ORD NO 03-1993 ORDINANCE NO-3
3
AN ORDINANCE PROVIDING FOR THE ISSUANCE OF $1,900,000 OF
WATER AND SEWER REVENUE BONDS BY THE CITY OF VAN BUREN,
ARKANSAS FOR THE PURPOSE OF ACQUIRING, CONSTRUCTING AND
EQUIPPING AN EXPANSION TO THE SEWER SYSTEM OF THE CITY;
PROVIDING FOR THE PAYMENT OF PRINCIPAL AND INTEREST ON
THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF BOND
PURCHASE AGREEMENTS PROVIDING FOR THE SALE OF THE BONDS;
PRESCRIBING OTHER MATTERS RELATING THERETO; AND DECLARING
AN EMERGENCY.
WHEREAS, the City of Van Buren, Arkansas (the "City owns a
water and sewer system which is operated and maintained as a
single, integrated municipal undertaking (the "System on behalf
of the City by the Van Buren Water and Sewer Commission (the
"Commission and
WHEREAS, the City Council and the Commission have determined
that the acquisition, construction and equipping of an expansion to
the north side sewage treatment plant of the System (the
"Improvements is necessary in order to make the services provided
by the System adequate for the needs of the City and have caused to
be prepared by a qualified consulting engineer, a preliminary
engineering report with respect to the Improvements, which report
has been examined and approved by the City Council and the
Commission and a copy of which report is on file in the office of
the City Clerk where it may be inspected by any interested person;
and
WHEREAS, the City presently has outstanding its Water and
Sewer Revenue Refunding and Construction Bonds, Series 1989, dated
September 1, 1989, issued in the original principal amount of
$3,070,000, of which $2,815,000 in principal amount is currently
outstanding (the "1989 Bonds issued under and secured by the
provisions of Ordinance No. 18 -1989 (the "1989 Ordinance of the
City, adopted and approved on August 21, 1989, under the authority
of Act No. 131 of the Acts of the General Assembly of the State of
Arkansas for the year 1933, as amended "Act 131 and Act No. 132
of the Acts of the General Assembly of the State of Arkansas for
the year 1933, as amended "Act 132 and
WHEREAS, the City is authorized under Act 131 to issue and
sell revenue bonds for the purpose of financing the costs of
acquiring and constructing improvements and betterments to its
water system, and is authorized under Act 132 to issue and sell
revenue bonds for the purpose of financing the costs of acquiring
and constructing improvements and betterments to its sewer system,
together with printing, legal, underwriting and other expenses
incidental to the issuance of such bonds, and is authorized under
Act No. 305 of the Acts of the General Assembly of the State of
Arkansas for the year 1967, as amended "Act 305 to pledge and
cross pledge the revenues of any City water or sewer utility to
revenue bonds issued for constructing, reconstructing, extending,
improving or equipping water and sewer utilities owned by the City
at the time of such pledge or cross pledge; and
WHEREAS, to secure funds necessary to finance the Improvements
and to pay legal and other costs incidental to the issuance of
revenue bonds for such purposes, the City has determined to issue
its Water and Sewer Revenue Bonds, Series 1993, in an aggregate
principal amount of not to exceed One Million Nine Hundred Thousand
Dollars ($1,900,000) (the "Bonds and
WHEREAS, the City has made arrangements pursuant to a
Placement Agreement (the "Placement Agreement with T.J. Raney
Sons, a division of Morgan Keegan Company, Inc. (the "Placement
Agent for the placement of the Bonds with the First National
Bank of Crawford County, Van Buren, Arkansas, and Citizens Bank
Trust Company, Van Buren, Arkansas (collectively, the
"Purchasers at a price of 100% of par plus accrued interest
pursuant to Bond Purchase Agreements (the "Purchase Agreements
which Placement Agreement and Purchase Agreements have been
presented to and are before this meeting; and
WHEREAS, a Preliminary Private Placement Memorandum, dated
March 15, 1993 (the "Preliminary Placement Memorandum offering
the Bonds for sale has been presented to and is before -this
meeting; and
WHEREAS, a final Private Placement Memorandum (the "Placement
Memorandum will be prepared and will be distributed in
connection with the sale of the Bonds.
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City
of Van Buren, Arkansas that:
Section 1. The Improvements shall be accomplished under the
control and supervision of, and all details in connection therewith
shall be handled by, the Commission. The Commission shall make all
contracts and agreements necessary or incidental to the performance
of its duties and the execution of its powers. The Commission
shall let all contracts pursuant to and in accordance with existing
laws and shall require such performance bonds and insurance for
construction as will, in the judgment of the Commission, fully
insure completion of the Improvements so as to fully promote and
protect the best interests of the City and the owners of the Bonds.
Section 2. The City Council hereby finds and declares that
the period of usefulness of the Improvements will be more than
twenty (20) years, which is longer than the term of the Bonds.
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030893
Section 3. The offers of the Purchasers to purchase
$1,900,000 principal amount of Bonds from the City, at a price of
100% of par plus accrued interest, for Bonds bearing interest at
the rates per annum, maturing and otherwise subject to the terms
and provisions hereafter in this Ordinance set forth in detail be,
and are hereby accepted, and the Purchase Agreements, in
substantially the form submitted to this meeting, are approved and
confirmed, and the Bonds are hereby sold to the Purchasers. The
Mayor is hereby authorized and directed to execute and deliver the
Purchase Agreements on behalf of the City and to take all action
required on the part of the City to fulfill its obligations under
the Purchase Agreements, and the City Clerk is hereby authorized to
attest the same and to affix the seal of the City thereto. Any
changes to the Purchase Agreements may be approved by the officers
of the City executing such documents, their execution and delivery
to constitute conclusive evidence of such approval.
The Preliminary Private Placement Memorandum is hereby
approved in substantially the form submitted to this meeting, and
the use of the Preliminary Private Placement Memorandum in
connection with the offer and sale of the Bonds is hereby in all
respects authorized, approved and confirmed, and the Mayor be and
he hereby is authorized, empowered and directed, for and on behalf
of the City, to execute the final Private Placement Memorandum in
the name of the City to be delivered to the Purchasers in
connection with the sale of the Bonds as set forth in the Purchase
Agreements, and the Mayor is hereby authorized, empowered and
directed to do all such acts and things necessary to carry out and
comply with the provisions of the Private Placement Memorandum.
The Preliminary Private Placement Memorandum is hereby "deemed
final" within the meaning of Section 15c2 -12 of the Securities
Exchange Act of 1933. All actions heretofore taken by the City and
the Commission in connection with the offer and sale of the Bonds,
including the preparation and distribution of the Preliminary
Private Placement Memorandum, are hereby in all respects ratified
and approved.
Section 4. The offer of the Placement Agent to place the
Bonds with the Purchasers pursuant to the terms of the Placement
Agreement in substantially the form submitted to this meeting is
hereby approved and confirmed, and the Mayor is hereby authorized
and directed to execute and deliver the Placement Agreement on
behalf of the City and to take all action required on the part of
the City to fulfill its obligations under the Placement Agreement,
and the City Clerk is hereby authorized and directed to attest the
same and to affix the seal of the City thereto. Any changes to the
Placement Agreement may be approved by the officers of the City
executing such document, their execution and delivery to constitute
conclusive evidence of such approval.
RS901300.11PS
030093
Section 5. Under the authority of the Constitution and laws
of the State of Arkansas, including particularly Amendment 65 to
the Constitution of Arkansas, Act 131, Act 132 and Act 305, there
is hereby authorized the issuance of bonds of the City to be
designated as "Water and Sewer Revenue Bonds, Series 1993" in the
principal amount of $1,900,000 for the purpose of accomplishing the
Improvements and paying necessary expenses incidental thereto and
to the authorization and issuance of the Bonds. The Bonds shall
mature on April 1 in the years and in the principal amounts and
shall bear interest as follows:
Year Principal Interest
(April 1) Amount Rate
1994 $60,000 2.801
1995 65,000 3.25
1996 65,000 3.55
1997 65,000 3.85
1998 70,000 4.15
19 99 75,000 4.35
2000 75,000 4.45
2001 80,000 4.70
2002 85,000 5.00
2003 85,000 5.15
2004 90,000 5.25
2005 95,000 5.40
2006 100,000 5.60
2007 105,000 5.70
2008 115,000 5.90
2009 120,000 6.00
2010 125,000 6.00
2011 135,000 6.00
2012 140,000 6.00
2013 150,000 6.00
The Bonds shall bear interest from their respective dates, and
the Bonds shall be issuable only as fully registered bonds without
coupons in denominations of $5,000 or any integral multiple
thereof. Unless the City shall otherwise direct, the Bonds shall
be numbered from R -1 upwards in order of issuance. Each Bond shall
have a CUSIP number.
