ORD NO 06-1999 ORDINANCE NO. 6 -1999
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An Ordinance Providing for the Issuance of $5,880,000 Water and Sewer
Capital Improvement and Refunding Revenue Bonds by the City of Van
Buren, Arkansas for the Purpose of Acquiring, Constructing and
Equipping Betterments and Improvements to the Water and Sewer
System of the City and Refunding the City's Outstanding Water and
Sewer Revenue Bonds, Series 1993; Providing for the Payment of
Principal of and Interest on the Bonds; Authorizing the Execution and
Delivery of a Bond Purchase Agreement Providing for the Sale of the
Bonds; Authorizing the Execution and Delivery of an Escrow Deposit
Agreement Providing for the Refunding of the Series 1993 Bonds;
Prescribing Other Matters Relating Thereto; and Declaring an
Emergency.
Whereas, the City of Van Buren, Arkansas (the "City owns, operates and maintains a
municipal waterworks and sewer system which is operated as a single, integrated municipal
undertaking (the "System on behalf of the City by the Van Buren Municipal Utilities
Commission (the "Commission and
Whereas, the City Council and the Commission have determined that the construction and
equipping of betterments and improvements to the System (the "Improvements are necessary
in order to make the services provided by the System adequate for the needs of the City and have
caused to be prepared a preliminary report, including estimates of costs for the proposed
Improvements, which has been examined and approved by the City Council and the Commission
and a copy of which is on file in the office of the City Clerk, where it may be inspected by any
interested person; and
Whereas, the engineering report has estimated the cost of the Improvements (including the
furnishing of all labor, materials, and other services in connection with the completion of the
Improvements) to be approximately $4,000,000; and
Whereas, the City presently has outstanding its Water and Sewer Revenue Bonds, Series 1993,
dated April 1, 1993, issued in the original principal amount of $1,900,000, of which $1,500,000 is
currently outstanding (the "Series 1993 Bonds issued under and secured by the provisions of
Ordinance No. 3 -1993 of the City (the "1993 Bond Ordinance adopted and approved on
March 15, 1993 under the authority Arkansas Code of 1987 Annotated (1998 Repl.) 14 -234-
101 to -218 and 14- 235 -101 to -225 (collectively, the "Statutes and
Whereas, the City also has outstanding its Water and Sewer Revenue Refunding Bonds, Series
1995, dated November 1, 1995, in the original principal amount of $2,580,000, of which
$2,195,000 is now outstanding (the "Series 1995 Bonds issued under and secured by the
provisions of Ordinance No. 32 -1995 of the City (the "1995 Bond Ordinance adopted and
approved on October 30, 1995 under the authority of the Statutes; and
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Whereas, the Commission has recommended to the City Council and the City Council has
0 determined that, in order to achieve debt service savings, it is in the best interest of the City to
refund the outstanding Series 1993 Bonds; and
Whereas, in order to provide for the defeasance and redemption prior to maturity of the Series
1993 Bonds, there is to be executed and delivered an Escrow Deposit Agreement, dated as of
June 1, 1999 (the "Escrow Agreement between the City and Citizens Bank Trust Company,
Van Buren, Arkansas, as escrow trustee (the "Escrow Trustee and
Whereas, the City is authorized under Amendment No. 65 to the Constitution of the State of
Arkansas and the Statutes to issue and sell revenue bonds for the purpose of financing the costs
of acquiring and constructing improvements and betterments to the System or to refund
outstanding bonds payable from revenues of the System, together with printing, legal,
underwriting and other expenses incidental to the issuance of such bonds; and
'Whereas, to secure funds necessary to finance the Improvements, refund the Series 1993 Bonds,
fund a debt service reserve, and 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 Capital
Improvement and Refunding Revenue Bonds, Series 1999, in the aggregate principal amount of
Five Million Eight Hundred Eighty Thousand Dollars ($5,880,000) (the "Bonds and
Whereas, the City has made arrangements for the sale of the Bonds to Morgan Keegan
Company, Inc. (the "Purchaser at a price of 98.35% of the principal amount thereof plus
accrued interest (the "purchase price pursuant to a Bond Purchase Agreement dated May 17,
1999 (the "Purchase Agreement which has been presented to and is before this meeting; and
Whereas, a Preliminary Official Statement, dated May 11, 1999 (the "Preliminary Official
Statement offering the Bonds for sale has been presented to and is before this meeting;
Now, Therefore, be it Ordained by the City Council of the City of Van Buren, Arkansas that:
Section 1. The Improvements and the refunding of the Series 1993 Bonds 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 registered
owners (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.
Section 3. The offer of the Purchaser to purchase the Bonds pursuant to the terms of the Purchase
Agreement, in the form submitted to this meeting, is hereby accepted and the Purchase Agreement
is hereby approved and confirmed, and the Mayor is hereby authorized and directed to execute and
deliver the Purchase Agreement on behalf of the City and to take all action required on the part of
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the City to fulfill its obligations under the Purchase Agreement, and the City Clerk is hereby
authorized and directed to attest the same and to affix the seal of the City thereto.
Section 4. The Escrow Agreement is hereby approved in substantially the form submitted to this
meeting, and the Mayor is hereby authorized and directed to execute and deliver the Escrow
Agreement on behalf of the City and to take all action required on the part of the City to fulfill its
obligations under the Escrow Agreement. Any changes to the Escrow Agreement may be approved
by the Mayor, his execution and delivery to constitute conclusive evidence of such approval.
Section 5. The Preliminary Official Statement is hereby approved and the previous use of the
Preliminary Official Statement in connection with the offer and sale of the Bonds is hereby in all
respects ratified, approved and confirmed. The Preliminary Official Statement is hereby "deemed
final" within the meaning of Section 15c2 -12 of the Securities Exchange Act of 1933. The
preparation of a final Official Statement in the name of the City and its use in connection with the
sale of the Bonds as set forth in the Purchase Agreement is hereby approved. The Mayor is hereby
authorized, empowered and directed, for and on behalf of the City, to execute the final Official
Statement in the name of the City and do all such acts and things necessary to carry out and comply
with the provisions of the Official Statement.
