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Ordinance 3506
n c -n D N C7 f' ORDINANCE NO . 3506 0 a P rrNq r AN ORDINANCE OF THE BOARD OF DIRECTb bF T F�1 CITY OF FAYETTEVILLE , ARKANSAS , PROVIDING FOR THE ISSUANCE AND CERTAIN DETAILS OF n N o $ 33 , 0191000 SALES AND USE TAX CAPITAL w o IMPROVEMENT BONDS , SERIES 1990 OF THE CITY OF FAYETTEVILLE , ARKANSAS , AUTHORIZING THE EXECUTION AND DELIVERY OF A TRUST INDENTURE SECURING SUCH BONDS , PROVIDING FOR THE SALE OF SUCH BONDS AND CERTAIN OTHER MATTERS RELATING THERETO AND DECLARING AN EMERGENCY . WHEREAS , the Board of Directors ( the " Board" ) of the City of Fayetteville , Arkansas ( the " City" ) , pursuant to Subchapter 2 of s Chapter 75 of Title 26 of the Arkansas Statutes , on October 4 , a ' 1988 duly passed Ordinance No . 3381 ; and WHEREAS , pursuant to such Ordinance No . 3381 , the Board levied a local sales and use tax of one per centum ( 1% ) to a maximum of Twenty - five Dollars ( $ 25 . 00 ) on each single transaction and called a special election to be held in the City on November v 8 , 1988 in order to submit to the qualified electors of the City the question of levying such tax for a period of twenty ( 20 ) years to finance a capital improvement program and economic development program ( capital facilities ) for the City ; and WHEREAS , at such election held on November 8 , 1988 , a majority of the qualified electors of the City voting thereon approved the levy by the City of such local sales and use tax ( the " Sales and Use Tax" ) , and the Sales and Use Tax has been levied and collected since December 1 , 1988 ; and WHEREAS , the Board , pursuant to Amendment 62 to the Constitution of the State of Arkansas and the Local Government Bond Act of 1985 , on April 19 , 1990 duly passed Ordinance 3480 ; and WHEREAS , pursuant to such Ordinance No . 3480 , the Board authorized the issuance of not exceeding $ 33 , 019 , 000 capital improvement bonds of the City to finance , with any other available funds , the acquisition , construction , reconstruction , improvement , renovation , expansion and equipment of the various capital improvements described therein ( the " Improvements " ) and related costs of issuance , with the retirement of such bonds to be secured by a pledge of all of the proceeds of the Sales and Use Tax or such portion of such proceeds as shall be determined by the City to be adequate to obtain satisfactory ratings or insurance on such IIBER 1389PAGE092 bonds , and called a special election to be held in the City on May 29 , 1990 in order to submit to the qualified electors of the City the questions of issuing such bonds to be so secured for each of the Improvements and in the respective amounts described therein ; and WHEREAS , at such election held on May 29 , 1990 , a majority of the qualified voters of the City voting thereon approved the issuance of such bonds and the security therefor pursuant to such Ordinance No . 3480 ; and WHEREAS , the Board has determined to proceed at this time with the sale and issuance of all of such bonds in one series , to be designated " Sales and Use Tax Capital Improvement Bonds , Series 1990 " the " Series 1990 Bonds " ) , for the purpose of paying a part of the cost ( as such term is defined in the Indenture hereinafter described ) of the Improvements and to provide for the issuance of one or more additional series for the purpose of refunding the bonds of any series issued under the Indenture ( the Series 1990 Bonds and all such additional bonds being collectively called the "Bonds " ) ; and WHEREAS , the Board desires in this ordinance to provide for the issuance of the Series 1990 Bonds and to set forth certain terms , covenants and conditions with respect thereto ; and WHEREAS , the City is authorized to enter into the Indenture for the purpose of setting forth certain terms , covenants and conditions with respect to the Bonds ; and WHEREAS , the City has made arrangements for the sale of the Series 1990 Bonds to the Llama Company , of Fayetteville , Arkansas ( the "Purchaser" ) , and in connection therewith has prepared and distributed a Preliminary Official Statement , dated September 7 , 1990 ( the "Preliminary Official Statement " ) ; and WHEREAS , the City has received from Capital Guaranty Insurance Company , a Maryland Corporation ( " Capital Guaranty" ) , an offer to issue a Financial Guaranty Bond ( the " Financial Guaranty Bond" ) which provides for the payment of the principal of and the interest on the Series 1990 Bonds when Due for Payment which is unpaid by reason of Nonpayment ( as each such term is defined in the Financial Guaranty Bond ) ; and WHEREAS , the Purchaser has submitted to the City a Bond Purchase Agreement , dated September 13 , 1990 , providing for the purchase of the Series 1990 bonds by the Purchaser ( the " Bond Purchase Agreement " ) ; and WHEREAS , a final Official Statement , dated September 13 , 1990 ( the " Official Statement " ) , has been prepared and is to be distributed in connection with the sale of the Series 1990 Bonds ; 2 Lim 1389 PAGE 093 NOW , THEREFORE , BE IT ORDAINED BY THE BOARD OF DIRECTORS OF THE CITY OF FAYETTEVILLE , ARKANSAS : Section 1 . The Series 1990 Bonds shall be issued in the aggregate principal amount of $ 33 , 019 , 000 for the purpose of providing funds , with any other available funds , for ( a ) paying the Cost of Improvements , ( b ) making a deposit to the credit of the Reserve Account ( as defined in the Indenture ) and ( c ) paying the cost of issuing the Series 1990 Bonds . The proceeds of the Series 1990 Bonds are to be allocated to paying the cost of the Improvements as described in Appendix A to this ordinance . Section 2 . The Series 1990 Bonds shall be dated October 15 , 1990 and shall consist of Serial Bonds ( as defined in the Indenture ) in the principal amount of $ 17 , 184 , 000 maturing on November 15 in each of the years , in the amounts and at the interest rates shown below : Year of Maturity Principal Amount Interest Rate 1991 $ 824 , 000 6 . 00% 1992 11065 , 000 6 . 10 % 1993 11130 , 000 6 . 20 % 1994 11205 , 000 6 . 30 % 1995 17280 , 000 6 . 40 % 1996 11360 , 000 6 . 50 % 1997 17450 , 000 6 . 60 % 1998 11545 , 000 6 . 70 % 1999 176509000 6 . 80% 2000 11765 , 000 6 . 90 % 2001 17890 , 000 7 . 00% 2002 210209000 7 . 05% and of Term Bonds ( as defined in the Indenture ) in the principal amount of $ 15 , 835 , 000 maturing on November 15 in each of the years in the amounts and at the interest rate set forth below : Year of Maturity Principal Amount Interest Rate 2005 $ 6 , 985 , 000 7 . 15 % 2008 81850 , 000 7 . 25 % The Amortization Requirements ( as defined in the Indenture ) for the Term Bonds maturing November 15 , 2005 shall begin in the Bond Year ending November 14 , 2003 and shall be as follows : Bond Year Amortization Ending November 14 Requirement 2003 $ 2 , 1659000 2004 2 , 3257000 2005 294959000 3 MIR1389PAGE �`t The Amortization Requirements for the Term Bonds maturing November 15 , 2008 shall begin in the Bond Year ending November 14 , 2006 and shall be as follows : Bond Year Amortization Ending November 14 Requirement 2006 $ 2 , 675 , 000 2007 218709000 2008 3 , 305 , 000 The Series 1990 Bonds shall be issued as fully registered Bonds without coupons in the denomination of $ 5 , 000 or any whole multiple thereof , except that one Series 1990 Bond shall be in the denomination of $ 4 , 000 . Interest on the Series 1990 Bonds shall be payable on May 15 , 1991 and semiannually thereafter on each May 15 and November 15 ( each an " Interest Payment Date" ) . Principal of the Series 1990 Bonds shall be payable only upon presentation and surrender of such Bonds at the principal corporate trust office of McIlroy Bank & Trust , in the City of Fayetteville , Arkansas , as bond registrar , transfer agent and paying agent ( the "Bond Registrar" ) . Interest on the Series 1990 Bonds shall be paid by check or draft mailed by the Bond Registrar to the registered owners of the Series 1990 Bonds as shown on the registration books kept by the Bond Registrar on the Regular Record date or the Special Record date ( as each such term is defined in the Indenture ) ; provided , however , that upon the request of the registered owner of $ 1 , 000 , 000 or more in principal amount of the Series 1990 Bonds , such interest shall be paid by wire transfer of funds to a bank account designated by such registered owner . Section 3 . The Series 1990 Bonds maturing on or before November 15 , 2000 are not subject to redemption prior to their respective maturities . The Series 1990 Bonds at the time outstanding which mature after November 15 , 2000 may be redeemed prior to their respective maturities , at the option of the City , from any monies that may be available for such purpose , upon notice as provided in Article III of the Indenture , either in whole or in part , in inverse order of maturity ( and by lot within any maturity ) on any date not earlier than November 15 , 2000 , at the redemption prices ( expressed as percentages of the principal amount of the Series 1990 Bonds or portions thereof to be redeemed as of the date of such redemption ) , together with accrued interest to the redemption date , as follows : Redemption Dates ( Both Inclusive ) Redemption Prices November 15 , 2000 to November 14 , 2001 102 % November 15 , 2001 to November 14 , 2002 101 November 15 , 2002 and thereafter 100 4 LIBIR1389PAGE095 The Term Bonds maturing on November 15 , 2005 are also subject to redemption in part by lot on November 15 , 2003 and each November 15 thereafter to and including November 15 , 2005 in an amount equal to the Amortization Requirement therefor in the immediately preceding Bond Year set out in Section 2 of this ordinance and the Term Bonds maturing on November 15 , 2008 are also subject to redemption in part by lot on November 15 , 2006 and each November 15 thereafter to and including November 15 , 2008 in an amount equal to the Amortization Requirement therefor in the immediately preceding Bond Year set out in Section 2 of this ordinance , in each case upon notice as provided in Article III of the Indenture , at the principal amount of each Bond to be redeemed , together with accrued interest to the date fixed for redemption , without premium . Section 4 . From the proceeds of the Series 1990 Bonds , there shall be deposited to the credit of the Reserve Account established under the Indenture an amount equal to the Reserve Account Deposit Requirement ( as Defined in the Indenture ) on account of the issuance of the Series 1990 Bonds and to the credit of the Construction Fund ( as defined in and established under the Indenture ) the balance of such proceeds for paying a part of the cost of the Improvements and the costs of issuing the Series 1990 Bonds . Section 5 . The principal of and interest and any redemption premium on the Bonds and all sinking fund payments with respect thereto required by or pursuant to the Indenture shall be payable solely from the Sales and Use Tax Revenues ( as defined in the Indenture ) pledged therefor but may also be paid under certain circumstances from the proceeds of the Bonds or the Financial Guaranty Bond and the income received from the investment of monies deposited in the funds and accounts established by or pursuant to the Indenture as provided in the Indenture . The faith and credit of the City are not pledged to the payment of such principal , interest and premium . Section 6 . The Series 1990 Bonds are to be executed and delivered as provided in the Indenture . Section 7 . The Trust Indenture , dated as of October 15 , 1990 , by and between the Trustee named therein and the City ( the " Indenture" ) , securing the Bonds and containing certain terms , covenants and conditions with respect to the bonds , is hereby approved in substantially the form presented to the Board for its consideration and the Mayor and the City Clerk of the City are hereby authorized and directed to execute and deliver and to affix the seal of the City to the Indenture in the name of and on behalf of the City . Any changes to the Indenture which are not material may be approved by such officers of the City executing the Indenture , their execution and delivery of the Indenture to constitute conclusive evidence of such approval . 5 EtBER 1389PAGE 096 Section 8 . The Financial Guaranty Bond and the offer of Capital Guaranty to issue the Financial Guaranty Bond are hereby approved in substantially the forms presented to the Board for its consideration and an appropriate officer of the City is hereby authorized to accept such offer on behalf of the City . Section 9 . The Bond Purchase Agreement , constituting the offer of the Purchaser to purchase the Series 1990 Bonds at a price of $ 32 , 576 , 545 plus accrued interest from October 15 , 1990 to the date of delivery thereof and with such rates of interest and other terms as are set forth in this ordinance , is hereby approved and the Mayor and the City Clerk of the City are hereby authorized and directed to execute and deliver and to affix the seal of the City to the Bond Purchase Agreement in the name of and on behalf of the City . Section 10 . The Official Statement is hereby approved in substantially the form presented to the Board for its consideration and the Mayor of the City is hereby authorized and directed to execute , deliver and permit the distribution of the Official Statement with such changes as he deems advisable in the name of and on behalf of the City , his execution and delivery of the Official Statement to constitute conclusive evidence of his approval of any such changes . The City hereby consents to the use by the Purchaser of the Preliminary Official Statement . Section 11 . McIlroy Bank & Trust , in the City of Fayetteville , Arkansas , is hereby designated as the Trustee for the purposes and within the meaning of the Indenture and McIlroy Bank & Trust in the City of Fayetteville , Arkansas , is hereby designated as the Bond Registrar for the Series 1990 Bonds for the purposes and within the meaning of the Indenture . Section 12 . All actions heretofore taken by the officers , agents and employees of the City in connection with the authorization and issuance of the Series 1990 Bonds are hereby approved , ratified and confirmed . The officers , agents and employees of the City and the officers and agents of the Trustee and the Bond Registrar are hereby authorized and directed to execute such documents and to do all other acts and things required of them by the provisions of the Series 1990 Bonds , the Indenture , the Financial Guaranty Bond , the Bond Purchase Agreement and this ordinance for the full , punctual and complete performance of the terms , covenants , provisions and agreements therein . Section 13 . The Board hereby determines that the City is in dire need of additional capital funds in order to provide essential capital improvements ; that an appropriate way to provide such funds is by the issuance of the Series 1990 Bonds as authorized by such Ordinance 3480 and this ordinance ; and that 6 LIBER 1389PAGE097 this ordinance shall be given immediate effect so that the essential capital improvements described in Appendix A hereto may be effected as soon as possible . Therefore , an emergency is hereby declared to exist and this ordinance , being necessary for the immediate preservation of the public health , safety and welfare , shall be in full force and effect and after its passage and approval . PASSED AND APPROVED this 11th day of GPptPmhPr 1990 . APPROVED : By : Mayor ATTEST : By : City C rc 1 V9 , P• A 7 •. 11111 \ 11 \ • • • , Lim,, 1389PAGE 098 7 Appendix A The proceeds of the Series 1990 Bonds are to be applied to pay a part of the cost of the Improvements as follows : ( i ) constructing , reconstructing and improving City streets and bridges - - $ 10 , 717 , 000 ( ii ) acquiring , constructing and equipping water transmission and distribution facilities - - $ 9 , 988 , 288 ; ( iii ) acquiring , constructing and reconstructing drainage improvements - - $ 1 , 542 , 000 ; ( iv ) acquiring , constructing and equipping solid waste collection , disposal , compacting and recycling facilities - - $ 1 , 025 , 000 ; ( v ) acquiring , constructing and equipping public parks and playgrounds - - $ 487 , 000 ; ( vi ) acquiring , constructing and equipping police equipment , apparatus and facilities - - $ 185 , 000 ; ( vii ) acquiring , constructing and equipping firefighting vehicles , equipment , apparatus and facilities - - $ 1 , 475 , 000 ; ( viii ) acquiring , constructing , and equipping emergency medical service vehicles , equipment and facilities - - $ 60 , 000 ; ( ix ) expanding and renovating the City Youth Center swimming pool and related facilities - - $ 867 , 500 ; ( x ) acquiring , constructing and equipping parking facilities for the Dickson Street area $ 1 , 750 , 000 ; and ( xi ) acquiring , constructing and equipping City maintenance and storage facilities and building- - $500 , 000 . upiF1389N,,GEQ99 8 t. Alma Koflmeyer, Circuit Clerk and rx'offlclo (.:corder for Washington Coun b Ar esas, do hereby certify that this 10-or nt res f:!od for record in my aH � CB Indicated hereooffice n and ;t,e someis duly recorded with the is n and certlri a'Snc�^' Iedgement wtc thereon :n Record Book and page as indlceled thereon. ft got mY hood end rfL�ECF' I hehereunto affixed the seal of said Court on the dere Indicorod hereon, Alma Ko!Inyyar Qrcu" Clerk and Fnofflclo Kecare3r by CER'1<'MCATE OF RECON State of Arkansas City of Fayetteville ( SS L Sherry Thomas, City Clerk and Es- Fayetteville recorderlo do hereby cerhtlfy that tine annexed or foregoing is of record in my office and the same appears in Ordinance & Resolution book XX at page 93 imine ss y 6`an 1*1and seal day of fY Ctcrb. e, 1 °ter e 10200a1 Novas 1024,e;al Notices 1024A94 Notion 102199 NoUM ORD I NANCE NO. 3506 reason o1 Nonpaymer" (as moneys that may Abe avail- authorized and direct to AN ORDINANCE OF THE each such term Is defined in able for such purpose, upm execute and deliver and to BOARD . OF DIRECTORS the Financial Guaranty notice as provided In Article ;aHixIlthe met Of the City to I dc OF THE CITY OF FAYET- Bond) ; and lfl of the )nnture, aither in YPe Bontl Purchase Agree- , STATE of ARKANSAS 1 TEVILLE , ARKANSAS, WHEREAS, the Pur. Whole or in part, In inverse ment in the name of and on as. PROVIDING PROVIDING FOR THE IS- chaser has submitted to the order of maturity (and by lot behalf of the City. SUANCE AND CERTAIN City a Bond Purchase within anymatllrlty) on any Section 10. The Official County of Washington DETAILS OF $33,019;000 Agreement , dated date not earlier than Statement is hereby approv- SALES AND USE TAX September 13, 1990, pro- November 15,. 2000. at the ed in Substantially the form CAPITAL IMPROVEMENT viding for the purchase of redemption prices (express- presented to the Board for BONDS. SERIES 1990 OF the Series 19M Bonds by the ad as percentages of the Its consideration and the I, hereby certify that I THE CITY OF FAYET- Purchaser (the "Bond Pur- principal amount - of the Mavoraf-theCity Whereby am the publisher of fENORTHWEST ARKA AS TIMES, a daily newspaper TEVILLE . ARKANSAS, chase Agreement") - and Series 1990 Bonds or portions authorized and directed to AUTHORIZING THE EX- WHEREAS, a final Of. thereof to be redeemed as of execute, tleliver and permit having a second class mailing privilege, and b#Ing not less than four pages of EC U T -1 O N A N D ficial Statement, dated the date of such redemp. the distrit utlon of the Of. five columns each, published at a fixed place of business and at a fixed (daily) DELIVERY OF A TRUST September 13, 1990 (the "Of- tionj, together with accrued ficial Statement with such Intervals continuously y y y g y INDENTURE SECURING ficial Statement'), has been Interest to the redemption changes as he deems adviS- y in the Cit Of Fayetteville. County of Washington. Arkansas SUCH BONDS , PRO . prepared and Is to be date, as follows: able In the name of and on for more than a period of twelve months, circulated and distributed from an V IDING FOR THE SALE distributed In connection Redemption Redemption behalf of the City, his execu- established place of business to subscribers and readers generally of all classes OF SUCH BONDS AND with the sale of the Series Dates ( Both Prices tion and delivery of the Of- CERTAIN OTHER MAT- 1990 Bonds; I a c I u s - i v e ) ficial Statement to can- In the City and County for a definite price for each copy, or a fixed price per T ER. S RELATING NOW, THEREFORE, BE November 15, 2000 to Stitute conclusive evidence annum, which price was fixed at what is considered the value of the publication, THERETO AND DECLAR- IT ORDAINED BY THE November 142001 102% of his approval of any such ING AN EMERGENCY. BOARD OF DIRECTORS November 15, 2001 to Changes. The City hereby based upon the news value and service value it contains, that at least fifty percent WHEREAS, the Board o1 OF THE CITY OF FAYET- November 142002 101 consents to the use by the of the subscribers thereto have paid cash for their subscriptions newspaper tions to thenews a r Directors (the "Board") of TEVILLE, ARKANSAS: November '1S, 2002 and Purchaser of the Prelimi. the City of Fayetteville, Section 1. The Series 1990 thereafter 100 nary official Statement. or Its agents or through recognized news dealers over a period of at least six Arkansas (the "City"), pur- Bonds shall be Issued in the onT The Term Bonds maatsuring 6 Section 11. Mcffroy FBankayet- months; and that the said newspaper publishes an average of more than forty suant to Subchapter 2 of aggregate principal amount also ovemberubject to redemption15, 2are le Trusille, Arkansas, IS hereby percent news matter. Chapter 75 of Title 26 of One of S33,01providing 9,000 for the purpose part by lot on November 15, designated as the Trustee Arkansas Statutes. se Or- of pr avail funds, with any 2003 and each November 15 for the purposes and Within tuber 4, No. duly381; passed Or- other available ands, for I further certify that the legal notice hereto attached In the matter of tli WHEREAS, No. 3387; and (a) paying the Cast Of the thereafter to and Including the meaning M OI the andep- WHEREAS, pursuant to Improvements, re itlof the November 15, o the in Amor- are and Mc l Croy Bank t- such Ordinance No. al S the a e epbsn to the credit of me amount equal q iha r- Trust in the City Is hereby ayet- Board tax a local sates Reservendentut ) and (c) t thtionerefor i Requ irement ant design ted as the IS hereby /f lZ my n ! JI a//l o C O / and use fax a one per can- p the the costs antl (U therefor In the Im Year Set elyout Istrar Sin the the Bond Rap- �) tum (1%) to a maximum of paying the costs of issuing preceding Bond Veer set out Istrar for the Series 1990 Twenty-five Dollars ($25.00) the Series 1990 Bonds. The in Section 2 of this ordinance Bonds for the purposes and was published In the regular dally issue of said news a Z on each single transaction Proceeds of the Series 1990 and the Term Bonds matur. Within the meaning of the p per for and called a special election Bonds are to be allocated to Ing on November 15. 2008 are Indenture. Consecutive Insertions as follows: to be held In the City on paying the Cost Of the IM- also sublect to redemption in Section 12. All actions November 0, 1988 in order to provemenis as described In part by lot on November 15, heretofore taken by the of / submit to the qualified elec. Appendix A to this ordi- 2006 and each November 15 f i c e r s , agents and The first Insertion On the .L day Of ]g tors of the City the question nance. _ thereafter to and Including employees of the City In (/ of levying such tax for a Section 2. The Series 1990 November 15, 2008 In an connection with the ars Bones shall be dated Oc. amount equal to the Amor- authorization and Issuance the second Insertion On the day of 19 period of twenty (20) ye to finance a capital Im-ars }ober 15, 19l and shall can. tization Requirement of the Series 1990 Bonds are provement program and cast of Serial Bonds (as therefor In the Immediately hereby approved, fatliletl the third Insertion On the ( economic development pro- defined in the Indenture) in preceding Bond Year "tout and confirmed. The officers, day Of lg gram (capital facilities) for the principal amount of in Section 2 of this ordi- agents and employees of the the City; and , $17,184,000 maturing on nance, In each case upon City and the officers and and the fourth insertion on the WHEREAS, at such eleC- November 15, In each of the notice as provided In Article agents of the Trustee and the ____,__,.day.,of ] tion held on November 8, years, In the amounts and at I I I of the Indenture, at The Bond Registrar are hereby 1988, a majority of the quali. the Interest rates shown principal amount of each authorized and directed to fled electors of the City below: Bond to be redeemed, execute Such documents and voting thereon approved the Year of Principal Interest together with accrued inter. to do all other acts and levy by the City of such local Maturity Amount Rate est to the date fixed for things required of them by Sworn IO and Subscribed before m On this day of Sales and use tax (the "Sales 1991 S 826,000 6.6O0 redemption , without the provisions of the Series and Use Tax"), and the 1992 11065,000 6y10 premium. 1990 Bonds, the Indenture, Sales and Use Tax hes been 1993 1,130,000 6.20 Section 4. From the pro. the Financial Guaranty 1 19 Q_ levied and collected since 1996 1,205,000 - 6.30 A Coeds of the Series 1990 Bontl, the Bond Purchase December 1, 1988; and 1995 1,280,000 6.40 Bonds, there shall be depos- Agreement and' this ordi- WHEREAS, the Board 1996 1,360,000 6.50 ffea tto' the credit of the nance forthelfull; punctual pursuant to Amendment 62 1997 1,450,000 6.60 Reserve Account estab. and complete performance N0I r Public to the Constitution of the 1998 1,5451000 6.70 lishetl under the Indenture Of the terms, covenants, I State of Arkansas and the 1999 116501000 6.80 an amount equal to the provisions and agreements Local Government Bond Act 2000 1,765,000 6.90 Reserve Account estab- therein. My Commission Expires: of 1985, on April 19, 1990 duly 2001 118901000 7.00 lishetl under the Indenture Section 13. The Board Passed Ordinance No. 3680; 2002 2,020,000 7.05 an amount equal to the hereby determines .that the and � and of Term Bonds (as Reserve Account Deposit City is In dire need of addi- ( y WHEREAS, pursuant to defined in the Indenture) In Requirement (as defined In tional capital funds In order such Ordinance No. 3480, the the principal amount of the Indenture) on account of to provide essential capital Board authorized the IS- $15,635,000 maturing on The Issuance of the Series Improvements; that an ap- suance of not exceeding November 15 in each of the 1990 Bonds and to the credit propriate way to provide $33,019,000 capital iM- years, in the amounts and at of the Construction Fund (as such funds is by the issuance cn�1A -� provemenf bonds of the City the Interest rate set forth defined In . and established of the Series 1990 Bonds as to finance, with any other below: under the Indenture) the authorized by Such Ord)- Fees for Printing _ 5 / W available funds, the aCquisi- Yearof Principal Interest balance of such Proceeds for nance No. 3480 and this or- t I o n , construction , Maturity Amount Rafe paying a part of the Cost of dianance; and that this or- reconstruction, improve- 2005 $6,985,000 7.15% the Improvements and the dinance shell be given im- COSt Of Proof _. 5 ment, renovation, expansion 2008 818501000 7.25 costs of issuing the Series mediate effect Sal that the and equipment of The _ The Amortization Re- 1990 Bonds. essential capital Improve. various capital improve- quirements (as defined In Section 5. The principal of monis described in Appen- T01a1 mems described therein the Indenture) for the Term and Interest and any dix A hereto may be effected (the "Improvements") and Bonds maturing November redemption premium on the as soon as possible . related costs of Issuance, 15, 2005 shall begin In the Bonds anE,all Sinking fund Therefore, an emergency Is With the retirement of such Bond Year ending pa,y ments 'with respect hereby declared to exist and bonds to be secured by a November 14, 2003 and shall thereto required by or pur. this ordinance, being neves- pledge of all of the proceeds beasfoll"S: suant to the Indenture shall nary for the Immediate of the Sales and Use Tax or Bond Year Amortization be payable solely from the preservation of the public Such Portion of Such pro- Ending Requirement Sales and Use Tax Revenues health, Safety and welfare, ceeds as shall be determined November 14 (aSdeflned in the Indenture) shall be In full force and ef- by the City to be adequate to 2003 $2,165.000 pledged therefor but may fect from and after its obtain satisfactory ratings 2004 2,325.000also be paid under certain passage and approval. or Insurance on such bonds, 2005 2,495,000 circumstances from the PASSED AND APPROV- and called a special election The Amortization Require- Proceeds Of the Bonds or the ED this 13th day of to be held in the City on May ments for the Term Bonds Financial Guaranty Bond September, 1990. 29, 19901n order to submit to maturing November 15, 2006 and the Income received William Martin the qualified electors of the Shall begin in the Bond Year from the Investment of Mayor City the questions of issuing ending November 14, 2006 moneys deposited in the ATTEST: such bonds to be so Secured and shall be as follows: funds and accounts estab- Sherry Thomas for each of the Improve- Bond Year Amortization Iished by or pursuant to the .City Clerk ments and In the respective Ending Requirement Indenture as provided in the Appendix A amounts described therein; November 14 lVilture. The faith and The proceeds of the Series ' and 2006 $2,675.000 credit of the City are not '. 1990 Bonds are to be applied WHEREAS, at such elec- 2007 2,870.000 Pledged to the payment of to pay a part of the Cost of tion held on May 29, 1990, a 2008 3,305,000 such principal, interest and the Improvements as majority of the qualified The Series 1990 Bontls Premium. follows: vote•v ot• tM. Clty -votlno shall be issued as fully regis- Section 6. The series 1990 ( I ) constructing , thereon approved the IS- teres Bonds without coupons Bonds are to be executed reconstructing and improv- suance of such bonds and the In the denomination of 55,000 and delivered as provided In Ing City streets and bridges - security therefor pursuant or any whole multiple the Indenture. $10,717,000; to such Ordinance No. 3480; thereof, except that one Section 7. The Trust In. (11) acquiring, construc- and Series 1990 Bond shall be In denture, dated as of October ting and equipping water WHEREAS, the Board has the denomination of $1,000. 15, 1990, by and between the transmission and distribu- determined to proceed at Interest on the series 1990 Trustee named therein and tion facilities - $9,932,288; this time with the sale and Bonds shall be payable on the City (the "Indenture"), (iii) acquiring, con5truc- issuance of all of such bonds May 15, 1991 and semiannu- securing the Bonds and con- ting and reconstructing In one series, to be deslg- ally thereafter on each May taining certain terms, cove. drainage Improvements - nated "Sales and Use Tax 15 and November 15 (each nants and conditions with $1,542,000; Capital Improvement an " Interest Payment respect to The Bonds, IS (iv) acquiring, construe- Bonds, Series 1990" (the Date"). Principal of the hereby approved In Substan- ting and equipping solid "Series 1990 Bonds"), for Series 1990 Bonds shall be Bally the form presented to waste collection, disposal, the purpose of paying a part payable only upon presenia- the Board for its considera. compacting and recycling of the Cost (as such term is tion and surrender of such tion and the Mayor and the facilities - 51,025,000; defined In the Indenture Bontls at the principal cor- City Clerk of the City are (v) acquiring, construc- hereinafferdescribed) ofthe porate trust office of hereby authorized and ting and equipping public Improvements and to pro. Mcilroy Banka Trust, in the directed to execute and parks and playgrounds - vide for the issuance of one City of Fayetteville, Arkan. deliver and to affix the seal $487,000; or more additional series for sas, as bond registrar, M the City to The Indenture (Vi) acquiring, construc- the purpose of refunding the transfer agent and paying in the name of and on behalf ting and equipping police bons of any series Issued agent (the "Bond Regis- of the City. Any changes to equipment, apparatus and under the Indenture (the trar"). Interest on the Series the Indenture which are not facilities - 5185,00; Series 1990 Bonds and all 1990 Bonds shall be paid by material may be approved (vii) acquiring, construc. such additional bends being Check or draft mailed by the by such officers of the City ting and equipping collectively called the Bond Registrar to the regis- executing the Indenture, firefighting vehicles, "BopndS"); and tered owners of the Series their execution and delivery equipment, apparatus and WHEREAS, the Board 1990 Bonds as shown on the of the Indenture to constitute facilities - 31,475,000; desire& in this ordinance to registration books kept by conclusive evidence of Such (viii) acquiring, construc provide for the issuance of the Bond Registrar on the approval. ting and equipping . the Series 1990 Bonds and to Regular Record Date or the Section 8. The Financial emergency medical Service set forth certain terms, Special Record Date (as Guaranty Bond and the offer vehicles, equipment and fa. covenants and conditions each such term Is defined in u7 Capital Guaranty to Issue cilities - 360,000; with respect thereto; and the Indenture) ; provided,.the Financial Guaranty ( ix ) expanding and WHEREAS, the City Is however, that upon the re- Bond are hereby approved renovating the City Youth authorized to enter Into the quest of the registered In substantially the forms Center swimming pool and Indenture for the purpose of owner of $1,000,000 or more presented to the Board for related facilities - 5867,500; setting forth certain terms, In principal, amount of the Its consideration and an ap. (x) acquiring, construc- ' covenants and conditions Series 1990 Bonds, Such In. propriate officer of the City ting and equipping parking with respect to the Bonds; forest shall be paid by wire is hereby authorized to ac- facilities for the Dickson and transfer of funds to a bank cePt Such offer on behalf of Street area $1,750,000; and WHEREAS, the City has account designated by such the City. (xi) acquiring, construe- made arrangements for the registered owner. Section 9. The Bond Pur- ting and equipping City sale of the Series 1990 Bonds Section 3. The Series 1990 chase Agreement, con- maintenance and storage to the Llama Company, Of Bonds maturing on or before stituting the offer of the facilities and buildings Fayetteville, Arkansas (the November 75, 2000 are not Purchaser to purchase the 3500,000. "Purchaser"), and In con- subject to redemption prior Series 1990 Bonds ata price - neetlon therewith has to their respective of 332,576,549 Plus accrued prepared and distributed a maturities. The Series 1990 interest from October 75, Preliminary. Official State- Bonds of the time outsfan- 1990 to the date of tlelivery ment„ dated September 7, ding which mature after thereof and with such rates 7990 (the "Preliminary Of- November 15, 2000 may be of interest and other terms ficial Statement") ; and redeemed prior to their as are set forth in this ordi- WHEREAS, the City has respective maturities, at the nance, Is hereby approved received from Capital option of the City, from env and the Mayor. and the City Guaranty Insurance Com- _ Clerk of the City are hereby ' pany, a Maryland corpora. I �_ tion ("Capital Guaranty"), an offer to issue a Financial Guaranty Bond (the "Fi- nancial Guaranty Bond") which provides for the pay. Ment of the principal of and the Interest on the Series 1990 Bonds when Due for Payment which is unpaid by .ZM C417' / mei %Aids Series /990 October 18, 1990 CITY OF FAYETTEVILLE, ARKANSAS $33,019,000 Sales and Use Tax Capital Improvement Bonds Series 1990 Dated October 15, 1990 LIST OF DOCUMENTS The following is a list of the documents incidental to the authorization and issuance of the above -mentioned bonds (the "Series 1990 Bonds"). Transcripts of such documents are being provided to the following: 4 - City of Fayetteville, Arkansas (the "City") 1 - Llama Company, as the underwriter of the Series 1990 Bonds (the "Underwriter") 1 - Rose Law Firm ("Underwriter's Counsel") 1 - Mcllroy Bank & Trust, as trustee (the "Trustee") and bond registrar (the "Bond Registrar") 2 - Capital Guaranty Insurance Company ("Capital Guaranty") 1 - Brown & Wood ("Bond Counsel") Authorization Documents 1. Certificate of City as to Ordinance No. 3381, including: (a) a copy of Ordinance No. 3381, (b) a copy of an excerpt from the minutes of a special meeting of the Board of Directors of the City (the "Board of Directors") held on October 4, 1988 evidencing its consideration and passage of } Ordinance No. 3381, (c) a copy of a publisher's affidavit evidencing the publication of Ordinance No. 3381 in The Northwest Arkansas Times on October 15, 1988, (d) a copy of the ballot for the general election held on November 18, 1988 on the questions therein, including the questions proposed by Ordinance 3381, r;z (e) a copy of a publisher's affidavit evidencing the publication of the proclamation of results of the i°`a November 8, 1988 election by the Mayor of the City in The Northwest Arkansas Times on November 22, • 1988. 2. Copy of Certificate of Washington County Election Commission as to the results of the November 8, 1988 election. 3. Certificate of City as to Ordinance No. 3480, including: (a) a copy of Ordinance No. 3480, (b) a copy of an excerpt from the minutes of a regular meeting of the Board of Directors held on April 17, 1990 evidencing its consideration and passage of Ordinance No. 3480, (c) a copy of a publisher's affidavit evidencing the publication of Ordinance No. 3480 in The Northwest Arkansas Times on May 8, 1990, (d) a copy of a publisher's affidavit evidencing the publication of a notice of election concerning Ordinance No. 3480 in The Northwest Arkansas Times on May 18, 1990, (e) a copy of the ballot for the special election held on May 29, 1990 on the questions proposed by Ordinance 3480, (f) a copy of the proclamation of results of the May 29, 1990 election by the Mayor of the City and (g) a copy of a publisher's affidavit evidencing the publication of the proclamation of results of the May 29, 1990 election by the Mayor of the City in The Northwest Arkansas Times on June 10, 1990. 4. Copy of Certificate of Washington County Election Commission as to the results of the May 29, 1990 election. F 5. Certificate of City as to Ordinance No. 3506, including: (a) a copy of Ordinance No. 3506, (b) a copy of an excerpt from the minutes of a special meeting of the Board of Directors held on i• September 1:i, 1990 evidencing its consideration and passage of Ordinance No. 3506 and 2 (c) a copy of a publisher's affidavit evidencing the publication of Ordinance No. 3506 in The Northwest Arkansas Times on September 16, 1990 6. Executed copy of Trust Indenture, dated as of October 15, 1990, between the City and the Trustee. { Sale Documents 7. Preliminary Official Statement, dated September 7, 1990, relating to the Series 1990 Bonds. 8. Official Statement, dated September 13, 1990 and signed by the Mayor of the City, relating to the Series 1990 Bonds. 9. Executed copy of the Bond Purchase Agreement, dated September 13, 1990, between the City and the Underwriter. 10. Blue Sky Memorandum. 11. Legal Investment Survey. Closing Certificates and Documents 12. Specimen Series 1990 Bond. 13. Officers and Seal Certificate of the City. 14. Signature and No -Litigation Certificate of the City. 15. Certificate as to Arbitrage. 16. Certificate of the Mayor of the City Pursuant to Section 3(d)(4) of the Bond Purchase Agreement. 17. Certificate of Trustee and Bond Registrar. 18. Certificate of Delivery and Payment. 19. Underwriter's Receipt for the Series 1990 Bonds. 20. Letter of Standard & Poor's Corporation confirming its rating for the Series 1990 Bonds. 21. Letter of Moody's Investors Service confirming its rating for the Series 1990 Bonds. 3 Opinions 22. Opinion of General Counsel to Capital Guaranty Insurance Company pursuant to Section 3(d)(3) and Exhibit B of the Bond Purchase Agreement. 23. Opinion of Jerry Rose, Esq., City Attorney, pursuant to Section 3(d)(3) and Exhibit C of the Bond Purchase Agreement. 24. Opinion of Friday, Eldredge & Clark, counsel to the Trustee. 25. Opinion of Brown & Wood, Bond Counsel, pursuant to Section 3(d)(3) and Exhibit D of the Bond Purchase Agreement. 26. Opinion of Brown & Wood, Bond Counsel, approving the Series 1990 Bonds, and related reliance letter. 27. Opinion of Rose Law Firm, Underwriter's Counsel. Capital Guaranty Documents 28. Copy of Capital Guaranty's Financial Guaranty Bond. 29. Certificate of Capital Guaranty. 30. Copies of certain documents provided to Capital Guaranty by the City. Miscellaneous 31. Form 8038-G. 32. Certificates of Arkansas Department of Finance and Administration and State Treasurer as to Sales and Use Tax. CERTIFICATE OF CITY AS TO ORDINANCE NO. 3381 We, William V. Martin and Sherry L. Thomas, the Mayor and the City Clerk, respectively of the City of Fayetteville, Arkansas, a duly organized and existing municipality and political subdivision of the State of Arkansas (the "City"), DO HEREBY CERTIFY as follows: { 1. We are the duly elected or appointed, qualified, and acting Mayor and City Clerk of the City and as such officials have in our possession or have access to the official books and corporate records of the City. 2. Attached hereto as Exhibit A is a true, complete, and correct copy of Ordinance No. 3381 (the "Ordinance"), duly passed • by a majority of the Directors of the City, with an emergency clause duly passed by a two-thirds vote of said Directors, at a duly called special meeting of the Board of Directors of the • City, open to the public, held on October 4, 1988. 3. Attached hereto as Exhibit B is a true, complete and correct copy of an excerpt from the minutes of said meeting held on October 4, 1988, evidencing the passage of the Ordinance, as said minutes appear in the official records of the City; at said • meeting a quorum was present and acted throughout; and the Ordinance is in full force and effect and has not been altered, amended, or repealed as of the date hereof. No petition to refer the Ordinance to the people under Amendment 7 to the Constitution • of the State of Arkansas has been filed as of the date hereof and the Board of Directors of the City has not referred the Ordinance to the people for adoption or rejection. 4. Attached hereto as Exhibit C is a true, complete, and correct copy of a publisher's affidavit evidencing publication of the Ordinance in The Northwest Arkansas Times on October 15, 1988. 5. The meeting referred to in paragraph 2 hereof was open to the public in compliance with the provisions of Section 25- 19-106 of the Arkansas Statutes Annotated, as amended and supplemented. P 6. The Board of Directors of the City had not adopted any by-laws or rules of procedure relating to said meeting. 7. As of a date prior to said meeting, the time for filing a referendum petition in the City has been fixed at 31 days after the publication of local measures passed by the Board of Directors of the City. 8. Attached hereto as Exhibit D is a true, complete and correct copy of the ballot utilized in the election concerning the Ordinance held on November 8, 1988. 9. Attached hereto as Exhibit E is a true, complete and correct copy of a proclamation of the Mayor of the City declaring the results of said election and proof of publication of said proclamation in The Northwest Arkansas Times on November 22, 1988. WITNESS our hands as of the 18th day of Octob r 1990. yor C y Clerk F Exhibit A FILED FCP. RECORD 88 0CT 19 Pfd 2 28 WASHING; iN CO AR (r = ORDINANCE NO. 3381 A.KOLLMEYER >y AN ORDINANCE LEVYING A LOCAL SALES (GROSS RECEIPTS) AND USE TAX; CALLING AND SETTING A DATE FOR A SPECIAL ELECTION TO REFER SAID LEVY MKRO TO A VOTE OF THE PEOPLE; AND DECLARING AN EMERGENCY. BE IT ORDAINED BY THE BOARD OF DIRECTORS OF THE CITY OF FAYET1EVILLE, ARKANSAS: Section 1. (a) Subject to the limitation prescribed by paragraph (b) of this section, there is hereby levied a local sales (gross receipts) tax at the rate of one percent (19) on the receipts of the sale at retail within the City of Fayetteville, Arkansas, of all items which are subject to taxation under the Arkansas Gross Receipts Tax Act of 1941, Act 386 of the 1941 Acts of Arkansas, as said Act has been heretofore or may be hereinafter amended; and that there is hereby imposed an excise tax on the storage, use, or other consumption within the City of tangible personal property purchased, leased, or rented from any retailer from outside the state for storage, use, or other consumption in the City at a rate of one percent (1%) of the sale price of the property or, in the case of leases or rentals, of said lease or rental price, which tax shall be collected according to the terms, procedures and regulations of the Arkansas Compensating Tax Act of • 1949, Act 487 of the 1949 Acts of Arkansas, as said Act has been • heretofore or may hereinafter be amended. (b) The aforesaid sales and use tax shall be levied and collected only to a maximum tax of $25.00 on each single trans- action, and vendors shall be responsible for collecting and remitting the tax only to the maximum of $25.00 for each single transaction. Vendors collecting, reporting, and remitting said taxes shall show said taxes as a separate entry on the tax report form filed with the Commissioner of Revenues. (c) The term "single transaction" shall be defined according to the nature of the goods purchased, as follows: (1) When two or more devices in which, upon which, or by which any person or property is, or may be, transported or drawn, including but not limited to on -road vehicles, off - road vehicles, or farm vehicles, whether required to be licensed or not, airplanes, water vessels, motor vehicles, or non -motorized vehicles, or mobile homes, are sold by a seller, each individual unit, whether part of a "fleet" sale or not, shall be considered a single transaction. (2) Charges for utility services which are furnished on a continuous service basis, whether paid daily, weekly, monthly or annually, shall be computed in daily increments, and each such daily charge increment shall be considered to be a single transaction. The total amount of the city sales -c and use tax for each billing cycle may be computed as the lesser of either one percent (1%) of the total charge for the billing cycle, or $25.00 multiplied by the number of days in the billing cycle. (3) For sales of building materials and supplies to contractors, builders, or other persons, a single transaction shall be considered to be any single sale made on a single day which is reflected on a single invoice or receipt on which an aggregate sales or use tax figure has been reported • and remitted to the State. (4) when two or more items of major household applian- ces, commercial appliances, major equipment or machinery are • sold, each individual unit shall be considered to be a single transaction. The total amount of the City sales and use tax LIa(i. 1281?,cc852 -2- �q fdue may be computed as the lesser of either one percent (1) $25.00 multiplied by of the total amount of the invoice, or units listed on the invoice. the number of individual (5) For groceries, drugs, dry goods and other tangible expressly personal property and/or services not otherwise shall be deemed to be covered hereby, a single transaction a single day which is reflected esona any single sale on tax ggr9 e invoice or receipt on which an aggregate single figure has been reported or remitted to the State. Section 2. A special election be, and the same is hereby 8th day of November, 1988, at called to be held in the City on the be submitted to the electors of the City which election there will the questions of (a) levying a local sales and use tax at the rate improvement revenue of one percent (1%), and (b) issuing capital of a portion of the City's 1% local bonds secured by a pledge sales and use tax, if approved, to finance the acquisition, educational facili- construction, reconstruction and equipping of Fayetteville School District. ties for the on3. The questions shall on the ballot ngform following for theelectionin substantially the FOR adoption of a 1% local sales and use tax levied and collected withinibe maximum of$25.00oneachsingle transaction a for a period of 20 years. --- AGAINST adoption of a 1% local sales and use tax levied c within the Cetransact mion maximuof$25.00 on eachsingl a for a period of 20 years. ---- Collection of the 1% local sales and use tax will not City's existing 1% commence until collection of the use tax shall have ceased. It is local sales and proposed that proceeds from the tax be used to finance a and development capital improvement teconomic program (capital facilities) for the City. FOR the issuance of revenue bonds secured by a pledge City's 1% local sales and use of a portion of the if approved, to finance the acquisition, tax, construction, reconstruction and equipping of facilities for the $10,000,000.00 in educational Fayetteville School District. AGAINST the issuance of revenue bonds secured by a pledge City's 1% local sales and use of a portion of the if approved, to finance the acquisition, tax, construction, reconstruction and equipping of facilities for the $10,000,000.00 to educational Fayetteville School District. Section. The election shall be held and conducted and declared under the law and in the the vote cast and the results for municipal elections, so far as the same may be have the manner provided applicable. Only qualified electors of the City shall right to vote at the election. Section 5. The results of the election shall be pro- Proclamation shall be published claimed by the Mayor. The Mayor's having general circulation in the :.s one (1) time in a newspaper • City. -3- Section 6. A copy of this ordinance shall be furnished to the Washington County Board of Election Commissioners so that the necessary election officials and supplies may be provided. Section 7. In the event a majority of the qualified electors voting on the question vote for the adoption of a one percent (1%) local sales and use tax within the City, said tax shall become effective, enforceable, and collectible on the date collection of the City's existing 1% local sales and use tax ceases. Section 8. The Board of Directors hereby determines that the City of Fayetteville is in dire need of additional capital improvements; that an appropriate way to provide funds for such improvements is by the levying of a sales and use tax on the gross receipts from businesses within the City; and, that this ordinance needs to be given effect at the earliest possible date so that essential capital improvements may be constructed as soon as possible. Therefore, an emergency is hereby declared to exist and this ordinance being necessary for the public health, safety and welfare shall be in full force and effect from and after its passage and approval. 0ctaher 1988. PASSED AND APPROVED this 4hh day of APPROVED ATTEST 111[d291.P,6E 854 s Exhibit B 313 44INUTE5 OF A SPfCIAL MEETING OF THE CITY BOARD OF DIRECTORS The special meeting of the City Board of Directors which was begun on Monday, October 3, 1988 was reconvened on Tuesday, October 4, 1988, in Room 326 of the City Administration Building at 113 West Mountain Street. PRESENT: Mayor Johnson; Directors Lancaster, Martin, Kelley, Marinoni, Hess and Bumpass; City Manager Pennington, City Attorney McCord, City Clerk McWethy, members of the staff, press and audience. CALL TO ORDER The meeting was called to order by the Mayor at 8:15 a.m. with seven Directors 313.1 present. SALES TAX ORDINANCE Director Martin asked if the staff had any new thoughts regarding the termination had 313.2 or non -termination of the sales tax. City Manager Pennington said the staff assumed everyone knew it would be a continuing tax for a number of reasons. He be continuing said a twenty-year bond issue was involved. He said there would in five-year time period. infrastructure problems which will not be solved a Martin expressed concern that, when the proposed projects are completed and the 313.3 sales tax "rolls off", there would be uncertainty about what's going to happen. He asked if the sales tax was envisioned as always being earmarked for capital items and, if so, why not have an infrastructure trust fund. City Manager Pennington said the ordinance was written to earmark the funds for 313.4 infrastructure -type needs. City Attorney McCord noted the explanatory paragraph under the ballot question in Section 3 states "It is proposed that proceeds from the tax be used to finance a capital improvement program and economic development program for the City." Martin pointed out that, assuming the tax is not being used to pay down a bond 313.5 issue, a future City Board could always rescind the tax. Bumpass said he was reluctant to pass an ordinance for a permanent sales tax, 313.6 commenting that he was shocked this was being proposed. He suggested an alternative ordinance that would set a total amount of money for certain projects. Regarding the school issue, he said he had problems with mixing city revenues and school revenues, and suggested this question of giving $10 million to the schools be submitted to the voters to decide, rather than including it as part of the overall sales tax package. I 14 October 4, 1988 4.1 Martin said he liked Bumpass' idea of two questions on the ballot - one asking the voters whether to continue the sales tax, and a second question asking the voters whether $10 million should be used for the schools. 14.2 City Manager Pennington suggested the Board approve a mandated five-year capital improvement plan. Martin said a problem he had with the open-ended nature of the tax is that we don't really know what is in the future. Pennington said he was wholeheartedly in favor of a continuing tax, but admitted the drawback is whether philosophies will be carried through by future boards and future staff. 14.3 HcCord said, if the Board didn't want a continuing tax, the ordinance could be worded for twenty years or whatever period of time is desired. Bumpass asked how many years it would take to pay off a $46 million bond issue. Linebaugh said he estimated a $49 million bond issue, netting around $42 million, would take twenty years to pay off and would mean an average collection of $4.6 million per year. 14.4 Director Bumpass asked if the bond issue could have a fixed amount of dollars. Pennington said the capital improvement plan is not totally contingent upon bond issues, but some projects will be paid for straight from sales tax. He said, if the Board wants to set a limitation, the twenty-year limit would be best. McCord pointed out that, under Arkansas law, specific bond issues would still have to be submitted to voters. 14.5 Bumpass said if revenues increase over what is projected, he wondered what would be done with the extra money, if there is any. Pennington said the ordinance is worded such that the funds would have to be used for capital improvements and economic development. Bumpass asked if salaries could be paid out of economic development funds. Pennington said the proposal is not for sales tax to be used for operating expenses, but they may be used for engineering or architectural costs of a capital project. Director Kelley asked how any excess revenues would be allocated. Pennington said these would be allocated by the City Board and pointed out that every year the Board would go through this same process. 14.6 HcCord advised the ordinance could be amended to reflect the fact that proceeds from the tax would be used to finance capital facilities only, for example, and the phrase "for a period of twenty years" could be added to the ballot question if the Board desired. 14.7 Martin moved that the ordinance be amended to include a twenty-year termination period. The motion was seconded by Marinoni. The Mayor asked if the amendment included adding language to the ordinance such as "economic development capital improvement program", and the choice of the ordinance which included school funding. Martin agreed. X14.8 The Mayor asked the Clerk to call the roll so the record would reflect who was present. The roll was called and all seven directors were present. 114.9 Director Bumpass asked if $10 million school funding should be a separate ballot issue under Section 3 of the ordinance. McCord said he understood the staff was recommending that question be voted on next year, along with other bond issues. 315 October 4, 1988 The Mayor said that question could be placed on the November 8 ballot. Bumpass 315.1 expressed his preference for the question to be placed on the November 8 ballot. Marinoni spoke in favor of the twenty-year limitation, and allowing voters to 315.2 vote for sales tax separately from voting for school funding. The Mayor asked the City Attorney to read the ordinance including school funding. 315.3 With the City Clerk advising there had been no vote on the motion, the Mayor asked the City Attorney instead to redraft the ordinance to reflect the intent of the motion. The City Attorney explained the ordinance could be changed as follows: At the 315.4 end of the "For" paragraph and at the end of the "Against" paragraph in the ballot question the phrase "for a period of twenty years" would be added. In the explanatory paragraph, after the phrase "economic development program" the wording "(capital facilities)" would be inserted. He asked the Board if they wished to add a second ballot question to the ordinance - "For or Against the issuance of $10 million in bonds secured by a pledge of local sales tax revenues, to finance the construction or reconstruction of educational facilities." The City Manager pointed out that $10 million in bonds would not give the schools $10 million. Linebaugh said it would only net approximately $8 million which could actually be used. Bumpass suggested the question be worded to reflect "the financing of $10 million in capital improvements to the Fayetteville Public Schools to be financed with a bond issue." Martin clarified that the intent of his motion was that the ordinance would 315.5 provide that sales tax funds could be used to construct educational facilities, that the tax be limited to twenty years, and to provide that the economic development program be for capital items only. He said there would be a second question in the ordinance for the citizens to vote on the school issue. McCord read proposed wording for the second ballot question: "For or against the 315.6 issuance of revenue bonds secured by a pledge of a portion of the City's 1% local sales and use tax, if approved, to finance the construction or reconstruction of $10 million in educational facilities for the Fayetteville School District." McCord suggested striking the reference to the Fayetteville School District in the first ballot question's explanatory paragraph. It was the consensus that the ordinance should be so amended as recommended by the City Attorney. The City Attorney read the ordinance for the first time. Director Martin, 315.7 seconded by Bumpass, moved to suspend the rules and place the ordinance on its second reading. Mayor Johnson asked if Section 7 of the ordinance needed to be changed because it 315.8 states the tax shall become effective on the first day of the first month subsequent to the expiration of 30 days from the date of the proclamation of the results of the election. The City Attorney said that paragraph should be deleted because the tax should become effective when the current tax expires. 31F3 October 4, 1988 6.1 Hess asked if the ballot question on the school issue would have to be subject to a vote a second time. McCord said that would be subject to a decision by bond counsel. Hess said he felt if he voted for the ordinance as worded it wouldn't show that he is in favor of funding the schools. Martin said he thought the ordinance would clarify the sales tax issue for the citizens. Hess said the ordinance takes the Board "out of the posture of having to support school funding." The Mayor said she thought the option was still available, since the ordinance puts the question on the ballot. 6.2 Upon roll call, the motion to place the ordinance on its second reading passed by a vote of 7-0. The City Attorney read the ordinance for the second time. Director Bumpass, seconded by Martin, made a motion to further suspend the rules and place the ordinance on its third and final reading. 6.3 A citizen in the audience asked if there would be any public discussion. The Mayor stated she had not intended to take public comment. 6.4 The Mayor asked the City Attorney if a motion was necessary to delete Section 7. The City Attorney advised a motion would be in order to modify Section 7 to be consistent with the ballot question. It was moved by Bumpass and seconded by Martin to modify Section 7 as recommended by the City Attorney. Upon roll call, the motion passed, 7-0. 6.5 Upon roll call, the motion to place the ordinance on its third reading was passed, 7-0. The City Attorney read the ordinance for the third time. 6.6 Director Martin suggested that those who were not present in the audience yesterday and who have a brief statement to make be given an opportunity to speak. The Mayor asked if anyone had a brief statement to make. 6.7 Gordon Cummings said he thought it was a healthy new development for the Board to be putting a heavy emphasis on public elections. He said he thought it was quite inappropriate to be placing a tax increase on the ballot thirty days before an election. He said he didn't believe citizens would have time to clearly • understand the ordinance and have a public debate on the issues. He said there will be at least one, and perhaps three, new members of the Board and he believed the new Board should take a look at the capital improvements to determine that they are necessary. He said he believed a majority of them were totally unnecessary. He said he believed the street improvements were necessary but pointed out that, if $46 million in bonds are issued at 7%-8% interest, the first year the interest cost will be $3.5 million, and the bond broker, underwriting and attorney fees will run another $1.5 million. He said that $5 million in the first year could almost pay for all the street improvements the city needs. Cummings said he thought there ought to be a one-year moratorium on tax increases in the community. He said he believed eventually a tax increase may be necessary but thought if it is submitted to voters on such short notice for not cost- effective projects we maybe burning our bridges in the future. Cummings said "when Governor Clinton and President Bush get through with us next year, the citizens of Fayetteville may need that 1% a lot more than the city government." Oh7 October 4, 1988 J Director Martin pointed out that staff, in preparing the program, incorporated 317.1 the input of many citizens during the five-year planning forums. He added that he was comfortable that these were necessary projects. upon roll call, the ordinance passed, 7-0. 317.2 ORDINANCE NO. 3381 APPEARS ON PAGE OF ORDINANCE AND RESOLUTION BOOK ADJOURNMENT The meeting was adjourned at 9:15 a.m. 317.3 Exhibit C 11 A Hu ORDIHAHC. LEVY' flion D.. and In• um• • Call.O to D. Mld In NO A LOCAL SALFw3 N hso, 100 (GRJSS CEIPT31 AND- N1110 amON. waldot AND lt. ' VAX,: ChLLINO A DATE • FORA 01ec1100 Ih0re .Th 06 W°• STATE of ARKANSAS SETTINGyrnkn• SET SPECIAL ELECTION TO 001000 10110. .1.0105's a m. SAID LEVY TO A CITY the go..tlons a 10) I.' Court of Washington ry g 00 �./• REFER t111 �1 0101 lot 00 VOTE OF THE PEOPLE: i�><� AND DECLARING AN all%1. amp ID)lfwIM C.D1101' bonds RIT E RE S 111 0s,omentreven ORDAINED DE IT ORDAINlD IY secured OY • DI.00• a a pot• THE eoA.aD of ola[c• 0001 I• OF 110004I lCF4 ]C-] l7L I, hereby certify that I am thepubllsherof ENORTHWESTARI $SAS TIMES, a daily newspaper TORS OF THE CITY F A Y E T T E V I L L E • w and Use is.. I I�OR having a second class mailing privilege, and being not less than four pages of to lin•nc. to. K°u10I• AR1c AHSA5: 1100. C O n s l r u c t 1 ° °' five columns each, published at a fixed place of business and at a fixed Idaily) sactlon 1. f.1 SuDIM to NMIatlon Drescrle.a by ^iC110n 'n° a9u1pr 1010 InteIntervalsconllnuouYCity yesl in the of Fa Itevllle, County of Washington. Arkansas m. bar•w•w (DI d ml• sec- 100 Ina 04 a ducat Ono fK M ih0 F•r•n•vlll• scn°°1 for more than a period of twelve months, circulated and distributed from an non, mere I. heceor Nr10d • MIN to Ot D" ,10?. I J. TM tueltbns established place of business to subscribers and readers generally of all classes of o s POI'c SMIm •t ten nab a orw p• tOo 101.110.5100000110• pall* 1.0 0 recall" of In the City and County for a definite price for each copy, or a fixed price per tie•) Dn The 11 city to, Ito. .IKt10O In 500010 • within Ina CITY annum, which price was fixed al what is considered the value of the publlcatloo. ,al. at (.tall t"IIY It,. folkwln9 form: 0F1001.v111..ArI'?*o0 01 FOR• based upon the news valueandservice value itcontains, that atleast fifty percent .111I..ti000cn•r. subject• .000000 a a'1% 10001 of the subscribers thereto have paid cash for their subscriptions totDe newspaper 10 t•ufton undal ttM Art An- £05 •na 010 no wean the a, Grp•s Receipts Tax ACTd Clh Is oa MVladim or its agents or through recognized news dealers over a period of at least six g teal. Act S.. a I.. 19.1 T a 11ecl� months: and that the said newspaper publishes an average of more than forty Ac" a Aran • said 0 .acn •IrgM rr•n.• act flat wart n.r.raw• or action 100 a pa(lod.a percent news matter. may be Mr.1—flex .men0' .01 and that Ihe,. 1. 10.1000 0t00ra. t" I further certify that the legal notice hereto attached In the matter of Imposed an.0C10010000 to. AGAINSTr 010. 01oRcar' • .0001100 a ••lK bt•1. too within ten 510(.9•. sUmp1%+1 wrTlltttl tn0 cot - JJIH at. Hf0 "MIDI. p0(spnal ProMTt1' ICIh IS Do 1,0110 at. Ca• IM•d la ImVm d �...CI(— to ( eL If •"^/r+ / W,chlsed. leased. 0< ranted $21.05 on 00011 110010 trans' m froany r•I.IIM Ito.,,out' Kilos for a period a20 / i1°' tn. "•n to.'ttor•fse. 1M,r ca"umptbn In a oI. a 100 1% local was publishIn the regular daily Issue of laId newspaper for . C, ImoCIh ale rat. aOn)"ono p• CDIIMIon .nl lt%) 041110 fat. 00100 04 sale• •"d Use tax will nut no poop eTY or. In Itse Caw commH00 unt11 colI1% to a CIh'a .x"11051 1% lot•1 consecutive Insertions as follows: f' o_!1_ a lo.f0e 01 110101010. a So. II'.. 101M and v10 tax .hall holy The first Insertion on the �•s-day of 19 ler until pelt.. which C.._d. It 1. proposals met ees. tax mall be ta110Ctho a ads from 000 lax 0000' in• 10001*. Ott' alma td. M to INoanca • cool).) lm• the second Insertion on the day of 19 ca.ur•f and C Cop 11or+ a i erepr.r0 .•d ten M .4110 ComWns•r1n9 1c0 020ld .M4ro•en" otoln ico itel lopmanl Dro• TeaA Irom (taoltal IKIIIIIM) for the Third insertion on the day of 19 194 Acts a "%a-- n cts .1 slid Act has 00.0 ner"tofora O CIM1. FOR �_ F and the fourth insertion on the da 19 or mar h•raln%9taf Oa tlfe secured by a P1009e of lot The aforesaid Leis 0. pod ion of ten City's 1% ' a. Dori and Ufa I.. shall tO 10v1•d • Us 000100100 only b 11Mx• .00051000. In 1MK1 Tiw K• on inctlI.D1onr Imum I.. a 513.001 cenot000tlon. $11rg1. "...sc? ao and 1.M /U lrucllan and .0ulpp• Sworn to and subscribed before me day of don shall w r..P°nsIn0 tot Inge of SI0.000.00e.00 In oCnly " r0m1"xal for ih. 111-lal IKIII/I _r1 ' ,•- l �U-LC-c I• l0 C/ d l 0 too only . ten .•.Imum or Gds too S F.y.tle vI1In Scheel 1125t 0 la each slnpl. W-- 0101,101. Mlon. V.neo00 .m Minn. AGAINST •= ' r raPominO. and nml"Ina c flea d 1.00000001.0000000No l a.rs Nall tt Mg lreh s•lred Ma 04.09.0) b ryPublic en ma alt .•pars" entry an loo nrw ra% revert 1°000 511'° a °ort1on °f ^'• CIty'se. local teas. It lM CemmlYlen. of the K• My Commission Expires: 1 I rlih ap91 061 IS � loom 'sfn91• Ovleltl u�1p ' let TM �i� Ind N.I. na 00110- d 110.000.0f10.0° In• eO Accor01ng to the nature a In0 •t .0.0.010 109 I the plods pvICII001d. . P • t 1511111110 InS l . l S It .I 101100510 '' - Olstrlct. 111 WMn two or ma0 .. 'floe .100110111 devices In nice. Pen tn•�II"1» nail and cond*0110 i which, Dy v00,1015 AM' per- ar10 IM vote cut and ten: tan 00pr00.rry ". 0 may 000)0000 under iM' Fees for Printing -.S a, transported or drew". rMUI" low and II 111010011100011Out not 11.11'0 10 • ahread vehicles. 0N -m" video }or m nlclpal • K 11001*. Cost of Proof — s �/y .van Iln�l' aeeoulred to Der SO ��Ik b OMy .1.0100004 III. ..,s(� ,rt Total _�.�-+-�+• 110M� I loot. allto1✓ 1.1..lhalt have) the 10111 ,Golf.. c10s. or nen•moter1ad vole)- 1 It el.dI r IM a c100. or 100011• hnk4 aarm I _ old by 1 101100. each 11101'1005 sltall be 4O' a It II .10 D ien tNYor• Th. i vi0u.1 (0011. wMin.r w AMyx's Procl•mallal Mall I •"1NM"saleer.uw be pobllalled en. (5)111,1.1.0 conlsld.rfd • $l11no011 � nr • ly+nD•peyieeo1 haN 9e clecvletiTr Cityng M] CharOM for .11110Y es"circulation M S.clbn 4 A cop'! Dl his .0100* whkh sett rnisRc0 - s contlmlw1 10rvlce beN.. I To T a11111rgton County . witler paid dolly. weakly. M malmly or •rnuOnY. 000111 001104 04 115511011 Commis - to elecetoary .De cetP104 In daily Nxry be+(? oM101aM .I • manly Irld each well 0111y IM mdY W P evld.d. b a$15110n • co4tld Illcrinleld .paII 1111 7. in ten .•rant • c,mld.r•d toA be a si1101• llfhd M file Olio . Ifansactidn. The• tetli melerlb amount a ten Cal Sal" and 0tactile, votNg an II1110 d tbh vole for 1M tax for .0011 01111119 eyel., may be comWrld I1• Text •1 sn. Der CSIII ( loeal 1010 and ten la% wlinin iM 1.0000 04 either one p.teMl Pool t (1x1 of the mot chorlRi �.=Ib.. the billig cycle, at' as.0. edays bli Ind mtl a by.day' tolad . lnnhsDUNgrycia. .aM. Mb gmoot. ,...,.I.. a. wawa use tax for .acre o-mv cyt..• may be computed as the lesser of either one percent • (1%) of the total charge for itiV billing cytlerof• 125.00 multiplied by the number of • days M the billing cycle. • (3) For sales of building materials and supplies to , contractors, builders. cc other persons, a single transaction shall be consid- *red to be any single sale made on a single day which is reflected on a single In- voice or receipt on which an aggregate salts or use tax figure has been reported a remitted to the State. (a) When two or more items of malor household appliances: commercial ap- pliances. malor equipment or machinery are sold. each individual unit shall be corn sidered to be a single trans- action. TM total amount of the city sales Ind use tax due may be Computed as the lesser of either on. percent (1%) of the total amount of the Invoice. or $13.00 multiplied by the number of individual units listed on.ttW, Invoice. 'f- (5) For groceries. drugs.' dry goods and other tangible, personal property and/or services not otherwlsa ax pressfy covered hereby, a dregie transaction shall be deemed to be any single sale on a single day which Is. refi*Cted on a single invoice or receipt on which an ag- gregate sales tax figure has been reported or remitted to aVone percent (1%) local sales and use tax within the City, said tax shall become effective, enforceable, and ' collectible on the date col- I faction of Itla City's existing I 1% local sales and use tax 1. Section s.' The Board of Directors hereby dater - mines that the City of Fayef• tevllle is In dire need of addl- tlonal capital Improve- meatsi that an appropriate way to provide funds for such Improvements is by the levying of a sales and use tax on the gross receipts from bu$lnessss• within the City, and, that this ordl- nanca needs to be given ef- fact at the earliest possible date so that essential capital Improvements may be con• structed as soon as possible. Therefore, an emergency Is hereby declared to exist and this ordinance being neces- sary for the public health, safety and welfare shall be in full force and effect from and after Its passage and approval. PASSED AND APPROV- ED this 4th day of DrJobor. •1 191*. APPROVED_ By: Marilyn Johnson Mayor ATTEST. By Suzann McWetiw , _...: City Clerk IT Exhibit D rayenevlll. 3 lAsbolO. P1.Ine SM'. NI!. F.yenerin. l3. ABSENTEE OFF COAL BALLOT GENERAL ELECTION WASHINGTON COUNTY, ARKANSAS November 8, 1988 DOTE BY PLACING AN "X" IN THE SQUARE OP. 'OSITE THE PERSON FOR WHOM YOU WISH TO JOTS. FOR PRESIDENT AND VICE PRESIDENT OF THE UNITED STATES (Vote for One) ..dg. eufh P...... R•pua"•n ❑ )1n Dusyl. Vk.-Ryld.nl Akh.tl S. Duk.Lb PTISid.M O morel O byd M. a.nlaen Vice-PT.1O.Dl 7lra E. tyro. Prnd.m ChrhDan Populist ❑ Ivy! C. P.ra•r Vk•.P,n.d.nl • Md. B. F0t.n1 Pr nld.nl N.. Nb.no. O nyc• DecNw Vk►R.f4.n :.n F. OOdo. R•ud.M PTOMaron O -..de. D. Ormsby Vk. PT.3Id•d Pon P.ul Pr..idoa LIDM.r 4n ❑ Lndn Mirror Vk►Re.ldsre U.S. CONGRESS —THIRD DISTRICT (Vote for One) John Paul Hammerschmidl....... Republican O David Stewart ...................Democrat O STATE SENATE —DISTRICT 6 (Vote for One) 3,11 Myers .....................Republican O :avid R. Malone ..:.............. Democrat ❑ COUNTY JUDGE (Vote for One) lames R. (Jim) Ray.............Republican O Judge Charles Johnson........... Democrat O COUNTY CORONER (Vote for On.) Mike Wlanlewskl ................Republcan O David L Rogers. M.D. ...........Democrat O CIRCUIT CLERK (Unopposed) sJma Kofineyer.................. Democrat O JUSTICE OF THE PEACE —DISTRICT 6 (Vote for One) Rich Haberman ................. Republican O Wilson Kimbrough ................Democrat O CONSTABLE —DISTRICT 6 (Vole for One) Michael Conley .................Republican O .1. C. Hauls.....................Democrat 0 Jote on Amendments and Question by placing en •'X" In the square opposite the Amendments and Ouaslion either FOR or AGAINST. 1001•.40 COnrrnflTO•L OSI SWT I.O. 1 e•r•.•... •» P•..» ti 0.0..5• •.....tT 5..OWT A•5+r.. N•.• n.I 41314100431 rattle COermnOI0 MST•Ttp4•i..OA;CMATTO • C0.4R141dt AOCvn pOP1P3 r1CD3+wTt..0104 rot 04040 f., rn0(0.q ,q M orlas04.r 0, 010.0430,350000.01. p 151000.01, 1POrb•1p 1010%415310 5411•.; tUll(e.O.r; KIWL l4n POMP TO AC, 00.115,1.003 M.•1001vOM3llr<K COUI, .0511. TO MAC n,OC10.VL.AL3A10 M 0[MMl4a50.11T 10040 a O„■Nf14011•rr0M11W4. /d 1 1 510 0—..s5.+1 A«+e............................B .......................... ❑ 4.001/ COnfnTVTask ATR00.f 113 I.0. a F,M5»I I. M hy0 •1 M Ow.T •.1047• n.a 1..•.5,....04 M......,d...,4, Al •. P..e.•.t Cw— 4 •0555.5 - I.......................... .w]r 141.1 C504 *0,O3 . ...................... 41,00.5.bttrtN.OwLL •It.oltwr T1o. f A. •......M -- APti W Y...YM AIOY repose04cIo04M to MMt.A•J,.Aa a05TIMP..1750 n.AT 11.��nrr r.r H,se ror•a.0l.wu01TOILe 111040 41((7 n.O.mK.rnn[S M nr Ww, +a +nndrnuTow p nm.C ..... c....+.. 4...»,.w' Ii ca. ] L7 v...r. a.+.l .....»....:.',.»».. 1055..1.1 �r.w:.�w..,..:..� wO ,quSI�O.D DODOS. +f 1p rwPO. Trp. 311`+0 vu Mlu } llr. u •r Cn. f. COVa�4 a, KM)0 DOIat l S +10 0n. n ,..10 M+tanll r41a5 Wn.p ,r N.1. w rr.0 Sr+11X,00/d •040040.31 •9a[wa♦+]DK N01+K0 IMiaAlxmTOn 1.510[ p w, Bal TOIf n •.• .u. TO •l n e 104 .•H �elty7tir0 IM •rnt�,0a d �w,0.tuplD l5i 1110 Iw 0431G0•µ 31'AOn p Aa, ru Oe t0 0040.•.31 •0410 On aI1LN ur• PepwSM p 51 [nwo •,u:+unavw rM 3151.4.031... Ioalru Io 1w non[•5Tsalt.CuAS •,u,ro+lt[u C.l tConI uTTu.t0 d.w +5r 1.(urtg5, (•C.uS95. CMpT 0, ODUCrO5.n,5 MnCT lO rM •4414510 p w, t••, r0I IT[5D TK .4.104..•13.. d uT fu.Oe r0 >,m.31 •.[10 a ae.w 4.. rwpn3k5 p l.w .[r.•q + t,•, rc5 eu M31M aic (, ovx w r'oa[n eadrw �sn.LX...w.rnw�pp H 0O5]«nL rt... u LaG 1p0bW wM04MO5 MH rrOtlll(Cl10.1Ov1m.0 U TM Yo Wa(M d TM «a�sL.Tn1 x ssa w e..p1 we.. otil wu 5rlMao •wawl u raC°4'..D voiei onr�'.wD ,00'..'.ir av>. i.v 14nN,ow�`woi,Dt'w±er u' ..o esr4luv,.rodpr.. rT. ax sv.o •.loea.telwDw r+"xioa�t».+.(s w.a xc.a>a ;�tta:.i.i iro rp'r•r[ n..a.. dwca. .�. Mw+wl s • rNt[.wnr5a vare p rN .4.Hex.. a i4c1p1.aJ.e p ,M D[Me4 wax.w. rn •Pww4 p M w4• •o oLt,N 1T.re ,D.cMwal .ronen. Gcei 4.«5!31 p rtn [f, C*... M •Ma[.ww 11110104 J44•wr I. rx. 4U.we.a c..5. .1.. 4.5x....... U .045.... w.5. w..:"...w..r...... r.5... 4..cr wnor„tro TN .w 1so.:wo w.nncwuar.roa u+. a134, OrS..lt wuTl p5.03+. 4O 40.1u.p+e+r1-1loll .] Ne4 oMa.ro.lo.na w roT44w..c54 •..p..r ao.lol.uen me.mrm w x.45 rep. rr to Tu[ w 4M.ce4 4310415 101 To u 3115. wn.ouT ,won 4++,54 d M 31045 •ssl.n., m amm w ...rec4 ••..ww.rgr �.L..ox p_rw_wc..awurtorvo[[.a »u d •na•4•fwL x04.0.10 M C.Kfro. p M Oxe10l p 1o.os .1 M .w «Me+1 nrcro.. 4Mawe5D orMe 31.+01 wl MurwD M,04O rp Orwe e.50el3 aa1 �.+r:a ai.ri a 501150 rto e MTM •CTO.S p ]T•rl DprtMu uO 3105•». el4Pn OuewO.[OIS.•Tn ( M1Mrl0..o GCI�1Gur+Ow 011.•.4110ro..;s. (SC 00cr(STOOP To plwc�<ws.0 Ri,io..».CoLAP 41 imlw 0.04,00000 4.05eTM0 .MP31110M,000ClTsCLDet•tn RO04nm4,_n+C`r,50A10LO„t• Tutu, 000,',_31 SOlO_o TO,OIG+w0..+rO5p MAAOICTp00 4000A M_OIr500re.. 05.10 or 110x1.[:.50«rw u.. Hoop. r.p..a..oan.lno.. 15.3001410 r04w ..015011. P010w.qIT., SLITS 40 41 004 TtOJ3+w0 00.1043 PIA00l31O of In TIC1..w04M Tn.On(D OCIL•ef Pn..OO.tl, 4.03.11• [•0117..01004 end OP wmN COO .trTuTwO•POOT000P TIC 0003. 500.14 M P1RIO OTTT4;M 0,04001340150311.04330, P70,5530 4. MAw[3f wn311*KTI 0.4(0.054 nOj 3110 dA*ASPIn004O rnnn fOU3+M(M X01050 OO.IAI,f e,Latl Oq 0,013 d1 0,lROr,Lrlr1 1415 w ,00MOr.nC•v4U( d03,0eOS0 0LAA1 PIG 0! 00 I_nt 5. 51,1.0 OTT olco1. 10 01.0,100, OMgOTI 44n50 r•..• Ie,r0 410 50UAe 1(10(5, 10 ,cd Prof •„0,5410 001043 104500:1 CO IOW[ 00.710 VTI Dulouno, 0,G dunit 10 arr14 131an 311•4104d0.1/•]AlY[D 00413.10.47 ,1N.14T I, INS.m •00 n0.O0lnw04M4. C( 103p P30401 Pq TIE 075031. PO4. 100000 40 10404 530510,53 0* IaP WD I,IM1005045I•,tlt411F 51.00/10100014. To 00. [1.OKM,rm, 01.. 50147[5 11114 a n ,.30on10t1101CL+10rwntNl TCIOn»I.+,C 00 LIST OF VOTERS NUMBERS_ f.. I000�..w,.w�..« b Li ❑ °ln.laTd s.alaa TM pAw o%.'��:i•." wI+ O .l»1d I.+.s O. Pal DpGa ow.. n•sp....ro ryar,w�0ww+1..O,p.ODv1n T[r tN nura'Cx d elf10«O+OK . L«vA. 00111 TpI TN ull7aa p wlT.w.DTpr p• of 4 .a0 rtn50»+1 1'•.01[01, uSIOp KC`I� p a•TOw +wo fuwgwT 0 ..S.«..O,Oa a,G«.0 O .D•wa1 ❑ FAYETTEVILLE DIRECTOR —POSITION 5 (Vole for One) Shell Spivey .............................0 ❑ Gordon L. Cummings .....................0 U Jeremy Hess ............................ ❑ Richard S. Drake ......................... ❑ FAYETTEVILLE DIRECTOR —POSITION 6 (Vote for One) Al Vick ................................. ❑ Fred S. Vorsanger ...... ................. ❑ FAYETTEVILLE DIRECTOR.' -POSITION 7 (Vole for One) Marilyn Johnson,.........................0 ❑ O. Michael Green ...... ................. Ll George A. Bogrees ..... ................. ❑ ow...5n 101 uyp .�.10ael u.ip MMcaa�n,�.�n ni lr.�c„ .0,0 -PT ❑ m(rP PT040,io'...:::w'd.131x5 U ..D•w.r•DO1To500 • I..IL h 0415 .4o Vx Tu wmw TM rn• r0 uvrto•.o r(ert, ..+Tewpmmal.u. a.«er U vcro•rd..nroop 05n.M n TM mu•aa d Mnwl ep5,e ucuelD .• • n[m! d • .Da 01. 1»1104 tO,. 401S114L• ,000 D.,04•C0 TOP *00.75101. w5.14,c,T.. nm5.Teuero. ..0 !w•1.a d ®_ w 10R•rKw4 r¢anu 4P rN r.•mlh.1 Q •Ours 0410.5500, 001. s0w41lnaaa LIL t t,• Ito, 0.401 M � l CO5ST•11CrO.a MN..rnS�i0r41 •a0 lOu.04.rRn oinvci m w rowTi»4 r+Can4. •P rN r.mm�H . O UNOPPOSED ........................... ❑ C.. A4 AN.J4.LOO10.. TO. 0•. w•. rrS•. M I f.. 0 ft4,aM CO 11:45111 t....•, 0.* nJ w-1.'e.wr.M G» w. A_..a 1•[•50 w�t0.5 e DOT.PO` T»• P_Pm,ew Ow t P.w. CO0.0411 •5.•s Y now. b. P.+•.0 4L L 315+.15.01. P...M 1...h W' eT.OTO. e4.•rw..J... 1.0.0*, M. I rw. T.. rP.0.133 IM PMt15.5T.n.0•..M I:WS0wr..1/w TM.MP.. to w•... 45*4.4 e...r ..: OMIT TO,M I: rWC.D..aP PM.ram. X14A+ ITan.e+.t Plot CO K O••.¼ P5.5 05. Iw.p OCOTC 104 J.I.: MOI 10.0,5.0*,. M 0 e.ey T... AT P1.I:0.a.1a1. 000PM P 1..•1040..04 .: POOP[.5..013 .31t Pd0.•e.41. .: 01.0051000.141. I:vny.L CO%04 T.f IM PP.. tew..C.05, M.. M 11.' n.ap5...M. A 11.100.• 101.0.0504 e.a.Trr: n..r P.PyM r:O.0 w..M. P. a.. Ma 1MTI0.4h rT. 0 LA[a P,. I I.T I...s ,OM(wLAW. 14..•511 AT. O* TO .1 Ph 1:w.t e., I...% 03 1 04 1 5005 0 01.5. 00 IMI:P. 3 C.. 151 PM1.P. 00.3 LM 045. M a 0* b A.5 n.4.T.,•L . M ,: I.4.T D. T_0�. w.. M .e.�ew tf •..s.5PA 05a,w[ 1 M ,:Ox., Sr.. 1;1* Iw.0.. 104.0 0 ..70 MT 10+••, I041n.r C.,q.w 5(105lo.•,C.1•...•p.14 w.T 0 IPr. M o: n., L 00.. Iw5. M.•.C.. 0.1.0411,0. 1041. OswlA c.T.T5..MI I. er,.. P 01•.1. rw.. u. 1••h. Exhibit E STATE of ARKANSAS } 88. • PROCLAMATION I, Marilyn Johnson, Mayor of the City of Fayetteville, Arkansas hereby proclaim the results of the November 8, 1988, election in the City of • Fayetteville, Arkansas on the question of levying a one percent (1%) sales tax to be as follows: ISFOR adoption of a 1% local sales and use tax within the City to be levied and col' .)acted to a maximum of 125.00 on each single trans• ;action for a period of 20 years. 7,643 -AGAINST- adoption of a 1% local sales and use tax within the City to be levied and col' I,lected. to a maximum of 1825.00 on each single tranac• lion for a period 01 20 years. 5,260 This proclamation shall be ipublished one time in a newspaper b. ying general 'circulation irt'fle, City of •RCayettevllle,Arkansas. Dated this 177•h .day of November, 1988: MArit tJbhnson -•arc M.eYOR � County of Washington 1, c e c . hethat I am thepublishero fHENORTHWESTARJK�ASTIMES.Aadailyn paper having a second c ass mailing privilege, ang not less g� five columns each, published at a fired place of business and at a fixed Id. ily) Intervals continuously in the City of Fayetteville, County of Washington, Arkfansas for more than a period of twelve months, circulated and distributed from an established place of business to subscribers and readers generally of all classes in the City and County for a definite price for each copy, or a fixed price per annum, which price was fixed at what Is considered the value of the publication, based upon the news value and service value it contains, that at least fifty percent of the subscribers thereto have paid cash for their subscriptions to the newspaper or its agents or through recognized news dealers over a period of at least six months; and that the said newspaper publishes an average of more than forty percent news matter. II further certify that the legal notice hereto attached in the matter of / Jai _ Gt it C „n1 & IL=-zY�Li was published in the regular daily issue of said newspaper for consecutive Insertions as follows: The first insertion on thec1?Xfday of 19 t2�_ the second insertion on the day of 19 the third insertion on the day of _ 19 and the fourth insertion on the _ day. of 19 Sworn to and subscribed before me on this S_I L day of v G 9 0 do a Publ(c My Commission Expires: Fees for Printing _ S Cost of Proof — S Total _ So/• 3c CERTIFICATE OF WASHINGTON COUNTY ELECTION COMMISSION ELECTION ON THE QUESTION OF LEVYING A ONE PERCENT SALES TAX IN THE CITY OF FAYETTEVILLE, ARKANSAS. STATE OF ARKANSAS SS COUNTY OF WASHINGTON) We, the duly commissioned and acting Election Commissioners of Washington County, Arkansas do hereby certify that the following is a true and correct abstract of votes cast in the election on the question of levying a 1% sales and use tax held in the City of Fayetteville, Arkansas, on the 8th day of November, 1988, as the same is reflected by the Certificates of judges and clerks of said election. The vote was as follows: FOR adoption of a 1% local sales and use tax within the City to be levied and collected to a maximum of $25.00 on each single transaction for a period of 20 years. 7,643 AGAINST adoption of a 1% local sales and use tax within the City to be levied and collected to a maximum of $25.00 on each single transaction for a period of 20 years. 5,260 we further certify that the polls were open from 8:00 a.m. until 7:30 p.m.; that only qualified electors of the City of Fayetteville, Arkansas were permitted to vote in said election; that only duly appointed judges and clerks made due returns of the votes cast; and that we canvassed the votes as required by law. IN TESTIMONY WHEREOF, we have hereunto set our hands this 15th day of November, 1988. BOARD OF ELECTION COMMISSIONERS, WASHINGTON COUN AS CERTIFICATE OF WASHINGTON COUNTY ELECTION COMMISSION ELECTION ON THE QUESTION OF LEVYING A ONE PERCENT SALES TAX IN THE CITY OF FAYETTEVILLE, ARKANSAS. STATE OF ARKANSAS SS COUNTY OF WASHINGTON) We, the duly commissioned and acting Election Commissioners of Washington County, Arkansas do hereby certify that the following is a true and correct abstract of votes cast in the election on the question of levying a 1% sales and use tax held in the City of Fayetteville, Arkansas, on the 8th day of November, 1988, as the same is reflected by the Certificates of judges and clerks of said election. The vote was as follows: FOR adoption of a 1% local sales and use tax within the City to be levied and collected to a maximum of $25.00 on each single transaction for a period of 20 years. 7,643 AGAINST adoption of a 1% local City to be levied and $25.00 on each single 20 years. sales and use tax within the collected to a maximum of transaction for a period of 5,260 We further certify that the polls were open from 8:00 a.m. until 7:30 p.m.; that only qualified electors of the City of Fayetteville, Arkansas were permitted to vote in said election; that only duly appointed judges and clerks made due returns of the votes cast; and that we canvassed the votes as required by law. IN TESTIMONY WHEREOF, we have hereunto set our hands this 15th day of November, 1988. BOARD OF ELECTION COMMISSIONERS, WASHINGTON COUN SAS CERTIFICATE OF CITY AS TO ORDINANCE NO. 3480 We, William V. Martin and Sherry L. Thomas, the Mayor and the City Clerk, respectively of the City of Fayetteville, Arkansas, a duly organized and existing municipality and political subdivision of the State of Arkansas (the "City"), DO HEREBY CERTIFY as follows: 1. We are the duly elected or appointed, qualified, and acting Mayor and City Clerk of the City and as such officials ha=ie in our possession or have access to the official books and corporate records of the City. 2. Attached hereto as Exhibit A is a true, complete, and correct copy of Ordinance No. 3480 (the "Ordinance"), duly passed by a majority of the Directors of the City, with an emergency clause duly passed by a two-thirds vote of said Directors, at a duly called regular meeting of the Board of Directors of the City, open to the public, held on April 17, 1990. 3. Attached hereto as Exhibit B is a true, complete and correct copy of an excerpt from the minutes of said meeting held on April 17, 1990, evidencing the passage of the Ordinance, as said minutes appear in the official records of the City; at said meeting a quorum was present and acted throughout; and the Ordinance is in full force and effect and has not been altered, amended, or repealed as of the date hereof. No petition to refer the Ordinance to the people under Amendment 7 to the Constitution of the State of Arkansas has been filed as of the date hereof and the Board of Directors of the City has not referred the Ordinance to the people for adoption or rejection. 4. Attached hereto as Exhibit C is a true, complete, and correct copy of a publisher's affidavit evidencing publication of the Ordinance in The Northwest Arkansas Times on May 8, 1990. 5. The meeting referred to in paragraph 2 hereof was open to the public in compliance with the provisions of Section 25- 19-106 of the Arkansas Statutes Annotated, as amended and supplemented. 6. The Board of Directors of the City had not adopted any by-laws or rules of procedure relating to said meeting. 7. As of a date prior to said meeting the time for filing a referendum petition in the City has been fixed at 31 days after the publication of local measures passed by the Board of Directors of the City. 8. Attached hereto as Exhibit D is a true, complete and correct copy of a publisher's affidavit evidencing the publication of a notice of election concerning the Ordinance on May 29, 1990 in The Northwest Arkansas Times on May 18, 1990. �j; 9. Attached hereto as Exhibit E is a true, complete and correct copy of the ballot utilized in said election. 10. Attached hereto as Exhibit F is a true, complete and correct copy of a proclamation of the Mayor of the City declaring the results of said election and proof of publication of said proclamation in The Northwest Arkansas Times on June 10, 1990. WITNESS our hands as of the 18th ay of Octo er 1990. Mayor 2 Exhibit A FLED FOR RECORD '90 APR 27 P19 3 19 ORDINANCE NO. 3480 WASHINGTON CO AR AN ORDINANCE CALLING A SPECIAL ELECTION FOR OptMEOSS �(' OF SUBMITTING TO THE ELECTORS OF THE CITY OF FAYETTE- VILLE, ARKANSAS, THE QUESTIONS OF ISSUING NOT TO EXCEED !(� $33,019,000 IN CAPITAL IMPROVEMENT BONDS FOR VARIOUS �Q CAPITAL IMPROVEMENTS AND PLEDGING ALL OR A PORTION OF THE PROCEEDS OF THE CITY'S EXISTING ONE PERCENT (1%) LOCAL SALES AND USE TAX TO RETIRE SAID CAPITAL IMPROVE- MENT BONDS; PROVIDING PROCEDURES FOR THE ELECTION; AND DECLARING AN EMERGENCY WHEREAS, the Board of Directors of the City of Fayetteville, Arkansas (the "City"), has determined that it would be in the best interest of the City to issue bonds to finance, with any other available funds, the costs of acquiring, constructing, reconstruc- ting, improving, renovating, expanding and equipping the various capital improvements described in Section 3 hereof (the "Improve- ments"); and WHEREAS, the Board of Directors of the City has heretofore levied a one percent (1%) local sales and use tax pursuant to Ordinance No. 3381, adopted on October 4, 1988, which tax was approved by the electors of the City in an election held on November 8, 1988; and WHEREAS, the City can, pursuant to Amendment 62 to the Constitution of the State of Arkansas ("Amendment 62") and Act 871 of the General Assembly of the State of Arkansas for 1985, as amended ("Act 871"), issue capital improvement bonds in principal amount not to exceed $33,019,000 to finance, with any other avail- able funds, the costs of acquiring, constructing, reconstructing, improving, renovating, expanding and equipping the Improvements and related costs of issuance and secure the retirement of such bonds with the proceeds of the City's existing one percent (1%) local sales and use tax; NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF DIRECTORS OF THE CITY OF FAYETTEVILLE, ARKANSAS THAT: Section 1. (a) The Board of Directors hereby authorizes the issuance of capital improvement bonds under Amendment 62, as implemented by Act 871, in principal amount not to exceed $33,019,000 (the "Bonds"), to finance, with any other available funds, the acquisition, construction, reconstruction, improvement renovation, expansion and equipment of the Improvements and related costs of issuance; provided, however, that the question of issuance of the Bonds shall be submitted to the electors of the City at a special election as hereinafter provided. (b) If approved by the electors of the City and issued, the retirement of the Bonds shall be secured by a pledge of all of the UBER 1364p�GE243 4E proceeds of the City's existing one percent (1%) local sales and use tax levied pursuant to Ordinance No. 3381, adopted on October 4, 1988, which tax was approved by the electors of the City at an election held on November 8, 1988, or such portion of such proceeds as shall be determined by the City to be adequate to obtain satisfactory ratings or insurance on the Bonds. In addition, such proceeds may be pledged to secure the retirement of not to exceed $10,000,000 of educational facilities bonds of the City approved by the electors of the City at the election held on November 8, 1988. (c) The Mayor and the City Clerk are hereby authorized to execute a trust indenture which defines the terms and provisions of the Bonds and the rights of the owners of the Bonds and provides for the appointment of a trustee for the Bonds. (d) The Board of Directors may negotiate and approve, in its sole discretion, bond insurance or other credit enhancement devices with respect to the Bonds. Section 2. A special election shall be, and the same is hereby, called to be held in the usual polling places in the City on May 29, 1990, at which election there shall be submitted to the electors of the City the questions of issuing the Bonds to be secured as described in Section 1 above for each of the Improvements and in the respective amounts specified in Section 3 hereof. Section 3. The questions shall be placed on the ballot for the election in substantially the following form: There is hereby submitted to the qualified electors of the City of Fayetteville, Arkansas, the issuance of capital improvement bonds under Amendment No. 62 to the Arkansas Constitution, as implemented by Act 871 of 1985, as amended, in the principal amount set forth in each question below, for the purpose of financing, with any other available funds, the costs of acquiring, constructing, reconstructing, improving, renovating, expanding and equipping capital improvements for the City as described in the respective question below and related costs of issuance, such improvements including (i) streets and bridges, (ii) water transmission and distribution facilities, (iii) drainage improvements, (iv) solid waste collection, disposal, compacting and recycling facilities, (v) public parks and playgrounds, (vi) police equipment, apparatus and facilities, (vii) firefighting vehicles, equipment, apparatus and facilities, (viii) emergency medical service vehicles, equipment and facilities, (ix) the City Youth Center swimming pool and related facilities, (x) parking facilities for the Dickson Street area and (xi) maintenance and storage buildings and facilities. The City has levied a one percent (1%) local sales and use tax within -2- UBER13fi4FM 0244 the City pursuant to Ordinance No. 3381, adopted on October 4, 1988, to be levied and collected to a maximum of $25.00 on each single transaction. The retirement of the bonds shall be secured by a pledge of all of the proceeds of such tax or such portion of such proceeds as shall be determined by the City to be adequate to obtain satisfactory ratings or insurance on the bonds. In addition, such proceeds may be pledged to secure the retirement of not to exceed $10,000,000 of educational facilities bonds of the City approved by the electors of the City at an election held on November 8, 1988. In the event that the electors shall approve only a portion of the bonds proposed to be issued, there shall only be issued bonds for the purposes approved by the electors. The bonds that are approved may be combined into one or more issues of bonds, which may be issued at one time or in series from time to time. Vote on each question by placing an "X" in one of the squares opposite the question, either for or against: Question One FOR bond issue in principal amount not to exceed $12,326,000 for the purpose of constructing, reconstructing and improving City streets _ and bridges. U AGAINST bond issue in principal amount not to exceed $12,326,000 for the purpose of constructing, reconstructing and improving _ City streets and bridges. V Question Two FOR bond issue in principal amount not to exceed $11,615,000 for the purpose of acquiring, constructing and equipping water transmission and distribution _ facilities. AGAINST bond issue in principal amount not to exceed $11,615,000 for the purpose of acquiring, constructing and equipping water transmission and distribution _ facilities. L/ U8( j3fl4FAGE 245 -3- rl Question Three FOR bond issue in principal amount not to exceed $1,773,000 for the purpose of acquiring, constructing and reconstructing drainage improvements. LJ AGAINST bond issue in principal amount not to exceed $1,773,000 for the purpose of acquiring, constructing and reconstructing _ drainage improvements. Question Four FOR bond issue in principal amount not to exceed $1,179,000 for the purpose of acquiring, constructing and equipping solid waste collection, disposal, compacting and recycling facilities. /— AGAINST bond issue in principal amount not to exceed $1,179,000 for the purpose of acquiring, constructing and equipping solid waste collection, disposal, compacting and recycling facilities. L/ Question Five FOR bond issue in principal amount not to exceed $561,000 for the purpose of acquiring, constructing and equipping public parks and playgrounds. L/ AGAINST bond issue in principal amount not to exceed $561,000 for the purpose of acquiring, constructing and equipping public parks and playgrounds. L/ Question Six FOR bond issue in principal amount not to exceed $213,000 for the purpose of acquiring, constructing and equipping police equipment, apparatus and facilities. � AGAINST bond issue in principal amount not to exceed $213,000 for the purpose of acquiring, constructing and equipping police equipment, apparatus and facilities. L/ FIBER.L. fPNGE2 S -4- Question Seven FOR bond issue in principal amount not to exceed $1,697,000 for the purpose of acquiring, constructing and equipping firefighting vehicles, equipment, apparatus and facilities. U AGAINST bond issue in principal amount not to exceed $1,697,000 for the purpose of acquiring, constructing and equipping firefighting vehicles, equipment, apparatus and facilities. /U Question Eight FOR bond issue in principal amount not to exceed $69,000 for the purpose of acquiring, constructing and equipping emergency medical service vehicles, equipment and facilities. U AGAINST bond issue in principal amount not to exceed $69,000 for the purpose of acquiring, constructing and equipping emergency medical service vehicles, equipment and facilities. U Question Nine FOR bond issue in principal amount not to exceed $998,000 for the purpose of expanding and renovating the City Youth Center swimming pool and related facilities. U AGAINST bond issue in principal amount not to exceed $998,000 for the purpose of expanding and renovating the City Youth Center swimming pool and related facilities. U Question Ten FOR bond issue in principal amount not to exceed $2,013,000 for the purpose of acquiring, constructing and equipping parking facilities for the Dickson Street area. U AGAINST bond issue in principal amount not to exceed $2,013,000 for the purpose of acquiring, constructing and equipping parking facilities for the Dickson Street area. U FIBER 13� rP--GE247j' sir Question Eleven FOR bond issue in principal amount not to exceed $575,000 for the purpose of acquiring, constructing and equipping City maintenance and storage facilities and buildings. AGAINST bond issue in principal amount not to exceed $575,000 for the purpose of acquiring, constructing and equipping City maintenance and storage facilities and buildings. U In order to retire the bonds, the City shall pledge all of the proceeds its one percent (1%) local sales and use tax previously approved by the electors of the City or such portion of such proceeds as shall be determined by the City to be adequate to obtain satisfactory ratings or insurance on the Bonds. Section 4. The election shall be held and conducted and the votes cast and the results declared in the manner provided for municipal elections under the election laws of the State of Arkansas as then in effect. Only qualified electors of the City shall have the right to vote at the election. The City Clerk is hereby authorized and directed to give notice of the election by one advertisement in a newspaper having a general circulation within the City, the publication to be not less than ten (10) days prior to the date of the election. Section 5. A certified copy of this ordinance shall be furnished to the Washington County Board of Election Commissioners so that it may place the questions on the ballot for the election, provide the necessary election officials and supplies, and canvass the votes on the questions. A certified copy of this ordinance shall also be provided to the Director of the Department of Finance and Administration of the State of Arkansas and to the Treasurer of the State of Arkansas. Section 6. The results of the election shall be proclaimed by the Mayor. The Mayor's proclamation shall be published one (1) time in a newspaper having general circulation within the City. The results as proclaimed shall be conclusive unless suit is filed in the Circuit Court of Washington County within thirty (30) days after the date of publication of the proclamation. Section 7. The aforesaid pledge of sales and use tax proceeds shall continue until the bonds secured thereby shall have been retired in full. Section 8. All ordinances and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. UB(R I^3M4PAGE248 -6- Section 9. The Board of Directors hereby determines that the City is in dire need of additional capital funds in order to provide essential capital improvements; that an appropriate way to provide such funds is by the issuance of bonds as authorized by Amendment No. 62 to the Arkansas Constitution and the implementing legislation therefor; and that this ordinance shall be given immediate effect so that the essential capital improvements may be acquired, constructed and equipped as soon as possible. Therefore, an emergency is hereby declared to exist and this ordinance being necessary for the immediate preservation of the public health, safety and welfare shall be in full force and effect from and after its passage and approval. AND APPROVED this �a day of April, 1990. op• o :. May�r r. UATTESY' By C)Lti �. WER 13$ (PAGE 249 -7- e Exhibit B MINUTES OF A MEETING OF THE CITY BOARD OF DIRECTORS A regular meeting of the Fayetteville City Board of Directors was held on Tuesday, April 17, 199O at 73O p.m. in the Directors' Room of the City Administration Building at 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Directors Michael Green, Russ Kelley, Ernest Lancaster, Paul Marinoni, Jr., Shell Spivey and Fred Vorsanger; Acting City Manager Scott Linebaugh, City Attorney Jerry Rose, City Clerk Sherry Thomas; members of the staff, press and audience ABSENT: Mayor William Martin The meeting was called to order by the Assistant Mayor, with six Directors present. Mr. Vorsanger asked those present to stand and recite the Pledge of Allegiance, and then asked that a brief moment of respectful silence be observed. Mr. Vorsanger welcomed the public watching the meeting on television, and those present in the audience. He said everyone present would have an opportunity to address the Board on every time under discussion. He asked that those wishing to speak introduce themselves, give their place of residence, keep their comments concise and non -repetitive, and address the entire Board. He said any questions for the Board or staff should be directed to the Assistant Mayor. Vorsanger introduced consideration of an ordinance calling for a special election for the purpose of submitting to the electors of the City of Fayetteville the issuing of capital improvement bonds. The ordinance was read for the first time. Director Marinoni, seconded by Kelley, made a motion to suspend the rules and place the ordinance on its second reading. Upon roll call, the motion passed, 6-0. The ordinance was read for the second time. Director Marinoni, seconded by Kelley, made a motion to further suspend the rules and place the ordinance on its third and final reading. The City Attorney read the ordinance for the third time. Green asked if it was necessary for the ordinance to be as long as it is and contain all of the provisions outlined to comply with legal requirements. Rose stated it was an agonizing and lengthy process compiling the ordinance. The bond counsel believes that the detail that is included is necessary to make the ordinance beyond a doubt capable of withstanding any legal attack and capable of giving the voters a clear and direct choice of precisely what they are voting for as required by the law. Robert Reus addressed the Board stating a form of government reorganization election was forthcoming probably in early June. He stated his group was not having trouble getting signatures. They have slowed down to concentrate on raising the voter registration level in certain neighborhoods. He asked if the voters did vote to reorganize in June, would the bonds be issued anyway and does the City have to i■su& them after the citizen; vote to do so. He feels this would foreclose on the options of the new council. Vorsanger stated everything being proposed in the'bond issue already has a tax that is being collected to cover the project. The projects are essential to the maintenance and future of this City regardless of the form of government. Certainly you aren't saying that if you change the form of government, you won't fix bridges and build roads. This is the democratic process at its finest. The people are telling their government how to spend their money. Vorsanger further stated that Reus and his group will not have the choice to set the election when they want it. He asked City Attorney Rose to explain how an election of this sort comes about. Rose stated he was aware of no provision that nets a specific time after which a petition is submitted in which an election must be held. The only thing the statutes state is that it can be held no sooner than 30 days after the approval of the petition. It is up to the Board of Directors to set the election. Rose stated the election should be net in a reasonable time in the future. He suggested calling the election sometime before the November elections so that if the mayor/council form were to be adopted, candidates would have time to file for one of the new positions. Reus stated his research at the law library indicated that the City had 30-60 days to call the election. He will check this out again. As to the necessity for issuing the bonds, most of the projects are necessary. However, there may be a new council next year that believes in a more frugal administration and may want to pay-as-you-go rather than paying off the principle and interest amounts on the bond issue. Spivey stated that he had heard many times regarding the incinerator over the past year and a half about the City deciding to spend $20 million without taking it to the public for a vote. He stated this was being taken to the voters, but it seems ironic that Reus sew=n to be suggesting that the City would rescind this if a new council is elected and let them make that decision. Reus stated general obligations bonds have to be voted on by the public. Reus stated he was suggesting that Board is foreclosing on the options of the new council. He feels it in wrong to mortgage the future of the town for the next .20 years. Vorsanger stated as strong as Reus feels that the current form of government will not be here in January, he feels just as strongly that it will. Wayne Jones stated he took exception to Reus' comments regarding telling him that he would change the form of government. He felt the other well educated voters in the City feel the same way he does. The voters last fall voted in favor of going the way the Board is going with the Capital Improvements Program. At that point in time, it was stated that the citizens would have a chance to vote on the individual projects. He feels delaying the CIP vote would be delaying needed improvements in the City. He feels he is speaking for a majority of the citizens of Fayetteville supporting the Board's actions on the ordinance on the CIP issue. Upon roll call, the motion to approve the ordinance passed by a vote of 6 to 0. ORDIXAXCE N0. 3480 APPEARS ON PAGI OF OKDn01xCs AHD lzsoLVTI0a BOOK 2. -naJ6' l rrd-pay,R0rA^1rfYt"Aya ..v�llable are: R A C istWa)lrfl. Catin'Asa td coo f11�In7aninc4.. M1111,m im YY t«Ir1Q at. Felday, Y'1$. *heat apply at the visitor Information Cant., For more-informEtl Calf HiS-URANCE S@CRE. NARY: RequIres2yrsffke etwarlfncf. typing.a5 Wry, •IBM Wheelwrlt.r, Ilc- taphone; filing, good organitationil skill.. Far Jn- tfrvlew call Res.. at ae2\ iC6NNEL MELF, p.'.'me for Veterinary Clinic. Send Resume to 20a7 S. School, Fayetteville. AR. 72701 I ' .S`....ffR MVIIL1 MAIk}Cl,aIO�S.M s INAI4CE CAIiLIM :IAir..691 CTtloPAirn your own business! Keep f4' PURPOSE OPCOa 0 carrier for the Nor. t.44• TO...LN have just a law routes avail. IRS -OF T}fE' r11 1`E TTE V t -C laying areas: Dutterfiold Trail' IJG1 t tQujan Ave., Arrowhaod, Custer 'JF SSt1ING N towson, Porter Rd., Mood. E lf ipw.b19A00 N. Washington, Jackson Or., L IMPROVEM FOR VARIO Al... IMJSR ve near each route. We or. 10 to IS years old. Deiivory pR.illx `thru Friday and baton 800 aid y in `son at: lQC rkansaa'Tim. tNbUSE'7.tx' Fay.ft.e111e,AR SAID CAPIT EMENT EON tsp.ak to Jack, Sher ry I.D.tN G. P R lonal Information. :ES FOR T T 1 O N; A A R I N G =NCY ) EAS, m. Boar DEALERSHIP oa me _ Cl Ile, Arkansas has d�' f sales people. r}'the city to I flnance,.wlth q�referred alJalye funds, but of[b1g, consrr nriilrecttng, , you are willing riisovt.tIng„e bribed In Sfctl (the "Impro and SAS, the Boar Of 1M CIty levied a one locamt'to'es and Orrdin' imes, adopted on mlch tax was ,Box #A285, nOf.cl' 111e.f1lC1M3 Ot ;land`' AR 72702, :AS: the Clfy to Amendm onstltutlon of of Arkan m=;.Aa -TIME to of Arken amended ( ry sue capital Dai Store in Fayetteville I bonds In lions for spring and sum- unt not to f as. All shifts available - avallable enings. We need mature of acquiring n work •10 to 35 hours per reconstr on meals and groceries. md .qujpp per hour on day shift on. Mat) -and r ivance and ion, pleas. see the store Rent of such in g location any day be. Iroceeds of ��ryryqq.� ptdr -T p.m. No appointment faaoaaN�'A_� contacted for your Intor. F DIRECI 111 ITV Ff4 II ARKA • f k1Y.STnw.C Exhibit C STATE of ARKANSAS a. County of Washington - 41 4 hereby certify that I am the publisher of E NORTHWEST ARKAN AS TIMES, a daily newspaper having a second class mailing privilege, and being not less than four pages of five columns each, published at a fixed place of business and at a fixed (daily) Intervals continuously In the City of Fayetteville. County of Washington. Arkansas for more than a period of twelve months, circulated and distributed from an established place of business to subscribers and readers generally of all classes In the City and County for a definite price for each copy, or a fixed price per annum, which price was fixed at what Is considered the value of the publication. based upon the news value and service value It contains, that at least fifty percent of the subscribers thereto have paid cash for their subscriptions to the newspaper or Its agents or through recognized news dealers over a period of at least six months; and that the said newspaper publishes an average of more than forty percent news matter. I further certify that the legal notice hereto attached in the matter of was published in the regular daily issue of said newspaper for consecutive insertions as follows: The first insertion on the day of /1'%fit'- 19 9d v the second insertion on the day of 19 the third insertion on the day of 19 and the fourth insertion on the day !— 19 Sworn to and subscribed before me on this - day o 19 LG- - N I nY Publ etc Commission Expires Fees for Printing (•os1 of Proof — •', Total. —SO' shall be placed on the ballot •itY _ for an- tlaAy 1d Ifl�es. = , J13r11 0•. T1te toed AINST;bOidd :I ,^ (pp��1 /rI1gRR' to ..tlla gilellftaE: of qU �!v $d9,tigb; for "tie purpose i I that • CT i fen *K4Vittevlile Ole acquiring, as. .ArkMw,.',Ilset bs�lana N ,ttructing ll sd agrylppltlO.,.Pm•rONicY } uWl•laoprovwnant•b,onda fltladlcat MrVfe•.' Vslirciea, undp A.manMmnd No. 12 to equipment and facilities, the' Arkansas. Coastltrtflon, Question facia as implemented by AQ Rt FOR bond.issus In principal of 1915. as aslanded, M its amount not to •xcead " hereby certify that I Principalan$6(ints•tfMfitp eechquestion b9lprv: for the-',axpainding $f1tStt,,0000Sa for 'the purpose of ENORTHWESTARKAN AS TIMES, a dally newspaper i1 Purpose of drtancing with and renovating the City Youth Center 1 mailing privilege, and being not less than four pages of taiIh qny otMr •gamble tunas, swimming pool and related ibllshed at a fixed place of business and at a fixed (daily) the costs of acquiring, con. facilities. in the City of Fayettevllie. County of Washington. Arkansas structlon, reconstructing, Improving, renovating, ax- , AGAINST bond Issue in principal amount not to ix' od of twelve months, circulated and distributed from an pending and equipping cap(, tat Improvements for the ti. teed $991,000 for the purpose ,usiness to subscribers and readers generally of all classes of expanding and renovating ty as described in the the City Youth. Center ty for a definite price for each copy, or a fixed price per 4 respective question beibw swimming pool and related vas fixed at what is considered the value of the publication, and related costs of Is• suancS, such improvements facilities, Question Ten • ----ralueandservicevalueitcontains,thatatleastfiftypercent t including (I) streets and FOR bond lssus in principal reto have paid cash for their subscriptions to the newspaper bridges, (11), water IA$CENQ.44M transmission and dlstribu• amount not to exceadugh recognized news dealers over a period of at least six $2,017,000 for tit purpose of NANCE CALLING flop facilities, (ill) drainage acquiring, constructing and' said newspaper publishes an average of more than forty 'I#, ,ELECTION improvements. (Iv) solid equipping parking facilities • B' PURPOSE OF waste collection, disposal, TING'- TO 'THE compacting and recycling for the Dickson Street •area. ❑ RS.QF THE CLTY facllltles, (v) Public parks AGAINST bond Issue in •hat the legal notice hereto attached in the matter of YE TT E V IL t E. and playgrounds, (vi) police 'principal amount not to ex• XS, THE QUES- equipment, apparatus and ceed $2,017,000 for the put if ISSUING NOT facilities, (vii) firefighting pose of acquiring. construe- Y1 EE11 !77,011,000 IN vehicles, equipment, ap- ling and equipping parking ti-� p ' , IMPROVEMENT paratus and facilities, (vlll) facilities for the Dickson E FOR VARIOUS emergency medical service Street area. ❑ , ►i:- 4M-PROVE.-van)des, egvipmanr. and fa- Question Eleven •egular dally issue Of Sald sale's dPe C for p �• e• City Youth AND.P4EDGl _c11itie}the faNning' FOR'bond Issue In principal follows: , r PORtiON' OR.Cenlir'i pool and OF Tit related fatlHttee. (k) amount not to exceed s as �? 5C`EEDs park' EXISTING ON6� lee facilities for the Dickson 1575,000 for the purpose of - acquiring, constructing and �d ' ' IW -(Hi) LOCAL' Streat.arya end (xi) mainte- 19 on the day of ,h , — equipping City maintenance 'ti �, HOUSE TAX' TO mince and storage builidings and storage facilities and SAID CAPITAL. and facilities. The City has buildings. ❑ n On the day of 19 ' EMENT BONDS; levied a one per cent (1%) AGAINST bond Issue In I.D t -N G •P R O •• local sales and use tax principal amount not to ex. ES FOR THE within the City pursuant to ceed 1575,000 for the purpose on the day of 19 T I O N; AND Ordinance No. 7781, adopted of acquiring, constructing - .A R I N O A N on October 4, 1988, to be and equipping City mainte. i.NCY levied and collected to a nance and storage facilities ert)on on the day 19 EAS, me'Board of maximum of $25.00 on each end, elldings. O of th., City of single transaction. The In .ordar to retire the II.; Arkansas (tile retirement of the bonds shall bonds, the City shall pledge -has determined be secured by a pledge of all all Of the proceeds its one said be in the best of the proceeds of such tax percent (1%) local sales and t the'Etty to Issue or such portion of such pro- use tax previously approved subscribed before me on this fusapgt, Witt( any coeds as shall be determined by the electors of the City or $))epic. funds, the, by the City to be adequate to G9YJcing, construe- obtain satisfactory ratings 911stNtlktg, Ins' or Insurance on the bonds. In such portion of such pro• coeds as shall be determined 19 Li.___ by the City to be adequate to rr YAz.' ing„expan- addition, such proceeds may I .ai(lIIppf g'•. the be pledged to secure the obtain satisfactory ratings or insurance on the Bonds. capital improve' retirement of not to exceed Section A. The election .\ t ry Publ Icrlbed in Section 3 $10,000,000 of educational fa- shall be held and conducted (the' "Improve' cilities bonds of the City ape and the votes cast and the and - proved by the electors of the results declared In the man- (pires' EAS, the Board of City at an election held on ner provided for municipal of the City has November 8, 1988. In the elections under the election 1 levied a one per- event that the electors shall laws of the State of Arkansas - , / .local sales and use approve only a portion of the as then In effect. Only quell' ant to Ordinance bonds proposed to be issued, fled electors, of the City shall Idopted on October there shall only be Issued have the right to vote at the ditch tax was ap- bonds for the purposes ape election. The City Clerk is ttm.el.ctors of the proved by the electors. The Is election Mid on 'bonds that are approved hereby authorized and directed to give notice of the /- 5 r$, Weer and may be combined into one or election by one advertise- — t\ (AS, the Clty can, more Issues of bonds, which ment In a newspaper having to Amendment 62 may be issued at one time or a general circulation within t)nstltutlon of the Inserles'irintunetotlme. -the City, the publication to— - o 1 Arkansas Vote on each question by be not less then ten (10) days Inent 62") and Act placing an "X" in one of the prior to the date of the elate p� , General Assembly squares opposite the ques- e of Arkansas for tlon. either for or against. lion. —'�� Section S. A certified copy amended ("Act Qu.ston One of this ordinance shall be be see capital im- FOR bond issue in principal furnished to the Washington It bonds in prin- amount not to exceed County Board of Election of not to exceed $12,326,00) for the purpose of Commissioners so that it to finance, with construction, reconstructing may place ten questions on available funds, and Improving City streets file ballot for the election, of acquiring, con. and bridges. O provide Its. necessary elec- • reconoructing, AGAINST bond Issue in tion officials and supplies, p. ,raapy9tiog, ex- principal amount not to ex• and canvass the votes on the nd equlpp(ng'the coed 112,326,000 for the pure questions. A certified copy M related pose of constructing, of this ordinance shall also rams and secure reconstructing and Improve be provided to the Director en,or, Uchbonds'IAO City streets and of the Department of F1' of �se CI; bridges, ❑ nance and Administration of r<61101' ceed Two the State of Arkansas and to _panties M �f LWta4 FOR bond Issue In principal the Treasurer of the State of HERE%TfRE; BE amount not to exceed Arkansas. NED BY THE $11,615.000 for the purpose of Section 6. The results of F DIRECTORS acquiring, constructiong the election shall be pro' ITY OF FAYET• and equipping water claimed by the Mayor. The .