Each Bond shall be dated as of the interest payment date to
which interest has been paid, as of the date on which it is
authenticated, or if it is authenticated prior to a date on which
interest has been paid, it shall be dated April 1, 1993. Interest
on the Bonds shall be payable on October 1, 1993, and semiannually
thereafter on April 1 and October 1 of each year. Payment of each
installment of interest shall be made by Citizens Bank Trust
Company, Van Buren, Arkansas, as paying agent (the "Paying Agent
O -4- RSS01886.WP5
030893
to the person in whose name each Bond is registered on the
registration books of the City maintained by the First National
Bank of Crawford County, Van Buren, Arkansas, as trustee and bond
registrar (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.
Only such Bonds as shall have endorsed thereon a Certificate
of Authentication substantially in the form set forth in Section 7
hereof, 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 such Certificate of
Authentication shall have been duly executed by the Trustee, and
such certificate of the Trustee upon any Bond shall be conclusive
evidence that such Bond has been authenticated and delivered under
this Ordinance. The Trustee's Certificate of Authentication 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 of Authentication on all
of the Bonds issued hereunder.
In case any Bond issued hereunder shall become mutilated or be
destroyed or lost, the City shall, if not then prohibited byelaw,
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's 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 Bonds were destroyed or lost, and of
his ownership thereof, and furnishing the City and Trustee with
indemnity satisfactory to them. The Trustee is hereby authorized
to authenticate any such new Bond. In the event any such Bond
shall have matured, instead of issuing a new Bond, the City may pay
the same without the surrender thereof. Upon the issuance of a new
Bond under this Section 5, the City may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee) connected
therewith.
The City shall cause books for the registration and transfer
of the Bonds to be maintained by the Trustee as provided herein and
in the Bonds. The Trustee shall act as the bond registrar. Bach
Bond is transferable by the registered owner thereof or by his
attorney duly authorized in writing at the principal office of the
Trustee. Upon such transfer, a new fully registered Bond or Bonds
5 RSS01300.WP5
0]009]
of the same maturity, of authorized denomination or denominations,
and for the same aggregate principal amount will be issued to the
transferee in exchange therefor.
No charge shall be made to any owner of any Bond for the
privilege of transfer or exchange, but any owner of any Bond
requesting any such transfer or exchange shall pay any tax or other
governmental charge required to be paid with respect thereto.
Except as otherwise provided in the immediately preceding sentence,
the cost of preparing each new Bond upon each exchange or transfer
and any other expenses of the City or the Trustee incurred in
connection therewith shall be paid by the City. The City shall not
be required (i) to issue, transfer or exchange any Bond during a
period beginning at the opening of business fifteen (15) days
before any selection of Bonds of that maturity for redemption and
ending at the close of business on the day of the first mailing of
the relevant notice of redemption, or (ii) to transfer or exchange
any Bond selected for redemption in whole or in part.
The person in whose name any Bond shall be registered shall be
deemed and regarded as the absolute owner thereof for all purposes,
and payment of or on account of the principal or premium, if any,
or interest on any Bond shall be made only to or upon the order of
the registered owner thereof or his legal representative, but such
registration may be changed as hereinabove provided. All such
payments shall be valid and effectual to satisfy and discharge the
liability upon such Bond to the extent of the sum or sums so paid.
Neither the City, the Trustee nor the Paying Agent shall be
affected by any notice to the contrary.
In any case where the date of maturity of interest on or
principal of the Bonds or the date fixed for redemption of any
Bonds shall be a Saturday or Sunday or shall be in the State of
Arkansas a legal holiday or a day on which banking institutions are
authorized by law to close, then payment of interest or principal
(and premium, if any) need not be made on such date but may be made
on the next succeeding business day not a Saturday or Sunday or a
legal holiday or a day upon which banking institutions are
authorized by law to close with the same force and effect as if
made on the interest payment date, the date of maturity or the date
fixed for redemption, and no interest shall accrue for the period
after the interest payment date, the date of maturity or the date
fixed for redemption.
Section 6. The Bonds shall be executed on behalf of the City
by the manual or facsimile signatures of the Mayor and City Clerk
and shall have impressed, imprinted, engraved or lithographed
thereon the seal of the City. In case any one or more of the
officers who shall have signed or sealed any of the Bonds shall
cease to be such officer before the Bonds so signed and sealed
shall have been delivered by the Trustee, such Bonds may,
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RSS013B0.HPS
070893
II) nevertheless, be delivered as herein provided, and may be issued as
if the persons who signed or sealed such Bonds had not ceased to
hold such offices. Any Bonds may be signed and sealed on behalf of
the City by such person as at the time of the execution of such
Bonds shall be duly authorized or hold the proper office in the
City, although at the date borne by the Bonds, such persons may not
have been so authorized or have held such office.
The Bonds, together with interest thereon, are secured by and
are payable solely from revenues derived from the operation of the
System (the "Revenues Pursuant to Act 131 and Act 132, the
Bonds are also secured by a statutory lien on the System. There is
hereby created, in the manner and to the extent as provided herein,
a continuing pledge of and lien on the Revenues to secure the full
and final payment of the principal of, premium, if any, and
interest on the Bonds. The Bonds shall be a valid claim of any
owner thereof only against such Revenues, which Revenues are hereby
pledged and mortgaged for the equal and ratable payment of the
principal of, premium, if any, and interest on the Bonds, and shall
be used for no other purpose except as in this Ordinance
specifically provided. The Bonds and interest thereon shall be
special obligations of the City and shall not constitute an
indebtedness of the City within any constitutional or statutory
limitation.
The pledge of Revenues securing the Bonds shall initially be
subordinate to the pledge of Revenues securing the 1989 Bonds.
However, at such time as (i) the moneys on deposit in the Debt
Service Reserve (as defined in Section 15 hereof) with respect to
the Bonds shall be equal to or exceed the Required Level (as
defined in Section 15 hereof) and (ii) there shall be obtained from
an independent certified public accountant not in the regular
employ of the City the certificate described in Section 18 of the
1989 Ordinance with respect to the Net Revenues of the System, the
Bonds shall be deemed to be secured on a parity basis with the 1989
Bonds.
The issuance of the Bonds shall not directly, indirectly or
contingently obligate the City to levy or pledge any taxes
whatsoever or to make any appropriation for the payment of the
Bonds, except as described herein with respect to Revenues. The
City may, but shall not be required to, expend moneys derived from
sources other than the Revenues for debt service on the Bonds,
System operating and maintenance expenses, and System insurance
premiums.
The Bonds shall be subject to redemption prior to maturity in
accordance with the provisions pertaining thereto appearing in the
form of Bond hereinafter set forth in Section 7 of this Ordinance.
R59013BB.WPS
030293
The Bonds shall be payable, with respect to principal,
premium, if any, and interest, in any coin or currency of the
United States of America which at the time of payment is legal
tender for the payment of public and private debts.
Section 7. The Bonds and the Trustee's Certificate of
Authentication shall be in substantially the following form, and
the Mayor and City Clerk are hereby expressly authorized and
directed to make all recitals contained therein:
(Form of Bond)
REGISTERED REGISTERED
No. R
UNITED STATES OF AMERICA
STATE OF ARKANSAS
COUNTY OF CRAWFORD
CITY OF VAN BUREN
WATER AND SEWER REVENUE BOND,
SERIES 1993
Interest Rate: 6 Maturity Date: Dated Date:
Registered Owner:
Principal Amount: Dollars
CUSIP No.