Section 6. Under the authority of the Constitution and laws of the State of Arkansas, including
particularly Amendment No. 65 to the Constitution of the State of Arkansas and the Statutes,
there is hereby authorized the issuance of bonds of the City to be designated as "Water and
Sewer Capital Improvement and Refunding Revenue Bonds, Series 1999" in the principal
amount of $5,880,000 for the purpose of accomplishing the Improvements, refunding the Series
1993 Bonds, paying necessary expenses incidental thereto and to the authorization and issuance
of the Bonds, and establishing a debt service reserve.
The Bonds shall mature on April 1 in the years 2000 to 2019, inclusive, and in the principal
amounts and shall bear interest as follows:
Year Principal Rate of Year Principal Rate of
(April 1) Amount Interest (April l) Amount Interest
2000 $240,000 3.500% 2010 $330,000 4.450%
2001 235,000 3.650% 2011 345,000 4.550%
2002 245,000 3.750% 2012 360,000 4.600%
2003 255,000 3.850% 2013 380,000 4.650%
2004 260,000 3.950% 2014 260,000 4.700%
2005 270,000 4.000% 2015 270,000 4.750%
2006 280,000 4.100% 2016 285,000 4.800%
2007 290,000 4.150% 2017 300,000 4.850%
2008 305,000 4.250% 2018 315,000 4.900%
2009 325,000 4.350% 2019 330,000 4.950%
Each Bond shall be dated (1) as of the interest payment date to which interest has been paid, (ii)
as of the date on which it is authenticated, or (iii) if it is authenticated prior to a date on which
interest has been paid, June 1, 1999.
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Interest on the Bonds shall be payable on October 1, 1999 and semiannually thereafter on April 1
and October 1 of each year. Payment of each installment of interest shall be made to the Owner
whose name is shown on the registration books of the City maintained by the Trustee, at the
close of business on the fifteenth day of the month (whether or not a business day) next
preceding each interest payment date (the "Record Date irrespective of any transfer or
exchange of any such Bond subsequent to such Record Date and prior to such interest payment
date.
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 principal or interest 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.
The principal of the Bonds shall be payable to the Owners thereof at the principal corporate trust
office of Citizens Bank Trust Company, in the City of Van Buren, Arkansas, which is hereby
designated the Trustee, Paying Agent and Bond Registrar (the "Trustee for the Bonds.
Only such Bonds as shall have endorsed thereon a Certificate of Authentication substantially in
the form set forth in Section 10 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 such 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 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'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, filing with the Trustee
evidence satisfactory to it that such Bonds were destroyed or lost, and of the ownership thereof,
and furnishing the City and Trustee with indemnity satisfactory to them. The Trustee is hereby
authorized to authenticate any such new Bond. In the event any such Bond shall have matured,
instead of issuing a new Bond, the City may pay the same without the surrender thereof Upon
the issuance of a new Bond under this Section, the City may require the payment of a sum
sufficient to 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.
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Section 7. The Bonds shall be registered in the name of Cede Co., as nominee of The
Depository Trust Company ("DTC"), and shall be held in the custody of DTC. A Letter of
Representations with DTC (the "Letter of Representations is hereby approved in substantially
the form submitted to this meeting, and the Mayor is hereby authorized and directed to execute and
deliver the Letter of Representations on behalf of the City and to take all action required on the part
of the City to fulfill its obligations under the Letter of Representations. All payments of principal of
and interest on the Bonds and all notices with respect thereto, including notices of full or partial
redemption, shall be made and given at the times and in the manner set out in the Letter of
Representations. The terms and provisions of the Letter of Representations shall govern in the
event of any inconsistency between the provisions of this Ordinance and the Letter of
Representations. The Letter of Representations may be amended without notice to or consent of
the Owners of the Bonds. All payments of principal of and interest on the Bonds and all notices
with respect thereto, including notices of full or partial redemption, shall be made and given at
the times and in the manner set out in the Letter of Representations.
The book -entry registration system for all of the Bonds may be terminated and certificates (in
denominations of $5,000 or integral multiples thereof) delivered to and registered in the name of
the beneficial owners of such Bonds (the "Beneficial Owners under either of the following
circumstances:
(a) DTC notifies the City and the Trustee that it is no longer willing or able to act as
securities depository for the Bonds and a successor securities depository for the Bonds is not
appointed by the City prior to the effective date of such discontinuation; or
(b) The City determines that continuation of the book -entry system through DTC (or a
successor securities depository) is not in the best interest of the Beneficial Owners of the
Bonds.
In the event a successor securities depository is appointed by the City, the Bonds will be
registered in the name of such successor securities depository or its nominee. In the event
certificates are required to be issued to Beneficial Owners, the Trustee and the City shall be fully
protected in relying upon a certificate of DTC or any DTC participant as to the identity of and
the principal amount of Bonds held by such Beneficial Owners.
The Beneficial Owners of Bonds will not receive physical delivery of certificates except as
provided herein. For so long as there is a securities depository for the Bonds, all of such Bonds
shall be registered in the name of the nominee of the securities depository, all transfers of
beneficial ownership interests in such Bonds will be made by the nominee of the securities
depository, and no investor or other party purchasing, selling, or otherwise transferring beneficial
ownership of such Bonds is to receive, hold, or deliver any certificate. The City and the Trustee
shall have no responsibility or liability for transfers of beneficial ownership interests in such
Bonds.
The City and the Trustee will recognize the securities depository or its nominee as the
Bondholder for all purposes, including receipt of payments, notices, and voting; provided the
Trustee may recognize votes by or on behalf of Beneficial Owners as if such votes were made by
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Owners of a related portion of the Bonds when such votes are received in compliance with an
omnibus proxy or other comparable evidence delivered to the Trustee by the Owners.
