordinance.
Interest on the bonds shall be payable on February 1, 2012, and semiannually thereafter on
February 1 and August 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 Regions 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 July 1, 2011, 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 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
[PAGE 6 OF 27]
I furnishing the City and Trustee with indemnity satisfactory to them. The Trustee is hereby
2 authorized to authenticate any such new bond. In the event any such bond shall have matured,
3 instead of issuing a new bond, the City may pay the same without the surrender thereof. Upon
4 the issuance of a new bond under this Section, the City may require the payment of a sum
5 sufficient to cover any tax or other governmental charge that may be imposed in relation thereto
6 and any other expenses (including the fees and expenses of the Trustee) connected therewith.
7 The City shall maintain, or cause to be maintained, books for the registration and for the
8 transfer of the bonds, as provided herein and in the bonds. The Trustee shall act as the bond
9 registrar. Each bond is transferable by the registered owner thereof or by his attorney duly
10 authorized in writing at the principal office of the Trustee. Upon such transfer, a new fully
11 registered bond or bonds of the same maturity, of authorized denomination or denominations, for
12 the same aggregate principal amount will be issued to the transferee in exchange therefor.
13 No charge shall be made to any owner of any bond for the privilege of transfer or exchange,
14 but any owner of any bond requesting any such transfer or exchange shall pay any tax or other
15 governmental charge required to be paid with respect thereto. Except as otherwise provided in
16 the immediately preceding sentence, the cost of preparing each new bond upon each exchange or
17 transfer and any other expenses of the City or the Trustee incurred in connection therewith shall
18 be paid by the City. The City shall not be required to transfer or exchange any bonds selected for
19 redemption in whole or in part.
20 The person in whose name any bond shall be registered shall be deemed and regarded as the
21 absolute owner thereof for all purposes, and payment of or on account of the principal or
22 premium, if any, or interest on any bond shall be made only to or upon the order of the registered
23 owner thereof or his legal representative, but such registration may be changed as hereinabove
24 provided. All such payments shall be valid and effectual to satisfy and discharge the liability
25 upon such bond to the extent of the sum or sums so paid.
26 In any case where the date of maturity of interest on or principal of the bonds or the date
27 fixed for redemption of any bonds shall be a Saturday or Sunday or shall be in the State a legal
28 holiday or a day on which banking institutions are authorized by law to close, then payment of
29 interest or principal (and premium, if any) need not be made on such date but may be made on
30 the next succeeding business day with the same force and effect as if made on the date of
31 maturity or the date fixed for redemption, and no interest shall accrue for the period after the date
32 of maturity or date fixed for redemption.
[PAGE 7 OF 271
I Section 7. The bonds shall be executed on behalf of the City by the manual or facsimile
2 signatures of the Mayor and City Clerk, and shall have impressed or imprinted thereon the seal
3 of the City. The bonds, together with interest thereon, are secured by and are payable solely
4 from the net revenues derived from the System (the "Net Revenues ") which are hereby pledged
5 and mortgaged for the equal and ratable payment of the bonds. The pledge of Net Revenues in
6 favor of the bonds shall be (i) on a parity with the pledge in favor of the Parity Bonds, and (ii)
7 prior to the pledge in favor of the Subordinate Bonds. The bonds and the interest thereon shall
8 not constitute an indebtedness of the City within the meaning of any constitutional or statutory
9 limitation.
10 Section 8. The bonds and the Certificate shall be in substantially the following form, and the
11 Mayor and City Clerk are hereby expressly authorized and directed to make all recitals contained
12 therein:
13
14 (Form of bond)
REGISTERED REGISTERED
No. R -_
15
16 UNITED STATES OF AMERICA
17 STATE OF ARKANSAS
18 COUNTY OF PULASKI
19 CITY OF LITTLE ROCK
20 SEWER REFUNDING REVENUE BOND
21 SERIES 2011
22
Maturity Date: 1,20 Interest Rate: %
Dated Date: July 1, 2011 CUSIP No.:
23
24 Registered Owner: CEDE & CO.
25
26 Principal Amount: DOLLARS
27
28 KNOW ALL MEN BY THESE PRESENTS:
29
30 That the City of Little Rock, County of Pulaski, State of Arkansas (the "City "), for value
31 received, hereby promises to pay, but solely from the source as hereinafter provided and not
32 otherwise, to the Registered Owner shown above upon the presentation and surrender hereof at
33 the principal corporate office of Regions Bank, Little Rock, Arkansas, or its successor or
34 successors, as trustee and paying agent (the "Trustee "), on the Maturity Date shown above, the
35 Principal Amount shown above, in such coin or currency of the United States of America as at
[PAGE 8 OF 271
I the time of payment shall be legal tender for the payment of public and private debts and to pay
2 by check or draft interest thereon, but solely from the source as hereinafter provided and not
3 otherwise, in like coin or currency from the interest commencement date specified below at the
4 Interest Rate per annum shown above, payable February 1, 2012 and semiannually thereafter on
5 the first days of February and August of each year, until payment of such principal sum or, if this
6 bond or a portion thereof shall be duly called for redemption, until the date fixed for redemption,
7 and to pay interest on overdue principal and interest (to the extent legally enforceable) at the rate
8 borne by this bond. Payment of each installment of interest shall be made to the person in whose
9 name this bond is registered on the registration books of the City maintained by the Trustee at
10 the close of business on the fifteenth day of the month (whether or not a business day) next
11 preceding each interest payment date (the "Record Date "), irrespective of any transfer or
12 exchange of this bond subsequent to such Record Date and prior to such interest payment date.