KNOW ALL MEN BY THESE PRESENTS:
That the City of Van Buren, Arkansas (the "City a city of
the first class, duly created under the laws of the State of
Arkansas, for value received, hereby promises to pay, but solely
from the source as hereinafter provided and not otherwise, to the
Registered Owner shown above, or registered assigns, upon the
presentation and surrender hereof at the principal corporate office
of Citizens Bank Trust Company, Van Buren, Arkansas, or its
successor or successors, as paying agent (herein referred to as the
"Paying Agent on the Maturity Date shown above (unless this bond
shall have been called for prior redemption, in which case the
redemption date), the Principal Amount shown above, in such coin or
currency of the United States of America as at the time of payment
shall be legal tender for the payment of public and private debts
and to pay by check or draft interest thereon, but solely from the
source as hereinafter provided and not otherwise, in like coin or
currency from the Dated Date shown above at the Interest Rate per
annum shown above, payable October 1, 1993, and semiannually
thereafter on the 1st days of April and October of each year, until
-8- ASS011139.WPS
0]089)
payment of such Principal Amount or, if this bond or a portion
thereof shall be duly called for redemption, until the date fixed
for redemption, and to pay interest on overdue principal and
interest (to the extent legally enforceable) at the rate borne by
this bond. Payment of each installment of interest shall be made
to the person in whose name this bond is registered on the
registration books of the City maintained by the First National
Bank of Crawford County, Van Buren, Arkansas, or its successor or
successors, as trustee and registrar (herein referred to as the
"Trustee at the close of business on the fifteenth day of the
month (whether or not a business day) next preceding each interest
payment date (the "Record Date irrespective of any transfer or
exchange of this bond subsequent to such Record Date and prior to
such interest payment date.
This bond is one of an issue of City of Van Buren, Arkansas
Water and Sewer Revenue Bonds, Series 1993, aggregating One Million
Nine Hundred Thousand Dollars ($1,900,000) in principal amount (the
"Bonds and is issued for the purpose of financing the costs of
acquiring, constructing and equipping an expansion (the
"Improvements to the City's water and sewer system (the "System
and to pay costs of issuance of the Bonds.
The Bonds are issued pursuant to and in full compliance with
the Constitution and laws of the State of Arkansas, including
particularly Amendment 65 to the Constitution of Arkansas, Acts 131
and 132 of the Acts of the General Assembly of the State of
Arkansas for the year 1933, as amended, and Act No. 305 of the Acts
of the General Assembly of the State of Arkansas for the year 1967,
as amended, and pursuant to Ordinance No. duly adopted by the
City Council on March 15, 1993 (the "Bond Ordinance and do not
constitute an indebtedness of the City within any constitutional or
statutory limitation. The Bonds are not general obligations of the
City, but are special obligations payable solely from the revenues
derived from the operation of the System. Pursuant to Act 131 and
Act 132, the Bonds are also secured by a statutory lien on the
System. An amount of System revenues sufficient to pay the
principal of and interest on the Bonds has been duly pledged and
shall be set aside into the 1993 Water and Sewer Revenue Bond Fund
created by the Bond Ordinance. The Bond Ordinance permits the City
to incur, under certain circumstances, additional bonds and
indebtedness which may be on a parity of security with the Bonds.
The pledge of System revenues securing the Bonds shall
initially be subordinate to the pledge of System revenues securing
the City's Water and Sewer Revenue Refunding and Construction
Bonds, Series 1989, dated September 1, 1989, issued in the original
principal amount of $3,070,000 (the "1989 Bonds issued under and
secured by the provisions of Ordinance No. 18 -1989 (the "1989
Ordinance of the City, adopted and approved on August 21, 1989.
However, at such time as (i) the moneys on deposit in the Debt
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070893
Service Reserve (as hereinafter defined) with respect to the Bonds
shall be equal to or exceed the Required Level (as defined in the
Bond Ordinance) and (ii) there shall be obtained from an
independent certified public accountant not in the regular employ
of the City the certificate described in Section 18 of the 1989
Ordinance with respect to the Net Revenues of the System, the Bonds
shall be deemed to be secured on a parity basis with the 1989
Bonds.
The City has fixed and has covenanted and agreed to maintain
rates for the services of the System which shall be sufficient,
together with other available moneys, 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
all bonds to which System revenues are pledged, including Trustee's
and Paying Agent's fees, if any, as the same become due and
payable, to establish and maintain required debt service reserves
and to make deposits required for the depreciation of the System.
THE CITY HAS DESIGNATED THIS BOND AS A "QUALIFIED TAX- EXEMPT
OBLIGATION" WITHIN THE MEANING OF SECTION 265(b) (3) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED.
The Bonds are not general obligations of the City, but are
special obligations payable solely from revenues derived from the
operation of the System (the "Revenues An amount of Revenues
sufficient to pay the principal of and interest on the Bonds has
been duly pledged and shall be set aside (after provisions being
made from such Revenues for payment of the 1989 Bonds, if required
pursuant to the provisions of the Bond Ordinance) in a special fund
for that purpose identified as the 1993 Water and Sewer Revenue
Bond Fund. Reference is made to the Bond Ordinance for a detailed
statement of the nature and extent of security, the rights and
obligations of the City, the Trustee and the registered owners of
the Bonds, the terms and conditions upon which the Bonds are issued
and the terms and conditions upon which additional bonds may be
issued on a parity of security with the Bonds. In the Bond
Ordinance, the City covenants to maintain rates for System services
sufficient to produce net revenues annually of at least one hundred
thirty percent (130 of the amount required to provide for the
payment of aggregate average annual principal and interest
requirements on all System debt payable from Revenues.
The Bonds are further secured by amounts to be maintained in
the Debt Service Reserve (the "Debt Service Reserve in the 1993
Water and Sewer Revenue Bond Fund. Moneys in the Debt Service
Reserve may be used only for the payment of principal of and
interest on the Bonds in the event moneys paid into the 1993 Water
and Sewer Revenue Bond Fund are insufficient for such purposes, or
to pay the final principal maturity of the Bonds.
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The Bonds shall be subject to extraordinary and optional
redemption as follows:
1. The Bonds or portions thereof shall be redeemed from Bond
proceeds remaining in the Improvements Fund (hereinafter defined)
not needed for the purposes intended, in whole or in part, on any
interest payment date, but in no event later than April 1, 1996, in
inverse order of maturity (and by lot within a maturity in such
manner as the Trustee shall determine), at a price equal to the
principal amount being redeemed plus accrued interest to the
redemption date.
2. The Bonds or portions thereof may be redeemed at the
option of the City, in whole or in part, from funds from any
source, in inverse order of maturity (and by lot within a maturity
in such manner as the Trustee shall determine) on any interest
payment date on and after April 1, 2000, at a redemption price
equal to the principal amount thereof plus accrued interest to the
redemption date.
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 Bond Ordinance prior to the date fixed for
redemption will cease to bear interest on such redemption date.
This bond is transferable by the registered owner hereof in
person or by his attorney -in -fact duly authorized in writing at the
principal corporate office of the Trustee, but only in the manner,
subject to the limitations and upon payment of the charges provided
in the Bond Ordinance, and upon surrender and cancellation of this
bond. Upon such transfer, a new fully registered bond or bonds of
the same maturity, of authorized denomination or denominations, and
for the same aggregate principal amount, will be issued to the
transferee in exchange therefor. This bond shall be deemed a
negotiable instrument under the laws of the State of Arkansas, and
is issued with the intent that the laws of the State of Arkansas
shall govern its construction.
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030893
The City, the Trustee and the Paying Agent may deem and treat
the registered owner hereof as the absolute owner hereof for the
purpose of receiving payment of or on account of principal hereof
and premium, if any, hereon and interest due hereon and for all
other purposes, and neither the City, the Trustee nor the Paying
Agent shall be affected by any notice to the contrary.
The Bonds are issuable only as fully registered bonds in the
denomination of $5,000, and any integral multiple thereof. Subject
to the limitations and upon payment of the charges provided in the
Bond Ordinance, fully registered bonds may be exchanged for a like
aggregate principal amount of fully registered bonds of the same
maturity of other authorized denominations.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts,
conditions and things required to exist, happen and be performed
precedent to and in the issuance of the Bonds do exist, have
happened and have been performed in due time, form and manner as
required by law; that the indebtedness represented by the Bonds,
together with all obligations of the City, does not exceed any
constitutional or statutory limitation; and that the above referred
to revenues pledged to the payment of the principal of and premium,
if any, and interest on the Bonds as the same become due and
payable will be sufficient in amount for that purpose.
This bond shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Bond
Ordinance until the Certificate of Authentication hereon shall have
been signed by the Trustee.