During any period for which a securities depository or its nominee is the Owner of the Bonds,
the City and the Trustee shall be entitled to treat the person in whose name a Bond is registered
as the absolute owner of such Bond for all purposes of this Ordinance, and neither the City nor
the Trustee shall have any responsibility or obligation to any Beneficial Owner of such Bond.
Without limiting the immediately preceding sentence, neither the City nor the Trustee shall have
any responsibility or obligation with respect to (a) the accuracy of the records of any securities
depository or any other person with respect to any ownership interest in the Bonds, (b) the
delivery to any person, other than an Owner, of any notice with respect to the Bonds, including
any notice of redemption or refunding, (c) the selection of the particular Bonds or portions
thereof to be redeemed or refunded in the event of a partial redemption or refunding of part of
the Bonds then outstanding, or (d) the payment to any person, other than an Owner, of any
amount with respect to the principal of or interest on the Bonds.
Section 8. 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. Each Bond is transferable by the Owner thereof or by the Owner's attorney duly
authorized in writing at the principal office of the Trustee. Upon such transfer, a new fully
registered Bond or Bonds of the same maturity, of authorized denomination or denominations,
and for the same aggregate principal amount will be issued to the transferee in exchange therefor.
No charge shall be made to an Owner of a Bond for the privilege of transfer or exchange, but an
Owner of a Bond requesting a 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 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 Owner shall be deemed And regarded as the absolute owner thereof for all purposes, and
payment of or on account of the principal or interest on any Bond shall be made only to or upon
the order of the Owner thereof or the Owner's 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
nor the Trustee shall be affected by any notice to the contrary.
Section 9. The Bonds shall be executed on behalf of the City by the manual or facsimile
signatures of the Mayor and City Clerk and shall have impressed or imprinted thereon the seal of
the City or facsimile thereof. 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, nevertheless, be delivered as herein
provided, and may be issued as if the persons who signed or sealed such Bonds had not ceased to
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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.
Section 10. 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
CITY OF VAN BUREN
WATER AND SEWER CAPITAL IMPROVEMENT AND REFUNDING REVENUE BOND,
SERIES 1999
Interest Rate: CUSIP No. Maturity Date: April 1,
Registered Owner:
Principal Amount: Dollars
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 (the "Owner shown
above, or registered assigns, upon the presentation and surrender hereof at the principal corporate
office of Citizens Bank Trust Company, in the City of Van Buren, Arkansas, or its successor
or successors, as trustee, paying agent and registrar (herein referred to as the "Trustee 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 date hereof at the
Interest Rate per annum shown above, payable October 1, 1999, and semiannually thereafter on
April 1 and October 1 of each year, until payment of such principal sum or, if this bond or a
portion thereof shall be duly called for redemption, until the date fixed for redemption, and to
pay interest on overdue principal and interest (to the extent legally enforceable) at the rate borne
by this bond. Payment of each installment of interest shall be made to the person in whose name
this bond is registered on the registration books of the City maintained by the Trustee at the close
of business on the fifteenth day of the month (whether or not a business day) next preceding each
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interest payment date (the "Record Date irrespective of any transfer or exchange of this bond
tot 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 Capital
Improvement and Refunding Revenue Bonds, Series 1999, aggregating Five Million Eight
Hundred Eighty Thousand Dollars ($5,880,000) in principal amount (the "Bonds and is issued
to finance the costs of acquiring, constructing and equipping betterments and improvements (the
"Improvements to the City's municipal waterworks and sewer system (the "System refund
certain outstanding debt of the System (the "Series 1993 Bonds pay costs of issuance of the
Bonds, and establish a debt service reserve (the "Debt Service Reserve
The Bonds are issued pursuant to and in full compliance with the Constitution and laws of the
State of Arkansas, including particularly Amendment No. 65 to the Constitution of the State of
Arkansas and Arkansas Code of 1987 Annotated (1998 Repl.) 14 -234 -101 to -218 and 14-
235 -101 to -225 (collectively, the "Statutes and pursuant to Ordinance No. -1999, duly
adopted by the City Council on May 17, 1999 (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 net revenues
of the System. Pursuant to Arkansas Code of 1987 Annotated (1998 Repl.) 14- 234 -208, the
Bonds are also secured by a statutory lien on the waterworks. 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 Series 1999 Water and Sewer Revenue Bond Fund (the "Bond Fund created by
the Bond Ordinance.
The Bonds are issued on a parity of lien, pledge and security with the City's Water and Sewer
Revenue Refunding Bonds, Series 1995 (the "Series 1995 Bonds issued in the original
principal amount of $2,580,000. The Bond Ordinance permits the City to incur, under certain
circumstances, additional bonds and indebtedness that may be on a parity of security with the
Series 1995 Bonds and the Bonds. The Series 1995 Bonds, the Bonds, and any additional parity
bonds are referred to as "System Bonds." Reference is hereby made to the Bond 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 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, 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 the System Bonds, including Trustee'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.
In the Bond Ordinance, the City covenants to maintain rates for System services sufficient to
produce net revenues annually equal to the amount required to be set aside for a depreciation fund
and leave a balance equal to at least 130% of the aggregate average annual principal and interest
requirements on all System Bonds.
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The Bonds are further secured by amounts maintained in the Debt Service Reserve in the 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 Bond Fund are insufficient for such
purposes, or to pay the final principal maturity of the Bonds.
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 I, 2003, 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
October 1, 2004, at the price of par plus accrued interest to the redemption date.
Notice of redemption identifying the Bonds or portions thereof (which shall be $5,000 or a
multiple thereof) to be redeemed shall be given by the Trustee, not less than 30 nor more than 60
days prior to the date fixed for redemption, by mailing a copy of the redemption notice by first
class mail, postage prepaid, to all Owners of Bonds to be redeemed. Failure to mail an
appropriate notice or any such notice to one or more 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. 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. 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 Owner hereof in person or by the Owner's 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, for the same
aggregate principal amount, will be issued to the transferee in exchange therefor. This bond is
issued with the intent that the laws of the State of Arkansas shall govern its construction.
