HomeMy WebLinkAboutOrdinance 4488 ORDINANCE NO. 4488 " .
AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE
OF NOT TO EXCEED $6,620,000 OF HOTEL AND RESTAURANT
GROSS RECEIPTS TAX REFUNDING BONDS, SERIES 2003, BY
THE CITY OF FAYETTEVILLE, ARKANSAS FOR THE PURPOSE
OF REFUNDING THE CITY'S OUTSTANDING HOTEL AND
RESTAURANT GROSS RECEIPTS TAX BONDS, SERIES 1998;
AUTHORIZING THE EXECUTION AND DELIVERY OF A TRUST
INDENTURE PURSUANT TO WHICH THE SERIES 2003 BONDS
WILL BE ISSUED AND SECURED; AUTHORIZING THE
EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT
PURSUANT TO WHICH THE SERIES 2003 BONDS WILL BE
OFFERED; AUTHORIZING THE EXECUTION AND DELIVERY
OF A BOND PURCHASE AGREEMENT PROVIDING FOR THE
SALE OF THE SERIES 2003 BONDS; AUTHORIZING THE
EXECUTION AND DELIVERY OF AN ESCROW DEPOSIT
AGREEMENT PROVIDING FOR THE REDEMPTION OF THE
SERIES 1998 BONDS; AUTHORIZING THE EXECUTION AND
DELIVERY OF A CONTINUING DISCLOSURE AGREEMENT;
AND PRESCRIBING OTHER MATTERS RELATING THERETO
WHEREAS, the City of Fayetteville, Arkansas (the "City") is authorized under
the provisions of the Advertising and Promotion Commission Act, Arkansas Code
Annotated (1997 Repl.) §§26-75-601 et seq. (as from time to time amended, the " Act"), to
issue its bonds secured by and payable from the revenues derived by the City from the
one percent (1 %) tax (the "Tax") levied by the City pursuant to Ordinance No. 2310
adopted by the City on March 1, 1977, as subsequently amended, upon the gross
receipts or gross proceeds (i) derived from renting, leasing or otherwise furnishing hotel
or motel accommodations for profit within the boundaries of the City and (ii) of
restaurants, cafes, cafeterias, delis, drive-in restaurants, carry-out restaurants,
concession stands, convenience stores, grocery store-restaurants, caterers and similar
businesses within the boundaries of the City engaged in the business of selling
prepared food for on-premises or off-premises consumption; and
WHEREAS, pursuant to the provisions of Ordinance No. 4038, duly adopted by
the City on June 3, 1997, there was submitted to the qualified electors of the City the
question of the issuance of not to exceed $6,950,000 in principal amount of bonds
pursuant to the Act, said bonds to be secured by a pledge of and lien upon the City's
receipts of the Tax (the "Tax Receipts"); and
WHEREAS, at a special election held August 5, 1997, a majority of the qualified
electors of the City voting on the aforementioned question approved the issuance of the
bonds and the corresponding pledge of the Tax Receipts to the payment thereof; and
WHEREAS, pursuant to the Act and the results of the aforementioned election,
the City issued its City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts
Tax Bonds, Series 1998, dated November 1, 1998 (the "Series 1998 Bonds'), for the
purpose of financing a portion of the costs of constructing the Fayetteville Town Center
(the "1998 Project"); and
WHEREAS, the Series 1998 Bonds were originally issued in the aggregate
principal amount of $6,950,000, of which $6,620,000 presently remains outstanding; and
WHEREAS, the City has also, pursuant to the Act and an ordinance duly
adopted by the City, previously issued its $2,675,000 City of Fayetteville, Arkansas
Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series 1995, dated October
1, 1995 (the "Series 1995 Bonds"), of which $700,000 in principal amount presently
remains outstanding, for the purpose of financing the construction and equipping of
convention facilities; and
WHEREAS, the City has now determined that debt service savings can be
realized with respect to the Series 1998 Bonds by issuing its Hotel and Restaurant Gross
Receipts Tax Refunding Bonds, Series 2003 (the "Series 2003 Bonds"), for the purpose of
refunding the Series 1998 Bonds; and
WHEREAS, the payment of debt service on the Series 2003 Bonds will be secured
by a pledge of the Tax Receipts on a junior and subordinate basis to the pledge of Tax
Receipts securing the payment of debt service on the Series 1995 Bonds; and
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of
Fayetteville, Arkansas that:
Section 1 . Under the authority of the Constitution and laws of the State of
Arkansas, including particularly Amendment 65 to the Constitution of the State of
Arkansas and the Act, there is hereby authorized the issuance of bonds of the City to be
designated as "Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series 2003"
(the "Series 2003 Bonds"). The Series 2003 Bonds shall be issued in the original
aggregate principal amount of not to exceed Six Million Six Hundred Twenty Thousand
Dollars ($6,620,000), shall mature not later than October 1, 2015, and shall bear interest
at the rates specified in the Bond Purchase Agreement. The average yield on the Series
2003 Bonds as a whole shall not exceed 3.75% per annum. The proceeds of the Series
2003 Bonds will be utilized to finance a portion of the cost of redeeming the Series 1998
Bonds, to establish a debt service reserve for the Series 2003 Bonds or purchase a surety
bond for reserve purposes, to pay a premium for bond insurance, if deemed
2
economically beneficial, and to pay printing, underwriting, legal and other expenses
incidental to the issuance of the Series 2003 Bonds. The Series 2003 Bonds shall be
issued in the forms and denominations, shall be dated, shall be numbered, shall mature,
shall be subject to redemption prior to maturity, and shall contain such other terms,
covenants and conditions, all as set forth in the Trust Indenture submitted to this
meeting.
The Mayor is hereby authorized and directed to execute and deliver the Series
2003 Bonds in substantially the form thereof contained in the Trust Indenture submitted
to this meeting, and the City Clerk is hereby authorized and directed to execute and
deliver the Series 2003 Bonds and to affix the seal of the City thereto, and the Mayor and
City Clerk are hereby authorized and directed to cause the Series 2003 Bonds to be
accepted and authenticated by the Trustee. The Mayor is hereby authorized to confer
with the Trustee, Stephens Inc., Fayetteville, Arkansas (the "Underwriter'), and Kutak
Rock LLP, Little Rock, Arkansas ("Bond Counsel"), in order to complete the Series 2003
Bonds in substantially the form contained in the Trust Indenture submitted to this
meeting, with such changes as shall be approved by such persons executing the Series
2003 Bonds, their execution to constitute conclusive evidence of such approval.
Section 2. In order to pay the principal of and interest on the Series 2003
Bonds as they mature or are called for redemption prior to maturity, there is hereby
pledged all of the Tax Receipts. This pledge of Tax Receipts is made on a junior and
subordinate basis to the prior pledge of Tax Receipts securing repayment of the Series
1995 Bonds. The levy and collection of the Tax shall not be discontinued or reduced
while any of the Bonds are outstanding unless sufficient funds are on deposit with the
Trustee under the Trust Indenture to redeem the Series 2003 Bonds in full. The City
covenants and agrees that all Tax Receipts will be accounted for separately as special
funds on the books of the City, and all Tax Receipts will be deposited and will be used
solely as provided in the Trust Indenture.
Section 3. To prescribe the terms and conditions upon which the Series 2003
Bonds are to be executed, authenticated, issued, accepted, held and secured, the Mayor
is hereby authorized and directed to execute and acknowledge a Trust Indenture (the
"Trust Indenture"), by and between the City and Bank of Oklahoma, N. A., Tulsa,
Oklahoma (the "Trustee"), and the City Clerk is hereby authorized and directed to
execute and acknowledge the Trust Indenture and to affix the seal of the City thereto,
and the Mayor and the City Clerk are hereby authorized and directed to cause the Trust
Indenture to be accepted, executed and acknowledged by the Trustee. The Trust
Indenture is hereby approved in substantially the form submitted to this meeting,
including, without limitation, the provisions thereof pertaining to the pledge of Tax
Receipts and the terms of the Series 2003 Bonds. The Mayor is hereby authorized to
confer with the Trustee, the Underwriter and Bond Counsel in order to complete the
Trust Indenture in substantially the form submitted to this meeting, with such changes
3
as shall be approved by such persons executing the Trust Indenture, their execution to
constitute conclusive evidence of such approval.
(Advice is given that a copy of the Trust Indenture in substantially the form
authorized to be executed is on file with the City Clerk and is available for inspection by
any interested person.)
Section 4. There is hereby authorized and approved a Preliminary Official
Statement of the City, including the cover page and appendices attached thereto,
relating to the Series 2003 Bonds. The Preliminary Official Statement is hereby "deemed
final" by the City within the meaning of U.S. Securities and Exchange Commission Rule
15c2-12. The distribution of the Preliminary Official Statement is hereby approved. The
Preliminary Official Statement, as amended to conform to the terms of the Bond
Purchase Agreement, including Exhibit A thereto, and with such other changes and
amendments as are mutually agreed to by the City and the Underwriter, is herein
referred to as the "Official Statement," and the Mayor is hereby authorized to execute
the Official Statement for and on behalf of the City. The Official Statement is hereby
approved in substantially the form of the Preliminary Official Statement submitted to
this meeting, and the Mayor is hereby authorized to confer with the Trustee, the
Underwriter and Bond Counsel in order to complete the Official Statement in
substantially the form of the Preliminary Official Statement submitted to this meeting,
with such changes as shall be approved by such persons, the Mayor's execution to
constitute conclusive evidence of such approval.
(Advice is given that a copy of the Preliminary Official Statement is on file with
the City Clerk and is available for inspection by any interested person.)
Section 5. In order to prescribe the terms and conditions upon which the
Series 2003 Bonds are to be sold to the Underwriter, the Mayor is hereby authorized and
directed to execute a Bond Purchase Agreement on behalf of the City, to be dated as of
the date of its execution (the "Bond Purchase Agreement'), by and between the City
and the Underwriter, and the Bond Purchase Agreement is hereby approved in
substantially the form submitted to this meeting, and the Mayor is hereby authorized to
confer with the Underwriter and Bond Counsel in order to complete the Bond Purchase
Agreement in substantially the form submitted to this meeting, with such changes as
shall be approved by such persons executing the Bond Purchase Agreement, their
execution to constitute conclusive evidence of such approval.
(Advice is given that a copy of the Bond Purchase Agreement in substantially the
form authorized to be executed is on file with the City Clerk and is available for
inspection by any interested person.)
Section 6. In order to provide for the redemption of the Series 1998 Bonds, the
Mayor is hereby authorized and directed to execute an Escrow Deposit Agreement to be
4
dated as of the date of its execution (the "Escrow Agreement'), by and between the City
and Bank of Oklahoma, N.A., as escrow trustee (the "Escrow Trustee"), and the Mayor
is hereby authorized and directed to cause the Escrow Agreement to be executed by the
Escrow Trustee. The Escrow Agreement is hereby approved in substantially the form
submitted to this meeting, and the Mayor is hereby authorized to confer with the
Underwriter, the Escrow Trustee and Bond Counsel in order to complete the Escrow
Agreement in substantially the form submitted to this meeting, with such changes as
shall be approved by such persons executing the Escrow Agreement, their execution to
constitute conclusive evidence of such approval.
(Advice is given that a copy of the Escrow Agreement in substantially the form
authorized to be executed is on file with the City Clerk and is available for inspection by
any interested person.)
Section 7. In order to provide for continuing disclosure of certain financial
and operating information with respect to the Tax and the City in compliance with the
provisions of Rule 15c2-12 of the U. S. Securities and Exchange Commission, the Mayor
is hereby authorized and directed to execute a Continuing Disclosure Agreement to be
dated as of the date of its execution (the "Continuing Disclosure Agreement'), by and
between the City and the Trustee, and the Mayor is hereby authorized and directed to
cause the Continuing Disclosure Agreement to be executed by the Trustee. The
Continuing Disclosure Agreement is hereby approved in substantially the form
submitted to this meeting, and the Mayor is hereby authorized to confer with the
Trustee, the Underwriter and Bond Counsel in order to complete the Continuing
Disclosure Agreement in substantially the form submitted to this meeting, with such
changes as shall be approved by such persons executing the Continuing Disclosure
Agreement, their execution to constitute conclusive evidence of such approval.
(Advice is given that a copy of the Continuing Disclosure Agreement in
substantially the form authorized to be executed is on file with the City Clerk and is
available for inspection by any interested person.)
Section 8. In order to secure lower interest rates on the Series 2003 Bonds, the
Underwriter has proposed that the City consider the purchase of a policy of bond
insurance with a portion of the proceeds of the Series 2003 Bonds, which policy would
guarantee the payment of the principal of and interest on the Series 2003 Bonds when
due. If deemed economically advantageous by the Mayor, upon the advice of the
Underwriter, the Mayor is hereby authorized to execute an insurance commitment and
to do any and all things necessary to accomplish the delivery of a bond insurance policy
with respect to the Series 2003 Bonds.
Section 9. The Mayor and City Clerk, for and on behalf of the City, are hereby
authorized and directed to do any and all things necessary to effect the issuance, sale,
execution and delivery of the Series 2003 Bonds and to effect the execution and delivery
5
of the Trust Indenture, the Bond Purchase Agreement, the Official Statement, the
Escrow Agreement, the Continuing Disclosure Agreement and a Tax Regulatory
Agreement relating to the tax exemption of interest on the Series 2003 Bonds, and to
perform all of the obligations of the City under and pursuant thereto. The Mayor and
the City Clerk are further authorized and directed, for and on behalf of the City, to
execute all papers, documents, certificates and other instruments that may be required
for the carrying out of such authority or to evidence the exercise thereof.
Section 10. The provisions of this Ordinance are hereby declared to be
severable, and if any section, phrase or provision shall for any reason be declared to be
illegal or invalid, such declaration shall not affect the validity of the remainder of the
sections, phrases or provisions of this Ordinance.
Section 11. All ordinances, resolutions and parts thereof in conflict herewith
are hereby repealed to the extent of such conflict.
PASSED and APPROVED this the 20w day of May, 2003.
ea APPROVED:
•N , 1
j D COODY, Mayor
A '
Sondra Smith, City Clerk
6
NAME OF FILE: Ord. No. 4488
CROSS REFERENCE:
Item # Date Document
1 1 05/20/03 Ord. No. 4488
2 05/01 /03 Staff Review Form w/attachments:
draft ordinance
memo to Steve Davis
memo to mayor/city council
draft Trust Indenture
3 05/24/03 memo to Steve Davis
4 05/24/03 Affidavit of Publication
NOTES:
Z
NORTWEST ARKANSV EDITION
A kavas Demomtt IV 05azeW
AFFIDAVIT OF PUBLICATION
I , , do solemnly swear that I am
Lega Clerk of the Arkansas Democrat-Gazette newspaper, printed and
published in Lowell , Arkansas, and that from my own personal knowledge
and reference to the files of said publication , the advertisement of:
Oa, was inserted in the regular editions on
'* Publication Charge : $ 56 L32Z
Subscribed and sworn to before me this
day of .32003.
Notary Publi
sew
M Commission Expires: TAMMY ""EN
My on p WASHINGTON COGN"
MY Commission E)0� 11 05 p11
Please do not pay from Affidav
An invoice will be sent.
RECEIVED
MAY 2 8 2003
U„ ;:F FAYETTEVILLE
CITY CLERK'S OFFICE
212 NORTH EAST AVENUE P.O. BOX 1607 • FAYEfTEVII I E, ARKANSAS 72702 • (501) 442-1700
- ORDINANCE NO. 4488
AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE
OF NOT TO EXCEED $6,620,000 OF HOTEL AND
RESTAURANT GROSS RECEIPTS TAX REFUNDING BONDS,
SERIES 2003, BY THE CITY OF FAYETTEVILLE, ARKANSAS
FOR THE PURPOSE OF - REFUNDING THE CITY'S
TAX BONDS.
SERIES
1993 RESTAURANT THE EXECUTION REC 0f FayeftWile
TAX BONDS, SERIES 1998: AUTHORIZING THE SANTTO
AND HTHESDELIVERY OF A TRUST I WILL B IIS PUD AND TO
WHICH THE SERIES 2003 BONDS WILLBEISSUED ANDSECURED; AUTHORIZING THE IX E30NDS
v ANDD E OFFERED:
E AN OFFICIAL STATEMENT PURSUANT TO WHICH THE SERIES 2003 BONDS
WILL M OFFERED: ING FOR THE THE LE OF T HE AJJD S203DELIVERY OF : BOND PURCHASE
AGREEMENT PROVIDING FOR THE SALE OF THE SERIES 2003 BONDS;PROVIDING
AUTHORIZING THE
IDECUTIONREDEMPTION
AND THE
OF 19 ESCROW DEPOSIT AGREEMENT PROVIDING FOR THE
OF A CONTINUING
OF THE SERIES 1998 BONDS; AUTHORIZING THE OTHER
AT AND DELIVERY
OF A CONPNUING DISCLOSURE AGREEMENT, AND PRESCRIBING OTHER MATTERS RELATING
THERETO
WHEREAS, the City of FayOneMle. Arkansas (the 0011y") is,aulfnrized under Lha provisions of the
Advertising and Prommon Commission Ac. Arkansas Code Annotated (1997 Repl.) §§26-75601 at
seq. (ea from lime to time amended the 'Actl, to Issue its bonds secured by and payable from the
revenues derived by the GN from the one.percent (1%) tax (the Tax) laded by the City pursuant to
Ordinance No. 2310 adopted by the City on March 1, 1977, as subsequently amended. upon the gross
receipts or gross Proceeds 0 blamed from Matig, leasing Or Othewse fumishi g hotel or metal
aa0mrtedatkxs fa prefil wnhm the bO ndarios Of the City and n of restaurants, miss, colelenas, data
dr'rvain resfaunvtts, carry-out IMISIUMIS, concession stands, convenience stores, grocery store-
restaurants, caterers and similar businesses within the boundaries of the City engaged in the business
• of selling prepared food foron-premises or off-premises consumption; and
WHEREAS, Pursuant to RIe Provisions of Ordvwtce No. 4038, duly adapted by the Gry on June 3,
1997, there was suichmedto the qualfied elections of the City ft question 01 the issuance of not to
exceed $6,950,000 n principal anrhant of bonds pursuant to the Act, Said bonds to be seared by a
Pledge Of and lien upon the CiNs receipts of the Tax (the '7ax Receiptsl; and
WHEREAS, at a special election held August 5. 1997, a majority of the quail dactore of the cry
voting On the aforementioned question approved the issuance of the bonds and the corresponding
pledge of the Tax Receipts to the payment Moral and
WHEREAS, grsuent to the Act and the mass of the aforementioned election, the Dry issued its City
Of Fayetteville, Afkarsas Hotel and Restaurant Gress Receipts Tax Bonds, Sarles 1998, dated November
1, 1998 (the 'Senm 1998 Bonet, for the purpose of financing a portion of the costs of constructing the
Fayetteville Town Center (the -1998 Pnfiectl; and
WHEREAS, Rte Series 1998 Bands were originally issued in the aggregate panipai amount a
$6.950.000, of which $6,620,000 preamity remains onstanding: and
WHEREAS, the City has also, pursuant to the Act and an Ordinarhra duty adopted by the Ciry,
previously Issued its $2,675,000 City of Fayettevilie, Arkansas Hole and Restaurant Gross Receipts Tax
Refunding Bonds, Series 1995, dated October 1, 1995 (Re "Sedes 1995 Bo ds'):of which $700,000 in
Principal anent Presently remains onstanding, Is the Purpose of financing the ca¢Lvcuon and
mopping of convention facilities: and
WHEREAS, the Gry has now delemtlned that debt service savings ran be realized with respect to
the Sense 1998 Bonds by asuig As Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series
2003 ghe 'Senes 2003 Dorsal, for the W noose of refunding the Senes 1998 Bonds; and
WHEREAS, the payment of debt service on the Series 2003 Bonds will be seared by a pledge of
Me Tax Receipts on a junior aro Subordinate basU t0 the pledge Of Tax RacaPk securing the payment
n of debt service on the Series 1995 Bonds: and
NOW, THEREFORE, BE IT ORDAINED by the Cry Cotnci of the City of FayenaAle, Arkansas that
Section 1. Under the authority of the ConstltuWn and laws of the State of Arkansas, Including
I Parttcukriy Amendment 65 to the Constitution of the State of Arkansas and tire Act, there is hereby
authorized Ne mivance of bonds of the City to be designated as -Hotel and Restaurant Grew Fleceipts
Tax Refunding Bonds, Spies 2003' (the 'Smes 2003 Randal. The Series 2003 Echols shat be issued
• n the Original aggragate Principal amount of not in exceed Six Millon Su Hun clad Twenty Thousand
I Oolars ($6,620,000), shat mature rot later than October 1, 2015, and slat bear interest at the rates
specified in the Bond Purchase Agreement The average yield on the Series 2003 Bonds as a wade
shall rot exceed 3.75% per annum. The proceeds of the Series 2003 Bonds volt be uWzed to Mance
h a portion Of the cost of remaining the Series 1998 Bonds. to establish a debt service reserve for the
Series 2003 Boras Of arrows a surety bond far reserve prromm, to pay a prennum far boo l
insurance, if deaned wonomicahy beneficial, and to pay printing, underwriting, legal and other expenses
inadental to the issuance of Ne Series 2003 Bonds. The Sense 2003 Bonds shall be issued in the forms
and denominations, shall be dated, shall be numbered, steal mature, shall b r subject t0 redemption prior
to maturity, and shat contain such other terms, covenants and Whill"S, ag as set forth In the Trust
Indenture summed t0 this rmaefig•
I . The Maya is hereby authorized and directed to "BOWS and deFrer the Series 2003 Bondsin
substantially the tone thereof contained In the Trust Indenture Submitted to this meeting, and the City
Clerk Is hereby authorized and directed to execute and deliver the Series 2003 Bonds and to affix the
seal of the City thereto, end the Mayor and City Clerk we hereby authorized and directed, to cause the
Serres 2003 Bunds to be accepted and authenticated by the Trustee. The Mayor is hereby authorized
to border wily the Trustee. Stephens Inc., FayemAe, Arkansas (the - ndaxnter7, and Kutak Rock LLP,
I Rock, Afkarreas ('Bohol Counsel, In oder to complete Me Series 2003 Bonds in substantially We
toren contained in the Trust Indenture submittetl to this meeting, with Such changes as shall be approved
by Such persons executing the Series 2003 Bons, their execution to constitute conclusive evidahce of
arch approve.
Section 2. In order to pay the principal of and Merest on the Series 2003 Bonds as May mean e or
one called lar rnemPtbn Prior to rtetal thea is hereby pledged all of the Tax pesetas. The pledge of
Tax Receipts is made an a jumior and subordinate basis to Ne prior pledge of Tax Receipts assuring
( repayment of the Series 1995 Bands. The levy and collection of the Tax shall not be discontinued or
reduced while any of the Bonds are outstanding unless suMkAent funs are on deposit with the Trustee
under the Trust Indenture to redeem ire Series 2003 Bods in full. The City payments and agrees that
e0 Tax Receipts will be amounted for separately, as special funds m the books of the Gry, and el Tax
Receipts will be deposted and will ho used so* as Provided in Me Trust Intervals.
Section 3. To prescribe the terms end conditions upon which the Sense 2003 Bonds are to be
executed authenticated, issued, accepted, held and seared the Mayor Is hereby authorized and
directed to execute and ackrovAedge a Trust Indenture (Me 'Tnst IrWenturel, by and between the City
antl Bank of Oklahoma, NA., Tulsa, Okeems (the 'Trusteal, end the Gry Cleric is hereby sumpfeed
and directed to execute antl acN GwkKIMo the Test Indenture and to afro the seal T the Gry thereto,
and the Mayor and the City Clerk Bre hereby authorized and directed to cause the Trust Indenture to be
accepted, executed and acknoMeciged by the TwErms. The Trust Indenture is hereby approved in
substantially the forth Submitted to this meel Including, without Irritation, the ProvIle s thereof
Pertainin910 the pledge of Tax Receipts and Ns terms of the Series 2003 Bonds. The Mayor is hereby
I uftdzed to Cana with firsTrustee, MO Underwriter fer aBond Counsel in order t0 complete We That
fortune in substantially the form stbmittn to this meating, with such Gmanges as shall ho approved by
such persons executing the Trust Indenture, mar execution to constitute coWuslve evidence of Such
approval.
(Advice Is given that a copy of the Trust Indenture In Subsimtletly the form eutho izeci to ho exacutn i5
an rile with the Gry Clerk antl Is evalable fa inspection by arty, marected person.)
Section 4. There a hereby authorized and approved a Preliminary Of c al Statement of the City.
I including Ne cover Page and appendices anaaed thereto, renting to Ne Senile 2003 Bonds. The
Pre immary Official Statement S hereby 'seemed final' by the City within the meaning of U.S. Securities
and Exchange Commission Fria 15c2-12. The distribution of the Pmimrary Oficial Statement is hereby
t approved. The Preliminary Oficia Statarri as amended to Conform to the tarts a the Bond
Purchase Agreement, involing Exhibit A thereto. and with such other changes and amendments as are
mutually agreed to by the Ciry and the UnENWITI i5 herein referretl to as the 'Official Statement; and
t the Mayor Is hereby euthodzed to execute the Official Statement for and on behalf of the Gry. The Olfidal
Statement IS hereby approved in Substantially the form of the Preliminary Official Statement submitted to
INS meeting, and the Maya is hereby auRhonzed to confer with the Trustee, the Underwriter and Bond
Course n oder to complete the Official Statement in Subatantiay the form of the Pretmibery Offda
Statement submitted to this meeting, with such changes as shell be approved by such persons, the
Mayors exeaaim to constitute conclusive evidence of such approval.
(Advice Is given that a copy of the Preliminary Official Statement Is on file with the City Clerk and Is
available for inspection by any Interested person.)
Section 5. In order to prawnee the tams and conditions upon which the Series 2003 Bonds are to
be Said b de Unermilc. the Mayor b hereby auMObz9d and dracled to execute a Bond Purchase
Agreement an behalf of the Gry, to t» dated as of the date of Its executtorn (the 'Bond Purchase
Agreernal by and between the Cry and the Underwriter, and the Bao Punches Agreement a hereby
approves in substantial y the toren submitted to this meeting, and the Mayor is hereby authorized to
canto with the Underwriter and Bond Counsel in atler to complete the Bond Purchase Agreement in
• substantiaty the form submitted to this meeting, with Stash Charges as shell be approved by such
persons executing the Bond Purchase Agreement, Mw SwCUlan to constitute evidence of
such approve.
(Advice is given that a copy of rhe Bond Purchase Agreement In substantiary the torn authorized to ho
executed Is on to with the Gry Clerk anis avalable for inspection by any Interested person.)
Section 6. In order, to Provide for the redemption of the Series 1936 Bonds, the Mayor is hereby
sudhorizeld end directed to execute an Esci Deposit Agreement to ho dated as of the data of he
execution (the 'EsaOw Agrearnentl, by an between the City and Dank of ONahorl NA., a5 Sammy
trustee (the -Escmw Trusteal, and Ne Mayor is hereby authorized and directed to cause the Escrow
Agreement to ho executed by the Escrow Trustee. The Escrow Agreement Is hereby approved n
subssMkly the form Submitted to this meeting, antl the Mayor Is hereby authorizetl to confer wily the
lndavrtlter, the Escrow Trustee and Bond Cuff" In order W complete iia Essaw Agreement In
substmikly Re form Subrined to MIS meeting, with Such changes as 9a1 be approved by such
persons axecu4rg the ESCrow Agreement, their execution to mnstrum conclusive evidence of sucih
approval.
(Advice Is given that a copy of the Escrow Agreement In subwentiey,the farts authorized io be executed
is an lila with tie City Clerk ab a evadable for inspection by any interested person.)
Section 7. In ordef to provide fa conilairg disclosure of contain financial and! Operating information
with respect to the Tax and the City in compliance with the Provisions of Rue 1502-12 0f 0-9 U. S.
Secu iDes and Exchange Commission, the Maya Is hereby authorized and directed to execute a
Continuing Disclosure Agreement to be dated as of the date of its execurtim (the 'Continuing Disclosva
Agreemmtlk by and between ire City and the Trustee. and the Mayor Is hereby aunwrized and directed
b Cahse Rho CpnMung Dlstloare Agreement to be executed by the Trustee. The Continuing g Diaccesure
Agreements is hereby approved In Substantially ria forth submitted to this mewing, and the Mayo 5
hereby authorized to confer wily the Trustee, Ne Underwriter and Bond Counsel n order 10 complete
the Continuing Disclosure Agreement in substands the form submitted to this mewing, with such
flanges as shall be approved by Such persons executing the Continuing Disaosure Agreement, their
exepbon to wnstitute 00nchava syserce of such approval.
(Advice Is given that a copy of the Contrua g Disclosure Agrmmenb In shbscarmly the form athonzed
• to be (Oeduted is m Ne with the City Clerk and a avaWe for inspection by any interested person.)
Section 8. In other to secure lower interest rates on the Senes 2003 Bons, the Underwriter has
Proposed that Ne City consider the purchase of a policy of bond Insurance with a.potion of Ne
Proceeds of the Saks 2003 Bonds. which Policy wait guarantee the payment of the principal Of and
interest On the Series 20D3 Bons when due. 11 deemed aboxxonkaty advantageous by the May, upon
the advice of the Undawnta, the Mayan is hereby authorized to wasum an insurance commitment an
to der a v and at things necessary to acmnprsh Ra delivery of a bond insurance policy with respect to
Rhe Series 2003 Bonds.
Section 9. The Mayor and Cry Clerk, for and on behalf of the City, are hereby aulb prem and crashed
to do cry and en ttirgs necessary to effect the seance, sae. execution and delivery of the Serine 2003
Bonds and re affect the axexRiorh end delivery of Ne Thal Indenture, the Bond purchase Agreement,
the Oficial Statement, t e Escrow Agreement, the Cementing Disclosure Agreement and a Tax
Regulatory Agreement relating to the tax exemption of interest on the Series 2003 Bonds, and to perform
al of Ne obligations of the City under and pursuant thereto. The Mayor and the City Clerk ere further
authorized end directed, for and on belall of the Ciry, to SwCute all Papers, documents, certificates and
other instruments that may ho required Ic ire carrying an of such a thonty Of to evidence the exercise
thereof.
Section 10. The provision of this Ordinaboo she hereby doomed to be severable, aro it any section,
phrase a provision shall for any reason be declared to be illegal or Invalid. such decaratjpn shall not
affect the validity of the remember of the sectors, phrases Or prowabns of this Ordinance.
Section 11. M oNinences, resokAio and pans Rereof n c ffict heruMth ale hereby repealed to le
Want of such confict.
PASSED and APPROVED this the 20th day of May, 2003.
APPROVED:
DAN GOODY. Mayer
ATTEST:
Scridmi nm, Gary Clerk
:._ 1
I
FAYETTEVtLLE
THE CITY OF FAYETTEVIEEE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
To: Steve Davis
Finance and Internal Services
From: Clarice Buffalohead-Pearman
City Clerk's Division
Date: 5/28/2003
Re: Ordinance No. 4488
Attached hereto is an executed copy of the above ordinance passed by the City Council May 20,
2003, authorizing the issuance and sale of Hotel and Restaurant Gross Receipts Tax Refunding
Bonds, Series 2003; and authorizing the execution of an Official Statement; Bond Purchase
Agreement, Escrow Deposit Agreement and a continuing Disclosure Agreement. This
information has been recorded in the city clerk's office and will be microfilmed for archives.
Also attached is a copy of the Affidavit of Publication. If anything else is needed please let the
city clerk's office know.
/cbp
Attachment(s)
cc: Nancy Smith, Internal Auditor
FAYETTEALLE
THE CITY OF FAYETTEVILLE, ARKANSAS
Item # 9. Hotel & Restaurant Bonds (Series 2003) :
Additional Information :
The Preliminary Official Statement, Trust Indenture, Bond Purchase
Agreement, Escrow Deposit Agreement, and Continuing Disclosure
Agreement documents that are related to this Agenda Item are
available for your review in the City Clerk's Office.
113WESTMOUNTAIN 72701 479-521-7700
FAX 479-575-8257
oRb
STAFF REVIEW FORM 5 /Z,o� ZOo3
XX AGENDA REQUEST • • >o'^� �� ����
CONTRACT "REVIEW
GRANT REVIEW
For the Fayetteville City Council Meeting of : May 20, 2003 .
FROM :
Stephen Davis Finance & Internal Services Div. Finance & Internal Services
Name Division Department
ACTION REQUIRED : Approval of an ordinance authorizing the issuance and sale of not to exceed $6,620,000 of
Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series, 2003.
COST TO CITY :
Cost of issuance is deducted from bond proceeds
Cost of this request Program Category / Project Name
Account Number Funds Used to Date Program / Project Category Name
Project Number Remaining Balance Fund Name
BUDGET REVIEW : V Budgeted Item Budget Adjustment Attached
Budget Ma ger Date
CONTRACT
/GRANT/LEASE REVIEW :
1�J la, o
Accounting Man ger D� Internal Auc} for D
� � 5III �3
City Attorney Date Purchasing Manager Date
STAFF RECOMMENDATION :
Cross Reference
Division Head Date
New Item : Yea 'r7 No
Department Director Date Previous Ord/Res# : F e S . 43 - 03
ARE� � Z r( Orig . Contract Date (,
i+inance . & Internal Services Dir . Date
5 Orig . Contract Number- Fo3
Chief d" , nisirative Officer Date
Mayor Date
Description
Comments:
Budget Manager
Accounting Manager
City Attorney
Purchasing Manager
ADA Coordinator
Internal Auditor
Grants Coordinator
• Staff Review Form - Page 2
•
Meeting Date
Reference Comments:
KUTAK ROCK LLP
DRAFT 4/25/03
ORDINANCE NO.
AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF NOT
TO EXCEED $6,620,000 OF HOTEL AND RESTAURANT GROSS
RECEIPTS TAX REFUNDING BONDS, SERIES 2003, BY THE CITY OF
FAYETTEVILLE, ARKANSAS FOR THE PURPOSE OF REFUNDING
THE CITY'S OUTSTANDING HOTEL AND RESTAURANT GROSS
RECEIPTS TAX BONDS, SERIES 1998; AUTHORIZING THE
EXECUTION AND DELIVERY OF A TRUST INDENTURE PURSUANT
TO WHICH THE SERIES 2003 BONDS WILL BE ISSUED AND
SECURED; AUTHORIZING THE EXECUTION AND DELIVERY OF AN
OFFICIAL STATEMENT PURSUANT TO WHICH THE SERIES 2003
BONDS WILL BE OFFERED; AUTHORIZING THE EXECUTION AND
DELIVERY OF A BOND PURCHASE AGREEMENT PROVIDING FOR
THE SALE OF THE SERIES 2003 BONDS; AUTHORIZING THE
EXECUTION AND DELIVERY OF AN ESCROW DEPOSIT
AGREEMENT PROVIDING FOR THE REDEMPTION OF THE SERIES
1998 BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF A
CONTINUING DISCLOSURE AGREEMENT; AND PRESCRIBING
OTHER MATTERS RELATING THERETO.
WHEREAS, the City of Fayetteville, Arkansas (the "City") is authorized under the
provisions of the Advertising and Promotion Commission Act, Arkansas Code Annotated (1997
Repl.) §§26-75-601 et seq. (as from time to time amended, the "Act"), to issue its bonds secured
by and payable from the revenues derived by the City from the one percent (1%) tax (the "Tax")
levied by the City pursuant to Ordinance No. 2310 adopted by the City on March 1, 1977, as
subsequently amended, upon the gross receipts or gross proceeds (i) derived from renting,
leasing or otherwise furnishing hotel or motel accommodations for profit within the boundaries
of the City and (ii) of restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out
restaurants, concession stands, convenience stores, grocery store -restaurants, caterers and similar
businesses within the boundaries of the City engaged in the business of selling prepared food for
on -premises or off -premises consumption; and
WHEREAS, pursuant to the provisions of Ordinance No. 4038, duly adopted by the City
on June 3, 1997, there was submitted to the qualified electors of the City the question of the
issuance of not to exceed $6,950,000 in principal amount of bonds pursuant to the Act, said
bonds to be secured by a pledge of and lien upon the City's receipts of the Tax (the "Tax
Receipts"); and
WHEREAS, at a special election held August 5, 1997, a majority of the qualified
electors of the City voting on the aforementioned question approved the issuance of the bonds
and the corresponding pledge of the Tax Receipts to the payment thereof; and
WHEREAS, pursuant to the Act and the results of the aforementioned election, the City
issued its City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax Bonds, Series
10-47560.2/1
0
1998, dated November 1, 1998 (the "Series 1998 Bonds"), for the purpose of financing a portion
of the costs of constructing the Fayetteville Town Center (the "1998 Project"); and
WHEREAS, the Series 1998 Bonds were originally issued in the aggregate principal
amount of $6,950,000, of which $6,620,000 presently remains outstanding; and
WHEREAS, the City has also, pursuant to the Act and an ordinance duly adopted by the
City, previously issued its $2,675,000 City of Fayetteville, Arkansas Hotel and Restaurant Gross
Receipts Tax Refunding Bonds, Series 1995, dated October 1, 1995 (the "Series 1995 Bonds"),
of which $700,000 in principal amount presently remains outstanding, for the purpose of
financing the construction and equipping of convention facilities; and
WHEREAS, the City has now determined that debt service savings can be realized with
respect to the Series 1998 Bonds by issuing its Hotel and Restaurant Gross Receipts Tax
Refunding Bonds, Series 2003 (the "Series 2003 Bonds"), for the purpose of refunding the Series
1998 Bonds; and
WHEREAS, the payment of debt service on the Series 2003 Bonds will be secured by a•
pledge of the Tax Receipts on a junior and subordinate basis to the pledge of Tax Receipts
securing the payment of debt service on the Series 1995 Bonds; and
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of
Fayetteville, Arkansas that:
Section 1. Under the authority of the Constitution and laws of the State of Arkansas,
including particularly Amendment 65 to the Constitution of the State of Arkansas and the Act,
there is hereby authorized the issuance of bonds of the City to be designated as "Hotel and
Restaurant Gross Receipts Tax Refunding Bonds, Series 2003" (the "Series 2003 Bonds"). The
Series 2003 Bonds shall be issued in the original aggregate principal amount of not to exceed Six
Million Six Hundred Twenty Thousand Dollars ($6,620,000), shall mature not later than
October 1, 2015, and shall bear interest at the rates specified in the Bond Purchase Agreement.
The average yield on the Series 2003 Bonds as a whole shall not exceed 3.75% per annum. The
proceeds of the Series 2003 Bonds will be utilized to finance a portion of the cost of redeeming
the Series 1998 Bonds, to establish a debt service reserve for the Series 2003 Bonds or purchase
a surety bond for reserve purposes, to pay a premium for bond insurance, if deemed
economically beneficial, and to pay printing, underwriting, legal and other expenses incidental to
the issuance of the Series 2003 Bonds. The Series 2003 Bonds shall be issued in the forms and
denominations, shall be dated, shall be numbered, shall mature, shall be subject to redemption
prior to maturity, and shall contain such other terms, covenants and conditions, all as set forth in
the Trust Indenture submitted to this meeting.
The Mayor is hereby authorized and directed to execute and deliver the Series 2003
Bonds in substantially the form thereof contained in the Trust Indenture submitted to this
meeting, and the. City Clerk is hereby authorized and directed to execute and deliver the Series
2003 Bonds and to affix the seal of the City thereto, and the Mayor and City Clerk are hereby
authorized and directed to cause the Series 2003 Bonds to be accepted and authenticated by the
Trustee. The Mayor is hereby authorized to confer with the Trustee, Stephens Inc., Fayetteville,
10-47560.2/2 2
Arkansas (the "Underwriter"), and Kutak Rock LLP, Little Rock, Arkansas ("Bond Counsel"), in
order to complete the Series 2003 Bonds in substantially the form contained in the Trust
Indenture submitted to this meeting, with such changes as shall be approved by such persons
executing the Series 2003 Bonds, their execution to constitute conclusive evidence of such
approval.
Section 2. In order to pay the principal of and interest on the Series 2003 Bonds as
they mature or are called for redemption prior to maturity, there is hereby pledged all of the Tax
Receipts. This pledge of Tax Receipts is made on a junior and subordinate basis to the prior
pledge of Tax Receipts securing repayment of the Series 1995 Bonds. The levy and collection of
the Tax shall not be discontinued or reduced while any of the Bonds are outstanding unless
sufficient funds are on deposit with the Trustee under the Trust Indenture to redeem the Series
2003 Bonds in full. The City covenants and agrees that all Tax Receipts will be accounted for
separately as special funds on the books of the City, and all Tax Receipts will be deposited and
will be used solely as provided in the Trust Indenture.
Section 3. To prescribe the terms and conditions upon which the Series 2003 Bonds
are to be executed, authenticated, issued, accepted, held and secured, the Mayor is hereby
authorized and directed to execute and acknowledge a Trust Indenture (the "Trust Indenture"),
by and between the City and Bank of Oklahoma, N.A., Tulsa, Oklahoma (the "Trustee"), and the
City Clerk is hereby authorized and directed to execute and acknowledge the Trust Indenture and
to affix the seal of the City thereto, and the Mayor and the City Clerk are hereby authorized and
directed to cause the Trust Indenture to be accepted, executed and acknowledged by the Trustee.
The Trust Indenture is hereby approved in substantially the form submitted to this meeting,
including, without limitation, the provisions thereof pertaining to the pledge of Tax Receipts and
the terms of the Series 2003 Bonds. The Mayor is hereby authorized to confer with the Trustee,
the Underwriter and Bond Counsel in order to complete the Trust Indenture in substantially the
form submitted to this meeting, with such changes as shall be approved by such persons
executing the Trust Indenture, their execution to constitute conclusive evidence of such approval.
(Advice is given that a copy of the Trust Indenture in substantially the form authorized to
be executed is on file with the City Clerk and is available for inspection by any interested
person.)
Section 4. There is hereby authorized and approved a Preliminary Official Statement
of the City, including the cover page and appendices attached thereto, relating to the Series 2003
Bonds. The Preliminary Official Statement is hereby "deemed final" by the City within the
meaning of U.S. Securities and Exchange Commission Rule 15c2-12. The distribution of the
Preliminary Official Statement is hereby approved. The Preliminary Official Statement, as
amended to conform to the terms of the Bond Purchase Agreement, including Exhibit A thereto,
and with such other changes and amendments as are mutually agreed to by the City and the
Underwriter, is herein referred to as the "Official Statement," and the Mayor is hereby authorized
to execute the Official Statement for and on behalf of the City. The Official Statement is hereby
approved in substantially the form of the Preliminary Official Statement submitted to this
meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and
Bond Counsel in order to complete the Official Statement in substantially the form of the
10-07560.2/3 3
Preliminary Official Statement submitted to this meeting, with such changes as shall be approved
by such persons, the Mayor's execution to constitute conclusive evidence of such approval.
(Advice is given that a copy of the Preliminary Official Statement is on file with the City
Clerk and is available for inspection by any interested person.)
Section 5. In order to prescribe the terms and conditions upon which the Series 2003
Bonds are to be sold to the Underwriter, the Mayor is hereby authorized and directed to execute a
Bond Purchase Agreement on behalf of the City, to be. dated as of the date of its execution (the
"Bond Purchase Agreement"), by and between the City and the Underwriter, and the Bond
Purchase Agreement is hereby approved in substantially the form submitted to this meeting, and
the Mayor is hereby authorized to confer with the Underwriter and Bond Counsel in order to
complete the Bond Purchase Agreement in substantially the form submitted to this meeting, with
such changes as shall be approved by such persons executing the Bond Purchase Agreement,
their execution to constitute conclusive evidence of such approval.
(Advice is given that a copy of the Bond Purchase Agreement in substantially the form
authorized to be executed is on file with the City Clerk and is available for inspection by any
interested person.)
Section 6. In order to provide for the redemption of the Series 1998 Bonds, the
Mayor is hereby authorized and directed to execute an Escrow Deposit Agreement to be dated as
of the date of its execution (the "Escrow Agreement"), by and between the City and Bank of
Oklahoma, N.A., as escrow trustee (the "Escrow Trustee"), and the Mayor is hereby authorized
and directed to cause the Escrow Agreement to be executed by the Escrow Trustee. The Escrow
Agreement is hereby approved in substantially the form submitted to this meeting, and the
Mayor is hereby authorized to confer with the Underwriter, the Escrow Trustee and Bond
Counsel in order to complete the Escrow Agreement in substantially the form submitted to this
meeting, with such changes as shall be approved by such persons executing the Escrow
Agreement, their execution to constitute conclusive evidence of such approval.
(Advice is given that a copy of the Escrow Agreement in substantially the form
authorized to be executed is on file with the City Clerk and is available for inspection by any
interested person.)
Section 7. In order to provide for continuing disclosure of certain financial and
operating information with respect to the Tax and the City in compliance with the provisions of
Rule 15c2-12 of the U. S. Securities and Exchange Commission, the Mayor is hereby authorized
and directed to execute a Continuing Disclosure Agreement to be dated as of the date of its
execution (the "Continuing Disclosure Agreement"), by and between the City and the Trustee,
and the Mayor is hereby authorized and directed to cause the Continuing Disclosure Agreement
to be executed by the Trustee. The Continuing Disclosure Agreement is hereby approved in
substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer
with the Trustee, the Underwriter and Bond Counsel in order to complete the Continuing
Disclosure Agreement in substantially the form submitted to this meeting, with such changes as
shall be approved by such persons executing the Continuing Disclosure Agreement, their
execution to constitute conclusive evidence of such approval.
10-47560.2/4 4
S
(Advice is given that a copy of the Continuing Disclosure Agreement in substantially the
form authorized to be executed is on file with the City Clerk and is available for inspection by
any interested person.)
Section 8. In order to secure lower interest rates on the Series 2003 Bonds, the
Underwriter has proposed that the City consider the purchase of a policy of bond insurance with
a portion of the proceeds of the Series 2003 Bonds, which policy would guarantee the payment
of the principal of and interest on the Series 2003 Bonds when due. If deemed economically
advantageous by the Mayor, upon the advice of the Underwriter, the Mayor is hereby authorized
to execute an insurance commitment and to do any and all things necessary to accomplish the
delivery of a bond insurance policy with respect to the Series 2003 Bonds.
Section 9. The Mayor and City Clerk, for and on behalf of the City, are hereby
authorized and directed to do any and all things necessary to effect the issuance, sale, execution
and delivery of the Series 2003 Bonds and to effect the execution and delivery of the Trust
Indenture, the Bond Purchase Agreement, the Official Statement, the Escrow Agreement, the
Continuing Disclosure Agreement and a Tax Regulatory Agreement relating to the tax
exemption of interest on the Series 2003 Bonds, and to perform all of the obligations of the City
under and pursuant thereto. The Mayor and the City Clerk are further authorized and directed,
for and on behalf of the City, to execute all papers, documents, certificates and other instruments
that may be required for the carrying out of such authority or to evidence the exercise thereof.
Section 10. The provisions of this Ordinance are hereby declared to be severable, and
if any section, phrase or provision shall for any reason be declared to be illegal or invalid, such
declaration shall not affect the validity of the remainder of the sections, phrases or provisions of
this Ordinance.
10-47560.v5 5
Section 11. All ordinances, resolutions and parts thereof in conflict herewith are
hereby repealed to the extent of such conflict.
ADOPTED AND APPROVED THIS DAY OF , 2003.
APPROVED:
Mayor
ATTEST:
City Clerk
(SEAL)
10-47560.2/6 6
FAYETTE % LLE
THE CITY OF FAYETTEVILLE, ARKANSAS
KIT WILLIAMS, CITY ATTORNEY
DAVID WHITAKER, ASST. CITY ATTORNEY
LEGAL DEPARTMENT
DEPARTMENTAL CORRESPONDENCE
TO: Steve Davis, Finance & Internal Services Director
FROM: Kit Williams, City Attorney
DATE: April 30, 2003
RE: Refunding Ordinance for Town Center Bond
Section 1:
The original Town Centers Bonds were specifically limited to a
number of years before they would be paid off. It appears that the
October 1, 201$ date complies with that requirement. Please confirm
we are within the allotted pay off period if we refinance.
FAYETTEdILLE �
THE CRY OF FAYETTEVILLE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
TO: Fayetteville City Council
THROUGH: Dan Coody, Mayor
•
Hugh Earnest, Chief Administrative Officer
FROM: Stephen Davis, Finance & Internal Services Direct
DATE: April 28, 2003
SUBJECT: City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts
Tax Bonds — Series 1998
Background
The City issued bonds to pay for a portion of the construction cost of the Fayetteville Town Center
in 1998. The City's bond underwriter for the original bond issue, Stephen's Inc, has previously
provided the City with an analysis that predicts a net present value benefit of approximately
$334,000 when the bonds are re -financed.
Discussion
City Council previously authorized Staff, Kutak Rock (bond counsel), and Stephens, Inc (bond
underwriter) to begin developing the necessary bond documents to re -finance the 1998 Town Center
Bond Issue. This bond re=financing proposal has been made to the Advertising & Promotion
Commission and they approved a resolution in support of re -financing the bonds.
This request places the re -financing ordinance before City Council for approval. Additionally, a
draft of the City of Fayetteville Hotel and Motel Gross Receipts Tax Refunding Bonds, Series 2003
Trust Indenture is included for Council review. The series 2003 bonds are expected to be sold and
the bond issue closed on July 10, 2003.
Conclusion
The Advertising & Promotion Commission and Staff recommend enactment of the re -financing
ordinance.
K:\Steve Davis\Debt Financing\Town Center Bond Issue Refunding Ordinance Council Memo.doc
• • KUTAK ROCK LLP
DRAFT 04/28/2003
CITY OF FAYETTEVILLE, ARKANSAS,
Issuer
to
BANK OF OKLAHOMA, N.A.,
Trustee
TRUST INDENTURE
Dated as of July 1, 2003
Providing for:
City of Fayetteville, Arkansas
Hotel and Restaurant Gross Receipts Tax Refunding Bonds
Series 2003
Prepared by:
Kutak Rock LLP
425 West Capitol Avenue, Suite 1100
Little Rock, Arkansas 72201
10-47392.2
TABLE OF CONTENTS
(This Table of Contents is not part of the Trust
Indenture and is only for convenience of reference.)
Parties................................................................................................................
Recitals..............................................................................................................
GrantingClauses...............................................................................................
ARTICLE I
DEFINITIONS
..................1
.........................1
.........................
3
Section101. Definitions............................................................................................................... 4
Section102. Use of Words......................................................................................................... 11
ARTICLE II
THE BONDS
Section 201. Security for Bonds................................................................................................. 11
Section 202. Authorized Amount............................................................................................... 12
Section 203. Details of Bonds..................................................................................................... 12
Section204. Form of Bonds....................................................................................................... 12
Section205. Payment.................................................................................................................. 13
Section206. Execution...............................................................................................................13
Section 207. Authentication........................................................................................................13
Section 208. Delivery of Bonds..................................................................................................13
Section 209. Mutilated, Destroyed or Lost Bonds......................................................................15
Section 210. Registration and Transfer of Bonds....................................................................... 15
Section211. Cancellation....................................................................................................0......16
Section 212. Additional Bonds......................................................................0..0..0...................... 17
Section 213. Superior Obligations Prohibited............................................................................ 17
Section 214. Temporary Bonds................................................................................................... 18
Section 215. Book -Entry Bonds; Securities Depository............................................................. 18
ARTICLE III
REDEMPTION OF BONDS BEFORE MATURITY
Section 301. Redemption of Bonds............................................................................................ 19
Section302. Notice..................................................................................................................... 19
Section 303. Selection of Bonds to be Redeemed...................................................................... 20
Section 304. Surrender of Bonds Upon Redemption................................................................... 20
Section 305. Redemption in Part................................................................................................ 20
10-47392.2
• 0.
ARTICLE IV
GENERAL COVENANTS AND REPRESENTATIONS
Section 401. Payment of Principal, Premium and Interest......................................................... 21
Section 402. Performance of Covenants..................................................................................... 21
Section 403. Instruments of Further Assurance.......................................................................... 21
Section 404. Recordation and Filing........................................................................................... 21
Section 405. Inspection of Books............................................................................................... 22
Section406. Tax Covenants .................................... ................................ ... ................................ 22
Section 407. Trustee's and Paying Agent's Fees and Expenses ................................................. 22
Section 408. Construction of Projects; Certification of Completion Date ................................. 22
Section 409. Encumbrances........................................................................................................ 23
Section 410. Continuing Disclosure ...................................... .......................................a............. 23
Section 411. Authority of Commission....................................................................................... 23
ARTICLE V
REVENUES AND FUNDS
Section 501. Creation of Funds and Accounts............................................................................ 23
Section502. Project Fund...........................................................................................................24
Section 503. Revenue Fund..............................................................:......................................... 25
Section504. Bond Fund.............................................................................................................. 26
Section 505. Cost of Issuance Fund ...........26
26
Section506. Redemption Fund................................................................................................... 27
Section507. Rebate Fund............................................................................6.660..........................27
Section 508. Debt Service Reserve Fund.........................................................a.... a..................... 28
Section 509. Cessation of Fund Deposits.................................................................................... 28
Section 510. Separate Accounts Authorized................................................................................ 28
ARTICLE VI
INVESTMENTS
Section 601. Investment of Moneys........................................................................................... 29
Section 602. Investment Earnings.............................................................................................. 29
Section 603. Valuation of Funds................................................................................................. 29
Section 604. Responsibility of Trustee....................................................................................... 30
ARTICLE VII
DISCHARGE OF LIEN
Section701.
Discharge of Lien...................................................................................................
30
Section702.
Bonds Deemed Paid...............................................................................................
32
Section
703.
Non -Presentment of Bonds....................................................................................
30
ARTICLE VIII
DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS
10-47392.2
ii
Section 801. Events of Default................................................................................................... 31
Section 802. Acceleration........................................................................................................... 31
Section 803. Other Remedies; Rights of Bondholders............................................................... 32
Section 804. Right of Bondholders to Direct Proceedings......................................................... 32
Section 805. Appointment of Receiver.......................................................................................32
Section806. Waiver............................................................ .....;.................................................. 33
Section 807. Application of Moneys.......................................................................................... 33
Section 808. Remedies Vested in Trustee.................................................................................. 34
Section 809. Rights and Remedies of Bondholders.................................................................... 34
Section 8 Termination of Proceedings...........................................................0....................... 35
Section 811. Waivers of Events of Default................................................................................. 35
ARTICLE IX
TRUSTEE AND PAYING AGENT
Section
901.
Acceptance of Trusts.............................................................................................
35
Section
902.
Fees, Charges and Expenses of Trustee and Paying Agent ...................................
37
Section
903.
Additional Duties of Trustee..................................................................................
38
Section
904.
Notice to Bondholders of Default..........................................................................
39
Section
905.
Intervention by Trustee..........................................................................................
39
Section
906.
Merger or consolidation of Trustee.......................................................................
39
Section
907.
Resignation by Trustee..........................................................................................
39
Section
908.
Removal of Trustee................................................................................................
39
Section
909.
Appointment of Successor Trustee........................................................................
39
Section
910.
Concerning Any Successor Trustee.......................................................................
40
Section
911.
Reliance Upon Instruments....................................................................................
40
Section
912.
Appointment of Co-Trustee...................................................................................
40
Section
913.
Designation and Succession of Paying Agent .......................................................
41
ARTICLE X
SUPPLEMENTAL INDENTURES
Section
Section
1001.
1002.
Supplemental Indentures
Supplemental Indentures
Not Requiring Consent of Bondholders......... .............
Requiring Consent of Bondholders........ .....................
41
42
Section
1003.
Effect of Supplemental Indentures......................................................................
43
ARTICLE XI
MISCELLANEOUS
Section 1101. Consents, etc. of Bondholders............................................................................. 43
Section1102. Notices................................................................................................................. 43
Section 1103. Limitation of Rights............................................................................................. 44
Section1104. Severability.......................................................................................................... 44
Section 1105. Applicable Provisions of Law.............................................................................. 44
Section1106. Counterparts.........................................................................................................44
Section 1107. Successors and Assigns....................................................................................... 44
10-47392.2 111
0
Section1108. Captions ...... ..........:................................................. ..... ........................................ 45
Section 1109. Photocopies and Reproductions.......... . ......... 45
Section 1110. Bonds Owned by City.......................................................................................... 45
Signatures......................................................................................................................................46
Exhibit A Form of Series 2003 Bond............................................................................... A-1
Exhibit B Form of Coverage Certificate ................ ...........................................................B-1
Exhibit C Form of Requisition. ...... ...... ......... . ........... ..... . C-i
10-47392.2 iv
TRUST INDENTURE
THIS TRUST INDENTURE, made and entered into as of July 1, 2003, by and between
the CITY OF FAYETTEVILLE, ARKANSAS, a city of the first class organized under and
existing by virtue of the laws of the State of Arkansas (the "City"), as party of the first part, and
BANK OF OKLAHOMA, N.A., a national banking association organized under and existing by
virtue of the laws of the United States of America, with its principal office, domicile, and post
office address in Tulsa, Oklahoma (the "Trustee"), as party of the second part;
WITNESSETH:
WHEREAS, the City is authorized under the provisions of the Advertising and
Promotion Commission Act, Arkansas Code Annotated (1997 Repl.) §§26-75-601 et seq. (as
from time to time amended, the "Act"), to issue its bonds secured by and payable from the
revenues derived by the City from the one percent (1%) tax (the "Tax") levied by the City
pursuant to Ordinance No. 2310 adopted by the City on March 1, 1977, as subsequently
amended, upon the gross receipts or gross proceeds (i) derived from renting, leasing or otherwise
furnishing hotel or motel accommodations for profit within the boundaries of the City and (ii) of
restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out restaurants, concession stands,
convenience stores, grocery store -restaurants, caterers and similar businesses within the
boundaries of the City engaged in the business of selling prepared food for on -premises or off -
premises consumption; and
WHEREAS, pursuant to the provisions of Ordinance No. 4038, duly adopted by the City
on June 3, 1997, there was submitted to the qualified electors of the City. the question of the
issuance of not to exceed $6,950,000 in principal amount of bonds pursuant to the Act, said
bonds to be secured by a pledge of and lien upon the City's receipts of the Tax (the "Tax
Receipts"); and
WHEREAS, at a special election held August 5, 1997, a majority of the qualified electors
of the City voting on the aforementioned question approved the issuance of the bonds and the
corresponding pledge of the Tax Receipts to the payment thereof; and
WHEREAS, pursuant to the Act and the results of the aforementioned election, the City
issued its City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax Bonds, Series
1998, dated November 1, 1998 (the "Series 1998 Bonds"), for the purpose of financing a portion
of the costs of constructing the Fayetteville Town Center (the "1998 Project"); and
WHEREAS, the Series 1998 Bonds were originally issued in the aggregate principal
amount of $6,950,000, of which $6,620,000 presently remains outstanding; and
WHEREAS, the City has also, pursuant to the Act and an ordinance duly adopted by the
City, previously issued its $2,675,000 City of Fayetteville, Arkansas Hotel and Restaurant Gross
Receipts Tax Refunding Bonds, Series 1995, dated October 1, 1995 (the "Series 1995 Bonds"),
of which $700,000 in principal amount presently remains outstanding, for the purpose of
financing the construction and equipping of convention facilities; and
10-47392.2
WHEREAS, pursuant to the Act and the provisions of Ordinance No. _ of the City,
adopted by the City Council of the City on , 2003 (the "Authorizing Ordinance"),
the City has now determined that debt service savings can be realized with respect to the Series
1998 Bonds by issuing its Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series
2003 (the "Series 2003 Bonds"), for the purpose of refunding the Series 1998 Bonds; and
WHEREAS, the payment of debt service on the Series 2003 Bonds will be secured by a
pledge of the Tax Receipts on a junior and subordinate basis to the pledge of Tax Receipts
securing the payment of debt service on the Series 1995 Bonds; and
WHEREAS, the Series 2003 Bonds and the Trustee's Certificate of Authentication to be
endorsed thereon are to be in substantially the forms set forth in Exhibit A hereto, with necessary
and appropriate variations, omissions and insertions as permitted or required by this Indenture;
and
WHEREAS, the execution and delivery of this Indenture and the issuance of the Series
2003 Bonds have been in all respects duly and validly authorized by the Authorizing Ordinance;
and
WHEREAS, all things necessary to make the Series 2003 Bonds, when authenticated by
the Trustee and issued as in this Indenture provided, the valid, binding and legal obligations of
the City according to the import thereof, and to constitute this Indenture a valid obligation of the
City and a valid pledge of the Tax Receipts to the payment of the principal of and premium, if
any, and interest on the Series 2003 Bonds, as specified in and in accordance with the provisions
of the Act and the provisions hereof, have been done and performed, and the creation. execution
and delivery of this Indenture and the creation, execution, issuance and delivery of the Series
2003 Bonds, subject to the terms hereof, have in all respects been duly authorized;
NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, THIS
INDENTURE WITNESSEtH:
That the City, in consideration of the premises and the acceptance by the Trustee of the
trusts hereby created and of the purchase and acceptance of the Series 2003 Bonds by the holders
and owners thereof, and the sum of Ten Dollars ($10.00), lawful money of the United States of
America, to it duly paid by the Trustee, at or before the execution and delivery of these presents,
and for other good and valuable consideration, the receipt of which is hereby acknowledged, and
in order to secure the payment of the principal of and premium, if any, and interest on the Series
2003 Bonds and all Additional Bonds (hereinafter defined), if any, according to their tenor and
effect, and to secure the performance and observance by the City of all the covenants expressed
or implied herein and in the Series 2003 Bonds and Additional Bonds • (collectively, the
"Bonds"), subject to all of the provisions hereof, does hereby grant, bargain, sell, convey,
mortgage, assign, transfer and pledge unto the Trustee, and unto its successor or successors in
trust, and to them and their assigns forever, for the security of the performance of the obligations
of the City hereinafter set forth, the following:
10-07392.2 2
Subject to the prior pledge securing the payment of debt service with respect to the Series
1995 Bonds, the revenues derived by the City from the Tax levied by the City upon the gross
receipts or gross proceeds (i) derived from renting, leasing or otherwise furnishing hotel or motel
accommodations for profit within the boundaries of the City and (ii) of restaurants, cafes,
cafeterias, delis, drive-in restaurants, carry -out restaurants, concession stands, convenience
stores, grocery store -restaurants, caterers and similar businesses within the boundaries of the
City engaged in the business of selling prepared food for on -premises or off -premises
consumption (the "Tax Receipts"). The Tax has been levied by Ordinance No. 2310 adopted
March 1, 1977, as amended, of the City pursuant to the authority of the Act, at the rate of one
percent (1%).