13
14 Unless this bond is presented by an authorized representative of The Depository Trust
15 Company, a New York corporation ( "DTC "), to the Trustee for registration of transfer, exchange
16 or payment, and any certificate issued is registered in the name of Cede & Co. or in such other
17 name as is requested by an authorized representative of DTC (and any payment is made to Cede
18 & Co. or to such other entity as is required by an authorized representative of DTC), any transfer,
19 pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the
20 registered owner hereof, Cede & Co., has an interest herein.
21
22 This bond shall bear interest from the payment date next preceding the date on which it is
23 authenticated unless it is authenticated on an interest payment date, in which event it shall bear
24 interest from such date, or unless it is authenticated prior to the first interest payment date, in
25 which event it shall bear interest from the Dated Date shown above, or unless it is authenticated
26 during the period from the Record Date to the next interest payment date, in which case it shall
27 bear interest from such interest payment date, or unless at the time of authentication hereof
28 interest is in default hereon, in which event it shall bear interest from the date to which interest
29 has been paid.
30
31 This bond is one of an issue of City of Little Rock, Arkansas Sewer Refunding Revenue
32 Bonds, Series 2011, aggregating Seventeen Million Six Hundred Seventy -Five Thousand Dollars
33 ($17,675,000) in principal amount (the "bonds "), and is issued for the purposes of refunding the
34 City's outstanding Sewer Refunding and Construction Revenue Bonds, Series 2001, which
35 financed and refinanced certain betterments and improvements to the City's sewer system (the
36 "System "), funding a debt service reserve and paying expenses incidental thereto and to the
37 authorization and issuance of the bonds.
38
39 The bonds are issued pursuant to and in full compliance with the Constitution and laws of
40 the State of Arkansas (the "State "), including particularly Title 14, Chapter 164, Subchapter 4
41 and Title 14, Chapter 235, Subchapter 2 of the Arkansas Code of 1987 Annotated, and pursuant
42 to Ordinance No. 20,440 duly adopted on June 7, 2011 (the "Authorizing Ordinance "), and do
43 not constitute an indebtedness of the City within the meaning of any constitutional or statutory
44 limitation. The bonds are not general obligations of the City, but are special obligations payable
45 solely from the net revenues derived from the operation of the System (the "Net Revenues ") on a
46 parity of security with the City's outstanding Sewer Refunding and Construction Revenue
47 Bonds, Series 2005 and Sewer Construction Revenue Bonds, Series 2007A and Series 2007C
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and Sewer Revenue Bonds, Series 2008 and Series 2009B, and prior to the pledge of Net
Revenues in favor of the City's Sewer Revenue Bonds, Series 1990, Series 1991, Series 1996,
Series 1999, Series 2004A, Series 2004B, Series 2004C, Series 2007B and Series 2009A. An
amount of Net Revenues sufficient to pay the principal of and interest on the bonds has been
duly pledged and set aside into the 2011 Sewer Revenue Bond Fund created by 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, to establish
and maintain a debt service reserve and to make the required deposit for the depreciation of the
System.
The bonds are subject to redemption prior to maturity, at the option of the City, from
funds from any source, on and after August 1, 2021, at par, in whole at any time or in part on any
interest payment date, at a redemption price equal to the principal amount of the bonds being
redeemed, plus accrued interest to the redemption date. If fewer than all of the bonds shall be
called for redemption, the particular maturities of the bonds to be redeemed shall be selected by
the City in its discretion.
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, or sending a copy of the redemption
notice via other standard means, including electric or facsimile communication, to all registered
owners of bonds to be redeemed. Failure to mail or send 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 27]
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 2011 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
By:
Authorized Signature
Ott,
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
24 City and the conditions, rights and obligations pertaining thereto, as set out in those ordinances,
25 are hereby ratified, confirmed and continued. None of the facilities or services afforded by the
26 System shall be furnished without a charge being made therefor. In the event that the City or any
27 department, agency or instrumentality thereof shall avail itself of the facilities and services
28 afforded by the System, the reasonable value of the services or facilities so afforded shall be
[PAGE i l OF 271
I charged against the City or such department, agency or instrumentality and shall be paid for as
2 the charges accrue. The revenues so received shall be deemed to be revenues derived from the
3 operation of the System and shall be used and accounted for in the same manner as the other
4 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
6 bonds are outstanding unless there is obtained from an independent certified public accountant
7 ( "Accountant ") a certificate that the Net Revenues of the System ( "Net Revenues" being defined
8 as gross revenues of the System less the expenses of operation and maintenance of the System,
9 including all expense items properly attributable to the operation and maintenance of the System
10 under generally accepted accounting principles applicable to municipal sewer facilities,
11 excluding depreciation, interest and amortization of deferred bond discount expenses), with the
12 reduced rates, will always be equal to the amount required to be set aside for the Depreciation
13 Fund (hereinafter identified), and leave a balance equal to at least 130% of the average annual
14 principal and interest requirements on all outstanding bonds payable from System revenues
15 ( "System Bonds "). The City further covenants and agrees that the rates shall, if and when
16 necessary, from time to time, be increased in such manner as will produce revenues at least
17 sufficient to pay the principal and interest on all System Bonds when due, to pay the operation
18 and maintenance expenses of the System, and to deposit the amounts required to be paid into the