-.ARKANSAS transmission and dlstrlbu• Mayor's proclamation shall lion facilities. O be published one (1) time In tl� Section 1. (el The awrd of AGAINST bond issue in -a newspaper having general Directors hereby authorizes principal amount not to ax' circulation within the Clty. the issuance of capital Im• teed 011,615,000 for the pur- The results as proclaimed provement bonds under pose of acquiring. construe shall be conclusive .unless Amendment 62, as Im• hag and equipping water suit is flied in the Circuit plemented by Act 871, in transmission and dlstribu• Court of Washington County principal amount not to ax- lion facilities. Cl within thirty (30) days after teed $33,019,000 .(the QuestionThrw the date of pubilcatlan of•tM "Bonds"), to finance, with FOR bond Issue in principal proclamation. any other avon, c funds, amount10 fonot tto exceed Section. 1. the purpose of pledge of sales and uss tax forusatd the acquisition. construe acquiring, constructing and proceeds shall continue until lion, reconstruction, Im• reconstructing drainage ins' the bonds secured thereby provement renovation, ex• rovemenfs. O shall have been retired in pension and equipment of p the improvements and AGAINST bond Issue In full. related costs of Issuance principal amount not to en' Section S. All ordinances estion an, that the ceed of cqu�rngf constthe ruc- herewitr- and h hereby repeareof in l question of beissuance the Po Bonds shall be submitted to tiny and reconstructing M to the extent of such con• the electors of the City at a drainage Improvements. O lifcSectlon 9. The Board of special .election as Question Four hereinafter provided. FOR bond issue In principal Directors hereby deter• (b) ii approved by the amount not to exceed mines that the City loin dire electors of the City and 51,179,000 for ill, purpose of need of additional capital issued, the retirement of the acquiring, constructing and funds In order to provide Bonds shall be secured by a equipping solid waste coliec- essential capital t Improve - pledge of ell of the Proceeds Lion, disposal, compacting meats; that an appropriate p.'ovide such funds is percent (C1961siocaiexissales and AGAINSTting on. end recycling bond ll issue i❑n by the issuance ofbonds as use tax levied pursuant to principal amounttx» to ox' authorized by Amendment Ordinance No. 7381, adopted teed of acquiring. cqu ng lila put'. NO. 62 to The cottsTrvc• st tutlon and till lmpismen- on nsas Con' approved by which tax ting � end equipping' solid ting legislation therefor; was eby the eIK• tors of the City at e8 election waste Cad dl posal,recycling and that this ordinance eft so lt held on November s, 1988, or compacting and recycling t th given imat the mediate effect capital such portion of such pro- tacllitles. improvements may be ac- ceeds as shall be determined Question Five by the City to be adequate to FOR bond issue In principal qulred, constructed nand obtain satisfactory ratings amount not to exceed equipped as soon as possl- or insurance on the Bonds. 1561,000 for the purpose of ble. Therefore, an emerges - In addition• such proceeds acquiring, constructing and cy is hereby declared to ex- ! may be pledged to secure equipping public parks and nthis ordithnance being the retirement of not to ex- playgrounds. necessary foiate ceed $10.000.000 of educe- AGAINST amount not to ex• healthpreser,/ stdfety and wellsre ti0nal approved bonds of the principalbe City approved by the elec• ceed SS61,000for ins purpose shall tram in full force end Its tors of the City at the elec- and acquiring, constructing C parks passage and approval. Its lion held on November 8, and Playgrounds. O PASSED AND APPROV' (c) The Mayor and the Ci 1988. ED this 19th day of April, It Clerk are hereby - FORbondllssue in principal 1990. Martin authorized to execute a trust amount not to exceed By: William V.Mayor indenture which defines the $213,000 for the purpose of terms and provisions of the acquiring, constructing and ATTEST. Bonds and the rights o1 the equipping Police equipment, By: Karen A. Faris owners of the Bonds and apparatus and tacllitles. ❑ Seal _ provides for the appoint- AGAINST bond not to esue in meat of a trustee for the teed $213,000 for the purpose Bonds. (d) The Board of Directors of acquiring, constructing equ may negotiate and approve, and equipping and faetll• ip- In its sole discretion, bond meat, apparatus C insurance or other credit ties• enhancement devices with Quesstion bondS llnse in principal respect to the Bonds. FOR amount not to exceed Section 2. A special eIK• pion shall the be, and the same is (1,697,000for the purpose of hereby, called to be held in acquiring, constructing and the usual polling places in equipping firefighting v.011 - the city on Mey 29, 1990. at des, equipment, apparatus which election there shall be and facilities. O submittedn the electors bond Issue in the City thequestions of is- principalTamount not to ek suing the Bonds to be ceed 01.7,for ct sie prur' secured as described in Sac' pose acquiring. Lion I Move for each of the ling and equipping improvements and in the flretignt Ing vehicles. respective amounts equipment, apparatus and facilities. Question Eight FOR bond Issue in principal amount not to exceed 069,000 for 1M purpose of acquiring, constructing and equipping emergency medical service vehicles, equipment and la• ii 2 2 2 4 :1 Exhibit D STATE OF ARKANSAS $3 - COUNTY OF WASHINGTON, j I, CC i t T 1 ill t, , t >t r do hereby certify that I am the manager of THE NORTHWEST ARKANSAS TIMES, a daily newspaper published in said county, and that I was such manager on the dates of pub- lication hereinafter stated, and that said newspaper had a bona fide circulation in said county on said dates, and had been regularly published in said county for a period of one month next before the date of publication of ad- vertisement hereto annexed, and that said advertisement was published in said newspaper daily. The first inser- tion on the ./.c1.. ` day of - i� i � !h. X ............... . 19. %-... The last insertion on the ..... ........ .. day of .................... 19......... Manager /G LY Subscribed and sworn to before me this ........ ..... cs�.....__19..... My Commission expires .......9Q.. _--------i9./ 9.... Cost of publication $ �. �.Q.e. 1.�G'.............. • • • • • • • • • *'• •Ir • o • • 1 a ll� NOTICE OF SPECIAL ELECTION Notice is hereby given that the City of Fayetteville, special election on May 29, 1990, at'which there electors of the City the following questions: OFFICIAL BALLOT CAPITAL IMPROVEMENT • • • • • • • • e Arkansas, will hold a will be submitted to the II!I BONDS •AY 29, 1990 �''I" �! CITY Oa FAYETTEVILLE. B ARKANSAS I INSTRUCTIONS TO VOTER j 1, To vote you must blacken QUESTION ONE the Oval I — 1 completely A bond Noun in principal 000.4,1 near to "FOR" of not to .....d 012.326.000 for me "AG AINS7" in each purpose of connruet,nq. QUESTION EIGHT A bond luue In principal amount not to ascend 369.000 for me pu•• pose of acquiring, constructing and' I question. reconstructing and Improving Clip *Quipping emergency medical far• I t sirNls and Ondg.., 2. Use only the pencil vice 6011101.5. equipment and provided. FOR I.c11ev... I. 3. After voting, deposit ballot O FOR .I In ballot box AGAINST O AGAINST Tnoe n nerecy suomnted to in* I QUESTION TWO QUESTION NINE I qu.6nee <Itno„ or m< City of A bond w.. In principal amount F.yenerrua Animas A bond Issue In principal .mourn I ordlmnce Ne 3480 he Citynt m 60110 exceed 111.615.000 for the the Cny I not to •.send 1996.000 for the puss I Of 050!!.01IM purpose of acquiring, constryctIng rmp,Ovm•nt postal •.pending and renovating I and equipping water tn.ncmia,llon bong, canoe, Amendment No 6250 the City Youth Center sw mming •nd d,.lrlbution 1601111,60. ine Arkansas Constitution. II pool and rebted bcll,iiea. plamenled by Act 971 or 1965' as p FOR O FOR amended. in Ine principal •mount set loin In 0.0n ouestinn De.,o for AGAINST O AGAINST the Durpo,, 01 nnanerng w,tn any Cthe, .valla bit luno.. Ine _I o1 p ! �w •cournnq cPmlryding. RDOnaryd• QUESTION THREE QUESTION TEN • I ling Imrrouing I ..pan A bond .-ue In principal •mount A bond ,.sue in pricolo.l .mount nq renoralmg drn9 • eQuipping 6.0,1.1 . , not Is tasted 11,773,000 Ion Ine not m noted 12,013.000 Im the �x • pron.m.... for the City.. 0ecnb- I purpose of acquiring con,tructm purpose offing Parse <onalI,.. n. Pd in the reapectrve suntan below ag •11p re0onatru0ting O,alnagt .i •n0 Parsing I.011,1r.r In. and 1.1.1,0 coals of Issuance. such I ,mprorement, Including III .I,enta ,mProv.m.nla Dicksonequipping Ine ICR.OStreet are. and 1.11...0 IIn wale, Iranrmisoion O FOR p FOR end dnln0uu0n 1•alIIIIe a. Illil drainage Improvemtnla. (Ivl solid __ AGAINST AGAINST I _ wale eohec1,an. dnpoul. ..moss• p 1111. •no recycling tac.lnle.. wmlc wr.l and Dlsygnoundill QUESTION FOUR QUESTION ELEVEN palme egmPmrn: apparatus and I A bond nut In principal •mount A bond 1flu, in principal . lanmw, pin tirebgnbng vehicle. I not to ..teed 11.179.000 Ion 560 001 10 0.0.00 1175 000 nor In, pa - apulpmeni, ....ntu. and taclhti... I purpose of acqu•nng. eonslrticlln9 Dose o1 acau,nng a n,iryci,ng and trill emergency medical .ems. I and equipping $01.0 oust, edlec equipping City tneinlen.nce enu nanilt tlee Cny yours Genie 'Iw cmllmits. loon. d,aporal. Compacting ant 1,g alusge I.c1111 es arb building. ycnnq I.nWbai. pool and ,...led t,c11111e,, III Dark. C FOR Ing tacln1,e, to, lm .....on Street Ire. and I.II malnlenanee and O FOR .ror.ge buildings and facilities, The p AGAINST - Cny h.a'erred a one pneem "') 100•Iurns•+0useI.. 0th ,l If4 Cr. I O AGAINST j 09 Durau.m to ON rdrn•nce O JJ61. In order 10 retire the bond., 114 .dd0tee o^ Oa10Der a 1966 to be QUESTION FIVE Cn, shall of inc procMnd Ier,e: .1d collected to a murmum I rcedge.n it. one percent hy.0010 wen and' e' 121 OC a .:n sing., lrsn..c, A bond m principal •mourn use as O,andu IDDrored by 10, slou,eed ho, T.•r, re.rr cf Ine bonds not to *,,,ad 1111, 0010, Ine pun em0y•a elactars of the City or Ponron olselulet Pledge 01 III or .Cqunn COnrlrychrg and o1 wcn Proceed,1..1.11 05 a all 0 dt1 equi urpo,n, public parks and of Ine Orocee O, Ol nisi b. Or.ucn b nuns. by the Cnylo beededual. to 0 10 pl PPrt_ e• wen pr oc .s In. I be .." lend, o0bin brl.elo y 1.1,19. Or in. Per,•n.ne: d, in. Cn, to be .de- p FOR ranee on Ine bond. euale to Ob1a•n san.taclory r.1,nga I..,^•nee on Int bond, In add,- I �T AGAINST wcn proceed, m.1 be Merig ee 1c secure Ine re1,•rne�! O! n Io ester. 510.000.00O of eouu' QUESTION SIX bona1 lantilitr pond5 of the City .P . peered by Inc erector. .1111. Cityal A bond laud in ue principal amount e4Ctidn nerd On Nove nib.. a I hot to ..ce,a f3t].000 for 160 0140. 196! In tit cram Ihai the elector, pose OI ac.uornq. eon.troclrng and nail apprOvt Oni1 I Donlon of me Ing .qu,Pmfnt, alp- paretu 100111 Ddnd, pl...te01. be 11 d. hole 1 ptralus and bclllbet I r... onry be I..ued bonds for the O FOR purposes ...•Orea by Ine d OCtOrf In. pones In., are aOoroo.onrmy .be <ombmtd Into one a, ma,, IC AGAINST issues 01 1.011.0 wh,eh may be 1151,0 Diane tin, o,,n series horn QUESTION SEVEN lime 10 lime I A bond flea m in principal amount not to e.ceedf 1.697.000 for the I purport 01 acournng. connryc1,rp and .u,pprn9 1pehgnpng what,*, equipment. •ppsratus and facilities. O FOR O AGAINST 9i! 6 . •F9 TRINIT( METHODIST_— SAMPLE BALLOT �: _--__ _ __�__ �,,... -I. Exhibit E OFFICIAL BALLOT CAPITAL IMPROVEMENT BONDS INSTRUCTIONS TO VOTER 1. To vote you must blacken the Oval ( ) completely next to "FOR" or "AGAINST" In each question. 2. Use only the pencil provided. 3. After voting, deposit ballot In ballot box. There Is hereby submitted to the qualified electors of the City of Fayetteville. Arkansas, pursuant to ordinance No. 3480 of the City. The Issuance of capital improvement bonds under Amendment No. 62 to the Arkansas Constitution, as im- plemented by Act 871 01 1985, as amended, in the principal amount set forth in each question below, for the purpose of financing, with any other available funds, the costs of acquiring, constructing. reconstnuc- ting. improving. renovating, expan� ding and equipping capital im. provements for the City as describ- ed in the respective question below and related costs of issuance, such Improvements including (I) streets and bridges, (ii) water transmission and distribution facilities, (ill) drainage improvements, pv) solid waste collection. disposal, compac- ting and recycling facilities, (v) public parks and playgrounds, (vi) police equipment, apparatus and facilities. (vii) firefighting vehicles, equipment, apparatus and facilities, (viii) emergency medical service vehicles, equipment and facilities. (ix) the City Youth Center swimming pool and related facilities, (x) park- ing facilities for the Dickson Street area and (xl) maintenance -and storage buildings and facilities. The City has levied a one percent (1%) local sales and use tax within the Ci. ty pursuant to Ordinance No. 3381. adopted on October 4, 1988. to be levied and collected to a maximum of $25.00 on each single transac. Lion. The retirement of the bonds shall be secured by a pledge of all of the proceeds of such tax or such portion of such proceeds as shall be determined by the City to be ade- quate to obtain satisfactory ratings or insurance on the bonds. In addi- tion, such proceeds may be pledg- ed to secure the retirement of not to exceed 510.000,000 of educa- tional facilities bonds of the City ap- proved by the electors of the City at an election held on November 8. 1988. In the event that the electors shall approve only a portion of the bonds proposed to be issued, there shall only be issued bonds for the purposes approved by the electors. The bonds that are approved may be combined into one or more Issues of bonds, which may be issued at one time or in series from time to time. QUESTION ONE A bond Issue in principal amount not to ex..eed $12,326,000 for the purpose of constructing, reconstructing and Improving City streets and bridges. CD FOR O AGAINST QUESTION TWO A bond Issue In principal amount not to exceed S11.615.000 for the purpose of acquiring. constructing and equipping water transmission and distribution facilities. O FOR O AGAINST QUESTION THREE A bond issue in principal amount not to exceed 51,773,000 for the purpose of acquiring, constructing and reconstructing drainage Improvements. p FOR p AGAINST QUESTION FOUR A bond issue in principal amount not to exceed 51,179.000 for the purpose of acquiring, constructing and equipping solid waste collec- tion, disposal, compacting and recycling facilities. p FOR p AGAINST QUESTION FIVE A bond issue in principal amount not to exceed $561,000 for the pur. pose of acquiring, constructing and equipping public parks and playgrounds. CD FOR CD AGAINST QUESTION SIX A bond Issue in principal amount not to exceed $213,000 for the pur- pose of acquiring. constructing and equipping police equipment, ap- paratus and facilit es. O FOR O AGAINST QUESTION SEVEN A bond issue in orincipal amount not to exceed 51.697.000 for the purpose of acquiring. constructing and equipping firefighting vehicles, equipment, apparatus and facilities. O FOR O AGAINST QUESTION EIGHT A bond Issue In principal amount not to exceed 569.000 for the pur. pose of acquiring, constructing end equipping emergency medical se,. vice vehicles, equipment and facilities. O FOR O AGAINST QUESTION NINE A bond Issue in principal amount not to exceed 5998.000 for the pur- pose of expanding and renovating the City Youth Center swimming pool and related facilities. CD FOR O AGAINST QUESTION TEN A bond issue in principal amount not to exceed S2,013,000 for the purpose of acquiring, constructing and equipping parking facilities for the Dickson Street area. CD FOR CD AGAINST QUESTION ELEVEN A bond Issue in principal amount 001 10 exceed $575.000 for the pur- pose of acquiring. constructing and equipping City maintenance and storage facilities and buildings. CD FOR O AGAINST In order to retire the bonds, the City shall pledge all of the proceeds its one percent (1½) local sales and use tax previously approved by the electors of the City or such portion of such proceeds as shall be deter. mined by the City to be adequate to obtain satisfactory ratings or In- surance on the bonds. ® ® A B BF9 JCIII® 0171 TRINITY METHODIST ° r ` r" 1�+✓� y I Exhibit F PROCLAMATION OF RESULTS OF SPECIAL BOND ELECTION I. William Martin, Mayor of the City of Fayetteville, Arkansas, hereby proclaim the results of the special election held on May 29, 1990 in said City, pursuant to Ordinance No. 3480 of said City, on the eleven (11) questions described below concerning the issuance of capital improvement bonds of said City for the purpose of financing, with any other available funds, the costs of acquiring, constructing, reconstructing, improving, renovating, expanding and equipping capital improvements for said costs of issuance. In order to retire said bonds, said City shall pledge all of the proceeds of its one percent (l7) local sales and use tax previously approved by the electors of said City or such portion of such proceeds as shall be determined by said City to be adequate obtain satisfactory ratings or insurance on said bonds. The vote on each of said questions was as follows: QUESTION ONE A bond issue in principal amount not to exceed $12,326,000 for the purpose of constructing, reconstructing and improving City streets and bridges. FOR 5,743 AGAINST 1,378 QUESTION TWO A bond issue in principal amcunt riot to exceed $11,615,000 for the purpose of acquiring, constructing and equipping water transmission and distribution facilities. FOR 5,269 AGAINST 1,755 QUESTION THREE A bond issue in principal amount not to exceed $1,773,000 for the purpose of acquiring, constructing and reconstructing drainage improvements. FOR 5,390 AGAINST 1,646 QUESTION FOUR A bond issue in principal amount not to exceed $1,179,000 for the purpose of acquiring, constructing and equipping solid waste collection, disposal, compacting and recycling facilities. FOR 5,837 AGAINST 1,302 _I� 1, .2 2 2 2 4 QUESTION FIVE A bond issue in principal amount not to exceed $561,000 for the purpose of acquiring, constructing and equipping public parks and playgrounds. FOR 5,374 AGAINST 1,736 QUESTION SIX A bond issue in principal amount not to exceed $213,000 for the purpose of acquiring, constructing and equipping police equipment, apparatus and facilities. FOR 5,184 AGAINST 1,905 QUESTION SEVEN A bond issue in principal amount not to exceed $1,697,000 for the purpose of acquiring, constructing and equipping firefighting vehicles, equipment, apparatus and facilities. FOR 5,623 AGAINST 1,423 QUESTION EIGHT A bond issue in principal amount not to exceed $69,000 for the purpose of acquiring, constructing and equipping emergency medical service vehicles, equipment and facilities. FOR 5,716 AGAINST 1,354 QUESTION NINE A bond issue in principal amount not to exceed $988,000 for the purpose of expanding and renovating the City Youth Center swimming pool and related facilities. FOR 5,490 AGAINST 1,667 QUESTION TEN A bond issue in principal amount not to exceed $2,013,00 for the purpose of acquiring, constructing and equipping parking facilities for the Dickson Street area. FOR 3,811 AGAINST 3,240 QUESTION ELEVEN A bond issue in principal amount not to exceed $575,000 for the purpose of acquiring, constructing and equipping City maintenance and storage facilities and buildings. FOR 3,990 AGAINST 3,001 This proclamation shall be published one time in a newspaper having general circulation in said City. Any person desiring to challenge the results of the special election described above shall file such challenge in the Circuit Court of Washington County within thirty (30) days of the date of publication of this proclamation. Dated this day of June, 1990. By: Mayor 1 .2 2 P 4 1 STATE OF ARKANSAS ss. COUNTY OF WASHINGTON, j I, �(�tt�('�t.�1c („ do hereby certify that I am the manager of TIIE NORTHWEST ARKANSAS TIMES, a daily newspaper published in said county, and that I was such manager on the dates of pub- lication hereinafter stated, and that said newspaper had a bona fide circulation in said county on said dates, and had been regularly published in said county for a period of one month next before the date of publication of ad - v ertisement hereto annexed, and that said advertisement was published in said newspaper daily. The first inser- tion on the .�'... day of sl.C.;44................ 19..4.. The last insertion on the . ............ .. day of ... .... 19......... / Manager Subscribed and sworn to before me this i.tSl...... !I day of "' � = `. ----- T�_. My Commission expires ....._ .:_ �..... 194.1.--. Cost of publication $..ti /..../ ---------3. PROCLAMATION OF ESULTS OF SPECIAL :I' BOND ELECTION I, William Martin, Mayor of the City of Fayetteville, Arkan- sas, hereby proclaim the results of the special election held on May 29, 1990 in said City, pursuant to Ordinance No. 3480 of said City, on the eleven (ii) questions described below concerning the issuance of capital improvement bonds of said City for the fG purpose of financing, with any other available funds, the costs of I fl acquiring, constructing, reconstructing, improving, renovating, expanding and equipping capital improvements for said costs of issuance, in order to retire said bonds, said City shall pledge all of the proceeds of Its one percent (1%) local sales and use tax previously approved by the electors of said City or such portion of such proceeds as shall be determined by said City to be ade• 4. quate to obtain satisfactory ratings or insurance on said bonds. The vote on each of said questions was as follows: QUESTION ONE A bond issue in principal amount not to exceed $12,326,000 for the purpose of constructing, reconstructing and improving City streets and bridges. FOR 5,7 AGAINST /11 QUESTION TWO A bond issue in principal amount not to exceed $11,615, for the purpose of acquiring, constructing and equi ater transmission and distribution facilities. FOR 5,269 AGAINST 1,755 y; QUESTION THREE ' A bond issue in principal amount not to exceed $1,773,000 for the f; purpose of acquiring, constructing and reconstructing drainage improvements. t .1 FOR 5,390 AGAINST 1,646 QUESTION FOUR A bond issue in principal amount not to exceed $1,179,000 for the purpose of acquiring, constructing and equipping solid waste collection, disposal, compacting and recycling facilities. FOR 5,837 AGAINST 1,302 QUESTION FIVE A bond issue in principal amount not to exceed $561,000 for the 4 purpose of acquiring, constructing and equipping public parks and playgrounds. FOR 5,374 AGAINST 1,736 QUESTION SIX A bond issue in principal amount not to exceed $213,000 for the purpose of acquiring, constructing and equipping police equip- ment, apparatus and facilities. FOR 5,164 AGAINST 1,905 QUESTION SEVEN A bond issue in principal amount not to exceed $1,697,000 for the purpose of acquiring, constructing and equipping firefighting vehicles, equipment, apparatus and facilities. FOR 5,623 AGAINST .1,423 QUESTION EIGHT A bond issue in principal amount not to exceed $69,000 for the purpose of acquiring, constructing and egwpping emergency facilities. medical service vehicles, equipmentand FOR 5,716 .AGAINST 1,354 QUESTION NINE A bond issue in principal amount not to exceed $968,000 for the purpose of expanding and renovating the City Youth Center swimming pool and related facilities. FOR 5,490 AGAINST 1,667 QUESTION TEN for the 4 A bond issue in principal amount not to exceed $2,013,000 purpose of acquiring, constructing and equipping perking of tea for the Dickson Street area. FOR 3,811 AGAINST 3,240 4 QUESTION ELEVEN A bond issue in principal amount not to exceed $575,000 for the purpose of acquiring, constructing and equipping City mainte- nance and storage facilities and buildings. FOR 3,990 AGAINST 3,001 This proclamation shall be published one time in a newspaper having general circulation in said City. An person desiring to challenge the results of the sppeeccial election described above shall file such challenge in the Circuit "q Court of Washington County within thirty (30) days of the date of publication of this proclamation. Dated this 6th day of June, 1990. By: William V. Martin, Mayor L, I CERTIFICATE; OF WASHINGTON COUNTY ELECTION COMMISSION SPECIAL ELECTION ON THE QUESTION OF ISSUING a CAPITAL IMPROVEMENT BONDS. tl STATE OF ARKANSAS ) )SS: COUNTY OF ARKANSAS WE, THE DULY COMMISSIONED AND ACTING ELECTION COMMISSIONERS of Washington County, Arkansas do hereby certify that the following is a true and correct abstract of votes cast in the special election held on May 29, 1990 in the City of Fayetteville, I' Arkansas pursuant to Ordinance No. 3480 of said City, on the eleven (11) questions described below concerning the issuance of capital improvement bonds of said City for the purpose of financing, with any other available funds, the costs of acquiring, constructing, reconstructing, improving, renovating, expanding and equipping capital improvements for said City, as described in the respective questions below, and related costs of issuance. The vote on each of said questions was as follows: QUESTION ONE A bond issue in principal amount not to exceed 912,326,000 for the purpose of constructing, reconstructing and improving City streets and bridges. FOR 5,743 AGAINST 1,378 QUESTION TWO A bond issue in principal amount not to exceed 911,615,000 for the purpose of acquiring, constructing and equipping water transmission and distribution }' facilities. FOR 5,269 ?'^ AGAINST 1,755 ,� b Page 2 Certificate of Election City of Fayetteville Special Election May 29, 1990 QUESTION THREE A bond issue in principal amount not to exceed $1,773,000 for the purpose of acquiring, constructing !iii and reconstructing drainage improvements. FOR 5,390 AGAINST 1,646 QUESTION FOUR A bond issue in principal amount not to exceed �. $1,179,000 for the purpose of acquiring, constructing and equipping solid waste collection, disposal, compacting and recycling facilities. FOR 5,837 AGAINST 1,302 if QUESTION FIVE A bond issue in principal amount not to exceed $561,000 for the purpose of acquiring, constructing and equipping public parks and playgrounds. FOR 5,374 AGAINST 1,736 QUESTION SIX + A bond issue in principal amount not to exceed $213,000 for the purpose of acquiring, constructing and equipping police equipment, apparatus and facilities. FOR 5,184,E AGAINST 1,905 QUESTION SEVEN A bond issue in principal amount not to exceed $1,697,000 For the purpose of acquiring, constructing and equipping firefighting vehicles, equipment, apparatus and facilities. !' FOR 5,623 AGAINST 1,423 QUESTION EIGHT A bond issue in amount not to exceed $69,000 principal for the purpose of acquiring, constructing and equipping emergency medical service vehicles, equipment and facilities. 4 FOR 5,716 AGAINST 1,354 I ` is '� Page 3 Certificate of Election City of Fayetteville Special Election May 29, 1990 QUESTION NINE A bond issue in principal amount not to exceed $988,000 for the purpose of expanding and renovating the City Youth Center swimming pool and related facilities. FOR 5,490 AGAINST 1,667 QUESTION TEN A bond issue in principal amount not to exceed $2,013,00 for the purpose of acquiring, constructing and equipping parking facilities for the Dickson Street area. FOR 3,811 AGAINST 3,240 QUESTION ELEVEN A bond issue in principal amount not to exceed $575,000 for the purpose of acquiring, constructing and equipping City maintenance and storage facilities and buildings. FOR 3,990 AGAINST 3,001 WE FURTFIXR CERTIFY that the polls were open from 8:00 a.m. until 7:30 p.m.; that only qualified electors of the City of Fayetteville, Arkansas were permitted to vote in said election; that only duly appointed judges and clerks made due returns of the votes cast; and that we canvassed the votes as required by law. LN TESTIMONY WHEREOF, we have hereunto set our hands this _ 7thdav of June , 1990. WASHINGTON COUNTY ELECTION COMMISSION WASHINGTON COUNTY-nARKANSAS e Evans, Ke'' th Pummill, Member Steven Neuse, Member i4 CERTIFICATE OF CITY AS TO ORDINANCE NO. 3506 li We, William V. Martin and Sherry L. Thomas, the Mayor and City Clerk, respectively, of the City Fayetteville, Fa etteville Arkansas, a duly organized and existing municipality and political subdivision of the State or Arkansas (the "City"), DO HEREBY CERTIFY as follows: 1. We are the duly elected or appointed, qualified, and acting Mayor and City Clerk of the City and as such officials have in our possession or have access to the official books and corporate records of the City. 2. Attached hereto as exhibit A is a true, complete and correct copy of Ordinance No. 3506 (the "Ordinance"), duly passed by a majority of the Directors of the City, with an emergency clause duly passed by a two-thirds vote of said Directors, at a dulycalled special meeting of the Board of Directors of the City, open to the public, held on September 13, 1990. 3. Attached hereto as Exhibit B is a true, complete and correct copy of an excerpt from the minutes of said meeting held on September 13, 1990, evidencing the passage of the Ordinance, as said minutes appear in the official records of the City; at said meeting a quorum was present and acted throughout; and the Ordinance is in full force and effect and has not been altered, .% amended, or repealed as of the date hereof. No petition to refer the Ordinance to the people under Amendment 7 to the Constitution of the State of Arkansas has been filed as of the date hereof and the Board of Directors of the City has not referred the Ordinance to the people for adoption or rejection. 4. Attached hereto as Exhibit C is a true, complete and correct copy of a publisher's affidavit evidencing publication of the Ordinance in The Northwest Arkansas Times on September 16, 1990. 5. The meeting referred to in paragraph 2 hereof was open to the public in compliance with the provisions of Section 25- 19-106 of the Arkansas Statutes Annotated, as amended and supplemented. 6. The Board of Directors of the City had not adopted any by-laws or rules of procedure relating to said meeting. 7. As of a date prior to said meeting the time for filing a referendum petition in the City has been fixed at 31 days after ''; the publication of local measures passed by the Board of Directors of the City. WITNESS our hands as of the 18th day of October 1990. ayor ty Clerk K Exhibit A ORDINANCE NO. 3506 AN ORDINANCE OF THE BOARD OF DIRECTORS OF THE CITY OF FAYETTEVILLE, ARKANSAS, PROVIDING FOR THE ISSUANCE AND CERTAIN DETAILS OF $33,019,000 SALES AND USE TAX CAPITAL IMPROVEMENT BONDS, SERIES 1990 OF THE CITY OF FAYETTEVILLE, ARKANSAS, AUTHORIZING THE EXECUTION AND DELIVERY OF A TRUST INDENTURE SECURING SUCH BONDS, PROVIDING FOR THE SALE OF SUCH BONDS AND CERTAIN OTHER MATTERS RELATING THERETO AND DECLARING AN EMERGENCY WHEREAS, the Board of Directors (the "Board") of the City of Fayetteville, Arkansas (the "City"), pursuant to Subchapter 2 of Chapter 75 of Title 26 of the Arkansas Statutes, on October 4, 1988 duly passed Ordinance No. 3381; and WHEREAS, pursuant to such Ordinance No. 3381, the Board levied a local sales and use tax of one per centum (1%) to a maximum of Twenty-five Dollars ($25.00) on each single transaction and called a special election to be held in the City on November 8, 1988 in order to submit to the qualified electors of the City the question of levying such tax for a period of twenty (20) years to finance a capital improvement program and economic development program (capital facilities) for the City; and WHEREAS, at such election held on November 8, 1988, a majority of the qualified electors of the City voting thereon approved the levy by the City of such local sales and use tax (the "Sales and Use Tax"), and the Sales and Use Tax has been levied and collected since December 1, 1988; and WHEREAS, the Board, pursuant to Amendment 62 to the Constitution of the State of Arkansas and the Local Government Bond Act of 1985, on April 19, 1990 duly passed Ordinance No. 3480; and WHEREAS, pursuant to such Ordinance No. 3480, the Board authorized the issuance of not exceeding $33,019,000 capital improvement bonds of the City to finance, with any other available funds, the acquisition, construction, reconstruction, improvement, renovation, expansion and equipment of the various capital improvements described therein (the "Improvements") and related costs of issuance, with the retirement of such bonds to be secured by a pledge of all of the proceeds of the Sales and Use Tax or such portion of such proceeds as shall be determined by the City to be adequate to obtain satisfactory ratings or insurance on such bonds, and called a special election to be held in the City on May 29, 1990 in order to submit to the qualified electors of the City the questions of issuing such bonds to be so secured for each of the Improvements and in the respective amounts described therein; and WHEREAS, at such election held on May 29, 1990, a majority of the qualified voters of the City voting thereon approved the issuance of such bonds and the security therefor pursuant to such !I Ordinance No. 3480; and f WHEREAS, the Board has determined to proceed at this time with 4 the sale and issuance of all of such bonds in one series, to be designated "Sales and Use Tax Capital Improvement Bonds, Series P 1990" (the "Series 1990 Bonds"), for the purpose of paying a part of the Cost (as such term is defined in the Indenture hereinafter described) of the Improvements and to provide for the issuance of�';'i.1, one or more additional series for the purpose of refunding the bonds of any series issued under the Indenture (the Series 1990 Bonds and all such additional bonds being collectively called the "Bonds"); and WHEREAS, the Board desires in this ordinance to provide for the issuance of the Series 1990 Bonds and to set forth certain terms, covenants and conditions with respect thereto; and WHEREAS, the City is authorized to enter into the Indenture for the purpose of setting forth certain terms, covenants and conditions with respect to the Bonds; and WHEREAS, the City has made arrangements for the sale of the Series 1990 Bonds to the Llama Company, of Fayetteville, Arkansas (the "Purchaser"), and in connection therewith has prepared and distributed a Preliminary Official Statement, dated September 7, 1990 (the "Preliminary Official Statement"); and WHEREAS, the City has received from Capital Guaranty Insurance Company, a Maryland corporation ("Capital Guaranty"), an offer to issue a Financial Guaranty Bond (the "Financial Guaranty Bond") which provides for the payment of the principal of and the interest on the Series 1990 Bonds when Due for Payment which is unpaid by reason of Nonpayment (as each such term is defined in the Financial Guaranty Bond); and WHEREAS, the Purchaser has submitted to the City a Bond Purchase Agreement, dated September 13, 1990, providing for the purchase of the Series 1990 Bonds by the Purchaser (the "Bond Purchase Agreement"); and WHEREAS, a final Official Statement, dated September 13, 1990 (the "Official Statement"), has been prepared and is to be distributed in connection with the sale of the Series 1990 Bonds; NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF DIRECTORS OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. The Series 1990 Bonds shall be issued in the aggregate principal amount of $33,019,000 for the purpose of providing funds, with any other available funds, for (a) paying the Cost of the Improvements, (b) making a deposit to the credit of the 2 L�� Reserve Account (as defined in the Indenture) and (c) paying the costs of issuing the Series 1990 Bonds.. The proceeds of the Series 1990 Bonds are to be allocated to paying the Cost of the Improvements as described in Appendix A to this ordinance. Section 2. The Series 1990 Bonds shall be dated October 15, 1990 and shall consist of Serial Bonds (as defined in the Indenture) in the principal amount of $17,184,000 maturing on November 15 in each of the years, in the amounts and at the interest rates shown below: Year of Maturity Principal Amount Interest Rate 1991 $ 824,000 6.00% 1992 1,065,000 6.10 1993 1,130,000 6.20 1994 1,205,000 6.30 1995 1,280,000 6.40 1996 1,360,000 6.50 1997 1,450,000 6.60 1998 1,545,000 6.70 1999 1,650,000 6.80 2000 1,765,000 6.90 2001 1,890,000 7.00 2002 2,020,000 •7.05 and of Term Bonds (as defined in the Indenture) in the principal amount of $15,835,000 maturing on November 15 in each of the years, in the amounts and at the interest rate set forth below: Year of Maturity 2005 2008 Principal Amount $6,985,000 8,850,000 Interest Rate 7.15% 7.25 The Amortization Requirements (as defined in the Indenture) for the Term Bonds maturing November 15, 2005 shall begin in the Bond Year ending November 14, 2003 and shall be as follows: Bond Year Amortization Ending November 14 Requirement 2003 $2,165,000 2004 2,325,000 2005 2,495,000 The Amortization Requirements for the Term Bonds maturing November 15, 2008 shall begin in the Bond Year ending November 14, 2006 and shall be as follows: 3 Bond Year Amortization Ending November 14 Requirement 2006 $2,675,000 2007 2,870,000 2008 3,305,000 The Series 1990 Bonds shall be issued as fully registered Bonds without coupons in the denomination of $5,000 or any whole multiple thereof, except that one Series 1990 Bond shall be in the denomination of $4,000. Interest on the Series 1990 Bonds shall be payable on May 15, 1991 and semiannually thereafter on each May 15 and November 15 (each an "Interest Payment Date"). Principal of the Series 1990 Bonds shall be payable only upon presentation and surrender of such Bonds at the principal corporate trust office of Mcllroy Bank & Trust, in the City of Fayetteville, Arkansas, as bond registrar, transfer agent and paying agent (the "Bond Registrar"). Interest on the Series 1990 Bonds shall be paid by check or draft mailed by the Bond Registrar to the registered owners of the Series 1990 Bonds as shown on the registration books kept by the Bond Registrar on the Regular Record Date or the Special Record Date (as each such term is defined in the Indenture); provided, however, that upon the request of the registered owner of $1,000,000 or more in principal amount of the Series 1990 Bonds, such interest shall be paid by wire transfer of funds to a bank account designated by such registered owner. Section 3. The Series 1990 Bonds maturing on or before November 15, 2000 are not subject to redemption prior to their respective maturities. The Series 1990 Bonds at the time outstanding which mature after November 15, 2000 may be redeemed prior to their respective maturities, at the option of the City, from any moneys that may be available for such purpose, upon notice as provided in Article III of the Indenture, either in whole or in part, in inverse order of maturity (and by lot within any maturity) on any date not earlier than November 15, 2000, at the redemption prices (expressed as percentages of the principal amount of the Series 1990 Bonds or portions thereof to be redeemed as of the date of such redemption), together with accrued interest to the redemption date, as follows: Redemption Dates (Both Inclusive) Redemption Prices November 15, 2000 to November 14 2001 102% November 15, 2001 to November 14 2002 101 November 15, 2002 and thereafter 100 The Term Bonds maturing on November 15, 2005 are also subject to redemption in part by lot on November 15, 2003 and each November 15 thereafter to and including November 15, 2005 in an amount equal to the Amortization Requirement therefor in the immediately preceding Bond Year set out in Section 2 of this ordinance and the Term Bonds maturing on November 15, 2008 are also subject to redemption in part by lot on November 15, 2006 and each November 15 thereafter to and including November 15, 2008 in an amount equal to the Amortization Requirement therefor in the immediately preceding Bond Year set out in Section 2 of this ordinance, in each case upon notice as provided in Article III of the Indenture, at the principal amount of each Bond to be redeemed, together with accrued interest to the date fixed for redemption, without premium. Section 4. From the proceeds of the Series 1990 Bonds, there shall be deposited to the credit of the Reserve Account established under the Indenture an amount equal to the Reserve Account Deposit Requirement (as defined in the Indenture) on account of the issuance of the Series 1990 Bonds and to the credit of the Construction Fund (as defined in and established under the Indenture) the balance of such proceeds for paying a part of the Cost of the Improvements and the costs of issuing the Series 1990 Bonds. Section 5. The principal of and interest and any redemption premium on the Bonds and all sinking fund payments with respect thereto required by or pursuant to the Indenture shall be payable solely from the Sales and Use Tax Revenues (as defined in the Indenture) pledged therefor but may also be paid under certain circumstances from the proceeds of the Bonds or the Financial Guaranty Bond and the income received from the investment of moneys deposited in the funds and accounts established by or pursuant to the Indenture as provided in the Indenture. The faith and credit of the City are not pledged to the payment of such principal, interest and premium. Section 6. The Series 1990 Bonds are to be executed and delivered as provided in the Indenture. Section 7. The Trust Indenture, dated as of October 15, 1990, by and between the Trustee named therein and the City (the "Indenture"), securing the Bonds and containing certain terms, covenants and conditions with respect to the Bonds, is hereby approved in substantially the form presented to the Board for its consideration and the Mayor and the City Clerk of the City are hereby authorized and directed to execute and deliver and to affix the seal of the City to the Indenture in the name of and on behalf of the City. Any changes to the Indenture which are not material may be approved by such officers of the City executing the Indenture, their execution and delivery of the Indenture to constitute conclusive evidence of such approval. Section 8. The Financial Guaranty Bond and the offer of Capital Guaranty to issue the Financial Guaranty Bond are hereby approved in substantially the forms presented to the Board for its consideration and an appropriate officer of the City is hereby authorized to accept such offer on behalf of the City. Section 9. The Bond Purchase Agreement, constituting the offer of the Purchaser to purchase the Series 1990 Bonds at a price of $32,576,545 plus accrued interest from October 15, 1990 to the date of delivery thereof and with such rates of interest and other terms as are set forth in this ordinance, is hereby approved and the Mayor and the City Clerk of the City are hereby authorized and directed to execute and deliver and to affix the seal of the City to the Bond Purchase Agreement in the name of and on behalf of the City. Section 10. The Official Statement is hereby approved in substantially the form presented to the Board for its consideration and the Mayor of the City is hereby authorized and directed to execute, deliver and permit the distribution of the Official Statement with such changes as he deems advisable in the name of and on behalf of the City, his execution and delivery of the Official Statement to constitute conclusive evidence of his approval of any such changes. The City hereby consents to the use by the Purchaser of the Preliminary Official Statement. +' Section 11. Mcllroy Bank & Trust, in the City of Fayetteville, Arkansas, is hereby designated as the Trustee for the purposes and within the meaning of the Indenture and Mcllroy Bank & Trust in the City of Fayetteville, Arkansas, is hereby designated as the Bond Registrar for the Series 1990 Bonds for the purposes and within the meaning of the Indenture. Section 12. All actions heretofore taken by the officers, agents and employees of the City in connection with the authorization and issuance of the Series 1990 Bonds are hereby approved, ratified and confirmed. The officers, agents and employees of the City and the officers and agents of the Trustee and the Bond Registrar are hereby authorized and directed to execute such documents and to do all other acts and things required of them by the provisions of the Series 1990 Bonds, the Indenture, the Financial Guaranty Bond, the Bond Purchase Agreement and this ordinance for the full, punctual and complete performance of the terms, covenants, provisions and agreements therein. Section 13. The Board hereby determines that the City is in dire need of additional capital funds in order to provide essential capital improvements; that an appropriate way to provide such funds is by the issuance of the Series 1990 Bonds as authorized by such Ordinance No. 3480 and this ordinance; and that this ordinance shall be given immediate effect so that the essential capital improvements described in Appendix A hereto may be effected as soon as possible. Therefore, an emergency is hereby declared to exist and this ordinance, being necessary for the immediate preservation 6 ' 1 h, ri. of the public health, safety and welfare, shall be in full force and effect from and after its passage and approval. PASSED AND APPROVED this 13th day of September, 1990. /s/ William V. Martin Mayor .�. k 0a i� I IH ATTEST: /s/ Sherry L. Thomas City Clerk r'. 2I 2 2 2 2 7 The proceeds of the Series 1990 Bonds are to be applied to pay a part of the Cost of the Improvements as follows: +' (i) constructing, reconstructing and improving City 8� streets and bridges -- $10,717,000; (ii) acquiring, constructing and equipping water transmission and distribution facilities -- $9,988,288; (iii) acquiring, constructing and reconstructing drainage improvements -- $1,542,000; (iv) acquiring, constructing and equipping solid waste collection, disposal, compacting and recycling facilities - - $1,025,000; (v) acquiring, constructing and equipping public parks 4j and playgrounds -- $487,000; (vi) acquiring, constructing and equipping police equipment, apparatus and facilities -- $185,000; (vii) acquiring, constructing and equipping firefighting vehicles, equipment, apparatus and facilities -- $1,475,000; (viii) acquiring, constructing and equipping emergency medical service vehicles, equipment and facilities -- $60,000; (ix) expanding and renovating the City Youth Center swimming pool and related facilities -- $867,500; (x) acquiring, constructing and equipping parking facilities for the Dickson Street area $1,750,000; and (xi) acquiring, constructing and equipping City maintenance and storage facilities and buildings -- $500,000. t. jl L , Exhibit B MINUTES OF A SPECIAL MEETING OF THE CITY BOARD OF DIRECTORS A special meeting of the Fayetteville City Board of Directors was held on Thursday, September 13, 1990 at 3:00 p.m. in the Directors' Room of the City Administration Building at 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Mayor William Martin; Directors Michael Green, Ernest Lancaster, Russ Kelley, Paul Marinoni, Jr., Shell Spivey and Fred Vorsanger; City Manager Scott bl Linebaugh, City Attorney Jerry Rose, City Clerk Sherry Thomas; members of the staff, press and visitors. CALL TO ORDER The meeting was called to order by the Mayor with seven Directors present. The Mayor explained the reason for the special Board meeting was to consider adoption of an ordinance authorizing the issuance of certain sales and use tax Capital Improvement Bonds. Martin reminded the Board that they were not permitted to take action on any other item during the meeting without unanimous approval and consent of the Board. City Attorney Jerry Rose read the ordinance. Director Marinoni, seconded by Green, made a motion to suspend the rules and place the ordinance on its second reading. Upon roll call, the motion passed 7 to 0. The ordinance was read for the second time. Director Marinoni, seconded by Green, made a motion to further suspend the rules and place the ordinance on its third and final reading. Upon roll call, the motion passed 7 to 0. The ordinance was read for the third and final time. Mayor Martin explained to the audience that the special meeting i. was somewhat less formal; however, all rules of order would still apply and anyone wishing to address the Board regarding the Capital Improvement Bond issue was welcomed to do so. Martin invited City Manager Scott Linebaugh or the representatives of the underwriting council to make any opening remarks or comments. Linebaugh explained that the Llama Corporation has agreed to purchase the bonds, setting up approximately thirteen sellers. The average coupon is 7.064. Linebaugh stated that the bonds will be paid out of the sales tax proceeds and explained that the excess r: above the principal, interest and other requirements of the reserves will be returned to the City. He highlighted some of the projects the bonds would be used for including the following: STREETS & BRIDGES ....................$11 million WATER TRANSMISSION & DISTRIBUTION. . . . $10 million DRAINAGE IMPROVEMENTS ................$1.5 million September 13, 1990 I'{ PARKS. ...............$500,000 SOLID WASTE FACILITIES ...............$1 million POLICE FACILITIES ....................$185,000 FIRE FIGHTING FACILITIES .............$1.5 million YOUTH CENTER.........................$867,000 is PARKING FACILITIES ...................$1.75 million t ; CITY MAINTENANCE & STORAGE ...........$500,000 6, Li�i5t Linebaugh stated that the Board was being asked to sign the bond ordinance and give the Mayor permission to sign the other pertinent documents necessary to follow through with the bond sale. Mike Phillips, representing the Llama Company, first introduced Les Balladge and Gordon Wilburn. Both men are with Rose Law Firm and served as underwriter's council. He also introduced associates Tim Webb and David Hausam, then gave a presentation highlighting the capital improvement bonds in a step-by-step account of how the program had begun and has proceeded since that time. Phillips stated that the Llama Company's proposal to serve as underwriter was originally presented on March 13 and stressed the fact that the company would be available on short notice and the city's financing would be made a priority for the company. It was stated that the company would obtain a good credit rating for the proposed issue and present the City with a competitive financing package. Phillips stated that the company had obtained an "A" rating from Moody's Investor Rating Service and an "A-" rating from Standard & Poor's. He stated that approval was needed now for the program which would provide financing at favorable rates and a fair cost. Phillips explained the sources and uses. Bond proceeds were listed as $33,019,000. He stated that $18,897.19 would be paid from the projected settlement date of October 18. Accrued interest will be placed in an Accrued Interest Fund with a trustee. $28,596,788 will be deposited into the construction fund. Deposit to a debt service fund will be in the amount of $3,302,000 which will be invested with interest to serve as a "stop -gap" protection for the investors in case of temporary problems in the flow of funds. Phillips explained that this money would pay the principal and interest and would become the property of the City when the bonds were paid off in the year 2008. Underwriter's Discount ($13.30 per thousand) amounts to $442,454.60. He stated over half of that amount was paid out for the distribution. Expenses for the Underwriter's Council and a ratings expert were also taken from that amount. A Cost of Issuance account will be funded for $139,700 and will pay the City's portion of expenses, including the Brown & Wood Law Firm, printing the official statements, as well as the bonds themselves, the Trustees authentication fees and all other incidental fees involved in closing. Phillips stated that September 13, 1990 P any money left in that account after expenses would be placed into 'I the Bond Fund at the end of a reasonable period of time. Phillips stated that the Bond Insurance Premium had a cost of $537,308.57 which was a somewhat higher amount than it was first thought the City would be required to pay, but Phillips stated that this insurance would certainly save the City money in the long run. bl iI��F For sources and uses during the Construction period, amounts ran in the following: Bond proceeds ................$33,019,000.00 Accrued interest .............$ 18,997.19 Construction Project.........$28,596,788.00 Reserve Fund Account .........$ 3,302,000.00 Underwriter's Discount.......$ 442,454.60 Cost of Issuance .............$ 139,700.00 Bond Insurance ...............$ 537,308.57 Balance remaining ............$ 748.83 Linebaugh summarized the steps taken so far to bring the City Board to the present situation. 1. Public vote to re -dedicate usage of 1% sales tax 2. Vote to allow the City to issue bonds 3. Pursuing bond issue through Llama company 4. Selection Committee to hire Underwriter's and Bond Council 5. City & Underwriter's composition of the bond issue Linebaugh stated that a presentation was given at the last Board meeting by Mike Phillips which described the usage of Mcllroy Bank as Trustee. He stated that the question before the Board at this meeting was whether or not to issue these bonds on these specific terms discussed. Actual closing would be in one month but Linebaugh stated that the Board must approve the Bond Ordinance. This would allow Linebaugh's office to sign the documents and proceed. Director Green asked if the Construction. Fund would be funded at the date of closing. Phillips explained that it would be funded on the closing date which was projected for October 18. He stated that the funds would be invested and due to projected earnings on the money, there would probably be some rebate due the Federal Government unless there are some regulation changes within the next three years. Tiny Hamilton, Fayetteville, asked if the sale of these bonds would have any of the directors in a conflict of interest situation. Mayor Martin pointed out that any person living in the City would it September 13, 1990 directly benefit from the sale of the bonds; therefore, everyone would really have a "conflict of interest", including Mr. Hamilton. Director Kelley stated that Merrill Lynch was a part of the selling group and, although he did not know the company's position at that time, he did sell 50 bonds. He stated further that he did not anticipate any conflict of interests in doing so. I ', Hamilton further questioned the Board as to where the funding would come from and if the school renovations would be affected by the "re -dedication". Linebaugh stated that the re -dedication Hamilton spoke of was for the 1 cent sales tax. He noted that the money being used for the bonds is not the entire amount of the tax and explained that is the reason the wording is as it is. This allows the portion of the money coming in that is not used for paying principal and interest will be returned to the City to be used for future projects. Linebaugh also noted that the City's obligation to the schools would be upheld. He stated that an arrangement had been worked out for deposit of funds into an escrow account for school projects over and above the $10 million voted for. Les Balladge, associate of the Rose Law Firm in Little Rock, I; addressed the questions regarding the school district improvements ► and the public's authorization to issue bonds if the City chose to do so. - Joe Robson, Fayetteville, addressed the Board regarding the re- dedication and questioned the amount of interest to be paid in the eighteen years the issue is to be financed. Phillips answered that, if there is no refunding, the total amount including projected interest would be $26,681,951.88. City Attorney Jerry Rose pointed out several minor changes in the Bond Purchase Agreement and stated that they needed to be clarified before voting on the ordinance. The changes were read and noted. Upon roll call, the ordinance was adopted by an unanimous vote of 7 to 0. ORDINANCE NO. 3506 APPEARS ON PAGE OF ORDINANCE AND RESOLUTION BOOK ADJOURNMENT ► f ;] The meeting was adjourned at 4:24 p.m. wi0gs, NO + winr .a wind l_ud a INrwr.ronr IN .1.1.14. 101 m. nm Exhibit C ��.!:'..Ii ofoap111A N TotC..... Dr l.a •w•<1I w<`I Nam N •N1M. nl N 1 '�'<N <Nl. in• f�i•1 wI1M c w t FInAMNI T•Ar•N, STATE d ARKANSAS i i . iow.p 01 DIA/6TTRf 2M In.MaN1Mrb aNr Man. w «. V...10.Al. EW lilW<a ww•N `n f••f. Y1 a•N«1wM .I .N Mm•M W<n 11.• i rFTNa<IT I'S. In. a1.. T 1l1VILL/. • A N ` NIMMIIOaSl4IW Se IN C•lu.Ntl• O...... r TNa IY •N na• MwnaR b 111• NI NM, e+ fMbn 10.lrTM OM1KIN fUA.6/ N' 1lRTAI. ^Ilr • ••M ..<1,. .•In•^r m• 1.11.1. • «1•Nm•'.MMM. 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I 1 w MwMt w<n Ora nNOc• N •' N 06100.1. . . ro b � anlir•m1u MIN INO NaD11w41Wn M If. 1x10. ~2W N1r.e•'1 m• N ..re - - ___.._ w ....1..,w a a.m.. __ _.__ __ ...11.04 1wnlNunN.•n .<,I.lbl� l im .i• l�«MaM � r,M. Nn• rI1 N NI •µ.. r CITY OF FAYETTEVILLE, ARKANSAS to McILROY BANK & TRUST AS TRUSTEE TRUST INDENTURE Dated as of October 15, 1990 Securing SALES AND USE TAX CAPITAL IMPROVEMENT BONDS of the City of Fayetteville, Arkansas TABLE OF CONTENTS (This Table of Contents is not a part of this Indenture but is for convenience of reference only.) Page ARTICLE I. Definitions Section 101. Meaning of Words and Terms . . . . . . . . 1 Section 102. Rules of Construction . . . . . . . . . . . 12 ARTICLE II. Authorization, Form, Execution, Delivery and Registration of Bonds Section 201. Issuance of Bonds . . . . . . . . . . . . . 1 Section 202. Details of Bonds Section 203. Execution and Form of Bonds . . . . . . . . 4 Section 204. Authentication of Bonds . . . . . . . . . . 12 Section 205. Exchange of Bonds . . . . . . . . . . 13 Section 206. Negotiability, Registration and Transfer of Bonds . . . . . . . . . . . . 13 Section 207. Ownership of Bonds . . . . . . . . . . . . 14 Section 208. Authorization of the Series 1990 Bonds . . 14 Section 209. Refunding Bonds . . . . . . . . . . . . . . 15 Section 210. Other Indebtedness . . . . . . . . . . . . 19 Section 211. Temporary Bonds . . . . . . . . . . . . . . 20 Section 212. Mutilated, Destroyed or Lost Bonds . . . . 20 ARTICLE III. Redemption of Bonds Section 301. Redemption Generally . . . . . . . . . . . 1 Section 302. Selection of Bonds for Redemption or Purchase . . . . . . . . . . . . . . 1 Section 303. Redemption Notice . . . . . . . . . . . . . 1 Section 304. Partial Redemption of Bonds . . . . . . . . 1 Section 305. Effect of Calling for Redemption . . . . . 2 Section 306. Cancellation of Bonds . . . . . . . . . 2 Section 307. Bonds Called for Redemption or Defeased Not Outstanding . . . . . . . . 2 Z1 2 2 2 ARTICLE IV. Construction Fund Section 401. Construction Fund . . . . . . . . . . . . . 1 Section 402. Payments from Construction Fund . . . . . . 1 Section 403. Cost of Improvements . . . . . . . . . 1 Section 404. Requisitions from Construction Fund . . . . 2 Section 405. Reliance upon Requisitions . •. . . . . 4 Section 406. Disposition of Construction FundBalance 4 ARTICLE V. Revenues and Funds Section 501. Sinking Fund and Related Accounts . . . . . 1 Section 502. Establishment of Other Sinking Funds and Deposit of Sales and Use Tax Revenues . . . . . . . . . . . . 1 Section 503. Application of Moneys in Bond Service Account . . . . . . . . . . . . . 3 Section 504. Application of Moneys in Redemption Account . . . . . . . . . . . . . . 3 Section 505. Application of Moneys in Reserve Account 5 Section 506. Moneys Held in Trust . . . . . . . . . . . 5 Section 507. Cancellation of Bonds . . . . . . . . . . . 6 Section 508. Concerning the Financial Guaranty Bond 6 ARTICLE VI. Depositories of Moneys, Security for Deposits and Investment of Funds Section 601. Security for Deposits . . . . . . . . . . . 1 Section 602. Investment of Moneys . . . . . . . . 1 Section 603. Valuation of Investment Obligations . . . . 2 Section 604. Covenant as to Arbitrage and Private Activity Bond Status . . . . . . . . . . 3 ARTICLE VII. Particular Covenants Section 701. Payment of Principal, Interest and Premium . . . . . . . . . . . . . 1 Section 702. Construction of Improvements . . . . . . . 1 Section 703. Covenant against Encumbrances . . . . . . . 1 Section 704. Employment of Accountant . . . . . . . . . 2 Section 705. Annual Budget • . . . • . . . . . . . . . 2 Section 706. Use of Sales andUse TaxRevenues . . . . . 2 ii Section 707. Records, Accounts and Audits . . . . . . . 3 Section 708. Sales and Use Tax Revenues . . . . . . . . 3 Section 709. Sale of Improvements . . . . . . . . . . . 3 ARTICLE VIII. Remedies Section 801. Extension of Interest Payment . . . . . . . 1 Section 802. Events of Default . . . . . . . . . 1 Section 803. Acceleration of Maturities . . . . . . . . 2 Section 804. Enforcement of Remedies . . . . . . . . . . 3 Section 805. Pro -Rata Application of Funds . . . . . 4 Section 806. Effect of Discontinuance of Proceedings . 6 Section 807. Restrictions upon Action by Individual Owner of Bonds . . . . . . . . . . . . . . 6 Section 808. Actions by Trustee . . . . . . . . . . . . 7 Section 809. No Remedy Exclusive . . . . . . . . . . . . 7 Section 810. Delay Not a Waiver . . . . . . . . . . . . 7 Section 811. Notice of Default. . . . . . . . . . . . 7 Section 812. Subrogation . . . . . . . . . . . . . . . . 8 ARTICLE IX. Concerning the Trustee and the Bond Registrar. Section 901. Acceptance of Duties . . . . . . . . . 1 Section 902. Trustee Entitled to Indemnity . . . . . . 1 Section 903. Limitation on Obligations and Responsibilities of Trustee . . . . . . 2 Section 904. Trustee Not Liable for Failure of City to Act . . . . . . . . . . . . 2 Section 905. Compensation and Indemnification of Trustee . . . . . . . . . . . . . . . . 2 Section 906. Monthly Statement from Trustee . . . . . . 3 Section 907. Trustee May Rely on Certificates . . . . . 3 Section 908. Notice of Default . . . . . . . . . . . . 4 Section 909. Trustee May Deal in Bonds . . . . . 4 Section 910. Trustee Not Responsible for Recitals . . . 4 Section 911. Trustee Protected in Relying on Certain Documents . . . . . . . . . . . . . . . 4 Section 912. Resignation of Trustee . . . . . . . . . . 5 Section 913. Removal of Trustee . . . . . . . . . . . . 5 Section 914. Appointment of Successor Trustee . . . . . 5 Section 915. Vesting of Trusts in Successor Trustee . . 6 iii j; 21 2 2 2 2 4 ARTICLE X. Execution of Instruments by Owners and Proof of Ownership of Bonds Section 1001. Execution of Instruments by Owners and ii Proof of Ownership of Bonds . . . . . . 1 ARTICLE XI. Supplemental Indentures Section 1101. Supplemental Indentures without Owners' Consent . . . . . . . . . . . . . . 1 Section 1102. Supplemental Indentures with Owners' Consent . . . . . . . . . . . . . . . . 2 Section 1103. Supplemental Indenture Part of Indenture 4 ARTICLE XII. Defeasance Section 1201. Cessation of Interest of Owners . . . . . 1} ARTICLE XIII. Miscellaneous Provisions, Section 1301. Effect of Covenants . . . . . . . . . . 1 Section 1302. Manner of Giving Notice . . . . . . . . 1 Section 1303. Successorship of Bond Registrar . . . . . 2 Section 1304. Successorship of City Officers . . . . . . 3 Section 1305. Credit Facility Provider as Owner . . . . 3 Section 1306. Inconsistent Indentures . . . . . . . . . 3 Section 1307. Headings Not Part of Indenture . . . . . . 3 Section 1308. Parties, Capital Guaranty and Owners Alone Have Rights under Indenture . . . . . . 3 Section 1309. Multiple Counterparts . . . . . . . . . . 4 EXHIBIT A t' LIST OF PERMITTED INVESTMENTS . . . . . . . . . . . . A-1 iv TRUST INDENTURE THIS TRUST INDENTURE (this "Indenture"), dated as of the it fifteenth day of October, 1990, by and between the CITY OF gg° FAYETTEVILLE, ARKANSAS (the "City"), a city of the first class organized under and existing by virtue of the laws of the State, of Arkansas, and Mcllroy Bank & Trust, a banking institution organized under and existing by virtue of the laws of the State of Arkansas, with its principal corporate trust office located at Fayetteville, Arkansas, as trustee (said bank and any bank or trust company becoming successor trustee under this Indenture being hereinafter called the "Trustee") , W I T N E S S E T H• WHEREAS, the Board of Directors (the "Board") of the City pursuant to Subchapter 2 of Chapter 75 of Title 26 of the Arkansas Statutes, on October 4, 1988 duly passed Ordinance No. 3381 (the "Sales and Use Tax Ordinance"); and WHEREAS, pursuant to the Sales and Use Tax Ordinance, the Board levied a local sales and use tax of one percentum (1%) to a maximum of twenty-five dollars ($25.00) on each single transaction and called a special election to be held in the City on November 8, 1988 in order to submit to the qualified electors of the City the question of levying such tax for a period of twenty (20) years to finance a capital improvement program and economic development program (capital facilities) for the City; and WHEREAS, at such election held on November 8, 1988, a majority of the qualified electors of the City voting thereon approved the levy by the City of such local sales and use tax (the "Sales and Use Tax"), and the Sales and Use Tax has been levied and collected since December 1, 1988 and WHEREAS, the Board, pursuant to Amendment 62 to the Constitution of the State of Arkansas (the "State") and the Local Government Bond Act of 1985, on April 19, 1990 duly passed Ordinance No. 3480; and WHEREAS, pursuant to such Ordinance No. 3480, the Board authorized the issuance of not exceeding $33,019,000 capital improvement bonds of the City to finance, with any other available funds, the acquisition, construction, reconstruction, improvement, renovation, expansion and equipment of the various capital improvements described therein (the "Improvements") and related costs of issuance, with the retirement of such bonds to be secured by a pledge of all of the proceeds of the Sales and Use Tax or such portion of such proceeds as shall be determined by the City to be adequate to obtain satisfactory ratings or insurance on such bonds, and called a special election to be held in the City on May 29, 1990 in order to submit to the qualified electors of the City the questions of issuing such bonds to be so secured for each of the Improvements and in the respective 5, amounts described therein; and WHEREAS, at such election held on May 29, 1990, a majority of the qualified voters of the City voting thereon approved the issuance of such bonds and the security therefor pursuant to such Ordinance No. 3480; and WHEREAS, the City is authorized pursuant to the Local Government Bond Act of 1985 to provide by a trust indenture for certain terms, covenants and conditions in connection with the issuance of such bonds and has determined to provide in this Indenture for the issuance of such bonds in one series (the "Series 1990 Bonds") for the purpose of paying a part of the Cost (as hereinafter defined) of the Improvements and subsequently in one or more additional series for the purpose of refunding the bonds of any series issued hereunder (the Series 1990 Bonds and all such additional bonds being collectively called the "Bonds"); and: WHEREAS, the principal of and interest and any redemption premium on the Bonds and all sinking fund payments with respect thereto required by or pursuant to this Indenture shall be payable solely from the Sales and Use Tax Revenues (as hereinafter defined) pledged therefor but may also be paid under certain circumstances from the proceeds of the Bonds or a Credit Facility and income received from the investment of moneys deposited in the funds and accounts established by or pursuant to this Indenture as hereinafter provided; WHEREAS, all acts, conditions and things required by the Constitution and laws of the State to happen, exist and be performed precedent to and in the execution and delivery of this Indenture have happened, exist and have been performed as so required in order to make this Indenture a valid and binding trust indenture for the security of the Bonds and in accordance with its terms; and WHEREAS, the execution and delivery of this Indenture and the issuance of the Series 1990 Bonds have been in all respects duly and validly authorized by the City pursuant to Ordinance No. 3506 duly passed by the Board on September 13, 1990; and WHEREAS, the Trustee has accepted the trusts created by this Indenture and in evidence thereof has joined in the execution hereof; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in consideration of the premises, the mutual promises and covenants herein contained, the acceptance by the Trustee of the trusts hereby created, and of the purchase and acceptance of the Bonds IL by the registered owners thereof, and also for and in consideration of the sum of One Dollar ($1) to the City in hand paid by the Trustee at or before the execution and delivery of this Indenture, the receipt of which is hereby acknowledged, and for the purpose of fixing and declaring the terms and conditions upon which the Bonds are to be issued, authenticated, delivered, secured and accepted by all persons who shall from time to time y`. be or become registered owners thereof, and in order to secure payment of all of the Bonds at any time issued and Outstanding hereunder and the interest and the redemption premium, if any, thereon according to their tenor, purport and effect, and in order to secure the performance and observance of all covenants, agreements and conditions, express or implied, therein and herein contained, the City has executed and delivered this Indenture and has agreed that the Bonds shall be special obligations of the City, payable from the Sales and Use Tax Revenues and also from the proceeds of the Bonds or a Credit Facility and the income received from the investment of moneys deposited in the funds and accounts established by or pursuant to this Indenture, as hereinafter provided, and has pledged and does hereby pledge to the Trustee the Sales and Use Tax Revenues, as provided in this Indenture, as security for the payment of the Bonds, including principal, interest and any redemption premium; TO HAVE AND TO HOLD the Sales and Use Tax Revenues thus pledged and hereby conveyed and assigned, or agreed or intended so to be, to the Trustee or its successor or successors in trust to their own use and behoof forever, IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth, for the equal and proportionate benefit, security and protection of all or registered owners of the Bonds, issued or to be issued and Outstanding and secured under this Indenture, without preference, priority or distinction as to lien or otherwise of any Bond over any other Bond; PROVIDED, HOWEVER, that if the City, its successors or assigns shall well and truly pay or cause to be paid the principal of the Bonds and the interest and any premium due or to become due thereon, at the times and in the manner mentioned in the Bonds, according to the true intent and meaning thereof, and shall make the payments into the Sinking Fund (as hereinafter defined) as required under this Indenture, or shall provide, as permitted hereby, for the payment thereof in accordance with Article XII hereof, and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay to the Trustee all sums of money due or to become due to it in accordance with the terms and provisions hereof, then upon such final payment or provision for payment in full this Indenture and the rights granted shall cease, terminate and be void; otherwise this Indenture to be and remain in full force and effect. THIS INDENTURE FURTHER WITNESSETH and it is expressly declared that all Bonds issued or to be issued and secured hereunder are to be issued, authenticated and delivered and all Hi of the Sales and Use Tax Revenues hereby pledged are to be dealt with and disposed of under, upon and subject to the terms, ryi1 H conditions, stipulations, covenants, agreements, trusts, uses and purposes as hereinafter stated, and the City has agreed and covenanted and does hereby agree and covenant with the Trustee 0'` and with the respective registered owners, from time to time, of the Bonds, as follows, that is to say: BI` , i 4 t I� I�; 1' I ARTICLE I. Definitions. Section 101. Meaning of Words and Terms. In addition to words and terms elsewhere defined in this Indenture, the fol- lowing words and terms as used in this Indenture shall have the, following meaning, unless some other meaning is plainly intended: "Accountant" shall mean the independent certified public accountant or firm of independent certified public accountants which shall have a favorable reputation for skill and experience in accounting matters at the time and during the period employed by the City under the provisions of Section 704 of this Indenture to perform and carry out the duties imposed on the Accountant by this Indenture. "Accreted Value" of a Capital Appreciation Bond shall mean the original principal amount thereof plus interest accrued thereon on the basis of a 360 -day year consisting of twelve 30 -day months compounded semi-annually on each Interest Payment Date commencing on the Interest Payment Date next succeeding the dated date of such Capital Appreciation Bond to the date of maturity or redemption prior to maturity of such Capital Appreciation Bond. The Accreted Value with respect to any date other than an Interest Payment Date is the Accreted Value on the next preceding Interest Payment Date or the dated date of such Capital Appreciation Bond plus the percentage of the Accreted Value on the next succeeding Interest Payment Date derived by dividing the number of days from the next preceding Interest Payment Date or the dated date of such Capital Appreciation Bond for the period between such dated date and the initial Interest ;. Payment Date for such Bond to the date of determination by the total number of days from the next succeeding Interest Payment Date or the dated date of such Capital Appreciation Bond to the next succeeding Interest Payment Date. "Amortization Requirements" shall mean the amounts required to be deposited in the Redemption Account for any Series of Bonds for the purpose of redeeming prior to their maturity and paying E; at their maturity the Term Bonds of such Series, the specific amounts and times of such deposits to be determined by the Board in the Series Ordinance providing for the issuance of such Series. "Annual Budget" shall mean the Annual Budget adopted pursuant to Section 705 of this Indenture. "Average Annual Debt Service" shall mean at any given time of determination average annual Principal and Interest Requirements for the Bonds until their final maturity. itf Ii "Board" shall mean the Board of Directors of the City or any successor board or body in which the general legislative powers of the City shall be vested. "Bond Counsel" shall mean a lawyer or firm of lawyers nationally recognized in municipal bond law selected by the City. a;. "Bond Registrar" shall mean a bank or trust company, either within or without the State, designated as such by the Board which shall perform such functions as Bond Registrar as are required by Article II of this Indenture; provided, however, if the Board shall so determine, the City Clerk may act as Bond Registrar. "Bond Service Account" shall mean the Bond Service Account, a special account created and designated by Section 501 of this Indenture. "Bonds" shall mean collectively the Bonds issued under the • provisions of Article II of this Indenture. �' "Bond Year" shall mean the period commencing on November 15 of any year and ending on November 14 of the following year. "Capital Appreciation Bond" shall mean any Bond or Bonds of a Series which are sold at an initial price to the public of less than ninety-seven percentum (97%) of the principal amount thereof payable at maturity, but only if such Bond or Bonds are designated as a Capital Appreciation Series or Term Bond or Bonds pursuant to the Series Ordinance providing for the issuance of the Series of Bonds of which such Capital Appreciation Bond or Bonds are to be a part. "Capital Guaranty" shall mean Capital Guaranty Insurance Company or any successor to its functions hereunder. "City" shall mean the City of Fayetteville, a municipal corporation in Washington County, Arkansas. "City Attorney" shall mean the City Attorney of the City or the officer succeeding to his or her principal functions. "City Clerk" shall mean the City Clerk of the City or the officer succeeding to his or her principal functions. "Code" shall mean the Internal Revenue Code of 1986, as amended, and all regulations applicable thereto. "Completion Date" shall mean the date of completion of the Improvements as such date shall be certified pursuant to the requirements of this Indenture. 1-2 "Board" shall mean the Board of Directors of the City or any successor board or body in which the general legislative powers !i City the ,.rty shall be vested. "Bond Counsel" shall mean a lawyer or firm of lawyers I.! nationally recognized in municipal bond law selected by the City. "Bond Registrar" shall mean a bank or trust company, either within or without the State, designated as such by the Board which shall perform such functions as Bond Registrar as are Ia' required by Article II of this Indenture; provided, however, if the Board shall so determine, the City Clerk may act as Bond Registrar. "Bond Service Account" shall mean the Bond Service Account, a special account created and designated by Section 501 of this Indenture. "Bonds" shall mean collectively the Bonds issued under the !` provisions of Article II of this Indenture. "Bond Year" shall mean the period commencing on November 15 of any year and ending on November 14 of the following year. "Capital Appreciation Bond" shall mean any Bond or Bonds of a Series which are sold at an initial price to the public of less than ninety-seven percentum (97%) of the principal amount thereof payable at maturity, but only if such Bond or Bonds are designated as a Capital Appreciation Series or Term Bond or Bonds pursuant to the Series Ordinance providing for the issuance of (: the Series of Bonds of which such Capital Appreciation Bond or Bonds are to be a part. "Capital Guaranty" shall mean Capital Guaranty Insurance Company or any successor to its functions hereunder. "City" shall mean the City of Fayetteville, a municipal corporation in Washington County, Arkansas. "City Attorney" shall mean the City Attorney of the City or the officer succeeding to his or her principal functions. "City Clerk" shall mean the City Clerk of the City or the officer succeeding to his or her principal functions. "Code" shall mean the Internal Revenue Code of 1986, as amended, and all regulations applicable thereto. "Completion Date" shall mean the date of completion of the Improvements as such date shall be certified pursuant to the requirements of this Indenture. I-2 "Construction Fund" shall mean the City of Fayetteville Sales and Use Tax Capital Improvement Bonds Construction Fund, a special fund created and designated by Section 401 of this Indenture. "Convertible Bonds" shall mean Bonds issued under this Inde- nture 1' which are convertible, at the option of the City, into a form of Bonds which are permitted by this Indenture other than the form of such Bonds at the time they were issued. "Cost", as applied to the Improvements, shall embrace the cost of the work constituting the respective Improvements, including all obligations and expenses and all other items of cost which are set forth in Section 403 of this Indenture. "Credit Facility" shall mean any legal arrangement pursuant j to which the entity providing such Credit Facility agrees to make or provide funds to or on behalf of the City to make payment of (i) the purchase price (including principal or principal and interest) of Optional Tender Bonds upon their tender by the Owners for purchase or (ii) with respect to all Bonds, the prin- cipal of and interest on the Bonds when due, whether by maturity, redemption, acceleration or otherwise; provided that the furnish- ing of such funds by such entity pursuant to such arrangement shall be required despite material adverse changes in the financial condition of the City. With respect to the Series 1990 Bonds, "Credit Facility" shall mean the Financial Guaranty Bond. "Credit Facility Provider" shall mean the entity providing a Credit Facility. With respect to the Series 1990 Bonds, "Credit Facility Provider" shall mean Capital Guaranty, and so long as Capital Guaranty is a Credit Facility Provider, any Credit Facility Provider must have a rating of "A-1+" from S&P or be approved by Capital Guaranty. "Current Interest Bonds" shall mean Bonds the interest on which is payable to the Bondholder on the Interest Payment Dates with respect thereto and not only at the maturity thereof. "Daily Newspaper" shall mean a newspaper published in the K. English language on at least five (5) business days in each calendar week. "Defaulted Interest" shall have the meaning attributed to such term in Section 202 of this Indenture. "Defeasance Obligations" shall mean those obligations described in clause (i) of the definition of "Government Obligations" herein. I-3 "Department" shall mean the State Department of Finance and Administration or any other department or agency of the State succeeding to its principal functions with respect to the Sales and Use Tax, which, pursuant to the Local Government Bond Act of 1985, is responsible for the collection of the proceeds of the Sales and Use Tax and the distribution of such proceeds to the State Treasurer. "Director of Finance" shall mean the Director of Finance of the City or the officer succeeding to his or her principal functions. "Depository" shall mean any bank or banking institution duly authorized by law to engage in the banking business and qualified under the laws of the State to act as a depository of moneys hereunder, which bank or banking institution has entered into an agreement with the City for the deposit of such moneys as required by State law. "Financial Guaranty Bond" shall mean the Financial Guaranty Bond issued by Capital Guaranty which provides for the payment of principal of and interest on the Series 1990 Bonds when Due for Payment which is unpaid by reason of Nonpayment (as such terms are defined in the Financial Guaranty Bond) to be issued by Capital Guaranty simultaneoulsy with the delivery of the Series 1990 Bonds. "Financial Statements" shall mean the audited financial statements of the City prepared in accordance with generally accepted accounting principles applicable to municipalities. "Fiscal Year" shall mean the period commencing on the first day of January and ending on the last day of December of the same year as the same may be amended from time to time to conform to the fiscal year of the City. "Government Obligations" shall mean (i) direct obligations of, or obligations the payment of the principal of and interest on which is fully guaranteed by, the United States of America; (ii) obligations issued or guaranteed by any instrumentality or agency of the United States of America, whether now existing or hereafter organized, including but not limited to those of the Federal Financing Bank, the members of the Farm Credit System whether individually or consolidated, Federal Home Loan Banks, the Export -Import Bank, Government National Mortgage Association and the Tennessee Valley Authority; (iii) evidences of ownership of proportionate interests in future interest or principal payments on obligations specified in clause (i) of this definition held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against I-4 the obligor on the underlying obligations described in clause (i) of this definition, and which underlying obligations are not. available to satisfy any claim of the custodian or any person claiming through the custodian or to whom the custodian may be obligated; (iv) municipal obligations, the payment of the principal of, interest on and redemption premium, if any, on which are irrevocably secured by obligations described in clause (i) of this definition and which obligations have been deposited in an escrow account which is irrevocably pledged to the payment of the principal of, interest on and redemption premium, if any, on such municipal obligations; (v) obligations issued by any state of the United States; and (vi) municipal obligations the payment of the principal of and interest on which are insured; provided, however, the obligations described in clauses (v) and (vi) of this definition shall also be rated in one of the top two highest rating categories (without regard to any gradation within such category) by both Moody's and S&P or, upon the discontinuance of either or both of such services, any other nationally recognized rating service or services. "Guaranteed Investment Contract" shall mean investment agreements with any bank or trust company which has long-term obligations rated in one of the two highest rating categories by Moody's and S&P or, upon the discontinuance of either or both of such services, any other nationally recognized rating service or services. "Improvements" shall mean the various capital improvements described in Ordinance No. 3480 passed by the Board on April 19, 1990, the acquisition, construction, reconstruction, improvement, renovation, expansion and equipment of which are to be financed, with any other available funds, by the issuance of the Series 1990 Bonds. "Indenture" shall mean this Trust Indenture and all supplements hereto as herein permitted. "Interest Payment Date" shall mean May 15 and November 15 in each Bond Year, except to the extent that other dates for the payment of interest on a Series of Bonds or portion thereof are provided by the Series Ordinance for such Series of Bonds. "Interim Notes" shall mean notes issued by the City with a final maturity not longer than thirty-six (36) months (or such longer period as may be permitted by State law) in anticipation of the refinancing thereof from all or a portion of the proceeds of a Series of Bonds issued under this Indenture. "Investment Obligations" shall mean any of the following, to the extent that the same are legal investments for the investment of public funds under State law: I-5 li the obligor on the underlying obligations described in clause (i) of this definition, and which underlying obligations are not ' available to satisfy any claim of the custodian or any person jl'I claiming through the custodian or to whom the custodian may be obligated; (iv) municipal obligations, the payment of the principal of, interest on and redemption premium, if any, on which are irrevocably secured by obligations described in clause (i) of this definition and which obligations have been deposited in an escrow account which is irrevocably pledged to the payment of the principal of, interest on and redemption premium, if any, on such municipal obligations; (v) obligations issued by any state of the United States; and (vi) municipal obligations the payment of the principal of and interest on which are insured; [: provided, however, the obligations described in clauses (v) and (vi) of this definition shall also be rated in one of the top two highest rating categories (without regard to any gradation within such category) by both Moody's and S&P or, upon the discontinuance of either or both of such services, any other nationally recognized rating service or services. "Guaranteed Investment Contract" shall mean investment agreements with any bank or trust company which has long-term obligations rated in one of the two highest rating categories by Moody's and S&P or, upon the discontinuance of either or both of such services, any other nationally recognized rating service or services. "Improvements" shall mean the various capital improvements described in Ordinance No. 3480 passed by the Board on April 19, 1990, the acquisition, construction, reconstruction, improvement, renovation, expansion and equipment of which are to be financed, with any other available funds, by the issuance of the Series r. 1990 Bonds. "Indenture" shall mean this Trust Indenture and all supplements hereto as herein permitted. "Interest Payment Date" shall mean May 15 and November 15 in each Bond Year, except to the extent that other dates for the payment of interest on a Series of Bonds or portion thereof are provided by the Series Ordinance for such Series of Bonds. "Interim Notes" shall mean notes issued by the City with a final maturity not longer than thirty-six (36) months (or such longer period as may be permitted by State law) in anticipation of the refinancing thereof from all or a portion of the proceeds of a Series of Bonds issued under this Indenture. "Investment Obligations" shall mean any of the following, to the extent that the same are legal investments for the investment of public funds under State law: I-5 (i) Government Obligations; (ii) bankers acceptances, certificates of deposit or time deposits of any bank, trust company or savings and loan association (including any investment in pools of such bankers acceptances, certificates of deposit or time deposits), which to the extent that such obligations are not insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, are collateralized at all times in amounts and by obligations as shall be permitted by State law; (iii) any repurchase, reverse repurchase or investment agreement with any bank or trust company organized under the laws of any state of the United States or any national bank- ing association, insurance company, or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York and a member of the Security Investors Protection Corporation, which agreement is secured by any one or more of the securities described in clauses (i), (ii) or (iii) of the definition of Government Obligations provided that the City has a perfected first security interest in the collateral and that the City or its agent has possession of the collateral, and that such collateral is held free and clear of claims by third parties; and (iv) Guaranteed Investment Contracts; provided that, so long as Capital Guaranty is a Credit Facility Provider, "Investment Obligations" shall mean Permitted Investments as defined in the List of Permitted Investments attached to this Indenture as Exhibit A, to the extent the same are legal investments for the investment of public funds under State law. "Maximum Permitted Maturity" shall mean December 1, 2008, the date which is twenty (20) years after December 1, 1988, the first day on which the Sales and Use Tax was actually levied and collected. "Maximum Principal and Interest Requirements" shall mean the maximum amount of Principal and Interest Requirements for any Bond Year. "Maximum Rate" shall mean two percentum (2%) per annum above the Federal Reserve discount rate on ninety -day commercial paper in effect at the Federal Reserve bank for the Federal Reserve district in which the State is located on May 29, 1990, the date of the election approving the issuance of the Bonds. I-6 "Mayor" shall mean the Mayor of the City or the officer ;! succeeding to his or her principal functions. "Moody's" shall mean Moody's Investors Service, a corporation organized and existing under the laws of the State of !' Delaware, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. <, "Optional Tender Bonds" shall mean the portion of a Series ial of Bonds issued under this Indenture, a feature of which is an. option on the part of the Owners of such Bonds to tender such Bonds to the City or a trustee or other fiduciary for such Owners for purchase. �. "Outstanding" shall mean, when used with respect to the Bonds, all Bonds theretofore delivered except: (a) Bonds paid or redeemed or delivered to or acquired by the Trustee and cancelled; and (b) Bonds deemed to have been paid in accordance with Section 307 or Section 1201 of this Indenture. "Owners" shall mean the registered owners of the Bonds from time to time Outstanding. "Principal" or "principal" shall mean (i) with respect to Current Interest Bonds, the stated principal amount thereof and (ii) with respect to Capital Appreciation Bonds, the Accreted Value thereof, as of any particular date of determination. "Principal and Interest Requirements" shall mean the respec- tive amounts which are required in each Bond Year to provide: (i) for paying the interest on all Bonds then Outstanding which is payable on the second Interest Payment Date in such Bond Year and the first Interest Payment Date in the following Bond Year, and (ii) for paying the principal of all Serial Bonds then Outstanding which is payable upon the maturity of Serial Bonds in the following Bond Year, and (iii) the Amortization Requirements for all Term Bonds for such Bond Year. I-7 In determining the amount of the Principal and Interest Require- ments for any Bond Year, the following rules shall apply: (a) with respect to Variable Rate Bonds, the interest rate shall be assumed to be the average rate of interest for all Variable Rate Bonds for the prior Bond Year or portion thereof or if there were no Variable Rate Bonds Outstanding during such prior Bond Year, then the initial rate of inter- est on such Variable Rate Bonds; "average rate" shall mean the rate determined by dividing the total amount of interest paid on Variable Rate Bonds in any Bond Year or portion thereof by the average principal amount of Variable Rate Bonds Outstanding during such Bond Year or portion thereof; (b) with respect to Interim Notes, interest only and not the principal shall be included in Principal and Interest Requirements if the Series of Bonds all or a portion of the proceeds of which are expected to be used to refinance such Interim Notes has been duly authorized by the City; provided, however, that none of the interest on or principal of Interim Notes shall be included in Principal and Interest Requirements if the Board shall determine in the ordinance providing for the issuance of such Interim Notes that such Interim Notes shall be Subordinated Indebtedness hereunder; (c) with respect to Optional Tender Bonds, Principal and Interest Requirements shall not include the principal amount of such Optional Tender Bonds payable upon exercise by the Owners thereof of the option to tender such Bonds for purchase to the extent and for so long as a Credit Facility shall be in full force and effect with respect to such Optional Tender Bonds but shall include the regularly scheduled principal payments on such Optional Tender Bonds, either upon payment at maturity or redemption in satisfac- tion of the Amortization Requirements for such Optional Tender Bonds; provided, however, that during any period of time after the issuer of the Credit Facility has advanced funds thereunder and before such amount is repaid, Principal and Interest Requirements shall include the principal amount due and payable thereunder and interest thereon, in accordance with the principal repayment schedule and interest rate or rates specified in the Credit Facility; (d) if interest on a Series of Bonds is payable from the proceeds of such Bonds or from other amounts set aside irrevocably for such purpose at the time such Bonds are issued, interest on such Series of Bonds shall be included in Principal and Interest Requirements only in proportion to the amount of interest payable in the then current Bond Year I-8 from amounts other than amounts so funded to pay such inter- est; fli (e) Principal and Interest Requirements shall not '! include the principal of and redemption premium, if any, and f' interest on Subordinated Indebtedness. I, I "Redemption Account" shall mean the Redemption Account, a special account created and designated by Section 501 of this Indenture. "Refunding Bonds" shall mean the Bonds issued at any time under the provisions of Section 209 of this Indenture. "Regular Record Date" shall mean the fifteenth (15th) day (whether or not a business day) of the month preceding any Interest Payment Date (if such Interest Payment Date is the first day of a month) or the first day (whether or not a business day) of the month of any Interest Payment Date (if such Interest I! .} Payment Date is the fifteenth (15th) day of a month); provided, however, that a different Regular Record Date may be provided for a Series of Bonds pursuant to the Series ordinance providing for 1 the issuance of such Series. "Reserve Account" shall mean the Reserve Account, a special account created and designated by Section 501 of this Indenture including any subaccounts created therein and any separate reserve accounts created as permitted by Section 502 of this Indenture. "Reserve Account Deposit Requirement" shall mean the amount, if any, determined in any Series Ordinance to be required to be deposited monthly to the credit of the Reserve Account on account of the respective Series of Bonds; provided, however, that: (i) the Reserve Account Deposit Requirement for any Series shall not be less than one -sixtieth (1/60) of the Reserve Account Requirement for such Series in each month following the month in. which such Series is issued until the amount on deposit in the Reserve Account in connection with such Series shall be equal to the Reserve Account Requirement for such Series; (ii) in the event any deficiency is created in the Reserve Account for any Series by a withdrawal, valuation or otherwise, the Reserve Account Deposit Requirement, if any, then in effect for any Series shall be increased, beginning in the month following the month in which such deficiency was created, by an amount at least equal to one -twelfth (1/12) of the amount of such deficiency; and Ii I-9 from amounts other than amounts so funded to pay such inter- est; (e) Principal and Interest Requirements shall not include the principal of and redemption premium, if any, and interest on Subordinated Indebtedness. "Redemption Account" shall mean the Redemption Account, special account created and designated by Section 501 of this Indenture. "Refunding Bonds" shall mean the Bonds issued at any time under the provisions of Section 209 of this Indenture. "Regular Record Date" shall mean the fifteenth (15th) day (whether or not a business day) of the month preceding any Interest Payment Date (if such Interest Payment Date is the first day of a month) or the first day (whether or not a business day) of the month of any Interest Payment Date (if such Interest Payment Date is the fifteenth (15th) day of a month); provided, however, that a different Regular Record Date may be provided for a Series of Bonds pursuant to the Series ordinance providing for the issuance of such Series. "Reserve Account" shall mean the Reserve Account, a special account created and designated by Section 501 of this Indenture including any subaccounts created therein and any separate reserve accounts created as permitted by Section 502 of this Indenture. "Reserve Account Deposit Requirement" shall mean the amount, if any, determined in any Series Ordinance to be required to be deposited monthly to the credit of the Reserve Account on account of the respective Series of Bonds; provided, however, that: (i) the Reserve Account Deposit Requirement for any Series shall not be less than one -sixtieth (1/60) of the Reserve Account Requirement for such Series in each month following the month in which such Series is issued until the amount on deposit in the Reserve Account in connection with such Series shall be equal to the Reserve Account Requirement for such Series; (ii) in the event any deficiency is created in the Reserve Account for any Series by a withdrawal, valuation or otherwise, the Reserve Account Deposit Requirement, if any, then in effect for any Series shall be increased, beginning in the month following the month in which such deficiency was created, by an amount at least equal to one -twelfth (1/12) of the amount of such deficiency; and I-9 (iii) so long as Capital Guaranty is a Credit Facility Provider, the Reserve Account Deposit Requirement for any Series at the time of the issuance of such Series shall be the Reserve Account Requirement for such Series and thereafter shall be such amount, if any, as may be required to make the amount on deposit in the Reserve Account in connection with such Series equal to the Reserve Account Requirement for such Series. In the event that the Reserve Account Requirement for any Series is provided by the alternate funding methods permitted herein, if after a withdrawal from the Reserve Account the City shall cause the letter of credit, insurance policy or other similar instrument to be reinstated in the full amount of the Reserve Account Requirement, no additional deposits of moneys to the Reserve Account shall be required in connection with such withdrawal. "Reserve Account Requirement" shall mean the least of (i) Maximum Principal and Interest Requirements on account of the Bonds issued under the provisions of Article II of this Indenture in the then current or any subsequent Fiscal Year, (ii) one hundred twenty-five percentum (125%) of the Average Annual Debt Service on account of Bonds issued under the provisions of Article II of this Indenture and (iii) ten percentum (10%) of the proceeds of all Series of Bonds determined on the basis of their initial purchase price to the public; provided, however, that clause (iii) will not be applicable in the event the City receives an opinion of Bond Counsel to the effect that funding the Reserve Account in an amount larger than the amount stated in clause (iii) will not cause the interest on the Bonds to be included in the gross income of the Owners for federal income taxation purposes and, further, that, with the consent of Capital Guaranty, (a) the City shall be permitted to provide all or a portion of the Reserve Account Requirement by the execution and delivery of a policy of insurance or letter of credit or other similar arrangement which, after its issuance and delivery, will permit the Trustee to receive the full amount covered by such arrangement without further conditions, financial or otherwise, (b) with respect to all or any portion of a Series of Bonds the interest rate on which is not fixed at a single numerical rate, the City shall be permitted to provide for a Reserve Account Requirement which is less than the least of the amounts stated in clauses (i), (ii) and (iii) above pursuant to the Series Ordinance with respect to such Series, (c) with respect to a Series of Bonds or portion thereof which is supported by a Credit Facility, the City shall be permitted to provide for a Reserve Account Requirement which is based only on the principal and interest due on the Bonds of such Series and not on the repay- ment provisions of such Credit Facility, and (d) with respect to a Series of Bonds the City shall be permitted to provide that there shall be no Reserve Account Requirement provided that the I-10 Series ordinance with respect to such Series of Bonds provides (A) for the establishment of separate accounts within the Bond Service Account and Redemption Account with respect to such Series of Bonds and (B) that the remaining accounts within the Sinking Fund are not charged with the payment of principal of and interest and any redemption premium on such Series of Bonds. "Sales and Use Tax" shall mean the local sales and use tax of one percentum (1%) to a maximum of twenty-five dollars ($25.00) on each single transaction levied and collected by or on behalf of the City for a period of twenty (20) years pursuant to the Sales and Use Tax Ordinance. "Sales and Use Tax Ordinance" shall mean Ordinance No. 3381, passed by the Board on October 4, 1988. "Sales and Use Tax Revenues" shall mean the moneys actually received during any period of time by or on behalf of the City from the State Treasurer representing the proceeds of the Sales and Use Tax less certain amounts deducted or retained by the State Treasurer as authorized by Subchapter 2 of Chapter 75 of Title 26 of the Arkansas Statutes. "Serial Bonds" shall mean the Bonds of a Series which shall be stated to mature in annual installments and "Term Bonds" shall mean the Bonds of a Series so designated in the Series Ordinance for such Bonds. "Series" shall mean the Bonds delivered at any one time under the provisions of Section 208 or 209 of this Indenture. "Series 1990 Bonds" shall mean the Bonds issued pursuant to Section 208 of this Indenture for the purpose of paying, with any other available funds, the Cost of the Improvements. "Series Ordinance" means the ordinance of the Board that is required by this Indenture to be passed prior to the issuance of any Series of Bonds under this Indenture and, with particular reference to the Series 1990 Bonds, means Ordinance No. 3506, passed by the Board on September 13, 1990. Unless otherwise provided herein, each Series Ordinance shall (a) determine the details of the Bonds of such Series, including, among other things, the maximum principal amount of such Series, the date thereof, the method of payment of interest thereon, the maximum maturity thereof, the redemption provisions relating thereto, including the Amortization Requirements for the Term Bonds, if any, of such Series, and the Bond Registrar therefor, (b) identify the purpose to be effected with the proceeds of such Series, (c) provide for the application of the proceeds of the Bonds to which such Series Ordinance relates, and (d) if permitted pursuant to Section 502 of this Indenture, create a eparate sinking fund for such Series and determine the method of unding of the sinking fund for such Series and such other atters as the Board shall determine. "Sinking Fund" shall mean the City of Fayetteville Sales and se Tax Capital Improvement Bonds Interest and Sinking Fund, a ;. pecial fund created and designated by Section 501 of this ndenture. "Special Record Date" shall mean a date fixed by the Trustee or the payment of Defaulted Interest pursuant to Section 202 of his Indenture. "S&P" means Standard & Poor's Corporation, a corporation rganized and existing under the laws of the State of New York, is successors and their assigns, and, if such corporation shall e dissolved or liquidated or shall no longer perform the func- ions of a securities rating agency, "S&P" shall be deemed to efer to any other nationally recognized securities rating agency !' esignated by the City. "State" shall mean the State of Arkansas. "State Treasurer" shall mean the State Treasurer of the tate of Arkansas or the officer succeeding to the functions of he State Treasurer referred to in this Indenture. "Subordinated Indebtedness" shall mean bonds or notes, the ment of the principal of or interest or any redemption premium which are payable from Sales and Use Tax Revenues which may m time to time be made available therefor by the City after City makes the deposits required by Section 502 of this enture and which is designated as Subordinated Indebtedness by Board in an ordinance authorizing the issuance of such ,ordinated Indebtedness. "Trustee" shall mean the Trustee serving as such under this lenture, whether original or successor. "Variable Rate Bonds" shall mean any Bonds issued under this ndenture the interest rate on which is not established at the ime of issuance at a single numerical rate. Section 102. Rules of Construction. Words of the masculine ender shall be deemed and construed to include correlative words f the feminine and neuter genders. Unless the context shall therwise indicate, the words "Bond", "Owner" and "person" shall nclude the plural as well as the singular number and the word person" shall mean any individual, corporation, partnership, oint venture, association, joint-stock company, trust, j! I-12 y� eparate sinking fund for such Series and determine the method of unding of the sinking fund for such Series and such other atters as the Board shall determine. "Sinking Fund" shall mean the City of Fayetteville Sales and se Tax Capital Improvement Bonds Interest and Sinking Fund, a pecial fund created and designated by Section 501 of this ndenture. "Special Record Date" shall mean a date fixed by the Trustee or the payment of Defaulted Interest pursuant to Section 202 of his Indenture. "S&P" means Standard & Poor's Corporation, a corporation rganized and existing under the laws of the State of New York, is successors and their assigns, and, if such corporation shall e dissolved or liquidated or shall no longer perform the func- ➢ ions of a securities rating agency, "S&P" shall be deemed to efer to any other nationally recognized securities rating agency esignated by the City. "State" shall mean the State of Arkansas. "State Treasurer" shall mean the State Treasurer of the tate of Arkansas or the officer succeeding to the functions of he State Treasurer referred to in this Indenture. "Subordinated Indebtedness" shall mean bonds or notes, the ayment of the principal of or interest or any redemption premium n which are payable from Sales and Use Tax Revenues which may rom time to time be made available therefor by the City after he City makes the deposits required by Section 502 of this ndenture and which is designated as Subordinated Indebtedness by he Board in an ordinance authorizing the issuance of such ubordinated Indebtedness. "Trustee" shall mean the Trustee serving as such under this ndenture, whether original or successor. "Variable Rate Bonds" shall mean any Bonds issued under this ndenture the interest rate on which is not established at the ime of issuance at a single numerical rate. Section 102. Rules of Construction. Words of the masculine ender shall be deemed and construed to include correlative words f the feminine and neuter genders. Unless the context shall, therwise indicate, the words "Bond", "Owner" and "person" shall nclude the plural as well as the singular number and the word person" shall mean any individual, corporation, partnership, oint venture, association, joint-stock company, trust, 1 iincorporated organization or government or any agency or >litical subdivision thereof. ARTICLE II. Authorization, Form, Execution, Delivery and Registration of Bonds. Section 201. Issuance of Bonds. For the purpose of pro- iding funds for paying a part of the Cost of the Improvements, stablishing certain reserves and paying related costs of ssuance, as more specifically provided in Section 208 of this ndenture, Bonds of the City may be issued under and secured by his Indenture, subject to the provisions of this Article. Bonds f the City may also be issued, as more specifically provided in ection 209 of this Indenture, subject to the provisions of this rticle, for the purpose of refunding all or any portion of the ,onds of one or more Series issued by the City under the rovisions of this Indenture. The principal of and the interest nd any redemption premium on all such Bonds shall be payable ,olely from the Sales and Use Tax Revenues pledged therefor as •` ,rovided in this Indenture but may also be paid as herein irovided from other moneys in the Sinking Fund or other separate ,inking funds created under the provisions of Section 502 of this ndenture or in the Construction Fund, including any income ,eceived from the investment of moneys deposited in such funds end accounts, or from a Credit Facility and all of the covenants, agreements and provisions of this Indenture shall be for the ienefit and security of all and singular the present and future iwners of the Bonds so issued or to be issued, without !reference, priority or distinction as to lien or otherwise, xcept as otherwise hereinafter provided, of any one Bond over ny other Bond by reason of priority in the issue, sale or egotiation thereof or otherwise. Section 202. Details of Bonds. Each Series of Bonds shall issued pursuant to a Series Ordinance providing for the suance of such Series. The Bonds of each Series shall be signated "City of Fayetteville, Arkansas Sales and Use Tax pital Improvement Bonds, Series _," in each case inserting an entifying Series year, and if more than one Series are issued a single calendar year, inserting an identifying Series letter addition to the year. Except as otherwise provided in the ries Ordinance relating to a Series of Bonds, the Bonds of any ries are issuable in fully registered form without coupons in nominations (either with respect to original principal amount principal amount payable at maturity) of $5,000 or any whole ltiple thereof. Bonds shall be numbered consecutively from R-1 wards. Bonds of each Series shall be dated, shall be stated to ture not later than the Maximum Permitted Maturity and shall ar interest until their payment at a rate or rates, including tes which may vary, not exceeding the Maximum Rate, such terest being payable and such Bonds being subject to redemption for to their respective maturities, all as provided in the ries Ordinance for such Series to the extent permitted by State w. Unless otherwise provided in the Series Ordinance pursuant which each Series of Bonds is issued, each Bond shall bear terest from the Interest Payment Date next preceding the date which it is authenticated unless it is (a) authenticated upon y Interest Payment Date in which event it shall bear interest om such Interest Payment Date or (b) authenticated before the rst Interest Payment Date in which event it shall bear interest om its date; provided, however, that if at the time of thentication of any Bond interest is in default, such Bond all bear interest from the date to which interest has been id. Both the principal of and the interest on the Bonds shall be yable in any coin or currency of the United States of America at is legal tender for the payment of public and private debts the respective dates of payment thereof. The principal of such Bonds shall be payable upon the esentation and surrender of such Bonds as the same shall become e at the principal corporate trust office of the Bond aistrar. Unless otherwise provided in the Series Ordinance pursuant which each Series of Bonds is issued, any interest on any such nd which is payable, and is punctually paid, or for which yment is duly provided, on any Interest Payment Date shall be id to the person in whose name the Bond is registered in the gistration books provided for in Section 2O6 of this Indenture the close of business on the Regular Record Date. The Bond gistrar shall pay interest which is payable on the Bonds by eck or draft mailed to the persons entitled thereto on the terest Payment Date; provided, however, the Board pursuant to e Series Ordinance for a Series may provide for payment of such terest by the Bond Registrar by wire transfer to the Owners of ,000,000 or more in principal amount of any Series of Bonds sued under this Indenture. Unless otherwise provided in the Series Ordinance pursuant which each Series of Bonds is issued, any interest on any such nd which is payable, but is not punctually paid, or for which yment is not duly provided, on any Interest Payment Date erein called "Defaulted Interest") shall forthwith cease to be yable to the Owner on the relevant Regular Record Date solely virtue of such Owner having been such Owner; and such faulted Interest may be paid by the City, at its election in oh case, as provided in subsection A or B below: A. The City may elect to make payment of any Defaulted est on the Bonds of any Series to the persons in whose names Bonds are registered at the close of business on a Special II -2 cord Date for the payment of such Defaulted Interest, which all be fixed in the following manner. The City shall notify a Bond Registrar and the Trustee in writing of the amount of faulted Interest proposed to be paid on each Bond and the date the proposed payment (which date shall be such as will enable e Trustee to comply with the next sentence hereof), and at the me time the City shall deposit or cause to be deposited with e Bond Registrar an amount of money equal to the aggregate ount proposed to be paid in respect of such Defaulted Interest shall make arrangements satisfactory to the Bond Registrar for ch deposit prior to the date of the proposed payment, such ney when deposited to be held in trust for the benefit of the rsons entitled to such Defaulted Interest as in this subsection ovided. Thereupon the Trustee shall fix a Special Record Date r the payment of such Defaulted Interest which shall be not re than fifteen (15) nor less than ten (10) days prior to the to of the proposed payment and not less than ten (10) days ter the receipt by the Trustee of the notice of the proposed yment. The Trustee shall promptly notify the City of such ecial Record Date and, in the name and at the expense of the ty, shall cause notice of the proposed payment of such faulted Interest and the Special Record Date therefor to be fled, first-class postage prepaid, to each Owner at his address it appears in the registration books provided for in Section 6 of this Indenture not less than ten (10) days prior to such ecial Record Date. The Trustee may, in its discretion, in the me and at the expense of the City, cause a similar notice to be blished at least once in a Daily Newspaper of general rculation published in the City and in a Daily Newspaper of neral circulation or in a financial journal published in the rough of Manhattan, City and State of New York, but such blication shall not be a condition precedent to the tablishment of such Special Record Date. Notice of the ,oposed payment of such Defaulted Interest and the Special :cord Date therefor having been mailed as aforesaid, such ;faulted Interest shall be paid to the persons in whose names ie Bonds of such Series are registered on such Special Record ite and shall no longer be payable pursuant to the following tbsection B. The Bond Registrar shall pay such Defaulted iterest which is payable on the Bonds pursuant to this Lbsection A by check or draft mailed to the persons entitled iereto on the date fixed for the payment of such Defaulted iterest pursuant to this subsection A; provided, however, the )ard pursuant to the Series Ordinance for a Series may provide )r payment of such Defaulted Interest by the Bond Registrar by lre transfer. B. The City may make payment of any Defaulted Interest on e Bonds of any Series in any other lawful manner not incon- stent with the requirements of applicable law or any securities chancre on which such Bonds may be listed and upon such notice II -3 may be required by such exchange, if, after notice given by City to the Bond Registrar and the Trustee of the proposed merit pursuant to this subsection, such payment shall be deemed cticable by the Bond Registrar and the Trustee. subject to the foregoing provisions of this Section, each d delivered under this Indenture upon transfer of or in hange for or in lieu of any other Bond shall carry all the hts to interest accrued and unpaid, and to accrue, which were ried by such other Bond and each such Bond shall bear interest m such date, that neither gain nor loss in interest shall ult from such transfer, exchange or substitution. Section 203. Execution and Form of Bonds. The Bonds shall signed by or bear the facsimile signature of the Mayor and 11 be signed by or bear the facsimile signature of the City rk, and the official seal of the City or a facsimile thereof 11 be impressed or imprinted on the Bonds. In case any icer whose signature or a facsimile of whose signature shall ear on any Bonds shall cease to be such officer before the ivery of such Bonds, such signature or such facsimile shall ertheless be valid and sufficient for all purposes the same as he had remained in office until such delivery and, also, any d may bear the facsimile signature of, or may be signed by, h persons as at the actual time of the execution of such Bond 11 be the proper officers to execute such Bond although at the e of such Bond such persons may not have been such officers. Bonds issued under the provisions of this Article, the tificate of authentication, the opinion certification and the m of assignment shall be, respectively, in the following forms h such appropriate variations, omissions and insertions as may required or permitted by this Indenture or the Series inance pursuant to which such Bonds are issued. All Bonds 11 be endorsed thereon with such legends or text as may be essary or appropriate to conform to the applicable rules and vlations of any governmental authority or any securities :hange on which such Bonds may be listed or to any requirements law with respect thereto. [Face of Bond] ital Guaranty Insurance Company ("Capital Guaranty"), a yland corporation, has issued its Financial Guaranty Bond ber (the "Guaranty") securing the payment of this igation when Due for Payment, as such terms are defined in the is made to the Guaranty for the complete provisions All payments required to be made under the Guaranty II -4 11 be made in accordance with provisions thereof. The owner this obligation acknowledges and consents to the subrogation .transfer rights of Capital Guaranty as more fully set forth the Guaranty. ...... $_,000 United States of America State of Arkansas City of Fayetteville SALES AND USE TAX CAPITAL IMPROVEMENT BOND, SERIES .urity Date Interest Rate Original Issue Date CUSIP ......... ;ISTERED OWNER: ............ ................... ..... :NCIPAL AMOUNT: �. The City of Fayetteville (herein called the "City"), a icipal corporation of the State of Arkansas, is justly ebted and for value received hereby promises to pay to the istered owner shown above or registered assigns or legal resentative on the date specified above (or earlier as einafter referred to), upon the presentation and surrender eof, at the principal office of in the City (the "Bond istrar"), the principal sum shown above, and to pay to the -istered owner hereof, by check or draft mailed to the istered owner at his address as it appears on the bond ristration books of the City, or by wire transfer to the iistered owner of at least $1,000,000 principal amount of the ids, interest on such principal sum from the date hereof or Im 15 or 15 next preceding the date of .hentication to which interest shall have been paid, unless :h date of authentication is a 15 or - _ 15 to which interest shall have been paid, in which case >m such date, such interest to the maturity hereof being Fable on 15 and 15 in each year, mencing 15, 19_, at the rate per annum !cified above, until payment of such principal sum. The :erest so payable and punctually paid, or duly provided for, on r interest payment date will be paid to the person in whose ae this bond is registered at the close of business on the I '� jular Record Date for such interest, which shall be the first ;t) day (whether or not a business day) of the month of such :erest payment date. Any such interest not so punctually paid II -5 duly provided for shall forthwith cease to be payable to the istered owner on such Regular Record Date and may be paid to person in'whose name this bond is registered at the close of mess on a Special Record Date (as defined in the Indenture einafter mentioned) for the payment of such defaulted interest be fixed by the Trustee, notice whereof being given to the istered owners not less than ten (10) days prior to such cial Record Date, or may be paid at any time in any other ful manner not inconsistent with the requirements of licable law or any securities exchange on which the bonds of s series may be listed and upon such notice as may be required such law or exchange, all as more fully provided in the enture. Such payment of interest shall be by check mailed to registered owner at his address as it appears on the bond istration books maintained by the Bond Registrar. All such ments shall be made in such coin or currency of the United tes of America as at the time of payment is legal tender for went of public and private debts. This bond has been issued under the provisions of Amendment of the Arkansas Constitution, the Local Government Bond Act of 5, the Ordinances hereinafter mentioned and the Indenture. City is not obligated to pay the principal of or the premium, any, or the interest on this bond except from the Sales and Tax Revenues (as defined in the Indenture) pledged under the enture, and the faith and credit of the City are not pledged the payment of the principal of or the premium, if any, or the erest on this bond. The issuance of this bond shall not ectly or indirectly or contingently obligate the City to levy to pledge any taxes whatever or to make any appropriation for payment of the principal of or the premium, if any, or the erest on this bond except as provided in the ordinances and Indenture. ADDITIONAL PROVISIONS OF THIS BOND ARE SET FORTH ON THE SE HEREOF AND SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS T FORTH HERE. This bond shall not be valid or become obligatory for any se or be entitled to any benefit or security under the ture until this bond shall have been authenticated by the tion by the Bond Registrar of the certificate of ntication endorsed hereon. II -6 IN WITNESS WHEREOF, said City of Fayetteville has caused bond to [bear the facsimile signatures of] [be signed by] Mayor and its City Clerk and [a facsimile of] the official of the City to be [imprinted] [impressed] hereon, all as of day of , 19_. [Facsimile or manual signature] Mayor [Facsimile or manual signature] City Clerk CERTIFICATE OF AUTHENTICATION This bond is one of the bonds of the series designated ein and issued under the provisions of the within -mentioned inances and Indenture. Bond Registrar By Authorized Signatory of authentication: II -7 [Reverse Side of Bond] United States of America State of Arkansas City of Fayetteville SALES AND USE TAX CAPITAL IMPROVEMENT BOND, SERIES This bond is one of a series of bonds designated "Sales and Tax Capital Improvement Bonds, Series " and issued by the for the purpose of providing funds, with any other available .s, for and this bond is issued r and pursuant to Ordinance No. 3480, passed by the Board of actors of the City (the "Board") on April 19, 1990, and .nance No. __, passed by the Board on :h ordinances being herein collectively called the finances") and also pursuant to a Trust Indenture, dated as of fiber 15, 1990, by and between , in the City of , Arkansas, �r trustee (such and any bank or trust company becoming :essor trustee thereunder being herein called the "Trustee") the City (such indenture, together with all indentures >lemental thereto as therein permitted, being herein .ectively called the "Indenture"). The Indenture provides for issuance from time to time, under the conditions, limitations restrictions therein set forth, of one or more series of .tional bonds secured by the Indenture on a parity as to the Ige of the Sales and Use Tax Revenues as all other bonds then ted or as may be issued, from time to time, under the risions of the Indenture to refund the bonds of any series ied under the provisions of the Indenture. The Indenture also rides for the issuance of subordinated indebtedness payable n the Sales and Use Tax Revenues subordinate to the bonds ired by the Indenture under the conditions, limitations and :rictions therein set forth. Reference is hereby made to the anture for the provisions, among others, with respect to the :ody and application of the proceeds of the bonds issued under Indenture, the collection and disposition of the Sales and Tax Revenues, the special fund charged with and made Liable for the payment of the principal of and the interest any redemption premium on the bonds, the nature and extent of security for the bonds and any such subordinated abtedness, the terms and conditions under which bonds of each Les may be issued, the rights, duties and obligations of the ', the Bond Registrar and the Trustee and the rights of the istered owners of the bonds. An executed counterpart of the =nture and a certified copy of each of the Ordinances are on at the principal office of the Trustee. By the acceptance II -8 his bond, the registered owner hereof assents to all of the isions of the Indenture and the Ordinances. The bonds of this series consist of bonds maturing on 15 of the years to , inclusive (the "Serial ,s ) and of bonds maturing on 15, (the u Term Bonds"), on 15, (the " Term ,s") and on 15, (the " Term Bonds"). Term Bonds, the Term Bonds and the Term Bonds subject to mandatory redemption at 100% of the principal int thereof, plus accrued interest, but without premium, on 15 of the following years and in the following Lots: Term Bonds Term Bonds Term Bonds [Here insert Amortization Requirements] IThe bonds of this series at the time outstanding which re after 15, may be redeemed prior to their ective maturities, at the option of the City, from any moneys may be made available for such purpose, either in whole or art, in inverse order of maturity, on any date not earlier 15, , at the redemption prices (expressed ercentages of principal amount to be redeemed) plus accrued rest to the redemption date as follows: Redemption Redemption Dates (Both Inclusive) Price 15, to 14, _% 15, to 14, _$ 15, to 14, _% 15, to 14, 15, to 14, _% If less than all of the bonds of any one maturity shall be ed for redemption, the particular bonds to be redeemed shall elected by lot as provided in the Ordinances. At least thirty (30) days before the redemption date of any s to be redeemed, whether such redemption be in whole or in , the Trustee shall cause a notice of such redemption to be d with the Bond Registrar and mailed, first class postage aid, to all registered owners of bonds to be redeemed in e or in part at their last addresses appearing upon the stration books of the City held by the Bond Registrar as of date forty-five (45) days prior to the date fixed for mption. To supplement such notice to the registered owners, notice may be also made by overnight mail to at least two II -9 national depositaries and one national wire service used to is distribute information relating to municipal bonds at least thirty-five (35) days prior to the redemption date. The failure to mail such notice to any registered owners or such depositaries and wire services, or any defect in any notice so mailed, shall not affect the validity of the proceedings for such redemption as to the registered owners to whom notice was given as required. On the date fixed for redemption, notice having been given as aforesaid, the bonds or portions thereof so called for redemp- tion shall be due and payable at the redemption price provided for the redemption of such bonds or portions thereof on such date and, if moneys for payment of such redemption price and the accrued interest are held by the Bond Registrar or an appro- priate fiduciary institution acting as escrow agent, as provided in the Indenture, interest on the bonds or the portions thereof so called for redemption shall cease to accrue. If a portion of this bond shall be called for redemption, a new bond or bonds in principal amount equal to the unredeemed portion hereof will be issued to the registered owner hereof or his legal representative upon the surrender hereof. The registered owner of this bond shall have no right to enforce the provisions of the Indenture, or to institute action to enforce the covenants therein, or to take any action with respect to any Event of Default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. Modifications or alterations of the Indenture or of any ordinance supplemental thereto may be made only to the extent and in the circumstances permitted by the Indenture. The bonds are issuable as fully registered bonds of the denomination of $5,000 or any whole multiple thereof. At the principal office of the Bond Registrar, in the manner and subject to certain conditions provided in the Indenture, bonds may be exchanged for an equal aggregate principal amount of bonds of the same maturity, of authorized denominations and bearing interest at the same rate. The Bond Registrar is required to keep at its principal office the books of the City for the registration of and for the registration of transfers of bonds. The transfer of this bond may be registered only upon such books and as otherwise provided in the Indenture upon the surrender hereof to the Bond Registrar together with an assignment duly executed by the registered owner hereof or his attorney or legal representative in such form as shall be satisfactory to the Bond Registrar. Upon any such registration of transfer, the Bond Registrar shall deliver in exchange for this bond a new bond or bonds, registered in the name of the transferee, of authorized denominations, in an II -10i aggregate principal amount equal to the unredeemed principal amount of this bond, of the same maturity and bearing interest at the same rate. The City or the Bond Registrar may make a charge for every such exchange or registration of transfer of bonds sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or registration of transfer, but no other charge shall be made to any registered owner for the privilege of exchanging or registering the transfer of bonds. Neither the City nor the Bond Registrar shall be required to make any such exchange or registration of transfer of bonds of a series during the fifteen (15) days immediately preceding the date of first giving notice of any redemption of bonds of such series or any portion thereof or of any bond after such bond or any portion thereof has been selected for redemption. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the bonds then outstanding under the Indenture may become or may be declared due and payable before the stated maturities thereof, together with the interest accrued thereon. The Indenture provides for the creation of a special fund designated "City of Fayetteville Sales and Use Tax Capital Improvement Bonds Interest and Sinking Fund", which special fund is charged with and made available for the payment of the principal of and premium, if any, and interest on all bonds issued and outstanding under the Indenture [the language in the preceding clause will change if a separate sinking fund is created for a Series of Bonds pursuant to Section 502 of this Indenture), and the Indenture provides for the deposit to the credit of said special fund of a sufficient amount of the Sales and Use Tax Revenues to provide for the payment of the principal of and premium, if any, and interest on the bonds issued under the provisions of the Indenture as the same shall become due and to maintain a reserve for such purpose. All acts, conditions and things required by the Constitution and laws of the State of Arkansas, the Ordinances and the Indenture to happen, exist and be performed precedent to and in the issuance of this bond have happened, exist and have been performed as so required. OPINION CERTIFICATION I HEREBY CERTIFY that the foregoing is a true and correct copy of the legal opinion on the bonds therein described which was manually signed by , date of deliver of and payment and was dated as of the delivery for said bonds. [Facsimile signature] City Clerk ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto the within bond and all rights thereunder, and hereby irrevocably !I constitutes and appoints attorney to register the transfer of the within bond on the books kept for registration thereof with full power of substitution in the premises. Dated: NOTICE: The signature to this assignment must correspond with the name as it appears on the face of the within bond in every particular, without alteration or enlargement or any change whatever. Signature Guaranteed: NOTICE: Signatures must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a trust company. Section 204. Authentication of Bonds. Only such of the Bonds as shall have endorsed thereon a certificate of authenti- cation substantially in the form set forth above, duly executed by the Bond Registrar, shall be entitled to any benefit or security under this Indenture. No Bond shall be valid or obligatory for any purpose unless and until such certificate of authentication shall have been duly executed by the Bond Registrar, and such certificate of the Bond Registrar upon any such Bond shall be conclusive evidence that such Bond has been duly authenticated and delivered under this Indenture and the II -13 Series Ordinance relating to such Bond. The certificate of authentication on any Bond shall be deemed to have been duly executed if signed by an authorized officer of the Bond Registrar, but it shall not be necessary that the same officer sign the certificate of authentication on all of the Bonds that may be issued hereunder at any one time. Section 205. Exchange of Bonds. Bonds, upon surrender thereof at the principal corporate trust office of the Bond Registrar, together with an assignment duly executed by the Owner. or his attorney or legal representative in such form as shall be satisfactory to the Bond Registrar, may, at the option of the Owner thereof, be exchanged for an equal aggregate principal amount of Bonds of the same Series and maturity, of any denomination or denominations authorized by this Indenture or the Series Ordinance relating to such Bonds and bearing interest at the same rate. The City shall make provision for the exchange of Bonds at the principal corporate trust office of the Bond Registrar. Section 206. Negotiability, Registration and Transfer of Bonds. The Bond Registrar shall keep books for the registration of and for the registration of transfers of Bonds as provided in this Indenture. The transfer of any Bond may be registered only upon the books kept by the Bond Registrar for the registration of and registration of transfers of Bonds upon surrender thereof to the Bond Registrar together with an assignment duly executed by the Owner or his attorney .or legal representative in such form as shall be satisfactory to the Bond Registrar. Upon any such registration of transfer the City shall execute and the Bond Registrar shall authenticate and deliver in exchange for such Bond a new Bond or Bonds registered in the name of the transferee, of any denomination or denominations authorized by the Series Ordinance relating to such Bonds. In all cases in which Bonds shall be exchanged, the City shall execute and the Bond Registrar shall authenticate and deliver at the earliest practicable time Bonds in accordance with the provisions of this Indenture. All Bonds surrendered in any such exchange or registration of transfer shall forthwith be cancelled by the Bond Registrar. The City or the Bond Registrar may make a charge for every such exchange or registration of transfer of Bonds sufficient to reimburse it for any tax or other governmental charge required to be paid with respect to such exchange or registration of transfer, but no other charge shall be made to any owner of Bonds for the privilege of exchanging or registering the transfer of Bonds under the provisions of this Indenture. Neither the City nor the Bond Registrar shall be required to make any such exchange or registration of transfer of Bonds of a Series during the fifteen (15) days immediately II -14 preceding the date of first publication or mailing of notice of any redemption of Bonds of such Series or any portion thereof or of any Bond after such Bond or any portion thereof has been selected for redemption. Section 207. Ownership of Bonds. As to any Bond, the person in whose name the same 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 redemption price of any such Bond and the interest on any such Bond shall be paid only to or upon the order of the Owner thereof or his legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond including the premium, if any, and interest thereon to the extent of the sum or sums so paid. Section 208. Authorization of the Series 1990 Bonds. There shall be initially issued under and secured by this Indenture Bonds of the City, each of which shall bear the designation "City of Fayetteville, Arkansas, Sales and Use Tax Capital Improvement Bonds, Series 1990". The Series 1990 Bonds shall be issued for the purpose of providing funds, together with other available funds, if any, to (a) make a deposit to the Reserve Account in an amount equal to the Reserve Account Requirement for the Series 1990 Bonds, (b) make a deposit to the Construction Fund for paying all or a portion of the Cost of the Improvements in such amount as may be determined and specified in the Series Ordinance providing for the issuance of the Series 1990 Bonds, and (c) pay the costs of issuing the Series 1990 Bonds. The Series 1990 Bonds shall be in such aggregate principal amount, shall be dated, shall be stated to mature (subject to the right of prior redemption as hereinafter set forth) on such date or dates, in such year or years not later than the Maximum Permitted Maturity, shall bear interest at such rate or rates, fixed or variable, shall have such optional tender features, and such Credit Facilities, shall have such Bond Registrar, shall have such Serial Bonds and Term Bonds, with any Term Bonds having such Amortization Requirements, and shall be redeemable at such times and prices (subject to the provisions of Article III of this Indenture), all as may be provided in the Series Ordinance specified in the preceding paragraph hereof. The Series 1990 Bonds shall be executed substantially in the form and manner hereinabove set forth, shall be deposited with the Bond Registrar for authentication and shall be delivered by the Bond Registrar to the Trustee for delivery but prior to or simultaneously with the delivery of the Series 1990 Bonds by the Trustee there shall be filed with the Trustee the following: It �' (a) a copy, certified by the City Clerk, of the Sales and Use Tax Ordinance, Ordinance No. 3480 of the City, passed by the Board on April 19, 1990, and the Series Ordinance providing for {; the issuance of the Series 1990 Bonds; �• (b) an executed copy of this Indenture; (c) a copy, certified by the City Clerk, of an ordinance of the Board directing the delivery of the Series 1990 Bonds to or upon the order of the purchasers therein named upon payment of the purchase price therein set forth and providing for other matters in connection with the issuance of the Series 1990 Bonds, which ordinance may be a part of the Series Ordinance providing for the issuance of the Series 1990 Bonds; (d) an opinion of the City Attorney to the effect that the i. Sales and Use Tax Ordinance, Ordinance No. 3480 of the Board and �. Ordinance No. 3506 of the Board were duly passed by the Board; ;• and (e) an opinion of Bond Counsel to the effect that the !; Series 1990 Bonds constitute valid and binding obligations of the City in accordance with their terms, subject to certain laws affecting creditors' rights and to the exercise of judicial discretion in appropriate cases. When the documents mentioned in clauses (a) to (e), inclu- sive, of this Section shall have been filed with the Trustee and when the Series 1990 Bonds shall have been executed by the City and authenticated by the Bond Registrar as required by this Indenture, the Trustee shall deliver such Bonds at one time to or upon the order of the purchasers named in the ordinance mentioned in clause (c) of this Section, but only upon payment to the Trustee of the purchase price of such Bonds. The Trustee shall be entitled to rely upon such ordinance as to all matters stated therein. The proceeds (including accrued interest and any premium) shall be applied by the Trustee in the manner required by the Series Ordinance providing for the issuance of the Series 1990 Bonds. Section 209. Refunding Bonds. Refunding Bonds may be issued under and secured by this Indenture, subject to the conditions hereinafter provided in this Section, from time to time for the purpose of providing funds for refunding all or any portion of the outstanding Bonds of any one or more Series by payment at maturity or redemption at a selected redemption date or dates or combination of such payment at maturity and redemption, including the payment of any redemption premium thereon and any interest which will accrue on such Bonds to such maturity dates or selected redemption date or dates or combination of maturity and redemption dates and any expenses incurred or to be incurred in connection with such refunding. Before any Refunding Bonds shall be issued under the provi- sions of this Section the Board shall pass a Series Ordinance providing for the issuance of such Refunding Bonds, fixing the amount and details thereof, describing the Bonds to be refunded and setting forth the determination of the Board that such refunding is in the best interests of the City and stating the reasons for such determination. Such Refunding Bonds shall be dated, shall be stated to mature (subject to the right of prior redemption as hereinafter set forth) on such date or dates, in such year or years not later than the Maximum Permitted Maturity, shall bear interest at such rate or rates, fixed or variable, shall have such optional tender features and such Credit Facilities, shall have such Bond Registrar, shall have such Serial Bonds and Term Bonds, with any Term Bonds having such Amortization Requirements, and shall be redeemable at such times and prices (subject to the provisions of Article III of this Indenture), all as may be provided in the Series Ordinance for such Refunding Bonds. Except as to any differences in the maturities thereof or the rate or rates of interest or the provi- sions for redemption, such Refunding Bonds shall be on a parity as to the pledge of the Sales and Use Tax Revenues with all other Bonds issued under this Indenture. Such Refunding Bonds shall be executed substantially in the form and manner hereinabove set forth, with such changes as may be necessary or appropriate to conform to the provisions of the Series Ordinance providing for the issuance of such Refunding Bonds, shall be deposited with the Bond Registrar for authentication and shall be delivered by the Bond Registrar to the Trustee for delivery, but prior to or simultaneously with the delivery of such Refunding Bonds by the Trustee, there shall be filed with the Trustee the following: (a) a copy, certified by the City Clerk, of the Series Ordinance providing for the issuance of such Refunding Bonds; (b) a copy, certified by the City Clerk, of an ordinance of the Board directing the delivery of such Refunding Bonds to or upon the order of the purchasers therein named upon payment of the purchase price therein set forth and providing for other matters in connection with the issuance of such Refunding Bonds, which ordinance may be a part of the Series Ordinance providing for the issuance of such Refunding Bonds; (c) an opinion of Bond Counsel to the effect that such Refunding Bonds constitute valid and binding obligations of the City in accordance with their terms, subject to certain laws affecting creditors' rights and to the exercise of judicial discretion in appropriate cases, and that upon the issuance of such Refunding Bonds and the application of the proceeds thereof, the Bonds to be refunded will no longer be deemed to be Outstanding under this Indenture and the issuance of such Refunding Bonds will not cause interest paid on any Bonds issued hereunder and then Outstanding or the Bonds to be refunded to be included in the gross income of the Owners thereof for federal income taxation purposes if such income is then so excludable; (d) an opinion of the City Attorney stating that the ordinances mentioned above in clauses (a) and (b) of this Section were duly passed by the Board; (e) a certificate of the Director of Finance pursuant to which he shall state and certify that the Maximum Principal and Interest Requirements payable with respect to all Bonds Outstanding subsequent to the issuance of such Refunding Bonds are less than or equal to the Maximum Principal and Interest Requirements payable with respect to all Bonds Outstanding prior to the issuance of such Refunding Bonds; provided, however, that if the Maximum Principal and Interest Requirements payable with respect to all Bonds Outstanding subsequent to the issuance of such Refunding Bonds exceeds the Maximum Principal and Interest Requirements payable with respect to all Bonds Outstanding prior to the issuance of such Refunding Bonds, the Director of Finance shall state and certify in this certificate that the Sales and Use Tax Revenues, received by or on behalf of the City during the latest complete Fiscal Year of the City are at least equal to one -hundred fifty percentum (150%) of the Maximum Principal and Interest Requirements payable with respect to all Bonds Outstanding subsequent to the issuance of such Refunding Bonds; (f) such documents as Director of Finance and the has been duly made in accor� Indenture and State law for combination of such payment Bonds to be refunded; and shall be required by the Trustee to show that provision lance with the provisions of this the payment or redemption or and redemption of all of the (g) so long as Capital Guaranty is a Credit Facility Provider, a certificate of the Trustee to the effect that the amount on deposit to the credit of the Reserve Account is not less than the Reserve Account Requirement for each II -18 .4 4 Series of Bonds then Outstanding not including such refunded Bonds and such Refunding Bonds. When the documents mentioned in clauses (a) to (g), inclusive, of this Section shall have been filed with the Trustee and when such Refunding Bonds shall have been executed by the City and authenticated by the Bond Registrar as required by this Indenture, the Trustee shall deliver such Refunding Bonds at one time to or upon the order of the purchasers named in the ordinance mentioned in clause (b) of this Section, but only upon payment to the Trustee of the purchase price of such Refunding Bonds. The Trustee shall be entitled to rely upon such ordinance as to all matters stated therein. Simultaneously with the delivery of such Refunding Bonds, the Trustee shall withdraw, if so provided in the Series Ordinance mentioned in clause (a) of this Section 209, from the Sinking Fund an amount equal to the amount on deposit therein on account of the principal of and any redemption premium and interest on and reserves for the Bonds to be refunded, and apply the amount so withdrawn in accordance with the Series Ordinance mentioned in clause (a) of this Section 209. The total amount so withdrawn, if so provided in the Series Ordinance mentioned in clause (a) of this Section 209, the proceeds of such Refunding Bonds (including accrued interest and any premium) and any other moneys provided for such purpose shall be applied by the Trustee as follows: (1) the accrued interest received as part of the proceeds of such Refunding Bonds shall be deposited to the credit of the Bond Service Account for application to the first interest due on such Refunding Bonds; (2) an amount which, together with any income which shall be derived from the investment of such amount pursuant to this clause (2), shall be sufficient to pay the principal of and any redemption premium and interest on the Bonds to be refunded hereunder, either at maturity or a selected redemption date or dates or combination of such payment and redemption, shall be deposited by the Trustee to the credit of a special fund, appropriately designated, to be held in trust by a bank or trust company which may include the Bond Registrar, as escrow agent, for the sole and exclusive purpose of paying such principal, redemption premium, if any, and interest; and moneys held for the credit of such fund shall, as nearly as may be practicable and reasonable, be invested and reinvested by such escrow agent at the direction of the Director of Finance in Government Obligations which shall mature, or which shall be subject to redemption by the holder thereof at the option of such holder, not later than the respective dates when the moneys held for the credit of such fund will be required for the purposes intended; (3) such amount shall be applied to, or set aside for, the payment of the expenses incident to such refunding as shall be specified in the Series Ordinance providing for the issuance of such Refunding Bonds; (4) an amount equal to the Reserve Account Deposit Requirement for such Refunding Bonds shall be deposited to the credit of the Reserve Account; and (5) any balance of such proceeds shall be deposited to j f the credit of the Bond Service Account. Section 210. Other Indebtedness. In addition to the Bonds authorized pursuant to the provisions of sections 208 and 209 hereof and to the extent permitted by the laws of the State from time to time in effect, the City may incur other forms of indebtedness as follows: _IJ (a) The City may incur Subordinated Indebtedness without limit as to amount. (b) The City may issue Convertible Bonds, secured on a parity as to the pledge of Sales and Use Tax Revenues with Bonds issued hereunder, provided that such Convertible Bonds are issued under Section 209 of this Indenture, that such Convertible Bonds comply with the tests of such section based upon the form of such Convertible Bonds at the time of their issuance and that Capital Guaranty has consented in writing to the issuance of such Convertible Bonds. (c) The City may issue Optional Tender Bonds, secured on a parity as to the pledge of Sales and Use Tax Revenues with Bonds issued hereunder provided that such Optional Tender Bonds comply with the tests for the issuance of Refunding Bonds contained in Section 209 of this Indenture, and so long as (i) such Bonds are the subject of a remarketing agreement between the City or the trustee for such Owners thereof and an investment banking firm with experience in marketing tax-exempt securities on a national basis and (ii) there is in effect with respect to such Optional Tender Bonds a Credit Facility, then the provisions with respect to Optional Tender Bonds contained in the definition of Principal and Interest Requirements shall apply to such Optional Tender Bonds. In demonstrating compliance with the test for the issuance of Refunding Bonds contained in Section 209 hereof, the principal requirements for Optional Tender Bonds shall include the regularly scheduled principal payments, either upon payment at I1-20 maturity or redemption in satisfaction of the Amortization Requirements for such Bonds and shall not include the payment of the purchase price of such Bonds upon their tender for purchase. (d) The City may issue Variable Rate Bonds upon com- pliance with the tests for the issuance of Refunding Bonds contained in Section 209 of this Indenture, using for the purpose of demonstrating compliance with such tests the interest rate assumption with respect to Variable Rate Bonds contained in the definition of Principal and Interest Requirements, provided that Capital Guaranty has consented in writing to the issuance of such Variable Rate Bonds. (e) The City may enter into Credit Facilities to the extent that the Series of Bonds or portion thereof which is supported by such Credit Facilities is issued in compliance with the provisions of this Article II. Section 211. Temporary Bonds. Until the definitive Bonds of any Series are ready for delivery, there may be executed by the City and authenticated by the Bond Registrar, and the Bond Registrar may deliver, in lieu of definitive Bonds and subject to the same limitations and conditions except as to identifying numbers, temporary printed, engraved, lithographed or typewritten Bonds in the denomination of $5,000 or any whole multiple thereof, substantially of the tenor hereinabove set forth, in fully registered form without coupons, and with appropriate omissions, insertions and variations as may be required. The City shall cause the definitive Bonds to be prepared and to be executed, endorsed and delivered to the Bond Registrar, and the Bond Registrar, upon presentation to him of any temporary Bond, shall cancel the same and authenticate and deliver, in exchange therefor, at the place designated by the Owner, without expense to the Owner, a definitive Bond or Bonds of the same Series and in the same aggregate principal amount, maturing on the same date and bearing interest at the same rate as the temporary Bond sur- rendered. Until so exchanged, the temporary Bonds shall in all respects, including the privilege of registration and registration of transfer if so provided, be entitled to the same benefit of this Indenture and the respective Series Ordinance as the definitive Bonds to be issued and authenticated hereunder, and interest on such temporary Bonds, when payable, shall be paid on presentation of such temporary Bonds and notation of such payment shall be endorsed thereon. Section 212. Mutilated, Destroyed or Lost Bonds. In case any Bonds secured hereby shall become mutilated or be destroyed or lost, the City may cause to be executed, and the Bond Registrar may authenticate and deliver, a new Bond of like date, number and tenor in exchange and substitution for and upon the 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 the Bond Registrar in connection therewith and, in the case of a Bond destroyed or lost, his filing with the Bond Registrar evidence satisfactory to the Bond Registrar that such Bond was destroyed or lost, and of his ownership thereof, and furnishing the City and the Trustee with indemnity as required by State law and satisfactory to each of them. II -22 ARTICLE III. Redemption of Bonds. Section 301. Redemption Generally. The Bonds of each Series issued under the provisions of this Indenture shall be subject to redemption, either in whole or in part and at such times and prices, as may be provided by the Series Ordinance relating to such Series. Section 302. Selection of Bonds for Redemption or Purchase. The Trustee shall, in accordance with the terms and provisions of the Bonds and of this Indenture and the Series Ordinance relating to any Bonds to be redeemed, select the Bonds or portions thereof to be purchased or redeemed by lot. The Trustee shall promptly notify in writing the Bond Registrar of the numbers of the Bonds so selected for redemption and, in making such selection, each Bond of each Series of Bonds shall be treated as representing that number of Bonds of the lowest authorized denomination of that Series as is obtained by dividing the principal amount of such Bond by such denomination. Section 303. Redemption Notice. At least thirty (30) days before the redemption date, a notice of any such redemption, either in whole or in part, signed by the Trustee, (a) shall be filed with the Bond Registrar and (b) shall be mailed, first class mail, postage prepaid, to all Owners of Bonds to be redeemed in whole or in part at their addresses as they appear on the registration books hereinabove provided for. To supplement such notice to the Owners, the notice of redemption may also be mailed by overnight mail to at least two national depositaries and one national wire service used to distribute information re- lating to municipal bonds, at least thirty-five (35) days prior to the redemption date. Failure to mail any redemption notice to any Owner or any depositaries and wire services described in this Section 303, or any defect in any notice so mailed, shall not ,affect the validity of the proceedings for the redemption of the Bonds as to the Owners to whom notice was given as required. Each such notice shall set forth the date fixed for redemption, ,the redemption price to be paid and, if less than all of the Bonds of a Series then Outstanding shall be called for redemption, the numbers of such Bonds. Each notice of redemp- tion mailed to an Owner of a Bond to be redeemed shall, if less than the entire principal amount thereof is to be redeemed, also state the principal amount thereof to be redeemed and that such Bond must be surrendered to the Bond Registrar in exchange for the payment of the principal amount thereof to be redeemed and the issuance of a new Bond or Bonds equalling in principal amount that portion of the principal sum not to be redeemed of the Bonds to be surrendered, as provided in Section 302 hereof. Section 304. Partial Redemption of Bonds. In the event that y part of the principal sum of any Bond shall be called for redemption or prepaid, payment of the amount to be redeemed or prepaid shall be made only upon surrender of such Bond to the Bond Registrar. Upon surrender of such Bond, the Bond Registrar shall execute and deliver to the Owner thereof at the principal office of the Bond Registrar, new duly executed Bonds, of authorized principal sums equal in aggregate principal amount to, and of the same maturity and interest rate as, the unredeemed portion of the Bond surrendered. Section 305. Effect of Calling for Redemption. On the date so designated for redemption, notice having been given in the manner and under the conditions hereinabove provided, the Bonds so called for redemption shall become and be due and payable at the redemption price provided for redemption of such Bonds on such date, and, moneys for payment of the redemption price and accrued interest being held in separate accounts by the Trustee or by the Bond Registrar in trust for the Owners of the Bonds to be redeemed, all as provided in this Indenture, interest on the Bonds so called for redemption shall cease to accrue, such Bonds shall cease to be entitled to any lien, benefit or security under this Indenture, and the Owners of such Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof and accrued interest. Section 306. Cancellation of Bonds. All Bonds so redeemed be cancelled upon the surrender thereof. Section 307. Bonds Called for Redemption or Defeased Not utstanding. Except as otherwise provided below, if (a)(1) Bonds ave been duly called for redemption under the provisions of this rticle or (2) irrevocable instructions have been given by the ity to the Bond Registrar or to a bank, trust company or other ppropriate fiduciary institution acting as escrow agent (the escrow agent") to (i) call Bonds for redemption under the rovisions of this Article, (ii) pay Bonds at their maturity or aturities or (iii) both call Bonds for redemption under the rovisions of this Article and pay Bonds at their maturity or aturities in any combination (the Bonds described in clauses a)(1) and (a)(2) being herein collectively called the "Bonds to e Paid"), and (b) cash or Defeasance Obligations are held in eparate accounts by the Bond Registrar or escrow agent solely or the Owners of the Bonds to be Paid, then the Bonds to be Paid hall not be deemed to be Outstanding under the provisions of •his Indenture and shall cease to be entitled to any benefit or ecurity under this Indenture other than to receive payment of ,rincipal of, redemption premium, if any, and interest from such In the event that the Series 1990 Bonds guaranteed by tal Guaranty are to be called for redemption or paid and ision for such redemption or payment is to be made as III -2 rovided above in this Section, then Capital Guaranty shall be otified thereof by the City and provided with draft copies of ny proposed escrow agreement with the Bond Registrar or any scrow agent relating thereto, any proposed verification by a ertified public accountant or firm of certified public ccountants of the sufficiency of the cash and securities to be scrowed for such purpose, any preliminary official statement of he City relating to any obligations of the City to be offered in onnection therewith and any opinion of Bond Counsel relating hereto. Such materials shall be delivered to Capital Guaranty ot less than five (5) business days prior to the making of such rovision for the redemption or payment of such Bonds. Such rovision for the redemption or payment of such Bonds shall be :? ccomplished only with an irrevocable deposit in escrow of one or ore of the following: (a) cash, (b) State and Local Government eries, Time Deposit Securities issued by the United States reasury, (c) United States Treasury bills, notes and bonds, as raded on the open market and (d) zero coupon United States reasury Bonds. Substitutions of securities placed in such scrow will not be permitted. The cash and securities in such scrow must be sufficient, without reimbursement, to pay all rincipal of and interest and any redemption premiums on the eries 1990 Bonds to and including the date or dates of edemption as scheduled. A copy of any related escrow agreement, certificate of a certified public accountant or firm of ertified public accountants to the effect that such escrow is ufficient for the redemption or payment of such Bonds as ontemplated by this Section, any final official statement of the -ity relating to any obligations of the City offered in onnection therewith, any opinion of Bond Counsel relating .hereto and a certificate of the Bond Registrar or the escrow .gent as to the receipt and application of the cash and securities in such escrow shall be provided to Capital Guaranty ,ot less than ten (10) business days subsequent to the making of ;uch provision for the redemption or payment of such Bonds. ARTICLE IV. Construction Fund. Section 401. Construction Fund. A special fund is hereby created and designated "City of Fayetteville Sales and Use Tax Capital Improvement Bonds Construction Fund" (herein sometimes called the "Construction Fund") which shall be held by the Trustee and to the credit of which there shall be deposited the amount specified in the Series Ordinance providing for the issuance of the Series 1990 Bonds pursuant to Section 208 hereof. The moneys in the Construction Fund shall be held in trust by the Trustee and applied to the payment of the Cost of the Improvements and, pending such application, shall be subject to a lien and charge in favor of the Owners of the Series of Bonds issued under this Indenture the proceeds of which were deposited to the credit of the Construction Fund and for the further security of such Owners until paid out as herein provided. Section 402. Payments from Construction Fund. Payment of the Cost of the Improvements shall be made from the Construction Fund as herein provided. All such payments shall be subject to the provisions and restrictions set forth in this Article, and the City covenants that it will not cause or permit to be paid from the Construction Fund any sums except in accordance with such provisions and restrictions. Section 403. Cost of Improvements. For the purposes of this rticle, the Cost of the Improvements shall include, without ntending thereby to limit or to restrict or to extend any proper efinition of such Cost under the provisions of this Indenture, he following: (a) obligations incurred for labor and materials and to contractors, builders and materialmen in connection with the construction of enlargements, improvements and extensions or other work, for machinery and equipment, and for the restoration of property damaged or destroyed in connection therewith; (b) interest accruing upon the Series 1990 Bonds prior to the commencement of and during the period of the work or for any additional period as may be authorized by law if so provided, and subject to any limitation, in the Series Ordinance providing for the issuance of the Series 1990 Bonds; (c) all direct costs of the Improvements described in the plans and specifications for the Improvements; (d) the cost of acquiring by purchase, if such pur- chase shall be deemed expedient, and the amount of any award or final judgment in any proceeding to acquire by condemna- I tion, such land, property rights, rights -of -way, franchises, easements, and other interests in lands as may be deemed necessary or convenient in connection with the Improvements, and._the amount of any damages incident thereto; (e) expenses of administration properly chargeable to the work constituting the Improvements, legal, architectural and engineering expenses and fees, cost of audits and of preparing and issuing the Bonds, fees and expenses of consultants, financing charges, taxes or other governmental charges lawfully assessed during such work, premiums on insurance in connection with such work, deposits to the Reserve Account, premiums for bond insurance, interest rate insurance or insurance assuring availability of the amounts required to be on deposit in the Reserve Account, initial set-up fees and annual fees for letters of credit, lines of credit, standby bond purchase agreements or other similar credit enhancement or liquidity enhancement devices and tender agent fees and fees payable for remarketing Bonds during the period of such work for which Bonds supported by such devices were issued and all other items of expense not elsewhere in this Section specified, incident to the work constituting the Improvements and the placing of the same in operation; and (f) any obligation or expense heretofore or hereafter incurred by the City for any of the foregoing purposes, including the cost of materials, supplies or equipment fur- nished by the City in connection with the work constituting the Improvements and paid for by the City out of funds other than moneys in the Construction Fund. Section 404. Requisitions from Construction Fund. Payments om the Construction Fund shall be made in accordance with the ovisions of this Section. Before any such payment shall be de, there shall be filed with the Trustee a requisition, signed the City Manager or one or more other officers or employees of e City designated for such purpose by the City, stating: (a) the item number of such payment, (b) the name of the person to whom such payment is due, (c) the amount to be paid excluding any applicable sales tax, (d) the purpose by general classification for which the obligation to be paid was incurred, (e) that the obligation in the stated amount has been incurred, is presently due and payable and constitutes IV -2 a proper charge against the Construction Fund that has not been paid, (f) that there has not been filed with or served upon the City notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the money payable to any of the persons named in such requisition, which has not been released or will not be released simultaneously with the payment of such obligation, and (g) that such requisition contains no item representing payment on account of any retainage which the City is entitled to retain at the date of such requisition. Upon receipt of each requisition, the Trustee shall pay the ligation set forth in such requisition out of money in the nstruction Fund or, if so requested by the City, shall withdraw on the Construction Fund and deposit with such Depositor', as all be designated in such requisition to the credit of a ecial checking account in the name of the City an amount equal the total of the amounts to be paid as set forth in such cu sizicn, the amount so deposited to be used solely for the vment of the obligations set forth in such requisition, and ch such obligation shall be paid by check by one or more ficers or employees of the Trustee designated for such purpose the Trustee or signed by one or more authorized officers or plovees of the City as provided above in this Section. Moneys posited to the credit of such checking account shall be deemed be a part of the Construction Fund until paid out as above ovided. if for any reason the City should decide prior to the vment of any item in a requisition not to pay such item, it all give written notice of such decision to the Trustee and ereupon the Trustee shall not make such payment or, if such ea was to be paid from moneys in such checking account, it all give written notice of such decision to the Depository and e Trustee and thereupon the City shall pay the amount of such em by check drawn on such checking account to the Trustee for posit to the credit of the Construction Fund. In addition to such payments or such withdrawals and sits, the Trustee shall pay from the Construction Fund to the upon its requisitions therefor, signed by one or more orized officers or employees of the City as provided above in Section, at one time or from time to time, a sum or sums egating not more than One Hundred Thousand Dollars ($100,000) usive of reimbursements as hereafter in this Section orized, such sums and such reimbursements to be used by the as a revolving fund for the payment of items of Cost rred to in Section 403 of this Article which cannot eniently be paid as herein otherwise provided. The moneys in mac] h revolving fund shall be deemed to be a part of the struction Fund until paid out. Such revolving fund shall be mbursed by the Trustee from time to time for such items or t so paid by payments from the Construction Fund upon uisition of the City, filed with the Trustee and similarly ned, specifying the payee, the amount and the purpose by eral classification of each payment from the revolving fund which such reimbursement is requested, and stating that each h item of Cost so paid was a necessary item of Cost within d Section 403 and that such Cost could not conveniently be d except from such revolving fund. Section 405. Reliance upon Requisitions. The Trustee may y upon all requisitions received by it as conditions of went from the Construction Fund. Such requisitions shall be ained by the Trustee for a period of time not less than that uired by the law of the State for the retention of City ords and shall be subject at all reasonable times to urination by the City and the Owners. Section 406. Disposition of Construction Fund Balance. When work constituting the Improvements shall have been completed, ch fact shall be evidenced to the Trustee and Capital Guaranty a certificate stating the date of such completion, signed by City Manager for the City, the balance in the Construction d not reserved by the City for the payment of any remaining t of the Cost of the Improvements shall be transferred by the stee, in the discretion and at the direction of the City, to credit of the Sinking Fund for the payment of principal of interest on the Series 1990 Bonds or retained in the struction Fund and used to pay the Cost of a different capital rovement or improvements within the meaning of the Act which e been approved by the City. IV -4 J ARTICLE V. Revenues and Funds. Section 501. Sinking, Fund and Related Accounts. A special d is hereby created with the Trustee and designated "City of etteville Sales and Use Tax Capital Improvements Bonds erest and Sinking Fund" (herein sometimes called the "Sinking d"). There are hereby created in the Sinking Fund three arate accounts designated "Bond Service Account", "Redemption ount" and "Reserve Account", respectively. Section 502. Establishment of Other Sinking Funds and osit of Sales and Use Tax Revenues. If required by the terms the Series 1990 Bonds or any Series of Refunding Bonds issued suant to Section 209 of this Indenture, the City hereby enants to establish with the Trustee pursuant to the Series inance providing for the issuance of such Bonds, a separate king fund to provide for payment of the principal of and • emption premium, if any, and interest on such Series of Bonds to provide a reserve for such payment or to provide within accounts in the Sinking Fund separate subaccounts as required the terms of such Bonds. If any separate sinking funds or arate subaccounts within the accounts in the Sinking Fund are ated pursuant to this paragraph, such sinking funds or sepa- e subaccounts shall be funded in the manner and at the times uired by the respective Series Ordinance, shall be held by the stee separate and apart from the sinking funds with respect to other Series of Bonds issued under this Indenture, and shall held solely for the benefit and security of the Series of ds with respect to which such separate sinking fund or arate subaccounts were created. Each such separate sinking d or separate subaccounts with respect to a Series shall be ignated "Series Sinking Fund" or "Series Sub- ount," as the case may be (inserting an identifying Series r and, if more than one Series is to be issued in a single endar year, an identifying Series letter). The moneys in each of the accounts in the Sinking Fund shall held in trust and applied as hereinafter provided with regard each such account and, pending such application, shall be ject to a lien and charge in favor of the Owners of the Bonds ued and Outstanding under this Indenture and for the further urity of such Owners until paid out or transferred as herein The City shall cause the Sales and Use Tax Revenues, less applicable charges and retainages in accordance with the al Government Bond Act of 1985, to be deposited with the stee. The Trustee shall, on the last business day of each th, beginning with the month in which the Series 1990 Bonds issued, withdraw from the Sales and Use Tax Revenues osited with the Trustee an amount sufficient to make the its to the credit of the following accounts in the following and in the following amounts: (a) To the credit of the Bond Service Account, an amount equal to one -sixth (1/6) of the amount of interest payable on the Bonds of each Series on the next succeeding Interest Payment Date and an amount equal to one -twelfth (1/12) of the next maturing installment of principal on all Serial Bonds then Outstanding less any amounts received and on deposit to the credit of the Bond Service Account, including (i) amounts received as accrued interest and (ii) amounts transferred from the Construction Fund pursuant to Section 406 hereof; provided, however, that (i) the amount so deposited in each month for the payment of interest after the delivery of the Bonds of any Series up to and including the month immediately preceding the first Interest Payment Date of the Bonds of such Series shall be that amount which, when multiplied by the number of such deposits to be made before such first Interest Payment Date, will be equal to the amount of interest payable on such Bonds on such first Interest Payment Date, after taking into account any amounts then held for the credit of the Bond Service Account for the payment of such interest, and (ii) the amount so deposited in each month for the payment of principal after the delivery of the Bonds of any Series up to and including the month immediately preceding that first principal payment date of the Bonds of such Series shall be that amount which, when multiplied by the number of such deposits to be made before such first principal payment date, will be equal to the amount of the principal of such Bonds payable on such first principal payment date after taking into account any amounts then held for the credit of the Bond Service Account for the payment of such principal. (b) To the credit of the Redemption Account, an amount equal to one -twelfth (1/12) of the principal amount of Term Bonds of each Series then Outstanding required to be retired, in satisfaction of the Amortization Requirements, if any, for such Bond Year plus the premiums, if any, on such principal amount of Term Bonds which would be payable if such principal amount of Term Bonds were to be redeemed in such Bond Year from moneys held for the credit of the Redemption Account less any amounts received and on deposit to the credit of the Redemption Account. (c) To the credit of the Reserve Account, an amount equal to the Reserve Account Deposit Requirement for each Series of Bonds. If the amount deposited to the credit of any of the accounts e Sinking Fund shall be less than the amount required to be V-2 osited under the foregoing provisions of this Section, the uirement therefor shall nevertheless be cumulative and the unt of any deficiency shall be added to the amount otherwise uired to be deposited thereafter until such time as all such iciencies have been made up. Such amounts of the Sales and Use Tax Revenues as shall be ficient to make the deposits to the credit of the accounts as scribed in clauses (a) through (c) of this Section 502 are eby pledged for the purpose of making such deposits so long as of the Bonds are Outstanding. Any Sales and Use Tax Revenues in excess of amounts required be deposited by clauses (a) through (c), inclusive, above 11 be transferred by the Trustee within one business day of last business day of each month to one or more Depositories ected by the City and may be used by the City for any purpose vided in the Sales and Use Tax Ordinance. Section 503. Application of Moneys in Bond Service Account. Trustee shall on the business day immediately preceding each rest Payment Date withdraw from the Bond Service Account and sit in trust with the Bond Registrar an amount sufficient to le the Bond Registrar to remit by mail to the Owners of Bonds amounts required for paying the interest on the Bonds as such rest becomes due and payable. The Bond Registrar shall be .fitted to transfer by wire to owners of at least $1,000,000 cipal amount of the Bonds the amounts required for paying the rest on such Bonds as such interest becomes due and payable ay be determined in the respective Series Ordinance. The tee shall on the business day immediately preceding a date on h principal is due on Serial Bonds withdraw from the Bond ice Account and deposit in trust with the Bond Registrar the nts required for paying the principal of all Serial Bonds as principal becomes due and payable. The Trustee, in its retion, may make the deposits required by this Section with Bond Registrar by wire transfer. Section 504. Application of Moneys in Redemption Account. ys held for the credit of the Redemption Account shall be ied to the retirement of the Bonds issued under the isions of this Indenture as follows: (a) Subject to the provisions of paragraph (c) of this Section, at the direction of the City the Trustee shall endeavor to purchase any Bonds secured hereby and then Outstanding, whether or not such Bonds shall then be subject to redemption, on the most advantageous terms obtainable with reasonable diligence, such price not to exceed the principal of such Bonds plus the amount of the redemption premium, if any, which might on the next redemption date be V-3 sited under the foregoing provisions of this Section, the irement therefor shall nevertheless be cumulative and the nt of any deficiency shall be added to the amount otherwise ired to be deposited thereafter until such time as all such ciencies have been made up. Such amounts of the Sales and Use Tax Revenues as shall be ficient to make the deposits to the credit of the accounts as scribed in clauses (a) through (c) of this Section 502 are eby pledged for the purpose of making such deposits so long as of the Bonds are Outstanding. Any Sales and Use Tax Revenues in excess of amounts required be deposited by clauses (a) through (c), inclusive, above 11 be transferred by the Trustee within one business day of last business day of each month to one or more Depositories ected by the City and may be used by the City for any purpose vided in the Sales and Use Tax Ordinance. Section 503. Application of Moneys in Bond Service Account. Trustee shall on the business day immediately preceding each rest Payment Date withdraw from the Bond Service Account and sit in trust with the Bond Registrar an amount sufficient to le the Bond Registrar to remit by mail to the Owners of Bonds amounts required for paying the interest on the Bonds as such rest becomes due and payable. The Bond Registrar shall be itted to transfer by wire to Owners of at least $1,000,000 cipal amount of the Bonds the amounts required for paying the rest on such Bonds as.such interest becomes due and payable ay be determined in the respective Series Ordinance. The tee shall on the business day immediately preceding a date on h principal is due on Serial Bonds withdraw from the Bond ice Account and deposit in trust with the Bond Registrar the nts required for paying the principal of all Serial Bonds as principal becomes due and payable. The Trustee, in its retion, may make the deposits required by this Section with Bond Registrar by wire transfer. Section 504. Application of Moneys in Redemption Account. s held for the credit of the Redemption Account shall be ed to the retirement of the Bonds issued under the sions of this Indenture as follows: (a) Subject to the provisions of paragraph (c) of this Section, at the direction of the City the Trustee shall endeavor to purchase any Bonds secured hereby and then Outstanding, whether or not such Bonds shall then be subject to redemption, on the most advantageous terms obtainable with reasonable diligence, such price not to exceed the principal of such Bonds plus the amount of the redemption premium, if any, which might on the next redemption date be V-3 paid to the Owners of such Bonds under the provisions of Article III of this Indenture and the respective Series Ordinance if such Bonds should be called for redemption on such date from moneys in the Sinking Fund. The Trustee shall pay the interest accrued o1 such Bonds to date of settlement therefor from the Bond Service Account and the purchase price from the Redemption Account, but no such purchase shall be made by the Trustee within the period of forty-five (45) days next preceding any interest payment date on which such Bonds are subject to call for redemption under the provisions of this Indenture and the respective Series Ordinance, except from moneys other than moneys set aside or deposited for the redemption of Bonds. (b) Subject to the provisions of Article III of this Indenture and paragraph (c) of this Section, the Trustee may call for redemption on each date on which Bonds are subject to redemption as provided in the respective Series Ordinances such amount of such Bonds as, with the redemption • premium, if any, will exhaust the moneys which will be held for the credit of the Redemption Account on such date as nearly as may be; provided, however, that not less than Fifty Thousand Dollars ($50,000) principal amount of Bonds shall be called for redemption at any one time unless a lesser amount shall be required to satisfy the Amortization Requirements for any Bond Year. Such redemption shall be made pursuant to the provisions of Article III of this Ordi- nance. The Trustee shall during the period of five (5) business days prior to each redemption date withdraw from the Bond Service Account and the Redemption Account and set aside in separate accounts or deposit with the Bond Registrar the respective amounts required for paying the interest on, and the principal and redemption premium of, the Bonds so called for redemption. (c) Moneys held by the Trustee in the Redemption Account shall be applied by the Trustee during each Bond Year to the retirement of Bonds of each Series then Outstanding in the following order: First: the Term Bonds of each such Series to the extent of the Amortization Requirement, if any, for such Bond Year for such Term Bonds, plus the applicable premium, if any, and any deficiency in any preceding Bond Years in the purchase or redemption of such Term Bonds under the provisions of this subdivision and, if the amount available in such Bond Year shall not be sufficient therefor, then in proportion to the Amorti- zation Requirements, if any, for such Bond Year for the Term Bonds of each such Series then Outstanding, plus V-4 the applicable premium, if any, and any such deficiency; Second: Term Bonds of each Series, if any, in proportion (as nearly as practicable) to the aggregate principal amount of the Bonds of each such Series originally issued; and Third: after the retirement of all Term Bonds, if any, Serial Bonds issued under the provisions of this Indenture in the inverse order of their maturities and, to the extent that Serial Bonds of different Series mature on the same date, in proportion (as near- ly as practicable) to the principal amount of Bonds of each Series maturing on such date. Upon the retirement of any Bonds by purchase or redemption Trustee shall file with the City Clerk a statement briefly ribing such Bonds and setting forth the date of their base or redemption, the amount of the purchase price or the mption price of such Bonds and the amount paid as interest eon. The expenses in connection with the purchase or mption of any Bonds shall be paid by the City or the Trustee Sales and Use Tax Revenues on deposit with the City or the tee, as may be applicable under Section 502 hereof, after the ication of the Sales and Use Tax Revenues as required by ses (a) through (c) of Section 502 hereof. Section 505. Application of Moneys in Reserve Account. ys held for the credit of the Reserve Account shall be used the purpose of paying the interest on and the principal of Bonds and to provide funds for the retirement of Term Bonds he extent of the Amortization Requirements therefor whenever to the extent that the moneys held for the credit of the Bond ice Account shall be insufficient for such purpose. If at any the moneys held for the credit of the Reserve Account shall ed the Reserve Account Requirement, such excess shall be drawn by the Trustee and shall be transferred to the truction Fund during the period prior to the completion of Improvements or to the Bond Service Account or the Redemption unt at the option of the City; provided, however, that the may provide for a different disposition of any such excess he Series Ordinance providing for the issuance of any Series In the event that all or a portion of the Reserve Account rement for any Series shall be provided by a Credit ity, the Trustee shall do all things necessary to receive in ely fashion from the Credit Facility Provider amounts red to be expended pursuant to this Section. V-5 Section 506. Moneys Held in Trust. All moneys which the stee shall have withdrawn from the Sinking Fund or shall have eived from any other source and deposited with the Bond istrar for the purpose of paying any of the Bonds hereby ured, either at the maturity thereof or upon call for redemp- n, or for the purpose of paying any interest or redemption mium on any of the Bonds hereby secured, shall be held in st for the respective Owners of such Bonds. But any moneys ch shall be so set aside or deposited by the Trustee and which 11 remain unclaimed by the Owners of such Bonds for the period three (3) years after the date on which such Bonds or the erest or any redemption premium thereon shall have become due payable shall be remitted to the State Treasurer or to such er officer, board or body as may then be entitled by law to eive the same, and thereafter the Owners of such Bonds shall k only to the State Treasurer or to such other officer, board body, as the case may be, for payment and then only to the ent of the amounts so received without any interest thereon, the Bond Registrar shall have no responsibility with respect such moneys. Section 507. Cancellation of Bonds. All Bonds, paid, emed or purchased, either at or before maturity, shall be elled upon the payment, redemption or purchase of such Bonds shall be delivered to the Bond Registrar when such payment, mption or purchase is made. All Bonds cancelled under any of provisions of this Indenture shall be destroyed by the tee or the Bond Registrar, who shall execute a certificate in icate describing the Bonds so destroyed, and one executed ificate shall be filed with the Director of Finance and the r executed certificate shall be filed with or retained by the Registrar. Section 508. Concerning the Financial Guaranty Bond. As as the Financial Guaranty Bond shall be in full force and t, the City and the Trustee agree to comply with the wing provisions: (a) The gross amounts to be deposited to the Sinking Fund by the Trustee on behalf of the City required to pay in full (i) the interest on the Series 1990 Bonds on each stated interest payment date and (ii) the principal of the Series 1990 Bonds on each stated maturity date thereof and on each date on which such principal shall have been duly called for mandatory redemption (in either event the "Payment Date") shall be deposited by the Trustee at least five (5) business days prior to each such stated Payment Date. (b) If, at the close of business on the fifth business day prior to a Payment Date, the Trustee determined that V-6 after having exhausted the amounts, if any, available in the Reserve Account, there will be insufficient moneys in the funds and accounts available to pay in full the principal of and/or interest on the Series 1990 Bonds on such Payment Date, the Trustee shall so notify Capital Guaranty via telephonic notice to Capital Guaranty's Claims Officer at (415) 995-8000, confirmed by telecopy at (514) 995-8008 of a completed "Notice of Nonpayment" in the form attached as Exhibit A to the Financial Guaranty Bond. (c) Simultaneously with the giving of notice to Capital Guaranty as provided in the preceding paragraph, the Trustee and the Bond Registrar shall make available to Capital Guaranty, its agents or assigns the bond registration books of the City maintained by the Bond Registrar and all records relating to the funds and accounts established under the Indenture. M (d) By the close of business on the third business day prior to a Payment Date for which there will be a deficiency as aforesaid, the Bond Registrar shall provide Capital Guaranty with a list of Owners of Bonds entitled to receive principal or interest payments from Capital Guaranty under the terms of the Financial Guaranty Bond and the full or partial amounts of interest and principal due each such Owner. (e) By the close of business on the second business day prior to a Payment Date for which there will be a deficiency as aforesaid, Capital Guaranty shall make arrangements with its Disbursing Agent (as such term is defined in the Financial Guaranty Bond) to disburse to the Bond Registrar on such Payment Date funds to be held by the Bond Registrar in a segregated trust account (the "Segregated Account") in an amount sufficient to enable the Bond Registrar (i) to mail checks or drafts on such Payment Date to the Owners of Series 1990 Bonds entitled to receive full or partial interest payments pursuant to the terms of the Financial Guaranty Bond, and (ii) to pay principal upon Series 1990 Bonds surrendered to the Bond Registrar by the Owners of Series 1990 Bonds entitled, pursuant to the terms of the Financial Guaranty Bond, to receive full or partial principal payments from Capital Guaranty. The Bond Registrar shall administer the Segregated Account (including, but not limited to, the investment thereof and the return of excess amounts, if any) in accordance with the written instructions of an authorized officer of Capital Guaranty. (f) The Trustee, at the time it provides Notice of Nonpayment to Capital Guaranty, shall notify Owners of V-7 Series 1990 Bonds entitled to receive principal and/or interest payments from Capital Guaranty (i) as to the fact of such entitlement, (ii) that Capital Guaranty's Disbursing Agent may or will remit to the Bond Registrar all or a portion of the interest payments coming due on the next scheduled Payment Date, (iii) that if entitled to receive full or partial payment of principal pursuant to the terms of the Financial Guaranty Bond, such Owners must tender their Series 1990 Bonds for payment thereof to the Bond Registrar along with a valid and duly executed transfer of title in a form reasonably satisfactory to Capital Guaranty. Upon the tendering of such Series 1990 Bonds to the Bond Registrar, the Bond Registrar shall pay the Owners thereof the unpaid portion of principal then due pursuant to the Financial Guaranty Bond. (g) Capital Guaranty, if it causes its Disbursing Agent to make payment of all or a portion of principal of or interest on the Series 1990 Bonds pursuant to the Financial Guaranty Bond, shall become subrogated to the rights of the recipients of such payments in accordance with the terms of the Financial Guaranty Bonds, and to evidence such subrogation (i) in the case of subrogation as to payments under Financial Guaranty Bond representing interest, the Bond Registrar shall note Capital Guaranty's rights as subrogee and the amount of such interest so paid by Capital Guaranty on the registration books of the City maintained by the Bond Registrar, and (ii) in the case of subrogation as to payments under the Financial Guaranty Bond representing principal, the Bond Registrar shall note Capital Guaranty's rights as subrogee and the amount of such principal so paid by Capital Guaranty on the registration books of the City maintained by the Bond Registrar upon surrender of the Series 1990 Bonds by the Owners thereof. V-8 ARTICLE _I. O_positories of honeys, Security for DELOslts and invests ent of Funds. Section 601. Security. for .e ... O Cam! 'rll 76OnEfS depositedthe Trustee �.� Cer t.^_e �.T7 151 _ Of S this Indenture to the :it of a fund, account or Sl.b.cccu :t established by this or a Series Ordinance Sidle De held in tT1St shall be Only in accordance With the P o'visions of t?Sis'inden`L're -he rEs�eCt_'.e Series Ordinance and shall not be subject to or attachby �ert iany Creditor of the City or the Trustee. moneys ce_cs:t c ':t..-1 t e - rust �tEc IIEre ::GaE: in S f excess ascent uat: .ranteethe Federal De C �of ;Crat_cn, the Federal =?' _ cs and pd- _ s'_r?-ce Cc crd` - CO:t ;i1CtiS L Sec..re d for - - fit of the City and Gr«^c_ c_ the Cnds nn- r as then .'C -_Cu_.__... r�i__tad by _ice State or fed_`a Cr _ '� __�._. _ _.��_.__ :C' tOC AFC:.._ _t for, c C'�� `_nc _ _ ._ a arence in the case of, the deposit~ ,._ _—ttst `u var, that it shall nct be necess.a-, for the Trustee to g:Ye city _o_ the r_^..C-J of any mG eys M__.- it for -.._ rJf-Ili= c _-.C_.G_ of o- the redemotion _eti,:m or t-_ interest or. Scnds issued hereunder,_ for -___ _trot-- to g:'/e security based ._-Cc= tOG _,.-I ____nC _f t. _.7 A.rt:cle?-yam_ _-r.G st" .- L:Ch mcne :"_ . Al! icnevis iaoc _t -r_ 'with he ._;st=e shall be credited to ra—_Czia_ fund cc account to r` _c - such moneys be l .,'G . Section Q2. lnves-tnenz of WCncys ?!Gneys Feld _`C_ the .t of c1_ _ _rC ,tS - -cc _ , dCCCL" and Summa CCCi_TL�s Estes: _ _o iZT_"_ or a Series Ordinance shall, as nearly as may be✓ iczh _ ^.F_ coat is ucus _ invested and reinvested y the e ac in 'l=ies me-= z Gb icat ions et ch_ shall mature, or vt ich be sut-j sct t0 _ ede_n" t tici_ by the bolder ...hereof at the in of such holder, not later than the restect_'7e dates 'r::....n rS held for the credit of such fund, account and su accou -.S be ~cured for the :urocses _Mended; rOvided , ct a-7er, a curetsor detos i - in the :.csc^7_ Account shall be invested Lveso ellm Oblica Lions vn,' ct mature moo later than e final joy data of Eons GL'ts'wnd i no under this Indenture and, so as canital Guaranty is a Credit Facility Provider, at least aif _/2) of the amounts on depcs i t in the %user 7e Account . he ii vested in Ines ent Obligations vita maturities of than six (6•) months and the remainder of such amclunt s she!: vested in irzse�-tnent Gbiicaticrs with maturities of not nc,e five () veers, unless ct. erv±se aocroved in vr_i ti nq by al Guaranty.. I The City shall direct the Trustee in writing or by ephone, confirmed in writing, as to the investment of all leys required to be invested hereunder, subject, however, to provisions of this Article. The Trustee shall invest such eys as so directed by the City or, in the event that the City ii s not provide the Trustee with direction as to any investment, the Trustee considers to be appropriate, subject, however, to provisions of this Article. Investment Obligations so purchased as an investment of tys in any such fund, account or subaccount shall be deemed at times to be part of such fund, account or subaccount. The rest accruing thereon and any profit realized from such stment shall be credited to such fund, account or subaccount any loss resulting from such investment shall be charged to fund, account or subaccount. The Trustee or the City, as the case may be, shall sell or ent for payment or redemption any Investment Obligations so ired whenever it shall be necessary so to do in order to ide moneys to meet any payment from any such fund, account or ccount. Neither the Trustee nor any agent thereof shall be le or responsible for any loss resulting from any investment. Investment Obligations may be purchased by the Trustees ugh its own investment division or other bank facilities Dlished for such purpose. Section 603. Valuation of Investment Obli ations. In com- ng the amount in any fund, account or subaccount created uant to the provisions of this Indenture or a Series nance, obligations purchased as an investment of moneys ein shall be valued (a) at face value if such obligations re within six (6) months from the date of valuation thereof (b) if such obligations mature more than six (6) months after date of valuation thereof, at the price at which such obliga- s are redeemable by the holder at his option if so redeem- , or, if not so redeemable, at the lesser of (i) the cost of obligations plus the amortization of any premium or minus amortization of any discount thereon and (ii) the market of such obligations; provided that, so long as Capital anty is a Credit Facility Provider, such obligations shall be ad at their market value. Valuation on any particular date L include the amounts of interest then earned or accrued to date on any moneys or investments in such fund, account or .count. The computation of the amounts on deposit in or Lted to the funds, accounts or subaccounts created under this iture or Series Ordinance and the valuation of the invest - of such amounts shall be performed by the Trustee, not than the ninetieth (90th) day after the last day of each it Year as of the last day of such Fiscal Year, and such VI -2 pputation and valuation shall not be required to be other times; provided that, so long Capital antyorsea is edit Facility Provider, such computationand valuation tshallabe formed on a quarterly basis by the Trustee and the Trustee 11 promptly deliver copies of such quarterly computations and uations to Capital Guaranty. Section 6O4. Covenant as to Arbitrage and Private Activity Status. The City covenants and agrees to, and shall not ct the Trustee to violate, the following tax matters with ,ect to Bonds as to which an opinion of Bond Counsel is vered stating, to the effect, that interest on such Bonds is includable in the gross income of the Owners thereof for ral income tax purposes: (a) So long as such Bonds remain Outstanding, the ys on deposit in any fund or account maintained in connection such Bonds, whether or not such moneys were derived from eeds of the sale of such Bonds or any other sources, will not sed in any manner that would cause such Bonds to be itrage bonds" within the meaning of Section 148 of the Code onds not described under Section 103(a) of the Code and the icable regulations thereunder. (b) The proceeds of such Bonds will not be used in a er that would cause any such Bonds to be "private activity s" within the meaning of Section 141(a) of the Code and the icable regulations thereunder. In furtherance of this nant, the City covenants that it shall not use or permit the or direct the Trustee to make any use of any portion of the eeds of such Bonds or any portion of any Improvements nced in whole or in part with the proceeds of such Bonds for private business use by a person or entity or otherwise so as use any such Bonds to be such "private activity bonds". The Trustee shall be entitled to receive and rely upon an on of counsel for the City as to conformity of any use or sed use of the proceeds of the Bonds with the requirements id sections 103(a) and 141(a) and regulations. VI -3 ARTICLE VII. Particular Covenants. Section 701. Payment of Principal, Interest and Premium. City covenants that it will promptly pay or cause to be paid principal of and the interest on each and every Bond and all er indebtedness issued or incurred under the provisions of s Indenture at the places, on the dates and in the manner cified herein and in the Bonds and such indebtedness and any mium required for the retirement of the Bonds and such ebtedness by purchase or redemption, according to the true ent and meaning thereof. Such principal, interest and premium 1 be payable solely from the Sales and Use Tax Revenues and Sales and Use Tax Revenues are hereby pledged to the payment such principal of and interest and premium on the Bonds and h other indebtedness secured on a parity with the Bonds as to pledge of Sales and Use Tax Revenues hereunder and then such .- er indebtedness not so secured in the manner and to the extent !° einabove particularly specified. The City is not obligated to pay the principal of and !rest and any premium on the Bonds and such other indebtedness pt from the Sales and Use Tax Revenues pledged hereunder, and faith and credit of the City are not pledged to the payment uch principal, interest and premium. The issuance or rrence of the Bonds and such other indebtedness shall not ctly or indirectly or contingently obligate the City to levy o pledge any taxes whatsoever or to make any appropriation the payment of such principal, interest and premium except as ided in this Indenture with respect to the Sales and Use Tax Section 702. Construction of Improvements. The City iants that it will construct the Improvements for which Bonds . be issued under the provisions of this Indenture, or for i moneys repayable from the proceeds of Bonds issued under irovisions of this Indenture shall have been advanced to the in accordance with plans and specifications theretofore ved by the City and otherwise as required by law. The City .er covenants that any contract with any person for any work ituting a part of the Improvements shall provide for such rmance and payment bonds or security in lieu thereof and for retainages as shall be in compliance with the laws of the and the normally established practices of the City from to time in effect. Section 703. Covenant against Encumbrances. The City ants that, from available funds, it will pay all municipal vernmental charges lawfully levied or assessed upon the vements or any part thereof or upon any Sales and Use Tax ues pledged hereunder when the same shall become due, the nts of which are the responsibility of the City, and that it 1 not create or suffer to be created any lien or charge upon Sales and Use Tax Revenues pledged hereunder ranking equally h or prior to the Bonds or any other indebtedness hereunder ured on a parity with the Bonds as to the pledge of Sales and Tax Revenues hereunder. The City further covenants that, m available funds, it will pay or cause to be discharged, him sixty (60) days after the same shall accrue, all lawful ins and demands for labor, materials, supplies or other ects which, if unpaid, might by law become a lien upon the es and Use Tax Revenues pledged hereunder; provided, however, t nothing contained in this Section shall require the City to or cause to be discharged, or make provision for, any such n or charge so long as the validity thereof shall be contested good faith and by appropriate legal proceedings. Section 704. Employment of Accountant. The City covenants agrees that it will for the purpose of performing and carry- out the duties imposed on the Accountant by this Indenture Loy an independent certified public accountant or firm of ?pendent certified public accountants of suitable experience responsibility. Section 705. Annual Budget. The City covenants that on or ire the second day of February of each Fiscal Year it will lly adopt the budget covering the above items for such Fiscal (herein sometimes called the "Annual Budget"). Copies of Annual Budget shall be filed with the Trustee and mailed by City to Capital Guaranty and all Owners who shall have filed r names and addresses with the City Clerk for such purpose. If for any reason the City shall not have adopted the Annual et before the second day of February of any Fiscal Year, the al Budget for the preceding Fiscal Year shall, until the tion of the Annual Budget, be deemed to be in force and shall reated as the Annual Budget under the provisions of this -le. The City may at any time adopt an amended or supplemental 1 Budget for the remainder of the then current Fiscal Year, he Annual Budget so amended or supplemented shall be treated e Annual Budget under the provisions of this Article. There be no limitation on the nature or amount covered by any amendment to the Annual Budget. Section 706. Use of Sales and Use Tax Revenues. The City ants and agrees that, so long as any of the Bonds secured y or any other indebtedness incurred hereunder secured on y with the Bonds as to the pledge of Sales and Use Tax ues hereunder shall be Outstanding, none of the Sales and ax Revenues pledged hereunder will be used for any purpose than as provided in this Indenture and no contract or VII -2 tracts will be entered into or any action taken by which the hts of Owners of the Bonds might be impaired or diminished. Section 707. Records Accounts and Audits. The City cove - its that it will keep the funds and accounts created hereunder )arate from all other funds and accounts of the City or any of departments, and that it will keep accurate records and :ounts of Sales and Use Tax Revenues received by the City and application of such Sales and Use Tax Revenues. Such records accounts shall be open to the inspection of the Trustee, the iers and their agents and representatives. The City further covenants that within six (6) months after close of each Fiscal Year it will cause an audit to be made its books and accounts pertaining to the City by the ountant. The Trustee shall make available to the Accountant its books and records pertaining to the funds, accounts and accounts established with the Trustee and all Sales and Use Revenues received by the Trustee hereunder. Within a sonable time thereafter reports of each such audit shall be ed with the Board and the Trustee, and copies of such report 11 be mailed to Capital Guaranty and any Owner who shall have ed his name and address with the City Clerk for such purpose. h audit reports shall be open to the inspection of all erested persons. The City further covenants that it will cause any additional its or audits relating to the City to be made as required by or by any applicable rules or regulations of any governmental ority or of any securities exchange on which the Bonds may be ed or traded. Section 708. Sales and Use Tax Revenues. The City covenants it will take all actions permitted by law to continue to ive the Sales and Use Tax Revenues in the greatest amount ible. Except to the extent required by law, the City will take any action the result of which could be a reduction or nution of the Sales and Use Tax Revenues below the level h would have been received but for such action. Section 709. Sale of Improvements. Nothing in this iture shall be construed to prohibit the City from selling, ng or otherwise disposing of the Improvements financed with eds of the Bonds; provided, however, that prior to the sale, or other disposition of any Improvement there shall be with the Trustee an opinion of Bond Counsel to the effect such sale, lease or other disposition will not cause est on the Bonds to be included in the gross income of the s thereof for federal income taxation purposes. VII -3 ARTICLE VIII. Remedies. Section 801. Extension of Interest Payment In case the e for the payment of any interest on any Bond shall be ended, whether or not such extension be by or with the consent the City, such interest so extended shall not be entitled in e of default hereunder to the benefit or security of this enture except subject to the prior payment in full of the ncipal of all Bonds then Outstanding and of all.interest the e for the payment of which shall not have been extended. Section 802. Events of Default. Each of the following nts is hereby declared an "Event of Default": (a) payment of the principal of and the redemption premium, if any, on any of the Bonds shall not be made when the same shall become due and payable, either at maturity or by proceedings for redemption or otherwise; or (b) payment of any installment of interest on any of the Bonds shall not be made when the same shall become due and payable; or (c) the City shall for any reason be rendered incapable of fulfilling its obligations hereunder; or (d) the City admits in writing its inability to pay its debts generally as they become due, or files a petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of a receiver or trustee for itself or a receiver or trustee for such purpose is appointed without the consent of the City; or (e) the City is adjudged insolvent by a court of competent jurisdiction, or it be adjudged a bankrupt on a petition in bankruptcy filed against the City, or an order, judgment or decree be entered by any court of competent jurisdiction appointing, without the consent of the City, a receiver or trustee of the City or of the whole or any part of its property and any of the aforesaid adjudications, orders, judgments or decrees shall not be vacated or set aside or stayed within ninety (90) days from the date of entry thereof; or (f) the City shall file a petition or answer seeking reorganization or any arrangement under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state thereof; or (g) under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property, and such custody or control shall not be terminated within ninety (90) days from the date of assumption of such custody or control; or (h) the City shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds or in this Indenture or any Series Ordinance on the part of the City to be performed and such default shall continue for thirty (30) days after written notice specifying such default and requiring the same to be remedied shall have been given to the City by the Trustee, which may give notice in its discretion and shall give such notice at the written request of the Owners of not less than ten percentum (10%) in aggregate principal amount of the Bonds then Outstanding; provided, however, if the default specified in this clause (h) shall be of a type which cannot be remedied within thirty (30) days, it shall not constitute an Event of Default if the City shall begin to remedy such default within such period of thirty (30) days. Section 803. Acceleration of Maturities. Upon the happening continuance of any Event of Default specified in clauses (a) >ugh (h) of Section 8O2 of this Article, then and in every i case Trustee may, and upon the written request of the Owners tot less than a majority in aggregate principal amount of the !s then Outstanding shall, by a notice in writing to the City, are the principal of all of the Bonds then Outstanding (if then due and payable) to be due and payable immediately, and ,such declaration the same shall become and be immediately and payable, anything contained in the Bonds or in this nture to the contrary notwithstanding; provided, however, if at any time after the principal of the Bonds shall have so declared to be due and payable, and before the entry of 1 judgment of decree in any suit, action or proceeding ituted on account of such default, or before the completion he enforcement of any other remedy under this Indenture, ys shall have accumulated in the Sinking Fund sufficient to the principal of all matured Bonds and all arrears of rest, if any, upon all Bonds then Outstanding (except the cipal of any Bonds not then due except by virtue of such a ration and the interest accrued on such Bonds since the last rest Payment Date), and the charges, compensation, expenses, VIII -2 ;bursements, advances and liabilities of the Trustee and all ,er amounts then payable by the City hereunder shall have been d or a sum sufficient to pay the same shall have been osited with the Trustee, and every other default known to the stee in the observance or performance of any covenant, condi- n, agreement or provision contained in the Bonds or in this enture or any Series Ordinance (other than a default in the ment of the principal of such Bonds then due only because of eclaration under this Section) shall have been remedied to the isfaction of the Trustee, then and in every such case the stee may, and upon the written request of the Owners of not s than a majority in aggregate principal amount of the Bonds then due except by virtue of such declaration and then standing shall, by written notice to the City, rescind and ul such declaration and its consequences, but no such -ission or annulment shall extend to or affect any subsequent sult or impair any right consequent thereon. Section 804. Enforcement of Remedies. Upon the happening continuance of any Event of Default specified in Section 802 :his Article, then and in every such case the Trustee may ;eed,.and upon the written request of the Owners of not less i ten per centum (10%) in aggregate principal amount of the is then Outstanding hereunder shall proceed, subject to the risions of Section 902 of this Indenture to protect and )rce the rights of the Owners under State law or under this !nture by such suits, actions or special proceedings in equity it law, either for the specific performance of any covenant or :ement contained herein or in aid or execution of any power :in granted or for the enforcement of any proper legal or table remedy, as the Trustee, being advised by counsel, shall imost effectual to protect and enforce such rights. In the enforcement of any remedy under this Indenture the tee shall be entitled to sue for, enforce payment of and ive any and all amounts then or during any default becoming, at any time remaining, due from the City for principal, rest or otherwise under any of the provisions of this nture or of the Bonds and unpaid, with interest on overdue ents of principal at the rate or rates of interest specified uch Bonds, together with any and all costs and expenses of ection and of all proceedings hereunder and under such Bonds, out prejudice to any other right or remedy of the Trustee or he Owners, and to recover and enforce judgment or decree ast the City, but solely as provided herein and in such VIII -3 ids, for any portion of such amounts remaining unpaid and :erest, costs and expenses as above provided, and to collect it solely from moneys in the funds and accounts charged with made available for the payment of the Bonds under the visions of this Indenture and any other moneys available for h purpose) in any manner Provided by law, the moneys adjudged decreed to be payable. Section 8O5. Pro -Rata Application Of Fund .s Indenture to the contrary Aat any g in notwithstanding, if at time moneys in the Sinking Fund shall not be sufficient to pay the .ncipal of or the interest on the Bonds as the same become due I payable (either by their terms or by acceleration of maturi- s under the provisions of Section 803 of this Article), such Leys, together with any moneys then available or thereafter oming available for such purpose, whether through the exercise the remedies provided for in this Article or otherwise, shall applied as follows: (a) Unless the principal of all the Bonds shall have become due and payable or shall have been declared due and payable, all such moneys shall be applied: First: to the payment of the persons entitled thereto of all installments of interest then due and payable, in the order in which such installments become due and payable, and, if the amount available shall not be sufficient to pay in full, any particular install- ment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or preference except as to any difference in the respective rates of interest specified in the Bonds; Second: to the payment of the persons entitled thereto of the unpaid principal of any of the Bonds which shall have become due (other than Bonds called for redemption for the payment of which sufficient moneys are held pursuant to the provisions of this Indenture), in the order of their due dates, and, if the amount available shall not be sufficient to pay in full the principal of Bonds due on any particular date, then to the payment first of such interest, ratably according to the amount of such interest due on such date, and then to the payment of such principal, VIII -4 ratably according to the amount of such principal due on such date, to the persons entitled thereto without any discrimination or preference; and Third: to the payment of the interest on and the principal of the Bonds, to the purchase and retirement of Bonds and to the redemption of Bonds, all in accord- ance with the provisions of Article V of this Indent- ure. (b) If the principal of all the Bonds shall have become due and payable or shall have been declared due and payable, all such moneys shall be applied to the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal over interest or of interest over principal or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the persons entitled thereto without any discrimination or preference except as to any difference in the respective rates of interest specified in the Bonds. (c) If the principal of all the Bonds shall have been declared due and payable and if such declaration shall thereafter have been rescinded and annulled under the provi- sions of Section 803 of this Article, then, subject to the provisions of paragraph (b) of this Section in the event that the principal of all the Bonds shall later become due or be declared due and payable, the moneys remaining in and thereafter accruing to the Sinking Fund shall be applied in accordance with the provisions of paragraph (a) of this Section. The provisions of this Section are in all respects subject e provisions of Section 801 of this Article. Whenever moneys are to be applied by the Trustee pursuant to provisions of this Section, such moneys shall be applied by 'rustee at such times, and from time to time, as the Trustee s sole discretion shall determine, having due regard to the it of such moneys available for application and the ihood of additional moneys becoming available for such .cation in the future; the deposit of such moneys with the Registrar, or otherwise setting aside such moneys, in trust VIII -5 the proper purpose, shall constitute proper application by Trustee; and the Trustee shall incur no liability whatsoever any owners or to any other person for any delay in applying such funds, so long as the Trustee acts with reasonable .igence, having due regard to the circumstances, and ultimately ,lies the same in accordance with such provisions of this lenture as may be applicable at the time of application by the [stee. Whenever the Trustee shall exercise such discretion in ,lying such funds, it shall fix the date upon which such lication is to be made and upon such date interest on the unts of principal to be paid on such date shall cease to rue. The Trustee shall give such notice as it may deem ropriateaanand saslnot be required otherwise required herein of the fixing of any h date, to make payment to the Owner any unpaid Bond until such Bond shall be surrendered to the stee for appropriate endorsement. Section 806. Effect of Discontinuance of Proceedin s. In any proceeding taken by the Trustee on account of any ult shall have been discontinued or abandoned for any reason, and in every such case the City, the Trustee and the Owners 1 be restored to their former positions and rights hereunder, ectively, and all rights, remedies, powers and duties of the tee shall continue as though no such proceeding had been Section 807. Restrictions upon Action by Individual Owner of _. No Owner shall have any right to institute any suit, )n or proceeding in equity or at law on any Bond or for the ition of any trust hereunder or for any other remedy ender unless such Owner previously shall have given to the :ee written notice of the Event of Default on account of i such suit, action or proceeding is to be instituted, and ;s also the Owners of not less than ten percentum (10%) in :gate principal amount of the Bonds then Outstanding shall made written request of the Trustee after the right to ise such powers or right of action, as the case may be, have accrued, and shall have afforded the Trustee a nable opportunity either to proceed to exercise the powers nabove granted or to institute such action, suit or eding in its or their name, and unless, also, there shall been offered to the Trustee reasonable security and nity against the costs, expenses and liabilities to be red therein or thereby, and the Trustee shall have refused glected to comply with such request within a reasonable VIII -6 and such notification, request and offer of indemnity are by declared in every such case, at the option of the Trustee, )e conditions precedent to the execution of the powers and ;ts of this Order or to any other remedy hereunder. It is �rstood and intended that no one or more Owners hereby secured .1 have any right in any manner whatever by his or their .on to affect, disturb or prejudice the security of this :nture, or to enforce any right hereunder except in the manner in provided, that all proceedings at law or in equity shall nstituted, hade and maintained in the manner herein provided for the benefit of all Owners of such Outstanding Bonds, and any individual right of action or other right -given to one ore of such Owners by law is restricted by this Indenture to rights and remedies herein provided. Section 808. Actions by Trustee. All rights of action r this Indenture or under any of the Bonds secured hereby, rceable by the Trustee, may be enforced by it without the ession of any of the Bonds or the production thereof at the 1 or other proceeding relative thereto, and any such suit, on or proceeding instituted by the Trustee shall be brought ts name for the benefit of all of the Owners of such Bonds, ect to the provisions of this Indenture. Section 809. No Remedy Exclusive. No remedy herein con - d upon or reserved to the Trustee or to the Owners is ded to be exclusive of any other remedy or remedies herein ded, and each and every such remedy shall be cumulative and be in addition to every other remedy given hereunder. Section 810. Delay Not a Waiver. No delay or omission of rustee or any Owner to exercise any right or power accruing any default shall impair any such right or power or shall be rued to be a waiver of any such default or an acquiescence in; and every power and remedy given by this Article to any may be exercised from time to time and as often as may be d expedient. The Trustee may, and upon written request of the Owners of ess than a majority in principal amount of the Bonds then anding shall, waive any default which in its opinion shall been remedied before the entry of final judgment or decree y suit, action or proceeding instituted by it under the sions of this Indenture or before the completion of the VIII -7 orcement of any other remedy under this Indenture, but no such vertshall extextend nd or orimpair affect any other existing or subsequent aulany rights or remedies Consequent reon. Section 811. Notice of Default. The Trustee shall mail to ital Guaranty and each Owner written notice of the occurrence any Event of Default within thirty (30) days after the Trustee 11 have notice, pursuant to the provisions of Section 908 of s Indenture, that any such Event of Default shall have urred. The Trustee shall not, however, be subject to any bility to any Owner by reason of its failure to mail any such ice. Section 812. Subrocxation. Notwithstanding any other -ision of this Indenture, in the event that the principal and mption price, if applicable, and interest due on the Series Bonds shall be paid by Capital Guaranty pursuant to the ncial Guaranty Bond, the assignment and pledge of the trust to under this Indenture and all covenants, agreements and r obligations of the City to the Owners of such Series 1990 s shall continue to exist and Capital Guaranty shall be ogated to the rights of such Owners. VIII -8 ARTICLE IX. Concerning the Trustee and the Bond Registrar. Section 901. Acceptance of Duties. Mcllroy Bank & Trust in City of Fayetteville, Arkansas, is hereby appointed as stee under this Indenture. The Trustee accepts the duties and igations and agrees to execute the trusts imposed upon it by s Indenture, but only upon the terms and conditions set forth this Article and subject to the provisions of this Indenture, ill of which the parties hereto and the respective Owners :e. Unless an Event of Default of which the Trustee shall a notice pursuant to the provisions of Section 908 of this icle has occurred and is continuing, the Trustee shall not be )onsible except for the performance of those duties that are -essly set forth in this Indenture, and no implied covenant or ,shall be read into this Indenture against the Trustee. The City shall appoint such registrars, transfer agents, .ng agents or other agents as may be necessary for the .stration, registration of transfer and exchange of Bonds in a reasonable time according to then current commercial idards and for the timely payment of principal, interest and redemption premium with respect to the Bonds. Mcllroy Bank & t in the City of Fayetteville, Arkansas, is hereby appointed registrar, transfer agent and paying agent for the Series Bonds (collectively the "Bond Registrar"), subject to the t of the City to appoint another Bond Registrar, and as such 1 keep the books of the City for the registration, stration of transfer, exchange and payment of the Bonds as ided in this Indenture. Prior to the issuance of any Bonds, City shall obtain from a duly authorized officer of the Bond strar a written acceptance of the duties imposed upon the Registrar by this Indenture. Section 902. Trustee Entitled to Indemnity. The Trustee be under no obligation to institute any suit, or to take emedial proceeding under this Indenture, or to enter any rance or in any way defend in any suit in which it may be defendant, or to take any steps in the execution of the s hereby created or in the enforcement of any rights and s hereunder, until it shall be indemnified to its faction against any and all costs and expenses, outlays and el fees and other reasonable disbursements, and against all lity; the Trustee may, nevertheless, begin suit, or appear 3 defend suit, or do anything else in its judgment proper to ne by it as such Trustee, without indemnity, and in such the City shall reimburse the Trustee for all costs and !uses, outlays and counsel fees and other reasonable ,ursements properly incurred in connection therewith, provided .the Trustee will inform the City of any such action which ,t require the City to reimburse the Trustee before commencing action. If the City shall fail to make such reimbursement, Trustee may reimburse itself from any moneys in its ession under the provisions of this Indenture and shall be tied to a preference therefor over any of the Bonds tanding hereunder. Section 9O3. Limitation on Obli ations and Res onsibilities Cstee. The Trustee shall be under no obligation to effect naintain insurance or to renew any policies of insurance or to lire as to the sufficiency of any policies of insurance pied by the City or to report, or make file claims or proof of for, any loss or damage insured against or which may occur, :o keep itself informed or advised as to the payment of any ;s or assessments, or to require any such payment to be made. Trustee shall have no responsibility in respect of the .dity or sufficiency of this Indenture or the due execution or iowledgment thereof, or in respect of the validity of the is or the due execution or issuance thereof. The Trustee 1 be under no obligation to see that any duties herein ised upon the City, any Bond Registrar, any Depositary, or any ,y other than itself, or any covenants herein contained on the of any party other than itself to be performed, shall be or performed, and the Trustee shall be under no obligation failure to see that any such duties or covenants are so done Section 904. Trustee Not Liable for Failure of City to Act. 