The City and the Trustee may deem and treat the Owner hereof as the absolute owner hereof for
the purpose of receiving payment of or on account of principal hereof and interest due hereon
and for all other purposes, and neither the City nor the Trustee nor any 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
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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 an 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 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.
The City has designated this bond as a "qualified tax exempt obligation" within the meaning of
the Internal Revenue Code of 1986, as amended.
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 or facsimile thereof to be impressed, or imprinted on this bond, all as of June I,
1999.
City of Van Buren, Arkansas
By
Ma r
ATTEST: //�/iL
City Clerk
[SEAL]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Thi's'bond,is one of the Bonds issued under the provisions of the within mentioned Bond
OPdin'ancei
Citizens Bank Trust Co., as Trustee
fl By:
Authorized Signature
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LEGEND
Unless this bond is presented by an authorized representative of The Depository Trust Company,
a New York corporation "DTC to the City or its agent for registration of transfer, exchange,
or payment, and any bond issued is registered in the name of Cede Co. or in such other name
as is requested by an authorized representative of DTC (and any payment is made to Cede Co.
or to such other entity as is requested by an authorized representative of DTC), any transfer,
pledge, or other use hereof for value or otherwise by or to any person is wrongful inasmuch as
the Owner hereof, Cede Co., has an interest herein.
ASSIGNMENT
For value received, the undersigned hereby sells, assigns, and transfers unto
(Name and Address, Including Postal Zip Code of Assignee)
(Social Security or Other Identifying Number of Assignee)
the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints
as attorney to transfer the within bond on the books kept for registration
thereof, with full power of substitution in the premises.
DATE:
Signature Guaranteed:
NOTICE: Signature(s) must be guaranteed by NOTICE: The signature(s) to this assignment
an institution acceptable to the Trustee. must correspond with the names appearing
upon the face of the within bond in every
particular, without alteration or enlargement or
any change whatever.
Section 11. The City covenants and agrees that:
(a) The rates charged for water furnished by the System, fixed by Ordinance No. 22 -1998, and
the rates charged for sewer services of the System, fixed by Ordinance No. 20 -1998
(collectively, the "System Rates and the conditions, rights and obligations pertaining thereto,
as set out in those Ordinances, are hereby ratified, confirmed and continued;
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(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 (being defined as gross revenues Less the expenses
of operation, maintenance and repair of the System, including all expense items (with the
exception of depreciation, interest and amortization expenses, which are specifically excluded)
properly attributable to the operation, maintenance and repair of the System under generally
accepted accounting principles applicable to municipal water and sewer facilities "Net
Revenues with the reduced rates, will always be equal to the amount required to be set aside
for the Depreciation Fund (hereinafter identified) and leave a balance equal to at least 130% of
the aggregate average annual principal and interest requirements on all outstanding bonds
payable from System revenues "System Bonds
(c) System Rates shall, if and when necessary, from time to time, be increased in such manner as
will produce Net Revenues at least sufficient to provide the required deposits into the
Depreciation Fund and to leave a balance equal to 130% of the aggregate average annual
principal and interest requirements on all outstanding System Bonds.
(d) The balance provided by (b) and (c) must be sufficient to pay principal of and interest on all
System Bonds, pay any trustee, paying agent or registrar fees and make required deposits into
any debt service reserve fund or account during the current and next ensuing fiscal year.
(e) The Owners of the Bonds shall have the protection of the provisions of Arkansas Code of
1987 Annotated (1998 Repl.) 14- 235 -223, and the City will diligently proceed to collect the
amount due for sewer services together with the penalty and expenses so authorized.
Section 12. 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, 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 derived
from the operation of the System and shall be used and accounted for in the same manner as any
other revenues derived from the operation of the System. 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 13. Revenues of the System shall be collected, held and disbursed by the Commission.
Each employee of the City handling revenues of the System shall give bond for the faithful
discharge of his or her duties. Such bond shall be approved by the City Council. All revenues of the
System shall be held in trust for the Owners of the System Bonds and shall at all times be accounted
for separately and distinctly from other moneys of the City. All revenues of the System shall be
used and applied only as provided herein. All revenues of the System shall be deposited in the
Revenue Fund (hereinafter defined) to 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 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 designated on the books and records of the City so as to indicate
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the particular fund to which the revenues of the System belong. The City may establish one or
more accounts or sub accounts into which System revenues are deposited; provided, however,
separate accounts for the 1995 Bond Fund and the 1999 Bond Fund (each as defined below) have
been or will be established. The City or the Commission shall notify the Trustee in writing of the
initial depository or depositories for the Revenue Fund, the 1995 Bond Fund and the 1999 Bond
Fund (and any other fund for which a separate account is established and into which System
revenues are deposited) and any change in such depository or depositories.
Section 14. 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 revenue derived from
such dispositions shall be deposited into the Revenue Fund.
Section 15. All revenues derived from the operation of the System shall be paid monthly into the
special fund created by Ordinance No. 31 -1978 of the City, adopted and approved on August 31,
1978 (the "1978 Bond Ordinance and designated as the "Water and Sewer Fund" (the "Revenue
Fund Moneys in the Revenue Fund are hereby pledged and shall be applied to the payment of the
reasonable and necessary expenses of operation, maintenance and repair of the System, the payment
of the principal of and interest on System Bonds, the maintenance of the debt service reserves for
System Bonds at required levels, the providing of an adequate Depreciation Fund, to the payment
of the Trustee's fees and otherwise as described in the 1978 Bond Ordinance, the 1995 Bond
Ordinance, and this Ordinance.
Section 16. There shall be paid from the Revenue Fund into a special fund created by the 1978
Bond 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, maintenance and repair of the
System 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 cost of operation, maintenance and repair of the System during the
remainder of the then current fiscal year and the next ensuing fiscal year, such surplus may be
transferred and deposited into the Revenue Fund.