IN WITNESS WHEREOF, the City of Van Buren, Arkansas has caused
this bond to be executed by its Mayor and City Clerk, their manual
or facsimile signatures thereunto duly authorized and its corporate
seal to be impressed, lithographed or imprinted on this bond, all
as of the Dated Date shown above.
CITY OF VAN BUREN, ARKANSAS
By: (manual or facsimile signature)
Mayor
ATTEST:
(manual or facsimile signature)
City Clerk
[S E A L]
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030693
(Form of Trustee's Certificate)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This bond is one of the Bonds designated Series 1993 in and
issued under the provisions of the within mentioned Bond Ordinance.
FIRST NATIONAL BANK OF CRAWFORD COUNTY,
Van Buren, Arkansas, Trustee
BY:
Authorized Signature
(Form of Assignment)
ASSIGNMENT
FOR VALUE RECEIVED,
"Transferor hereby sells, assigns and transfers unto
the within bond and all rights thereunder,
and hereby irrevocably constitutes and appoints
as attorney to transfer the within bond on the books for
registration thereof with full power of substitution in the
premises.
DATE:
Transferor
GUARANTEED BY:
NOTICE: Signature(s) must be guaranteed by a member firm of
the New York Stock Exchange or a cortuuercial bank or a trust
company.
-13-
RSSOL3B9 _was
03D09)
0 Section 8. The City covenants and agrees that: (a) The rates
charged for System services heretofore fixed by ordinances of the
City "System Rates and the conditions, rights and obligations
pertaining thereto, as set out in those ordinances, are hereby
ratified, confirmed and continued;
(b) System Rates shall never be reduced while any of the
Bonds are outstanding unless there is obtained from an independent
certified public accountant not in the regular employ of the City
a certificate that the net revenues of the System (the "Net
Revenues [Net Revenues being defined as gross revenues of the
System less the expenses of operation and maintenance of the
System, including all expense items properly attributable to the
operation and maintenance of the System under generally accepted
accounting principles applicable to municipal water and sewer
systems (excluding depreciation, interest and amortization
expenses)), with the reduced rates, will always be equal to the
amount required to be set aside in the Depreciation Fund
(hereinafter identified), and leave a balance equal to at least
130t of the aggregate average annual principal and interest
requirements on all outstanding bonds payable from Revenues
"System Bonds provided, however, such balance shall be
sufficient to pay principal and interest on all System Bonds to pay
any trustee, paying agent or registrar fees and to make required
deposits into any debt service reserve fund or account during the
current and next ensuing fiscal year. The gross revenues of' the
System shall include all fees, tolls, rates, rentals and charges
levied and collected in connection with, and all other income and
receipts of whatever kind or character derived by the City from the
operation of the System;
(c) System Rates shall, if and when necessary, from time to
time, be increased in such manner as will produce Net Revenues at
least equal to the amount required to be set aside in the
Depreciation Fund (hereinafter identified), and leave a balance
equal to 130'& of the aggregate average annual principal and
interest requirements on all System Bonds; provided, however, such
balance shall be sufficient to pay principal and interest on all
System Bonds, to pay any trustee, paying agent or registrar fees
and to make required deposits into any debt service reserve fund or
account during the current and next ensuing fiscal year.
Section 9. None of the facilities or services afforded by the
System shall be furnished without a charge being made therefor. In
the event that the City or any department, agency or
instrumentality thereof shall avail itself of the facilities and
services afforded by the System, the reasonable value of the
services or facilities so afforded shall be charged against the
City or such department, agency or instrumentality and shall be
paid for as the charges therefor accrue. The revenues so received
shall be deemed to be Revenues and shall be used and accounted for
-24- RSS013BB.WP5
030893
in the same manner as any other Revenues. Nothing herein shall be
construed as requiring the City or any department, agency or
instrumentality thereof to avail itself of the facilities or
services afforded by the System.
Section 10. The Treasurer of the City shall be custodian of
the Revenues. However, Revenues shall be collected, held and
disbursed by the Commission on behalf of the Treasurer. Each
employee of the City handling Revenues shall give bond for the
faithful discharge of his or her duties. Such bonds shall be
approved by the City Council. All Revenues shall be held in trust
for the registered owners of the Bonds and shall at all times be
accounted for separately and distinctly from other moneys of the
City. All Revenues shall be used and applied only as provided
herein. All Revenues shall be deposited in such depository or
depositories for the City as may be lawfully designated from time
to time by resolution of the City or the Commission; subject,
however, to the giving of security as now or as hereafter may be
required by law and provided that such depository or depositories
shall hold membership in the Federal Deposit Insurance Corporation
"FDIC All deposits shall be in the name of the City and shall
be so designated as to indicate the particular fund to which the
Revenues belong. The City or the Commission shall notify the
Trustee in writing of the initial depositories for each fund into
which Revenues have been deposited and any change in depositories.
Section 11. The City covenants that it will continuously
operate the System as a revenue producing undertaking and will not
sell or lease the same, or any substantial portion thereof;
provided, however, that nothing herein shall be construed to
prohibit the City from making such dispositions of properties of
the System and such replacements and substitutions for properties
of the System as shall be necessary or incidental to the efficient
operation of the System as a revenue producing undertaking; and
provided further, however, that all revenues derived from such
dispositions shall be deposited into the Water and Sewer Fund
(hereinafter identified).
Section 12. That there shall be paid monthly into a special
fund created by Ordinance No. 31 -1978 of the City, adopted and
approved on August 31, 1978 (the "1978 Ordinance and designated
as the "Water and Sewer Fund" (the "Water and Sewer Fund all
Revenues. Moneys in the Water and Sewer Fund are hereby pledged
and shall be applied to the payment of the reasonable and necessary
expenses of operation and maintenance of the System, to the payment
of the principal of and interest on System Bonds, to the
maintenance of the debt service reserves for System Bonds at
required levels, to the providing of an adequate Depreciation Fund
(hereinafter identified), and otherwise as described herein.
-15-
RSS01713B. WP5
070893
Section 13. That there shall be paid from the Water and Sewer
Fund into a special fund created by the 1978 Ordinance and
designated as the "Water and Sewer Operation and Maintenance Fund"
(the "Operation and Maintenance Fund on the first business day
of each month, an amount sufficient to pay the reasonable and
necessary monthly expenses of operation, repair and maintenance of
the System "operation expenses for such month and from which
disbursements shall be made only for those purposes. Fixed annual
charges, such as insurance premiums and the cost of major repair
and maintenance expenses, may be computed and set up on an annual
basis and one twelfth (1/12) of the amount thereof may be paid into
the Operation and Maintenance Fund each month.
If in any month for any reason there shall be a failure to
transfer and pay the required amount into the Operation and
Maintenance Fund, the amount of any deficiency shall be added to
the amount otherwise required to be transferred and paid into the
Operation and Maintenance Fund in the next succeeding month. If in
any fiscal year a surplus shall be accumulated in the Operation and
Maintenance Fund over and above the amount which shall be necessary
to defray the reasonable and necessary operation expenses during
the remainder of the then current fiscal year and the next ensuing
fiscal year, such surplus may be transferred and deposited into the
Water and Sewer Fund.
Section 14. So long as any 1989 Bonds are outstanding, after
making the required payments into the Operation and Maintenance
Fund, there shall be set aside from the Water and Sewer Fund moneys
for the payment of the principal of and interest on the 1989 Bonds
by the transfer of Revenues therefrom into the fund designated for
such purposes in the 1989 Ordinance (the "1989 Bond Fund in the
manner set forth in the 1989 Ordinance.
Section 15. After making the required deposits into the
Operation and Maintenance Fund and the 1989 Bond Fund, there shall
be transferred from the Water and Sewer Fund into a special fund to
be established with the Trustee in the name of the City which is
hereby created and designated the "1993 Water and Sewer Revenue
Bond Fund" (the "Bond Fund (i) on the first business day of each
month, commencing May 3, 1993, until all outstanding Bonds, with
interest thereon, have been paid in full or provision made for such
payment, a sum equal to 1/6 of the next installment of interest due
on the Bonds (except that with respect to the payments to be made
on the first business day of each month prior to October 1, 1993,
the sum deposited shall be equal to 1/5 of the next installment of
interest due on the Bonds, less the amount of accrued interest
deposited in the Bond Fund upon the sale of the Bonds) and (ii) on
the first business day of each month, commencing May 3, 1993, until
all outstanding Bonds, with interest thereon, have been paid in
full or provision made for such payment, a sum equal to 1/12 of the
next installment of principal on the Bonds (except that with
-16- RSS013BB. WPS
03009)
respect to the payments to be made on the first business day of
each month prior to April 1, 1994, the sum deposited shall be equal
to 1 /11 of the next installment of principal due on the Bonds).