2.
The Bond Fund, Debt Service Reserve Fund, Redemption Fund, Project Fund and all
other funds held by the Trustee pursuant to the Indenture except the Rebate Fund and Cost of
Issuance Fund, and all moneys and investments in the pledged funds but subject to the provisions
of this Indenture pertaining thereto, including the making of disbursements therefrom.
3.
Any and all other moneys, rights and interests of every kind and nature which is from
time to time hereafter conveyed, pledged, assigned or transferred by delivery or by writing or
transfer of any kind, as and for additional security hereunder, by the City or by any other person,
firm or corporation, to the Trustee, which is hereby authorized to receive any and all such
property at any time and at all times and to hold and apply the same subject to the terms hereof.
TO HAVE AND. TO HOLD all the same (the "Trust Estate") with all privileges and
appurtenances hereby conveyed and assigned, or agreed or intended so to be, to the Trustee and
its successors in said trusts and to them and their assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal
and proportionate benefit, security and protection of all owners of the said Bonds issued under
and secured by this Indenture without privilege, priority or distinction as to lien or otherwise of
any of said Bonds over any of the other Bonds; provided, however, that if the City, its successors
or assigns, shall well and truly pay, or cause to be paid, the principal of, premium, if any, and
interest due on the Bonds, at the times and in the manner provided in the Bonds according to the
true intent and meaning thereof, and shall make the payments as required under this Indenture or
shall provide, as permitted hereby, for the payment thereof by depositing with or causing to be
deposited with the Trustee the entire amount due or to become due thereon, and shall well and
truly keep, perform and observe all of 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 payments or deposits this Indenture and the lien and rights hereby granted shall cease,
determine and be void; otherwise, this Indenture to be and remain in full force and effect.
10-47392.2 3
THIS INDENTURE FURTHER WITNESSETH that, and it is expressly declared that, all
Bonds issued and secured hereunder are to be issued, authenticated and delivered and all said
revenues and income hereby pledged are to be dealt with and disposed of under, upon and
subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as
hereinafter expressed, and the City has agreed and covenanted, and does hereby agree and
covenant, with the Trustee and with the holders from time to time of the Bonds or any. part
thereof, as follows, that is to say:
ARTICLE I
DEFINITIONS
Section 101. Definitions. In addition to the words and terms elsewhere defined in this
Indenture, the following words and terms as used in this Indenture shall have the following
meanings:
"Account" Means an Account established by Article V of this Indenture.
"Act" means the Advertising and Promotion Commission Act, Arkansas Code Annotated
(1997 Repl.) § § 26-75-601 et seq., as from time to time amended.
"Additional Bonds" means Bonds in addition to the Series 2003 Bonds which are issued
under the provisions of Section 212 of this Indenture.
"Additional Convention Facilities" means land, buildings, structures, machinery,
furniture, fixtures, equipment and all related or• necessary tangible property constituting
convention center improvements which are permitted to be financed under the provisions of the
Act.
"Annual Debt Service" means, with respect to all or any particular amount of Bonds, the
Debt Service for any particular Fiscal Year required to be paid or set aside during such Fiscal
Year, less the amount of such payment which is provided from the proceeds of the sale of Bonds
or from sources other than Tax Receipts.
"Authorized Representative" means either the Mayor or the Finance & Internal Services
Director of the City and such additional persons as from time to time may be designated to act on
behalf of the City by a Certificate furnished to the Trustee containing the specimen signature
thereof and executed on behalf of the City by its Mayor.
"Authorizing Ordinance" means Ordinance No. , adopted by the City on
, 2003, which authorized the issuance of the Series 2003 Bonds pursuant to this
Indenture.
"Beneficial Owner" means any Person who acquires beneficial ownership interest in a
Bond held by the Securities Depository. In determining the Beneficial Owner of any Bond, the
Trustee may rely exclusively upon written representations made and information given to the
10-47392.2 4
Trustee by the Securities Depository or its Participants with respect to any Bond held by the
Securities Depository in which a beneficial ownership interest is claimed.
"Bond Counsel" means any firm of nationally recognized municipal bond counsel
designated by the City and acceptable to the Trustee.
"Bond Fund" means the fund by that name created and established in Section 501 of this
Indenture.
"Bonds" means the Series 2003 Bonds and all Additional Bonds, if any, authenticated
and delivered under this Indenture.
"Book -Entry System" means the book -entry system maintained by the Securities
Depository and described in Section 215 of this Indenture.
"Certificate" means a
document signed
by an
Authorized Representative of the City
attesting to or acknowledging
the circumstances or other
matters therein stated.
"City" means the City of Fayetteville, Arkansas.
"City Clerk" means the person holding the office and performing the duties of the City
Clerk of the City.
"Closing Date" means, with respect to any series of Bonds, the date upon which there is
an exchange of such series of Bonds for the proceeds representing the purchase price for such
series of Bonds by the Original Purchaser or Purchasers thereof.
"Code" means the Internal Revenue Code of 1986, as from time to time amended, and
applicable regulations issued or proposed thereunder.
"Commission" means the Advertising and Promotion Commission of the City of
Fayetteville, Arkansas, or any successor thereto.
"Completion Date" means the date upon which a Project is first ready for normal
continuous operation or the date upon which damaged Project facilities are replaced in normal
and continuous operation.
"Continuing Disclosure Agreement" means, collectively, each Continuing Disclosure
Agreement between the City and the Trustee, dated the date of issuance and delivery of a series
of Bonds, as originally executed and as amended from time to time in accordance with the terms
thereof.
"Cost of Issuance Fund" means the fund by that name created and established in
Section 501 of this Indenture.
"Costs of Issuance" means
all
items of expense
payable
or reimbursable directly or
indirectly by the City and related to
the
authorization, sale
and issuance of the Bonds, including,
10-47392.2 5
but not limited to, underwriting discounts, fees and expenses, election expenses, publication
expenses, expenses of printing, reproducing, filing and recording documents, initial fees and
charges of the Trustee and Paying Agent, fees and expenses for legal, accounting and other
professional services, rating fees, costs of securing any credit enhancement for the Bonds, costs
of execution, transportation and safekeeping of the Bonds, and other costs, charges and fees
incurred in connection with the foregoing.
"Debt Service" means, with respect to all or any particular amount of Bonds for any
Payment Period, the amount required to pay the sum of the interest on such Bonds payable
during the Payment Period and the principal of, and any other amount required to effect any
mandatory redemption of, such Bonds, if any, during the Payment Period.
"Debt Service Reserve Fund" means the fund by that name created and established in
Section 501 of this Indenture.
"Event of Default" means any event of default specified in Section 801 hereof.
"Fiscal Year" means the 12 -month period used, at any time, by the City for accounting
purposes, which may be the calendar year.
"Fund" means a fund confirmed or established by Article V of this Indenture.
"Government Securities" means (i) bonds, notes, certificates of indebtedness, treasury
bills or other securities constituting direct obligations of, or obligations on which the full and
timely payment of principal and interest is fully and unconditionally guaranteed by, the United
States of America (including any such securities issued or held in book -entry form on the books
of the Department of Treasury of the United States of America), and (ii) evidences of direct
ownership or proportionate or individual interest in future interest or principal payments on
specified direct obligations of, or obligations on which the full and timely payment of principal
and interest is fully and unconditionally guaranteed by, the United States of America, which
obligations are held by a bank or trust company organized and existing under the laws of the
United States of America or any state thereof in the capacity of custodian in form and substance
satisfactory to the Trustee.
"Holder" or "Bondholder" or "Owner of the Bonds" means the registered owner of any
Bond.
"Indenture" means this Trust Indenture dated as of July 1, 2003, between the City and the
Trustee, together with all indentures supplemental hereto.
"Interest Payment Date" means any date on which interest is payable on the Bonds.
"Investment Obligations" means, if and to the extent the same are at the time legal for
investment of Funds and Accounts held under this Indenture:
(a) Government Securities;
10-47392.2 6
(b) bonds, notes or other obligations of any state of the United States of
America or any political subdivision of any state, which at the time of their purchase are
rated in either of the two highest rating categories by a nationally recognized Rating
Agency;
(c) certificates of deposit or time or demand deposits constituting direct
obligations of any bank, bank holding company, savings and loan association or trust
company organized under the laws of the United States of America or any state thereof
(including the Trustee or any of its affiliates), except that investments may be made only
in certificates of deposit or time or demand deposits which are:
(1) insured by the Federal Deposit Insurance Corporation, or any other
similar United States Government deposit insurance program then in existence; or
(2) continuously and fully secured by Government Securities, which
have a market value, exclusive of accrued interest, at all times at least equal to the
principal amount of such certificates of deposit or time or demand deposits;
(d) short term discount obligations of the Federal National Mortgage
Association and the Government National Mortgage Association;
(e) money market mutual funds (1) that invest in Government Securities or
that are registered with the federal Securities and Exchange Commission (SEC), meeting
the requirements of Rule 2a-7 under the Investment Company Act of 1940, and (2) that
are rated in either of the two highest categories by a nationally recognized Rating
Agency; and
[(f) with respect to the Debt Service Reserve Fund only, the Surety Bond.]
"Mayor" means the person holding the office and performing the duties of the Mayor of
the City.
"Original Purchaser" means the first purchaser(s) of a series of Bonds from the City.
"Outstanding" means, as of any date of computation, Bonds theretofore or thereupon
being delivered under this Indenture, except:
(a)
Bonds
cancelled at or prior to such
date or delivered to or acquired
by the
Trustee at or
prior to
such date for cancellation;
(b) Bonds deemed to be paid in accordance with Article VII of this Indenture;
lit,
(c) • Bonds in lieu of or in exchange or substitution for which other Bonds shall
have been authenticated and delivered pursuant to this Indenture.
10-47392.2 7
"Participants" means those financial institutions for whom the Securities Depository
effects book -entry transfers and pledges of securities deposited with the Securities Depository in
the Book -Entry System, as such listing of Participants exists at the time of such reference.
"Payment Period" means a period from, but not including, a Principal Payment Date up
to, and including, the next succeeding Principal Payment Date.
"Person" means any natural person, firm, association, corporation, limited liability
company, partnership, joint stock company, joint venture, trust, unincorporated organization or
firm, or.a government or any agency or political subdivision thereof or other public body.
"Principal Payment Date" means any date on which principal is payable on the Bonds,
whether at maturity, by operation of the mandatory sinking fund, or otherwise.
"Project" means
the 1998
Project and
any Additional Convention
Facilities that may be
acquired, constructed or
equipped
in the future
with the proceeds of Bonds
issued hereunder.
"1998 Project" means the construction of the Fayetteville Town Center, financed in part
with the proceeds of the Series 1998 Bonds.
"Project Costs" means, to the extent permitted by the Act or other applicable laws, with
respect to a Project, all costs of planning, designing, purchasing, acquiring, constructing,
improving, enlarging, extending, repairing, financing and placing in operation, including
obtaining governmental approvals, certificates, permits and licenses with respect thereto,
heretofore or hereafter paid or incurred by or on behalf of the City and which shall include, but
shall not be limited to:
(a) interest accruing in whole or in part on the Bonds prior to and during
construction of a Project, including all amounts required by this Indenture to be paid
from the proceeds of the Bonds into the Bond Fund;
(b) preliminary investigation and development costs, engineering fees,
contractors' fees, labor costs, the cost of materials, equipment, utility services and
supplies, costs of obtaining permits, licenses and approvals, costs of real property,
insurance premiums, legal and financing fees and costs, administrative and general costs,
and all other costs properly allocable to the acquisition, construction and equipping of a
Project and placing the same in operation;
(c) all costs relating to injury and damage claims arising out of the
acquisition, construction or equipping of a Project;
(d) all other costs incurred in connection with, and properly allocable to, the
acquisition, construction and equipping of a Project; and
(e) amounts to pay or reimburse the City or any City fund for expenses of the
City incident and properly allocable to such planning, designing, purchasing, acquiring,
10-47392.2 8
C
El
constructing, improving, enlarging, extending, repairing, financing and placing in
operation of a Project.
"Project Fund" means the fund by that name created and established in Section 501 of
this Indenture.
"Qualified Engineer" means an independent consulting engineer or firm of independent
consulting engineers not in the regular employ of the City.
"Rating Agency" means Moody's Investors Service, Standard & Poor's Ratings Services,
a Division of The McGraw-Hill Companies, Inc., or Fitch, Inc., and their respective successors
and assigns. If any such corporation ceases to act as a securities rating agency, the City may
appoint any nationally recognized securities rating agency as a replacement.
"Rebate Fund" means the fund by that name created and established in Section 501 of
this Indenture.
"Record Date" means the close of business on the 15th day of the calendar month next
preceding each Interest Payment Date on the Bonds or, if such day shall not be a business day,
the immediately preceding business day.
"Redemption Fund" means the fund by that name created and established in Section 501
of this Indenture.
"Requisition" means a written requisition of the City, consecutively numbered, signed by
an Authorized Representative including, without limitation, the following with respect to each
payment requested:
(i) the name of the person or party to whom payment is to be made and the
purpose of the payment,
(ii) the amount to be paid thereunder;
(iii) that such amount has not been previously paid by the City and is justly
due and owing to the person(s) named therein as a proper payment or reimbursement of a
Project Cost; and
(iv) that no Event of Default exists under the Indenture and that, to the
knowledge of the Authorized Representative, no event has occurred and continues which
with notice or lapse of time or both would constitute an Event of Default under the
Indenture.
"Reserve Requirement" means, at any particular time, an amount equal to the least of
(a) 10% of the face amount of [all][each series of] Outstanding Bonds, (b) the maximum Annual
Debt Service on [all][each series of] Outstanding Bonds, or (c) 1.25 times the average Annual
Debt Service on [all][each series of] Outstanding Bonds. For all purposes of this Indenture, the
Reserve Requirement may be satisfied by cash or by Investment Obligations.
10.47392.2 9
"Revenue Fund" means the fund by that name confirmed and continued in Section 501 of
this Indenture.
"Securities Depository" means The Depository Trust Company, a limited -purpose trust
company organized under the laws of the State of New York, or its nominee, and it successors
and assigns, or any other depository institution appointed by the City to act as depository for the
Bonds in connection with the Book -Entry -Only System.
"Series 1995 Bonds" means the $2,675,000 City of Fayetteville, Arkansas Hotel and
Restaurant Gross Receipts Tax Refunding Bonds, Series 1995, dated October 1, 1995, of which
$700,000 in principal amount presently remains Outstanding. The Series 1995 Bonds are
secured by and payable from the Tax Receipts on a prior and senior basis to the pledge of Tax
Receipts securing the payment of the Bonds.
"Series 1998 Bonds" means the $6,950,000 City of Fayetteville, Arkansas Hotel and
Restaurant Gross Receipts Tax Bonds, Series 1998, dated November 1, 1998, of which
$6,620,000 in principal amount presently remains Outstanding. The Series 1998 Bonds are
being refunded with a portion of the proceeds of the Series 2003 Bonds.
"Series 2003 Bonds" means the $ City of Fayetteville, Arkansas Hotel and
Restaurant Gross Receipts Tax Refunding Bonds, Series 2003, dated July 1, 2003, issued under
and secured by this Indenture.
"State" means the State of Arkansas.
"Supplemental Indenture" means any indenture supplemental to or amendatory of this
Indenture, adopted by the City in accordance with Article X hereof.
["Surety Bond" means the surety bond issued by guaranteeing
certain payments into the Debt Service Reserve Fund with respect to the Series 2003 Bonds as
provided therein and subject to the limitations set forth therein.]
"Tax" means the one percent (1%) tax levied by the City pursuant to Ordinance No. 2310
adopted by the City on March 1, 1977, as subsequently amended, upon the gross receipts or
gross proceeds (i) derived from renting, leasing or otherwise furnishing hotel or motel
accommodations for profit within the boundaries of the City and (ii) of restaurants, cafes,
cafeterias, delis, drive-in restaurants, carry -out restaurants, concession stands, convenience
stores, grocery store -restaurants, caterers and similar businesses within the boundaries of the
City engaged in the business of selling prepared food for on -premises or off -premises
consumption.
"Tax Receipts" means receipts derived by the City from the levy of the Tax.
"Tax Regulatory Agreement" means with respect to any series of Bonds issued under this
Indenture, that Tax Regulatory Agreement of the City relating to maintenance of the
10-47392.2 10
excludability of interest on such Bonds from gross income for federal income tax purposes,
delivered in connection with the issuance of such series of Bonds.
"Trustee" and Paying Agent" means the trustee and paying agent for the time being,
whether original or successor, with the same institution to always occupy both positions, and
with the original Trustee and Paying Agent being Bank of Oklahoma, N.A., Tulsa, Oklahoma.
"Trust Estate" means the property described in the granting clauses of this Indenture.
Section 102. Use of Words. Words of the masculine gender shall be deemed and
construed to include correlative words of the feminine and neuter genders. Unless the context
shall otherwise indicate, the words "Bond," "owner," "holder," and "person" shall include the
plural, as well as the singular number.
ARTICLE II
THE BONDS
Section 201. Security for Bonds. (a) The Bonds are special and limited obligations of
the City payable as to principal, premium, if any, and interest solely out of the Trust Estate. The
Trust Estate is hereby pledged, appropriated and assigned to the payment of the principal of,
premium, if any, and interest on the Bonds, all in accordance with their terms and the provisions
of this Indenture. The Bonds do not constitute an indebtedness for which the faith and credit of
the State of Arkansas or the City is pledged within the meaning of any Constitutional or statutory
limitation. The Bonds shall never constitute an obligation of or a charge against the general
credit or general taxing powers of the City.
(b) The pledge, charge, lien, trusts and assignments made herein with respect to the
Trust Estate shall be valid and binding, and shall be deemed continuously perfected from the
time of issuance of the Series 2003 Bonds, and the Trust Estate shall thereupon be immediately
subject to the pledge, charge, lien, trust and assignment created hereby upon receipt thereof by or
for the City or by the Trustee and Paying Agent hereunder, without any physical delivery,
segregation thereof or further act, and such pledge, charge, lien, trust and assignment shall be
valid and binding as against all parties having claims of any kind in tort, contract or otherwise
against the City, irrespective of whether such parties have notice thereof.
(c) The Bonds shall be equally and ratably payable and secured hereunder without
priority by reason of date of adoption of this Indenture or any Supplemental Indenture
authorizing their issuance or by reason of their series, number, date, date of issue, execution,
authentication or sale, or otherwise.
(d) So long as any Bonds are Outstanding under the provisions of this Indenture, all
Tax Receipts shall be deemed to be necessary to accomplish the purposes of the City and shall
be subject to the covenants and agreements set forth in this Indenture, and no such Tax Receipts
shall ever be used or deposited otherwise except as herein expressly permitted.
10-47392.2 11
(e) The City covenants, as permitted by the Act, that while any of the Bonds are
Outstanding, the levy and collection of the Tax shall not be reduced or discontinued, and the City
will use due diligence in causing the collection of the Tax. Nothing herein shall prohibit the City
from increasing the rate of the Tax from time to time, to the extent permitted by law, and no part
of the revenues or receipts derived by the City from any such increase shall be deemed part of
the Tax Receipts unless authorized and pledged by a Supplemental Indenture.
Section 202. Authorized Amount. There is hereby authorized the issuance of bonds of
the City to be designated "Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series
2003" in the principal amount of Dollars ($) (the "Series 2003
Bonds"). No Bonds may be issued under the provisions of this Indenture except in accordance
with this Article II. The total principal amount of Bonds that may be issued hereunder is limited
to the extent described in Section 212 hereof, except as provided in Section 209 and except for
refunding bonds issued under the provisions of Section 212.
Section 203. Details of Bonds. (a) The Series 2003 Bonds (i) shall be designated
"City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax Refunding Bonds,
Series 2003," (ii) shall be in the aggregate principal amount of $ ,
(iii) shall be dated as of July 1, 2003, (iv) shall bear interest from such date at the rates
hereinafter provided until paid, payable semiannually on April 1 and October 1 of each year,
commencing October 1, 2003, (v) shall be issued in denominations of $5,000 each, or any
integral multiple thereof, (vi) shall be numbered from R03-1 upwards in order of issuance
according to the records of the Trustee, and (vii) shall mature, unless sooner redeemed in the
manner in this Indenture set forth, on October 1 in each of the years and in the amounts set forth
in the following table, which table also sets forth the interest rates for the Series 2003 Bonds:
Year
(October 1)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Principal Amount
D
Interest Rate
Section 204. Form of Bonds. (a) The Series 2003 Bonds shall be initially issued as
fully registered Bonds, without coupons, in the form of [twelve] typewritten bond certificates
(one for each maturity) to be delivered to the Securities Depository. Each such certificate shall
be initially registered in the name of the nominee of the Securities Depository, and no Beneficial
10-47392.2 12
Owner will receive a certificate representing his interest in the Series 2003 Bonds, except upon
the occurrence of the events described in Section 215 hereof. Beneficial Owners shall be
deemed to have waived any right to receive a bond certificate except under the circumstances
described in Section 215. The Series 2003 Bonds and the Trustee's certificate of authentication
to be endorsed thereon shall be in substantially the form set forth in Exhibit A hereto, with
appropriate variations, insertions and omissions as permitted or required by this Indenture.
Section 205. Payment. The Bonds shall be payable, with respect to principal,
premium, if any, and interest in any coin or currency of the United States of America which at
the time of payment is legal tender for the payment of public and private debts. The principal of
and premium, if any, on the Bonds shall be payable upon surrender thereof at the principal
corporate trust office of the Trustee. Payment of interest on each Bond shall be made by check
or draft mailed to the registered owner of such Bond as of the applicable Record Date at his
address as it appears on the registration books maintained by the Trustee. For purposes of this
Indenture, interest on the Bonds shall be deemed to accrue on the basis of a 360 -day year of
twelve 30 -day months. So long as the Securities Depository or its nominee is the sole registered
owner of the Bonds, payment of interest thereon shall be made by wire transfer of immediately
available funds by the Paying Agent to the Securities Depository or its nominee.
Section 206. Execution. The Bonds shall be executed on behalf of the City by the
manual or facsimile signatures of its Mayor and City Clerk and shall have impressed or
imprinted thereon the seal of the City. A facsimile signature shall have the same force and effect
as if manually signed. In case any officer whose manual signature or a facsimile of whose
signature shall appear on the Bonds shall cease to be such officer before the delivery of such
Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such official had remained in office until delivery.
Section 207. Authentication. Only such Bonds as shall have endorsed thereon a
certificate of authentication substantially in the form set forth in Exhibit A attached hereto duly
executed by the Trustee shall be entitled to any right or benefit under this Indenture. No Bond
shall be valid and obligatory for any purpose unless and until such certificate of authentication
shall have been duly executed by the Trustee, and such certificate of the Trustee upon any such
Bond shall be conclusive evidence that such Bond has been authenticated and delivered under
this Indenture. The Trustee's certificate of authentication on any Bond shall be deemed to have
been executed if signed by an authorized officer of the Trustee, but it shall not be necessary that
the same officer sign the certificate of authentication on all of the Bonds issued hereunder.
Section 208. Delivery of Bonds. The City shall execute and deliver to the Trustee and
the Trustee shall authenticate the Bonds of any series and deliver said Bonds to the Securities
Depository as may be directed in this Section 208, in Section 212 hereof or iri any Supplemental
Indenture.
(a) Prior to the delivery or original issuance by the Trustee of any authenticated
Bonds of any series, there shall be delivered to the Trustee:
10-47392.2 13
0
(1) An original executed counterpart of this Indenture or, in the case of
Additional Bonds, a Supplemental Indenture by and between the City and the Trustee
setting forth the details concerning such Additional Bonds;
(2) Original executed counterparts of the Continuing Disclosure Agreement
and the Tax Regulatory Agreement applicable to such series of Bonds;
(3) A Certificate directing the Trustee toauthenticate the Bonds and
containing instructions as to the delivery of the Bonds upon payment to the Trustee, for
the account of the City, of a sum specified in such Certificate;
(4) A copy, duly certified by the City Clerk, of the proceedings of the City
authorizing the issuance of the Bonds;
(5) A written opinion of Bond Counsel approving the legality of the Bonds;
(6) In the case of any series of Additional Bonds, a Certificate signed by the
Mayor certifying that (i) the City is not then in default in the performance of any of the
covenants, conditions, agreements or provisions contained in this Indenture, and (ii) the
City is current as to all required deposits at that time in all the Funds and Accounts
described in Article V of this Indenture or hereafter created by Supplemental Indentures,
or if the City is in default or is not so current, certifying in the case of (i) or (ii) as to that
fact and that, upon the application of the proceeds of the sale of such Additional Bonds as
provided in the Supplemental Indenture authorizing the issuance thereof, the City will not
be in default or will be current thereafter;
(7) In the case of any series of Additional Bonds, a written opinion of Bond
Counsel to the effect that the exemption from federal income tax of the interest on the
Series 2003 Bonds and any Additional Bonds theretofore issued will not be adversely
affected by the issuance of the Additional Bonds then being issued;
(8) A resolution of the Commission approving the issuance of the Additional
Bonds; and
(9) Such further documents and certificates as may be required by the
Original Purchaser of such series of Bonds.
(b) Simultaneously with the delivery of the Series 2003 Bonds, the Trustee shall
apply the proceeds thereof as follows:
(1) The amount, if any, received as accrued interest on the Series 2003 Bonds
shall be deposited in the Bond Fund;
(2) $ , an amount [equal to the Reserve Requirement] [sufficient
to purchase the Surety Bond], shall be deposited in the Debt Service Reserve Fund;
(3)
An amount
equal to
$
shall be deposited in
the Costs of
Issuance Fund
for payment
of Costs
of Issuance
as directed by a Certificate
of the City;
10-47392.2
14
(4) An amount sufficient, together with moneys held by the Bank of
Oklahoma, N.A., as trustee for the Series 1998 Bonds, in funds and accounts created by
the trust indenture securing the payment of the Series 1998 Bonds, to refund the Series
1998 Bonds shall be deposited in trust with the the Bank of Oklahoma, N.A., as escrow
trustee (the "1998 Escrow Trustee"), in accordance with the provisions of an Escrow
Deposit Agreement to be dated as of the date of delivery of the Series 2003 Bonds (the
"1998 Escrow Agreement"), by and between the City and the 1998 Escrow Trustee. The
1998 Escrow Agreement shall provide for the investment of the funds, to the extent
feasible, in Government Securities which will mature and bear interest at such times and
in such amounts as will, together with any uninvested moneys held by the 1998 Escrow
Trustee, provide sufficient moneys to pay as due at maturity and upon redemption prior
to maturity on October 1, 2003, all principal of and premium, if any, and interest on the
Series 1998 Bonds. The 1998 Escrow Agreement will provide for giving notice of
redemption prior to maturity of the Series 1998 Bonds, for the payment of required
trustee and paying agent fees on the Series 1998 Bonds, and for release of all claims of
the Series 1998 Bonds on the Trust Estate; and
(5) The balance of said proceeds shall be deposited in the Bond Fund and
shall serve as a credit against the deposit required to be made to the Bond Fund by the
City on or before July 15, 2003 pursuant to Section 503(b) hereof.
Section 209. Mutilated, Destroyed or Lost Bonds. In case any Bond issued hereunder
shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause
to be executed and the Trustee may authenticate and deliver a new Bond of like series, date,
number, maturity and tenor in exchange and substitution for and upon cancellation of such
mutilated Bond, or in lieu of and in substitution for such Bond destroyed or lost, upon the
Bondholder's paying the reasonable expenses and charges of the City and the Trustee in
connection therewith, and, in the case of a Bond destroyed or lost, filing by the Bondholder with
the Trustee evidence satisfactory to the Trustee that such Bonds were destroyed or lost, and of
the Bondholder's ownership thereof, and furnishing the City and Trustee with indemnity
satisfactory to them. The Trustee is hereby authorized to authenticate any such new Bond. In
the event any such Bonds shall have matured, instead of issuing a new Bond, the City may pay
the same without the surrender thereof. Upon the issuance of a new Bond under this Section
209, the City may require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including the fees and
expenses of the Trustee) connected therewith.
Section 210. Registration and Transfer of Bonds. The City hereby constitutes and
appoints the Trustee as Bond Registrar of the City, and as Bond Registrar the Trustee shall keep
books for the registration and for the transfer of the Bonds as provided in this Indenture at the
principal corporate trust office of the Trustee. The person in whose name any Bond shall be
registered shall be deemed and regarded as the absolute owner thereof for all purposes and
payment of or on account of the principal of and interest on any such Bond shall be made only to
or upon the order of the registered owner thereof, or the owner's legal representative, and neither
the City, the Trustee nor the Bond Registrar shall be affected by any notice to the contrary, but
such registration may be changed as herein provided. All such payments shall be valid and
10-47392.2 15
effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so
paid.
Bonds may be transferred on the books of registration kept by the Trustee by the
registered owner in person or by the owner's duly authorized attorney, upon surrender thereof,
together with a written instrument of transfer duly executed by the registered owner or the
owner's duly authorized attorney. Upon surrender for transfer of any Bond at the principal
corporate office of the Trustee, the City shall execute and the Trustee shall authenticate and
deliver in the name of the transferee or transferees a new Bond or Bonds of the same series and
in the same aggregate principal amount and of any authorized denomination or denominations.
Bonds may be exchanged at the principal corporate trust office of the Trustee for an equal
aggregate principal amount of Bonds of any other authorized denomination or denominations of
the same series with corresponding maturities. The City shall execute and the Trustee shall
authenticate and deliver Bonds which the Bondholder making the exchange is entitled to receive,
bearing numbers not contemporaneously then Outstanding. The execution by the City of any
Bond of any denomination shall constitute full and due authorization of such denomination and
the Trustee shall thereby be authorized to authenticate and deliver such Bond.
Such transfers of registration or exchanges of Bonds shall be without charge to the
Owners of such Bonds, but any taxes or other governmental charges required to be paid with
respect to the same shall be paid by the Owner of the Bond requesting such transfer or exchange
as a condition precedent to the exercise of such privilege.
The Trustee shall not be required to transfer or exchange any Bond during the period
from and including a Record Date to the next succeeding Interest Payment Date of such Bond
nor to transfer or exchange any Bond after the mailing of notice calling such Bond for
redemption has been made, and prior to such redemption.
If the Securities Depository or its nominee is the sole registered owner of the Bonds,
transfers of ownership and exchanges shall be effected on the records of the Securities
Depository and its Participants pursuant to rules and procedures established by the Securities
Depository and its Participants. In such case, the Trustee shall deal with the Securities
Depository as representative of the Beneficial Owners of the Bonds for purposes of exercising
the rights of Bondholders hereunder, and the rights of the Beneficial Owners of such Bonds held
by the Securities Depository or its nominee shall be limited to those established by law and
agreements between such Beneficial Owners and the Securities Depository and its Participants.
Requests, consents and directions from, and votes of, the Securities Depository or its nominee as
representative shall not be deemed inconsistent if they are made with respect to different
Participants or Beneficial Owners.
Section 211. Cancellation. All Bonds surrendered for payment, redemption, transfer
or exchange, if surrendered to the Trustee, shall be promptly cancelled by it, and, if surrendered
to any person other than the Trustee, shall be delivered to the Trustee and, if not already
cancelled, shall be promptly cancelled by it. The City may at any time deliver to the Trustee for
cancellation any Bonds previously authenticated and delivered hereunder, which the City may
10-47392.2 16
S 9
have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly cancelled
by the Trustee. All cancelled Bonds held by the Trustee shall be.disposed of as directed by the
City. Whenever in this Indenture provision is made for the cancellation by the Trustee and the
delivery to the City of any Bonds, the Trustee may, upon the written request of the City, in lieu
of such cancellation and delivery, destroy such Bonds in the presence of any officer of the City
(but only if the City shall so require), and deliver a certificate of such destruction to the City.
Section 212. Additional Bonds. The City may issue from time to time one or more
series of Additional Bonds for the purpose of (i) financing Project Costs in connection with the
acquisition, construction and/or equipping of a Project, (ii) refunding the Series 2003 Bonds or
any series of Additional Bonds, in whole or in part, or (iii) any combination thereof. Additional
Bonds shall be secured equally and ratably with the Series 2003 Bonds and any other series of
Additional Bonds theretofore issued and then Outstanding, except insofar as any terms or
conditions of redemption or purchase established under this Indenture may afford additional
benefit or security for the Bonds of any particular series and except for the security afforded by
any municipal bond insurance obtained with respect to a particular series of Bonds. Before any
Additional Bonds are authenticated, there shall be delivered to the Trustee the items required for
the issuance of Bonds by Section 208 hereof, plus a Certificate of the Finance & Internal
Services Director of the. City (in the form attached as Exhibit B hereto) certifying that, based
upon necessary investigation, the Tax Receipts deposited into the Revenue Fund during the most
recent twelve (12) months were not less than (i) 125% of the maximum Annual Debt Service
requirement on all then Outstanding Bonds and Series 1995 Bonds, plus the Additional Bonds
then proposed to be issued, and (ii) the amount, if any, needed to make required deposits to the
Debt Service Reserve Fund. Notwithstanding anything herein to the contrary, no Additional
Bonds shall be issued unless there is no default at the time of issuance under this Indenture.
Section 213. Superior Obligations Prohibited. Except to the extent permitted in
Section 212 hereof for the issuance of Additional Bonds, from and after the issuance of any of
the Bonds and for so long as any of the Bonds are Outstanding, the City shall not create or
permit the creation of any indebtedness, or issue any bonds, notes, warrants, certificates or other
obligations or evidences of indebtedness payable in any manner from the Tax Receipts or
otherwise from the Trust Estate which (i) will in any way be superior to or rank on a parity with
the Bonds, or (ii) will in any way be secured by a lien and charge on the Tax Receipts or on the
moneys deposited in or to be deposited in the Revenue Fund, prior to or equal with the lien,
pledge and charge created herein for the security of the Bonds, or (iii) will be payable prior to or
equal with the payments to be made from the Tax Receipts or the Revenue Fund into the Bond
Fund or Debt Service Reserve Fund, or from said Bond Fund or Debt Service Reserve Fund for
the payment of the Bonds. To that end, the City hereby specifically covenants not to issue any
additional bonds under the provisions of the trust indenture securing the Series 1995 Bonds.
Nothing in Section 213 shall be construed as prohibiting or restricting the issuance of bonds
payable from Tax Receipts so long as use of the Tax Receipts in favor of bonds issued pursuant
to this Section 213 shall be made expressly subject and subordinate to the pledge and use of Tax
Receipts to pay principal of and premium, if any, and interest on the Bonds and to make all
required deposits into all funds held by the Trustee pursuant to the Indenture.
10.47392.2 17
Section 214. Temporary Bonds. Until Bonds in definitive form are ready for delivery,
the City may execute, and upon the request of the City, the Trustee shall authenticate and
deliver, subject to the provisions, limitations and conditions set forth herein, one or more Bonds
in temporary form, whether printed, typewritten, lithographed or otherwise produced,
substantially in the form of the definitive Bonds, with appropriate omissions, variations and
insertions, and in authorized denominations. Until exchanged for Bonds in definitive form, such
Bond in temporary form shall be entitled to the lien and benefit of this Indenture. Upon the
presentation and surrender of any Bond or Bonds in temporary form, the City shall, without
unreasonable delay, prepare, execute and deliver to the Trustee and the Trustee shall authenticate
and deliver, in exchange therefor, a Bond or Bonds in definitive form. Such exchange shall be
made by the Trustee without making any charge therefor to the Owner of such Bond in
temporary form.
Section 215. Book -Entry Bonds; Securities Depository. The Bonds shall initially be
registered to Cede & Co., the nominee for The Depository Trust Company, New York, New York
(the "Securities Depository"), and no Beneficial Owner will receive certificates representing
their respective interests in the Bonds, except in the event the Trustee issues replacement bonds
as provided in this Section 215. It is anticipated that during the term of the Bonds, the Securities
Depository will make book -entry transfers among its Participants and receive and transmit
payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and
unless the Trustee authenticates and delivers replacement bonds to the Beneficial Owners as
described in the following paragraph.
If the City or the Trustee determines (A) that the Securities Depository is unable to
properly discharge its responsibilities, or (B) that the Securities Depository is no longer qualified
to act as a securities depository and registered clearing agency under the Securities and
Exchange Act of 1934, as amended, or (C) that the continuation of a Book -Entry System to the
exclusion of any Bonds being issued to any Bondholder other than Cede & Co. is no longer in
the best interests of the Beneficial Owners of the Bonds, or (2) if the Trustee receives written
notice from Participants representing interests in not less than 50% of the Bonds Outstanding, as
shown on the records of the Securities Depository (and certified to such effect by the Securities
Depository), that the continuation of a Book -Entry System to the exclusion of any Bonds being
issued to any Bondholder other than Cede & Co. is no longer in the best interests of the
Beneficial Owners of the Bonds, then the Trustee shall notify the Bondholders of such
determination or such notice and of the availability of certificates to Bondholders requesting the
same, and the Trustee shall register in the name of and authenticate and deliver replacement
bonds to the Beneficial Owners or their nominees in principal amounts representing the interest
of each; provided, that in the case of a determination under (A) or (B) of this paragraph, the City
or the Trustee may select a successor securities depository in accordance with the following
paragraph to effect book -entry transfers. In such event, all references to the Securities
Depository herein shall relate to the period of time when the Securities Depository has
possession of at least one Bond. Upon the issuance of replacement bonds, all references herein
to obligations imposed upon or to be performed by the Securities Depository shall be deemed to
be imposed upon and performed by the Trustee, to the extent applicable with respect to such
replacement bonds. If the Securities Depository resigns and the City, the Trustee or Bondholders
10-47392.2 18
are unable to locate a qualified successor of the .Securities Depository in accordance with the
following paragraph, then the Trustee shall authenticate and cause delivery of replacement bonds
to Bondholders, as provided herein. The Trustee may rely conclusively on information from the
Securities Depository and its Participants as to the names and addresses of the Beneficial Owners
of the Bonds. The cost of printing, registration, authentication, and delivery of replacement
bonds shall be paid for by the City.
In the event the Securities Depository resigns, is unable to properly discharge its
responsibilities, or is no longer qualified to act as a securities depository and registered clearing
agency under the Securities and Exchange Act of 1934, as amended, the City may appoint a
successor Securities Depository provided the Trustee receives written evidence satisfactory to
the Trustee with respect to the ability of the successor Securities Depository to discharge its
responsibilities. Any such successor Securities Depository shall be a securities depository which
is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or
other applicable statute or regulation that operates a securities depository upon reasonable and
customary terms. The Trustee upon its receipt of a Bond or Bonds for cancellation shall cause
the delivery of Bonds to the successor Securities Depository in appropriate denominations and
form as provided herein.
ARTICLE III
REDEMPTION OF BONDS BEFORE MATURITY
Section 301. Redemption of Bonds. The Bonds shall be subject to redemption prior to
maturity as follows:
(a) The Series 2003 Bonds are subject to redemption at the election of the City, on
and after October 1, 2008, in whole or in part (in inverse order of maturities and by lot within a
maturity) at any time, at a redemption price equal to the principal amount being redeemed plus
accrued interest to the date of redemption.
(b) The applicable series of Bonds shall be redeemed prior to maturity, in whole or in
part, on any Interest Payment Date, in inverse order of maturity and by lot in such manner as the
Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal
amount being redeemed, plus accrued interest to the date of redemption, from Project Fund
moneys in excess of the amount needed to complete the applicable Project or portion thereof
being financed with the proceeds of such series of Bonds, which moneys shall be transferred to
the Redemption Fund pursuant to Section 502 hereof.
(c) Additional Bonds may also be made subject to optional, extraordinary and
mandatory sinking fund redemption, in whole or in part, in such manner, at such times and at
such prices as may be provided in the Supplemental Indenture providing for their issuance.
Section 302.. Notice. Notice of the call for any redemption, identifying the Bonds or
portions thereof being called and the date on which they shall be presented for payment, shall be
mailed by the Trustee by first class mail (or, so long as the Securities Depository or its nominee
is the sole registered owner of the Bonds, by any other means acceptable to the Securities
10-47392.2 19
Depository, including facsimile) to the registered owner of each such Bond addressed to such
registered owner at his registered address and placed in the mails not less than thirty (30) nor
more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure
to give such notice by mailing, or any defect therein, shall not affect the validity of any
proceeding for the redemption of any Bond with respect to which no such failure or defect has
occurred. Any notice mailed as provided in this Section 302 shall be conclusively presumed to
have been duly given, whether or not the registered owner receives the notice.
Section 303. Selection of Bonds to be Redeemed. If less than all of the Bonds of like
series, maturity, interest rate and otherwise identical payment terms shall be called for
redemption, the particular Bonds or portions of Bonds to be redeemed shall be selected by lot by
the Trustee in such manner as the Trustee in its discretion may deem fair and appropriate;
provided, however, that the portion of any Bond of a denomination of larger than the minimum
denomination may be redeemed in the principal amount of such minimum denomination or a
multiple thereof, and that for purposes of selection and redemption, any such Bond of a
denomination larger than the minimum denomination shall be considered to be that number of
separate Bonds of such minimum denomination which is obtained by dividing the principal
amount of such Bond by such minimum denomination. So long as the Securities Depository or
its nominee is the sole registered owner of a series of Bonds, the procedures established by the
Securities Depository shall control with respect to the selection of the particular Bonds of such
series to be redeemed.
Section 304. Surrender of Bonds Upon Redemption. Notice having been given in the
manner and under the conditions hereinabove provided, and moneys for payment of the
redemption price being held by the Trustee as provided in this Indenture (i) the Bonds or
portions of Bonds so called for redemption shall, on the date fixed for redemption designated in
such notice, become due and payable at the redemption price provided for redemption of such
Bonds, and interest on such Bonds or portions of Bonds so called for redemption shall cease to
accrue, (ii) upon surrender of the Bonds or portions of Bonds so called for redemption in
accordance with such notice, such Bonds or portions of Bonds shall be paid at the applicable
redemption price, (iii) such Bonds or portions of Bonds shall cease to be entitled to any lien,
benefit or security under this Indenture, and (iv) the owners of said Bonds or portions of Bonds
shall have no rights in respect thereof except to receive payment of the redemption price thereof.
Section 305. Redemption in Part. Any Bond which is to be redeemed only in part shall
be surrendered to the Trustee (with, if the City or the Trustee so requires, due endorsement by, or
a written instrument of transfer in form satisfactory to the City and the Trustee duly executed by,
the owner thereof or his attorney duly authorized in writing), and the appropriate officials of the
City shall execute and the Trustee shall authenticate and deliver to the owner of such Bond,
without service charge, a new Bond or Bonds of the same series, of any authorized denomination
or denominations, having the same maturity and interest rate as requested by such owner, in
aggregate principal amount equal to and in exchange for the unredeemed portion of the principal
of the Bond so surrendered.
ARTICLE IV
GENERAL COVENANTS AND REPRESENTATIONS
10-47392.2 20
Section 401. Payment of Principal, Premium and Interest. The City covenants that it
will promptly pay or cause to be paid the principal of and premium, if any, and interest on every
Bond issued under this Indenture at the place, on the dates and in the manner provided herein
and in the Bonds according to the true intent and meaning thereof. The principal, premium, if
any, and interest (except interest paid from the proceeds from the sale of the Bonds and accrued
interest) are payable solely from the Trust Estate which is hereby specifically pledged to the
payment thereof in the manner and to the extent herein specified, and nothing in the Bonds or
this Indenture should be considered as assigning or pledging any funds or assets of the City other
than the Trust Estate. Anything in this Indenture to the contrary notwithstanding, it is
understood that whenever the City makes any covenants involving financial commitments it
pledges no funds or assets other than the Trust Estate in the manner and to the extent herein
specified, but nothing herein shall be construed as prohibiting the City from using any other
funds or assets. The City covenants that the Tax will not be repealed, and the rate of the Tax will
not be reduced, for so long as there are any Outstanding Bonds. It is further covenanted that all
necessary action will be taken, from time to time, to collect the Tax in the full amount due and to
apply Tax Receipts in the manner provided in this Indenture.
Section 402. Performance of Covenants. The City covenants that it will faithfully
perform at all times any and all covenants, undertakings, stipulations and provisions contained in
this Indenture, in any and every Bond executed, authenticated and delivered hereunder, and in all
ordinances pertaining hereto. The City covenants that it is duly authorized under the
Constitution and laws of the State of Arkansas, including particularly and without limitation, the
Act, to issue the Bonds authorized hereby and to execute this Indenture and to make the pledge
of the Tax Receipts and to make the covenants in the manner and to the extent herein set forth,
that all action on its part for the issuance of the Bonds and the execution and delivery of this
Indenture has been duly and effectively taken, and that the Bonds in the hands of the Holders and
owners thereof are and will be valid and enforceable obligations of the City according to the
import thereof.
Section 403. Instruments of Further Assurance. At the request of the Trustee, the
City shall, so far as it may be authorized by law, pass, make, do, execute, acknowledge and
deliver, all and every such further resolutions, ordinances, acts, deeds, conveyances,
assignments, transfers and assurances as may be necessary or desirable for the better assuring,
conveying, granting, pledging, assigning and confirming of all and singular the Tax Receipts and
all other moneys hereby pledged or assigned, or intended so to be, or which the City may
become bound to pledge or assign.
Section 404. Recordation and Filing. To the extent necessary, the City covenants that
it will cause this Indenture, such security agreements, financing statements, and all supplements
thereto and other instruments as may be required from time to time to be kept, to be recorded and
filed in such manner and in such places as may be required by law in order to fully preserve and
protect the security of the owners of the Bonds and the rights of Trustee hereunder, and to
perfect the security interest created by this Indenture.
Section 405. Inspection of Books. The City shall keep proper books of record and
account (separate from all other records and accounts) in which complete and correct entries
10-47392.2 21
shall be made of its transactions relating to the Projects and the Funds and Accounts established
by this Indenture.
Section 406. Tax Covenants. The City covenants that it will not use or permit the use
of any Bond proceeds or any other funds of the City, directly or indirectly, in any manner, and
will not take or permit to be taken any other action or actions which would adversely effect the
exclusion of interest on any Bond from gross income for federal income tax purposes. Without
limiting the generality of the foregoing, the City further covenants that no part of the proceeds of
the Bonds shall at any time be used, directly or indirectly, to acquire securities or obligations the
acquisition of which would cause any of the Bonds to be an "arbitrage bond" as defined in
Sections 148(a) and (b) of the Code. The City agrees that so long as any of the Bonds remain
Outstanding, it will comply with the provisions of each applicable Tax Regulatory Agreement.
Section 407. Trustee's and Paying Agent's Fees and Expenses. Subject to the
provisions of Section 902 hereof, the City hereby agrees and covenants to make payments for the
fees, expenses and charges of the Trustee and Paying Agent, if any, as authorized and provided
by this Indenture. The City is to make payments on statements rendered by the Trustee and
Paying Agent either (i) directly to the Trustee and Paying Agent or (ii) pursuant to
Section 503(b) hereof.
Section 408. Construction of Projects; Certification of Completion Date. The City
hereby covenants to use its best efforts to acquire, construct and equip each Project being
financed with proceeds of the Bonds with all reasonable dispatch and to use its best efforts to
cause the acquisition, construction and equipping of such Project to be completed as soon as may
be practicable, but in any case within a period not to exceed three years after the issuance of the
applicable series of Bonds, delays caused by force majeure only excepted, but if for any reason
such acquisition, construction and equipping is not completed within said period, there shall be
no diminution or postponement of payments required hereunder to be made by the City.
Promptly after each such Completion Date, the City shall submit to the Trustee the certificate of
a Qualified Engineer which shall specify the Completion Date and shall state that acquisition,
construction and equipping of the Project being financed with a particular series of Bond
proceeds has been completed and the Project Costs have been paid, except for any Project Costs
which have been incurred but are not then due and payable, or the liability for the payment of
which is being contested or disputed by the City, and for the payment of which the Trustee is
directed to retain specified amounts of moneys in the Project Fund. Notwithstanding the
foregoing, such certificate may state that it is given without prejudice to any rights against third
parties which exist at the date thereof or which may subsequently come into being.
Section 409. Encumbrances. The City covenants that it will not create or suffer to be
created any lien or charge upon the Trust Estate, except in accordance with the provisions of this
Indenture.
Section 410. Continuing Disclosure. The City hereby covenants and agrees that it will
comply with and carry out all of the provisions of each Continuing Disclosure Agreement.
Notwithstanding any other provision of this Indenture to the contrary, failure of the City or the
Trustee to comply with the provisions of a Continuing Disclosure Agreement shall not be
10-47392.2 22
considered an Event of Default hereunder; however, the Trustee may (and at the request of the
Original Purchaser of a series of Bonds or the owners of at least 25% in aggregate Outstanding
principal amount of such series of Bonds, shall) or any Beneficial Owner may take such actions
as may be necessary and appropriate, including seeking mandate or specific performance by
court order, to cause the City or the Trustee, as the case may be, to comply with its obligations
under this Section 410.
Section 411. Authority of Commission. The City hereby recognizes that the
Commission is the agency and instrumentality of the City designated by the Act and ordinances
of the City to expend the Tax Receipts. Such authority and responsibility of the Commission is
hereby confirmed and continued.
ARTICLE V
REVENUES AND FUNDS
Section 501. Creation of Funds and Accounts. (a) There is hereby confirmed and
continued the Revenue Fund established in the trust indenture securing the Series 1995 Bonds.
The Revenue Fund shall be maintained by the City as a segregated fund. There are hereby
created and established with the Trustee the following Funds and Accounts:
(i) Project Fund;
(ii) Bond Fund, and an Interest Account and a Principal Account therein;
(iii) Debt Service Reserve Fund;
(iv) Cost of Issuance Fund;
(v) Redemption Fund; and
(vi) Rebate Fund.
(b) Except for the Revenue Fund, . all Funds and Accounts shall be held by the
Trustee, which shall hold and maintain said Funds and Accounts in trust, for the use and benefit
of the Bondholders and the City, but subject to the permitted applications expressed herein.
Section 502. Project Fund. (a) The Trustee shall maintain the Project Fund to the
credit of which there shall be deposited the proceeds of Additional Bonds as directed in a
Supplemental Indenture.
(b) Moneys credited to the Project Fund shall be expended only as set forth in this
Section 502.
(c) Amounts in the Project Fund shall be expended and applied for the payment of
Project Costs. Disbursements shall be made from the. Project Fund on the basis of consecutively
numbered Requisitions in the form attached hereto as Exhibit C signed by an Authorized
Representative. Requisitions may be submitted to the Trustee by certified mail, first class mail
10-47392.2 23
or facsimile transmission. If the Trustee deems that a Requisition submitted by the City is
sufficient pursuant to this Section 502, the amount requested thereunder shall be disbursed in
payment of the Project Costs set forth therein, or in reimbursement of such Project Costs, within
two (2) business days of the date of receipt of such Requisition by the Trustee. Each Requisition
shall specify:
(i) the name of the person or party to whom payment is to be made and the
purpose of the payment;
(ii) •the amount to be paid thereunder;
(iii) that such amount has not been previously paid by the City and is justly
due and owing to the person(s) named therein as a proper payment or reimbursement of a
Project Cost; and
(iv) that no Event of Default exists under the Indenture and that, to the
knowledge of the Authorized Representative, no event has occurred and continues which
with notice or lapse of time or both would constitute an Event of Default under the
Indenture.
(d) The Trustee shall keep full and complete records concerning and reflecting all
disbursements from the Project Fund and shall file an accounting of said disbursements if and
when requested by the City. The Trustee shall only make payments from the Project Fund
pursuant to and in accordance with Requisitions. In making payments from the Project Fund, the
Trustee may rely on any Requisitions delivered to it pursuant to this Section 502, and the Trustee
shall be relieved of all liability relating to payments made in accordance with such Requisitions
and any supporting certificate or certificates requested by the Trustee without physical
inspection of the Project. Within ninety (90) days following completion of the Project or portion
thereof being financed with a particular series of Bonds, the City shall deliver to the Trustee its
Certificate stating that the Project or applicable portion thereof is complete and the Trustee shall
transfer the remaining moneys in the Project Fund relating to such series of Bonds (save and
except moneys needed to satisfy unpaid Project Costs) to the Redemption Fund for application to
the retirement of Bonds by redemption or purchase, as provided by Section 301(b) and
Section 506 hereof.
(e) Upon the occurrence and continuance of an Event of Default or the occurrence
and continuance of an event which with notice or lapse of time or both would constitute an Event
of Default, amounts on deposit in the Project Fund shall not be disbursed but shall instead be
applied to the payment of Debt Service or the redemption price of the Bonds.
Section 503. Revenue Fund. (a) There shall be deposited to the credit of the Revenue
Fund, as and when received, all Tax Receipts. For the purposes of financial reporting by the
City with respect to the Tax, "receipts" and "revenues" shall have the same meaning.
(b) On or before the fifteenth day of each month, commencing July 15, 2003, and
immediately following any required transfer of Tax Receipts to the bond fund and reserve fund
10-47392.2 24
established with
respect to the Series
1995 Bonds,
the
City
shall transfer to the Trustee from the
Revenue Fund, in the following order,
the amounts
set
forth
below:
FIRST: For deposit to the Interest Account of the Bond Fund, an amount
equal to one -sixth (1/6) of the interest on the Outstanding Bonds due on the next Interest
Payment Date (except that with respect to deposits required with respect to a series of
Bonds prior to the first Interest Payment Date for such series of Bonds, the required
monthly transfers shall be equal to a fraction, the numerator of which shall be 1 and the
denominator of which shall be the number of transfers to be made prior to such Interest
Payment Date);
SECOND: For deposit to the Principal Account of the Bond Fund, an amount
equal to one -twelfth (1/12) of the next scheduled principal maturity of Outstanding
Bonds (including mandatory sinking fund redemptions) (except that with respect to
deposits required with respect to a series of Bonds prior to the first Principal Payment
Date for such series of Bonds, the required monthly transfers shall be equal to a fraction,
the numerator of which shall be I and the denominator of which shall be the number of
transfers to be made prior to such Principal Payment Date);
THIRD: For deposit to the Debt Service Reserve Fund, an amount sufficient
to cure any deficiency in the Debt Service Reserve Fund;
FOURTH: For deposit to the Rebate Fund, an amount sufficient to satisfy the
City's obligations under Section 507 hereof; and
FIFTH: For payment to the Trustee and Paying Agent, the amount, if any,
necessary to pay or reimburse the Trustee and Paying Agent for fees and expenses related
to the Bonds.
(c) Required deposits into the Interest Account and Principal Account of the Bond
Fund and the Debt Service Reserve Fund shall be reduced by investment earnings, if any, in said
Funds and Accounts and, with respect to required deposits to the Interest Account of the Bond
Fund only, by any accrued interest deposited to the Interest Account of the Bond Fund upon the
initial sale of a series of Bonds. In the event there shall be insufficient moneys in the Revenue
Fund in a particular month to make the required transfers described above, then any deficiencies
shall be added to the required deposits during the next month.
(d)
Any
moneys
remaining
in the Revenue Fund following the required transfers set
forth above
may be
used for
any lawful
purpose as determined by the Commission.
• Section 504. Bond Fund. (a) There shall be deposited to the credit of the appropriate
Account of the Bond Fund all moneys required to be transferred thereto pursuant to
Sections 208, 503, 505, 506 and 508 of this Indenture and all other moneys received for said
Fund.
10-47392.2 25
0 •
(b) Moneys credited to the Bond Fund shall be expended only as set forth in this
Section 504.
(c) (i) On each Interest Payment Date for any of the Bonds Outstanding, the
Trustee shall pay out of moneys credited to the Interest Account of the Bond Fund the
amounts required for the payment of interest on the Bonds due on such date, and on each
redemption date, the amounts required for the payment of accrued interest on Bonds then
to be redeemed or purchased unless the payment of such accrued interest shall be
otherwise provided for, and such amounts shall be applied to such payments.
(ii) On each principal payment or redemption date for any of the Bonds
Outstanding, the Trustee shall pay out of moneys credited to the Principal Account of the
Bond Fund the amounts required for the payment of principal and premium, if any, due
on the Bonds on such date and such amounts shall be applied to such payments.
(iii) If there shall be insufficient moneys in the Bond Fund to pay in full
interest, principal or premium, if any, due on the Bonds on any interest or principal
payment or redemption date, the Trustee shall, three days prior to such date, notify the
City of such deficiency, and if by one day prior to such date such deficiency has not been
cured, transfer an amount equal to the deficiency into the appropriate Account of the
Bond Fund from the Funds indicated in the following order:
FIRST: the Redemption Fund; and
SECOND: the Debt Service Reserve Fund (for payment of principal and
interest on any Interest or Principal Payment Date only).
(d) All payments made pursuant to this Section 504 shall be made in immediately
available funds.
Section 505. Cost of Issuance Fund. There shall be deposited to the credit of the Cost
of Issuance Fund all moneys received for said Fund pursuant to Section 208 hereof. The Trustee
shall pay those Costs of Issuance as directed by the City pursuant to a Certificate delivered on a
Closing Date. After all Costs of Issuance have been paid (and, in any event not later than
September 1, 2003 with respect to the Series 2003 Bonds), any remaining moneys in the Cost of
Issuance Fund shall be transferred to the Interest Account of the Bond Fund. The Cost of
Issuance Fund is not pledged to the payment of the Bonds.
Section 506. Redemption Fund. (a) There shall be deposited to the credit of the
Redemption Fund all moneys required to be transferred thereto to effect an optional redemption
of the Bonds pursuant to Section 301(a) hereof and all moneys transferred thereto pursuant to
Section 502 of this Indenture.
(b) Moneys credited to the Redemption Fund shall be expended only as set forth in
this Section 506.
10-07392.2 26
(c) Moneys in the Redemption Fund shall be transferred to the Principal Account of
the Bond Fund at such times as may be necessary to effectuate, on the first available date,
redemptions of Bonds required by Section 301(a) and (b) of this Indenture.
(d) The amounts accumulated in the Redemption Fund, if so directed by the City by
means of a Certificate delivered to the Trustee, shall be applied by the Trustee to the purchase of
Bonds of the maturities which would otherwise be redeemed pursuant to Section 301(a) and (b)
and this Section 506 but for the provisions of this subsection (d), at prices directed by the City
not exceeding the applicable redemption prices of the Bonds which would be redeemed but for
the operation of this sentence. Interest accrued on the Bonds so purchased shall be paid from
moneys credited to the Interest Account of the Bond Fund.
Section 507. Rebate Fund. (a) The Trustee shall establish and maintain, separate and
apart from any other Funds and Accounts established and maintained hereunder, a Fund to be
designated as the Rebate Fund, which Fund is not pledged to the payment of any Bonds. Subject
to the transfer provisions provided in subsection (c) below, all moneys at any time deposited in
the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate
Amount (as defined in each Tax Regulatory Agreement), for payment to the United States of
America, and neither the City nor the Owner of any Bond shall have any rights in or claim to
such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by
this Section 507, by Section 406, and by each Tax Regulatory Agreement (which are
incorporated herein by reference).
(b) As provided in Section 503(b) hereof, there shall be deposited in the Rebate Fund
the amount of all income or gain on moneys deposited in any of the Funds and Accounts
established by this Indenture which is required to be rebated to the United States and is
designated for deposit therein, as calculated by the City to be owing to the United States
pursuant to the Tax Regulatory Agreement, which shall be delivered by the City concurrently
with the issuance of a series of Bonds.
(c) The Trustee, upon receipt of written instructions from the Mayor or Finance &
Internal Services Director of the City, shall pay to the United States out of amounts in the Rebate
Fund such amounts as are required pursuant to each Tax Regulatory Agreement.
(d) Any moneys remaining in the Rebate Fund after payment to the United States,
within sixty (60) days after the date on which the last Bond is redeemed, of one hundred percent
(100%) of the rebate amount as described in Section 148(0(2) of the Code, shall be transferred
to the Revenue Fund.
(e) The Trustee, as instructed by Certificate of the City, shall invest all amounts held
in the Rebate Fund in Investment Obligations, subject to the restrictions set forth in the
applicable Tax Regulatory Agreement. Money shall not be transferred from the Rebate Fund
except as provided in subsection (c).