Section 17. (a) After making the required monthly transfer into the Operation and Maintenance
Fund, there shall be transferred from the Revenue Fund into 1995 Water and Sewer Revenue
Bond Fund (the "1995 Bond Fund created by the 1995 Bond Ordinance and into the 1999
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Bond Fund created below, the amounts required by the 1995 Bond Ordinance (for the 1995 Bond
Fund), by this Ordinance (for the 1999 Bond Fund), and by any future ordinance for any
additional bonds issued on a parity of security with the Series 1995 Bonds and the Bonds
(collectively, the "Bond Funds The transfers to the Bond Funds shall be made on the first
business day of each month and shall be on a parity with one another.
(b) A special fund is hereby created and established with the Trustee in the name of the City
which is designated the "Series 1999 Water and Sewer Revenue Bond Fund" (the "1999 Bond
Fund Amounts credited to the 1999 Bond Fund shall be used for the purpose of providing
funds for the payment of the principal of and interest on the Bonds, payment of Trustee's fees
and as a debt service reserve (the "Debt Service Reserve The Debt Service Reserve shall be
initially funded from the proceeds of the Bonds in an amount equal to the lesser of (i) the
maximum annual principal and interest requirements for the Bonds, (ii) 1.25 times the average
annual principal and interest requirements for the Bonds, and (iii) 10% of the original proceeds
of the Bonds (the "Required Level
(c) On the first business day of each month, commencing July 1, 1999, until all outstanding
Bonds, with interest thereon, have been paid in full or provision made for such payment, there
shall be transferred from the Revenue Fund to the 1999 Bond Fund a sum equal to (i) 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, 1999, the sum deposited shall be equal to
1/3 of the next installment of interest due on the Bonds less the amount of accrued interest deposited
in the 1999 Bond Fund upon the sale of the Bonds), plus (ii) 1/12 of the next installment of
principal on the Bonds (except that with respect to the payments to be made on the first business
day of each month prior to April 1, 2000, the sum deposited shall be equal to 1/9 of the next
installment of principal due on the Bonds), plus (iii) the amount necessary to pay Trustee's and
paying agents fees and expenses, plus (iv) if the Debt Service Reserve is not fully funded at the
Required Level, a sum equal to 1/24 of the Required Level.
(d) If the revenues of the System are insufficient to make the required payments on the first
business day of any month into the 1999 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 1999 Bond
Fund on the first business day of the next month.
(e) If for any reason there shall be a deficiency in the payments made into the 1999 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 and interest. 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. Earnings on the
Debt Service Reserve which increase the amount therein above the Required Level shall be
deposited into the 1999 Bond Fund.
(f) To provide for the payment of the principal of and interest on the Bonds as the same becomes
due and payable, the Trustee shall pay from the 1999 Bond Fund to the Owners the following
amounts at the times set forth below:
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Principal Interest
0 Year .(April 1) April 1 October 1 Total
1999 85,775.00 85,775.00
2000 240,000.00 128,662.50 124,462.50 493,125.00
2001 235,000.00 124,462.50 120,173.75 479,636.25
2002 245,000.00 120,173.75 115,580.00 480,753.75
2003 255,000.00 115,580.00 110,671.25 481,251.25
2004 260,000.00 110,671.25 105,536.25 476,207.50
2005 270,000.00 105,536.25 100,136.25 475,672.50
2006 280,000.00 100,136.25 94,396.25 474,532.50
2007 290,000.00 94,396.25 88,378.75 472,775.00
2008 305,000.00 88,378.75 81,897.50 475,276.25
2009 325,000.00 81,897.50 74,828.75 481,726.25
2010 330,000.00 74,828.75 67,486.25 472,315.00
2011 345,000.00 67,486.25 59,637.50 472,123.75
2012 360,000.00 59,637,50 51,357.50 470,995.00
2013 380,000.00 51,357.50 42,522.50 473,880.00
2014 260,000.00 42,522,50 36,412.50 338,935.00
2015 270,000.00 36,412.50 30,000.00 336,412.50
2016 285,000.00 30,000.00 23,160.00 338,160.00
2017 300,000.00 23,160.00 15,885.00 339,045.00
2018 315,000.00 15,885.00 8,167.50 339,052.50
2019 330,000.00 8,167.50 338,167.50
(g) If a surplus shall exist in the 1999 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 or, (2) transferred to the Revenue Fund.
(h) When the moneys held in the 1999 Bond Fund, including the Debt Service Reserve, shall be
and remain sufficient to pay the principal of and interest on all of the Bonds then outstanding
plus Trustee's fees, the City shall not be obligated to make any further payments into the 1999
Bond Fund.
(i) The Bonds shall be specifically secured by a pledge of all the revenues required to be placed
into the 1999 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 18. After making the monthly deposits into the Operation and Maintenance Fund and the
Bond Funds, there shall be paid from the Revenue Fund into a fund created by the 1978 Bond
Ordinance and designated "Water and Sewer Depreciation Fund" (the "Depreciation Fund on the
PI 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 major
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improvements, repairs and replacements to the System or for extraordinary repairs to 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 (12)
months, such surplus may be transferred and paid into the Revenue Fund.
Section 19. Payments from the Revenue 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 20. Any surplus in the Revenue 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 City, for any lawful municipal purpose authorized by the City.
Section 21. The City may, but shall not be required to, expend moneys derived from sources
other than the operation of the System for debt service on the Bonds, System operating,
maintenance and repair expenses and System insurance premiums.
Section 22. 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 of the System over the
lien securing the Bonds of this issue.