'rustee shall not be liable or responsible because of the ire of the City or of any of its employees or agents to make :ollections or deposits or to perform any act herein required Le City or because of the loss of any moneys arising through nsolvency or the act or default or omission of any other itary in which such moneys shall have been deposited under rovisions of this Indenture. The Trustee shall not be nsible for the application of any of the proceeds of the or any other moneys deposited with it and paid out, rawn or transferred hereunder if such application, payment, rawal or transfer shall be made in accordance with the sions of this Indenture. The immunities and exemptions from lity of the Trustees hereunder shall extend to its tors, officers, employees and agents. Section 905. Compensation and Indemnification of Trustee. ct to the provisions of any contract between the City and rustee relating to the compensation of the Trustee, the City , from moneys lawfully available therefor, pay to the ee reasonable compensation for all services performed by it IX -2 :under and also all its reasonable expenses, charges and other ,ursements and those of its attorneys, agents and employees irred in and about the administration and execution of the ;ts hereby created and the performance of its powers and .es hereunder, and to the extent permitted by law and from Sys lawfully available therefor, shall indemnify and save the tee ;teerharmless se ess against any liabilities which it may incur in performance of its powers and duties hereunder. he City shall fail to make any payment required by this ,ion, the Trustee may make such payment from any moneys in its ession under the provisions of this Indenture and shall be tied to a preference therefor over any of the Bonds tanding hereunder. The City shall not be required to mnify the Trustee against any liabilities which the Trustee incur as a result of negligent or wrongful acts or omissions he Trustee. Section 906. Monthly Statement from Trustee. It shall be duty of the Trustee, on or before the 10th day of each month r the month in which any Series of Bonds is delivered, to with the City and Capital Guaranty a statement setting forth espect of the preceding calendar month: (a) the amount withdrawn or transferred by it and the amount deposited with it on account of each fund and account held by it under the provisions of this Indenture, (b) the amount on deposit with it at the end of such month to the credit of each such fund and account, (c) a brief description of all obligations held by it as an investment of moneys in each such fund and account, (d) the amount applied to the purchase or redemption of Bonds under the provisions of this Indenture and a description of the Bonds or portions of Bonds so purchased or redeemed, and (e) any other information which the City may reasonably request. All records and files pertaining to each such fund and int and the Sales and Use Tax Revenues in the custody of the ee hereunder shall be open at all reasonable times to the ction of the City and its agents and representatives and the may make copies thereof. Section 907. Trustee May Rely on Certificates. In case at ime it shall be necessary or desirable for the Trustee to any investigation respecting any fact preparatory to taking t taking any action or doing or not doing anything as such IX -3 ;tee, and in any case in which this Indenture provides for ajttingeorrr takanio ing anytactiton, the Trustee may rely Upon any i it under the provisions of this Indenturre or permitted be eandanyosuchfiled :rument shall be evidence of such fact to protect the Trustee ,ny action that it may or may not take or in respect of thing it may or may not do, in good faith, by reason of the ,oIedeexexistence ce of such fact. Except as otherwise provided in y request, notice, certificate or other rument from the City to the Trustee shall be deemed to have signed by the proper party or parties if signed by the Mayor he City Manager of the City or by any two officers or oyees of the City who shall be designated by the City by lution for such purpose and the Trustee may accept and rely a certificate signed by the City Clerk as to any action n by the City. Section 908. Notice of Default. Except upon the happening ny Event of Default specified in clauses (a) and (b) of ion 802 of this Indenture, the Trustee shall not be obliged ,,- !i, ake notice or be deemed to have notice of any Event of ilt hereunder, unless specifically notified in writing of Event of Default by the Owners of not less than ten antum (10%) in aggregate principal amount of the Bonds hereby red and then Outstanding. Section 909. Trustee May Deal in Bonds. The bank or trust any acting as Trustee under this Indenture, and its :tors, officers, employees or agents, may in good faith buy, , own, hold and deal in any of the Bonds issuer under and red by this Indenture, and may join in any action which any may be entitled to take with like effect as if such bank or : company were not the Trustee under this Indenture. Section 910. Trustee Not Responsible for Recitals. The :als, statements and representations contained herein and in fonds shall be taken and construed as made by and on the part to City and not by the Trustee, and the Trustee assumes and • be under no responsibility for the correctness of the same. Section 911. Trustee Protected in Relying on Certain ents. The Trustee shall be protected and shall incur no lity in acting or proceeding, or in not acting or not eding, in good faith, and in accordance with the terms of Indenture, upon any resolution, order, notice, request, nt, waiver, certificate, statement, affidavit, requisition, or other paper or document which it shall in good faith ve to be genuine and to have been adopted or signed by the r board or person or to have been prepared and furnished ant to any of the provisions of this Indenture, or upon the an opinion of an attorney, engineer or accountant believed IX -4 tee o ithe the Trussteeetohbel benon relation to the subject matter, inquiry as to any statement containedduty oorae any ireferedtton any such instrument. The Trustee matters breferred ryto shall not be under any .ication to see to the recording or filing of this Indenture or ,erwise to the giving to any Person of notice of the provisions -eof. No permissive right of the Trustee under this Indenture take any action shall impose any duty upon the Trustee to take h action, and the Trustee shall not be liable to the Owners or the ion City any ny eother uperson for failing to take any such pursuant any Permissive right. Section 912. Resignation of Trustee. The Trustee may ign and thereby become discharged from the trusts hereby ated, by notice in writing to be given to the City and lished once in a Daily Newspaper of general circulation lished in the City and in a Daily Newspaper of general ,ulation or a financial journal published in the Borough of iattan, City and State of New York, not less than sixty (60) before such resignation is to take effect, but such ignation shall take effect immediately upon the appointment of �y �w Trustee hereunder, if such new Trustee shall be appointed )re the time limited by such notice and shall then accept the ;ts hereof; provided, however, that such notice need not be .fished in the event that Mcllroy Bank & Trust is to be seeded by Arvest Trust Company, N.A. as Trustee. Section 913. Removal of Trustee. The Trustee may be ved at any time by an instrument or concurrent instruments in ing, executed by the Owners of not less than a majority in cipal amount of the Bonds hereby secured and then Outstanding filed with the City. A photostatic copy of each such rument shall be delivered promptly by the City to the tee. The Trustee may also be removed at any time for any ch of trust or for acting or proceeding in violation of, or failing to act or proceed in accordance with, any provision his Indenture with respect to the duties and obligations of Trustee, by any court of competent jurisdiction, upon the ication of the City or the Owners of not less than five :ntum (5%) in aggregate principal amount of the Bonds then handing under this Indenture, or by Capital Guaranty at its Section 914. Appointment of Successor Trustee. If at any hereafter the Trustee shall resign, be removed, be dissolved herwise become incapable of acting, or the bank or trust ny acting as Trustee shall be taken over by any governmental ial, agency, department or board, the position of Trustee thereupon become vacant. If the position of Trustee shall e vacant for any of the foregoing reasons or for any other n, the City shall appoint a Trustee to fill such vacancy. IX -5 City shall cause a notice of any such appointment by it to be Led by first-class mail, Postage prepaid to all Owners at lr addresses as they appear on the registration books. At any time within one year after any such vacancy shall occurred, the Owners of a majority in principal amount of Bonds hereby secured and then Outstanding, by an instrument !oncurrent instruments nst�may appoint writing, executed by such Owners and d with Y. a successor Trustee, which shall rsede any Trustee theretofore appointed by the City. ostatic copies of each such instrument shall be delivered ptly by the City to the predecessor Trustee and to the tee so appointed by such Owners. If no appointment of a successor Trustee shall be made ant to the foregoing provisions of this Section, the Owner y Bond Outstanding hereunder or any retiring Trustee may to any court of competent jurisdiction to appoint a ssor Trustee. Such court may thereupon, after such notice, y, as such court may deem proper and prescribe, appoint a ssor Trustee. Any Trustee hereafter appointed shall be a bank or trust my in good standing located in or incorporated under the of the State, duly authorized to exercise corporate trust •s and subject to examination by federal or state authority o long as Capital Guaranty is a Credit Facility Provider, s waived in writing by Capital Guaranty, shall maintain a ted capital and surplus aggregating not less than Seventy - Million Dollars ($75,000,000). Section 915. Vesting of Trusts in Successor Trustee. Every ssor Trustee appointed hereunder shall execute, acknowledge eliver to its predecessor, and also the City, an instrument iting accepting such appointment hereunder, and thereupon successor Trustee, without any further act, shall become vested with all the rights, immunities, powers and trusts, object to all the duties and obligations, of its cessor; but such predecessor shall, nevertheless, on written st of its successor or of the City, and upon payment of the ses, charges and other disbursements of such predecessor are payable pursuant to the provisions of Section 905 of 4rticle, execute and deliver an instrument transferring to successor Trustee all the rights, immunities, powers and s of such predecessor hereunder; and every predecessor :e shall deliver all property and moneys held by it ider to its successor. Should any instrument in writing :he City be required by any successor Trustee for more fully :rtainly vesting in such Trustee the rights, immunities, and trusts hereby vested or intended to be vested in the :essor Trustee, any such instrument in writing shall and IX -6 on request, be executed, acknowledged and delivered by the Notwithstanding any of the foregoing cle, any bank or trust Company g ng provisions of this having power to �° es and execute the trusts of this Indenture andpotherwiseerforu e ified to act as Trustee hereunder with or into which the bank rust company acting as Trustee may be o which the assets and business ofsuch bank merged or cr onsolidated sticompan, be sold, shall be deemed the successor oftheoTrustee.coany 1 IX -7 ARTICLE X. Execution of Instruments by Owners and Proof of Ownership of Bonds. Section 1001. Execution of Instruments b Owners and oof mershiP of Bonds. Any request, direction -ument in writing required or permitted b ' hossInt or other ,gned or executed by Owners may be any number umbe Indenture to irrent instruments of similar t 1 enorand may be signed or ted by the Owners or their attorneys or legal repre- tives. Proof of the execution of any such instrument and of wnership of Bonds shall be sufficient for any purpose of Indenture and shall be conclusive in favor of the Trustee regard to any action taken by it under such instrument if in the following manner: (a) The fact and date of the execution by any person of any such instrument may be proved by the verification of any officer in any jurisdiction who, by the laws thereof, has power to take affidavits within such jurisdiction, to the effect that such instrument was subscribed and sworn to before him, or by an affidavit of a witness to such execu- tion. Where such execution is on behalf of a person other than an individual such verification or affidavit shall also constitute sufficient proof of the authority of the signer thereof. (b) The fact of the ownership of Bonds shall be proved by the registration books required to be maintained pursuant to Article II of this Indenture. ,thing contained in this Article shall be construed as ig the Trustee to such proof, it being intended that the may accept any other evidence of the matters herein which it may deem sufficient. Any request or consent of er of any Bond shall bind every future Owner of the same respect of anything done by the Trustee in pursuance of quest or consent. ,twithstanding any of the foregoing provisions of this , the Trustee shall not be required to recognize any as an Owner of any Bond or to take any action at such request unless such Bond shall be deposited with it. s Article shall not apply to transfers of Bonds pursuant on 206 of this Indenture. ARTICLE XI. Supplemental Indentures. Section 1101. Su lemental Indentures Without Owners' ,ent. The City and the Trustee may, from time to time and at time, enter into such indentures supplemental hereto as shall be inconsistent with the terms and provisions hereof (which lemental indentures shall thereafter form a part hereof): (a) to cure any ambiguity or formal defect or omission or to correct any inconsistent provisions in this Indenture or in any Series Ordinance or in any supplemental indenture, or (b) to grant to or confer upon the Trustee for the benefit of the Owners any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the Owners or the Trustee, or (c) to add to the conditions, limitations and restric- tions on the issuance of Bonds under the provisions of this Indenture other conditions, limitations and restrictions thereafter to be observed, or (d) to add to the covenants and agreements of the City in this Indenture or in any Series Ordinance other covenants and agreements thereafter to be observed by the City or to surrender any right or power herein or in any Series Ordinance reserved to or conferred upon the City, or (e) to permit the issuance of Bonds in coupon form, if as a condition precedent to the adoption of such supplemental resolution, there shall be delivered to the City an opinion of Bond Counsel to the effect that the issuance of Bonds in coupon or bearer form is then permitted by law to be issued and that the interest on such Bonds would not be included in the gross income of the Owners thereof for purposes of federal income taxation, or (f) to permit the City to issue Bonds the interest on which would not be included in the gross income of the )wners thereof for purposes of federal income taxation, or (g) to qualify the Bonds or any of them for registra- :ion under the Securities Act of 1933, as amended, or the securities Exchange Act of 1934, as amended, or (h) to qualify this Indenture as an "indenture" under Trust Indenture Act of 1939, as amended, or (i) to create additional sinking funds for any Series f Bonds as permitted by Section 502 hereof, or a (j) to permit Bonds to be issued in denominations IiI1h= smaller than $5,000, or to permit (k) Certificated bonds, Bonds oorbe issued in book -entry form (1) which, in the opinion of Bond Counsel, do not adversely affect the rights or security of the Owners. eAtalleast asteththirty f(30)or days of the prior to the passage of any sup- yPurposes of this Section other the purposes set forth in clauses (f), (g), (h), (i), (j) (k), the Trustee shall cause a notice of the proposed passage ich supplemental indenture to be mailed by first-class mail, ige prepaid, to all Owners at their addresses as they appear ie registration books. Such notice shall briefly set forth iature of the proposed supplemental indenture and shall state copies thereof are on file at the office of the Trustee for action by all Owners. A failure on the part of the Trustee til the notice required by this Section shall not affect the lity of such supplemental indenture. Section 1102. Supplemental Indentures With Owners' Consent. :ct to the terms and provisions contained in this Section, iot otherwise, the Owners of not less than two-thirds (2/3) gregate principal amount of the Bonds then Outstanding shall the right, from time to time, anything contained in this ture to the contrary notwithstanding, to consent to and ve the execution by the City and the Trustee of such ture or indentures supplemental hereto as shall be deemed sary or desirable by the City for the purpose of modifying, ing, amending, adding to or rescinding, in any particular, f the terms or provisions contained in this Indenture, any s Ordinance or any supplemental indenture; provided, er, that nothing herein contained shall permit, or be rued as permitting, (a) an extension of the maturity of the [pal of or the interest on any Bond issued hereunder or an ;ion of any date fixed for meeting any Amortization cements, or (b) a reduction in the principal amount of any )r the redemption premium or the rate of interest thereon, a preference or priority of any Bond or Bonds over any Bond or Bonds, or (d) a reduction in the aggregate ipal amount of the Bonds required for consent to such sup- ital indenture. Nothing herein contained, however, shall be rued as making necessary the approval by Owners of the ;ion of any supplemental indenture as authorized in Section �f this Article. XI -2 The consent of the Owners of any Series of Bonds to be ed hereunder shall be deemed given if the underwriters or 'al purchasers for resale consent in writing to the execution ch supplemental indenture and the nature of the amendment ted by such supplemental indenture is disclosed in the ial statement or other offering document pursuant to which Series of Bonds is offered and sold to the public. If at any time the City shall request the Trustee to enter • any supplemental indenture for any of the purposes of this on, the Trustee shall, at the expense of the City, cause a of the proposed execution of such supplemental indenture mailed by first-class mail, postage prepaid, to all Owners rids then Outstanding at their addresses as they appear on egistration books. Such notice shall briefly set forth the e of the proposed supplemental indenture and shall state the copies thereof are on file at the principal office of rustee for inspection by all Owners. The Trustee shall not, er, be subject to any liability to any Owner by reason of ailure to cause the notice required by this Section to beI d and any such failure shall not affect the validity of such emental indenture when consented to and approved as provided is Section. henever, at any time within one year after the date of the publication of such notice, the City shall deliver to the e an instrument or instruments in writing purporting to be ed by the Owners of not less than two-thirds (2/3) in ate principal amount of the Bonds then Outstanding, which merit or instruments shall refer to the proposed sup- tal indenture described in such notice and shall specific- onsent to and approve the execution thereof in substan- the form of the copy thereof referred to in such notice, pon, but not otherwise, the City and the Trustee may a such supplemental indenture in substantially such form, t liability or responsibility to any Owner of any Bond, r or not such Owner shall have consented thereto. the Owners of not less than two-thirds (2/3) in aggregate )al amount of the Bonds then Outstanding at the time of the .on of such supplemental indenture shall have consented to proved the execution thereof as herein provided, no Owner Bond shall have any right to object to the execution of Ipplemental indenture or to object to any of the terms and ons contained therein or the operation thereof, or in any to question the propriety of the execution thereof, or to or restrain the City or the Trustee from executing the from taking any action pursuant to the provisions XI -3 Upon the passage of any supplemental indenture pursuant to rovisions of this Section, this Indenture shall be and be d to be modified and amended in accordance therewith, and espective rights, duties and obligations under this ture of the City, the Trustee, and all Owners of Bonds then anding shall thereafter be determined, exercised and ced in all respects under the provisions of this Indenture modified and amended. Section 1103. Su lemental Indenture Part of Indenture. The ee is authorized to join with the City in the execution of uch supplemental indenture and to make the further ments and stipulations which may be contained therein. Any emental indenture passed in accordance with the provisions is Article shall thereafter form a part of this Indenture, 11 of the terms and conditions contained in any such emental indenture as to any provision authorized to be fined therein shall be and shall be deemed to be part of the and conditions of this Indenture for any and all u se of the execution of any supplemental indenture, ndenture Pexpress. once may be made thereof in the text of any Bonds issued after, if deemed necessary or desirable by the Trustee. section 1104. Responsibilities of Trustee. In each and case provided for in this Article, the Trustee shall be .ed to exercise its discretion in determining whether or not -oposed supplemental indenture, or any term or provision .n contained, is desirable, having in view the purposes of .nstrument, the needs of the City, the rights and interests :Owners and the rights, obligations and interests of the e, and the Trustee shall not be under any responsibility or ity to the City or to any Owner or to anyone whomsoever for fusal in good faith to enter into any such supplemental ure if such indenture is deemed by it to be contrary to the ions of this Article. The Trustee shall be entitled to e, and shall be fully protected in relying upon, the n of any counsel approved by it, who may be counsel for the as evidence that any such proposed supplemental indenture r does not comply with the provisions of this Indenture, at it is or is not proper for it, under the provisions of rticle, to join in the execution of such supplemental ure. Notwithstanding anything in this Article to the ry, the Trustee shall not be obligated to accept any ed supplemental indenture that affects the Trustee's , remedies, powers, duties or immunities under this ure or otherwise. XI -4 ARTICLE XII. Defeasance. Section 1201. Cessation of Interest of Owners. �' If, (a) whne onds secured hereby shall have become due 11 and payable in dance with their terms or shall have been duly called for ption or (b) irrevocable instructions to call the Bonds for ption or to pay the Bonds at their respective maturities or fect some combination of such payment and redemption shall been given by the City to the Trustee, the whole amount of rincipal and the interest and premium, if any, so due and le upon all of the Bonds then Outstanding shall .% be paid or cient moneys, or Defeasance Obligations the principal of and nterest (which with respect to any Variable Rate Bonds shall to be the maximum • sumed interest rate permitted under the ents governing such Variable Rate Bonds) on • which when due provide sufficient moneys, shall be held by the Trustee, for purpose under the provisions of this Indenture, and sion shall also be made for paying all other sums payable 4' der by the City or payable by the City under the Financial ty.Bond, then and in that case the right, title and est of the Trustee in the pledged Sales and Use Tax funds, accounts and subaccounts mentioned in this ?y ies, ure shall thereupon cease, determine and become void, and ty shall have no obligation with respect to such Bonds for the payment of the principal of, redemption premium, and interest thereon solely from the moneys or Defeasance tions deposited pursuant to this Section, and the Trustee h case, on demand of the City, shall release this Indenture • all execute such documents to evidence such releases as may sonably required by the City, and shall turn over to the f my surplus in any account and subaccount in the Sinking •nd all balances remaining in any other funds, accounts or ounts other than moneys held for the redemption or payment • ds or the interest thereon for application as provided in n 502 to any lawful purpose of the City as the Board shall ine; otherwise this Indenture shall be, continue and remain 1 force and effect; provided, however, that in the event ance Obligations shall be deposited with and held by the e or other bank, trust company or other appropriate ial institution, acting as escrow agent, as hereinabove ed, and in addition to the requirements set forth in e III of this Indenture, the Trustee shall within thirty ys after such Defeasance Obligations shall have been (, ed with it, cause a notice signed by the Trustee to be ed once in a Daily Newspaper of general circulation ed in the City, and in a Daily Newspaper of general tion or a financial journal published in the Borough of an, City and State of New York, setting forth (i) the date s, if any, designated for the redemption of the Bonds or rtion of the Outstanding Bonds are not being redeemed o their maturities or mandatory redemption dates, a 9 nt to the effect that such Bonds are being paid at rity and any Term Bonds are being redeemed in amounts and at s which will satisfy the Amortization Requirements therefor, a description of the Defeasance Obligations so held by the tee or other bank, trust company or other appropriate ncial institution, acting as escrow agent, and (iii) that Indenture has been released in accordance with the isions of this Section. + With respect to Variable Rate Bonds or Optional Tender s, prior•to the release of this Indenture, there shall be d with the Trustee, the following: (i) a resolution, adopted he Board, determining (which determination may be based upon ions of Bond Counsel or investment bankers) that the rights he Owners of such Variable Rate Bonds or Optional Tender s to receive payment of interest at the Variable Rate as ided in the documents pursuant to which such Bonds were •ed and the right to receive payment of the purchase price of Bonds upon tender for purchase, as provided in the docu- s pursuant to which such Bonds were issued, either pursuant Credit Facility provided therefor or otherwise will not be rially adversely impaired by the release of this Indenture want to this Article XI; (ii) a resolution, adopted by the d, which may be the same resolution specified in clause (i) e, specifying the uses to which any Current Excess Interest -1 ings (as hereinafter defined) shall be applied, provided that uses shall be for capital improvements, the construction or isition of which would, but for the receipt of such Current s Interest Earnings, have been constructed or acquired using eeds of unissued Bonds or other bonds of the City or paid future revenues of the City; and (iii) there shall have been shed to the Trustee, as a condition of the release of this ture, an opinion of Bond Counsel to the effect that such se will not have an adverse effect on the federal income tax tion of interest on any of such Bonds as are then exempt such taxation. For the purposes of this Section, "Current Excess Interest ngs" shall mean for each period for which interest is ved by the escrow agent on the Defeasance Obligations held crow for the Owners of the Outstanding Bonds, the excess, if of interest received on such Defeasance Obligations over the t of interest paid on the Variable Rate Bonds in such d. The agreement pursuant to which such Defeasance ations are held by the escrow agent shall provide for rawal of such Current Excess Interest Earnings when received e escrow agent and payment of such sums to the City for diture in the manner provided in the resolution mentioned in e (ii) of the preceding paragraph. XII-2 All moneys and obligations held by the Trustee or other trust company or other appropriate financial institution, ng as escrow agent, pursuant to this Section shall be held in t and the principal of and interest on said obligations when •ived, and said moneys, applied to the payment, when due, of principal of, and the interest and the premium Bonds payable therefrom. , if any, on XII-3 ARTICLE XIII. Miscellaneous Provisions. Section 1301. Effect of Covenants. All covenants, stipula- is, obligations and agreements of the City contained in this :nture shall be deemed to be covenants, stipulations, gations and agreements of the City and of the Board and of department and agency of the City to the full extent orized or permitted by law, and all such covenants, stipula- s, obligations and agreements shall bind or inure to the fit of the successor or successors thereof from time to time any officer, board, body or commission to whom or to which power or duty affecting such covenants, stipulations t' gations and agreements shall be transferred by or in rdance with law. Except as otherwise provided in this Indenture, all rights, •s and privileges conferred and duties and liabilities ed upon the City or upon the Board by the provisions of this ture shall be exercised or performed by the Board, or by other officers, board, body or commission as may be required w to exercise such powers or to perform such duties. No covenant, stipulation, obligation or agreement herein fined shall be deemed to be a covenant, stipulation, obli- n or agreement of any member, agent or employee of the Board s individual capacity, and neither the members of the Board fly official executing the Bonds shall be liable personally e Bonds or be subject to any personal liability or ntability by reason of the issuance thereof. Section 1302. Manner of Giving Notice. Any notice, demand, tion, request or other instrument authorized or required by Indenture to be given to or filed with the City and the and with the Trustee shall be deemed to have been ciently given or filed for all purposes of this Indenture if hen sent by registered mail, return receipt requested: to the City, the Board or the City Clerk, if addressed to the Mayor, the Board or the City Clerk, respectively, at: City of Fayetteville 113 W. Mountain Fayetteville, Arkansas 72701 to the Trustee, if addressed to the Corporate Trust Officer at: Mcllroy Bank & Trust Co. One Mcllroy Plaza P.O. Box 1327 Fayetteville, Arkansas 72702 Capital Guaranty shall be deemed to be an Owner of the Bonds anteed by Capital Guaranty for all purposes in connection the giving of notice under this Indenture. At the time that the Trustee is required to give any notice fly party by this Indenture, like notice shall also be given apital Guaranty addressed to Capital Guaranty Insurance any, Steuart Tower - 22nd Floor, One Market Plaza, San Cisco, California 94105. In addition, the Trustee shall diately notify Capital Guaranty (i) not less than ten (10) ness days in advance of the execution of any supplement, dment or change to this Indenture and any Series Ordinance, upon any draw upon the Reserve Account, (iii) upon any -iency in any fund, account or subaccount established under Indenture or any Series Ordinance, (iv) upon a direction the City to redeem all or any portion of the Bonds, (v) upon resignation or petition for removal of the Trustee or the Lntment of a successor Trustee and (vi) upon any Event of ilt or upon any event that with notice and/or with the lapse Line could become an Event of Default under this Indenture and 'eries Ordinance. All documents received by the Trustee under the provisions is Indenture shall be retained in its possession, subject at easonable times to the inspection of the City, any Owner and gents and representatives thereof. Section 1303. Successorshib of Bond Registrar. Any bank or .company with or into which the Bond Registrar may be merged insolidated, or to which the assets and business of such Bond trar may be sold, shall be deemed the successor of such Bond trar for the purposes of this Indenture. If the position of ond Registrar shall become vacant for any reason, the Board within thirty (30) days thereafter, appoint a bank or company to act as Bond Registrar to fill such vacancy. The shall have the right at any time to remove the Bond trar and to appoint a successor Bond Registrar; provided, er, that no such removal and appointment shall cause a delay XIII-2 :he payment of principal of or redemption premium, if any, or Crest on any Bond Outstanding under this Indenture. Section 1304. Successorship of City Officers. In the event the offices of Mayor, Director of Finance, City Clerk, City ,rney or City Manager shall be abolished or any two or more of offices shall be merged or consolidated, or in the event of cancy in any such office by reason of death, resignation, oval from office or otherwise, or in the event any such cer shall become incapable of performing the duties of his ce by reason of sickness, absence from the City or otherwise, powers conferred and all obligations and duties imposed upon officer shall be performed by the officer succeeding to the cipal functions thereof or by the officer upon whom such rs, obligations and duties shall be imposed by law. Section 1305. Credit Facility Provider as Owner. Wherever term "Owner" or a term of like meaning appears herein, �, tal Guaranty shall be deemed to be an Owner of a sufficient !% entage of the outstanding Bonds (a) to initiate any action or _____________ ct any demand which Owners may initiate or effect and (b) to �' ove or disapprove any action, forbearance or amendment which ubject to Owner approval or initiation. :M, Notwithstanding any provision of this Indenture to the rary, any Series Ordinance or supplemental ordinance adopted uant to Article XI hereof may provide that any Credit lity Provider providing a Credit Facility with respect to any es of Bonds that is not in default under the terms of the it Facility shall be deemed the Owner of all Bonds of such es so supported by such Credit Facility, to the exclusion and ieu of the persons in whose names such Bonds are registered all purposes of Articles VIII and XI of this Indenture. Section 1306. Inconsistent Indentures. All indentures and thereof which are inconsistent with any of the provisions is Indenture are hereby declared to be inapplicable to the sions of this Indenture. Section 1307. Headings Not Part of Indenture. Any headings ding the texts of the several articles and sections hereof fly table of contents, marginal notes or footnotes appended pies hereof shall be solely for convenience of reference, hall not constitute a part of this Indenture, nor shall they t its meaning, construction or effect. Section 1308. Parties. Capital Guaranty and Owners Alone Rights under Indenture. Except as herein otherwise XIII-3 he payment of principal of or redemption premium, if any, or rest on any Bond Outstanding under this Indenture. Section 13O4. Successorshin of City Officers. In the event the offices of Mayor, Director of Finance, City Clerk, City mey or City Manager shall be abolished or any two or more of offices shall be merged or consolidated, or in the event of !ancy in any such office by reason of death, resignation, ,al from office or otherwise, or in the event any such er shall become incapable of performing the duties of his e by reason of sickness, absence from the City or otherwise, ,owers conferred and all obligations and duties imposed upon officer shall be performed by the officer succeeding to the ipal functions thereof or by the officer upon whom such •s, obligations and duties shall be imposed by law. levntage ection 13O5. Credit Facility Provider as Owner. Wherever rm "Owner" or a term of like meaning appears herein, ,; l Guaranty shall be deemed to be an Owner of a sufficient of the Outstanding Bonds(a) to initiate any action or any demand which Owners may initiate or effect and (b) toe or disapprove any action, forbearance or amendment which ject to Owner approval or initiation. r, Notwithstanding any provision of this Indenture to the ary, any Series Ordinance or supplemental ordinance adopted ant to Article XI hereof may provide that any Credit ity Provider providing a Credit Facility with respect to any s of Bonds that is not in default under the terms of the t Facility shall be deemed the Owner of all Bonds of such s so supported by such Credit Facility, to the exclusion and eu of the persons in whose names such Bonds are registered 11 purposes of Articles VIII and XI of this Indenture. Section 13O6. Inconsistent Indentures. All indentures and thereof which are inconsistent with any of the provisions is Indenture are hereby declared to be inapplicable to the sions of this Indenture. Section 13O7. Headings Not Part of Indenture. Any headings ding the texts of the several articles and sections hereof my table of contents, marginal notes or footnotes appended pies hereof shall be solely for convenience of reference, hall not constitute a part of this Indenture, nor shall they t its meaning, construction or effect. ection 13O8. Parties. Capital Guaranty and Owners Alone ights under Indenture. Except as herein otherwise XIII-3 •ssly provided, nothing in this Indenture, expressed or ei, is intended or shall be construed to confer upon any firm or corporation, other than the City, the Trustee, al Guaranty and the Owners of the Bonds issued under and ed by this Indenture, any right, remedy or claim, legal or able, under or by reason of the Indenture or any provisions f, this Indenture and all its provisions being intended to d being for the sole and exclusive benefit of the City, the ee, capital Guaranty and the Owners from time to time of the issued hereunder. To the extent that the provisions of this Indenture relate :I; pital Guaranty or the Financial Guaranty Bond, however, they be applicable only as long as Capital Guaranty is not in •it under the Financial Guaranty Bond and the Series 1990 Guarantied thereby are Outstanding. Section 1309. Multiple Counterparts. This Indenture may be ted in multiple counterparts, each of which shall bey ded for all purposes as an original, and such counterparts constitute but one and the same instrument. !. IT WITNESS WHEREOF, the city of Fayetteville, Arkansas, g by and through its Board of Directors, has caused this ture to be signed in its name by its Mayor and its corporate to be hereunto affixed and attested by its City Clerk, and oy Bank & Trust, the Trustee hereunder, acting by and gh its Board of Directors, has caused this Indenture to be d in its corporate name by its Senior Vice President and its rate seal to be hereunto affixed and attested by its tant Trust Officer, all as of the day and year first above City of Fayetteville, Arkansas By yor XIII-4 ACKNOWLEDGMENT OF ARKANSAS ss.: Y OF PULASKI on this day, before me, a Notary Public duly commissioned, fied and acting within and for the County and State said, appeared in person the within named William Martin and L. Thomas, to me personally well known, who stated that were the Mayor and City Clerk, respectively, of the City of teville, Arkansas, and were duly authorized in their ctive capacities to execute the foregoing instrument for and a name and behalf of said City, and further stated and wledged that they had so signed, executed and delivered the oing instrument for the consideration, uses and purposes in mentioned and set forth. IN WITNESS WHEREOF, I have hereunto set my hand and official this /7-' day of October 1990. n x (a/2L-�- Q L9i /1arca�-- Notary lic FFALOy�c mmission Expires: •44) q�•.� '. BUD t4O T'4 ij , p�c , v AVBL\G a I ••".C. NGT0N co ie f. J.a.aeaet' XIII-6 ACKNOWLEDGMENT OF P 45ki ) ss.. OFWSINGPON) on this day, before me, a Notary Public, duly commissioned, 'fied and acting within and for the County and State �• said, appeared in person the within named Robert P. Plummer ary Ella Earle, to me personally well known, who stated that were the Senior Vice President and Assistant Trust Officer, ctively, of Mcllroy Bank & Trust, of Fayetteville, Arkansas, ., oration, and were duly authorized in their respective ities to execute the foregoing instrument for and in the and behalf of said Bank, and further stated and acknowledged they had so signed, executed and delivered the foregoing L�; ent for the consideration, uses and purposes therein oned and set forth. IN WITNESS WHEREOF, I have hereunto set my hand and official this I74,day of October 1990. Notary Public ission Expires: 23 �5 S XIII-7 A I EXHIBIT A LIST OF PERMITTED INVESTMENTS iipermitted Investments" shall mean any of the following, an appropriate market value and of an appropriate maturity: 1. Obligations of, or guaranteed as to principal and interest by, the United States of America, or by any agency or instrumentality thereof hereinafter designated when such obligations are backed by the full faith and credit of the United States of America. These are limited to: -- U.S. Treasury obligations All direct or fully guarantied obligations .f' -- Farmers Home Administration Certificates of beneficial ownership -- U.S. Maritime Administration Guaranteed Title XI financing -- Small Business Administration Guaranteed participation certificates Guaranteed pool certificates A M1 •j --Government National Mortgage Association (GNMA) GNMA - guaranteed mortgage backed securities GNMA - guaranteed participation certificates -- U.S. Department of Housing & Urban Development Local authority bonds -- Washington Metropolitan Area Transit Authority Guaranteed transit bonds. 2. Obligations of instrumentalities or agencies of the United States of America. These are specifically limited to: -- Federal Home Loan Mortgage Corporation (FHLMC) Participation Certificates Debt Obligations -- Federal Home Loan Banks (FHL Banks) A-1 7 Consolidated debt obligation Letter of credit (LOC) backed issues Federal National Mortgage Association (FNMA) 'r, Debt obligations Mortgage backed securities (Excluded are stripped mortgage securities which are valued greater than par on the portion of unpaid principal). entry securities listed in 1 and 2 above must be held in a t account with the Federal Reserve Bank or with a clearing oration or chain of clearing corporations which has an unt with the Federal Reserve Bank. Federal Housing Administration debentures. Commercial paper, payable in the United States of America, ;Z having original maturities of not more than 92 days and which are rated in the highest rating category by Standard & Poor's Corporation. Interest bearing demand or time deposits issued by state banks or trust companies or any national banking associations which are members of the Federal Deposit Insurance Corporation (FDIC). Savings and loan associations which are members of the Federal Savings and Loan Insurance Corporation (FSLIC) are also acceptable issuers. These deposits: (a) must be continuously and fully insured by FDIC or FSLIC, or (b) must have maturities of less than 366 days and be deposited with banks the short term obligations of which are rated A-1+ by Standard & Poor's Corporation. Money market mutual funds or portfolios investing in short- term US Treasury securities rated AAA by Standard & Poor's Corporation. The Trustee shall provide Capital Guaranty annual certification that the money market portfolio into which funds are invested is then rated AAA by Standard & Poor's and Moody's Investors Service and, upon notice that the Standard & Poor's or Moody's Investors Service rating of the money market portfolio has dropped below AAA, the Trustee shall immediately withdraw funds and reinvest in Permitted Investments. Such other investments as are approved in writing by Capital Guaranty Insurance Company. A-2 ,}}"Y"+� :� r "i- ..'..cH,>;•.�Me,%:rw=:(S�7hY'a'bkNt�+eawxc�urawzr,'Nw•v 1' • UI Q�•y •-oo-• as o�, �,n �i,�..To. �': i•d" •..EOOeco uGc o� i I :`_a1h OOyh� .O ^.. y.a `�,c a orniu Hag, ¢f E I $cu..Q--Eo &EE a I yy x �;;�a°Ga cWo c N e o c ear murii °1 E�'-`�i�o�coo` o V iris ��u^ �, >,cN ayye °G V .C >y •-A C o .voYpuu^ Zuu u 4gE'GEhyo,ohoE `�ZE?'Ho ur—>•�vd���>.i c �Ya or •' o vTre-- aid F GG G d Gy � re O 41'�Y Q y ° 0 7 U=�3�bv= .tea TCvEz �� Kn'cU df ,�m°^C uI • E oa, `� uY 'oo.iF °3 �, `^&°cL =•gym �C`EF.c��'v� TT.T. r�i of �Cu0 .., ,WC. e F y h5 ��o g' >,.E �° r><•o °' °.c'" e o u e .`a _ u u o 0 m y aG ear h Z a� u. DUo� o'v a._A. o aVi S252525�25 Z e•e o` otio�ti� C y A�_2a"uo'i '�nvrna Enos`° �,A m oaoreaory .: •c >. •v c° ,d'-.oeO.�o O a �o a. _ c c•'l o CE v'n •oncoo ate, 2 �'.e ra •+� o v°G ce �1: M o`F cam �h v9fi�^o,LCT 8n ao d .o CCo GL: C7vb-C �. 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E.E€ u ew°b�oo'M V%am5u U� C' `� °'moo V} ymo�ti "r M 17a to .u.�:: 'd'iiy Lu..c�uctmn�•.u. emu Q '7 FF Aom avu _ ` V .a eFveeodGc fArr�C�[� ��cnc_u� `o�'°�'C�°• L es ` i < �yl dR 822R o °'3c am°W.^= (.1 •k�y`v +' ca F+�1 y dH�et: e•� �aA uv�.uc=°9' aeint A G ^0G o y� E "> Oy k. t����p•-o Q'� Aw.E 4'�� L oo,_ a��•¢� •7 s E3a°vi��ec > '° vi� •3 —- a c io2H E m uco v9 c,„ o m _ L_.AL a= o i. ••5•`esa ..I h q'lrxyE I!iflHDili vb� eW "'� r Eu m" c on QQQQQQ �t%i mo-� v3�v 'o •->!vy U�. eA�e�y�, •°c W•=CQmgp E o m 09 N.o e�ow.p a a°'ui=al Vim° L Z Go�bk oy Vi m•o •.-mm a CJ u'-�„o•E` u ° e aoo...NNrn o, Es o I °eaGG aG o.oe vo uo'au uo• '°�m're Zre� .a ;eCo:°io`c3 a emu LE:.•�oTg rTe��rF W o •c. a Yi o c .n u Pi FG a7 `asoa�gea eooa�Cm e ° Ems 2 c a onde 7,L„j W ..e=�•acU .g a`x rii�'Q.�Bee,,`�o"Lr o�mo�L•o o�y & •.+, ' "•gym tite o�. �S C S �:� BURR+ �I a a a 31 0 .. ... ....« ,.� ..... `.': ..«n-.....,...., .o .... .a a., fe ,,.,.mar :..e. •..o a a.,�sa�a-.r w `.r •- � 4 � 'L /'t i h � S � t h Y"� ^.V4 4r S 1 / ,�` r �>",�i,.�4;1!"a.,�7p.ti�,E4���>x�w`�kt���.���'�"s`��r �?+:,0:�al�w�a�•"�iw��,�^t:d'��.Ck� �ilr,� std"�`�,kuah��'A�'�„ut;�,�t?4d...r.�+:s1,t?_.,�4.1=,Tr i.�.. ._... . _. ... ... , THE CITY OF FAYETTEVILLE, ARKANSAS p R, UNDERW Issuer j40 OR TOE' ER TI' C►�EN fATIONS' DES SUC �pRIFGIVEN OR AS HAVII Board of Directors 19Dt ERELIED U ATEM EIJT D William Martin, Mayor 0Tg ICIAL WHICH Fred Vorsanger, Assistant Mayor DII,VRlsDICTI01 OFFER Michael Green •4�N N9�RINLpWFIJL TO N Shell Spivey ?0I p' IS ON CONTAINEE Ernest Lancaster 90NSOF0HERTHE DELI EERY Russ Kelley�El UUND Paul Marinoni, Jr. IIF U1'BD HAN'I GE H NN Scott Linebaugh, City Manager SERE CTION WITH THI Keven Crosson, Administrative Services Director E AIESACTIONS W Sherry Thomas, City Clerk DII X990 BONDS AT A OPEN MAR SUCH STA McILROY BANK & TRUST t�yphlE. Fayetteville, Arkansas Trustee and Bond Registrar STATEMENT •• BROWN & WOOD 0IR0DUCTORY 1990 BONDS. •..••••••• New York, New York a5ERIES gJRITYFOR THE SERIES 1990. Bond Counsel RBTSERVICEREQUIREJ¢NTTS 1�JTED DEBT RVICE COVJ JERRY ROSE, ESQ. IOF FUNDS._ RCESAND Fayetteville, Arkansas I 9CITY............•••••."""...........*•••••- City Attorney 1IEl11PROVEMENTS ..................... BIAIN DEFINITIONS .................. ROSE LAW FIRM, A PROFESSIONAL ASSOCIATION .UUL\IkRY OF PORTIONS OF T M 1N,N'CIALGUARANTY BOND..., Little Rock, Arkansas IIUERWRITING Underwriter's Counsel 11TISGS................................ ............ [A EXEMPTION ............................. LLAMA COMPANY M01A1TERS ............................. Fayetteville, Arkansas IANSOUS ............................. Underwriter MBITA-FORM OF FINTANNCL 199 B — FINANCIAL STATED COMPANY.........:...... CAPITAL GUARANTY INSURANCE COMPANY San Francisco, California Insurer } v bra _ t— Qom. v '-I EV C', M M ERY RA GE! ThI! 3ICf STAI NTT .. 199( NTS �-D I Mz, yZ— z44OrAawF-u; xwz- WOzyx.F Uq¢O Ox ^¢ 7jf - _ .v n n onnaoaoo . N W N Z (, xa¢OawxWWF^wjox •aawwwz aF¢�¢-.wwzZQ-< UA >a o ,U aaVWFox¢oF"¢0. O�C3v' E� ZOa:wu,E O�F 3N F < WA m00WwWwa OZ>�V axmw EO i cnF�wwu NOzFZZ WtJp, iz i xFa w x ZUF> o Fx oOzzm-<HOWHFWV az5w° Wzwc)atw- OH=bF.U'wz A��¢.-,xz `n ¢ �Qzo =z- uwwUQ� x >>Q z :m¢ Q —<U . ,ZQOMvu. ZNx`" w ? w Q U E ,'ZHFxwzxOvw,wxaw Wm>z w ;A `ai ' j0 i :w Qx FmrnUzur.ytWF-x �QON iz aaFU;AxW L>'ZW ExW �WWNxzx�O¢�WZ x Wx ' ZQ Z ;u.z i oZF w irnnw z E¢ pip: FyU 3o`0[~-Unz.v�prs w O -.Oa.a Oa:OOZO 4�a� O >'jutn-,oxwvmi z �'2 tO q° 'yjwpv�z^„ I-. Ou u.0 I z''�P�o��o0�oz[p5yy�"��z�y1,b^y��3oK�r�d�";� u°y3.;u`v3c�aUaZ((yJF xaZ��wWVI �t 2�jr���jj µy7 EwFa�eCi:�Xxm z L O I A .a�• t '� � x , F r �i y gg .1' [THIS PAGE LEFT BLANK INTENTIONALLY] CITY, 0 SAf�s AND USE INT Statement' inch 0ffici p19,Mos Sales and 0Zf,s3by the City of Fayette goads ), of the first the City State') Y Pursuant tca c srs (the Act No. 871 of g ryeoled bpct ) the City is ant tdcd (thefor purposes ap aod e1noaou uestion ° y voting on the q r'J ggg Bonds and the pledge c a19 nse tar of the City (the ata of e qu the C3 3ity480vpassed b oting ony he won No. Use Tax, which i ddc S'les and. mb� herein to secure the Series y�dty of the voters of the City vi 1�S pauaant to Sub l apte by of thC D�nact No. 3381 passed nioa of the Sales and Use Tax tied by a pledge of revenues rec od Use Tar Revenues') in amounts kris and to maintain a debt servic th be paid as provided in the I :dtdisg certain income received srbgshcd by the Trust Indenture. hs 1990 Bonds, when due, has Gaanty Bond (the 'Financial Guar beds aptions 'SECURITY. FOR ,1 �9D' herein. The '''Series 1990 :B, hdsdiag the Act, the ordinances a hd of Directors of .the City on Se Mime dated as of October 15, ;,1 lab k Trust, in Fayetteville, Ark spst and bond registrar (the. 'Bond 0f1HE INDENTURE. herein.` ibe Proceeds of the, Series 1990 hsate casts of acquiring, constructi �P'1°t►y, s6bdect to change *tacxf oRea..°'° av� « O ,y ° T ld E.' A O, 8 q 7 U O « vj N w w C p D m m. .•I (!. a z O W °o rnaF"oF 3 m .a.—rno00gm a c 8�j w yO1 e a pyp O,i q 00 Op W O m iJ a_ 7 i. > O O, v W O a` U Q y 'O •O O ��� A ° w u a d .° o" o z~ aa xCO00)0 yw >.a m ,n ` prn °` ••N.fl Q et ( . vY " Q r a o °mow m°° 0 O0) y. 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A m o -a Cq u .v ° pW F ° 7 a a ° m° _ >° U x` m F r 8 F ° 6 a°i °. a `� w a a m O' 'w p a a CO CO 'z" c A am O m. �,,, O a ° o .. m �_ o E" >> C7 O o u° vj Q o F U p = W m a w 4 ...y .r7 U N . m m Q C y U. a° .•1 y t OO« op c°= tl 3 e m a] a •q d °o r Q a y O tl U L m U O X" .O > a m w .c V 'O U> u a U ° Z d o ci o m U , .O y'b ' a V V a w 0' s •_ O [A .7 W�a� A y n. y '+ 4 .u^oo°°woamN a°o7°$ 3w a,,wa Tu7 " o>oa G'n�amp3 pF _mW� ook .t ',a O.p.q �F >` V cn .O M .., y..TQ"p .° e.,xa„"�'d > «°. M.m v a>i Qv`nF u c (0.9 .0(00 (� C p i W ... 0.� a •� 'O C C N - m > W y O .t7 g 0 >� 0.l C ami v '-' W T,,p U 'a .'.r.: 'r O » z m,q O �i7.'. O a m ° ' O u .O O O O. •` « .Q �'" 'p z 7m�{ 4�ix'�,tix� k+.i�o•o U o.o'o .a a•e my.•oo�m,aaF:a ?'O°a��3.a eQ °'F'q'� 9•C _'� vm �'.�F"iC �.S.:X `Yi "-5 r�+ f?.,i 6 B w.0 9.: �' O 8a.a.8'° .%t$ .0 �m • +!�' a u •�i "� � Y�IE �'€ �.G , ,�r*fx tic' �₹) � e 1 j r����l,,�;��,4� r{{pr � v�5r v�l�Is� � i+ti �e�"r t sj`F'�A.c��.�+x �i��ir'tyw� 13 S• . }i�J Z���riirSt��iki ya4T�JM�"itr[x "� G�J�.a it ii �ilG' 4tyJ fk i�?.ry �vV rr� 1 ' �-%!v ��`{rLR� i 5,7r �y X ��1 i �.kc y �I� y'i �� � a4f� i♦�n $l� �^ � �'� M1����"y�'t - 1t` r �y y� rri � 3•r<'�„ }r7 rl i�t y.,�` �rti ` �Irr � e 1 r Uv '{pl t r t �j 1 � �.. I t � x� r luP,� � L R � � 1 r x aN r �� �• , u f. a P �.� ��Vttk�x��5Ul�" �ik4�Se,�7tY� . .,i, r; `'A ' �,�'`:,,ir. J � �. ..'. � �, �;.;J •a-r,...N'6�sr ;cd_.. � .... .. ; '1 � �;r,., •.µ. '�„x' i�,tE„ rl._. 2>. the "Improvements") for the City, to fund a debt service reserve and to costs of a for the Financial Guarantyn premium Boad USES OF FUNDS" and "THE issuance of the Series 1990 Bonds, including IMPROVEMENTS" herei •. See the captions "SOURCES AND t 1 This Official Statement contains brief descriptions or summaries of, among other matter Improvements, the Ordinances, the Indenture ifl the Series 1990 Bonds, the City, the and the Bond. Such descriptions and information do not purport'' to be d, Financial Guaranty comprehensive or definitive. All capitalizedwords, unless otherwise defined herein, shall hors "CERTAIN caption DEFINITIONS" herein. All refereacts the meanings set forth under the to the Ordinances, Indenture and the Financial GuarantyBond are qualified in their herein entirety by reference to such documents, and references herein to the Series 1990 Bondy in entirety by reference to the form thereof included in the Indenture. The foral qualified their the Financial Guaranty Bond appears in Exhibit A hereto and copies of the Ordinances sad `� �'k₹eoli, of the Indenture may be obtained during the initial offering period from the Underwriter Sr the City. THE SERIES 1990 BONDS ii Description • The Series 1990 Bonds are being issued as fully registered bonds, without coupons in $5,000 or any integral multiple thereof, except for one Series 1990 Bond in ' 1 denominations of the denomination of $4,000 maturing November 15, 1991. The Series 1990 Bonds will be dated October 15, 1990, and will bear interest from such date, payable on May 15 and November 15 of each year, commencing May 15, 1991. The principal of the Series 1990 Bonds will be payable upon presentation and surrender at the principal corporate trust office of the Bond Registrar in Fayetteville, Arkansas. Payment of interest on the Series 1990 Bonds will be made to each Owner thereof by check or draft mailed by the Bond Registrar to such Owner at the address as such name and address appears on the registration books of the City kept by the Bond Registrar on the Regular. Record Date, which I the first day, whether or not a business day, of the month in which such Interest Payment Date falls, , or, under certain circumstances, a Special Record Date as provided in the Indenture Payment of interest will also be made by wire transfer upon the request of an Owner of at least $1,000,000 principal amount of the Series 1990 Bonds. All such payments will be made in lawful money of the United States of America. The Series 1990 Bonds are transferable and exchangeable at the principal office of the Bond Registrar upon surrender together with an assignment duly executed by the Owner or his attorney or legal representative in form satisfactory to the Bond Registrar. No charge will be made to any Owner for the privilege of registration of transfer or exchange, but any Owner. requesting such registration of transfer or exchange will be required to pay any tax or ether governmental charge required to be paid with respect thereto. Upon any such transfer or exchange, a new registered Series 1990 Bond or Series 1990 Bonds of the same maturity, interest rate, and in authorized denominations for the same aggregate principal amount will be issued in exchange therefor. The Bond Registrar will not be required to register the transfer of or exchange Series 1990 Bonds during the fifteen days immediately preceding the date of first publication or mailing of Series 1990 notice of any redemption of Series 1990 Bonds or any portion thereof, or of any Bond after such Series 1990 Bond or portion thereof has been selected for redemption. _Z_ • shal 0y.a1 he rtes "of.', torso, Series with:: the trustee rtificd ending ;rtif led efundit ;the :rime iserve.,;:aA the P:_ . rssgN. caries of',• Arno t on nCeathe••lad do not 'wisp defi NS tied IIO heroin tY Bond are led�i0 15d5 the rid Copies offrthe the it,.. :d bonds, without rt for one Series 19gp d will bear interest frog icing May 15, 1991, a presentation and nrty4 :tteville, Arkansas, Pay,, rereof by check or dnt(o tine and address appeinp Regular Record it; sti Lich such Interest Payminl as provided in the Idle request of an Owner ofa'1 ich payments will be sit e principal office of tl:h ecuted by the Owounf Registrar. No charge di or exchange, but soy It ired to pay any tai orb Upon any such trash of the same maturity,ht cipal amount will be ioaf er of or exchange Serial first publication or mab. ereof, or of any Serial ted for redemption. lddltl0°°I Indebtedness The City may issue or incur indebtedness in addition to the Series 1990 Bonds secured in parity 90 dscasp erovided below. to the pledge of the Sales and Use Tax Revenues with the Series 1990 Reas pirr6 Bonds. Refunding Bonds may be issued under and secured by the Indenture (tom time to time for the purpose of providing funds for refunding all or any portion of the ponds of any one or more Series y payment at redemption date or dates or combination b of such payment at atmaturity ir redemption srlectedredemption, the payment of any redemption thereon andinterest which will accrue premium any such 00 such Bonds to such maturity dates or selected redemption date or dates or combination of maturity and redemption dates and any expenses incurred or to be incurred in connection with such refunding. Before Refunding Bonds shall be issued, the Board shall pass a Series Ordinance providing let the issuance of such Refunding Bonds, fixing the amount and details thereof, describing the Bonds to be refunded and setting forth the determination of the Board that such refunding is in the best interests of the City and stating the reasons for such determination. Such Refunding s set fothe hs shall dated, shall stated odates,mature in su h(subject yearoorthe yeas notf laterprior than heredemption Maximum forth is Indenture) on'such date or Permitted Maturity, shall bear interest at such rate or rates, fixed or variable, shall have such Crediall optionSeriald Bondstuandand Term such Bonds, Facilities, anys Termhave Bo Bonds havingRegistrar, such Amortization such Requirements, and shall be redeemable at such times and prices, all as may be provided in the Series Ordinance for such Refunding Bonds. Except as to any differences in the maturities thereof visions for onds l or the rate or rates of interest or the as to the pledge of Sales andoUse Tax Revenues tion, such Refunding w with all other Bonds issued shall be on a parity under the Indenture. Such Refunding Bonds shall be executed substantially in the form and masher oforth, with such changes as may be vvisions of the Series Ordinance providing for tnecessary he issuance of such Refunding Bonds to the p and shall be deposited with the Bond Registrar for authentication and shall be delivered by t e Bond Registrar to the Trustee for delivery, but prior to or simultaneously with the delivery of such Refunding Bonds by the Trustee, there shall be filed with the Trustee the following: (a) a copy, certified by the City Clerk, of the Series Ordinance providing for the issuance of such Refunding Bonds; (b) a copy, certified by the City Clerk, of an ordinance of the Board directing the delivery of such Refunding Bonds to or upon the order of the purchasers therein named upon payment of the purchase price therein set forth and providing for other matters in connection with the issuance of such Refunding Bonds, which ordinance may be a p of the Series Ordinance providing for the issuance of such Refunding Bonds; (c) an opinion of Bond Counsel to the effect that such Refunding Bonds constitute valid and binding obligations of the City in accordance with their terms, subject to certain laws affecting creditors' rights and to the exercise of judicial discretion in appropriate cases, and that upon the issuance of such Refunding Bonds and the application of the proceeds thereof, the Bonds to be refunded will no longer be deemed to be outstanding under the Indenture and the issuance of such Refunding Bonds will not cause interest paid on any Bonds issued under the Indenture and then outstanding or the Bonds to be refunded to be included in the gross income of the Owners thereof for federal income taxation purposes if such income is then so excludable; -3- • the ordinances ) an on of the City Attorney daboveaBo� rand in clauses (a) (b) were duly passed by the Board; mention • ) certificatetheDirectorFinance owhich land certify Interest that the Requirements state and' payable withrespect Bonds Outstanding subsequent to the issuance of such Refunding Bonds to ag less equal to the Maximum Principal and Interest Requirements payable with respectare tbao or' to Outstanding prior to the issuance of such Refunding Bonds; all that dall Maximum Principal and Interest Requirements payable a with respect to itsublhc. Bonds P q P YDods Outstan sent such tuiremenissuance Maximum Prsnclpaldand` respectto allBonds Interest Re ts payable with BondsOutstandingexceeds Requirements p' Y to the issu prior to such Refunding Bonds, the Director of Finance shall state and certify in this ccrtific Ftthia%' toCesf, the Sales and Use Tax Revenues received by or on behalf of the City during the complete Fiscal Year of the City are at least equal to one hundred fift latest Y Percent the Maximum Principal and Interest Requirements payable with (150/ Outstanding subsequent to the issuance of such Refunding Bonds; respect to all Bonds- (f) such documents as shall be required by the Director of Finance and the Trustee to show that provision has been duly made in accordance with f' the provisions of the Indentur5and . law for payment on and on or combination of such of allate redemption of thleeBon sort refunded; payment and (g) so long as Capital Guaranty is a Credit Facility Provider, a certificate of the,{s Trustee to the effect that the amount on deposit to the credit of the Reserve Account is not less than the Reserve Account Requirement for each Series of Bonds then Outstanding including such refunded Bonds and such Refunding Bonds. not Simultaneously with the delivery of such Refunding Bonds, the Trustee shall withdraw, if so provided in the Series Ordinance mentioned in clause (a) above, from the Sinking Fund as amount equal to the amount on deposit therein on account of the principal of and redemption premium and interest any on and reserves for the Bonds to be refunded, and apply the amount so withdrawn in accordance with the Series Ordinance mentioned in clause (a) above, The total amount so withdrawn, if so provided in the Series Ordinance mentioned in clause (a) above, the proceeds of such Refunding Bonds (including accrued interest and any premium) and any other moneys provided for such purpose shall be applied by the Trustee as follows: (1) the accrued interest received as part of the proceeds of such Refunding Bonds shall be deposited to the credit of the Bond Service Account for due on such Refunding Bonds; application to the first interest '' (2) an amount which, together with any income which shall be derived from the investment of such amount pursuant to this clause (2), shall be sufficient to pay the principal of and any redemption premium and interest on the Bonds to be refunded, either? at maturity or a selected redemption date or dates or combination of such payment at maturity and redemption, shall be deposited by the Trustee to the credit of a special fund, appropriately designated, to be held in trust by a bank or trust company which may include';. the Bond Registrar, as escrow agent, for the sole and exclusive purpose of paying such principal, redemption premium, if any, and interest; and moneys held for the credit of such ,1 fund shall, as nearly as may be practicable and reasonable, be invested and reinvested by such escrow agent at the direction of the Director of Finance in Government Obligations which shall mature, or which shall be subject to redemption by the holder thereof at the := Option of such holder, not later than the respective dates when the moneys held for the credit of such fund will be required for the purposes intended; 4- eatF.utsua ` ' ; Requiresgen�to q�tthl (3) such amount shall be applied to, or set aside for, the payment of the to such refunding equtretpsuceRefugdraaYable'' expenses incident as shall be specified in the Series Ordinance for the issuance of such Refunding Bonds; ats providing andin paYab �ayableBonds� Pr le"yyithr' (4) an amount equal to the Reserve Account Deposit Requirement for such Refunding Bnd wtth rospe��de, ` Bonds shall be deposited to the credit of the Reserve Account; and 11 Bndate a ed ndhq 'M i . ' shall *, (5) any balance of such proceeds shall be deposited to the credit of the Bond Service or ost to and cenfP orh� s. half quaI stlhds� Account. In addition to the Bonds to °p t!!e Ocher Lsrleb1edness. authorized pursuant to the provisions of the by meats pa ablepdrea indenture YSble and to the extent permitted the laws of the State from time to time in effect, the indebtedness :efunsin with0nds. pity may incur other forms of as follows: the Direc (a) The City may incur Subordinated Indebtedness without limit as to amount. tor pi } �n once with the of Prov°alpf� ;;_ or ut°udh (b) The City may issue Convertible Bonds, secured on a parity as to the pledge of combination: { td Sales and Use Tax Revenues with Bonds issued under the Indenture, provided that such Convertible Bonds are issued under the section of the Indenture relating to the issuance of dit Facility Refunding Bonds, such Convertible Bonds comply with the tests of such section based upon Bonds at of their that Capital Guaranty Provider, sin a''"" to the dit of the Resent writing toble has consented the issuance ofesucheC nvertiblesuance Bonds.and g Bondses of Beads .thei (c) The City may issue Optional Tender Bonds, secured on a parity as to the pledge of Sales and Use Tax Revenues with Bonds issued under the Indenture, provided that such ig Bonds, the Tru Optional Tender Bonds comply with the tests for the issuance of Refunding Bonds contained long Bonds the agreement stees se (a) above, "} in the Indenture, and so as (i) such are subject of a remarketing from the• n account between the City or the trustee for such Owners thereof and an investment banking firm in of the pdy the Bonds with experience in marketing tax-exempt securities on a national basis and (ii) there is Optional Tender Bonds a Credit Facility, then the to be refunddf Ordinance mentioned id effect with respect to such provisions with respect to Optional Tender Bonds contained in the definition of Principal and Interest rhig Series Ordinance mentioi�o Requirements shall apply to such Optional Tender Bonds. og accrued interest andat, pplied by the Trustee (d) The City may issue Variable Rate Bonds upon compliance with the tests for the ai Est ' issuance of Refunding Bonds contained in the Indenture, using for the purpose of proceeds of such Refus g`;' demonstrating compliance with such tests the interest rate assumption with respect to Variable Rate Bonds contained in the definition of Principal and Interest Requirements, 'count fora pplicationtsth, provided that Capital Guaranty has consented in writing to the issuance of such Variable %ts Rate Bonds. ome which shall be dtiinh , (e) The City may enter into Credit Facilities to the extent that the Series of Bonds or ise (2), shall be sufGtidh portion thereof which is supported by such Credit Facilities is issued in compliance with the 'est on the Bonds to be provisions of the Indenture. es or combination of Trustee to the credit sf i" nk or trust company whid , ': Redemption Prior to Maturity and exclusive purposed( and moneys held for Optional Redemption. The Series 1990 Bonds maturing after November 15, 2000, are subject sonable, be invested adt to redemption prior to maturity at the option of the City, in whole or in part on any date on or of Finance in Gave after November 15, 2000, from any moneys that may be available for such purpose, upon notice demption by the holder;) as provided in the Indenture, in inverse order of maturity and by lot in such manner as the dates when the.mose)i `: intended; thr -5- Trusteeshalldetermine withia maturity, at the redemption prices (expressed, redemption. percentages of principal amount) set forth below, plus accrued interest . to the date Redemption Dates (Both Inclusive) Redemn� do November 15, 2000 to November 14, 2001 102% November 15, 2001 to November 14, 2002 101% November 15, 2002 and thereafter 100% Mandatory Redemption. The Term Bonds maturing on November 15, 2005 subject to redemption in part by lot on November 15, 2003, and each Noarealso thereafter to and including November 15, 2005, in an amount equal to the A Vember1 Requirement therefor in the immediately preceding Bond Year as set forth below,monitatioo' as provided in the Indenture, at the principal amount of each Series 1990 Bond to bopen titj ned ' plus accrued interest to the redemption date, without premium. e redeoied, Y Principal ear AAmm untt 2003 $2,165,000 2004 2,325,000 2005 2,495,000 The Term Bonds maturing on November 15, 2008, are also subject to redemption in part by lot on November 15, 2006, and each November 15 thereafter to and including November 15, 2008 in an amount equal to the Amortization Requirement therefor in the immediately preceding Bond Year as set forth below, upon notice as provided in the indenture, at the principal amount of each Series 1990 Bond to be redeemed, plus accrued interest to the redemption date, without premium. Year Principal Amount " 2006 $2,675,000 2007 2008 2,870,000 3,305,000 Pu rchase the, 1990 Bonds. Subject to Trustee shallendeavortoopurcha e a required anyOut tandingon Series vssions of the 1990 Bonds secured under the Indenture, whether or not such Series 1990 Bonds shall then be subject to redemption, on the most advantageous terms obtainable with reasonable diligence, such price not to exceed the principal of such Series 1990 Bonds plus the amount of redemption premium, if any, which might on the next redemption date be paid to the Owners of such Series 1990 Bonds under the redemption provisions of the Indenture and the Series Ordinance if such Series 1990 Bonds should be called for redemption on such date from moneys in the Sinking Fund. "Preliminary, subject to change. 6 Y�u Athe red'' • Plus accrruu d ,. '• e Pn d Selection of Bonds to be Redeemed. The Trustee shall, in accordance with the terms •8od provisions of the Bonds and of the Indenture and the Series Ordinance relating to Ili any Bonds to be redeemed, select the Bonds or portions thereof to be purchased or redeemed by In making such selection, each Bond of each Series of Bonds shall be treated as O2% � representing that number of Bonds of the lowest authorized denomination of that Series as is 10 by dividing the principal amount of such Bond by such denomination. 1• c obtain wring Redemption. on � Notice and Effect of At least thirty (30) days before the redemption date, a Novemb r P nber 15, 2003, er 15, notice of any such redemption, either in whole or in part, signed by the Trustee (a) shall be an and the Bond Registrar and (b) shall be first asno 01St eacl ;filed with mailed, class mail, postage prepaid, to all end fear equal tp Owners of Bonds to be redeemed in whole or in part at their addresses as they appear on the )f each Series et fo*�btr ;registration books provided for in the indenture. To supplement such notice to the Owners, the remium. 1990 Boadtp ;notice of redemption may also be mailed by overnight mail to at least two national depositories 'and one national wire service used to distribute information relating to municipal bonds, at least thirty five (35) days prior to the redemption date. Failure to mail any redemption notice to any Principal * ;Owner or any depositories and wire services, or any defect in any notice so mailed, shall not 6� —81911g yy affect the validity of the proceedings for the redemption of the Bonds as to the Owners to t�II whom notice was given as required. Each such notice shall set forth the date fixed for $2,165,000 is ' redemption, the redemption price to be paid and, if less than all of the Bonds of a Series then 2,325,00p ; 4':wa outstanding shall be called for redemption, the numbers of such Bonds, Each notice of 4' •2,495, y ;'redemption mailed to an Owner of a Bond to be redeemed shall, if less than the entire principal amount thereof is to be redeemed, also state the principal amount thereof to be redeemed and that such Bond must be surrendered to the Bond Registrar in exchange for the payment of the also subject to redem to be issuance a; redeemed and the ter to and iacludin phoa principal amount thereof of a new Bond or Bonds equaling in g Noreahx. t. therefor in the '>principal amount that portion of the principal sum not to be redeemed of the Bonds to be in the Indenture, f. ; surrendered. at they'•. interest to the redemptioa On the date so designated for redemption, notice having been given in the manner and under the conditions provided in the indenture, the Bonds so called for redemption shall ' become and be due and payable at the redemption price provided for redemption of such Bonds Principal on such date, and, moneys for payment of the redemption price and accrued interest being held A�ouot_ ' . in separate accounts by the Trustee or by the Bond Registrar in trust for the Owners of the Bonds to be redeemed, interest on the Bonds so called for redemption shall cease to accrue, such I, 52,675,000 _ Bonds shall cease to be entitled to any lien, benefit or security under the indenture, and the 2,870,000 Owners of such Bonds shall have no rights in respect thereof except to receive payment of the 3,305,000 redemption price thereof and accrued interest. required redemption protae SECURITY FOR THE SERIES 1990 BONDS any Outstanding Sena sv, es 1990 Bonds shall the ham' General vith reasonable diligence, nsdp;' the amount of redemptor The Series 1990 Bonds are special obligations of the City payable solely from amounts n the Owners of such Sensreceived by or on behalf of the City as Sales and Use Tax Revenues. The Series 1990 Bonds he Series Ordinance ifs Use Tax Revenues in are secured by a pledge by the City of the Sales and amounts sufficient to moneys in the Sinking l' provide for debt service on the Series 1990 Bonds and to maintain a debt service reserve as described in clauses (a) through (c) below. The Series 1990 Bonds may also be paid as provided in the Indenture from other moneys in the Sinking Fund, including certain income received from the investment thereof, and the Construction Fund. In addition, payment of principal of and interest on the Series 1990 Bonds, when due, has been guarantied pursuant to the terms of a Financial Guaranty Bond (the "Financial Guaranty Bond") issued by Capital Guaranty Insurance Company. -7- � iii t tl r + a The Indenture provides that the City shall cause the Sales and Use Tax Revenu retainages, to be deposited with the Trustee. h`y less ally applicable charges and •The' B B draw 'Trustee shall, on the last business day of each month, beginning October 31, 199p with from the Sales and Use Tax Revenues deposited with the Trustee amounts sufficient to bale the deposits to the credit of the following accounts in the Sinking Fund in the followin g order and in the following ansounts: (n) To the credit of the Bond Service Account, an amount equal to one -sixth (1/6th) of the amount of interest payable on the Bonds of each Series on the next succeeding laterest l'aynsent Date and an amount equal to one -twelfth (1/12th) of the next maturing installment of principal on till Serial Bonds then Outstanding (less certain credits and subject to certain adjustments); 3ktak�'. (b) To the credit of the Redemption Account, an amount equal to one -twelfth 11/121h) of the principal amount of Term Bonds of each Series then Outstanding required to be retired, in satisfaction of the Amortization Requirements, if any, for such Bond Year, plus plus she prcnsiunss, if any, on such principal amount of Term Bonds which would be pay ,Ile preloillills, if any, on such principal amount of Term Bonds which would be payable -if such principal :uuount of Terns Bonds were to be redeemed in such Bond Year from moneys held for the credit of the Redemption Account (less certain credits); and • (c) To the credit of the Reserve Account, an amount equal to the Reserve Account • Deposit lZequirentent for each Series of Bonds. If the amount deposited to the credit of any of the accounts in the Sinking Food shall be less than the amount required to be deposited as provided above, the requirements therefor shall nevertheless he cumulative and the amount of any deficiency shall be added to the amount otherwise required to be deposited thereafter until such time as all such deficiencies have been made up. Such amounts of the Sales and Use Tax Revenues as shall be sufficient to make the deposits to the credit of the accounts as prescribed in clauses (a) through (c) above have been pledged by the City under the Indenture for the purpose of making such deposits so long as any of the Bonds arc Outstanding. An) Sales and Use Tax Revenue's in excess of amounts required to be deposited by clauses-₹2tas (a) through (c), inclusive, above shall he transferred by the Trustee within one business day receipt to one or more Depositories selected by the City and may be used by the City for any purpose provided by the Sales and Use Tax Ordinance. att�esa s s�3nt The City cannot predict with certainty the expected amount of Sales and Use Tax Revenues to be received. See the caption 'SECURITY FOR THE BONDS -- Sales and Use Tax -- F,crinsated Farrar Sales and Use Ta.r Retrnues' herein. The indenture provides that the City will take all actions permitted by law to continue to•` receive the Sales and Use Tax Revenues in the greatest amount possible and that, except to the extent required by la-, the City will not take any action the result of which could be a ; reduction or diminution of the Sales and Use Tax Revenues below the level which would have been received hut far such action. Sale's And Ilse Tax General. Pursuant to Subchapter 2 of Chapter 75 of Title 26 of the Arkansas Code Annotated and Ordinance No. 3351 of the City, the City has levied a one percent local Sales and Use Tax on all items which are subject to taxation under the Arkansas Gross Receipts Tax eSe dte a Sales aoa beposited U" i.the glnnin Owith4u Trustee Oct i Art of 1941 or the Arkansas Compensating Tax Act of 1949. The Sales and Use Tax is e Ssa kin ay' ited to a maximum of $25 per single transaction as described under the caption thama 1, gs . Faad 6e 1 '�ggCURITY FOR THE BONDS -- Sales and Use Tax -- Single Transaction Limitation" herein. pledged portion of the amounts Pursuant to the Ordinances and the Indenture, the City has led ed a ch amount °goal ` w^unceer t from captSales and Use ion 'SECURITY FORax to the THESERIESyment of the 1990BONDS Series 1990 Bonds as described Series qa to ° under the General" above. 1/12th) oft the t °ertto Sales Tax. The sales tax portion of the Sales and Use Tax is generally levied upon the ess certain oredits a ae gross proceeds or receipts derived from all sales to any persons within the City of the following: - (a) Tangible personal property; Series thequal centst ;f an Oa to °ae (b) Natural or artificial gas, electricity, Water, ice, steam, or any other utility or staadie Ter y for B public service except transportation services, sewer services, and sanitation or garbage qt Bon , h Bod [ ; eemed credits). °ds which collection services Yalt 'ertaiq d e(c) (i) Service by telephone,telecommunications, telegraph companies and to � and� a subscribers or users, including transmission of messages or images, whether local or long amount equal to distance, including basic local service and rental charges, all installation and construction the R charges, and all service and rental charges having any connection with transmission of any message or image; accounts iq the above, the SinkI11 f (ii) Service of furnishing rooms by hotels, apartment hotels, lodging houses, and iciency shallr be iremenu a. r tourist camps or courts to transient guests; time as all such adder` s deficieedp (iii) Service of alteration, addition, cleaning, refinishing, replacement, and repair of motor vehicles, aircraft, farm machinery and implements, motors of all kinds, tires and hall be batteries, boats, electrical appliances and devices, furniture, rugs, upholstery, household sufficient to ear' appliances, televisions and radios, jewelry, watches and clocks, engineering instruments, medical rough (c) above have and surgical instruments, machinery of all kinds, bicycles, office machines and equipment, posits such de ins tii so '< shoes, tin and sheet metal, mechanical tools, and shop equipment. However, the tax does not �! apply to coin -operated car washes nor to the maintenance or repair of railroad parts, railroad cars, and equipment brought into the State solely and exclusively for the purpose of being I' its required to be de repaired, refurbished, modified, or converted within the State; he Trustee within one yt�l and may be used by the (iv) Service of cable television, community antenna television, and any and all C9 other distribution of television, video, or radio services with or without the use of wires provided to subscribers or users including all service and rental charges, installation and repair ,.. service charges, and any other charges having any connection with providing cable television nount of Sales and UseTu services; BONDS -- Sales and i'e (d) Printing of all kinds, types, and characters, including the service of overprinting, and photography of all kinds; and ons permitted by law`b bunt possible and that,es (e) Tickets or admissions to places of amusement and to athletic, entertainment, and on the result of which ae recreational events or fees for the privilege of having access to or the use of amusement, es below the level w•hid '' entertainment, athletic, or recreational facilities, including free or complimentary passes and tickets, admissions, dues, or fees. (f) Lease or rental of motor vehicles, other than diesel trucks rented for commercial shipping or farm machinery rented or leased for a commercial purpose, for a period less than 30 of Title 26 of the gds? days, or purchase of motor vehicles for rental or lease regardless of the length of the rental or l; has levied a one perttc(bt+;, lease. er the Arkansas Gross R'a:�:: rY iw y�yV 11 CA•. - _.. ..1 sl Lil.{�u VAC, +. I i 4• ffs�f' Exemptions Front Sales Tax. As summarized below, several types of transaotio been legislatively exempted by the General Assembly of thasgg Current include the saleof exemptions generally le on which the tax levied has once been paid by the origsaalp'i (apurchasera; subsequent 1!j�fi (b) Tangible personal property or services by churches, except where organizations may be engaged in business for profit; sub (c) Tangible personal property or services by charitable organizations, oxCept such organizations may be engaged in business for profit; when ,kk �Sr5iw: (d) Food in public, common, high school, or college cafeterias and luachroam� operated primarily for teachers and pupils, and not operated primarily for the pabltc profit; or (or (e) Newspapers; (f) Property or services to the United States Government; (g) Motor vehicles and adaptive equipment to disabled veterans who have purchased said vehicles or equipment with financial assistance of the Veterans Administration; (h) Tangible personal property or services to the Boy Scouts of America, the Girl'. Scouts of America, or any of the Scout Counsels in the State; and tangible personal propertyo services to the Boys Clubs of America or any local counsels or organizations of the Boys Clah, of America, the Girls Clubs of America or any local counsels or organizations of the Guh. Clubs of America, the Poets' Roundtable of Arkansas, 4-H Clubs, FFA Clubs, the Arkansas 4•g, Foundation, the Arkansas Future Farmers of America Foundation, and the Arkansas Future' Farmers of America Association; (i) Gasoline or motor vehicle fuel on which the motor vehicle fuel or gasoline tax has`! been paid to the State and special fuel or petroleum products sold for consumption by vessel barges, and other commercial watercraft and railroads; (j) Property resales to persons regularly engaged in the business of reselling thei? articles purchased, whether within or without the State if the sales within the State are made to'i persons to whom sales tax permits have been issued; (k) Advertising space in newspapers and publications and billboard advertising i. services; (1) Gate admission fees at state, district, county, or township fairs or at any rodeo if the receipts or proceeds derived from gate admission fees to the rodeo are used exclusively for the improvement, maintenance, and operation of such rodeo and if no part of the net earnings 3 thereof inures to the benefit of any private stockholder or individual; r! (m) Property resales which the State is prohibited by the Constitution and laws of the United States or by the Constitution of the State from taxing; (a) Isolated sales not made by an established business; -10- `� � �c{�... I, •III o Cotton, seed cotton, lint cotton, baled cotton, whether compressed or not, for cptf°°seed in its original condition; seed use in the commercial production of an from far, or product or of seed raw products the m orchard, or garden, where such + ogricultural is made by the producer of such raw products directly to the consumer and user; livestock, Dale products, and dairy products of producers owning not more than five cows; and poultry 3 uultryhi babyi b (p) Foodstuffs to governmental agencies for free distribution to any public, penal, and • institutions or for free distribution to the poor and needy or the rental or sale of picemosy°ary equipment for the benefit of persons enrolled in and eligible for Medicare or Medicaid medical ar programs; (q) Tangible personal property or services provided to any hospital or sanitarium operated for charitable and nonprofit purposes or any nonprofit organization whose sole purpose a{ is to provide temporary housing to the family members of patients in a hospital or sanitarium; !! (r) Used tangible personal property where such property was (i) traded in and accepted by the seller as part of the sale of other tangible personal property and (ii) the ;Arkansas Gross Receipts Tax was collected and paid on the total amount of consideration for ge " 'the sale of the other tangible personal property without any deduction or credit for the value of The condition that the Arkansas Gross Receipts Tax was u.A ' -- ;tbe used tangible personal property. for this 1 collected and paid on the total amount of consideration is not required entitlement of Zc Pag S sso'exemption when the sale of the other tangible personal property was otherwise exempt under ¢ ':other of the Act. Further, this exemption does not apply to transactions involving provisions arU automobiles, used mobile homes, or used aircraft, as provided for in Arkansas Code ; used 0�4<it' Annotated (1987 & Supp. 1989) sections 26-52-510(b), 26-52-504, and 26-52-505, respectively; " • (s) Unprocessed crude oil; (t) Tangible personal property consisting of machinery and equipment used directly in manufacturing, fabricating, assembling, processing, finishing, or packaging of articles producing, • aarar ��cxfgia of commerce at manufacturing or processing plants or facilities in the State; (u) Tangible personal property consisting of machinery and equipment required by State law or regulations to be installed and utilized by manufacturing and processing plants or me facilities to prevent or reduce air or water pollution or contamination; ar- (v) Electricity used in the manufacture of aluminum metal by the electrolytic UU reduction process; t ai atom tad (w) Articles sold on the premises of the Arkansas Veterans Home; (x) Automobile parts which constitute 'core charges" which are received for the =S`v—rana$iQ purpose of securing a trade-in for the article purchased; [ reds arc Z rnr ii 30 3tol `&_ (y) Bagging and other packaging and tie materials sold to and used by cotton gins in twine which is used in the production of • the State for packaging or tying baled cotton and tomato crops; �� .. the Cam-tmcz (z) Prescription drugs by licensed pharmacists, hospitals, dispensing physicians, and oncologists for human use and oxygen sold for human use on prescription of a licensed i'. physician; 11 �111�C �h t U. (aa) Property or services to humane societies; Il tl; (bb) Vessels, towboats of at east 50 tons load displacement and aconstruction same; parts labor used aoa. f II f (cc) Property or services to all orphans' homes or children's homes which I' operated forate pot'. operated by a church, religious organization, or association;whether benevolent charitable other (dd) Agricultural fertilizer, agricultural limestone, or agricultural herbicides including, but not limited to, agricultural pesticides and s used in the comatrci production of agricultural products and including vaccines, medications, and mediclns ys- being for preparations used in treating livestock and poultry grown commercial purposes (ee) Feedstuffs used in the commercial production of livestock or Poultry in the State;` (ff) Tickets or admissions by municipalities to places of amusement or to athletic'. entertainment, or recreational events, or fees for the privilege of having access to or the use entertainment,of mmtrecreational facilities, including free or complimentary'.. apasses, tickets, admissions, dues,,thlor fees; (gg) New automobiles to a veteran of the United States Armed Services who is blind a result of a service -connected injury; as (hh) Rental or lease of specialized equipment used in the filming of a motion picture' which qualifies for the tax incentives provided by Arkansas Code Annotated (1987 & Sapp. 1989) sections 26-4-201 to -213, inclusive; (ii) The first 500 kilowatt hours of electricity per month and the total franchise tares billed to each residential customer whose household income is no more than $12,000 per year, (jj) Natural gas, LP gas, or electricity purchased by a processor or mining company in or in connection with the open pit and underground mining or processing of bauxite; (kk) New custom manufactured homes constructed from materials on which the Arkansas Gross Receipts Tax or Arkansas Compensating (Use) Tax has been paid; (11) Repair or refurbishing of telephone instruments sent into the State for refurbishing or repair and then shipped back to the state of origin; (mm) New and used farm equipment and machinery; (nn) Motor vehicles to municipalities and counties or to state -supported colleges and universities or to public school districts in the State; (no) School buses to school districts of the State; (pp) Purchases made with U.S.D.A. food stamps. (qq) Religious, professional, trade, and sports journals and publications printed and published within the State and sold through regular subscriptions; 12- ,l n 50 tons load dtsPlacem (rr) Tickets for admission to athletic events and interscholastic activities at I Y blic and private elementary and secondary schools in the State; ehurchr ce kite' s h m -L (us) Motor fuels to owners or operators of motor buses operated on designated streets '9 .according to regular schedule and under municipal franchise which are used for municipal argas ortation purposes; and traasP limestone, and b e, e,. Or. a6rical' r -` (tt) Natural gas and electricity to taxpayers qualified under Act No. 48 of 1987 as a vd hers des used ?d "qualified manufacturer of steel" for use in connection with the steel mill. m I grown for CO, s (uu) Used house trailers or mobile homes on which the gross receipts tax or the Ptm compensating use tax has once been paid by the original or a subsequent purchaser; ion of livestock Paltr1o6 (vv) The repair or remanufacture of industrial metal rollers that have a remanufactured, to places of am i non-metallic, material covering on all or part of the roller surface which are brought into the rivilege of havuSemeat A'?' .State solely and exclusively for the purpose of being repaired or remanufactured in this State inc alities, o B aecand are then shipped eo 1 judi Or ; back to the state of origin. 8 free or a Reference is made to the "Arkansas Gross Receipts Act of 1941," Arkansas Code Annotated ad States Ard ;(1987 R SuPP• 1989) sections 26-52-101 to -903, inclusive, for more specific information me Servj�t concerning the sales tax. used jn Use Ta.r. The use tax portion of the Sales and Use Tax is levied on every person for the the filming of lx. privilege of storing, using, distributing, or consuming in the City any article of tangible rkansas Code Annotated ( . personal property purchased for storage, use, distribution, or consumption. The use tax applies to the use, storage, distribution, or consumption of every article of tangible personal property tiexcept as described below. The tax does not apply to aircraft, aircraft equipment, and railroad per month and the o("Parts, cars, and equipment, nor to tangible personal property owned or leased by aircraft, ne is no more than to l 'automotive, or railroad companies brought into the City solely and exclusively for refurbishing, �P? conversion, or modification within the City or storage for use outside or inside the City ed by a processor or 3 regardless of the length of time any such property is so stored in the City. The use tax is ing or processia of iaia6 : levied on the following described tangible personal property: B baont� (a) Tractors, trailers, semi -trailers, trucks, buses, and other rolling stock, including ructed from materials ofd replacement tires, used directly in the transportation of persons or property in intrastate or ,Use) Tax has been pti interstate common carrier transportations; cents sent into the State for (b) All tangible personal property (except fuel) consumed in the operation of railroad rolling stock; ery; (c) Transmission lines and pumping or pressure control equipment used directly in or I' connected to the primary pipeline facility engaged in intrastate or interstate common carrier ties or to state-supportede transportation of property; { (d) Airplanes and navigation instruments used directly in or becoming a part of flight aircraft engaged in transportation of persons or property in regular scheduled intrastate or interstate common carrier transportation; (e) Exchange equipment, lines, boards, and all accessory devices used directly in and k• connected to the primary facility engaged in the transmission of messages; journals and publicattou ptions; , (f) Transmission and distribution pipelines and pumping or pressure control equipment used in connection therewith which is used directly in primary pipeline facility for the purpose of transporting and delivering natural gas; -13- n,y. (g) Transmission and distribution lines, pumping machinery, and controls used, in connection therewith and cleaning or treating equipment of a primary , water,. J ( distribution system; (h) Tangible personal property of public electric power companies Consisting of'{ machinery and equipment, including reactor cores, and related accessory devices used in the: generation and production of electric power and energy, and transmission facilities consisting of, the lines, including poles, towers, and other supporting structures, transmitting electric power and energy together with substations located on or attached to such lines; and (i) Computer software including tapes, disks, cards, or other devices or materials • which contain instructions for a computer and dictate different operations or functions to performed by the computer. ivlf. F..ctmptiwrs %roar Use Tax. Some of the property exempted from the use tax by the General, Assembly of the State is as follows: °t (a) Property, the storage, use, or consumption of which the State is prohibited from taxing under the Constitution or laws of the United States of America or of the State; HI 17 (b) Tangible personal property in which the tax under the Arkansas Gross Receipt Act of 1941 is levied and any property exempted therefrom; (c) Unprocessed crude oil; (d) Machinery and equipment used directly in producing, manufacturing, fabricating; assembling, processing, finishing, or packaging of articles of commerce at manufacturing or processing plants or facilities in the State, including facilities and plants for manufacturing feed, processing of poultry, eggs, and livestock, and the hatching of poultry, but only to the:: extent that the machinery and equipment is purchased and used to create new manufacturing or ≥. processing plants or facilities within the State or to expand existing manufacturing or processing`; plants or facilities within the State; and machinery purchased to replace existing machinery and'+ used directly in producing, manufacturing, fabricating, assembling, processing, finishing, or packaging of articles of commerce at manufacturing or processing plants or facilities in the State: (e) Machinery or equipment required by State or federal law or regulation to be installed and utilized by manufacturing or processing plants or facilities or cities or towns in the State to prevent or reduce air or water pollution or contamination; (f) Aircraft, aircraft equipment, railroad parts, cars, and equipment, and tangible personal property owned or leased by aircraft, airmotive, or railroad companies, brought into the State solely and exclusively for refurbishing, conversion, or modification or for storage for use outside or inside the State: (gl Vessels, barges, and towboats of at least 50 tons load displacement and parts and labor used in the repair and construction of them; th) Motor fuels to the owners or operators of motor buses operated on designated, streets according to regular schedule, under municipal franchise, which are used for municipal transportation purposes; Ill Custom manufactured homes constructed from materials on which the Arkansas Dross Receipts Tax or Arkansas Compensating Use Tax has once been paid; _14_ t,s ry�t,� ¢ipmea[nery of a p� (j) Agricultural fertilizer, agricultural limestone, agricultural chemicals, I; ' agricultural pesticides and herbicides used in commercial production of aea�emPames �a and dicinal preparations, used in treating Proultry �a ' be ng grownvaccines, comrmercnal purposess, gricultural livestock and p q atrre�tm ah d1 : (k) All feedstuffs used in the commercial production of livestock or poultry in the such line h'14 and state; and or other (I) All used cars upon being registered in the State for the first time. d en ens opelyUo� ch h or fa (m) Any tangible personal propertyused, consumed, distributed, or stored in this State ►• npon which a like tax, equal to or greater than the Arkansas Compensating Tax, has been paid • f from the use tar blo is another state.. ± , • n(198ce madeThe s26-53101atog- lfor9morekinformation hich 1989) Sections 31,t inclusive, onotated ( 7 rl'j�t i t the State u prs imeriea or of the StuK' Annotated concerning the use tax. tax liability Single Transaction Limitation. The Sales and Use Tax is limited to a maximum ceder the Ar Groan of $25 for any single transaction. The term "single transaction" is defined according to the nature of the goods purchased, as follows: (a) When two or more devices in which, upon which, or by which any person or is, or may be, transported or drawn, including but not limited to on -road vehicles, acing, manufactnting S property off -road vehicles, or farm vehicles, whether required to be licensed or not, airplanes, water or mobile homes, are sold by a seller, each individual unit, whether part commerce at ms c. ies and plants for vessels, motor vehicles, of a "fleet" sale or not, shall be considered a single transaction. ching of poultry, bat t od (b) Charges for utility services which are furnished on a continuous service basis, - l to create nevr taaa fisting manufactnriagw • whether paid daily, weekly, monthly, or annually, shall be computed in daily increments, and daily charge increment shall be considered to be a single transaction. The total to replace ezistiag embliag proctssia each such amount of the sales and use tax on each billing cycle may be computed as the lesser of either of the total charge for the billing cycle, or $25 multiplied by the number of days in IC erring plants or f one percent the billing cycle. federal law or r (c) For sales of building materials and supplies to contractors, builders, or other transaction shall be considered to be all sales made with respect to a single - or facilities or dries tr>,p persons, a single construction project (which project must be reflected by location on all invoices or receipts on and remitted to the State). tiaation; which a sales or use tax payment has been reported as. and equipment rnd silroad companies, bmuktt (d) When two or more items of major household appliances, commercial appliances, or machinery are sold, each individual unit shall be considered to be a single modification or for maeif- major equipment, transaction. The total amount of the sales and use tax due may be computed as the lesser of $25 multiplied by the number of either one percent of the total amount of the invoice or individual units listed on the invoice. ss load displacement tad • (e) For groceries, dry goods, and other tangible personal property and/or services not deemed to be any single sale a otherwise expressly described above, a single transaction shall be on a single day which is reflected on a single invoice or receipt on which an aggregate sales tax otor bases operated which are used fzn figure has been reported or remitted to the State. rise, Administration of the Sales and Use Tax. Pursuant to the Act, the Director of the State Administration (the "Director") performs all functions incidental to which fa Department of Finance and materials on ece been paid; -15- If l '(i, uj the administration, collection, enforcement, and operation of the Sales and Use!' Tax All Sales `and Use Tax Revenues shall be transmitted by • the Director to the:,gtat • Treasurer, who shall transmit them monthly to the Trustee on behalf of the City, less cerlaie charges payable and retainages authorized by the Act. • [This space left blank intentionally.] "peratt smtttedl of� rustee by the r on. behalf Sales and Use Tax Revenues, The City commenced collection of the Sales 4of+� i r C . Historical Use Tax in December, 1988, A similar one percent local sales and use tax (the jt Y +� and " prior Tax) was in effect in the City prior to December, 1988, Set forth below are the City's Prior Tax from Sales receipts from the and the and Use Tax: historical PRIOR TAX REVENUES AND SALES AND USE TAX REVENUES BY MONTH "t' ' y 19 4(1) 19 (1)(2) 1986(1) 1<IR7(1) 1988(1) 19$2(3) 1990(3) t $ 287,352 $ $ 434,960 $ 409,724 $ 423,209 $ 498,211 $ 525,730 s, r- January 1 'kv Februay 235,681 274,956 308,657 331,063 336,553 320,853 376,157 r March 237,072 271,794 267,952 287,742 326,114 345,845 380,379 244,089 299,580 324,396 343,175 334,484 419,780 393,822 April rationally,] May 267,820 339,819 299,535 341,632 358,201 369,357 387,119 June 257,654 306,132 334,539 355,063 330,815 371,121 390,279 July 291,735 313,962 309,769 333,920 410,972 385,377 August 268,078 308,134 323,293 328,036 362,941 404,722 September 284,864 308,224 338,313 393,085 372,177 401,781 October 311,145 344,910 346,218 352,281 358,107 426,814 ! November 290,967 297,172 321,898 302,404 374,132 385,158 is December 384.602 282.762 365.018 395.319 351.314 416,896 Totals $3.311) 059 $3.347.445 $3.974.548 $4.173.444 $4 339 Ol $4745915 (1) Reflects historical revenues from the Prior Tax. (2) The City changed its method of recognizing Prior Tax Revenues in 1985, which resulted in only eleven months of revenue being recorded. (3) Reflects historical revenues from the Sales and Use Tax. Source: City of Fayetteville, Arkansas. Estimated Future Sales and Use Tax Revenues. Future Sales and Use Tax Revenues will be contingent upon the sale and use of property and services within the City, which activity is generally dependent upon economic conditions within the City and surrounding trade area. by changes made by the General Also, future Sales and Use Tax Revenues may be affected Assembly of the State to transactions included or excluded from the Sales and Use Tax. In the past, the General Assembly of the State has considered changes to the Sales and Use Tax which, Tax Revenues. The City has no I; if adopted, would materially reduce future Sales and Use whether changes to the Sales control over actions of the General Assembly and cannot predict City cannot predict with certainty the expected and Use Tax may be made. Accordingly, the 1u amount of Sales and Use Tax Revenues to be received. r _ i44 Reserve Account The Indenture provides for the establishment and maintenance of a ReAccount serve gc within the Sinking Fund. Upon delivery of the Series 1990 Bonds, the City shall deposit to tli Count credit of the Reserve Account a sum equal to the Reserve Account Deposit Requitement Moneys held for the credit of the Reserve Account shall be used for the purposa of paying the interest on and the principal of the Series 1990 Bonds and to provide funds for the retirement of Term Bonds to the extent of the Amortization Requirements therefor whenever' and to the extent that the moneys held for the credit of the Bond Service Account shall be insufficient for such purpose. If at any time the moneys held for the credit of the Reserve Account shall exceed the Reserve Account Requirement, such excess shall be withdrawn by the Trustee and shall be transferred to the Construction Fund during the period prior to the N.' completion of the Improvements or to the Bond Service Account or the Redemption Account at the option of the City; provided, however, that the City may provide for a different disposition of any such excess in the Series Ordinance providing for the issuance of any Series of Bonds. In the event that all or a portion of the Reserve Account Requirement for any Series is provided by the alternate funding methods permitted in the Indenture, if after a withdrawal from the Reserve Account the City shall cause the letter of credit, insurance policy Sr other similar instrument to be reinstated in the full amount of the Reserve Account Requirement en additional deposits of moneys to the Reserve Account shall be required in connection with such +. withdrawal. Upon the issuance of any additional Series of Bonds, the City shall, on the date of delivery of such Bonds, increase the sum required to be accumulated and maintained on deposit in the Reserve Account to be at least equal to the Reserve Account Requirement on all Outstanding Bonds including the Bonds then issued. For additional information concerning the Reserve Account, see "Reserve Account Deposit Requirement" and "Reserve Account Requirement" under the caption "CERTAIN DEFINITIONS" herein. (This space left blank intentionally.] -18- a• r+� ' '4°'fir .. l t DEIIT SERVICE REQUIREMENTS J' 3tThe following table details amounts required to pay scheduled principal maturities, 1 daiory fedemptions and interest payments on the Series 1990 Bonds during each year Principal Maturities and Mandatory Debt • Redemptions Interest Service sttttl:t 1991 $ 824,000 $ $ trsl�t c 1992 1993 1,065,000 1,130,000 �1tw 1994 1,205,000 OQ19961,360,000 1995 1,280,000 1997 1,450,000 1998 1,545,000 1999 1,650,000 Vic,° bra 2000 1,765,000 2001 1,890,000 2002 2,020,000 2003 2,165,000 : "-4?+ 2004 2005 2,325,000 2,495,000 2006 2,675,000 nct:ti°a�:u 2007 2008 2,S70,000 3.305.000 goir�� �"r u Totals: $33.019,000 $$ i 'Preliminary, subject to change. � I s1 (This space left blank intentionally.] ....... 2;. J 19 ..!fit ryfi F ii .t 11 ESTIMATED DEBT SERVICE COVERAGE l f - Set forth below is estimated debt service coverage information for the Series 1990 Bonds t`V For purposes of this Preliminary Official Statement, the estimated maximum annual debt servics≥ on the Series 1990 Bonds is assumed to be $3,338,788. The estimate of annual Sales and Use 5 Tax Revenues utilized in this calculation is $4,874,234, which is equal to actual Sales and Use GGGR" i I Tax Revenues for the twelve month period ending in June, 1990. See the caption "SECURITY' FOR THE BONDS -- Sales and Use Tax •- Historical Sales and Use Tax Revenues" herein, The City cannot predict with certainty the expected amount of Sales and Use Tax Revenues'; to be received. See the caption "SECURITY FOR THE BONDS -- Sales and Use Tax .. Estimated Future Sales and Use Tax Revenues" herein. The figures set forth below are only an'; estimate and there can be no assurance that actual Sales and Use Tax Revenues will equal the', amount shown below: Estimated Annual Sales and Use Tax Revenues $4,874,234 Estimated Maximum Annual Debt �j„h� Service on the Series 1990 Bonds tt) $3,338,788 Estimated Coverage 1.46X (1) Excluding Debt Service in 2008 to be paid in part with Reserve Account moneys. SOURCES AND USES OF FUNDS The proceeds of the Series 1990 Bonds are anticipated to be used in the following manner: Sources of Fundstl> Proceeds of the Series 1990 Bonds $33.019.000 Total Sources: $33.019.000 Uses of Fundstlt $28,540,788 Cost of Improvements 3,302,000 Deposit to Reserve Account 635,105 Costs of Issuance Bond Insurance Premium 541.107 Total Uses: $33.019.000 11) Preliminary, subject to change. [This space left blank intentionally.] 20- jLE CpVE�C1�v ,r, age infothe eatima edm foi 188, j The`esttm THE CITY t3 4 . which ate yof 2 W� egl�{ General 21 sales and (JS The City is a city of the first class organized and existing under the laws of the State of e rox "State"). "County") i.. R Atpansas (the The City is the seat of government of Washington County (the -ed amount of 1 THE B0NDSSalts.aya�� rrea aed is the fifth largest city in the State. The City is located in the Metropolitan Statistical of Fayetteville -Springdale in the northwest part of the State and is approximately 185 miles (' n. The figures of let northwest of Little Rock, Arkansas, 125 miles east of Tulsa, Oklahoma, and 210 miles south of !. Sales and Use fn� 'Kansas City, Missouri. Taz Ae�akt The City is served by U.S. Highways 62 and 71, State Highways 16, 45, 11.2, 156, 180 and � ty. �. Cs f' z :26$, The Burlington -Northern Railroad has several lines running through the City, and a 54,874, municipal airport with a 6,006 foot runway is available for air travel. Commuter airlines provide til daily flights from the airport. v 53,338789 } Government The City operates under the City Manager form of government pursuant to which seven with Resery directors are elected at large to serve on the Board of Directors and a full-time City Manager is e AcC°°atmoa�` employed. Four directors must reside in designated wards within the City. The Board of Directors elects one director to serve as Mayor for a two-year term. The Mayor does not have OF FUNDS ,, veto power. The current Mayor and members of the Board of Directors of the City, the years in which their terms expire and their principal occupations are as follows: ted to be used in the fog�s�,,� _,4 Name Term Expires Principal Occupation William Martin 12/31/90 Mayor/CEO and President of Arkansas S 19 Western Gas • Fred Vorsanger 12/31/92 Assistant Mayor/Vice President $ 019nra• (Emeritus) University of Arkansas Michael Green 12/31/92 Engineer Shell Spivey 12/31/92 Executive Vice President of First $28'540'789 National Bank Ernest Lancaster 12/30/90 Retired 3'30_,00o T Russ Kelley 12/31/90 Financial Consultant for Merrill, Lynch, 635 Pierce, Fenner & Smith, Inc. 41107 Paul Marinoni, Jr. 12/31/90 Farmer 019 Economic Data Per capita income figures for the County and State are as follows: Year Washington County State of Arkansas 1982 $ 8,586 S 8,605 1983 9,164 9,098 1984 10,238 9,933 entionally.] 1985 10,922 10,526 1986 11,634 11,050 1987 12,150 11,538 Source: U.S. Bureau of Economic Analysis. -21- 1,3�dri1i ti-i, l Retail sales figures for the City, County and State are as follows; City of Washington State of 4'�Ij Year Fayetteville County Arkansas 1984 $336,865,000 $569,127,000 $10,484,427,000 1985 367,560,000 623,247,000 11,074,799,000 + ! 1986 420,739,000 649,750,000 11,733,828,000 1987 450,438,000 692,830,000 12,129,763,000 1988 472,642,000 726,962,000 12,742,118,000 Source: Sales and Marketing Management Survey of Buyer Power, ifollowing a lshows total assessed value of real and personal the withn the City for the ears property' 9i Real Property Personal Prop" er!y 1983 $ 59,667,270 $24,124,885 1984 62,797,945 25,870,570 1985 165,514,940 39,355,360 1986 170,543,026 40,886,665 1987 176,276,162 43,951,545 1988 183,113,783 50,989,875 89 ,875 1989 189,400,558 58,753,884 The following table shows the total assessed value within the County for the years indicated: of real and personal property Real Property Personal PropertProperty 1983 $141,586,495 $ 61,493,760 1984 147,382,925 65,375,310 1985 385,802,975 84,942,340 1986 396,888,985 98,704,405 1987 410,113,703 104,173,357 1988 425,306,283 123,707,616 1989 444,311,743 144,004,357 Building permits issued by the City(t) are shown below for the years indicated: 1985 1986 1987 1988 1989 1990(2) Single Family 171 198 218 Multifamily 183 171 69 58 56 31 Commercial 25 25 61 28 4 26 34 39 8 Value of All Building Permits $33,063,628 $19,080,672 $17,002,278 $21,341,739 $21,483,018 $15,470,416 ttl Does not include building activity of the University of Arkansas. (2) Through April of 1990. -22- �tdte pf ,:' �3 �h loyment and Industry r be University of Arkansas is located in the City and had total enrollment for Spring of 0 ,484'427,000` 0 0[ 13237. For the 1989-90 fiscal year, the University had an operating budget in excess l074,799,000 ' . 119 $130 million. The University employs approximately 3,912 faculty, administrative, 1,733,828,000 4'ry ; clerical and maintenance personnel. 2129 763 2742118,000'' ' secretarial, major employers in the City, their products or services and approximate number of Other are set forth below: employees r. Em er Product or Service Number of Employees t f real and Ponpad.. Campbell Soup Manufacturer of frozen dinners and entrees 1OOO washington Reg Tonal Hospital 1000 • n I Pr r Medical Center Manufacturer of tortillas htexican $24,124,885 yson's Original Division and chips 8OO Industries International Manufacturer of cast aluminum 25,870,570 a Superior Incorporated 48O 39, 355, 360 Levi Strauss Co. Clothing manufacturer 385 40,8$6 665 StanManufacturer of business forms 325 dard Register Co. 43,951,545 Baldwin Piano & Organ Co. Manufacturer of keyboard and 50,989,875 electronic products 250 5R,753 884 American Air Filter Manufacturer of air filters 175 Elkhart Products Corp. Manufacturer of copper pipe f real and permoal. p, fittings 171 Kearney Corp. Manufacturer of electrical highwire connectors 160 Unemployment figures for the City, County and State according to the Arkansas $ 61,493,760 Employment Security Division, are as follows: 65,375,310 City of Washington State of 84,942,340 98,704,405 Year Favctteville County Arkansas 104,173,357 •• 1986 5.0% 4.8% 8.7% 123,707,616 1987 4.3 4.1 8.1 144,004,357 1988 4.5 4.2 7.7 he years indicated: :' 1989 3.7 3.7 7.2 1990 3.8 3.6 7.3 988 19 9 , •;� 183 171 is 61 28 34 39 ..:'.I_ 1,341,739 $21,483,0119' as. 'March of 1990 only. -23- 1�� I Population The City and County have experienced steady increases in population over the last several (. decades. Population figures, according to the United States Bureau of the Census, are)yt follows: Yl�L City of Fayetteville Washington County 1940 8,212 41,114 1950 17,071• 49,979 1960 20,274 55,797 1970 30,729* 77,370 1980 36,608 100,494 Yl 41 1989 (estimated) 42,084 112,000 'Population figures reflect increases due to annexation. THE IMPROVEMENTS The Improvements consist of the acquiring, constructing, reconstructing, improving, renovating, expanding and equipping of eleven (11) separate capital improvement projects for the City at an approximate total cost not to exceed $28,540,788. As individually described below, such improvements include: (i) constructing, reconstructing and improving City streets and bridges at an approximate cost not to exceed $10,717,000; (ii) acquiring, constructing and equipping water transmission and distribution facilities at an approximate cost not to exceed $9,932,288; (iii) acquiring, constructing and reconstructing drainage improvements at an approximate cost not to exceed $1,542,000; (iv) acquiring, constructing and equipping solid waste collection, disposal, compacting and recycling facilities at an approximate cost not to exceed $1,025,000; (v) acquiring, constructing and equipping public parks and playgrounds at an approximate cost not to exceed $487,000; (vi) acquiring, constructing and equipping police equipment, apparatus and facilities at an approximate cost not to exceed $185,000; (vii) acquiring, constructing and equipping firefighting vehicles, equipment, apparatus and facilities at an approximate cost not to exceed $1,475,000; (viii) acquiring, constructing and equipping emergency medical service vehicles, equipment and facilities at an approximate cost not to exceed $60,000; (ix) expanding and renovating the City Youth Center swimming pool and related, facilities at an approximate cost not to exceed $867,500; -24- increases.i nited States BtPUldo(x) acquiring, constructing and equipping parking facilities for the Dickson re • pp diet tEe Street area at an approximate cost not to exceed $1,750,000; and hi vt (xi) acquiring, constructing and equipping City maintenance and storage facilities and buildings at an approximate cost not to exceed $500,000. 41,114 fi 49979 CERTAIN DEFINI'T'IONS 55,797[ 77,37p ,th The following are definitions of some of the words and terms used in the Indenture and this 100,494 zr„ Official Statement: 1.12,000 5? "Accountant" shall mean the independent certified public accountant or firm of independent certified public accountants which shall have a favorable reputation for skill and experience in 'accounting matters at the time and during the period employed by the City to perform and carry out the duties imposed on the Accountant by the Indenture. "Accreted Value" of a Capital Appreciation Bond shall mean the original principal amount [ENTS ay thereof plus interest accrued thereon on the basis of a 360 -day year consisting of twelve 30 -day months compounded semi-annually on each Interest Payment Date commencing on the Interest constructin Payment Date next succeeding the dated date of such Capital Appreciation Bond to the date of separate cagr recopstro maturity or redemption prior to maturity of such Capital Appreciation Bond. The Accreted pital imprpvemtd'. ,Value with respect to any date other than an Interest Payment Date is the Accreted Value on 54Q,788. As'iadiQ. the next preceding Interest Payment Date or the dated date of such Capital Appreciation Bond plus the percentage of the Accreted Value on the next succeeding Interest Payment Date derived w1°g City .by dividing the number of days from the next preceding Interest Payment Date or the dated streets and u. date of such Capital Appreciation Bond for the period between such dated date and the initial Interest Payment Date for such Bond to the date of determination by the total number of days from the next succeeding Interest Payment Date or the dated date of such Capital Appreciation [ter transmission and distngnC ,Bond to the next succeeding Interest Payment Date. 