(0 Notwithstanding any other provision of this Indenture, the obligation to remit the
Rebate Amount to the United States and to comply with all other requirements of this
10-47392.2 27
Section 507, Section 406 and each Tax Regulatory Agreement shall survive the defeasance or
payment in full of the Bonds.
Section 508. Debt Service Reserve Fund. As provided in Section 208(b)(2) hereof,
upon the issuance of each series of Bonds, there shall be deposited into the Debt Service Reserve
Fund, from proceeds of the Bonds, an amount sufficient to cause the amounts on deposit therein
to be equal to the Reserve Requirement. The Debt Service Reserve Fund shall be maintained in
an amount equal to the Reserve Requirement. The Debt Service Reserve Fund shall be used
solely to pay the principal of and interest on Outstanding Bonds for which there are insufficient
funds available in the Bond Fund to make such payments, as the same become due at maturity
(including mandatory sinking fund redemption). If the Debt Service Reserve Fund, by virtue of
any such payment, is reduced below the Reserve Requirement, it shall be reimbursed in the
amount of any such deficiency as provided in Section 503. Notwithstanding the above
provisions of this Section 508, the amount on deposit in the Debt Service Reserve Fund may be
used, together with other available funds, to provide for the payment at maturity or to redeem
prior to maturity all, but not less than all, of the Outstanding Bonds. If an excess shall exist in
the Debt Service Reserve Fund over and above the Reserve Requirement, such excess shall be
transferred to the Interest Account of the Bond Fund.
Section 509. Cessation of Fund Deposits. When the moneys in the Bond Fund, the
Debt Service Reserve Fund and the Redemption Fund shall be and remain sufficient to pay in
full the principal and interest on all Bonds then Outstanding in accordance with Article VII of
this Indenture, together with the required fees and expenses to be paid or reimbursed to the
Trustee and Paying Agent, the City shall have no further obligation to make payments into said
Funds.
Section 510. Separate Accounts Authorized. A Supplemental Indenture authorizing
the issuance of Additional Bonds may provide for the creation of separate Accounts within the
Bond Fund, Debt Service Reserve Fund, Redemption Fund, Project Fund, Costs of Issuance
Fund and Rebate Fund for such series of Bonds and such other Accounts as the City may direct;
provided, that the creation of such separate Accounts shall be solely for the ease of
administration and shall in no event affect the equal and ratable security of the Bonds of each
series.
If any Supplemental Indenture authorizing the issuance of Additional Bonds provides for
the establishment of separate Accounts for a series of Bonds, then such Supplemental Indenture
shall require that the Tax Receipts received by the City shall be deposited pursuant to written
direction of the City into each of the Accounts within the Bond Fund and Debt Service Reserve
Fund for each series of Bonds on the basis of the installments of principal, premium, if any, and
interest due on each series of Bonds and the amounts required to be deposited in the Accounts
within the Bond Fund and the Debt Service Reserve Fund during the applicable period, to the
end that the Bonds of each series shall be equally and ratably secured by the Tax Receipts.
Any Supplemental Indenture authorizing the issuance of Additional Bonds shall provide
that any proceeds of such series of Bonds and investment earnings thereon remaining after some
10-47392.2 28
specified date, or after the construction of all facilities to be financed with the proceeds of such
series of Bonds, shall be applied to the redemption of such series of Bonds.
ARTICLE VI
INVESTMENTS
Section 601. Investment of Moneys. At the direction of the City or absent such
direction, the Trustee shall invest moneys in Funds or Accounts held by the Trustee in
Investment Obligations with maturity or redemption dates consistent with the times at which said
moneys will be required for the purposes provided in this Indenture; provided, however, the
stated maturity dates of Investment Obligations of Debt Service Reserve Fund moneys shall not
exceed five years from the date of investment therein. Moneys in separate Funds or Accounts
may be commingled for the purpose of investment.
Section 602. Investment Earnings. Subject to the provisions of the Tax Regulatory
Agreement and Article V hereof, Investment Obligations purchased with moneys held in or
attributable to any Fund or Account held by the Trustee under the provisions of this Indenture
shall be deemed at all times to be a part of such Fund or Account and the income or interest
earned, profits realized or losses suffered by a Fund or Account due to the investment thereof
shall be retained in, credited or charged, as the case may be, to such Fund or Account unless
otherwise provided pursuant to this Indenture.
Section 603. Valuation of Funds. Investments in any Fund or Account shall be
evaluated monthly by the Trustee. The Trustee shall report the determined value of each Fund
and Account to the City. For the purpose of determining the amount in any Fund or Account, the
Trustee shall value all Investment Obligations credited to such Fund or Account at the price at
which such Investment Obligations are redeemable by the owner thereof at its option if so
redeemable, or, if not so redeemable, at the lesser of (i) the cost of such Investment Obligations
minus the amortization of any premium or plus the amortization of any discount thereon and
(ii) the market value of such Investment Obligations, provided that Investment Obligations
credited to the Debt Service Reserve Fund, if not so redeemable, shall be valued at the cost
thereof minus the amortization of any premium or plus the amortization of any discount thereon.
The Trustee shall sell or present for redemption any Investment Obligations as necessary
in order to provide money for the purpose of making any payment required hereunder, and the
Trustee shall not be liable for any loss resulting from any such sale.
Section 604. Responsibility of Trustee. The Trustee shall not be responsible or liable
for any loss suffered in connection with any investment of moneys made by it at the direction of
the City.
ARTICLE VII
DISCHARGE OF LIEN
Section 701. Discharge of Lien. If the
City shall pay or cause
to be paid
to the owners
of the Bonds the principal, premium, if any, and
interest to become due
thereon at
the times and
10-47392.2 29
in the manner stipulated therein, and if the City shall keep, perform and observe all and singular
the covenants and promises in the Bonds and in this Indenture expressed as to be kept,
performed and observed by it on its part, then these presents and the estate and rights hereby
granted shall cease, determine and be void, and thereupon the Trustee shall cancel and discharge
the lien of this Indenture, and execute and deliver to the City such instruments in writing as shall
be requisite to satisfy the lien hereof, and reconvey to the City the estate hereby conveyed, and
assign and deliver to the City any property at the time subject to the lien of this Indenture which
may then be in its possession, except moneys or Government Securities held by it for the
payment of the principal of and premium, if any, and interest on the Bonds.
Section 702. Bonds Deemed Paid. Any Bond shall be deemed to be paid within the
meaning of this Article VII when payment of the principal of and premium, if any, and interest
on such Bond (whether at maturity or upon redemption as provided in this Indenture, or
otherwise), either (i) shall have been made or caused to be made in accordance with the terms
thereof, or (ii) shall have been provided for by irrevocably depositing with the Trustee, in trust
and irrevocably set aside exclusively for such payment, (1) moneys sufficient to make such
payment or (2) Government Securities @rovided that such deposit will not affect the tax-exempt
status of the interest on any of the Bonds or cause any of the Bonds to be classified as "arbitrage
bonds" within the meaning of Section 148(a) of the Code, as reflected in an opinion of Bond
Counsel delivered to the Trustee), maturing as to principal and interest in such amount and at
such times as will provide sufficient moneys to make such payment, and all necessary and proper
fees, compensation and expenses of the Trustee and any Paying Agent pertaining to the Bonds
with respect to which such deposit is made shall have been paid or the payment thereof provided
for to the satisfaction of the Trustee and any said Paying Agent.
Section 703. Non -Presentment of Bonds. In the event any Bonds shall not be
presented for payment when the principal thereof becomes due, either at maturity or otherwise,
or at the date fixed for redemption thereof, if there shall have been deposited with the Trustee for
that purpose, or left in trust if previously so deposited, funds sufficient to pay the principal
thereof, and premium, if any, together with all interest unpaid and due thereon, to the due date
thereof, for the benefit of the Holder thereof, all liability of the City to the Holder thereof for the
payment of the principal thereof, premium if any, and interest thereon, shall forthwith cease,
determine and be completely discharged, and thereupon it shall be the duty of the Trustee to hold
such fund or funds, without liability for interest thereon, for the benefit of the Holder of such
Bonds, who shall thereafter be restricted exclusively to such fund or funds, for any claim of
whatever nature on his part under this Indenture or on, or with respect to, the Bonds.
ARTICLE VIII
DEFAULT PROVISIONS AND REMEDIES
OF TRUSTEE AND BONDHOLDERS
Section 801. Events of Default. Each of the following events shall constitute and is
referred to in this Indenture as an "Event of Default":
(a) Default in the due and punctual payment of any interest on any Bond;
10-47392.2 30
0
(b) Default in the due and punctual payment of the principal of or premium, if
any, on any Bond, whether at the stated maturity thereof, or upon proceedings for•
redemption thereof, or upon the maturity thereof by declaration;
(c) Default in the payment of any other amount required to be paid under this
Indenture or the performance or observance of any other of the covenants, agreements or
conditions contained in this Indenture, or in the Bonds issued hereunder, and continuance
thereof for a period of sixty (60) days after written notice specifying such failure and
requesting that it be remedied shall have been given to the City by the Trustee, which
may give such notice in its discretion and shall give such notice at the written request of
Bondholders of not less than 51% in aggregate principal amount of the Bonds then
Outstanding, unless the Trustee, or the Trustee and Holders of an aggregate principal
amount of Bonds not less than the aggregate principal amount of Bonds the Holders of
which requested such notice, as the case may be, shall agree in writing to an extension of
such period prior to its expiration; provided, however, if the failure stated in the notice
cannot be corrected within the applicable period, the Trustee will not unreasonably
withhold its consent to an extension of such time if corrective action is instituted by the
City within such period and is being diligently pursued;
(d) The filing of a petition in bankruptcy by or against the City under the
United States Bankruptcy Code or the commencement of a proceeding by or against the
City under any other law concerning insolvency, reorganization or bankruptcy; and
(e) If the State has limited or altered the rights of the City pursuant to the Act,
as in force on the date of this Indenture, to fulfill the terms of any agreements made with
the Trustee or the Bondholders or in any way impaired the rights and remedies of the
Trustee or the Bondholders while any Bonds are Outstanding.
The term "default" as used in clauses (a), (b) and (c) above shall mean default by the City
in the performance or observance of any of the covenants, agreements or conditions on its part
contained in this Indenture or in the Bonds Outstanding hereunder, exclusive of any period of
grace required to constitute a default an "Event of Default" as hereinabove provided.
Section 802. Acceleration. Upon the occurrence of an Event of Default, the Trustee
may, and upon the written request of the Holders of not less than 51% in aggregate principal
amount of Bonds Outstanding hereunder shall, by notice in writing delivered to the City, declare
the principal of all Bonds then Outstanding, together with the interest accrued thereon,
immediately due and payable, and such principal and interest shall thereupon become and be
immediately due and payable.
Section 803. Other Remedies; Rights of Bondholders. Upon the occurrence of an
Event of Default, the Trustee may, as an alternative, pursue any available remedy by suit at law
or in equity, including, without limitation, mandamus to enforce the payment of the principal of
and premium, if any, and interest on the Bonds then Outstanding hereunder.
10.47992.2 31
If an Event of Default shall have occurred, and if it shall have been requested so to do by
the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding hereunder
and if it shall have been indemnified as provided in Section 901(1) hereof, the Trustee shall be
obligated to exercise such one or more of the rights and powers conferred upon it by this Section
803 as the Trustee, being advised by counsel, shall deem most expedient in the interests of the
Bondholders.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to
the Bondholders) is intended to be exclusive of any other remedy, but each and every such
remedy shall be cumulative and shall be in addition to any other remedy given hereunder or now
or hereafter existing at law or in equity or by statute.
No delay or omission to exercise any right or power accruing upon any default or Event
of Default shall impair any such right or power or shall be construed to be a waiver of any such
default or Event of Default or acquiescence therein; and every such right and power may be
exercised from time to time and as often as may be deemed expedient.
No waiver of any default or Event of Default hereunder, whether by the Trustee or by the
Bondholders, shall extend to or shall affect any subsequent default or Event of Default or shall
impair any rights or remedies consequent thereon.
Section 804. Right of Bondholders to Direct Proceedings. Anything in this Indenture
to the contrary notwithstanding, the Holders of not less than 51% in aggregate principal amount
of Bonds Outstanding hereunder shall have the right, at any time, by an instrument or
instruments in writing executed and delivered to the Trustee, to direct the method and place of
conducting all proceedings to be taken in connection with the enforcement of the terms and
conditions of this Indenture, or for the appointment of a receiver or any other proceeding
hereunder; provided that such direction shall not be otherwise than in accordance with the
provisions of law and of this Indenture.
Section 805. Appointment of Receiver. Upon the occurrence of an Event of Default,
and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights
of the Trustee and of the Bondholders under this Indenture, the Trustee shall be entitled to the
appointment of a receiver or receivers of the Trust Estate and of the tolls, rents, revenues, issues,
earnings, income, products and profits thereof, including, without limitation, the Tax Receipts
(subject to the prior right of the trustee for the Series 1995 Bonds), pending such proceedings
with such powers as the court making such appointment shall confer.
Section 806. Waiver. In case of an Event of Default on its part, as aforesaid, to the
extent that such rights may then lawfully be waived, neither the City nor anyone claiming
through the City or under the City shall or will set up, claim or seek to take advantage of any
appraisement, valuation, stay, extension or redemption laws now or thereafter in force, in order
to prevent or hinder the enforcement of this Indenture, but the City, for itself and all who may
claim through or under it, hereby waives, to the extent that it lawfully may do so, the benefit of
all such laws and all right of appraisement and redemption to which it may be entitled under the
laws of the State.
10-47392.2 32
Section 807. Application of Moneys. Available moneys remaining after discharge of
costs, charges and liens prior to this Indenture shall be applied by the Trustee as follows:
(a) Unless the principal of all the Bonds shall have become or shall have been
declared due and payable, all such moneys shall be applied:
First: To the payment to the Persons entitled thereto of all
installments of interest then due, in the order of the maturity of the installments of
such interest, and, if the amount available shall not be sufficient to pay in full any
particular installment, then to the payment ratably, according to the amounts due
on such installment, to the Persons entitled thereto, without any discrimination or
privilege;
Second: To the payment to 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 moneys are held pursuant to the
provisions of this Indenture), in the order of their due dates, with interest on such
Bonds from the respective dates upon which they become due, and, if the amount
available shall not be sufficient to pay in full Bonds due on any particular date,
together with such interest, then to the payment ratably, according to the amount
of principal due on such date, to the Persons entitled thereto without any
discrimination or privilege of any Bond over any other Bond and without
preference or priority of principal over interest or of interest over principal; and
Third: To the payment of the interest on and the principal of the
Bonds, and to the redemption of Bonds, all in accordance with the provisions of
Article V of this Indenture.
(b) If the principal of all the Bonds shall have become due or shall have been
declared due and payable, all such moneys shall be applied first to the payment of the
interest then due and unpaid upon the Bonds, and then to the payment of the principal
then due and unpaid upon the Bonds, in each case without preference or priority of any
Bond over any other Bond, ratably, according to the amounts due respectively for
principal and interest, to the Persons entitled thereto.
(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
provisions of this Article VIII then, subject to the provisions of paragraph (b) of this
Section 807, in the event that the principal of all the Bonds shall later become due or be
declared due and payable, the moneys shall be applied in accordance with the provisions
of paragraph (a) of this Section 807.
Whenever moneys are to be applied by the Trustee pursuant to the provisions of this
Section 807, such moneys shall be applied by it at such times, and from time to time, as it shall
determine, having due regard to the amount of such moneys available for application and the
likelihood of additional moneys becoming available for such application in the future.
10-47392.2 33
Whenever the Trustee shall apply such funds, it shall fix the date (which shall be an Interest
Payment Date unless it shall deem another date more suitable) upon which such application is to
be made and upon such date interest on the amounts of principal to be paid on such dates shall
cease to accrue. The Trustee shall give such notice as it may deem appropriate of the deposit
with it of any such moneys and of the fixing of any such date and shall not be required to make
payment to the Holder of any Bond until such Bond shall be presented to the Trustee for
appropriate endorsement or for cancellation if fully paid.
Section 808. Remedies Vested in Trustee. All rights of action (including the right to
file proof of claim) under this Indenture or under any of the Bonds may be enforced by the
Trustee without the possession of any of the Bonds or the production thereof in any trial or other
proceeding relating thereto, and any such suit or proceeding instituted by the Trustee shall be
brought in its name as Trustee, without the necessity of joining as plaintiffs or defendants any
Bondholders hereby secured, and any recovery of judgment shall be for the equal benefit of the
Holders of all Outstanding Bonds.
Section 809. Rights and Remedies of Bondholders. No Bondholder shall have any
right to institute any suit, action or proceeding in equity or at law for the enforcement of this
Indenture or for the execution of any trust hereof or for the appointment of a receiver or any
other remedy hereunder, unless a default has occurred of which the Trustee has been notified as
provided in subsection (g) of Section 901, or of which by said subsection it is deemed to have
notice, nor unless such default shall have become an Event of Default and the Holders of not less
than 51% in aggregate principal amount of Bonds Outstanding hereunder shall have made
written request to the Trustee and shall have offered it reasonable opportunity either to proceed
to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its
own name, nor unless also they have offered to the Trustee indemnity as provided in
subsection (I) of Section 901, nor unless the Trustee shall thereafter fail or refuse to exercise the
powers hereinbefore granted, or to institute such action, suit or proceeding in its own name; and
such notification, request and offer of indemnity are hereby declared in every such case, at the
option of the Trustee, to be conditions precedent to the execution of the powers and trusts of this
Indenture, and to any action or cause of action for the enforcement of this Indenture or for the
appointment of a receiver or for any other remedy hereunder; it being understood and intended
that no one or more Holders of the Bonds shall have any right in any manner whatsoever to
affect, disturb or prejudice the lien of this Indenture by action of the Holder or Holders or to
enforce any right hereunder except in the manner herein provided, and that all proceedings at law
or in equity shall be instituted, held and maintained in the manner herein provided for the equal
benefit of the Holders of all Bonds Outstanding hereunder. Nothing in this Indenture contained
shall, however, affect or impair the right of any Bondholders to enforce the payment of the
principal of and premium, if any, and interest on any Bonds at and after the maturity thereof, or
the obligation of the City to pay, the principal of and premium, if any, and interest on each of the
Bonds issued hereunder to the respective Holders thereof at the time and place in said Bonds
expressed.
Section 810. Termination of Proceedings. In case the Trustee shall have proceeded to
enforce any right under this Indenture by the appointment of a receiver or otherwise, and such
10-47392.2 34
proceedings shall have been discontinued or abandoned for any reason, or shall have been
determined adversely to the Trustee, then and in every such case the City and the Trustee shall
be restored to their former positions and rights hereunder with respect to the property herein
conveyed, and all rights, remedies and powers of the Trustee shall continue as if no such
proceedings had been taken, except to the extent the Trustee is legally bound by such adverse
determination.
Section 811. Waivers of Events of Default. The Trustee may, and upon the written
request of the Holders of not less than 51% in principal amount of all Bonds Outstanding
hereunder shall, waive any Event of Default hereunder and its consequences and rescind any
declaration of maturity of principal; provided, however, there shall not be waived any Event of
Default described in clause (a) or (b) of the first paragraph of Section 801 hereof, unless prior to
such waiver or rescission all arrears of principal (due otherwise than by declaration) and interest,
and all expenses of the Trustee and Paying Agent, shall have been paid or provided for. In case
of any such waiver or rescission the City, Trustee and the Bondholders shall be restored to their
former positions and rights hereunder respectively, but no such waiver or rescission shall extend
to any subsequent or other default, or impair any right subsequent thereon.
ARTICLE IX
TRUSTEE AND PAYING AGENT
Section 901.Acceptance of Trusts. The Trustee hereby accepts the trusts imposed
upon it by this Indenture and agrees to perform said trusts, but only upon and subject to the
following expressed terns and conditions:
(a) The Trustee may execute any of the trusts or powers hereof and perform
any duties required of it by or through attorneys, agents, receivers or employees, and
shall be entitled to advice of counsel concerning all matters of trusts hereof and its duties
hereunder, and may in all cases pay reasonable compensation to all such attorneys,
agents, receivers and employees as may reasonably be employed in connection with the
trusts hereof. Reimbursement of such compensation paid by the Trustee is subject to the
provisions of Section 902 hereof. The Trustee may act upon the opinion or advice of any
attorney, surveyor, engineer or accountant selected by it in the exercise of reasonable
care, or, if selected or retained by the City prior to the occurrence of a default of which
the Trustee has been notified as provided in subsection (g) of this Section 901, or of
which by said subsection the Trustee is deemed to have notice, approved by the Trustee
in the exercise of such care. The Trustee shall not be responsible for any loss or damage
resulting from an action or nonaction in accordance with any such opinion or advice.
(b) The Trustee shall not be responsible for any recital herein, or in the Bonds
(except in respect to the certificate of authentication of the Trustee endorsed on such
Bonds), or for the validity of the execution by the City of this Indenture or of any
Supplemental Indentures or instruments of further assurance, or for the sufficiency of the
security for the Bonds issued hereunder or intended to be secured hereby, or for the value
of the title of the property herein conveyed or otherwise as to the maintenance of the
security hereof; except that in the event the Trustee enters into possession of a part or all
10-47392.2 35
of the property herein conveyed pursuant to any provision of this Indenture, it shall use
due diligence in preserving such property; and the Trustee shall not be bound to ascertain
or inquire as to the performance or observance of any covenants, conditions and
agreements aforesaid as to the condition of the property herein conveyed.
(c)
The Trustee
may
become the owner of Bonds secured hereby with the
same rights
which it would
have
if not Trustee.
(d). The Trustee shall be protected in acting upon any notice, request, consent,
certificate, order, affidavit, letter, telegram or other paper or document believed by it, in
the exercise of reasonable care, to be genuine and correct and to have been signed or sent
by the proper person or persons. Any action taken by the Trustee pursuant to this
Indenture upon the request or authority or consent of the owner of any Bond secured
hereby, shall be conclusive and binding upon all future owners of the same Bond and
upon Bonds issued in exchange therefor or in place thereof.
(e) As to the existence or nonexistence of any fact or as to the sufficiency or
validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon
a Certificate of the City signed by its Authorized Representative and attested by the City
Clerk as sufficient evidence of the facts therein contained and, prior to the occurrence of
a default of which it has been notified as provided in subsection (g) of this Section 901,
or of which by that subsection it is deemed to have notice, shall also be at liberty to
accept a similar certificate to the effect that any particular dealing, transaction, or action
is necessary or expedient, but may at its discretion, at the reasonable expense of the City,
in every case secure such further evidence as it may think necessary or advisable but
shall in no case be bound to secure the same. The Trustee may accept a certificate of the
City Clerk of the City under its seal to the effect that a resolution or ordinance in the form
therein set forth has been adopted by the City as conclusive evidence that such resolution
or ordinance has been duly adopted, and is in full force and effect.
(f) The permissive right of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty of the Trustee, and the Trustee shall be
answerable only for its own gross negligence or willful misconduct.
(g) The Trustee shall not be required to take notice or be deemed to have
notice of any default hereunder (except for defaults under clause (a) or (b) of the first
paragraph of Section 801 hereof as to which the Trustee shall be deemed to have notice)
unless the Trustee shall be specifically notified in writing of such default by the City or
by the Holders of at least 10% in aggregate principal amount of Bonds Outstanding
hereunder, and all notices or other instruments required by this Indenture to be delivered
to the Trustee must, in order to be effective, be delivered to the principal corporate trust
office of the Trustee, and in the absence of such notice so delivered, the Trustee may
conclusively assume there is no such default except as aforesaid.
(h) [Reserved].
10-47392.2 36
0
(i) At any and all reasonable times the Trustee, and its duly authorized
agents, attorneys, experts, engineers, accountants and representatives, shall have the right
fully to inspect any and all of the property herein conveyed, including all books, papers
and records of the City pertaining to the Tax Receipts and the Bonds, and to take such
memoranda from and in regard thereto as may be desired.
(j) The Trustee shall not be required to give any bond or surety in respect of
the execution of the said trusts and powers or otherwise in respect of the premises.
(k) Notwithstanding anything elsewhere in this Indenture contained, the
Trustee shall have the right, but shall not be required, to demand, in respect of the
authentication of any Bonds, the withdrawal of any cash, the release of any property, or
any action whatsoever within the purview of this Indenture, any showings, certificates,
opinions, appraisals or other information, or corporate action or evidence thereof, in
addition to that by the terms hereof required as a condition of such action by the Trustee,
deemed desirable for the purpose of establishing the right of the City to the authentication
of any Bonds, the withdrawal of any cash, the release of any property, or the taking of
any other action by the Trustee.
(1) Before taking such action hereunder, the Trustee may require that it be
furnished an indemnity bond satisfactory to it for the reimbursement to it of all expenses
to which it may be put and to protect it against all liability, except liability which is
adjudicated to have resulted from the gross negligence or willful misconduct of the
Trustee, by reason of any action so taken by the Trustee.
Section 902. Fees, Charges and Expenses of Trustee and Paying Agent. (a) Subject
to subsection (b) of this Section 902, the City shall, from moneys lawfully available therefor, pay
to the Trustee and Paying Agent reasonable compensation for all services performed hereunder
and also all reasonable expenses, charges and other disbursements and those of their attorneys,
agents and employees incurred in and about the administration and execution of the trusts hereby
created and the performance of the powers and duties hereunder and, to the extent permitted by
law and from moneys lawfully available therefor, shall indemnify and save the Trustee harmless
against any liabilities which it may incur in the exercise and performance of its powers and
duties hereunder. With respect to the Series 2003 Bonds, the Trustee's initial authentication fee
shall be $2,500 and the annual administration fee of the Trustee shall be up to, but shall not
exceed, $4,500. If the City shall fail to make any payment required by this subsection (a), the
Trustee may make such payment from any moneys in its possession under the provisions of this
Indenture and shall be entitled to a preference therefor over any of the Bonds Outstanding
hereunder. The City shall not be required to indemnify the Trustee against any liabilities which
the Trustee may incur as a result of negligent or wrongful acts or omissions of the Trustee.
(b) The City shall pay to the Trustee compensation for its services as described in
Section 902(a), provided that such compensation, together with all expenses, charges and other
disbursements of the Trustee and its attorneys, agents and employees and all reimbursements to
the Trustee for all costs and other disbursements as described in Section 901(a) hereof shall not
exceed $9,500 annually (not including the initial authentication fee) without the prior written
10-47392.2 37
approval of the City, which approval shall not be unreasonably withheld. If the Trustee wishes
to consult with or retain counsel for any purpose hereunder whose anticipated fees, together with
all other compensation, disbursements and reimbursements of the Trustee and its attorneys,
agents and employees to be paid by the City hereunder, shall exceed $10,000 annually, then such
counsel shall have to be acceptable to the City and such fees shall have to be approved by the
City as described above.
Section 903. Additional Duties of Trustee. (a) In addition to the other duties of the
Trustee described in this Indenture, it shall be the duty of the Trustee, on or before the tenth day
of each month after the month in which the Series 2003 Bonds are delivered, to file with the City
a statement setting forth in respect of the preceding calendar month:
(i) 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;
(ii) the amount on deposit with it at the end of such month to the credit of
each such Fund and Account;
(iii) a brief description of all obligations held by it as an investment of moneys
in each such Fund and Account;
(iv) 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
(v) any other information that the City may reasonably request, including, but
not limited to, submittal of monthly statements of activity relating to the Bonds. Such
information shall also be provided at the direction of the City to one additional
designated entity.
All records and files pertaining to each such Fund and Account in the custody of the
Trustee hereunder shall be open at all reasonable times to the inspection of the City and its
agents and representatives, and the City may make copies thereof.
(b) The Trustee additionally shall be responsible for the preparation and timely
distribution of any and all forms and reports required by law to all Bondholders, the State and the
Internal Revenue Service in connection with the payment to the Bondholders of interest on the
Bonds.
Section 904. Notice to Bondholders of Default. If a default occurs of which the
Trustee is pursuant to the provisions of Section 901(g) deemed to have or is given notice, the
Trustee shall promptly make demand upon the City and give notice to each owner of Bonds then
Outstanding.
Section 905. Intervention by Trustee. In any judicial proceeding to which the City is a
party and which in the opinion of the Trustee and its counsel has a substantial bearing on the
interests of Holders of Bonds issued hereunder, the Trustee may intervene on behalf of
Bondholders and shall do so if requested in writing by the Holders of at least 51%. of the
10-47392.2 38
aggregate principal amount of Bonds Outstanding hereunder. The rights and obligations of the
Trustee under this Section 905 are subject to the approval of the court having jurisdiction in the
premises.
Section 906. Merger or Consolidation of Trustee. Any bank or trust company to
which the Trustee may be merged, or with which it may be consolidated, or to which it may sell
or transfer its trust business and assets as a whole or substantially as a whole, or any bank or
trust company resulting from any such sale, merger, consolidation or transfer to which it is a
party, ipso facto, shall be and become successor trustee hereunder and vested with all of the title
to the whole property or Trust Estate and all the trusts, powers, discretions, immunities,
privileges and all other matters as was its predecessor, without the execution or filing of any
instrument or any further act, deed, or conveyance on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided, however, that such successor trustee
shall have capital and surplus of at least $40 million.
Section 907. Resignation by Trustee. The Trustee and any successor trustee may at
any time resign from the trusts hereby created by giving written notice to the City and the
Bondholders, and such resignation shall take effect upon the appointment of a successor trustee
by the Bondholders or by the City. Such notice may be served personally or sent by registered
mail (to the City) or first class mail (to the Bondholders).
Section 908. Removal of Trustee. The Trustee may be removed at any time by an
instrument or concurrent instruments in writing delivered to the Trustee and to the City, and
signed by the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding
hereunder.
Section 909. Appointment of Successor Trustee. In case the Trustee hereunder shall
resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or
otherwise become incapable of acting hereunder, or in case it shall be taken under the control of
any public officer or officers, or of a receiver appointed by the court, a successor may be
appointed by the Holders of not less than 51% in aggregate principal amount of Bonds
Outstanding hereunder, by an instrument or concurrent instruments in writing signed by such
Holders, or by their attorneys in fact, duly authorized; provided, nevertheless, that in case of
such vacancy the City by an instrument executed and signed by its Mayor and attested by its City
Clerk under its seal, shall appoint a temporary trustee to fill such vacancy until a successor
trustee shall be appointed by the Bondholders in the manner above provided. Any such
temporary trustee appointed by the City shall immediately and without further act be superseded
by the trustee appointed by such Bondholders. Every such temporary trustee and every such
successor trustee shall be a trust company or bank in good standing, having capital and surplus
of not less than $40 million.
Section 910. Concerning Any Successor Trustee. Every successor or temporary
trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to
the City an instrument in writing accepting such appointment hereunder, and thereupon such
successor or temporary trustee, without any further act or conveyance, shall become fully vested
with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor;
10-47392.2 39
but such predecessor shall, nevertheless, on the written request of the City or of its successor
trustee, execute and deliver an instrument transferring to such successor all the estate, properties,
rights, powers and trusts of such predecessor hereunder; and every predecessor trustee shall
deliver all securities, moneys and any other property held by it as trustee hereunder to its
successor. Should any instrument in writing from the City be required by any successor trustee
for more fully and certainly vesting in such successor the estates, rights, powers and duties
hereby vested or intended to be vested in the predecessor trustee, any and all such instruments in
writing shall, on request, be executed, acknowledged, and delivered by the City.
Section 911. Reliance Upon Instruments. The resolutions, opinions, certificates and
other instruments provided for in this Indenture may be accepted and relied upon by the Trustee
as conclusive evidence of the facts and conclusions stated therein and shall be full warrant,
protection and authority to the Trustee for its actions taken hereunder.
Section 912. Appointment of Co -Trustee. The City and the Trustee shall have power
to appoint, and upon the request of the Trustee the City shall for such purpose join with the
Trustee in the execution of all instruments necessary or proper to appoint, another corporation or
one or more Persons approved by the Trustee, either to act as co -trustee or co -trustees jointly
with the Trustee of all or any of the property subject to the lien hereof, with such powers as may
be provided in the instrument of appointment and to vest in such corporation or Person oi•
Persons as such co -trustee any property, title, right or power deemed necessary or desirable. In
the event that the City shall not have joined in such appointment within fifteen (15) days after
the receipt by it of a request so to do, the Trustee alone shall have the power to make such
appointment. Should any deed, conveyance or instrument in writing from the City be required by
the co-trustee.so appointed for more fully and certainly vesting in and confirming to such co -
trustee such properties, rights, powers, trusts, duties and obligations, any and all such deeds,
conveyances and instruments in writing shall, on request, be executed, acknowledged and
delivered by the City. Every such co -trustee shall, to the extent permitted by law, be appointed
subject to the following provisions and conditions, namely:
(a) The Bonds shall be authenticated and delivered, and all powers, duties,
obligations and rights conferred upon the Trustee in respect of the custody of all money
and securities pledged or deposited hereunder, shall be exercised solely by the Trustee;
and
(b) The Trustee, at any time by an instrument in writing, may remove any
such separate Trustee or co -trustee.
Every instrument, other than this Indenture, appointing any such co -trustee shall refer to
this Indenture and the conditions of this Article IX expressed, and upon the acceptance in writing
by such co -trustee, the co -trustee shall be vested with the estate or property specified in such
instrument, jointly with the Trustee (except insofar as local law makes it necessary for any
separate trustee to act alone), subject to all the trusts, conditions and provisions of this Indenture.
Any such co -trustee may at any time, by an instrument in writing, constitute the Trustee as the
co -trustee's agent or attorney -in -fact with full power and authority, to the extent authorized by
law, to do all acts and things and exercise all discretion authorized or permitted by the co -trustee,
10-47392.2 40
for and on behalf of the co -trustee and in the co -trustee's name. In case any co -trustee shall die,
become incapable of acting, resign or be removed, all the estate, properties, rights, powers,
trusts, duties and obligations of said co -trustee shall vest in and be exercised by the Trustee until
the appointment of a new trustee or a successor to such co -trustee.
Section 913. Designation and Succession of Paying Agent. The Trustee and any
successor Trustee shall also be the Paying Agent for the Bonds. The Paying Agent shall enjoy
the same protective provisions in the performance of its duties hereunder as are specified in
Section 901 hereof with respect to the Trustee insofar as such provisions may be applicable.
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 1001. Supplemental Indentures Not Requiring Consent of Bondholders.
The City and the Trustee may, from time to time and at any time, without the consent of or
notice to the Bondholders, enter into Supplemental Indentures as follows:
(a) to cure any formal defect, omission, inconsistency or ambiguity in this
Indenture;
(b) to grant to or confer or impose upon the Trustee for the benefit of the
Bondholders any additional rights, remedies, powers, authority, security, liabilities or
duties which may lawfully be granted, conferred or imposed and which are not contrary
to or inconsistent with this Indenture as theretofore in effect, provided that no such
additional liabilities or duties shall be imposed upon the Trustee without its consent;
(c) to add to the covenants and agreements of, and limitations and restrictions
upon, the City in this Indenture other covenants, agreements, limitations and restrictions
to be observed by the City which are not contrary to or inconsistent with this Indenture as
theretofore in effect;
(d) to confirm, as further assurance, any pledge under, and the subjection to
any claim, lien or pledge created or to be created by, this Indenture, of the Trust Estate or
of any other moneys, securities or funds;
(e) to comply with the requirements of the Trust Indenture Act of 1939, as
from time to time amended;
(f) to authorize the issuance and sale of one or more series of Additional
Bonds;
(g) to make such additions, deletions or modifications as may be necessary to
assure compliance with Section 148(f) of the Code relating to required rebate to the
United States or otherwise as may be necessary to assure exemption from federal income
taxation of interest on the Bonds; or
10-47392.2
41
(h) to modify, alter, amend or supplement this Indenture in any other respect
which is not materially adverse to the Bondholders and which does not involve a change
described in clause (a), (b), (c), (d), (e) or (f) of Section 1002 hereof and which, in the
judgment of the Trustee, is not to the prejudice of the Trustee.
Section 1002. Supplemental Indentures Requiring Consent of Bondholders. Subject
to the terms and provisions contained in this Section 1002, and not otherwise, the Holders of not
less than 2/3 in aggregate principal amount of the Bonds then Outstanding shall have the right,
from time to time, anything contained in this Indenture to the contrary notwithstanding, to
consent to and approve the execution by the City and the Trustee of such indenture or indentures
supplemental hereto as shall be deemed necessary and 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 this Indenture or in any Supplemental Indenture; provided, however, that
nothing herein contained shall permit or be construed as permitting (a) an extension of the
maturity (or mandatory redemption date) of the principal of or the interest on any Bond issued
hereunder, or (b) a reduction in the principal amount of or redemption premium or rate of interest
on any Bond issued hereunder, or (c) the creation of any lien on the Trust Estate or any part
thereof, except as hereinbefore expressly permitted, or (d) a privilege or priority of any Bond or
Bonds over any other Bond or Bonds, or (e) a reduction in the aggregate principal amount of the
Bonds required for consent to such Supplemental Indenture, or (f) the deprivation of the Holder
of any Bond then Outstanding of the lien hereby created on the Trust Estate. Nothing herein
contained, however, shall be construed as making necessary the approval of Bondholders of the
execution of any Supplemental Indenture as provided in Section 1001.
If, at any time the City shall request the Trustee to enter into any Supplemental Indenture
for any of the purposes of this Section, the Trustee shall, at the expense of the City, cause notice
of the proposed execution of such Supplemental Indenture to be mailed by first class mail to
each registered owner of the Bonds. Such notice shall briefly set forth the nature of the proposed
Supplemental Indenture and shall state that copies thereof are on file at the principal office of the
Trustee for inspection by Bondholders. The Trustee shall not, however, be subject to any
liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall
not affect the validity of such Supplemental Indenture when consented to and approved as
provided in this Section 1002. If the Holders of not less than 2/3 in aggregate principal amount
of the Bonds Outstanding at the time of the execution of any such Supplemental Indenture shall
have consented to and approved the execution thereof as herein provided, no Holder of any Bond
shall have any right to object to any of the terms and provisions contained therein, or the
operation thereof, or in any manner to question the propriety of the execution thereof, or to
enjoin or restrain the Trustee or the City from executing the same or from taking any action
pursuant to the provisions thereof.
Section 1003. Effect of Supplemental Indentures. Upon the execution of any
Supplemental Indenture entered into pursuant to Section 1001 or 1002 hereof, this Indenture
shall be deemed to be modified and amended in accordance therewith.
10.47392.2 42
ARTICLE XI
MISCELLANEOUS
Section 1101. Consents, etc. of Bondholders. Any request, direction, objection or
other instrument required by this Indenture to be signed and executed by the Bondholders may
be in any number of concurrent writings of similar tenor and may be signed or executed by such
Bondholders in person or by agent appointed in writing. Proof of the execution of any such
request, direction, objection or other instrument or of the writing appointing any such agent and
of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the
purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any
action taken by it under such request or other instrument, namely:
(a) The fact and date of the execution by any Person of any such writing may
be proved by the certificate of any officer in any jurisdiction who by law has power to
take acknowledgments within such jurisdiction that the Person signing such writing
acknowledged before such officer the execution thereof, or by an affidavit of any witness
to such execution.
(b) The fact of ownership of Bonds and the amount or amounts, numbers, and
other identification of such Bonds, and the date of holding the same shall be proved by
the registration books of the City maintained by the Trustee, as Bond registrar.
Section 1102. Notices. Except as otherwise provided in this Indenture, all notices,
certificates or other communications shall be sufficiently given and shall be deemed given when
mailed by registered or certified mail, postage prepaid, to the City or the Trustee. Notices,
certificates or other communications shall be sent to the following addresses:
City: City of Fayetteville
City Administration Building
113 West Mountain
Fayetteville, Arkansas 72701
Attention: Mayor
Trustee: Bank of Oklahoma, N.A.
P. O. Box 2300
Tulsa, Oklahoma 74192
Attention: Cynthia Wilkinson
Either of the foregoing may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates or other communications shall be sent.
Section 1103. Limitation of Rights. With the exception of rights herein expressly
conferred, nothing expressed or mentioned in or to be implied from this Indenture, or the Bonds
issued hereunder, is intended or shall be construed to give to any person or company other than
the parties hereto, and the Holders of the Bonds secured by this Indenture any legal or equitable
rights, remedy, or claim under or in respect to this Indenture or any covenants, conditions, and
10-47392.2 43
S
provisions hereof being intended to be and being for the sole exclusive benefit of the parties
hereto and the Holders of the Bonds hereby secured as herein provided.
Section 1104. Severability. If any provisions of this Indenture shall be held or deemed
to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any
jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any
provisions or any constitution or statute or rule of public policy, or for any other reason, such
circumstances shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other provision• or
provisions herein contained invalid, inoperative or unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or paragraphs in this
Indenture contained shall not affect the remaining portions of this Indenture or any part thereof.
Section 1105. Applicable Provisions of Law. This Indenture shall be considered to
have been executed in the State of Arkansas and it is the intention of the parties that the
substantive law of the State of Arkansas govern as to all questions of interpretation, validity and
effect.
Section 1106. Counterparts. This Indenture may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and the same
instrument.
Section 1107. Successors and Assigns. All the covenants, stipulations, provisions,
agreements, rights, remedies and claims of the parties hereto in this Indenture contained shall
bind and inure to the benefit of their successors and assigns.
Section 1108. Captions. The captions or headings in this Indenture are for convenience
only and in no way define, limit or describe the scope or intent of any provisions or sections of
this Indenture.
Section 1109. Photocopies and Reproductions. A photocopy or other reproduction of
this Indenture may be filed as a financing statement pursuant to the Uniform Commercial Code,
although the signatures of the City and the Trustee in such reproduction are not original manual
signatures.
Section 1110. Bonds Owned by City. In determining whether Bondholders of the
requisite aggregate principal amount of the Bonds have concurred in any direction, consent or
waiver under this Indenture, Bonds which are owned by the City shall be disregarded and
deemed not to be Outstanding for the purpose of any such determination, except that, for the
purpose of determining whether the Trustee shall be protected in relying on any such direction,
consent or waiver, only Bonds which the Trustee knows are so owned shall be so disregarded.
Bonds so owned which have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Bonds and that the pledgee is not the City. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee.
10-47392.2 44
IN WITNESS WHEREOF, the City has caused these presents to be signed in its name
and behalf by its Mayor and its corporate seal to be hereunto affixed and attested by its City
Clerk, and, to evidence its acceptance of the trust hereby created, the Trustee has caused these
presents to be signed in its behalf by its duly authorized officers and its corporate seal to be
hereto affixed.
ATTEST:
City Clerk
(SEAL)
ATTEST:
By:
Title:
(SEAL)
CITY OF FAYETTEVILLE, ARKANSAS
By:
Mayor
BANK OF OKLAHOMA, N.A.,
as Trustee
By:_
Title:
[SIGNATURE PAGE TO TRUST INDENTURE]
10-47392.2
CONSENT AND AGREEMENT
TO TRUST INDENIURE
The Advertising and Promotion Commission of the City of Fayetteville, Arkansas hereby
consents to the execution and delivery of the foregoing Trust Indenture.
ADVERTISING AND PROMOTION
COMMISSION OF THE CITY OF
FAYETTEVILLE,ARKANSAS
By:
Title: Chairman
ATTEST:
City Clerk
[CONSENT PAGE TO TRUST INDENTURE]
10-47392.2
•
EXHIBIT A TO TRUST INDENTURE
Form of Series 2003 Bond
Unless this certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in
such other name as is requested by the authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized representative of
DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is
wrongful inasmuch as the registered owner hereof Cede & Co., has an interest herein.
REGISTERED
No. R03 -
REGISTERED
UNITED STATES OF AMERICA
STATE OF ARKANSAS
CITY OF FAYETTEVILLE, ARKANSAS
HOTEL AND RESTAURANT GROSS RECEIPTS TAX REFUNDING BOND
SERIES 2003
Interest Rate: % Maturity Date: October 1, 20
Date of Bond: July 1, 2003
Registered Owner: CEDE & CO.
Principal Amount:
KNOW ALL MEN BY THESE PRESENTS:
CUSIP:
DOLLARS
That the City of Fayetteville, Arkansas, a municipality and political subdivision
organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value
received, promises to pay to the Registered Owner shown above, or registered assigns, on the
Maturity Date shown above, but solely from the source and in the manner hereinafter set forth,
the Principal Amount shown above, and in like manner to pay interest on said amount from the
date hereof until payment of such Principal Amount has been made or duly provided for, at the
Interest Rate per annum shown above, such interest to be payable semiannually on April 1 and
October I of each year, commencing on the April 1 or October 1 next succeeding the date of this
bond shown above, except as the provisions hereinafter set'forth with respect to redemption of
this bond prior to maturity may become applicable hereto. The principal of and premium, if any,
on this bond are payable in lawful money of the United States of America upon the presentation
and surrender hereof at the principal corporate trust office of Bank of Oklahoma, N.A., Tulsa,
Oklahoma, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or
another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be
made by wire transfer of immediately available funds by the Trustee to the Registered Owner as
of the fifteenth day of the calendar month preceding the calendar month in which such interest
10-07392.2 A-1
•
payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon
shall be made by check or draft of the Trustee to the Registered Owner as of the applicable
Record Date, at the owner's address as it appears on the bond registration books of the City kept
by the Trustee.
This bond, designated "Hotel and Restaurant Gross Receipts Tax Refunding Bond, Series
2003", is one of a series of bonds aggregating Dollars (S) in
principal amount (the "Series 2003 Bonds"). The Series 2003 Bonds are being issued for the
purpose of refunding the City's Hotel and Restaurant Gross Receipts Tax Bonds, Series 1998
(the "Series 1998 Bonds"), funding a debt service reserve, and paying the costs of issuance of the
Series 2003 Bonds.
The Series 2003 Bonds are issued under and are secured by and entitled to the protection
of a Trust Indenture dated as of July 1, 2003 (the "Indenture"), by and between the City and the
Trustee, which Indenture is available for inspection at the principal corporate trust office of the
Trustee. Reference is hereby made to the Indenture and to all indentures supplemental thereto
for the provisions, among others, with respect to the nature and extent of the security, the rights,
duties and obligations of the City, the Trustee and the owners of the Bonds, and the terms upon
which the Bonds are issued and secured.
The Series 2003 Bonds are issued pursuant to and in full compliance with the
Constitution and laws of the State of Arkansas, including particularly, the Advertising and
Promotion Commission Act, codified as Arkansas Code Annotated (1997 Repl.) §§26-75-601 et
seq. (as from time to time amended, the "Act"), and Ordinance No. of the City adopted
2003, which ordinance authorized the execution and delivery of the Indenture.
In order to secure the repayment of the Series 2003 Bonds, the City has, in accordance
with the Act, pledged all receipts from a one percent (1%) tax (the "Tax") levied by the City
pursuant to Ordinance No. 2310 adopted by the City on March 1, 1977, as subsequently
amended, upon the gross receipts or gross proceeds (i) derived from renting, leasing or otherwise
furnishing hotel or motel accommodations for profit within the boundaries of the City and (ii) of
restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out restaurants, concession stands,
convenience stores, grocery store -restaurants, caterers and similar businesses within the
boundaries of the City engaged in the business of selling prepared food for on -premises or off -
premises consumption.
The pledge of the receipts of the Tax (the "Tax Receipts") is subject to the prior and
senior pledge of such Tax Receipts securing payment of the City's Hotel and Restaurant Gross
Receipts Tax Refunding Bonds, Series 1995, dated October 1, 1995, of which $700,000 in
principal amount presently remains outstanding.
The Indenture provides that the City may hereafter issue Additional Bonds under certain
terms and conditions contained in the Indenture and, if issued or incurred, such Additional Bonds
will rank on a parity of security with the Series 2003 Bonds and be equally and ratably secured
by and entitled to the protection of the Indenture.
10-47392.2 A-2
•
The Series 2003 Bonds are not general obligations of the City, but are special obligations
secured by an irrevocable pledge of and lien on the Tax Receipts, as more particularly described
in the Indenture. In no event shall the Series 2003 Bonds constitute an indebtedness of the City
within the meaning of any constitutional or statutory limitation.
The holder of this Series 2003 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. In certain events, on the
conditions, in the manner and with the effect set forth in the Indenture, the principal of all the
Series 2003 Bonds and Additional Bonds, if any, issued under the Indenture and then
outstanding may be declared and may become due and payable before the stated maturity
thereof, together with accrued interest thereon. Modifications or alterations of the Indenture, or
of any indenture supplemental thereto, may be made only to the extent and in the circumstances
permitted by the Indenture.
The Series 2003 Bonds are subject to redemption at the election of the City, on and after
October 1, 2008, in whole or in part (in inverse order of maturities and by lot within a maturity)
at any time, at a redemption price equal to the principal amount being redeemed plus accrued
interest to the date of redemption.
Notwithstanding the foregoing, so long as DTC or its nominee is the sole registered
owner of the Series 2003 Bonds, the particular Series 2003 Bonds or portions thereof to be
redeemed in part within a maturity shall be selected by lot by DTC in such manner as DTC shall
determine. In selecting Series 2003 Bonds for redemption prior to maturity, in the case any
outstanding Series 2003 Bond is in a denomination greater than $5,000, each $5,000 of face
value of such Series 2003 Bond shall be treated as a separate Series 2003 Bond of the
denomination of $5,000.
In the event any of the Series 2003 Bonds or portions thereof (which shall be $5,000 or
any integral multiple thereof) are called for redemption, notice thereof shall be given by the
Trustee by first class mail to the registered owner of each such Series 2003 Bond addressed to
such registered owner at his registered address and placed in the mails not less than thirty (30)
nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that
failure to give such notice by mailing, or any defect therein, shall not affect the validity of the
proceedings for the redemption of any Series 2003 Bond with respect to which no such failure or
defect has occurred. Each notice shall identify the Series 2003 Bonds or portions thereof being
called, and the date on which they shall be presented for payment. After the date specified in
such call notice, the Series 2003 Bond or Bonds so called for redemption will cease to bear
interest provided funds sufficient for their redemption have been deposited with the Trustee, and,
except for the purpose of payment, shall no longer be protected by the Indenture and shall not be
deemed to be outstanding under the provisions of the Indenture.
This Series 2003 Bond may be transferred on the books of registration kept by the
Trustee by the registered owner or by his duly authorized attorney upon surrender hereof,
together with a written instrument of transfer duly executed by the registered owner or his duly
authorized attorney.
10.47392.2 A-3
•
The Series 2003 Bonds are issuable as registered bonds without coupons in
denominations of $5,000 and any integral multiple thereof. Subject to the limitations and upon
payment of the charges provided in the Indenture, Series 2003 Bonds may be exchanged for a
like aggregate principal amount of Series 2003 Bonds of other authorized denominations.
No recourse shall be had for the payment of the principal of or premium, if any, or
interest on any of the Series 2003 Bonds or for any claim based thereon or upon any obligation,
covenant or agreement contained in the Series 2003 Bonds or the Indenture against any past,
present or future alderman, officer or employee of the City, or any successor, as such, either
directly or through the City or any successor of the City, under any rule of law or equity, statute
or constitution or by the enforcement of any assessment or penalty or otherwise, and all such
liability of any such alderman, officer or employee as such is hereby expressly waived and
released as a condition of and consideration for the issuance of any of the Series 2003 Bonds.
This Series 2003 Bond is issued with the intent that the laws of the State of Arkansas will
govern its construction.
[The Series 2003 Bonds have been designated by the City as "qualified tax-exempt
obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as
amended.]
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required to exist, happen and be performed precedent to and in the issuance of the Series
2003 Bonds do exist, have happened and have been performed in due time, form and manner as
required by law; that the indebtedness represented by the Series 2003 Bonds, together with all
obligations of the City, does not exceed any constitutional or statutory limitation; and that the
revenues pledged to the payment of the principal of and premium, if any, and interest on the
Series 2003 Bonds as the same become due and payable will be sufficient in amount for that
purpose.
This Series 2003 Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the Certificate of Authentication
hereon shall have been signed by the Trustee.
10-47392.2 A-4
•
IN WITNESS WHEREOF, the City of Fayetteville, Arkansas has caused this Series 2003
Bond to be executed by its Mayor and City Clerk, thereunto duly authorized (by their manual or
facsimile signatures), and its corporate seal to be affixed or imprinted hereon, all as of the date
hereof shown above.
CITY OF FAYETTEVILLE, ARKANSAS
By:
Mayor
ATTEST:
By:
City Clerk
(SEAL)
(Form of Trustee's Certificate)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This bond is one of the Series 2003 Bonds of the issue described in and issued under the
provisions of the within mentioned Indenture.
Attached hereto is the complete text of the opinion of Kutak Rock LLP, a signed original
of which is on file with the undersigned, delivered and dated the date of the original delivery of
and payment for the Series 2003 Bonds.
BANK OF OKLAHOMA, N.A.,
as Trustee
By:
Authorized Signature
10-47392.2 . - A-5
S
(Form of Assignment)
ASSIGNMENT
FOR VALUE RECEIVED, , hereby sells, assigns, and transfers
unto , the within Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints as
attorney to transfer the within Bond on the books kept for registration thereof with full power of
substitution in the premises.
DATE: __________,20__
Transferor
GUARANTEED BY:
NOTICE: Signature(s) must be guaranteed by an institution satisfactory to the Trustee or
other transfer agent.
10-47392.2 A-6
I
EXHIBIT B TO TRUST INDENTURE
COVERAGE CERTIFICATE
City of Fayetteville, Arkansas
Series 2003 Hotel and Restaurant Gross
Receipts Tax Refunding Bonds
Date:
TO: Bank of Oklahoma, N.A., as Trustee
This certificate is provided pursuant to the provisions of Section 212 of the Trust Indenture
dated as of July 1, 2003 (the "Indenture"), by and between the City of Fayetteville, Arkansas (the
"City") and you, as trustee, in connection with the proposed issuance of Additional Bonds. In
connection with such issuance, the undersigned certifies as follows:
(a) Tax Receipts deposited into Revenue
Fund for preceding twelve (12) months:
(b) Maximum Annual Debt Service
on all Outstanding Bonds and
Series 1995 Bonds, plus the
proposed Additional Bonds: $
(c) (a) divided by (b) _ % (which is greater than 125%)
The undersigned hereby certifies that he is authorized to deliver this Certificate on behalf of
the City.
No Event of Default exists under the Indenture and, to the knowledge of the undersigned,
no event has occurred and continues which with notice or lapse of time or both would constitute
an Event of Default under the Indenture. All capitalized terms not otherwise defined herein shall
have the meanings set forth in the Indenture.
CITY OF FAYETTEVILLE, ARKANSAS
By:
Finance & Internal Services Director
10-47392.2 B-1
•
EXHIBIT C TO TRUST INDENTURE
FORM OF REQUISITION
City of Fayetteville, Arkansas
Series Hotel and Restaurant
Gross Receipts Tax Bonds
Date:
Requisition No.:
TO: Bank of Oklahoma, N.A., as Trustee
Pursuant to the provisions of Section 502 of the Trust Indenture dated as of July 1, 2003 (the
"Indenture"), by and between the City of Fayetteville, Arkansas (the "City") and you, as trustee, you
are authorized to make the following described payment directly to the Payee named below from the
Project Fund:
Name and Address of Payee:
Amount of Payment: $
General Classification of
the Expenditures:
The undersigned hereby certifies that he is authorized to deliver this Requisition on behalf of
the City.
The amount requested hereunder has not been the basis for any previous Requisition by the
City and is justly due and owing to the person(s) named herein as a proper payment or
reimbursement of a Project Cost.
No Event of Default exists under the Indenture and, to the knowledge of the undersigned,
no event has occurred and continues which with notice or lapse of time or both would constitute
an Event of Default under the Indenture.
CITY OF FAYETTEVILLE, ARKANSAS
By:
Authorized Representative
10-47392.2 C- I
S
Stephens Inc.
CITY OF FAYETTEVILLE, ARKANSAS
Hotel Restaurant Gross Receipts Tax Refunding Bonds
Series 2003
SCHEDULE OF EVENTS
April 25, 2003
April 2003
0
2
3
4
5
6
7
8
®
10
11
12
13
14
15
1®
17
18
19
20
21
22
23
®
25
26
27
28
2.9
30
June 2003
10104
M®
7
8
9
10
11111
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
May 2003
1
23
4
5
6
7®
9
10
11
12
1®
17
18
19
id
fl
24
25
26
30
31
• July 2003
1
2
3
4
5
6
7
8
9
]0
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
2003 Date
Event
Responsible Parties
April I
Discuss proposed financing with City Council
City / Stephens
April 9
Organizational Meeting
All Parties
April 16
Prepare and distribute first draft of financing documents
Kutak Rock
April 24
Comments due on financing documents
All Parties
April 28
Blacklined financing documents distributed
Kutak Rock
April 29
Comments due on blacklined financing documents
All Parties
April 30
Submit Financing Documents to Insurers
Stephens
Ma?S4
MA 41
Publish Bond Ordinance
City/ Kutak Rock
May 16
Obtain Insurance Commitment
Stephens
May 20
Bond Ordinance approved by City Council
City / Kutak Rock /
Stephens
May 23
Final Preliminary Official Statement to the printer
Kutak Rock!
Stephens
May 27
Distribute POS to Investors
Stephens
June 2
Pre -pricing meeting with the City
Stephens
June 3
Offer bonds
Stephens
S
• Stephens Inc.
June 5 Commit to underwrite Stephens
June 5 City Executes BPA City / Stephens
Kutak Rock /
June 5 Redemption Notice Distributed
Trustee
June 6 Final draft of the Official Statement distributed Kutak Rock
June 9 Comments due on Official Statement All Parties
June 11 Print final Official Statements Kutak Rock /
Stephens
July 10 Closing of issue All Parties
ORDINANCE NO.
4488 MICROFILMED
AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE
OF NOT TO EXCEED $6,620,000 OF HOTEL AND RESTAURANT
GROSS RECEIPTS TAX REFUNDING BONDS, SERIES 2003, BY
THE CITY OF FAYETTEVILLE, ARKANSAS FOR THE PURPOSE
OF REFUNDING THE CITY'S OUTSTANDING HOTEL AND
RESTAURANT GROSS RECEIPTS TAX BONDS, SERIES 1998;
AUTHORIZING THE EXECUTION AND DELIVERY OF A TRUST
INDENTURE PURSUANT TO WHICH THE SERIES 2003 BONDS
WILL BE ISSUED AND SECURED; AUTHORIZING THE
EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT
PURSUANT TO WHICH THE SERIES 2003 BONDS WILL BE
OFFERED; AUTHORIZING THE EXECUTION AND DELIVERY
OF A BOND PURCHASE AGREEMENT PROVIDING FOR THE
SALE OF THE SERIES 2003 BONDS; AUTHORIZING THE
EXECUTION AND DELIVERY OF AN ESCROW DEPOSIT
AGREEMENT PROVIDING FOR THE REDEMPTION OF THE
SERIES 1998 BONDS; AUTHORIZING THE EXECUTION AND
• DELIVERY OF A CONTINUING DISCLOSURE AGREEMENT;
AND PRESCRIBING OTHER MATTERS RELATING THERETO
WHEREAS, the City of Fayetteville, Arkansas (the "City") is authorized under
the provisions of the Advertising and Promotion Commission Act, Arkansas Code
Annotated (1997 Repl.) §§26-75-601 et seq. (as from time to time amended, the "Act"), to
issue its bonds secured by and payable from the revenues derived by the City from the
one percent (1%) tax (the "Tax") levied by the City pursuant to Ordinance No. 2310
adopted by the City on March 1, 1977, as subsequently amended, upon the gross
receipts or gross proceeds (i) derived from renting, leasing or otherwise furnishing hotel
or motel accommodations for profit within the boundaries of the City and (ii) of
restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out restaurants,
concession stands, convenience stores, grocery store -restaurants, caterers and similar
businesses within the boundaries of the City engaged in the business of selling
prepared food for on -premises or off -premises consumption; and
WHEREAS, pursuant to the provisions of Ordinance No. 4038, duly adopted by
the City on June 3, 1997, there was submitted to the qualified electors of the City the
question of the issuance of not to exceed $6,950,000 in principal amount of bonds
pursuant to the Act, said bonds to be secured by a pledge of and lien upon the City's
receipts of the Tax (the "Tax Receipts"); and
•
• economically beneficial, and to pay printing, underwriting, legal and other expenses
incidental to the issuance of the Series 2003 Bonds. The Series 2003 Bonds shall be
issued in the forms and denominations, shall be dated, shall be numbered, shall mature,
shall be subject to redemption prior to maturity, and shall contain such other terms,
covenants and conditions, all as set forth in the Trust Indenture submitted to this
meeting.