The City reserves the right to issue additional bonds payable from revenues of the System to
finance the cost of constructing any future extensions, betterments or improvements to the
System, or to refund outstanding bonds payable from revenues of the System, but the City shall
not authorize or issue any such additional bonds ranking on a parity with outstanding System
Bonds unless and until there have been procured and filed with the Trustee and City Clerk 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 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 maximum annual principal and interest
requirements on all the then outstanding System Bonds and the additional System Bonds then
proposed to be issued. In making the computation set forth above, the City and the independent
certified public accountant on behalf of the City may, based upon the opinion or report of a
registered professional engineer not in the regular employ of the City, treat any increase in rates
for the System enacted subsequent to the first day of such preceding fiscal year as having been in
effect throughout such fiscal year and may include in gross revenues for such fiscal year the
amount that would have been received, based on such opinion or report, had the increase been in
effect throughout such fiscal year.
The City may also issue additional bonds subordinate in security to the System Bonds.
Section 23. 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 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.
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Section 24. The Bonds shall be subject to redemption prior to maturity in accordance with the
terms set out in the bond form contained in Section 10 hereof. The Bonds paid either at or before
maturity shall be canceled and shall not be reissued.
Section 25. 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 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 Owners of the Bonds requesting the same in writing within 120 days after
the end of the fiscal year. In the event that the City fails or refuses to make the audit, the Trustee,
or any 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 to be paid
by the City under this Ordinance for such month.
Section 26. 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. The City covenants that, to the
extent comparable protection is not otherwise provided to the satisfaction of the Trustee, it will
keep the System insured against loss or damage, and will maintain public liability and property
damage insurance against claims for bodily injury or death and damage to property occurring
upon, in or about the System, in each case in an amount and against such risks as are usually
insured against in connection with similar facilities and undertakings as the System. The City
further covenants, to the extent comparable protection is not otherwise provided to the
satisfaction of the Trustee, that it will maintain adequate fidelity insurance or bonds on all
officers or employees responsible for handling funds of the System. All insurance shall be
effected with reputable insurance companies selected by the City, which usually insure risks
similar in nature and monetary exposure. Policies of insurance shall name the Trustee as a
beneficiary to the extent of its interest under this Ordinance. Copies of certificates of the
insurance, or summaries thereof, shall be placed on file with the Trustee. In the event of loss, the
proceeds of such insurance shall be applied solely toward the reconstruction, replacement or
repair of the System, and in such event the City will, with reasonable promptness, cause to be
commenced and completed the reconstruction, replacement and repair work. If such proceeds are
more than sufficient for such purposes, the balance remaining shall be deposited to the credit of
the Revenue Fund, and if such proceeds shall be insufficient for such purposes, the deficiency
shall be supplied first from moneys in the Depreciation Fund and second from moneys in the
Operation and Maintenance Fund and third from surplus moneys in the Revenue Fund. Nothing
shall be construed as requiring the City to expend any moneys for operation and maintenance of
the System or for premiums on its insurance which are derived from sources other than the
operation of the System, but nothing shall be construed as preventing the City from doing so.
Section 27. (a) 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
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with the Trustee, in trust and irrevocably set aside exclusively for such payment (1) cash, fully
insured by the FDIC or fully collateralized by securities described in (2), sufficient to make such
payment and (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
(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 as set forth in an
opinion of counsel nationally recognized with respect to obligations the interest on which is
exempt from federal income taxation, which opinion is acceptable to the Trustee), maturing as to
principal and interest in such amounts and at such times as will provide sufficient moneys to
make such payment, and all necessary and proper fees, compensation and expenses of the
Trustee pertaining to the 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. In determining the
sufficiency of the deposit of the obligations of the United States of America, there shall be
considered the principal amount thereof and interest to be earned thereon until the maturity of the
obligations.
(b) 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 obligations.
(c) When all the Bonds shall have been paid within the meaning of this Ordinance, and any
arbitrage rebate due the United States under section 148 of the Code has been paid or provided
for to the satisfaction of the Trustee and if the Trustee has been paid its fees and expenses, the
Trustee shall take all appropriate action to cause (i) the pledge and lien of this Ordinance to be
discharged and canceled, and (ii) all moneys held by it pursuant to this Ordinance and which are
not required for the payment of such Bonds to be paid over or delivered to or at the direction of
the City.
Section 28. (a) 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 1999 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 Owners of not less than 20% 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 Owners of not
less than 20% in principal amount of the then outstanding Bonds, shall, apply in a proper action
to a court of competent jurisdiction for the appointment of a receiver to administer the System on
behalf of the City and the 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 of the System 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.
(b) No Owner of any of the outstanding Bonds shall have any right to institute any suit, action,
mandamus or other proceeding in equity or at law for the protection or enforcement of any power
or right unless such Owner previously shall have given to the Trustee written notice of the
18
default on account of which such suit, action or proceeding is to be taken, and unless the 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 Owners of the Bonds shall
have any right in any manner whatever by the Owner's action to affect, disturb or prejudice the
security of this Ordinance, or to enforce any right hereunder except in the manner herein
provided. All proceedings at law or in equity shall be instituted, had and maintained in the
manner herein provided and for the benefit of all Owners of the outstanding Bonds. Any
individual rights of action or other right given to one or more of such Owners by law are
restricted by this Ordinance to the rights and remedies herein provided.
(c) No remedy conferred upon or reserved to the Trustee or to the Owners of the Bonds is
intended to be exclusive of any other remedy or remedies, and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this Ordinance or by law.
(d) The Trustee may, and, upon the written request of the Owners of not less than 50% in
principal amount of the Bonds then outstanding, shall, waive any default which shall have been
remedied before the entry of final judgment or decree in any suit, action or proceeding instituted
under the provisions of this Ordinance or before the completion of the enforcement of any other
remedy, but no such waiver shall extend to or affect any other existing or any subsequent default
or defaults or impair any rights or remedies consequent thereon.
(e) All rights of action under this Ordinance or under any of the Bonds 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 Owners of such Bonds, subject to the provisions of this Ordinance.
(f) No delay or omission of the Trustee or of any Owners of the Bonds to exercise any right or
power accrued upon any default shall impair any such right or power or shall be construed to be
a waiver of any such default or an acquiescence therein; and every power and remedy given by
this Ordinance to the Trustee and to the Owners of the Bonds, respectively, may be exercised
from time to time and as often as may be deemed expedient.