19 Depreciation Fund and any debt service reserves in accordance with this Ordinance.
20 The City covenants and agrees that the existing rates will produce total System revenues at
21 least sufficient to pay the operation and maintenance expenses of the System, to pay the principal
22 of and premium, if any, and interest on all outstanding System Bonds and trustee fees in
23 connection therewith, and to make the required deposits into the debt service reserves and the
24 Depreciation Fund.
25 Section 10. The System shall be continuously operated as a revenue producing undertaking
26 and all System revenues shall be paid into a special fund heretofore created and designated
27 "Sewer Fund" (the "Revenue Fund "). The System revenues so deposited in the Revenue Fund
28 are hereby pledged and shall be applied to the payment of the reasonable and necessary expenses
29 of operation, repair and maintenance of the System, to the payment of the principal of and
30 premium, if any, and interest on System Bonds, to the establishment and maintenance of debt
31 service reserves, and to the providing of a Depreciation Fund, as hereinafter set forth. The
32 Revenue Fund, and the other special funds hereinafter in this Ordinance provided for or referred
[PAGE 12 OF 27]
I to, shall be maintained in such depositories of the City as shall from time to time be designated
2 by the Committee, with all such depositories to hold membership in the Federal Deposit
3 Insurance Corporation (the "FDIC "), to be located in Little Rock, Arkansas, and to have a capital
4 and surplus of not less than $15,000,000, and with all deposits in any depository in excess of the
5 amount insured by the FDIC to be secured by bonds or other direct or fully guaranteed
6 obligations of the United States of America unless invested in accordance with Section 27
7 hereof.
8 Section 11. There shall be paid from the Revenue Fund into a fund heretofore created and
9 designated "Sewer Operation and Maintenance Fund" (the "Operation and Maintenance Fund ")
10 on or before the tenth day of each month while any bonds are outstanding, an amount sufficient
11 to pay the reasonable and necessary monthly expenses of operation, repair and maintenance of
12 the System for such month and from which disbursements shall be made only for those purposes.
13 Fixed annual charges such as insurance premiums and the cost of major repair and maintenance
14 expenses may be computed and set up on an annual basis, and one - twelfth (1/12) of the amount
15 thereof may be paid into the Operation and Maintenance Fund each month.
16 If in any month for any reason there shall be a failure to transfer and pay the required amount
17 into Operation and Maintenance Fund, the amount of any deficiency shall be added to the
18 amount otherwise required to be transferred and paid into such fund in the next succeeding
19 month. If in any fiscal year a surplus shall be accumulated in the Operation and Maintenance
20 Fund over and above the amount which shall be necessary to defray the reasonable and necessary
21 costs of operation, repair and maintenance of the System during the remainder of the then current
22 fiscal year and the next ensuing fiscal year, such surplus may be transferred and deposited in the
23 Revenue Fund.
24 Section 12. After making the required monthly deposits into the Operation and Maintenance
25 Fund, there shall be paid from the Revenue Fund, pro rata, the required monthly deposits into the
26 bond funds (and debt service reserves therein) for the Parity Bonds and any additional bonds
27 issued on a parity with the bonds pursuant to Section 16 hereof (the "Parity Bond Funds ") and
28 into a special fund in the name of the City which is hereby created and designated the "2011
29 Sewer Revenue Bond Fund" (the "2011 Bond Fund" and collectively with the Parity Bond
30 Funds, the "Senior Bond Funds "). Payments into the 2011 Bond Fund shall be made on or
31 before the fifteenth day of each month, commencing in August 2011, until all outstanding bonds,
[PAGE 13 OF 27]
I with interest thereon, have been paid in full or provision made for such payment, a sum equal to
2 1/6 of the next installment of principal and interest due on the bonds.
3 The City shall also pay into the 2011 Bond Fund such additional sums as necessary to
4 provide for the Trustee's fees and expenses and any arbitrage rebate due the United States
5 Treasury under Section 148(f) of the Internal Revenue Code of 1986, as amended (the "Code ").
6 The City shall realize a credit against monthly deposits into the 2011 Bond Fund from bond
7 proceeds deposited therein, all interest earnings on moneys in the 2011 Bond Fund and all
8 transfers, if any, made from the debt service reserve during the preceding month.