'Amortization Requirements" shall mean the amounts required to be deposited in the acting drainage im Redemption Account for any Series of Bonds for the purpose of redeeming prior to their tort p 'maturity and paying at their maturity the Term Bonds of such Series, the specific amounts and times of such deposits to be determined by the Board in the Series Ordinance providing for the id waste collection, ditpes^,issuance of such Series. exceed $1,025,000; "Annual City et" shall mean the Annual Budget of the g g y adopted p pursuant to the "Indenture. public parks and I Average Annual Debt Service' shall mean at any given time of determination average annual Principal and Interest Requirements for the Bonds until their final maturity. ce equipment, apparatusiulEp,' ;fighting vehicles, equip .,475,000; emergency medical it exceed $60,000; h Center swimming )0; "Board" shall mean the Board of Directors of the City or any successor board or body in which the general legislative powers of the City shall be vested. "Bond Counsel" shall mean a lawyer or firm of lawyers nationally recognized in municipal bond law selected by the City. "Bond Registrar" shall mean a bank or trust company, either within or without the State, designated as such by the Board which shall perform such functions as Bond Registrar as are required by the Indenture; provided, however, if the Board shall so determine, the City Clerk may act as Bond Registrar. -25- a., "Bond Service Account" shall mean the Bond Service Account, a special ; accougi created and designated by Section 501 of the Indenture. "Bonds" shall mean collectively the Bonds issued under the provisions of the Indenture. "Bond Year" shall mean the period commencing on November 15, of any year and ending op November 14 of the following year. "Capital Appreciation Bond" shall mean any Bond or Bonds of a Series which are sold et an initial price to the public of less than ninety-seven percent (97%) of the principal amount thereof payable at maturity, but only if such Bond or Bonds are designated as a Capital Appreciation Series or Term Bond or Bonds pursuant to the Series Ordinance providing for the issuance of the Series of Bonds of which such Capital Appreciation Bond or Bonds are to be a part. "Capital Guaranty" shall mean Capital Guaranty Insurance Company or any successor, thereof. "City" shall mean the City of Fayetteville, a municipal corporation in Washington County, Arkansas. "City Attorney" shall mean the City Attorney of the City or the officer succeeding to his or her principal functions. "City Clerk" shall mean the City Clerk of the City or the officer succeeding to his or her principal functions. "Code" shall mean the Internal Revenue Code of 1986, as amended, and all regulations applicable thereto. "Completion Date" shall mean the date of completion of the Improvements, as such date shall be certified pursuant to the requirements of the indenture. "Construction Fund" shall mean the City of Fayetteville Sales and Use Tax Capital Improvement Bonds Construction Fund, a special fund created and designated by Section 401 of the Indenture. "Convertible Bonds" shall mean Bonds issued under the indenture which are convertible, at: the option of the City, into a form of Bonds which are permitted by the Indenture other than,`. the form of such Bonds at the time they were issued. "Cost", as applied to the Improvements, shall embrace the cost of the work constituting the respective Improvements, including all obligations and expenses and all other items of cost �•: which are set forth in Section 403 of the indenture. "Credit Facility" shall mean any legal arrangement pursuant to which the entity providing such Credit Facility agrees to make or provide funds to or on behalf of the City to make payment of (i) the purchase price (including principal or principal and interest) of Optional Tender Bonds upon their tender by the Owners for purchase or (ii) with respect to all Bonds, the principal of and interest on the Bonds when due, whether by maturity, redemption, acceleration or otherwise; provided that the furnishing of such funds by such entity pursuant to such arrangement shall be required despite material adverse changes in the financial condition of the City. With respect to the Series 1990 Bonds, "Credit Facility" shall mean the Financial Guaranty Bond. -26- vz�tty>( CC Account? t ' > ' Provider" shall mean the entity a Credit Facility . With Credit Facility5eris i•. provisions of } 1990 Bonds dlsproviding t Capital the , respect andthso longe ar of any ratingof "A-1+' from SCP and hloody's or be approved by Capital i;. year tad Guaranty IS of a Serte ' Current Interest Bonds' shall mean Bonds the interest on which is payable to the of hk6>ri on the Interest Payment Date with respect thereto and not only at the maturity onds7%) the ieries are dear e t . Bondholder thereof. Ordinatiq .tit ciatioa Boad proy _ 'Daily Newspaper' shall mean a newspaper published in the English language on at least five or B°nds�Yt :. (i) business days in each calendar week. 3nce Com : 'Defeasance Obligations' shall mean those obligations described in clause (i) of the pant or aiJ definition of 'Government Obligations' herein. 'Director of Finance' shall mean the Director of Finance of the City or the officer orporatioa is µashia6�ot functions to his or her principal . succeeding 'Depository' shall mean any bank or banking institution duly authorized by law to engage in sr the leer sac cetd'j the banking business and qualified under the laws of the State to act as a depository of moneys City for hereunder, which bank or banking institution has entered into an agreement with the the deposit of such moneys as required by State law. officer sucOlding • t 'Financial Guaranty Bond' shall mean the Financial Guaranty Bond issued by Capital Guaranty which provides for the payment of principal of and interest on the Series 1990 Bonds as amended, and "" when Due for Payment which is unpaid by reason of Nonpayment (as such terms are defined in . the Financial Guaranty Bond) to be issued by Capital Guaranty simultaneously with the delivery of the Series 1990 Bonds. Improvements, as agcy 'Financial Statements' shall mean the audited financial statements of the City prepared in accordance with generally accepted accounting principles applicable to municipalities. lie Sales and Use Ta 'Fiscal Year' shall mean the period commencing on the first day of January and ending on and designated bytata the last day of December of the same year as the same may be amended from time to time to conform to the fiscal year of the City. lenture which are m 'Government Obligations' shall mean (i) direct obligations of, or obligations the payment of itted by the Indenture the principal of and interest on which is fully guaranteed by, the United States of America; (ii) obligations issued or guaranteed by any instrumentality or agency of the United States of of the or hereafter organized, including but not limited to those cost of the work ml,, America, whether now existing Federal Financing Bank, the members of the Farm Credit System whether individually or sea and all other i[eis! • consolidated, Federal Home Loan Banks, the Export -Import Bank, Government National (iii) evidences of ownership of Mortgage Association and the Tennessee Valley Authority; in future interest or principal payments on obligations specified in it to which the enmy proportionate interests clause (i) of this definition held by a bank or trust company as custodian, under which the in interest and has the right to proceed directly and on behalf of the CIIy*`` intertu) of owner of the investment is the real party individually against the obligor on the underlying obligations described in clause (i) of this ncipal and ar (ii) with respecttodk_ definition, and which underlying obligations are not available to satisfy any claim of the through the custodian or to whom the custodian may be ether by maturity, "reds¢: such entity funds by ra custodian or any person claiming obligated; (iv) municipal obligations, the payment of the principal of, interest on and redemption by described in clause (i) of this ages in the ialm�r premium, if any, on which are irrevocably secured obligations in account which is irrevocably cility' shall mean definition and which obligations have been deposited an escrow interest on and redemption premium, pledged to the payment of the principal of, -27- ;` # LP— #JC-. �? .i,. ,N#, , ,.r rt at*'(a ,. if any, on such municipal obligations; (v) obligations issued by any state of the States; and nobligations the principal o as nd intere which are insured; provided, however,theobligations described inclauses(v)f (vi) . definition shall also be rated in one of the top two highest rating categories (without regardany within category) both and S&P or, rvicethe suchsuch eitherradation or both of services, any othernationally recognized rating seoody's of o or services services. "Guaranteed Investment Contract" shall mean investment agreements with any bank or trust company which has long-term obligations rated in one of the two highest rating categories Moody's and S&P or, upon the discontinuance of either or both of such services, nationally recognized service or services. any other skts "Improvements" shall mean the various capital improvements described in Ordinance 3480 passed by the Board on April 19, 1990, the acquisition, construction, reconstruction improvement, renovation, expansion and equipment of which are to be financed, with sayothnr available funds, by the issuance of the Series 1990 Bonds. "Indenture" shall mean that Trust Indenture, dated as of October 15, 1990, by and between' the City and the Trustee, and all supplements thereto. "Interest Payment Date" shall mean May 15 and November 15 in each Bond Year, except to the extent that other dates for the payment of interest on a Series of Bonds or portion are provided by the Series Ordinance for such Series of Bonds. thereof "Interim Notes" shall mean notes issued by the City with a final maturity not longer than thirty-six (36) months (or such longer period as may be by State permitted law) in anticipation of the refinancing thereof from all or a portion of the proceeds of a Series Bonds under the Indenture. of issued "Investment Obligations" shall mean any of the following, to the extent that the same are legal investments for the investment of public funds under State law: (i) Government Obligations; (ii) bankers acceptances, certificates of deposit or time deposits of any bank, trust company or savings and loan association (including any investment in pools of such bankers acceptances, certificates of deposit or time deposits), which to the extent that such obligations are not insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, are collateralized at all times in amounts and by obligations as shall be permitted by State law; (iii) any repurchase, reverse repurchase or investment agreement with any bank or trust company organized under the laws of the state of the United States or any national banking association, insurance company, or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York and as a member of the Security Investors Protection Corporation, which agreement is secured by any one or more of the securities described in clauses (i), (ii) or (iii) of the definition of Government Obligations provided that the City has a perfected first security interest in the collateral and that the City or its agent has possession of the collateral, and that such collateral is held free and clear of claims by third parties; and (iv) Guaranteed Investment Contracts; -28- ii a7 ns tssued.,'by of the Gnn Ly- tar 1 raot° clause= frtI ighestra and S&p or categoriet'ttl ognized ratta6 s�sk od_ of theBreemepts Wq { her or two htgheet b �.h;! both provements deSerib s acquisition, S. construe• tx Which are to be fia a^ as of October 15 199 svember 15 in each Bood Bonds Series of Bonds ash y with a final maturity' to permitted by State ha)h to proceeds of a Series of I (lowing, to the extent lin ler State law: it or time deposits of ul any investment in poolso(_+,, )sits), which to the etty Insurance Corporation eralized at all times intxxtx stment agreement with to United States oranyie •: I dealer reporting to, tndaiir- ve Bank of New Yorksxd,ata Lich agreement is secortdbj4l or (iii) of the definitioaof[ai first security interest nthi to collateral, and that sidt 4` ,K Provided that, so long as Capital Guaranty is a Credit Facility Provider, "Investment obligationsshall mean "Permitted Investments" as defined herein to the extent the same are legal investments for the investment of public funds under State law. Maximum Permitted Maturity" shall mean December 1, 2008, the date which is twenty (20) years after December 1, 1988, the first day on which the Sales and Use Tax was actually levied and collected. 'Maximum Principal and Interest Requirements" shall mean the maximum amount of Principal and Interest Requirements for any Bond Year. "Maximum Rate" shall mean two percent (2%) per annum above the Federal Reserve discount rate on ninety -day commerical paper in effect at the Federal Reserve Bank for the Federal Reserve district in which the State is located on May 29, 1990, the date of the election approving the issuance of the Series 1990 Bonds. 'Mayor' shall mean the Mayor of the City or the officer succeeding to his or her principal functions. -Moody's" shall mean Moody's Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, 'Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. 'Optional Tender Bonds' shall mean the portion of a Series of Bonds issued under the Indenture, a feature of which is an option on the part of the Owners of such Bonds to tender such Bonds to the City or a trustee or other fiduciary for such Owners for purchase. "Outstanding" shall mean, when used with respect to the Bonds, all Bonds theretofore delivered except: (a) Bonds paid or redeemed or delivered to or acquired by the Trustee and cancelled; and (b) Bonds deemed to have been paid in accordance with the provisions of the Indenture. "Owners" or "Bondowners' shall mean the registered owners of the Bonds from time to time Outstanding. 'Permitted Investments' shall mean any of the following, with an appropriate market value and of an appropriate maturity: 1. Obligations of, or guaranteed as to principal and interest by, the United States of America, or by any agency or instrumentality thereof hereinafter designated when such obligations are backed by the full faith and credit of the United States of America. These are limited to: (a) U. S. Treasury Obligations All direct or fully guarantied obligations (b) Farmers Home Administration Certificate of beneficial ownership -29- �p a t �r a f J1t tom. !1`tN I� sp �s �7i +a t�i l e i} � a� (c) U. S. Maritime Administration " ' I 'j i h! Guaranteed Title XI financing (d) Small Business Administration Guaranteed participation certificates Guaranteed pool certificates ( a) Government National Mortgage Association GNMA") GNMA - guaranteed mortgage backed securities GNMA - guaranteed participation certificates (f) U. S. Department of Housing & Urban Development Local authority bonds (g) Washington Metropolitan Area Transit Authority Guaranteed transit bonds ry' 2. Obligations of instrumentalities or agencies of the United States of America " These are specifically limited to: (a) Federal Home Loan Mortgage Corporation Participation Certificates Debt Obligations (b) Federal Home Loan Banks Consolidated debt obligations Letter of credit backed issues (c) Federal National Mortgage Association Debt obligations Mortgage backed securities (excluded are stripped mortgage securities which are valued greater than par on the portion of unpaid principal) Book entry securities listed in I and 2 above must be held in a trust account with the Federal Reserve Bank or with a clearing corporation or chain of clearing corporations which has an account with the Federal Reserve Bank. 3. Federal Housing Administration debentures 4. Commercial paper, payable in the United States of America, having original maturities of not more than 92 days and which S&P and Moody's. are rated in the highest rating category by 5. Interest bearing demand or time deposits issued by state banks or trust companies or any national banking associations which are members of the Federal Corporation ("FDIC"). Deposit Insurance Savings and loan associations which are members of the Federal Savings and Loan Insurance Corporation "FSLIC") ( are also acceptable issuers. These deposits: (a) must be continuously and fullyinsured by FDIC or FSLIC, or (b) must have maturities of less than 366 days and be deposited with banks the short term obligations of which are rated A-1+ by S&P and Moody's. 6. Money market mutual funds or portfolios investing in short-term U.S. Treasury securities rated AAA by S&P and Moody's. ` annual The Trustee shall provide Capital Guaranty certification that the money { market portfolio into which funds are invested is then -30- h l , S is {tl ' AA by S&P and Moody's and, upon notice that the S&P and Moody's rating of the portfolio has dropped below AAA, the Trustee shall immediately withdraw tfy money market nvest and reinvest in Permitted Iments. s funds Such other investments as are approved in writing by Capital Guaranty. M.S) 7. s+currties z al' or "principal' shall mean r with respect to Current Juterest Bonds, the stated 'Princip c) P' ficates amountt thereof r)with rprtal Appreciation Bonds, the Accreted determination principal ratiau ardate of thereof, as of any par rloPLUent i ; slue and Interest Requirements' shall mean the respective amounts which are required Principal Bond Year to provide: city in each for paying the interest on all Bonds then Outstanding which is payable on the (il Interest Payment Date in such Bond Year and the first Juterest Payment Date in the ✓ s of the second following Bond Year, and Oiled uS� d liil for paying the principal of all Serial Bonds then Outstanding which is payable upon the maturity of Serial Bonds in the following Bond Year, and the Amortization Requirements fur all 'Term Bonds for such Bond Year. the amount of the Principal and Interest Requirements for any Bond Year, the Jr determining lniawist riles shall apply: • aj ,ith respect to Variable Rate Bonds, the interest rate shall be assumed to be the • rte el interest for ell Variable Rate Bonds for the prior Bond Year or portion aittuge or if there were no Variable Rate Bonds Outstanding during such prior Bond Year, • therevi ;hen the re tial ritt of interest on such Variable Rate Bonds; 'average rate" shall mean the re stripped rate determinec by dividing the total amount of interest paid on Variable Rate Bonds in any amount of Variable Rate Bonds mor, 'n of unpaid @ p°Pd) Bone Year or portion thereof by the average principal Bond Year or portion thereof; Outstanding during such id in a trusaccount 1,; Hitl: res ct to Interim Notes, interest only and not the principal shall be included prt f clearing nerpvratioes :n r'rincrpel Lod interest Requirements if the Series of Bonds a.11 or a portion of the Interim Notes has been duly • rr.ds of ' bcii are eupected to be used to refinance such by the City: provided, hon ever, that none of the interest on or principal of zctnvnzed lc -curia ho.ee shell be included in Principal and Interest Requirements if the Board shall issuance of such Interim Notes that such States of America, bar * determine in the ordinance providing for the interim linter shall be Subordinated Judebtedness under the Indenture; fed in the highest ntigt8s with respect to Optional Tender Bonds, Principal and Interest Requirements shall cc not lnc:ua tilt principal amount of such Optional Tender Bonds payable upon exercise by to the extent and for so ad by state basis at hat the On nets thereof of the option to tender such Bonds for purchase with respect to such Optional nrs of the Feder Dpog lung an x Crean Facility shall be in full force and effect but include the regularly scheduled principal payments on such .Optional which are membert'af4 are also acceptable iws Tender Bonds shall 7raaer Bonds, either upon payment at maturity or redemption in satisfaction of the fur Optional Tender Bonds; provided, however, that during cr y FDIC or FSLICtir� Amortization Requirements such issuer of the Credit Facility has advanced funds thereunder and i bank the shoe any period of time after the before such amount is repaid. Principal and Interest Requirements shall include the principal in with the principalrepayment amount due and payable thereunder and interest thereon, accordance or rates specified in the Credit FaciLly; vesting in short-term ti schaedule and interest raft 2stee shall provide,Cpu4,a io which funds art li I fu:` -31- . b- tit„ tl iii (d) if interest on a Series of Bonds is payable from the proceeds of such i Bonds or from other amounts set aside irrevocably for such purpose at the time such {I)I Bonds are issued, interest on such Series of Bonds shall be included in Principal and.Interest Requirements only in proportion to the amount of interest payable in the then current Bold Year from amounts other than amounts so funded to pay such interest; (e) Principal and Interest Requirements shall not include the principal of and redemption premium, if any, and interest on Subordinated Indebtedness. "Redemption Account" shall mean the Redemption Account, a special account created and designated by Section 501 of the Indenture. "Refunding Bonds" shall mean the Bonds issued at any time under the provisions of Section 209 oft e h Indenture. si "Regular Record Date" shall mean the fifteenth (15th) day (whether or not a business day), of the month preceding any Interest Payment Date (if such Interest Payment Date is the first' i day of a month) or the first day (whether or not a business day) of the month of any Interest'.;;' Payment Date (if such Interest Payment Date is the fifteenth (15th) day of a month); provided however, that a different Regular Record Date may be provided for a Series of Bonds pursuant to the Series Ordinance providing for the issuance of such Series. "Reserve Account" shall mean the Reserve Account, a special account created and designated.} by Section 501 of the Indenture including any subaccounts created therein and any separate .:. reserve accounts created as permitted by Section 502 of the Indenture. "Reserve Account Deposit Requirement" shall mean the amount, if any, determined in any Series Ordinance to be required to be deposited monthly to the credit of the Reserve Account on account of the respective Series of Bonds; provided, however, that: (i) the Reserve Account Deposit Requirement for any Series shall not be less than one -sixtieth (1/60th) of the Reserve Account Requirement for such Series in each month following the month in which such Series is issued until the amount on deposit in the Reserve Account in connection with such Series shall be equal to the Reserve Account Requirement for such Series; (ii) in the event any deficiency is created in the Reserve Account for any Series by a withdrawal, valuation or otherwise, the Reserve Account Deposit Requirement, if any, then in effect for any Series shall be increased, beginning in the month following the mouth in which such deficiency was created, by an amount at least equal to one -twelfth (1/12th) of the amount of such deficiency; and (iii) so long as Capital Guaranty is a Credit Facility Provider, the Reserve Account Deposit Requirement for any Series at the time of the issuance of such Series shall be the Reserve Account Requirement for such Series and thereafter shall be such amount, if any, as may be required to make the amount on deposit in the Reserve Account in connection with such Series equal to the Reserve Account Requirement for such Series. In the event that the Reserve Account Requirement for any Series is provided by the alternate funding methods provided herein, if after a withdrawal from the Reserve Account the City shall cause the letter of credit, insurance policy or other similar instrument to be -32- Ssi'zr' en not include a mz ated Indebtedness�w Pru account a s { Peetal aea tY time under the provt day (whetheUch r interest paymco aessday) nessenth of the.moelhl (15th) day of rovided for a Series of Series. special account created; unts created therein:ooi e Indenture. he amount, if any,'dete to the credit of the Rs wever, that: for any Series, shall to rement for such Series I until the amount on all be equal to the lb Reserve Account for nt Deposit Requirem in the month followi least equal to one-twi in the full amount of the Reserve Account Requirement, no additional deposits reinstated of m0°eys t° the Reserve Account shall b° required in connection with such withdrawal. 'Reserve Account Requirement' shall mean the least of (i) Maximum Principal and Interest Requirements on account of the Bonds issued under the provisions of Article 11 of the Indenture qW 'ia the then current or any subsequent Fiscal Year, (ii) one hundred twenty-five percent (125%) ° of the Average Annual Debt Service on account of Bonds issued under the provisions of Article -;R of the Indenture and (iii) ten percent (10%n) of the proceeds of all Series of Bonds determined `ca she basis of their initial purchase price to the public; provided, however, that clause (iii) will not be applicable in the event the City receives an opinion of Bond Counsel to the effect that funding the Reserve Account in an amount larger than the amount stated in clause (iii) will stl ?,pot cause the interest on the Bonds to be included in the gross income of the Owners for federal income taxation purposes and, further, that with the consent of Capital Guaranty (a) the r+t city shall be permitted to provide all or a portion of the Reserve Account Requirement by the c; arecution and delivery of a policy of insurance or letter of credit or other similar arrangement Ilj which, after its issuance and delivery, will permit the Trustee to receive the full amount 1 covered by such arrangement without further conditions, financial or otherwise, (b) with respect ii 'to all or any portion of a Series of Bonds, the interest rate on which is not fixed at a single numerical rate, the City shall be permitted to provide for a Reserve Account Requirement ,which is less than the least of the amounts stated in clauses (i), (ii) and (iii) above pursuant to the Series Ordinance, (c) with respect to such Series of Bonds or portion thereof which is �` ,supported by a Credit Facility, the City shall be permitted to provide for a Reserve Account Requirement which is based only on the principal and interest due on the Bonds of such Series and not on the repayment provisions of such Credit Facility, and (d) with respect to a Series of Bonds, the City shall be permitted to provide that there shall be no Reserve Account Requirement provided that the Series Ordinance with respect to such Series of Bonds provides (A) for the establishment of separate accounts within the Bond Service Account and Redemption Account with respect to such Series of Bonds and (B) that the remaining accounts within the Sinking Fund are not charged with the payment of principal and interest and any redemption •premium on such Series of Bonds. tit ��? { "Sales and Use Tax- shall mean the local sales and use tax of one percent (1%) to a qo maximum of twenty-five dollars (S25.00) on each single transaction levied and collected by or •on behalf of the City for a period of twenty (20) years pursuant to the Sales and Use Tax Ordinance. 1 'Sales and Use Tax Ordinance' shall mean Ordinance No. 3381, passed by the Board on l4 October 4, 198S. scility Provider, the Rtst e issuance of such Send reafter shall be such u ❑ the Reserve Account i nent for such Series.' t for any Series u prm ,drawal from the Reserve or other similar imue 'Sales and Use Tax Revenues' shall mean the moneys actually received during any period of time by or on behalf of the City from the State Treasurer representing the proceeds of the Sales and Use Tax less certain amounts deducted or retained by the State Treasurer as authorized by Subchapter 2 of Chapter 75 of Title 26 of the Arkansas Code Annotated. "Serial Bonds" shall mean the Bonds of a Series which shall be stated to mature in annual installments and "Term Bonds' shall mean the Bonds of a Series so designated in the Series Ordinance for such Bonds. "Series" shall mean the Bonds delivered at any one time under the provisions of Section 208 or 209 of the Indenture. "Series 1990 Bonds" shall mean the Bonds issued pursuant to Section 208 of the Indenture for the purpose of paying, with any other available funds, the Cost of the Improvements. -33- "Series Ordinance" means the ordinance of the Board that is required Indenture to be passed prior to the issuance of any Series of Bonds under the ladeajph and, with particular reference to the Series 1990 Bonds, means Ordinance No. P ' Passed. b; the adetermine the details of 9tlse Bonds of e such Series, includingcaamon Series' shat ( )g other things a6i maximum principal amount of such Series, the date thereof, the method of payment of toter' thereon, the maximum maturity thereof, the redemption provisions relating thereto, feel ts' Amortization Requirements for the Term Bonds, if any, of such Series, and the Bond Regg�rei therefor, (b) identify the purpose to be effected with the proceeds of such Series, (c) provide for the application of the proceeds of the Bonds to which such Series Ordinance relates, and id if permitted pursuant to Section 502 of the Indenture, create a separate sinking fund far such Series and determine the method of funding of the sinking fund for such Series and such other matters as the Board shall determine. "Sinking Fund" shall mean the City of Fayetteville Sales and Use Tax Capital ImproYerndo, Bonds Interest and Sinking Fund, a special fund created and designated by Section 501 of the Indenture. means Standard & Poor's Corporation, a corporation organized and existin p P g g under the laws of the State of New York, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency "S&P" shall be deemed to refer to any other nationally recognized securities ratingagency. designated by the City. "Special Record Date" shall mean a date fixed by the Trustee for the payment of Defaulted Interest pursuant to the Indenture. "State" shall mean the State of Arkansas. "State Treasurer" shall mean the State Treasurer of the State of Arkansas or the officer' succeeding to the functions of the State Treasurer referred to in the Indenture. "Subordinated Indebtedness" shall mean bonds or notes, the payment of the principal of or'. interest or any redemption premium on which are payable from Sales and Use Tax Revenues' which may from time to time be made available therefor by the City after the City makes the deposits required by Section 502 of the Indenture and which is designated as Subordinated' Indebtedness by the Board in an ordinance authorizing the issuance of such Subordinated Indebtedness. "Trustee" shall mean the Trustee serving as such under the Indenture, whether original or successor. "Variable Rate Bonds" shall mean any Bonds issued under the Indenture the interest rate on which is not established at the time of issuance at a single numerical rate. "Underwriter" shall mean Llama Company. -34- th thet I1 Bo f Y` Ser that pry tea. -of fu } Is ` meas't)Banda oo wided, hereto taancetHdi <' SUMMARY OF PORTIONS OF TIIE INDENTURE wes, iucludi ' each Se'U.IE ereof, the ng' amoaha The Bonds will be issued pursuant to the Indenture. The following is a summary of certain Provisionsm shod of9�+Ii ah prov'Sosubject hinlalerespects Ttosthe nspec fictermstandrprovisions ofnthe eIndentu e, to definitive which of such' Sa . ag th, lZ 'and the proceedshe; aod'tit `reference is hereby made and copies of which are available from the City and the ersuch Senes �rthh� 'Underwriter. M.y kin ate a'. separate alaatery3 lStahllshment of Funds I r'i king fuad for such SeIfi n4 td The Indenture establishes the following funds and accounts: daes andand Use Tat Ca' (a) Sinking Fund, and a Bond Service Account, Redemption Account and Reserve designated h' Ptd Account therein; and y t (b) Construction Fund. oration organj5ed issigns and and 11g, Sinking Fund. The Sinking Fund is established with the Trustee with respect to the Series functions of tf such to a sec covenants 1990 Bonds or any Series of Refunding Bonds issued pursuant to the Indenture. The City sh h the 1iY recognized secoridq� ssuanceof anytSerties oftTrustee, Refunding Bonds, ant to aseparate the etproviding the sinkingfundto provide for payment of the principal of and redemption premium, if any, and interest on such Series of Bonds and to to Trustee for the provide a reserve for such payment or to provide within the accounts in the Sinking Fund luymin1 separate subaccounts as required by the terms of such Bonds. If any separate sinking funds or separate subaccounts within the accounts in the Sinking Fund are created pursuant to this paragraph, such sinking funds or separate subaccounts shall be funded in the manner and at the times required by the respective Series Ordinance, shall be held by the Trustee separate and apart from the sinking funds with respect to any other Series of Bonds issued under the the State of Ariaattta Indenture, and shall be held solely for the benefit and security of the Series of Bonds with d to in the lndentare, U, respect to which such separate sinking fund or separate subaccounts were created. Each such separate sinking fund or separate subaccounts with respect to a Series shall be designated es, the payment of the 'Series Sinking Fund' or "Series Subaccount," as the case may be (inserting an ble from Sales and u0 P�' identifying Series year and, if more than one Series is to be issued in a single calendar year, an tr by the City after heCn identifying Series letter). which is designated ul', ig the issuance of sud The moneys in each of the accounts in the Sinking Fund shall be held in trust and applied as hereinafter provided with regard to each such account and, pending such application, shall be U. subject to a lien and charge in favor of the Owners of the Bonds issued and Outstanding under der the Indenture, whtthe the Indenture and for the further security of such Owners until paid out or transferred as provided in the Indenture. The City shall cause the Sales and Use Tax Revenues, less any applicable charges and order the Indenture the attd retainages, to be deposited with the Trustee. numerical rate. UU The Trustee shall, on the last business day of each month, beginning October 31, 1990, withdraw from the Sales and Use Tax Revenues deposited with the Trustee an amount sufficient to make the deposits to the credit of the following accounts in the following order and in the following amounts: } (a) To the credit of the Bond Service Account, an amount equal to one -sixth (1/6th) of the amount of interest payable on the Bonds of each Series on the next succeeding Interest Payment Date and an amount equal to one -twelfth (1/12th) of the next maturing installment of principal on all Serial Bonds then Outstanding less any amounts received and on deposit to the credit of the Bond Service Account, including (i) amounts received as .35 try, 1 };i I ,: t,v.. } accrued interest and (ii) certain amounts transferred from the Construction F. i;, subject to certain adjustments; and and (b) To the credit of the Redemption Account, an amount equal to one -twelfth of the principal amount of Term Bonds of each Series then Outstanding required'to (1/12th ) retired, in satisfaction of the Amortization Requirements, if any, for such Bond yea, be r the premiums, if any, on such principal amount of Term Bonds which would be ploi Payable if such principal amount of Term Bonds were to be redeemed in such Bond Year from mooe, held for the credit of the Redemption Account less any amounts received and on deposit to the credit of the Redemption Account; and (c) To the credit of the Reserve Account, an amount equal to the Reserve Account Deposit Requirement for each Series of Bonds. If the amount deposited to the credit of any of the accounts in the Sinking Fund shall be less than the amount required to be deposited under the foregoing provisions, the requirement' therefor shall nevertheless be cumulative and the amount of any deficiency shall be added to the amount otherwise required to be deposited thereafter until such time as all such deficiencies have been made up. Such amounts of the Sales and Use Tax Revenues as shall be sufficient to make the deposits to the credit of the accounts as prescribed in clauses (a) through (c) above are pledged by Indenture for the purpose of making such deposits so long as any of the Bonds are Outstanding. Any Sales and Use Tax Revenues in excess of amounts required to be deposited by clauses (a) through (c), inclusive, above shall be transferred by the Trustee within one business day of the last business day of each month to one or more Depositories selected by the City and may be used by the City for any purpose provided in the Sales and Use Tax Ordinance. Bond Service Account. The Trustee shall on the business day immediately preceding each Interest Payment Date withdraw from the Bond Service Account and deposit in trust with the Bond Registrar an amount sufficient to enable the Bond Registrar to remit by mail to the Owners of Bonds the amounts required for paying the interest on the Bonds as such interest becomes due and payable. The Bond Registrar shall be permitted to transfer by wire to Owners of at least $1,000,000 principal amount of the Bonds the amounts required for paying the interest on such Bonds as such interest becomes due and payable as may be determined in the respective Series Ordinance. The Trustee shall on the business day immediately preceding a date on which principal is due on Serial Bonds withdraw from the Bond Service Account and deposit in trust with the Bond Registrar the amounts required for paying the principal of all Serial Bonds as such principal becomes due and payable. Redemption Account. Moneys held for the credit of the Redemption Account shall be applied to the retirement of the Bonds issued under the provisions of the Indenture as follows: (a) Subject to the provisions of paragraph (c) below, the Trustee shall endeavor to purchase any Bonds secured by the Indenture and then Outstanding, whether or not such Bonds shall then be subject to redemption, on the most advantageous terms obtainable with reasonable diligence, such price not to exceed the principal of such Bonds plus the amount of the redemption premium, if any, which might on the next redemption date be paid to the Owners of such Bonds under the provisions of the Indenture and the respective Series Ordinance if such Bonds should be called for redemption on such date from moneys in the Sinking Fund. The Trustee shall pay the interest accrued on such Bonds to date of settlement therefor from the Bond Service Account and the purchase price from the__ 36 greg fthis ;Ord al Bonds, of cable) to th [to ferred a 1 ri,1� CG daYiif ibe°Cei^fig ti i l l e7F t, a° amount ' , rmu Redemption Account, but no such purchase shall be made by the Trustee within the e � Series e9ua1 °ter the �o period of forty five (45) days next preceding any interest payment date on which p for ° put eme°is, Bonds are subject to call redemption under the provisions of the Indenture and the , s7 s if k' a°Y fot of Term such respective Series Ordinance, except from moneys other than moneys set aside or deposited arovT ° each B redeemed onds W�t)tyd al for the redemption of Bonds. )rdiPa. ss a°Y amountse'SUhBoglt ei (b) Subject to the provisions of the Indenture and paragraph (c) below, the Trustee date Bonds U xhaUst 4 may call for redemption on each on which are subject to redemption as provided such �� ,, in the respective Series Ordinances such amount of such Bonds as, with the redemption Ilars . an amount equal premium if any, will exhaust the moneys which will be held for the credit of the p i! U tim. Redemption Account on such date as nearly as may be; provided, however, that not less sifor' U UUU than Fifty Thousand Dollars ($50,000) principal amount of Bonds shall be called for each he accounts E redemption at any one time unless a lesser amount shall be required to satisfy the unt.:a the foregoin to the Slob Amortization Requirements for any Bond Year. The Trustee shall during the period of five ed for IIT of an f pto"ious y deficiency (5) business days prior to each redemption date withdraw from the Bond Service Account in the Bond Registrar the celled t until such ?Alie and the Redemption Account and set aside separate accounts with l..,y,flj$ time as m respective amounts required for paying the interest on, and the principal and redemption of, the Bonds so called for redemption. y the UU premium t Bop' as shall be suffideat (c) Moneys held by the Trustee in the Redemption Account shall be applied by ng oUU rd (a) through (c) n iti the Trustee during each Bond Year to the retirement of Bonds of each Series then is so 10119 as any �f outstanding in the following order: )' rID B. for; Fir : the Term Bonds of each such Series to the extent of the Amortization d any punts required Requirement, if any, for such Bond Year for such Term Bonds, plus the applicable Term; to be y the Trustee I: premium, if any, and any deficiency in any preceding Bond Years in the purchase or if sucli'B withinPOtt5 epositoo riesselect redemption of such Term Bonds under the provisions of this subdivision and, the in Requir edh 145 lea and Use Tax y , Ordinaut.. amount available in such Bond Year shall not be sufficient therefor, then proportion to the Amortization Requirements, if any, for such Bond Year for the Term Bonds of i`Outs each such Series then Outstanding, plus the applicable premium, if any, and any such business da y immed'°tdy deficiency; e Account and deposit rm B and Registrar to remit Second: the Term Bonds of each Series, if any, in proportion (as nearly as aggreg e interest on the Bondsun' �' practicable) to the aggregate principal amount of the Bonds of each such Series permitted to transfer b y� �. originally issued; and he reti s the amounts required fu nd payable as may be d P YttGxx'. Third: after the retirement of all Term Bonds, if any, Serial Bonds issued under is; Ord usiness day immediate) ( YP; the provisions of this Ordinance in the inverse order of their maturities and, to the date, in (as nds.of m the Bond ServiceAaatg extent that Serial Bonds of different Series mature on the same proportion of Bonds of each Series maturing on such I to thr d for paying the priadpdd nearly as practicable) to the principal amount date. Upon the retirement of any Bonds by purchase or redemption the Trustee shall file with the Ui oy Boa t of the Redemption , City Clerk a statement briefly describing such Bonds and setting forth the date of their purchase descri ttrt provisions of the Indentaree or redemption, the amount of the purchase price or the redemption price of such Bonds and the the p on ) below, [he Trustee shs01 amount paid as interest thereon. The expenses in connection with the purchase or redemption Use Taxes as provided in the Indenture. :T om Sal then Outstanding, whaWI of any Bonds shall be paid from Sales and most advantageous terms Reserve Account. Moneys held for the credit of the Reserve Account shall be used for the the Bonds and to provide funds for the held, rincipal of such Boxpl ttonr the next redemptiondauh .. purpose of paying the interest on and the principal of retirement of 'term Bonds to the extent of the Amortization Requirements therefor whenever the Bond Service Account shall be othe,i money he Indenture and the date fraon' and to the extent that the moneys held for the credit of insufficient for such purpose. If at any time the moneys held for the credit of the Reserve Ifai ption on such t accrued on such P. U U nt and the purchase Account shall exceed the Reserve Account Requirement, such excess shall be . transferred to the Construction Fund during the period prior to the completion of the Improvements or to the Bond Service Account or the Redemption Account at the option of the City; provided,', however, that the City may provide for a different disposition of any such excess in the Series Ordinance providing for the issuance of any Series of Bonds. In the event that all or a portion of the Reserve Account Requirement for any Series shall' be provided by a Credit Facility, the Trustee shall do all things necessary to receive in a Ihmely' fashion from the Credit Facility Provider amounts required to be expended as provided n the. preceding paragraph. Construction Fund. The Construction Fund shall be held by the Trustee and applied in accordance with requisitions from the City to the payment of the Cost of the Improvements, and pending such application, shall be subject to a lien and charge in favor of the Owners of the Series of Bonds issued under the Indenture the proceeds of which were deposited to the credit of the Construction Fund. When the work constituting the Improvements shall have been completed, the balance in the' Construction Fund not reserved by the City for the payment of any remaining part of the Cost of the Improvements shall be transferred, in the discretion of the City, to the credit of the Sinking Fund for the payment of principal of and interest on the Series 1990 Bonds or retained in the Construction Fund and used to pay the cost of a different improvement or improvements within the meaning of the Act which have been approved by the City. Investnsents Investment of Moneys. Moneys hold for the credit of all funds, accounts and subaccounts established in the Indenture or a Series Ordinance shall, as nearly as may be practicable, be continuously invested and reinvested by the Trustee in Investment Obligations which shall mature, or shall be subject to redemption by the holder thereof at the option of such holder, not later than the respective dates when moneys held for the credit of such funds, accounts and subaccounts will be required for the purposes intended; provided however, that amounts on deposit in the Reserve Account shall be invested in Investment Obligations which mature not later than the final maturity date of Bonds Outstanding under the Indenture and, so long as Capital Guaranty is a Credit Facility Provider, at least one-half (1/2) of the amounts on deposit in the Reserve Account shall be invested in Investment Obligations with maturities of less than six (6) months and the remainder of such amounts shall be invested in Investment Obligations with maturities of not more than five (5) years, unless otherwise approved in writing by Capital Guaranty. Investment Obligations so purchased as an investment of moneys in any such fund or account shall be deemed at all times to be part of such fund, account or subaccount. The interest accruing thereon and any profit realized front such investment shall be credited to such fund or account and any loss resulting from such investment shall be charged to such fund, account or subaccount. The Trustee or the City, as the case may be, shall sell or present for payment or redemption any Investment Obligations so acquired whenever it shall be necessary so to do in order Cu provide moneys to meet any payment from any such fund or account. Neither the Trustee nor any agent thereof shall be liable or responsible for any loss resulting from any investment. Investment Obligations may be purchased by the Trustee through its own investment division or other bank facilities established for such purpose. -38 ,d ITr ! II t e.snch excess nt at b°Polin Isihon of any lh , , d� o (rn,estnrent Obligations. In computing the amount in any fund, account subaccount, f g obli ations purchased as an investment of moneys therein shall be valued ! . I^ sticb , face value if such obligations mature within six (6) months from the date of valuation Re r �• at suchtr ate of e than six (6) hs:ount and (b) Bf eel metlttorL iation thereof rice whlichtssuch obligations are redeemablmbyttheafter holdereaths optionfso at fle or price lesser tel to n :d to be ty � thereof, not so redeemable, at the of (i) the cost of such obligations plus the the discount ei rkotl " Pearl rmorti�abt°° °f any premium or minus amortization of any thereon and (ii) market ed b , I pt a of such obligations, provided that, so long as Capital Guaranty is a Credit Facility be J ; held , value valued at their market value. Valuation on any particular date provider, such obligations will then earned or of interest atsuch on any moneys or the Trustee'" of the the amounts shall iacludeinsuchfund, account orsubaccount. Thecomputaion of the te deposit Cost Cost of the ' iovestmeets on funds, or subaccounts the investments -liar 11. $e sn favor of mp accounts and valuation of the of or credited to the Trustee later of which were tD ., ,n not than the ninetieth (90th) day after the amounts shall be performed by the de pot 0 such list day of each Fiscal Year as of the last day of such Fiscal Year, and such computation and , •valuation shall not be required to be performed at other times, provided that, so long as Capital ;; ` ve beescomple1ed Guaranty is a Credit Facility Provider, such computation and valuation shall be performed on a Trustee deliver eat of any the" uarterly basis by the Trustee, and the shall promptly copies of such quarterly ion the iemainiog" i of Cst W�Idh. ` q computations and valuations to Capital Guaranty. comp Mh' on the Series 199og, l t improvement Security for Deposits. All moneys deposited with the Trustee under the provisions of the Series iI y the Iy City. at. ` Indenture to the credit of a fund, account or subaccount established by the Indenture or a in the t' Ordinance shall be held in trust, shall be applied only accordance with the provisions of Indenture or the respective Series Ordinance and shall not be subject to lien or attachment by �! any creditor of the City or the Trustee. all funds, accounts AG ' Al) moneys deposited with the Trustee in excess of the amount guaranteed by the Federal as nearly as may be Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation or other Owners the Investment Obligatioes federal agency shall be continuously secured for the benefit of the City and the of federal laws hereof at the option of iul • >. ie credit of ? Bonds in such manner as may then be required or permitted by applicable State or regulations regarding the security for, or granting a preference in the case of, the deposit of such fund;' provided however or trust funds; provided, however, that it shall not be necessary for the Trustee to give security tment Obligations whirl for the deposits of any moneys with it for the payment of the principal of or the redemption interest on any Bonds issued hereunder, or for the Trustee to give security for under the Indentureand,b half (1/2) of the emdtui premium or the any moneys which shall be represented by obligations purchased as an investment. digations with mamsitiesolh invested in Investmeuf, rwise approved in writingh Certain Covenants t ' • ' Payment of Principal, Interest and Premium. The City covenants that it will promptly pay or cause to be paid the principal of and the interest on each and every Bond and all other t of moneys in any saeltd : indebtedness issued or incurred under the provisions of the Indenture at the places, on the dates fund, account or subinsr and in the manner specified therein and in the Bonds and such indebtedness and any premium purchase indebtedness by or redemption, investment shall be aedmdt lent shall be charged to id required for the retirement of the Bonds and such according to the true intent and meaning thereof. Such principal, interest and premium will be payable solely from the Sales and Use Tax Revenues and the Sales and Use Tax Revenues are interest and on the Bonds and such for or pledged to the payment of such principal of and premium other indebtedness secured on a parity with the Bonds as to the pledge of Sales and Use Tax present payment [be necessary so to don , Revenues and then to such other indebtedness not so secured in the manner and to the extent br account. Neither the! particularly specified in the Indenture. suiting from any invatn ' The City is not obligated to pay the principal of and interest and any premium on the Tax Revenues hrough its own snvestad _' Bonds and such other indebtedness except from the Sales and Use pledged n .39 ti • ofder the Indenture, and suchprinc pal, interest lt e faith and premium. creditThe f the City issuance or arc incurrence pledgedth of the payment • such other indebtedness shall not directly or indirectly or contingently obligate the City[, sail or to pledge any taxes whatsoever or to make any appropriation for the payment of levy'; principal, interest and premium except as provided in the Indenture with respect to Sales • Use Tax Revenues. Consrcgjon f e City that for whichttBondsoor/otherrt indetbtedness shall be issued sunder it provisionst ofIndentsmeots • P the Indenture,[ for which moneys repayable from the proceeds of Bonds or other indebtedness issued under the" provisions of the indenture shall have been advanced to the City, in accordance with plans and e as further specifications covenantsrethat anyy and by any person any Improvements shall provide for such performance and payment bonds or security in lies g a ttbereof and for such retainages as shall be in compliance with the laws of the State and the normally established practices of the City from time to time in effect. Covenant Against F_rrcuotbrances. The City covenants that, from available funds, it wi0 pyy all municipal or governmental charges lawfully levied or assessed upon the Improvements part thereof or upon any Sales and Use Tax Revenues pledged under the Indenture or any same shall become due, the payments of which are the responsibility of the City, when the will nor create or suffer to be created any lien or charge upon the Sales and Use Sales a dthaUse Tax Revenues pledged under the Indenture ranking equally with or prior to the Bonds or any other indebtedness secured on a parity with the Bonds as to the pledge of Sales and Use Tax Revenues. The City further covenants that, from available funds, it will pay or cause to be discharged, within sixty (60) days after the same shall accrue, all lawful claims and demands for j labor, materials or supplies or other objects which, if unpaid, might by law become a lien upon the Sales and Use Tax Revenues pledged under the Indenture; provided, however, that nothing contained in this covenant shall require the City to pay or cause to be discharged, or make provision for, any such lien or charge so long as the validity thereof shall be contested in good faith and by appropriate legal proceedings. Enplgrnrenr of Accountant. The City covenants and agrees that it will for the purpose of performing and carrying out the duties imposed on the Accountant by the Indenture employ an independent certified public accountant or firm of independent certified public accountants of suitable experience and responsibility. .4runial Budge,. The City covenants that on or before the second day of February of each Fiscal Year it will finally adopt the budget for such Fiscal Year (herein sometimes called the -Annual Budget"). Copies of the Annual Budget shall be filed with the Trustee and mailed by the City to Capital Guaranty and all Owners who shall have filed their names and addresses with the City Clerk for such purpose. If for any reason the City shall not have adopted the Annual budget before the second day of February of any Fiscal Year, the Annual Budget for the preceding Fiscal Year shall, until the adoption of the Annual Budget, be deemed to be in force and shall be treated as the Annual Budget. The City may at any time adopt an amended or supplemental Annual Budget for the remainder of the then current Fiscal Year, and the Annual Budget so amended or supplemented shall be treated as the Annual Budget. There shall be no limitation on the nature or amount covered by any such amendment to the Annual Budget. -40- i try t r, lncurrenc g d foT. gently ofi th�i6a pse o/ Sales and Use Tax Revenues. The City covenants and agrees that, so long as under the Identure " 4 ab�.'• tdo •gate har n far the theCr�:,"q fare - 'of the ponds secured or any other indebtedness incurred pursuant nay Indenture and secured on a parity with the Bonds as to the pledge of Sales and Use Tax akKc with"''respayrnenlob rortaues shall be outstanding, nose of the Sales and Use Tax Revenues pledged will be used pect fo p, , Rp as purpose other than as provided in the Indenture and no contract or contracts will be for yaction taken by which the rights of Owners of the Bonds might be impaired into or any g g ill coast. vta act tha a+'p entered p diminished. Provisions of tha indebte fa t°t dregs ar Records, Accounts and Audits. The City covenants that it will keep the funds and accounts -nand° •n actor edt°g is re dance art .1ttd pursuant to the Indenture separate from all other funds and accounts of the City or any created P dopartmunts, and that it will keep accurate records and accounts Sales quired.by lawhpld ork constituting "nf of its of and Use Tax Revenues received by the City and the application of such Sales and Use Tax Revenues. Such be open to the inspection �+ nds or secant tf records and accounts shall of the Trustee, the Owners, and their of the State and Iau agents and representatives. 11 the The City further covenants that within six (6) months after the close of each Fiscal Year, it m available mill cause an audit to be made of its books and accounts pertaining to the City by the POn I a make Accountant oks and records Rataiingttote funds, pfunemeoli nderthe u the Ind° a� accounts andsubaccountstestablishedtheall Trustee and all Sales and p �II ture p ility of the City, Use Tax Revenues received by the Trustee. Within a reasonable time thereafter reports of each with the audha.Q Sales and Use$slu»t such such itCapital r prior to addreport . Guarantyand any Owner who shall have filed hisnameandress withshall the the Bondsosh pledge Sales City Clerk for such purpose. Such audit reports shall be open to the inspection of all interested of and Use o caoseph persons. wful claims and t f law denu itit Y become The City further covenants that it will cause any additional reports or audits relating to the by law by a lito ,vided, however, that e to be discharged, City to be made as required or any applicable rules or regulations of any governmental authority or of any securities exchange on which the Bonds may be listed or The cost of such audits shall be treated as a the ttirh traded. part of cost of operation. of shall be contested Sales and Use Tax Revenues. The City covenants that it will take all actions permitted by law to continue to receive the Sales and Use Tax Revenues in the greatest t iI will for the porposd amount possible. Except to the extent required by law, the City will not take any action the by the Indenture emphla result of which could be a reduction or diminution of the Sales and Use Tax Revenues below tified public accounuaad the level which would have been received but for such action. Sale of Impros'emenrs. Nothing in the Indenture shall be construed to prohibit the City ad day of Februaryofad from selling, leasing or otherwise disposing of the Improvements financed with proceeds of the herein sometimes calldtk Bonds; provided, however, that prior to the sale, lease or other disposition of any Improvement a the Trustee and maltdh there shall be filed with the Trustee an opinion of Bond Counsel to the effect that such sale, their names and addma lease or other disposition will not cause interest on the Bonds to be included in the gross income of the Owners thereof for federal income taxation purposes. r.: dget before the second dfr Fiscal Year shall, uoold Defaults end Remedies I be treated as the And Each of the following events is an "Event of Default": r, al Annual Budget forde (a) payment of the principal of and the redemption premium, if any, on any of or supplemutd the Bonds shall not be made when the same shall become due and payable, either at amended on the nature or aaod the maturity or by proceedings for redemption or otherwise; or -41- Ir r I of any interest on any of the Bonds made(w)henatheent same shall becomedueinstallment andf payable; or shall 6e pot p (c) the City shall for any reason be rendered incapable of fulfills hereunder; or ng its obligatipa�` (d) the City admits in writing its inability to pay its debts generally III due, or files a petition in bankruptcy or makes an assignment for the benefit of�hey edi 1-, or consents to the appointment of a receiver or trustee for itself or a receiveits Qditpk? such purpose is appointed without the consent of the City; or tryst. a;, (e) the City is adjudged insolvent by a court of competent jurisdiction d ha it' or adjudged a bankrupt on a petition in bankruptcy filed against the City, judgment or decree be entered by any court of competent a° order': jurisdiction appointio the consent of the City, a receiver or trustee of the City or of the whole g' o property and any of the aforesaid nS adjudications, orders, judgments or decreesor Part of vacated or set aside or stayed within ninety (90) days from the date of entry not be, b5 Y thereof; or (f) City the shall file a petition or answer seeking reorganization or kl any arras under the federal bankruptcy laws or any other applicable law or statute of the Bement States of America or any state thereof; or United (g) under the provisions of any other law for the relief or aid of debtors, any of competent jurisdiction shall assume custody court or control of the City or of the whole or any substantial part of its property, and such custody or control shall not be t j terminated within ninety (90) days from the date of assumption of such custody or control; or (b) the City shall default in the due and punctual performance of covenants, any other of the conditions, agreements and provisions contained in the Bonds or in the Indenture or any Series Ordinance on the part of the City to be performed and such default shall continue for thirty (30) days after written notice specifying such default and requiring the same to be remedied shall have been given to the City by the Trustee, which may give notice in its discretion and shall give such notice at the written request of the Owners of not less than ten percent (10%) in aggregate principal amount of the Bonds then Outstanding; provided, however, if the default specified in this clause (h) shall be of a type which cannot be remedied within thirty (30) days, it shall not constitute an event of default if the City shall begin to remedy such default within such period of thin s. Y( 30 ) day Acceleration of Maturities. Upon the happening and continuance of any Event of Default specified in clauses (a) through (h) above, Trustee then and in every such case the may, and upon the written request of the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall, by a notice in writing to the City, declare the principal of all of the Bonds then Outstanding (if not then due and payable) to be due and payable immediately, and upon such declaration the same shall become and be immediately immediately due and lydu payable, anything contained in the Bonds or in the Indenture to the Contrarynotwithstanding; provided, however, that if at any time shall have been after the principal of the Bonds so declared to be due and payable, and before the entry of final judgment of decree in any suit, action or proceeding instituted on account of such default, or before the '. completion of the enforcement of any other remedy under the Indenture, moneys shall have accumulated in the Sinking Fund sufficient to pay the principal of all matured Bonds and all arrears of interest, if any, upon all Bonds then Outstanding (except the principal of any Bonds ru't's Ftri_ If the C tiom aid; °the Onmsom2Esec L i 3 42- "`aPable of f; f� I 'to pay its debt e f m assignment for styr ener� the City. for itself ' ' °tfq R or ar tpourt of contpeteol''. r competent om filed agarnstte°fls the Citent lunsdictioo"ist ordersy or of the;wh ,ol lays rsudgments:ar:d,or the date of end seeking r applicable law or r lawor4.01 for the relief or aid of,d control of the City or ofd or control shall not he'.. uch custody or control; or punctual performance e(`y contained in the Brinds or'a y to be performed and nil specifying such defaoh nI the City by the Trustee, a at the written request of l principal amount of de' cified in this clause (h) tl] it shall not constitute Tom in such period of thir•,y(k g and continuance of u UZVfe, then and in every a Owners of not less thu ing shall, by a notice at standing (if not then dstt laration the same shall bc the Bonds or in the loft ny time after the princi i _ d before the entry of fid, account of such defaah,;i ws .a under the Indenture, ensj principal of all maturedk ing (except the priocipild then due except by virtue of such declaration and the interest accrued on such Bonds e the last Interest Payment Date), and the charges, compensation, expenses, rursements, advances and liabilities of the Trustee and all other amounts then payable by the f hereunder shall have been paid or a sum sufficient to pay the same shall have been osited with the Trustee, and every other default known to the Trustee in the observance or formance of any covenant, condition, agreement or provision contained in the Bonds or in Indenture (other than a default in the payment of the principal of such Bonds then due only ause of a declaration under this covenant) shall have been remedied to the satisfaction of the stee, then and in every such case the Trustee may, and upon the written request of the ners of not less than a majority in aggregate principal amount of the Bonds not then due apt by virtue of such declaration and then Outstanding shall, by written notice to the City, ;ind and annul such declaration and its consequences, but no such recission or annulment I extend to or affect any subsequent default or impair any right consequent thereon. Enforcement of Remedies. Upon the happening and continuance of any Event of Default, t and in every such case the Trustee may proceed, and upon the written request of the ners of not less than ten percent (10%) in aggregate principal amount of the Bonds then standing under the Indenture shall proceed, subject to the provisions of the Indenture, to leer and enforce the rights of the Owners under State law or under the Indenture by such s, actions or special proceedings in equity or at law, either for the specific performance of covenant or agreement contained in the Indenture or in aid or execution of any power tted or for the enforcement of any proper legal or equitable remedy, as the Trustee, being ised by counsel, shall deem most effectual to protect and enforce such rights. Subrogation. Notwithstanding any other provision of the Indenture, in the event that the tcipal and redemption price, if applicable, and interest due on the Series 1990 Bonds shall be I by Capital Guaranty pursuant to the Financial Guaranty Bond, the assignment and pledge the trust estate under the Indenture and all covenants, agreements and other obligations of City to the Owners of such Series 1990 Bonds shall continue to exist and Capital Guaranty I be subrogated to the rights of such Owners. the Trustee Removal of Trustee. The Trustee may be removed at any time by an instrument or current instruments in writing, (i) executed by the Owners of not less than a majority in regate principal amount of Bonds then Outstanding and filed with the City, provided, ;ever, that a photostatic copy of each such instrument shall be delivered promptly by the to the Trustee. The Trustee may also be removed at any time for any breach of trust or acting or proceeding in violation of, or for failing to act or proceed in accordance with, any vision of the Indenture with respect to the duties and obligations of the Trustee, by any rt of competent jurisdiction, upon the application of the City or the Owners of not less than percent (5%) in aggregate principal amount of the Bonds then Outstanding, or by Capital tranty at its request. Payment of Trustee's Fees. If the City fails to cause required payments to be made to the stee for compensation and expenses, the Trustee may make such payment from any moneys its possession under the provisions of the Indenture and shall be entitled to a preference refor over any of the Outstanding Bonds. 43 Supplemental Indentures f Supplemental Indentures wit/rr irIndentures: and the Trustee may, frorn '' ttr to time ndtanytime,enteriinosupplemental lie ambiguity or l defect or n or to t�ii I inconsistent provisions inbthe Indenturema or in any Seriesio Ordinance oorrrect au1 • f supplemental indenture, or (b) grant to or nfer n the stee for the benefit of the Owners ooru anj additionaltri his, remedies, powers, security that lawfully be g authority may granted to conferred upon the Owners or the Trustee, orof (c) to add to the conditions, limitations and restrictions on the issuance of Bondi under the provisions of the Indenture other conditions, limitations and restriction, thereafter to be observed, or (d) to add to the covenants and agreements of the City in the Indenture or in any Series Ordinance other covenants and agreements thereafter to be observed by the City or to surrender any right or power in the Indenture or in any Series Ordinance reserved to or conferred upon the City, or (e) to permit the issuance of Bonds in coupon form, if as a condition precedent to the adoption of such supplemental resolution, there shall be delivered to the City an opinion of Bond Counsel to the effect that the issuance of Bonds in coupon or bearer form is then permitted by law to be issued and that the interest on such Bonds would not be included is the gross income of the Owners thereof for purposes of federal income taxation, or (f) to permit the City to issue Bonds the interest on which would not be included in the gross income of the Owners thereof for purposes of federal income taxation, or (g) to quality the Bonds or any of them for registration under the Securities Act of. 1933, as amended, or the Securities Exchange Act of 1934, as amended, or (h) to qualify the Indenture as an "indenture" under the Trust Indenture Act of 1939,1 as amended, or (i) to create additional sinking funds for any Series of Bonds as permitted by the Indenture, or (j) to permit Bonds to be issued in denominations smaller than $5,000, or (k) to permit Bonds to be issued in book -entry form without certificated Bonds, or (1) which, in the opinion of Bond Counsel, do not adversely affect the rights or security of the Owners. At least thirty (30) days prior to the passage of any supplemental indenture for anyj of the purposes other than the purposes set forth in clauses (f), (g), (h), (i), (j) and;? (k), the Trustee shall cause a notice the of proposed passage of such supplemental indenture to be mailed by first-class mail, postage prepaid, to all Owners at their addresses as they appear on the registration books. Such notice shall briefly set forth the nature of the proposed -44- ect 0r Ur4is t any,• eries: for the beue rety that may l restrictions oa f the City to the lade =after to be observed' any Series Ordioac, arm, if as a condit• ion be delivered to the Ch ids in coupon. or be such Bonds would not f federal income taxatu st on which would not federal income tatatio ;istration under the See X34, as amended, or der the Trust Indeetui aeries of Bonds as Pt smaller than $5,000,e m without certificated not adversely affect ay supplemental fades clauses (f), (g), (h), e of such supplements at their addresses as d rrth the nature of; t so plemental indenture and shall state that copies thereof are on file at the office of the Trustee for inspection by all Owners. A failure by the Trustee to mail the required notice shall not affect the validity of such supplemental indenture. gttpplerneutal indentures svfrh Owners' Consent. Subject to the terms and provisions contained in this Section, and not otherwise, the Owners of not less than two-thirds (2/3) in aggfegate principal amount of the Bonds then Outstanding shall have the right, from time to time, anything contained in the Indenture to the contrary notwithstanding, to consent to and approve the execution by the City and the Trustee of such indenture or indentures supplemental to the Indenture as shall be deemed necessary or desirable by the City for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Indenture or in any Series Ordinance or any supplemental indenture; provided, however, that nothing contained in the Indenture shall permit, or be construed as permitting, (a) an extension of the maturity of the principal of or the interest on any Bond issued under the Indenture or an extension of any date fixed for meeting any Amortization Requirements, or (b) a reduction in the principal amount of any Bond or the redemption premium on the rate of interest thereon, or (c) a preference or priority of any Bond or Bonds over any other Bond or Bonds, or (d) a reduction in the aggregate principal amount of the goads required for consent to such supplemental indenture. Defeasance If, (a) when the Bossds secured by the Indenture shall have become due and payable in accordance with their terms or shall have been duly called for redemption or (b) irrevocable instructions to call the Bonds for redemption or to pay the Bonds at their respective maturities or to the effect some combination of such payment and redemption shall have been given by the City to the Trustee, the whole amount of the principal and the interest and premium, if any, so due and payable upon all of the Bonds then Outstanding shall be paid or sufficient moneys, or Defeasance Obligations the principal of and the interest (which with respect to any Variable Rate Bonds shall be assumed to be the maximum interest rate permitted under the documents governing such Variable Rate Bonds) on which when due will provide sufficient moneys, shall be held by the Trustee, for such purpose under the provisions of the Indenture, and provision shall also be made for paying all other sums payable pursuant to the Indenture by the City or payable by the City under the Financial Guaranty Bond, then and in that case the right, title and interest of the Trustee in the pledged Sales and Use Tax Revenues, funds, accounts and subaccounts mentioned in the Indenture shall thereupon cease, determine and become void, and the City shall have no obligation with respect to such Bonds except for the payment of the principal of, redemption premium, if any, and interest thereon solely from the moneys or Defeasance Obligations deposited pursuant to the Indenture, and the Trustee in such case, on demand of the City, shall release the Indenture and shall execute such documents to evidence such release as may be reasonably required by the City, and shall turn over to the City any surplus in any account or subaccount in the Sinking Fund and all balances remaining in any other funds, accounts or subaccounts other than moneys held for the redemption or payment of Bonds or the interest thereon for application to any lawful purpose of the City as the Board shall determine; otherwise the Indenture shall be, continue and remain in full force and effect; provided, however, that in the event Defeasance Obligations shall be deposited with and held by the Trustee or other bank, trust company or other appropriate financial institution, acting as escrow agent, as hereinabove provided, and in addition to the requirements set forth in the Indenture, the Trustee shall within thirty (30) days after such Defeasance Obligations shall have been deposited with it, cause a notice signed by the Trustee to be published once, and in a Daily Newspaper of general circulation published in the City, and in a Daily Newspaper of IN 45 J ,' . tr I 4i; general circulation or a financial journal published in the Borough g ofMarsh attars C{ .;, forth (i) the date or dates, if any, designated fl and State of New York, setting -'.for the + redemption of the Bonds or if a portion of the Outstanding Bonds are not being redeemed poor to the effect that I to their maturities or mandatory redemption dates, a statement such Bandssre Term Bonds are being redeemed in amounts and at times ll being paid at maturity and any which satisfy the Amortization Requirements therefor, (ii) a description of the.Defeasaace will Obligations so held by the Trustee or other bank, trust company or other appropriate;finant,al i (iii) that the Indenture has been released. institution, acting as escrow agent, and f All moneys and obligations held by the Trustee or other bank, trust company or other `? appropriate financial institution, acting as escrow agent, shall be held in trust and the ;- obligations when received, and said moneys, applied to principal of and interest on said the 'j due, of the principal of, and the interest and the premium, if any, on the Bonds riFitia = payment, when payable therefrom. FINANCIAL GUARANTY BOND 4i A Financial Guaranty Bond (the "Financial Guaranty Bond") will be issued by Capital Guaranty Insurance Company ("Capital Guaranty") simultaneously with the issuance and delivery of the Series 1990 Bonds which provides for the prompt payment of principal of and interest on the Series 1990 Bonds when Due for Payment (as defined below and in the Financial Guaranty Bond) to the extent that the Trustee has not received sufficient funds from the City or other obligor (other than Capital Guaranty) responsible for payment of the Series 1990 Bonds. 'Due for Payment" means, when referring to principal of the Series 1990 Bonds, the stated maturity date thereof or the date on which the principal becomes due for mandatory redemption and does not refer to any earlier date on which payment of principal is due by reason of any other call for redemption, acceleration or other advancement of maturity. The term "Due for Payment' means, when referring to interest, the stated date for payment of interest. To the extent the maturity of the Series 1990 Bonds may be accelerated upon a default, such I,-pz jorbusiness condsnoaacceleration may not occur without the prior written consent of Capital Guaranty.Notwithstanding any such acceleration, Capital Guaranty may continue to pay principal and Ver inteads toof interest on scheduled payment dates (i.e., when "Due for Payment"). In the event that Capital Ses forth on the;.i Guaranty shall make any payment of principal of or interest on the Series 1990 Bonds pursuant cban a without any,.re to the terms of the Financial Guaranty Bond, and the maturity of the Series 1990 Bonds is ipn vith:';dealers" and oihi thereafter accelerated, Capital Guaranty may (but is not obligated to), at any time and at its ' Underwriter may of sole option, pay Owners of the Series 1990 Bonds all or a portion of amounts due on such Series Series 1990 Bonds into 1990 Bonds prior to the stated maturity dates thereof. For specific information on the coverage provided, reference should be made to the text of i Cg hu agreed to inde. the Financial Guaranty Bond, which has been reproduced in specimen form as Exhibit A to this � •.. . Official Statement. The Financial Guaranty Bond does not insure any payment to any investor pa offering and PY 1' rrl securities lave. to compensate for any loss or limitation of any tax exemption, either past or future. The t. Financial Guaranty Bond does not insure against nonpayment of principal or interest caused by the insolvency or negligence of the Trustee. Capital Guaranty Insurance Company is a monoline stock insurance company incorporated in the State of Maryland, and is a wholly owned subsidiary of Capital Guaranty Corporation, a Fnors Corporation Maryland insurance holding company. Capital Guaranty Corporation is owned by the following xure ratings sat fort Constellation Investments, Inc., an affiliate of Baltimore Gas and Electric; Fleet/Norstar . J; .flews of such orga erseatatiors as to t< 1s t> _ -46- r. yid vt r :ara�ty x4% �4R tr re has beegt ele1PISi tther ban tl tad shall be that e4 the said madetnt,. premium, if a l,e )ND Bond") will be ously with the lent of Princi tsspf 44, elow and in the p.f.aadid :ient funds fro matul9 It of the Serfeml�eCes .- Bond e for 1990 s, the mandator th e I is due y f°demp$ ti by reason of tt 'rtY• The term Due't r h of interest be accelerated upon a dtfi' consent of Capita] Ct ay continue to pay pd meat"). In the event two on the Series 1990 Boalipe urity of the Series 1S0I ® igated to), at any time ash on of amounts due nattdi nce should be made utam ecimen form as ErhibilAt sure any payment tou;kt ion, either past or farm of principal or interenatd tsurance company aocurpaal Capital Guaranty Core ration is owned bytit f ' ias and Electric; Fl Inc.; Safeco Corporation; financial Group United States Fidelity and Guaranty Corporation, andCompany;affiliate certain membersof the Siameas A G" 1 aagemeCor oration, the investors tO of CapitalGtuarantty Corporation us their aarel onot sobligated to pay staff of Cnttta1 tment to Capital Geamaty P ;he debts of, or the claims against, Capital Guaranty Insurance Company. As of June 30, 1990, thetotat polrcyholders' surplus of Capital Guaranty Insurance Company was approximately $94.4 illion (unaudited) and total admitted assets were approximately $167.2 million (unaudited) as m fi0ond to the Insurance Department of the State of Maryland. Interested parties should refer to the financial statement attached hereto as Exhibit B for more detailed financial information on Capital Guaranty. The financial information on Capital Guaranty set forth in this caption fINANCIAL GUARANTY BOND and the attached financial statement were prepared in accordance with statutory insurance accounting principles. Neither Capital Guaranty nor its affiliates make any representation as to the contents of this Official Statement, the suitability of the Series 1990 Bonds for any investor, the feasibility or performance of any project or compliance with any securities or tax laws and regulations. Capital Guaranty's role is limited to providing the coverage set forth in the Financial Guaranty Bond. UNDERWRITING Under a Bond Purchase Agreement (the "Agreement") entered into by and between the City and Llama Company (the "Underwriter"), the Series 1990 Bonds are being purchased at a price of $__- plus accrued interest to the date of delivery for public reoffering by the Underwriter. The Agreement provides that the Underwriter will purchase all of the Series 1990 Bonds if any are purchased. The obligation of the Underwriter to accept delivery of the Series 1990 Bonds is subject to various conditions contained in the Agreement including the absence of pending or threatened litigation challenging the validity of the Series 1990 Bonds or any proceedings in connection with the issuance thereof and the absence of material adverse changes in the financial or business condition of the City. The Underwriter intends to offer the Series 1990 Bonds to the public initially at the offering prices set forth on the cover page of this Official Statement, which prices may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the Series 1990 Bonds to the public. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Series 1990 Bonds into investment trusts) at prices lower than the public offering price. The City has agreed to indemnify the Underwriter against certain civil liabilities in connection with the offering and sale of the Series 1990 Bonds, including certain liabilities under federal securities laws. RATINGS Standard & Poor's Corporation and Moody's Investors Service have given the Series 1990 Bonds the respective ratings set forth on the cover page of this Official Statement. Such ratings reflect only the views of such organizations at the time such ratings were given, and the City makes no representations as to the appropriateness of the ratings. An explanation of the _47_ �nwsaRnwsma significance of such ratings may be obtained from such rating companies. There,.. is IAli k 1 assurance that such ratings will continue for any given period of time or that °p they wdl not be revised downward or withdrawn entirely by such rating companies, if in the judgment of such rating companies circumstances so warrant. Any such downward revision or withdrawal such ratings may have an adverse effect on the market price of the Series 1990 Bonds. I� ! TAX EXEMPTION � - Federal Income Taxes In the opinion of Brown Sr. Wood, New York, New York, as Bond Counsel, based existing statutes, regulations and court decisions and assuming compliance by the City with ttk:' certain covenants and requirements of the Code regarding use, expenditure and investment of,,% Bond proceeds and the timely payment of certain investment earnings to the United States Treasury, interest on the Series 1990 Bonds is not includable in the gross income of the Owners of the Series 1990 Bonds for purposes of federal income taxation. Interest on the Series 1990 Bonds will not be treated as a preference item in calculating alternative minimum taxable income of individuals; however, interest on the Series 1990 Bonds will be included in the calculation of the alternative minimum tax and environmental tax liabilities of corporations. Ownership of tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain foreign corporations doing business in the United States, certain S corporations with excess passive income, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Series 1990 Bonds should consult their tax advisors as to applicability of any such collateral consequences. State Taxes Bond Counsel is of the opinion that, under existing law, the Series 1990 Bonds and interest thereon are exempt from all state, county and municipal taxes in the State of Arkansas. LEGAL MATTERS Legal Opinions Legal matters incident to the authorization and issuance of the Series 1990 Bonds are subject to the unqualified approving opinion of Brown & Wood, Bond Counsel, a copy of whose approving opinion will be delivered with the Bonds. Certain legal matters will be passed upon for the Underwriter by Rose Law Firm, a Professional Association. Certain legal matters will be passed upon for the City by Jerry Rose, Esq., City Attorney. -48- h rahn g, co pars°d d�whw a 1r sh (etp � � yltlgatlon of ev tho Seo4' tyro° orr rte 19 ? `. 90° There is no litigation pending seeking to restrain or enjoin the issuance or delivery of the or affecting the legality 1990 B°ads or questioning of the Series 1990 Bonds or the genes t. y sing ht°ostexecutderandhdeliver sIndentOeBortto xt t ptoceebt of the Cityand the i suetheeSeries 1990 Bonds. the rig Except as described below, there is no action, suit or proceeding known to be pending or for *rr restraining or enjoining the City in any way which could have a material adverse k, as tin B°qd Co B co u threatened, effect o° the City's financial affairs. rnPliaaco Ise, expendttur by the C� Re ource Recovery Authority Litigation. The City, the City of West Fork, Arkansas ("West "County") ant earnings to and tt % in Fork') and Washington County, Arkansas (the are members of the Northwest Arkansas "Authority") the gross iac the'0° income Resource Recovery Authority (the which was formed in 1982 to provide solid waste ! ion, of t6r disposal services. The Board of Directors of the Authority consists of nine members, seven of whom are appointed by the City. s a Preference tram t interest y,� In 1985, the Authority issued $22,400,000 of Fixed/Adjustable Rate Revenue Bonds, Series II on ibe Sent; 4 `g i°1°m tax 1985 (the "Authority Bonds") to finance the acquisition, construction and equipping of a solid 'Recovery and enyrroa4 waste resource recovery facility (the Facility") within or near the City. The in by a Waste Disposal Agreement "Waste Authority Bonds were secured, part, (the Agreement')k=, between the City, West Fork, the County and the Authority, whereby the City unconditionally collaterl a federal ' agreed to pay "tipping fees" to the Authority from City sanitation fees in amounts sufficient to _ro rn, financial ins6to6oag 'I as doing retire the Authority Bonds. In addition, payment of the Authority Bonds was guaranteed by i+ business io Financial GuarantyInsurance Corporation ("FGIC"). lli individual rueay be deemed toipltutstfhzye+ 1 a In December of 1986, the Authority Bonds were remarketed at fixed interest rates, and Itsons. Prospective construction on the Recovery Facility began in 1987. After construction began, the location for PPlicability of the Recovery Facility became controversial and on March 8, 1988, the City held a nonbinding any such referendum wherein a majority of the voters elected to cancel construction of the Recovery Facility. On March 9, 1988, the Board of Directors of the City voted to cancel the Recovery Facility. On March 11, 1988, the Board of Directors of the Authority voted to halt construction of the Recovery Facility, and on March 15, 1988, Union National Bank of Little Rock, the I. trustee for the Authority Bonds (the "Authority Bond Trustee"), notified the Authority that to Series 1990Bondsyj�, termination of construction was an event of default under the trust indenture securing the the State of Arkansas,,';! Authority Bonds. By the time the Authority Facility was cancelled, approximately $7,000,000 of Authority Bond proceeds had been expended on unrecoverable costs. On August 28, 1989, a citizen of the City sued, on behalf of himself and all others similarly situated, the City, the Authority and the Authority Bond Trustee (Roudabush et al. 1 City of Fayetteville, No. E89-1170, Chancery Court of Washington County, Arkansas) seeking the invalidation of the Waste Agreement. The plaintiff also sought to enjoin the City from Series expending any public moneys to repay the Authority Bonds or from raising sanitation rates to dated December 21, 1989, the City ie 1990 Bondsaren provide moneys for such purposes. By third party complaint tnd Counsel, a copy of d sued A.G. Edwards & Sons, Inc., the Authority's underwriter, Rose Law Firm, a Professional :gal matters will be pasud[p Association, counsel to the underwriter, and Wright, Lindsey & Jennings, bond counsel to the ion. Certain legal mound Authority, alleging negligence in the preparation of the Authority Bonds and the Waste Agreement. In April of 1990 the City raised sanitation fees to provide sufficent revenues to fund obligations under the Waste Agreement. Moneys generated from the increased sanitation fees have been deposited into a third party escrow fund because of the pending litigation. -49- ':iJr. llil' ( On May 25, 1990, FGIC sued the City, West Fork, the County and the Authority in US District Court (EQJQ 1tv of Fwetteville et. al, No. 90-5052, U.S. District Court Arkansas, Fayetteville Division) seeking, among other things, either'? Western District of enforcement of the Waste Agreement or damages for misrepresentation by the City and Authority. The City cannot predict the outcome of the litigation summarized above or the remedies that„ might be granted if any of the actions against the City are successful. Copies of pleadings is r', the litigation described above can be obtained from the Underwriter or the City. At the November 8, 1988 election, the voters of the City also approved the issuance of up to $10,000,000 of bonds secured by the Sales and Use Tax Revenues to finance educational;( facilities for the Fayetteville School District (the "School District"). After the election questions were raised as to whether the City could lawfully issue capital improvement bonds or otherwise grant excess Sales and Use Tax Revenues to finance facilities for the School District.:-' Since this question had not been previously litigated, the City and School District considered pursuing test litigation to obtain a judicial interpretation. However, at this time the City and School District do not plan to commence litigation concerning these matters. MISCELLANEOUS Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as reprsentations of fact, and no representation is made that any of the estimates will be realized. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or owners of any of the Series 1990 Bonds. The information contained in this Official Statement has been taken from sources considered to be reliable, but is not guaranteed. To the best of the knowledge of the undersigned, the Official Statement does not include any untrue statement of a material fact, nor does it omit the `. statement of any material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The execution and delivery of this Official Statement has been duly authorized by the City as of the date shown on the cover hereof. CITY OF FAYETTEVILLE, ARKANSAS By: William Martin, Mayor -50- iloa ''.4� )Chot A ever, at 71116 theseIDattertb11'�p in9 matters o(o�owta`4 EXHIBIT A and not as reprusq"d be realized ThyO((�� the City and the pore as been taken fn CAPITAL GUARANTY INSURANCE COMPANY FINANCIAL GUARANTY BOND BOND NUMBER: NNNN PREMIUM: PPPP IED MATURITIES: DATE: DDDD �Capital Guaranty Insurance Company, ("Capital"), a corporation organized under the laws of Maryland, in consi eration of the premium paid or directed to be paid and subject to erms of this Bond, �,ereby unconditionally and irrevocably a surety, OBLIGATION to topay the ("Paying pAp��gent"), or its successor as Payin n WNERS. Li"r, Capital will make such payme h u O its DISBURSING AGENTS on the date such principal b s Due for Pay ment, or on the Business Day next fol i g,t n which NOTICE OF NONPAYMENT is received, whichever s; tii M B RSING AGENT will disburse to the Paying Agent the �j f LIGATION which is then DUE FOR PAYMENT )ut is unpaid by of ch NONPAYMENT but only upon receipt by )ISBURSING AGENT, rm reasonably satisfactory to it, of (i) ?vidence of the OW right to receive such payment, and (ii) vidence, including any appropriate instruments of assignment, that all ,f the OWNER'S rights to such payment shall thereupon vest in Capital. Ipon such disbursement, Capital shall become the OWNER of that portion if the OBLIGATION as paid, including any appurtenant coupon or right to iayment of principal or interest on such OBLIGATION and shall be fully ;ubrogated to the OWNER'S right to payment thereof. In addition, `apital has the rights of a surety as to reimbursement from the ISSUER or other obligor responsible for payment of the OBLIGATION) as ,rincipal. By its acceptance of this Financial Guaranty Bond, the older hereof agrees on behalf of the OWNER that upon payment by apital of the OBLIGATION, Capital shall be fully subrogated to all of WNER'S right, title and interest in the OBLIGATION including, but not imited to, the right to commence and pursue legal proceedings in espect of the OBLIGATION and to direct any Bond Trustee under an ndenture securing the OBLIGATION or similar agent notwithstanding that ayments of the OBLIGATION may become due in the future or may be uarantied by others. A-1 ri " This Bond is not cancellable for an rea iT0N�� �pgi� is not refundable for any reason, Includingthehpapremi th W�,�tO E Ymentuofon 18utjad� Naturi y_ r�i, OBLIGATION prior to its maturity. This Bond does not t the . DOry s4, Cn pr any prepayment premium will be aid u on sure (a �pti. yfpr Per prior to .its maturity as a result of optionaleredem the OBLIGATY�that ,Da� �' ption e or (b) that any amount received or to be received upon t a talc tC or will remain exempt from State or Federal taxation LIGgT �,. �' J any compensato he OB call aw') as ry payment will be made to OWNER as a ren, oro(°e thatN ' t gBpt determination of taxability. DEFINITIONS: As used herein, the term: p 'but fur ¢on,t to Par, �11N"98�on ,, }.+. (i) "BUSINESS DAY" means any day on which Disbursing for business. ita] Agent is oPea s�?of,�nd to (ii) "DISBURSING AGENT" means a bank or trmpany daYeon"the'dat Capital, or a successor Disbursin n cdesign teletorec et(e pIR and remit funds on behalf of C 9nated to yve recef r (iii) "DUE FOR PAYMENT" means, By: Obligation, the state n i the principal of Title which the same sha i ereof or the fund redemptio n called for the date on mandato O Payment is du ny other to any earlier date nswhic accelet i a o defaultr call for redemptiono, maturity, efe n advancemen for Paymen g to interest on the Obli t of f Principal a the stated date forSinter, "Due Brest previous)payment ytay igtAgest. thereafter recovered from n paid by the Pa made pursuant to any Owner to whom such payment ay Agent' but seut: C jurisdiction holding final judgment by any court ofP om et was preference within that such payment constituted a competent ("Preferential Pa the meaning of any applicable bankruoidable hereunder upon receipt shall be deemed Due for Payme Ptcyiaw recovery of such P by Disbursing Agent of evidence of 19nature if requir funds from the Owner. (iv) "NONPAYMENT" means responsible for the failure of the Issuer (or other the Paying payment of the Obligations) to have obligor y g Agent funds sufficient to pay all provided to interest on the Obligation which is "Non a principal and P yment" also includes PreferentialnPa m Due for Payment. (v) "NOTICE OF NONPAYMENT" Payments. Capital, subsequent) means telephonic or tele ra Ca the form y confirmed in writing,g Written notice to rngtheeror or Exhibit A attached hereto, or written notice, the stere torn certified mail, from an Owner ooraPayingbAgent for to the Notice to Capital shall be given or addressed Claims Officer Steuart Tower, 22nd Floor, Guaranty Insurance Company, California Tower 94105, teleFl phone (415) ' One Market Plaza, 995-8000. San Francisco, A-2 be�real red Fed CeiIled to OVER os which Disbu rrouz alled for o for cal I any e or1r other'- rest adva °n thfor e Obl. Paid Payment'o1 r to wh by the Pa b °o Suchen any court mbf constitute ny applicable b; 1g Agent Of evi ier. he Issuer (or 01 gations) to bavE pay all princi then Due for Pa :ial Payments;, nic or telegrap rating, or writt reto, to Capital Owner or Papin 'all be given of Ity Insurance Ca Plaza, SanFr& -8000. OBLIGATION" means the payment of principal and interest ' �! scheduled to be paid on the Issue, but only with respect to the• Guarantied Maturities thereof, together with any mandatory • redemption premium then required to be paid which shall have become Due for Payment but shall be unpaid by reason of Nonpayment. "OWNER" means, as to the Guarantied Maturities of the Issue, the Hi person who, at the time of Nonpayment, is entitled to payment j thereon, but does not include the Issuer or any person whose agreement to pay funds to or on behalf of the Issuer secures the obligation. itness Whereof, Capital Guaranty Insurance Company has caused this ncial Guaranty Bond to be signed by its duly authorized officers to me effective on the date set forth belo CAPITAL GUARANT CE COMPANY By: Title: ive Date: C ture if required by state law A-3 Issuer: Issue: Series: Dated Date: Guarantied Maturities: Ladies and Gentlemen: All capitalized terms used herein have the same meaning as is set forth in the Financial Guaranty Bond. In accordance with the above -captioned Financial Guaranty Bond, you are hereby notified of a Nonpayment under the referenced Issue. An amount is currently Due for Payment by Issuer but is unpaid, or is expected to be unpaid, by reason of the following Nonpayment: // The principal of the Obligation in the amount of $ is unpaid, or is expected to be unpaid, as of its stated maturity on 19 // The principal of the Obligation in the amount of S is unpaid, is expected the date whichithas been duly callto unpaid,of edfor amandatory sinking fund redemption on 19_; // Interest on the Obligation in the amount of S___________ is unpaid, or is expected to be unpaid, as of the stated date for payment on 19_; and/or // Principal in the amount of $ amount of $ and interest in the amount which were previously paid at stated maturd y,on sinking fund redemption or at the date for payment, have since been recovered from an Owner to whom such payment was made pursuant to a final judgment by a court of competent jurisdiction holding that such payment constituted a voidable preference within the A-4 - 5Ca F't,N't er �t p yiA4aA9ent� t) meaning of any applicable bankruptcy law. ��NPA�yMENTA� NICE OF NONPAYMENT (DATE] s,sMw tit Page 2 parry 5� jell monies received from you shall be applied directly to the }" payment to the Owners of the captioned Obligations and for no other ,r purpose. ,qq` ;gig I have attached hereto a certified copy of the resolution of the I'!, 4' Board of Directors or the applicable provisions of the by-laws sy hich authorize me to execute this notice. :d Date: n Dated: Title: ve the same meaning e I ad Financial Guaranty Jnder the refer zt by Issuer butis ,f the - following I in the amount, of S „• :� unpaid, as of. its in the amount of expected to be unpaid, my called fora 19 he amount of paid, as of the stat4 and/or ;z and interest is G' sere previously paidd 'und redemption or at .nce been recovered tra lade pursuant. to, a, fJd 's jurisdictionhodio9 ible_ preference wig =,rssi Uatui 5°a'er � 22nd Floor ^ OM MIr W putat Srn ROC'yco• CA 941O5 14 13 to 588 8 TeiecoPer iet5i 99 Information • CAPITAL GUARANTY INSURANCE COMPANY FINANCIAL STATEMENT (STATUTORY BASIS) AS OF June 30, 1990 ASSETS Cash (Includes Money Markets) .................$ 1,583,847 Investments ................................... 159,007,133 Accrued Interest .............................. 2,857,090 other Assets .................................. 3,709,761 Total Assets ..................................$ 167,157,831 LIABILITIES AND POLICYHOLDERS' SURPLUS Contingency Reserve ...........................$ 8,318,488 Unearned Premiums ............................. 61,574,754 Other Liabilities ............................. 2,883,048 Policyholders' Surplus ........................ 94,381,541 Total Liabilities and Policyholders' surplus... S 167,157,831 B-1 OFFICIAL S'T'ATEMENT RATINGS: Standard & Poor's: "AAA" yElh Moody's: "A" (Capital Guaranty Insurance Company Insured) (See the caption "RATINGS" herein) oftPher'on of BomalRevennersel. based on Code of 1986, as amended (then"C de'),rs and as descriurt bed herein, odecisions interest on the Series 1990nce rBo Bonds e taxation, Interest On the ies /990 13ondc d o rcated anp pbe inchoided t i the calculating bn fante of the ownets r alternative tares. including tthetome alr alternative ninnrn tax orrcorporationsinterest n th s ,� 1990 Bonds may, f y^�under the capnon 'TAX EXEMPTION' herein. See the caption "TAA' F.,YEb/l'T/UN" herein for a description ojcertain Ss"foasofthe he ca that may a(lect the tar treatment o interest on the Series 1990 Bonds for certain owners ojthe Series 1990 ►" e.,tor etisfinq law, the Sr, 1990 Bonds and the interest thereat are exempt from all state, county amid municipal rases in $33,019,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 1990 Ied: October 15, 1990 Due: November 15, as shown below trait on the Series 1990 Bonds is payable on May 15, 1991, and semiannually thereafter on May 15 and November 15 of reof, ear The Series 1990 Bond in the denomination e as lof $y 4,000 maturing stered bonds tNovember 1n 5,199ns 1 SPr000pal isr tpayab a at tral he principal es uxpantetrust office of Mctlroy Bank & Trust, in Fayetteville, Arkansas, the trustee (the "Trustee") and the transfer agent, paying able stered owner as of the (cable record date attthe address ahe "Bond s shown on ' interest the bond ts reg registration by maincheck or tained byraft led theto the Bond Registrar.. The Series 1990 are subject to redemption prior to maturity as described under the caption "THE SERIES 1990 BONDS — Redemption hubo, i rity herein. Tie$eries 1990 Bonds are special obligations of the City of Fayetteville, Arkansas (the "City"), payable solely front amounts mmeedby or on behalf of the City from a one percent local sales and use tax (the "Sales and Use Tax Revenues"), The Series p908onds are secured by a pledge of the Sales and Use Tax Revenues in amounts sufficient to provide for debt service on the Seder 1990 Bonds and to maintain a debt service reserve as described herein. Accumulated Sales and Use Tax Revenues in excess inxhdebt service and reserve requirements and certain charges and retainages may be used by the City to finance capital facilities. IheSena 1990 Bonds may also be paid from certain other moneys, and, under certain circumstances, the Series 1990 Bonds may kpa d pursuant to the terms of the Financial Guaranty Bond as described herein. The faith and credit of the City arc not pledged one payment of the Series 1990 Bonds, and the issuance of the Series 1990 Bonds shall not directly, indirectly or contingently dl/tare the City to lest' or to pledge any taxes whatsoever or to make any appropriation for the payment of the Series 1990 Bonds n'eptasprovided in the Trust Indenture described herein with respect to the Sales and Use Tax Revenues. Payment of principal of and interest on the Series 1990 Bonds when Due for Payment which is unpaid by reason of Nonpayment lusuch terms are defined in the Financial Guaranty Bond) will be guarantied by a Financial Guaranty Bond (the "Financial Guaranty Bond') to be issued simultaneously with the delivery of the Series 1990 Bonds by Capital Guaranty Insurance Company. CAPITALLaARANNs. luuance of the Financial Guaranty Bond is a condition to the delivery of the Series 1990 Bonds. MATURITY SCHEDULE Principal Interest Principal Interest fear Amount Rate Year Amount Rare 1991 $ 824,000 6.00% 1997 $1,450,000 6.60% 1992 1,065,000 6.10 1998 1,545,000 6.70 1993 1,130,000 6.20 1999 1,650,000 6.80 1994 1,205,000 6.30 2000 1,765,000 6.90 1995 1,280,000 6.40 2001 1,890,000 7.00 1996 1,360,000 6.50 2002 2,020,000 7.05 56,985,000 7.15% Term Bonds due November 15, 2005 $8,850,000 7.25% Term Bonds due November 15, 2008 All Series 1990 Bonds are offered at par plus accrued interest. The proceeds of the Series 1990 Bonds will be used, along with other available moneys, to finance the acquisition, construction adequippingof certain capital improvements within the City, to fund a debt service reserve and to pay costs of issuance of the Series 1990 Bonds, including a premium for the Financial Guaranty Bond. The Series 1990 Bonds are offered, subject to prior sale, when, as, and if issued and received by the Underwriter, subject to teapproval of their validity by Brown & Wood, Bond Counsel, and the approval of certain legal matters by Rose Law' Firm, a 9tofmional Association, Counsel to the Underwriter, and by Jerry Rose, Esq., City Attorney, and subject to certain other conditions. It seapected that the Series 1990 Bonds will be available for delivery in New York, New York, on or about October 18. 1990. Llama +, The date of this Official Statement is 13, 1990. THE CITY OF FAYETTEVILLE, ARKANSAS Issuer � Board of Directors 1 William Martin, Mayor Fred Vorsangcr, Assistant Mayor Michael Green Shell Spivey Ernest Lancaster Russ Kelley Paul Marinoni, Jr. Scott Linebaugh, City Manager Kevin Crosson, Administrative Services Director Sherry Thomas, City Clerk 1p; McILROY BANK & TRUST COMPANY fi Fayetteville, Arkansas Trustee and Bond Registrar BROWN & WOOD New York, New York Bond Counsel JERRY ROSE, ESQ. Fayetteville, Arkansas City Attorney ROSE LAW FIRM, A PROFESSIONAL ASSOCIATION Little Rock, Arkansas Underwriter's Counsel LLAMA COMPANY Fayetteville, Arkansas Underwriter CAPITAL GUARANTY INSURANCE COMPANY San Francisco, California Insurer ma IRE RVII - t, .w 4t y DEALER, BROKER, SALESMAN, OR OTHER PERSON HAS BEEN ' �! 11• Vii, AUTHORIZED CITY OR THE UNDERWRITER TO GIVE ANY INFORMATION 1 c. THE OR TO MAKE BY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS OFFICIAL ii)u •STATEhIENT AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR 1 �5 nT ESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY EITHER OF THE FOREGOING. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE it u OFFER TO SELL BONDS IN ANY JURISDICTION IN WHICH SUCH OFFER IS NOT OR IN WHICH THE PERSON MAKING SUCH OFFER IS NOT QUALIFIED „ s ,. AUTHORIZED, O DO SOOR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER T, THE INFORMATION AND EXPRESSIONS OF OPINION CONTAINED HEREIN ARE WITHOUT NOTICE, y4 g)ECT TO CHANGE AND NEITHER THE DELIVERY OF THIS ' OFFICIAL STATEMENT NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY Iger ` +. CIRCUhISTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE ;. (t IN THE AFFAIRS OF THE CITY SINCE TFIE DATE HEREOFes. : D)rector. o ' ' IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT "I EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE i ;r OR OF THE SERIES 1990 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE ,Ip, PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 1i TABLE OF CONTENTS Page INTRODUCTORY STATEMENT 1 THE SERIES 1990 BONDS 2 SECURITY FOR THE SERIES 1990 BONDS DEBT SERVICE REQUIREMENTS 19 { ESTIMATED DEBT SERVICE COVERAGE 20 SOURCES AND USES OF FUNDS 20 XO<IATI0N THE CITY 21 THE IMPROVEMENTS 24 CERTAIN DEFINITIONS 25 SUMMARY OF PORTIONS OF THE INDENTURE 35 FINANCIAL GUARANTY BOND 46 UNDERWRITING 47 RATINGS 48 TAX EXEMPTION 48 LEGAL MATTERS 48 MISCELLANEOUS 50 IPAAY EXHIBIT A - FORM OF FINANCIAL GUARANTY BOND A-1 EXHIBIT B - FINANCIAL STATEMENT OF CAPITAL GUARANTY INSURANCE COMPANY B-1 E y uIu � I II+ u OFFICIAL STATEMENT $33,019,000 ,'(Is h i`jt CITY OF FAYETTEVILLE, ARKANSAS r SALES AND USE TAX CAPITAL IMPROVEMENT BONDS •L Fx SERIES 1990 i$ If f c INTRODUCTORY STATEMENT i 1i This Official Statement, including the cover page, is furnished in connection with the of 533,019,000 Sales and Use Tax Capital Improvement Bonds, Series 1990 (the "Series offering 1990 Bonds'), by the City of Fayetteville, Arkansas (the "City"). The City is a city of the first class organized and existing under laws of the State of ty� , Arkansas (the "State"). Pursuant to Amendment No. 62 to the Constitution of the State, as ' implemented by Act No. 871 of the General Assembly of Arkansas for the year 1985, as i c the City is authorized to finance capital improvements of a amended ([he 'Act"), p p public nature ENTIONALtI] in amounts and for purposes approved by a majority of the qualified electors of the for municipality voting on the question at an election called that purpose. The issuance of the Series 1990 Bonds and the pledge of all or a portion of a preexisting one percent (1%) local ! i and use tax of the City (the "Sales and Use Tax") were approved by a majority of the sales voters of the City voting on the question at a special election held May 29, 1990, pursuant to •? Ordinance No. 3480 passed by the Board of Directors of the City on April 19, 1990. The levy " { of the Sales and Use Tax, which is pledged to the extent provided in the Trust Indenture described herein to secure the Series 1990 Bonds, was approved for a period of 20 years by a majority of the voters of the City voting on the question at a special election held November 8, 1988, pursuant to Subchapter 2 of Chapter 75 of Title 26 of the Arkansas Code Annotated and Ordinance No. 3381 passed by the Board of Directors of the City on October 4, 1988. The collection of the Sales and Use Tax commenced in December 1988. The Series 1990 Bonds are secured by a pledge of revenues received by the City from the Sales and Use Tax (the "Sales and Use Tax Revenues") in amounts sufficient to provide for debt service on the Series 1990 Bonds and to maintain a debt service reserve as described herein. The Series 1990 Bonds may also be paid as provided in the Trust Indenture from other moneys in the Sinking Fund, including certain income received from the investment thereof, and the Construction Fund established by the Trust Indenture. In addition, payment of principal of and interest on the •is Series 1990 Bonds, when due, has been guarantied, pursuant to the terms of a Financial • -'c Guaranty Bond (the "Financial Guaranty Bond") issued by Capital Guaranty Insurance Company. See the captions 'SECURITY FOR THE SERIES 1990 BONDS' and 'FINANCIAL GUARANTY s BOND' herein. The Series 1990 Bonds are being issued pursuant to the laws of the State, including the Act, the ordinances mentioned above and Ordinance No. 3506 passed by the Board r of Directors of the City on September 13, 1990 (collectively the "Ordinances") and a Trust • et ' Indenture dated as of October 15, 1990 (the "Indenture"), by and between the City and hicllroy Bank & Trust, in Fayetteville, Arkansas, as trustee (the "Trustee") and transfer agent, paying agent and bond registrar (the "Bond Registrar"). See the caption 'SUMMARY OF PORTIONS OF THE INDENTURE' herein. The proceeds of the Series 1990 Bonds will be used, along with other available moneys, to ` finance costs of acquiring, constructing and equipping certain capital improvements (collectively, the "Improvements") for the City, to fund a debt service reserve and to pay the costs of 1 A�, issuance of the Series 1990 Bonds, including a premium for the Financial Guaranty Bond. See the captions "SOURCES AND USES OF FUNDS." and "THE IMPROVEMENTS" herein; This Official Statement contains brief descriptions or summaries of, among other matters,` the Series 1990 Bonds, the City, the Improvements, the Ordinances, the Indenture and the Financial Guaranty Bond. Such descriptions and information do not purport to comprehensive or definitive. All capitalized words, unless otherwise defined herein, shall babe the meanings set forth under the caption "CERTAIN DEFINITIONS" herein. All references herein to the Ordinances, Indenture and the Financial Guaranty Bond are qualified in their entirety by reference to such documents, and references herein to the Series 1990 Bonds are qualified in their entirety by reference to the form thereof included in the Indenture. The form of the Financial Guaranty Bond appears in Exhibit A hereto and copies of the Ordinances and the Indenture may be obtained during the initial offering period from the Underwriter or the City. THE SERIES 1990 BONDS Description The Series 1990 Bonds are being issued as fully registered bonds, without coupons, in denominations of $5,000 or any integral multiple thereof, except for one Series 1990 Bond in the denomination of $4,000 maturing November 15, 1991. The Series 1990 Bonds will be dated October 15, 1990, and will bear interest from such date, payable on May 15 and November 15 of each year, commencing May 15, 1991. The principal of the Series 1990 Bonds will be payable upon presentation and surrender at the principal corporate trust office of the Bond Registrar in Fayetteville, Arkansas. Payment of interest on the Series 1990 Bonds will be made to each Owner thereof by check or draft mailed by the Bond Registrar to such Owner at the address as such name and address appears on the registration books of the City kept by the Bond Registrar on the Regular Record Date, which is the first day, whether or not a business day, of the month in which such Interest Payment Date falls, or, under certain circumstances, a Special Record Date as provided in the Indenture. Payment of interest will also be made by wire transfer upon the request of an Owner of at least $1,000,000 principal amount of the Series 1990 Bonds. All such payments will be made in lawful money of the United States of America. The Series 1990 Bonds are transferable and exchangeable at the principal office of the Bond Registrar upon surrender together with an assignment duly executed by the Owner or his attorney or legal representative in form satisfactory to the Bond Registrar. No charge will be made to any Owner for the privilege of registration of transfer or exchange, but any Owner requesting such registration of transfer or exchange will be required to pay any tax or other governmental charge required to be paid with respect thereto. Upon any such transfer or exchange, a new registered Series 1990 Bond or Series 1990 Bonds of the same maturity, interest rate, and in authorized denominations for the same aggregate principal amount will be issued in exchange therefor. The Bond Registrar will not be required to register the transfer of or exchange Series 1990 Bonds during the fifteen days immediately preceding the date of first publication or mailing of notice of any redemption of Series 1990 Bonds or any portion thereof, or of any Series 1990 Bond after such Series 1990 Bond or portion thereof has been selected for redemption. -2- Flea dPROVEMEHTS ara", hereto ; AddltlonnlIndebtedaess cries of amen ,, aaces, city may issue or incur indebtedness in addition to the Series 1990 Bonds secured in tho;Indeotherp�,� ion' do afore �"�' the a parity as to the pledge of the Sales and Use Tax Revenues with the Series 1990 . ( ed b ti a cases Bo ds as provided below. IONS' he erpoq I Bond heresy it a . h( All dirrg Bonds. Refunding Bonds may be issued under and secured by the Indenture funds for dttime ref_!!R to fj4tk to time for the purpose of providing refunding all or any portion of the Series by the Series 19 ?.sa in from sg Bonds of any one or more payment at maturity or redemption at a the Iadepj� Bost loco Ouutedaredemption date or dates or combination of such payment at maturity and redemption, redemption thereon and any interest pies of the Ordivab° from the oduding the payment of any premium which will accrue such maturity dates or selected redemption date or dates or combination of underwr;ter14551 on such Bonds to and redemption dates and any expenses incurred or to be incurred in connection with maturity such refunding. Before Refunding Bonds shall be issued, the Board shall pass a Series Ordinance providing the issuance of such Refunding Bonds, fixing the amount and details thereof, describing the for to be refunded and setting forth the determination of the Board that such refunding is in goods best interests of the City and stating the reasons for such determination. Such Refunding I bonds, wsthout the shall be dated, shall be stated to mature (subject to the right of prior redemption as set for one Series cooporit goads in the Indenture) on such date or dates, in such year or years not later than the Maximum 19901 Bieda forth permitted Maturity, shall bear interest at such rate or rates, fixed or variable, shall have such tender features and such Credit Facilities, shall have such Bond Registrar, shall have I will bear snterest n :ing May 15, 1991. optional such Serial Bonds and Term Bonds, with any Term Bonds having such Amortization Requirements, and shall be redeemable at such times and prices, all as may be provided in the , Ordinance for such Refunding Bonds. Except as to any differences in the maturities i presentation and surretdu= Series thereof or the rate or rates of interest or the provisions for redemption, such Refunding Bonds be on a parity as to the pledge of Sales and Use Tax Revenues with all other Bonds issued tteville, Arkansas Payaasd ereof by check or drab shall under the Indenture. Such Refunding Bonds shall be executed substantially in the form and forth, with such changes as may be necessary or appropriate to conform me and address appeanoade manner hereinabove set the of the Series Ordinance providing for the issuance of such Refunding Bonds Regular Record Date, vhidi ich such Interest Paymeasll,± to provisions and shall be deposited with the Bond Registrar for authentication and shall be delivered by the delivery, but to or simultaneously with the delivery of is provided in the Indeain Bond Registrar to the Trustee for prior Refunding Bonds by the Trustee, there shall be filed with the Trustee the following: equest of an Owner of at la such ch payments will be mtdeh (a) a copy, certified by the City Clerk, of the Series Ordinance providing for the issuance of such Refunding Bonds; me principal office of the Bad recuted by the Owner tth (b) a copy, certified by the City Clerk, of an ordinance of the Board directing the delivery of such Refunding Bonds to or upon the order of the purchasers therein named in Registrar. No charge till or exchange, but any0r upon payment of the purchase price therein set forth and providing for other matters with the issuance of such Refunding Bonds, which ordinance may be a part of aired to pay any tax of* connection the Series Ordinance providing for the issuance of such Refunding Bonds; Upon any such tnasfur of the same maturity, lam (c) an opinion of Bond Counsel to the effect that such Refunding Bonds constitute terms, subject to certain scipal amount will be ivatd valid and binding obligations of the City in accordance with their laws affecting creditors' rights and to the exercise of judicial discretion in appropriate the application of the fer of or exchange 5orisLl cases, and that upon the issuance of such Refunding Bonds and proceeds thereof, the Bonds to be refunded will no longer be deemed to be Outstanding not cause interest paid first publication or n5litl any Serieslfg under the Indenture and the issuance of such Refunding Bonds will on any Bonds issued under the Indenture and then Outstanding or the Bonds to be refunded income taxation hereof, or of for redemption thOwners thereof for federal me of the eluded in the income toeses be cted income gross psrpif so ex-3- f+ I d opinion of the City Attorney stating that the ordinances 1 I t ( ) an P mentio above in clauses (n) and (b) were duly passed by the Board; ned • ) certificate the Director of Finance pursuant which shall certifythat the Maximum Principal and Interest with state and Requirements payable respect to all l " Bonds Outstanding subsequent to the issuance of such Refunding Bonds are less than or equal to the Maximum Principal and Interest Requirements payable with respect to all Bonds Outstanding prior to the issuance of such Refunding Bonds; provided, however, that if the • Maximum Principal and Interest Requirements payable with respect to all Bonds Outstanding subsequent to the issuance of such Refunding Bonds exceeds the Maximum Principal sad Interest Requirements payable with respect to all Bonds Outstanding prior to the issuance of such Refunding Bonds, the Director of Finance shall state and certify in this certificate that the Sales and Use Tax Revenues received by or on behalf of the City during the latest b.' complete Fiscal Year of the City are at least equal to one hundred fifty percent (150%) of the Maximum Principal and Interest Requirements payable with respect to all Bonds Outstanding subsequent to the issuance of such Refunding Bonds; _ (f) such documents as shall be required by the Director of Finance and the Trustee to show that provision has been duly made in accordance with the provisions of the Indenture and State law for the payment or redemption or combination of such payment and redemption of all of the Bonds to be refunded; and qua gpnds arc issn goads, sutls'Co 10d1g f sacb CQflVCtfl (atn ting to � �scated to •: (g) so long as Capital Guaranty is a Credit Facility Provider, a certificate of the Trustee to the effect that the amount on deposit to the credit of the Reserve Account is not less than the Reserve Account Requirement for each Series of Bonds then Outstanding not including such refunded Bonds and such Refunding Bonds. Simultaneously with the delivery of such Refunding Bonds, the Trustee shall withdraw, if so provided in the Series Ordinance mentioned in clause (a) above, from the Sinking Fund an amount equal to the amount on deposit therein on account of the principal of and any P redem [ion premium and interest on and reserves for the Bonds to be refunded, and apply the amount so withdrawn in accordance with the Series Ordinance mentioned in clause (a) above, The total amount so withdrawn, if so provided in the Series Ordinance mentioned in clause (a) above, the proceeds of such Refunding Bonds (including accrued interest and any premium) and any other moneys provided for such purpose shall be applied by the Trustee as follows: TheCiry�yli�' rr�t)1 Tat 4Reve ;f ;>ad Use t Tcoder aad sa l ktr%°` orthet ket m in i&a tit so`„Optional'^7 shall apply° do tarths55Dc 'for ;Option '`pla ats pthu:,nP°ntP?7 (1) the accrued interest received as part of the proceeds of such Refunding Bonds shall iclgusds rtpo?'thetr tent be deposited to the credit of the Bond Service Account for application to the first interest due on such Refunding Bonds; Ihn City (�1 y my us xe of, RefundingI (2) an amount which, together with any income which shall be derived from the Ong: compliance investment of such amount pursuant to this clause (2), shall be sufficient to pay the -Tttule'Rate Bondsl,_ooal principal of and any redemption premium and interest on the Bonds to be refunded, either rdod that Capital 'Ga at maturity or a selected redemption date or dates or combination of such payment at :lignin: maturity and redemption, shall be deposited by the Trustee to the credit of a special fund, rx appropriately designated, to be held in trust by a bank or trust company which may includet �e) Thehe City mayo: the Bond Registrar, as escrow agent, for the sole and exclusive purpose of paying such ahieb iss principal, redemption premium, if any, and interest: and moneys held for the credit of such ?tmoaso{ the Iadentarr fund shall, as nearly as may be practicable and reasonable, be invested and reinvested by +'J such escrow agent at the direction of the Director of Finance in Government Obligations e which shall mature, or which shall be subject to redemption by the holder thereof at the option of such holder, not later than the respective dates when the moneys held for the a°' innts credit of such fund will be required for the purposes intended; "r`u4f Reddir• paon. Th .4. ag 3tha ' ' � the II t, card ursuant��o.''5v (3) such amount shall be applied to, or set aside for, the !I ' airs whr h` payment of the eases incident to such refunding as shall be specified in the Series Ordinance for the issuance of such Refunding Bonds; I L" � ad10 providing nts PaYah(e 8°adt are gh' with (q) an amount equal to the Reserve Account Deposit Requirement for such Refunding ; ' Bonds shall be deposited to the credit of the Reserve Account and % q rosroytded 6apb exe dspect t0'11111 1j. ee the Ma :.Outstanding tttaum; (5) any balance of such proceeds shall be deposited to the credit of the Bond Service te nnor to!he r Account y, behand certify behalf of rho thtse" -sty 1 Otlser lrsdebtedness. In addition to the Bonds authorized pursuant to the provisions of the by one hundred dae fifty Indenture and to the extent permitted the laws of the State from time to time in effect, the indebtedness Y p1r , pa able wit h respeM'fo (I , City may incur other forms of as follows: g Bonds• (a) The City may incur Subordinated Indebtedness without limit as to amount. U. ector of Finance ' ` i+ with the dth�I (b) The City may issue Convertible Bonds, secured on a parity as to the pledge of orabfnatirovssso ofd I,�; o Sales aad Use Tax Revenues with Bonds issued under the Indenture, provided that such issued under the lsakfl �! q of such 0 pa�y1' Convertible Bonds are section of the Indenture relating to the issuance of Refunding Bonds, such Convertible Bonds comply with the tests of such section based upon lrty Provider the form of such Convertible Bonds at the time of their issuance and that Capital Guaranty redit of cerhgpadi such has consented in writing to the issuance of Convertible Bonds. the Rene 'es of Bonds'theo Ong'4it . (c) The City may issue Optional Tender Bonds, secured on a parity as to the pledge of Use Tax Revenues with Bonds issued Sales and under the Indenture, provided that such Optional Tender Bonds comply with the tests for the issuance of Refunding Bonds contained 5, the Trustee shall /7 is in the Indenture, and so long as (i) such Bonds are the subject of a remarketing agreement from the-SinFiagyyt; e stee for investment banking firm toneaf and an tat o tat of the prdnci Pal.t s{a tax-exem t e ur tiesers witheen ex experie eny cer national basis and th p g p(ii) there is in Optional Tender Bonds ads to be refund effect with respect to such a Credit Facility, then the provisions ce mentioned ined,andai. clase(t) with respect to Optional Tender Bonds contained in the definition of Principal and Interest Ordinance mentionedindniI Requirements shall apply to such Optional Tender Bonds. In demonstrating compliance with ed interest and the test for the issuance of Refunding Bonds contained in the Indenture, the principal any prtmira�� y the Trustee as follows requirements for Optional Tender Bonds shall include the regularly scheduled principal payments, either upon payment at maturity or redemption in satisfaction of the Amortization ds of such Refundtngedtdh Requirements for such Bonds, and shall not include the payment of the purchase price of for or application to the fuuhb such Bonds upon their tender purchase. •,� (d) The City may issue Variable Rate Bonds upon compliance with the tests for the i 'hick shall be derived fmnh issuance of Refunding Bonds contained in the Indenture, using for the purpose of demonstrating compliance with such tests the interest rate assumption with respect to shall be sufficient to'pji Variable Rate Bonds contained in the definition of Principal and Interest Requirements, the Bonds to be refunded db provided that Capital Guaranty has consented in writing to the issuance of such Variable ombination of suchpijeut Rate Bonds. e to the credit of a sper'ulfd rust company which mtyi►+s♦ (e) The City may enter into Credit Facilities to the extent that the Series of Bonds or eclusive purpose xfpa,icta portion thereof which is supported by such Credit Facilities is issued in compliance with the Ineys held for the,ueddof. provisions of the Indenture. be invested and i6arWdy once in Government 066p In by the holder theiwfr_ - Redemption Prior to Maturity is when the mo.y•/ Optional Redemption. The Series 1990 Bonds maturing after November 15, 2000, are subject to redemption prior to maturity at the option of the City, in whole or in part on any date on Kfy -5- � t f. or after November 15, 2000, from any moneys that may be available for such pprpose notice as provided in the Indenture, in inverse order of maturity and a li manner as the Trustee shall determine within a maturity, at the redemption pries lot sa'a�ey. percentages of principal amount) set forth below, plus accrued interest to (expressed as;' • redemption. the dSte s t,• Redemption Dates (Both Inclusive) Redemption -£§ November 15, 2000 to November 14, 2001 102% November 15, 2001 to November 14, 2002 November 15, 2002 and thereafter 101% 100% Mandatory Redemption. The Term Bonds maturing on November 15, subject to redemption in part by lot on November15, 2003, and 2005, are also thereafter to and including November 15, 2005, in an amount equal tot each Novehe mber IS Requirement therefor in the immediately preceding Bond Year as set forth below Amortitati0p as provided in the Indenture, at the principal amount of each Series 1990 Bond to be pep a , plus accrued interest to the redemption date, without premium. redeemeded, ii �0< Principal jt Amount_ called tor; to as Owner o mailed u,`,ro be redeemei 2003 2004 $2,165,000 siusef goad must be surrender re to,be 2005 2,325,000 2,495,000tmonot leas t;thereof of that portion The Term Bonds maturing on November 15, 2008, are also subject to redemption in part by on November 15, 2006, and each November 15 thereafter lot in y ft to and including November 15, q q2008, an amount equal to the Amortization Requirement therefor in the immediately Bond Year as set forth below, a the date, so designated de'roaditions pipayabl „'.a preceding upon notice as provided in the Indenture, at the principal amount of each Series 1990 Bond to be redeemed, plus accrued interest ud due and payable a premium. to the redemption date, without ytsl and m for pa by th iir i`ic6oants by eTrus. sm Wi'cdeemed, interest on. Y r Princi al ear i 4iW cease to be entitled 1 Amount rail such Bonds shall ;have 2006 once Itiereof and accrt 2007 $2,675,000 2008 2,870,000 € 3,305,000 Purchase of Series 1990 Bonds. Subject Indenture, SECURII to the required redemption the Trustee shall endeavor to purchase any p provisions of the secured under the Indenture, Outstanding Series mil 1990 Bonds whether or not such Series 1990 Bonds shall then be subject to redemption, on the most advantageous terms obtainable with reasonable diligence, to exceed the principal f( lfdtdhy,19lt Bonds are such price not of such Series 1990 Bonds plus the amount of redemption any, which might on the next redemption date hyorod:behalf:of_.the f be paid to the Owners of such Series 1990iBonds under the redemption provisions of the Indenture and the Series Bonds should be � � by a pledge by the Cit As�+de Ordinance if such Series 1990 called for redemption on such date from moneys in the Sinking e Claussrom throuon gh skdm clause's"(a) through (c; Fund. ( •hdentire,from other mar jade mrestment thereof, and Admerest.oa'the'Series 1990 Br obtinil Guaranty Bond <: (the Cam 8 e j or after November 15, 2000, from any moneys that may be available for such. purpoao, u notice as provided in the Indenture, in inverse order of maturity and by lot Pon. manner as the Trustee shall determine within a maturity, at the redemption pricet° suth' percentages of principal amount) set forth below, plus accrued interest (esp1ptsed redemption. tos the date of Redemption Dates (Both Inclusive) Redemn� do November 15, 2000 to November 14, 2001 102% November 15, 2001 to November 14, 2002 101% November 15, 2002 and thereafter 100% 3t Mandatory Redemption The Term Bonds maturin subject to redemption in part by lot on November 15, 2003, em and each 2005, are,also thereafter to and including November 15, 2005, in an amount equal toNovember Is'' Requirement therefor in the immediately preceding Bond Year as set a forth bthe Amortizatiop as provided in the Indenture, at the principal amount of each Series 1990 Bond low, upon aouce plus accrued interest to the redemption date, without premium, be redeemed, Yea Principal Ammou= _t 2003 $2,165,000 2004 2,325,000 2005 2,495,000 The Term Bonds maturing on November 15, 2008, are also subject to redemption in part by lot on November 15, 2006, and each November 15 thereafter to and including November 15, 2008, in an amount equal to the Amortization Requirement therefor in the immediately preceding Bond Year as set forth below, upon notice as provided in the Indenture, at the principal amount of each Series 1990 Bond to be redeemed, plus accrued interest to the redemption date, without premium. Year Principal Amount 2006 2007 $2,675,000 2008 2,870,000 3,305,000 Purchase of Series 1990 Bonds. Subject to the required redemption provisions of the Indenture, the Trustee shall endeavor to purchase any Outstanding Series 1990 Bonds secured under the Indenture, whether or not such Series 1990 Bonds shall then be subject to redemption, on the most advantageous terms obtainable with reasonable diligence, such price not to exceed the principal of such Series 1990 Bonds plus the amount of redemption premium, if any, which might on the next redemption date be paid to the Owners of such Series 1990 Bonds under the redemption provisions of the Indenture and the Series Ordinance if such Series 1990 Bonds should be called for redemption on such date from moneys in the Sinking Fund. -6- y`,theTrustee , interest on the e' entitled to a, shall ' have no f and accrued i s; SECURITY I onds,are speci If..of the City by the City of eon the Seri through (c) be other` moneys :reof, - and the Dud (the °F '> rd oa Nnvembe ar 2003 i am nouut.:- equal set fOti ar Series 199011 Principal $2,165,000 2,325,000 2,495,000 to it in the immediately' tdenture, at the prix to the redemption ddi Principal Amount $2,675,000 2,870,000 3,305,000 redemption piovisisudi utstanding Series (i991In Bonds shall then be sit onable diligence, suchpin ,unt of redemptionpriei¢i ,ners of such Series 199l6s Ordinance if such SeihO in the Sinking Fund. Y xk Selection of Bonds to be Redeemed. The Trustee shall, in accordance with the terms f the Bnds and of the indenture and50d gpro oods relating to sro be redeemed, select the Bonds or portions therreoftto be tpur based ordinanceredeemedby Is making such selection, each Bond of each Series of Bonds shall be treated as lot that number of Bonds of the lowest authorized denomination of that Series as is representing dg principal the rinci al amount of such Bond by such denomination. obtained by Notice and Effect of Redemption. At least thirty (30) days before the redemption date, a notice of any such redemption, either in whole or in part, signed by the Trustee (a) shall be filed with the Bond Registrar and (b) shall be mailed, first class mail, postage prepaid, to all Owners of Bonds to be redeemed in whole or in part at their addresses as they appear on the registration books provided for in the Indenture. To supplement such notice to the Owners, the notice of redemption may also be mailed by overnight mail to at least two national depositories and one national wire service used to distribute information relating to municipal bonds, at least thirtyfive (35) days prior to the redemption date. Failure to mail any redemption notice to any Owner or any depositories and wire services, or any defect in any notice so mailed, shall not affect the validity of the proceedings for the redemption of the Bonds as to the Owners to whom notice was given as required. Each such notice shall set forth the date fixed for redemption, the redemption price to be paid and, if less than all of the Bonds of a Series then Outstanding shall be called for redemption, the numbers of such Bonds. Each notice of redemption mailed to an Owner of a Bond to be redeemed shall, if less than the entire principal amount thereof is to be redeemed, also state the principal amount thereof to be redeemed and that such Bond must be surrendered to the Bond Registrar in exchange for the payment of the principal amount thereof to be redeemed and the issuance of a new Bond or Bonds equaling in principal amount that portion of the principal sum not to be redeemed of the Bonds to be surrendered. On the date so designated for redemption, notice having been given in the manner and under the conditions provided in the Indenture, the Bonds so called for redemption shall become and be due and payable at the redemption price provided for redemption of such Bonds on such date, and, moneys for payment of the redemption price and accrued interest being held is separate accounts by the Trustee or by the Bond Registrar in trust for the Owners of the Bonds to be redeemed, interest on the Bonds so called for redemption shall cease to accrue, such Bonds shall cease to be entitled to any lien, benefit or security under the Indenture, and the Owners of such Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof and accrued interest. SECURITY FOR THE SERIES 1990 BONDS General The Series 1990 Bonds are special obligations of the City payable solely from amounts received by or on behalf of the City as Sales and Use Tax Revenues. The Series 1990 Bonds are secured by a pledge by the City of the Sales and Use Tax Revenues in amounts sufficient to provide for debt service on the Series 1990 Bonds and to maintain a debt service reserve as described in clauses (a) through (c) below. The Series 1990 Bonds may also be paid as provided in the Indenture from other moneys in the Sinking Fund, including certain income received from the investment thereof, and the Construction Fund. In addition, payment of principal of and interest on the Series 1990 Bonds, when due, has been guarantied pursuant to the terms of a Financial Guaranty Bond (the "Financial Guaranty Bond") issued by Capital Guaranty Insurance Company. -7- I. I i(t {;t E� i'. f The Indenture provides that the City shall cause the Sales and Use T less any applicable charges and retainages, to be deposited with the ax Repa°ues l �i Trustee shall, on the last business day of each month, beginning October 31, 199ustee; The �'J from the Sales and Use Tax Revenues deposited with the Trustee amounts sufficie4twtthdrat H the deposits accounts in the Sinking Fund in the following make to the credit of the following and in the following amounts:H. 1°g order (a) To the credit of the Bond Service Account, an amount equal to one. sixththe amount of interest payable on the Bonds of each Series on the next succeeding Payment Payment Date and an amount equal to one -twelfth (1/12th) of the next maturing g I°serest of principal on all Serial Bonds then Outstanding (less certain credits and t°otcerta5 adjustments); subject to certain ry'h (b) To the credit of the Redemption Account, an amount equal to one -twelfth 1 of the principal amount of Term Bonds of each Series then Outstanding ( Is be retired, in satisfaction of the Amortization Requirements, if any, for such Bond to us the premiums, if any, on such principal amount of Term Bonds which would be Year, Payable if such principal amount of Term Bonds were to be redeemed in such Bond Year frommif held for the credit of the Redemption Account (less certain credits); and moneys q, (c) To the credit of the Reserve Account, an amount equal to the Reserve Account s Deposit Requirement for each Series of Bonds. If the amount deposited to the credit of any of the accounts in the Sinking Fund shall be less than the amount required to be deposited as provided above, the requirements therefor nevertheless be cumulative and the amount of any deficiency shall be added to the am ou ant otherwise required to be deposited thereafter until such time as all such deficiencies have been made up. Such amounts of the Sales and Use Tax Revenues as shall be sufficient to make the deposits to the credit of the accounts as prescribed in clauses (a) through (c) above have been pledged by the City under the Indenture for the purpose of making such deposits so long as any of the Bonds are Outstanding. Any Sales and Use Tax Revenues in excess of amounts required to be deposited by clauses (a) through (c), inclusive, above shall be transferred by the Trustee within one business day of 1i the last business day of each month to one or more Depositories selected by the City and may be used by the City for any purpose provided by the Sales and Use Tax Ordinance. The City cannot predict with certainty the expected amount of Sales and Use Tax Revenues to be received. See the caption 'SECURITY FOR THE BONDS -- Sales and Use Tax •- Estimated Furore Sales and Use Tax Revertes' herein. The Indenture provides that the City will take all actions permitted by law to continue to receive the Sales and Use Tax Revenues in the greatest amount possible and that, except to the r• extent required by law, the City will not take any action the result of which could be a reduction or diminution of the Sales and Use Tax Revenues below the level which would have been received but for such action. Sales and Use Tax General. Pursuant to Subchapter 2 of Chapter 75 of Title 26 of the Arkansas Code, Annotated and Ordinance No. 3381 of the City, the City has levied a one percent local Sales 4i and Use Tax on all items which are subject to taxation under the Arkansas Gross Receipts Tax erafed washes eat brought .into hed, madded, or Service of cable oftelevisoa, V abeex,or, users im aid; any other ch. fig of. all kinds, if all kinds; and etsor. admissjons. sarfees for tha detie; or recreatit dues; or fees.' , or'reatal of mo nscfiiaery rented r of etotor vehicle: the e 8inntn wlth �t6 T+t. x 8 mO ry Trustee amo�er�h1T of 1941 or the Arkansas Compensating Tax Act of 1949. The Sales and Use Tax is lUse i i '1 I SInktn6 tiad°art+°fitgyh ,, Act imited" to Y FOP- THE BONDS - Sales and Tax Single Transaction describeduLimitar on" herein SrCURI to to the Ordinances and the Indenture, the City has pledged a portion of the amounts tm HtY v�oust equalreceived pursuant Use Tax to the payment of the Series 1990 Bonds as described from the Sales and ewes on one SECURITY the cap tioa " FOR THE SERIES 1990 BONDS -- General^ above, t' t fie ne u q • certa e`lts next mafnp•' '' ` under Tax. The sales tax portion of the Sales and Use Tax is generally levied upon the aaod d su >ant. Sales proceeds or receipts derived from all sales to any persons within the City of the following: j 'bq mount gross (a) Tangible personal property; equal to s`' es then l Otitstand.edhs (b) Natural or artificial gas, electricity, water, ice, steam, or any other utility or i� m Bonny' f°r such Eoll ds which d public service except transportation services, sewer services, and sanitation or garbage services; ed in such B0p tv°uld 1i 1 . : •1 collection in credits ; d Yeu " and t+e� (c) (i) Service by telephone, telecommunications, and telegraph companies to subscribers or users, including transmission of messages or images, whether local or long Dual equal to theA ''`' l ice rental all and on having anyrges, connectionstwithion charges' aadlallnervicecandcarental charges ransmisionstofcany image; jl h• i message or :ousts in the ' F: -} S+a ove,e (ii) Service of furnishing rooms by hotels, apartment hotels, lodging houses, and uve ncy hall [ ba menu tourist camps or courts to transient guests; added'+ e as all such dehmenri° ❑t Service of alteration, addition, cleaning, refinishing, replacement, and repair of motor vehicles, aircraft, farm machinery and implements, motors of all kinds, tires and I be sufficient to maleth ` batteries, boats, electrical appliances and devices, furniture, rugs, upholstery, household appliances, televisions and radios, jewelry, watches and clocks, engineering instruments, medical 8h (c) above have btea' ` . ' and surgical instruments, machinery of all kinds, bicycles, office machines and equipment, IC h deposits so long ii s' shoes, tin and sheet metal, mechanical tools, and shop equipment. However, the tax does not apply to coin -operated car washes nor to the maintenance or repair of railroad parts, railroad cars, and equipment brought into the State solely and exclusively for the purpose of being required to be depositoj repaired, refurbished, modified, or converted within the State; Trustee within one busiash ones selected b the • "" Y C!!, (iv) Service of cable television, community antenna television, and any and all - ; d Use Tax Ordinance.';: ' other distribution of television, video, or radio services with or without the use of wires provided to subscribers or users including all service and rental charges, installation and repair ant of Sales and UseTu0.T service charges, and any other charges having any connection with providing cable television ONDS •- Sales and Unto services; (d) Printing of all kinds, types, and characters, including the service of overprinting, s permitted by law 6 cnu and photography of all kinds; and mt possible and that; titer' (e) Tickets or admissions to places of amusement and to athletic, entertainment, and the result of which fail ` recreational events or fees for the privilege of having access to or the use of amusement, below the level whichrcdi a entertainment, athletic, or recreational facilities, including free or complimentary passes and tickets, admissions, dues, or fees. (f) Lease or rental of motor vehicles, other than diesel trucks rented for commercial 'Arhlsm. shipping or farm machinery rented or leased for a commercial purpose, for a period less than 30 lease regardless of the length of the rental or Title 26 of the days, or purchase of motor vehicles for rental or lease. s levied a one percent the Arkansas Gross Rey 9 �rt Exemptions From Sales Tax. As summarized below, several types of lrsnsa f + k been - legislatively exempted from the sales lax by the General Assem(ipst bly of h4Yp.`, Current exemptions generally include the sale of; lhq Sigls (a) Used automobiles on which the tax levied has once bean paid by tbn nrl e'- subsequent purchaser; BIAA�p (b) { organizations mayTangible lbeengagedinbusinessty or for profit; services by churches, except s", e, loch' (c) Tangible personal property or services by charitable argaai%aligns such organizations may be engaged in business for profit; eCeepl Whelp (d) Food in public, common, high school, or college cafeterias operated primarily for teachers and pupils, and not operated primarily for the d lltnchrAgnq profit; pnhlle nt font ¶9(e) Newspapers; (f) Property or services to the United States Government;; Motor vehicles vehicles or equipment with financial'disabled as ista cee of theVeterans Admin;strithave purChzted ion (h) Tangible personal property or services to the Boy Scouts of America, the Gltl Scouts of America, or any of the Scout Counsels in the State; and tangible persona' nrnperly xi services to the Boys Clubs of America or say local counsels or organizations of the Boys Clubs of America, the Girls Clubs of America or any local counsels or .organizations of the (hilt Clubs of America, the Poets' Roundtable of Arkansas, 4.11 Clubs, FFA Clubs, the Arkansas 4•I� Foundation the Arkansas Future Farmers of America Foundation, and the Arkansas Futare Farmers of America Association; (i) Gasoline or motor vehicle fuel on which the motor vehicle fuel or gasoline tax l t been geld to the State and special fuel or petsoieurn products sold for consumption by vessels, berts, and other commercial watercraft and railroads; 1 ()) Property resales to persons regularly engaged in the business of reselling tl:e articles purchased, whether within or without the State if the sales within the State are made to persons to whom sales tax permits have been issued; jjj (L) Advertising space in newspapers and publications and billboard advertising services: ii (l) Gate admission fees at state. district, county, or township fairs or at anyrodevif for receipts or proceeds aerrved from at admission lees to the eoduv are used er:luively fw the im➢rovementmaintenance, and Operation of such rudov and if no part of the net earaisgm the:eof inures to the benefit of any private stockholder or individual• (s) vruperr`' resales which the State is pruitibnt;d by the Constitution and .laws of the United States u: by tie Cuustitutioo of the State from taxing; to) holated sales tint made by an estabiisied business: -1O- aGe ral tYPea aeral Assembyar u Cotton, compressed seed cotton, lint cotton, baled cotton, whether or not, in its original condition; seed for use is the commercial production of an oace be,fr4�d en. �a� cottonseed oaaicultural product or of seed; raw products from the farm, orchard, or garden, where such pat d byt eg by the producer of such raw products directly to the consumer and user; livestock, is made ltry products, and dairy products of producers owning not more than five cows; and churches eXe � b byrchicke Pt,k.X4a (p) Foodstuffs to governmental agencies for free distribution to any public, penal, and ritable orgaatzahoa; free needythe rental or le of notherbenef 3 s tofdistribution m:dmalyequipme tufo enrolled in and eligible orMed care orr Medicaid Tolle a t B td .cafeterias and pgmarilY programs; (q) Tangible personal property or services provided to any hospital or sanitarium for the for charitable and nonprofit purposes or any nonprofit organization whose sole purpose Pp kE operated temporary housing to the family members of patients in a hospital or sanitarium; 0P°provide (r) Used tangible personal property where such property was (i) traded in and by the seller as part of the sale of other tangible personal property and (ii) the neat; accepted Gross Receipts Tax was collected and paid on the total amount of consideration for Arkansas sale of the other tangible personal property without any deduction or credit for the value of aled era t vet its Who havr the the used tangible personal property. The condition that the Arkansas Gross Receipts Tax was :raUS Administration e collected and paid on the total amount of consideration is not required for entitlement of this exemption when the sale of the other tangible personal property was otherwise exempt under 30Y Scouts of Arlen ' " other provisions of the Act. Further, this exemption does not apply to transactions involving and tangible .dt : used automobiles, used mobile homes, or used aircraft, as provided for in Arkansas Code perso ar organizations t e� ht Annotated (1987 & Supp. 1989) sections 26-52-510(b), 26-52-504, and 26-52.505, respectively; of sels or organizations oy bs, FFA Clubs, thega tk� (s) Unprocessed crude oil; dation, and the A�iaasQ(t) Tangiblepersonal property consisting of machinery and equipment used directly in B P P Y producing, manufacturing, fabricating, assembling, processing, finishing, or packaging of articles ar vehicle fuel of commerce at manufacturing or processing plants or facilities in the State; or gasolm b sold for consumptioohyta . (a) Tangible personal property consisting of machinery and equipment required by State law or regulations to be installed and utilized by manufacturing and processing plants or facilities to prevent or reduce air or water pollution or contamination; the business of n r• esrlfigi ales within the State amen[ (v) Electricity used in the manufacture of aluminum metal by the electrolytic reduction process; [ions and billboard adres (w) Articles sold on the premises of the Arkansas Veterans Home; (x) Automobile parts which constitute "core charges" which are received for the :ownship fairs or at aoythi purpose of securing a trade - in for the article purchased; to rodeo are used esclosiro46 id if no part of the nctn (y) Bagging and other packaging and tie materials sold to and used by cotton gins in is used in the production of dual; • the State for packaging or tying baled cotton and twine which tomato crops; the Constitution and hnifi (z) Prescription drugs by licensed pharmacists, hospitals, dispensing physicians, and a licensed oncologists for human use and oxygen sold for human use on prescription of physician; -11- t iFA t It - �Bi �, ;< �' sM i� f ! a1� .�,. { '� ( 1 r r I (aa) Property or services to humane societies " k�� t t� i� `, (bb) Vessels, barges, nod towboats of at least 50 tons load displacement labor used in the repair and construction of the same aad parts(,! aad "�, II�i. (cc) Property or services to all orphans' a homes or children's ' homes e ���,, 1 operated for profit and whether operated by church, religious or which are not , wE3t Itf! l; ' benevolent charitable association; ganization, or other r xl '` d,4 it , (dd) Agricultural fertilizer, agricultural limestone, or agricultural including, but not limited to, a ricultural B pesticides and herbicides used chemicals ps�ls' production of agricultural products and including vaccines, medications, in the commerce ` �t preparations used in treating livestock and poultry being grown for commercial purposesmedictaal atE stir, (ee) Feedstuffs used in the commercial production of livestock or Poultry in the State; (ff) Tickets or admissions by municipalities to places of amusement entertainment, or recreational events, or fees for the privilege of having sor to athletico amusement, entertainment, athletic, or recreational facilities, including freeor or 6 ? the use Complimentary agcn� passes, tickets, admissions, dues, or fees; complimentary ' ' y (gg) New automobiles to a veteran of the United States Armed Services who is blind as a result of a service -connected injury; of (hh) Rental or lease of specialized equipment used in the filming of a motion pictare dc ar, which qualifies for the tax incentives provided by Arkansas Code Annotated (1987 & Sspp, 1989) sections 26-4-201 to -213, inclusive;, PP �� y�,tir't (ii) The first 500 kilowatt hours of electricitpery and i''Cr C billed to each residential customer whose household income is nomorethan $12,000 per year tares 6 year, �t(tSe (ii) Natural gas, LP gas, or electricity purchased by a processor or mining company in or in connection with the open pit and underground mining or processing of bauxite; (kk) New custom manufactured homes constructed from materialson which the j� asd F Arkansas Gross Receipts Tax or Arkansas Compensating (Use) Tax has been paid; y prrd (11) Repair or refurbishing of telephone instruments sent into the State fofrs or repair and then shipped back to the state of origin; F r refurbishing (mm) New and used farm equipment and machinery; Truua limes ask (nn) Motor vehicles to municipalities and counties or to state -supported colleges and �et3r pcmag pmeimcf� universities or to public school districts in the State; (On) School buses to school districts of the State; isned nt �tci� ai (pp) Purchases made with U.S.D.A. food stamps. zca�er,`.taa< Gir (qq) Religious, professional, trade, and sports journals and publications Pig racy printed and •Ira published within the State and sold through regular subscriptions; dti5 r g 12- 1�K Iii l ( 1 (as) Property or services to humane societies; (bb) 1 I ' the repair and constructionof the same sels, barges, and towboats of at least 50 tons load displacement and labor used inparts P aad , operated (cc) for Property and servicesto to operatedomes church, religious o homes which a e nut P profit P by B ganization, or et benevolent charitable association; oth (dd) Agricultural fertilizer, agricultural limestone, or agricultural nhemtca including, ut not limited r duct on bof agricultural to, pultandf pesticides including and vaccinesrcrdes used medicat medications, the commerciaj production g products and preparations used in treating livestock and poultry being grown for commercial purpOnes;al medicin (ee) Feedstuffs used in the commercial production of livestock or poultry in the State; (ff) Tickets or admissions by municipalities to places of amusement or to athletic, entertainment, or recreational events, or fees for the privilege of having access to or the use of amusement, entertainment, athletic, or recreational facilities, including free or complimentary passes, tickets, admissions, dues, or fees; (gg) New automobiles to a veteran of the United States Armed Services who is blind as a result of a service -connected injury; (hh) Rental or lease of specialized equipment used in the filming of a motion picture which qualifies for the tax incentives provided by Arkansas Code Annotated (1987 & Supp. 1989) sections 26-4-201 to -213, inclusive; (ii) The first 500 kilowatt hours of electricity per month and the total franchise taxes billed to each residential customer whose household income is no more than $12,000 per year, (jj) Natural gas, LP gas, or electricity purchased by a processor or mining company in or in connection with the open pit and underground mining or processing of bauxite; (kk) New custom manufactured homes constructed from materials on which the Arkansas Gross Receipts Tax or Arkansas Compensating (Use) Tax has been paid; (11) Repair or refurbishing of telephone instruments sent into the State for refurbishing or repair and then shipped back to the state of origin; (mm) New and used farm equipment and machinery; (nn) Motor vehicles to municipalities and counties or to state -supported colleges and universities or to public school districts in the State; (no) School buses to school districts of the State; (pp) Purchases made with U.S.D.A. food stamps. (qq) Religious, professional, trade, and sports journals and publications printed and published within the State and sold through regular subscriptions; -12- nor ectly in lines and pipeline' d navigatit portation'I ransportat aipment,; I acthty eni asWk>G .Tickets for admission to athletic ents and interscholastic activities at `• Private elementary and secondary schools inevthe State; etr )t brr fic and (as) hfotor fuels to owners or operators of motor buses operated on designated streets sti,,�A sty "�q� rdiag to regular schedule and under municipal franchise which are used for municipal �j a� u uses; and uaaapomtson p gas and electricity to taxpayers ualified under Act No. 48 of 1987 as a (n) Natural qualified manufacturer of steel" for use in connection with the steel mill. r �4_:' qualified (uu) Used house trailers or mobile homes on which the gross receipts tax or the has been by the original or use tax once paid a subsequent purchaser; bmpeesating or ;% (vv) The repair or remanufacture of industrial metal rollers that have a remanufactured, metallic, material covering on all or part of the roller surface which are brought into the �s ; gos and exclusively for the purpose of being repaired or remanufactured in this State Sute solely then shipped back to the state of origin. aadare 'Arkansas Gross Receipts Reference is made to the Act of 1941," Arkansas Code Annotated .lviitrt:rc (1951 & Supp, 1989) sections 26-52-101 to -903, inclusive, for more specific information rx concerning the sales tax. 4 a .. Use Tax. The use tax portion of the Sales and Use Tax is levied on every person for the tie t at� privilege of storing, using, distributing, or consuming in the City any article of tangible purchased for storage, use, distribution, or consumption. The use tax applies C� es (19f! personal property to the use, storage, distribution, or consumption of every article of tangible personal property except as described below. The tax does not apply to aircraft, aircraft equipment, and railroad z '•. parts, cars, and equipment, nor to tangible personal property owned or leased by aircraft, Yazd r� �': ` automotive, or railroad companies brought into the City solely and exclusively for refurbishing, t>az 5 2e, ; conversion, or modification within the City or storage for use outside or inside the City of the length of time any such property is so stored in the City. The use tax is sg p"„mot cr m ' regardless levied on the following described tangible personal property: or pre% -fix cs (a) Tractors, trailers, semi -trailers, trucks, buses, and other rolling stock, including f 4. zc +` msch m replacement tires, used directly in the transportation of persons or property in intrastate or ee) exz hr_s bums interstate common carrier transportations; a s.eix is t 5mi _ (b) All tangible personal property (except fuel) consumed in the operation of railroad .C' rolling stock; (c) Transmission lines and pumping or pressure control equipment used directly in or connected to the primary pipeline facility engaged in intrastate or interstate common carrier or s transportation of property; (d) Airplanes and navigation instruments used directly in or becoming a part of flight aircraft engaged in transportation of persons or property in regular scheduled intrastate or interstate common carrier transportation; (e) Exchange equipment, lines, boards, and all accessory devices used directly in and connected to the primary facility engaged in the transmission of messages; rasis aid pocErainm. , ionsz •(f) Transmission and distribution pipelines and pumping or pressure control equipment facility for the purpose used in connection therewith which is used directly in primary pipeline of transporting and delivering natural gas; Ti -13- . (1 x{yit F,Yry i E l } I}� � ! ( r J l+ 1 (g) Transmission and distribution lines in connection therewith and cleaning or treating pumping machr°try, anCo d r� lts4,.�i distribution system; equipment of a prim trots aced ary watt, (h) Tangible personal property of public electric Power companies illy machinery and equipment, including reactor cores, and related accessory devices st.of NII, generation and production of electric power and energy,Y devices ah the lines, • including poles, towers, and other supportng structures, ucturess,, ttransmittilnties used in6tuf t and energy together with substations located on or attached to such lines; and cansntPow`` transmitting electric er (i) Computer software including tapes, disks, cards, or other devices which contain instructions for a computer and dictate different o or to performed by the computer. Operations or functio aterials, ns to be Exemptions from Use Tax. Some of the property exempted from the use tax Assembly of the State is as follows: by the Genera; (a) Property, the r e taxing under he Constitution storage, or u laws of the United States of America or of se, or consumption of which the State prohibited State; ; (b) Tangible Act of 1941 is le ved and personal propertyexempted therefrom; aproperty which under the Arkansas Gross R ceipu (c) Unprocessed crude oil; (d) Machinery and equipment used directly in producing, manufacturing , assembling, processing, finishing, or packaging of articles of commerce at or processing plants or facilities in the State, including facilities and f turingiug feed, processing of poultry, eggs, and livestock, and the hatching of °taut only urfng a ., plants for manufacturing extent that the machinery and equipment is purchased and used to create new Processing plants Poultry, but to the or facilities within the State or to expand existing manufacturing or plants or facilities within the State; and machinery purchased to replace existing used directly in producing, manufacturing or Processing Packaging manufacturing, fabricating,P g machinery and B B of articles of commerce at manufacturing r assembling, processing, finishing, or State; processing plants or facilities in the (e) Machinery or equipment required installed and utilized by q by State or federal law is the State to prevent or reduemanufactring airoruwateror pollutiontg plants or facilities or cities or towns be contamination; or regulation to be (f) Aircraft, aircraft equipment, nn personal property owned or leased b pment, railroad parts, cars, and equipment, and tangible Statey aircraft airmorive, or railroad companies, brought into the 'r Solely and exclusively for refurbishing, conversion, or modification or for storage for use outside or inside the State; (ry (g) Vessels, barges, and towboats of at least 50 tons load displacemenhe labor used in the repair and construction of them; t and parts and (h) Motor fuels to the owners or operators of motor buses operated on designated streets according to regular schedule, under transportation u municipal franchise, which are used for municipal ea p rposes; ta4 (i) Custom manufactured homes constructed from materials on which the Arkansas Gross Receipts Tax or Arkansas Compensating Use Tax has once been paid; nigp 14• x�>` r anmC • th211 sad. we ta= as trl dtuge for the l t b rani mccam shal5 he cr IiHA pmpect mast a gapineat fins hero rc or moor ;'sins ntacciaeq are: strfd sat of the sa the mraD amount .F the inaaira ecfes, d llpa4, a salted ahaae,, a. s ik refli emch, an ai ifie !efts and &si an a Ado ah s- tti )5,P� *A. achtn f � rti, t 3 �t teat ! asod t� Fs a pry�a,'u�oy'- �)rs 'J v Agricultural fertilizer, agricultural limestone, agricultural ��pesticides and herbicides used in g chemicals, rsw�0 company ; t," tccesso a cc 4 �dpdiag agricultural commercial production of cultural products, and vaccines, medications, and medicinal preparations, used in treating sp being grown for commercial purposes; r 5 miss ry devtces�°g of �. a fahlltiea Grptoc t and poultry �'� �mtttin (k) All feedstuffs used in the commercial production of livestock or poultry in the wf lines, and ,. B etecpu .� wu; and r otier (1) All used cars upon being registered in the State for the first time. des aperatioits ytcean oa or fu ttai (m) Any tangible personal property used, consumed, distributed, or stored in this State 4 which a like tax, equal to or greater than the Arkansas Compensating Tax, has been paid ° the use by the tpoa is mother state.. Ceo Reference is made to "The Arkansas Compensating Tax Act of 1949," Arkansas Code the State a000tated (1987 Sc Supp. 1989) Sections 26-53-101 to -131, inclusive, for more information fs za or of prohibited'1 the state t?e roaterning the use tax. he Arkan :sas Single Transaction Limitation. The Sales and Use Tax is limited to a maximum tax liability The term "single Orou R bra of i'5 for any single transaction. transaction" is defined according to the follows: store of the goods purchased, as (a) When two or more devices in which, upon which, or by which any person or o,operty is, or may be, transported or drawn, including but not limited to on -road vehicles, manufacturtng fahtip' scree off•road vehicles, or farm vehicles, whether required to be licensed or not, airplanes, water at manufactu1 rit resins, motor vehicles, or mobile homes, are sold by a seller, each individual unit, whether part d plants for :maaufamIn, ofa'ffeet" sale or not, shall be considered a single transaction. of poultry, but only toth create new mauufaetorirfq (b) Charges for utility services which are furnished on a continuous service basis, manufacturing or p whither paid daily, weekly, monthly, or annually, shall be computed in daily increments, and dace existing mschine51 each such daily charge increment shall be considered to be a single transaction. The total 1, processing, fiuhhhs u amount of the sales and use tax on each billing cycle may be computed as the lesser of either plants or facilities jab one percent of the total charge for the billing cycle, or $25 multiplied by the number of days in the billing cycle. sl law or regulation (c) For sales of building materials and supplies to contractors, builders, or other ilities or cities or tovwh persons, a single transaction shall be considered to be all sales made with respect to a single construction project (which project must be reflected by location on all invoices or receipts on which a sales or use tax payment has been reported and remitted to the State). d equipment, and taglfo :ompanies, broughtintod (d) When two or more items of major household appliances, commercial appliances, stion or for storagefortx major equipment, or machinery are sold, each individual unit shall be considered to be a single transaction. The total amount of the sales and use tax due may be computed as the lesser of either one percent of the total amount of the invoice or $25 multiplied by the number of displacement and paror:d individual units listed on the invoice. (e) For groceries, dry goods, and other tangible personal property and/or services not es operated bddeaigmm otherwise expressly described above, a single transaction shall be deemed to be any single sale ch used for mooid^ on a single day which is reflected on a single invoice or receipt on which an aggregate sales tax are figure has been reported or remitted to the State. I s the Atla m ddministratfon of the Sales and Use Tax. Pursuant to the Act, the Director of the State Department on which of Finance and Administration (the "Director") performs all functions incidental to paid; -15- des Use Tax Revenues. The City d )n b°half aDueeta�Ukii Historical Sales arid commenced collection of the Sales December, 1988. A similar one local i i the 1 Tax in percent sales and use tax (the Tax") was in effect in the City prior to December, 1988. Set forth below are the City's 'r 4i or receipts from the Prior Tax and from the Sales and Use Tax: via historical i PRIOR TAX REVENUES AND SALES AND USE TAX REVENUES BY MONTH 19 4(t) j.(l)(2) 19Rr(t) i.81<'> jrg(t) 3.2B2< laauary $ 287,352 $ $ 434,960 $ 409,724 $ 423,209 $ 498,211 $ 525,730 February 235 ,681 274,956 308,657 331,063 336,553 320,853 376,157 " itch 237,072 271,794 267,952 287,742 326,114 345,845 380,379 dpril 244 089 299,580 324,396 343,175 334,484 419,780 393,822 illy.] 267,820 339,819 299,535 341,632 358,201 369,357 387,119 May June 257,654 306,132 334,539 355,063 330,815 371,121 390,279 July 291,735 313,962 309,769 333,920 410,972 385,377 437,240 August 268,078 308,134 323,293 328,036 362,941 404,722 September 284,864 308,224 338,313 393,085 372,177 401,781 • October 311,145 344,910 346,218 352,281 358,107 426,814 • November 290,967 297,172 321,898 302,404 374,132 385,158 December 384.602 282.762 365 18 395.319 351,314 416.896 Totals $3 361 0 9 $3.347.445 $3.974,548 $4.173.444 $4.339.019 $4,745,915 (t) Reflects historical revenues from the Prior Tax. (2) The City changed its method of recognizing Prior Tax Revenues in 1985, which resulted in only eleven months of revenue being recorded. ))) Reflects historical revenues from the Sales and Use Tax. • Source: City of Fayetteville, Arkansas. • h Estimated Future Sales and Use Tax Revenues. Future Sales and Use Tax Revenues will be contingent upon the sale and use of property and services within the City, which activity is generally dependent upon economic conditions within the City and surrounding trade area. by changes made by the General Also, future Sales and Use Tax Revenues may be affected Assembly of the State to transactions included or excluded from the Sales and Use Tax. In the • •„ ! past, the General Assembly of the State has considered changes to the Sales and Use Tax which, if adopted, would materially reduce future Sales and Use Tax Revenues. The City has no whether changes to the Sales control over actions of the General Assembly and cannot predict with certainty the expected and Use Tax may be made. Accordingly, the City cannot predict be amount of Sales and Use Tax Revenues to received. -17- fir_ IL Reserve Account ypj � l� l,� , { The Indenture provides for the establishment and maintenance of a Reserve within the Sinking Fund. Upon delivery of the Series 1990 Bonds, the City shall de unt credit of the Reserve Account a sum equal to the Reserve Account Deposit Re quire ent�t to theft . 4 went, Moneys held for the credit of the Reserve Account shall be used for the purpose of paying the interest on and the principal of the Series 1990 Bonds and to provide funds for retirement of Term Bonds to the extent of the Amortization Requirementthes therefor whenever'' and to the extent that the moneys held for the credit of the Bond Service Account shall insufficient for such purpose. If at any time the moneys held for the credit of the be Account Reserve', shall exceed the Reserve Account Requirement, such excess shall be withdrawn Trustee and be liprior shall transferred to the Construction Fund during the period y the - completion ' of the Improvements or to the Bond Service Account or the Redemption Accounttht ;+ the option of the City; provided, however, that the City may provide for a different at' dis p°sition' of any such excess in the Series Ordinance providing for the issuance of any Series of Boods. In the event that all or a portion of the Reserve Account Requirement for provided by the alternate funding methods permitted in the Indenture, if after a any Series is from the Reserve Account the City shall cause the letter of credit, insurance policy or instrument similar Other to be reinstated in the full amount of the Reserve Account Re qui ement`hs additional deposits of moneys to the Reserve Account shall be required in connection withdrawal. with such Upon the issuance of any additional Series of Bonds, the City shall, on the date of delivery of such Bonds, increase the sum required to be accumulated and maintained on deposit in the Reserve Account to be at least equal to the Reserve Account Requirement on all Outstanding Bonds including the Bonds then issued. For additional information concerning the Reserve Account, see "Reserve Account Deposit Requirement" and "Reserve Account Requirement" under the caption "CERTAIN DEFINITIONS" herein. [This space left blank intentionally.] -18- DEBT SERVICE REQUIWdENTS o' tFatplste�� The following table details amounts required to pay scheduled principal maturities, and interest payments on the Series 1990 Bonds during each year. skali a trtedi r `�a' % Rdemprions Principal Maturities its ,r'1 a I'rov e¢uiretII�� ' and Mandatory Interest Debt f1� 1 Redemptions Service 51�fort ess- gC 1991 S 824,000 1,065,000 S 2,469,634 2,230,223 S 3,293,634 3,295,223 .4 dtutng≤' 1 992 1493 1,130,000 2,165,257 3,295,257 ' 'a 1444 1,205,000 2,095,197 2,019,283 3,300,197 3,299,283 •b1 prop] r 7 1995 1,280,000 1,937,362 3,297,362 n�of'aAdtft nYSen 1996 1,360,000 1,450,000 1,848,963 3,298,963 re fk . . 1997 1998 1,545,000 1,753,262 1,649,748 3,298,262 3,299,748 1,650,000 E credy- ,tt.ster. t tn3aran� .; q Reserve; A'? a ;000 2 001 1,765,000 1,890,000 1,537,547 1,415,763 3,302,547 3,305,763 uat,g —raiedtsconna�?t '-,020,000 1,283,162 3,303,462 '003 2,165,000 1,141,053 3,306,053 2004 2,325,000 986,255 3,311,255 . the City oaf 2005 2006 M495,000 2,675,000 820,017 641,625 3,315,017 3,316,625 mttlateda maiataiaaa i 2007 2,870,000 117,688 3,317,688 •fve hccount: Bey. �t:.al 7tiona! _008 3.30.5.4 239.612 3.544.612 inforIDlttoQtapC ear' and: 'lteuoe y� Totals 5 19 S26.681.951 8 9 7 9 1 rein. [This space left blank intentionally.] ' I -19- • f. ESTIMATED DEBT SERVICE COVERAGE Set forth below is estimated debt service coverage information for The estimate of annual Sales tPt� the and Use Tax Revenues utilized in Series 1990 which is equal to actual Sales and Use Tax Revenues for the twelve calculation July, 1990. See the caption 'SECURITY FOR is $4 9 6 pgA tperiod {�! f e THE BONDS -- Sales and Usa pert eadiq I' Sales and Use Tax Revenues" herein. Tax Bin r .- Nistoricai 1 The City cannot predict with certainty the expected amount of Sales and to be received. See the caption "SECURITY FOR THE BONDS -- Sales Use Tax R Estimated Future Sales and Use Tax Revenues" herein. The figures set forthand u estimate and there can be no assurance amount shown below: that actual Sales and Use Taxbelow are oo y an Revenues will equal the Estimated Annual Sales and Use Tax Revenues $4,926 097 Maximum Annual Debt Service on the Series 1990 Bondstt) $3,317,688 Estimated Coverage 9 ;r (t) Excluding Debt Service in 2008 to be paid in part with Reserve Account moneys. SOURCES AND USES OF FUNDS The proceeds of the Series 1990 Bonds are anticipated to be used in the following Sources of Funds g maaaer. Proceeds of the Series 1990 Bonds ++. $33.0QQ Total Sources: [� Uses of Funds Cost of Improvements Deposit to Reserve Account $28,596,788 Costs of Issuance Bond Insurance Premium 3,301,900 583,003 Total Uses: 7 09 jln! 019000 Wu [This space left blank intentionally,] 20 - ,1Z/31/9 igures for the Was— hin�r^_ 5 8,58 9,16 Po,fl a �aT�' for!tht Se s�esr y. thu calcglaho ' 1 THE CITY a'elve mouth' a t+ i4 a Aux , ales and U Pekpd a Geael uTa Rye The city is a city of the first class organized and existing under the laws of the State of is }� of Sates kaasas (the "State"). The City the seat of government of Washington County (the "County") x k b S and Use lr is the fifth largest city in the State. The City is located in the Metropolitan Statistical T''" r �e an sad of Fayetteville -Springdale in the northwest part of the State and is approximately 185 miles set fotth beltu e : ak'-aodhwest ,lien of Little Rock, Arkansas, 125 miles east of Tulsa, Oklahoma, and 210 miles south of Paz Rey50,o1. Kansas City, Missouri. = The City is served by U.S. Highways 62 and 71, State Highways 16, 45, 112, 156, 180 and 54,926 ,097 bj The Burlington -Northern Railroad has several lines running through the City, and a with •a 6,006 foot runway is available for air travel. Commuter airlines provide flightsthe t. da�lycp31airport S3,317,688 1 45 Government n;Aa t#n! , rye Account The City operates under the City Manager form of government pursuant to which seven moneysat+ directors are elected at large to serve on the Board of Directors and a full-time City Manager is employed. Four directors must reside in designated wards within the City. The Board of Directors elects one director to serve as Mayor for a two-year term. The Mayor does not have veto power. The current Mayor and members of the Board of Directors of the City, the years in ised in the foil owing "'hick their terms expire and their principal occupations are as follows: m lame Term Expires Principal Occupation William Martin 12/31/90 Mayor/CEO and President of Arkansas S 19 Western Gas Fred Vorsanger 12/31/92 Assistant Mayor/Vice President (Emeritus) University of Arkansas Michael Green 12/31/92 Engineer $28,596,788 Shell Spivey 12/31/92 Executive Vice President of First .. 3,301,900 National Bank 583,003 Ernest Lancaster 12/31/90 Retired 537.309 Russ Kelley 12/31/90 Financial Consultant for Merrill, Lynch, Pierce, Fenner & Smith, Inc. $33,019,000 Paul Marinoni, Jr. 12/31/90 Farmer Economic Data 1. Per capita income figures for the County and State are as follows: •Year Washington County State of Arkansas 1982 S 8,586 $ 8,605 9,098 1983 9,164 1984 10,238 9,933 1985 10,922 10,526 1986 11,634 11,050 1987 12,150 11,538 • Source: U.S. Bureau of Economic Analysis. • 21 r �+ ' I 2 '•�1��� it �7 Ir�I :; Retail sales figures for the City, County and State are as follows: 11 I. �(t ' :� +� � City of Washington State of Year Fayetteville County Ar[ansag •;� �; 1984 $336,865,000 $569,127,000 367,560,000 623,247,000 $10,484,427,000 11,074,799,000 1� 1985 1986 420,739,000 649,750,000 11,733,828,000 (- r 1987 450,438,000 692,830,000 12,129,763,000 1988 472,642,000 726,962,000 12,742,118,000 IS; F 4th4 Source: Sales and Marketing Management Survey of Buyer Power. The following table shows the total assessed value of real and personal 3 property.,; within the City for the years indicated: Real Property Personal Property • 1983 $ 59,667,270 $24,124,885 I �Gii 1984 62,797,945 25,870,570 • 1985 165,514,940 39,355,360 1986 170,543,026 40,886,665 1987 176,276,162 43,951,545 1988 183,113,783 50,989,875 1989 189,400,558 58,753,884 The following table shows the total assessed value of real and personal property within the County for the years indicated: Real Property Personal Property 1983 $141,586,495 $ 61,493,760 1984 147,382,925 65,375,310 • 1985 385,802,975 84,942,340 1986 396,888,985 98,704,405 1987 410,113,703 104,173,357 1988 425,306,283 123,707,616 1989 444,311,743 144,004,357 Building permits issued by the City(1) are shown below for the years indicated: 985 1286 1987 1988 1989 Mt:> Single Family 171 198 218 183 171 69 • Multifamily 58 56 31 61 28 4 Commercial 25 25 26 34 39 8 Value of All Building Permits $33,063,628 $19,080,672 $17,002,278 $21,341,739 $21,483,018 $15,470,41! t> Does not include building activity of the University of Arkansas. (2) Through April of 1990. .22_ Y} �t leap IN I C Retail sales figures for the City, County and State are as follows: City of Washington State of Fayetteville County Arkansas 1984 $336,865,000 $569,127,000 $10,484,427,000 1985 367,560,000 623,247,000 11,074,799,000 II 1986 420,739,000 649,750,000 11,733,828,000 1987 450,438,000 692,830,000 12,129,763,000 i 1988 472,642,000 726,962,000 12,742,118,000 Source: Sales and Marketing Management Survey of Buyer Power. The following table shows the total assessed value of real and personal property within the City for the years indicated: Real Property Personal Property ,,. 1983 $ 59,667,270 $24,124,885 :-! 1984 62,797,945 25,870,570 1985 165,514,940 39,355,360 • 1986 170,543,026 40,886,665 1987 176,276,162 43,951,545 1988 183,113,783 50,989,875 1989 189,400,558 58,753,884 The following table shows the total assessed value of real and personal property within the County for the years indicated: Real Property Personal Property 1983 $141,586,495 $ 61,493,760 1984 147,382,925 65,375,310 1985 385,802,975 84,942,340 1986 396,888,985 98,704,405 1987 410,113,703 104,173,357 1988 425,306,283 123,707,616 • 1989 444,311,743 144,004,357 Building permits issued by the City(1) are shown below for the years indicated: 1 5 1986 1987 1988 1989 122Q12) Single Family 171 198 218 183 171 69 Multifamily 58 56 31 61 28 4 Commercial 25 25 26 34 39 8 Value of All Building Permits $33,063,628 $19,080,672 $17,002,278 $21,341,739 $21,483,018 $15,470,411 (1) Does not include building activity of the University of Arkansas. (2) Through April of 1990. .22. u n ( ..n ower of real P • $24,1248F 43,951,545 50,989,875 ?'r 58,753,884 r< of real and penoai r3:c S 61,493,760 65,375,310 84,942,340 98,704,405 104,173,357 123,707,616 144,004,357 the years indicated 12 183 171 61 34 $21,341,739 S21,483ollfy usas. Employment and Industry The University of Arkansas is located in the City and had total enrollment for Spring of 1990 of 13,237. For the 1989-9O fiscal year, the University had an operating budget in excess of S130 million. The University employs approximately 3,912 faculty, administrative, ucretarial, clerical and maintenance personnel. Other major employers in the City, their products or services and approximate number of employees are set forth below: Em Product or Service Numbe rof Employees bell Soup Manufacturer of frozen Camp dinners and entrees 1OOO Nashingtoa Regional Hospital 1OOO Medical Center Tyson's Mexican Manufacturer of tortillas Original Division and chips 8OO Superior Industries International Manufacturer of cast aluminum heels Incorporated 48O Levi Strauss Co. Clothing manufacturer 385 Standard Register Co. Manufacturer of business forms 325 Baldwin Piano & Organ Co. Manufacturer of keyboard and electronic products 25O American Air Filter Manufacturer of air filters 175 Elkhart Products Corp. Manufacturer of copper pipe fittings 171 Kearney Corp. Manufacturer of electrical highwire connectors 16O Unemployment figures for the City, County and State according to the Arkansas Employment Security Division, are as follows: City of Washington State of Year Fayetteville County Arkansas 1986 5.0% 4.8% 8.7% 1987 4.3 4.1 8.1 1988 4.5 4.2 7.7 1989 3.7 3.7 7.2 1990' 3.8 3.6 7.3 'March of 199O only. -23- Population The City and County have experienced steady increases in population over the last several decades. Population figures, according to the United States Bureau of the Census; are as follows: 11 City of Fayetteville Washington Count.. 1940 8,212 41,114 1950 17,071' 49,979 1960 20,274 55,797 1970 30,729' 77,370 1980 36,608 100,494 1989 (estimated) 42,084 112,000 'Population figures reflect increases due to annexation. 1 THE IMPROVEMENTS The Improvements consist of the acquiring, constructing, reconstructing, improving, renovating, expanding and equipping of eleven (11) separate capital improvement projects for the City. As individually described below, the Improvements and the Costs thereof to be paid with Series 1990 Bond proceeds are as follows: (i) constructing, reconstructing and improving City streets and bridges at an approximate cost not to exceed $10,717,000; (ii) acquiring, constructing and equipping water transmission and distribution facilities at an approximate cost not to exceed $9,988,288; (iii) acquiring, constructing and reconstructing drainage improvements at an approximate cost not to exceed $1,542,000; (iv) acquiring, constructing and equipping solid waste collection, disposal, compacting and recycling facilities at an approximate cost not to exceed $1,025,000; (v) acquiring, constructing and equipping public parks and playgrounds at an approximate cost not to exceed $487,000; (vi) acquiring, constructing and equipping police equipment, apparatus and facilities at an approximate cost not to exceed $185,000; (vii) acquiring, constructing and equipping firefighting vehicles, equipment, apparatus and facilities at an approximate cost not to exceed $1,475,000; (viii) acquiring, constructing and equipping emergency medical service vehicles, equipment and facilities at an approximate cost not to exceed $60,000; (ix) expanding and renovating the City Youth Center swimming pool and related facilities at an approximate cost not to exceed $867,500; -24- i d5 dih �'a SYt Ir 7. It II Stat 8P°lat 01 s "f acquiring, constructing and equipping parking facilities for the Dickson �a �gtt of `tCry area at an approximate cost not to exceed $1,750,000; and " 1 4 S steel acquiring, constructing and equipping City maintenance and storage facilities and building sat an approximate cost not to exceed $500,000. G Tys 41114_ 49,979 ' CERTAIN DEFINITIONS 55,797r 77"370 `: following are definitions of some of the words and terms used in the Indenture and this I .; r 100,494 ; a The Official Statement 112 p00 pccountant" shall mean the independent certified public accountant or firm of independent ceriifje public accountants which shall have a favorable reputation for skill and experience in matters at the time and during the period employed by the City to perform and • accounting the duties imposed on the Accountant by the Indenture. carry out Accreted Value of a Capital Appreciation Bond shall mean the original principal amount �,tl plus interest accrued thereon on the basis of a 360 -day year consisting of twelve 30 -day thereof months compounded semi-annually on each Interest Payment Date commencing on the Interest d , • Brnctiri v4z payment Date next succeeding the dated date of such Capital Appreciation Bond to the date of The t�°nsrmq K Lrate p prior maturity Capital Appreciation or redemption to of such A reciation Bond. Accreted ca Value with respect to any date other than an Interest Payment Date is the Accreted Value on [eats and the�CPa°mAthj the next preceding Interest Payment Date or the dated date of such Capital Appreciation Bond `k the percentage of the Accreted Value on the next succeeding Interest Payment Date derived plus by dividing the number of days from the next preceding Interest Payment Date or the dated B City strt y155 i,rLt : date of such Capital Appreciation Bond for the period between such dated date and the initial Payment Date for such Bond to the date of determination by the total number of days • Interest from the next succeeding Interest Payment Date or the dated date of such Capital Appreciation t ansmissioat aad , : Bond to the next succeeding Interest Payment Date. • Amortization Requirements" shall mean the amounts required to be deposited in the ng draiat¢e 't Redemption Account for any Series of Bonds for the purpose of redeeming prior to their maturity and paying at their maturity the Term Bonds of such Series, the specific amounts and., times of such deposits to be determined by the Board in the Series Ordinance providing for the ".2 cfl:cnaz ff issuance of such Series. xc! d $I"B'''= 'Annual Budget' shall mean the Annual Budget of the City adopted pursuant to the �nlic Is End aht t' Indenture. "Average Annual Debt Service" shall mean at any given time of determination average annual Principal and Interest Requirements for the Bonds until their final maturity. mam'nt n td 'Board' shall mean the Board of Directors of the City or any successor board or body in which the general legislative powers of the City shall be vested. itinhnP 4 UD "Bond Counsel" shall mean a lawyer or firm of lawyers nationally recognized in municipal bond law selected by the City. :mc�.� mna4z! svc • Bond Registrar" shall mean a bank or trust company, either within or without the State, functions as Bond Registrar as are designated as such by the Board which shall perform such if Board shall so determine, the City Clerk innmnz ' required by the Indenture; provided, however, the may act as Bond Registrar. 0' 1r ^..w r f -25- i s "ond Service Account" shall mean the created and designated by Section 501 of the Indeo u red Service Account, a special account "Bonds" shati mean collectively the Bonds issued under the provisions of the Indentur"Bond e. Year" the f ar"shall mean the iod commencing on November 15, of any year and end Novembering oa' "Capital Appreciation Bond" shall mean any Bond or Bonds of a Series which are sold at an initial price to the public of less than ninety-seven percent (97%) of the principal a atflOan: thereof payable at maturity, but only if such Bond or Bonds are designated as a Cypital Appreciation Series or Term Bond or Bonds pursuant to the Series Ordinance providing for the issuance of the Series of Bonds of which such Capital Appreciation Bond or Bonds are to be e. part. "Capital Guaranty" shall mean Capital Guaranty Insurance Company or any successor thereof. "City" shall mean the City of Fayetteville, a municipal corporation in Washington County, Arkansas. "City Attorney" shall mean the City Attorney of the City or the officer succeeding to his or her principal functions. "City Clerk" shall mean the City Clerk of the City or the officer succeeding to his or her principal functions. "Code" shall mean the Internal Revenue Code of 1986, as amended, and all regulations applicable thereto. "Completion Date" shall mean the date of completion of the Improvements, as such date shall be certified pursuant to the requirements of the Indenture. "Construction Fund" shall mean the City of Fayetteville Sales and Use Tax Capital Improvement Bonds Construction Fund, a special fund created and designated by Section 401 of the Indenture. "Convertible Bonds" shall mean Bonds issued under the Indenture which are convertible, at the option of the City, into a form of Bonds which are permitted by the Indenture other than the form of such Bonds at the time they were issued. "Cost", as applied to the Improvements, shall embrace the cost of the work constituting the respective Improvements, including all obligations and expenses and all other items of cost which are set forth in Section 403 of the Indenture. "Credit Facility" shall mean any legal arrangement pursuant to which the entity providing such Credit Facility agrees to make or provide funds to or on behalf of the City to make payment of (i) the purchase price (including principal or principal and interest) of Optional Tender Bonds upon their tender by the Owners for purchase or (ii) with respect to all Bonds, the principal of and interest on the Bonds when due, whether by maturity, redemption, acceleration or otherwise; provided that the furnishing of such funds by such entity pursuant to such arrangement shall be required despite material adverse changes in the financial condition of the City. With respect to the Series 1990 Bonds, "Credit Facility" shall mean the Financial Guaranty Bond. -26- Vx' 4 slG . Facility Provider" shall mean the entity providing a Credit Facility. With ;i4v •:'• <<Provtgoyt of s+n 'Credi` the Series 1990 Bonds, "Credit Facilit Provider" shall mean Capita! Y Aber 15 pf G tiler °nil so long as Cgapital Guaranty is a Credit Facili� Provider,papny Credit Fa ility ' �Y ygr`a provider must Gave a ratio of "A-1+" from S&P and Mood s or be a roved b Ca rtal �d :p �t Guaranty ads of a S s"`�Uz`3 Current Interest Bonds" shall mean Bonds the interest on which is payable to the l ; sat ra., the Interest Payment Date with respect thereto and not only at the maturity Bo of><ep� goadbolder on Series Or'� thereof. r tion Bond or 'Daily Newspaper" shall mean a newspaper published in the English language on at least five Y adtth'bk (5) business days in each calendar week. ) trance Co. Defaulted interest" shall mean any interest on any Bond which is payable, but is not mp�Y of Sop tq punctually paid, or for which payment is not duly provided, on any Interest Payment Date. corporation an a 'Defeasaace Obligations" shall mean those obligations described in clause (i) of the ulmt definition of "Government Obligations" herein. KdtGl or the officer Director of Finance" shall mean the Director of Finance of the City or the officer saM pb� succeeding to his or her principal functions. he officer sntx Depository" shall mean any bank or banking institution duly authorized by law to engage in S to bei! the banking business and qualified under the laws of the State to act as a depository of moneys hereunder, which bank or banking institution has entered into an agreement with the City for zs d the deposit of such moneys as required by State law. amended and 'Financial Guaranty Bond' shall mean the Financial Guaranty Bond issued by Capital Guaranty which provides for the payment of principal of and interest on the Series 1990 Bonds ae Improvements, as when Due for Payment which is unpaid by reason of Nonpayment (as such terms are defined in the Financial Guaranty Bond) to be issued by Capital Guaranty simultaneously with the delivery of the Series 1990 Honds Ville Sales and Use 1n fm J and designated by5xret(li 'Financial Statements' shall mean the audited financial statements of the City prepared in accordance with generally accepted accounting principles applicable to municipalities. adenttue which are col -4t 'Fiscal Year' shall mean the period commencing on the first day of January and ending on .. mined by the Indentu:atirhthe last day of December of the same year as the same may be amended from time to time to conform to the fiscal year of the City. Government Obligations" shall mean (i) direct obligations of, or obligations the payment of a cost of the vort cots i a" :uses and aH othx it sdp . the principal of and interest on which is fully guaranteed by, the United States America; of obligations issued or guaranteed by any instrumentality or agency of the United States of ` America, whether now existing or hereafter organized, including but not limited to those of the ' Federal Financing Bank, the members of the Farm Credit System whether individually or ant to which the enmjp?m consolidated, Federal Home Loan Banks, the Export -Import Bank, Government National r on behalf of the Cahn Mortgage Association and the Tennessee Valley Authority; (iii) evidences of ownership of arincipal and_nmeree)10 proportionate interests in future interest or principal payments on obligations specified in or (ii) with rspOeta clause (i) of this definition held by a bank or trust company as custodian, under which the rbother by; mnttmly, I49 owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor on the underlying b funds by such CM,. 7i obligations described in clause (i) of this angel in the faanaal ° definition, and which underlying obligations are not available to satisfy any claim of the Facility' shall mxn rbp. custodian or any person claiming through the custodian or to whom the custodian may be tip -27- edemobligattion(iv) criflanylrgonrons, whichhe payment of the are irrevocably securedrncipal by interestobliPa,s ou as clausep (i) of this definition yand which obligations have been deposited in aaios rosenbedjd''. an escrow ec it i which is irrevocably any,onsuch municipal to the payment of he cipal obligationst (v)obligationsissued principal , sbyannd rednotptu°e4 premium, United States; and (vi) municipal obligations the payment of the principal of y state of he which are insured; provided, however, the obligations described in clauses (v) and rnterest'ao`,: definition shall also be rated in one of the top two highest rating categories (withoutvr) of thh ' any gradation within such category) by both Moody's and S&P or, upon the discont- r,e Ard to either or both of such services, any other nationally recognized rating service or services, dace of "Guaranteed Investment Contract" shall mean investment agreements with any bank or trust company which has long-term obligations rated in one of the two highest rating categories b Moody's and S&P or, upon the discontinuance of either or both of such services, any other nationally recognized service or services. "Improvements" shall mean the various capital improvements described in Ordinance No. 3480 passed by the Board on April 19, 1990, the acquisition, construction, reconstruction, improvement, renovation, expansion and equipment of which are to be financed, with any other available funds, by the issuance of the Series 1990 Bonds. "Indenture" shall mean that Trust Indenture, dated as of October 15, 1990, by and between the City and the Trustee, and all supplements thereto. "Interest Payment Date" shall mean May 15 and November 15 in each Bond Year, eacept to the extent that other dates for the payment of interest on a Series of Bonds or portion thereof are provided by the Series Ordinance for such Series of Bonds. "Interim Notes" shall mean notes issued by the City with a final maturity not longer than thirty-six (36) months (or such longer period as may be permitted by State law) in anticipation of the refinancing thereof from all or a portion of the proceeds of a Series of Bonds issued under the Indenture. "Investment Obligations" shall mean any of the following, to the extent that the same are legal investments for the investment of public funds under State law: (i) Government Obligations; (ii) bankers acceptances, certificates of deposit or time deposits of any bank, trust company or savings and loan association (including any investment in pools of such bankers acceptances, certificates of deposit or time deposits), which to the extent that such obligations are not insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, are collateralized at all times in amounts and by obligations as shall be permitted by State law; (iii) any repurchase, reverse repurchase or investment agreement with any bank or trust company organized under the laws of the state of the United States or any national banking association, insurance company, or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York and as a member of the Security Investors Protection Corporation, which agreement is secured by any one or more of the securities described in clauses (i), (ii) or (iii) of the definition of Government Obligations provided that the City has a perfected first security interest in the collateral and that the City or its agent has possession of the collateral, and that such collateral is held free and clear of claims by third parties; and 28- s'shall the two bights aal.. °r both of Inch kq rr y�l Vera <s uisftion� a nbed ra constinctro ch are to be �naoc of October 15, 1990 byI 4 �f ber 15 in each Bond a Series of Boada'orpo Is. Us a final maturity act'faat'y rmitted by State law) is nips 'oceeds of a Series of Boidik tg, to the extent that thinyi ate law: time deposits of saylrbtrl,h nvestment in pools of sodlae which to the `. client t5 c I at all times in smoiaaiii agreement with aay,baataua ed States oraay.natiossll5 reporting to, `tradiag vpl,s' k of New Yorkassd asa •cement is secured by inset of the definition of Guv security interest in the oolc! teral, and that sncb: O0gaph tixn� iv Guaranteed Investment Contracts; reviled that, so long as Capital Guaranty is a Credit Facility Provider, "Investment Obligations" �hyII jean "Permitted I funds under veal defined lawn to the extent the same are legal investments for the investment of P ,Maximum permitted Maturity" shall mean December 1, 2008, the date which is twenty (20) sar collected. after December 1, 1988, the first day on which the Sales and Use Tax was actually levied e 'Maximum Principal and Interest Requirements" shall mean the maximum amount of Friacipal and Interest Requirements for any Bond Year. "Maximum Rate" shall mean two percent (2%) per annum above the Federal Reserve discount rate on ninety -day commerical paper in effect at the Federal Reserve Bank for the Federal Reserve district in which the State is located on May 29, 1990, the date of the election approving the issuance of the Series 1990 Bonds. 'Mayor' shall mean the Mayor of the City or the officer succeeding to his or her principal functions. -Moody's" shall mean Moody's Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. 'Optional Tender Bonds" shall mean the portion of a Series of Bonds issued under the Indenture, a feature of which is an option on the part of the Owners of such Bonds to tender such Bonds to the City or a trustee or other fiduciary for such Owners for purchase. 'Outstanding' shall mean, when used with respect to the Bonds, all Bonds theretofore delivered except: (a) Bonds paid or redeemed or delivered to or acquired by the Trustee and cancelled; and (b) Bonds deemed to have been paid in accordance with the provisions of the Indenture. "Owners" or "Bondowners" shall mean the registered owners of the Bonds from time to time Outstanding. 'Permitted Investments" shall mean any of the following, with an appropriate market value and of an appropriate maturity: 1. Obligations of, or guaranteed as to principal and interest by, the United States of America, or by any agency or instrumentality thereof hereinafter designated when such obligations are backed by the full faith and credit of the United States of America. These are limited to: (a) U. S. Treasury Obligations All direct or fully guarantied obligations _29- rt , (b) Farmers Home Administration G'fI fit, ' i Certificate of beneficial ownership i (c) U. S. Maritime Administration Guaranteed Title XI financing (d) Small Business Administration 1' Guaranteed participation certificates Guaranteed pool certificates (e) Government National Mortgage Association ("GNMA") GNMA - guaranteed mortgage backed securities GNMA - guaranteed participation certificates (f) U. S. Department of Housing & Urban Development Local authority bonds (g) Washington Metropolitan Area Transit Authority Guaranteed transit bonds 2. Obligations of instrumentalities or agencies of the United States of America. + i q These are specifically limited to: (a) Federal Home Loan Mortgage Corporation Participation Certificates Debt Obligations (b) Federal Home Loan Banks Consolidated debt obligations Letter of credit backed issues (c) Federal National Mortgage Association Debt obligations Mortgage backed securities (excluded are stripped mortgage securities which are valued greater than par on the portion of unpaid principal) Book entry securities listed in 1 and 2 above must be held in a trust account with the Federal Reserve Bank or with a clearing corporation or chain of clearing corporations which has an account with the Federal Reserve Bank. 3. Federal Housing Administration debentures 4. Commercial paper, payable in the United States of America, having original maturities of not more than 92 days and which are rated in the highest rating category by S&P and Moody's. 5. Interest bearing demand or time deposits issued by state banks or trust companies or any national banking associations which are members of the Federal Deposit Insurance Corporation ("FDIC"). Savings and loan associations which are members of the Federal Savings and Loan Insurance Corporation ("FSLIC") are also acceptable issuers. These deposits: (a) must be continuously and fully insured by FDIC or FSLIC, or (b) must have maturities of less than 366 days and be deposited with banks the short term obligations of which are rated A-1+ by S&P and Moody's. -30- r� 6 Money market mutual funds or portfolios investing in short-term securities rated AAA by S&P and Moody's. The Trustee shall provide US, Treasury "Fs3V Capital Guaranty annual certification that the money market portfolio into which funds are i !, invested is then rated AAA by S&P and Moody's and, upon notice that the S&P and Moodya rating of the money market portfolio has dropped below AAA, the Trustee shall immediately withdraw funds and reinvest in Permitted Investments. 99 Er; 7, Such other investments as are approved in writing by Capital Guaranty. 74< ritUe ) i_t ; Principal" or "principal" shall mean (i) with respect to Current Interest Bonds, the stated I� es ri °=. z principal amount thereof and (ii) with respect to Capital Appreciation Bonds, the Accreted Value thereof, as of any particular date of determination. { j1 ' ' 1" neat principal and Interest Requirements shall mean the respective amounts which are required in each Bond Year to provide: () for paying the interest on all Bonds then Outstanding which is payable on the second Interest Payment Date in such Bond Year and the first Interest Payment Date in the ul+el of thfollowing Bond Year, and e United Stater et t • (ii) for paying the principal of all Serial Bonds then Outstanding which is payable ° { upon the maturity of Serial Bonds in the following Bond Year, and • (iii) the Amortization Requirements for all Term Bonds for such Bond Year. • In determining the amount of the Principal and Interest Requirements for any Bond Year, the following rules shall apply: (a) with respect to Variable Rate Bonds, the interest rate shall be assumed to be the } i average rate of interest for all Variable Rate Bonds for the prior Bond Year or portion thereof or if there were no Variable Rate Bonds Outstanding during such prior Bond Year, then the initial rate of interest on such Variable Rate Bonds; "average rate" shall mean the e stripped mottgage setmma rate determined by dividing the total amount of interest paid on Variable Rate Bonds in any a of un aid rind Bond Year or portion thereof by the average principal amount of Variable Rate Bonds P p P Outstanding during such Bond Year or portion thereof; ld in a trust account widtk ' (b) with respect to Interim Notes, interest only and not the principal shall be included f clearing corpotadom rhdh . in Principal and Interest Requirements if the Series of Bonds all or a portion of the • proceeds of which are expected to be used to refinance such Interim Notes has been duly authorized by the City; provided, however, that none of the interest on or principal of Interim Notes shall be included in Principal and Interest Requirements if the Board shall a determine in the ordinance providing for the issuance of such Interim Notes that such States of America, ?httal�` Interim Notes shall be Subordinated Indebtedness under the Indenture; aced in the highest ratinlrras (c) with respect to Optional Tender Bonds, Principal and Interest Requirements shall r,u not include the principal amount of such Optional Tender Bonds payable upon exercise by ued by state banks otuaa the Owners thereof of the option to tender such Bonds for purchase to the extent and for so bers of the Ftdtbanks D a •: long as a Credit Facility shall be in full force and effect with respect to such Optional s which are members'of, tk Tender Bonds but shall include the regularly scheduled principal payments on such Optional e also acceptable, isi Tender Bonds, either upon payment at maturity or redemption in satisfaction of the arAmortization Requirements for such Optional Tender Bonds; provided, however, that during by FDIC or FSLIC; or(w any period of time after the issuer of the Credit Facility has advanced funds thereunder and ith banks the short term• before such amount is repaid, Principal and Interest Requirements shall include the �} -31- EE IEtt principal amount due and a able thereunder and interest thereon, ny tbe"fu11°' P Y �`', '�i G '� the principal repayment schedule and interest rate '° accordant tht0' "tom a tbor` a or rotes a with ldise tosr� " fr1 1 `' i the Credit Facility; specified th �p(t�°�fyy 1 � r'= Ii I f wy� yr, (d) if interest on a Series of Bonds is payable from the proceeds of such put Refrom other amounts set aside irrevocably for such purpose at the suchtimeB°ads Or of the issued, interest on such Series of Bonds shall be included in Principal Bonds' 'oo,af sub! Il' Requirements only in proportion to the amount of interest payable in the are d r r anY Ia ten and Interest oturcpt oal Debf;Sy f ' Year from amounts other than amounts so funded to pay such interest; Current'Bond ii8e A° apd (iii) ;teai; re (e) Principal and Interest Requirements shall not include the principal )f°ary)hetr`ssnttaLPt of lathe' ev redemption premium, if any, and interest on Subordinated Indebtedness. of and s iQP!Ruh b the I the ay. "Redemption Account" shall mean the Redemption Account, a special account ( g be thp;l designated by Section 501 of the indenture. utptecest created and rid m taranoa p°tP°se; ed to p�ovi "Refunding Bonds" shall mean the Bonds issued at any time under the ttnttt of a P 209 of the Indenture. provisions of dejjVef Y and 1 Section its nsuaace �d bm`stch�arraagement,ws "Regular Record Date" shall mean the fifteenth (15th) day (whether or not a business day) ' be of a Srie. u t{ of the month preceding any Interest Payment Date (if such Interest Payment D IK�Ttde Csty shall'. day of a month) or the first day (whether or not a business day) of the month Payment Date (if such Interest Payment Date is the fifteenth (15th) da Y of an the first iayafl an=.the 1East f however, that a different Regular Record Date may be Y Interest 0rdl9a°C� (c) _Wil Y f a month); provided,' Y to the Series Ordinance providing for the issuance of such rSer es. for a Series of Bonds ,,{hT a Cirdd Facilst , pursuant Y- � heh;ts based :on1; de fepayment provV by Section "Reserve 501c of n the Indenture [he including anye cc special and and separate p fdlCttyvshall be per. reserve accounts created as permitted by Section 502 of the Indenture. roytded that the,'S any separate F� de ptabinhmant of sepa "Reserve Account Deposit Requirement" shall mean the amount, if an 'nth t' ect.to such Si Series Ordinance to be required to be deposited monthly to the credit ofythe eReerve Ain ccount hlf0°d are tint'charged w on account of the respective Series of Bonds; provided, however, that: yaca such Series of Bonds (ti) the Reserve Account Deposit Re uirement for an Series shall not be less than -of twenstY-five dollars one -sixtieth (1/60th) of the Reserve Account Requirement for such Series in each month J of the,. itY.for.. ape following the month in which such Series is issued until the amount on deposit in the fax Reserve Account in connection with such Series shall be equal to the Reserve Account Requirement for such Series; 4 ' L+a and Use Taz Ordinam (ii) in the event any deficiency is created in the Reserve Account for any Series by a >W11988 withdrawal, valuation or otherwise, the Reserve Account Deposit Requirement, if any, then in effect for any Series shall be increased, beginning in themonthfollowing the month in which such deficiency was created, by Ystad Use Tax Revenues the amount of such deficiency; an amount at least equal to one -twelfth (1/12th) of !h oroabehcertai o City, and fCxTar less aptera amount: (iii) so long as Capital Guaranty is a Credit Facility Provider, the Reserve Account Chapter a5 of Tit Deposit Requirement for any Series at the time of the issuance of such Series shall be they Reserve Account Requirement for such Series and thereafter shall be such amount, if any�nds,shall mean the' as may be required to make the amountposit its and Term Bondst sl with such Series equal to the Reserve Account Requirement for esuch Se iesunt in connection for such Bonds. in thIn the event that the Reserve Account Requirement for an y Series is provided by thes�ll men the Bonds alternate funding methods provided herein, if after a withdrawal from the Reserve Account the gofnel°dentu.r re m P, -32-1y' ��y� r fith shall cause the letter of credit, insurance policy or other similar instrument to P ntR the p c i"ia be retm[ofmoneys edthe so full the amount R serve of the AccountReserveconnection Account Requirement, wit l 'Fsg dposits 'flC1areat fld a ttme Kr withdrawal. Yabl , Reserve Account Requirement" shall mean the least of (i) Maximum Principal and Interest Requirements on account of the Bonds issued under the provisions of Article II of the Indenture %) nOt •tnclude 1fthe then veragecurrent Annualany Debt Servicent onFiscal account of Bonds issued undeundred r rovis-five ionsent of Article ed Indebtedn the p ; of the A P tyt y p of the Indenture and (iii) ten percent (10%) of the proceeds of all Series of Bonds determined t=on auk ou the basis of their initial purchase price to the public; provided, however, that clause (iii) nt, a speCI5) a s r p.y not be applicable Reserve Account inthe City an amountclar receives than the amountnd statedinel to the clause(iii) effect that funding g 3 ?t not cause the interest on the Bonds to be included in the gross income of the Owners for time nnde federal income taxation purposes and, further, that with the consent of Capital Guaranty (a) the rth° Protj`° City shall be permitted to provide all or a portion of the Reserve Account Requirement by the execution and delivery of a policy of insurance or letter of credit or other similar arrangement lay (Whathar which after its issuance and delivery, will permit the Trustee to receive the full amount Interest pa or A°f aba , covered by such arrangement without further conditions, financial or otherwise, (b) with respect s day) o f thyme41 Date t to all or any portion of a Series of Bonds, the interest rate on which is not fixed at a single dedIi 5th) aay of A nu It!] nhich is lessratethane therty leastaolbe f sheamountsstated to provide inclauses(i)R (ii) ve end (iii) abovunt e pursuant month for uirement a Series,aEBdoy to the Series Ordinance, (c) with respect to such Series of Bonds or portion thereof which is supported by a Credit Facility, the City shall be permitted to provide for a Reserve Account cial Requirement which is based only on the principal and interest due on the Bonds of such Series account createda�` and not on the repayment provisions of such Credit Facility, and (d) with respect to a Series of created therein a.a Bonds, the City shall be permitted to provide that there shall be no Reserve Account denture. hSa Requirement provided that the Series Ordinance with respect to such Series of Bonds provides (A) for the establishment of separate accounts within the Bond Service Account and Redemption mount, if any, Bete Account with respect to such Series of Bonds and (B) that the remaining accounts within the :he credit of the RaraA Sinking Fund are not charged with the payment of principal and interest and any redemption r, that: premium on such Series of Bonds. any Series Shan not leNas 'Sales and Use Tax" shall mean the local sales and use tax of one percent (1%) to a maximum of twenty-five dollars ($25.00) on eachsingle transaction levied and collected by or at for such Series in 1 the amount ` on behalf of the City for a period of twenty (_' 0) years pursuant to the Sales and Use Tax amount :on Cdepomyt Ordinance. equal .to the :Resene Amc Sales and Use Tax Ordinance" shall mean Ordinance No. 3381, passed by the Board on October 4, 1988. trve Account for any 5aiski eposir Requiremenif,ule "Sales and Use Tax Revenues" shall mean the moneys actually received during any period of e .month ,following tiemmoi time by or on behalf of the City from the State Treasurer representing the proceeds of the Sales equal to one•ttwlfth'(1,1'Bh'f and Use Tax less certain amounts deducted or retained by the State Treasurer as authorized by Subchapter 2 of Chapter 75 of Title 26 of the Arkansas Code Annotated. Provider, the `Reserteias 'Serial Bonds' shall mean the Bonds of a Series which shall be stated to mature in annual trice of such Series installments and 'Term Bonds' shall mean the Bonds of a Series so designated in the Series • shall be such amoxst d Ordinance for such Bonds. Reserve Account m arm arsuch'Series Series" shall mean the Bonds delivered at any one time under the provisions of Section 208 or 209 of the Indenture. toy Series isptov'ictd:r<f' from the'ReserYeAc0n -33- i i "Series 1990 Bonds' shall mean the Bonds issued pursuant to Section 208 of the Indenture for the purpose of paying, with any other available funds, the Cost of the Improvements. "Series Ordinance" means the ordinance of the Board that is required by the Indenture to he passed prior to the issuance of any Series of Bonds under the Indenture and, with paiticular reference to the Series 1990 Bonds, means Ordinance No. 3506, passed by the Board os „r I September 13, 1990. Unless otherwise provided herein, each Series Ordinance shall (a) determine the details of the Bonds of such Series, including, among other things, the maximum principal amount of such Series, the date thereof, the method of payment of interest thereon, the maximum maturity thereof, the redemption provisions relating thereto, including the Amortization Requirements for the Term Bonds, if any, of such Series, and the Bond Registrar therefor, (b) identify the purpose to be effected with the proceeds of such Series, (c) provide for the application of the proceeds of the Bonds to which such Series Ordinance relates, and (d) if permitted pursuant to Section 502 of the Indenture, create a separate sinking fund for such Series and determine the method of funding of the sinking fund for such Series and such other .' . matters as the Board shall determine. Ig "Sinking Fund" shall mean the City of Fayetteville Sales and Use Tax Capital Improvement Bonds Interest and Sinking Fund, a special fund created and designated by Section 501 of the Indenture. "S&P" means Standard & Poor's Corporation, a corporation organized and existing under the laws of the State of New York, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "S&P" shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. "Special Record Date" shall mean a date fixed by the Trustee for the payment of Defaulted Interest pursuant to the Indenture. "State" shall mean the State of Arkansas. "State Treasurer" shall mean the State Treasurer of the State of Arkansas or the officer succeeding to the functions of the State Treasurer referred to in the Indenture. "Subordinated Indebtedness" shall mean bonds or notes, the payment of the principal of or interest or any redemption premium on which are payable from Sales and Use Tax Revenues which may from time to time be made available therefor by the City after the City makes the deposits required by Section 502 of the Indenture and which is designated as Subordinated Indebtedness by the Board in an ordinance authorizing the issuance of such Subordinated Indebtedness. "Trustee" shall mean the Trustee serving as such under the Indenture, whether original or successor. "Variable Rate Bonds' shall mean any Bonds issued under the Indenture the interest rate on which is not established at the time of issuance at a single numerical rate. "Underwriter" shall mean Llama Company. 34- other yt thinE tYment SUMMARY OF PORTIONS OF THE INDENTURE The Bonds will be issued pursuant to the Indenture. The following is a summary of certain tesuThis themmarY does specific notcomprehensive erms and p ovisions ofthe Indnturdefinitive Indenture, to which RErence is hereby made and copies of which are available from the City and the Underwriter. falablisbmeat of Funds ewes and"tbe Boad ghg' The Indenture establishes the following funds and accounts: Is of such Serie 5+1111 •ies Ordinance r =pala e4,a d?d: =paste sinking fund forty or such Series and s, o oki Use Tax Capital Improvcm granted by Section 501 of ;anized and existing uodery d, if such corporatioc s6tpy� of a securities ratiog aget, sized securities rating slag for the payment of Defraw le of Arkansas or the offre se Indenture. ayment of the principal of% t Sales and Use Tax Reason e City after the City asks lie is designated as Subordinbl issuance of such Subordie d Indenture, whether origmds le Indenture the interest nttos ical rate. Vl. (a) Sinking Fund, and a Bond Service Account, Redemption Account and Reserve Account therein; and (b) Construction Fund. Sinking Fund. The Sinking Fund is established with the Trustee with respect to the Series 1990 goods or aaY Series of Refunding Bonds issued pursuant to the Indenture. The City covenants to establish with the Trustee, pursuant to the Series Ordinance providing for the issuance of any Series of Refunding Bonds, a separate sinking fund to provide for payment of the principal of and redemption premium, if any, and interest on such Series of Bonds and to provide a reserve for such payment or to provide within the accounts in the Sinking Fund separate subaccounts as required by the terms of such Bonds. If any separate sinking funds or separate subaccounts within the accounts in the Sinking Fund are created pursuant to this paragraph, such sinking funds or separate subaccounts shall be funded in the manner and at the times required by the respective Series Ordinance, shall be held by the Trustee separate and apart from the sinking funds with respect to any other Series of Bonds issued under the Indenture, and shall be held solely for the benefit and security of the Series of Bonds with respect to which such separate sinking fund or separate subaccounts were created. Each such separate sinking fund or separate subaccounts with respect to a Series shall be designated 'Series Sinking Fund" or "Series Subaccount," as the case may be (inserting an identifying Series year and, if more than one Series is to be issued in a single calendar year, an identifying Series letter). The moneys in each of the accounts in the Sinking Fund shall be held in trust and applied as hereinafter provided with regard to each such account and, pending such application, shall be subject to a lien and charge in favor of the Owners of the Bonds issued and Outstanding under the Indenture and for the further security of such Owners until paid out or transferred as provided in the Indenture. The City shall cause the Sales and Use Tax Revenues, less any applicable charges and retainages, to be deposited with the Trustee. The Trustee shall, on the last business day of each month, beginning October 31, 1990, withdraw from the Sales and Use Tax Revenues deposited with the Trustee an amount sufficient to make the deposits to the credit of the following accounts in the following order and in the following amounts: (a) To the credit of the Bond Service Account, an amount equal to one -sixth (1/6th) of the amount of interest payable on the Bonds of each Series on the next succeeding Interest Payment Date and an amount equal to one -twelfth (1/12th) of the next maturing installment of principal on all Serial Bonds then outstanding less any amounts received received and as on deposit to the credit of the Bond Service Account, including (i) -35- I accrued interest and (ii) certain amounts transferred from the Construction Fund and I ,.wti'j r ! subject to certain adjustments; (b) To the credit of the Redemption Account, an amount equal to one -twelfth (1/12th I III! of the principal amount of Ternt Bonds of each Series then Outstanding required to t' be retired, in satisfaction of the Amortization Requirements, if any, for such Bond Year tx t the premiums, if any, on such principal amount of Term Bonds which would be payable"lif i I lal such principal amount of Term Bonds were to be redeemed in such Bond Year from moneys held for the credit of the Redemption Account less any amounts received and on deposit to 1; the credit of the Redemption Account; and (c) To the credit of the Reserve Account, an amount equal to the Reserve Account Deposit Requirement for each Series of Bonds. tlti, If the amount deposited to the credit of any of the accounts in the Sinking Fund shall be 1 less than the amount required to be deposited under the foregoing provisions, the requirement J ., therefor shall nevertheless be cumulative and the amount of any deficiency shall be added to the amount otherwise required to be deposited thereafter until such time as all such deficiencies t s t have been made up. Such amounts of the Sales and Use Tax Revenues as shall be sufficient to make the deposits • to the credit of the accounts as prescribed in clauses (a) through (c) above are pledged by the Indenture for the purpose of making such deposits so long as any of the Bonds are Outstanding. • Any Sales and Use Tax Revenues in excess of amounts required to be deposited by clauses (a) through (c), inclusive, above shall be transferred by the Trustee within one business day of the last business day of each month to one or more Depositories selected by the City and may be used by the City for any purpose provided in the Sales and Use Tax Ordinance. Bard Service Account. The Trustee shall on the business day immediately preceding each Interest Payment Date withdraw from the Bond Service Account and deposit in trust with the Bond Registrar an amount sufficient to enable the Bond Registrar to remit by mail to the Owners of Bonds the amounts required for paying the interest on the Bonds as such interest becomes due and payable. The Bond Registrar shall be permitted to transfer by wire to Owners • of at least $1,000,000 principal amount of the Bonds the amounts required for paying the interest on such Bonds as such interest becomes due and payable as may be determined in the respective Series Ordinance. The Trustee shall on the business day immediately preceding a date on which principal is due on Serial Bonds withdraw from the Bond Service Account and deposit • in trust with the Bond Registrar the amounts required for paying the principal of all Serial Bonds as such principal becomes due and payable. Redemption Accorrr:t. Moneys held for the credit of the Redemption Account shall be applied to the retirement of the Bonds issued under the provisions of the Indenture as follows: (a) Subject to the provisions of paragraph (c) below, at the direction of the City, the ___________________ Trustee shall endeavor to purchase any Bonds secured by the Indenture and then Outstanding, whether or not such Bonds shall then be subject to redemption, on the most advantageous terms obtainable with reasonable diligence, such price not to exceed the principal of such Bonds plus the amount of the redemption premium, if any, which might on the next redemption date be paid to the Owners of such Bonds under the provisions of the Indenture and the respective Series Ordinance if such Bonds should be called for redemption on such date from moneys in the Sinking Fund. The Trustee shall pay the interest accrued on such Bonds to date of settlement therefor from the Bond Service -36- g' (`+. } } �ailnl" + ( ' transferred from the Construe interest and (ii) certain amounts trop Fund and accrued subject to certain adjustments; To the credit of the Redemption Account, an amount equal to one -twelfth (1/12th) (b) of the principal amount of Term Bonds of each Series then Outstanding required to be- Requirements if any, for such Bond'.Year retired, in satisfaction of the Amortization plus such principal amount of Term Bonds which would be payable the premiums, if any, on if amount of Term Bonds were to be redeemed in such Bond Year from moneys such principal held for the credit of the Redemption Account less any amounts received and on deposit to the credit of the Redemption Account; and (c) To the credit of the Reserve Account, an amount equal to the Reserve Account Deposit Requirement for each Series of Bonds. If the amount deposited to the credit of any of the accounts in the Sinking Fund shall be less than the amount required to be deposited under the foregoing provisions, the requirement shall nevertheless be cumulative and the amount of any deficiency shall be added to the therefor amount otherwise required to be deposited thereafter until such time as all such deficiencies L+ have been made up. Such amounts of the Sales and Use Tax Revenues as shall be sufficient to make the deposits to the credit of the accounts as prescribed in clauses (a) through (c) above are pledged by the Indenture for the purpose of making such deposits so long as any of the Bonds are Outstanding. Any Sales and Use Tax Revenues in excess of amounts required to be deposited by clauses (a) through (c), inclusive, above shall be transferred by the Trustee within one business day of the last business day of each month to one or more Depositories selected by the City and may be used by the City for any purpose provided in the Sales and Use Tax Ordinance. Bond Service Account. The Trustee shall on the business day immediately preceding each Interest Payment Date withdraw from the Bond Service Account and deposit in trust with the Bond Registrar an amount sufficient to enable the Bond Registrar to remit by mail to the Owners of Bonds the amounts required for paying the interest on the Bonds as such interest becomes due and payable. The Bond Registrar shall be permitted to transfer by wire to Owners of at least $1,000,000 principal amount of the Bonds the amounts required for paying the interest on such Bonds as such interest becomes due and payable as may be determined in the respective Series Ordinance. The Trustee shall on the business day immediately preceding a date on which principal is due on Serial Bonds withdraw from the Bond Service Account and deposit in trust with the Bond Registrar the amounts required for paying the principal of all Serial Bonds as such principal becomes due and payable. Redemption Account. Moneys held for the credit of the Redemption Account shall be applied to the retirement of the Bonds issued under the provisions of the Indenture as follows: (a) Subject to the provisions of paragraph (c) below, at the direction of the City, the Trustee shall endeavor to purchase any Bonds secured by the Indenture and then Outstanding, whether or not such Bonds shall then be subject to redemption, on the most the advantageous terms obtainable with reasonable diligence, such price not to exceed if any, which might principal of such Bonds plus the amount of the redemption premium, the of on the next redemption date be paid to the Owners of such Bonds under provisions be called for the Indenture and the respective Series Ordinance if such Bonds should Trustee shall pay the redemption on such date from moneys in the Sinking Fund. The Service interest accrued on such Bonds to date of settlement therefor from the Bond -36- rom{the Ca a ) "tr, raFtq . of and the purchase price from the Redemption Account, but no such purchase " i �; ount e p 'F'' Ap°°ubo made by the Trustee within the period of forty-five (45) days next the11 pn� a shall any interest payment date on which such Bonds are subject to call for redem n tstandta t fth I Ffectdrag ovisions of the Indenture and the respective Series Ordinance, except from if any f g re er the P P `Bonds whi ouch B `d �oaeys other than moneys set aside or deposited for the redemption of Bonds. ch wn °p Y mo such'Bond Yr fnp,� (b) Subject to the provisions of the Indenture and paragraph (c) below, the Trustee f' oats received tad oink , �ny redemption on each date on which Bonds are subject to redemption as provided �1 call for redemp 1 P a; the respective Series Ordinances such amount of such Bonds as, with the redemption oat equal !t 1° if any, will exhaust the moneys which will be held for the credit of the tp rho Redemption Account on such date as nearly as may be; provided, however, that not less ti �w R has Fifty Thousand Dollars ($50,000) principal amount of Bonds shall be called for aunts in ?