Notwithstanding the preceding paragraph, at such time as (i)
the moneys on deposit in the Debt Service Reserve (as defined
below) with respect to the Bonds shall be equal to or exceed the
Required Level (as defined below) and (ii) there shall be obtained
from an independent certified public accountant not in the regular
employ of the City the certificate described in Section 18 of the
1989 Ordinance with respect to the Net Revenues of the System, the
Bonds shall be deemed to be secured on a parity basis with the 1989
Bonds and the deposits to the Bond Fund required to be made
pursuant to this Section 15 shall be made at the same time and with
the same priority as the deposits to the 1989 Bond Fund required by
Section 14 hereof.
The City shall also pay into the Bond Fund such additional
sums as necessary to provide for the Trustee's and Paying Agent's
fees and expenses. The City shall receive a credit against monthly
deposits into the Bond Fund for all interest earnings on moneys in
the Bond Fund and for transfers into the Bond Fund derived from
earnings on the Debt Service Reserve (as defined below) during the
preceding month.
If Revenues are insufficient to make the required payments on
the first business day of the following month into the Bond Fund,
then the amount of any such deficiency in the payment made shall be
added to the amount otherwise required to be paid into the Bond
Fund on the first business day of the next month.
There is hereby created as a part of the Bond Fund, a Debt
Service Reserve (the "Debt Service Reserve which shall funded
over a period of twenty -four (24) months to an amount equal to
(i) the average annual principal and interest requirements on the
Bonds and outstanding System Bonds ranking on a parity of security
with the Bonds or (ii) 10% of the aggregate proceeds of such Bonds
and outstanding System Bonds ranking on a parity of security with
the Bonds as originally issued, whichever is lesser (the "Required
Level After making the required payments into the Bond Fund as
provided above, there shall be deposited to the Debt Service
Reserve a sum equal to 1/24 of the Required Level until such time
as the amount on deposit in the Debt Service Reserve shall be equal
to the Required Level. Once the Required Level has been initially
reached in the Debt Service Reserve, should the Debt Service
Reserve become impaired or be reduced below the Required Level, the
deficiency shall be cured by making additional monthly payments
equal to at least 1/12 of the deficiency until the impairment or
reduction is corrected.
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030093
If for any reason there shall be a deficiency in the payments
made into the Bond Fund so there are not sufficient moneys therein
to pay the principal of and interest on the Bonds as the same
become due, then any sums held in the Debt Service Reserve shall be
used to the extent necessary to pay such principal, interest and
Trustee's and Paying Agent's fees, but the Debt Service Reserve
shall be reimbursed in the amount of any such payment as described
above. The Debt Service Reserve shall be used solely as herein
described, but the moneys therein may be invested as set forth
below. Any earnings on moneys in the Debt Service Reserve which
increase the amount therein above the Required Level shall be
deposited into the Bond Fund.
If a surplus shall exist in the Bond Fund over and above the
amount required for making all principal and interest payments
during the next succeeding twelve month period and in excess of the
Required Level for the Debt Service Reserve, such surplus shall, at
the option of the Commission, either be (1) applied to the payment
of the principal of and interest on the Bonds that may be called
for redemption prior to maturity on the next available redemption
date within such twelve month period, (2) transferred to the Water
and Sewer Fund, or (3) transferred to the Rebate Fund (hereinafter
identified) in accordance with Section 29(f) hereof.
When the moneys held in the Bond Fund, including the Debt
Service Reserve with respect thereto, shall be and remain
sufficient to pay the principal of and interest on all of the Bonds
then outstanding plus Trustee's and Paying Agent's fees, the City
shall not be obligated to make any further payments into the Bond
Fund.
It shall be the duty of the Trustee to withdraw from the Bond
Fund on or before the due date of any principal and /or interest on
any Bond, at maturity or redemption prior to maturity, an amount
equal to the amount of such principal and interest and to transfer
such moneys to the Paying Agent for the sole purpose of paying the
same, together with the Trustee's and Paying Agent's fees. No
withdrawal of funds from the Bond Fund shall be made for any other
purpose except as otherwise authorized in this Ordinance.
The Bonds shall be specifically secured by a pledge of all
Revenues required to be placed into the Bond Fund. This pledge in
favor of the Bonds is hereby irrevocably made according to the
terms of this Ordinance, and the City and its officers and
employees shall execute, perform and carry out the terms thereof in
strict conformity with the provisions of this Ordinance.
Section 16. After making the monthly deposits into the
Operation and Maintenance Fund, the 1989 Bond Fund and the Bond
Fund, there shall be paid from the Water and Sewer Fund into a fund
created by the 1978 Ordinance and designated "Water and Sewer
-18- RSSOI38e. WPS
0301393
Depreciation Fund" (the "Depreciation Fund on the first business
day of each month, 5% of the gross revenues of the System for the
preceding month. Moneys in the Depreciation Fund shall be used
solely for the purpose of paying the cost of replacements made
necessary by depreciation of the System.
If in any fiscal year a surplus shall be accumulated in the
Depreciation Fund over and above the amount necessary to defray the
cost of the probable replacements during the next twelve months,
such surplus may be transferred and paid into the Water and Sewer
Fund.
Section 17. Payments from the Water and Sewer Fund, the
Operation and Maintenance Fund and the Depreciation Fund shall be
made by check signed by the person or persons designated by the
Commission and drawn on the depository with which the moneys in the
fund shall have been deposited, and each such check shall briefly
specify the purpose of the expenditure.
Section 18. Any surplus in the Water and Sewer Fund
immediately after making all disbursements and providing for all
funds described above, and before additional deposits of gross
revenues, may be used, at the option of the Commission, for any
lawful municipal purpose authorized by the City.
Section 19. So long as any of the Bonds are outstanding, the
City shall not issue or attempt to issue any bonds claimed to be
entitled to a priority of lien on the Revenues over the lien
securing the Bonds.
The City reserves the right to issue additional bonds to
finance or refinance the cost of constructing any future
extensions, betterments or improvements to the System, but the City
shall not authorize or issue any such additional bonds ranking on
a parity with the outstanding Bonds of this issue unless and until
there have been procured and filed with the Trustee a statement by
an independent certified public accountant not in the regular
employ of the City reciting the opinion, based upon necessary
investigation, that the Net Revenues of the System (Net Revenues
being gross revenues of the System less the amounts required to pay
the costs of operation and maintenance of the System in accordance
with generally accepted accounting principles applicable to
municipal water and sewer systems, but excluding depreciation,
interest and amortization expenses) for the fiscal year immediately
preceding the fiscal year in which it is proposed to issue such
additional bonds shall equal not less than 140% of the average
annual principal and interest requirements on all the then
outstanding System Bonds and the additional bonds then proposed to
be issued. In making the computation set forth above, additional
amounts may be added to the Net Revenues of the completed fiscal
year immediately preceding the issuance of the additional bonds, as
0 -19- RSSO13BB.WPS
030897
follows: If, prior to the issuance of the additional bonds and
subsequent to the first day of such preceding fiscal year, the City
shall have increased its rates or charges imposed for services of
the System, there may be added to Net Revenues of such fiscal year
the additional Net Revenues which would have been received from the
operation of the System during such fiscal year had such increase
been in effect throughout such fiscal year, as reflected by a
certificate of a duly qualified consulting engineer not in the
regular employ of the City and approved by the Trustee.
Section 20. The City covenants that the City or the
Commission will faithfully and punctually perform all duties with
reference to the System required by the Constitution and laws of
the State of Arkansas, including the making and collecting of
reasonable and sufficient rates lawfully established for services
rendered by the System, segregating the revenues of the System and
applying them to the respective funds herein created.
Section 21. The Bonds shall be subject to redemption prior to
maturity in accordance with the terms set out in the bond form
contained in Section 7 hereof. The Bonds paid either at or before
maturity shall be cancelled and shall not be reissued.