9 There is hereby created, as a part of the 2011 Bond Fund, a debt service reserve (the "Debt
10 Service Reserve ") which shall be maintained by the City in an amount equal to the maximum
11 annual principal and interest requirement on the bonds or 10% of the principal amount of the
12 bonds, whichever is lesser (the "Required Level "). The maintenance of the Debt Service
13 Reserve at the Required Level shall be initially satisfied through bond proceeds deposited in the
14 Debt Service Reserve concurrently with the issuance and delivery of the bonds. Should the Debt
15 Service Reserve become impaired or be reduced below the Required Level by reason of
16 withdrawal or valuation, the City shall make additional monthly payments from the Revenue
17 Fund until the impairment or reduction is corrected within a twenty -four month period.
18 If for any reason the City should fail at any time to make any of the required payments into
19 the 2011 Bond Fund, any sums then held in the Debt Service Reserve shall be used to the extent
20 necessary for the payment of principal of or interest on the bonds, but the Debt Service Reserve
21 shall be reimbursed from the Revenue Fund before any moneys in the Revenue Fund shall be
22 used for any other purpose other than the making of payments required to be made into the
23 Operation and Maintenance Fund and the Senior Bond Funds. The Debt Service Reserve shall
24 be used solely as provided herein.
25 If Net Revenues are insufficient to make the required payment on the first business day of
26 the following month into the 2011 Bond Fund, the amount of any such deficiency in the payment
27 made shall be added to the amount otherwise required to be paid into the 2011 Bond Fund on the
28 first business day of the next month.
29 When the moneys held in the 2011 Bond Fund shall be and remain sufficient to pay the
30 principal of and interest on all of the bonds then outstanding plus Trustee's fees and any
31 arbitrage rebate due as provided above, the City shall not be obligated to make any further
32 payments into the 2011 Bond Fund.
[PAGE 14 OF 271
I It shall be the duty of the City to cause to be withdrawn from the 2011 Bond Fund and
2 deposited with the Trustee at least one (1) business day before the due date of any principal
3 and/or interest on any bond, at maturity or redemption prior to maturity, and deposited with the
4 Trustee an amount equal to the amount of such bond and interest due thereon for the sole
5 purpose of paying the same, together with the Trustee's fee. There shall also be withdrawn and
6 paid to the United States Treasury any arbitrage rebate due at the times and in the amounts
7 required by Section 148(0 of the Code. No withdrawal of funds from the 2011 Bond Fund shall
8 be made for any other purpose except as otherwise authorized in this Ordinance.
9 The bonds shall be specifically secured by a pledge of all Net Revenues remaining after the
10 deposits have been made to the Operation and Maintenance Fund. This pledge in favor of the
11 bonds is hereby irrevocably made according to the terms of this Ordinance, and the City and its
12 officers and employees shall execute, perform and carry out the terms thereof in strict conformity
13 with the provisions of this Ordinance.
14 Section 13. After making the deposits into the Operation and Maintenance Fund and the
15 Senior Bond Funds, there shall be transferred from the Revenue Fund into the bond funds for the
16 Subordinate Bonds (the "Subordinate Bond Funds "), the amounts required by the ordinances
17 authorizing the Subordinate Bonds, and the administration and servicing fees due in connection
18 with the Subordinate Bonds.
19 Section 14. After making the required payments into the Operation and Maintenance Fund,
20 the Senior Bond Funds and the Subordinate Bond Funds, there shall be paid from the Revenue
21 Fund into a fund heretofore created and designated the "Sewer Depreciation Fund" (the
22 "Depreciation Fund ") on, or before the 15th day of each month while any bonds are outstanding,
23 three percent (3 %) of the System revenues which remain after the required payment into the
24 Operation and Maintenance Fund has been made. The moneys in the Depreciation Fund shall be
25 used solely for the purpose of paying the cost of replacements made necessary by the
26 depreciation of the System. If in any fiscal year a surplus shall be accumulated in the
27 Depreciation Fund over and above the amount necessary to defray the cost of the probable
28 replacements during the then current fiscal year and the next ensuing fiscal year, such surplus
29 may be transferred and paid into the Revenue Fund.
30 Section 15. Any surplus in the Revenue Fund, after making the required monthly deposits
31 into all of the funds as set forth above, may be used, at the option of the City, for any lawful
32 purpose of the System, as approved by the Committee.
[PAGE 15 OF 271
I Section 16. So long as any of the bonds are outstanding, the City shall not issue or attempt to
2 issue any bonds claimed to be entitled to a priority of lien on Net Revenues over the lien securing
3 the bonds and the Parity Bonds, except as hereinafter provided. The City reserves the right to
4 issue additional bonds to finance or pay the cost of making any future extensions, betterments or
5 improvements to the System, or to refund bonds issued for such purposes, but the City shall not
6 authorize or issue any such additional bonds ranking on a parity with the bonds and the Parity
7 Bonds unless and until there have been procured and filed with the City Clerk and the Trustee a
8 statement by an Accountant reciting the opinion, based upon necessary investigation, that the Net
9 Revenues of the System for the fiscal year immediately preceding the fiscal year in which it is
10 proposed to issue such additional bonds shall equal not less than 120% of the average annual
11 principal and interest requirements on all the then outstanding System Bonds and the additional
12 bonds then proposed to be issued. The term "Net Revenues" means gross System revenues less
13 operation and maintenance expenses other than depreciation, interest and amortization of
14 deferred bond discount expenses, determined in accordance with generally accepted accounting
15 principles. In making the computation set forth above, the City, and the Accountant on behalf of
16 the City, may, based upon the opinion or report of a registered professional engineer not in the
17 regular employ of the City, treat any increase in rates for the System enacted subsequent to the
18 first day of such preceding fiscal year as having been in effect during or throughout such fiscal
19 year and may include in gross System revenues for such fiscal year the amount that would have
20 been received, based on such opinion or report, had the increase been in effect during or
21 throughout such fiscal year.