The Mayor is hereby authorized and directed to execute and deliver the Series
2003 Bonds in substantially the form thereof contained in the Trust Indenture submitted
to this meeting, and the City Clerk is hereby authorized and directed to execute and
deliver the Series 2003 Bonds and to affix the seal of the City thereto, and the Mayor and
City Clerk are hereby authorized and directed to cause the Series 2003 Bonds to be
accepted and authenticated by the Trustee. The Mayor is hereby authorized to confer
with the Trustee, Stephens Inc., Fayetteville, Arkansas (the "Underwriter"), and Kutak
Rock LLP, Little Rock, Arkansas ("Bond Counsel"), in order to complete the Series 2003
Bonds in substantially the form contained in the Trust Indenture submitted to this
meeting, with such changes as shall be approved by such persons executing the Series
2003 Bonds, their execution to constitute conclusive evidence of such approval.
Section 2. In order to pay the principal of and interest on the Series 2003
Bonds as they mature or are called for redemption prior to maturity, there is hereby
pledged all of the Tax Receipts. This pledge of Tax Receipts is made on a junior and
subordinate basis to the prior pledge of Tax Receipts securing repayment of the Series
1995 Bonds. The levy and collection of the Tax shall not be discontinued or reduced
while any of the Bonds are outstanding unless sufficient funds are on deposit with the
Trustee under the Trust Indenture to redeem the Series 2003 Bonds in full. The City
covenants and agrees that all Tax Receipts will be accounted for separately as special
funds on the books of the City, and all Tax Receipts will be deposited and will be used
solely as provided in the Trust Indenture.
Section.3. To prescribe the terms and conditions upon which the Series 2003
Bonds are to be executed, authenticated, issued, accepted, held and secured, the Mayor
is hereby authorized and directed to execute and acknowledge a Trust Indenture (the
"Trust Indenture"), by and between the City and Bank of Oklahoma, N.A., Tulsa,
Oklahoma (the "Trustee"), and the City Clerk is hereby authorized and directed to
execute and acknowledge the Trust Indenture and to affix the seal of the City thereto;
and the Mayor and the City Clerk are hereby authorized and directed to cause the Trust
Indenture to be accepted, executed and acknowledged by the Trustee. The Trust
Indenture is hereby approved in substantially the form submitted to this meeting,
including, without limitation, the provisions thereof pertaining to the pledge of Tax
Receipts and the terms of the Series 2003 Bonds. The Mayor is hereby authorized to
confer with the Trustee, the Underwriter and Bond Counsel in order to complete the
Trust Indenture in substantially the form submitted to this meeting, with such changes
3
•. •
• dated as of the date of its execution (the "Escrow Agreement"), by and between the City
and Bank of Oklahoma, N.A., as escrow trustee (the "Escrow Trustee"), and the Mayor
is hereby authorized and directed to cause the Escrow Agreement to be executed by the
Escrow Trustee. The Escrow Agreement is hereby approved in substantially the form
submitted to this meeting, and the Mayor is hereby authorized to confer with the
Underwriter, the Escrow Trustee and Bond Counsel in order to complete the Escrow
Agreement in substantially the form submitted to this meeting, with such changes as
shall be approved by such persons executing the Escrow Agreement, their execution to
constitute conclusive evidence of such approval.
(Advice is given that a copy of the Escrow Agreement in substantially the form
authorized to be executed is on file with the City Clerk and is available for inspection by
any interested person.)
Section 7. In order to provide for continuing disclosure of certain financial
and operating information with respect to the Tax and the City in compliance with the
provisions of Rule 15c2-12 of the U. S. Securities and Exchange Commission, the Mayor
is hereby authorized and directed to execute a Continuing Disclosure Agreement to be
dated as of the date of its execution (the "Continuing Disclosure Agreement"), by and
between the City and the Trustee, and the Mayor is hereby authorized and directed to
•cause the Continuing Disclosure Agreement to be executed by the Trustee. The
Continuing Disclosure Agreement is hereby approved in substantially the form
submitted to this meeting, and the Mayor is hereby authorized to confer with the
Trustee, the Underwriter and Bond Counsel in order to complete the Continuing
Disclosure Agreement in substantially the form submitted to this meeting, with such
changes as shall be approved by such persons executing the Continuing Disclosure
Agreement, their execution to constitute conclusive evidence of such approval.
(Advice is given that a copy of the Continuing Disclosure Agreement in
substantially the form authorized to be executed is on file with the City Clerk and is
available for inspection by any interested person.)
Section 8. In order to secure lower interest rates on the Series 2003 Bonds, the
Underwriter has proposed that the City consider the purchase of a policy of bond
insurance with a portion of the proceeds of the Series 2003 Bonds, which policy would
guarantee the payment of the principal of and interest on the Series 2003 Bonds when
due. If deemed economically advantageous by the Mayor, upon the advice of the
Underwriter, the Mayor is hereby authorized to execute an insurance commitment and
to do any and all things necessary to accomplish the delivery of a bond insurance policy
with respect to the Series 2003 Bonds.
Section 9. The Mayor and City Clerk, for and on behalf of the. City, are hereby
• authorized and directed to do any and all things necessary to effect the issuance, sale,
execution and delivery of the Series 2003 Bonds and to effect the execution and delivery
F
015 04
City of Fayetteville
Maintenance/Inquiry
6/21/2006
16:56:06
Document Item Action
Reference Date Ref. Taken Brief Description
ORD 5/20/2003 4488 HMR Tax Refunding Bonds 2003
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
�words..............: Ord. 4488
HTax Refunding Bonds 2003
Series 2003
$6,620,000
Escrow Deposit Agreement
Series 1998
Disclosure Agreement
Bond
Advertising & Promotion
4488
File Reference #......: ORD/2003 ground fl
Security Class........:
Expiration Date.......:
Date for Cont/Referred:
Name Referred to......:
Press Cmd 6 to Update
Cmdl-Return Cmd2-Check Out Cmd8-Retention Cmd3-End Press 'ENTER' to Continue
Cmd5-Abstract Yes No (c) 1986-1992 Munimetrix Systems Corp.
Retention Type:
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PRELIMINARY OFFICIAL STATEMENT DATED MAY _,2003
NEW ISSUE
BOOK -ENTRY ONLY
KUTAK ROCK LLP
DRAFT 05/07/_003
'KttlNG:
In the opinion of Band Counsel, ur.-ler existing law and assuming compliance with certain covenants, interest on the Series 2003 Band% is e.u'/uded from
gross income of the owners thereof fur fderal income tax purposes and is not od item of tax preference for purposes of the federal alremarire minimum tar
imposed an individuals and corporations: however. with respect to corporations, interest on the Series 2003 Bonds will be taken into account in detererining
adjusted current earnings and prgtits for purposes of computing the federal alternative minimum tar. Bond Counsel is also of the opinion that the Series 2003
Bonds are "qualified tax-exempt obligatnnv" within the meaning of Section 265(bj(3) of the Internal Revenue Code of 1986. as amended. Under exisrin a law,
Bond Counsel is of the opinion that the Series 2003 Bonds and the interest thereon are exempt from all state, county and municipal :tors in the Sr -rte of
Arkansas. See the caption "TAX EXEbIPTION" herein.
Dated: July 1, 2003
$ ""
CITY OF FAYETTEVILLE, ARKANSAS
HOTEL AND RESTAURANT GROSS RECEIPTS TAX REFUNDING BONDS
SERIES 2003
Due: October 1, as shown below
The Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series 2003 (the "Series 2003 Bonds"), are being issued by the City of Fayetteville,
Arkansas (the "City") for the purpose of financing a portion of the costs of (i) redeeming the City's Hotel and Restaurant Gross Receipts Tax Bonds.
Series 1998 (the "Series 1998 Bonds". funding a debt service reserve, and paying certain expenses in connection with the issuance of the Series 2003
Bonds. See the captions "ESTIMATED SOURCES AND USES OF FUNDS" and "REFUNDING PROGRAM" herein.
The Series 2003 Bonds are issuable only as fully registered bonds and, when issued, will be registered in the name of Cede & Co.. as nominee of The
Depository Trust Company ("DTC"), New York. New York, to which principal, premium, if any, and interest payments on the Series 2003 Bonds will be
made so long as Cede & Co. is the registered owner of the Series 2CU3 Bonds. Individual purchases of the Series 2003 Bonds will be made only in book -entry
form,in denominations of $5,000 or integral multiples thereof. Individual purchasers ("Beneficial Owners') of Series 2003 Bonds will not receive physical
delivery of bond certificates. See the caption "BOOK -ENTRY ONLY SYSTEM" herein.
The Series 2003 Bonds shall bear interest from their dated date, payable on April I and October I of each year, commencing October 1. 2003. All such
interest payments shall be payable to the persons in whose name such Series 2003 Bonds are registered on the bond registration books maintained by the Bank
of Oklahoma, N.A., Tulsa, Oklahoma as trustee and paying agent (the "Trustee"), as of the fifteenth day of the calendar month next preceding the calendar
month in which the applicable interest payment date falls. Principal of and premium, if any, on the Series 2003 Bonds shall be payable at the principal
corporate trust office of the Trustee. So long as DTC or its nominee is the registered owner of the Series 2003 Bonds, disbursement of such payments to DTC
Participants is the responsibility of DTC. and the disbursement of such payments to Beneficial Owners is the responsibility of DTC Participants or Indirect
Participants, as more fully described herein.
Pursuant to a Trust Indenture dated as of July I. 2003 (the "Indenture"), between the City and the Trustee, the payment of the principal of, premium, if
any, and interest on the Series 2003 Bonds is secured by a pledge of the receipts from a one percent (1%) city-wide tax (the "Tax") levied by the City upon
(i) the gross receipts and gross proceeds derived from renting. leasing or otherwise furnishing hotel or motel accommodations for profit within the boundaries
of the City. and (ii) the portion of gross receipts or gross proceeds received by restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out restaurants.
concession stands, convenience stores. grocery store -restaurants, caterers and similar businesses from the sale of prepared food and beverages for on -premises
or off -premises consumption. See the caption "SECURITY FOR THE BONDS" herein. Assuming the satisfaction of certain coverage tests, the City has
reserved the right to issue additional bonds to be secured on a parity basis with the Series 2003 Bonds. See the caption 'THE SERIES 2003 BONDS —
Additional Bonds" herein. The Series 2003 Bonds are subject to optional redemption prior to maturity as more fully described herein under the caption "THE
SERIES 2003 BONDS - Redemption."
The Series 2003 Bonds are special obligations of the City secured by and payable solely from receipts of the Tax. The Series 2003 Bonds do not
constitute an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restriction. The issuance of the Series
2003 Bonds shall not directly, indirectly or contingently obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the
payment of the Series 2003 Bonds, except as described herein with respect to the Tax.
1.3
MATURITY SCHEDULE"
Maturity
Principal
Interest Maturity Principal Interest .
(October I)
Amount
Rate Price (October I) Amount Rate Price
2004
$
2010 $ % %
2005
2011
2006
2012
2007
2013
2008
2014
2009
2015
(Accrued interest from July I. 2003 to be added)
The Series 2003 Bonds are offered when, as and if issued by the City and are subject to the final approving opinion of Kutak Rock LLP, Little Rock,
Arkansas, Bond Counsel. Certain matters will be passed upon for the City by its counsel, Kit Williams, Esq., City Attorney. It is expected that the Series 2003
Bonds will be available for delivery in New York, New York, on or about July 10, 2003.
Stephens Inc.
' See the caption "RATING" herein.
" Preliminary: subject to change.
The date of this Official Statement is June_, 2003.
S CITY OF FAYETTEVILLE, ARKANSAS
Issuer
City Council
Dan Coody, Mayor
Kyle Cook
Bob Davis
Lioneld Jordan
Shirley Lucas
Don Man
Robert Reynolds
Robert Rhoades
Brenda Thiel
Hugh Earnest, Chief Administrative Officer
Stephen Davis, Finance & Internal Services Director
Sondra Smith, City Clerk
Kit Williams, City Attorney
Fayetteville Advertising and Promotion Commission
• Bob Davis, Chairman
Dan Coody
Neal Crawford
• Pat Gazzola
David McGeady
Ching Mong
Curtis Shipley
BANK OF OKLAHOMA, N.A.
Tulsa, Oklahoma
Trustee and Paying Agent
KUTAK ROCK LLP
Little Rock, Arkansas
Bond Counsel
STEPHENS INC.
Fayetteville, Arkansas
• Underwriter
10-47615.3
No dealer, broker, salesman or other person has been authorized by the City or by Stephens Inc. (the
• "Underwriter") to give any information or to make any representations, other than those contained herein: and, if
given or made, such other information or representations must not be relied upon as having been authorized by
either of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to
buy, nor shall there be any sale of any Series 2003 Bonds inany jurisdiction in which such offer is not authorized. or
in which the person making such offer. solicitation or sale is not qualified to do so, or to any person to whom it is
unlawful to make such offer, solicitation or sale. The information and expressions of opinion contained herein are
subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no change in the affairs of the City since
the date hereof.
THE SERIES 2003 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, NOR HAS THE TRUST INDENTURE BEEN QUALIFIED UNDER THE TRUST
INDENTURE ACT OF 1939. AS AMENDED. IN RELIANCE UPON CERTAIN EXEMPTIONS FROM SUCH
REGISTRATION AND QUALIFICATION CONTAINED IN SUCH LAWS.
CERTAIN INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM THE CITY, THE
DEPOSITORY TRUST COMPANY AND OTHER SOURCES WHICH ARE BELIEVED TO BE RELIABLE.
THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN
ACCORDANCE WITH, AND AS PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE
FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS
TRANSACTION, BUT THE UNDERWRITER DOES NOT GUARANTY THE ACCURACY OR
COMPLETENESS OF SUCH INFORMATION.
IN CONNECTION WITH THIS OFFERING. THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2003 BONDS
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
• TABLE OF CONTENTS
Page
IntroductoryStatement......................................................................................................................................... I
TheSeries 2003 Bonds......................................................................................................................................... 2
Securityfor the Bonds.......................................................................................................................................... 4
Book -Entry Only System...................................................................................................................................... 5
RefundingProgram............................................................................................................................................... 7
EstimatedSources and Uses of Funds.................................................................................................................. 8
Estimated Debt Service Requirements.........:........................................................................................................ 8
Estimated Debt Service Coverage........................................................................................................................ 9
TheCity................................................................................................................................................................ 9
TheCommission................................................................................................................................................... 12
Definitions of Certain Terms................................................................................................................................ 12
Summaryof the Indenture.................................................................................................................................... 16
Summary of the Continuing Disclosure Agreement............................................................................................. 20
Underwriting......................................................................................................................................................... 22
TaxExemption...................................................................................................................................................... 22
Rating.....................................................................................................................................................................
LegalMatters........................................................................................................................................................ 23
Miscellaneous....................................................................................................................................................... 23
Accuracy and Completeness of Official Statement.............................................................................................. 23
APPENDIX A - Form of Bond Counsel Opinion................................................................................................. A -I
10-47615.3
C1
• [THIS PAGE LEFT BLANK INTENTIONALLY]
CI
10-37615.3
• PRELIMINARY OFFICIAL STATEMENT
$
CITY OF FAYETTEVILLE, ARKANSAS
HOTEL AND RESTAURANT GROSS RECEIPTS TAX REFUNDING BONDS
SERIES 2003
INTRODUCTORY STATEMENT
The following introductory statement is subject in all respects to the more complete information set forth in
this Official Statement. All descriptions and summaries of documents hereinafter set forth are qualified in their
entirety by reference to each such document. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms under the caption "DEFINITIONS OF CERTAIN TERMS" herein.
This Official Statement, including the cover page and the Appendix hereto, is furnished in connection with
the offering of Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series 2003, in the principal amount of
3 * (the "Series 2003 Bonds"), by the City of Fayetteville, Arkansas (the "City").
The City is a city of the first class organized and existing under the laws of the State of Arkansas (the
"State"). The City is authorized under the laws of the State, including particularly, the Advertising and Promotion
Commission Act, Arkansas Code Annotated (1997 Repl.) §§26-75-601 et seq. (as from time to time amended, the
"Act"), to issue and sell its bonds for the purpose of financing and refinancing the cost of convention center projects.
Pursuant to the Act, the City has previously issued and there are currently outstanding (i) its Hotel and Restaurant
Gross Receipts Tax Refunding Bonds, Series 1995 (the "Series 1995 Bonds") and (ii) its Hotel and Restaurant Gross
Receipts Tax Bonds, Series 1998 (the "Series 1998 Bonds").
The Series 2003 Bonds are to be issued by the City pursuant to the Act and Ordinance No. —, adopted and
approved by the City Council on _, 2003 (the ".Authorizing Ordinance"), for the purpose of financing a portion
of the costs of (i) redeeming all of the outstanding Series 1998 Bonds, (ii) establishing a debt service reserve for the
• Series 2003 Bonds, and (iii) paying the costs of issuing the Series 2003 Bonds. See the captions "ESTIMATED
SOURCES AND USES OF FUNDS" and `REFUNDING PROGRAM" herein. The issuance of the Series 1998
Bonds was approved by a majority of the qualified electors of the City at a special election held August 5, 1997, for
the purpose of financing a portion of the costs of constructing the Fayetteville Town Center.
The Series 2003 Bonds are not general obligations of the City, but are special obligations payable solely
from and secured by a pledge of the revenues derived by the City from a one percent (1%) tax (the "Tax") originally
levied in 1977 upon (i) the gross receipts and gross proceeds derived from renting, leasing or otherwise furnishing
hotel or motel accommodations for profit within the boundaries of the City, and (ii) the portion of gross receipts or
gross proceeds received by restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out restaurants, concession
stands, convenience stores, grocery store -restaurants and similar businesses from the sale of prepared food and
beverages for on -premises and off -premises consumption. The pledge of the receipts of the Tax (the `"fax
Receipts") securing the Series 2003 Bonds is subject and subordinate to a prior pledge of said Tax Receipts securing
the Series 1995 Bonds. See the caption "SECURITY FOR THE BONDS" herein.
The faith and credit of the City are not pledged to the payment of the Series 2003 Bonds, and the
Series 2003 Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or
statutory debt limitation or restriction. The issuance of the Series 2003 Bonds shall not directly, indirectly or
contingently obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the
payment of the Series 2003 Bonds, except as described herein with respect to the Tax Receipts.
Additional Bonds may be issued on a parity of security with the Series 2003 Bonds under certain
circumstances set forth in the Indenture (hereinafter defined). The Series 2003 Bonds and any such Additional
Bonds are herein collectively referred to as the "Bonds." The City has covenanted in the Indenture not to issue any
additional bonds under the indenture securing the Series 1995 Bonds or any other indebtedness secured on a senior
basis to the Series 2003 Bonds. See the caption "THE SERIES 2003 BONDS - Additional Bonds" and " — Superior
Obligations Prohibited" herein.
• * Preliminary; subject to change.
10-47615.3
The Series 2003 Bonds are subject to redemption at the option of the City as provided under the caption
'THE SERIES 2003 Bonds — "Redemprion" herein.
• Pursuant to the provisions of a Continuing Disclosure Agreement dated as of the date of delivery of the
Series 2003 Bonds, by and between the City and the Trustee (the "Continuing Disclosure Agreement"), the City has
undertaken certain obligations with respect to providing ongoing disclosure of certain financial and operating data
concerning the City and the Tax Receipts and of the occurrence of certain material events. See the caption
"SUMMARY OF THE CONTINUING DISCLOSURE AGREEMENT" herein.
This Official Statement contains brief descriptions or summaries of, among other matters, the City, the
Series 2003 Bonds, the Tax Receipts, the Continuing Disclosure Agreement, and the Trust Indenture dated as of July
1. 2003, (the "Indenture"), by and between the City and Bank of Oklahoma, N.A., Tulsa, Oklahoma, as trustee and
paying agent (the `Trustee"), pursuant to'which the Series 2003 Bonds are issued and secured. Such descriptions
and information do not purport to be comprehensive or definitive. All references herein to the Indenture and the
Continuing Disclosure Agreement are qualified in their entirety by reference to each such documents, and all
references to the Series 2003 Bonds are qualified in their entirety by reference to the definitive form thereof and the
information with respect thereto included in the Indenture. Copies of the Continuing Disclosure Agreement, the
Indenture, and the form of Series 2003 Bond included therein, are available from the City by writing to the attention
of the City Clerk, City of Fayetteville, City Administration Building, 113 West Mountain, Fayetteville, Arkansas
72701 and, during the initial offering period only, from the Underwriter, Stephens Inc., 3425 North Futrall. Suite
201, Fayetteville, Arkansas 72703. Tax Receipt data has been provided by the City from the audited records of the
City and certain demographic information has been obtained from other sources which are believed to be reliable.
THE SERIES 2003 BONDS
Description. The Series 2003 Bonds will be initially dated as of July 1, 2003, and will bear interest payable
semiannually on April I and October 1 of each year, commencing October 1, 2003, at the rates set forth on the cover
page hereof. The Series 2003 Bonds will mature on October 1 in the years and in the principal amounts set forth on
the cover page hereof.
• The Series 2003 Bonds are issuable only in the form of fully registered bonds and, when issued, will be
registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York,
New York, to which principal, premium, if any, and interest payments on the Series 2003 Bonds will be made so
long as Cede & Co. is the registered owner of the Series 2003 Bonds. Individual purchases of the Series 2003
Bonds will be made only in book -entry form, in denominations of $5,000 or integral multiples thereof. Individual
purchasers ("Beneficial Owners") of Series 2003 Bonds will not receive physical delivery of bond certificates. See
the caption "BOOK -ENTRY ONLY SYSTEM" herein.
All interest payments on the Series 2003 Bonds shall be payable to the persons in whose name such Series
2003 Bonds are registered on the bond registration books maintained by the Trustee, as of the fifteenth day of the
calendar month next preceding the calendar month in which the applicable interest payment date falls. Principal of
and premium, if any. on the Series 2003 Bonds shall be payable at the principal corporate trust office of the Trustee.
All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2003 Bond to
the extent of the sum or sums so paid. So long as DTC or its nominee is the registered owner of the Series 2003
Bonds, disbursement of such payments to DTC Participants is the responsibility of DTC, and the disbursement of
such payments to Beneficial Owners is the responsibility of DTC Participants or Indirect Participants, as more fully
described herein.
Redemption. The Series 2003 Bonds are subject to redemption prior to maturity at the election of the City,
on and after October 1, 2008, in whole or in part (in inverse order of maturities and by lot within a maturity) at any.
time, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date
of redemption.
Partial Redemption of a Series 2003 Bond. If less than all of the Series 2003 Bonds of a maturity are called
for redemption, the particular Series 2003 Bonds or portions of Series 2003 Bonds to be redeemed shall be selected
by lot in such manner as the Trustee in its discretion may deem fair and appropriate. So long as DTC or its nominee
is the sole registered owner of the Series 2003 Bonds, the procedures established by DTC shall control with respect
to the selection of the particular Series 2003 Bonds to be redeemed.
• Notice of Redemption. Notice of the call for any redemption, identifying the Series 2003 Bonds or portions
thereof being called and the date on which they shall be presented for payment, shall be mailed by the Trustee by
first class mail (or, so long as DTC or its nominee is the sole registered owner of the Series 2003 Bonds, by any
10-47615.3
other means acceptable to DTC, including facsimile) to the registered owner of each such Series 2003 Bond
addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) nor more
• than sixty (60) days prior to the date fixed for redemption: provided, however, that failure to give such notice by
mailing, or any defect therein, shall not affect the validity of any proceeding for the redemption of any Series 2_003
Bond with respect to which no such failure or defect has occurred. Any notice mailed as provided above shall be
conclusively presumed to have been duly given, whether or not the registered owner receives the notice.
Additional Bonds. The City may issue from time to time one or more series of Additional Bonds for the
purpose of (i) financing Project costs in connection with the acquisition, construction and/or equipping of a Project.
(ii) refunding the Series 2003 Bonds or any series of Additional Bonds, in whole or in part, or (iii) any combination
thereof. Additional Bonds shall be secured equally and ratably with the Series 2003 Bonds and any other series of
Additional Bonds theretofore issued and then Outstanding, except insofar as any terms or conditions of redemption
or purchase established under the Indenture may afford additional benefit or security for the Bonds of any particular
series and except for the security afforded by any municipal bond insurance obtained with respect to any particular
series of Bonds. Before any .Additional Bonds are authenticated, there shall be delivered to the Trustee the items
required for the issuance of Bonds by the Indenture, plus a Certificate of the Finance & Internal Services Director of
the City certifying that, based upon necessary investigation, the Tax Receipts deposited into the Revenue Fund
during the most recent twelve (12) months were not less than (i) 125% of the maximum Annual Debt Service on all
then Outstanding Bonds and Series 1995 Bonds. plus the Additional Bonds then proposed to be issued, and (ii) the
amount, if any, needed to make required deposits to the Debt Service Reserve Fund. No Additional Bonds shall be
issued unless there is no default at the time of issuance under the Indenture.
Superior Obligations Prohibited. Except to the extent as provided above with respect to the issuance of
Additional Bonds, so long as Bonds are Outstanding 'under the Indenture, the City has covenanted not to create or
permit the creation of any indebtedness, or to issue any bonds, notes, warrants, certificates or other obligations or
evidences of indebtedness payable in any manner from the Tax Receipts or otherwise from the Trust Estate which
(i) will in any way be superior to or rank on a parity with the Bonds, or (ii) will in any way be secured by a lien and
charge on the Tax Receipts or on the moneys deposited in or to be deposited in the Revenue Fund, prior to or equal
with the lien, pledge and charge created in the Indenture for the security of the Bonds, or (iii) will be payable prior
• to or equal with the payments to be made from the Tax Receipts or the Revenue Fund into the Bond Fund or Debt
Service Reserve Fund, or from said Bond Fund or Debt Service Reserve Fund for the payment of the Bonds. To that
end, the City specifically covenants not to issue any additional bonds under the provisions of the trust indenture
securing the Series 1995 Bonds. The City is not prohibited or restricted from issuing bonds payable from Tax
Receipts so long as use of the Tax Receipts in favor of said bonds shall be made expressly subject and subordinate to
the pledge and use of Tax Receipts to pay principal of and premium, if any, and interest on the Bonds and to make
all required deposits into all funds held by the Trustee pursuant to the Indenture; -
Transfer or Exchange. The Bonds may be transferred on the books of registration kept by the Trustee by
the registered owner in person or by the owner's duly authorized attorney, upon surrender thereof, together with a
written instrument of transfer duly executed by the registered owner or the owner's duly authorized attorney. Upon
surrender for transfer of any Bond at the principal corporate office of the Trustee, the City shall execute and the
Trustee shall authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds of the same
series and in the same aggregate principal amount and of any authorized denomination or denominations.
Transfers of registration or exchanges of Bonds shall be without charge to the Holders of such Bonds, but
any taxes or other governmental charges required to be paid with respect to the same shall be paid by the Holder of
the Bond requesting such transfer or eichange as a condition precedent to the exercise of such privilege.
The Trustee shall not be required to transfer or exchange any Bond during the period from and including a
Record Date to the next succeeding interest payment date of such Bond nor to transfer or exchange any Bond after
the mailing of notice calling such Bond for redemption has been made, and prior to such redemption.
So long as DTC or its nominee is the sole registered owner of the Series 2003 Bonds, transfers of beneficial
interests in the Series 2003 Bonds shall be in accordance with the rules and procedures of DTC and its direct and
indirect participants. See the caption "BOOK -ENTRY ONLY SYSTEM" herein.
LJ
10-47615.3
SECURITY FOR THE BONDS
• Tax Receipts. The Bonds, including the Series 2003 Bonds. are special obligations of the City secured by
and payable from the revenues derived by the City from a one percent (1%) tax (the "Tax") levied upon (fl the gross
receipts and gross proceeds derived from renting. leasing or otherwise furnishing hotel or motel accommodations for
profit within the boundaries of the City. and (ii) the portion of gross receipts or gross proceeds received by
restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out restaurants, concession stands, convenience stores.
grocery store -restaurants and similar businesses from the sale of prepared food and beverages for on -premises and
off -premises consumption. The pledge of the receipts of the Tax (the "Tax Receipts") securing the Series 2003
Bonds is subject and subordinate to a prior pledge of said Tax Receipts securing the Series 1995 Bonds. The Series
1995 Bonds are presently outstanding in the aggregate principal amount of $700,000 and have a final maturity date
of October 1,2004.
Pursuant to the Act, the City levied the Tax in 1977. The Tax is limited by statute to 3% of the amount of
such gross receipts and proceeds. Pursuant to the Act and the Indenture, the City has pledged the Tax Receipts to
the payment of the Bonds. The Advertising and Promotion Commission of the City of Fayetteville, Arkansas (the
"Commission") has approved such pledge, as required by statute. The City has continuously collected the Tax since
June 1, 1977, following approval by the citizens of the City in a special election held on May 3, 1977.
The City has covenanted in the Indenture that, for so long as there are Outstanding Bonds, the Tax will not
be repealed and the current Tax rate of 1% will not be reduced. In addition, the City has further covenanted that all
necessary action will be taken, from time to time. to collect such tax in full amount due and to apply the Tax
Receipts in the manner provided in the Indenture.
The following table shows Tax Receipts for The years 1977 through 2002. The amounts in the table do not
include the Parks Tax.
Calendar Year Total Receipts
1977 $ 90,102
1978 185,514
• 1979 210,583
1980 235,547
1981 276,336
1982 303,269
1983 344,217
1984 394,034
1985 394,818
1986 437,419
1987 452,387
1988 470,323
1989 513,094
1990 555,694
1991 578,348
1992 659,193
1993 736,097
1994 866,253
1995 932,916
1996 956,093
1997 992,939
1998 1,094.521
1999 1,170,114
2000 1,254,310
2001 1,316,096
2002[" 1,489,011
1O Unaudited
• Source: City records.
10-47615.3
he faith and credit of the City are not pledged to the payment of the Series 2003 Bonds, and the
Series 2003 Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or
• statutory debt limitation or restriction. The issuance of the Series 2003 Bonds shall not directly, indirectly or
contingently obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the
payment of the Series 2003 Bonds, except as described herein with respect to the Tax Receipts.
Debt Service Reserve. From the proceeds of sale of each series of Bonds issued pursuant to the Indenture.
there shall be deposited into the Debt Service Reserve Fund an amount which, together with the amounts then on
deposit therein, will be equal to the least of (a) 10% of the face amount of [all] [each series of] Outstanding Bonds,
(b) the maximum Annual Debt Service on [all] [each series of] Outstanding Bonds, or (c) 1.25 times the average
Annual Debt Service on [all] [each series of] Outstanding Bonds. For all purposes of this Indenture, the Reserve
Requirement may be satisfied by cash or by Investment Obligations. The Debt Service Reserve Fund shall be used
solely to pay the principal of and interest on Outstanding Bonds as due for which there are no available funds in the
Bond Fund to make such payments.
If the amount in the Debt Service Reserve Fund is ever reduced below the Reserve Requirement, it shall be
reimbursed to an amount equal to the Reserve Requirement through monthly payments, beginning not later than the
fifteenth day of the month following the month in which the Debt Service Reserve Fund was reduced below the
Reserve Requirement, and continuing not later than the fifteenth day of each month thereafter until such
reimbursement shall have been accomplished, from any funds in the Revenue Fund (after making the required
deposits into the Interest Account and Principal Account of the Bond Fund, as provided in the Indenture). If a
surplus shall exist in the Debt Service Reserve Fund over and above the Reserve Requirement, such surplus shall be
transferred to the Interest Account of the Bond Fund.
The moneys on deposit in the Debt Service Reserve Fund may be used, together with other available funds.
to provide for the payment at maturity or to redeem prior to maturity all, but not less than all, of the Outstanding
Bonds.
BOOK -ENTRY ONLY SYSTEM
• The Series 2003 Bonds will be issued only as one fully registered Series 2003 Bond for each maturity, in
the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"), as
registered owner of all the Series 2003 Bonds. The fully registered Series 2003 Bonds will be retained and
immobilized in the custody of DTC.
DTC (or any successor securities depository) or its nominee for all purposes under the Indenture will be
considered by the City and the Trustee to be the owner or holder of the Series 2003 Bonds.
Owners of any book entry interests in the Series 2003 Bonds (the "book entry interest owners") described
below, will not receive or have the right to receive physical delivery of the Series 2003 Bonds, and will not be
considered by the City and the Trustee to be, and will not have any rights as, owners or holders of the Series 2003
Bonds under the bond proceedings and the Indenture except to the extent, if any. expressly provided thereunder.
CERTAIN INFORMATION REGARDING DTC AND DIRECT PARTICIPANTS IS SET FORTH
BELOW. THIS INFORMATION HAS BEEN PROVIDED BY DTC. THE CITY, THE UNDERWRITER AND
BOND COUNSEL ASSUME NO RESPONSIBILITY FOR THE ACCURACY OF SUCH STATEMENTS.
DTC, the world's largest depository, is a limited -purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System. a "clearing corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over two million issues of U.S. and non-U.S. equity issues.
corporate and municipal debt issues and money market instruments from over 85 countries that DTC's participants
("Direct Participants') deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants
of sales and other securities transactions in deposited securities, through electronic computerized book -entry
transfers and pledges among Direct Participants' accounts. This eliminates the need for physical movement of
securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The
Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants
• of DTC and
by Members of the National Securities
Clearing Corporation, Government
Securities Clearing
Corporation.
MBS Clearing Corporation and Emerging Markets
Clearing Corporation (NSCC,
GSCC, MBSCC and
EMCC, also
subsidiaries of DTCC). as well as by the
New York Stock Exchange. Inc.,
the American Stock
1037615.3
Exchange LLC. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available
to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing
• corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The DTC Rules applicable to its Direct and Indirect Participants are on file with
the Securities and Exchange Commission. More information about DTC can be found at www.dtc.com.
Purchases of Series 2003 Bonds under the DTC system must be made by or through Direct Participants.
which will receive a credit for the Series 2003 Bonds on DTC's records. The ownership interest of each actual
purchaser of each Series 2003 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. but
Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings. from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Series 2003 Bonds are to be accomplished by
entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership interests in Series 2003 Bonds, except in the event
that use of the Book -Entry System for the Series 2003 Bonds is discontinued.
To facilitate subsequent transfers. all Series 2003 Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an
authorized representative of DTC. The deposit of Series 2003 Bonds with DTC and their registration in the name of
Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Series 2003 Bonds, DTC's records reflect only the identity of the Direct Participants
to whose accounts such Series 2003 Bonds are credited, which may or may not be the Beneficial Owners. The
Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to
time. Redemption notices shall be sent to DTC. If less than all of the Series 2003 Bonds within a maturity are to be
• redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such
maturity to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series
2003 Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the Record Date. The Omnibus
Proxy will assign Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series
2003 Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy).
Payment of debt service and redemption proceeds with respect to the Series 2003 Bonds will be made to
Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is
to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the
City or the Trustee on payable date in accordance with their respective holdings shown on DTC's records.
Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Trustee or the City, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and debt service to
Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the
responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of
Direct and Indirect Participants.
BENEFICIAL OWNERSSHOULDCONSULT WITH THE DIRECT PARTICIPANTS OR INDIRECT
PARTICIPANTS FROM WHOM THEY PURCHASE A BOOK ENTRY INTEREST TO OBTAIN
INFORMATION CONCERNING THE SYSTEM MAINTAINED BY SUCH DIRECT PARTICIPANTS OR
INDIRECT PARTICIPANTS TO RECORD SUCH INTERESTS, TO MAKE PAYMENTS, TO FORWARD
NOTICES OF REDEMPTION AND OF OTHER INFORMATION.
THE CITY AND THE TRUSTEE HAVE NO RESPONSIBILITY OR LIABILITY FOR ANY ASPECTS
OF THE RECORDS OR NOTICES RELATING TO, OR PAYMENTS MADE ON ACCOUNT OF, BOOK
ENTRY INTEREST OWNERSHIP, OR FOR MAINTAINING. SUPERVISING OR REVIEWING ANY
RECORDS RELATING TO THAT OWNERSHIP.
10-17615.3
The Trustee and the City, so long as a book entry method of recording and transferring interest in the Series
2003 Bonds is used, will send any notice of redemption or of any Indenture amendment or supplement or other
• notices to Bondholders under the Indenture only to DTC (or any successor securities depository) or its nominee.
Any failure of DTC to advise any Direct Participants, or of any Direct Participants or Indirect Participants to notify
any Beneficial Owner, of any such notice and its content or effect will not affect the validity of the redemption of
the Series 2003 Bonds called for redemption. the Indenture amendment or supplement, or any other action premised
on notice given under the Indenture.
The City and the Trustee cannot and do not give any assurances that DTC, Direct Participants. Indirect
Participants or others will distribute payments of debt service on the Series 2003 Bonds made to DTC or its nominee
as the registered owner of the Series 2003 Bonds, or any redemption or other notices, to the Beneficial Owners, or
that they will do so on a timely basis, or that DTC will serve and act in a manner described in this Official
Statement.
DTC may discontinue providing its services as securities depository with respect to the Series 2003 Bonds
at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, bond certificates are required to be printed and delivered.
In addition, the City may decide to discontinue use of the system of book -entry transfers through DTC (or a
successor securities depository). In that event, bond certificates will be printed and delivered.
REFUNDING PROGRAM
Purpose. A portion of the proceeds of the Series 2003 Bonds will be utilized, along with other available
moneys, to effect a current refunding of $6,620.000 outstanding principal amount of the City's Hotel and Restaurant
Gross Receipts Tax Bonds, Series 1998 (the "Series 1998 Bonds"). The Series 1998 Bonds were originally issued to
finance a portion of the costs of construction of the Fayetteville Town Center, a multipurpose civic center located on
the south side of the downtown square.
Refunded Bonds. The Series 1998 Bonds will be called for redemption by the City on October 1. 2003,
pursuant to the provisions of the trust indenture under which the Series 1998 Bonds were issued, and will be paid
• from funds deposited with the Bank of Oklahoma, N.A., Tulsa, Oklahoma, as escrow trustee (the "Escrow Trustee")
under the provisions of an Escrow Deposit Agreement to be dated as of the date of delivery of the Series 2003
Bonds (the "Escrow Agreement"), between the City and the Escrow Trustee.
The Indenture provides that a portion of the proceeds from the sale of the Series 2003 Bonds, together with
moneys released from the bond fund and the debt service reserve fund relating to the Series 1998 Bonds, will be
held by the Escrow Trustee under the Escrow Agreement in an escrow fund (the "Escrow Fund") and used to
purchase direct obligations of the United States of America (or their equivalents) (the "Defeasance Securities"). The
Underwriter will verify at the time of delivery of the Series 2003 Bonds that the Defeasance Securities will mature
and yield interest in such amounts which, together with uninvested funds, if any, in the Escrow Fund will be
sufficient to pay, when due, the principal of and interest on the Series 1998 Bonds.
Pursuant to the terms of the Escrow Agreement, the Escrow Fund is irrevocably pledged to the payment of
the principal of and interest on the Series 1998 Bonds.
By the deposit of Defeasance Securities and uninvested cash with the Escrow Trustee pursuant to the
Escrow Agreement, the City will have defeased the Series 1998 Bonds. In the opinion of Bond Counsel, the Series
1998 Bonds will no longer be payable from, or secured by a pledge of, the Tax Receipts, but will be payable solely
from the principal of and the interest on the Defeasance. Securities and uninvested cash held for such purpose by the
Escrow Trustee, and the pledge of Tax Receipts securing the Series 1998 Bonds, together with all other obligations
of the City to the holders of the Series 1998 Bonds under the trust indenture securing the Series 1998 Bonds, will be
discharged.
•
1047615.3
ESTIMATED SOURCES AND USES OF FUNDS
• The proceeds of the Series 2003 Bonds are expected to be used as follows:
Sources of Fundsttt
Series 2003 Bond Proceeds $
Series 1998 Bond Fund and Reserve Fund
Total Sources: $
Uses of Funds't
Transfer to Escrow Trustee $
[Debt Service Reserve Fund Deposit] [Purchase of Surety Bond]
[Bond Insurance Premium]
Costs of Issuance and Underwriter's Discount
Contingency
Total Uses:
Preliminary; subject to change.
ESTIMATED DEBT SERVICE REQUIREMENTS
•
•
As
of the date of closing,
the Series 1995 Bonds and the Series
2003 Bonds will constitute the only debt
obligations
secured by the Tax Receipts. The following table sets forth
estimates of the amounts
required to pay
scheduled principal of and interest on the Series 1995 Bonds and the Series 2003 Bonds during each
year:
Series 1995
Series 1995 Series 2003
Series 2003
Total Debt
Year
. Principal
Interest Principal
Interesttlt
Service
2003
$ 340,000
$ 36,581 $
$
$
2004
360,000
18,900
2005
-
-
2006 -
2007 -
2008 -
2009 -
2010 -
2011 -
2012 -
2013 -
2014 -
2015 -
..ttlllllllll
Preliminary;
subject to change.
Assuming for purposes of
this Preliminary Official State, an average coupon rate on the Series 2003
Bonds of
_% per annum.
10-67615.3
E:1
ESTIMATED DEBT SERVICE COVERAGE
• The following table shows estimated maximum annual debt service coverage with respect to the Series
1995 Bonds and the Series 2003 Bonds utilizing Tax Receipts for the year ended December 31, 2002.
Historical Tax Receiptsttl $1,489,011
Maximum Annual Debt Service Requirement on the Series 1995 S
Bonds and the Series 2003 Bondst2l
Maximum Annual Debt Service Coverage
M See the caption "SECURITY FOR THE BONDS —Tax Receipts' herein.
(2) Preliminary: subject to change. See the caption "ESTIMATED DEBT SERVICE REQUIREMENTS" herein.
THE COVERAGE NUMBERS SET FORTH ABOVE ARE BASED ON HISTORICAL COLLECTIONS OF TAX
RECEIPTS. ACTUAL COLLECTIONS OF TAX RECEIPTS WILL DEPEND ON NUMEROUS FACTORS.
AND THERE CAN BE NO ASSURANCE THAT FUTURE TAX RECEIPTS AVAILABLE TO PAY DEBT
SERVICE ON THE SERIES 1995 BONDS AND THE SERIES 2003 BONDS WILL APPROXIMATE SUCH
HISTORICAL RESULTS.
THE CITY
General. The City is a city of the first class organized and existing under the laws of the State of Arkansas.
The City is the seat of government of Washington County (the "County") and is the. fourth largest city in the State.
The City is located in the Metropolitan Statistical Area of Fayetteville/Springdale/Rogers (the "MSA"), which
includes all of Washington and Benton Counties in the northwest corner of the State and is approximately 185 miles
northwest of Little Rock, Arkansas, 125 miles east of Tulsa, Oklahoma, and 210 miles south of Kansas City,
Missouri.
• The City is served by U.S. Interstate 540, U.S. Highways 62 and 71, and State Highways 16, 45, 112, 156.
180 and 265. The Burlington Northern Railroad has several lines running through the City, and a general aviation
airport with a 6,006 -foot runway is available for limited commuter travel. The Northwest Arkansas Regional
Airport is located approximately 40 minutes from downtown Fayetteville and provides daily flights to numerous
venues.
Government. The City currently operates under the Mayor -Council form of government pursuant to which
a mayor, city attorney, city clerk and eight aldermen are elected, two from each of the City's four wards. The
mayor, city attorney and city clerk are full-time positions elected to four year terms. Aldermen also serve four year
terms.
The City's elected officials and the dates on which their respective terms expire are as follows:
Name
Office
Term Expires
Dan Coody
Mayor
12/31/04
Kit Williams
City Attorney
12/31/06
Sondra Smith
City Clerk
12/31/04
Kyle Cook
Alderman
12/31/06
Bob Davis
Alderman
12/31/04
Lioneld Jordan
Alderman
12/31/04
Shirley Lucas
Alderman
12/31/06
Don Marr
Alderman
12/31/04
Robert Reynolds
Alderman
12/31/06
Robert Rhoades
Alderman _
12/31/06
Brenda Thiel
Alderman
12/31/04
•
1047615.3
Population. The following is a table of population changes for the City, the MSA and the State of
Arkansas. according to the United States Census Bureau:
• City of State of
Year Fayetteville MSA Arkansas
1960 20.274 92,069 1,786,272
1970 30.729 127,846 1,923,322
1980 36.608 178,609 2,286.435
1990 42.099 210,908 2,350,624
2000 58.047 311,121 2,673;400
Economic Data. Per capita personal income figures for the MSA and the State of Arkansas are as follows:
State of
Year MSA Arkansas
1992 S18,260 $16,425
1993 18,765 16,995
1994 19,590 17,750
1995 20,193 18,546
1996 20,870 19,442
1997 21,586 20,228
1998 22,893 21,256
1999 24,213 22,223
2000 23,316 21,995
Source: Bureau of Economic Analysis.
Retail sales figures for the MSA and the State are as follows:
State of MSA as % of
Year MSA Arkansas State of Arkansas
• 1993 $1,880,105,000 $16,997,721,000 11.06%
1994 2,217,229,000 19,090,516,000 11.61
1995 2,486,425,000 20,998,923,000 11.84
1996 2,692,554,000 22,053,022,000 12.21
1997 2,845,968,000 22,872,236,000 12.44
1998 3,018,896,000 23,944,647,000 12.61
1999* n/a n/a n/a
2000 3,526,791,000 28,488,033,000 12.38
2001 3,806,422,000 29,652,693,000 12.84
2002 3,841,326,000 29,269,775,000 13.12
* Methodology changed to calendar year basis. No reliable information is available for 1999.
Source: Sales and Marketing Management Survey of Buyer Power.
The following table shows the total assessed value of non -utility real and personal property within the City
for the years indicated:
Year Real Property Personal Property Total
1994 $245,093,513 $ 86,322,277 $331,415,790
1995 340,593,452 101,274,620 441,868,072
1996 359,369,202 113,157,365 472,526,567
1997 382,798,143 120,064,627 502,862,770
1998 401,001,338 127,575,096 528,576,434
1999 413,648,415 137,404,499 551,052,914
2000 432,951,171 145,147,891 578,099,062
2001 486,853.822 155.794,579 642,648,401
2002
• Source: Washington County Tax Assessor's Office. The assessed value represents 20% of the appraised value of
property.
1047615.3 10
Building permits issued by the City"/ are shown below for the years indicated:
• 1998 1999 2000 2001 2002
Residential Building Permits 304 451 361 339 323
Commercial Building Permits 41 59 27 38 35
Value of All Building Permits $58.948.911 $100.744,816 $121,887,263 $85,262,302 $100.809.486
t" Does not include building activity of the University of Arkansas, school permits and additions/alterations to existing structures.
Source: City of Fayetteville.
Unemployment figures for the MSA and the State of Arkansas, according to the U.S. Bureau of Labor
Statistics, are as follows:
Year
MSA
State of Arkansas
1994
2.4%
5.3%
1995
2.4
4.9
1996
2.9
5.4
1997
3.0
5.3
1998
3.2
5.5
1999
2.4
4.5
2000
2.1
.4.4
2001
1.7
5.1
2002
2.4
5.4
2003*
2.6
4.9
* February 2003 only; preliminary.
Source: Arkansas Employment Security Department
• Employment and Industry. The principal campus of the University of Arkansas is located in the City and
had total enrollment for the Spring semester of 2003 of approximately 15,068. For the 2002-03 fiscal year ending
June 30, 2003, the University has an operating budget in excess of $318 million, which does not include the
agricultural experimentation station or other associated operations. On. the Fayetteville campus, the University
employs approximately 2,522 faculty, administrative, secretarial, clerical and maintenance personnel in both full-
time and part-time positions, making the University the largest employer in the City.
Other major employers in the City, their products or services and approximate number of employees are set
forth below:
Employer Product or Service Employee Range
Pinnacle Foods, International
Frozen Dinners
1,000-2,499
Superior Industries
Cast Aluminum Wheels
1,000-2,499
Washington Regional Medical Center
Medical
1,000-2,499
Fayetteville School District
Education
500-999
Tyson's Mexican Original
Mexican Food Products
500-599
Arkansas Western Gas Co.
Utilities
300-499
Ayrshire Electronics
Manufacturing
300-499
City of Fayetteville
Government
300-499
Dillards Department Store
Retail
300-499
Hanna's
Potpourri, Soup, Candles
300-499
McClinton -Anchor Co.
Limestone & Hot Mix
300-499
Tyson's Entree Div.
Frozen Dinner Entrees
300-499
Veteran's Admin. Medical Center
Medical
300-499
•
Source: Fayetteville Chamber of Commerce.
10-47615.3
THE COMMISSION
. Pursuant to the authority of the Act, the Advertising and Promotion Commission of the City of Fayetteville.
Arkansas (the "Commission") was created by ordinance of the City dated March 1, 1977. The Commission is
responsible for the advertising and promotion of the City and its environs and oversees the leasing of certain City -
owned convention facilities to the Board of Trustees of the University of Arkansas. The Commission is composed
of four members appointed by the City Council. who are hotel, motel or restaurant owners or managers. The three
remaining members are two aldermen on the City Council and one member from the public at large. The present
members of the Commission are as follows:
Member Term Expires
Bob Davis. Chairman
Dan Coody
Neal Crawford
Pat Gazzola
David McGeady
Ching Mong
Curtis Shipley
(City Council Member)
(Mayor)
4/1/07
4/1/06
4/1/04
4/1/05
4/1/05
DEFINITIONS OF CERTAIN TERMS
The following are definitions of certain terms used in this Official Statement:
"Account" means an Account established byArticle V of the Indenture.
"Act" means the Advertising and Promotion Commission Act, codified as Arkansas Code Annotated (1997
Repl.) Sections 26-75-601 et seq., as from time to time amended.
"Additional Bonds" means Bonds in addition to the Series 2003 Bonds which are issued under the
provisions of Section 212 of the Indenture.
• "Additional Convention Facilities" means land, buildings, structures, machinery, furniture, fixtures,
equipment and all related or necessary tangible property constituting convention center improvements which are
permitted to be financed under the provisions of the Act.
"Annual Debt Service" means, with respect to all or any particular amount of Bonds, the Debt Service for
any particular Fiscal Year required to be paid or set aside during such Fiscal Year, less the amount of such payment
which is provided from the proceeds of the sale of Bonds or from sources other than Tax Receipts.
"Authorized Representative" means either the Mayor or the Finance & Internal Services Director of the
City and such additional persons as from time to time may be designated to act on behalf of the City by a Certificate
furnished to the Trustee containing the specimen signature thereof and executed on behalf of the City by its Mayor.
"Authorizing Ordinance" means Ordinance No._, adopted by the City on , 2003, which
authorized the issuance of the Series 2003 Bonds pursuant to the Indenture.
"Beneficial Owner" means any Person who acquires beneficial ownership interest in a Bond held by the
Securities Depository. In determining the Beneficial Owner of any Bond, the Trustee may rely exclusively upon
written representations made and information given to the Trustee by the Securities Depository or its Participants
with respect to any Bond held by the Securities Depository in which a beneficial ownership interest is claimed.
"Bond Counsel" means any firm of nationally recognized municipal bond counsel selected by the City and
acceptable to the Trustee.
"Bond Fund" means the fund by that name created and established in the Indenture.
"Bonds" mean the Series 2003 Bonds and all Additional Bonds, if any, issued by the City pursuant to the
Indenture.
"Book -Entry System" means the book -entry system maintained by the Securities Depository and described
in the Indenture.
• "Certificate" means a document signed by an Authorized Representative of the City attesting to or
acknowledging the circumstances or other matters therein stated.
10-47615.3 12
"City" means the City of Fayetteville. Arkansas. a municipality and political subdivision under the laws of
the State of Arkansas.
• "City Clerk" means the person holding the office and performing the duties of the City Clerk of the City.
"Closing Date" means, with respect to any series of Bonds, the date upon which there is an exchange of
such series of Bonds for the proceeds representing the purchase price for such series of Bonds by the Original
Purchaser or Purchasers thereof.
"Code" means the Internal Revenue Code of 1986, as from time to time amended. and applicable
regulations issued or proposed thereunder.
"Commission" means the Advertising and Promotion Commission of the City of Fayetteville, Arkansas, or
any successor thereto.
"Continuing Disclosure Agreement" means. collectively, each Continuing Disclosure Agreement between
the City and the Trustee, dated the date of issuance and delivery of a series of Bonds, as originally executed and as
amended from time to time in accordance with the terms thereof.
"Cost of Issuance Fund" means the fund by that name created and established in the Indenture.
"Costs of Issuance" means all items of expense payable or reimbursable directly or indirectly by the City
and related to the authorization, sale and issuance of the Bonds, including, but not limited to, underwriting
discounts, fees and expenses, election expenses, publication expenses, expenses of printing, reproducing, filing and
recording documents, initial fees and charges of the Trustee and any Paying Agent, fees and expenses for legal.
accounting and other professional services, rating fees, costs of securing any credit enhancement for the Bonds,
costs of execution, transportation and safekeeping of the Bonds, and other costs, charges and fees incurred in
connection with the foregoing.
"Debt Service" means, with respect to all or any particular amount of Bonds for any Payment Period, the
amount required to pay the sum of the interest on such Bonds payable during the Payment Period and the principal
of, and any other amount required to effect any mandatory redemption of, such Bonds, if any, during the Payment
. Period.
"Debt Service Reserve Fund" means the fund by that name created and established in the Indenture.
"Event of Default" means any event of default specified in Section 801 of the Indenture.
"Fiscal Year" means
the 12 -month period used, at any time,
by
the City for accounting purposes, which
may be the calendar year.
"Fund" means a fund confirmed or established by the Indenture.
"Government Securities" means (i)bonds, notes, certificates of indebtedness, treasury bills or other
securities constituting direct obligations of, or obligations on which the full and timely payment of principal and
interest is fully and unconditionally guaranteed by, the United States of America (including any such securities
issued or held in book -entry form on the books of the Department of Treasury of the United States of America), and
(ii)evidences of direct ownership or proportionate or individual interest in future interest or principal payments on
specified direct obligations of, or obligations on which the full and timely payment of principal and interest is fully
and unconditionally guaranteed by, the United States of America, which obligations are held by a bank or trust
company organized and existing under the laws of the United States of America or any state thereof in the capacity
of custodian in form and substance satisfactory to the Trustee.
"Holder" or "Bondholder" or "Owner of the Bonds" means the registered owner of any Bond.
"Indenture" means the Trust Indenture dated as of July I, 2003, between the City and the Trustee, pursuant
to which the Bonds are issued, and any amendments and supplements thereto.
"Interest Payment Date" means any date on which interest is payable on the Bonds.
"Investment Obligations" means, if and to the extent the same are at the time legal for investment of Funds
and Accounts held under the Indenture:
• (a) Government Securities;
10-47615.3 13
(b) bonds, notes or other obligations of any state of the United States of America or any
• political subdivision of any state, which at the time of their purchase are rated in either of the two highest
rating categories by a nationally recognized Rating Agency;
(c) certificates of deposit or time or demand deposits constituting direct obligations of any
bank, bank holding company, savings and loan association or trust company organized under the laws of
the United States of America or any state thereof (including the Trustee or any of its affiliates), except that
investments may be made only in certificates of deposit or time or demand deposits which are:
(1) insured by the Federal Deposit Insurance Corporation, or any other similar
United States Government deposit insurance program then in existence; or
(2) continuously and fully secured by Government Securities, which have a market
value, exclusive of accrued interest, at all times at least equal to the principal amount of such
certificates of deposit or time or demand deposits;
(d) short term discount obligations of the Federal National Mortgage Association and the
Government National Mortgage Association;
(e) money market mutual funds (1)that invest in Government Securities or that are registered
with the federal Securities and Exchange Commission (SEC), meeting the requirements of Rule 2a-7 under
the Investment Company Act of 1940, and (2)that are rated in either of the two highest categories by a
nationally recognized Rating Agency; and
[(f) with respect to the Debt Service Reserve Fund only, the Surety Bond.]
"Mayor" means the person holding the office and performing the duties of the Mayor of the City.
"Original Purchaser" means the first purchaser(s) of a series of Bonds from the City.
"Outstanding" means, as of any date of computation, Bonds theretofore or thereupon being delivered under
the Indenture, except:
(a) Bonds cancelled at or prior to such date or delivered to or acquired by the Trustee at or
prior to such date for cancellation;
(b) Bonds deemed to be paid in accordance with Article VII of the Indenture; and
(c) Bonds in lieu of or in exchange or substitution for which other Bonds shall have been
authenticated and delivered pursuant to the Indenture.
"Participants" means those financial institutions for whom the Securities Depository effects book -entry
transfers and pledges of securities deposited with the Securities Depository in the Book -Entry System, as such
listing of Participants exists at the time of such reference.
"Payment Period" means a period from, but not including, a Principal Payment Date up to, and including,
the next succeeding Principal Payment Date.
"Person" means any natural person, firm, association, corporation, limited liability company, partnership,
joint stock company, joint venture, trust, unincorporated organization or firm, or a government or any agency or
political subdivision thereof or other public body.
"Principal Payment Date" means any date on which principal is payable on the Bonds, whether at maturity,
by operation of the mandatory sinking fund, or otherwise.
"Project" means the 1998 Project and any Additional Convention Facilities that may be acquired.
constructed and equipped in the future with the proceeds of Bonds.
"1998 Project" means the construction of the Fayetteville Town Center, financed in part with the proceeds
of the Series 1998 Bonds.
"Qualified Engineer" means an independent consulting engineer or firm of independent consulting
• engineers not in the regular employ of the City.
"Rating Agency" means Moody's Investors Service. Standard & Poor's Ratings Services, a Division of
The McGraw-Hill Companies, Inc., or Fitch, Inc., and their respective successors and assigns. If any such
10-07615.3 14
corporation ceases to act as a securities rating agency, the City may appoint any nationally recognized securities
rating agency as a replacement.
• "Rebate Fund" means the fund by that name created and established in the Indenture.
"Record Date" means the close of business on the fifteenth day of the calendar month next preceding each
Interest Payment Date on the Bonds or, if such day shall not be a business day, the immediately preceding business
day.
"Redemption Fund" means the fund by that name established in the Indenture.
"Reserve Requirement"
means, at any particular time, an amount equal to
the least of (a) 10% of the face
amount of [all] [each series of]
Outstanding Bonds. (b) the maximum
Annual Debt
Service on [all] (each series of]
Outstanding Bonds, or (c) 1.25
times the average Annual Debt Service
on [all] [each
series of] Outstanding Bonds.
"Revenue Fund" means the fund by that name confirmed and continued in the Indenture.
"Securities Depository" means The Depository Trust Company, a limited -purpose trust company organized
under the laws of the State of New York, or its nominee, and its successors and assigns, or any other depository
institution appointed by the City to act as depository for the Bonds in connection with the Book -Entry System..
"Series 1995 Bonds" means the $2,675.000 City of.Fayetteville, Arkansas Hotel and Restaurant Gross
Receipts Tax Refunding Bonds, Series 1995, dated October 1, 1995, of which $700,000 in principal amount
presently remains Outstanding.
"Series 1998 Bonds" means the $6,950,000 City of Fayetteville, Arkansas Hotel and Restaurant Gross
Receipts Tax Bonds, Series 1998, dated November 'I, 1998, of which $6,620,000 in principal amount presently
remains Outstanding.
"Series 2003 Bonds" means the City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax
Refunding Bonds, Series 2003. dated July 1, 2003, issued under and secured by the Indenture in the aggregate
principal amount of $________
• "State" means the State of Arkansas.
"Supplemental Indenture" means any indenture supplemental to or amendatory of the Indenture.
["Surety Bond" means the Surety Bond issued by guaranteeing certain payments into
the Debt Service Reserve Fund with respect to the Series 2003 Bonds as provided therein and subject to the
limitations set forth therein.]
"Tax" means the one percent (1%) tax (the "Tax") originally levied in 1977 upon (i) the gross receipts and
gross proceeds derived from renting, leasing or otherwise furnishing hotel or motel accommodations for profit
within the boundaries of the City, and (ii) the portion of gross receipts or gross proceeds received by restaurants,
cafes, cafeterias, delis, drive-in restaurants, carry -out restaurants, concession stands, convenience stores, grocery
store -restaurants and similar businesses from the sale of prepared food and beverages for on -premises and off -
premises consumption.
"Tax Receipts" means receipts derived by the City from the levy of the Tax.
'Tax Regulatory Agreement" means with respect to any series of Bonds, that Tax Regulatory Agreement of
the City relating to maintenance of the excludability of interest on such Bonds from gross income for federal income
tax purposes, delivered in connection with the issuance of such series of Bonds.
"Trustee" and "Paying Agent" means the trustee and paying agent for the time being, whether original or
successor, with the same institution to always occupy both positions, and with the original Trustee and Paying Agent
being Bank of Oklahoma, N.A.. Tulsa, Oklahoma.
`Trust Estate" means the property described in the granting clauses of the Indenture.
Preliminary; subject to change.
10-47615.3 15
SUMMARY OF THE INDENTURE
• The following statements are brief summaries of certain provisions of the Indenture. The statements do not
purport to be complete. and reference is made to the Indenture, copies of which are available for examination at the
offices of the City Clerk, for a full statement thereof.