Section 22. The City shall cause proper books of accounts and
records to be kept (separate from all other records and accounts)
in which complete and correct entries shall be made of. all
transactions relating to the operation of the System, and such
books shall be available for inspection by the registered owners of
any of the Bonds at reasonable times and under reasonable
circumstances. The City agrees to have these records audited by an
independent certified public accountant at least once each year,
and a copy of the audit shall be delivered to the Trustee and made
available to the registered owners of the Bonds requesting the same
in writing. In the event that the City fails or refuses to make
the audit, the Trustee, or any registered owner of the Bonds, may
have the audit made, and the cost thereof shall be charged against
the Operation and Maintenance Fund. The Trustee shall provide
monthly to the City and the Commission a statement of all
transactions involving the funds held by the Trustee under this
Ordinance for the previous month and a statement of all fees and
expenses of the Trustee and the Paying Agent to be paid by the City
under this Ordinance for such month.
Section 23. The City covenants and agrees that it will
maintain the System in good condition and operate the same in an
efficient manner and at reasonable cost. While any of the Bonds
are outstanding, the City agrees that it will insure and at all
times keep insured, in the amount of the full insurable value
thereof, in a responsible insurance company or companies selected
by the Commission and authorized and qualified under the laws of
the State of Arkansas to assume the risk thereof, properties of the
20 RSS01300.WPS
030893
System, to the extent that such properties would be covered by
insurance by private companies engaged in similar types of
businesses against loss or damage thereto from fire, lightening,
tornado, winds, riot, strike, civil commotion, malicious damage,
explosion, extended coverage and against any other loss or damage
from any other causes customarily insured against by private
companies engaged in similar types of business. The insurance
policies are to be taken with companies approved by the Trustee and
are to carry a clause making them payable to the Trustee as its
interest may appear, and are either to be placed in the custody of
the Trustee or satisfactory evidence of said insurance shall be
filed with the Trustee. In the event of loss, the proceeds of such
insurance shall be applied solely toward the reconstruction,
replacement or repair of the System, and in such event the City
will, with reasonable promptness, cause to be commenced and
completed the reconstruction, replacement and repair work. If such
proceeds are more than sufficient for such purposes, the balance
remaining shall be deposited to the credit of the Water and Sewer
Fund, and if such proceeds shall be insufficient for such purposes,
the deficiency shall be supplied first from moneys in the
Depreciation Fund, second from moneys in the Operation and
Maintenance Fund and third from surplus moneys in the Water and
Sewer Fund. Nothing shall be construed as requiring the City to
expend any moneys for operation and maintenance of the System or
for premiums on its insurance which are derived from sources other
than the operation of the System, but nothing shall be construed as
preventing the City from doing so.
Section 24. Any Bond shall be deemed to be paid within the
meaning of this Ordinance when payment of the principal of and
interest on such Bond (whether at maturity or upon redemption as
provided herein, or otherwise), either (i) shall have been made or
caused to be made in accordance with the terms thereof, or
(ii) shall have been provided for by irrevocably depositing with
the Trustee, in trust and irrevocably set aside exclusively for
such payment (1) cash fully insured by the FDIC sufficient to make
such payment and /or (2) non callable direct obligations of
(including obligations issued or held in book entry form on the
books of) the Department of the Treasury of the United States of
America "Investment Securities [provided that such deposit will
not affect the tax exempt status of the interest on any of the
Bonds or cause any of the Bonds to be classified as "arbitrage
bonds" within the meaning of Section 148 of the Internal Revenue
Code of 1986, as amended (the "Code maturing as to principal
and interest in such amounts and at such times as will provide
sufficient moneys to make such payment, and all necessary and
proper fees, compensation and expenses of the Trustee and Paying
Agent pertaining to the Bonds with respect to which such deposit is
made shall have been paid or the payment thereof provided for to
the satisfaction of the Trustee.
-21- RS901 ]BB. WPS
0]009]
On the payment of all the Bonds within the meaning of this
Ordinance, the Trustee shall hold in trust, for the benefit of the
owners of such Bonds, all such moneys and /or Investment Securities.
When all the Bonds shall have been paid within the meaning of this
Ordinance, and if the Trustee and Paying Agent have been paid their
fees and expenses, the Trustee shall take all appropriate action to
cause (i) the pledge and lien of this Ordinance to be discharged
and canceled, and (ii) all moneys held by it or the Paying Agent
pursuant to this Ordinance and which are not required for the
payment of such Bonds to be paid over or delivered to or at the
direction of the City. In determining the sufficiency of the
deposit of Investment Securities there shall be considered the
principal amount of such Investment Securities and interest to be
earned thereon until the maturity of such Investment Securities.
Section 25. If there be any default in the payment of the
principal of or interest on any of the Bonds, or if the City
defaults in any Bond Fund requirement or in the performance of any
of the other covenants contained in this Ordinance, the Trustee
may, and upon the written request of the registered owners of not
less than 10'k in principal amount of the then outstanding Bonds,
shall, by proper suit, compel the performance of the duties of the
officials of the City under the laws of the State of Arkansas. In
the case of a default in the payment of the principal of and
interest on any of the Bonds, the Trustee may, and upon written
request of the registered owners of not less than 10$ in principal
amount of the then outstanding Bonds, shall, apply in a proper
action to a court of competent jurisdiction for the appointment of
receiver to administer the System on behalf of the City and the
registered owners of the Bonds with power to charge and collect (or
by mandatory injunction or otherwise to cause to be charged and
collected) rates sufficient to provide for the payment of the
expenses of operation, maintenance and repair and to pay any Bonds
and interest outstanding and to apply the revenues in conformity
with the laws of the State of Arkansas and with this Ordinance.
When all 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 ten percent (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
h ave afforded the Trustee a reasonable opportunity either to proceed
to exercise the powers granted to the Trustee, or to institute such
-22- 125501IDB. NPS
030893
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 fifty percent (50 in principal
mount 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 secured hereby, enforceable by the Trustee, may be enforced
by it without the possession of any of the Bonds, and any such
suit, action or proceeding instituted by the Trustee shall be
brought in its name for the benefit of all the registered owners of
such Bonds, subject to the provisions of this Ordinance.
No delay or omission of the Trustee or of any registered
owners of the Bonds to exercise any right or power accrued upon any
default shall impair any such right or power or shall be construed
to be a waiver of any such default or an acquiescence therein; and
every power and remedy given by this Ordinance to the Trustee and
to the registered owners of the Bonds, respectively, may be
exercised from time to time and as often as may be deemed
expedient.
In any proceeding to enforce the provisions of this Ordinance,
the Trustee or any plaintiff bondholder shall be entitled to
recover from the City all costs of such proceeding, including
reasonable attorneys' fees.
-23- RS901300. WPS
03089]
Section 26. (a) The terms of this Ordinance shall constitute
a binding contract between the City and the registered owners of
the Bonds and no variation or change in the undertaking herein set
forth shall be made while any of the Bonds are outstanding, except
as hereinafter set forth in subsections (b) and (c), and the owner
of any Bonds may at any time for and on his own behalf or for and
on behalf of all bondholders enforce the obligations of the City by
a proper suit for that purpose.
(b) The Trustee may consent to any variation or change in
this Ordinance to cure any ambiguity, defect or omission in this
Ordinance or any amendment hereto without the consent of the owners
of the outstanding Bonds.
(c) The owners of not less than seventy -five percent (75%) in
aggregate principal amount of the Bonds then outstanding shall have
the right, from time to time, anything contained in this Ordinance
to the contrary notwithstanding, to consent to and approve the
adoption by the City of such ordinance or ordinances supplemental
hereto as shall be necessary or desirable for the purpose of
modifying, altering, amending, adding to or rescinding, in any
particular, any of the terms or provisions contained in this
Ordinance or in any supplemental ordinance; provided, however, that
nothing contained in this Section 26 shall permit or be construed
as permitting (a) an extension of the maturity of the principal of
or the interest on any Bond issued hereunder, or (b) a reduction in
the principal amount of any Bond or the rate of interest thereon,
or (c) the creation of a lien or pledge superior to the lien and
pledge created by this Ordinance, or (d) a privilege or priority of
any Bond or Bonds over any other Bond or Bonds, or (e) a reduction
in the aggregate principal amount of the Bonds required for consent
to such supplemental ordinance.