22 Section 17. The City covenants and agrees that it will maintain the System in good condition
23 and operate the same in an efficient manner and at reasonable cost. While any of the bonds are
24 outstanding, the City agrees that it will insure and at all times keep insured, in the amount of the
25 full insurable value thereof, in a responsible insurance company or companies selected by the
26 Committee and authorized and qualified under the laws of the State to assume the risk thereof,
27 all aboveground structures of the System, to the extent that such structures would be covered by
28 insurance by private companies engaged in similar types of businesses, against loss or damage
29 thereto from fire, lightning, tornados, winds, riot, strike, civil commotion, malicious damage,
30 explosion and against any other loss or damage from any other causes customarily insured
31 against by private companies engaged in similar types of business. The insurance policies are to
32 carry a clause making them payable to the Committee and the Trustee as their interests may
[PAGE 16 OF 271
I appear, and satisfactory evidence of said insurance shall be filed with the Trustee. In the event
2 of loss, the proceeds of such insurance shall be applied solely toward the reconstruction,
3 replacement or repair of the System, and in such event the City will, with reasonable promptness,
4 cause to be commenced and completed the reconstruction, replacement and repair work. If such
5 proceeds are more than sufficient for such purposes, the balance remaining shall be deposited to
6 the credit of the Revenue Fund, and if such proceeds shall be insufficient for such purposes, the
7 deficiency shall be supplied first from moneys in the Depreciation Fund, second from moneys in
8 the Operation and Maintenance Fund, and third from surplus moneys in the Revenue Fund.
9 Nothing shall be construed as requiring the City to expend any moneys for operation and
10 maintenance of the System or for premiums on its insurance which are derived from sources
11 other than the operation of the System, but nothing shall be construed as preventing the City
12 from doing so.
13 Section 18. The bonds shall be subject to redemption prior to maturity in accordance with
14 the terms set out in the bond form.
15 Section 19. The Committee will keep proper books of accounts and records (separate from
16 all other records and accounts of the City) in which complete and correct entries shall be made of
17 all transactions relating to the operation of the System, and such books shall be available for
18 inspection by the Trustee and any registered owner of any of the bonds at reasonable times and
19 under reasonable circumstances. The City and the Committee agree to have these records
20 audited by an Accountant at least once each year, and a copy of the audit shall be delivered to the
21 Trustee and made available to interested registered owners requesting the same in writing. In the
22 event that the City or the Committee fail or refuse to make the audit, the Trustee, or any
23 registered owner of the bonds, may have the audit made, and the cost thereof shall be charged
24 against the Operation and Maintenance Fund.
25 Section 20. Any bond shall be deemed to be paid within the meaning of this Ordinance when
26 payment of the principal of and interest on such bond (whether at maturity or upon redemption as
27 provided herein, or otherwise), either (i) shall have been made or caused to be made in
28 accordance with the terms thereof, or (ii) shall have been provided for by irrevocably depositing
29 with the Trustee, in trust and irrevocably set aside exclusively for such payment (1) cash
30 sufficient to make such payment and /or (2) direct obligations of (including obligations issued or
31 held in book entry form on the books of) the Department of the Treasury of the United States of
32 America ( "Government Securities ") (provided that such deposit will not affect the tax exempt
[PAGE 17 OF 27]
I status of the interest on any of the bonds or cause any of the bonds to be classified as "arbitrage
2 bonds" within the meaning of Section 148 of the Code), maturing as to principal and interest in
3 such amounts and at such times as will provide sufficient moneys to make such payment, and all
4 necessary and proper fees, compensation and expenses of the Trustee pertaining to the bonds
5 with respect to which such deposit is made shall have been paid or the payment thereof provided
6 for to the satisfaction of the Trustee.
7 On the payment of any such bonds within the meaning of this Ordinance, the Trustee shall
8 hold in trust, for the benefit of the owners of such bonds, all such moneys and /or Government
9 Securities.
10 When all the bonds shall have been paid within the meaning of this Ordinance, if the Trustee
11 has been paid its fees and expenses and if any arbitrage rebate due the United States Treasury has
12 been paid or provided for to the satisfaction of the Trustee, the Trustee shall take all appropriate
13 action to cause (i) the pledge and lien of this Ordinance to be discharged and cancelled, and (ii)
14 all moneys held by it pursuant to this Ordinance and which are not required for the payment of
15 such bonds to be paid over or delivered to or at the direction of the City. In determining the
16 sufficiency of the deposit of Government Securities, there shall be considered the principal
17 amount of such Government Securities and interest to be earned thereon until the maturity of
18 such Government Securities.