Funds and Accounts. The Tax Receipts are pledged by the Indenture to the payment of the principal of and
interest on the Bonds. The Indenture confirms and continues the Revenue Fund established by the trust indenture
securing the Series 1995 Bonds. In addition, the following Funds and Accounts are established with the Trustee in
connection with the Bonds:
Funds and Accounts
Bond Fund. and a Principal Account and an Interest Account therein
Debt Service Reserve Fund
Redemption Fund
Cost of Issuance Fund
Rebate Fund
Application of Tar Receipts. The application of Tax Receipts is as follows:
(a) Revenue Fund. All Tax Receipts shall, as and when received, be deposited into the Revenue
Fund. The Revenue Fund is maintained by the City'as a segregated fund. Moneys at any time on deposit in the
Revenue Fund are to be applied, as needed, on a monthly basis (following any necessary application to the bond
fund and debt service reserve fund for the Series 1995 Bonds) to provide for the payment of Debt Service on the
Bonds, to the maintenance of the Debt Service Reserve Fund, to the payment of any arbitrage rebate due under
Section 148(1) of the Code, and to the payment of fees and expenses of the Trustee and any Paying Agent, at the
times and in the amounts set forth as follows:
• (b) Bond Fund. On or before the fifteenth day of each month, commencing July 15, 2003, there shall
be transferred from the Revenue Fund (i) into the Interest Account of the Bond Fund, an amount equal to 1/6 of the
interest on the Bonds due on the next Interest Payment Date, and (ii) into the Principal Account of the Bond Fund,
an amount equal to 1/12 of the principal on the Bonds due on the next Principal Payment Date. Moneys in the Bond
Fund shall be used solely for the purpose of paying Annual. Debt Service on the Bonds, as provided in the Indenture.
The Trustee shall withdraw from the Bond Fund, on the date of any principal or interest payment, an amount equal
to such payment for the sole purpose of paying the same.
If Tax Receipts in the Revenue Fund are insufficient to make the required monthly payment into the Bond
Fund, the amount of any such deficiency in the payment made shall be added to the amount otherwise required to be
paid into the Bond Fund in the next succeeding month.
When the moneys held in the Bond Fund, the Debt Service Reserve Fund and the Redemption Fund shall
be and remain sufficient to pay in full the principal of and interest on all Bonds then Outstanding in accordance with
the Indenture, together with the required fees and expenses to be paid or reimbursed to the Trustee and Paying
Agent, the City shall have no further obligation to make payments into such Funds.
(c) Debt Service Reserve Fund. See the caption "SECURITY FOR THE BONDS — Debt Service
Reserve" herein.
(d) Redemption Fund. There shall be deposited to the credit of the Redemption Fund the moneys
necessary to effect an optional redemption of the Bonds. Moneys in the Redemption Fund shall be transferred to the
Principal Account of the Bond Fund at such times as may be necessary to effectuate redemptions of the Bonds on
the first available redemption date. See the caption "THE SERIES 2003 BONDS — Redemption" herein.
(e) Cost of Issuance Fund. A portion of the proceeds of the Series 2003 Bonds shall be deposited to
the credit of the Cost of Issuance Fund. The Trustee shall pay those Costs of Issuance as directed by the City
pursuant to a Certificate delivered on a Closing Date. After all Costs of Issuance have been paid with respect to a
series of Bonds, any remaining moneys in the Cost of Issuance Fund shall be transferred to the Interest Account of
• the Bond Fund.
(t) Rebate Fund. The Trustee shall establish and maintain, separate and apart from any other Funds
and Accounts established and maintained under the Indenture, the Rebate Fund, which Fund is not pledged to the
10-47615.3 16
payment of any Bonds. Subject to transfer to the United States in payment of any arbitrage rebate due under Section
148(f) of the Code, all moneys at any time deposited in the Rebate Fund shall be held by the Trustee in trust, and
• neither the City nor the Owner of any Bond shall have any rights in or claim to such money. Any amounts
remaining in the Rebate Fund after payment in full of the rebate amount owing to the United States, within sixty
(60) days after the date on which the last Bond is redeemed, shall be transferred to the Revenue Fund.
Any moneys remaining in the Revenue Fund following the required transfers described above may be used
for any lawful purpose as determined by the Commission.
Investment of Funds. At the direction of the City or absent such direction, the Trustee shall invest moneys
in Funds or Accounts held by the Trustee in Investment Obligations with maturity or redemption dates consistent
with the times at which said moneys will be required for the purposes provided in the Indenture; provided, however,
the stated maturity dates of Investment Obligations of Debt Service Reserve Fund moneys shall not exceed five
years from the date of investment therein. Moneys in separate Funds or Accounts may be commingled for the
purpose of investment.
Obligations purchased as an investment of moneys in any Fund or Account created by the Indenture shall
be deemed at all times to be a part of such Fund or Account, and any income or loss due to an investment thereof
shall be charged to the respective Fund or Account for which the investment was made except as otherwise provided
in the Indenture.
Valuation of Funds and Accounts. Investments in any Fund or Account shall be evaluated monthly by the
Trustee. For the purpose of determining the amount in any Fund or Account, the City and the Trustee shall value all
Investment Obligations credited to such Fund or Account at the price at which such Investment Obligations are
redeemable by the Holders or owners thereof at their option if so redeemable, or, if not so redeemable, at the lesser
of (i)the cost of such Investment Obligations minus the amortization of any premium or plus the amortization of any
discount thereon and (ii)the market value of such Investment Obligations, provided that Investment Obligations
credited to the Debt Service Reserve Fund, if not so redeemable, shall be valued at the cost thereof minus the
amortization of any premium or plus the amortization of any discount thereon.
The Trustee shall sell or present for redemption any Investment Obligations as necessary in order to
• provide money for the purpose of making any payment required under the Indenture, and the Trustee shall not be
liable for any loss resulting from any such sale.
Responsibility of Trustee. The Trustee shall not be responsible or liable for any loss suffered in connection
with any investment of moneys made by it at the direction of the City.
Instruments of Further Assurance. At the request of the Trustee, the City shall, so far as it may be
authorized by law, pass, make, do, execute, acknowledge and deliver, all and every such further resolutions.
ordinances, acts, deeds, conveyances, assignments, transfers and assurances as may be necessary or desirable for the
better assuring, conveying, granting, pledging, assigning and confirming of all and singular the Tax Receipts and all
other moneys pledged or assigned by the Indenture, or intended so to be, or which the City may become bound to
pledge or assign.
Tax Covenants. The City shall not use or permit the use of any Bond proceeds or any other funds of the
City, directly or indirectly, in any manner, and will not take or permit to be taken any other action or actions which
would adversely effect the exclusion of interest on any Bond from gross income for federal income tax purposes.
No part of the proceeds of the Bonds shall at any time be used, directly or indirectly, to acquire securities or
obligations the acquisition of which would cause any of such Bonds to be an "arbitrage bond" as defined in Sections
148(a) and (b) of the Code. The City agrees that so long as any of the Bonds remain Outstanding, it will comply
with the provisions of each applicable Tax Regulatory Agreement.
Defeasance. Any Bond shall be deemed to be paid within the meaning of the Indenture when payment of
the principal of and premium, if any, and interest on such Bond (whether at maturity or upon redemption as provided
in the Indenture, or otherwise), either (i)shall have been made or caused to be made in accordance with the terms
thereof, or (ii)shall have been provided for by irrevocably depositing with the Trustee, in trust and irrevocably set
aside exclusively for such payment, (I)moneys sufficient to make such payment or (2)Government Securities
(provided that such deposit will not affect the tax-exempt status of the interest on any of the Bonds or cause any of
the Bonds to be classified as "arbitrage bonds" within the meaning of Section 148(a) of the Code, as reflected in an
• opinion of Bond Counsel delivered to the Trustee), maturing as to principal and interest in such amounts and at such
times as will provide sufficient moneys to make such payment, and all necessary and proper fees, compensation and
expenses of the Trustee and any Paying Agent pertaining to the Bonds with respect to which such deposit is made
10-47615.3 17
shall have been paid or the payment thereof provided for to the satisfaction of the Trustee and any said Paying
Agent.
Events of Default. Each of the following events shall constitute and is referred to in the Indenture as an
"Event of Default":
(a) Default in the due and punctual payment of any interest on any Bond;
(b) Default in the due and punctual payment of the principal of or premium, if any, on any Bond.
whether at the stated maturity thereof, or upon proceedings for redemption thereof, or upon the maturity thereof by
declaration;
(c) Default in the payment of any other amount required to be paid under the Indenture or the
performance or observance of any other of the covenants, agreements or conditions contained in the Indenture, or in
the Bonds issued under the Indenture, and continuance thereof for a period of sixty (60) days after written notice
specifying such failure and requesting that it be remedied, shall have been given to the City by the Trustee. which
may give such notice in its discretion and shall give such notice at the written request of Holders of not less than
fifty-one percent (51%) in aggregate principal amount of the Bonds then Outstanding, unless the Trustee, or the
Trustee and Holders of an aggregate principal amount of Bonds not less than the aggregate principal amount of
Bonds the Holders of which requested such notice, as the case may be, shall agree in writing to an extension of such
period prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the
applicable period, the Trustee will not unreasonably withhold its consent to an extension of such time if corrective
action is instituted by the City within such period and is being diligently pursued;
(d) The filing of a petition in bankruptcy by or against the City under the United States Bankruptcy
Code or the commencement of a proceeding by or against the City under any other law concerning insolvency,
reorganization or bankruptcy; and
(e) If the State has limited or altered the rights of the City pursuant to the Act, as in force on the date
of the Indenture, to fulfill the terms of any agreements made with the Trustee or the Bondholders or in any way
impaired the rights and remedies of the Trustee or the Bondholders while any Bonds are Outstanding.
The term "default" as used in clauses (a). (b) and (c) above shall mean default by the City in the
performance or observance of any of the covenants, agreements or conditions on its part contained in the Indenture,
or in the Bonds Outstanding thereunder, exclusive of any period of grace, required to constitute a default an "Event
of Default" as described above.
Acceleration. Upon the occurrence of an Event of Default, the Trustee may, and upon the written request
of the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding shall, by notice in writing
delivered to the City, declare the principal of all Bonds then Outstanding, together with any premium and the
interest accrued thereon, immediately due and payable, and such principal and interest shall thereupon become and
be immediately due and payable.
Other Remedies; Rights of Bondholders. Upon the occurrence of an Event of Default, the Trustee may, as
an alternative, pursue any available remedy by suit at, law or in equity, including, without limitation, mandamus to
enforce the payment of the principal of and premium, if any, and interest on the Bonds then Outstanding.
If an Event of Default shall have occurred, and if it shall have been requested so to do by the Holders of
51% in aggregate principal amount of Bonds Outstanding and if it shall have been indemnified as provided in the
Indenture, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred upon it by
the Indenture as the Trustee, being advised by counsel, shall deem most expedient in the interests of the
Bondholders.
No remedy by the terms of the Indenture conferred upon or reserved to the Trustee (or to the Bondholders)
is intended to be exclusive. of any other remedy, but each and every such remedy shall be cumulative and shall be in
addition to any other remedy given under the Indenture or now or hereafter existing at law or in equity or by statute.
No delay or omission to exercise any right or power accruing upon any default or Event of Default shall
impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or
acquiescence therein; and every such right and power may be exercised from time to time and as often as may be
deemed expedient.
No waiver of any default or Event of Default under the Indenture, whether by the Trustee or by the
Bondholders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any rights or
remedies consequent thereon.
1047615.3 18
Rights and Remedies of Bondholders. No Holder of any Bond shall have any right to institute any suit.
action or proceeding in equity or at law for the enforcement of the Indenture or for the execution of any trust thereof
• or for the appointment of a receiver or any other remedy thereunder, unless a default has occurred of which the
Trustee has been notified as provided in the Indenture, or of which by the Indenture it is deemed to have nonce, nor
unless such default shall have become an Event of Default and the Holders of not less than 51% in aggregate
principal amount of Bonds Outstanding shall have made written request to the Trustee and shall have offered it
reasonable opportunity either to proceed to exercise the powers granted or to institute such action, suit, or
proceeding in its own name, nor unless also they have offered to the Trustee indemnity as provided in the Indenture
nor unless the Trustee shall thereafter fail or refuse to exercise the powers granted, or to institute such action, suit, or
proceeding in its own name; and such notification, request and offer of indemnity are declared in every such case at
the option of the Trustee to be conditions precedent to the execution of the powers and trusts of the Indenture, and to
any action or cause of action for the enforcement of the Indenture or for the appointment of a receiver or for any
other remedy thereunder; it being understood and intended that no one or more Holders of the Bonds shall have any
right in any manner whatsoever to affect. disturb or prejudice the lien of the Indenture by action of the Holder or
Holders or to enforce any right under the Indenture except in the manner therein provided, and that all proceedings
at law or in equity shall be instituted, held and maintained in the manner therein provided for the equal benefit of the
Holders of all Bonds Outstanding thereunder. Nothing in the Indenture contained shall, however, affect or impair
the right of any Bondholders to enforce the payment of the principal of and premium, if any, and interest on any
Bonds at and after the maturity thereof, or the obligation of the City to pay the principal of and premium, if any. and
interest on each of the Bonds issued under the Indenture to the respective Holders thereof at the time and place in
said Bonds expressed.
Supplemental Indentures Not Requiring Consent of Bondholders. The City and the Trustee may, from time
to time and at any time, without the consent of or notice to the Bondholders, enter into Supplemental Indentures as
follows:
(a) to cure any formal defect, omission, inconsistency or ambiguity in the Indenture;
(b) to grant to or confer or impose upon the Trustee for the benefit of the Bondholders any additional
rights, remedies, powers, authority, security, liabilities or duties which may lawfully be granted, conferred or
• imposed and which are not contrary to or inconsistent with the Indenture as theretofore in effect, provided that no
such additional liabilities or duties shall be imposed upon the Trustee without its consent;
(c) to add to the covenants and agreements of, and limitations and restrictions upon. the City in the
Indenture other covenants, agreements, limitations and restrictions to be observed by the City which are not contrary
to or inconsistent with the Indenture as theretofore in effect;
(d) to confirm, as further assurance, any pledge under, and the subjection to any claim, lien or pledge
created or to be created by, the Indenture, of the Trust Estate or of any other moneys, securities or funds;
(e) to comply with the requirements of the Trust Indenture Act of 1939, as from time to time
amended;
(1) to authorize the issuance and sale of one or more series of Additional Bonds;
(g) to make such additions, deletions or modifications as may be necessary to assure compliance with
Section 148(f) of the Code relating to required rebate to the United States or otherwise as may be necessary to assure
exemption from federal income taxation of interest on the Bonds; or
(h) to modify, alter, amend or supplement the Indenture in any other respect which is not materially
adverse to the Bondholders and which does not involve a change described in clause (a), (b), (c), (d), (e) or (f) below
and which, in the judgment of the Trustee, is not to the prejudice of the Trustee.
Supplemental Indentures Requiring Consent of Bondholders. Subject to the terms and provisions contained
in this paragraph, and not otherwise, the Holders of not less than 2/3 in aggregate 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 and 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 Supplemental Indenture; provided, however, that nothing contained in the Indenture shall permit
• or be construed as permitting (a)an extension of the maturity (or mandatory redemption date) of the principal of or
the interest on any Bond issued thereunder, or (b)a reduction in the principal amount of or redemption premium or
rate of interest on any Bond issued thereunder, or (c)the creation of any lien on the Trust Estate or any part thereof,
10-47615.3 19
except as expressly permitted in the Indenture, or (d)a privilege or priority of any Bond or Bonds over any other
Bond or Bonds, or (e)a reduction in the aggregate principal amount of the Bonds required for consent to such
• Supplemental Indenture, or (I)depriving the Holder of any Bond then Outstanding of the lien created on the Trust
Estate.
If, at any time the City shall request the Trustee to enter into any Supplemental Indenture for any of the
purposes described above, the Trustee shall, at the expense of the City, cause notice of the proposed execution of
such Supplemental Indenture to be mailed by first class mail to each registered owner of the Bonds. Such notice
shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that copies thereof are on file
at the principal office of the Trustee for inspection by Bondholders. The Trustee shall not, however, be subject to
any liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall not affect the
validity of such Supplemental Indenture when consented to and approved as provided above. If the Holders of not
less than 2/3 in aggregate principal amount of the Bonds Outstanding at the time of the execution of any such
Supplemental Indenture shall have consented to and approved the execution thereof, no Holder of any Bond shall
have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any
manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the City from
executing the same or from taking any action pursuant to the provisions thereof.
SUMMARY OF THE CONTINUING DISCLOSURE AGREEMENT
The City has entered into an undertaking in the form of the Continuing Disclosure Agreement as required
by the Indenture for the benefit of the Beneficial Owners of the Series 2003 Bonds to cause certain financial
information to be sent to certain information repositories annually and to cause notice to be sent to such information
repositories of certain specified events, pursuant to' the requirements of Section(b)(5)(i) of Rulel5c2-12 of the
Securities Exchange Act of 1934, as amended (the "Rule"). The City has not failed to comply with any previous
undertaking pursuant to the Rule.
The Continuing Disclosure Agreement contains the following covenants and provisions:
(a) The
City shall, not later
than August 1 of each
year, commencing August 1, 2003, provide to each
Repository and the
Trustee its Annual
Financial Information
consistent with the requirements of subsection (d)
• below.
(b)
If, on the date specified in
subsection
(a) above for providing the Annual Financial Information to
Repositories,
the Trustee has not received
a copy of the
Annual Financial Information, the Trustee shall contact the
Disclosure Representative
to determine if the City is in
compliance with subsection(a).
(c)
If the Trustee is unable to
verify that
the Annual Financial Information has been provided to the
Repositories
by the date required within
subsection
(a), the Trustee shall file a notice to such effect with the
Repositories
and the MSRB.
(d) The City's Annual Financial Information shall contain or incorporate by reference the following:
(i) Tax Receipts for the latest Fiscal Year and for the four previous Fiscal Years;
and.
(ii) The City's audited financial statements for the prior Fiscal Year, prepared in
accordance with accounting principles generally accepted in the United States ("GAAP") as such
principles are modified by the governmental accounting standards promulgated by the
Government Accounting Standards Board ("GASB") and by mandated principles of the State of
Arkansas, if any, as in effect from time to time, which financial statements have been audited by
such auditor as shall then be required or permitted by the laws of the State of Arkansas. If the
City's audited financial statements are not available by the time its Annual Financial Information
is required to be filed pursuant to subsection (a) above, the Annual Financial Information shall
contain the unaudited financial statements of the City, and the audited financial statements shall be
filed in the same manner as the Annual Financial Information when they become available.
(e) The City has agreed to instruct the Trustee to deliver to each National Repository, or the MSRB
and the Arkansas State Repository, notice of the occurrence of any of the following Specified Events, if deemed
material:
• (i) Principal and interest payment delinquencies;
(ii) Non-payment related defaults;
10-47615.3 20
Unscheduled draws on any debt service reserve reflecting financial difficulties;
Unscheduled draws on any credit enhancement reflecting financial difficulties;
Substitution of any credit or liquidity providers, or their failure to perform;
Adverse tax opinions or events affecting the tax-exempt status of the Series 2003 Bonds;
Modifications to rights of Bondowners;
Bond calls;
Defeasances;
Release, substitution or sale of property securing payment of the Series 2003 Bonds; or
Rating changes.
(f) The City has agreed that the foregoing undertakings shall be for the benefit of the Beneficial
Owners of the Series 2003 Bonds, and shall be enforceable by any Beneficial Owner of the Series 2003 Bonds in an
action for specific performance against the City.
• (g) The continuing obligation of the City to provide Annual Financial Information and notice of the
occurrence of Specified Events, if material, will terminate if the City is no longer an "obligated person" within the
meaning of the Rule or upon the maturity, defeasance. prior redemption or payment in full of the Series 2003 Bonds.
The City and the Trustee may amend the Continuing Disclosure Agreement, and any provision of the Continuing
Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel,
reasonably acceptable to each of the City and the Trustee, to the effect that such amendment or waiver would not, in
and of itself, cause the undertakings under the Continuing Disclosure Agreement to violate the Rule, taking into
account any subsequent change in or official interpretation of the Rule.
(h) The following terms used under this caption shall have the meanings set forth below:
"Annual Financial information" means the annual financial information to be provided by the City of the
• type described in the Continuing Disclosure Agreement.
"Arkansas State Repository" means any public or private repository or entity as may be designated by the
State of Arkansas as a state repository for purposes of the Rule and recognized as such by the SEC. As of the date
of the Continuing Disclosure Agreement, there is no Arkansas State Repository.
"Beneficial Owner" means any Person which has the power, directly or indirectly, to vote or consent with
respect to, or to dispose of ownership of, any Series 2003 Bonds, including Persons holding Series 2003 Bonds
through nominees or depositories.
"Disclosure Representative" means the City's Finance & Internal Services Director or his or her designee,
or such other officer or employee as the City shall designate in writing to the Trustee from time to time.
"Fiscal Year" means the 12 -month period used, at any time, by the City for accounting purposes, which
may be the calendar year. The City's fiscal year presently ends on December 31.
"MSRB" means the Municipal Securities Rulemaking Board.
"National Repository" means any nationally recognized municipal securities information repository for
purposes of the Rule.
"Participating Underwriter" means Stephens Inc.
"Repository" means each National Repository and the Arkansas State Repository.
"Specified Events" means each of the events with respect to the Series 2003 Bonds listed in subsection(e)
above:
(i) A failure by the City to comply with the provisions of the Continuing Disclosure Agreement will
not constitute an Event of Default under the Indenture, and the sole remedy in such an event shall be an action to
compel specific performance. Nevertheless, such a failure to comply must be reported in accordance with the Rule
• and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or
sale of the Series 2003 Bonds in the secondary market. Consequently, such a failure may adversely affect the
transferability and liquidity of the Series 2003 Bonds.
10-47615.3 21
UNDERWRITING
Under a bond purchase agreement entered into by and between the City and Stephens Inc.. Fayetteville.
Arkansas (the "Underwriter"), the Series 2003 Bonds are being purchased at a purchase price of $
(representing the stated principal amount of the Series 2003 Bonds less an underwriting discount of $ ) plus
accrued interest from July 1, 2003 to the date of delivery of the Series 2003 Bonds. The bond purchase agreement
provides that the Underwriter will purchase all of the Series 2003 Bonds if any are purchased. The obligation of the
Underwriter to accept delivery of the Series 2003 Bonds is subject to various conditions contained in the bond
purchase agreement, including the absence of pending or threatened litigation questioning the validity of the Series
2003 Bonds or any proceedings in connection with the issuance thereof, and the absence of material adverse changes
in the financial condition of the City.
The Underwriter intends to offer the Series 2003 Bonds to the public initially at the offering prices as set
forth on the cover page of this Official Statement, which offering prices (or bond yields establishing such offering
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 2003 Bonds to the public, and may offer the Series 2003
Bonds to such dealers and other underwriters at a price below 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 2003 Bonds, including certain liabilities under federal securities laws.
TAX EXEMPTION
Federal Income Taxes. In the opinion of Kutak Rock LLP, Bond Counsel, under existing law, the interest
on the Series 2003 Bonds is excludable from the gross income of the owners thereof for federal income tax purposes
and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and
corporations; it should be noted, however, that for purposes of computing the alternative minimum tax imposed on
corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted
current earnings and profits. The opinions set forth in the preceding sentence are subject to the condition that the
City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2003
• Bonds in order that the interest thereon be, or continue to be, excludable from gross income for federal income tax
purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such
requirements may cause the inclusion of interest on the Series 2003 Bonds in gross income for federal income tax
purposes to be retroactive to the date of issuance of the Series 2003 Bonds.
Bond Counsel is also of the opinion that the Series 2003 Bonds are "qualified tax-exempt obligations"
within the meaning of Section265(b)(3) of the Code, and, in the case of certain financial institutions (within the
meaning of the Section265(b)(5) of the Code), a deduction is allowed for 80percent of that portion of such financial
institution's interest expense allocable to interest on the Series 2003 Bonds.
Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the
Series 2003 Bonds.
Prospective purchasers of the Series 2003 Bonds should be aware that 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 Subchapter 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 2003 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 interest on the Series 2003 Bonds
is exempt from all state, county and municipal taxes in the State of Arkansas.
RATING
Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies. Inc. ("S&P"), has given
the Series 2003 Bonds the rating of""[BASED [BASED ON THE DELIVERY OF THE POLICY BY I].
Such rating reflects only the view of S&P at the time such rating was given. An explanation of the significance of
. the rating may be obtained from S&P. There is no assurance that such rating will continue for any given period of
time or that the rating will not be revised downward or withdrawn entirely by S&P if in its judgment circumstances
so warrant. Any downward revision or withdrawal of the rating may have an adverse effect on the market price of
the Series 2003 Bonds. .
10-47615.3 - 22
Neither the City nor the Underwriter have undertaken any responsibility subsequent to the issuance of the
Series 2003 Bonds to assure the maintenance of the rating or to oppose any revision or withdrawal of the rating. No
application has been made to any Rating Agency other than S&P for a rating on the Series 2003 Bonds.
LEGAL MATTERS
Legal Opinions. Legal matters incident to the authorization and issuance of the Series 2003 Bonds are
subject to the unqualified approving opinion of Kutak Rock LLP, Little Rock, Arkansas, Bond Counsel, a copy of
whose approving opinion will be delivered with the Series 2003 Bonds and a form of which is attached hereto as
Appendix A. Certain legal matters will be passed upon for the City by its counsel, Kit Williams, Esq.. City
Attorney.
Litigation. There is no litigation pending seeking to restrain or enjoin the issuance or delivery of the Series
2003 Bonds or questioning or affecting the legality of the Series 2003 Bonds or the proceedings and authority under
which the Series 2003 Bonds are to be issued, or questioning the right of the City to issue the Series 2003 Bonds or
to levy the Tax or pledge the Tax Receipts.
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 representations 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 2003 Bonds.
ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT
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 City, this 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 herein, or
necessary to make the statements herein, 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 of Fayetteville,
Arkansas.
CITY OF FAYETTEVILLE, ARKANSAS
By:.
Mayor
•
10-37615.3 23
APPENDIX A
Proposed Form of Bond Counsel Opinion
Kutak
Rock LLP, Bond Counsel, will render an opinion
with respect to the Series 2003 Bonds, dated the
date of issuance
and delivery thereof, in substantially the
following
form:
July_, 2003
City of Fayetteville, Arkansas
Fayetteville, Arkansas
Bank of Oklahoma, N.A., as Trustee
Tulsa, Oklahoma
Stephens Inc.
Fayetteville, Arkansas
City of Fayetteville, Arkansas
Hotel and Restaurant Gross Receipts Tax Refunding Bonds
Series 2003
Ladies and Gentlemen:
• We have acted as bond counsel in connection with the issuance and sale by the City of Fayetteville,
Arkansas (the "City"), a political subdivision of the State of Arkansas, of its $ * Hotel and Restaurant
Gross Receipts Tax Refunding Bonds, Series 2003 (the "Bonds").
The Bonds are being issued pursuant to the provisions of the Constitution and laws of the State of
Arkansas, including, particularly, the Advertising and Promotion Commission Act, Arkansas Code Annotated (1997
Repl.) §§26-75-601 er seq. (as from time to time amended, the "Act"), pursuant to Ordinance No. of the City,
duly adopted and approved on __________,2003 (the "Authorizing Ordinance"), and pursuant to a Trust Indenture
dated as of July!, 2003 (the "Indenture"), by and between the City and Bank of Oklahoma, N.A., as trustee (the
"Trustee"). Reference is hereby made to the Indenture and to all indentures supplemental thereto for the provisions,
among others, with respect to the conditions for the issuance of parity indebtedness by the City, the nature and
extent of the security for the Bonds, the rights, duties and obligations of the City, the Trustee and the Holders of the
Bonds, and the terms upon which the Bonds are issued and secured.
Reference is made to an opinion of even date herewith of Kit Williams, Esq., City Attorney, a copy of
which is on file with the Trustee, with respect, among other matters, to the status and valid existence of the City, the
power of the City to adopt the Authorizing Ordinance and to enter into and perform its obligations under the
Indenture, the valid adoption of the Authorizing Ordinance, and the due authorization, execution and delivery of the
Indenture by the City, and with respect to the Indenture being enforceable upon the City.
We have examined the law and such certified proceedings and other papers as we have deemed necessary
to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the
City contained in the Authorizing Ordinance and the Indenture and in the certified proceedings and other
certifications of public officials furnished to us, without undertaking to verify the same by independent
investigation.
• * Preliminary; subject to change.
10-47615.3 A -I
• Based upon the foregoing, we are of the opinion, under existing law, as follows:
I. The City is duly created and validly existing as a municipal corporation of the State of Arkansas.
Pursuant to the Constitution and laws of the State of Arkansas, including, particularly, the Act, the City is
empowered to adopt the Authorizing Ordinance, to execute and deliver the Indenture, to perform the agreements on
its part contained therein, and to issue the Bonds.
2. The Authorizing Ordinance has been duly adopted by the City and constitutes a valid and binding
obligation of the City enforceable upon the City in accordance with its terms.
3. The Indenture has been duly authorized, executed and delivered by the City and is a valid and
binding obligation of the City enforceable upon the City in accordance with its terms.
4. The Bonds have been validly authorized, executed, issued and delivered by the City and represent
valid and binding special obligations of the City. The principal, premium, if any, and interest on the Bonds shall be
payable from, and shall be secured by an assignment and pledge by the City to the Trustee of the Tax Receipts (as
defined in the Indenture).
5.
The Tax Receipts have been
duly
and validly assigned and pledged to the
Trustee under the
Indenture, and
the Indenture creates, as security
for the
Bonds, a valid security interest in the Tax
Receipts.
6. The interest on the Bonds is excluded from gross income for federal income tax purposes and is
not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and
corporations; it should be noted, however, that, for the purpose of computing the alternative minimum tax imposed
on corporations (as defined for federal income tax purposes), such interest is taken into account in determining
adjusted current earnings for purposes of such alternative minimum tax. The opinions set forth in the preceding
sentence are subject to the condition that the City comply with all requirements of the Internal Revenue Code of
• 1986, as amended, that must be satisfied prior to or subsequent to the issuance of the Bonds in order that the interest
thereon be, or continue to be. excluded from gross income for federal income tax purposes. The City has
covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause
the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of
issuance of the Bonds. The Bonds are "qualified tax-exempt obligations" within the meaning of Section 265(b)(3)
of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a
deduction is allowed for 80 percent of that portion of such financial institution's interest expense allocable to interest
on the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds.
7. The interest on the Bonds is exempt from all state, county and municipal taxes in the State of
Arkansas.
8. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and
the Indenture is not required to be qualified under the Trust Indenture Act of 1939, as amended, in connection with
the offer and sale of the Bonds.
It is to be understood that the rights of the registered owners of the Bonds and the enforceability of the
Bonds, the Authorizing Ordinance and the Indenture may be subject to bankruptcy, insolvency, reorganization,
moratorium and other 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,
•
10-67615.3 A-2
WHEREAS, at a special election held August 5, 1997, a majority of the qualified •
electors of the City voting on the aforementioned question approved the issuance of the
bonds and the corresponding pledge of the Tax Receipts to the payment thereof; and
WHEREAS, pursuant to the Act and the results of the aforementioned election,
the City issued its City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts
Tax Bonds, Series 1998, dated November 1, 1998 (the "Series 1998 Bonds"), for the
purpose of financing a portion of the costs of constructing the Fayetteville Town Center
(the "1998 Project"); and
WHEREAS,
the Series
1998 Bonds were
originally issued
in the aggregate
principal amount of
$6,950,000,
of which $6,620,000
presently remains
outstanding; and
WHEREAS, the City has also, pursuant to the Act and an ordinance duly
adopted by the City, previously issued its $2,675,000 City of Fayetteville, Arkansas
Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series 1995, dated October
1, 1995 , (the "Series 1995 Bonds"), of which $700,000 in principal amount presently
remains outstanding, for the purpose of financing the construction and equipping of
convention facilities; and i
WHEREAS, the City has now determined that debt service savings can be
realized with respect to the Series 1998 Bonds by issuing its Hotel and Restaurant Gross
Receipts Tax Refunding Bonds, Series 2003 (the "Series 2003 Bonds"), for the purpose of
refunding the Series 1998 Bonds; and
WHEREAS, the payment of debt service on the Series 2003 Bonds will be secured
by a pledge of the Tax Receipts on a junior and subordinate basis to the pledge of Tax
Receipts securing the payment of debt service on the Series 1995 Bonds; and
NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of
Fayetteville, Arkansas that: '
Section 1. Under the authority of the Constitution and laws of theState of
Arkansas, including particularly Amendment 65 to the Constitution of the State of
Arkansas and the Act, there is hereby authorized the issuance of bonds of the City to be
designated as "Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series 2003"
(the "Series 2003 Bonds"). The Series 2003 Bonds shall be issued in the i original
aggregate principal amount of not to exceed Six Million Six Hundred Twenty Thousand
Dollars ($6,620,000), shall mature not later than October 1, 2015, and shall bear interest
at the rates specified in the Bond Purchase Agreement. The average yield on the Series
2003 Bonds as a whole shall not exceed 3.75% per annum. The proceeds of the Series
2003 Bonds will be utilized to finance a portion of the cost of redeeming the Series 1998
Bonds, to establish a debt service reserve for the Series 2003 Bonds or purchaseia surety ' l
bond for reserve purposes, to pay a premium for bond insurance, if !deemed
as shall be approved by such persons executing the Trust Indenture, their execution to •�
constitute conclusive evidence of such approval.
(Advice is given that a copy of the Trust Indenture in substantially the form
authorized to be executed is on file with the City Clerk and is available for inspection by
any interested person.)
Section 4. There is hereby authorized and approved a Preliminary Official
Statement of the City, including the cover page and appendices attached thereto,
relating to the Series 2003 Bonds. The Preliminary Official Statement is hereby "deemed
final" by the City within the meaning of U.S. Securities and Exchange Commission Rule
15c2-12. The distribution of the Preliminary Official Statement is hereby approved. The
Preliminary Official Statement, as amended to conform to the terms of the Bond
Purchase Agreement, including Exhibit A thereto, and with such other changes and
amendments as are mutually agreed to by the City and the Underwriter, is herein
referred to as the "Official Statement," and the Mayor is hereby authorized to execute
the Official Statement for and on behalf of the City. The Official Statement is hereby
approved in substantially the form of the Preliminary Official Statement submitted to
this meeting, and the Mayor is hereby authorized to confer with the Trustee, the
Underwriter and Bond Counsel in order to complete the Official Statement in
substantially the form of the Preliminary Official Statement submitted to this ,meeting,
with such changes as shall be approved by such persons, the Mayor's execution to •l
constitute conclusive evidence of such approval.
(Advice is given that a copy of the Preliminary Official Statement is on file with
the City Clerk and is available for inspection by any interested person.)
Section 5. In order to prescribe the terms and conditions upon which the
Series 2003 Bonds are to be sold to the Underwriter, the Mayor is hereby authorized and
directed to execute a Bond Purchase Agreement on behalf of the City, to be dated as of
the date of its execution (the "Bond Purchase Agreement"), by and between the City
and the Underwriter, and the Bond Purchase Agreement is hereby approved in
substantially the form submitted to this meeting, and the Mayor is hereby authorized to
confer with the Underwriter and Bond Counsel in order to complete the Bond Purchase
Agreement in substantially the form submitted to this meeting, with such changes as
shall be approved by such persons executing the Bond Purchase Agreement, their
execution to constitute conclusive evidence of such approval.
(Advice is given that a copy of the Bond Purchase Agreement in substantially the
form authorized to be executed is on file with the City Clerk and is available for
inspection by any interested person.)
Section 6. In order to provide for the redemption of the Series 1998 Bonds, the •
Mayor is hereby authorized and directed to execute an Escrow Deposit Agreement to be
4
0 !
Sondra Smith, City Clerk
of the Trust Indenture, the Bond Purchase Agreement, the Official Statement, the
Escrow Agreement, the Continuing Disclosure Agreement and a Tax Regulatory
Agreement relating to the tax exemption of interest on the Series 2003 Bonds, and to
perform all of the obligations of the City under and pursuant thereto. The Mayor and
the City Clerk are further authorized and directed, for and on behalf of the City, to
execute all papers, documents, certificates and other instruments that may be required
for the carrying out of such authority or to evidence the exercise thereof.
Section 10. The provisions of this Ordinance are hereby declared to be
severable, and if any section, phrase or provision shall for any reason be declared to be
illegal or invalid, such declaration shall not affect the validity of the remainder of the
sections, phrases or provisions of this Ordinance.
Section 11. All ordinances, resolutions and parts thereof in conflict herewith
are hereby repealed to the extent of such conflict.
PASSED and APPROVED this the 20th day of May, 2003.
APPROVED:
•I
r 1
LA
6
KUTAK ROCK LLP
DRAFT 05/07/2003
•
CITY OF FAYETTEVILLE, ARKANSAS,
Issuer
to
BANK OF OKLAHOMA, N.A.,
Trustee
TRUST INDENTURE
• Dated as of July 1, 2003
Providing for:
City of Fayetteville, Arkansas
Hotel and Restaurant Gross Receipts Tax Refunding Bonds
Series 2003
Prepared by:
Kutak Rock LLP
425 West Capitol Avenue, Suite 1100
• Little Rock, Arkansas 72201
10-47392.4
• TABLE OF CONTENTS
Page
(This Table of Contents is not part of the Trust
Indenture and is only for convenience of reference.)
ARTICLE I
DEFINITIONS
Section101. Definitions...............................................................................................
Section102. Use of Words.....................................................................0....................
ARTICLE II
THE BONDS
Section 201. Security for Bonds...................................................................................
• Section 202. Authorized Amount.................................................................................
Section 203. Details of Bonds......................................................................................
Section 204. Form of Bonds.........................................................................................
Section
205.
Payment ....................................................
Section
206.
Execution ..................................................
Section
207.
Authentication ..........................................
Section
208.
Delivery of Bonds ....................................
Section
209.
Mutilated, Destroyed or Lost Bonds ........
Section
210.
Registration and Transfer of Bonds ..........
Section
211.
Cancellation ..............................................
Section
212.
Additional Bonds ......................................
Section
213.
Superior Obligations Prohibited ...............
Section
214.
Temporary Bonds .....................................
Section
215.
Book -Entry Bonds; Securities Depository
ARTICLE III
REDEMPTION OF BONDS BEFORE MATURITY
.4
11
11
12
12
12
13
13
13
13
15
15
16
17
17
18
18
Section 301. Redemption of Bonds.............................................................................................19
Section302. Notice.....................................................................................................................19
Section 303. Selection of Bonds to be Redeemed.......................................................................20
Section 304. Surrender of Bonds Upon Redemption..................................................................20
• Section 305. Redemption in Part.................................................................................................20
10-47392.4 1 1
• ARTICLE IV
GENERAL COVENANTS AND REPRESENTATIONS
Section
401.
Payment of Principal. Premium and Interest..........................................................21
Section
402.
Performance of Covenants.............................:.......................................................21
Section
403.
Instruments of Further Assurance..........................................................................21
Section
404.
Recordation and Filing...........................................................................................21
Section
405.
Inspection of Books..................................................................................:.............22
Section406.
Tax Covenants........................................................................................................22
Section
407.
Trustee's and Paying Agent's Fees and Expenses..................................................22
Section
408.
Construction of Projects; Certification of Completion Date..................................22
Section
409.
Encumbrances........................................................................................................23
Section
410.
Continuing Disclosure............................................................................................23
Section
411.
Authority of Commission........................................................................................23
ARTICLE V
REVENUES AND FUNDS
Section
501.
Creation of Funds and Accounts............................................................................23
Section502.
Project Fund...........................................................................................................24
Section503.
Revenue Fund.........................................................................................................25
Section504.
Bond Fund...............................................................................................................
26
• Section
505.
Cost of Issuance Fund............................................................................................26
Section506.
Redemption Fund...................................................................................................27
Section507.
Rebate Fund............................................................................................................27
Section
508.
Debt Service Reserve Fund....................................................................................28
Section
509.
Cessation of Fund Deposits.....................................................................................28
Section
510.
Separate Accounts Authorized................................................................................28
ARTICLE VI
INVESTMENTS
Section
601.
Investment of Moneys...........................................................................................29
Section
602.
Investment Earnings...............................................................................................
29
Section
603.
Valuation of Funds.................................................................................................29
Section
604.
Responsibility of Trustee.........................................................................................30
ARTICLE VII
DISCHARGE OF LIEN
Section
701.
Discharge of Lien...................................................................................................30
Section
702.
Bonds Deemed Paid...............................................................................................30
Section
703.
Non -Presentment of Bonds....................................................................................30
•
10-47392.4 ii
• ARTICLE VIII
DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS
Section 801. Events of Default....................................................................................................31
Section 802. Acceleration...........................................................................................................32
Section 803. Other Remedies; Rights of Bondholders................................................................32
Section 804. Right of Bondholders to Direct Proceedings..........................................................32
Section 805. Appointment of Receiver.......................................................................................32
Section806. Waiver....................................................................................................................33
Section 807. Application of Moneys...........................................................................................33
Section 808. Remedies Vested in Trustee...................................................................................34
Section 809. Rights and Remedies of Bondholders.............................................:......................34
Section 810. Termination of Proceedings...................................................................................35
Section 811. Waivers of Events of Default.................................................................................35
ARTICLE IX
TRUSTEE AND PAYING AGENT
Section
901.
Acceptance of Trusts..............................................................................................35
Section
902.
Fees, Charges and Expenses of Trustee and Paying Agent....................................37
Section
903.
Additional Duties of Trustee..................................................................................38
Section
904.
Notice to Bondholders of Default..........................................................................39
• Section
905.
Intervention by Trustee...........................................................................................39
Section
906.
Merger or consolidation of Trustee.......................................................................39
Section
907.
Resignation by Trustee...........................................................................................39
Section
908.
Removal of Trustee................................................................................................39
Section
909.
Appointment of Successor Trustee........................................................................39
Section
910.
Concerning Any Successor Trustee........................................................................40
Section
911.
Reliance Upon Instruments....................................................................................40
Section
912.
Appointment of Co-Trustee...................................................................................40
Section
913.
Designation and Succession of Paying Agent........................................................41
ARTICLE X
SUPPLEMENTAL INDENTURES
Section
1001.
Supplemental Indentures
Not Requiring Consent of Bondholders ......................41
Section
1002.
Supplemental Indentures
Requiring Consent of Bondholders .............................42
Section
1003.
Effect of Supplemental Indentures.......................................................................43
ARTICLE XI
MISCELLANEOUS
Section 1101.
Consents, etc. of Bondholders..............................................................................43
Section1102.
Notices..................................................................................................................
43
Section 1103.
Limitation of Rights.............................................................................................44
• Section1104.
Severability...........................................................................................................44
10-47392.4 III
• Section 1105. Applicable Provisions of Law ...............
Section 1106. Counterparts ..........................................
Section 1107. Successors and Assigns .........................
Section 1108. Captions .................................................
Section 1109. Photocopies and Reproductions ............
Section 1110. Bonds Owned by City ...........................
Signatures.....................................................................................................................:.............. 46
CJ
I
Exhibit A Form of Series 2003 Bond............................................:.....................................A-1
Exhibit B Form of Coverage Certificate............................................................................. B-1
Exhibit C Form of Requisition............................................................................................C-1
10-47392.4 iv
• TRUST INDENTURE
THIS TRUST INDENTURE, made and entered into as of July 1, 2003, by and between
the CITY OF FAYETTEVIL.LE, ARKANSAS, a city of the first class organized under and
existing by virtue of the laws of the State of Arkansas (the "City"), as party of the first part. and
BANK OF OKLAHOMA. N.A., a national banking association organized under and existing by
virtue of the laws of the United States of America, with its principal office, domicile, and post
office address in Tulsa, Oklahoma (the "Trustee"), as party of the second part;
WITNESSETH:
WHEREAS, the City is authorized under the provisions of the Advertising and Promotion
Commission Act, Arkansas Code Annotated (1997 Repl.) §§26-75-601 et seq. (as from time to
time amended, the "Act"), to issue its bonds secured by and payable from the revenues derived
by the City from the one percent (1%) tax (the "Tax") levied by the City pursuant to Ordinance
No. 2310 adopted by the City on March 1, 1977, as subsequently amended, upon (i) the gross
receipts or gross proceeds derived from renting, leasing or otherwise furnishing hotel or motel
accommodations for profit within the boundaries of the City and (ii) the portion of gross receipts
or gross proceeds received by restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out
restaurants, concession stands, convenience stores, grocery store -restaurants, caterers and similar
businesses from the sale of prepared food and beverages for on -premises or off -premises
consumption; and
• WHEREAS, pursuant to the provisions of Ordinance No. 4038, duly adopted by the City
on June 3, 11997, there was submitted to the qualified electors of the City the question of the
issuance of not to exceed $6,950,000 in principal amount of bonds pursuant to the Act, said
bonds to be secured by a'pledge of and lien upon the City's receipts of the Tax (the "Tax
Receipts"); and
WHEREAS, at a special election held August 5, 1997, a majority of the qualified electors
of the City voting on the aforementioned question approved the issuance of the bonds and the
corresponding pledge of the Tax Receipts to the payment thereof; and
WHEREAS, pursuant to the Act and the results of the aforementioned election, the City
issued its City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax Bonds, Series
1998, dated November 1, 1998 (the "Series 1998 Bonds"), for the purpose of financing a portion
of the costs of constructing the Fayetteville Town Center (the "1998 Project"); and
WHEREAS, the Series 1998 Bonds were originally issued in the aggregate principal
amount of $6,950,000, of which $6,620,000 presently remains outstanding; and
WHEREAS, the City has also, pursuant to the Act and an ordinance duly adopted by the
City, previously issued its $2,675,000 City of Fayetteville, Arkansas Hotel and Restaurant Gross
Receipts Tax Refunding Bonds, Series 1995, dated October 1, 1995 (the "Series 1995 Bonds"),
. of which $700,000 in principal amount presently remains outstanding, for the purpose of
financing the construction and equipping of convention facilities; and
10-47392.4
• WHEREAS, pursuant to the Act and the provisions of Ordinance No. _ of the City.
adopted by the City Council of the City on , 2003 (the "Authorizing Ordinance"). the
City has now determined that debt service savings can be realized with respect to the Series 1998
Bonds by issuing its Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series '_003
(the "Series 2003 Bonds"), for the purpose of refunding the Series 1998 Bonds; and
WHEREAS, the payment of debt service on the Series 2003 Bonds will be secured by a
pledge of the Tax Receipts on a junior and subordinate basis to the pledge of Tax Receipts
securing the payment of debt service on the Series 1995 Bonds; and
WHEREAS, the Series 2003 Bonds and the Trustee's Certificate of Authentication to be
endorsed thereon are to be in substantially the forms set forth in Exhibit A hereto, with necessary
and appropriate variations, omissions and insertions as permitted or required by this Indenture;
and
WHEREAS, the execution and delivery of this Indenture and the issuance of the Series
2003 Bonds have been in all respects duly and validly authorized by the Authorizing Ordinance:
and
WHEREAS, all things necessary to make the Series 2003 Bonds, when authenticated by
the Trustee and issued as in this Indenture provided, the valid, binding and legal obligations of
the City according to the import thereof, and to constitute this Indenture a valid obligation of the
• City and a valid pledge of the Tax Receipts to the payment of the principal of and premium, if
any, and interest on the Series 2003 Bonds, as specified in and in accordance with the provisions
of the Act and the provisions hereof, have been done and performed, and the creation. execution
and delivery of this Indenture and the creation, execution, issuance and delivery of the Series
2003 Bonds, subject to the terms hereof, have in all respects been duly authorized;
NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, THIS
INDENTURE WITNESSETH:
That the City, in consideration of the premises and the acceptance by the Trustee of the
trusts hereby created and of the purchase and acceptance of the Series 2003 Bonds by the holders
and owners thereof, and the sum of Ten Dollars ($10.00), lawful money of the United States of
America, to it duly paid by the Trustee, at or before the execution and delivery of these presents,
and for other good and valuable consideration, the receipt of which is hereby acknowledged, and
in order to secure the payment of the principal of and premium, if any, and interest on the Series
2003 Bonds and all Additional Bonds (hereinafter defined), if any, according to their tenor and
effect, and to secure the performance and observance by the City of all the covenants expressed
or implied herein and in the Series 2003 Bonds and Additional Bonds (collectively, the
"Bonds"), subject to all of the provisions hereof, does hereby grant, bargain, sell, convey,
mortgage, assign, transfer and pledge unto the Trustee, and unto its successor or successors in
trust, and to them and their assigns forever, for the security of the performance of the obligations
of the City hereinafter set forth, the following:
•
10-47392.4 2
• 1.
Subject to the prior pledge securing the payment of debt service with respect to the Series
1995 Bonds, the revenues derived by the City from the Tax levied by the City upon (i) the gross
receipts or gross proceeds derived from renting, leasing or otherwise furnishing hotel or motel
accommodations for profit within the boundaries of the City and (ii) the portion of gross receipts
or gross proceeds received by restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out
restaurants, concession stands, convenience stores, grocery store -restaurants, caterers and similar
businesses from the sale of prepared food and beverages for on -premises or off -premises
consumption (the "Tax Receipts"). The Tax has been levied by Ordinance No. 2310 adopted
March 1, 1977, as amended, of the City pursuant to the authority of the Act, at the rate of one
percent (1%).
2.
The Bond Fund, Debt Service Reserve Fund, Redemption Fund, Project Fund and all
other funds held by the Trustee pursuant to. the Indenture except the Rebate Fund and Cost of
Issuance Fund, and all moneys and investments in the pledged funds but subject to the provisions
of this Indenture pertaining thereto, including the making of disbursements therefrom.
3
• Any and all other moneys, rights and interests of every kind and nature which is from
time to time hereafter conveyed, pledged, assigned or transferred by delivery or by writing or
transfer of any kind, as and for additional security hereunder, by the City or by any other person,
firm or corporation, to the Trustee, which is hereby authorized to receive any and all such
property at any time and at all times and to hold and apply the same subject to the terms hereof.
TO HAVE AND TO HOLD all the same (the "Trust Estate") with all privileges and
appurtenances hereby conveyed and assigned, or agreed or intended so to be, to the Trustee and
its successors in said trusts and to them and their assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal
and proportionate benefit, security and protection of all owners of the said Bonds issued under
and secured by this Indenture without privilege, priority or distinction as to lien or otherwise of
any of said Bonds over any of the other Bonds; provided, however, that if the City, its successors
or assigns, shall well and truly pay, or cause to be paid, the principal of, premium,, if any, and
interest due on the Bonds, at the times and in the manner provided in the Bonds according to the
true intent and meaning thereof, and shall make the payments as required under this Indenture or
shall provide, as permitted hereby, for the payment thereof by depositing with or causing to be
deposited with the Trustee the entire amount due or to become due thereon, and shall well and
. truly keep, perform and observe all of 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
payments or
deposits this Indenture and
the
lien and rights hereby granted shall cease,
determine
and be void;
otherwise, this Indenture to
be
and remain in full force and effect.
10-47392.4 3
• THIS INDENTURE FURTHER WITNESSETH that, and it is expressly declared that, all
Bonds issued and secured hereunder are to be issued, authenticated and delivered and all said
revenues and income hereby pledged are to be dealt with and disposed of under, upon and subject
to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as
hdreinafter expressed, and the City has agreed and covenanted, and does hereby agree and
covenant, with the Trustee and with the holders from time to time of the Bonds or any part
thereof, as follows, that is to say:
ARTICLE I
DEFINITIONS
Section 101. Definitions. In addition to the words and terms elsewhere defined in this
Indenture, the following words and terms as used in this Indenture shall have the following
meanings:
"Account" means an Account established by Article V of this Indenture.
"Act" means the Advertising and Promotion Commission Act, Arkansas Code Annotated
(1997 Repl.) §§ 26-75-601 et seq., as from time to time amended.
"Additional Bonds" means Bonds in addition to the Series 2003 Bonds which are issued
under the provisions of Section 212 of this Indenture.
• "Additional Convention Facilities" means land, buildings, structures, machinery,
furniture, fixtures, equipment and all related or necessary tangible property constituting
convention center improvements which are permitted to be financed under the provisions of the
Act.
"Annual Debt Service" means, with respect to all or any particular amount of Bonds, the
Debt Service for any particular Fiscal Year required to be paid or set aside during such Fiscal
Year, less the amount of such payment which is provided from the proceeds of the sale of Bonds
or from sources other than Tax Receipts.
"Authorized Representative" means either the Mayor or the Finance & Internal Services
Director of the City and such additional persons as from time to time may be designated to act on
behalf of the City by a Certificate furnished to the Trustee containing the specimen signature
thereof and executed on behalf of the City by its Mayor.
"Authorizing Ordinance" means Ordinance No. , adopted by the City on
2003, which authorized the issuance of the Series 2003 Bonds pursuant to this
Indenture.
"Beneficial Owner" means any Person who acquires beneficial ownership interest in a
Bond held by the Securities Depository. In determining the Beneficial Owner of any Bond, the
• Trustee may rely exclusively upon written representations made and information given to the
10-47392.4 4
• Trustee by the Securities Depository or its Participants with respect to any Bond held by the
Securities Depository in which a beneficial ownership interest is claimed.
"Bond
Counsel" means any
firm
of nationally recognized municipal bond counsel
designated by
the City and acceptable
to the
Trustee.
"Bond Fund" means the fund by that name created and established in Section 501 of this
Indenture.
"Bonds" means the Series 2003 Bonds and all Additional Bonds, if any, authenticated and
delivered under this Indenture.
"Book -Entry System" means the book -entry system maintained by the Securities
Depository and described in Section 215 of this Indenture. '
"Certificate" means a
document signed
by an
Authorized Representative
of the City
attesting to or acknowledging
the circumstances or other
matters therein stated.
"City" means the City of Fayetteville, Arkansas.
"City Clerk" means the person holding the office and performing the duties of the City
Clerk of the City.
• "Closing Date" means, with respect to any series of Bonds, the date upon which there is,
an exchange of such series of Bonds for the proceeds representing the purchase price for such
series of Bonds by the Original Purchaser or Purchasers thereof.
"Code" means the Internal Revenue Code of 1986, as from time to time amended, and
applicable regulations issued or proposed thereunder.
"Commission"
means
the Advertising
and Promotion Commission of the City of
Fayetteville, Arkansas,
or any
successor thereto.
"Completion Date" means the date upon which a Project is first ready for normal
continuous operation or the date upon which damaged Project facilities are replaced in normal
and continuous operation.
"Continuing Disclosure Agreement" means, collectively, each Continuing Disclosure
Agreement between the City and the Trustee, dated'the date of issuance and delivery of a series
of Bonds, as originally executed and as amended from time to time in accordance with the terms
thereof.
"Cost of Issuance Fund" means the fund by that name created and established in
Section 501 of this Indenture.
• "Costs of Issuance" means all items of expense payable or reimbursable directly or
indirectly by the City and related to the authorization, sale and issuance of the Bonds, including,
10-47392.4 5
• but not limited to, underwriting discounts, fees and expenses, election expenses, publication
expenses, expenses of printing, reproducing, filing and recording documents, initial fees and
charges of the Trustee and Paying Agent, fees and expenses for legal, accounting and other
professional services, rating fees, costs of securing any credit enhancement for the Bonds, costs
of execution, transportation and safekeeping of the Bonds, and other costs, charges and fees
incurred in connection with the foregoing.
"Debt Service" means, with respect to all or any particular amount of Bonds for any
Payment Period, the amount required to pay the sum of the interest on such Bonds payable during
the Payment Period and the principal of, and any other amount required to effect any mandatory
redemption of, such Bonds, if any, during the Payment Period.
"Debt Service Reserve Fund" means the fund by that name created and established in
Section 501 of this Indenture.
"Event of Default" means any event of default specified in Section 801 hereof.
"Fiscal Year" means the 12 -month period used, at any time, by the City for accounting
purposes, which may be the calendar year.
"Fund" means a fund confirmed or established by Article V of this Indenture.
• "Government Securities" means (i) bonds, notes, certificates of indebtedness, treasury
bills or other securities constituting direct obligations of, or obligations on which the full and
timely payment of principal and interest is fully and unconditionally guaranteed by, the United
States of America (including any such securities issued or held in book -entry form on the books
.of the Department of Treasury of the United States of America), and (ii) evidences of direct
ownership or proportionate or individual interest in future interest or principal payments on
specified direct obligations of, or obligations on which the full and timely payment of principal
and interest is fully and unconditionally guaranteed by, the United States of America, which
obligations are held by a bank or trust company organized and existing under the laws of the
•United States of America or any state thereof in the capacity of custodian in form and substance
satisfactory to the Trustee.
"Holder" or "Bondholder" or "Owner of the Bonds" means the registered owner of any
Bond.
"Indenture" means this Trust Indenture dated as of July 1, 2003, between the City and the
Trustee, together with all indentures supplemental hereto.
"Interest Payment Date" means any date on which interest is payable on the Bonds.
"Investment Obligations" means, if and to the extent the same are at the time legal for
investment of Funds and Accounts held under this Indenture:
• (a) Government Securities;
10-47392.4 6
• (b) bonds, notes or other obligations of any state of the United States of
America or any political subdivision of any state, which at the time of their purchase are
rated in either of the two highest rating categories by a nationally recognized Rating
Agency;
(c) certificates of deposit or. time or demand deposits constituting direct
obligations of any bank, bank holding company, savings and loan association or trust
company organized under the laws of the United States of America or any state thereof
(including the Trustee or any of its.affiliates), except that investments may be made only
in certificates of deposit or time or demand deposits which are:
(1) insured by the Federal Deposit Insurance Corporation. or any other
similar United States Government deposit insurance program then in existence; or
(2) continuously and fully secured by Government Securities, which
have a market value, exclusive of accrued interest, at all times at least equal to the
principal amount of such certificates of deposit or time or demand deposits;
(d)
short
term discount obligations of the Federal
National Mortgage
Association
and the
Government National Mortgage Association;
(e) money market mutual funds (1) that invest in Government Securities or
• that are registered with the federal Securities and Exchange Commission (SEC), meeting
the requirements of Rule 2a-7 under the Investment Company Act of 1940, and (2) that
are rated in either of the two highest categories by a nationally recognized Rating Agency;
and
[(f) with respect to the Debt Service Reserve Fund only, the Surety Bond.]
"Mayor"
means the person holding
the office and performing
the duties of the Mayor of
the City:
"Original Purchaser" means the first purchaser(s) of a series of Bonds from the City.
"Outstanding" means, as of any date of computation, Bonds theretofore or thereupon
being delivered under this Indenture, except:
(a)
Bonds cancelled at
or prior to such
date or delivered to or acquired
by the
Trustee at or
prior to such date for
cancellation;
(b) Bonds deemed to be paid in accordance with Article VII of this Indenture;
and
(c) Bonds in lieu of or in exchange or substitution for which other Bonds shall
have been authenticated and delivered pursuant to this Indenture.
10-47392.4 7
• "Participants" means those financial institutions for whom the Securities Depository
effects book -entry transfers and pledges of securities deposited with the Securities Depository in
the Book -Entry System, as such listing of Participants exists at the time of such reference.
"Payment Period" means a period from, but not including, a Principal Payment Date up
to, and including, the next succeeding Principal Payment Date.
"Person" means any natural person. firm, association, corporation, limited liability
company, partnership, joint stock company, joint venture, trust, unincorporated organization or
firm, or a government or any agency or political subdivision thereof or other public body.
"Principal Payment Date" means any date on which principal is payable on the Bonds,
whether at maturity, by operation of the mandatory sinking fund, or otherwise.
"Project" means
the 1998
Project and
any Additional Convention
Facilities that may be
acquired, constructed or
equipped
in the future
with the proceeds of Bonds
issued hereunder.
"1998 Project" means the constructiqn of the Fayetteville Town Center, financed in part
with the proceeds of the Series 1998 Bonds.
"Project Costs" means, to the extent permitted by the Act or other applicable laws, with
respect to a Project, all costs of planning, designing, purchasing, acquiring, constructing,
improving, enlarging, extending, repairing, financing and placing in operation, including
• obtaining governmental approvals, certificates, permits and licenses with respect thereto,
heretofore or hereafter paid or incurred by or on behalf of the City and which shall include, but
shall not be limited to:
(a) interest accruing in whole or in part on the Bonds prior to and during
construction of a Project, including all amounts required by this Indenture to be paid from
the proceeds of the Bonds into the Bond Fund;
(b) preliminary investigation and development costs, engineering fees,
contractors' fees, labor costs, the cost of materials, equipment, utility services and
supplies, costs of obtaining permits, licenses and approvals, costs of real property,
insurance premiums, legal and financing fees and costs, administrative and general costs,
and all other costs properly allocable to the acquisition, construction and equipping of a
Project and placing the same in operation;
(c) all costs relating to injury and damage claims arising out of the acquisition,
construction or equipping of a Project;
(d)
all other costs
incurred
in connection with, and
properly allocable to, the
acquisition,
construction and
equipping
of a Project; and
(e) amounts to pay or reimburse the City or any City fund for expenses of the
City incident and properly allocable to such planning, designing, purchasing, acquiring,
10-47392.4
8
• constructing, improving, enlarging, extending, repairing, financing and placing in
operation of a Project.
"Project Fund" means the fund by that name created and established in Section 501 of
this Indenture.
"Qualified Engineer" means an independent consulting engineer or firm of independent
consulting engineers not in the regular employ of the City.
"Rating Agency" means Moody's Investors Service, Standard & Poor's Ratings Services,
a Division of The McGraw-Hill Companies, Inc., or Fitch, Inc., and their respective successors
and assigns. If any such corporation ceases to act as a securities rating agency, the City may
appoint any nationally recognized securities rating agency as a replacement.
"Rebate Fund" means the fund by that name created and established in Section 501 of this
Indenture.
"Record Date" means the close of business on the 15th day of the calendar month next
preceding each Interest Payment Date on the Bonds or, if such day shall not be a business day,
the immediately preceding business day.