Section 27. (a) Moneys held for the credit of the Bond Fund
shall be continuously invested and reinvested pursuant to the
direction of the Commission in Permitted Investments (as
hereinafter defined), all of which shall mature, or which shall be
subject to redemption by the holder thereof, at the option of such
holder, not later than the date or dates when the moneys will be
required for payment of the principal of and interest on the Bonds
when due.
(b) Moneys held for the credit of the Debt Service Reserve in
the Bond Fund shall be invested and reinvested at the direction of
the Commission in Permitted Investments, all of which shall mature,
or which shall be subject to redemption by the holder thereof, at
the option of such holder, not later than (i) ten (10) years after
the date of investment or (ii) the maturity date of the Bonds,
whichever is earlier.
-24- RS901300.WP5
030093
(c) Moneys held for the credit of any other fund, excluding
the Rebate Fund, shall be continuously invested and reinvested
pursuant to the direction of the Commission in Permitted
Investments, or other investments as may, from time to time, be
permitted by law, which shall mature, or which shall be subject to
redemption by the holder thereof, at the option of such holder, not
later than the date or dates when the moneys held for the credit of
the particular fund will be required for purposes intended.
(d) Obligations so purchased as an investment of moneys in
any fund shall be deemed at all times to be a part of such fund and
the interest accruing thereon and any profit or loss realized from
such investments shall be credited or charged to such fund, except
that interest earnings and profits on investments of moneys in the
Debt Service Reserve which increases the amount thereof above the
Required Level shall, to the extend of any such excess, be
transferred from time to time by the Trustee into the Bond Fund or,
at the option of the Commission, shall be transferred to the Rebate
Fund.
(e) Moneys so invested in Government Securities (hereinafter
defined) or in certificates of deposit of banks to the extent
insured by the FDIC need not be secured by the Trustee or the
depository bank or banks.
(f) All investments and deposits shall have a par value (or
market value when less than par), exclusive of accrued interest, at
all times at least equal to the amount of money credited to such
bonds.
(g) Investments of moneys in all funds shall be valued in
terms of current market value as of the first day of each year,
except that direct obligations of the United States (State and
Local Government Series) in book -entry form shall be continuously
valued at par or face principal amount.
(h) "Permitted Investments" are defined as direct or fully
guaranteed obligations of the United States of America "Government
Securities or certificates of deposit or time deposits of banks,
including the Trustee, to the extent insured by the FDIC or in
excess of insurance coverage, collateralized with Government
Securities.
(i) All investments and reinvestments made under this
Section 27 shall be subject to the provisions of Section 148 of the
Code pertaining to "arbitrage bonds" and Section 29 of this
Ordinance.
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Section 28. When the Bonds have been executed, they shall be
authenticated by the Trustee, and the Trustee shall deliver the
Bonds to the Purchasers upon payment in cash of the purchase price
of 100% of the principal amount thereof plus accrued interest
"total sale proceeds
The total sale proceeds shall be distributed as follows:
(a) There shall be deposited into the Bond Fund the amount of
accrued interest paid by the Purchasers;
(b) There shall be paid all costs associated with the
issuance of the Bonds as specified by written instructions of the
City; and
(c) The remainder of total sale proceeds shall be deposited
in trust into a special account in the name of the City established
with a depository selected by the City and designated "Water and
Sewer Revenue Bond Improvements Fund, Series 1993" (the
"Improvements Fund
Bond proceeds deposited to the Improvements Fund may be held
by such depository or depositories for the City as may be
designated herein or, if not, as may be lawfully designated from
time to time; subject, however, to the giving of security as now or
as hereafter may be required by law and provided that such
depository or depositories shall hold membership in the FDIC.
The moneys in the Improvements Fund shall be disbursed solely
in payment of the costs of accomplishing the Improvements, paying
necessary expenses incidental thereto and paying expenses of
issuing the Bonds.
When the Improvements have been completed and all required
expenses paid and expenditures made from the Improvements Fund for
and in connection with the accomplishment of the Improvements and
the financing thereof, this fact shall be evidenced by a
certificate signed by the Manager of the System and by the
consulting engineer with respect to the Improvements, which
certificate shall state, among other things, the date of the
completion and that all obligations payable from the Improvements
Fund have been discharged. A copy of the certificate shall be
filed with the Trustee, and upon receipt thereof the Trustee shall
transfer any remaining balance to the Bond Fund for the purpose of
redeeming the Bonds as set forth in the form of Bond herein.
Section 29. (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 subject to federal income taxation. Without limiting the
generality of the foregoing, the City covenants that the proceeds
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0 of the sale of the Bonds and the 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 (1) not in excess of ten
percent (10 of the Net Proceeds of the Bonds is used for Private
Business Use if, in addition, the payment of more than ten percent
(10 of the principal or ten percent (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 (2) that, in the event
that both (A) in excess of five percent (5 of the Net Proceeds of
the Bonds are used for a Private Business Use, and (B) an amount in
excess of five percent (5 of the principal or five percent (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 five percent (5 of
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.
The City shall assure that not in excess of five percent (5
of the Net Proceeds of the Bonds are used, directly or indirectly,
to make or finance a loan to persons other than state or local
governmental units.
As used in -this subsection (b), the following terms shall have
the following meanings:
"Net Proceeds" means the face amount of the Bonds, plus
accrued interest and premium, if any, less original issue discount,
if any, less the amount deposited into the Debt Service Reserve.
"Private Business Use" means use directly or indirectly in a
trade or business carried on by a natural person or in any activity
carried on by a person other than a natural person, excluding,
however, use by a state or local government unit and use as a
member of the general public.
(c) The Bonds are hereby designated as "qualified tax exempt
obligations" within the meaning of the Code. The City represents
and covenants that the aggregate principal amount of its qualified
-27- R55"1399.WPS
03089]
tax exempt obligations (excluding "private activity bonds" within
the meaning of Section 141 of the Code which are not "qualified
501(c) (3) bonds" within the meaning of Section 145 of the Code),
including those of its subordinate entities, issued in calendar
year 1993 will not exceed $10,000,000.
The City further covenants and represents that (i) the
aggregate principal amount of its tax exempt obligations (not
including "private activity bonds" within the meaning of
Section 141 of the Code), including those of its subordinate
entities, issued in calendar year 1993 will not exceed $5,000,000,
and (ii) at least 95% of the proceeds of the Bonds will be expended
for the governmental activities of the City.
(d) The City covenants that it will take no action which
would cause the Bonds to be "federally guaranteed" within the
meaning of Section 149(b) of the Code; specifically, (A) the
payment of any portion of principal or interest with respect to the
Bonds will not be guaranteed (directly or indirectly) by the United
States or any agency or instrumentality thereof, and (B) not more
than 5% of the proceeds of the Bonds (exclusive of proceeds
invested for an initial temporary period until needed for the
purpose for which the Bonds were issued and proceeds deposited into
the Bond Fund) will be invested (directly or indirectly) in
federally insured deposits or accounts. Nothing in this Section 29
shall prohibit investments in bonds issued by the United States
Treasury.
(e) The City covenants that it will submit to the Secretary
of the Treasury of the United States, not later than the 15th day
of the second calendar month after the close of the calendar
quarter in which the Bonds are issued, a statement required by
Section 149(e) of the Code.
(f) The City recognizes that the exclusion of the interest
paid on the Bonds from gross income for purposes of federal income
taxation is dependent upon compliance with the provisions of the
Code. The City shall, unless and until the City delivers to the
Trustee a written opinion of nationally recognized bond counsel as
described in the last paragraph of this subsection (f), make the
determinations and take the action hereinafter by this subsection
(f) required and make such further or different determinations and
take such further or different actions as are necessary, in the
opinion of such bond counsel, to comply with the requirements of
Section 148(f) of the Code and the Treasury Regulations pertaining
thereto. The City shall rebate to the United States, not later
than thirty (30) days after the end of the five -Bond Year period
ending April 1, 1998, and not later than thirty (30) days after the
end of each five -Bond Year period thereafter, an amount which
ensures that at least ninety percent (90 of the Rebate Amount (as
hereinafter defined) at the time of such payment will have been
-28- RSS01398.WPS
030893
paid to the United States, and within sixty (60) days after the
payment or redemption of all of the principal of the Bonds, an
amount sufficient to pay the remaining unpaid balance of the Rebate
Amount, all in the manner and as required by Section 148 of the
Code and the Treasury regulations pertaining thereto. As used
herein, "Rebate Amount" means the amount described in
Section 148(f)(2) of the Code, computed in accordance with the
provisions of Section 148(f)(2) and the Treasury Regulations
pertaining thereto now or hereafter promulgated.