(g) 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.
Section 29. (a) The terms of this Ordinance shall constitute a binding contract between the City
and the Owners of the Bonds and no variation or change in the undertakings herein set forth shall
be made while any of the Bonds are outstanding, except as hereinafter set forth in subsections (b)
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and (c), and the Owner of any Bonds may at any time for and on the Owner's own behalf or for
and on behalf of all Owners 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, which in the opinion of the
Trustee is not materially adverse to the interests of Owners, without the consent of the Owners of
the outstanding Bonds.
(c) The Owners of not less than 75% in aggregate principal amount of the Bonds then
outstanding shall have the right, from time to time, anything contained in this Ordinance to the
contrary notwithstanding, to consent to and approve the adoption by the City of such ordinance
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 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 30. (a) Moneys held for the credit of all funds identified in this Ordinance may be
invested and reinvested pursuant to the direction of the Commission in:
(i) direct or fully guaranteed obligations of the United States of America (including any such
securities issued or held in book -entry form on the books of the Department of the Treasury
of the United States of America) "Government Securities
(ii) time deposits or certificates of deposits of banks, including the Trustee, to the extent
insured by the FDIC, or, if in excess of insurance coverage, collateralized by Government
Securities; and
(iii) money market funds comprised exclusively of investments described in (i) above
(collectively, "Permitted Investments
(b) Moneys held for the credit of the Debt Service Reserve in the 1999 Bond Fund shall be
invested and reinvested 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 the earlier
of five years after the date of investment and the maturity date of the Bonds. Moneys held for the
credit of the 1999 Bond Fund (other than the Debt Service Reserve) shall be invested and
reinvested in Permitted Investments which shall mature, or which shall be subject to redemption
by the holder thereof, at the option of such holder, not later than the date or dates when the
moneys will be required for payment of the principal of and interest on the Bonds when due. The
Trustee shall so invest and reinvest moneys in the 1999 Bond Fund and the Debt Service Reserve
in Permitted Investments pursuant to the direction of the Commission and, in the absence of any
direct instructions from the Commission, in Permitted Investments described in (a)(iii) above.
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(c) Obligations so purchased as an investment of moneys in any fund shall be deemed at all times
to be a part of such fund and the interest accruing thereon and any profit 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 increase the amount thereof
above the Required Level shall, except as provided herein, be transferred promptly into the 1999
Bond Fund. Amounts so transferred shall be credited against the City's obligation to make
payments into the 1999 Bond Fund.
(d) Not later than the 90th day after the last day of each calendar year, the Trustee shall provide
the City with a statement showing the amounts on deposit or credited to the funds and accounts
held by the Trustee and a valuation of the investments of such amounts. In computing the
amount in any fund or account, obligations purchased as an investment of moneys therein shall
be valued (i) at face value if such obligations mature within six months from the date of
valuation thereof and (ii) if such obligations mature more than six months after the date of
valuation thereof, at the price at which such obligations are redeemable by the holder at the
holder's option if so redeemable, or, if not so redeemable, at the lesser of (1) the cost of such
obligations plus the amortization of any premium or minus the amortization of any discount
thereon and (2) the market value of such obligations. Valuation on any particular date shall
include the amounts of interest then earned or accrued to such date on any moneys or
investments in such fund or account.
Section 31. When the Bonds have been executed, they shall be authenticated by the Trustee and
the Trustee shall deliver the Bonds to the Purchaser upon payment in cash of the purchase price
specified in the Purchase Agreement, including accrued interest (the "total sale proceeds The
City will simultaneously deposit with the Trustee the entire amount held for the credit of the
bond fund being maintained in connection with the Series 1993 Bonds (the "1993 Bond Fund
including the debt service reserve therein. The total sale proceeds and the amounts transferred
from the 1993 Bond Fund shall be applied as follows:
(a) The amount of accrued interest paid by the Purchaser shall be deposited into the 1999
Bond Fund;
(b) An amount equal to the Required Level shall be deposited in the Debt Service Reserve;
(c) The amount required pursuant to the Escrow Agreement shall be deposited with the
Escrow Trustee, which sum shall be sufficient to pay the Series 1993 Bonds and all trustee
and paying agent fees in connection therewith, such amounts to be applied to the payment as
due at maturity and upon redemption prior to maturity on April 1, 2000 of the principal of
and interest on the Series 1993 Bonds and all trustee and paying agent fees in connection
therewith; and
(d) The remainder of total sale proceeds shall be deposited in trust into a special account or
sub account in the name of the City established with a depository selected by the City and
designated "Series 1999 Water and Sewer Revenue Bond Improvements Fund" (the
"Improvements Fund
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The Improvements Fund shall be maintained by the Commission. 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 the expenses of the
issuance of the Bonds. Disbursements shall be made either on the basis of delivery instructions
signed by the Chairman of the Commission on the date of' issuing the Bonds or requisitions
which shall contain at least the following information: the person to whom payment is being
made and the amount and purpose of the payment. Each requisition must be signed by the agent
designated by the Commission. The Commission shall retain copies of all such delivery
instructions and requisitions. Upon execution of the requisition, the Commission shall issue its
check to the persons, firms, or corporations designated in the delivery instructions or a
requisition. The Commission shall keep accurate records as to all payments made on the basis of
the delivery instructions and the requisitions.
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 the Commission shall transfer any remaining balance to the
1999 Bond Fund for the purpose of redeeming the Bonds as set forth in the form of Bond herein
to the extent practicable. Any balance not sufficient to redeem a Bond shall be applied to the next
principal payment on the Bonds.
Section 32. (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 of the sale of the Bonds and revenues of the System will not be used
directly or indirectly in such manner as to cause the Bonds to be treated as "arbitrage bonds"
within the meaning of section 148 of the Code.
(b) The City shall assure that (1) 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 (2) 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
ea 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.
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The City shall assure that not in excess of 5% of the Net Proceeds of the Bonds are used, directly
or indirectly, to make or finance a loan to persons other than state or local governmental units.