-'ty redemption at any one time unless a lesser amount shall be required to satisfy the d" e oin the Stuhtng Fn` Requirements for any Bond Year. The Trustee shall during the period of five B ient, ioo business on g addays prior to each redemption date withdraw from the Bond Service Account � Ii � thdt• �?It (5) such , iency shall be M�hy and the Redemption Account and set aside in separate accounts with the Bond Registrar the time as all such db6 respective amounts required for paying the interest on, and the principal and redemption ak+p premium of, the Bonds so called for redemption. be sufficient to t;GFY«thli( r makejbc (c) Moneys held by the Trustee in the Redemption Account shall be applied by 'ough (c) above are pled the Trustee during each Bond Year to the retirement of Bonds of each Series then long as any of the gs�1 Outstanding in the following order: fl : the Term Bonds of each such Series to the extent of the Amortization required to be de Requirement, if any, for such Bond Year for such Term Bonds, plus the applicable Trustee within Pontedb�� one sited r premium, if any, and any deficiency in any preceding Bond Years in the purchase or tories selected b dtdh. redemption of such Term Bonds under the provisions of this subdivision and, if the d Use Tax Ordi y the Citjnda amount available in such Bond Year shall not be sufficient therefor, then in proportion nance I ! to the Amortization Requirements, if any, for such Bond Year for the Term Bonds of as day immedrateI each such Series then Outstanding, plus the applicable premium, if any, and any such j 1 oust and deposit inp l deficiency; Registrar to remit bgadyt Second: the Term Bonds of each Series, if any, in proportion (as nearly as ;rest on the Bonds as sad'¢n practicable) to the aggregate principal amount of the Bonds of each such Series itted to transfer by wtetaoriginally issued; and amounts required for pt t Lyable as may be datertiiatdii Third: after the retirement of all Term Bonds, if any, Serial Bonds issued under ;s day immediately prettdiyjI the provisions of this Ordinance in the inverse order of their maturities and, to the Bond Service Accountidl* extent that Serial Bonds of different Series mature on the same date, in proportion (as paying the principal 'if db nearly as practicable) to the principal amount of Bonds of each Series maturing on such date. the Redemption Accoati Upon the retirement of any Bonds by purchase or redemption the Trustee shall file with the sions of the Indentureisf ii , City Clerk a statement briefly describing such Bonds and setting forth the date of their purchase r3 or redemption, the amount of the purchase price or the redemption price of such Bonds and the sw, at the direction of deft ! amount paid as interest thereon. The expenses in connection with the purchase or redemption ured by the Iadeuture;id# of any Bonds shall be paid from Sales and Use Taxes as provided in the Indenture. ;object to reempuon,palk Reserve Account. Moneys held for the credit of the Reserve Account shall be used for the ce, such pricce if anout ,' ur ose of paying the interest on and the principal of the Bonds and to provide funds for the ition premium, ant 101 retirement of Term Bonds to the extent of the Amortization Requirements therefor whenever such Bonds under thep and to the extent that the moneys held for the credit of the Bond Service Account shall be such Bonds should ;be: . ; insufficient for such purpose. If at any time the moneys held for the credit of the Reserve Fund. The Trustee'sW.W t therefor from the Boad1fa° >"a -37- i 7S Lµ3 frk+i` p ff r� Account shall exceed the Reserve Account Requirement, such excess shall Construction Fund be ng period prior to the tor poption letion of :: otr th the Bond Service Account the Improvefot the Redemption Account at the P of thee however, Ciio that the City may provide for a different disposition of any such excess , Pr°vt Ordinance providing for the issuance of any Series of Bonds. the Syi I., In the event that all or a portion of the Reserve Account Requirement for Ir an be provided by a Credit Facility, the Trustee shall do all things necessary y Series receive in fashion from the Credit Facility Provider amounts required to be expended a tin P preceding paragraph. as provided in Construction Frurd. The Construction Fund shall be held by the Trustee and applied accordance with requisitions from the City to the payment of the Cost fmu. of the Improvements, pending such application, shali be subject to a lien and charge in favor of the Series of Bonds issued under the Indenture the proceeds of which were deposited to the of of the Construction Fund. When the work constituting the Improvements shall have been completed, the balance in i Construction Fund not reserved by the City for the payment of any remaining C of the Improvements shall be transferred, at the discretion and at the direction of t the City, the credit of the Sinking Fund for the payment ofCity; Bonds or retained in the Construction Fund and used to principal of and interest on the Series 19 improvement the cost of a different capi or improvements within the meaning of the Act which have been City pproved by Investments Investment of Moneys. Moneys held for the credit of all funds, accounts and subaccouo established in the Indenture or a Series Ordinance shall, as nearly as may be practicable, continuously invested and reinvested by the Trustee in Investment Obligations which mature, or shall be subject to sin redemption by the holder thereof at the option of such holdt. not later than the respective dates when moneys held for the credit of such funds, accounts subaccounts will be required for an the purposes intended; provided however, that amounts a deposit in the Reserve Account shall be invested in Investment Obligations which mature ec later than the final maturity date of Bonds Outstanding under the Indenture and, so long a Capital Guaranty is a Credit Facility Provider, at least one-half (1/2) of the amounts on deposi in the Reserve Account shall be invested in Investment Obligations with maturities of less that six (6) months and the remainder of such amounts shall be invested in Investment Obligation, with maturities of not more than five (5) years, unless otherwise approved in writing by Capita Guaranty. The City shall direct the Trustee in writing or by telephone, confirmed in writing, as to the investment of all moneys required to be invested under the Indenture, subject, however, to the provisions of the Indenture. The Trustee shall invest such moneys as so directed by the City or, in the event that the City does not provide the Trustee with direction as to any investment, as the Trustee considers to be appropriate, subject, however, to the provisions of the Indenture. Investment Obligations so purchased as an investment of moneys in any such fund or account shall be deemed at all times to be part of such fund, account or subaccount. The, interest accruing thereon and any profit realized from such investment shall be credited to such fund or account and any loss resulting from such investment shall be charged to such fund„ account or subaccount. -38- F Yea fi7 of such I etsuOa and shad prwm Y ntf. Au moneys : deposzte Foxe° i j5t shall iie Sesies Ordiaay¢ am the=Teu ee. ritb'the Trasaee an ei the Federal Say the oedy, aaued - zif'; thee be required security for, : or tier, that it shall not coneys with it for the y Bonds issued $t n- w--=ed by oblisat uerttt cud Prmeinm.. tittciaI of, and d, end under the provis Ierein and in the r of . the Bones 39 a._ 11,� �r j�� ' ps�Sbe.eAso t�"J f r Ct ybBe°''n iP a 46' . v Accoma;t shit) exceed the Reserve Account R �� {O pjeEt a ylsa rc t' Y , eytrire>reat: sac6 ei shaJj U m�pEYrq sh811,i r x8tj� crss rd s be f c ro to the Coasaractioa Fund daring the ptriad prior to the coaplti-lion of the Iy� �ntferred D�dap4"thet�f i lj� v t IOwerh_ drat the City ma ant i the Red:ffere dispicat at the option of the Ct p*emgjb ilt'�� '. '; 1� Ordinance providing for thYisstuace otany Series of Bonds. of nap Bach eat �ro ded, be Pu chasedo 11a mAYr for such P In the event that all or a portion of the Reserve Accoact R airemeat for es bbl f� i i F FFfF ; be provided by a Credit Facility. the Trustee wall do all things aecessarrTOany Berta s� b !i°ru 1 IO precedic¢ �' it Facility Provider amounts renuired to be e'pd d Is hm �rimK u�hasefd ag'ant fte(6 '. ° �e pons PrmaturE'ait man stx Carrtrnxror Fvra' The Corursction Fund shall be held br tee TrP�tes i P° matuie to°rears cedes alto char_ With raeisitions iron the City to the meet of the Cot of the Ire and mtOLed m dfP�°fh obbgattpoe f ( ) iX'r ° l ion apob a xoa, shalt be scbje t to a lien and cha z: in favor OT` Prove � a� �y sdc rat he IeS9Er hen' Seri s of Bonds issued ender the ledentuft the prrkzeds of which mere d rosited a.n °f ► aIDtaUf the A :10 C of theCo=stree,ioc Face to th or ya so longas h`� , �»�.tftpttded at �6eu market val or $ cm:s;its _ the 1=D- rev:erects :Fait ha•re bee t� n Earoed: or c•omp Cozyn,6oe F :or r by the City for tie Pay =ee tha n of t m 0e"I� a oat e of is ID0T of a :r : e Part of s si ll it t _rife red as nc else iOe .d ac the dLectaoa of the tqt pt or sabeaeu°rAunts'-And the' V ¢h: r>di:of stLtl Facd for ;=.e ; nee a priL gat of and is ih Cityor ?db t.uch than Boarol or ,. .Lau In tL. Co s: ccaoe Feed and es.ed :o ?err tic terms: on the Sena 199p tbe'7tusd p0 such r tames Cir • ;:hie the c _ciag of tie ,., which �wsa of diff:rem capittlthe last deY uf, times —e b ea approved by thea�� Performed' at.; other IavesameaL; a�oplpnder;'snch comall promp ) a'�+ ibE Trustee shall p tl lmria a 'ppul Guaranty o sr>�zt_ Mo:es Enid for the credit of atf feeds, xcLro� k+" �:abii d i Ind r ,•- moneys depos or a Se.— :_s Or�r_:e sett as =Ytrfy its r_area iv t .::redas =v and zi ble,aaa : fgPpt All i rinses; , by the Tr...s:re ie Ina =t Practica6le he l f {und; account o cre c: s�U be r c: to r ec=p iuc by the !oldr: - � Obi sorb holder rDt� d:tn trust, shall be':ap =a fare: tE_- t= -e:t a the eptioa of sack , ;P Ordinance s= •^"a=3 ,'rte 0par xs.-s ict foo:a-s bold r c `it of Sth L, t,- accounts and fKt her the Trustee. O«e7nrt dc�� iz t= R -s : Accts__ s_ It b t ObfiL amounts as St Lr. ca = m r I:--;:. s: a c I we ch a: of Ocs i 3 e eEc tedenenre nut led with the Trustee .,i Ran Credit Factlt r ?ro•,ta . ( , and_ is bag at - l= ie •s_tt be s _- Its_- o__ _.f F.?) of t_e eee on der sk�pQCt Corpomdon,ythe- Federal s t 1 t� t., o cos s,aFG afrrida of less t { :hilt be. continuously seca then be ured not _o._ t.n i j rx:� ==l_ss Of_ tom` D,:a'-ctic ankObh rotsl °8 the security for, or Iamidtd however, that it shat The Ct'' r ibsa cf any moneys with it for .c t_. T:_s;ne «tip__ C: = °' t cci:eo to t O v '` i= Wntinz- as to the nitde interest on an Bonds issut i .•l tL Y. of I I he t -- s tr l -� -=01 _`De er to the saT6xh shall be represented by of _ CI ` — s i � s3 ea Yby -: City or, 'a scbi _yuve-.=at,as r =r 'e p:J zs us o: ire Lc - e. a is Ic - Obit aces r =e c- oaf Prmci 1, Interest and Pren be ei. ?: nit .J a=r S_:C land o• I7Y = 'a: s=, - ` oL lee±. a. or ta3ha1TemL The ... .. r f f: s�cE i_r =e abbe td or he principal of . and s=c. s --G b c iited to such } or incurred under the _. _. •__ti i=%Wi=n ? tl c_ar -d to such feed, zh eerspeeified therein and a d 5e ti. retirement of the '4l at Y. Y fs3s, ; -- s rzyn i� 7Ut 8Y'"� 4 it _ I1t r yrP such t c eas, �I , to `. 1 eh txth�Pehop oftbeh° �tkn a Trustee or the City, us the case may be, shall sell or present for payment or (, t,{y s of any su hf'th° CtmPu ~� gdtmPt1°° toyprovide moneys togm etsany payment f omen anyrsuchsfund or ac ousnt ryNeither . ski i i +s h p° peifx ti! +. �Trysteer nor any agent thereof shall be liable or responsible for any loss resulting from any Ii S�. t' Requiremev; �st nt wotmeat. pVest Y to as , 8s necesso' be ar ety�'s° Tec�na expended Investmk facilities established ent Obligations may be purchased by the Trustee through its own investment division For such purpose. stx (6 as Pre➢at aother ban t% Id':b : �°6 Y the Trustee yalunnun of Gn+estment Obligations. In computing the amount in any fund, account or purchased as an investment of moneys therein be edee aad the Cost im' sobacrounl+ obligations shall valued (a) at face i if such obligations mature within six (6) months from the date of valuation thereof and tpon. •Be 1p favortof pAnd t the 0'W �) if such obligations mature more than six (6) months after the date of valuation thereof, at • ,C which were deposited° 44 pace at which such obligations are redeemable by the holder at his option if so redeemable, { .; as ds so redeemable, at the lesser of (i) the cost of such obligations plus the amortization et. Vai if not say premium or minus the amortization of any discount thereon and (ii) market value of accru been co completed of obligations, provided that, so long as Capital Guaranty is a Credit Facility Provider, such comp the b of any r maanan aa4 rack pli ations will be valued at their market value. Valuation on any particular date shall include the ad at the dieectmna°all tbuamouats of interest then earned or accrued to such date on any moneys or investments in The r!wtlt'jl than of and interest of btC01 fund, account or subaccount. computation of the amounts on deposit in or credited to tscal•ay the cost tbt.Sed5 such funds, accounts or subaccounts and the valuation of theh investments of such amounts shall of a which have been the tee than the day ter last the of sand such9ccompu p an approvedy4* of the astsday oftsucchr andhe Fis al Year, valuation shallach FFlintrYear°d asby ationnot amphl be required to be performed at other times, provided that, so long as Capital Guaranty is a fndit Facility Provider, such computation and valuation shall be performed on a quarterly basis by the Trustee, and the Trustee shall promptly deliver copies of such quarterly computations and depo funds, accounts aid valuations to Capital Guaranty. {' at of suha°e nearly as may be pracoeay44 Security for Deposits. All moneys deposited with the Trustee under the provisions of the be at vestment Obhgatiom whr ',k eof at the of " ption suit hdenture to the credit of a fund, account or subaccount established by the indenture or a Series be in aance o credit of such f` unds, acw Ordinance shall be held in trust, shall applied only accordance with the provisions of the be lien by eia Vided however, that aowrus hdenture or the respective Series Ordinance and shall not subject to or attachment Trustee. j any creditor of the City or the •ent Obligations which stee ?: der the Indenture and, d, solxta All moneys deposited with the Trustee in excess of the amount guaranteed by the Federal if (1/2) of the amounuondq: Pposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation or other ;cuffed ations with maturitiesoflmdr federal agency shall be continuously secured for the benefit of the City and the Owners of the requ invested in InvestmentobIjev Bonds in such manner as may then be required or permitted by applicable State or federal laws or, or ise approved in writinghyrA or regulations regarding the security for, or granting a preference in the case of, the deposit of ! •� t sba trust funds; provided, however, that it shall not be necessary for the Trustee to give security it for for the deposits of any moneys with it for the payment of the principal of or the redemption s issu e, confirmed in writiag'uo,3 premium or the interest on any Bonds issued hereunder, or for the Trustee to give security for byol hdenture, subject, howeve th any moneys which shall be represented by obligations purchased as an investment. a: eys as so directed by theCej6 direction as to soy inveuar$s e provisions of the lodesler. Certain Covenants I Pre of moneys in any,sachfuu Payment of Principal, Interest and Premium. The City covenants that it will promptly pay f : and ,ind account or subaccatst;k shall be credited or cause to be paid the principal of and the interest on each and every Bond and all other indebtedness issued or incurred under the provisions of the Indenture at the places, on the dates the:: vestment t be charged to sad fad and in the manner specified therein and in the Bonds and such indebtedness and any premium and i shall required for the retirement of the Bonds and such indebtedness by purchase or the` -39- Iii, �lTredern tion, according P atinteresttM '+ and premium will be payable solely from the Sales and Use Tax Revenues and the Sales dgeG s Ifl Use Tax Revenues arc pledged to the payment of suchprincipalof and interest and premium � {i 1 the Bonds and such other indebtedness secured on a parity with the Bonds as to the tim Sales and Use Tax Revenues and then to such other indebtedness not so secured in theledge of k I I and to the extent particularly specified in the Indenture. masoer �fbefcnrren 1 The City is not obligated to pay the principal of and interest and any premium > td sh �endmenl lI , m on the oc �� Bonds and such other indebtedness except from the Sales and Use Tax Revenues pledged under Di�cc rpz`: the Indenture, and the faith and credit of the City are not pledged to the payment of s;' q*�rpndUre� principaluch , interest and premium. The issuance or incurrence of the Bonds and such other','' dt�s�d3uader thg, indebtedness shall not directly or indirectly or contingently obligate the City to levn don a P j any appropriation payment Y or to a rsecure ndsng� i pledge any taxes whatsoever or to make an a ro riation for the a ment of such principal ' fip� �'ontsta interest and premium except as provided in the Indenture with respect to Sales and Use Tar ` `s ' ei than as Revenues .eoth action takei at trig t a Construction of lmprovemenrs. The City covenants that it will construct the f Improvements rs for which Bonds shall be issued under the provisions ofthe Indenture, or for which moneys ';rots,ond -dr repayable from the proceeds of Bonds issued under the rovisions of the Indenture shall have the Iaden[t been advanced to the City, in accordance with plans and specifications theretofore approved by °t tosaad that it the City dotherwise as required by any person forany workconstituting laa a part of City furthercovenants that tt the Improvementsshallprovide fortech ` tetn!. byahejj4be performance and payment bonds or security in lieu thereof and for such retains es as shall be P Y ttco ntatives y in compliance with the laws of the State and the normally established practices of the City fromr '' • time to time in effect. 8r �orthcrwvenana Covenant Against Encumbrances. The City covenants that, from available funds, it will pay >^a">eaudsto be all municipal or governmental charges lawfully levied or assessed upon the improvements or any • The Trsstee sha part thereof or upon any Sales and Use Tax Revenues pledged under the Indenture when the`.p�6F_(°eds, accent same shall become due, the payments of which are the responsibility of the City, and that it pg-'eoues received b will not create or suffer to be created any lien or charge upon the Sales and Use Sales and Use ` dill be filed wttt Tax Revenues pledged under the Indenture ranking equally with or prior to the Bonds or any .ptpl Guaranty a°' other indebtedness secured on a parity with the Bonds as to the pledge of Sales and Use Tar ; (arssch!porpose Revenues. The City further covenants that, from available funds, it will pay or cause to be discharged, within sixty (60) days after the same shall accrue, all lawful claims and demands for' r� labor, materials or supplies or other objects which, if unpaid, might by law become a lien open _: (rtbej}caveaaaL the Sales and Use Tax Revenues pledged under the Indenture; provided, however, that nothing, � made .as require contained in this covenant shall require the City to pay or cause to be discharged, or make' mpl asthority or . of provision for, any such lien or charge so long as the validity thereof shall be contested in good ' t t of such audit faith and by appropriate legal proceedings. tin ed Use Taz Re Employment of Accountant. The City covenants and agrees that it will for the purpose of �� law.ao conhnui performing and carrying out the duties imposed on the Accountant by the Indenture employ an 1"V rol Eire t to b independent certified public accountant or firm of independent certified public accountants of : <� 4 P ,hu6 ronld be suitable experience and responsibility. •6dththWould,have`bei :btnual Badger. The City covenants that on or before the second day of February of each Fiscal Year it will finally adopt the budget for such Fiscal Year (herein sometimes called the' st8 ,t.0! n 1Us N "Annual Budget"). Copies of the Annual Budget shall be filed with the Trustee and mailed by ;'tom a6{or otherp the City to Capital Guaranty and all Owners who shall have filed their names and addresses pjPaldd however, thaa with the City Clerk for such purpose. (fed wrththe4' eder 40 ' e-, Tazl Itev�achpu y Pal of ands�d for any reason the City shall not have adopted the Annual budget before the ( i •. )vtih the $Dnd ett eaa`psl�d0Vi : `If daY of February of any Fiscal Year, the Annual Budget for the preceding Fiscal +•':mss• chess not,so a�,t}e i.abelhye pnnoul Budget n of the Annual Budget, be deemed to be in force and shall be �r1 l'taterest 7"`tixs � pealed Tye Cit may at any time adopt a amended or supplemental Annual Budget for the Fiscal Year, Annual y d Use.T Re opi p 0m3ioder of te he then current and the Budget so amended or supplemented be limitation of pledges to et'',a--q no �n the nature or amount bt treaAnnual Budget. i e of the till such amendment to the by any Yc oblig tee �eadi a forCt: orucd rr s t y e1ind °f Indenture ncurrredspuors ti with respe tot if CUtt under the or any other indebtedness ant to the Bonds secured I� Snleadl( and secured on a parity with the Bonds as to the pledge of Sales and Use Tax ladeoture shall be outstanding, none of the Sales and Use Tax Revenues pledged will be used it will coastroct gerenues any purpose other than as provided in the Indenture and no contract or contracts will be he lnden� fur into or any action taken by which the rights of Owners of the Bonds might be impaired or foreliip visioas of the laden � �1 ecil5cations catered at diminished, theretofor a Records, Accoiuits and Audits. The City covenants that it will keep the funds and accounts ai4�k� 1 rovemen rsts any ) P is rrwted Pursuant to the Indenture separate from all other funds and accounts of the City or any to keep slap and for P?oeide departments, and that it will accurate records and accounts of Sales and Use Tax such reuniu,y stablished prac6cm of tftC Revenues received by the City and the application of such Sales and Use Tax Revenues. Such and accounts shall be open to the inspection of the Trustee, the Owners, and their records ageats and representatives. at, from available fundat The City further covenants that within six (6) months after the close of each Fiscal Year, it sled upon the 1nprave sa rill cause an audit to be made of its books and accounts pertaining to the City by the aged under the Ind Accountant. The Trustee shall make available to the Accountant all its books and records pottsibili tq of the city ; ndyi penalising to the funds, accounts and subaccounts established with the Trustee and all Sales and con the Sales and Us-Stl Use Tax Revenues received by the Trustee. Within a reasonable time thereafter reports of each with or prior to the sock audit shall be filed with the Board and the Trustee, and copies of such report shall be 0 the pledge of Selh"wady mailed to Capital Guaranty and any Owner who shall have filed his name and address with the funds, it will pay or 1.. ti City Clerk for such purpose. Such audit reports shall be open to the inspection of all interested all lawful claims cad del persons. '' 1, might by law became 5211 are; provided, however tic© The City further covenants that it will cause any additional reports or audits relating to the Dr cause to be de charg ea City to be made as required by law or by any applicable rules or regulations of any authority or of any securities exchange on which the Bonds may be listed or = :y thereof shall be comrsse governmental traded. The cost of such audits shall be treated as a part of the cost of operation. reel that it will for the pt}ir reel Sales and Use Tax Revenues. The City covenants that it will take all actions permitted by law to continue to receive the Sales and Use Tax Revenues in the greatest by the Indtmn raper dent certified publicacromtr. amount possible. Except to the extent required by law, the City will not take any action the result of which could be a reduction or diminution of the Sales and Use Tax Revenues below the level which would have been received but for such action. the second day of Ftbraufds sometnns.P0r Sale of Improvements. Nothing in the Indenture shall be construed to prohibit the City from Improvements financed with proceeds of the (_ I Year (herein 'fled with the Trustheand selling, leasing or otherwise disposing of the Bonds, provided, however, that prior to the sale, lease or other disposition of any Improvement ave filed their namea.ad there shall be filed with the Trustee an opinion of Bond Counsel to the effect that such sale, lease or other disposition will not cause interest on the Bonds to be included in the gross income of the Owners thereof for federal income taxation purposes. v: ; -41- fi�"v- •1 Defaults and Remedies Each of the following events is an "Event of Default": (a) payment of the principal of and the redemption premium, if any, on anythe Bonds of the maturity sorll not be by proceedings ewhen the same sall become for redemption or otherwise;or due and payable, either at (b) payment of any installment of interest on any of the Bonds shall not be made when the same shall become due and payable; or (c) the City shall for any reason be rendered incapable of fulfilling its objigatiapg hereunder; or (d) the City admits in writing its inability to pay its debts generally as they become due, or files a petition in bankruptcy or makes an assignment for the benefit of its creditors or consents to the appointment of a receiver or trustee for itself or a receiver or trustee such purpose is appointed without the consent of the City; or �< ik (e) the City is adjudged insolvent by a court of competent jurisdiction, or it be adjudged a bankrupt on a petition in bankruptcy filed against the City, or an order, judgment or decree be entered by any court of competentjurisdiction a4*� j B P appointing, without T the consent of the City, a receiver or trustee of the City or of the whole or any part of its property and any of the aforesaid adjudications, orders, judgments or decrees shall not be vacated or set aside or stayed within ninety (90) days from the date of entry thereof; or (f) the City shall file a petition or answer seeking reorganization or any arrangement under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state thereof; or (g) under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property, and such custody or control shall not be terminated within ninety (90) days from the date of assumption of such custody or control; or (h) the City shall default in the due and punctual performance of any other of the covenants, conditions, agreements and provisions contained in the Bonds or in the Indenture or any Series Ordinance on the part of the City to be performed and such default shall continue for thirty (30) days after written notice specifying such default and requiring the same to be remedied shall have been given to the City by the Trustee, which may give notice in its discretion and shall give such notice at the written request of the Owners of. not less than ten percent (10%) in aggregate principal amount of the Bonds then, Outstanding; provided, however, if the default specified in this clause (h) shall be of a type which cannot be remedied within thirty (30) days, it shall not constitute an event of default if the City shall begin to remedy such default within such period of thirty (30) days. Acceleration of Maturities. Upon the happening and continuance of any Event of Default specified in clauses (a) through (h) above, then and in every such case the, Trustee may, and upon the written request of the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding shall, by a notice in writing to the City, declare the principal of all of the Bonds then Outstanding (if not then due -42- �yabl;) m be due and payable immediately, and upon such declaration the same shall r 1 ;, cod and be immediait y due and payable, anything contained in the Bonds or in the blot to the Contrary norwithstandiag provided, however, that if at any time after the ion p1emtp`',x$T la��rcof the Bonds shall have been so declared to be due and payable, and before the entry :come due,' d� aaXr 't 10,01 judglent of decree in any suit action or proceeding instituted on account of such e; or payaD a hjt of faalor before the completion of the enforcement of any other remedy under the Indenture, rr, y "0h , s]afl have accumulated in the Sinking Fund sufficient to pay the principal of all of the Eons iqa g °°' Bonds and all arrears of interest, if any, upon all Bonds then Outstanding (except the �atl a� 1 of any Bonds not then due except by virtue of such declaration and the interest •y ,$r 0 ed on such Bonds since the last Interest Payment Date), and the charges, compensation, apable of,i •,s a dtsbarsements advances and liabilities of the Trustee and all other amounts then 1 "aB ii ' t'by Ibe City hereunder shall have been paid or a sum sufficient to pay the same shall u•pt ), b deposited with the Trustee, and every other default known to the Trustee in the [Is debts ,:" bfe aatm or performance of any covenant, condition, agreement or provision contained in the •CMt;for a et'%' nerds or in the Indenture (other than a default in the payment of the principal of such Bonds for itspaf O fit of j5 dy ace only because of a declaration under this covenant) shall have been remedied to the E or eC+�►211,sjaesioe of the Trustee, then and in every such case the Trustee may, and upon the written test of the Owners of not less than a majority in aggregate principal amount of the Bonds Compart tit a due except by virtue of such declaration and than Outstanding shall, by written notice• = + wf d etent lttrta the City, rescind and annul such declaration and its consequences, but no such recission or rt the City,as �talIDee1 shall extend to or affect any subsequent default or impair any right consequent 8d. or . of the -,ham mtmg t ere °- ludemetus or'd�1Ly �t Remedies. Upon the happening and continuance of any Event of Default, the date of Xi Ersea in a of P pe g �•.t th:e and in every such case the Trustee may proceed, and upon the written request of the zArEat anon owners of not less than ten percent (lie) in aggregate principal amount of the Bonds then tiL Lta patraading under the indenture shall proceed, subject to the provisions of the indenture to or Eta un . protect and enforce the rights of the Owners under State law or under the indenture by such yen actions or special proceedings in equity or at law, either for the specific performance of try revenant or agreement contained in the Indenture or in aid or execution of any power relief or aid oldehten, orated or for the enforcement of any proper legal or equitable remedy, as the Trustee being if the City atof-Ie tp 1:eisedby counsel, shall deem most effectual to protect and enforce such rights. sal shall nut bet yq Idy or coauul; or Subrogcrior_ Notwithstanding any other provision of the Indenture, in the event that the principal and redemption price, if applicable, and interest due on the Series 1990 Bonds shall be zrrformaace u7 anSatiwy*i pad by Coital Guaranty pursuant to the Financial Guaranty Bond, the assignment and pledge I in the Bonds taQilt of the trust estate under the Indenture and all covenants, agreements and other obligations of performed sad 3''g the City to the Owners of such Series 1990 Bonds shall continue to exist and Capital Guaranty us such default-. shti be subrDeated to the rights of such Owners by the Tusk✓, w7tid.iotra written request nl dih Drrrei iril amount of fhe`Boeg:h Cetcemine the Truster s this Oaltr :(hjsi�l ttp Removal of Trustee. The Trustee may be removed at any time by an instrument or nut confnrvr<MEsvIc d mcerreut instruments is writing. (if executed by the Owners of not less than a majority in myeriod of ihiry j30) i1s?t tkreeate principal amount of Bonds then Outstanding and filed with the City, provided, hoarser, that a photostatic copy of each such instrument shall be delivered promptly by the con nuan+ id. City to the Trustee_ The Trustee may also be removed at any time for any breach of trust or i and to et" -3 for acting or proceeding in violation of, or for failing to act or proceed in accordance with, any of nut Lss than'$ m : p Dosing of the Indenture with respect to the duties and obligations of the Trustee, by any nutsce use a town of competent jurisd_icaon, upon the application of the City or the Owners of not less than D>RSLaniimS Lvt percent (5%) in aggregate principal amount of the Bonds the' Outstanding, or by Capital Gaarauty at its request i} ( Payment of Trustee's Fees. If the City fails " to cause required payments 0,, useusa ��F t �l+ t ! i� moneys T n st is possessions under athe ex ovisions hofTthet Indentu eaands sha11 be ent f um aq° �mpticba �: Y P P be entitled Yp ,� S0 f�� . tf I' preference therefor over any of the Outstanding Bonds. to h Hpolw s� ��If •! r, l �, i . r deot°�� °all �0 ,,,oc r sac r Supplemental Indentures t„ 'd�ty,0ft to 1'li,. Supplemental Indentures without OwnersConsent. The City and the Trustee may, from q mt 1 0a;caa to time and at any time, enter into supplemental Indentures: 0 ecu i, i.: ' I 6rSat00Untk.�(l d ( i (a) to cure any ambiguity or formal defect or omission or to correctinconsistent provisions as jttco� ed dye( supplemental indenture, or s the Indenture or in any Series Ordinance or m ant's �"at ahAll be . �a.IN` jd0rota"✓'reateodmB„ (b) grant Po+tpua6 :^rthe Inc additional trights, remedies,cpowyers authority or security that may ynbethe Owners any rtt�ceAt}n n0thi: lawfully granted �r tteo conferred upon the Owners or the Trustee, or to or pt�l!tea0pf o, tCasa,,, tip a (adeature , . (c) to add to the conditions, limitations and restrictions on the issuance of Bonds � (b) as reduc under the provisions of the Indenture other conditions, limitations and restrictions teYOf tntere i !} thereafter to be observed, or Age orBon i i',i �r BoOd, r A! foracoesent to (d) to add to the covenants and agreements of the City in the Indenture or loony Series Ordinance other covenants and agreements thereafter to be observed by the City or to ^i surrender any right or power in the Indenture or in any Series Ordinance reserved to or conferred upon the City, or (e) to permit the issuance of Bonds in coupon form, if as a condition precedent to the s• adoption of such supplemental resolution, there shall be delivered to the City an opinion of N their terms ; r 'the Bonds Bond Counsel to the effect that the issuance of Bonds in coupon or bearer form is then permitted by law to be issued and that the interest on such Bonds would not be included in wmeemtvh h the gross income of the Owners thereof for purposes of federal income taxation, or tjtTrastee, 3� pble upoa all of (f) to permit the City to issue Bonds the interest on which would not be included in �066gauuns the p the gross income of the Owners thereof for purposes of federal income taxation, or t aye assumed ptbVariable Rats: (g) to qualify the Bonds or any of them for registration under the Securities Act of apijfde rastee, for. 1933, as amended, or the Securities Exchange Act of 1934, as amended, or •t6iaa4efor payitil lie Cttyrander tk (h) to qualify the Indenture as an "indenture" under the Trust Indenture Act of 1939,tsdof tbeaTrustee< as amended, or i tAh seahonoaed to the sW haterno oblil (i) to create additional sinking funds for any Series of Bonds as permitted by the qlo�*redeption pb Indenture, or Obligations depos titltkCity, shall re (j) to permit Bonds to be issued in denominations smaller than $5,000, or Oyu ma be rea. Y (k) to permit Bonds to be issued in book -entry form without certificated Bonds, or aaat or(1) r+q tCW°IIia Or SIIh whi ch, intheopinion of Bond Counsel, do not adversely affect the rights or security of otherwuer -44- make be thirty (30) days prior to the passage of any supplemental indenture for any reaa°d "shalsuch l pbay e t } st IPur oses other than the purposes set forth in clauses (f), (g), (h), (i), (j) and of shall cause a notice of the proposed passage of such supplemental indenture to 4 ) The Trustee y first-class mail, postage prepaid, to all Owners at their addresses as they appear on eta d y0uagistrano° books. Such notice shall briefly set forth the nature of the proposed indenture and shall state that copies thereof are on file at the office of the Ilnental inspection by all Owners. A failure by the Trustee to mail the required notice shall Trustee INsptee f°y validity of such supplemental indenture. the maY, fro what 0!, indentures widr Owners' Consent. Subject to the terms and provisions omission or Section, and not otherwise, the Owners of not less than two-thirds (2/3) in to ieries Ordinance Orn�t+ry' aniaedrainnthis Outstanding f e Bonds en shall ave the ime to , from ito Dag p P nint othehIndenture hto tco ate the contrary notwithstanding, ttotconsent thr grcontainedal and °! �rorcnthe execution by the City and the Trustee of such indenture or indentures supplemental benefit of be deemed s ary or desirable by e City for the rpose of ppibe indenture as amend the 0 7. may IaWfullp ng,l adding to or rescinding, in any part cu ar, any of theuterms or be 9 it a ture or in any Series Ordinance or any supplemental indenture; �ya°ag,contained in the Indenture Pro that nothing containednhnshallpermit, or be construed as however, rity s o an the yOrtdcd, oftheprincipal of or theinterest on any Bond (a) an extension of the maturity Issuance'af limitations pmittinB, under the Indenture or an extension of any date fixed for meeting any Amortization and ratr a bled or (b) a reduction in the principal amount of any Bond or the redemption g;quirements, on the rate of interest thereon, or (c) a preference or priority of any Bond or Bonds prtmium Bond or Bonds, or (d) a reduction in the aggregate principal amount of the ty in the Indenture or m d` be observed b 9 osn nay other Bonds required for consent to such supplemental indenture. tries OrdinanceYreserved Wa Ddeasance as a condition precedenttada If (a) when the Bonds secured by the Indenture shall have become due and payable in ered to the City an opiaioad with their terms or shall have been duly called for redemption or (b) irrevocable Oupon or bearer torus h� would are form 16 out io accordance iutructions to call the Bonds for redemption or to pay the Bonds at their respective maturities combination of such payment and redemption shall have been given by the t income taxation, trio the effect some Pity to the Trustee, the whole amount of the principal and the interest and premium, if any, so hich due and payable upon all of the Bonds then Outstanding shall be paid or sufficient moneys, or interest (which with respect to any Variable would not be maddb I income taxation, or------ Defeasance principal Obligations the of and the g bin Bonds shall be assumed to be the maximum interest rate permitted under the documents such Variable Rate Bonds) on which when due will provide sufficient moneys, shall n under the Securities Add piercing be held by the Trustee, for such purpose under the provisions of the Indenture, and provision the Indenture by the City or amended, or shall also be made for paying all other sums payable pursuant to Financial Guaranty Bond, then and in that case the right, title • Trust Indenture Act of 193 payable by the City under the udinterest of the Trustee in the pledged Sales and Use Tax Revenues, funds, accounts and determine and become void, and subaccounts mentioned in the Indenture shall thereupon cease, the City shall have no obligation with respect to such Bonds except for the payment of the or sf Bonds as permittedbjh principal of, redemption premium, if any, and interest thereon solely from the moneys Defeasance deposited to the Indenture, and the Trustee in such case, on Obligations pursuant demand of the City, shall release the Indenture and shall execute such documents to evidence over to the City any r than $5,000, or such release as may be reasonably required by the City, and shall turn in the Sinking Fund and all balances remaining in any lout certificated Bonds, 00 " surplus in any account or subaccouat other funds, accounts or subaccounts other than moneys held for the redemption or payment of the City as the Board Bonds or the interest thereon for application to any lawful purpose of and remain in full force and effect; dversely affect the righoa 'ball determine; otherwise the Indenture shall be, continue Obligations shall be deposited with provided, however, that in the event Defeasance •45- G4 � 'I r and held by the Trustee or other bank, trust company or other appropriate fiaaoci agent, as hereinabove provided, and in addition institution, acting as escrow to I the set forth in the Indenture, the Trustee shall within thirty (30) days after ankh requirements Defeasance Obligations shall have been deposited with it, cause a notice signed by the Trustee"to be published once, and in a Daily Newspaper of general circulation published in the City aad circulation or a financial journal published in the Borough in a Daily Newspaper of general of City and State of New York, setting forth (i) the date or dates, if any, designated Manhattan, for the redemption of the Bonds or if a portion of the Outstanding Bonds are not'beip� redeemed prior to their maturities or mandatory redemption dates, a statement to the effect tha maturity and any Term Bonds are being redeemed in amounts such Bonds are being paid at ax•t at times which will satisfy the Amortization Requirements therefor, (ii) a description of thi r - Defeasance Obligations so held by the Trustee or other bank, trust company or other appropriati financial institution, acting as escrow agent, and (iii) that the Indenture has been released.:. N+Ir! All moneys and obligations held by the Trustee or other bank, trust company or other appropriate financial institution, acting as escrow agent, shall be held in trust and th', said obligations when received, and said moneys, applied to principal of and interest on th payment, when due, of the principal of, and the interest and the premium, if any, on the Bond payable therefrom. FINANCIAL GUARANTY BOND A Financial Guaranty Bond (the "Financial Guaranty Bond") will be issued by Capital Guaranty Insurance Company ("Capital Guaranty") simultaneously with the issuance and delivery:' of the Series 1990 Bonds which provides for the prompt payment of principal of and interest onf] the Series 1990 Bonds when Due for Payment (as defined below and in the Financial Guaranty;; Bond) to the extent that the Trustee has not received sufficient funds from the City or other'; obligor (other than Capital Guaranty) responsible for payment of the Series 1990 Bonds. '0se for Payment" means, when referring to principal of the Series 1990 Bonds, the stated maturityi date thereof or the date on which the principal becomes due for mandatory redemption and does',', not refer to any earlier date on which payment of principal is due by reason of any other call, for redemption, acceleration or other advancement of maturity. The term "Due for Payment' means, when referring to interest, the stated date for payment of interest. To the extent the maturity of the Series 1990 Bonds may be accelerated upon a default, such- acceleration may not occur without the prior written consent of Capital Guaranty:';: Notwithstanding any such acceleration, Capital Guaranty may continue to pay principal and interest on scheduled payment dates (i.e., when "Due for Payment"). In the event that Capital; Guaranty shall make any payment of principal of or interest on the Series 1990 Bonds pursuant to the terms of the Financial Guaranty Bond, and the maturity of the Series 1990 Bonds is� thereafter accelerated, Capital Guaranty may (but is not obligated to), at any time and at its: sole option, pay Owners of the Series 1990 Bonds all or a portion of amounts due on such Series; 1990 Bonds prior to the stated maturity dates thereof. For specific information on the coverage provided, reference should be made to the text of- the Financial Guaranty Bond, which has been reproduced in specimen form as Exhibit A to this; Official Statement. The Financial Guaranty Bond does not insure any payment to any investor, to compensate for any loss or limitation of any tax exemption, either past or future. The. Financial Guaranty Bond does not insure against nonpayment of principal or interest caused by the insolvency or negligence of the Trustee. -46- F a' rust co v a rleknpti 44 ndentu a has beenttefq o shall bank trust com au` r be held iu P,.Y oral and said mooe tract utg he premium if ys' aPP,li .mh ay,5 i D load") will be issued Iyy sly with the issuance and ent of principal of and iatit ow and in the Fioancinl0 out funds from the City of the Series 1990 Bond: qq s 1990 Bonds, the statediaiq ar mandatory redemptions, is due 'by reason of an�otbpd ty. The term Due for fijs' of interest. e accelerated upon a defy consent of Capital Gino y continue to pay prieeiprli meat"). In the event thttf;B on the Series 1990 Bondipinoi urity of the Series 1990lodi igated to), at any time'and13 on of amounts due en sodSm nce should be made to - the tdt aecimen form as EzhibitAlob nsure any payment to 101id tion, either pastor fosI of principal or intereit;era'! z;. d -r� r +a Guaranty Insurance Company is a monoline stock insurance company Cnprted in the State of Maryland, and is a wholly owned subsidiary of Capital jj rpus Corporation, a Maryland insurance holding company. Capital Guaranty Corporation is 6 d by the following: Constellation Investments, Inc., an affiliate of Baltimore Gas and. °t'tt a Fleet/Norstar Financial Group, Inc.; Safeco Corporation; Siting Finance Corporation, an dritn.iof Siemens A. G.; United States Fidelity and Guaranty Company; and certain members ofthe�mar,agemant and staff of Capital Guaranty. Other than their capital commitment to °fa6I Guaranty Corporation, the investors of Capital Guaranty Corporation are not obligated to G°p1ihe debts of, or the claims against, Capital Guaranty Insurance Company. As of June 30, too, the total policyholders' surplus of Capital Guaranty Insurance Company was approximately 990 million (unaudited) and total admitted assets were approximately $167.2 million (unaudited) It reported to the Insurance Department of the State of Maryland. Interested parties should refer to the financial statement attached hereto as Exhibit B for more detailed financial afnrmation on Capital Guaranty. The financial information on Capital Guaranty set forth in to caption FINANCIAL GUARANTY BOND and the attached financial statement were p1Qared io accordance with statutory insurance accounting principles. Neither Capital Guaranty nor its affiliates make any representation as to the contents of this official Statement, the suitability of the Series 1990 Bonds for any investor, the feasibility or ptformance of any project or compliance with any securities or tax laws and regulations. Capital Guaranty's role is limited to providing the coverage set forth in the Financial Guranty Bond. UNDERWRITING Under a Bond Purchase Agreement (the "Agreement") entered into by and between the City rad Llama Company (the "Underwriter"), the Series 1990 Bonds are being purchased at a price of $32,576,545 plus accrued interest to the date of delivery for public reoffering by the Underwriter. The Agreement provides that the Underwriter will purchase all of the Series 1990 floods if any are purchased. The obligation of the Underwriter to accept delivery of the Series 1990 Bonds is subject to various conditions contained in the Agreement including the absence of pending or threatened litigation challenging the validity of the Series 1990 Bonds or any proceedings in connection with the issuance thereof and the absence of material adverse changes iothe financial or business condition of the City. The Underwriter intends to offer the Series 1990 Bonds to the public initially at the offering prices set forth on the cover page of this Official Statement, which prices may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the Series 1990 Bonds to the public, The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Series 1990 Bonds into investment trusts) at prices lower than the public offering price. The City has agreed to indemnify the Underwriter against certain civil liabilities in cenoection with the offering and sale of the Series 1990 Bonds, including certain liabilities under federal securities laws. -47- RATINGS Standard & Poor's Corporation and Moody's Investors Service have given the Senei'I990 a Bonds the respective ratings set forth on the cover page of this Official Statement Such ratings reflect only the views of such organizations at the time such ratings were given, and the City!'? makes no representations as to the appropriateness of the ratings. An explanation of the 's significance of such ratings may be obtained from such rating companies. There'is no assurance that such ratings will continue for any given period of time or that they will not be revised' downward or withdrawn entirely by such rating companies, if in the judgment of suchatiagi; companies circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Series 1990 Bonds, TAX EXEMPTION Federal Income Taxes In the opinion of Brown & Wood, New York, New York, as Bond Counsel, based on existing statutes, regulations and court decisions and assuming compliance by the City with certain covenants and requirements of the Code regarding use, expenditure and investment of 1 Bond proceeds and the timely payment of certain investment earnings to the United States Treasury, interest on the Series 1990 Bonds is not includable in the gross income of the Owners of the Series 1990 Bonds for purposes of federal income taxation. Interest on the Series 1990 Bonds will not be treated as a preference item in calculating alternative minimum taxable income of individuals; however, interest on the Series 1990 Bonds will be included in the calculation of the alternative minimum tax and environmental tax liabilities of corporations. Ownership of tax-exempt obligations may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, certain foreign corporations doing business in the United States, certain S corporations with excess passive income, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of`. the Series 1990 Bonds should consult their tax advisors as to applicability of any such collateral consequences. State Taxes Bond Counsel is of the opinion that, under existing law, the Series 1990 Bonds and interest thereon are exempt from all state, county and municipal taxes in the State of Arkansas. LEGAL MATTERS Legal Opinions Legal matters incident to the authorization and issuance of the Series 1990 Bonds are subject to the unqualified approving opinion of Brown & Wood, Bond Counsel, a copy of whose approving opinion will be delivered with the Bonds. Certain legal matters will be passed upon for the Underwriter by Rose Law Firm, a Professional Association. Certain legal matters will be passed upon for the City by Jerry Rose, Esq., City Attorney. -48 ��- .. .,.:; --..nor ,. _.. w., _.,,.�: :F n�•�tf i*�w 1f i J Sc hie pf ha're )�ey� K t� lltlgslloo p}Ja S'� S ?here is no litigation pending seeking to restrain or enjoin the issuance or delivery of the r'J u rattn 'y�e'dp 1990 Bonds or questioning or affecting the legality of the Series 1990 Bonds or the i' g-,00IDpa�um; v k �1 kp��ediags and authority under which the Series 1990 Bonds are to be issued, or questioning ae or that.�ek �� ❑gbt of the City to execute and deliver the Indenture or to issue the Series 1990 Bonds. i if to., Y mil d' rrvrnoa�mgmeil'• 4� grcept as described below, there is no action, suit or proceeding known to be pending or t Seers 1990 �� �6restened, restraining o: enjoining the Cityin any which could have a material adverse Boexy�b effect on the City's financial affairs. 4 P or Recovery Authority Lineation. The City, the City of West Fork, Arkansas ("West Sips part') and Washington County, Arkansas (the "County") are members of the Northwest Arkansas urce Recovery Authority (the "Authority") which was formed in 1982 to geso provide solid waste disposal services. The Board of Directors of the Authority consists of nine members, seven of appointed by the Ci[ York, as,gond abom are Y• i nmg complianq �}j In 1985, the Authority issued $22,400,000 of Fixed/Adjustable Rate Revenue Bonds, Series usq erpead • .tj 1985 (the 'Authority Bonds") to finance the acquisition, construction and equipping of a solid zeal earnings to) rote resource recovery facility (the "Recovery Facility') within or near the City. The �nal in the gross ram(!a Authority Bonds were secured, in part, by a Waste Disposal Agreement (the "Waste Agreement') bom 64'N between the City, West Fork, the County and the Authority, whereby the City unconditionally aJ' agreed to pay 'tipping fees' to the Authority from City sanitation fees in amounts sufficient to as a preference rl retire the Authority Bonds. In addition, payment of the Authority Bonds was guaranteed by interest on th tt Financial Guaranty Insurance Corporation ("FGIC'). inimum tnz ands It In December of 1986, the Authority Bonds were remarketed at fixed interest rates, and construction on the Recovery Facility began in 1987. After construction began, the location for in collateral fi4* IIe Recovery Facility became controversial and on March 8, 1988, the City held a nonbinding ed Lion, f. • al'h referendum wherein a majority of the voters elected to cancel construction of the Recovery ioaas doing iasacani in p Facility. On March 9, 1988, the Board of Directors of the City voted to cancel the Recovery bnniness'ia°-Ai Facility. On March 11, 1988, the Board of Directors of the Authority voted to halt construction se, individaa]'reftpixy dyi of the Recovery Facility, and on March 15, 1988, Union National Bank of Little Rock, the may be deemed to Etttitrustee for the Authority Bonds (the 'Authority Bond Trustee"), notified the Authority that igations Proeptctinptdml termination of construction was an event of default under the trust indenture securing the I� applicability of inys4 Authority Bonds. By the time the Authority Facility was cancelled, approximately $7,000,000 of Authority Bond proceeds had been expended on unrecoverable costs. On August 28, 1989, a citizen of the City sued, on behalf of himself and all others similarly i .4 situated, the City, the Authority and the Authority Bond Trustee (Roudabush et al. v. City of =^ SFavetteville. No. E89-1170, Chancery Court of Washington County, Arkansas) seeking the the Series 1990 Boes>j invalidation of the Waste Agreement. The plaintiff also sought to enjoin the City from t in the State of Arts.ttpeading any public moneys to repay the Authority Bonds or from raising sanitation rates to provide moneys for such purposes. By third party complaint dated December 21, 1989, the City sued A.G. Edwards & Sons, Inc., the Authority's underwriter, Rose Law Firm, a Professional Association, counsel to the underwriter, and Wright, Lindsey & Jennings, bond counsel to the u ' Authority, alleging negligence in the preparation of the Authority Bonds and the Waste _,::? Agreement. n,y In April of 1990 the City raised sanitation fees to provide sufficent revenues to fund the Seatt 1990 Btr'� dr obligations under the Waste Agreement. Moneys generated from the increased sanitation fees Bond Counsel, a m'PJ; have been deposited into an escrow fund to be held by a third party or a segregated account to legal matters aill,be be held by the City during the taaon• Cer a.. pending litigation. �Y• -49- x�;i v;ryt "rli Fi•, > r � grvtce have B ' Ullgathin vex Offtcta($tate o"th°'Se i rattn meoCi eq g P B B ghere is ao litr ation endin seekin to restrain or enjoin the issuance or delivery of the �'ngs` ga<ex°a aa4� Ph°teedin6 Sesser 1990 d authortyeunder wlichathetSeriesla1990aBondsfare to beeissued, oronuestionine Panne ;` c s There'ptvf4 or that the is a°l� q g F "ht of the City to execute and deliver the Indenture or to issue the Series 1990 Bonds. she rig uo f" 1n the � - will4 n i�,4 revisto gW��t @crept as described below, there is no action, suit or proceeding known to be pending or of• k ,. o%!ot roc Series 199 Boo d ot� Ihreeleaed, restraining or enjoining the City in any way which could have a material adverse the City's financial affairs. d�d`a tffect on +iR tit` a:. err R over A s h ri Li i i n. The City, the City of West Fork, Arkansas ("West "County") 11 7 Y M1K: Fork') and Washington County, Arkansas (the are members of the Northwest Arkansas "Authority") - ge0urce Recovery Authority (the which was formed in 1982 to provide solid waste JuP°sti services. The Board of Directors of the Authority consists of nine members, seven of *�&4 are appointed by the City. ork, as Bond ehour 6, compliance by the.f ,,p In 198SAuthothe nt thBonds"issued le o ) finance Othe0ac fuisition, se. expenditure and tionate andRevenue 1995 (the Y q colnstru ofs aSeries sol d "Recovery inF,!hrj :nt earnings to they n the llnottd gross ancome h? caste resource recovery facility (the Facility") within or near the City. The Authority Bands were secured, in part, by a Waste Disposal Agreement (the "Waste Agreement") of jhe n. 0C hetveea the City, West Fork, the County and the Authority, whereby the City unconditionally sgreed to pay "tipping fees" to the Authority from City sanitation fees in amounts sufficient to s a preference ' mire the Authority Bonds. In addition, payment of the Authority Bonds was guaranteed by neas s° interest on the Senesl9gg Financial Guaranty Insurance Corporation ("FGIC"). imuen tax and enviniom la December of 1986, the Authority Bonds were remarketed at fixed interest rates, and construction on the Recovery Facility began in 1987. After construction began, the location for collateral federal federu6institn the Recovery Facility became controversial and on March 8, 1988, the City held a nonbinding the n. on, financial ;h referendum wherein a majority of voters elected to cancel construction of the Recovery as doing ausiness in Facility. On March 9, 1988, the Board of Directors of the City voted to cancel the Recovery March 11, 1988, Board Directors the 0� individual recipients'bf Facility. On the of of the Authority voted to halt construction Facility, March ay be deemed to haveiaeiod, of the Recovery and on 15, 1988, Union National Bank of Little Rock, the Bonds "Authority 'pere trustee for the Authority (the Bond Trustee"), notified the Authority that ations. Prospective 'i termination of construction was an event of default under the trust indenture securing the ipplicability of Anysechto6 Authority Bonds. By the time the Authority Facility was cancelled, approximately $7,000,000 of Authority Bond proceeds had been expended on unrecoverable costs. On August 28, 1989, a citizen of the City sued, on behalf of himself and all others similarly • situated, the City, the Authority and the Authority Bond Trustee (Roudabush et al. 1 City of vttville, No. E89-1170, Chancery Court of Washington County, Arkansas) seeking the the Series 1990 Bendsaodidii invalidation of the Waste Agreement. The plaintiff also sought to enjoin the City from in the State of Arkaasaf``•,s expending any public moneys to repay the Authority Bonds or from raising sanitation rates to provide moneys for such purposes. By third party complaint dated December 21, 1989, the City sued A.G. Edwards & Sons, Inc., the Authority's underwriter, Rose Law Firm, a Professional Association, counsel to the underwriter, and Wright, Lindsey & Jennings, bond counsel to the ` Authority, alleging negligence in the preparation of the Authority Bonds and the Waste Agreement. ithe Series 1990 BondsireF In April of 1990 the City raised sanitation fees to provide sufficent revenues to fund Bond Counse, la copyofib legal matters will be pa_ obligations under the Waste Agreement. Moneys generated from the increased sanitation fees have been deposited into an escrow fund to be held by a third party or a segregated account to be nation, Certain legal ou�!i1 held by the City during the pending litigation. 49 2., 25 28 29 q.• 11 {! I,` -1 IFt41 ft a hJ,t !R-1 z`+ �J � iT dl �lll ! FGIC suethe City ; ,, On May 251990West Fork, the County and the Authont Y 15 iii ll si +� ,€i �1 •Western ... �f Fwrd U.S. U•g. rrPville et. al., No. 90-5052, UDistri District Court ( Y. ct Court, District of Arkansas, Fayetteville Division) seeking, among other things, r, enforcement of the Waste Agreement or damages for misrepresentation by the City eithe ill and Authority. li I I The City cannot predict the outcome of the litigation summarized above or the remedies that - ( might be granted if any of the actions against the City are successful. Copies of pleadings in the litigation described above can be obtained from the Underwriter or the City, At the November 8, 1988 election, the voters of the City also approved the issuance of up to $10,000,000 of bonds secured by the Sales and Use Tax Revenues to finance educational facilities for the Fayetteville School District (the School District'). After the election, questions were raised as to whether the City could lawfully issue capital improvement bonds or otherwise grant excess Sales and Use Tax Revenues to finance facilities for the School District„ Since this question had not been previously litigated, the City and School District considered pursuing test litigation to obtain a judicial interpretation. However, at this time the City, I School District do not plan to commence litigation concerning these matters. nti l,t MISCELLANEOUS Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as reprsentations of fact and no representation is made that any of the estimates will be realized. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or owners of any of the Series 1990 Bonds. The information contained in this Official Statement has been taken from sources considered { ! to be reliable, but is not guaranteed. To the best of the knowledge of the undersigned, the 1., Official Statement does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements .: therein, in light of the circumstances under which they were made, not misleading. The execution and delivery of this Official Statement has been duly authorized by the City as of the date shown on the cover hereof. ! 1 CITY OF FAYETTEVILLE, ARKANSAS i R •. By: /s/William Martin William Martin, Mayor L -50 duty .n fn EVIL ., A iLs,T3SS EXHIBIT A 1l 1 CAPITAL GUARANTY INSURANCE COMPANY FINANCIAL GUARANTY BOND `;h t kvw Yya air Lk,hr� i r. �. St fE Sj�71f4 BOND NUMBER: NNNN 1 ;'I ijl w°r Eh r' I , PREMIUM: PPPP t ITIES MATUR: ��IrABpNTIED 1I TER DATE: DDDD i e.2f DA VVV Insurance Company, • capital Guaranty ("Capital"), a corporation ? organized under the laws of Maryland, in consi eration of the premium r 4 aid or directed to be paid and subject to erms of this Bond, y" hereby unconditionally and irrevocably a surety, to pay the OBLIGATION to ("Paying Agent" ), or its successor as Payin n WNERS. VV: ``�� ,Bapital will make such payme h u o its DISBURSING AGENTS on• ri `the date such principal s Due for Payment, or on the Business Day next fol 1)g_.t n which NOTICE OF NONPAYMENT is received, whichever B RSING AGENT will disburse to the (, Paying Agent the LIGATION which is then DUE FOR PAYMENT but is unpaid by of ch NONPAYMENT but only upon receipt by V V V4DISBURSING AGENT, rm reasonably satisfactory to it, of (i) V :J evidence of the OW right to receive such payment, and (ii) V V evidence, including any appropriate instruments of assignment, that all of the OWNER'S rights to such payment shall thereupon vest in Capital. tar Upon such disbursement, Capital shall become the OWNER of that portion of the OBLIGATION as paid, including any appurtenant coupon or right to + payment of principal or interest on such OBLIGATION and shall be fully subrogated to the OWNER'S right to payment thereof. In addition, Capital has the rights of a surety as to reimbursement from the ISSUER 'i (or other obligor responsible for payment of the OBLIGATION) as principal. By its acceptance of this Financial Guaranty Bond, the e, holder hereof agrees on behalf of the OWNER that upon payment by Capital of the OBLIGATION, Capital shall be fully subrogated to all of OWNER'S right, title and interest in the OBLIGATION including, but not limited to, the right to commence and pursue legal proceedings in V' respect of the OBLIGATION and to direct any Bond Trustee under an �'-Indenture securing the OBLIGATION or similar agent notwithstanding that u ,payments of the OBLIGATION may become due in the future or may be guarantied by others. k 7ne .rxr. This Bond is not cancellable for any reason_ The premium t� tit is not refundable for any reason, including the payment of n this Ho' ti k fif '` OBLIGATION prior to its maturity. This Bond does not insurt yxP Pa . any prepayment e ti , [fat P yment premium will be paid upon payment of the OBLIC �T) that'< { prior to its maturity as a result of optional redemption or (b) that any amount received or to be received upon oor a tax is or will remain exempt from State or Federal taxationth6 OBLIOATa at thB any compensatory payment will be made to OWNER as a result of ��aapg5r; determination of ta:cabil.ity. :b f DEFINITIONS: As used herein, the term: nt � paY (i) "BUSINESS DAY" means any day on which Disbursing Agent f" CaPt for business. is M1� goad oPa a the .d { (ii) "DISBURSING AGENT" means a bank or t ve Capitaln , or a successor Disbursin company selected CAF and remit funds on behalf of C designated to recei` (iii) "DUE FOR PAYMENT" means, { 'rit the Principal o ereoe r ` Ti tI Obligation, the state i date which the same sha n calledforrmandatoon fund redemptio er to an earlier date sinkix�` ` Payment is du l On w acrxlerat' Y other call for redem 'S a o� default, or other advancement of rF matuPaymerity, efe ng to interest on the Obligation "Due. fornPi me a , the stated date for payment of interest. P erest previously paid by the Paying Agent, bu a pate thereafter recovered from any Owner to whom such t_ C made pursuant to a final judgment by any pa yment was + jurisdiction holdin e court of com etent 9 that such payment constituted a voidable'' preference within the meaning of any applicable bankrupt ("Preferential Payments"), shall be deemed Due for Paymen °ylar4l hereunder upon receipt by Disbursing Agent of evidence oftsgnatu if ragas recovery of such funds from the Owner. (iv) "NONPAYMENT" means h , the failure of the Issuer (or other obligor - responsible for payment of the Obligations) to have provided tot' the Paying Agent funds sufficient to pay all principal and interest on the Obligation which is then Due for Payment. yment "Nonpayment also includes Preferential Payments. ') "NOTICE OF NONPAYMENT" means tel Capital, subsequently Ir writ or telegraphic notice in the form of ExhibY_Con,irmed in writing, or written notice, i� A attached hereto, to Capital by registered or certified mail, from an Owner or Paying Agent for.,. the Oblication. Notice to Capital shall be + to the Claims Officer, given or addressed; Steuart Capital Guaranty Insurance Company Tower22nd r;• , Floor, One Market Plaza, San Francisco, Caiifor ia 94108, telephone (415) 995-8000. Ay{ _ N ; C ifs. - Payment c1 ut an Agent of a the rssaer ?I1Tga.t it to paya£F'g L is then, Due.h entjal Faymei ePlioaic ;orteie Ea wrttfnc,'or herto, ta. Cal flu en '0wner'or1 t shfl, be;gi!E aran IIsur, ix tF "0HfIGATI0N" means the payment of principal and interest scheduled to be paid on the Issue, but only with respect to the Guarantied Maturities thereof, together with any mandatory ,ii redemption premium then required to be paid which shall have become Due for Payment but shall be unpaid by reason of Nonpayment . "OWNER" means, as to the Guarantied Maturities of the Issue, the n who, at the time of Nonpayment, is entitled to payment person there, but does not include the Issuer or any person whose agreement to pay funds to or on behalf of the Issuer secures the Obligation. tness Whereof, Capital Guaranty Insurance Company has caused this cial Guaranty Bond to be signed by its duly authorized officers to a effective on the date set forth belo CAPITAL GUARANT CE COMPANY By: Title:;;. tive Date :C signature if required by state law] A-3 Re: Financial Guaranty Bond Number Issuer: Issue: Series: Dated Date:Guarantied Maturities: Ladies and Gentlemen: All capitalized terms used herein have the same meaning as is set forth in the Financial Guaranty Bond. In accordance with the above -captioned Financial Guaranty Bond, you are hereby notified of a Nonpayment under the referenced Issue. An amount is currently Due for Payment by Issuer but is unpaid, or is expected to be unpaid, by reason of the following Nonpayment: // The principal of the Obligation in the amount of S is unpaid, or is expected to be unpaid, as of its stated maturity on , 19 // The principal of the Obligation in the amount of S is unpaid, or is ex the date on which it has been duly cto unpaid,of called for a mandatory sinking fund redemption on , 19; // Interest on the Obligation in the amount of S unpaid, or is expected to be unpaid, as of the stated date for payment on 19_; and/or // Principal in the amount of $ and interest in the amount of $ which were maturity, on mandatory sinking fund redemption or at the r state to Whom such payment have since been recovered from an pau pursuant to a holdingthat final judgment by a courtof competent jurisdiction such payment constituted a voidable ewithin the A-4 in91lg �A aeaning of any applicable bankruptcy law2 3 rr tj . , I .OF N0NA'AYMENT AYMENT �� (DATE] "k Page Z e l sonies received from you shall be applied directly to the t to the owners of the captioned Obligations and for no other QWDosa. hsVe attached hereto a certified copy of the resolution .of the rd of Directors or the applicable provisions of the by-laws : ayhich authorize me to execute this notice_ ated: Date: ..D Title: the same me�9 a9y financial ier -the.'r�ier y .:issuer „bat 3s ' the :fnllrnring;; :the-::amotmt ^nf4� C■. , 19 id, .as:mff`±h and/or .ands een:. L9 ti: EXHIBIT B �G 7 JK ai Mfyy�. =az pa 18°� .22nod Floor n Plo 5�e fr,,4'uo. CA 94105.1413 :151995'8000 800eIPcoPer 11151995 8 ' �z4 Information CAPITAL ARANt CAPITAL GUARANTY INSURANCE COMPANY FINANCIAL STATEMENT (STATUTORY BASIS) AS OF June 30, 1990 ASSETS Cash (Includes Money Markets) .................$ 1,583,847 Investments ................................... 159,007,133 Accrued Interest .............................. 2,857,090 Other Assets .................................. 3,709,761 Total Assets ..................................$ 167,157,831 LIABILITIES AND POLICYHOLDERS' SURPLUS Contingency Reserve ...........................$ 8,318,488 Unearned Premiums ............................. 61,574,754 Other Liabilities ............................. 2,883,048 Policyholders' Surplus ........................ _94,381,541 Total Liabilities and Policyholders' surplus... S 167,157,831 B -I $33,019,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 1990 September 13, 1990 On the basis of the representations, warranties and agreements and upon the terms and conditions contained herein, the undersigned, Llama Company (the "Underwriter"), hereby offers to purchase the $33,019,000 Sales and Use Tax Capital Improvement Bonds, Series 1990 (the "Bonds"), to be issued by the City of Fayetteville, Arkansas (the "City"), a political subdivision organized and existing under the laws of the State of Arkansas, under and pursuant to an Ordinance adopted by the City on September 13, 1990 (the "Authorizing Ordinance"), and a Trust Indenture, dated as of October 15, 1990 (the "Indenture"), between the City and Mcllroy Bank & Trust, in Fayetteville, Arkansas (the "Trustee"). The Bonds are to be issued by the City pursuant to and in accordance with the provisions of t. Amendment No. 62 to the Constitution of the State of Arkansas, as implemented by Act No. 871 of the General Assembly of Arkansas for the year 1985, as amended (the "Act"). The Bonds j will constitute special obligations of the City secured by a pledge of revenues received by the City from a one percent (1%) ;,.o local sales and use tax (the "Tax Receipts") in amounts sufficient to provide for debt service on the Bonds and to maintain a debt service reserve. The levy of the one percent (1%) local sales and use tax was approved by a majority of the qualified electors of the City voting on the question at a special election held November 8, 1988. The issuance of the Bonds and the pledge of the Tax Receipts were approved by a majority of the qualified electors of the City voting on the question at a special election held May 29, 1990. The Indenture irrevocably pledges a sufficient portion of the Tax Receipts to the payment of the principal of and interest on the Bonds. The Bonds shall be issued in the forms and denominations set forth in the Indenture; shall be dated October 15, 1990; shall be numbered as provided in the Indenture; shall mature annually on November 15 of the years 1991 through 2002, inclusive, and on November 15, 2005 and November 15, 2008, as set forth in Exhibit A hereto; shall bear interest payable semiannually on May 15 and November 15 of each year commencing May 15, 1991, at the rates set forth in the Authorizing Ordinance and in Exhibit A hereto; and shall be subject to redemption prior to maturity upon the terms and conditions set forth in the Indenture and the Authorizing Ordinance. The issuance of the Bonds will not result in an excess of indebtedness of the City within the meaning of any constitutional or statutory limitation. The proceeds from the sale of the Bonds are to be used, wit along h other available moneys, to finance costs of acquiring, constructing and equipping certain capital improvements for the City and to pay the costs of issuance of the Bonds. SECTION 1. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS. By execution hereof, the City hereby represents to, and agrees with, the Underwriter that: (a) The City is a city of the first class and political subdivision duly organized and existing under the Constitution and laws of the State of Arkansas. The City is authorized by the provisions of the Act and the Authorizing Ordinance to issue, sell and deliver the Bonds for the purposes specified above, to adopt and perform its obligations under the Authorizing Ordinance, the Indenture and this Bond Purchase Agreement (this "Agreement"), and to irrevocably pledge a portion of the Tax Receipts to the payment of the principal of and interest on the Bonds as provided in the Indenture. (b) The City has full power and authority to consummate all transactions contemplated by this Agreement, the Bonds, the Authorizing Ordinance, the Indenture and any and all other agreements relating thereto to which the City is a party. (c) The City has duly authorized all action necessary under the Act or otherwise to be taken by it or on its behalf for: (i) the issuance and delivery of the Bonds upon the terms set forth in the Act, the Authorizing Ordinance, the Indenture, this Agreement and the Official Statement (as hereinafter defined); (ii) the execution and delivery by it of the Indenture and this Agreement; (iii) the pledge of a portion of the Tax Receipts; and (iv) the adoption of the Authorizing Ordinance and the performance of its duties thereunder. (d) The City has previously provided the Underwriter with copies of its Preliminary Official Statement, including the cover page, dated September 7, 1990, relating to the Bonds (the "Preliminary Official Statement"). As of its date, the Preliminary Official Statement has been "deemed final" by the City for purposes of SEC Rule 15c2- 12(b)(1). The Preliminary Official Statement, as amended to conform to the terms of this Bond Purchase Agreement, including Exhibit A hereto, and with such other changes and amendments as are mutually agreed to by je City and the Underwriter, is herein referreasthOfficial Statement. " (e) Except as described in the Official Statement, there is no action, suit, proceeding, inquiry or investigation at law or in equity or before or by any court, public board or body pending or, to the knowledge of the City, threatened against or affecting it (or, to its knowledge, any basis therefor) wherein an unfavorable decision, ruling or finding would adversely affect the transactions contemplated by this Agreement or would adversely affect the validity of the Bonds, the Authorizing Ordinance, the Indenture, this Agreement or any agreement or instrument to which the City is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby. (f) The descriptions and information contained in the Official Statement relating to the City, its organization, properties, operations and financial condition and the descriptions of the Bonds, the Indenture and the Tax Receipts are, and at the Closing Date (as defined in this Agreement and used hereinafter) will be, true and do not contain, and at the Closing Date will not contain, any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. (g) Since December 31, 1989, there has not been any material adverse change in the properties, financial position or results of operations of the City, whether or not arising from transactions arising in the ordinary course of business, other than any such changes which are disclosed in the Official Statement, and since such date the City has not entered into any transaction or incurred any liability material as to the City, except as disclosed in the Official Statement. (h) The City will not take or omit to take any action which will in any way result in the proceeds from the sale of the Bonds being applied in a manner inconsistent with the provisions of the Authorizing Ordinance and the Indenture. (i) The Bonds, when executed and delivered by the City, will constitute special obligations of the City enforceable in accordance with their terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally and by the application of general principles of equity. (j) The Authorizing Ordinance, the Indenture and this Agreement, when executed and delivered by the City, will be the legal, valid and binding obligations of the City enforceable in accordance with their respective terms, except to the extent -3- that enforcement Insolvency or other generally and by the (k) The execution and delivery of the Bonds, the Indenture and this Agreement, the adoption of the Authorizing Ordinance, and the performance by the City of its obligations under the aforementioned, do not and will not violate the Act or any court order by which the City is bound, and such actions do not and will not constitute a default under any existing resolution, agreement, indenture, mortgage, lease, note or other obligation or instrument to which the City is a party, and no approval or other action by any governmental authority or agency other than the State Treasurer is required in connection therewith. (1) The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. thereof may be limited by bankruptcy, similar laws affecting creditors' rights application of general principles of equity. SECTION 2. PURCHASE, SALE, AND DELIVERY OF THE BONDS. On the basis of, and in reliance upon, the warranties, representations and agreements of the City contained herein and in the other documents and agreements referred to herein and subject to the terms and conditions herein set forth, at the Closing Time, the Underwriter agrees to purchase from the City and the City agrees to sell to the Underwriter the Bonds at a price of , (.9-B- of the principal amount thereof) plus accr�d interest prom the date of the Bonds to the date of payment an delivery the eof. The Bonds shall be issued under and secured as provided in the Authorizing Ordinance and the Indenture, and the Bonds shall have the maturities and interest rates and be subject to redemption as set forth in the Authorizing Ordinance. Payment for the Bonds shall be made by certified or official bank check or draft, wire transfer, or otherwise in funds immediately available to the City on the same day, at the offices of Brown & Wood, in New York, New York, at 10:00 a.m. on 0: October 18, 1990, or at such other place, date and hour as shall • be mutually agreed upon between the City and the Underwriter. The date of such delivery and payment is herein called the "Closing Date," and the hour and date of such delivery and •: payment is herein called the "Closing Time." The Bonds shall be printed or lithographed on steel engraved borders, shall bear CUSIP numbers, shall be prepared and delivered as fully registered bonds in denominations of $5,000 • or integral multiples thereof (except for one Bond in the -4- f denomination least,000) in sinessnames s as the Underwriter may renuest days prior to the Closing Date, and shall be made available to the Underwriter at least one business day before the Closing Date for purposes of inspection and packaging . SECTION 3. CONDITIONS TO THE UNDERWRITER'S OBLIGATIONS. The Underwriter's obligations hereunder shall be subject to the due performance by the City of its obligations and agreements to be performed hereunder at or prior to the Closing Time and to the accuracy of and compliance with the representations and warranties of the City contained herein, as of the date hereof and as of the Closing Time, and the Underwriter's obligations hereunder are also subject to the following: (a) A policy of insurance issued by Capital Guaranty ii, Insurance Company, dated the Closing Date, shall have been delivered, which policy shall guarantee payment when due of principal of and interest on the Bonds and shall be in substantially the same form and substance as that attached as i Exhibit A to the Preliminary Official Statement. (b) The City shall have received from Standard & Poor's Corporation the rating of "AAA" and from Moody's Investor Service the rating of "A" on the Bonds and letters evidencing such ratings shall have been delivered to the Underwriter. (c) The Bonds shall have been duly authorized, executed and delivered in the form heretofore approved by the City in the Authorizing Ordinance with only such changes therein as the Underwriter and the City shall mutually agree upon. (d) At the Closing Time, the Underwriter shall receive two counterpart originals of the following documents, in each case satisfactory in form and substance to the Underwriter: (1) The Official Statement, executed on behalf of the City by its Mayor; (2) The Authorizing Ordinance, certified by the City Clerk as a true, correct and complete copy of the Authorizing Ordinance duly adopted by the City Board of Directors that has not been amended, modified or repealed and is in full force and effect as of the Closing Date; (3) The opinions dated as of the Closing Date of (A) General Counsel to the Capital Guaranty Insurance Company, in substantially the form and substance as that attached hereto as Exhibit B; (B) Jerry Rose, City Attorney, in substantially the form and substance as that attached hereto as Exhibit C; and (C) Brown & Wood, Bond Counsel, in substantially the form and Substance as that attached hereto as Exhibit D; (4) A certificate, in form and substance satisfactory to the Underwriter and Bond Counsel, of the Mayor of the City or any duly authorized officer or official of the City satisfactory to the Underwriter and Bond Counsel, dated as of the Closing pate, to the effect that: (i) each of the City's representations contained herein are true and correct as of the Closing Time; (ii) the City has authorized, by all action necessary under the Act, Ordinance No. 3480 adopted by the City on April 19, 1990 (the "Election Ordinance"), the adoption of the Authorizing Ordinance and the execution, delivery and due performance of the Bonds, the Indenture, this Agreement, and the pledging of a portion of the Tax Receipts; (iii) except as described in the Official Statement, no litigation is pending or, to his knowledge, threatened to restrain or enjoin the issuance or sale of the 'UBonds or in any way affecting any authority for or the validity of the Election Ordinance, the Authorizing Ordinance, the Indenture, this Agreement, or the pledge of the Tax Receipts; (iv) the Bonds, as executed by the City, are in the form or in substantially the form approved for such .execution by appropriate proceedings of the City; (v) since December 31, 1989, there has not been any material adverse change in the properties, financial position or results of operations of the City, whether or not arising from transactions in the ordinary course of business, other than such changes which are disclosed in the Official Statement, and since such date the City has not entered into any transaction or incurred any liability material as to the City except as disclosed in the Official Statement; (vi) there are not pending or, to his knowledge, threatened legal proceedings which are not disclosed in the Official Statement and which are material as to the City, or to which the City is a party, or of which property of the City is subject, or which will adversely affect the transactions contemplated hereby or by the Official Statement; (vii) the information contained in the Official Statement relating to the City, its organization, properties, operations and financial condition and the descriptions of the Bonds and the Tax Receipts are true and correct in all material respects and do not contain any untrue or incorrect statement of a material fact and do not omit to state a material fact -6- necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; and (viii) the City has duly authorized by all necessary action the signing of the Official Statement by its Mayor; (5) An arbitrage certificate of the City, in form satisfactory to Bond Counsel, signed by the Mayor; and (6) Such additional certificates and other documents as the Underwriter may reasonably request to evidence performance of or compliance with the provisions of this Agreement and the transactions contemplated hereby and by the Official Statement, all such certificates and other documents to be satisfactory in form and substance to the Underwriter and Bond Counsel. SECTION 4. THE UNDERWRITER'S RIGHT TO CANCEL. The Underwriter shall have the right to cancel its obligation to purchase the Bonds hereunder by notifying the City in writing or by telegram of its election to do so between the date hereof and the Closing Time, if at any time hereafter and prior to the Closing Time: (a) Legislation shall be introduced, by amendment or otherwise, in, or be enacted by the House of Representatives or the Senate, or be recommended to the Congress of the United States for passage by the President of the United States, or a decision by a court established under Article III of the Constitution of the United States or by the Tax Court of the United States, shall be rendered, or a ruling, regulation or order of the Treasury Department of the United States or the Internal Revenue Service shall be made or proposed having the purpose or effect of imposing federal income taxation, or any other event shall have occurred which results in the imposition of federal income taxation, upon revenues or other income to be derived by the City or upon the interest received on obligations of the general character of the Bonds, or the Bonds, which, in the Underwriter's opinion, materially adversely affects the market price of the Bonds; • (b) Any legislation, ordinance, rule or regulation shall be introduced in or be enacted by any department or agency of the State of Arkansas, or a decision by any court of competent jurisdiction within the State of Arkansas shall be rendered which, in the Underwriter's opinion, materially adversely affects the market price of the Bonds; (c) Legislation shall be introduced, by amendment or otherwise, in, or be enacted by the House of Representatives or the Senate of the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of the Securities and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the issuance, offering, or sale of obligations of the general character of the Bonds or the Bonds, as contemplated hereby or by the Official Statement, is or would be in violation of any provision of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect, or with the purpose or effect of otherwise prohibiting the issuance, offering, or sale of obligations of the general character of the Bonds or the Bonds, as contemplated hereby or by the Official Statement; (d) Any event shall have occurred or information become known which, in the Underwriter's opinion, makes untrue, incorrect or misleading in any material respect any statement or information contained in the Official Statement (or any appendices thereto) as originally circulated, or has the effect that the Official Statement (or any appendices thereto) as originally circulated, contains an untrue, incorrect or misleading statement of a material fact or omits to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; (e) Additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange; (f) A general banking moratorium shall have been established by federal or Arkansas authorities; (g) A default shall have occurred with respect to the obligations of, or proceedings have been instituted under the R federal bankruptcy laws or any similar state laws by or against, any state of the United States or any city located in the UnitedStates having a population in excess of one million persons or any entity issuing obligations on behalf of such a city or state which, in the Underwriter's opinion, materially adversely affects the market price of the Bonds; (h) Any rating of the Bonds shall have been downgraded or withdrawn by a national rating service; or (i) A war involving the United States shall have been declared, or any conflict involving the armed forces of the United States shall have escalated into armed conflict, or any other national emergency relating to the effective operation of -8- f r, overnment or the financial conununit shall g is Opinion, the Underwriter'Y have occurred, which, P materiall affects the market price of the Bonds. Y adversely SECTION 5. CONDITIONS TO THE OBLIGATIONS OF THE CITY. The obligations of the City hereunder are subject to the Underwriter's performance of its obligations hereunder, and the further condition that at the Closing Time the Underwriter shall receive the opinions described in Section 3(d)(3) hereof. SECTION 6. INDENIFICATION. To the extent permitted by law, the City agrees to indemnify and hold harmless the Underwriter, any member, officer, official or employee of the Underwriter, and each person, if any, who controls the Underwriter within the meaning of Section 15 of the Securities Act of 1933, as amended (collectively, the "Indemnified Parties"), against any and all losses, claims, damages, liabilities or expenses whatsoever caused by any untrue statement or misleading statement or allegedly misleading statement of a material fact contained in the Official Statement or caused by any omission or alleged omission from the Official Statement of any material fact necessary in order to make the statements made therein, in light of the circumstances under . which they were made, not misleading, except insofar as such losses, claims, damages, liabilities or expenses are caused by any such untrue or misleading statement or omission or allegedly untrue or misleading statement or omission in the information contained under the captions "UNDERWRITING" or "FINANCIAL GUARANTY BOND" or in Exhibits A and B or otherwise relating to the Financial Guaranty Bond or Capital Guaranty Insurance Company. I ______ In case any action shall be brought against one or more of the Indemnified Parties based upon the Official Statement and in respect of which indemnity may be sought against the City, the Indemnified Parties shall promptly notify the City in writing and, to the extent permitted by law, the City shall promptly assume the defense thereof, including the employment of counsel, the payment of all expenses and the right to negotiate and consent to settlement. Any one or more of the Indemnified Parties shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of ______ such Indemnified Party or Parties unless employment of such counsel has been specifically authorized by the City. The City shall not be liable for any settlement of any such action effected without its consent by any of the Indemnified Parties, but if settled with the consent of the City or if there be a final judgment for the plaintiff in any such action against the City or any of the Indemnified Parties, with or without the consent of the City, the City agrees to indemnify and hold harmless the Indemnified Parties to the extent provided in this Agreement and to the extent permitted by law. SECTION 7 • DELIVERY OF OFFICIAL STATEMENT. The City shall supply to the Underwriter a final Official Statement, in form satisfactory to the Underwriter, within seven business days of theate reof and in time to accompany any requests payment from any customer, and in a sufficient quantity to comply with SEC Rule 15c2 -12(b)(4) and the rules of the Municipal Securities Rulemaking Board. Such Official Statement shall be signed on behalf of the City by its Mayor. The City hereby authorizes the use of copies of the Indenture, the Authorizing Ordinance and the Official Statement and the information therein contained by the Underwriter in connection with the public offering and the sale of the Bonds. The City ratifies and confirms the use by the Underwriter prior to the date hereof of the Preliminary Official Statement in connection with the public offering of the Bonds. SECTION 8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All representations and agreements of the City shall remain operative and in full force and effect, regardless of any investigations made by or on the Underwriter's behalf, and shall l� survive delivery of the Bonds to the Underwriter. SECTION 9. PAYMENT OF EXPENSES. If the Underwriter accepts delivery of and pays for the Bonds as set forth herein, all expenses and costs to effect the authorization, preparation, issuance, delivery and sale of the Bonds (including, without limitation, the fees and disbursements of Brown & Wood as Bond Counsel and the expenses and costs for the preparation, printing, photocopying, execution and delivery of the Bonds, the Preliminary Official Statement, the Official Statement, the Authorizing Ordinance, and all other agreements and documents contemplated thereby) shall be paid by the City. Whether or not the Underwriter accepts delivery of and pays for the Bonds as set forth herein, the Underwriter shall pay all costs and disbursements incurred by it in connection with the transaction including, without limitation, fees and expenses of any counsel for the Underwriter. 10. NOTICE. Any notice or other communication to be given to the City r this Agreement may be given by mailing or delivering the in writing to the City Manager, City of Fayetteville, City 113 West Mountain, Fayetteville, Arkansas 72701; and any ce or other communication to be given to the Underwriter -10- � Y under this Agreement may be given by delivering the same in writing to Llama Company, One McIlroy Plaza, Suite 302, Fayetteville, Arkansas 72701, Attention: David M. Phillips. SECTION 11 • APPLICABLE LAW; NONASSIGNABILITY. ��' This Agreement shall be governed by the laws of the State of Ar!+ Arkansas asterand shall not be assigned by the City or the ��. SECTION 12. EXECUTION OF COUNTERPARTS. ^R� ;t This Agreement may be executed in several counterparts each of which shall be regarded as an original and all of which shall constitute one and the same document. " SECTION 13. SEVERABILITY. In the event any provision of this Agreement shall be held ;J invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof. CITY OF FAYETTEVILLE, ARKANSAS By: Mayor Attest: City Cle Y � (S E A L) LLAMA COMPANY By: I%% •C��^- Authorized Repre entative f S., EXHIBIT A $33,019,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 1990 Year November 15 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 * Mandatory redemptions Maturity Schedule $ 824,000 1,065,000 1,130,000 1,205,000 1,280,000 1,360,000 1,450,000 1,545,000 1,650,000 1,765,000 1,890,000 2,020,000 2, 165, 000* 2,325,000* 2,495,000 2,675,000* 2, 870, 000* 3,305,000 -12- Rate of Inter -st 6.00% 6.10 6.20 6.30 6.40 6.50 6.60 6.70 6.80 6.90 7.00 7.05 7.15 7.15 7.15 7.25 7.25 7.25 lf' EXHIBIT A a..:. $33,019,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds i13 Series 1990 13 Maturity Schedule Year November 15 mo �n Rate of !' interest 1991 $ 824,000 6.00% 1992 1,065,000 6.10 1993 1,130,000 6.20 1994 1,205,000 6.30 } 1995 1,280,000 6.40 1996 1,360,000 6.50 1997 1,450,000 6.60 1998 1,545,000 6.70 1999 1,650,000 6.80 2000 1,765,000 6.90 2001 1,890,000 7.00 2002 2,020,000 7.05 2003 2,165,000* 7.15 2004 2,325,000* 7.15 2005 2,495,000 7.15 2006 2,675,000* 7.25 2007 2,870,000* 7.25 t; 2008 3,305,000 7.25 * Mandatory redemptions a. • 1; City of Fayetteville Llama Company City Hall One McIlroy Plaza, Suite 302 113 West Mountain Fayetteville, AR 72701 Fayetteville, AR 72701 Brown & Wood Rose Law Firm, One World Trade Center a Professional Association New York, NY 10048 120 East Fourth Street Little Rock, AR 72201 McIlroy Bank & Trust One McIlroy Plaza, Box 1327 Fayetteville, AR 72702 Re: $33,019,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 1990 (the "Obligations") Ladies and Gentlemen: I am the General Counsel of Capital Guaranty Insurance Company, a stock insurance company incorporated in the State of Maryland �- ("Capital Guaranty") and, as such, am familiar with the corporate affairs of Capital Guaranty. -y In connection with the issuance by Capital Guaranty on the date �. hereof of a certain financial guaranty bond (the "Financial Guaranty Bond") insuring the payment of the principal of and interest on the above -captioned Obligations, I have examined ' such documents and reviewed such questions of law and procedures • as I deemed necessary or appropriate for the purpose of this opinion and, on the basis of such knowledge, examination and review, you are advised that in my opinion: ti (1) Capital Guaranty has been duly incorporated and is validly existing and in good standing under the laws of the State of Maryland. (2) The Financial Guaranty Bond was issued in the ordinary course of business and constitutes the legal, valid and ri binding obligation of Capital Guaranty enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, • rehabilitation and other similar laws of general applicability relating to or affecting creditors' and/or claimants' rights against insurance companies and to general equity principles. -13- (3) The statements contained in the Official Statement dated September 13, 1990, under the caption "FINANCIAL GUARANTY BOND" and in Appendix A entitled "FORM OF FINANCIAL GUARANTY BOND" and in Appendix B entitled "FINANCIAL STATEMENT OF CAPITAL GUARANTY INSURANCE COMPANY", insofar as such statements constitute �i summaries of the matters referred to therein, accurately reflect and fairly present the information purported to be shown and, insofar as such statements purport to describe Capital Guaranty and the Financial Guaranty Bond, fairly and accurately describe Capital Guaranty and the Financial Guaranty Bond. Capital Guaranty is organized under the laws of the State of Maryland. I am admitted to practice law in the State of ;.' California and do not hold myself out as expert in, generally familiar with, or qualified to express legal conclusions as to the laws of any other state, except for the matters expressly set forth in the foregoing opinion. This opinion is intended solely for your benefit and is not to be relied upon by any person other than you without my prior written consent. Very truly yours, [Name] [Title] -14- 1 October _, 1990 f Mcllroy Bank & Trust, as Trustee and Bond Registrar One Mcllroy Plaza, Box 1327 } Fayetteville, Arkansas 72702 Brown & Wood One World Trade Center New York, New York 10048 Llama Company One Mcllroy Plaza, Suite 302 Fayetteville, Arkansas 72701 Rose Law Firm, a Professional Association 120 East Fourth Street Little Rock, Arkansas 72201 Ladies and Gentlemen: I am City Attorney for the City of Fayetteville, Arkansas (the "City"), and have acted in that capacity in connection with the issuance and sale by the City of its $33,019,000 Sales and Use Tax Capital Improvement Bonds, Series 1990 (the "Bonds), which Bonds are being sold pursuant to a Bond Purchase Agreement dated September 13, 1990 (the "Bond Purchase Agreement"), between Llama Company (the "Underwriter") and the City. The terms defined in the Bond Purchase Agreement are used in this I: letter with the meaning assigned to them in the Bond Purchase Agreement. In this connection, I have reviewed certain documents with 91, respect to the Bonds, and such records, certificates and other documents as I have considered necessary or appropriate for the purposes of this opinion, including the Ordinance adopted by the • City on October 4, 1988 (the "Levying Ordinance"), the Ordinance adopted by the City on April 19, 1990 (the "Election Ordinance") and the Ordinance adopted by the City on Septmber 13, 1990 (the "Authorizing Ordinance"), the Trust Indenture dated as of October 15, 1990 (the "Indenture"), between the City and -15- October _, 1990 Page Two Mcllroy Bank & Trust, in Fayetteville, Arkansas, the Preliminary Official Statement dated September 7, 1990, and the final Official Statement dated September 13, 1990, with respect to the Bonds (collectively, the "Official Statement"), and a closing certificate of the City. Based on such review and such other considerations of law and fact as I believe to be relevant, I am of the opinion that: 1. The City has been properly formed and is validly existing as a city of the first class and political subdivision of the State of Arkansas with full power and authority to adopt the Levying Ordinance, the Election Ordinance and the Authorizing Ordinance and to execute and deliver the Bonds, the Indenture, the Official Statement and the Bond Purchase Agreement. 2. The adoption of the Levying Ordinance, the Election Ordinance and the Authorizing Ordinance, the issuance of the Bonds, the execution and delivery of the Indenture and the Bond Purchase Agreement, and the performance of the City's obligations thereunder do not and will not result in a violation of any provision of, or in default under, any other ordinance or any other agreement or instrument to which the City is a party or by which it or its properties are bound. 3. Excepting those matters discussed in the Official Statement, the City is not in violation of any provision of any agreement or instrument the violation of or default under which would materially and adversely affect the business, properties, assets, liabilities or condition (financial or other) of the _ City. sq 4. Excepting those matters discussed in the Official Statement, there are no legal or governmental actions, proceedings, inquiries or investigations pending or threatened by governmental authorities or to which the City is a party or to which any property of the City is subject which, if determined adversely, would individually or in the aggregate (i) materially and adversely affect the validity or the • enforceability of the Bonds, the Indenture or the Bond Purchase Agreement, (ii) otherwise materially and adversely affect the ability of the City to comply with its obligations on the Bonds or under the Authorizing Ordinance, the Indenture or the Bond Purchase Agreement, or (iii) materially and adversely affect the transactions contemplated by the Official Statement to be engaged in by the City. -16- October _l 1990 page Three 5. The aggregate amount which may reasonably be expected to be recovered in litigation pending or threatened against the City does not appear to be material to the Owners of the Bonds taking into account insurance coverage. 6. I have reviewed and considered the information contained in the Official Statement and nothing has come to my attention which leads me to believe that the Official Statement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements not misleading. I express no opinion as to made therein information included in the Official Statement under the captions "TAX EXEMPTION", "UNDERWRITING", and "FINANCIAL GUARANTY BOND" or in Appendices A and B thereto. I hereby consent to the references made to me in the Official Statement. Very truly yours, Jerry Rose OSIS EXHIBIT D �:..,,. October _, 1990 McIlroy Bank & Trust, as Trustee and Bond One McIlroy Plaza, Box Fayetteville, Arkansas City of Fayetteville City Hall 113 West Mountain Fayetteville, Arkansas Llama Company 2egistrar One McIlroy Plaza, Suite 302 1327 Fayetteville, Arkansas 72701 72702 Rose Law Firm, a Professional Association 120 East Fourth Street 72701 Little Rock, Arkansas 72201 Ladies and Gentlemen: • We have examined a certified copy of proceedings of the City a-` of Fayetteville, Arkansas (the "City"), and other documents (1� pertaining to the issuance by the City of its $33,019,000 1.% aggregate principal amount of Sales and Use Tax Capital 1.� Improvement Bonds, Series 1990 (the "Bonds"). The Bonds are being issued for the purpose of providing the funds necessary to finance the costs of acquiring, constructing and equipping certain capital improvements within the City (the "Improvements"), to fund a debt service reserve, and to pay the costs of issuance of the Bonds. The Bonds are issued under the authority of Amendment No. 62 to the Constitution of the State of Arkansas, as implemented by o. Act No. 871 of the General Assembly of the State of Arkansas for o: 9 the year 1985, as amended (the "Act"), pursuant to Ordinance No. — of the City adopted September 13, 1990 (the "Authorizing Ordinance"), and a Trust Indenture, dated as of October 15, 1990 (the "Indenture"), between the City and McIlroy Bank & Trust, of �r Fayetteville, Arkansas, as bond registrar, paying agent and trustee (the "Trustee"). In accordance with the Act and pursuant to Ordinance No. 3381 of the City adopted October 4, 1988 (the "Levying Ordinance"), the City has levied a one percent (1%) local sales and use tax (the "Sales Tax"). In accordance with the Act and pursuant to the Authorizing Ordinance, the City has pledged receipts from the Sales Tax (the -18- Approving Opinion 199 0 Page TWO ^Tax Receipts") in amounts sufficient to provide for debt service on the Bonds and to maintain a debt service reserve. The Bonds are not secured by a lien on or security interest in the Improvements or the revenues thereof. The issuance of the Bonds and the pledge of the Tax Receipts has been approved by a majority of the qualified electors of the City voting on the question at a special election held May 29, 1990, pursuant to the provisions of Ordinance No. 3400 adopted April 19, 1990 (the ^Election Ordinance") . The Bonds are being issued in fully registered form in denominations of $5,000 or integral multiples thereof, except for one Bond in the denomination of $4,000. The Bonds are dated October 15, 1990, and mature on November 15 in the years 1991 to 2002, inclusive, and on November 15, 2005 and on November 15, 2008. Interest is payable on the Bonds from their date semiannually on each May 15 and November 15, commencing May 15, 'I 1991, by check or draft mailed by the Trustee to the registered owners thereof . The Bonds are subject to redemption prior to maturity as set forth in the Indenture and the Authorizing Ordinance and the Bonds. a Based on the above, we are of the opinion, under existing �- law, that: 1. In reliance on the opinion of Jerry Rose, City Attorney, of even date herewith, the City is duly created and validly existing as a city of the first class of the State of Arkansas, with the power to adopt the Levying Ordinance, the Election Ordinance and the Authorizing Ordinance, to execute and deliver the Indenture, to perform the agreements on its part contained in the Indenture and to issue the Bonds. 2. The Bonds have been duly authorized and issued by the City and are valid and binding special obligations of the City enforceable in accordance with their terms. 3. The Bonds are secured by an irrevocable pledge a portion of the Tax Receipts as provided in the Indenture and the Authorizing Ordinance. 4. The Indenture has been duly executed and delivered by the City to the Trustee and is legally binding and enforceable in accordance with its terms. -19- ving Opinion JJ§Fpage er _, 1990 Three 5. Under existing statutes, regulations and court decisions and assuming compliance by the City with certain covenants d requ"Code") irements of the Internal Revenue Code of 1986, asamended r regarding use, expenditure and investment of Bond proceeds and the timely payment of certain investment earnings to the United States Treasury, interest on the Bonds is not includable in the gross income of the Owners of the Bonds for purposes of federal income taxation. Interest on the Bonds will not be treated as a preference item in calculating alternative minimum taxable income of individuals; however, interest on the Series 1990 Bonds will be included in the calculation of the alternative minimum tax and environmental tax liabilities of corporations. The Code contains other provisions that could result in tax consequences, upon which we render no opinion, as a result of ownership of the Bonds or the inclusion in certain computations (including, without limitation, those related to the corporate Lalternative minimum tax and environmental tax) of interest that is excluded from gross income. 6. The Bonds and interest thereon are exempt from all 7' state, county and municipal taxes in the State of Arkansas. 7. Nothing has come to our attention which would lead us to believe that the information in the Official Statement under the captions "Introductory Statement", "The Series 1990 Bonds", "Security for the Series 1990 Bonds" (except for that information under the subcaption "Prior Tax Revenues and Sales and Use Tax Revenues By Month" included under the caption "Security for the Series 1990 Bonds"), "Certain Definitions", "Summary of Portions of the Indenture" and "Tax Exemption" contains an untrue statement of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. • ______ With regard to matters expressed in this opinion, please be :R advised that the rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture may be subject to �? bankruptcy, insolvency, reorganization, moratorium and other 1 similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Very truly yours, Brown & Wood -2O- ROSE LAW FIRM ARROLL A PROFESSIONAL ASSOCIATION d WHpANE LAY E• CAMPBELL ATTORNEYS SARAH HOOD TEED STEPHEN N. JOINER � pEOROE C. RULE LD 12O EAST FOURTH STREET JAMES H. ORUFF ,j;,;„, RERBE ON JONES yNCENT FOSTER,JR• LITTLE ROCK, ARKANSAS 72201.2893 JAY F. SHELL GORDON M. WILBOURN WEBSTER L. BIRD HUBBELL W TELEPHONE ISO11 375.9131 JESS ASKEW, ID AMY LEE STEWART AEN E • BISHOP LLCRAIG WILL CLINTON TELECOPIER 15011 375-1309 DAVID TJONES HILLARY RODHAM C BRANTLY BUCK C. U. M. ROSE J. SCOTT SCHALLHORN I POE MICHAEL D. BOOKER '1 JANE DICKEY 1834-1913 JOHN T. HARDIN 3 II, WILLIAM H• KENNEDY. lII BRIAN ROSENTHAL KENNETN R• SHEMIN STEVEN D. DURAND RONALD H. CLARK JEFFREY J. GEARHART GARLAND.. GARRETT JAMES L. HARRIS ENNT C•JONES MARK ALAN PEOPLES t,1 THOMAS P. THRASH W BARER PATRICIA J. HERITAGE SAMMIE P. STRANGE, JR. f�h CNARLE5 pAVID L.WILLIAMS JAMES M. GARY JACKSON FARROW JR. BALEDGE WRITER'S DIRECT DIAL NO. CLAY H. DAVIS JOHN A. BRYANT .y� LE5 P. JIM HUNTER BIRCH FRANKLIN M. FAUST ROBERT e i 1J KEVIN R. BURNS CRAIG HANNAH RICHARD T• DONOVAN October 18, 1990 RICHARD N. MASSEY J J. GASTON WILLIAMSON - .f ppRYN. SPEED OF COUNSEL L; $33,019,000 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE CAPITAL IMPROVEMENT BONDS SERIES 1990 BLUE SKY MEMORANDUM ILlama Company Fayetteville, Arkansas a: Ladies and Gentlemen: This memorandum sets forth in summary form our comments as to the requirements of the securities laws of the jurisdictions enumerated herein with respect to the proposed offer and sale to the public of the �+ captioned bonds (the "Bonds"). The memorandum is based upon an examination of the various statutes and the related rules and regulations, if any, issued thereunder, as reported In the standard compilation customarily relied upon in this connection and upon statements contained In the Preliminary Official Statement dated September 7, 1990, in the form initially distributed to the public. •I We have prepared the memorandum as attorneys admitted to practice in the State of Arkansas, and we have obtained neither opinions of local counsel in any other jurisdiction nor formal rulings from regulatory commissions or other administrative bodies or officials. The statements made or conclusions expressed herein are subject to change upon the exercise of broad discretionary powers vested in administrative ,yn authorities, authorizing them, among other things, to withdraw exemptions, to impose additional requirements, to refuse registrations, or to issue stop orders. This memorandum does not purport to cover the requirements under any of the laws of the jurisdictions enumerated herein with respect to(i) the registration or licensing of dealers, brokers, or salesmen; (ii) the form or substance of advertising or the filing requirements applicable thereto; or (iii) the legality of investments in the Bonds by the institutions mentioned herein. Very truly yours, ROSE LAW FIRM, a Professional Association HFt.) l'('r' 'r' Blue Sky Memorandum October 18, 1990 to _ I !, SALES TO THE PUBLIC A. Jurisdictions Where f tlings Not Required �� 1, Our survey indicates that the Bonds may be sold to the public in the following jurisdictions without registration or other filings relating thereto by reason of available exemptions or otherwise, subject to the I_. specific requirement that the sellers must be registered or licensed as dealers or brokers therein: Illinois South Carolina Alabama Nebraska j Alaska Indiana Nevada South Dakota Arizona (2) Iowa New Hampshire (2) Arkansas Kansas p Tennessee (1) New Jersey Texas California Kentucky New Mexico Utah Colorado Louisiana New York Vermont Connecticut Maine North Carolina Virginia Delaware Maryland Ohio Washington D.C. Massachusetts Oklahoma West Virginia Florida Michigan Oregon Wisconsin Georgia Mississippi Pennsylvania Wyoming Hawaii Missouri Puerto Rico y g Idaho Montana Rhode Island B. Jurisdictions Where No Action Is Being Taken No action is being taken to register or qualify the Bonds or to establish an exemption therefor, for sale to the public in the following jurisdictions: z Minnesota North Dakota (1) Every person who sells securities from, in or into this state must file with the commissioner an irrevocable consent appointing the commissioner as such person's attorney -in -fact to receive service of a lawful process in any noncriminal suit, action, or proceeding against such person. S. (2) Requires, in 10 point type, a specified legend on the cover of any prospectus or offering document, when offered in a public offering to this state's residents. I. -3- ROSE LAW FIRM ''.. �WNpAIP CC (TOLL A PROFESSIONAL ASSOCIATION SARAH .1 . [, CAMPBELL ATTORNEYS HOOD TEED STEPHEN N. JOINER "ppO[ C. RULE IB 120 EAST FOURTH STREET JAMES H. GRUFF JAY NCRBCRT JONES W'WILSO FOSTER, JR. LITTLE ROCK. ARKANSAS 72201-2893 F. SHELL GORDON M. WILBOURN ,.. hNCCNi WEENTW BIRDS HUBBELL TELEPHONE 15011 375.9131 AMY LEES EWAART �C / •j WILLIAM E. BISHOP RODH AM CLINTON r- ALL TELECOPIER 15011 375-1309 DAVID A. SMITH :t T. CRAIG JONES HILLARY C BRANTLY BUCK U. M. ROSE J. SCOTT SCHALLHORN MICHAEL D. BOOKER J TIM MOEJANE DICKEY 1834-I 913 JOHN T. MARGIN N• H. KENNEDY, III BRIAN ROSENTHAL WILLIAM WILLIAM NNETH R. SHEMIN STEVEN D. DURAND 14 MORALS M CLARK JEFFREY J. SHART }�I GARLAND J, GA.RETT JAMES L. HARRIS MARK JONES ALAN PEOPLES PATRICIA .. J t JERRYC, THOMAS P. THRASH W BAKER J. HERITAGE E STRANGE, JR. I CHARLES L. WILLIAMS JSAMES JAMES M. GARY H. OASIS -ACHSON FARROW JR. R. E WRITER'S DIRECT DIAL NO. CLAY H. DAVIS JOHN A. BRYANT LES HURTBALEER JIM HUNTER BIRCH FRANKLIN M. FAUST MEVIN R. BURNS ROBERT CRAIG HANNAH RICHARD T• DONOVAN October 18, 1990 J. RICHARD N. MASSEY GASTON WILLIAMSON SON Y N. SPEED OF COUNSEL $33,019,000 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE CAPITAL IMPROVEMENT BONDS SERIES 1990 LEGAL INVESTMENT SURVEY Uama Company Fayetteville, Arkansas Ladies and Gentlemen: We have prepared the following Survey pertaining to the legality of investment by savings banks, trustees, life insurance companies and other insurance companies in the above -referenced bonds (the `Bonds"). The Survey is based upon an examination of the legal investment laws of the jurisdictions listed therein as reported in the standard compilation customarily relied upon for such a survey. Vie have also relied upon information set forth in the Preliminary Official Statement dated September 7, 1990, utilized In connection with the offer and sale of the Bonds. Legal Investment Survey October 18, 1990 We have prepared this Survey as attorneys admitted to practice in the State of Arkansas and we have obtained neither opinions from members of the bar of any other jurisdiction nor formal rulings from state commissions or other administrative bodies or officials. We have not filed applications for admission of the Bonds to the "legal list" in any jurisdiction, nor have we examined any such list. This Survey is furnished only for the general information of the Underwriters; no investor is entitled to rely upon this Survey as an opinion of counsel. In certain jurisdictions investors of the types mentioned above are permitted to invest only particular funds, or a specified portion or percentage of their funds, in securities of the class to which the Bonds belong or in securities of any one corporation. Specific action may be required by the boards of directors or investment committees of such investors in order to make the investment. The Survey does not cover such restrictions or requirements except to the extent specifically set forth. Furthermore, the Survey does not take into consideration the necessity of court orders for, or the effect of governing trust instruments upon, the investment of trust funds nor limitations as to investment of particular funds, such as funds held by guardians and other types of personal fiduciaries. Except as expressly noted, the four categories of investors shown in the Survey are general and do not indicate the particular types of savings banks, trustees, life insurance companies or other insurance companies concerned in each Instance. Certain statutory limitations concerning relationships between investor and issuer are not shown. Investors may also be subject to various governmental regulations and requirements not covered by the Survey. The laws and regulations examined in preparation of the Survey govern the behavior of investors of the types mentioned above, and each ultimate investor must independently satisfy itself that, as to such investor, investment in the Bonds is legal. The Survey does not cover the status of the Bonds under the "Blue Sky" or securities laws of the jurisdictions listed in the Survey and it assumes that all offers and sales of the Bonds in each such jurisdiction are made in compliance with such laws, either after an appropriate registration or qualification of the Bonds or pursuant to an exemption from the requirements of such laws. Very truly yours, ROSE LAW FIRM, a Professional Association -2- $33,019,000 CITY OF FAYETrEVILLE. ARKANSAS SALES AND USE CAPITAL IMPROVEMENT BONDS SERIES 1990 LEGAL INVESTMENT SURVEY Octob er18, 1990 Insurance Savings Life Insurance Companies Other J ' fiction Banks Trot mQgpjj n Lif Alabama (1) Not Legal Legal (1) Alaska Arizona (2) (1) (1) Prudent Investor Test Legal Leal (3) Legal Legal (3) Arkansas (1) Prudent Investor Test Legal Legal California Legal Prudent Investor Test Legal Legal Colorado (1) Prudent Investor Test Legal Legal Connecticut (4) Prudent Investor Test (1) (1) Delaware (1) Prudent Investor Test Legal (3) Legal (3) District of Columbia (5) Prudent Investor Test (6) Legal Legal Florida (1) Prudent Investor Test Legal (3) Legal (3) Georgia (1) Prudent Investor Test (7) Legal Legal Hawaii Not Legal Prudent Investor Test Legal (3) Legal (3) Idaho (1) Prudent Investor Test Legal (3) Legal (3) Illinois (1) Prudent Investor Test (4) (4) Indiana (1) Prudent Investor Test Legal Legal Iowa (1) Prudent Investor Test Legal Legal (8) Kansas (1) Prudent Investor Test Legal Legal Kentucky (1) Prudent Investor Test (9) Legal (3) Legal (3) Louisiana (1) Prudent Investor Test (10) (10) Maine (1) Prudent Investor Test Legal (3) Legal (3) Maryland (11) (1) Legal (3) Legal (3) Massachusetts Legal (1) Legal Legal Michigan (1) Prudent Investor Test Legal Legal i Savings Life Insurance Companies Trustees Insurance m ni Other n Lif Minnesota Legal (12) Prudent Investor Test Legal Legal g Mississipp i (1) (1) Prudent Investor Test (1) Legal Legal Missouri Montana Not Legal Prudent Investor Test Legal Legal (1) Legal Nebraska (1) Prudent Investor Test Legal Legal Nevada New Hampshire 1 ( ) Legal(13) Prudent Investor Test (14) Legal Legal (3) Legal Legal New Jersey Legal(15) Prudent Investor Test Leal 9 (3) Legal New Mexico New York (1) (17) Prudent Investor Test Prudent Investor Test Legal (3)(16) Legal (3)(18) Legal (3)(16) Legal North Carolina (1) Prudent Investor Test Legal (3)(18) Legal (3) North Dakota (1) Prudent Investor Test Legal Legal Ohio Oklahoma (1) (1) (1) Prudent Investor Test Legal(3) Legal(19) Legal (3) Legal (19) Oregon Not Legal Prudent Investor Test Legal(3)(20) Legal (3)(20) Pennsylvania (21) Prudent Investor Test Legal (3) (1) Puerto Rico Legal (18) (1) (4) (4) Rhode Island Legal (22) (23) (1) (1) South Carolina (1) Prudent Investor Test (1) (1) South Dakota (1) Prudent Investor Test Legal Legal Tennessee (1) Prudent Investor Test Legal (3) (1) Texas (1) Prudent Investor Test Legal (3) Legal (24) Utah (1) Prudent Investor Test Legal Legal Vermont (1) (1) Legal (1) Legal (1) Virginia (1) Prudent Investor Test Legal (3) Legal (3) Washington (1) Prudent Investor Test Legal (3) Legal (3) West Virginia (1) Not Legal Legal (3) Legal (3) Wisconsin Legal (25) Prudent Investor Test Legal Legal Wyoming (1) Prudent Investor Test Legal (3) Legal (3) (1) Either (a) the statutes of this jurisdiction contain no provisions either permitting or prohibiting investments by this class of investors, or (b) the statutes of this jurisdiction permit or prohibit certain investments by this class of investors but neither expressly nor by implication permit or prohibit an investment of the nature of the Bonds. (2) In Alaska, "mutual banks" may invest in the Bonds subject to a prudent Investor test. (3) Provided both principal and interest are payable from taxes levied or required to be levied upon all taxable property or all taxable income within the jurisdiction of such governmental unit. (4) Although the Bonds are not specifically legal for investment, the statute permits certain limited funds to be Invested in securities not otherwise eligible, provided that In certain instances the investment is prudent or Is approved by the proper state authority. (5) There are no provisions in the District of Columbia Code expressly governing investments by banks doing business in the District of Columbia. National banks and state banks which are members of the Federal Reserve System doing business in the District are permitted to invest in "marketable investment securities." (6) Established by rule of the United States District Court for the District of Columbia for fiduciaries subject to supervision by it. ) (7) Prudent Investor Test applies as to executors and trustees acting under instruments made after July 1, 1972; otherwise, not legal. (8) Provided that the Bonds are valued in accordance with methods and amounts as determined by the Committee on Valuation of Securities of the National Association of Insurance Commissioners. (g) Although the Bonds are not specifically legal for investment, the statute allows a trustee to do any act that a prudent man would perform. (t0) The Bonds will be eligible only by virtue of a statutory provision permitting this class of investors to invest to a limited extent in securities not otherwise eligible for investment. (11) The statute provides that a savings bank may invest deposits and make loans from deposits "on good security." (12) Provided that the Bonds are rated within the three highest grades by the appropriate rating service and not rated lower by any other such agency. (13) Provided the issuer has the ability to levy taxes for repayment of principal and interest and the bonds are rated among the first three ratings of one or more rating service. (14) There are no statutory provisions with respect to trustees in general. (15) Although the Bonds ae not specifically legal for investment, the statute permits certain limited funds1 to be invested in investments not specified by law. (16) Provided that no investment shall be made in any Bond rated lower than BAA by Moody's Investment Service, Inc., or BBB by Standard & Poors, Inc. 4._ (17) In New York, savings banks are authorized to invest in "interest -bearing obligations payable in United States funds which at the time of investment are rated In one of the three highest rating grades by each rating service, designated by the banking board, which has rated such obligations...." Standard & Poor's Corporation, Moody's Investors Service, Fitch Investors Service, Inc., and Duff and Phelps, Inc. have been so designated and provided the aggregate amount invested in the obligations of any single issues does not exceed specified limits. (18) Provided that the Prudent Investor Test is met. (19) Assuming the City has lawful authority to levy taxes or make assessments. (20) Legal if "amply secured." (21) Not legal unless the investment is authorized by the Department of Banking of the State of Pennsylvania. i! -Ill- 1`q fl (22) Provided that the Bonds are rated within the four highest grades by a recognized investment rating agency and subject to limits on the amounts that may be invested. ... (23) Trustees have discretion. Ala (24) For funds over and above minimum capital stock, minimum surplus and all reserves law. required by (25) investment obligations of the same class do not exceed 50% of the guaranty funda Provided rd undivided tprofits. t ;' ••a .iv. U.j a a� r m u) Z C ?n m u) y ss3� m D O n.oJ °-1 .a . 