The City shall determine the Rebate Amount within thirty (30)
days after the close of each five -Bond Year period and upon payment
or redemption of all principal of the Bonds, and shall furnish the
Trustee upon each determination with a written statement verifying
such determination (the "Rebate Certificate The City and the
Trustee shall retain copies of each Rebate Certificate and records
of such determinations until six years after final payment or
redemption of all principal of the Bonds. Upon each such
determination, the Trustee shall transfer to the Rebate Fund hereby
created (the "Rebate Fund to be held by the Trustee, from the
balance in the Debt Service Reserve account in the Bond Fund, the
Rebate Amount so determined, and shall separately account for, or
cause to be separately accounted for, the earnings from the
investment thereof, and such earnings shall become part of the
Rebate Amount.
In determining the Rebate Amount, the City shall take into
account all amounts held under this Ordinance in the Debt Service
Reserve account in the Bond Fund.
Moneys in the Rebate Fund shall be paid by the Trustee to the
United States at such times and in such amounts as are necessary to
comply with the provisions of Section 148(f) of the Code and the
Treasury Regulations issued thereunder. In addition, upon receipt
by the Trustee of a written request certifying that certain amounts
in the Rebate Fund are not subject to rebate and an opinion of
nationally recognized bond counsel to the effect that failure to
rebate such amounts will not cause interest on the Bonds to become
includable in gross income of the owners thereof for regular
federal income tax purposes under existing laws, regulations,
rulings and decisions and any then pending federal legislation, the
Trustee shall transfer any such amounts to the credit of the Bond
Fund. Moneys in the Rebate Fund shall not be available for
transfer to any fund under this Ordinance, except the Bond Fund
under the circumstances described in the preceding sentence, and
shall be applied solely to meet the City's rebate obligations.
In making the computations required to make the deposits and
rebates provided for in this Section 29, the City and the Trustee
shall comply with the applicable provisions of the arbitrage
certificate delivered to the City upon issuance of the Bonds.
-29- RSS013B8.WP5
03089)
The Trustee shall verify at least annually from the date of
delivery of the Bonds that (i) all requirements of this subsection
(f) have been met on a continuing basis, (ii) adequate procedures
have been established and are being complied with to insure
continuing compliance with the requirements of the arbitrage
certificate, (iii) if applicable, the proper amounts have been
deposited into the Rebate Fund, and (iv) if applicable, the timely
payment of all amounts due and owing to the United States Treasury
from the Rebate Fund has occurred.
Pending payments from the Rebate Fund, the moneys therein
shall be invested in Permitted Investments, and any earnings on or
income from such investments shall be retained therein. The
provisions of this subsection shall remain in full force and effect
notwithstanding the defeasance of the Bonds.
Notwithstanding the foregoing, in the event the Trustee is
furnished with a written opinion of nationally recognized bond
counsel to the effect that it is not necessary under either
existing law, regulations, rulings and decisions or any then
pending federal legislation to pay any portion of earnings on
investments held under this Ordinance or otherwise to the United
States in order to assure the exclusion from gross income for
federal income tax purposes of interest on the Bonds, the
requirements set forth in the preceding portion of this subsection
(f) (with respect to the portion of such earnings specified in
opinion) need not be complied with and shall no longer be effective
and all amounts at the time on deposit in the Rebate Fund (to the
extent covered by such opinion) shall be transferred as specified
in such opinion.
Section 30. In the event the office of Mayor, City Clerk,
City Treasurer, City Council or Commission shall be abolished, or
any two or more of such offices shall be merged or consolidated, or
in the event the duties of a particular office shall be transferred
to another office or officer, or in the event of a vacancy in any
such office by reason of death, resignation, removal from office or
otherwise, or in the event any such officer shall become incapable
of performing the duties of his office by reason of sickness,
absence from the City or otherwise, all powers conferred and all
obligations and duties imposed upon such office or officer shall be
performed by the office or officer succeeding to the principal
functions thereof, or by the office or officer upon whom such
powers, obligations and duties shall be imposed by law.
Section 31. The Trustee shall only be responsible for the
exercise of good faith and reasonable prudence in the execution of
its trust. The recitals in this Ordinance and on the face of the
Bonds are the recitals of the City and not of the Trustee. The
Trustee shall not be required to take any action as Trustee unless
it shall have been requested to do so in writing by the owners of
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030293
not less than ten percent (100) in principal amount of the Bonds
then outstanding and shall have been offered reasonable security
and indemnity against the costs, expenses and liabilities to be
incurred therein or thereby. The Trustee and the Paying Agent may
resign at any time by sixty (60) days notice in writing to the City
Clerk and to the registered owners of the Bonds, and the majority
in value of the registered owners of the outstanding Bonds at any
time, with or without cause, may remove the Trustee or the Paying
Agent. In the event of a vacancy in the office of Trustee or
Paying Agent, either by resignation or by removal, the majority in
value of the registered owners of the outstanding Bonds of this
issue may appoint a new Trustee or Paying Agent, as the case may
be, such appointment to be evidenced by a written instrument or
instruments filed with the City Clerk. If the majority in value of
the registered owners of the outstanding Bonds of this issue shall
fail to fill a vacancy within forty -five (45) days after the same
shall occur, then the City shall forthwith designate a new Trustee
or Paying Agent, as the case may be, by a written instrument filed
in the office of the City Clerk. The original Trustee and the
original Paying Agent and any successor Trustee or Paying Agent
shall file a written acceptance and agreement to execute the trusts
and duties imposed upon them by this Ordinance, but only upon the
terms and conditions set forth in this Ordinance and subject to the
provisions of this Ordinance, to all of which the respective owners
of the Bonds agree. Such written acceptance shall be filed with
the City Clerk and a copy thereof shall be placed in the.
transcript. Any successor Trustee or Paying Agent shall have all
the powers herein granted to the original Trustee or Paying Agent,
as the case may be. The Trustee's or Paying Agent's resignation
shall become effective upon the acceptance of the respective trusts
or duties by the successor Trustee or Paying Agent.
Section 32. Anything herein to the contrary notwithstanding,
all rights of any holder of any Bond hereunder to or with respect
to any moneys or investments held in any fund hereunder shall
terminate at the expiration of five years from the date of maturity
of such Bond, whether by scheduled maturity or by call for
redemption prior to maturity in accordance with the terms hereof.
Section 33. Rose Law Firm, a Professional Association, Little
Rock, Arkansas, is hereby appointed to act as Bond Counsel on
behalf of the City in connection with the issuance and sale of the
Bonds.
Section 34. The City Clerk is hereby directed to publish this
Ordinance for one insertion in a newspaper published and of general
circulation in the City, and to which there shall be attached a
Notice of Public Hearing in substantially the form attached to this
Ordinance.
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030093
Section 35. The provisions of this Ordinance are hereby
declared to be separable and if any provision shall for any reason
be held illegal or invalid, such holding shall not affect the
validity of the remainder of the Ordinance.
Section 36. This Ordinance shall not create any right of any
kind and no right of any kind shall arise hereunder pursuant to it
until the Bonds shall be issued and delivered.
Section 37. All ordinances and resolutions or parts thereof,
in conflict herewith are hereby repealed to the extent of such
conflict.
Section 38. It is hereby ascertained and declared that the
Improvements must be accomplished as soon as possible in order to
make the System adequate for the needs of the City and its
inhabitants and to insure the continued operation of the System,
without which the life, health, safety and welfare thereof are
jeopardized, and that the issuance of the Bonds and the taking of
the other action authorized by this Ordinance is necessary for the
accomplishment thereof. It is, therefore, declared that an
emergency exists and this Ordinance being necessary for the
immediate preservation of the public peace, health and safety shall
take effect and be in force from and after its passage.
PASSED: March /S 1993.
APPROVED:
ATTEST: Mayor 0
7
Ci:y Clerk
[S E A L]
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