19 Section 21. If there be any default in the payment of the principal of or interest on any of the
20 bonds, or if the City defaults in any 2011 Bond Fund requirement or in the performance of any of
21 the other covenants contained in this Ordinance and such failure continues unremedied for thirty
22 (30) days, the Trustee may, and upon the written request of the registered owners of not less than
23 10% in principal amount of the then outstanding bonds, shall, by proper suit, compel the
24 performance of the duties of the officials of the City under the laws of Arkansas. And in the case
25 of a default in the payment of the principal of and interest on any of the bonds, the Trustee may
26 and upon written request of the registered owners of not less than 10% in principal amount of the
27 then outstanding bonds, shall apply in a proper action to a court of competent jurisdiction for the
28 appointment of a receiver to administer the System on behalf of the City and the registered
29 owners of the bonds with power to charge and collect (or by mandatory injunction or otherwise
30 to cause to be charged and collected) rates sufficient to provide for the payment of the expenses
31 of operation, maintenance and repair and to pay any bonds and interest outstanding and to apply
32 the System revenues in conformity with the laws of Arkansas and with this Ordinance. When all
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defaults in principal and interest payments have been cured, the custody and operation of the
System shall revert to the City.
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% 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 hereunder
except in 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.
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.
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.
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,
[PAGE 19 OF 271
I action or proceeding instituted by the Trustee shall be brought in its name for the benefit of all
2 the registered owners of such bonds, subject to the provisions of this Ordinance.
3 No delay or omission of the Trustee or of any registered owners of the bonds to exercise any
4 right or power accrued upon any default shall impair any such right or power or shall be
5 construed to be a waiver of any such default or an acquiescence therein; and every power and
6 remedy given by this ordinance to the Trustee and to the registered owners of the bonds,
7 respectively, may be exercised from time to time and as often as may be deemed expedient.
8 In any proceeding in which any plaintiff bondholder prevails to enforce the provisions of this
9 Ordinance, such plaintiff bondholder shall be entitled to recover from the City all costs of such
10 proceeding, including reasonable attorneys' fees.
11 Section 22. (a) The terms of this Ordinance shall constitute a contract between the City and
12 the registered owners of the bonds and no variation or change in the undertaking herein set forth
13 shall be made while any of the bonds are outstanding, except as hereinafter set forth in
14 subsections (b) and (c).
15 (b) The Trustee may consent to any variation or change in this Ordinance without the
16 consent of the owners of the outstanding bonds (a) in connection with the issuance of additional
17 parity bonds under this Ordinance, (b) in order to cure any ambiguity, defect or omission herein
18 or to correct or supplement any defective or inconsistent provisions contained herein as the City
19 may deem necessary or desirable and not inconsistent herewith, or (c) in order to make any other
20 variation or change which the Trustee determines shall not adversely affect the interests of the
21 owners of the bonds.
22 (c) The owners of not less than 75% in aggregate principal amount of the bonds then
23 outstanding shall have the right, from time to time, anything contained in this Ordinance to the
24 contrary notwithstanding, to consent to and approve the adoption by the City of such ordinance
25 supplemental hereto as shall be necessary or desirable for the purpose of modifying, altering,
26 amending, adding to or rescinding, in any particular, any of the terms or provisions contained in
27 this Ordinance or in any supplemental ordinance; provided, however, that nothing contained in
28 this Section shall permit or be construed as permitting (a) an extension of the maturity of the
29 principal of or the interest on any bond, or (b) a reduction in the principal amount of any bond or
30 the rate of interest thereon, or (c) the creation of a lien or pledge superior to the lien and pledge
31 created by this Ordinance, or (d) a privilege or priority of any bond or bonds over any other bond
[PAGE 20 of 271
I or bonds, or (e) a reduction in the aggregate principal amount of the bonds required for consent
2 to such supplemental ordinance.
3 Section 23. When the bonds have been executed and sealed as herein provided, they shall be
4 authenticated by the Trustee, and the Trustee shall deliver the bonds to or at the direction of the
5 Purchasers upon payment in cash of the Purchase Price. The accrued interest shall be remitted to
6 the City for deposit into the 2011 Bond Fund. A deposit into the Debt Service Reserve, along
7 with the expenses of issuing the bonds, as set forth in the delivery instructions to the Trustee
8 signed by the Mayor and City Clerk (the "Delivery Instructions "), shall also be paid from the
9 Purchase Price. There shall be deposited with the trustee for the Refunded Bonds the amount
10 necessary, along with other funds of the System appropriated hereby, to accomplish the
11 Refunding. The remainder of the Purchase Price shall be deposited into a special account of the
12 City in the Trustee designated "Sewer Refunding Revenue Bond Cost of Issuance Fund, Series
13 2011" (the "Cost of Issuance Fund "). The moneys in the Cost of Issuance Fund shall be
14 disbursed solely in payment of the expenses of issuing the bonds and accomplishing the
15 Refunding. Disbursements shall be on the basis of requisitions which shall contain at least the
16 following information: the person to whom payment is being made; the amount of the payment;
17 and the purpose by general classification of the payment. Each requisition must be signed by the
18 Manager. The Trustee shall keep a record of all requisitions.
19 When all expenses have been paid for and in connection with the accomplishment of the
20 Refunding and the issuance of the bonds, this fact shall, if moneys remain in the Cost of Issuance
21 Fund, be evidenced by a certificate signed by the Chief Executive Officer of Little Rock
22 Wastewater ( "Utility CEO "), which certificate shall state, among other things, that all obligations
23 payable from the Cost of Issuance Fund have been discharged. A copy of the certificate shall be
24 filed with the Trustee, and upon receipt thereof the Trustee shall deposit any remaining balance
25 into the 2011 Bond Fund.