As used in this subsection (b), the following terms shall have the following meanings:
"Net Proceeds" means the face amount of the Bonds, plus accrued interest and premium, if any,
less original issue discount, if any, less 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
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 1999 will not exceed
$10,000,000.
The City further covenants and represents that 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
1999 Bond Fund) will be invested (directly or indirectly) in federally insured deposits or
accounts. Nothing in this Section shall prohibit investments in bonds issued by the United States
Treasury.
(e) The C ity 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 on Form 8038 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 (0, 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(0 of the Code
and the Treasury Regulations pertaining thereto. The City shall rebate to the United States, not
later than 30 days after the end of the Bond Year ended April 1, 2004, and not later than 30 days
after the end of each fifth Bond Year thereafter, an amount which ensures that at least 90% of the
Rebate Amount at the time of such payment will have been paid to the United States, and within
60 days after the payment or redemption of all of the principal of the Bonds, an amount sufficient
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to pay the remaining unpaid balance of the Rebate Amount, all in the manner and as required by
tar section 148 of the Code and the Treasury regulations pertaining thereto.
As used in this subsection (f), the following terms shall have the following meanings:
"Bond Year" means the 12 -month period ended April 1 in each year.
"Rebate Amount" means the amount described in section 148(0(2) of the Code, computed in
accordance with the provisions of section 148(0(2) and the Treasury Regulations pertaining
thereto now or hereafter promulgated.
The City shall determine the Rebate Amount within 30 days after April 1, 2004 and each fifth
April 1 thereafter 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. In determining the Rebate Amount, the City shall take
into account all amounts held under this Ordinance in the Debt Service Reserve in the 1999 Bond
Fund.
The Rebate Amount shall be paid by the City to the United States at such times and in such
amounts as are necessary to comply with the provisions of section 148(0 of the Code and the
Treasury Regulations issued thereunder.
In making the computations of the Rebate Amount provided for in this Section, the City and the
Trustee shall comply with the applicable provisions of the arbitrage certificate delivered to the
City upon issuance of the Bonds.
The Trustee shall verify at least annually from the date of delivery of the Bonds that (i) all
requirements of this subsection (0 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, and (iii) if applicable, the timely payment of all Rebate
Amounts due and owing to the United States Treasury has occurred.
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 (0 (with respect to the
portion of such earnings specified in such opinion) need not be complied with and shall no
longer be effective.
Section 33. 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
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performing the duties of his or her 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 34. The Trustee shall only be responsible for the exercise of good faith and reasonable
prudence in the execution of its trust. The recitals in this Ordinance and in the face of the Bonds
are the recitals of the City and not of the Trustee. The Trustee shall not be required to take any
action as Trustee unless it shall have been requested to do so in writing by the Owners of not less
than 10% in principal amount of the Bonds then outstanding and shall have been offered
reasonable security and indemnity against the costs, expenses and liabilities to be incurred
therein or thereby. The Trustee may resign at any time by 60 days' notice in writing to the City
Clerk and to the Owners of the Bonds, and the majority in principal amount of the Owners of the
outstanding Bonds at any time, with or without cause, may remove the Trustee. In the event of a
vacancy in the office of Trustee, either by resignation or by removal, the majority in principal
amount of the Owners of the outstanding Bonds may appoint a new Trustee, such appointment to
be evidenced by a written instrument or instruments filed with the City Clerk. If the majority in
principal amount of the Owners of the outstanding Bonds shall fail to fill a vacancy within 30
days after the same shall occur, then the City shall forthwith designate a new Trustee by a written
instrument filed in the office of the City Clerk. The new trustee shall be a bank or trust company
in good standing, duly authorized to exercise trust powers in the State of Arkansas and subject to
examination by federal or State of Arkansas authority, having a reported capital and surplus of
not less than $10,000,000. A "subsidiary trust company" within the meaning of the Bank
Holding Company Subsidiary Trust Company Formation Act of 1989 shall be deemed to have
capital and surplus equal to its capital and surplus plus the capital and surplus of its owning bank
holding company. The original Trustee and any successor Trustee shall file a written acceptance
and agreement to execute the trust imposed upon it or them by this Ordinance, but only upon the
terms and conditions set forth in this Ordinance and subject to the provisions of this Ordinance,
to all of which the Owners of the Bonds agree. Such written acceptance shall be filed with the
City Clerk and a copy thereof shall be placed in the Bond transcript. Any successor Trustee shall
have all the powers herein granted to the original Trustee. The Trustee's resignation shall
become effective upon the acceptance of the trusts by the successor Trustee.
Section 35. It is understood and agreed that the Commission, acting for and on behalf of the
City, has custody of and control over the System, operates, maintains and repairs the System and
collects and handles System revenues. Therefore, it is understood and agreed that even though
there are some express references to the Commission, all references hereto to the City shall,
when appropriate in view of the authority and responsibility of the Commission, be constructed
to mean and include the Commission.
Section 36. Anything herein to the contrary notwithstanding, all rights of any Owner 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
Cal scheduled maturity or by call for redemption prior to maturity in accordance with the terms
hereof
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Section 37. 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 38. 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 39. On the date of issuance and delivery of the Bonds, all funds and accounts being held
in accordance with the provisions of Ordinance No. 3 -1993 of the City, except for the bond fund,
including the debt service reserve, established therein, shall be transferred to the corresponding
funds and accounts created in Ordinance No. 32 -1995 or this Ordinance.
Section 40. Ordinance No. 3-1993 is hereby repealed effective on the date of issuance and
delivery of the Bonds. All ordinances and resolutions or parts thereof, in conflict herewith are
hereby repealed to the extent of such conflict.
Section 42. It is hereby ascertained and declared that the Improvenients must be accomplished
and the Series 1993 Bonds refunded 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: May 17, 1999.
APPROVED:
yo �l..�c�'.�-
ATTEST: rr
City Clerk
[SEAL.]
t
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