"Redemption Fund" means the fund by that name created and established in Section 501
• of this Indenture.
"Requisition" means a written requisition of the City, consecutively numbered, signed by
an Authorized Representative including, without limitation, the following with respect to each
payment requested:.
(i) the name of the person or party to whom payment is to be made and the
purpose of the payment,
(ii) the amount to be paid thereunder;
(iii) that such amount has not been previously paid by the City and is justly due
and owing to the person(s) named therein as a proper payment or reimbursement of a
Project Cost; and
(iv) that no Event of Default exists under the Indenture and that, to the
knowledge of the Authorized Representative, no event has occurred and continues which
with notice or lapse of time or both would constitute an Event of Default under the
Indenture.
"Reserve Requirement" means, at any particular time, an amount equal to the least of
(a) 10% of the face amount of [all][each series of] Outstanding Bonds, (b) the maximum Annual
• Debt Service on [all][each series of] Outstanding Bonds, or (c) 1.25 times the average Annual
10-47392.4 9
• Debt Service on [all][each series of] Outstanding Bonds. For all purposes of this Indenture. the
Reserve Requirement may be satisfied by cash or by Investment Obligations.
"Revenue Fund" means the fund by that name confirmed and continued in Section 501 of
this Indenture.
"Securities Depository" means The Depository Trust Company, a limited -purpose trust
company organized under the laws of the State of New York, or its nominee, and it successors
and assigns, or any other depository institution appointed by the City to act as depository for the
Bonds in connection with the Book -Entry -Only System.
"Series 1995 Bonds" means the $2,675,000 City of Fayetteville, Arkansas Hotel and
Restaurant Gross Receipts Tax Refunding Bonds, Series 1995, dated October 1, 1995, of which
$700,000 in principal amount presently remains Outstanding. The Series 1995 Bonds are
secured by and payable from the Tax Receipts on a prior and senior basis to the pledge of Tax
Receipts securing the payment of the Bonds.
"Series 1998 Bonds" means the $6,950,000 City of Fayetteville, Arkansas Hotel and
Restaurant Gross Receipts Tax Bonds, Series 1998, dated November 1, 1998, of which
$6,620,000 in principal amount presently remains Outstanding. The Series 1998 Bonds are being
refunded with a portion of the proceeds of the Series 2003 Bonds.
• "Series 2003 Bonds" means the $ City of Fayetteville, Arkansas Hotel and
Restaurant Gross Receipts Tax Refunding Bonds, Series 2003, dated July 1, 2003, issued under
and secured by this Indenture.
"State" means the State of Arkansas.
"Supplemental Indenture" means any indenture supplemental to or amendatory of this
Indenture, adopted by the City in accordance with Article X hereof.
["Surety Bond" means the surety bond issued by guaranteeing
certain payments into the Debt Service Reserve Fund with respect to the Series 2003 Bonds as
provided therein and subject to the limitations set forth therein.]
"Tax" means the one percent (1%) tax levied by the City pursuant to Ordinance No. 2310
adopted by the City on March 1, 1977, as subsequently amended, upon (i) the gross receipts or
gross proceeds derived from renting, leasing or otherwise furnishing hotel or motel
accommodations for profit within the boundaries of the City and (ii) the portion of gross receipts
or gross proceeds received by restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out
restaurants, concession stands, convenience stores, grocery store -restaurants, caterers and similar
businesses from the sale of prepared food and beverages for on -premises or off -premises
consumption.
• "Tax Receipts" means receipts derived by the City from the levy of the Tax.
10-47392.4 10
• "Tax Regulatory Agreement" means with respect to any series of Bonds issued under this
Indenture, that Tax Regulatory Agreement of the City relating to maintenance of the
excludability of interest on such Bonds from gross income for federal income tax purposes,
delivered in connection with the issuance of such series of Bonds.
"Trustee" and Paying Agent" means the trustee and paying agent for the time being,
whether original or successor, with the same institution to always occupy both positions, and
with the original Trustee and Paying Agent being Bank of Oklahoma, N.A., Tulsa, Oklahoma.
"Trust Estate" means the property described in the granting clauses of this Indenture.
Section 102. Use of Words.. Words of the masculine gender shall be deemed and
construed to include correlative words of the feminine and neuter genders. Unless the context
shall otherwise indicate, the words "Bond," "owner," "holder," and "person" shall include the
plural, as well as the singular number.
ARTICLE II
THE BONDS
Section 201. Security for Bonds. (a) The Bonds are special and limited obligations of
the City payable as to principal, premium, if any, and interest solely out of the Trust Estate. The
Trust Estate is hereby pledged, appropriated and assigned to the payment of the principal of,
• premium, if any, and interest on the Bonds, all in accordance with their terms and the provisions
of this Indenture. The Bonds do not constitute an indebtedness for which the faith and credit of
the State of Arkansas or the City is pledged within the meaning of any Constitutional or statutory
limitation. The Bonds shall never constitute an obligation of or a charge against the general
credit or general taxing powers of the City.
(b) The pledge, charge,.lien, trusts and assignments made herein with respect to the
Trust Estate shall be valid and binding, and shall be deemed continuously perfected from the
time of issuance of the Series 2003 Bonds, and the Trust Estate shall thereupon be immediately
subject to the pledge, charge, lien, trust and assignment created hereby upon receipt thereof by or
for the City or by the Trustee and Paying Agent hereunder, without any physical delivery,
segregation thereof or further act, and such pledge, charge, lien, trust and assignment shall be
valid and binding as against all parties having claims of any kind in tort, contract or otherwise
against the City, irrespective of whether such parties have notice thereof.
(c) The Bonds shall be equally and ratably payable and secured hereunder without
priority by reason of date of adoption of this Indenture or any Supplemental Indenture
authorizing their issuance or by reason of their series, number, date, date of issue, execution,
authentication or sale, or otherwise.
(d) So long as any Bonds are Outstanding under the provisions of this Indenture, all
Tax Receipts shall be deemed to be necessary to accomplish the purposes of the City and shall be
subject to the covenants and agreements set forth in this Indenture, and no such Tax Receipts
shall ever .be used or deposited otherwise except as herein expressly permitted.
10-47392.4 11
(e) The City covenants, as permitted by the Act, that while any of the Bonds are
Outstanding, the levy and collection of the Tax shall not be reduced or discontinued, and the City
will use due diligence in causing the collection of the Tax. Nothing herein shall prohibit the City
from increasing the rate of the Tax from time to time, to the extent permitted by law, and no part
of the revenues or receipts derived by the City from any such increase shall be deemed part of the
Tax Receipts unless authorized and pledged by a Supplemental Indenture.
Section 202. Authorized Amount. There is hereby authorized the issuance of bonds of
the City to be designated "Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series
2003" in the principal amount of Dollars ($ ) (the "Series 2003
Bonds"). No Bonds may be issued under the provisions of this Indenture except in accordance
with this Article II. The total principal amount of Bonds that may be issued hereunder is limited
to the extent described in Section 212 hereof, except as provided in Section 209 and except for
refunding bonds issued under the provisions of Section 212.
Section 203. Details of Bonds. (a) The Series 2003 Bonds (i) shall be designated
"City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax Refunding Bonds,
Series 2003," (ii) shall be in the aggregate principal amount of $
(iii) shall be dated as of July 1, 2003, (iv) shall bear interest from such date at the rates
hereinafter provided until paid, payable semiannually on April 1 and October 1 of each year,
commencing October 1, 2003, (v) shall be issued in denominations of $5,000 each, or any
integral multiple thereof, (vi) shall be numbered from R03-1 upwards in order of issuance
• according to the records of the Trustee, and (vii) shall mature, unless sooner redeemed in the
manner in this Indenture set forth, on October 1 in each of the years and in the amounts set forth
in the following table, which table also sets forth the interest rates for the Series 2003 Bonds:
Year
(October 1) Principal Amount Interest Rate
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
0
Section 204. Form of Bonds. (a) The Series 2003 Bonds shall be initially issued as
fully registered Bonds, without coupons, in the form of [twelve] typewritten bond certificates
• (one for each maturity) to be delivered to the Securities Depository. Each such certificate shall
be initially registered in the name of the nominee of the Securities Depository, and no Beneficial
10-47392.4 12
• Owner will receive a certificate representing his interest in the Series 2003 Bonds, except upon
the occurrence of the events described in Section 215 hereof. Beneficial Owners shall be deemed
to have waived any right to receive a bond certificate except under the circumstances described in
Section 215. The Series 2003 Bonds and the Trustee's certificate of authentication to be
endorsed thereon shall be in substantially the form set forth in Exhibit A hereto, with appropriate
variations, insertions and omissions as permitted or required by this Indenture.
Section 205. Payment. The Bonds shall be payable, with respect to principal,
premium, if any, and interest in any coin or currency of the United States of America which at the
time of payment is legal tender for the payment of public and private debts. The principal of and
premium, if any, on the Bonds shall be payable upon surrender thereof at the principal corporate
trust office of the Trustee. Payment of interest on each Bond shall be made by check or draft
mailed to the registered owner of such Bond as of the applicable Record Date at his address as it
appears on the registration books maintained by the Trustee. For purposes of this Indenture,
interest on the Bonds shall be deemed to accrue on the basis of a 360 -day year of twelve 30 -day
months. So long as the Securities Depository or its nominee is the sole registered owner of the
Bonds, payment of interest thereon shall be made by wire transfer of immediately available funds
by the Paying Agent to the Securities Depository or its nominee.
Section 206. Execution. The Bonds shall be executed on behalf of the City by the
manual or facsimile signatures of its Mayor and City Clerk and shall have impressed or imprinted
thereon the seal of the City. A facsimile signature shall have the same force and effect as if
manually signed. In case any officer whose manual signature or a facsimile of whose signature
shall appear on the Bonds shall cease to be such officer before the delivery of such Bonds, such
signature or such facsimile shall nevertheless be valid and sufficient for all purposes, the same as
if such official had remained in office until delivery.
Section 207. Authentication. Only such Bonds as shall have endorsed thereon a
certificate of authentication substantially in the form set forth in Exhibit A attached hereto duly
executed by the Trustee shall be entitled to any right or benefit under this Indenture. No Bond
shall be valid and obligatory for any purpose unless and until such certificate of authentication
shall have been duly executed by the Trustee, and such certificate of the Trustee upon any such
Bond shall be conclusive evidence that such Bond has been authenticated and delivered under
this Indenture. The Trustee's certificate of authentication on any Bond shall be deemed to have
been executed if signed by an authorized officer of the Trustee, but it shall not be necessary that
the same officer sign the certificate of authentication on all of the Bonds issued hereunder.
Section 208. Delivery of Bonds. The City shall execute and deliver to the Trustee and
the Trustee shall authenticate the Bonds of any series and deliver said Bonds to the Securities
Depository as may be directed in this Section 208, in Section 212 hereof or in any Supplemental.
Indenture.
(a) Prior to the delivery or original issuance by the Trustee of any authenticated
• Bonds of any series, there shall be delivered to the Trustee:
10-47392.4 13
(1) An original executed counterpart of this Indenture or, in the case of
Additional Bonds, a Supplemental Indenture by and between the City and the Trustee
setting forth the details concerning such Additional Bonds;
(2) Original executed counterparts of the Continuing Disclosure Agreement
and the Tax Regulatory Agreement applicable to such series of Bonds;
(3) A Certificate directing the Trustee to authenticate the Bonds and
containing instructions as to the delivery of the Bonds upon payment to the Trustee. for
the account of the City, of a sum specified in such Certificate;
(4) A copy, duly certified by the City Clerk, of the proceedings of the City
authorizing the issuance of the Bonds:
(5) A written opinion of Bond Counsel approving the legality of the Bonds;
(6) In the case of any series of Additional Bonds, a Certificate signed by the
Mayor certifying that (i) the City is hot then in default in the performance of any of the
covenants, conditions, agreements or provisions contained in this Indenture, and (ii) the
City is current as to all required deposits at that time in all the Funds and Accounts
described in Article V of this Indenture or hereafter created by Supplemental Indentures,
or if the City is in default or is not so current, certifying in the case of (i) or (ii) as to that
• fact and that, upon the application of the proceeds of the sale of such Additional Bonds as
provided in the Supplemental Indenture authorizing the issuance thereof, the City will not
be in default or will be current thereafter;
(7) In the case of any series of Additional Bonds, a written opinion of Bond
Counsel to the effect that the exemption from federal income tax of the interest on the
Series 2003 Bonds and any Additional Bonds theretofore issued will not be adversely
affected by the issuance of the Additional Bonds then being issued;
(8) A resolution of the Commission approving the issuance of the Additional
Bonds; and
(9) Such further documents and certificates as may be required by the Original
Purchaser of such series of Bonds.
(b) Simultaneously with the delivery of the Series 2003 Bonds, the Trustee shall
apply the proceeds thereof as follows:
(1) The amount, if any, received as accrued interest on the Series 2003 Bonds
shall be deposited in the Bond Fund;
(2) $ , an amount [equal to the Reserve Requirement] [sufficient
to purchase the Surety Bond], shall be deposited in the Debt Service Reserve Fund;
(3) An amount equal to $ shall be deposited in the Costs of
10 Issuance Fund for payment of Costs of Issuance as directed by a Certificate of the City;
10-47392.4 14
(4) An amount sufficient, together with moneys held by the Bank of
Oklahoma, N.A., as trustee for the Series 1998 Bonds, in funds and accounts created by
the trust indenture securing the payment of the Series 1998 Bonds, to refund the Series
1998 Bonds shall be deposited in trust with the the Bank of Oklahoma, N.A., as escrow
trustee (the "1998 Escrow Trustee"). in accordance with the provisions of an Escrow
Deposit Agreement to be dated as of the date of delivery of the Series 2003 Bonds (the
"1998 Escrow Agreement"), by and between the City and the 1998 Escrow Trustee. The
1998 Escrow Agreement shall provide for the investment of the funds, to the extent
feasible, in Government Securities which will mature and bear interest at such times and
in such amounts as will, together with any uninvested moneys held by the 1998 Escrow
Trustee, provide sufficient moneys to pay as due at maturity and upon redemption prior to
maturity on October 1, 2003, all principal of and premium, if any, and interest on the
Series 1998 Bonds. The 1998 Escrow Agreement will provide for giving notice of
redemption prior to maturity of the Series 1998 Bonds, for the payment of required
trustee and paying agent fees on the Series 1998 Bonds, and for release of all claims of
the Series 1998 Bonds on the Trust Estate; and
(5) The balance of said proceeds shall be deposited in the Bond Fund and
shall serve as a credit against the deposit required to be made to the Bond Fund by the
City on or before July 15, 2003 pursuant to Section 503(b) hereof .
Section 209. Mutilated, Destroyed or Lost Bonds. In case any Bond issued hereunder
• shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause
to be executed and the Trustee may authenticate and deliver a new Bond of like series, date,
number, maturity and tenor in exchange and substitution for and upon cancellation of such
mutilated Bond, or in lieu of and in substitution for such Bond destroyed or lost, upon the
Bondholder's paying the reasonable expenses and charges of the City and the Trustee in
connection therewith, and, in the case of a Bond destroyed or lost, filing by the Bondholder with
the Trustee evidence satisfactory to the Trustee that such Bonds were destroyed or lost, and of the
Bondholder's ownership thereof, and furnishing the City and Trustee with indemnity satisfactory
to them. The Trustee is hereby authorized to authenticate any such new Bond. In the event any
such Bonds shall have matured, instead of issuing a new Bond, the City may pay the same
without the surrender thereof. Upon the issuance of a new Bond under this Section 209, the City
may require the payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees and expenses of
the Trustee) connected therewith.
Section 210. Registration and Transfer of Bonds. The City hereby constitutes and
appoints the Trustee as Bond Registrar of the City, and as Bond Registrar the Trustee shall keep
books for the registration and for the transfer of the Bonds as provided in this Indenture at the
principal corporate trust office of the Trustee. The person in whose name any Bond shall be
registered shall be deemed and regarded as the absolute owner thereof for all purposes and
payment of or on account of the principal of and interest on any such Bond shall be made only to
or upon the order of the registered owner thereof, or the owner's legal representative, and neither
. the City, the Trustee nor
the Bond
Registrar
shall be affected by any notice
to the
contrary,
but
such registration may be
changed
as herein
provided. All such payments
shall
be valid
and
10-47392.4 15
effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so
paid.
Bonds may be transferred on the books of registration kept by the Trustee by the
registered owner in person or by the. owner's duly authorized attorney, upon surrender thereof,
together with a written instrument of transfer duly executed by the registered owner or the
owner's duly authorized attorney. Upon surrender for transfer of any Bond at the principal
corporate office of the Trustee, the City shall execute and the Trustee shall authenticate and
deliver in the name of the transferee or transferees a new Bond or Bonds of the same series and
in the same aggregate principal amount and of any authorized denomination or denominations.
Bonds may be exchanged at the principal corporate trust office of the Trustee for an equal
aggregate principal amount of Bonds of any other authorized denomination or denominations of
the same series with corresponding maturities. The City shall execute and the Trustee shall
authenticate and deliver Bonds which the Bondholder making the exchange is entitled to receive,
bearing numbers not contemporaneously then Outstanding. The execution by the City of any
Bond of any denomination shall constitute full and due authorization of such denomination and
the Trustee shall thereby be authorized to authenticate and deliver such Bond.
Such transfers of registration or exchanges of Bonds shall be without charge to the
Owners of such Bonds, but any taxes or other governmental charges required to be paid with
respect to the same shall be paid by the Owner of the Bond requesting such transfer or exchange
• as a condition precedent to the exercise of such privilege.
The Trustee shall not be required to transfer or exchange any Bond during the period
from and including a Record Date to the next succeeding Interest Payment Date of such Bond nor
to transfer or exchange any Bond after the mailing of notice calling such Bond for redemption
has been made, and prior to such redemption.
If the Securities Depository or its nominee is the sole registered owner of the Bonds,
transfers of ownership and exchanges shall be effected on the records of the Securities
Depository and its Participants pursuant to rules and procedures established by the Securities
Depository and its Participants. In such case, the Trustee shall deal with the Securities
Depository as representative of the Beneficial Owners of the Bonds for purposes of exercising
the rights of Bondholders hereunder, and the rights of the Beneficial Owners of such Bonds held
by the Securities Depository or its nominee shall be limited to those established by law and
agreements between such Beneficial Owners and the Securities Depository and its Participants.
Requests, consents and directions from, and votes of, the Securities Depository or its nominee as
representative shall not be deemed inconsistent if they are made with respect to different
Participants or Beneficial Owners.
Section 211. Cancellation. All Bonds surrendered for payment, redemption, transfer or
exchange, if surrendered to the Trustee, shall be promptly cancelled by it, and, if surrendered to
any person other than the Trustee, shall be delivered to the Trustee and, if not already cancelled,
• shall be promptly cancelled by it. The •City may at any time deliver to the Trustee for
10-47392.4 16
cancellation any Bonds previously authenticated and delivered hereunder, which the City may
have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly cancelled
by the Trustee. All cancelled Bonds held by the Trustee shall be disposed of as directed by the
City. Whenever in this Indenture provision is made for the cancellation by the Trustee and the
delivery to the City of any Bonds, the Trustee may, upon the written request of the City, in lieu of
such cancellation and delivery, destroy such Bonds in the presence of any officer of the City (but
only if the City shall so require), and deliver a certificate of such destruction to the City.
Section 212. Additional Bonds. The City may issue from time to time one or more
series of Additional Bonds for the purpose of (i) financing Project Costs in connection with the
acquisition, construction and/or equipping of a Project, (ii) refunding the Series 2003 Bonds or
any series of Additional Bonds, in whole or in part, or (iii) any combination thereof. Additional
Bonds shall be secured equally and ratably with the Series 2003 Bonds and any other series of
Additional Bonds theretofore issued and then Outstanding, except insofar as any terms or
conditions of redemption or purchase established under this Indenture may afford additional
benefit or security for the Bonds of any particular series and except for the security afforded by
any municipal bond insurance obtained with' respect to a particular series of Bonds. Before any
Additional Bonds are authenticated, there shall be delivered to the Trustee the items required for
the issuance of Bonds by Section 208 hereof, plus a Certificate of the Finance & Internal Services
Director of the City (in the form attached as Exhibit B hereto) certifying that, based upon
necessary investigation, the Tax Receipts deposited into the Revenue Fund during the most
• recent twelve (12) months were not less than (i) 125% of the maximum Annual Debt Service
requirement on all then Outstanding Bonds, and Series 1995 Bonds, plus the Additional Bonds
then proposed to be issued, and (ii) the amount,. if any, needed to make required deposits to the
Debt Service Reserve Fund. Notwithstanding anything herein to the contrary, no Additional
Bonds shall be issued unless there is no default at the time of issuance under this Indenture.
Section 213. Superior Obligations Prohibited. Except to the extent permitted in
Section 212 hereof for the issuance of Additional Bonds, from and after the issuance of any of
the Bonds and for so long as any of the Bonds are Outstanding, the City shall not create or permit
the creation of any indebtedness, or issue any bonds, notes, warrants, certificates or other
obligations or evidences of indebtedness payable in any manner from the Tax Receipts or
otherwise from the Trust Estate which (i) will in any way be superior to or rank on a parity with
the Bonds, or (ii) will in any way be secured by a lien and charge on the Tax Receipts or on the
moneys deposited in or to be deposited in the Revenue Fund, prior to or equal with the lien,
pledge and charge created herein for the security of the Bonds, or (iii) will be payable prior to or
equal with the payments to be made from the Tax Receipts or the Revenue Fund into the Bond
Fund or Debt Service Reserve Fund, or from said Bond Fund or Debt Service Reserve Fund for
the payment of the Bonds. To that end, the City hereby specifically covenants not to issue any
additional bonds under the provisions of the trust indenture securing the Series 1995 Bonds.
Nothing in Section 213 shall be construed as prohibiting or restricting the issuance of bonds
payable from Tax Receipts so long as use of the Tax Receipts in favor of bonds issued pursuant
to this Section 213 shall be made expressly subject and subordinate to the pledge and use of Tax
Receipts
to pay
principal of and premium, if any, and interest
on the Bonds and to make all
• required
deposits
into all funds held by the Trustee pursuant to the
Indenture.
10.47392.4 17
Section 214. Temporary Bonds. Until Bonds in definitive form are ready for delivery,
the City may execute, and upon the request of the City, the Trustee shall authenticate and deliver,
subject to the provisions, limitations and conditions set forth herein, one or more Bonds in
temporary form, whether printed, typewritten. lithographed or otherwise produced. substantially
in the form of the definitive Bonds, with appropriate omissions, variations and insertions, and in
authorized denominations. Until exchanged for Bonds in definitive form, such Bond in
temporary form shall be entitled to the lien and benefit of this Indenture. Upon the presentation
and surrender of any Bond or Bonds in temporary form, the City shall, without unreasonable
delay, prepare, execute and deliver to the Trustee and the Trustee shall authenticate and deliver,
in exchange therefor, a Bond or Bonds in definitive form. Such exchange shall be made by the
Trustee without making any charge therefor to the Owner of such Bond in temporary form.
Section 215. Book -Entry Bonds; Securities Depository. The Bonds shall initially be
registered to Cede & Co., the nominee for The Depository Trust Company, New York, New York
(the "Securities Depository"), and no Beneficial Owner will receive certificates representing their
respective interests in the Bonds, except in the event the Trustee issues replacement bonds as
provided in this Section 215. It is anticipated that during the term of the Bonds, the Securities
Depository will make book -entry transfers among its Participants and receive and transmit
payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and
unless the Trustee authenticates and delivers replacement bonds to the Beneficial Owners as
described in the following paragraph.
• If the City or the Trustee determines (A) that the Securities Depository is unable to
properly discharge its responsibilities, or (B) that the Securities Depository is no longer qualified
to act as a securities depository and registered clearing agency under the Securities and Exchange
Act of 1934, as amended, or (C) that the continuation of a Book -Entry System to the exclusion of
any Bonds being issued to any Bondholder other than Cede & Co. is no longer in the best
interests of the Beneficial Owners of the Bonds, or (2) if the Trustee receives written notice from
Participants representing interests in not less than 50% of the Bonds Outstanding, as shown on
the records of the Securities Depository (and certified to such effect by the Securities
Depository), that the continuation of a Book -Entry System to the exclusion of any Bonds being
issued to any Bondholder other than Cede & Co. is no longer in the best interests of the
Beneficial Owners of the Bonds, then the Trustee shall notify the Bondholders of such
determination or such notice and of the availability of certificates to Bondholders requesting the
same, and the Trustee shall register in the name of and authenticate and deliver replacement
bonds to the Beneficial Owners or their nominees in principal amounts representing the interest
of each; provided, that in the case of a determination under (A) or (B) of this paragraph, the City
or the Trustee may select a successor securities depository in accordance with the following
paragraph to effect book -entry transfers. In such event, all references to the Securities Depository
herein shall relate to the period of time when the Securities Depository has possession of at least
one Bond. Upon the issuance of replacement bonds, all references herein to obligations imposed
upon or to be performed by the Securities Depository shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such replacement bonds. If the
Securities
Depository
resigns and the City, the
Trustee or Bondholders are unable to locate a
• qualified successor of
the Securities Depository
in accordance with the following paragraph, then
10-47392.4 18
• the Trustee shall authenticate and cause delivery of replacement bonds to Bondholders, as
provided herein. The Trustee may rely conclusively on information from the Securities
Depository and its Participants as to the names and addresses of the Beneficial Owners of the
Bonds. The cost of printing, registration, authentication, and delivery of replacement bonds shall
be paid for by the City.
In the event the Securities Depository resigns, is unable to properly discharge its
responsibilities, or is no longer qualified to act as a securities depository and registered clearing
agency under the Securities and Exchange Act of 1934, as amended, the City may appoint a
successor Securities Depository provided the Trustee receives written evidence satisfactory to the
Trustee with respect to the ability of the successor Securities Depository to discharge its
responsibilities. Any such successor Securities Depository shall be a securities depository which
is a registered clearing agency under the Securities and Exchange Act of 1934, as amended. or
other applicable statute or regulation that operates a securities depository upon reasonable and
customary terms. The Trustee upon its receipt of a Bond or Bonds for cancellation shall cause
the delivery of Bonds to the successor Securities Depository in appropriate denominations and
form as provided herein.
ARTICLE III
REDEMPTION OF BONDS BEFORE MATURITY
• Section 301. Redemption of Bonds. The Bonds shall be subject to redemption prior to
maturity as follows:
(a) The Series 2003 Bonds are subject to redemption at the election of the City, on
and after October 1, 2008, in whole or in part (in inverse order of maturities and by lot within a
maturity) at any time, at a redemption price equal to the principal amount being redeemed plus
accrued interest to the date of redemption.
(b) The applicable series of Bonds shall be redeemed prior to maturity, in whole or in
part, on any Interest Payment Date, in inverse order of maturity and by lot in such manner as the
Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal
amount being redeemed, plus. accrued interest to the date of redemption, from Project Fund
moneys in excess of the amount needed to complete the applicable Project or portion thereof
being financed with the proceeds of such series of Bonds, which moneys shall be transferred to
the Redemption Fund pursuant to Section 502 hereof.
(c)
Additional Bonds may also be made subject to optional,
extraordinary and
mandatory
sinking
fund redemption,
in whole or in part, in such manner, at
such times and at
such prices
as may
be provided in the
Supplemental Indenture providing for their issuance.
Section 302. Notice. Notice of the call for any redemption, identifying the Bonds or
portions thereof being called and the date on which they shall be presented for payment, shall be
• mailed by the Trustee by first-class mail (or, so long as the Securities Depository or its nominee
is the sole registered owner of the Bonds, by any other means acceptable to the Securities
10-47392.4 19
Depository, including facsimile) to the registered owner of each such Bond addressed to such
registered owner at his registered address and placed in the mails not less than thirty (30) nor
more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure
to give such notice by mailing, or any defect therein, shall not affect the validity of any
proceeding for the redemption of any Bond with respect to which no such failure or defect has
occurred. Any notice mailed as provided in this Section 302 shall be conclusively presumed to
have been duly given, whether or not the registered owner receives the notice.
Section 303. Selection of Bonds to be Redeemed. If less than all of the Bonds of like
series, maturity, interest rate and otherwise identical payment terms shall be called for
redemption, the particular Bonds or portions of Bonds to be redeemed shall be selected by lot by
the Trustee in such manner as the Trustee in its discretion may deem fair and appropriate;
provided, however, that the portion of any Bond of a denomination of larger than the minimum
denomination may be redeemed in the principal amount of such minimum denomination or a
multiple thereof, and that for purposes of selection and redemption, any such Bond of a
denomination larger than the minimum denomination shall be considered to be that number of
separate Bonds of such minimum denomination which is obtained by dividing the principal
amount of such Bond by such minimum denomination. So long as the Securities Depository or
its nominee is the sole registered owner of a series of Bonds, the procedures established by the
Securities Depository shall control with respect to the selection of the particular Bonds of such
series to be redeemed.
• Section 304. Surrender of Bonds Upon Redemption. Notice having been given in the
manner and under the conditions hereinabove provided, and moneys for payment of the
redemption price being held by the Trustee as provided in this Indenture (i) the Bonds or portions
of Bonds so called for redemption shall, on the date fixed for redemption designated in such
notice, become due and payable at the redemption price provided for redemption of such Bonds,
and interest on such Bonds or portions of Bonds so called for redemption shall cease to accrue,
(ii) upon surrender of the Bonds or portions of Bonds so called for redemption in accordance
with such notice, such Bonds or portions of Bonds shall be paid at the applicable redemption
• price, (iii) such Bonds or portions of Bonds shall cease to be entitled to any lien, benefit or
security under this Indenture, and (iv) the owners of said Bonds or portions of Bonds shall have
no rights in respect thereof except to receive payment of the redemption price thereof.
Section 305. Redemption in Part. Any Bond which is to be redeemed only in part shall
be surrendered to the Trustee (with, if the City or the Trustee so requires, due endorsement by, or
a written instrument of transfer in form satisfactory to the City and the Trustee duly executed by,
the owner thereof or his attorney duly authorized in writing), and the appropriate officials of the
City shall execute and the Trustee shall authenticate and deliver to the owner of such Bond,
without service charge, a new Bond or Bonds of the same series, of any authorized denomination
or denominations, having the same maturity and interest rate as requested by such owner, in
aggregate principal amount equal to and in exchange for the unredeemed portion of the principal
of the Bond so surrendered.
CI
10-47392.4 20
• ARTICLE IV
GENERAL COVENANTS AND REPRESENTATIONS
Section 401. Payment of Principal, Premium and Interest. The City covenants that it
will promptly pay or cause to be paid the principal of and premium, if any, and interest on every
Bond issued under this Indenture at the place, on the dates and in the manner provided herein and
in the Bonds according to the true intent and meaning thereof. The principal, premium, if any,
and interest (except interest paid from the proceeds from the sale of the Bonds and accrued
interest) are payable solely from the Trust Estate which is hereby specifically pledged to the
payment thereof in the manner and to the extent herein specified, and nothing in the Bonds or
this Indenture should be considered as assigning or pledging any funds or assets of the City other
than the Trust Estate. Anything in this Indenture to the contrary notwithstanding, it is understood
that whenever the City makes any covenants involving financial commitments it pledges no
funds or assets other than the Trust Estate in the manner and to the extent herein specified, but
nothing herein shall be construed as prohibiting the City from using any other funds or assets.
The City covenants that the Tax will not be repealed, and the rate of the Tax will not be reduced,
for so long as there are any Outstanding Bonds. It is further covenanted that all necessary action
will be taken, from time to time, to collect the Tax in the full amount due and to apply Tax
Receipts in the manner provided in this Indenture.
Section 402. Performance of Covenants. The City covenants that it will faithfully
perform at all times any, and all covenants, undertakings, stipulations and provisions contained in
• this Indenture, in any and every Bond executed, authenticated and delivered hereunder, and in all
ordinances pertaining hereto. The City covenants that it is duly authorized under the Constitution
and laws of the State of Arkansas, including particularly and without limitation, the Act, to issue
the Bonds authorized hereby and to execute this Indenture and to make the pledge of the Tax
Receipts and to make the covenants in the manner and to the extent herein set forth, that all
action on its part for the issuance of the Bonds and the execution and delivery of this Indenture
has been duly and effectively taken, and that the Bonds in the hands of the Holders and owners
thereof are and will be valid and enforceable obligations of the City according to the import
thereof.
Section 403. Instruments of Further Assurance. At the request of the Trustee, the
City shall, so far as it may be authorized by law, pass, make, do, execute, acknowledge and
deliver, all and every such further resolutions, ordinances, acts, deeds, conveyances, assignments,
transfers and assurances as may be necessary or desirable for the better assuring, conveying,
granting, pledging, assigning and confirming of all and singular the Tax Receipts and all other
moneys hereby pledged or assigned, or intended so to be, or which the City may become bound
to pledge or assign.
Section 404. Recordation and Filing. To the extent necessary, the City covenants that
it will cause this Indenture, such security agreements, financing statements, and all supplements
thereto and other instruments as may be required from time to time to be kept, to be recorded and
filed in such manner and in such places as may be required by law in order to fully preserve and
•
10-47392.4 21
• protect the security of the owners of the Bonds and the rights of Trustee hereunder, and to perfect
the security interest created by this Indenture.
Section 405. Inspection of Books. The City shall keep proper books of record and
account (separate from all other records and accounts) in which complete and correct entries shall
be made of its transactions relating to the Projects and the Funds and Accounts established by
this Indenture.
Section 406. Tax Covenants. The City covenants that it will not use or permit the use
of any Bond proceeds or any other funds of the City, directly or indirectly, in any manner, and
will not take or permit to be taken any other action or actions which would adversely effect the
exclusion of interest on any Bond from gross income for federal income tax purposes. Without
limiting the generality of the foregoing, the City further covenants that no part of the proceeds of
the Bonds shall at any time be used, directly or indirectly, to acquire securities or obligations the
acquisition of which would cause any of the Bonds to be an. "arbitrage bond" as defined in
Sections 148(a) and (b) of the Code. The City agrees that so long as any of the Bonds remain
Outstanding, it will comply with the provisions of each applicable Tax Regulatory Agreement.
Section 407. Trustee's and Paying Agent's Fees and Expenses. Subject to the
provisions of Section 902 hereof, the City hereby agrees and covenants to make payments for the
fees, expenses and charges of the Trustee and Paying Agent, if any, as authorized and provided
by this Indenture. The City is to make payments on statements rendered by the Trustee and
• Paying Agent either (i) directly to the Trustee and Paying Agent or (ii) pursuant to Section 503(b)
hereof.
Section 408. Construction of Projects; Certification of Completion Date. The City
hereby covenants to use its best efforts to acquire, construct and equip each Project being
financed with proceeds of the Bonds with all reasonable dispatch and to use its best efforts to
cause the acquisition, construction and equipping of such Project to be completed as soon as may
be practicable, but in any case within a period not to exceed three years after the issuance of the
applicable series of Bonds, delays caused by force majeure only excepted, but if for any reason
such acquisition, construction and equipping is not completed within said period, there shall be
no diminution or postponement of payments required hereunder to be made by the City.
Promptly after each such Completion Date, the City shall submit to the Trustee the certificate of
a Qualified Engineer which shall specify the Completion Date and shall state that acquisition,
construction and equipping of the Project being financed with a particular series of Bond
proceeds has been completed and the Project Costs have been paid, except for any Project Costs
which have been incurred but are not then due and payable, or the liability for the payment of
which is being contested or disputed by the City, and for the payment of which the Trustee is
directed to retain specified amounts of moneys in the Project Fund. Notwithstanding the
foregoing, such certificate may state that it is given without prejudice to any rights against third
parties which exist at the date thereof or which may subsequently come into being.
L�
10-47392.4 22
• Section 409. Encumbrances. The City covenants that it will not create or suffer to be
created any lien or charge upon the Trust Estate, except in accordance with the provisions of this
Indenture.
Section 410. Continuing Disclosure. The City hereby covenants and agrees that it will
comply with and carry out all of the provisions of each Continuing Disclosure Agreement.
Notwithstanding any other provision of this Indenture to the contrary, failure of the City or the
Trustee to comply with, the provisions of a Continuing Disclosure Agreement shall not be
considered an Event of Default hereunder; however, the Trustee may (and at the request of the
Original Purchaser of a series of Bonds or the owners of at least 25% in aggregate Outstanding
principal amount of such series of Bonds, shall) or any Beneficial Owner may take such actions
as may be necessary and appropriate, including seeking mandate or specific performance by court
order, to cause the City or the Trustee, as the case may be, to comply with its obligations under
this Section 410.
Section 411. Authority of Commission. The City hereby recognizes that the
Commission is the agency and instrumentality of the City designated by the Act and ordinances
of the City to expend the Tax Receipts. Such authority and responsibility of the Commission is
hereby confirmed and continued.
ARTICLE V
REVENUES AND FUNDS
• Section 501. Creation of Funds and Accounts. (a) There is hereby confirmed and
continued the Revenue Fund established in the trust indenture securing the Series 1995 Bonds.
The Revenue Fund shall be maintained by the City as.a segregated fund. There are hereby
created and established with the Trustee the following Funds and Accounts:
(i) Project Fund;
(ii) 'Bond Fund, and an Interest Account and a Principal Account therein;
(iii) Debt Service Reserve Fund;
(iv) Cost of Issuance Fund;
(v) Redemption Fund; and
(vi) Rebate Fund.
(b) Except for the Revenue Fund, all Funds and Accounts shall be held by the
Trustee, which shall hold and maintain said Funds and Accounts in trust, for the use and benefit
of the Bondholders and the City, but subject to the permitted applications expressed herein.
•
10-47392.4 23
• Section 502. Project Fund. (a) The Trustee shall maintain the Project Fund to the
credit of which there shall be deposited the proceeds of Additional Bonds as directed in a
Supplemental Indenture.
(b) Moneys credited to the Project Fund shall be expended only as set forth in this
Section 502.
(c) Amounts in the Project Fund shall be expended and applied for the payment of
Project Costs. Disbursements shall be made from the Project Fund on the basis of consecutively
numbered Requisitions in the form attached hereto as Exhibit C signed by an Authorized
Representative. Requisitions may be submitted to the Trustee by certified mail, first class mail or
facsimile transmission. If the Trustee deems that a Requisition submitted by the City is sufficient
pursuant to this Section 502, the amount requested thereunder shall be disbursed in payment of
the Project Costs set forth therein, or in reimbursement of such Project Costs, within two (2)
business days of the date of receipt of such Requisition by the Trustee. Each Requisition shall
specify:
(i) the name of the person or party to whom payment is to be made and the
purpose of the payment;
(ii) the amount to be paid thereunder;
• (iii) that such amount has not been previously paid by the City and is justly due
and owing to the person(s) named therein as a proper payment or reimbursement of a
Project Cost; and
(iv) that no Event of Default exists under the Indenture and that, to the
knowledge of the Authorized Representative, no event has occurred and continues which
with notice or lapse of time or both would constitute an Event of Default under the
Indenture.
(d) The Trustee shall keep full and complete records concerning and reflecting all
disbursements from the Project Fund and shall file an accounting of said disbursements if and
when requested by the City. The Trustee shall only make payments from the Project Fund
pursuant to and in accordance with Requisitions. In making payments from the Project Fund, the
Trustee may rely on any Requisitions delivered to it pursuant to this Section 502, and the Trustee
shall be relieved of all liability relating to payments made in accordance with such Requisitions
and any supporting certificate or certificates requested by the Trustee without physical inspection
of the Project. Within ninety (90) days following completion of the Project or portion thereof
being financed with a particular series of Bonds, the City shall deliver to the Trustee its
Certificate stating that the Project or applicable portion thereof is complete and the Trustee shall
transfer the remaining moneys in the Project Fund relating to such series of Bonds (save and
except moneys needed to satisfy unpaid Project Costs) to the Redemption Fund for application to
the retirement of Bonds by redemption or purchase, as provided by Section 301(b) and
• Section 506 hereof.
10-47392.4 24
(e) Upon the occurrence and continuance of an Event of Default or the occurrence
and continuance of an event which with notice or lapse of time or both would constitute an Event
of Default, amounts on deposit in the Project Fund shall not be disbursed but shall instead be
applied to the payment of Debt Service or the redemption price of the Bonds.
Section 503. Revenue Fund. (a) There shall be deposited to the credit of the Revenue
Fund, as and when received. all Tax Receipts. For the purposes of financial reporting by the City
with respect to the Tax, "receipts" and "revenues" shall have the same meaning.
(b) On or before the fifteenth day of each month, commencing July 15, 2003, and
immediately following any required transfer of Tax Receipts to the bond fund and reserve fund
established with respect to the Series 1995 Bonds, the City shall transfer to the Trustee from the
Revenue Fund, in the following order, the amounts set forth below:
FIRST: For deposit to the Interest Account of the Bond Fund, an amount
equal to one -sixth (1/6) of the interest on the Outstanding Bonds due on the next Interest
Payment Date (except that with respect to deposits required with respect to a series of
Bonds prior to the first Interest Payment Date for such series of Bonds, the required
monthly transfers shall be equal to a fraction, the numerator of which shall be 1 and the
denominator of which shall be the number of transfers to be made prior to such Interest
Payment Date);
• SECOND: For deposit to the Principal Account of the Bond Fund, an amount
equal to one -twelfth (1/12) of the next scheduled principal maturity of Outstanding Bonds
(including mandatory sinking fund redemptions) (except that with respect to deposits
required with respect to a series of Bonds prior to the first Principal Payment Date for
such series of Bonds, the required monthly transfers shall be equal to a fraction, the
numerator of which shall be 1 and the denominator of which shall be the number of
transfers to be made prior to such Principal Payment Date);
THIRD: For deposit to the Debt Service Reserve Fund, an amount sufficient
to cure any deficiency in the Debt Service Reserve Fund;
FOURTH:
For
deposit
to the Rebate Fund, an amount sufficient to satisfy the
City's obligations
under
Section
507 hereof; and
FIFTH: For payment to the Trustee and Paying Agent, the amount, if any,
necessary to pay or reimburse the Trustee and Paying Agent for fees and expenses related
to the Bonds.
(c) Required deposits into the Interest Account and Principal Account of the Bond
Fund and the Debt Service Reserve Fund shall be reduced by investment earnings, if any, in said
Funds and Accounts and, with respect to required deposits to the Interest Account of the Bond
Fund only, by any accrued interest deposited to the Interest Account of the Bond Fund upon the
• initial sale of a series of Bonds. In the event there shall be insufficient moneys in the Revenue
10-47392.4 25
• Fund in a particular month to make the required transfers described above, then any deficiencies
shall be added to the required deposits during the next month.
(d)
Any
moneys
remaining
in the Revenue Fund following the required transfers set
forth above
may be
used for
any lawful
purpose as determined by the Commission.
Section 504. Bond Fund. (a) There shall be deposited to the credit of the appropriate
Account of the Bond Fund all moneys required to be transferred thereto pursuant to Sections 208,
503, 505, 506 and 508 of this Indenture and all other moneys received for said Fund.
(b) Moneys credited to the Bond Fund shall be expended only as set forth in this
Section 504.
(c) (i) On each Interest Payment Date for any of the Bonds Outstanding, the
Trustee shall pay out of moneys credited to the Interest Account of the Bond Fund the
amounts required for the payment of interest on the Bonds due on such date, and on each
redemption date, the amounts required for the payment of accrued interest on Bonds then
to be redeemed or purchased unless the payment of such accrued interest shall be
otherwise provided for, and such amounts shall be applied to such payments.
(ii) On each principal payment or redemption date for any of the Bonds
Outstanding, the Trustee shall pay out of moneys credited to the Principal Account of the
• Bond Fund the amounts required for the payment of principal and premium, if any, due
on the Bonds on such date and such amounts shall be applied to such payments.
(iii) If there shall be insufficient moneys in the Bond Fund to pay in full
interest, principal or premium, if any, due on the Bonds on any interest or principal
payment or redemption date, the Trustee shall, three days prior to such date, notify the
City of such deficiency, and if by one day prior to such date such deficiency has not been
cured, transfer an amount equal to the deficiency into the appropriate Account of the
Bond Fund from the Funds indicated in the following order:
FIRST: the Redemption Fund; and
SECOND: the Debt Service Reserve Fund (for payment of principal and
interest on any Interest or Principal Payment Date only).
(d) All payments made pursuant to this Section 504 shall be made in immediately
available funds.
Section 505. Cost of Issuance Fund. There shall be deposited to the credit of the Cost
of Issuance Fund all moneys received for said Fund pursuant to Section 208 hereof. The Trustee
shall pay those Costs of Issuance as directed by the City pursuant to a Certificate delivered on a
Closing Date. After all Costs of Issuance have been paid (and in any event not later than
• September 1, 2003 with respect to the Series 2003 Bonds), any remaining moneys in the Cost of
10-47392.4 26
• Issuance Fund shall be transferred to the Interest Account of the Bond Fund. The Cost of
Issuance Fund is not pledged to the payment of the Bonds.
Section 506. Redemption Fund. (a) There shall be deposited to the credit of the
Redemption Fund all moneys required to be transferred thereto to effect an optional redemption
of the Bonds pursuant to Section 301(a) hereof and all moneys transferred thereto pursuant to
Section 502 of this Indenture.
(b) Moneys credited to the Redemption Fund shall be expended only as set forth in
this Section 506.
(c) Moneys in the Redemption Fund shall be transferred to the Principal Account of
the Bond Fund at such times as may be necessary to effectuate, on the first available date,
redemptions of Bonds required by Section 301(a) and (b) of this Indenture.
(d) The amounts accumulated in the Redemption Fund, if so directed by the City by
means of a Certificate delivered to the Trustee, shall be applied by the Trustee to the purchase of
Bonds of the maturities which would otherwise be redeemed pursuant to Section 301(a) and (b)
and this Section 506 but for the provisions of this subsection (d), at prices directed by the City
not exceeding the applicable redemption prices of the Bonds which would be redeemed but for
the operation of this sentence. Interest accrued on the Bonds so purchased shall be paid from
_moneys credited to the Interest Account of the Bond Fund.
Section 507. Rebate Fund. (a) The Trustee shall establish and maintain, separate and
apart from any other Funds and Accounts established and maintained hereunder, a Fund to be
designated as the Rebate Fund, which Fund is not pledged to the payment of any Bonds. Subject
to the transfer provisions provided in subsection (c) below, all moneys at any time deposited in
the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate
Amount (as defined in each Tax Regulatory Agreement), for payment to the United States of
America, and neither the City nor the Owner of any Bond shall have any rights in or claim to
such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by
this Section 507, by Section 406, and by each Tax Regulatory Agreement (which are
incorporated herein by reference).
(b)
As provided in Section 503(b) hereof, there shall be
deposited in the Rebate Fund
the amount
of all income or gain on moneys, deposited in any
of the
Funds and Accounts
established
by this Indenture which is required to be rebated
to the
United States and is
designated
for deposit therein, as calculated by the City to be owing
to the
United States pursuant
to the Tax
Regulatory Agreement, which shall be delivered by the
City
concurrently with the
issuance of
a series of Bonds.
(c) The Trustee, upon receipt of written instructions from the Mayor or Finance &
Internal Services Director of the City, shall pay to the United States out of amounts in the Rebate
Fund such amounts as are required pursuant to each Tax Regulatory Agreement.
0
10-47392.4 27
(d) Any moneys remaining in the Rebate Fund after payment to the United States,
within sixty (60) days after the date on which the last Bond is redeemed, of one hundred percent
(100%) of the rebate amount as described in Section 148(f)(2) of the Code, shall be transferred to
the Revenue Fund.
(e) The Trustee, as instructed by Certificate of the City, shall invest all amounts held
in the Rebate Fund in Investment Obligations, subject to the restrictions set forth in the
applicable Tax Regulatory Agreement. Money shall not be transferred from the Rebate Fund
except as provided in subsection (c).
(f) Notwithstanding any other provision of this Indenture, the obligation to remit the
Rebate Amount to the United States and to comply with all other requirements of this
Section 507, Section 406 and each Tax Regulatory Agreement shall survive the defeasance or
payment in full of the Bonds.
Section 508. Debt Service Reserve Fund. [REVISE IF SURETY USED] As provided
in Section 208(b)(2) hereof, upon the issuance of each series of Bonds, there shall be deposited
into the Debt Service Reserve Fund, from proceeds of the Bonds, an amount sufficient to cause
the amounts on deposit therein to be equal to the Reserve Requirement. The Debt Service
Reserve Fund shall be maintained in an amount equal to the Reserve Requirement. The Debt
Service Reserve Fund shall be used solely to pay the principal of and interest on Outstanding
Bonds for which there are insufficient funds available in the Bond Fund to make such payments,
as the same become due at maturity (including mandatory sinking fund redemption). If the Debt
Service Reserve Fund, by virtue of any such payment, is reduced below the Reserve
Requirement, it shall be reimbursed in the amount of any such deficiency as provided in
Section 503. Notwithstanding the above provisions of this Section 508, the amount on deposit in
the Debt Service Reserve Fund may be used, together with other available funds, to provide for
the payment at maturity or to redeem prior to maturity all, but not less than all, of the
Outstanding Bonds. If an excess shall exist in the Debt Service Reserve Fund over and above the
Reserve Requirement, such excess shall be transferred to the Interest Account of the Bond Fund.
Section 509. Cessation of Fund Deposits. When the moneys in the Bond Fund, the
Debt Service Reserve Fund and the Redemption Fund shall be and remain sufficient to pay in full
the principal and interest on all Bonds then Outstanding in accordance with Article VII of this
Indenture, together with the required fees and expenses to be paid or reimbursed to the Trustee
and Paying Agent, the City shall have no further obligation to make payments into said Funds.
Section 510. Separate Accounts Authorized. A Supplemental Indenture authorizing
the issuance of Additional Bonds may provide for the creation of separate Accounts within the
Bond Fund, Debt Service Reserve Fund, Redemption Fund, Project Fund, Costs of Issuance Fund
and Rebate Fund for such series of Bonds and such other Accounts as the City may direct;
provided, that the creation of such separate Accounts shall be solely for the ease of
administration and shall in no event affect the equal and ratable security of the Bonds of each
series.
10-47392.4 28
• If any Supplemental Indenture authorizing the issuance of Additional Bonds provides for
the establishment of separate Accounts for a series of Bonds, then such Supplemental Indenture
shall require that the Tax Receipts received by the City shall be deposited pursuant to written
direction of the City into each of the Accounts within the Bond Fund and Debt Service Reserve
Fund for each series of Bonds on the basis of the installments of principal, premium, if any, and
interest due on each series of Bonds and the amounts required to be deposited in the Accounts
within the Bond Fund and the Debt Service Reserve Fund during the applicable period, to the end
that the Bonds of each series shall be equally and ratably secured by the Tax Receipts.
Any Supplemental Indenture authorizing the issuance of Additional Bonds shall provide
that any proceeds of such series of Bonds and investment earnings thereon remaining after some
specified date, or after the construction of all facilities to be financed with the proceeds of such
series of Bonds, shall be applied to the redemption of such series of Bonds.
ARTICLE VI
INVESTMENTS
Section 601. Investment of Moneys. At the direction of the City or absent such
direction, the Trustee shall invest moneys in Funds or Accounts held by the Trustee in
Investment Obligations with maturity or redemption dates consistent with the times at which said
moneys will be required for the purposes provided in this Indenture; provided, however, the
• stated maturity dates of Investment Obligations of Debt Service Reserve Fund moneys shall not
exceed five years from the date of investment therein. Moneys in separate Funds or Accounts
may be commingled for the purpose of investment.
Section 602. Investment Earnings. Subject to the provisions of the Tax Regulatory
Agreement and Article V hereof, Investment Obligations purchased with moneys held in or
attributable to any Fund or Account held by the Trustee under the provisions of this Indenture
shall be deemed at all times to be a part of such Fund or Account. and the income or interest
earned, profits realized or losses suffered by a Fund or Account due to the investment thereof
shall be retained in, credited or charged, as the case may be, to such Fund or Account unless
otherwise provided pursuant to this Indenture.
Section 603. Valuation of Funds. Investments in any Fund or Account shall be
evaluated monthly by the Trustee. The Trustee shall report the determined value of each Fund
and Account to the City. For the purpose of determining the amount in any Fund or Account, the
Trustee shall value all Investment Obligations credited to such Fund or Account at the price at
which such Investment Obligations are redeemable by the owner thereof at its option if so
redeemable, or, if not so redeemable, at the lesser of (i) the cost of such Investment Obligations
minus the amortization of any premium or plus the amortization of any discount thereon and
(ii) the market value of such Investment Obligations, provided that Investment Obligations
credited to the Debt Service Reserve Fund, if not so redeemable, shall be valued at the cost
thereof minus the amortization of any premium or plus the amortization of any discount thereon.
10-47392.4 29
• The Trustee shall sell or present for redemption any Investment Obligations as necessary
in order to provide money for the purpose of making any payment required hereunder, and the
Trustee shall not be liable for any loss resulting from any such sale.
Section 604. Responsibility of Trustee. The Trustee shall not be responsible or liable
for any loss suffered in connection with any investment of moneys made by it at the direction of
the City.
ARTICLE VII
DISCHARGE OF LIEN
Section 701. Discharge of Lien. If the City shall pay or cause to be paid to the owners
of the Bonds the principal, premium, if any, and interest to become due thereon at the times and
in the manner stipulated therein, and if the City shall keep, perform and observe all and singular
the covenants and promises in the Bonds and in this Indenture expressed as to be kept, performed
and observed by it on its part, then these presents and the estate and rights hereby granted shall
cease, determine and be void, and thereupon the Trustee shall cancel and discharge the lien of
this Indenture, and execute and deliver to the City such instruments in writing as shall be
requisite to satisfy the lien hereof, and reconvey to the City the estate hereby conveyed, and
assign and deliver to the City any property at the time subject to the lien of this Indenture which
may then be in its possession, except moneys or Government Securities held by it for the
• payment of the principal of and premium, if any, and interest on the Bonds.
Section 702. Bonds Deemed Paid. Any Bond shall be deemed to be paid within the
meaning of this Article VII when payment of the principal of and premium, if any, and interest
on such Bond (whether at maturity or upon redemption as provided in this Indenture, or
otherwise), either (i) shall have been made or caused to be made in accordance with the terms
thereof, or (ii) shall have been provided for by irrevocably depositing with the Trustee, in trust
and irrevocably set aside exclusively for such payment, (1) moneys sufficient to make such
payment or (2) Government Securities (provided that such deposit will not affect the tax-exempt
status of the interest on any of the Bonds or cause any of the Bonds to be classified as "arbitrage
bonds" within the meaning of Section 148(a) of the Code, as reflected in an opinion of Bond
Counsel delivered to the Trustee), maturing as to principal and interest in such amount and at
such times as will provide sufficient moneys to make such payment, and all necessary and proper
fees, compensation and expenses of the Trustee and any Paying Agent pertaining to the Bonds
with respect to which such deposit is made shall have been paid or the payment thereof provided
for to the satisfaction of the Trustee and any said Paying Agent.
Section 703. Non -Presentment of Bonds. In the event any Bonds shall not be presented
for payment when the principal thereof becomes due, either at maturity or otherwise, or at the
date fixed for redemption thereof, if there shall have been deposited with the Trustee for that
purpose, or left in trust if previously so deposited, funds sufficient to pay the principal thereof,
and premium, if any, together with all interest unpaid and due thereon, to the due date thereof, for
• the benefit of the Holder thereof, all liability of the City to the Holder thereof for the payment of
the principal thereof, premium if any, and interest thereon, shall forthwith cease, determine and
10-47392.4 30
• be completely discharged, and thereupon it shall be the duty of the Trustee to hold such fund or
funds, without liability for interest thereon, for the benefit of the Holder of such Bonds, who shall
thereafter be restricted exclusively to such fund or funds, for any claim of whatever nature on his
part under this Indenture or on, or with respect to, the Bonds.
ARTICLE VIII
DEFAULT PROVISIONS AND REMEDIES
OF TRUSTEE AND BONDHOLDERS
Section 801. Events
of
Default. Each of the
following events shall constitute and is
referred to in this Indenture as
an
"Event of Default":
(a) Default in the due and punctual payment of any interest on any Bond;
(b) Default in the due and punctual payment of the principal of or premium, if
any, on any Bond, whether at the stated maturity thereof, or upon proceedings for
redemption thereof, or upon the maturity thereof by declaration;
(c) Default in the payment of any other amount required to be paid under this
Indenture or the performance or observance of any other of the covenants, agreements or
conditions contained in this Indenture, or in the Bonds issued hereunder, and continuance
thereof for a period of sixty (60) days after written notice specifying such failure and
• requesting that it be remedied shall have been given to the City by the Trustee, which may
give such notice in its discretion and shall give such notice at the written request of
Bondholders of not less than 51% in aggregate principal amount of the Bonds then
Outstanding, unless the Trustee, or the Trustee and Holders of an aggregate principal
amount of Bonds not less than the aggregate principal amount of Bonds the Holders of
which requested such notice, as the case may be, shall agree in writing to an extension of
such period prior to its expiration; provided, however, if the failure stated in the notice
cannot be corrected within the applicable period, the Trustee will not unreasonably
withhold its consent to an extension of such time if corrective action is instituted by the
City within such period and is being diligently pursued;
(d) The filing of a petition in bankruptcy by or against the City under the
United States Bankruptcy Code or the commencement of a proceeding by or against the
City under any other law concerning insolvency, reorganization or bankruptcy; and
(e) If the State has limited or altered the rights of the City pursuant to the Act,
as in force on the date of this Indenture, to fulfill the terms of any agreements made with
the Trustee or the Bondholders or in any way impaired the rights and remedies of the
Trustee or the Bondholders while any Bonds are Outstanding.
The term "default" as used in clauses (a), (b) and (c) above shall mean default by the City
in the performance or observance of any of the covenants, agreements or conditions on its part
• contained in this Indenture or in the Bonds Outstanding hereunder, exclusive of any period of
grace required to constitute a default an "Event of Default" as hereinabove provided.
10-47392.4 31
Section 802. Acceleration. Upon the occurrence of an Event of Default, the Trustee
may, and upon the written request of the Holders of not less than 51% in aggregate principal
amount of Bonds Outstanding hereunder shall, by notice in writing delivered to the City, declare
the principal of all Bonds then Outstanding, together with the interest accrued thereon,
immediately due and payable, and such principal and interest shall thereupon become and be
immediately due and payable.
Section 803. Other Remedies; Rights of Bondholders. Upon the occurrence of an
Event of Default, the Trustee may, as an alternative, pursue any available remedy by suit at law
or in equity, including, without limitation, mandamus to enforce the payment of the principal of
and premium, if any, and interest on the Bonds then Outstanding hereunder.
If an Event of Default shall have occurred, and if it shall have been requested so to do by
the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding hereunder
and if it shall have been indemnified as provided in Section 901(1) hereof, the Trustee shall be
obligated to exercise such one or more of the rights and powers conferred upon it by this Section
803 as the Trustee, being advised by counsel, shall deem most expedient in the interests of the
Bondholders.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to
the Bondholders) is intended to be exclusive of any other remedy, but each and every such
remedy shall be cumulative and shall be in addition to any other remedy given hereunder or now
• or hereafter existing at law or in equity or by statute.
No delay or omission to exercise any right or power accruing upon any default or Event
of Default shall impair any such right or power or shall be construed to be a waiver of any such
default or Event of Default or acquiescence therein; and every such right and power may be
exercised from time to time and as often as may be deemed expedient.
No waiver of any default or Event of Default hereunder, whether by the Trustee or by the
Bondholders, shall extend to or shall affect any subsequent default or Event of Default or shall
impair any rights or remedies consequent thereon.
Section 804. Right of Bondholders to Direct Proceedings. Anything in this Indenture
to the contrary notwithstanding, the Holders of not less than 51% in aggregate principal amount
of Bonds Outstanding hereunder shall have the right, at any time, by an instrument or instruments
in writing executed and delivered to the Trustee, to direct the method and place of conducting all
proceedings to be taken in connection with the enforcement of the terms and conditions of this
Indenture, or for the appointment of a receiver or any other proceeding hereunder; provided that
such direction shall not be otherwise than in accordance with the provisions of law and of this
Indenture.
Section 805. Appointment of Receiver. Upon the occurrence of an Event of Default,
and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights
• of the Trustee and of the Bondholders under this Indenture, the Trustee shall be entitled to the
10-47392.4 32
• appointment of a receiver or receivers of the Trust Estate and of the tolls, rents, revenues, issues,
earnings, income, products and profits thereof, including, without limitation, the Tax Receipts
(subject to the prior right of the trustee for the Series 1995 Bonds), pending such proceedings
with such powers as the court making such appointment shall confer.
Section 806. Waiver. In case of an Event of Default on its part, as aforesaid, to the
extent that such rights may then lawfully be waived, neither the City nor anyone claiming
through the City or under the City shall or will set up, claim or seek to take advantage of any
appraisement, valuation, stay, extension or redemption laws now or thereafter in force, in order
to prevent or hinder the enforcement of this Indenture, but the City, for itself and all who may
claim through or under it, hereby waives, to the extent that it lawfully may do so, the benefit of
all such laws and all right of appraisement and redemption to which it may be entitled under the
laws of the State.