26 Section 24. In the event any of the offices of Mayor, City Clerk, Utility CEO, Committee or
27 Board of Directors shall be abolished, or any two or more of such offices shall be merged or
28 consolidated, or in the event the duties of a particular office shall be transferred to another office
29 or officer, or in the event of a vacancy in any such office by reason of death, resignation,
30 removal from office or otherwise, or in the event any such officer shall become incapable of
31 performing the duties of his office by reason of sickness, absence from the City or otherwise, all
32 powers conferred and all obligations and duties imposed upon such office or officer shall be
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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.
So long as the System is under the control of the Committee, performance by the Committee
of any obligation of the City hereunder shall be deemed performance by the City. The
Committee presently consists of Cindy Miller, Ken Griffey, Marilyn Perryman, Pete Hornibrook
and Richard L. Mays, Jr. There are currently two vacancies on the Committee.
Section 25. (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
System revenues will not be used directly or indirectly in such manner as to cause the bonds to
be treated as "arbitrage bonds" within the meaning of Section 148 of the Code.
(b) The City 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 refinanced by the bonds.
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:
[PAGE 22 OF 27]
I "Net Proceeds" means the face amount of the bonds, plus accrued interest and premium,
2 if any, less original issue discount, if any, less any amounts deposited into the Debt Service
3 Reserve from bond proceeds.
4 "Private Business Use" means use directly or indirectly in a trade or business carried on
5 by a natural person or in any activity carried on by a person other than a natural person,
6 excluding, however, use by a state or local governmental unit and use as a member of the general
7 public.
8 (c) The City covenants that it will take no action which would cause the bonds to be
9 "federally guaranteed" within the meaning of Section 149(b) of the Code. Nothing in this
10 Section shall prohibit investments in bonds issued by the United States Treasury.
11 (d) The City covenants that it will submit to the Secretary of the Treasury of the United
12 States, not later than the 15th day of the second calendar month after the close of the calendar
13 quarter in which the bonds are issued, the statement required by Section 149(e) of the Code.
14 (e) The City covenants that it will, in compliance with the requirements of Section 148(f)
15 of the Code, pay with moneys in the 2011 Bond Fund to the United States Government in
16 accordance with the requirements of Section 148(f) of the Code, from time to time, an amount
17 equal to the sum of (1) the excess of (A) the amount earned on all Non - purpose Investments (as
18 therein defined) attributable to the bonds, other than investments attributable to such excess, over
19 (B) the amount which would have been earned if such Non - purpose Investments attributable to
20 the bonds were invested at a rate equal to the Yield (as defined in the Code) on the bonds, plus
21 (2) any income attributable to the excess described in (1), subject to the exceptions set forth in
22 Section 148 of the Code. The City further covenants that in order to assure compliance with its
23 covenants herein, it will employ a qualified consultant to advise the City in making the
24 determination required to comply with this subsection (e). Anything herein to the contrary
25 notwithstanding, this provision may be modified or rescinded if in the opinion of Bond Counsel
26 such modification or rescission will not affect the tax - exempt status of the bonds for federal
27 income tax purposes.
28 Section 26. The Trustee shall only be responsible for the exercise of good faith and
29 reasonable prudence in the execution of its trust. The recitals in this Ordinance and on the face
30 of the bonds are the recitals of the City and not of the Trustee. The Trustee shall not be required
31 to take any action as Trustee unless it shall have been requested to do so in writing by the owners
32 of not less than 10% in principal amount of the bonds then outstanding and shall have been
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I offered reasonable security and indemnity against the costs, expenses and liabilities to be
2 incurred therein or thereby. The Trustee may resign at any time by giving sixty (60) days' notice
3 in writing to the City Clerk and to the registered owners of the bonds and the majority in value of
4 the registered owners of the outstanding bonds or the City, if it is not in default under this
5 Ordinance, at any time, with or without cause, may remove the Trustee. In the event of a
6 vacancy in the office of Trustee, either by resignation or by removal, the City shall appoint a new
7 Trustee, such appointment to be evidenced by a written instrument or instruments filed with the
8 City Clerk. Every successor Trustee appointed pursuant to this Section shall be a trust company
9 or bank in good standing, duly authorized to exercise trust powers and subject to examination by
10 federal or state authority. The original Trustee and any successor Trustee shall file a written
11 acceptance and agreement to execute the trust imposed upon it or them by this Ordinance, but
12 only upon the terms and conditions set forth in this Ordinance and subject to the provisions of
13 this Ordinance, to all of which the respective owners of the bonds agree. Such written
14 acceptance shall be filed with the City Clerk and a copy thereof shall be placed in the bond
15 transcript. Any successor Trustee shall have all the powers herein granted to the original
16 Trustee. The Trustee's resignation shall become effective upon the acceptance of the trusts by
17 the successor Trustee.
18 Section 27. (a) Moneys held for the credit of the 2011 Bond Fund shall be continuously
19 invested and reinvested pursuant to the direction of the Committee in Eligible Investments, all of
20 which shall mature, or which shall be subject to redemption by the holder thereof, at the option
21 of such holder, not later than the payment date for interest or principal and interest on the bonds.