1�1 > N �a� m rn x o O Li > `.a C �„3 z> G7 m C) U) Z O n C ♦ `� m E. �,4 m ='=g wa=s Co =$" Co O°ab -�D UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE SALES AND USE TAX CAPITAL IMPROVEMENT BOND, SERIES 1990 This bond is one of a series of bonds designated "Sales and Use Too Capital Improvement Bonds, Series 1940' and issued by the City for the pups,, of providing funds, with any other available funds, for paying the cost of cenain capital improvements, funding a debt service reserve and paying the cost of issuing such bonds, mad this bond is issued under and pursuant to Ordinance No. 338 I. passed by the Board of Dirccson of the City (the •"Board"I on ().toter 4. (988, Ordinance No. 3480, paned by the Board on April 19, 1990. and Ordinance No. 3506, passed by the bard nn Sepmmher 13.1990 leach ordinances being herein collenively called the '•Ordinancei'l and also pi nuanl to a Trost Imknture, dated as of Octoter 15, 1990, by and between hlcflmy Bank & Trost, in the City of Fa)eteville, Arkm,was, as snosier (such bank and any batik or trust company beroming successor wstee iherculder being herein called the "Trustee") and the City (such indenwse, together with all intlensutes suppten,ental thereto a% therein permitted. being heroin collectively called the "Indenture'). The Indenture provides for the issuance from tame in lime, under the conditions, limn,amon, and reurictiom therein .set forth, of our or more .ones of additional hinds secured by the Indenture on a parity as is, the pledge of the Sale, and Use Tax Revennea as all other hinds then issued tires may he issued, from time to time, under the pmvisinns of the Indenture to refund the bonds of env series issued order the yrottnsonn of the Indenture. The hldentum also provides for the issuance of wbnrdinmed indebtedness payable from the Sales and Use Tan Revenues subordinate in the bond, secured by the Indenture all the conditions, limitations and restrictions therein set fnnh. Reference is hereby made in the Indenture for the provisions among ashen, with respect to the cuxusly and application of the prnoeedr of the bonds issued under the Indcnsure, she collection and dispxition of the Sales and Use Tun Revenues. she special final charges) with and made available for the payment of the principal of and the interest and any rcdemptinn pemiom on the hods, the nature and enrol of the .secunsy for the bond, and any such subordinated indebtedness . the tenon and condition,, undw erwhich binds of each ..ones may to issued, the right.'. duties and obligations of the City, the Ilnnd Registrar and the Trustee and the rights of the registered ,,.mars of the hinds. An executed nmmerpan of the Indentue and a conifed copy of each of the Ordinances are on file at the principal office of the Ti- By ,he acceptance of this bond, she rtgistertA owner bercnf assents In Al n(me pros slum of the Indenture anti the Ordina The hods of this .series consist of binds maturing on November 15 of the (ears 1991 m 2(102. inclusive (Ihe "Serial Bonds") and of bonds malumig on N,,,embr (5.219130he •"21113 Term Bonds") and on Novembr (5, 21118 (the "21011 Term Bondi7. The 2)0)3 Term Hoods and the 21n18 Teri Bonds ate subject to mandatory tedeoptio at I11yi of she principal anon, 1 ,hereof. plus ac reed intertn, hot without pemtum, on November 15 of Ihe following yeah and in the following amours 12&io Tenn Bonds 211-,8 Term .41 21x6 52.Inxlx•i -lay, 920's.ixa, lie cared. el iii!, , n tern ni.Iu,0 ..hrh n. , nnxrn,n, Ix. 2 x41. ,,• is' rnla nod rte nn!rl o.p,m in lam ape.!, .41ii, I�tt , real,, u r<!o6.mo ,iioil,00ln t.r rich 'urnn,,' i'mhr, wt,iii , n pan. ,'it,',,,',,,, iii cal !, Ja!e o .,sloe, man N,,,no,ter It, lieu ul Ihe r<.Ic!nrin 'n•In:.c. ic,p,•s�nl .'0 . ,c„ma,r.•,a '"''''I'.d an!oo, 1n b ,,w..,,,rvnl Rrdc,np,! to lia!o, ke,h,,gai, cIb A fnxiulll,:l N„ nh•, I t liMsii,, No , Ii l,! N,,,rm Mr Ic.2ix,l 0,\,,,r,niv', II 2r o_ li!I'; N,losers kilt ,5lola„Jit!r,r,Inv, I, o•'; If lem ih.m ail ul arc t,oh cal .,n• ., ten, ..t orsls dull On' ,,dlcd bnrte lr!npw.n. d,, p.,mma.n Isrut, .-ircol,hallfo,rlr. eJh, I„i pn.tai<,1!!I mh< Ih,to.olac. At Ilav1 ihini 1.110 ,I.os lot 'i Ihe i',lrt,rnn. , dal , is' nice rd, uM1a-thee u,h toileml'n ale uhnlr, r,pu.III, 1ru 'sh.ill, o.u,1, rrJ•nnpoon t,Mfl Icdwah,tic Bond Rcgn, •till in 'ed' 1!nm ,i.!.s 1...!ac,' mcp.lo!'!,..nllri ci,irrrJ •.0 nil, o h,oi, o le rrdrrn!ed rn .500,10 ii, in pan ai Ihnr lao addresses npirarmng don i nn .tralool bras. ,.I ,1 , M1cl.l 1.. rte It Ro„I,n,I ,omn a. I ihos,ton, Ism lion !Axe Ja,. I,nt ,�, , ili<,I.nr ilxe,l Ion "I o+pi,,o• !Ii. ,upplc,orni .acts 1.111.\I I II'I N If /x, Board cal U+rcoon ni me Cis of Fa)ennvdlc. \0x00..,. Lul+c• and Gendonrn We hae examm<J carolled cnpi<• cal the Icgel ,--I!ng• o.lnuo' Iiisi!n.oce Si, 1100 pa„nl ht the Board of Direcicar• cal the Co, tat )'a)ci c,dle, Ank.msas jibe ''O nio + can IhoMi a, 11111. Onl!nuoc No, 3Jgl) passe) M' the lost oI D+rector, of the t'Is on April 1II. 19'x1 and Otdinan.r N., 1x10.pa.sc,i by the Board of Dlrccion tan September 11, I9a1 ,.nllrcin el) Ihe "Dnlln,u!ces" ,. m nnl ,cap, It a Troll Indenture. dated teal October 05, 14'al..c.unnp Ihe too, hreinaner Jrscribd Ithe "Indeniun''I Mtwttn he City and Mcllm) Hank ,k Trost, a, uusec Ilhe "Tno,lee"l, ,nd.rmmn other proA, •uhomaol Ialive to he umhoriemion and s•sussrco cal the bollow!ng Acscnhcd hm.l, ,heremn .stint Ihe "Sine, fret Bondi'): 13.,OI9.Iaa1 City of I'areilnllle. Arkansas Sales and Use Tax Capital Impmv mere Bonds, Senc, Iola) From ruvh enuelirasien orate of the opinion that. I. The Ordoeaecsn. he Indenture and such other pnmfs Mow lawiul authunty for the nulhnno,mian and issuance of the Series 1(000 Betide pun and to the Consutution and ,he, laws of the State rf Arkamas and particuBetidelarly Amendmem 62 to Ihe C,nstilulion of the Stale of .\exams and the Local Gcasemnem Bond An. 01198310, the purpose or providing funds, with any other available hunt,, topay the Cos of onhe Impr050menIs faa each such term is defined in the Irslenturel. to fund the Be— Account (a, defined in the Indenture) and to pay cenain costs of issuing the Series 1990 Bonds. 2. The Saner 1990 Bonds on valid and binding special obligations 01 500 City, enforecable in -dente with their corms, payable onto principal. mkmption premium, if any, and inmrosl solely from and eaued by a pledge or the Sale, and Use Tax Revenues Ian defined in the Indenure) to the en sent and n the manner provided in the Ordinances told the ledenrore. The principal of and redemption premium, if any, sod inemn nn Ihe Series I'100 nods ma) aiw, ho paid us prmfkd in ,Inc Imknture frog, mile, nnom0Cnneruv nn 100 oo Foollnn morn, •l. Credit l'acilo os:ha'urhn< •elrfnil nhIII, In Jrnmre rmhrrruf. and the •3. The (arch and crcdn of Ihe C'ir, art no pledged m Ihe payment oI loch pnnelpat of and rolrmptiou premium, i1 any, and limbo eels tan the Senn 1'Na) Bond,. 111, nruaince of Ilse Sell,, 11001 Bonds ,hall and Jlrtcrl)' en inmm9) car coniinmcNl)' nMig:ne Ihe City In lost or to plod go tan) tune, whulsoever or ❑n make ONinulpcei and ,bnalmmn tr thelokrnme wah respect m lt ml such be Salesian d Use Tae R..roc000ns .104 l.nues l r cep as prmiJeA in Ihe notice lathe registered owners, such notice may he also made by overnight mail io as least two national depositaries and one national wim sen•ice used to distribute information relating to municipal bonds m least shiny -five (35) day, poor In the redemption date. The failure Ih mail such notice to any registered itweernor .such defmsisanee and wire services, or any defect in any notice no mailed, shall not affect the validity of the proceedings for such redemption as to the registered owners to whom notice was given as required, On the dale fixed for redemption, notice having been given as aforesaid, she kinds or poninns thereof so called for rcdemptinn shall be due and payable at the redemption price provided for the redemption of such hoods or frontons thereof on such date and, if moneys for payment of such redemption price and the accrued intereu are held by the Bond Registrar or an appropriate fiduciary institution acting ndcllm tan,hall as .capers i I in the e Indenture, interest on the Minds or the (seniors thereof ro called for hindso�n 1 amount a tad to tacpun caamms Mind shall be called for redemption. a new bond or hcar his nlei a re cmd equalu ponion hereof will h: issued to the registered owner legal p pm the surrender hereof. The registered ounce of this bond shall have no right,, enforce the provisions of the Indenture, or m institute acm,n its enforce the covenants therein, or m take any action with ropc, In any event of default under the Indenture, or to moitute, appear in or defend any suit or ether preceding with respect thereto, weeps as pnwid.1 in Ihe Indenture. Modifications or alterations of the Indenture or of any ordinance supplemental therein may he made only to the extent and in the circumstances pm,iued by the Indemum. 'Ihe Mends are issuable as fully registered Minds of the denomination of 55,0001 or any whale multiple thereof, except that one bond of this .cries o in the denomination of SI,(yn1. Al the principal office of the Beni Rogishar, ,n the manner and subject to certain conditions pmviied in the Indcnture, bonds may to ,changed for an equal aggregate principal r ore unt of blinds of the some maturity. of xurhoriaed denomirahou, and Mating interest at the sane rate The Bond flegtotoeoieqcised to keep at its principal office the books of the City for the registration iii .04 for the registration of tramfer of hinds The transfer of this hind may ho registered only upon sash hicks and as otherwise provided in the Indenture upon the wrerldcr hereof to the Bond Registrar together with an a%signmenm duly executed by the registered owner hereof or his annmey or legal repremnmnve in such form as shall he sasisfannry so be Bond Registrar. Upon any such registration or transfer, the Bond Registrarshall deliver in .,change for this hand a new bred or None , registered in the name of the reansferee, of auhonced dennminalinm. in an aggregate principal umouns equal In the unredeemed principal amount of this bond, of Ihe same mmumy and Manng interest at the same none. 'Ihe Cn, car Il,r Bond Regiorur may make a charge for every such exchange ,r egotfab In of sander Ionul. sobinem mu reiniburso it tin ,on ,as or other b'osomnocrral charge rcquirrd b, lie paid x,tio e.p:n in ,uch miles, c or rcgnlmuo I of uanxfeg hot nn oho, t h.nd •hall he made m u,) olgio n, rr 111. rend pnv0110 of ...hang ong or h erchang the I gi.uta of hinds. \other Ihe Ci,) nor Ihe Bong Rcclorn •hall M rcy.,rest m make :up •uch exchange car regoom on Iranxico of Muds of a •errs during the dime!, I I xl Jay• !mmenlarcly precrmng he Aare of bill g!vmg nonce n1 car ,car nn pis of Mind• o loch .curs ,„ arse pom,m Ih—ol „r of any bond nlis t such bond car any pore.. lhercol his ken selected Ins rnI Ip, In .rmtlln even,.. tan rho cun,l uon., mm hue n,umwr and wah be elfrci srt lion In the Indenture, the pnnc!pal „f all Ihe I.vuls Ihe, on,undoig on,lo Ihe dnnue may le-cnnic or may a Aeclmed due and pa)ahlx• fours. Ihe slued rum. Iheeot. together nob the Interest acamnl thereon. Ile Iuocnore pn„r I,, lie the enamors of asocial fund dcs,gnal.J ''City of Faveneuolle Sales and l„e Tat eapnal Impn„rnlrn, Itnnitn Interest and Sinking Fund", wh,,h xl!ecoal fund is .harmed wish and naA0 asa!luhle for the p.,yulccul cal the principal of and premoum. if any, and nneto.s vim all hinds ,sweA and mnoand!ng under Ihe ].,ell c. and the Indenture p s-dn for Ihe Jeps!t to Ihe udl, of said special ant of a ,-Ifnem amounm of the S:dc•, and It,, Tas Revenues m provide loin Ihr puymenl of Ibe principal and pinnmeo. on an). and Interest on the hinds issued undet Ihe prnvs!nn, 01 11,0 Indenture a, if,, same 'hull Msi,inc Ion anul In ina,ntaun a e,cne fiat such purpose. All rout. sontboon, and thongs egosnd by the ('onllion n and lass of Iho glare. of Arkansas, Ihe I/nlu1.!ncc, .red the fail co urn to hcpjn'on. osam unithe prhmmd precedent u, riot in Ihe i,suame o(rhis ix,ni ha,r h.rpprned. rx,sr and ban foci, p•Aonncd ,, a rcqured. a l'nter rsisling .mason•, rcguluunns and.nun demurel unJ assuming ciomsophiurue h) the Coy xilh ., o . 411.1 re,lu!rtlneni, cal me Inemal Revenue dole our 118x, a, amon,000l Bhe "Coble"I. c.ml,nu uw, rspcndnure• .red Inn oilmen of Snore 19'X0 Hood pnweed, and Ihe Ilmcly payment of Si the Unoned Starnes Trea.orv, the rote«„ o, the Sears InOrm Bond, is nos !nslu'lubic sin the b'1'",none IA the nwnrn of the Series 10000 Ionsn(ur pugswes of federal income en nand. under ..ung I:Iw. hoc S,rie, 19911 Bond, and Ihe ,mares there,,,, are exempt from all 1late. a'I rmarl. teal tazn m the Stano Id Atk:mws. n11ln,r s , Ihe Sear, BnM Isall , 0,11n l norho h r eated as a preference arm in cal.ulaimg ulenotive usnhle ocome of Inloomal•: huxevrr, mlcrrs, on ills Sencs 199,1 HuntM , will nobolnl in Ihe .at,ulau n of Ihe ahcmmse i nnhnnm us and environmental las loabllitir, of corfwr ls. The Code other pro..ols omhal caul) In. resuiu on .n consequences, noupon xfiuch we ender nor i , , a —.11,md nwnrnbp cal Ito, Sines 1xaa, Boul• car Ihe inclusion no cemma .ompmaunne hncluding, ximout hmnatum, Ih„se ,eta,c0 101 the corp,rmc:Jiemmi.. .....!mars us and ens0mnmen,al lax) of merest has, exclmi,d from erns. Income. The enforceability of ihr Series 1x81 Minds is object vi bankmplcy, moohency, mominrium and oho laws affccnng co,doo: nghls morally and in general pnnciplrs of equity IeguNlr.. of oh,th,, laid enfonc0hJny is con„ Aeed Ina pneeed,ng m equity car m luwl. Ro,facl(ull) ,uhnullcd. AI funs n i wool OPINION CERTIFICATION 1111hRBBY CERTIFY that Ihe foregoing lea true and correct cop) cat the legal opinion on the hmd.s therein descrds d which was manually signed by Brnwn,E wood. Neu fork, boo York, and was staled as of de date of delivers of and payment for -d tennis. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells. assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE H_____ , , (Name and Address of Assignee) the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints ' to register the transfer of the within bond on the books kept for registration thereof with full power of substitution in the premises, Datcd: Signature Guaranteed: NOTICE: Signmures'mwt be7naracleed by a member Orin of she New York NOTICE: The stgnature to Ih . asignmem must curnenponJ with be name eels appears on Ihe face of Ito within hood Stock Cubango on commeehl bank on sand eanpany. le every pankulto, without altenlmn «enlargement or any change whoever, l : 7.. ,1 .. 1.. City Clerk attorney OFFICERS AND SEAL CERTIFICATE OF THE CITY OF FAYETTEVILLE I, Sherry L. Thomas, City Clerk of the City of Fayetteville, ,rkansas, DO HEREBY CERTIFY: 1. The following is a correct list of the names of the embers of the Board of Directors of said City and of certain fficers of said City as of a date or dates prior to October 4, 988 through November 22, 1988: Office Officer Mayor Marilyn Johnson Director Ronald Bumpass Director Jeremy Hess Director Ernest Lancaster Director Russ Kelley Director Paul Marinoni, Jr. Director William V. Martin City Clerk Suzanne McWethy 2. The following is a correct list of the names of the mbers of the Board of Directors of said City and of certain ficers by said City as of a date or dates prior to April 17, 1990 rough the date of this certificate: �.r Office Offfj Mayor William V. Martin Assistant Mayor Fred Vorsanger Director O. Michael Green Director Russ Kelly Director Ernest Lancaster Director Paul Marinoni, Jr. Director Shell Spivey City Clerk Sherry L. Thomas 3. The following is a correct list of the names of certain ficers of said City as of the date of this certificate: Office Officer Administrative Services Director Kevin Crosson City Attorney Jerry Rose City Manager Scott Linebaugh Finance Director Ben Mayes 4. The corporate seal of said City, being the only seal used the execution of the bonds, notes and contracts of said City, the seal an impression of which is affixed opposite my signature this certificate. WITNESS my hand and the corporate seal of said City as of the h day of October 1990. ity Clerk 3,t+ SIGNATURE AND NO -LITIGATION CERTIFICATE OF THE CITY OF FAYETTEVILLE We, Willian V. respectively,Main and Sherry L. Thomas, the Mayor and the ity clerk, of the City of Fayetteville, Arkansas, 1. our fficiallyWe have, $33,019,000respective C t tive facsimile signatures, executed y of Fayetteville ales and Use Tax Capital Improvement Bonds Arkadate, , Series :tober 15, 1990, maturing on November 15 in the followingg years id amounts, and bearing interest semiannuall o years iys of May and November, commencing on May n the fifteenth y 15, 1991, as follows: Year of Principal Interest Maturity Amount Rate 1991 $ 824,000 6.00% 1992 1,065,000 6.10 1993 1,130,000 6.20 1994 1,205,000 6.30 1995 1,280,000 6.40 1996 1,360,000 6.50 1997 1,450,000 6.60 1998 1,545,000 6.70 1999 1,650,000 6.80 2000 1,765,000 6.90 2001 1,890,000 7.00 2002 2,020,000 7.05 2005 6,985,000 7.15 2008 8,850,000 7.25 2. Said bonds are in fully -registered form, and a facsimile the corporate seal of said City has been imprinted on each of d Bonds. 3. Except as disclosed in or contemplated by the Official :ement of said City, dated September 13, 1990, relating to said Is, no litigation of any kind is now pending (either in state ederal courts) or, to our knowledge, threatened to restrain or yin the issuance or delivery of said bonds, or in any manner tioning the proceedings or authority under which said bonds are ig issued, or affecting the validity of said bonds or their tent; that neither the corporate existence or boundaries of said nor the title to the office of any officer whose signature ars on said bonds is being contested; and that no authority or eedings for the issuance of said bonds or for the security eof have been repealed, revoked, or rescinded. WITNESS our hands as of the 18th day of October 1990. OFFICIAL TITLE Mayor of the City of Fayetteville, Arkansas City Clerk of the City of Fayetteville, Arkansas I, Sherry L. Thomas, City Clerk of the City of Fayetteville, Lnsas, DO HEREBY CERTIFY that there was issued with respect to I of the bonds described in the foregoing certificate a legal ,ion upon said bonds which was manually signed by Brown & Wood, York, New York, and was dated as of the date of delivery of and ,ent for said bonds. I have read the foregoing certificates and I know that the ns who have signed the same are the officers whose titles w their signatures, respectively, and that said signatures are ne. Assistt Finance Officer of theLMcIlroy Bank & Trust Fayetteville, Arkansas CERTIFICATE AS TO ARBITRAGE We, William V. Martin and Kevin Crosson, the Mayor and the ,dministrative Services Director, respectively, of the City of 'ayetteville, Arkansas (the "City"), being duly charged with thers with the responsibility for issuing the City's $33,019,000 ales and Use Tax Capital Improvement Bonds, Series 1990, dated ctober 15, 1990 (the "Bonds"), DO HEREBY CERTIFY, pursuant to actions 1.103-13, 1.103-14 and 1.103-15 of the Treasury :gulations, Section 1.148 -OT through 1.148-9T of the Temporary -easury Regulations and Section 148 of the Internal Revenue Code 1986, as amended (the "Code"), as follows: 1. The Bonds are being issued pursuant to the authority of ,e Constitution and laws of the State of Arkansas, including the cal Government Bond Act of 1985, Ordinance No. 3381, Ordinance . 3480 and Ordinance No. 35O6, each duly passed by the Board of rectors of the City, and a Trust Indenture, dated as of October , 1990, between the City and Mcllroy Bank & Trust, as Trustee le "Indenture"). The proceeds of the Bonds, together with any ier available funds of the City, will be applied to (a) puire, construct, reconstruct, improve, renovate, expand and lip various capital improvements within the City as described said Ordinance No. 35O6 (the "Improvements"), (b) pay interest ;ruing on the Bonds from October 15, 199O to the date hereof "Accrued Interest"), (c) deposit to the credit of the rve Account established under the Indenture a sum equal qu 1 to LReserve Account Deposit Requirement and (d) pay expenses rred by the City in connection with the issuance of the :yy ids, including the Capital Guaranty Insurance Company " premium for insuring y ("Capital iranty") the Bonds (the "Issuance ,enses"). Unless otherwise specifically defined herein, all ,italized terms used in this certificate shall have the same Wings as those set forth in the Indenture. 2. On the basis of the facts, estimates and circumstances existence on the date hereof, we reasonably expect the lowing with respect to the Bonds and the use of the proceeds reof: (a) The proceeds to be derived by the City from the sale of the Bonds in the amount of $32,595,522.19 (representing $33,019,000 face amount of the Bonds plus Accrued Interest of $18,977.19 less the underwriter's discount of $442,455) are expected to be needed and fully expended as follows: (i) $18,977.19, representing Accrued Interest, will be deposited to the credit of the Bond Service Account in the Sinking Fund and expended to pay a portion of the interest on the Bonds due on May 15, 1991; (ii) $3,301,900 will be deposited in the Reserve Account in the Sinking Fund; (iii) $677,857 will be deposited in the Construc- tion Fund and expended within six months from the date hereof to pay Issuance Expenses, including $537,308.57 to pay the Capital 2 F, 1 Guaranty premium for insurance on the Bonds; and (iv) $28,596,788 Will be deposited in the Construction Fund, 85 percent of which amount will be expended within three years from the date hereof to pay the Cost of Improvements. (b) The total proceeds to be received by the City from the sale of the Bonds, together with anticipated investment earnings thereon, do not exceed the total of the amount necessary for the purposes described above. (c) The City does not expect to sell or otherwise dispose of any property comprising the Improvements prior to the final maturity date of the Bonds, except such minor parts or portions thereof as may be disposed of due to normal wear, obsolescence, or depreciation in the ordinary course of business. 3. Binding contracts or commitments obligating the mnditure of not less than $100,000 toward the Cost of 7ovements will be entered into by the City within six months ithe date hereof. Work on the Improvements will proceed with diligence to the completion thereof. 4. There are no funds or accounts established pursuant to laws of the State of Arkansas or the Indenture, other than Local Sales and Use Tax Trust Fund established by the Local rnment Bond Act of 1985 (the "Trust Fund") or the Sinking (including the Bond Service Account, the Redemption Account 3 na the Reserve Account) , which are reasonably expected to be Sed to pay debt service on the Bonds, or which are pledged as 011ateral for the Bonds and for which there is a reasonable ssurance that amounts therein will be available to pay debt ervice on the Bonds if the City encounters financial .fficulties. The Trust Fund, the Bond Service Account and the Redemption unt will be used primarily to achieve a proper matching of flues of the City and debt service on the Bonds within each year and amounts deposited thereto will be in each case eted at least once a year except for any carryover amount h will not in the aggregate exceed the greater of (A) one 's earnings on such amounts, or (B) one -twelfth of annual service on the Bonds. The amount to be deposited in the Reserve Account 1 equal the Reserve Account Requirement. The amount of the erve Account Requirement for the Bonds does not exceed the of the maximum annual debt service on the Bonds, 125% of average annual debt service on the Bonds and 10 percent of proceeds of the Bonds. Such amount is required by the enture and, based on the advice of the Llama Company (the derwriter"), is a vital factor in the marketing of the Bonds an interest rate comparable to that of other bond issues of a ilar type and is not in excess of the amount considered 4 necessary for such Purpose. See Exhibit B attached hereto. Any roopeys in the Reserve Account in excess of the Reserve Account Requirement are to be withdrawn and transferred as provided in ≥ection 505• of the Indenture, The Underwriter has also advised the City that the present value of the premium paid for the Capital Guaranty bond insurance s less than the present value of the interest reasonably xpected to be saved on the Bonds as a result of such insurance discounted at the yield on the Bonds determined without regard o such premium). See Exhibit B. In addition, Capital Guaranty is advised the City that it required the funding of the Reserve ;count in an amount equal to Reserve Account Requirement as a )ndition of its insuring the Bonds. See Exhibit D. 5. . The following represents the expectations of the City th respect to the investment of the funds on deposit in the orementioned funds and accounts: (a) Proceeds derived from the sale of the Bonds representing Accrued Interest and deposited in the Bond Service Account may be invested at an unrestricted yield until expended for a period not to exceed three years from the date hereof. (b) Proceeds derived from the sale of the Bonds deposited in the Construction Fund to pay Issuance Expenses may be invested at an unrestricted yield until expended within six months of the date hereof. 5 (c) Proceeds derived from in the Construction Fund to paY the Cost of Improvements may be invested at an unrestricted yield until expended for a period not to exceed three years from the date hereof. (d) The amount on deposit in the Reserve Account not in excess of the Reserve Account Requirement may be invested at an unrestricted yield. (e) Investment earnings on obligations acquired with amounts described in subparagraphs (a) through (d) of this paragraph 5 may be Y invested at an unrestricted yield for a period of three years from the date hereof or one year from the date of receipt, whichever period is longer. (f) Amounts described in subparagraphs (a) through (e) of this paragraph 5, together with investment earnings thereon, not invested at an unrestricted yield pursuant to such subparagraphs, may be invested at an unrestricted yield to the extent such amounts do not exceed $100,000 (the "Minor Portion"). (g) Amounts described in subparagraph (f) of this paragraph 5 not invested at an unrestricted yield pursuant to such subparagraph may be invested at a yield which shall not exceed the yield on the Bonds plus 1/8 of one percentage point or invested in tax-exempt obligations under Section 103(a) of the Code the interest on which 6 is not an item of tax Preference within the Section 57(a)(5 of meaning of ) the Code or in the United States Treasury — State and Local Government Series, Time Deposit Securities (°SLGs„). (h) All amounts deposited in the Trust Fund, the Bond Service Account (other than the the Redem tion Accrued Interest) and P Account may be invested at an unrestricted yield for a period of 13 months from the date of deposit of such amounts to such Fund and accounts. Investment earnings on such amounts may be invested at an unrestricted yield for a period of one year from the date of receipt of the amount earned. (i) Amounts described in subparagraph (h) of this paragraph 5 not invested at an unrestricted yield pursuant to such subparagraph may be invested at an unrestricted yield to the extent such amounts do not exceed the Minor Portion reduced by the amounts described in subparagraph (f) of this paragraph 5 that are invested at a yield in excess of the yield on the Bonds. (7) Amounts described in subparagraph (i) of this paragraph 5 that may not be invested at an unrestricted yield pursuant to such subparagraph may be invested at a yield which shall not exceed the yield on the Bonds or invested in tax-exempt obligations under Section 103(a) of the Code the interest on which is not an item of tax preference within the meaning of Section 57(a)(5) of the Code or SLGs. 6. For purposes of this certificate "Yield" means that Meld which when used in computing the present worth of all ,ayments of principal and interest to be paid on an obligation roduces an amount equal to the purchase price of such bligation. The Yield on obligations acquired with the proceeds erived from the sale of the Bonds and from amounts deposited in le Trust Fund, the Bond Service Account and the Redemption ;count and the yield on the Bonds shall be calculated by the use the same frequency interval of compounding interest. In the se of the Bonds the purchase price is the initial offering ice to the public (excluding bond houses, brokers, and other ternediaries) of $33,019,000 plus accrued interest of 3,977.19, as shown by the cover page of the Official Statement Lating to the Bonds, at which a substantial amount of the Bonds ;issued, as shown in the letter of the Underwriter attached •eto as Exhibit C. For purposes of calculating the yield on Bonds, the Capital Guaranty insurance premium in the amount $537,308.57 is treated as additional interest paid on the ds on the date hereof because the amount paid for such trance is less than the present value of the interest ;onably expected to be saved as a result of obtaining the trance. See Exhibit B. In addition, Capital Guaranty has !esented that the premium for the insurance on the Bonds has increased to reflect, directly or indirectly, the 8 payment of any Issuance Expenses and that such premium is wholly attributable to providing credit Exhibit D. Any investments enhancement for the Bonds. See invested at an unrestricted acquired with amounts that may not be yield pursuant to at Paragraph 5 above ;hall be purchased prevailing market prices and shall be invited to securities for which there is an established market, ax -exempt obligations under 103 (a) of the Code the interest on hich is not an item of tax preference within the meaning of action 57(a)(5) of the Code or SIGs. In accordance with such ,aning of the, term yield, the yield on the Bonds has been termined to be not less than 7.2536787$. 7. No portion of the proceeds of the Bonds will be used as substitute for other moneys of the City which were otherwise to used to pay the Cost of Improvements and which have been or L1 be used to acquire, directly or indirectly, obligations )ducing a yield in excess of the yield on the Bonds. 8. There are no other obligations of the City that (i) are ued at substantially the same time as the Bonds, (ii) are sold suant to a common plan of financing together with the Bonds (iii) will be paid out of substantially the same source of 3s (or will have substantially the same claim to be paid out substantially the same source of funds) as the Bonds. 9. The City has covenanted in Section 604 of the Indenture so long as the Bonds remain outstanding, the moneys on sit in any fund or account maintained in connection with the F, whether or not such moneys were derived from proceeds of 9 payment of any Issuance Expenses and that such premium is wholly attributable to providing credit enhancement for the Bonds. See sxhibit D. Any investments acquired with amounts that may not be invested at an unrestricted yield pursuant to paragraph 5 above ;hall be purchased at prevailing market prices and shall be invited to securities for which there is an established market, ax -exempt obligations under 103(a) of the Code the interest on hich is not an item of tax preference within the meaning of action 57 (a) (5) of the Code or SLGs. In accordance with such caning of the, term yield, the yield on the Bonds has been ;termined to be not less than 7.2536787%. 7. No portion of the proceeds of the Bonds will be used as substitute for other moneys of the City which were otherwise to used to pay the Cost of Improvements and which have been or 11 be used to acquire, directly or indirectly, obligations oducing a yield in excess of the yield on the Bonds. 8. There are no other obligations of the City that (i) are sued at substantially the same time as the Bonds, (ii) are sold .suant to a common plan of financing together with the Bonds (iii) will be paid out of substantially the same source of ids (or will have substantially the same claim to be paid out substantially the same source of funds) as the Bonds. 9. The City has covenanted in Section 604 of the Indenture )t so long as the Bonds remain outstanding, the moneys on sit in any fund or account maintained in connection with the s, whether or not such moneys were derived from proceeds of 7 the sale of the Bonds or any other any manner that would cause the sources, will not be used in Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code or bonds not described under Section 103 (a) of the Code and the applicable regulations promulgated from time to time thereunder. Accordingly, the City shall comply with the guidelines and instructions in the Certificate as to the Requirements of Section L48 of the Internal Revenue Code of 1986, as ended, attached iereto as Exhibit A, by which the City shall pay or cause to be ,aid to the United States an amount equal to the sum of (i) the xcess of the aggregate amount earned from the investment of the roceeds of the Bonds and certain other moneys from the date of ssue over the amount that would have been earned if such :oceeds and moneys had been invested at a yield equal to the ,eld on the Bonds plus (ii) the investment earnings attributable ithe excess amount described in (i). 10. The City has not received notice that its arbitrage rtifications may not be relied upon with respect to its issues, r has it been advised that the Commissioner of Internal Revenue 3 listed or is contemplating listing the City as a governmental it whose arbitrage certifications may not be relied upon. 11. To the best of our knowledge, information and belief, above expectations are reasonable. 10 WITNESS our hands as of the 18tthdaY of October 1990. 0 11 ces EXHIBIT A CERTIFICATE AS TO THE REQUIREMENTS OF SECTION 148 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED The City of Fayetteville, Arkansas "City") ;ovenanted that, so long as the Sales (the has Improvement Bonds, Series 1990, of theCitdy Use Tax Capital aintainedtstandinginthe moneys tionon deposit the In any tfund hore "account remain oneys were derived from proceeds Bonds, whether or not such ther sources, will not be used inoanyf he sale manner that the uldds or any he Bonds to be "arbitrage bonds"y woofd cause 48 of the Internal Revenue Code of Within96 the meaning m(theof Section f 1986, as amended :ode"), or bonds not described under Section 103 a �d the applicable regulations thereunder (the "Tax ( ) of the Code ifurtherance of the Tax Covenant, we undrstandthat vthe nCity ist observe and not violate the requirements of Section 148 of to Code, relating to the use of proceeds of the Bonds, certain .her moneys and investment earnings thereon and to limitations the yield that may be obtained from certain investments made th proceeds of the Bonds and certain other moneys in funds and counts held by or for the benefit of the City. To perform the City's obligations under the Tax Covenant scribed above and otherwise, the City shall comply with the ?licable yield restrictions and limitations set forth in the :tificate as to Arbitrage relating to the Bonds (the "Arbitrage -tificate") and comply with the guidelines set forth in this -tificate so that the rebate requirement set forth in Section 1(f) of the Code may be satisfied. All personnel concerned :h the use and investments of money in the funds and accounts ,t be familiar with these instructions because the tax-exempt tus of the interest with respect to the Bonds depends upon pliance with such limitations. This certificate is divided into several parts: Part A sets ithe various terms and definitions applicable to the ition of this certificate; Part B sets forth the records that be kept with respect to the investment of the Gross Proceeds e Bonds; and Part C sets forth the covenants made with ct to the calculation and payment of certain amounts red under the rebate provisions of Section 148 of the Code. A , Definitions. Except as otherwise defined used herein shall have the same earrings Set capitalized terms trage Certificate. In addition meanings forth defined in this certificate and tthe ete Arbitrage worand tificain t there following words and terms shall Certificate, the 1. Gross Proceeds o have the following meanings: f the Bonds. Gross Proceeds of the means: Bonds Proees (a) thecsale actually or constructively received from of the Bonds; (b) investment earnings on amounts subparagraph (a) of this ain paragrapphhcribed ; (c) amounts that are deposited into a bona fide debt service fund, including the Trust Fund, the Bond Service Account and the Redemption Account, other than amounts received from the sale of the Bonds; (d) in amounts ts ht are reasonably expected to be or are inract on used, ddirectly or indirectly, to pay debt eayear vt once tBonds that are not depleted at ("Sinking Fund Money"); (e) amounts deposited in a reasonably required reserve or replacement fund, including the Reserve Account; (f) any money that is pledged as security for the payment of debt service on the Bonds by the City if there is any reasonable assurance that such money will be available for such purpose if the City encounters financial difficulty; (g) amounts treated as Transferred Proceeds of the Bonds as defined in the Temporary Treasury Regulation Section 1.148-8T(d)(8), if any; (h) amounts treated as discount proceeds of the Bonds as defined in Temporary Treasury Regulation §1.148-8T(d) (7), if any; and (i) investment earnings on amounts described in subparagraphs (b) through (h) above. 2 2. Nonpurpose Investments, mentstYPe1Propertygawh0ch annuity cNOontractpos Investments include the Bonds, that is not ac 1s acquired with the any Other invest_ Nonpurposeiired out theG of purpose on of the Bonds. Carry Tax-Exempt Investments, Investments shall not include 3. Tax -Exempt InVac+-'"'e;ts. Tax - Exempt Investments are: (a) obligations the interest on gross income under Section which the interest on w is excluded and Which103(a) of the Code and preference under Section not an item of tax (a) (5) of the Code; (b) United States Treasury -State and Local Government Series, Demand Deposit Securities; and (c) stock in a corporation that (i) is a regulated investment company within the meaning of Code Section 851(a) and meets the requirements of Code Section 852(a) for the calendar year; (ii) has only one class of stock authorized and outstanding; (iii) invests all of its assets in tax exempt bonds to the extent practicable; and (iv) has at least 98% of (A) its gross income derived from interest on, or gain from the sale of or other disposition of, tax-exempt bonds or (B) the weighted average value of its assets is represented by investments in tax-exempt bonds. 4. Fair Market Price. For the purpose of this certificate, e purchase price and disposition price of the obligation must the fair market price of the obligation on an established rket (the "Fair Market Price"). This means that the City mot pay a premium to adjust the yield and that the City cannot :ept a lower interest rate than is usually paid to adjust the aid on an obligation and that no transaction is permitted to suit in a smaller profit or larger loss than would have ;ulted if the transaction had been at arm's -length and had the ,ld on the Bonds not been relevant to either party. (a) Certificates ofCertificates °f Deposit. The Fair Market Price of a tificate of deposit issued by a bank may be determined by erence to the bona fide bid price quoted by a dealer who ntains an active secondary market in such certificates of osit. If there is no active secondary market in such cer- icates of deposit, the purchase price of such certificate will treated as the Fair Market Price if either (i) three or more ifide bids are received from unrelated financial institutions the certificate of deposit is purchased from the bank 3 offering the highest yield or yield is as high or higher thanl(Aad )tealer certifies that the comparable obligations traded available o an b (B) the yield available on comparablective secondaryMarket and United States Treasury. The certificationgations offered by the dertificatesealer who aof intainsanactive secondary market be executed by a deposit and must be base in comparable depositon actual trad adjU5t the lstabilityect the landze areputationtof the certificatees the certificate of deposit, of the person issuing (b) Investment Areeg emenntss. Investments Pursuant to an investment contract maybe Market Price if (i) at least threeardeas being made at d a Fair e investment contract from persons bids u are interest in the p without Bonds; (ii) the winning bidder an interest in the Dnits reasonable expectations provides a certificate hthat, based p date the ;ntered into, investments will not be purchased cortsold at a )rice other than their fair market value investment contract is at least (iii) lde Yield on the ;he highest bid records derived froml to the yield offerty under fa 'iv) the yield on the investmentcontractnistateleas equa and ,he yield offered on similar contracts, is at least equal to (c) Obli ations Traded on an Established Market. For other bligations traded on an established market, the Fair Market rice shall be the actual price at which the obligations are sold 'a willing seller to a willing buyer. When an actual ransaction does not occur, the Fair Market Price shall be the ;an between the bid and offered prices for such obligations on me date of purchase or the date the obligation is deemed to !come proceeds of the issue or to no longer be proceeds of the sue. 5. Yield. For purposes of this certificate, yields are to calculated by means of an actuarial method of yield calcula- n whereby "yield" means that discount rate which, when used in puting the present worth of all payments of principal and erest to be paid on an obligation, produces an amount equal to purchase price of the obligation. For purposes of calcu- ing the yield on the Bonds, the purchase price of the Bonds is initial offering price of the Bonds to the public (excluding I houses, brokers and other intermediaries) at which a 'tantial amount of the Bonds was issued, as shown in the :er of the underwriter of the Bonds which is attached as .bit C of the Arbitrage Certificate, plus Accrued Interest. purposes of this certificate, the yield on the Bonds is 36787% as described in the Arbitrage Certificate. The d on investments must be computed by the use of the same f putingntheinterval onotheoBonds. interest as is Used in co - B. Recordkeepinc1. m The City shall keep or cause record and accounts containing to be kept proper books of all transactions relating to the completetand correct entries of disbursement, allocation and application pplicatio ' investment, the Bonds to the extent that such proceedsf the Gross Proceeds of account for purposes of determining be taken defined below. Accordinglyrecor-kee ingRebwith regard into amounts on deposit in the Trust Fund, ping with regard to as and the Redemption Account is not rethe Bond Service Account amounts need not be taken into mired as long as such determining the Rebate Re account for purposes of qch each invSuch rtcords shall specify the account or fund to which each is to be allocated and shall set forth, in theor thereof) investment security, the following information (the "Investment Report") : (a) purchase date of each investment, (b) purchase price, (c) information establishing that the purchase price and the disposition price is the Fair Market Price as of such date (e.g., the Published quoted bid by a dealer in such an investment on the date of purchase), (d) any accrued interest paid, (e) face amount, (f) coupon rate, (g) periodicity of its interest payments, (h) any accrued interest received, and (i) disposition date. To the extent any investment is allocated to Gross Proceeds the Bonds as a Nonpurpose Investment, it shall be treated as it were acquired at its Fair Market Price at that time. The City shall also retain or cuase to be retained with pect to each investment security such documentation as is uired as evidence to establish that each investment has been wired and disposed of on an established market in an 's -length transaction at a price equal to its Fair Market :e. Notwithstanding the tempora proceeds of the Bonds may be invested at during which forth in paragraph eB5 of at Gross set fires that an apht a the ArbitrageaCertificaie, thed yield as requegate amount earned eqall ual to the s top of (1) the e, Code with the Gross Proceeds of the Bondsrpose excess of the have beentearned if plus such nvinvestment hadratyieldount acquired yieldthat would (ii)utable to the any income equal to the described in louse (i) , be paid totthe bUnited States (ti,o 1. The City hereby covenants in the calculation of the Rebate to retain a race promulgated under Temporary Treasury Regulat ons section expert 1.148-8T, and to prepare gulations Section of each five-year period ending onMay45 days after the Close the Bonds have been redeemed o 15 and the date don which ,o herein as the r matured b(each such date referred tatement setting"forthttheon Date") beginning May 15, Rebate Requirement and the 1995, a caking the determination in any form or statement method for therefor by the Internal Revenue Service or United pStatesbed 'reasury. 2. Any amount earned in the Trust Fund, the Bond Service ccount or the Redemption Account and amounts earned on such mount if retained in such Fund or accounts shall not be taken nto account for purposes of determining the Rebate Requirement ;long as each such Fund or account is a bona fide debt service ;count. 3. The Rebate Requirement must be paid to the United States installments. Each payment shall be made not later than 60 ys after each Computation Date. Each payment must be in an aunt not less than 90 percent of the Rebate Requirement as of :h Computation Date. All of the Rebate Requirement must be id to the United States not later than 60 days after the final ,iputation Date. Payment shall be made to the Internal Revenue vice Center, Philadelphia, Pennsylvania 19255 and be :ompanied by a copy of the Form 8038-T and a statement imarizing the determination of the amount required to be paid the United States in connection with the Bonds and identifying City, the Bonds and the Committee on Uniform Security ratification Procedures (CUSIP) number for the Bonds. Records the determinations made hereunder shall be retained until six rs after the retirement of the Bonds. In order to comply with the Tax Covenant regarding the lion from gross income for federal income tax purposes of 6 Notwithstanding the temporary periods during which Gross proceeds of the Bonds may be invested set forth in at paragraph 5 of the Arbitragean unrestricted yield as requires that an amount equal to the sumCertificate, the Code aggregate amount earned on all Nonpu of (e) the excess zPose Investments °f the With the Gross Proceeds of the Bonds over the amount thatu would have been earned if such investments had a yield on the Bonds, plus (ii) any income attributablyield etotthe excess the described in ) clause (1), be paid to the United States (the ffRebate Requirement" ity covenantsth1.cThe euCityohereby yhcvenantzed expert lromulgated under Tem orar Treasury Regulations Section 1.148 -OT through 1.148-8T, and to prepare within 45 days after the Close of each five-year period ending on May 15 and the date on which the Bonds have been redeemed or matured (each such date referred to herein as the "Computation Date") beginning May 15, 1995, a statement setting forth the Rebate Requirement and the method for Baking the determination in any form or statement prescribed therefor by the Internal Revenue Service or United States rraasurv. 2. Any amount earned in the Trust Fund, the Bond Service ount or the Redemption Account and amounts earned on such unt if retained in such Fund or accounts shall not be taken o account for purposes of determining the Rebate Requirement long as each such Fund or account is a bona fide debt service ount_ 3. The Rebate Requirement must be paid to the United States installments. Each payment shall be made not later than 60 rs after each Computation Date. Each payment must be in an )unt not less than 90 percent of the Rebate Requirement as of :h Computation Date. All of the Rebate Requirement must be Ld to the United States not later than 60 days after the final iputation Date. Payment shall be made to the Internal Revenue vice Center, Philadelphia, Pennsylvania 19255 and be :ompanied by a copy of the Form 8038-T and a statement imarizing the determination of the amount required to be paid the United States in connection with the Bonds and identifying City, the Bonds and the Committee on Uniform Security ratification Procedures (CUSIP) number for the Bonds. Records the determinations made hereunder shall be retained until six rs after the retirement of the Bonds. In order to comply with the Tax Covenant regarding the usion from gross income for federal income tax purposes of the interest paid and to be paid on the Bonds described in this certificatey the guidelines on the advice of counsel, to complyeWithlfi rulings, s nregulati based legislation or judicial decisions as may brgeltoithe, Bonds. applicable to the THE CI OF FAYETTE I'LE, ARKANSAS William M in ayor Administrative nServices Director ober 18, 1990 7 EXHIBIT B October 18, 1990 City of Fayetteville, Arkansas Re: $33,019,000 City of Fa yetteville, Arkansas Sales and Use Tax Capital Series 1990 the 1� Improvement Bonds, Bonds�� Gentlemen: The •esentsnthatlgned, as the underwriter of the Bonds, hereby equal lto the. the Reserve gAccount Reof the serve Account in an amount is defined in the Trust Indenturelrement (as each such term 1990, securing the Bonds Vitalfactor dated as of October 15, Bonds, permits the marketing ofthe Bonds atln anminterest the rate comparable to that of other bond issues of a similar type, and is not in excess of the amount considered necessary for such purpose; and 2. with respect to the premium of $537,308.57 paid to Capital Guaranty Insurance Company for insurance on the Bonds, the present value of the premium is less than the present value of the interest reasonably expected to be saved on the Bonds as a result of such insurance (discounted at the yield on the Bonds as determined without regard to such premium) . Very truly yours, LLAMA COMPANY By: ) AJLOm CJ� Title: _ J. f E?BIT C CERTIFICATE WITH RESPECT TO "ISSUE PRICE'' This certificate is furnished by the Llama Company underwriter of the $33,019,000 aggregate , the city of Fayetteville, Arkansase Principal S ' Capital Improvement Bonds, Series1990(th SBonds"ndoUse Taxunt of es.celioof the Bondshe l Withinprice fortpurposesso) , to "issue price meaning f the Internal Revenue Code of 1986, as amended Section of the (the")• WE HEREBY CERTIFY to the best of our knowledge as follows: 1. With respect to substantially identical Bonds that )ffered to the general Public (excluding bondwere d similar persons acting in the capacity houses, brokers and tholesalers) (the "General Public's) at of underwriters thator lot sold, as of the date of issue ofthe at ens Price and were ,r other investors that do not constitute part to institutional l ublic (hereinafter "Institutional Investorsrt at athe General uch price, on the date the Bond Purchase A ) e a discount from eptember 13, 1990 was executed the Under(a) writer made aed ide public offering of all the Bonds rthetpr s a bona h ie cover page of the Official Statement ofethe 1Cit set forth en 3the Bonds (the "Official Statement"), and (b) sold With least astect )a of the aggregate face amount of the Bondsforcashatot the mneral Public at the prices as set forth in the Official :atement . 2. None of the Bonds has been sold to Institutional tors at a discount from the prices at which the Bonds were to the General Public. 3. The prices as set forth on the cover page of the icial Statement do not exceed the fair market value of the 9s as of the date the Bond Purchase Agreement was signed. LLAMA COMPANY r 18, 1990 EXHIBIT D October 18, 1990 ty of Fayetteville, Arkansas Re: $33,039,000 City of F SAles and Use Tax Cit aattle, Arkanaae pits] Smprovement The undersigned, as insurer of the that the funding of the Ressrve Account hereby represents Serve Account Requirement (as each such to , an amount equal to vat Indenture, dated as of October is defined in the pas) was required as a condition for BifSUrin securing Bog the i) that the prmium charged for insuring the gBondsHis wholly and tributable to providing credit enhancement for the Bo snot been increased to reflect, directly or indirectlyg the (sent of any cost of issuance of the Benda which is net' the iinarily borne by an insurer of municipal bonds. CAPITAL GUARANTY INSURANCE COMPANY By: R Title: " .. ,r PURSUANT TOCERTIFINATE OF 3(d)(4TH) OFMAYOR OF THE CITY THE BOND PURCHASE AGREEMENT I, William V. Martin, Mayor of Arkansas (the "City"), pursuantSection the City of purchase Agreement, dated September 13 ct199 3 ) (4) of the ille, Agreement ), between the City and the 1990 (the "BondBond the "Underwriter"), relating Llama Company, Purchase ( 019,000 Sales and Use to the sale topt y' n underwriter $33, Tax Capital Improvemente UBonrwriter of 199OCERTof the the City, dated at edf mOctober 15, 1990 t"Bonds") DO Series Y knowledge after due inquiry, )asDfollows: Bond (1) each of fahe enCity's representations contained in the Pare true and correct the date of this u certificate; as of (ii) the City has authorized under Act No. 871 of the General Assemblyof action necessary rh year 1985, as amended, the of Ordinance Arkansas for 3381 1 passed by the Board of Directors s of theof No. Directors") on October 4, 1988 City (the "Board of passage 3480 passed by the Board of Directors son April 17, 1990 anOrdinance N. the passage of Ordinance No. f Directors on September 13 3506 passed by the Board of , 1990, execution, due performance of the Bonds, the Indenture n enture(as defined in the Bond Purchase Agreement) and the Bond Purchase Agreement and the pledging of a portion of the Tax Receipts (as defined in the Bond Purchase Agreement) as Provided in the Indenture; (iii) except as described in the Official Statement, dated September 13, 1990, relating to the Bonds (the "Official Statement"), no litigation is pending or, to my knowledge, threatened to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the validity of any of said ordinances, the Indenture, the Bond Purchase Agreement or said pledge of the Tax Receipts; (iv) the Bonds, as executed by the City, are in the form or in substantially the form approved for such execution by appropriate proceedings of the City; (v) since December 31, 1989, there has not been any material adverse change in the properties, financial position or results of operations of the City, whether or not arising from transactions in the ordinary course of business, other than such changes which are disclosed in the Official Statement, and since such date the City has not entered into any transaction or incurred any liabilit City except as disclosed in the Official ymaterial the (vi) there are not statement; as to Pending, Officithreata l eStateml proceedings Whicare rnot o my knowledge, andWhichare material astodisclosed the to which the City is a y, or to is subject, or which will adversely property of the City contemplated by the Bond Purchase Agreementtothe transactions eoiStatement; by the Official (vii) the information statement relating to the City, contained in the Official operations and financial conditions organization perties Bonds and the Tax truehe descriptions of the Receipts are material respects and do not contain an and correct in all statement of a material fact and y untrue or incorrect material fact necessar do not omit to state a material fn inht of rye in order to make the statements made circumstances under which they were made, not misleading; and (viii) the City has duly authorized by all necessary action the signing of the Official Statement by me as the Mayor of the City. WITNESS my hand as of the 18th day of October 1990. Mayor 2 ,-1 CERTIFICATE OF TRUSTEE AND BOND REGISTRAR I, James C. Glenn, President o£ McIlroy Bank & Trust, of Fayetteville, Arkansas, DO HEREBY CERTIFY that: 1. Mcllroy Bank & Trust (the "Bank") is the Trustee and Bond Registrar under the Trust Indenture, dated as of October 15, 1990 (the "Indenture"), by and between the Bank as Trustee and the City of Fayetteville Ark „ securing the City's $33,019,000 Sales and Use Tax Ca i ' (the City'), Series 1990 (the "Bonds"). p tal Improvement Bonds, 2. The Indenture has been fully executed and delivered on behalf of the Bank as Trustee by Robert P. Plummer and Mary Ella Earle, Senior Vice President and Assistant Trust Officer, respectively, of the Bank. 3. The Bonds in the full authorized amount, numbered R-1 upwards, have been duly authenticated on behalf of the Bank as Bond Registrar by the signing and dating as of October 18, 1990, of the Certificate of Authentication on each of the Bonds by G.E. Cooper, Vice President of the Bank. 4. The following is the specimen officers: Name Robert P. Plummer Mary Ella Earle G.E. Cooper each of the above -named 5. The above named officers of the Bank were at the times of the acts above - mentioned duly elected or appointed, qualified and acting, and duly authorized to perform such acts. 6. The Bank is a banking association duly organized, validly existing and in good standing under the laws of the State of Arkansas, and the Bank has all requisite power and authority to enter into the Indenture and to carry out its obligations as Trustee and Bond Registrar thereunder. The nk hereby gegistrar under the Indenture accepts the duties imposed Up on it as Bond WITNESS my hand and the seal of McIlro Trust, as of the 18th day of October 1990. y Bank & (SEAL) 2 --�S►•+ [, ate--._ President CERTIFICATE OF DELIVERY AND PAYMENT I, Mary Ella Earle, Assistant Trust Officer of & Trust, of Fayetteville, Arkansas (the "Trustee'f)MclDO o CERTIFY: Y Bank HEREBY 1. City of Fayetteville ImprovemenC Bonds, Series 1990 Arkansas, Sales inand Use of $33,019,000, dated as of October the aggregate Tax Capital 1990 principal amounregi stered bonds in the denominations o15f $5 , consistin,000 and g of fully- thereof, except for one bond in the denomination of multiples numbered R-1 upwards, maturing on November 15 °f $4,000, years and amounts, and bearing interest in the following fifteenth days of May and November, semiannually on the ycommencin follows:g on May 15, 1991, as Year of Principal Maturity A mo_ unt 1991 $ 824,000 1992 1,065,000 1993 1,130,000 1994 1,205,000 1995 1,280,000 1996 1,360,000 1997 1,450,000 1998 1, 545, 000 1999 1, 650, 000 2000 1,765,000 2001 1,890,000 2002 2,020,000 2005 6,985,000 2008 8,850,000 Interest Rate 6.00% 6.10 6.20 6.30 6.40 6.50 6.60 6.70 6.80 6.90 7.00 7.05 7.15 7.25 day been ed or UPG thereofl upon payment llofr the opurchase the order of the purchaser accrued interest as follows: price of said bonds and Gross bond proceeds ,,,,.•. Less discount ................ $33,019,000.00 442,455.00 plus interestaccrued d 1990 to the date of said bonds..,.,,,.•.paent•for Total amount 18 977.19 received upon delivery of said bonds... " " " " '••••• $32,595,522.19 2. The total amount received with respect to said bonds has been applied as follows: rant Insurance Company f $537,308.57 has been paid to Capital y P y as the insurance premium with respect said bonds. (b) The sum of $18,977.19, being the accrued interest n said bonds, has been deposited to the credit of the Bond Service ccount created under the Trust Indenture, dated as of October 15, 990, between the Trustee and the City of Fayetteville, Arkansas the "Indenture"), to be held therein for payment of the first aterest due on said bonds on May 15, 1991. (c) The sum of $3,301,900.00, being equal to the Reserve :count Requirement, as defined in the Indenture, has been ?posited to the credit of the Reserve Account created under the identure for the purposes stated in the Indenture. (d) The sum of $140,548.43 has been deposited to the edit of the Construction Fund created under the Indenture for plication to the payment of certain expenses of issuing said nds. (e) The sum of $28,596,788.00 has been deposited to the it of the Construction Fund to be used to pay the cost of the ovements, as defined in the Indenture. WITNESS my hand as of the 18th day of October 1990. fL As taut Trust Officer 2 UNDERWRITER'S RECEIPT FOR THE SERIES 1990 BONDS The undersigned, as the Unde Agreement, dated September writer named lfl Fayetteville, Arkansas (the "City" 1990, between the Bond Purchase acknowledges receipt from the Cityy ) and such UnderwriterCity of Tax Capital Improvement Bonds, Series of its $3dated ct Sales hereby consisting of fully -registered bonds 11990,fl dated 15and Use 1990, whole f multiples therred eof, except for one bond in theof $5 000 and following years andupwards, maturing on Novemb denomination the semiannually on the fifteenthamounts and bearing interest Payable an l on May 15, 1991, as follows; days of May and NovembeYcommencing Year of Prink ci a Maturity Amo Interest 1991 $ Ra_ 1992 824,000 1993 1,065,000 6.00$ 1994 1,130,000 6.10 1995 1,205,000 6.20 1996 6 1,280,000 6.30 1997 1,360,000 6.40 1998 1,450,000 6.50 1999 1,545,000 6.60 1,650,000 6.70 21999 1,765,000 6.80 2001 1,890,000 6.90 2002 2,020,000 7.00 2005 6,985 000 7.05 2008 8,850,000 7.15 7.25 The undersigned hereby certifies that the above -referenced were registered in the names previously requested by the igned. Executed this 18th day of October 1990. Llama Company nnnn By: aU iM I/Y Title: J. • f/, ,, Standard & Poor's Corporation Bond Insurance Administration I' 25 Broadway New York. New York 10004 Telephone 212/208-1740 14h Fax 212/208.8262 October 16, 1990 Ms, Nancy J. McGee Vice president and Treasurer capital Guaranty Insurance y Steuart Tower - 22nd Floor one Market Plaza San Francisco, California 94105-1413 Re; 33 019 000 Fa etteville Ci of Tax ital rovement bonds Series 19kWL and IIse 15 1990 Serial Bonds duet November 15 1990 dated:- NovJer 1 2002 Term Bonds due: November 15 2005 2008, (POLICY #90-0101-Oalu �c� and November 15 'vet pursuant to your request for a Standard & Poor's rating on the subject obligations, we have reviewed the information suinautted and have assigned a rating of "AAA". This reflects our assessment of the likelihood of repayment of principal and interest based on the bond insurance policy your canpany is providing. Rating adjustments may result from changes in the financial position of your couPany or fran alterations in documents governing the issue. With respect to the latter, please notify us of any changes or amendments over the tern of the issue. When using this Standard & Poor's rating, include S&P's definition of the rating together with a statement that this may be changed, suspended or withdrawn as a result of changes in, or unavailability of, information. This rating is not a "market rating", because it is not a recommendation to buy, hold or sell the obligations. Please remember that couplete domimentation relatixg to this issue must be submitted no later than 90 days after the date of this letter. If you have any questions, please contact us. V trt11�� 21 u 24 N9oadY Investors service 99 Church Street, New York, N.Y, 10007 August Z1, 1990 Mr. Scott C. Linebaugh City Manager City of Fayetteville 113 West Mountain Fayetteville, Arkansas 72701 Dear Mr. Linebaugh We wish to inform you that our Rating Committee has the rating of a to the $33,015,000 Fayetteville Sales August assigned Tax Capital Improvement Bonds, Arkansas to be sold and 99 T 22, 1 1990. In order that we may maintain the currency of this rating over :hther e period of the loan, we will require current financial and ooperationiin theofuturen. We will appreciate your continued We will appreciate receiving a copy of the Official Statement hen available. Should you have any questions regarding the above, please do )t hesitate to contact Leonard Reininger at (212) 553-7758. Sincerely yours, Daniel N. Heimowitz Executive Vice President/ Director Public Finance Department cqj M. David Hausman Llama Company One Mcllroy Plaza, Suite 302 Fayetteville, Arkansas 72701 .2.2 23 .24 Nancy B. Cherney PIf:5 October 18, 1990 City of Fayetteville City Hall 113 West Mountain Fayetteville, AR 72701 Brown & Wood One World Trade Center New York, NY 10048 Mcilroy Bank & Trust One Mcllroy Plaza, Box 1327 Fayetteville, AR 72702 caPi ��aRaNTv Llama Company One Mcllroy Plaza, Suite 302 Fayetteville, AR 72701 Rose Law Firm a Professional Association 120 East Fourth Street Little Rock, AR 72201 $33,019,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 1990 Dated Date: October 15, 1990 Financial Guaranty Bond Number: 90-0101-08AK1-15 (the "Obligations") Ladies and Gentlemen: I am the General Counsel of Capital Guaranty Insurance Company, a stock insurance company incorporated in the State of Maryland ("Capital Guaranty") and, as such, am familiar with the corporate affairs of Capital Guaranty. In connection with the issuance by Capital Guaranty on the date hereof of a certain financial guaranty bond (the "Financial Guaranty Bond") insuring the payment of the principal of and interest on the above - captioned Obligations, I have examined such documents and reviewed such questions of law and procedures as I deemed necessary or appropriate for the purpose of this opinion and, on the basis of such knowledge, examination and review, you are advised that in my opinion: (1) Capital Guaranty has been duly incorporated and is validly existing and in good standing under the laws of the State of Maryland. (2) The Financial Guaranty Bond was issued in the ordinary course of business and constitutes the legal, valid and binding obligation of Capital Guaranty enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization, rehabilitation and other similar laws of general applicability relating to or affecting creditors' and/or claimants' rights against insurance companies and to general equity principles. 23 24 rt: e� October 18, 1990 page 2 (3) The Statements contained i September 13, 1990 for thenOble Official Statement dated "FINANCIAL GUARANTY BOND" 9ations under the FINANCIAL GUARANTY BOON" and in Exhibitcaption constitute summari , insofar as A entitled "FORM OF accurately Summarreflectes of the matterssuch statements purported to be fairly referred to therein, shown and, Present the to describe Ca and, insofar information Capital Guaranty, fairlas such statements purport Capital Guaranty. This opinion Y and accurately or financial data Thipdoes not refer to any yenumbee Concerning Capital Guaranty. numbers Capital Guaranty is organized under the laws of the State of Maryland. I am admitted to practice law in the State hold myself out as expert in, generally of California and do not express legal conclusions as to the any lawsfOflar with, or qualified xcto the matters expressly set forth in iother state, except for the foregoing Opinion. This opinion is intended solely for your benefit and is not to be relied upon by any person other than you without m consent. y prior written Very truly yours, Nancy B. Cherney 1 " Vice President and General Counsel 23 24 TTENILLE �M F. ARKANSAS EXHIBIT C October 18, 1990 JERRY E. ROSE CITY ATTORNEY Mcllroy Bank & Trust, Capital Guaranty sTrustee and Bond Registrar Company One Mcllroy Plaza Insurance Steuart Tower, 22nd Floor Box 1327 One Market Plaza Fayetteville, AR 72702 San Francisco, CA 94104-1413 Board of Directors of the City of Fayetteville, Arkansas City Hall, 113 West Mountain Fayetteville, Arkansas 72701 Llama Company One Mcllroy Plaza, Suite 302 Fayetteville, Arkansas 72701 Brown & Wood One World Trade Center New York, New York 10048 Ladies and Gentlemen: Rose Law Firm, a Professional Association 120 East Fourth Street Little Rock, Arkansas 72201 Friday, Eldredge & Clarke 2000 First Commercial Building Little Rock, Arkansas, 72201 I am City Attorney for the City of Fayetteville, Arkansas the "City"), and have acted in that capacity in connection with he issuance and sale by the City of its $33,019,00 Sales and Use ax Capital Improvement Bonds, Series 1990 (the "Bonds"), which onds are being sold pursuant to a Bond Purchase Agreement dated aptember 13, 1990 (the "Bond Purchase Agreement"), between Llama ompany (the "Underwriter") and the City. The terms defined in ie Bond Purchase Agreement are used in this letter with the caning assigned to them in the Bond Purchase Agreement. In this connection, I have reviewed certain documents with spect to the Bonds, and such records, certificates and other cuments as I have considered necessary or appropriate for the rposes of this opinion, including the Ordinance adopted by the ty on October 4, 1988 (the "Levying Ordinance"), the Ordinance opted by the City on April 17, 1990 (the "Election Ordinance") d the Ordinance adopted by the City on September 13, 1990 (the uthorizing Ordinance"), the Trust Indenture dated as of October , 1990 (the "Indenture"), between the City and Mcllroy Bank & � mot 501.5754313 October 18, 1990 page Two Trust, in Fayetteville, Statement dated September 7, thePreliminaryPreliminary Official Statement daed September f13, 199o, with respect etofthe lBonndsicial (collectively,the certificate of the City."Statement"), and a closing considerations of law andfactBasedas i such review and such other of the opinion that: believe to be relevant, I am 1. The City has been existing as a city of the first classand formed and is validly the State of Arkansas with full Political subdivision of Levying Ordinance, Election Power and authority to adopt the Ordinance and the Authorizing nt Ordinance, each of which wereduly passed b execute and deliver the Bonds, they the Board fc l Statement and the Bond Purchase AgreementIndenture, and the Official 2. he Ordinance and The adoptioninof the Levying Ordinance, Election g Ordinance, the issuance of -the Bonds, the execution and delivery of the Indenture and the Bond Purchase Agreement, and the performance of the City`s obligations thereunder do not and will not result in a violation of any provision of, or in default under, any other ordinance or any other agreement or instrument to which the City is a party or by which it or its properties are bound. 3. Excepting those matters discussed in the Official Statement, the City is not in violation of any provision of any agreement or instrument the violation of or default under which would materially and adversely affect the business, properties, assets, liabilities or condition (financial or other) of the City. 4. Excepting those matters discussed in the Official Statement, there is no legal or governmental actions, proceedings, inquiries or investigations pending or threatened by governmental authorities or to which the City is a party or to which any property of the City is subject which, if determined adversely, would individually or in the aggregate (i) materially and adversely affect the validity or the enforceability of the Bonds, :he Indenture or the Bond Purchase Agreement, (ii) otherwise aaterially and adversely affect the ability of the City to comply 'ith its obligations on the Bonds or under the Authorizing )rdinance, the Indenture or the Bond Purchase Agreement, or (iii) aaterially and adversely affect the transactions contemplated by :he Official Statement to be engaged in by the City. 5. The aggregate amount which may ted to be recovered in litigation pending st the City does not appear to be material to taking into account insurance coverage. reasonably be or threatened the Owners of ^^wwe P std f October 18, 1990 Page Three 6 6. I have reviewed and contained in the Official Statement and nothing the information attention which leads me to believe thatthe nothing has come to my contains any untrue statement of a material fact 0orlomits stotstate a material fact necessary in order therein not misleading. I express to make the statements made included �in� the Official Statement opinion as to information EXEMPTION UNDERWRITING", and tementCIALunder the captions r Ax in Appendices A and B thereto. GUARANTY BOND" or in I hereby consent to the reference made to me in the Official Statement. Very trul you J rry E. Rose JER/cbp FRIDAY, FLDRTDC73 K CLARIi A PARTNERSHIP OF INDIVIDUALS 'p .A. AND PROFESSIONAL AS50 CIA710N5 ATTORNEYS I[ONr P. A. A. AT LAW 2000 FIRST CO MEN THO-A5 MICHAEL [ Jp„v, BUILDING 400 WEST CAPITOL S. MOORE DIANE g, -ACnEY ALT[R -. EBEL 11 P LITTLE ROCKARK . ARKANSAS 72201.3493 . ,A. nEv1IA. C WADOCLL, cLYGE P.A. TELEP E NON 'MA. CALVIN J.LH ALL ALL RN[R ,,SCRr, P.A. . SCOTT J. LANCASTER [, P.A. 501-376.20I1 JERRY L. -ALONE M. GAYLE 1.JP. Iy Jp•r CARL EY P'A' SORANOOLPH LOONEr .LTTr ipON. V. A' October 18, 1990 J• NEE BROWN A ES R. P.A.a. LEES SSR. H. CHARLES GSCHWENO, I.IP.A. BET,. P.A. N RRY A, LIGHT SCOTT H UCnEN NA RRIS, IA. JOHN CLAYTON R ,OOLPH MARYI. WIb CMAN ALTO, fLCTT, P.A. AOE PRICE C. GAaON ER Mg5E MEE KS N,P'A' SSCLL III JHM CMAEL PICKENS P.A. •ON U. P. SON U. O.A. WILLIAM J9 SMITH I, P.A. OR. P. A. WILLIAM A. CLORE OG E, JR., WILLIAM L P. ,-..___ •TERRY BBEN, P.A. CLLCP, P.A. SNITN, P.A. TELECOPIER 15011 376'636R Board of Directors of the City of Fayetteville, Arkansas City Hall, 113 West Mountain Fayetteville, Arkansas 72701 Mcllroy Bank & Trust, as Trustee and Bond Registrar One Mcllroy Plaza, Box 1327 Fayetteville, Arkansas 72072 Llama Company One Mcllroy Plaza, Suite 302 Fayetteville, Arkansas 72701 Capital Guaranty Insurance Company Steuart Tower - 22nd Floor One Market Plaza San Francisco, CA 94105-1413 Brown & Wood One World Trade Center 59th Floor New York, New York 10048 Rose Law Firm, a Professional Association 120 East Fourth Street Little Rock, Arkansas 72701 Re: $33,019,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 1990 Ladies and Gentlemen: We have acted as counsel to Mcllroy Bank & Trust (the "Bank") i connection with the issuance and sale by the City of yetteville, Arkansas (the "City") of its $33,019,000 Sales and e Capital Improvement Bonds, Series 1990, dated October 15, 1990 he "Bonds"), pursuant to a Trust Indenture, dated as of October , 1990 (the "Indenture"), between the City and the Bank as ustee (the "Trustee") and with respect to which the Bank is also ting as bond registrar (the "Bond Registrar"). We have examined e Indenture and such other documents, agreements and instruments, d considered such matters of laws, as we deemed necessary in nnection with the following opinion. On the basis of the foregoing we are of the opinion that: 1, The Bank has been duly or and in good standing under the ganized and is validly laws s power and authority to act as Trust of the State of Arkansaswith benefor the it of the owners of the and Bond Regite Indenture, to execute and deliver nds pursuant to the sterms the the transactions contemplated thereby Bonds and to consummate 2. The Indenture has been duly ree of the delivered by the Bank and constitutes a authorized, executed and Bank enforceable in enforcement thereof accordance with its terms, exceg pt to the extent that y be limited by bankruptcy, at enncy or other laws affecting or h b enforcement lof bcreditors' hts from time to time provided that this opinion is given in reliance upon principles opinion and Brown & Wood of even date herewith that the tur the obeen d of y executed and delivered by the City, Indenture has been duly Yours very truly, FRIDAY, ELDREDGE & CLARK JSR/nkf y55 CALIFORNIA STREET San FRANCISCO. CA. 941 OA T CLEFNONE' A 15-398.3909 FAC51 MILE' 415.397-462 , IC900WIL5HIRE BOULEVARD L05 ANGELES. CA. 90024 IEtEONON E. 213208. A 3 4 3 FACSIMILE. 213 208-5740 BROWN & W000 0 0 ONE WORLD TRADE CENTER NEW YORK. N.Y. 10048 TELEPHONE 212.8395300 FACSIMILE' 212839 5599 Mcllroy Bank & Trust, as Trustee and Bond Registrar One Mcllroy Plaza, Box 1327 Fayetteville, Arkansas 72702 Board of Directors of the City of Fayetteville, Arkansas City Hall, 113 West Mountain Fayetteville, Arkansas 72701 Llama Company One Mcllroy Plaza, Suite 302 Fayetteville, Arkansas 72701 Ladies and Gentlemen: 815 CONNECTICUT AVENUE.N.W. WASHINGTON. D.(. 2ODO6 TELEPHONE. 202.2230220 FACSIMILE' 202.223-0485 BLACKWELL HOUSE GUILDHALL YARD LONDON EC2V SAD TELEPHONE 071-606 1888 FACSIMILE O71 796- IBO7 October 18, 1990 Capital Guaranty Insurance Company Steuart Tower - 22nd Floor 0 ne Market Plaza San Francisco, CA 94105-1413 Rose Law Firm, a Professional Association 120 East Fourth Street Little Rock, Arkansas 72701 Friday, Eldredge & Clarke 2000 First Commercial Bldg. Little Rock, Arkansas 72201 We have examined a certified copy of proceedings of the City of Fayetteville, Arkansas (the "City"), and other documents pertaining to the issuance by the City of its $33,019,000 aggregate principal amount of Sales and Use Tax Capital Improvement Bonds, Series 1990 (the "Bonds"). The Bonds are being issued for the purpose of providing funds, with any other available funds, to pay the costs of acquiring, constructing, reconstructing, improving, renovating, expanding and equipping certain capital improvements within the City (the "Improve- ments"), to fund a debt service reserve and to pay certain costs )f issuance of the Bonds. The Bonds are issued under the authority of Amendment 62 to Constitution of the State of Arkansas, as implemented by the al Government Bond Act of 1985 (the "Act"), pursuant to inance No. 3506 passed by the Board of Directors of the City September 13, 1990 (the "Authorizing Ordinance"), and a Trust enture, dated as of October 15, 1990 (the "Indenture"), between the City and Mcllroy Bank & Arkansas, as trustee (the "Trustee', Trust, of Fayetteville Subchapter 2 of Chapter 75 of )' In accordance Annotated, as amended, the Cityhase 26 of the one perceito(1 local sales and use tax levied lo. 3sa passed by the tBoard "Sales Tax")dpursuante to Ordinance (1$) 1988 (the deb in of Directors tCity Ofl 4, at which "Levying Ordinance) and Specialelectionheldonmajority of the8qualifiedSales Tax Wasapprovedby a electors dof the City voting thereon. In accordance with the Act pursuant Ordinance Tax and tpursuant City has o ledthe edtreceiptgreceiptfrom (the "Tax Receipts) in amounts sufficient to the Salesged provide for debt service on the Bonds service reserve. The Bonds and to yaanlien a debt are security interest in the not secured by a lien on or Improvements or the revenues thereof. The issuance of the Bonds and the pledge of the Tax Receipts has been approved by a majority of the qualified electors of the City voting nthereondataacsspec3480ial election held on May 29, 1990, of the City on April nc 17 passed by the Board of Directors 1990 (the "Election Ordinance"). The Bonds are being issued in fully denominations of $5,000 or integral multiples sthereof, ter form cn one Bond in the denomination of $4,000. The Bonds are dated for October 15, 1990 and mature on November 15, in the years 1991 to 2002, inclusive, and on November 15, 2005 and November 15, 2008. Interest is payable on the Bonds from their date semiannually on each May 15 and November 15, commencing on May 15, 1991, by check or draft mailed by the Trustee to the registered owners thereof. The Bonds are subject to redemption prior to maturity as set forth in the Authorizing Ordinance, the Indenture and the Bonds. Based on the above, we are of the opinion, under existing law, that: 1. The City is duly created and validly existing as a city of the first class of the State of Arkansas, with the power to pass the Levying Ordinance, the Election Ordinance and the Authorizing Ordinance, to execute and deliver the Indenture, to perform the agreements on its part contained in the Indenture and to issue the Bonds, provided that our opinion that the City is July created and validly existing as a city of the first class of the State of Arkansas is given in reliance upon the opinion of Terry Rose, Esq., City Attorney, of even date herewith to such ?ffect. 2. The Bonds have been duly authorized and issued by the ty and are valid and binding special obligations of the City forceable in accordance with their terms. 3. The Bonds are secured portion of the Tax Receipts as Ordinance and the Indenture. by an irrevocable pledge of provided in the Authorizing 4. The Indenture has the City to the Trustee and been duly executed accordance with its is legally binding and enforceableyin reliance upon the Opinion terms,ofrFriday that this opinion is given in Indenture has been duly executed and Eldredge and Clark that the delivered by the T 5. Under existing Trustee decisions and r assuming co statutes, regulations and court mpliance by the City with certain covenants and requiremeno as amended (the "Code") °f the lnternal Revenue Code of 1986, regardingUse, expenditure and investment of Bond proceeds and the timely payment of certain investment earnings to the United States Treasu on the Bonds is not includable in the gross income of the owners of the Bonds for rye the interest purposes of federal income taxation. Interest on the Bonds will not be treated as a preference item in calculating alternative minimum taxable income of individuals; however, interest on the Series 1990 Bonds will be included in the calculation of the alternative minimum tax and environmental tax liabilities of corporations. The Code contains other provisions that could result in tax consequences, upon which we render no opinion, as a result of ownership of the Bonds or the inclusion in certain computations (including, without limitation, those related to the corporate alternative minimum tax and environmental tax) of interest that is excluded from gross income. 6. Under existing law, the Bonds and interest thereon are exempt from all state, county and municipal taxes in the State of Arkansas. 7. Nothing has come to our attention which would lead us :o believe that the information in the Official Statement under he captions "Introductory Statement", "The Series 1990 Bonds", Security for the Series 1990 Bonds" (except for the information nder the heading "Historical Sales and Use Tax Revenues" under he subcaption "Sales and Use Tax" under the caption "Security or the Series 1990 Bonds"), "Certain Definitions", "Summary of ortions of the Indenture" and "Tax Exemption" contains an untrue tatement of a material fact required to be stated therein or acessary to make the statements therein, in light of the ircumstances in which they were made, not misleading. With regard to matters expressed in this opinion, please be wised that the rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture bankruptcy, insolvency, reorganizationmay be sub' g creditors ri n, moratorium and other to similar laws affecting ' g � herfore enforcementenacted to tmay he ealso tbeosubjectitoa11 applicable andrthatetheir uc'set the exercise of discretion in appropriate cases, their judicial Respectfully submitted, 555 CALIrORNIA 5TRCET 5,N CRANC.5Co. CA. 9.10. T[L[PHONC •15.390.3909 IACSIH ILE 415.397-.621 IC900,'ILSHIRE BOULEVARD 505 ANGELES. CA. 9002. T [LCPHONC 21 J-208-.3.3 ,,C5I�ILC 213 2085 70 BROWN & WOOD ONE WORLD TRADE CENTER NEW YOR,. N.Y. 10048 TELEPHONE 212.839.5300 i'ACSIH ILC. 212.839 5599 October 18, 1990 Board of Directors of the city of Fayetteville, Arkansas Ladies and Gentlemen: 815 CONNECTICUT AVCNUC.N. A. L'+A5HIN G10 N, D.C. 20006 TELEPHONE 20?•2230220 rACSIMILE 202.223-o.e5 BLA'CKWCLL HOUSE GUILDHALL YARD LONDON EC2V 5AB 1 CLEPHONE 071.606 Iaaa rAC51MILE 071 796 '807 We have examined certified copies of the legal proceedings including Ordinance No. 3381 passed by the Board of Directors of the City of Fayetteville, Arkansas (the "City") on October 4, 1988, Ordinance No. 3480 passed by the Board of Directors of the City on April 19, 1990 and Ordinance No. 3506 passed by the Board of Directors on September 13, 1990 (collectively the "Ordin- ances"), an executed copy of a Trust Indenture, dated as of October 15, 1990, securing the bonds hereinafter described (the "Indenture") between the City and Mcllroy Bank & Trust, as trustee (the "Trustee"), and certain other proofs submitted relative to the authorization and issuance of the following described bonds (herein called the "Series 1990 Bonds"): $33,019,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 1990 Dated October 15, 1990 From such examination we are of the opinion that: 1. The Ordinances, the Indenture and such other proofs show lawful authority for the authorization and issuance of the Series 1990 Bonds pursuant to the Constitution and other laws of the State of Arkansas and particularly Amendment 62 to the Constitution of the State of Arkansas and the Local Government Bond Act of 1985 for the purpose of providing funds, with any other available funds, to pay the Cost of the Improvements (as each such term is defined in the Indenture), to fund the Reserve Account (as defined in the Indenture) and to pay certain costs of issuing the Series 1990 Bonds. 2. The Series 1990 special obTh aSerie of 90 Bonds are valid and binding P g with their terms, payable as toy enforceable nin accordance premium, if any, and interest solelncipal, redemption pledge of the Sales and Use lely from and secured by a Indenture) to the extentTax Revenues (as defined in the and in the manner provided in the Ordinances and the Indenture. The principal of and redemredemptionaprmi a m, if any, and interest on the Series 1990 Bonds mayeas on the Sdnasnprovided in the Indenture from Fund, received from the investment thereof, and including ancertain act Fund or from a Credit Facility the Construction on in the Indenture). (as each such term is defined 3. The faith and credit of the City are not pledged to the payment of such principal of and redemption premium, if any, and interest on the Series 1990 Bonds. The issuance of the Series 1990 Bonds shall not directly or indirectly or contingently obligate the City to levy or to pledge any taxes whatsoever or to make any appropriation for the payment of such principal, premium and interest except as provided in the Ordinances and the Indenture with respect to the Sales and Use Tax Revenues. 4. Under existing statutes, regulations and court decisions and assuming compliance by the City with certain covenants and requirements of the Internal Revenue Code of 1986, as amended (the "Code"), regarding use, expenditures and investment of Series 1990 Bond proceeds and the timely payment of certain investment earnings to the United States Treasury, the interest on the Series 1990 Bonds is not includable in the gross income of the owners of the Series 1990 Bonds for purposes of federal income taxation and, under existing law, the Series 1990 Bonds and the interest thereon are exempt from all state, county and municipal taxes in the State of Arkansas. Interest on the Series 1990 Bonds will not be treated as a preference item in calculating alternative minimum taxable income of individuals; however, interest on the Series 1990 Bonds will be included in the calculation of the alternative minimum tax and environmental tax liabilities of corporations. The Code contains other provisions that could result in tax consequences, upon which we render no opinion, as a result of ownership of the Series 1990 Bonds or the inclusion in certain computations (including, without limitation, those related to the corporate alternative minimum tax and environmental tax) of interest that is excluded from gross income. The enforceability of the bankruptcy, insolvency, othermoratoriumlandes 1o0 Bonds is Subject to creditors' rights generally and to laws (reg ardless of whether said enforceabilitl principleseofiequity proceeding in equity or at law) y is considered in a Respectfully submitted, BROWN & WOOD ONE WORLD TRgDE CENTER 555 CALIFORNIA STREET 5AN,,ANCISCO. CA. 94104 NEW YORK, N.Y. 1 °p T[LE"HONE:415.398-3909 TELEPHON 48 FACSIMILE 415-397-4621 FACSIMILE. E'212-839.5300 212.839.5599 jp9GOWILEMIRE BOULEVARD LOSANGELE5. CA. 90024 ;[LE"H ONE 213.208-4343 FACSIMILE. 213-208-5740 October 18, 1990 Capital Guaranty Insurance Company Steuart Tower - 22nd Floor one Market Plaza San Francisco, CA 94105-1413 815 CONNECTICUT AVENUE.N.W. WASHINGTON• D.C. 20006 TELEPHONE 202-223.0220 FACSIMILE 202.223-0485 BLACKWELL HOUSE GUILDHALL YARD LONDON EC2V SAP TELEPHONED? I6O6. ELEPHONE071606. I BBB FACSI M I L E: 07 We hereby advise you that you may rely on our approving legal opinion addressed to the Board Of Directors of the City of Fayetteville, Arkansas and dated today concerning the $33,019,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 1990, dated October 15, 1990, as if such opinion were addressed to you. Ti! Tti ROSE LAW FIRM RROLL ,HILLIP EARROLL A PROFESSIONAL A SSOCIATI ELL If(C GEC 10"ERT C. RULE ID ON ATTORNEYS SARAH HOOD TEED .W WILSON JONES FOSTER, JR. 120 EAST FOURTH STREET LITTLE ROCK, STEPHEN N. JOINER JAMES H. GRUFF VINCENT ", L• HUBBEL ARK ANSAS 722OI.2893 JAY F. SHELL GORDON WL AIICN W, BIRD B E• BISHOP TELEPHONE NONE 1501) 375.9131 H. W1 JESS ASKEW, BOURN WILLIAM HILLARY RODHAM CLINTON BUCK TELECOPIER 1501137 5-1309 AMY LEE STEWART DAVID A. SMITH C RpANTLY 11M B0E CEN U. M. ROSE T. CRAIG JONES J. SCOTT SCHALLHORN M, JIAM I4 W1llIAM H. MSHEMIN, III R. SHEMIN 1834.1913 MICHAEL D, BOOKER JOHN T. HARDIN NENNETH M. CLARK LGASH BRIAN ROSENTHAL RCNALD wNLANO J. C, JONES October STEVEN D. DURAND JEFFREY J. GEARHART JAMES JLNRY THOMAS P• THRASH 18, 1990 L. HARRIS MARK ALAN PEOPLES EN,)pLES W BAKER LLIAMS PATRICIA J. HERITAGE SAMMI E P. STRANGE, JACN50N FARROW JR. l,,, SALEDGE WRITER'S DIRECT DIAL NO. JR JAMES M. GARY CLAY H. DAVIS JIM HUNTER BIRCH N1YIN R• BURNS JOHN A. BRYANT FRANKLIN H. FAUST RICHARD T. OONOVAN N. MASSEY ROBERT CRAIG HANNAH FART N. SPEED g. J. GASTON WILLIAMSON OF COUNSEL Llama Company Capital Guarant One Mcllroy Plaza, Suite 302 Y Insurance Company Fayetteville, Arkansas Steuart Tower -22nd Floor One Market Plaza San Francisco, California Re: $33,019,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 1990 Ladies and Gentlemen: This opinion is delivered to you in connection with the issuance and sale by the City of Fayetteville, Arkansas (the "City") of the referenced bonds (the "Bonds"). Undefined terms used in this opinion shall have the meaning assigned to them in the Bond Purchase Agreement, dated September 13, 1990 (the "Bond Purchase Agreement"), between the City and Llama Company (the "Underwriter"). We have acted as counsel to the Underwriter in connection with the issuance and sale of the Bonds, and in that capacity have examined executed counterparts of the Bond Purchase Agreement and the Trust Indenture. We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such other documents, records and instruments as we have deemed necessary or advisable for purposes of this )pinion. In connection with the preparation of the Official tatement, dated September 13, 1990 (the "Official Statement"), e have generally reviewed information furnished to us by, and ave participated in conferences with, representatives of the ssuer, Jerry Rose, counsel to the City (the "City Attorney"), October 18, 1990 Page Two and Brown & Wood, bond counsel Bond this opinion, we have also Counsel" the authorization, issuance an-eVd other records ) ieweed ofrelied, with your consent, Upon of the Bonds relating to including officials of the City,acertificates of offaniciahav lse upon written Opinions letters, Attorney includinandgopinions and letters received and the CityCounsel, from the City, Based upon our review and discussions of our representation course undertaken in the and reliance upon of the information contained in the an the accuracy written opinions and letters, aforementioned certificates, nothing has which leads us to believe thatcome to our attention statement under the the in the Official caption "UNDERWRITING" contains statement of a material fact WI" any untrue or omits to state a material necessary in order to make the statements fact �- made therein, of the circumstances in which they were made, not misleading. Very truly yours, tz r t/L"l / ki4J //Jic.Z; f�-4 CAPITAL GUARANTY NS NCE COMPANY FINANCIAL GUA QTY BOND ISSUER: City of Fayetteville, Arkansas BOND NUMBER• • 90-0101-OBAK1-15 : Bonds, rSales Series1990 ISSUEand Use Tax Capital Improvement GUARANTIED MATURITIES: Serial Bonds throu h maturing November 15, 1990 9 November 1, 2002, Term Bonds maturing November 15, 2005 and November 15, 2008 DATED DATE: October 15, 1990 Capital Guaranty Insurance Company under the laws of Maryland, inconsideration„)' a corporation organized directed to be paid and subject to the terms of the pBodum paid or of unconditionally and irrevocably , this pay, hereby to McIlroy Bank & Trust, in Fagees yettgrees as surety, to pay the OBLIGATION its successor as Paying Agent for the lOWNERSkansas ("Paying Agent"), or Capital will make such payment through one of its DISBURSING AGENTS on the date such principal or interest becomes Due for Payment, or on the Business Day next following the day' on which NOTICE OF NONPAYMENT is received, whichever is later. DISBURSING AGENT will disburse to the Paying Agent the amount of the OBLIGATION which is then DUE FOR PAYMENT but is unpaid by reason of such NONPAYMENT but only upon receipt by DISBURSING AGENT, in a form reasonably satisfactory to it, of (i) evidence of the OWNER'S right to receive such payment, and (ii) evidence, including any appropriate instruments of assignment, that all of the OWNER'S rights to such payment shall thereupon vest in Capital. Upon such disbursement, Capital shall become the OWNER of that portion of the OBLIGATION as paid, including any appurtenant coupon or right to payment of principal or interest on such OBLIGATION and shall be fully subrogated to the OWNER'S right to payment thereof. In addition, Capital has the rights of a surety as to reimbursement from the ISSUER (or other obligor responsible for payment of the OBLIGATION) as principal. By its acceptance of this Financial Guaranty Bond, the holder hereof agrees on behalf of the OWNER that upon payment by Capital of the OBLIGATION, Capital shall be fully subrogated to all of OWNER'S right, title and interest in the OBLIGATION including, but not limited to, the right to commence and pursue legal proceedings in respect of the OBLIGATION and to direct any Bond Trustee under an Indenture securing the OBLIGATION or similar agent notwithstanding that Payments of the OBLIGATION may become due in the future or may be guarantied by others. This Bond is not cancellable for any is not refundable for any reaso reason aOBLIGATIONmprior to its tsum wmaturity. 1ThisdBonding tdoes not ins on this Bond of the prior to its maturity as be Paid upon does not insure a resultpayment (a) that or (b) that any amountreceivedof °Ptianal em the OBLIGATION is or will remain exempt t are to be received epon or a tax cIONl, any compensatory Pt fromupon the OBLIGATION will °r Federal determination of tta ability, be made toOWNER asxatresultrofca that DEFINITIONS: As used herein, the term: (i) "BUSINESSDAY" means for bESne. any day on which Disbursing Agent is open (ii) "DISBURSING AGENTr, means a bank by Capital, or a successor Disbursing trust company selected ce and remit funds on behalf of CapitalDisbursing, g to receive (iii) "DUE FOR PAYMENT" means, ODUEgFORoP, EN stmead when referring to the principal of the which the same shall havetbeenYdSlte thereof or the date on fund redemption and does not refer3'toayd for mandatory payment is due by any earlier date onwhich acceleration by reason of any other call for redemption, acceleration maturity. reason of default, or other advancement of When referring to interest on the Obligation, "Due for Payment" means the stated date for payment of interest. Principal and interest ipalr recovered tfrom any paid by the Paying Agent, but made rto a final Owner to whom such payment was pursuant jurisdiction ajudgment by any court of competent holding that such payment constituted a voidable preference within the meaning of any applicable bankruptcy law ("Preferential Payments"), shall be deemed Due for Payment hereunder upon receipt by Disbursing Agent of evidence of recovery of such funds from the Owner. (iv) "NONPAYMENT" means the failure of the Issuer (or other obligor responsible for payment of the Obligations) to have provided to the Paying Agent funds sufficient to pay all principal and interest on the Obligation which is then Due for Payment. "Nonpayment" also includes Preferential Payments. (v) "NOTICE OF NONPAYMENT" means telephonic or telegraphic notice to Capital, subsequently confirmed in writing, or written notice, in the form of Exhibit A attached hereto, to Capital by registered or certified mail, from an Owner or Paying Agent for the Obligation. Notice to Capital shall be given or addressed to the Claims Officer, Capital Guaranty Insurance Company, Steuart Tower, 22nd Floor, One Market Plaza, San Francisco, California 94105, telephone (415) 995-8000. [3 1 32 (vi) "OBLIGATION" means scheduled to be the payment o f Guarantied Maturities Issue,Princi redemption othereof but Only and merest become Due for Payment thenbrequlredogotberpaith any mandatoryo the Nonpayment. shall be yhrea shall have unpaid by reason of (vii) "OWNER" means, as person who, at the time the Guarantied Maturities of thereon, but does not of Nonpayment, is entitled the the include Issue, agreement mtionto pay funds to or on Issuer or any Personpw whose behalf of the Issuer secures the In Witness Whereof, `capital FinancialfGuarantynyBond to beGusigned by aranty ysitsnde Company has caffc this Guathe date set forth duly authorized officers to below. CAPITAL GUARANTY INSURANCE COMPANY By: Title. �Ymond K. O'Neil xecutive Vice President By: N ncy B. he eye Title: Vice President and Secretary Effective Date: October 18, 1990 Resident Agent Countersignature: Agency: United States Fidelity & Guaranty Company Address: 1 Shackleford Drive P.O. Box 5880 Little Rock, AR 72215 ByI: Dates d ii CA485/9/89 [:i:. L3iLi 32 EXHIBIT A TO CAPITAL GUARANTY FINANCIAL [letterhead of p GUARANTY BOND Paying Agent] NOTICE OF NONP,AyMENT [Date] Capital To: Steuart Tower, lty 22ndFl Insurance Company One Market Plaza oor San Francisco, California 94105 Attention: Claims Officer Telephone: (415) 995-8000 Telecopy: (415) 995-8008 Re: Financial Guaranty Bond Number Issuer: Series: Issue: Guarantied Maturities: Dated Date: Ladies and Gentlemen: All capitalized terms used herein have the same meaning as is set forth in the Financial Guaranty Bond. In accordance with the above -captioned Financial Guaranty Bond, you are hereby notified of a Nonpayment under the referenced Issue. An amount is currently Due for Payment by Issuer but is unpaid, or is expected to be unpaid, by reason of the following Nonpayment: /_/ The principal of the Obligation in the amount of $ is unpaid, or is expected to be unpaid, as of its state— maturity on 19 // The principal of the Obligation in the amount of $ is unpaid, or is expected to be unpaid, as of the date on which it has been duly called for a mandatory sinking fund redemption on 19; // Interest on the Obligation in the amount of $ is unpaid, or is expected to be unpaid, as of the stated date for payment on , 19_; and/or // Principal in the amount of $ and interest in the amount of $ which were previously paid at stated maturity, on mandatory sinking fund redemption or at the stated date for payment, have since been recovered from an Owner to whom such payment was made pursuant to a final judgment by a court of competent jurisdiction holding that such payment constituted a voidable preference within the meaning of any applicable bankruptcy law. iMr NOTICE OF NONPAYMENT [DATE] Page 2 All llmmonies es recreceived edrffrom om you shall be applied payment the captioned Obli sdirectly to the purpose. gationand for no other I have attached hereto a certified co Board of Directors or the applicable Copy of the resolution of the which authorize me to execute this trcvisions of the by-laws notice. Dated: By: Title: CERTIFICATE OF CAPITAL GUARANTY INSURANCE CO MPANY Reference is made to Guaranty Bond dated the date (1) that certain Financial uarad by Capital Guaranty hereof (the "Financial Guaranty Bond") underntheBlawssof Maryland ("Capital Guance rani") corporation organized under y pursuant to i y ), which Financial of and interest on $33,019,000 is terms, pa City of Fayetteville, Arkansas 1n aggregate pnt of the principal Bonds,. dated October 15, A Sales and Use Tax a talImprf Official Statement of the1cityof (the FaObligations") and i(ii)Ithatvicertain September 13, 1990 (the "Official Fayetteville Arkansas dated and sale of the Obligations. Statement"), relating to the issuance Having examined the Financial Guaranty Bond and certain Nancy mJntMcGeeyaSenaornVice President Sandpmreas the undersigned hereby certifies that the statements contained inpr thefOfCaital ficial Guaranty Statement, set forth under the caption "FINANCIAL GUARANTY BOND", in Exhibits A and B and on the cover page of the Official Statement, insofar as such statements relate to Capital Guaranty, accurately and fairly present the information Purported to be shown and, insofar as such statements describe Capital Guaranty and the Financial Guaranty Bond, accurately and fairly describe Capital Guaranty and the Financial Guaranty Bond. IN ,this certificateNasSofHthe 018thhday unofrOctober, 19sined has 90ecuted CAPITAL GUARANTY INSURANCE COMPANY By: Nancy 1qk3ee Title: Senior-y.a President and Treasurer IUi aSY AGREEMENT TO REPORT INFORMATION Cit of $33,019,000 Sales and Use Tax Capital Arkansas pital Improvement Bonds, Series 1990 yes, Fayetteville MaArkansase (theFinan-IssDirector of the City of authorized to execute this agreement. ), certify that I am duly In consideration of the issuance of the Capital Guaranty Insurance Company Financial Guaranty Bond No. 90-0101-Guaran15 forstthe MiIsueyissue titled tled aboveustthe Issuer agrees that it will Indenture between the Issuer andas the Trustee under the Trust October 15, 1990, securing McIlroy Bank & Trust, dated "Indenture"), to file with Capital he issue titled above (the "I the address"),to below, Guaranty Insurance Company ator before 1990, and each month thereafter,a10th Statement in accordanceemwith Section 906 of the Indenture. Such statements shall be sent to: Capital Guaranty Insurance Company Steuart Tower - 22nd Floor One Market Plaza San Francisco, California 94105-1413 Attention: Risk Control CITY OF FAYETTEVILLE, ARKANSAS BY: v Finance Dir c or Signed and Dated: October 18, 1990 ASSIGNMENT CONCERNING FINANCIAL STATEMENTS City of F$33,019,000 yCatevlliArkan-as Sales and Use Tax Capital Improvement Bonds 19 Series 1990 Dated October 15, 1990 I, Kevin Crosson, the Adr"lnistrative Services Director of the City of Fayetteville am duly authorized to execute athis AgrOeemb1igorcertify that I In consideration of the issuance X90-0101-08AKI-15 for the issue titled abFinancial Guaranty Bond Obligor agrees that during the term of theIssue (the "Isfe"), final budget when adopted and each audited a copy of the will be provided to Capital Guaranty financial statement following address within thirty (30) days Insurancer Companyat the c by the Obligor, but in no event atersthaneone hundred eighty (180) days after the close of the Obligor's fiscal year which ends December 31: Capital Guaranty Insurance Company Steuart Tower - 22nd Floor One Market Plaza San Francisco, California 94105-1413 Attention: Risk Control Signed and Dated: October 18, 1990 OBLIGOR ll IM' �n BY: Administrative Services Director FORM OF CERTIFICATE OF OBLIGOR We, the undersigned, William V. Crosson, Administrative Services Director Of Mayor, and Kevin Fayetteville, Arkansas (the "Obli orti , of the city of behalf of the Obligrto thatcapital GuarantyoInsuranceeCompany ital Guaranty") Y (i) we have reviewed the official statement dated September 13, issued in connectio(tvith0thecsaleSatement") of $33,019,000 City of Fayetteville by the Obligor Sales and Use Tax Capital 1 Arkansas series 1990 " Improvement Bonds, of our 1990 (dge Obligations") and, to the best therein knowledge, the information contained pertaining to the Obligor and the Obligations is true and correct, and the Official Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein with respect to the Obligor and the Obligations not misleading; (ii) there are not facts known to us that the Obligor has failed to disclose to Capital Guaranty that, individually or collective) a adversely affect or will materially adversely affect the operations, affairs, properties, conditions or prospects (financial or otherwise) of the Obligor; (w) affect the security or credit of, or the validity of, the Obligations; (x) cause any of the documentation or information previously submitted to Capital Guaranty by or on behalf of the Obligor to be untrue or misleading; (y) give cause to allow the purchaser or underwriter of the Obligations the right not to purchase the Obligations (notwithstanding the fact that such event might be waived by the purchaser or underwriter of the Obligations) or (z) affect the ability of the Obligor to repay the Obligations as scheduled; (iii) the execution of the Trust Indenture, dated as of October 15, 1990, between the Obligor and Mcllroy Bank & Trust Company, as trustee, securing the Obligations (the "Indenture"), and related documents and compliance with the provisions thereof do not and will not constitute, on the part of the Obligor, a breach of or a default under any agreement or other instrument to which the Obligor is a party or by which it is bound or a breach of or default under any existing law, regulation, or court order or consent decree to which the Obligor is subject; and (iv) except as set forth in the litigation has been concludedficial pending or, to ndingmort, oo the best of our knowledge is questioning the continued threatened obligor, the right of existence of the Obligations or the oblige Obligor to issue the repay the Obligations gat ion of the obligor to t the times and in the manner eat forth in the litigation is pendin Indenture and no or, to the best of our knowledge, threatened an would (either Singularlyrdvnrth result of which materially adversely Y or in the aggregate) condition of the Oblinaffect the financial its business as curretl or oc its ability to conduct Y conducted. IN WITNESS WHEREOF, we have reviewed and have duly executed this certificate on behalf of the Obligor as of tie 18th day ofI October 1990. By: Name: Will am V. M tin Title: Mayor By:cwov Name: Key n Crosson Title: Administrative Services Director r• p}AS tam 8038.G Information Return for Tax- W,octobar 1989) Exempt Governmental ► Undo Sactlon 149(x) Obligations p,psRment of the Treasury ► Sea saparala instru tRerenue Service (Use Form ctlona OMB No. hlxM 8038•GC if the issue price is u 1545-O720 Re ortln Authorit nder $100,000] . �pues 5-31-92 Issuer's name City of yetteville, Arkansas Check box if Amended Return ► 3 Number and stFareet 2 Issuer's employer identification number 113 West Mountain 716018462 5 City or town, state, and ZIP code 4 Report number Fayetteville, Arkansas 72701 61990 _1 7 Name of Issue 6 Date of issue Sales and Use Tax Capital Inprovement 10/18/90 Bonds r Series 1990 8 CUSIP Number T e of Issue (check boxes that a lies and enter the Issue P 312673 9 Check box if obligations are tax or other revenue anticipation bonds. O rice 10 Check box if obligations are in the form of a lease or installment sale ► 0 11 ❑ Education . . . . . . . . . . . Issue price 12 ® Health and hospital . 13 ® Transportation 14 ® Public safety . . . . . ' 60 000 10 717 000 15 ® Environment (including sewage bonds) • • • • . . . . . 1 660 000 16 ❑ Housing . . . . . . . • . . . . . . . . 2 567 000 17 ® Utilities . . . . . . 18 ® Other. Describe (see Instructions)► Public recreation facilities 9 988 288 parking facilities and maintenance and stora e facilities�lic 3,604 500 Description of Obll ations Matur ty date Interest rate e stated redemption Wei rated (r) w Issue prKe rice at matur Net interest 19 Final maturity 11/15/2008 7.25 % 3,305,000 aneraematu Yield coat 20 Entire issue . . 3, 305, 000 33,019,000 33,019,000 11.44 ears Uses of Original Proceeds of Bond Issues (including underwriters' discount 21 Proceeds used for accrued interest 22 Issue price of entire issue (enter line 20c) 21 18, 997 23 Proceeds used for bond issuance costs (including underwriters' discount) . 23 583, 003.43 22 33, 019, 000 24 Proceeds used for credit enhancement . . . . . . . . . . 24 537, 308.57 25 Proceeds allocated to reasonably required reserve or replacement fund 301, 900.00 26 Proceeds used to refund prior issues . . . . . . . . 27 Total (add lines 23, 24, 25. and 26) . . . . . . . 28 Nonrefundin proceeds of the issue subtract line 27 from line 22 and enter amount here • 27 ,422,212 ZU Description of Refunded Bonds (complete this part only for refunding bonds) 28 28, 596, 788 29 Enter the remaining weighted average maturity of the bonds to be refunded ► years 30 Enter the last date on which the refunded bonds will be called ► 31 Enter the dates the refunded bonds were issued ► Miscellaneous 12 Enter the amount of the state volume cap allocated to the issue . ► —0- 13 Enter the amount of the bonds designated by the issuer under section 265(bX3XBXiXIII) (small issuer exception) ► —0— l4 Pooled financings: a Enter the amount of the proceeds of this issue that are to be used to make loans to other governmental units ► —0 b Check box if this issue is a loan made from the proceeds of another tax•exempt issue ► ❑ and enter the name of the issuer ► and the date of the issue ► Under penalties of penury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete. lease !gn ea 10/18/90 Administrative Services Direc IISignature of officer Date Type or print name and title rPepervork Reduction Act Notice, see page 1 of the Instructions. Form 8038•6 (Rev. 10-69) •oa. eu.an..ne I'Tr.nnr ofnxa 1989-ea-ut/00019 CERTIFICATE OF ARKANSAS DEPARTMENT OF FINANCE AND ADMINISTRATION The undersigned hereby certifies as follows. 1. The undersigned is the duly qualified and thelstateaofrArrkansasf the Department of Finance and AdministrationactinxAdmof 2. This certificate is executed in connection with the issuaissuance eeofe$33,019,000 0 SalesandUse Tax Capital Improvement Bonds, S (the e 1990 ( "Bonds") of the City of Fayetteville, 3. There have been filed in my office certified copies of Ordinance No. 3381, passed by the Board of Directors of the City on October 4, 1988, Ordinance No. 3480, passed by the Board of Directors of the City on April 17, 1990, and Ordinance No. 3506, passed by the Board of Directors of the City on September 13, 1990, and a copy of a Trust Indenture, dated as of October 15, 1990, between the City and Mcllroy Bank & Trust, securing the Bonds, which Trust Indenture was approved by the City pursuant to such Ordinance 3506. All of such documents relate to the levy by the City of a one percent (1%) local sales and use tax (the "Sales and Use Tax") and the pledging of moneys collected from the Sales and Use Tax to the Bonds as provided in such documents. 4. The collection of the Sales and Use Tax commenced December 1, 1988 and continues. 5. Moneys collected from the Sales and Use Tax will be transmitted to the State Treasurer of the State of Arkansas while the Bonds are outstanding. Certified this / day of October 1990. DEPARTMENT OF FINANCE AND ADMINISTRATION By: Ed Hicks, Tax Administrator CERTIFICATE OF TREASURER OF THE STATE OF ARKJ SAS The undersigned hereby certifies as follows: 1. The undersigned is Deputy Treasurer of the State tof Arkanhe duly saslified and acting Chief 2. This certificate isexecuted a issuance of $33,019,000 Sales andUse1n connection with the x Bonds, SSeries s 1990 (the "Bonds") of theCitapital Improvement Y ). y of FayettevilleA, 3. There have been filed the State of Arkansas certified in the Office of the Treasurer of passed by the Board of Directorsof Copiese of Ordinance No. 3381, Ordinance No. 3480, passed by theBoardof Directors rn October the , 1988, on April 17, 1990, and Ordinance No. 3506, bof City Directors of the City on September 13,passed by the Board of Trust Indenture, dated as of October 5, 1990, between the City 1990' and a copy of a and Mcllroy Bank & Trust, securing the Bonds Which between the city Indenture was approved by the City pursuant to which OTrust rdinance te one 3506percent. All o(1%)c localh usales and ausettaxthe (the v'Saleshand lUs °f a Tax") and the pledging of moneys collected from the SalesandUse Tax to the Bonds as provided in such documents. 4. Pursuant to Section 502 of such Trust Indenture, moneys collected from the Sales and Use Tax, less any applicable charges and retainages in accordance with the Local Government Bond Act of 1985, are to be deposited with Mcllroy Bank and Trust, as Trustee under such Trust Indenture, while the Bonds are outstanding. In accordance with such Section 502, moneys collected from the Sales and Use Tax and received by the State Treasurer, less any such charges and retainages, will be transmitted monthly by check mailed to Mcllroy Bank and Trust, P.O. Box 1327, Fayetteeville, Arkansas 72702. Certified this /I day of October 1990. TREASURER OF THE STATE OF ARKANSAS By: Robert C. Brown, Chief Deputy Treasurer