Section 807. Application of Moneys. Available moneys remaining after discharge of
costs, charges and liens prior to this Indenture shall be applied by the Trustee as follows:
(a) Unless the principal of all the Bonds shall have become or shall have been
declared due and payable, all such moneys shall be applied:
First: To the payment to the Persons entitled thereto of all
installments of interest then due, in the order of the maturity of the installments of
• such interest, and, if the amount available shall not be sufficient to pay in full any
particular installment, then to the payment ratably, according to the amounts due
on such installment, to the Persons entitled thereto, without any discrimination or
privilege;
Second: To the payment to 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 moneys are held pursuant to the
• provisions of this Indenture), in the order of their due dates, with interest on such
Bonds from the respective dates upon which they become due, and, if the amount
available shall not be sufficient to pay in full Bonds due on any particular date,
together with such interest, then to the payment ratably, according to the amount
of principal due on such date, to the Persons entitled thereto without any
discrimination or privilege of any Bond over any other Bond and without
preference or priority of principal over interest or of interest over principal; and
Third: To the payment of the interest on and the principal of the
Bonds, and to the redemption of Bonds, all in accordance with the provisions of
Article V of this Indenture.
(b) If the principal of all the Bonds shall have become due or shall have been
declared due and payable, all such moneys shall be applied first to the payment of the
• interest then due and unpaid upon the Bonds, and then to the payment of the principal
10-47392.4
33
•• then due and unpaid upon the Bonds, in each case without preference or priority of any
Bond over any other Bond, ratably, according to the amounts due respectively for
principal and interest, to the Persons entitled thereto.
(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
provisions of this Article VIII then, subject to the provisions of paragraph (b) of this
Section 807, in the event that the principal of all the Bonds shall later become due or be
declared due and payable, the moneys shall be applied in accordance with the provisions
of paragraph (a) of this Section 807.
Whenever moneys are to be applied by the Trustee pursuant to the provisions of this
Section 807, such moneys shall be applied by it at such times, and from time to time, as it shall
determine, having due regard to the amount of such moneys available for application and the
likelihood of additional moneys becoming available for such application in the future. Whenever
the Trustee shall apply such funds, it shall fix the date (which shall be an Interest Payment Date
unless it shall deem another date more suitable) upon which such application is to be made and
upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue.
The Trustee shall give such notice as it may deem appropriate of the deposit with it of any such
moneys and of the fixing of any such date and shall not be required to make payment to the
Holder of any Bond until such Bond shall be presented to the Trustee for appropriate
endorsement or for cancellation if fully paid.
• Section 808. Remedies Vested in Trustee. All rights of action (including the right to
file proof of claim) under this Indenture or under any of the Bonds may be enforced by the
Trustee without the possession of any of the Bonds or the production thereof in any trial or other
proceeding relating thereto, and any such suit or proceeding instituted by the Trustee shall be
brought in its name as Trustee, without the necessity of joining as plaintiffs or defendants any
Bondholders hereby secured, and any recovery of judgment shall be for the equal benefit of the
Holders of all Outstanding Bonds.
Section 809. Rights and Remedies of Bondholders. No Bondholder shall have any
right to institute any suit, action or proceeding in equity or at law for the enforcement of this
Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other
remedy hereunder, unless a default has occurred of which the Trustee has been notified as
provided in subsection (g) of Section 901, or of which by said subsection it is deemed to have
notice, nor unless such default shall have become an Event of Default and the Holders of not less
than 51% in aggregate principal amount of Bonds Outstanding hereunder shall have made written
request to the Trustee and shall have offered it reasonable opportunity either to proceed to
exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own
name, nor unless also they have offered to the Trustee indemnity as provided in subsection (I) of
Section 901, nor unless the Trustee shall thereafter fail or refuse to exercise the powers
hereinbefore granted, or to institute such action, suit or proceeding in its own name; and such
• notification, request and offer of indemnity are hereby declared in every such case, at the option
of the Trustee, to be conditions precedent to the execution of the powers and trusts of this
10-47392.4 34
• Indenture, and to any action or cause of action for the enforcement of this Indenture or for the
appointment of a receiver or for any other remedy hereunder; it being understood and intended
that no one or more Holders of the Bonds shall have any right in any manner whatsoever to
affect, disturb or prejudice the lien of this Indenture by action of the Holder or Holders or to
enforce any right hereunder except in the manner herein provided, and that all proceedings at law
or in equity shall be instituted, held and maintained in the manner herein provided for the equal
benefit of the Holders of all Bonds Outstanding hereunder. Nothing in this Indenture contained
shall, however, affect or impair the right of any Bondholders to enforce the payment of the
principal of and premium, if any, and interest on any Bonds at and after the maturity thereof, or
the obligation of the City to pay the principal of and premium, if any, and interest on each of the
Bonds issued hereunder to the respective Holders thereof at the time and place in said Bonds
expressed.
Section 810. Termination of Proceedings. In case the Trustee shall have proceeded to
enforce any right under this Indenture by the appointment of a receiver or otherwise, and such
proceedings shall have been discontinued or abandoned for any reason, or shall have been
determined adversely to the Trustee, then and in every such case the City and the Trustee shall be
restored to their former positions and rights hereunder with respect to the property herein
conveyed, and all rights, remedies and powers of the Trustee shall continue as if no such
proceedings had been taken, except to the extent the Trustee is legally bound by such adverse
determination.
• Section 811. Waivers of Events of Default. The Trustee may, and upon the written.
request of the Holders of not less than 51% in principal amount of all Bonds Outstanding
hereunder shall, waive any Event of Default hereunder and its consequences and rescind any
declaration of maturity of principal; provided, however, there shall not be waived any Event of
Default described in clause (a) or (b) of the first paragraph of Section 801 hereof, unless prior to
such waiver or rescission all arrears of principal (due otherwise than by declaration) and interest,
and all expenses of the Trustee and Paying Agent, shall have been paid or provided for. In case of
any such waiver or rescission the City, Trustee and the Bondholders shall be restored to their
former positions and rights hereunder respectively, but no such waiver or rescission shall extend
to any subsequent or other default, or impair any right subsequent thereon.
ARTICLE IX
TRUSTEE AND PAYING AGENT
Section 901. Acceptance of Trusts. The Trustee hereby accepts the trusts imposed
upon it by this Indenture and agrees to perform said trusts, but only upon and subject to the
following expressed terms and conditions:
(a) The Trustee may execute any of the trusts or powers hereof and perform
any duties required of it by or through attorneys, agents, receivers or employees, and shall
be entitled to advice of counsel concerning all matters of trusts hereof and its duties
hereunder, and may in all cases pay reasonable compensation to all such attorneys, agents,
receivers and employees as may reasonably be employed in connection with the trusts
10-47392.4
35
• hereof. Reimbursement of such compensation paid by the Trustee is subject to the
provisions of Section 902 hereof. The Trustee may act upon the opinion or advice of any
attorney, surveyor, engineer or accountant selected by it in the exercise of reasonable
care, or, if selected or retained by the City prior to the occurrence of a default of which
the Trustee has been notified as provided in subsection (g) of this Section 901, or of
which by said subsection the Trustee is deemed to have notice, approved by the Trustee in
the exercise of such care. The Trustee shall not be responsible for any loss or damage
resulting from an action or nonaction in accordance with any such opinion or advice.
(b) The Trustee shall not be responsible for any recital herein, or in the Bonds
(except in respect to the certificate of authentication of the Trustee endorsed on such
Bonds), or for the validity of the execution by the City of this Indenture or of any
Supplemental Indentures or instruments of further assurance, or for the sufficiency of the
security for the Bonds issued hereunder or intended to be secured hereby, or for the value
of the title of the property herein conveyed or otherwise as to the maintenance of the
security hereof; except that in the event the Trustee enters into possession of a part or all
of the property herein conveyed pursuant to any provision of this Indenture, it shall use
due diligence in preserving such property; and the Trustee shall not be bound to ascertain
or inquire as to the performance or observance of any covenants, conditions and
agreements aforesaid as to the condition of the property herein conveyed.
• (c) The Trustee may become the owner of Bonds secured hereby with the
same rights which it would have if not Trustee.
(d) The Trustee shall be protected in acting upon any notice, request, consent,
certificate, order, affidavit, letter, telegram or other paper or document believed by it, in
the exercise of reasonable care, to be genuine and correct and to have been signed or sent
by the proper person or persons. Any action taken by the Trustee pursuant to this
Indenture upon the request or authority or consent of the owner of any Bond secured
hereby, shall be conclusive and binding upon all future owners of the same Bond and
upon Bonds issued in exchange therefor or in place thereof.
(e) As to the existence or nonexistence of any fact or as to the sufficiency or
validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon
a Certificate of the City signed by its Authorized Representative and attested by the City
Clerk as sufficient evidence of the facts therein contained and, prior to the occurrence of a
default of which it has been notified as provided in subsection (g) of this Section 901, or
of which by that subsection it is deemed to have notice, shall also be at liberty to accept a
similar certificate to the effect that any particular dealing, transaction, or action is
necessary or expedient, but may at its discretion, at the reasonable expense of the City, in
every case secure such further evidence as it may think necessary or advisable but shall in
no case be bound to secure the same. The Trustee may accept a certificate of the City
Clerk of the City under its seal to the effect that a resolution or ordinance in the form
• therein set forth has been adopted by the City as conclusive evidence that such resolution
or ordinance has been duly adopted, and is in full force and effect.
10-47392.4 36
• (f) The permissive right of the Trustee to do things enumerated in this
Indenture shall not be construed as a duty of the Trustee, and the Trustee shall be
answerable only for its own gross negligence or willful misconduct.
(g) The Trustee shall not be required to take notice or be deemed to have
notice of any default hereunder (except for defaults under clause (a) or (b) of the first
paragraph of Section 801 hereof as to which the Trustee shall be deemed to have notice)
unless the Trustee shall be specifically notified in writing of such default by the City or by
the Holders of at least 10% in aggregate principal amount of Bonds Outstanding
hereunder, and all notices or other instruments required by this Indenture to be delivered
to the Trustee must, in order to be effective, be delivered to the principal corporate trust
office of the Trustee, and in the absence of such notice so delivered, the Trustee may
conclusively assume there is no such default except as aforesaid.
(h) [Reserved].
(i) At any and all reasonable times the Trustee, and its duly authorized agents,
attorneys, experts, engineers, accountants and representatives, shall have the right fully to
inspect any and all of the property herein conveyed, including all books, papers and
records of the City pertaining to the Tax Receipts and the Bonds, and to take such
memoranda from and in regard thereto as may be desired.
• (j) The Trustee shall not be required to give any bond or surety in respect of
the execution of the said trusts and powers or otherwise in respect of the premises.
(k) Notwithstanding anything elsewhere in this Indenture contained, the
Trustee shall have the right, but shall not be required, to demand, in respect of the
authentication of any Bonds, the withdrawal of any cash, the release of any property, or
any action whatsoever within the purview of this Indenture, any showings, certificates,
opinions, appraisals or other information, or corporate action or evidence thereof, in
addition to that by the terms hereof required as a condition of such action by the Trustee,
deemed desirable for the purpose of establishing the right of the City to the authentication
of any Bonds, the withdrawal of any cash, the release of any property, or the taking of any
other action by the Trustee.
(I) Before taking such action hereunder, the Trustee may require that it be
furnished an indemnity bond satisfactory to it for the reimbursement to it of all expenses
to which it may be put and to protect it against all liability, except liability which is
adjudicated to have resulted from the gross negligence or willful misconduct of the
Trustee, by reason of any action so taken by the Trustee.
Section 902. Fees, Charges and Expenses of Trustee and Paying Agent. (a) Subject.
to subsection (b) of this Section 902, the City shall, from moneys lawfully available therefor, pay
to the Trustee and Paying Agent reasonable compensation for all services performed hereunder
• and also all reasonable expenses, charges and other disbursements and those of their attorneys,
agents and employees incurred in and about the administration and execution of the trusts hereby
10-47392.4 37
• created and the performance of the powers and duties hereunder and, to the extent permitted by
law and from moneys lawfully available therefor, shall indemnify and save the Trustee harmless
against any liabilities which it may incur in the exercise and performance of its powers and duties
hereunder. With respect to the Series 2003 Bonds, the Trustee's initial authentication fee and
related fees for redeeming the Series 1998 Bonds shall be $2,500 and the annual administration
fee of the Trustee shall be up to, but shall not exceed, $4,500. If the City shall fail to make any
payment required by this subsection (a), the Trustee may make such payment from any moneys in
its possession under the provisions of this Indenture and shall be entitled to a preference therefor
over any of the Bonds Outstanding hereunder. The City shall not be required to indemnify the
Trustee against any liabilities which the Trustee may incur as a result of negligent or wrongful
acts or omissions of the Trustee.
(b) The City shall pay to the Trustee compensation for its services as described in
Section 902(a), provided that such compensation, together with all expenses, charges and other
disbursements of the Trustee and its attorneys, agents and employees and all reimbursements to
the Trustee for all costs and other disbursements as described in Section 901(a) hereof shall not
exceed $9,500 annually (not including the initial authentication fee) without the prior written
approval of the City, which approval shall not be unreasonably withheld. If the Trustee wishes to
consult with or retain counsel for any purpose hereunder whose anticipated fees, together with all
other compensation, disbursements and reimbursements of the Trustee and its attorneys, agents
and employees to be paid by the City hereunder, shall exceed $10,000 annually, then such
• counsel shall have to be acceptable to the City and such fees shall have to be approved by the
City as described above.
Section 903. Additional Duties of Trustee. (a) In addition to the other duties of the
Trustee described in this Indenture, it shall be the duty of the Trustee, on or before the tenth day
of each month after the month in which the Series 2003 Bonds are delivered, to file with the City
a statement setting forth in respect of the preceding. calendar month:
(i)
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;
(ii) the amount on deposit with it at the end of such month to the credit of each
such Fund and Account;
(iii)
a brief description of all
obligations
held by it as an investment of moneys
in each such
Fund and Account;
(iv) 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
(v) any other information that the City may reasonably request, including, but
not limited to, submittal of monthly statements of activity relating to the Bonds. Such
• information shall also be provided at the direction of the City to one additional designated
entity.
10-47392.4 38
• All records and files pertaining to each such Fund and Account in the custody of the
Trustee hereunder shall be open at all reasonable times to the inspection of the City and its agents
and representatives, and the City may make copies thereof.
(b) The Trustee additionally shall be responsible for the preparation and timely
distribution of any and all forms and reports required by law to all Bondholders, the State and the
Internal Revenue Service in connection with the payment to the Bondholders of interest on the
Bonds.
Section 904. Notice to Bondholders of Default. If a default occurs of which the
Trustee is pursuant to the provisions of Section 901(g) deemed to have or is given notice, the
Trustee shall promptly make demand upon the City and give notice to each owner of Bonds then
Outstanding.
Section 905. Intervention by Trustee. In any judicial proceeding to which the City is a
party and which in the opinion of the Trustee and its counsel has a substantial bearing on the
interests of Holders of Bonds issued hereunder, the Trustee may intervene on behalf of
Bondholders and shall do so if requested in writing by the Holders of at least 51% of the
aggregate principal amount of Bonds Outstanding hereunder. The rights and obligations of the
Trustee under this Section 905 are subject to the approval of the court having jurisdiction in the
premises.
Section 906. Merger or Consolidation of Trustee. Any bank or trust company to
• which the Trustee may be merged, or with which it may be consolidated, or to which it may sell
or transfer its trust business and assets as a whole or substantially as a whole, or any bank or trust
company resulting from any such sale, merger, consolidation or transfer to which it is a party,
ipso facto, shall be and become successor trustee hereunder and vested with all of the title to the
whole property or Trust Estate and all the trusts, powers, discretions, immunities, privileges and
all other matters as was its predecessor, without the execution. or filing of any instrument or any
further act, deed, or conveyance on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that such successor trustee shall have capital and
surplus of at least $40 million:
Section 907. Resignation by Trustee. The Trustee and any successor trustee may at any
time resign from the trusts hereby created by giving written notice to the City and the
Bondholders, and such resignation shall take effect upon the appointment of a successor trustee
by the Bondholders or by the City. Such notice may be served personally or sent by registered
mail (to the City) or first class mail (to the Bondholders).
Section 908. Removal of Trustee. The Trustee may be removed at any time by an
instrument or concurrent instruments in writing delivered to the Trustee and to the City, and
signed by the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding
hereunder.
Section 909. Appointment of Successor Trustee. In case the Trustee hereunder shall
• resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or
10-47392.4 39
• otherwise become incapable of acting hereunder, or in case it shall be taken under the control of
any public officer or officers, or of a receiver appointed by the court, a successor may be
appointed by the Holders of not less than 51% in aggregate principal amount of Bonds
Outstanding hereunder, by an instrument or concurrent instruments in writing signed by such
Holders, or by their attorneys in fact, duly authorized; provided, nevertheless, that in case of such
vacancy the City by an instrument executed and signed by its Mayor and attested by its City
Clerk under its seal, shall appoint a temporary trustee to fill such vacancy until a successor
trustee shall be appointed by the Bondholders in the manner above provided. Any such
temporary trustee appointed by the City shall immediately and without further act be superseded
by the trustee appointed by such Bondholders. Every such temporary trustee and every such
successor trustee shall be a trust company or bank in good standing, having capital and surplus of
not less than $40 million.
Section 910. Concerning Any Successor Trustee. Every successor or temporary
trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to
the City an instrument in writing accepting such appointment hereunder, and thereupon such
successor or temporary trustee, without any further act or conveyance, shall become fully vested
with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor;
but such predecessor shall, nevertheless, on the written request of the City or of its successor
trustee, execute and deliver an instrument transferring to such successor all the estate, properties,
rights, powers and trusts of such predecessor hereunder; and every predecessor trustee shall
• deliver all, securities, moneys and any other property held by it as trustee hereunder to its
successor. Should any instrument in writing from the City be required by any successor trustee
for more fully and certainly vesting in such successor the estates, rights, powers and duties
hereby vested or intended to be vested in the predecessor trustee, any and all such instruments in
writing shall, on request, be executed, acknowledged, and delivered by the City.
Section 911. Reliance Upon Instruments. The resolutions, opinions, certificates and
other instruments provided for in this Indenture may be accepted and relied upon by the Trustee
as conclusive evidence of the facts and conclusions stated therein and shall be full warrant,
protection and authority to the Trustee for its actions taken hereunder.
Section 912. Appointment of Co -Trustee. The City and the Trustee shall have power
toappoint, and upon the request of the Trustee the City shall for such purpose join with the
Trustee in the execution of all instruments necessary or proper to appoint, another corporation or
one or more Persons approved by the Trustee, either to act as co -trustee or co -trustees jointly
with the Trustee of all or any of the property subject to the lien hereof, with such powers as may
be provided in the instrument of appointment and to vest in such corporation or Person or
Persons as such co -trustee any property, title, right or power deemed necessary or desirable. In
the event that the City shall not have joined in such appointment within fifteen (15) days after the
receipt by it of a request so to do, the Trustee alone shall have the power to make such
appointment. Should any deed, conveyance or instrument in writing from the City be required by
the co -trustee so appointed for more fully and certainly vesting in and confirming to such co-
trustee such
properties, rights,
powers, trusts, duties
and obligations, any
and all such deeds,
• conveyances
and instruments
in writing shall, on
request, be executed,
acknowledged and
10-47392.4 40
• delivered by the City. Every such co -trustee shall; to the extent permitted by law, be appointed
subject to the following provisions and conditions, namely:
(a) The Bonds shall be authenticated and delivered, and all powers, duties,
obligations and rights conferred upon the Trustee in respect of the custody of all money
and securities pledged or deposited hereunder, shall be exercised solely by the Trustee;
and
(b) The Trustee, at any time by an instrument in writing, may remove any such
separate Trustee or co -trustee.
Every instrument, other than this Indenture, appointing any such co -trustee shall refer to
this Indenture and the conditions of this Article IX expressed, and upon the acceptance in writing
by such co -trustee, the co -trustee shall be vested with the estate or property specified in such
instrument, jointly with the Trustee (except insofar as local law makes it necessary for any
separate trustee to act alone), subject to all the trusts, conditions and provisions of this Indenture.
Any such co -trustee may at any time, by an.instrument in writing, constitute the Trustee as the
co -trustee's agent or attorney -in -fact with full power and authority, to the extent authorized by
law, to do all acts and things and exercise all discretion authorized or permitted by the co -trustee,
for and on behalf of the co -trustee and in the co -trustee's name. In case any co -trustee shall die,
become incapable of acting, resign or be removed, all the estate, properties, rights, powers, trusts,
duties and obligations of said co -trustee shall vest in and be exercised by the Trustee until the
• appointment of a new trustee or a successor to such co -trustee.
Section 913. Designation and Succession of Paying Agent. The Trustee and any
successor Trustee shall also be the Paying Agent for the Bonds. The Paying Agent shall enjoy
the same protective provisions in the performance of its duties hereunder as are specified in
Section 901 hereof with respect to the Trustee insofar as such provisions may be applicable.
ARTICLE X
SUPPLEMENTAL INDENTURES
Section 1001. Supplemental Indentures Not Requiring Consent of Bondholders.
The City and the Trustee may, from time to time and at any time, without the consent of or notice
to the Bondholders, enter into Supplemental Indentures as follows:
(a) to cure any formal defect, omission, inconsistency or ambiguity in this
Indenture;
(b) to grant to or
confer
or impose upon the Trustee for the
benefit of the
Bondholders any additional
rights, remedies, powers, authority, security, liabilities or
duties which may lawfully be
granted,
conferred or imposed and which are
not contrary to
or inconsistent with this Indenture
as theretofore in effect, provided
that no such
additional liabilities or duties
shall be
imposed upon the Trustee without its
consent;
•
10-47392.4 41
(c) to add to the'covenants and agreements of, and limitations and restrictions
upon, the City in this Indenture other covenants, agreements, limitations and restrictions
to be observed by the City which are not contrary to or inconsistent with this Indenture as
theretofore in effect:
(d) to confirm, as further assurance, any pledge under, and the subjection to
any claim, lien or pledge created or to be created by, this Indenture, of the Trust Estate or
of any other moneys, securities or funds:
(e) to comply with the requirements of the Trust Indenture Act of 1939, as
from time to time amended;
(f) to authorize the issuance and sale of one or more series of Additional
Bonds;
(g) to make such additions, deletions or modifications as may be necessary to
assure compliance with Section 14$(f) of the Code relating to required rebate to the
United States or otherwise as may be necessary to assure exemption from federal income
taxation of interest on the Bonds; or
(h) to modify, alter, amend or supplement this Indenture in any other respect
which is not materially adverse to the Bondholders and which does not involve a change
• described in clause (a), (b), (c), (d), (e) or (f) of Section 1002 hereof and which, in the
judgment of the Trustee, is not to the prejudice of the Trustee.
Section 1002. Supplemental Indentures Requiring Consent of Bondholders. Subject•
to the terms and provisions contained in this Section 1002, and not otherwise, the Holders of not
less than 2/3 in aggregate principal amount of the Bonds then Outstanding shall have the right,
from time to time, anything contained in this Indenture to the contrary notwithstanding, to
consent to and approve the execution by the City and the Trustee of such indenture or indentures
supplemental hereto as shall be deemed necessary and 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 this Indenture or in any Supplemental Indenture; provided, however, that
nothing herein contained shall permit or be construed as permitting (a) an extension of the
maturity (or mandatory redemption date) of the principal of or the interest on any Bond issued
hereunder, or (b) a reduction in the principal amount of or redemption premium or rate of interest
on any Bond issued hereunder, or (c) the creation of any lien on the Trust Estate or any part
thereof, except as hereinbefore expressly permitted, or (d) a privilege or priority of any Bond or
Bonds over any other Bond or Bonds, or (e) a reduction in the aggregate principal amount of the
Bonds required for consent to such Supplemental Indenture, or (f) the deprivation of the Holder
of any Bond then Outstanding of the lien hereby created on the Trust Estate. Nothing herein
contained, however, shall be construed as making necessary the approval of Bondholders of the
execution of any Supplemental Indenture as provided in Section 1001.
• If, at any time the City shall request the Trustee to enter into any Supplemental Indenture
for any of the purposes of this Section, the Trustee shall, at the expense of the City, cause notice
10-47392.4 42
• of the proposed execution of such Supplemental Indenture to be mailed by first class mail to each
registered owner of the Bonds. Such notice shall briefly set forth the nature of the proposed
Supplemental Indenture and shall state that copies thereof are on file at the principal office of the
Trustee for inspection by Bondholders. The Trustee shall not, however, be subject to any
liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall
not affect the validity of such Supplemental Indenture when consented to and approved as
provided in this Section 1002. If the Holders of not less than 2/3 in aggregate principal amount
of the Bonds Outstanding at the time of the execution of any such Supplemental Indenture shall
have consented to and approved the execution thereof as herein provided, no Holder of any Bond
shall have any right to object to any of the terms and provisions contained therein, or the
operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin
or restrain the Trustee or the City from executing the same or from taking any action pursuant to
the provisions thereof.
Section 1003. Effect of Supplemental Indentures. Upon the execution of any
Supplemental Indenture entered into pursuant to Section 1001 or 1002 hereof, this Indenture
shall be deemed to be modified and amended in accordance therewith.
ARTICLE XI
MISCELLANEOUS
Section 1101. Consents, etc. of Bondholders. Any request, direction, objection or other
• instrument required by this Indenture to be signed and executed by the Bondholders may be in
any number of concurrent writings of similar tenor and may be signed or executed by such
Bondholders in person or by agent appointed in writing. Proof of the execution of any such
request, direction, objection or other instrument or of the writing appointing any such agent and
of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the
purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any
action taken by it under such request or other instrument, namely:
(a) The fact and date of the execution by any Person of any such writing may
be proved by the certificate of any officer in any jurisdiction who by law has power to
take acknowledgments within such jurisdiction that the Person signing such writing
acknowledged before such officer the execution thereof, or by an affidavit of any witness
to such execution.
(b) The fact of ownership of Bonds and the amount or amounts, numbers, and
other identification of such Bonds, and the date of holding the same shall be proved by
the registration books of the City maintained by the Trustee, as Bond registrar.
Section 1102. Notices. Except as otherwise provided in this Indenture, all notices,
certificates or other communications shall be sufficiently given and shall be deemed given when
mailed by registered or certified mail, postage prepaid, to the City or the Trustee. Notices,
certificates or other communications shall be sent to the following addresses:
10-47392.4 43
City: City of Fayetteville
City Administration Building
113 West Mountain
Fayetteville, Arkansas 72701
Attention: Mayor
Trustee: Bank of Oklahoma, N.A.
P. O. Box 2300
Tulsa, Oklahoma 74192
Attention: Cynthia Wilkinson
Either of
the foregoing may,
by notice given hereunder, designate any
further
or different
addresses
to which subsequent
notices, certificates or other communications
shall be
sent.
Section 1103. Limitation of Rights. With the exception of rights herein expressly
conferred, nothing expressed or mentioned in or to be implied from this Indenture, or the Bonds
issued hereunder, is intended or shall be construed to give to any person or company other than
the parties hereto, and the Holders of the Bonds secured by this Indenture any legal or equitable
rights, remedy, or claim under or in respect to this Indenture or any covenants, conditions, and
provisions hereof being intended to be and being for the sole exclusive benefit of the parties
hereto and the Holders of the Bonds hereby secured as herein provided.
• Section 1104. Severability. If any provisions of this Indenture shall be held or deemed
to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any
jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any
provisions or any constitution or statute or rule of public policy, or for any other reason, such
circumstances shall not have the effect of rendering the provision in question inoperative or
unenforceable in any other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to any extent whatever.
The invalidity of
any one
or
more phrases, sentences,
clauses or
paragraphs in this
Indenture contained shall
not affect
the
remaining portions of this
Indenture or
any part thereof.
Section 1105. Applicable Provisions of Law. This Indenture shall be considered to
have been executed in the State of Arkansas and it is the intention of the parties that the
substantive law of the State of Arkansas govern as to all questions of interpretation, validity and
effect.
Section 1106. Counterparts. This Indenture may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and the same
instrument.
Section 1107. Successors and Assigns. All the covenants, stipulations, provisions,
agreements, rights, remedies and claims of the parties hereto in this Indenture contained shall
bind and inure to the benefit of their successors and assigns.
10-47392.4 44
• Section 1108. Captions. The captions or headings in this Indenture are for convenience
only and in no way define, limit or describe the scope or intent of any provisions or sections of
this Indenture.
Section 1109. Photocopies and Reproductions. A photocopy or other reproduction of
this Indenture may be filed as a financing statement pursuant to the Uniform Commercial Code,
although the signatures of the City and the Trustee in such reproduction are not original manual
signatures.
Section 1110. Bonds Owned by City. In determining whether Bondholders of the
requisite aggregate principal amount of the Bonds have concurred in any direction, consent or
waiver under this Indenture, Bonds which are owned by the City shall be disregarded and deemed
not to be Outstanding for the purpose of any such determination, except that, for the purpose of
determining whether the Trustee shall be protected in relying on any such direction, consent or
waiver, only Bonds which the Trustee knows are so owned shall be so disregarded. Bonds so
owned which have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such
Bonds and that the pledgee is not the City. In case of a dispute as to such right, any decision by
the Trustee taken upon the advice of counsel shall be full protection to the Trustee.
•
•
10-47392.4 45
• IN WITNESS WHEREOF, the City has caused these presents to be signed in its name
and behalf by its Mayor and its corporate seal to be hereunto affixed and attested by its City
Clerk, and, to evidence its acceptance of the trust hereby created, the Trustee has caused these
presents to be signed in its behalf by its duly authorized officers and its corporate seal to be
hereto affixed.
CITY OF FAYETTEVILLE, ARKANSAS
Mayor
ATTEST:
City Clerk
(SEAL)
•
ATTEST:
By:_
Title:
(SEAL)
BANK OF OKLAHOMA, N.A.,
as Trustee
By:_
Title:
[SIGNATURE PAGE TO TRUST INDENTURE]
10-47392.4
• CONSENT AND AGREEMENT
TO TRUST INDENTURE
The Advertising and Promotion Commission of the City of Fayetteville, Arkansas hereby
consents to the execution and delivery of the foregoing Trust Indenture.
ADVERTISING AND PROMOTION
COMMISSION OF THE CITY OF .
FAYETTEVILLE, ARKANSAS
By:
Title: Chairman
ATTEST:
City Clerk
•
•
[CONSENT PAGE TO TRUST INDENTURE]
10.47392.4
CI
CI
L�
EXHIBIT A TO TRUST INDENTURE
Form of Series 2003 Bond
Unless this certificate is presented by an authorized representative of The Depository Trust
Company, a New York corporation( 'DTC"), to the City or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in
such other name as is requested by the authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized representative of
DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is
wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
REGISTERED
No. R03 -
REGISTERED
UNITED STATES OF AMERICA
STATE OF ARKANSAS
CITY OF FAYETTEVILLE, ARKANSAS
HOTEL AND RESTAURANT GROSS RECEIPTS TAX REFUNDING BOND
SERIES 2003
Interest Rate: _%
Date of Bond: July 1, 2003
Registered Owner: CEDE & CO.
Principal Amount:
KNOW ALL MEN BY THESE PRESENTS:
Maturity Date: October 1, 20_
S1.!]'
DOLLARS
That the City of Fayetteville, Arkansas, a municipality and political subdivision organized
and existing by virtue of the laws of the State of Arkansas (the "City"), for value received,
promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity
Date shown above, but solely from the source and in the manner hereinafter set forth, the
Principal Amount shown above, and in like manner to pay interest on said amount from the date
hereof until payment of such Principal Amount has been made or duly provided for, at the
Interest Rate per annum shown above, such interest to be payable semiannually on April 1 and
October 1 of each year, commencing on the April I or October 1 next succeeding the date of this
bond shown above, except as the provisions hereinafter set forth with respect to redemption of
this bond prior to maturity may become applicable hereto. The principal of and premium, if any,
on this bond are payable in lawful money of the United States of America upon the presentation
and surrender hereof at the principal corporate trust office of Bank of Oklahoma, N.A., Tulsa,
Oklahoma, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or
another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be
made by wire transfer of immediately available funds by the Trustee to the Registered Owner as
10-47392.4 A -I
• of the fifteenth day of the calendar month preceding the calendar month in which such interest
payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon
shall be made by check or draft of the Trustee to the Registered Owner as of the applicable
Record Date, at the owner's address as it appears on the bond registration books of the City kept
by the Trustee.
This bond, designated "Hotel and Restaurant Gross Receipts Tax Refunding Bond, Series
2003", is one of a series of bonds aggregating Dollars ($ ) in
principal amount (the "Series 2003 Bonds"). The Series 2003 Bonds are being issued for the
purpose of refunding the City's Hotel and Restaurant Gross Receipts Tax Bonds, Series 1998
(the "Series 1998 Bonds"), funding a debt service reserve, and paying the costs of issuance of the
Series 2003 Bonds.
The Series 2003 Bonds are issued under and are secured by and entitled to the protection
of a Trust Indenture dated as of July 1, 2003 (the "Indenture"), by and between the City and the
Trustee, which Indenture is available for inspection at the principal corporate trust office of the
Trustee. Reference is hereby made to the Indenture and to all indentures supplemental thereto for
the provisions, among others, with respect to the nature and extent of the security, the rights,
duties and obligations of the City, the Trustee and the owners of the Bonds, and the terms upon
which the Bonds are issued and secured.
The Series 2003 Bonds are issued pursuant to and in full compliance with the
• Constitution and laws of the State of Arkansas, including particularly, the Advertising and
Promotion Commission Act, codified as Arkansas Code Annotated (1997 Repl.) §§26-75-601 et
seq. (as from time to time amended, the "Act"), and Ordinance No. of the City adopted
2003, which ordinance authorized the execution and delivery of the Indenture.
In order to secure the repayment of the Series 2003 Bonds, the City has, in accordance
with the Act, pledged all receipts from a one percent (1%) tax (the "Tax") levied by the City
pursuant to Ordinance No. 2310 adopted by the City on March 1, 1977, as subsequently
amended, upon (i) the gross receipts or gross proceeds derived from renting, leasing or otherwise
furnishing hotel or motel accommodations for profit within the boundaries of the City and (ii) the
portion of gross receipts or gross proceeds received by restaurants, cafes, cafeterias, delis, drive-
in restaurants, carry -out restaurants, concession stands, convenience stores, grocery store -
restaurants, caterers and similar businesses from the sale of prepared food and beverages for
on -premises or off -premises consumption.
The pledge of the receipts of the Tax (the "Tax Receipts") is subject to the prior and
senior pledge of such Tax Receipts securing payment of the City's Hotel and Restaurant Gross
Receipts Tax Refunding Bonds, Series 1995, dated October 1, 1995, of which $700,000 in
principal amount presently remains outstanding.
The Indenture provides that the City may hereafter issue Additional Bonds under certain
terms and conditions contained in the Indenture and, if issued or incurred, such Additional Bonds
10-47392.4 A-2
• will rank on a parity of security with the Series 2003 Bonds and be equally and ratably secured by
and entitled to the protection of the Indenture.
The Series 2003 Bonds are not general obligations of the City, but are special obligations
secured by an irrevocable pledge of and lien on the Tax Receipts, as more particularly described
in the Indenture. In no event shall the Series 2003 Bonds constitute an indebtedness of the City
within the meaning of any constitutional or statutory limitation.
The holder of this Series 2003 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. In certain events, on the
conditions, in the manner and with the effect set forth in the Indenture, the principal of all the
Series 2003 Bonds and Additional Bonds, if any, issued under the Indenture and then outstanding
may be declared and may become due and payable before the stated maturity thereof, together
with accrued interest thereon. Modifications or alterations of the Indenture, or of any indenture
supplemental thereto, may be made only to the extent and in the circumstances permitted by the
Indenture.
The Series 2003 Bonds are subject to redemption at the election of the City, on and after
October 1, 2008, in whole or in part (in inverse order of maturities and by lot within a maturity)
at any time, at a redemption price equal to the principal amount being redeemed plus accrued
• interest to the date of redemption.
Notwithstanding the foregoing, so long as DTC or its nominee is the sole registered
owner of the Series 2003 Bonds, the particular Series 2003 Bonds or portions thereof to be
redeemed in part within a maturity shall be selected by lot by DTC in such manner as DTC shall
determine. In selecting Series 2003 Bonds for redemption prior to maturity, in the case any
outstanding Series 2003 Bond is in a denomination greater than $5,000, each $5,000 of face
value of such Series 2003 Bond shall be treated as a separate Series 2003 Bond of the
denomination of $5,000.
In the event any of the Series 2003 Bonds or portions thereof (which shall be $5,000 or
any integral multiple thereof) are called for redemption, notice thereof shall be given by the
Trustee by first class mail to the registered owner of each such Series 2003 Bond addressed to
such registered owner at his registered address and placed in the mails not less than thirty (30)
nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that
failure to give such notice by mailing, or any defect therein, shall not affect the validity of the
proceedings for the redemption of any Series 2003 Bond with respect to which no such failure or
defect has occurred. Each notice shall identify the Series 2003 Bonds or portions thereof being
called, and the date on which they shall be presented for payment. After the date specified in
such call notice, the Series 2003 Bond or Bonds so called for redemption will cease to bear
interest provided funds sufficient for their redemption have been deposited with the Trustee, and,
except for the purpose of payment, shall no longer be protected by the Indenture and shall not be
• deemed to be outstanding under the provisions of the Indenture.
10-47392.4 A-3
• This Series 2003 Bond may be transferred on the books of registration kept by the Trustee
by the registered owner or by his duly authorized attorney upon surrender hereof, together with a
written instrument of transfer duly executed by the registered owner or his duly authorized
attorney.
The Series 2003 Bonds are issuable as registered bonds without coupons in
denominations of $5,000 and any integral multiple thereof. Subject to the limitations and upon
payment of the charges provided in the Indenture, Series 2003 Bonds may be exchanged for a
like aggregate principal amount of Series 2003 Bonds of other authorized denominations.
No recourse shall be had for the payment of the principal of or premium, if any, or
interest on any of the Series 2003 Bonds or for any claim based thereon or upon any obligation,
covenant or agreement contained in the Series 2003 Bonds or the Indenture against any past,
present or future alderman, officer or employee of the City, or any successor, as such, either
directly or through the City or any successor of the City, under any rule of law or equity, statute
or constitution or by the enforcement of any assessment or penalty or otherwise, and all such
liability of any such alderman, officer or employee as such is hereby expressly waived and
released as a condition of and consideration fbr the issuance of any of the Series 2003 Bonds.
This Series 2003 Bond is issued with the intent that the laws of the State of Arkansas will
govern its construction.
[The Series 2003 Bonds have been designated by the City as "qualified tax-exempt
obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as
amended.]
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and
things required to exist, happen and be performed precedent to and in the issuance of the Series
2003 Bonds do exist, have happened and have been performed in due time, form and manner as
required by law; that the indebtedness represented by the Series 2003 Bonds, together with all
obligations of the City, does not exceed any constitutional or statutory limitation; and that the
revenues pledged to the payment of the principal of and premium, if any, and interest on the
Series 2003 Bonds as the same become due and payable will be sufficient in amount for that
purpose.
This Series 2003 Bond shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until the Certificate of Authentication
hereon shall have been signed by the Trustee.
10-47392.4 A-4
• IN WITNESS WHEREOF, the City of Fayetteville, Arkansas has caused this Series 2003
Bond to be executed by its Mayor and City Clerk, thereunto duly authorized (by their manual or
facsimile signatures), and its corporate seal to be affixed or imprinted hereon, all as of the date
hereof shown above.
CITY OF FAYETTEVILLE, ARKANSAS
By:
Mayor
ATTEST:
By:
City Clerk
(SEAL)
•
C
(Form of Trustee's Certificate)
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This bond is one of the Series 2003 Bonds of the issue described in and issued under the
provisions of the within mentioned Indenture.
Attached hereto is the complete text of the opinion of Kutak Rock LLP, a signed original
of which is on file with the undersigned, delivered and dated the date of the original delivery of
and payment for the Series 2003 Bonds.
BANK OF OKLAHOMA, N.A.,
as Trustee
By:
Authorized Signature
10-47392.4
A-5
• (Form of Assignment)
ASSIGNMENT
FOR VALUE RECEIVED, , hereby sells, assigns, and transfers
unto , the within Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints as
attorney to transfer the within Bond on the books kept for registration thereof with full power of
substitution in the premises.
DATE: _________,20_
Transferor
GUARANTEED BY:
•
NOTICE:
Signature(s)
must be guaranteed
by
an institution satisfactory to the Trustee or
other transfer
agent.
10-47392.4
A-6
• EXHIBIT B TO TRUST INDENTURE
COVERAGE CERTIFICATE
City of Fayetteville, Arkansas
Series 2003 Hotel and Restaurant Gross
Receipts Tax Refunding Bonds
Date:
TO: Bank of Oklahoma, N.A., as Trustee
This certificate is provided pursuant to the provisions of Section 212 of the Trust Indenture
dated as of July 1, 2003 (the "Indenture"), by and between the City of Fayetteville, Arkansas (the
"City") and you, as trustee, in connection with the proposed issuance of Additional Bonds. In
connection with such issuance, the undersigned certifies as follows:
(a) Tax Receipts deposited into Revenue
Fund for preceding twelve (12) months: $
. (b) Maximum Annual Debt Service
on all Outstanding Bonds and
Series 1995 Bonds, plus the
proposed Additional Bonds: $
(c) (a) divided by (b) _ % (which is greater than 125%)
The undersigned hereby certifies that he is authorized to deliver this Certificate on behalf of
the City.
No Event of Default exists under the Indenture and, to the knowledge of the undersigned,
no event has occurred and continues which with notice or lapse of time or both would constitute
an Event of Default under the Indenture. All capitalized terms not otherwise defined herein shall
have the meanings set forth in the Indenture.
CITY OF FAYETTEVILLE, ARKANSAS
Finance & Internal Services Director
10-47392.4 B-1
EXHIBIT C TO TRUST INDENTURE
FORM OF REQUISITION
City of Fayetteville, Arkansas
Series Hotel and Restaurant
Gross Receipts Tax Bonds
Date:
Requisition No.:.
TO: Bank of Oklahoma, N.A., as Trustee
Pursuant to the provisions of Section 502 of the Trust Indenture dated as of July 1, 2003
(the "Indenture"), by and between the City of Fayetteville, Arkansas (the "City") and you, as
trustee, you are authorized to make the following described payment directly to the Payee named
below from the Project Fund:
Name and Address of Payee:
•
Amount of Payment:
General Classification of
the Expenditures:
The undersigned hereby certifies that he is authorized to deliver this Requisition on behalf
of the City.
The amount requested hereunder has not been the basis for any previous Requisition by the
City and is justly due and owing to the person(s) named herein as a proper payment or
reimbursement of a Project Cost.
No Event of Default exists under the Indenture and, to the knowledge of the undersigned,
no event has occurred and continues which with notice or lapse of time or both would constitute
an Event of Default under the Indenture.
CITY OF FAYETTEVILLE, ARKANSAS
• By:
Authorized Representative
10-47392.4 C-1
KUTAK ROCK LLP
DRAFT 5/07/03
• BOND PURCHASE AGREEMENT
, 2003
City of Fayetteville
City Administration Building
113 West Mountain
Fayetteville, Arkansas 72701
S
City of Fayetteville, Arkansas
Hotel and Restaurant Gross Receipts Tax Refunding Bonds
Series 2003
Ladies and Gentlemen:
On the basis of the representations, warranties and agreements and upon the terms and
conditions contained herein, the undersigned, Stephens Inc. (the "Underwriter"), hereby offers to
enter into this Bond Purchase Agreement (this "Bond Purchase Agreement") with the City of
Fayetteville, Arkansas (the "City") which, upon your acceptance of this offer, will be binding
upon you and upon the Underwriter. Terms not otherwise defined herein shall have the same
meanings as set forth in the Indenture defined and described below.
• This offer is made subject to your acceptance of this Bond Purchase Agreement on or
before midnight on , 2003.
1. General. Upon the terms and conditions and in reliance upon the respective
representations, warranties and covenants herein, the Underwriter hereby agrees to purchase
from the City, and the City hereby agrees to sell to the Underwriter, all (but not less than all) of
$ City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax Refunding
Bonds, Series 2003 (the "Bonds"), at the purchase price (the "Purchase Price") of
$ (equal to the par amount of the Bonds less an underwriter's discount of
$ ), plus accrued interest, if any, from July 1, 2003, to the Closing Date (hereinafter
defined).
The Bonds shall be issued by the City pursuant to the provisions of the laws of the State
of Arkansas, including, particularly, the Advertising and Promotion Commission Act, Arkansas
Code Annotated (1997 Repl.) §§26-75-601 et seq. (the "Act").
The Bonds will constitute special and limited obligations of the City, secured solely by
and payable solely from (1) a pledge of and lien on the receipts from a one percent (1.00%) gross
receipts tax (the "Tax") authorized under the Act and levied by the City pursuant to Ordinance
No. 2310 of the City adopted on March 1, 1977, as subsequently amended (the "Levying
Ordinance"), and (2) moneys on deposit in the Bond Fund and the Debt Service Reserve Fund
established by a Trust Indenture to be dated as of July 1, 2003 (the "Indenture"), by and between
• the City and Bank of Oklahoma, N.A., Tulsa, Oklahoma, as trustee (the "Trustee"), all as more
10-47965.2
• particularly described in the Indenture. The Tax is levied upon (i) the gross receipts or gross
proceeds derived from renting, leasing or otherwise furnishing hotel or motel accommodations
for profit within the boundaries of the City and (ii) the portion of gross receipts or gross proceeds
received by restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out restaurants,
concession stands, convenience stores, grocery store -restaurants, caterers and similar businesses
from the sale of prepared food and beverages for on -premises or off -premises consumption. The
pledge of the receipts of the Tax (the "Tax Receipts") securing the Bonds is made on a junior and
subordinate basis to the prior pledge of the Tax Receipts securing the City's outstanding Hotel
and Restaurant Gross Receipts Tax Refunding Bonds, Series 1995 (the "Series 1995 Bonds").
The Bonds shall be issued and secured pursuant to Ordinance No. _ of the City
Council of the City which was adopted on , 2003 (the "Authorizing Ordinance"),
and pursuant to the Indenture. The Bonds shall have the maturities and interest rates as set forth
in Exhibit A hereto. The Bonds shall be subject to redemption as set forth in the Indenture and in
the Official Statement (hereinafter defined).
The proceeds of the Bonds will be utilized to finance (i) a portion of the costs of
refunding the City's outstanding Hotel and Restaurant Gross Receipts Tax Bonds, Series 1998
(the "Series 1998 Bonds"), (ii) the creation of a debt service reserve for the Bonds, [(iii) the
payment of the premium for a policy of municipal bond insurance to be issued by
and (iv)] the payment of the costs of issuance of the Bonds.
A portion of the proceeds of the Bonds will be deposited with the Bank of Oklahoma,
• N.A., Tulsa, Oklahoma, as escrow trustee (the "Escrow Trustee"), pursuant to the terms of an
Escrow Deposit Agreement to be dated as of the date of delivery of the Bonds (the "Escrow
Agreement"), by and between the City and the Escrow Trustee, and said proceeds will be utilized
by the Escrow Trustee (along with other available moneys) to redeem the Series 1998 Bonds on
October 1, 2003.
The City will undertake, pursuant to a Continuing Disclosure Agreement to be dated as of
the date of delivery of the Bonds (the "Continuing Disclosure Agreement"), to provide certain
annual financial and operating information and notices of the occurrence of certain events, if
material, as required by Section (b)(5)(i) of Rule 15c2-12 under the Securities Exchange Act of
1934, as amended (the "Rule"). A description of this undertaking is set forth in the Preliminary
Official Statement and will also be set forth in the Official Statement (each hereinafter defined).
The City is not in default with respect to any of its obligations under previous undertakings
pursuant to the Rule.
In order to ensure compliance with the provisions of the Internal Revenue Code of 1986,
as amended (the "Code"), the City will enter into a Tax Regulatory Agreement dated as of the
date of delivery of the Bonds (the "Tax Regulatory Agreement").
2. Bona Fide Public Offering. The Underwriter agrees to make a bona fide public
offering of all of the Bonds at the offering prices set forth on the cover of the final Official
Statement described below.
2
10-07965.2
• 3. Delivery of Official Statement. (a) The City has previously provided the
Underwriter with copies of its Preliminary Official Statement, including the cover page
and the appendix thereto, dated , 2003, relating to the Bonds (the
"Preliminary Official Statement"). As of its date, the Preliminary Official Statement is
"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 the City and the Underwriter, is herein referred to as the
"Official Statement."
(b) The City agrees to deliver to the Underwriter, at such address as the
Underwriter shall specify, as many copies of the final Official Statement dated
2003, relating to the Bonds as the Underwriter shall reasonably request as
necessary to comply with paragraph (b)(4) of the Rule (as defined above) and with Rule
G-32 and all other applicable rules of the Municipal Securities Rulemaking Board. The
City agrees to deliver such final Official Statement within seven (7) business days after
the execution hereof.
(c) The City hereby authorizes and approves the Preliminary Official
Statement and the final Official Statement, consents to their distribution and use by the
Underwriter and authorizes the execution of the final Official Statement by a duly
authorized officer of the City.
• (d) The Underwriter shall give notice to the City on the date after which no
participating underwriter, as such term is defined in the Rule, remains obligated to deliver
final Official Statements pursuant to paragraph (b)(4) of the Rule.
4. City's Representation and Warranties. The City represents and warrants to the
Underwriter that:
(a) The City is a duly organized and existing political subdivision under the
Constitution and laws of the State of Arkansas (the "State"). The City is authorized by
the provisions of the Act to issue the Bonds for the purpose of financing the costs of
refunding the Series 1998 Bonds.
(b) The City has the full legal right, power and authority (i) to adopt the
Levying Ordinance levying the Tax, (ii) to adopt the Authorizing Ordinance authorizing
the issuance of and sale of the Bonds, (iii) to enter into this Bond Purchase Agreement,
the Indenture, the Escrow Agreement, the Continuing Disclosure Agreement and the Tax
Regulatory Agreement, (iv) to levy the Tax, (v) to issue, sell and deliver the Bonds to the
Underwriter as provided herein, (vi) to pledge irrevocably the Tax Receipts to the
payment of the principal of, premium, if any, and interest on the Bonds, and (vii) to carry
out and consummate all other transactions contemplated by each of the aforesaid
documents, and the City has complied with all provisions of applicable law, including the
Act, in all matters relating to such transactions.
•
3
10-07965.2
• (c) The City has duly authorized all actions necessary under the Act or
otherwise to be taken by it or on its behalf for (i) the pledge of the Tax Receipts as set
forth in the Indenture and as described in the Official Statement, (ii) the execution and
delivery of the Bonds and the execution, delivery and due performance of this Bond
Purchase Agreement, the Indenture, the Escrow Agreement, the Continuing Disclosure
Agreement and the Tax Regulatory Agreement, (iii) the distribution and use of the
Preliminary Official Statement and the execution, delivery and distribution of the final
Official Statement, and (iv) the taking of any and all such actions as may be required on
the part of the City to carry out, give effect to and consummate the transactions
contemplated by such instruments. All consents or approvals necessary to be obtained by
the City in connection with the foregoing have been received, and the consents or
approvals so received remain still in full force and effect.
(d) The Levying Ordinance and the Authorizing Ordinance have been duly
adopted by governing body of the City, are each in full force and effect and each
constitutes the legal, valid and binding act of the City; and this Bond Purchase
Agreement, the Indenture, the escrow Agreement, the Continuing Disclosure Agreement
and the Tax Regulatory Agreement, when executed and delivered, will constitute legal,
valid and binding obligations of the City, and this Bond Purchase Agreement, the
Indenture, the Escrow Agreement, the Continuing Disclosure Agreement and the Tax
Regulatory Agreement are enforceable against the City in accordance with their
respective terms, except as enforceability thereof may be limited by bankruptcy,
• insolvency or other laws affecting creditors' rights generally.
(e) When delivered to or at the direction of the Underwriter, the Bonds will
have been duly authorized, executed, authenticated, issued and delivered and will
constitute legal, valid and binding obligations of the City in conformity with the laws of
the State of Arkansas, including the Act, and will be entitled to the benefit and security of
the Authorizing Ordinance and the Indenture.
(f) The City has duly approved and authorized the distribution and use of the
Preliminary Official Statement and the execution, delivery and distribution of the Official
Statement.
(g) The information contained in the Preliminary Official Statement is, and as
of the Closing Date such information in the final Official Statement will be, true and
correct in all material respects, and the Preliminary Official Statement does not and the
final Official Statement will not contain any untrue or misleading statement of a material
fact or omit to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(h) If, at any time prior to the earlier of (i) receipt of notice from the
Underwriter pursuant to Section 3(d) hereof that Official Statements are no longer
required to be delivered under the Rule or (ii) 25 days after the Closing Date, any event
occurs as a result of which the Official Statement, as then amended or supplemented,
• might include an untrue statement of a material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under which they
4
10-47965.2
• were made, not misleading, the City shall promptly notify the Underwriter in writing of
such event. Any information supplied by the City for inclusion in any amendments or
supplements to the Official Statement will not contain any untrue or misleading statement
of a material fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
Upon the request of the Underwriter therefor, the City shall prepare and deliver to the
Underwriter, at the City's expense, as many copies of an amendment or supplement to the
Official Statement which will correct any untrue statement or omission therein as the
Underwriter may reasonably request.
(i) Neither the adoption of the Authorizing Ordinance or the Levying
Ordinance, the execution and delivery of this Bond Purchase Agreement, the Bonds, the
Indenture, the Escrow Agreement. the Continuing Disclosure Agreement or the Tax
Regulatory Agreement, nor the consummation of the transactions contemplated herein or
therein or the compliance with the provisions hereof or thereof will conflict with, or
constitute on the part of the City a violation of, or a breach of or default under, (i) any
statute, indenture, mortgage, commitment, note or other agreement or instrument to
which the City is a party or by which it is bound, (ii) any provision of the Constitution of
the State of Arkansas, or (iii) any, existing law, rule, regulation, ordinance, judgment,
order or decree to which the City (or the members of its City Council or any of its
officers in their respective capacities as such) is subject. All consents, approvals,
authorizations and orders of governmental or regulatory authorities, if any, which are
• required for the City's execution and delivery of, consummation of the transactions
contemplated by, and compliance with the provisions of this Bond Purchase Agreement,
the Authorizing Ordinance, the Levying Ordinance, the Bonds, the Escrow Agreement,
the Indenture, the Continuing Disclosure Agreement and the Tax Regulatory Agreement
have been obtained.
0j) Except as is specifically disclosed in the Official Statement, there is no
action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any
-court, public board or body, pending or, to the best knowledge of the City, threatened,
which in any way questions the powers of the City referred to in subparagraph 4(b)
above, or the validity of any proceeding taken by the City in connection with the issuance
of the Bonds, the levy of the Tax or the pledge of the Tax Receipts, or wherein an
unfavorable decision, ruling or finding could materially adversely affect the transactions
contemplated by this Bond Purchase Agreement, or of any other document or instrument
required or contemplated by the Bond financing, or which, in any way, could adversely
affect the validity or enforceability of the Authorizing Ordinance, the Levying Ordinance,
the Bonds, the Indenture, the Escrow Agreement, the Continuing Disclosure Agreement,
the Tax Regulatory Agreement or this Bond Purchase Agreement or, to the knowledge of
the City, which in any way questions the exclusion from gross income of the recipients
thereof of the interest on the Bonds for federal income tax purposes or in any other way
questions the status of the Bonds under federal or State of Arkansas tax laws or
regulations.
•
5
10-47965.2
• (k) Any certificate signed by any official of the City and delivered to the
Underwriter shall be deemed a representation and warranty by the City to the
Underwriter as to the truth of the statements therein contained.
(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.
(m) The collection history with respect to the Tax Receipts as set forth in the
Preliminary Official Statement under the caption entitled "SECURITY FOR THE
BONDS" is fair, accurate and complete.
(n) The City will not knowingly take or omit to take any action, which action
or omission will in any way cause the proceeds from the sale of the Bonds to be applied
in a manner other than as provided in the Indenture, or which would cause the interest on
the Bonds to be includable in gross income for federal income tax purposes.
5. City's Covenants. The City covenants with the Underwriter as follows:
(a) The City will cooperate with the Underwriter in qualifying the Bonds for
offer and sale under the securities or Blue Sky laws of such jurisdictions of the
United States as the Underwriter may request; provided, however, that the City shall not
be required to consent to suit or to service of process in any jurisdiction. The City
• consents to the use by the Underwriter in the course of its compliance with the securities
or Blue Sky laws of the various jurisdictions of the documents relating to the Bonds,
subject to the right of the City to withdraw such consent for cause by written notice to the
Underwriter.
(b) Prior to the earlier of (i) receipt of notice from the Underwriter pursuant to
Section 3(d) hereof that final Official Statements are no longer required under the Rule or
(ii) 25 days after the Closing Date, the City shall provide the Underwriter with such
information regarding the City, the Tax Receipts, and the current financial condition and
ongoing operations of the City, all as the Underwriter may reasonably request.
6. Closing. At 10:00 a.m. Little Rock time on , 2003, or at such other
time and/or date as shall have been mutually agreed upon by the City and the Underwriter (the
"Closing Date"), the City will deliver the Bonds, or cause the Bonds to be delivered, to or. at the
direction of the Underwriter, said Bonds to be in definitive form duly executed by the City and
authenticated by the Bank of Oklahoma, N.A., Tulsa, Oklahoma, as trustee (the "Trustee"),
together with the other documents hereinafter mentioned; and the Underwriter will accept such
delivery and pay the Purchase Price of the Bonds by making a wire transfer of federal funds
payable to the order of the Trustee for the account of the City.
The Bonds shall be delivered to The Depository Trust Company in New York,
New York, and the activities relating to the final execution and delivery of the Authorizing
• Ordinance, the Levying Ordinance, the Indenture, the Escrow Agreement, the Continuing
Disclosure Agreement and the Tax Regulatory Agreement and the other documents related to the
Bonds and the payment for the Bonds and the delivery of the certificates, opinions and other
6
10-17965.2
• instruments as described in Section 8 of this Bond Purchase Agreement shall occur in the offices
of Kutak Rock LLP, '.25 West Capitol Avenue, Suite 1100, Little Rock, Arkansas ("Bond
Counsel") or at such other place as shall have been mutually agreed upon between the City and
the Underwriter. The payment for the Bonds and simultaneous delivery of the Bonds to or at the
direction of the Underwriter is herein referred to as the "Closing."
7. 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, if at any time hereafter and prior to
the Closing:
(i) the House of Representatives or the Senate of the Congress of the
United States, or a committee of either, shall have pending before it, or shall have passed or
recommended favorably, legislation introduced previous to the date hereof, which
legislation, if enacted in its form as introduced or as amended, would have the purpose or
effect of imposing federal income taxation upon revenues or other income of the general
character to be derived by the City or by any similar body under the Authorizing Ordinance
or the Indenture or similar documents or upon interest received on obligations of the general
character of the Bonds or the Bonds, or of causing interest on obligations of the general
character of the Bonds, or the Bonds, to be includable in gross income for purposes of
federal income taxation, and such legislation, in the Underwriter's opinion, materially
adversely affects the market price of the Bonds; or
• (ii) a tentative decision with respect to legislation shall be reached by a
committee of the House of Representatives or the Senate of the Congress of the
United States, or legislation shall be favorably reported or rereported by such a committee or
be introduced, by amendment or otherwise, in or be.passed by the House of Representatives
or the Senate, or recommended to the Congress of the United States for passage by the
President of the United States, or be enacted or a decision by a federal court of the
United States or the United States Tax Court shall have been rendered, or a ruling, release,
order, regulation or official statement by or on behalf of the United States Treasury
Department, the Internal Revenue Service or other governmental agency shall have been
made or proposed to be made having the purpose or effect, or any other action or event shall
have occurred which has the purpose or effect, directly or indirectly, of adversely affecting
the federal income tax consequences of owning the Bonds or of any of the transactions
contemplated in connection herewith, including causing interest on the Bonds to be included
in gross income for purposes of federal income taxation, or imposing federal income
taxation upon revenues or other income of the general character to be derived by the City or
by any similar body under the Authorizing Ordinance or the Indenture or similar documents
or upon interest received on obligations of the general character of the Bonds, or the Bonds
which, in the opinion of the Underwriter, materially adversely affects the market price of or
market for the Bonds; or
(iii)
legislation shall have been
enacted, or
actively considered for enactment
with an effective date prior to the Closing, or a decision
by a court of the United States shall
• have been
rendered, the effect of which
is that the
Bonds, including any underlying
obligations,
or the Indenture, as the case
may be, is
not exempt from the registration,
7
10-17965.2
• qualification or other requirements of the Securities Exchange Act of 1933, as amended and
as then in effect, 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
(iv) a stop order, ruling, regulation or official statement by the Securities and
Exchange Commission or any other governmental agency having jurisdiction of the subject
matter shall have been issued or made or any other event occurs, the effect of which is that
the issuance, offering or sale of the Bonds, including any underlying obligations, or the
execution and delivery of the Indenture as contemplated hereby or by the Official Statement,
is or would be in violation of any provision of the federal securities laws, including the
Securities Act of 1933, as amended and as then in effect, 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
(v) any event shall have occurred or any information shall have become known
to the Underwriter which causes the Underwriter to reasonably believe that the Official
Statement as then amended or supplemented includes an untrue statement of a material fact,
or omits to state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or
(vi) there shall have occurred any outbreak of hostilities or any national or
international calamity or crisis, including a financial crisis, the effect of which on the
financial markets of the United States is such as, in the reasonable judgment of the
Underwriter, would materially adversely affect the market for or market price of the Bonds;
or
(vii) there shall be in force a general suspension of trading on the New York
Stock Exchange, the effect of which on the financial markets of the United States is such as,
in the reasonable judgment of the Underwriter, would materially adversely affect the market
for or market price of the Bonds; or
(viii) a general banking moratorium shall have been declared by federal,
New York or State authorities; or
(ix) any proceeding shall be pending or threatened by the Securities and
Exchange Commission against the City; or
(x) 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; or
(xi) the New York Stock Exchange or other national securities exchange, or any
governmental authority, shall impose, as to the Bonds or obligations of the general character
of the Bonds, any material restrictions not now in force, or increase materially those now in
force, with respect to the extension of credit by, or the charge to the net capital requirements
• of the Underwriter.