22 (b) Moneys held for the credit of the Debt Service Reserve shall be invested and
23 reinvested at the direction of the Committee in Eligible Investments which shall mature, or
24 which shall be subject to redemption by the holder thereof, at the option of such holder, not later
25 than five years after the date of investment or the final maturity date of the bonds, whichever is
26 earlier.
27 (c) Moneys held for the credit of any other fund shall be continuously invested and
28 reinvested pursuant to the direction of the Committee in Eligible Investments, which shall
29 mature, or which shall be subject to redemption by the holder thereof, at the option of such
30 holder, not later than the date or dates when the moneys held for the credit of the particular fund
31 will be required for purposes intended.
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I (d) "Eligible Investments" means any of the securities that are at the time legal for
2 investment of City funds pursuant to Resolution No. 12,520 of the City, and Arkansas Code
3 Annotated (2009 Supp.) § 14 -58 -309, as each may be amended from time to time. At June 1,
4 2011, "Eligible Investments" include:
5 (1) U.S. Treasury obligations, U.S. government agency obligations, and U.S.
6 government instrumentality obligations, which have a liquid market with a readily
7 determinable market value;
8 (2) Certificates of deposit and other evidences of deposit at financial institutions, and
9 commercial paper, rated in the highest tier (e.g., A -1, P -1, F -1, D -1, or higher) by a
10 nationally recognized rating agency;
11 (3) Investment -grade obligations of state, provincial, and local governments and
12 public authorities;
13 (4) Money market mutual funds regulated by the Securities and Exchange
14 Commission and whose portfolios consist only of dollar - denominated securities; and
15 (5) Local government investment pools either state - administered or developed
16 through joint powers statutes and other intergovernmental agreement legislation.
17 The City's investment policy prohibits investments in derivative products, common stocks,
18 and long -term bonds used for speculation.
19 (e) Obligations so purchased as an investment of moneys in any fund shall be deemed at
20 all times to be a part of such fund and the interest accruing thereon and any profit realized from
21 such investments shall be credited to such fund, and any loss resulting from such investment
22 shall be charged to such fund, except that interest earnings and profits on investments of moneys
23 in the Debt Service Reserve which increase the amount thereof above the Required Level shall to
24 the extent of any such excess be transferred from time to time into the 2011 Bond Fund.
25 (f) Moneys so invested in Government Securities or in certificates of deposit of banks to
26 the extent insured by FDIC, need not be secured by the depository bank or banks.
27 (g) All investments and deposits shall have a par value (or market value when less than
28 par), exclusive of accrued interest, at all times at least equal to the amount of money credited to
29 such funds and shall be made in such a manner that the money required to be expended from any
30 fund will be available at the proper time or times.
31 (h) Investments of moneys in all funds shall be valued in terms of current market value as
32 of the last day of each year, except that direct obligations of the United States (State and Local
[PAGE 25 OF 271
I Government Series) in book -entry form shall be continuously valued at par or face principal
2 amount.
3 (i) The City covenants that it will make all arbitrage rebate payments to the United
4 States in accordance with Section 148(f) of the Code.
5 Section 28. It is covenanted and agreed by the City with the registered owners of the bonds,
6 or any of them, that the City and the Committee will faithfully and punctually perform all duties
7 with reference to the System required by the Constitution and laws of the State, including the
8 charging and collecting of reasonable and sufficient rates lawfully established for services
9 rendered by the System, the segregating of System revenues as herein required, and the applying
10 of System revenues to the respective funds herein created or referred to.
11 Section 29. The City covenants that it will not sell or lease the System, or any substantial
12 portion thereof, provided, however, that nothing herein shall be construed to prohibit the City
13 from making such dispositions of properties of the System and such replacements and
14 substitutions for properties of the System as shall be necessary or incidental to the efficient
15 operation of the System as a revenue - producing undertaking. All revenues derived from such
16 dispositions shall be deposited into the Revenue Fund.
17 Section 30. The requirements of Ordinance No. 15,249, as they may relate to the
18 authorization and sale of the Bonds, are hereby waived.
19 Section 31. The provisions of this Ordinance are hereby declared to be separable and if any
20 provision shall for any reason be held illegal or invalid, such holding shall not affect the validity
21 of the remainder of this Ordinance.
22 Section 32. All ordinances and resolutions or parts thereof, in conflict herewith are hereby
23 repealed to the extent of such conflict.
24 Section 33. It is hereby ascertained and declared that the Refunding must be accomplished
25 as soon as possible in order to take advantage of low interest rates for tax - exempt bonds, such as
26 the bonds, that will enable the City to reduce future rate increases as much as reasonably
27 feasible. It is, therefore, declared that an emergency exists and this Ordinance being necessary
28 for the immediate preservation of the public peace, health and safety shall take effect and be in
29 force from and after its passage.
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I PASSED: June 7, 2011
2 ATTEST: APPROVED:
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5 us n a ey, City Clerk Mark Stodola,
6 APP AS TO LEGAL FORM:
7 4*1L
8
9 Thomas M. Carpenter, CiVy Attorney
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