10-47965.2
3. Conditions to Underwriter's Obligations. The obligation of the Underwriter to
purchase the Bonds shall be subject (a) to the performance by the City of its obligations to be
performed hereunder at and prior to the Closing, (b) to the accuracy of the representations and
warranties of the City herein as of the date hereof and as of the time of the Closing, and (c) to the
following conditions, including the delivery by the City of such documents as are enumerated
herein in form and substance satisfactory to the Underwriter:
(a) The Bonds shall have been duly authorized, executed and delivered in the
form approved by the City in the Indenture with only such changes therein as the
Underwriter and the City shall mutually agree upon, which shall in all instances be as
described in the final Official Statement;
(b) At the time of Closing, (i) the Official Statement, this Bond Purchase
Agreement, the Indenture, the Escrow Agreement, the Authorizing Ordinance, the
Levying Ordinance, the Continuing Disclosure Agreement and the Tax Regulatory
Agreement shall be in full force and effect and shall not have been amended, modified or
supplemented from the date hereof, except as may have been agreed to in writing by the
Underwriter, (ii) the proceeds of the sale of the Bonds and other funds shall be deposited
and applied as described in the Indenture, (iii) no default or event of default under the
Indenture shall have occurred and be continuing, and (iv) no material adverse change
affecting the City, the Tax -or the Tax Receipts shall have occurred;
• (c) Receipt of fully executed originals of the Indenture, the Escrow
Agreement, the Continuing Disclosure Agreement and the Tax Regulatory Agreement at
or prior to the Closing;
(d)
At or prior to the
Closing, the Underwriter
shall receive the following
documents
in such number of
counterparts as shall be
mutually agreeable to the
Underwriter
and Bond Counsel:
(1) A final approving opinion of Bond Counsel, dated the Closing
Date, in substantially the form set forth in Exhibit B hereto;
(2) A supplemental opinion of Bond Counsel, addressed to the City,
the Trustee and the Undenvriter and dated the Closing Date, in substantially the
form set forth in Exhibit C hereto;
(3) The Official Statement executed by a duly authorized officer of the
City;
(4) Certified copies of the Authorizing Ordinance and the Levying
Ordinance and all other ordinances and resolutions of the City relating to the
Bonds and the Tax;
(5) Photocopies of the Bonds as executed and delivered;
• (6) A letter from Standard & Poor's Ratings Services, a Division of
The McGraw-Hill Companies, Inc., to the effect that the Bonds have been
9
10-47965.2
• assigned a rating of no less than "", which rating shall be in effect as of the
Closing Date;
(7) The
certificates of and
satisfactory to Bond Counsel;
(the "Policy") issued by
(" "), together with such supporting
opinions of counsel to as shall be
.(S) A certificate, in form and substance satisfactory to the
Underwriter, of any duly authorized officer or official of the City. satisfactory to
the Underwriter, dated as of the Closing Date, to the effect that: (i) each of the
City's representations, warranties and covenants contained herein are true and
correct as of the Closing Date; (ii) the City has duly adopted the Authorizing
Ordinance and the Levying Ordinance by all action necessary under the Act and
the laws of the State of Arkansas, and has duly authorized the execution, delivery
and due performance of the Bonds, the Indenture, the Escrow Agreement, the
Continuing Disclosure Agreement, the Tax Regulatory Agreement, the Official
Statement and this Bond Purchase Agreement; (iii) no litigation is pending, or to
the knowledge of the officer or official of the City signing the certificate after due
investigation and inquiry, threatened, to restrain or enjoin the issuance or sale of
the Bonds or in any way affecting any authority for or the validity of the Bonds,
the Tax, the Official Statement, the Authorizing Ordinance, the Levying
• Ordinance, the Indenture, the Escrow Agreement, the Continuing Disclosure
Agreement, the Tax Regulatory Agreement or this Bond Purchase Agreement;
(iv) the Bonds, the Indenture, the Escrow Agreement, this Bond Purchase
Agreement, the Continuing Disclosure Agreement and the Tax Regulatory
Agreement, as executed and delivered by the City, are in the form or in
substantially the form approved for such execution by appropriate proceedings of
the City; (v) neither the Authorizing Ordinance nor the Levying Ordinance have
been amended, modified or repealed as of the Closing Date, and the Authorizing
Ordinance and the Levying Ordinance remain in full force and effect; (vi) none of
the proceedings of the City taken preliminary to the issuance of the Bonds, as
certified in such certificate, including the levy of the Tax, have been in any
manner repealed, amended or changed; (vii) the City has complied in all respects
with the provisions of the Act and has full legal right, power and authority to levy
the Tax, to pledge the Tax Receipts and to issue the Bonds for the purposes stated
in the Act and to enter into this Bond Purchase Agreement, to adopt the
Authorizing Ordinance and the Levying Ordinance, to issue, sell and deliver the
Bonds as provided in this Bond Purchase Agreement, and to carry out and
consummate all other transactions contemplated by this Bond Purchase
Agreement, the Authorizing Ordinance, the Levying Ordinance, the Indenture, the
Escrow Agreement, the Continuing Disclosure Agreement and the Tax
Regulatory Agreement; (viii) neither the Official Statement nor any amendment
or supplement thereto contains any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements contained
• therein, in the light of the circumstances under which they were made, not
misleading; and (ix) to the best knowledge of the officer or official of the City
10
I0-47965.?
• signing the certificate, no event affecting the City or the Tax has occurred since
the date of the Official Statement which should be disclosed in the Official
Statement for the purposes for which it is used that is necessary to disclose therein
in order to make the statements and information therein not misleading in any
respect;
(9) An opinion of Kit Williams, Esq., City Attorney, dated the Closing
Date and addressed to the Underwriter, Bond Counsel and the Trustee, to the
effect that (i) the City is a duly organized and validly existing political
subdivision and city of the first class, organized under the laws of the State of
Arkansas, with full power and authority to adopt the Authorizing Ordinance and
the Levying Ordinance, to levy the Tax, to pledge the Tax Receipts and to execute
and deliver the Bonds, the Indenture, the Escrow Agreement, the Continuing
Disclosure Agreement, the Tax Regulatory Agreement and this Bond Purchase
Agreement; (ii) the City has duly approved the Preliminary Official Statement and
the Official Statement; (iii) the Authorizing Ordinance and the Levying Ordinance
have been duly adopted by the City by all action necessary under the Act and the
laws of the State of Arkansas, and remain in full force and effect; (iv) the
Indenture, the Escrow Agreement, the Continuing Disclosure Agreement, the Tax
Regulatory Agreement and this Bond Purchase Agreement have been duly
authorized, approved, executed and delivered by the City and, subject to the
extent that the enforceability of the rights and remedies set forth therein may be
• limited by bankruptcy, insolvency or other laws affecting creditors' rights
generally, constitute valid and binding agreements of the City enforceable in
accordance with their terms; (v) the information in the Official Statement under
the captions "THE REFUNDING PROGRAM," "THE CITY," "THE
COMMISSION" and "LEGAL MATTERS" (apart from financial or statistical
data contained or incorporated therein, as to which no view need be expressed) is
fair, accurate and complete and does not omit any matter which, in such counsel's
opinion, for the purposes for which the Official Statement is to be used, should be
included or referred to therein; (vi) excepting those matters discussed in the
Official Statement, there is no action, suit or proceeding at law or in equity before
or by any court, public board or body, pending or threatened, against or affecting
the City, challenging the validity of the transactions contemplated by the Official
Statement or the validity of the Bonds, the Tax, the Authorizing Ordinance, the
Levying Ordinance, the Indenture, the Escrow Agreement, the Continuing
Disclosure Agreement, the Tax Regulatory Agreement or this Bond Purchase
Agreement and, to the best of such counsel's knowledge, there is no investigation,
pending or threatened, and no threatened action, suit or proceeding involving any
of the matters hereinabove mentioned in this clause (vi); (vii) the execution and
delivery of the Authorizing Ordinance, the Levying Ordinance, the Indenture, the
Escrow Agreement, the Continuing Disclosure Agreement, the Tax Regulatory
Agreement and this Bond Purchase Agreement, and compliance with the
provisions hereof and thereof, under the circumstances contemplated hereby and
• thereby, do not and will not in any material respect conflict with or constitute on
the part of the City a breach of or default under any agreement or other instrument
to which the City is a party or any existing law, regulation, court order or consent
1047965.2
• decree to which the City is subject; and (viii) based upon the examinations which
such counsel has made as counsel to the City, which shall be specified, nothing
has come to such counsel's attention which would lead such counsel to believe
that the Official Statement (except for the financial statements and other financial
data included in the Official Statement, as to which no view need be expressed)
contains an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(10) Evidence that Federal Form 8038-G has been executed by the City
and is ready for filing with the Internal Revenue Service.
(11) Evidence that, except as disclosed in the Official Statement, all
necessary approvals, whether legal or administrative, have been obtained from
applicable federal, state and local entities and agencies; and
(12) Such additional legal opinions, certificates, proceedings,
instruments and other documents as the Underwriter and Bond Counsel may
reasonably request to evidence compliance by the City with legal requirements,
the truth and accuracy; as of the time of Closing, of the representations of the City
herein contained and the due performance or satisfaction by the City at or prior to
such time of all agreements then to be performed and all conditions then to be
satisfied.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriter
contained in this Bond Purchase Agreement, or if the obligation of the Underwriter to purchase
and accept delivery of the Bonds shall be terminated for any reason permitted by this Bond
Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the Underwriter
nor the City shall be under further obligation hereunder; except that the respective obligations to
pay expenses, as provided in Section 12 hereof, shall continue in full force and effect.
9.
Conditions
to
Obligations of the City. The obligations of the City hereunder are
subject to
the performance
by
the Underwriter of its obligations hereunder.
10. Survival. All representations, warranties and agreements of the City shall remain
operative and in full force and effect, regardless of any investigations made by or on behalf of
the Underwriter, and shall survive the Closing. The obligations of the City under Sections 11 or
12 hereof shall survive any termination of this Bond Purchase Agreement by the Underwriter
pursuant to the terms hereof
11. . Indemnification. The City, to the extent permitted by law, agrees to indemnify
and hold harmless the Underwriter, each member, officer, director, partner or employee of the
Underwriter and each person who controls the Underwriter within the meaning of Section 15 of
the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as
amended (collectively called the "Indemnified Parties"), against any and all losses, claims,
damages, liabilities or expenses (including any legal or other expenses incurred by an
Indemnified Party in connection with investigating any claims against an Indemnified Party and
12
10-47965.2
• defending any actions) whatsoever caused by any untrue statement or misleading statement or
alleged untrue statement or alleged 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 required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not misleading insofar as
such losses, claims, damages, liabilities or expenses are caused by any such untrue or misleading
statement or omission or alleged untrue or misleading statement or omission in the information
contained in the Official Statement; provided, however, that the City shall not be liable to an
Indemnified Party in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any of such documents in reliance upon and in conformity
with written information furnished to the City by the Underwriter specifically for use therein.
No Indemnified Parties shall be indemnified hereunder for any losses, claims, damages or
liabilities resulting from the negligence of such Indemnified Parties.
12. Payment of Expenses. The City will pay or cause to be paid all reasonable
expenses incident to the performance of its obligations under this Bond Purchase Agreement,
including, but not limited to, expenses of mailing or delivery of the Bonds, costs of printing the
Bonds, the Preliminary and final Official Statements, any amendment or supplement to the
Preliminary or final Official. Statement and this Bond Purchase Agreement, fees and
disbursements of Bond Counsel, any fees charged by investment rating agencies for the rating of
the Bonds, bond insurance premiums, if any, fees of the Trustee and any paying agent fees, and
• any fees and disbursements in connection with the qualification of the Bonds for sale under the
securities or "Blue Sky" laws of the various jurisdictions and the preparation of "Blue Sky"
memoranda. In the event this Bond Purchase Agreement shall terminate because of the default
of the Underwriter, the City will, nevertheless, pay, or cause to be paid, all of the expenses
specified above. The Underwriter shall pay all advertising expenses in connection with the
public offering of the Bonds, and all other expenses incurred by it in connection with the public
offering and distribution of the Bonds, including the fees and expenses of any counsel retained
by the Underwriter. If the City defaults under this Bond Purchase Agreement, the Underwriter
may bring whatever legal action it may have against the City to recover damages, if any, incurred
• by the Underwriter.
13. Notices. Any notice or other communication to be given to the City under this
Bond Purchase Agreement may be given by delivering the same in writing to the Mayor at the
address set forth above, and any notice or other communication to be given to the Underwriter
under this Bond Purchase Agreement may be given by delivering the same in writing to Stephens
Inc., 3425 North Futrall, Suite 201, Fayetteville, AR 72703, Attention: Mr. Dennis Hunt.
14. Non assign ability. This Bond Purchase Agreement is made solely for the benefit
of the City and the Underwriter (including any successor or assign of the Underwriter), and no
other person, including any purchaser of the Bonds, shall acquire or have any right hereunder or
by virtue hereof.
15. Applicable Law. This Bond Purchase Agreement shall be governed by and
construed in accordance with the laws of the State of Arkansas.
13
10-47965.2
• 16. Counterparts. This Bond Purchase Agreement shall become effective upon your
acceptance hereof and may be executed in counterparts, each of which shall be regarded as an
original and all of which shall constitute one and the same document.
Very truly yours,
STEPHENS INC.
By:
Authorized Representative
Accepted and agreed to as of
the date first above written:
CITY OF FAYETTEVILLE, ARKANSAS
Title: Mayor
14
10-47965.2
• EXHIBIT A
MATURITY SCHEDULE
(October 1)
Principal
Interest
Maturity
Amount
Rate
Price
2004
$
2005
%
%
2006
2007
%
2008
°i°
%
2009
2010
2011
2012
2013
2014
2015
• (with accrued interest on all Bonds from July 1, 2003)
10-47965.2 A-1
• EXHIBIT B
PROPOSED FORM OF BOND COUNSEL APPROVING OPINION
Upon delivery of the Bonds in definitive form, Kutak Rock LLP, Little Rock, Arkansas,
proposes to deliver its approving opinion in substantially the following form:
July _, 2003
City of Fayetteville, Arkansas
Fayetteville, Arkansas
Bank of Oklahoma, N.A., as Trustee
Tulsa, Oklahoma
Stephens Inc.
Fayetteville, Arkansas
5
City of Fayetteville, Arkansas
Hotel and Restaurant Gross Receipts Tax Refunding Bonds
Series 2003
Ladies and Gentlemen:
We have acted as bond counsel in connection with the issuance and sale by the City of
Fayetteville, Arkansas (the "City"), a political subdivision of the State of Arkansas, of its
S Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series 2003 (the
"Bonds").
The Bonds are being issued pursuant to the provisions of the Constitution and laws of the
State of Arkansas, including, particularly, the Advertising and Promotion Commission Act,
Arkansas Code Annotated (1997 Repl.) §§26-75-601 et seq. (as from time to time amended, the
"Act"), pursuant to Ordinance No. _ of the City, duly adopted and approved on
2003 (the "Authorizing Ordinance"), and pursuant to a Trust Indenture dated as of July 1, 2003
(the "Indenture"), by and between the City and Bank of Oklahoma, N.A., as trustee (the
"Trustee"). Reference is hereby made to the Indenture and to all indentures supplemental thereto
for the provisions, among others, with respect to the conditions for the issuance of parity debt by
the City, the nature and extent of the security for the Bonds, the rights, duties and obligations of
the City, the Trustee and the Holders of the Bonds, and the terms upon which the Bonds are
issued and secured.
Reference is made to an opinion of even date herewith of Kit Williams, Esq., City
Attorney, a copy of which is on file with the Trustee, with respect, among other matters, to the
status and valid existence of the City, the power of the City to adopt the Authorizing Ordinance
• and to enter into and perform its obligations under the Indenture, the valid adoption of the
Authorizing Ordinance, and the due authorization, execution and delivery of the Indenture by the
City, and with respect to the Indenture being enforceable upon the City.
10-47965.2 B-1
We have examined the law and such certified proceedings and other papers as we have
deemed necessary to render this opinion. As to questions of fact material to our opinion, we
have relied upon the representations of the City contained in the Authorizing Ordinance and the
Indenture and in the certified proceedings and other certifications of public officials furnished to
us, without undertaking to verify the same by independent investigation.
Based upon the foregoing, we are of the opinion, under existing law, as follows:
1. The City is duly created and validly existing as a municipal corporation of the
State of Arkansas. Pursuant to the Constitution and laws of the State of Arkansas, including,
particularly, the Act, the City is empowered to adopt the Authorizing Ordinance, to execute and
deliver the Indenture, to perform the agreements on its part contained therein, and to issue the
Bonds.
2. The Authorizing Ordinance has been duly adopted by the City and constitutes a
valid and binding obligation of the City enforceable upon the City in accordance with its terms.
3. The Indenture has been duly authorized, executed and delivered by the City and is
a valid and binding obligation of the City enforceable upon the City in accordance with its terms.
4. The Bonds have been validly authorized, executed, issued and delivered by the
City and represent valid and binding special obligations of the City. The principal, premium, if
• any, and interest on the Bonds shall be payable from, and shall be secured by an assignment and
pledge by the City to the Trustee of, the Tax Receipts (as defined in the Indenture).
5. The Tax Receipts have been duly and validly assigned and pledged to the Trustee
under the Indenture, and the Indenture creates, as security for the Bonds, a valid security interest
in the Tax Receipts.
6. The interest on the Bonds is excluded from gross income for federal income tax
• purposes and is not an item of tax preference for purposes of the federal alternative minimum tax
imposed on individuals and corporations; it should be noted, however, that, for the purpose 'of
computing the alternative minimum, tax imposed on corporations (as defined for federal income
tax purposes), such interest is taken into account in determining adjusted current earnings for
purposes of such alternative minimum tax. The opinions set forth in the preceding sentence are
subject to the condition that the City comply with all requirements of the Internal Revenue Code
of 1986, as amended, that must be satisfied prior to or subsequent to the issuance of the Bonds in
order that the interest thereon be, or continue to be, excluded from gross income for federal
income tax purposes. The City has covenanted to comply with each such requirement. Failure
to comply with certain of such requirements may cause the inclusion of interest on the Bonds in
gross income for federal income tax purposes to be retroactive to the date of issuance of the
Bonds. The Bonds are "qualified tax-exempt obligations" within the meaning of Section
265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of
Section 265(b)(5) of the Code), a deduction is allowed for 80 percent of that portion of such
financial institution's interest expense allocable to interest on the Bonds. We express no opinion
• regarding other federal tax consequences arising with respect to the Bonds.
10-47965.2 B-2
• 7. The interest on the Bonds is exempt from all state, county and municipal taxes in
the State of Arkansas.
8. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as
amended, and the Indenture is not required to be qualified under the Trust Indenture Act of 1939,
as amended, in connection with the offer and sale of the Bonds.
It is to be understood that the rights of the registered owners of the Bonds and the
enforceability of the Bonds, the Authorizing Ordinance and the Indenture may be subject to
bankruptcy, insolvency, reorganization, moratorium and other 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,
•
10-47965.2 B-3
0 1 . EXHIBIT C
PROPOSED FORM OF BOND COUNSEL SUPPLEMENTAL OPINION
July __,2003
City of Fayetteville, Arkansas
Fayetteville, Arkansas
Bank of Oklahoma, N.A., as Trustee
Tulsa, Oklahoma
Stephens Inc.
Fayetteville, Arkansas
S
City of Fayetteville, Arkansas
Hotel and Restaurant Gross Receipts Tax Refunding Bonds
Series 2003
Ladies and Gentlemen:
This opinion supplements our bond approving opinion, dated the date hereof, relating to
the above -captioned bonds (the "Bonds"). Except as otherwise defined herein, the terms used
herein shall have the meanings prescribed for them in said opinion.
We have examined the law and such certified proceedings and other papers as we have
deemed necessary to render this opinion.. As to questions of fact material to our opinion, we
have relied upon the representations of the City contained in the Indenture and in the certified
proceedings and other certifications of public officials furnished to us, without. undertaking to
verify the same by independent investigation.
In
addition
to the
documents specifically mentioned in the approving opinion, in
connection
with this
opinion
we have also examined:
(a) An executed counterpart of the Bond Purchase Agreement dated
2003 (the "Bond Purchase Agreement"), by and between the City and
Stephens Inc., as underwriter (the "Underwriter");
(b) An executed counterpart of the Escrow Deposit Agreement dated July _,
2003 (the "Escrow Agreement"), by and between the City and the Bank of Oklahoma,
N.A., as escrow trustee (the "Escrow Trustee");
(c) An executed counterpart of the Continuing Disclosure Agreement dated
July _, 2003 (the "Disclosure Agreement"), by and between the City and the Bank of
Oklahoma, N.A., as trustee (the "Trustee");
10-47965.2 C- l
(d) An executed counterpart of the Tax Regulatory Agreement dated July _,
2003 (the "Tax Regulatory Agreement"), by and between the City and the Trustee; and
(e) Portions of the Official Statement dated , 2003, with respect
to the Bonds (the "Official Statement"), captioned "INTRODUCTORY STATEMENT,"
"THE SERIES 2003 BONDS," "SECURITY FOR THE BONDS," "ESTIMATED
SOURCES AND USES OF FENDS," "DEFINITIONS OF CERTAIN TERMS,"
"SUMMARY OF THE INDENTURE," "SUMMARY OF THE CONTINUING
DISCLOSURE AGREEMENT," "TAX EXEMPTION," and "APPENDIX A — Form of
Opinion of Bond Counsel" (the "Relevant Captions") insofar as they relate to this
opinion.
Based on our examination, we are of the opinion, as of the date hereof and under existing
law, as follows:
1. The Bond Purchase Agreement has been duly authorized, executed and
delivered by the City and, assuming due authorization, execution and delivery by the
Underwriter, the Bond Purchase Agreement constitutes the valid and binding agreement
of the City enforceable in accordance with its terms.
2.
The
Escrow Agreement has been
duly authorized, executed and delivered
by the City
and,
assuming due authorization,
execution and delivery by the Escrow
Trustee, the Escrow Agreement constitutes the valid and binding agreement of the City
enforceable in accordance with its terms.
3. The Disclosure Agreement has been duly authorized, executed and
delivered by the City and, assuming due authorization, execution and delivery by the
Trustee, the Disclosure Agreement constitutes the valid and binding agreement of the
City enforceable in accordance with its terms.
4. The Tax Regulatory Agreement has been duly authorized, executed and
delivered by the city and, assuming due authorization, execution and delivery by the
Trustee, the Tax Regulatory Agreement constitutes the valid and binding agreement of
the City enforceable in accordance with its terms.
5. The statements contained in the Official Statement under the Relevant
Captions, insofar as such statements purport to summarize certain provisions of the
Bonds, the•Indenture and the Continuing Disclosure Agreement, or conclusions of law
and legal opinions, are true, accurate and correct summaries thereof in all material
respects and do not omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading.
The enforceability of the respective obligations of the parties to the documents and other
items described above, and the availability of certain rights and remedies provided for therein,
may be limited by bankruptcy, receivership, insolvency, reorganization, moratorium, marshalling
• or other similar statutes or rules of law affecting creditors' rights and remedies, to general
principles of equity and to the discretion of any court in granting any relief or issuing any order,
whether the proceeding is considered a proceeding at law or equity. In particular, the right to
10-47965.2 C-2
• indemnification under any of the documents or other items described above may be limited by
federal of state securities laws or by the public policy underlying such laws.
This opinion is being rendered to you solely for your use and benefit and may not be
relied upon in any manner, nor used, by any other person.
Very truly yours,
•
10-47965.2 •C-3
KUTAK ROCK LLP
DRAFT 5/07/03
• ESCROW DEPOSIT AGREEMENT
THIS ESCROW DEPOSIT AGREEMENT (this "Agreement") dated July _, 2003,
by and between the City of Fayetteville, Arkansas, a political subdivision of the State of
Arkansas (the "City"), and Bank of Oklahoma, N.A., Tulsa, Oklahoma, a national banking
association organized and existing by virtue of the laws of the United States of America, as
escrow trustee for the hereinafter defined Prior Bonds (the "Escrow Trustee").
WITNESSETH:
WHEREAS, the City has heretofore issued its $6,950,000 Hotel and Restaurant Gross
Receipts Tax Bonds, Series 1998, dated as of November 1, 1998, of which $6,620,000 aggregate
principal amount are outstanding and are stated to mature on October 1, 2003 to October 1, 2012,
inclusive, and on October 1, 2015 (with sinking fund redemption on October 1 in the years 2013
and 2014) (the "Prior Bonds"); and
WHEREAS, the terms of and the security for the Prior Bonds are prescribed by that
certain Trust Indenture dated as of September 1, 1995, as amended and supplemented by a First
Supplemental Trust Indenture dated as of November 1, 1998 (the "Prior Indenture"), between the
City and the Bank of Oklahoma, N.A., as trustee (the "Prior Trustee"); and
• WHEREAS, Article IX of the Prior Indenture provides under certain circumstances that
the Prior Bonds shall be deemed paid within the meaning of the Prior Indenture if there shall be
on deposit with the Prior Trustee moneys or certain types of investment obligations described
therein maturing on or prior to the maturity or redemption dates of the Prior Bonds and sufficient
to pay when due the principal of, premium, if any, and interest on the Prior Bonds to the maturity
date or redemption date, as the case may be; and
WHEREAS, the City, pursuant to an ordinance adopted by its City Council on
, 2003, and the Constitution and laws of the State of Arkansas, has authorized the
issuance of $ aggregate principal amount of its Hotel and Restaurant Gross
Receipts Tax Refunding Bonds, Series 2003 (the "Refunding Bonds"), a portion of the proceeds
of which are to be used, together with other available funds, to refund all of the Prior Bonds; and
. WHEREAS, the City has made arrangements for deposit with the Escrow Trustee of
moneys and investment obligations derived from and purchased with (a) a portion of the
proceeds derived from the sale of the Refunding Bonds, (b) amounts released from the Bond
Fund for the Prior Bonds, and (c) amounts released from the Bond Reserve Fund for the Prior
Bonds, which in the aggregate will provide sufficient immediately available funds to enable the
Escrow Trustee to pay the principal of and interest on the Prior Bonds upon redemption on
October 1, 2003 (the "Redemption Date"), as set forth on Schedule 1 hereto; and
WHEREAS,
the City has entered
into
this Agreement
with the Escrow Trustee in order
to ensure that the
procedures required
for
discharging the
Prior Bonds will be followed;
•
10-47997.2
• NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth, and in order to provide for the redemption of the Prior Bonds and to set
forth the obligations of the parties hereto, the parties hereto agree as follows:
Section 1. Establishment of Escrow Fund. There is hereby created and established
with the Escrow Trustee a special, segregated and irrevocable escrow account designated "City
of Fayetteville, Arkansas - 1998 Refunding Escrow Fund" (the "Escrow Fund") to be held in the
custody of the Escrow Trustee as a trust fund for the benefit of the registered owners of the Prior
Bonds, separate and apart from other funds of the City and the Escrow Trustee.
Section 2. Deposit to Escrow Fund; Application of Moneys. Simultaneously with the
execution of this Agreement, the City has sold and delivered the Refunding Bonds. From the
proceeds of the sale of the Refunding Bonds, the City has delivered to the Escrow Trustee for
deposit in the Escrow Fund immediately available moneys in the amount of S . The•
Escrow Trustee, in its role as Prior Trustee, is hereby directed to liquidate all investments in the
Bond Fund and Bond Reserve Fund established under the Prior Indenture and applicable to the
Prior Bonds, and to transfer such moneys (viz., the sum of $_ ) to the Escrow Fund.
The Escrow Trustee has purchased, from and as an investment of moneys in the Escrow Fund, at
the prices indicated, the direct noncallable obligations of the United States of America identified
in Schedule 2 attached hereto (the "Government Obligations"). Accordingly, the Escrow Trustee
now holds (or has the right to receive principal and interest on) the Governmental Obligations
and S in uninvested cash.
• Section 3. Deposit to Escrow Fund Irrevocable. The deposit of the moneys and
Governmental Obligations in the Escrow Fund shall constitute an irrevocable deposit of said
moneys and Governmental Obligations exclusively for the benefit of the owners of the Prior
Bonds, and such moneys and Governmental Obligations shall be held in escrow and shall be
applied solely to the payment of the principal of and interest on the Prior Bonds through and
including the Redemption Date. Subject to the requirements set forth herein for the use of the
Escrow Fund and the moneys therein, the City covenants and agrees that the Escrow Trustee
shall have full and complete control and authority over and with respect to the Escrow Fund and
the moneys and Governmental Obligations deposited therein.
Section 4. Use of Moneys. The Escrow Trustee shall apply the moneys and
Governmental Obligations deposited in the Escrow Fund, together with any interest or income
earned thereon, in accordance with the provisions hereof. The Escrow Trustee shall withdraw
from the Escrow Fund immediately available funds for application to the payment of the
principal of and interest on the Prior Bonds in the amounts and at the times necessary in
accordance with Schedule I attached hereto. Schedule 3 attached hereto shows the availability
and application of moneys in the Escrow Fund necessary to meet the requirements set forth in
Section 1.
The Escrow Trustee shall not sell, transfer, otherwise dispose of or cause to be redeemed
prior to maturity, any Government Obligations, except as authorized by Section 5 hereof. The
Escrow Trustee shall make no further investment or reinvestment except as expressly authorized
• by Section 5. The liability of the Escrow Trustee for the payment of the amounts to be paid
hereunder shall be limited to the moneys available for such purposes in the Escrow Fund.
2
10-47997.2
• Subject to the provisions of Section 5 hereof, any amounts held as cash in the Escrow Fund shall
be held in cash without any investment thereof, not as a deposit with any bank or other
depository. The Escrow Trustee shall not have any duty with respect to calculating or verifying
the mathematical sufficiency of the moneys in the Escrow Fund to be utilized to pay the principal
of, redemption premium and interest on the Prior Bonds as the same shall become due and
payable.
Section 5. Investment of Escrow Fund Moneys. (a) The Escrow Trustee may from
time to time sell, cause the redemption of. or otherwise dispose of any Government Obligations
in the Escrow Fund upon the substitution of other direct or fully guaranteed and noncallable
obligations of the United States of America, provided:
(1) The Escrow Trustee shall have previously obtained an opinion of an
independent certified public accountant that the substitution will not adversely affect the
availability of moneys in the Escrow Fund at times. and in amounts sufficient to meet the
required payments on the Prior Bonds provided in Schedule 1 attached hereto; and
(2) The Escrow Trustee shall receive an unqualified opinion of recognized
attorneys in the field of tax-exempt municipal bonds to the effect that, if such substitution
had been reasonably expected on the date of issuance of the Prior Bonds, such
substitution would not have caused any of the Prior Bonds to be "arbitrage bonds" within
the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations of the U.S. Treasury thereunder proposed or in effect at the
• time of such substitution and applicable to obligations issued on the date of issuance of
the Prior Bonds, so as to adversely affect the exemption from Federal income taxation of
the interest on the Prior Bonds or the Refunding Bonds; and
(3) The City shall have given the Escrow Trustee its written consent to the
substitution.
All substituted obligations shall become a part of the Escrow Fund and shall be
"Government Obligations" for all purposes of this Agreement.
(b) Notwithstanding any other provision of this Agreement, the City and the Escrow
Trustee hereby covenant that no part of the proceeds of the moneys in the Escrow Fund shall be
used, at any time, directly or indirectly, in such a manner which, if such use had been reasonably
anticipated on the date of issuance of the Refunding Bonds, would have caused any of the
Refunding Bonds to be an "arbitrage bond" under Section 148 of the Code and the regulations of
the U.S. Treasury thereunder proposed or in effect at the time of such use and applicable to
obligations issued on the date of issuance of the Refunding Bonds.
Section 6. Redemption and Defeasance. (a) The City hereby calls the Prior Bonds
for redemption prior to maturity on October 1, 2003. The instructions to the Escrow Trustee to
redeem the Prior Bonds on October 1, 2003 are hereby declared to be irrevocable.
(b) The Escrow Trustee is hereby irrevocably instructed to give notice of the call for
• redemption to all registered owners of the Prior Bonds. Such notice shall be given by first class
mail, postage prepaid, in the form attached hereto as Exhibit A, at least thirty (30) days prior to
3
I0-17997.2
• the redemption date. The City will be responsible for any out-of-pocket expenses incurred in
connection with this Section 6(b) from moneys other than those in the Escrow Fund.
(c) As soon as practicable after receipt of these instructions, the Escrow Trustee shall
mail by first class mail, postage prepaid, to all of the registered owners of the Prior Bonds, a
notice of defeasance in the form attached hereto as Exhibit B. The City will be responsible for
any out-of-pocket expenses incurred in connection with this Section 6(c) from moneys other than
those in the Escrow Fund.
Section 7. Remaining Moneys in Escrow Fund. Upon the retirement of the Prior
Bonds, any amounts remaining in the Escrow Fund shall be deposited in the bond fund for the
Refunding Bonds, free and clear of the trust created by the Prior Indenture and this Agreement.
Section 8. Rights of Owners of Prior Bonds. The escrow created hereby shall be
irrevocable and the owners of the Prior Bonds shall have a beneficial interest and a first, prior
and paramount lien and claim on all moneys in the Escrow Fund until paid out, used and applied
in accordance with this Agreement.
Section 9. Fees of Escrow Trustee. In consideration of the services rendered by the
Escrow Trustee under this Agreement, the City has made arrangements satisfactory to the
Escrow Trustee for payment of its reasonable fees and expenses, and the Escrow Trustee hereby
acknowledges that it shall have no lien whatsoever upon any moneys in the Escrow Fund for
payment of such fees and expenses. The Escrow Trustee agrees to remain in office until all of
• the Prior Bonds have been redeemed.
Except to the extent arising from their gross negligence or willful misconduct, the Escrow
Trustee and its respective successors, assigns, agents and servants shall not be • held to any
liability whatsoever, in tort, contract or otherwise, in connection with the execution and delivery
of this Agreement, the establishment of the Escrow Fund, the acceptance of the moneys and
Governmental Obligations deposited therein, or by reason of any act, omission or error of the
Escrow Trustee made in good faith in the conduct of its duties.
The Escrow Trustee makes no representations or warranties as to whether the Escrow
Fund is adequate or sufficient to defease or redeem the Prior Bonds and shall not be responsible
or liable for any inadequacy or insufficiency.
The Escrow Trustee shall be entitled to the immunities, powers, privileges and
protections set forth in the Prior Indenture for the benefit of the Trustee as if set forth herein in
their entirety.
Section 10. Enforcement. The City and the owners of the Prior Bonds shall have the
right to take all actions available under law or equity to enforce this Agreement or the terms
hereof.
Section 11. Successors Bound. All covenants, promises and agreements in this
Agreement shall bind and inure to the benefit of the respective successors and assigns of the
• City, the Escrow Trustee and the owners of the Prior Bonds, whether so expressed or not.
4
10-47997.2
• Section 12. Arkansas Law Governing This Agreement shall be governed by the
applicable laws of the State of Arkansas.
Section 13. Termination. This Agreement shall terminate when all of the Prior Bonds
have been paid as aforesaid and any remaining moneys have been transferred as prodded in
Section 7 hereof.
Section 14. Severability. If any one or more of the covenants or agreements provided
in this Agreement on the part of the City or the Escrow. Trustee to be performed should be
determined by a court of competent jurisdiction to be contrary to law, such covenant or
agreement shall be deemed and construed to be severable from the remaining covenants and
agreements herein contained and shall in no way affect the validity of the remaining provisions
of this Agreement.
Section 15. Counterparts. This Agreement may be executed in several counterparts,
all or any of which shall be regarded for all purposes as one original and shall constitute and be
one and the same instrument.
Section 16. No Recourse Against City Officers and Employees. No recourse shall be
had for the payment of the principal of or interest on any of the Prior Bonds or for any claim
based thereon or upon any obligation, covenant or agreement in this Agreement. contained
against any past, present or future officer, member, alderman or employee of the City or of any
rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty
• or otherwise, and all such liability of any such officers, members, aldermen or employees, as
such, is hereby expressly waived and released as a condition of and consideration for the
execution of this Agreement.
Section 17. Notices. Unless otherwise provided, any notice, demand, direction,
request or other instrument authorized or required by this Agreement to be given to or filed with
the City or the Escrow Trustee shall be in writing and shall be addressed as follows:
To the City: City of Fayetteville, Arkansas
113 West Mountain
Fayetteville, Arkansas 72701
Attention: Finance & Internal Services Director
To the Escrow Trustee: Bank of Oklahoma, N.A.
Corporate Trust Group
I Williams Center Tower, I0`.h Floor
Tulsa, Oklahoma 74103
r
5
10-47997.2
• IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
CITY OF FAYETTEVILLE,
ARKANSAS
By:
Mayor
BANK OF OKLAHOMA, N.A.
By: _
Title:
•
• [SIGNATURE PAGE TO ESCROW AGREEMENT]
10-47997.2
• SCHEDULE1
REQUIREMENTS TO PAY AND REDEEM THE PRIOR BONDS
Principal Redemption
Payment Date Principal Due Redeemed Premium Interest Due
10-1-03 $ 80,000 $6,540,000 $ -0- $
•
•
S-1
10-47997.2 - -
Total Due
• SCHEDULE2
DESCRIPTION OF GOVERNMENT OBLIGATIONS
Type Maturity Date Principal Amount Coupon Rate
•
0
S-2
10-47997.2
• SCHEDULE3
SCHEDULE OF AVAILABILITY AND APPLICATION OF ESCROW FUND
Cash Balance at Receipts from Debt Service Requirement Cash Balance at
Period Ending Beginning of Period Government Obligations to Retire Prior Bonds End bf Period
7-_-03 $ -
10-1-03 $
•
r
LJ
S-3
10-47997.2
• EXHIBIT A
NOTICE OF REDEMPTION
City of Fayetteville, Arkansas
Hotel and Restaurant Gross Receipts Tax Bonds
Series 1998
NOTICE IS HEREBY GIVEN by Bank of Oklahoma, N.A., Tulsa, Oklahoma, the trustee (the
"Trustee") for the Hotel and Restaurant Gross Receipts Tax Bonds, Series 1998, of the City of
Fayetteville, Arkansas (the "City"), dated November 1, 1998 (the "Bonds"), that all of the
outstanding Bonds are hereby called for redemption and prepayment on October 1, 2003.
The outstanding Bonds called for redemption mature, bear interest and have been assigned
CUSIP numbers as follows:
Maturity Date
(October 1) Principal Amount Interest Rate CUSIP
2004 S 85,000 3.90% 312664 AQ 8
2005 475,000 3.95% 312664 AR 6
2006 490,000 4.00% 312664 AS 4
2007 510,000 4.15% 312664 AT 2
2008 535,000 , 4.20% 312664 AU 9
2009 555,000 4.30% 312664 AV 7
2010 580,000 4.40% 312664 AW 5
2011 605,000 4.50% 312664 AX 3
2012 630,000 4.60% 312664 AY I
2015 2,075,000 4.80% 312664 BA 2
No representation is made as to the accuracy of the CUSIP numbers set forth above, and the
redemption of the Bonds shall not be affected by any defect in or omission of such numbers.
Each of the Bonds so called for redemption and prepayment shall be redeemed and prepaid at a
redemption price of 100.0% of the principal amount thereof plus accrued interest to the date of
redemption. The Bonds shall cease to bear interest as of October 1, 2003. The Bonds so called
for redemption shall be payable at the corporate trust office of the Trustee and shall be presented
as follows:
Bank of Oklahoma, N.A.
Corporate Trust Services
1525 West W.T. Harris Blvd, 3C3
Charlotte, NC 28288-1153
Withholding. of 30% of gross redemption proceeds of any payment .made within the United
States may be required by the Economic Growth and Tax Relief Reconciliation Act of 2001,
unless the paying agent has the correct taxpayer identification number (social security or
• taxpayer identification number) or exemption certificate or equivalent when presenting your
securities for payment.
A-1
1047997.2
Dated this day of , 2003.
BANK OF OKLAHOMA, N.A.
as Trustee
Instructions: Mail by first class mail, postage prepaid to the registered owner of each Bond to be
redeemed, addressed to such registered owner at the owner's registered address, and placed in
the mails no later than September 1, 2003.
•
A-2
10-47997.2
0 EXHIBIT B
NOTICE OF DEFEASANCE
City of Fayetteville, Arkansas
Hotel and Restaurant Gross Receipts Tax Bonds
Series 1998
NOTICE IS HEREBY GIVEN THAT, pursuant to the provisions of a Trust Indenture dated as of
September 1, 1995, as amended and supplemented by a First Supplemental Trust Indenture dated
as of November 1, 1998 (the "Indenture"), under which the bonds referenced above (the
"Bonds") were issued and secured, there has been deposited with Bank of Oklahoma, N.A.,
Tulsa, Oklahoma, as Trustee for the Bonds, moneys and direct noncallable obligations of the
United States of America, sufficient in amount to pay at maturity and upon redemption on
October 1, 2003, all of the outstanding Bonds.
The City of Fayetteville, Arkansas has irrevocably called for redemption on October 1, 2003, all
of the Bonds maturing on October 1, 2004 and thereafter at a redemption price of 100% of the
principal amount thereof, together with accrued interest to the date of redemption. On and after
October 1, 2003, interest on the Bonds shall cease to accrue. As a result of the deposit with the
Trustee of the moneys and direct noncallable obligations of the United States of America
described above, the Bonds are deemed to have been paid in accordance with Article IX of the
Indenture.
• For further inquiries, contact Bank of Oklahoma, N.A., Corporate Trust Group, 1 Williams
Center Tower, 10`h Floor, Tulsa, Oklahoma 74103, Attn: Cynthia Wilkinson, phone (918) 588-
6043.
Date of mailing: July _, 2003
BANK OF OKLAHOMA, N.A.,
as Trustee
Instructions: Mail by first class mail, postage prepaid to the registered owner of each Bond to be
redeemed, addressed to such registered owner at the owner's registered address, and placed in
• the mails as soon as possible after July _, 2003.
B -I
1037997.2
KUTAK ROCK LLP
DRAFT 5/07/03
0 CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement dated as of July _, 2003 (this "Agreement'), is
executed and delivered by the City of Fayetteville, Arkansas (the "City") and the Bank of
Oklahoma, N.A., as trustee (the "Trustee"), in connection with the issuance of the City's
S Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series 2003 (the
"Bonds"). The Bonds are being issued pursuant to the terms and provisions of Ordinance
No. _ duly adopted by the City Council of the City on , 2003 (the "Authorizing
Ordinance"), and a Trust Indenture dated as of July 1, 2003 (the "Indenture"), by and between
the City and the Trustee. In connection with the issuance of the Bonds, the City and the Trustee
agree as follows:
Section 1. Purpose of this Agreement. This Agreement is being executed and
delivered by the City and the Trustee for the benefit of the Beneficial Owners of the Bonds and
in order to assist the Participating Underwriter in complying with, and constitutes the written
undertaking for the benefit of the Beneficial Owners of the Bonds required by, Section (b)(5)(i)
of Securities and Exchange Commission Rule 15c2-12 under the Securities Act of 1934, as
amended (17 C.F.R. Section 240.15c2-12) (the "Rule"). The City hereby represents that it has
not failed to comply with any previous undertaking pursuant to the Rule.
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which
apply to any capitalized term used in this Agreement unless otherwise defined in this Section, the
• following capitalized terms shall have the following meanings:
"Annual Financial Information" shall mean the annual financial information provided by
the City pursuant to, and as described in, Sections 3 and 4 of this Agreement.
"Arkansas State Repository" shall mean any public or private repository or entity as may
be designated by the State of Arkansas as a state repository for the purpose of the Rule and
recognized as such by the SEC. As of the date of this Agreement, there is no Arkansas State
Repository.
"Beneficial Owner" shall mean any person which has or shares the power, directly or
indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including
persons holding Bonds through nominees, depositories or other intermediaries.
"Disclosure Representative" shall mean the City's Finance & Internal Services Director
or his or her designee, or such other officer or employee as the City shall designate in writing to
the Trustee from time to time.
"Fiscal Year" shall mean the 12 -month period used, at any time, by the City for
accounting purposes, which may be the calendar year.
"MSRB"
shall mean
the Municipal Securities
Rulemaking Board established in
accordance with
the provisions
of Section 15B(b)(1) of the
1934 Act.
•
10-47915.2
• "National Repository" shall mean any Nationally Recognized Municipal Securities
Information Repository for purposes of the Rule. The National Repositories currently approved
by the Securities and Exchange Commission are set forth in Exhibit B hereto.
"Participating Underwriter" shall mean Stephens Inc.
"Repository" shall mean each National Repository and the Arkansas State Repository,
if any.
"Ride" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934, as the same may be amended
from time to time ("1934 Act").
"Specified Events" shall mean any of the events with respect to the Bonds listed in
Section 5(a) of this Agreement.
"Tax" shall mean the one percent (1%) tax levied by the City pursuant to Ordinance No.
2310 adopted by the City on March 1, 1977, as subsequently amended, upon (i) the gross
receipts or gross proceeds derived from renting, leasing or otherwise furnishing hotel or motel
accommodations for profit within the boundaries of the City and (ii) the portion of gross receipts
or gross proceeds received by restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out
restaurants, concession stands, convenience stores, grocery store -restaurants, caterers and similar
businesses from the sale of prepared food and beverages for on -premises or off -premises
• consumption.
"Tax Receipts" shall mean receipts derived by the City from the levy of the Tax.
Section 3. Provision of Annual Financial Information.
(a) The City shall, not later than August 1 of each year, commencing
August 1, 2003, provide to each Repository and to the Trustee its Annual Financial
Information which is consistent with the requirements of Section 4 of this Agreement.
The City's Annual Financial Information may be submitted as a single document or as
separate documents comprising a package, and may cross-reference other information as
provided in Section 4(b) hereof, provided that the audited financial statements of the City
may be submitted separately from the balance of its Annual Financial Information and
later than the date required above for the filing of the Annual Financial Information if
they are not available by that date. If the City's fiscal year changes, it shall give notice of
such change in the same manner as for a material Specified Event under Section 5 of this
Agreement.
(b) If, on the date specified in subsection (a) for providing the Annual
Financial Information to Repositories, the Trustee has not received a copy of the Annual
Financial Information, the Trustee shall contact the Disclosure Representative to
determine if the city is in compliance with subsection (a).
(c)
If the
Trustee is unable to
verify that the
Annual Financial
Information has
• been provided
to the
Repositories by the
date required
in subsection (a),
the Trustee shall
1047915.2 2
• file a notice with the Repositories and the MSRB in substantially the form set forth in
Exhibit A and as required by the Rule.
(d) The City shall:
(i) determine each year prior to the date for providing the Annual
Financial Information the name and address of each Repository; and
(ii) file a report with the Trustee certifying that the Annual Financial
Information has been provided pursuant to this Agreement, stating the date it was
provided, and listing all of the Repositories to which it was provided.
Section 4. Content of Annual Financial Information.
(a) The City's Annual Financial Information shall contain or incorporate by
reference the following:
(i) Tax Receipts for the latest Fiscal Year and for the four previous
Fiscal Years, if available; and'
(ii) The City's audited financial statements for the prior Fiscal Year,
prepared in accordance with accounting principles generally accepted in the
United States ("GAAP") as such principles are modified by the governmental
accounting standards promulgated by the Government Accounting Standards
• Board ("GASB") and by mandated principles of the State of Arkansas, if any, as
in effect from time to time, which financial statements have been audited by such
auditor as shall then be required or permitted by the laws of the State of Arkansas.
If the City's audited financial statements are not available by the time its Annual
Financial Information is required to be filed pursuant to Section 3(a) hereof, the
Annual Financial Information shall contain the unaudited financial statements of
the City, and the audited financial statements shall be filed in the same manner as
the Annual Financial Information when they become available.
(b) Any or all of the items listed above may be incorporated by reference from
other documents, including official statements of debt issues of the City or related public
entities, which have been submitted to each of the Repositories or the Securities and
Exchange Commission., If the document has been incorporated by reference in a final
official statement, it must be available from the Municipal Securities Rulemaking Board.
The City must clearly identify each such other document incorporated by reference.
Section 5. Reporting of Specified Events.
(a) This Section 5 shall govern the giving of notices of the occurrence of any
of the following events with respect to the Bonds, if material:
(1) Principal and interest payment delinquencies;
• (2) Non-payment related defaults;
I0-47915.2
3
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties;
(4) Unscheduled draws on credit enhancements reflecting financial
difficulties;
(5) Substitution of any credit or liquidity providers, or their failure to
perform;
(6) Adverse tax opinions or events affecting the tax-exempt status of
the Bonds;
(7) Modifications to rights of Bondowners;
(8) Bond calls;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the
Bonds; and
(11) Rating changes.
(b) The Trustee, upon obtaining actual knowledge of the occurrence of any of
• the Specified Events, shall promptly inform the Disclosure Representative of any
Specified Event that has occurred, and shall request that the City promptly notify the
Trustee.in writing whether to report the event pursuant to subsection (e).
(c) If the City determines that the occurrence of a Specified Event is material
to a Beneficial Owner of the Bonds, the Disclosure Representative shall promptly notify
the Trustee in writing. Such notice shall instruct the Trustee to report the occurrence
pursuant to subsection (e) below.
(d) If the City determines that the occurrence of a Specified Event is not
material, the Disclosure Representative shall so notify the Trustee in writing and instruct
the Trustee not to report the occurrence pursuant to subsection (e) below.
(e) If the Trustee has been instructed by the Disclosure Representative to
report the occurrence of a Specified Event, the Trustee shall file a notice of such
occurrence with each National Repository, or with the MSRB and the Arkansas State
Repository. The Trustee shall not be obligated to report the occurrence of a Specified
Event if there is no instruction to do so from the Disclosure Representative.
Notwithstanding the foregoing:
(i) notice of the occurrence of a Specified Event described in
subsections (a)(1), (4) or (5) shall be given by the Trustee unless the Disclosure
Representative gives the Trustee affirmative instructions not to disclose such
• occurrence; and
10.47915.2 4
(iil notice of the Specified Events described in subsections (a)(S) and
(9) need not be given under this subsection any earlier than the notice (if any) of
the underlying event is given to Beneficial Owners of affected Bonds pursuant to
the Indenture.
Section 6. Termination of Reporting Obligation. The City's obligations under this
Agreement shall terminate if the City is no longer an "obligated person" within the meaning of
the Rule. The City's obligations under this Agreement shall terminate upon the maturity,
defeasance, prior redemption or payment in full of all of the Bonds.
Section 7. Amendment; Waiver. Notwithstanding any other provision of this
Agreement, the City and the Trustee may amend this Agreement (and the Trustee shall consent
in its discretion, such consent not to be unreasonably withheld, to any amendment so requested
by the City), and any provision of this Agreement may be waived, if such amendment or waiver
is supported by an opinion of counsel, reasonably acceptable to each of the City and the Trustee,
to the effect that such amendment or waiver would not, in and of itself, cause the undertakings
herein to violate the Rule taking into account any subsequent change in or official interpretation
of the Rule.
Section 8. Additional Information. Nothing in this Agreement shall be deemed to
prevent the City from disseminating any other information, using the means of dissemination set
forth in this Agreement or any other means of communication, or including any other
information in any Annual Financial Information or notice of occurrence of a Specified Event, in
• addition to that which is required by this Agreement. If the City chooses to include any
information in any Annual Financial Information or notice of occurrence of a Specified Event in
addition to that which is specifically required by this Agreement, the City shall have no
obligation under this Agreement to update such information or include it in any future Annual
Financial Information or notice of occurrence of a Specified Event.
Section 9. Default.
(a) In the event of a failure of the City to provide to the Repositories the
Annual Financial Information as undertaken by the City in this Agreement, the Beneficial
Owner of any Bonds may take such actions as may be necessary and appropriate,
including seeking mandamus or specific performance by court order, to cause the City to
comply with its obligations to provide Annual Financial Information or notices under this
Agreement.
(b) Notwithstanding the foregoing, no Beneficial Owner of the Bonds shall
have the right to challenge the content or adequacy of the information provided pursuant
to Sections 3, 4 or 5 of this Agreement by mandamus, specific performance or other
equitable proceedings unless the City shall have been given ninety (90) days' written
notice by a Beneficial Owner of the Bonds to remedy the alleged inadequacy of the
information provided and unless Beneficial Owners of Bonds representing at least 25%
aggregate principal amount of outstanding Bonds shall join in such proceedings.
10-47915.2 5
• (c) A default under this Agreement shall not be deemed an Event of Default
under the Trust Indenture, and the sole remedy under this Agreement in the event of any
failure of the City or the Trustee to comply with this Agreement shall be an action to
compel performance.
Section 10. Duties, Immunities and Liabilities of Trustee. Article LX of the Trust
Indenture is hereby made applicable to this Agreement as if this Agreement were (solely for this
purpose) contained in the Trust Indenture The Trustee shall have only such duties as are
specifically set forth in this Agreement, and the City agrees to indemnify and save the Trustee,
its officers, directors, employees and agents, harmless against any liabilities which it may incur
arising out of or in the exercise or performance of its powers and duties hereunder, including the
costs and expenses (including attorneys' fees and expenses) of defending against any claim of
liability, but excluding liabilities due to its own negligence or willful misconduct.
Section 11. Beneficiaries. This Agreement shall inure solely to the benefit of the City,
the Trustee and the Beneficial Owners from time to time of the Bonds, and shall create no rights
in any other person or entity.
Section 12. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be an original and all of which shall constitute but one and the same
instrument.
CITY OF FAYETTEVILLE, ARKANSAS
•
By:
Title: Mayor
BANK OF OKLAHOMA, N.A.,
as Trustee
By:_
Title:
. [SIGNATURE PAGE TO CONTINUING DISCLOSURE AGREEMENT]
1017915.2
•
•
•
EXHIBIT A
NOTICE TO REPOSITORIES REGARDING
FINANCIAL INFORMATION
NAME OF ISSUER: City of Fayetteville, Arkansas
NAME OF BOND ISSUE: $ Hotel and Restaurant Gross Receipts Tax Refunding
Bonds, Series 2003
DATE OF ISSUANCE: July _, 2003
NOTICE IS HEREBY GIVEN that the City of Fayetteville, Arkansas (the "City") has not
yet provided Annual Financial Information with respect to the above -named Bonds as required
by Section 3 of the Continuing Disclosure Agreement dated as of July _, 2003, between the
City and Bank of Oklahoma, N.A., as trustee. [The City anticipates that the Annual Financial
Information will be filed by .1
Dated:
cc: City of Fayetteville
Stephens Inc.
BANK OF OKLAHOMA, N.A.,
as Trustee
A-1
10-47915.2
• EXHIBIT B
List of Nationally Recognized Municipal Securities Information Repositories
at the time of execution and delivery of the
Continuing Disclosure Agreement
This list may change from time to time. The Agreement requires that information and
notices be provided to each Repository. This list should be checked for changes each time
information or notice is to be provided.
A current list may be obtained from the Securities and Exchange Commission over the
Internet at http://www.sec.aov/info/municipal/mmsir.htm.
Bloomberg Municipal Repository
100 Business Park Drive
Skillman, NJ 08558
Phone: (609) 279-3225
Fax: (609) 279-5962
E-mail: Munis@Bloomberg.com
DPC Data Inc.
One Executive Drive
Fort Lee, NJ 07024
Phone: (201) 346-0701
• Fax: (201) 947-0107
E-mail: nrmsir@dpcdata.com
FT Interactive Data
Attn: NRMSIR
100 William Street
New York, New York 10038
Phone: (212) 771-6999
Fax: (212) 771-7390 (Secondary Market Information)
(212) 771-7391 (Primary Market Information)
Email: NRMSIR6r)FTID.com
Standard & Poor's J. J. Kenny Repository
55 Water Street
45`h Floor
New York, NY 10041
Phone: (212) 438-4595
Fax: (212) 438-3975
Email: nrmsir_repository@sandp.com
•
B-1
10-47915.2
KUTAK ROCK LLP
. ) DRAFT 05/07/2003
PRELIMINARY OFFICIAL STATEMENT DATED MAY _, 2003
N
o u NEW ISSUE *RATING:
BOOK -ENTRY ONLY
In the opinion of Bond Counsel, under existing law and assuming compliance with certain covenants, interest on the Series 2003 Bonds is excludedfrom
gross income of the owners thereof fin federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax
v v imposed on individuals and corporations; however, with respect to corporations, interest on the Series 2003 Bonds will be taken into account in determining
N adjusted current earnings and profits for purposes of computing the federal alternative minimum tax. Bond Counsel is also of the opinion that the Series 2003
Bonds are "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. Under existing law,
Bond Counsel is of the opinion that the Series 2003 Bonds and the interest thereon are exempt from all state, county and municipal taxes in the State of
2 .2 Arkansas. See the caption "TAX EXEMPTION" herein.
$ **
CITY OF FAYETTEVILLE, ARKANSAS
HOTEL AND RESTAURANT GROSS RECEIPTS TAX REFUNDING BONDS
°= SERIES 2003
I-.,-,
O �
c Dated: July 1, 2003 Due: October 1, as shown below
The Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series 2003 (the "Series 2003 Bonds"), are being issued by the City of Fayetteville,
Arkansas (the "City") for the purpose of financing a portion of the costs of (i) redeeming the City's Hotel and Restaurant Gross Receipts Tax Bonds,
Series 1998 (the "Series 1998 Bonds"), funding a debt service reserve, and paying certain expenses in connection with the issuance of the Series 2003
Bonds. See the captions "ESTIMATED SOURCES AND USES OF FUNDS" and "REFUNDING PROGRAM" herein.
I
o
5 The Series 2003 Bonds are issuable only as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The
'e`_-'� Depository Trust Company ("DTC"), New York, New York, to which principal, premium, if any, and interest payments on the Series 2003 Bonds will be
made so long as Cede & Co. is the registered owner of the Series 2003 Bonds. Individual purchases of the Series 2003 Bonds will be made only in book -entry
form, in denominations of $5,000 or integral multiples thereof. Individual purchasers ("Beneficial Owners") of Series 2003 Bonds will not receive physical
[Lv ° delivery of bond certificates. See the caption "BOOK -ENTRY ONLY SYSTEM" herein.
o `o The Series 2003 Bonds shall bear interest from their dated date, payable on April I and October 1 of each year, commencing October 1, 2003. All such
b 3 interest payments shall be payable to the persons in whose name such Series 2003 Bonds are registered on the bond registration books maintained by the Bank
o y of Oklahoma, N.A., Tulsa, Oklahoma as trustee and paying agent (the "Trustee"), as of the fifteenth day of the calendar month next preceding the calendar
o month in which the applicable interest payment date falls. Principal of and premium, if any, on the Series 2003 Bonds shall be payable at the principal
corporate trust office of the Trustee. So long as DTC or its nominee is the registered owner of the Series 2003 Bonds, disbursement of such payments to DTC
'3 N Participants is the responsibility of DTC, and the disbursement of such payments to Beneficial Owners is theTresponsibility of DTC,Participants or Indirect
Participants, as more fully described herein. I Pursuant to a Trust Indenture dated as of July 1, 2003 (the "Indenture"), between the City and the Trustee, the'payment of the principal of, premium,if
any, and interest on the Series 2003 Bonds is secured by a pledge of the receipts from a one percent (1%) citywide tax (the "Tax") levied by the City upon
c (i) the gross receipts and gross proceeds derived from renting, leasing or otherwise furnishing hotel or motel accommodations for profit within the boundaries
o rn of the City, and (ii) the portion of gross receipts or gross proceeds received by restaurants, cafes, cafeterias, delis; drive-in restaurants, carry -out restaurants,
concession stands, convenience stores, grocery store -restaurants, caterers and similar businesses from the sale of prepared food and beverages for on -premises
or off -premises consumption. See the caption "SECURITY FOR THE BONDS" herein. Assuming the satisfaction of certain coverage tests, the City has
E O o• reserved the right to issue additional bonds to be secured on a parity basis with the Series 2003 Bonds. See the caption "THE SERIES 2003 BONDS —
$ Additional Bonds" herein. The Series 2003 Bonds are subject to optional redemption prior to maturity as more fully described herein under the caption "THE
2 .� SERIES 2003 BONDS - Redemption."
9
'—� The Series 2003 Bonds are special obligations of the City secured by and payable solely from receipts of the Tax. The Series 2003 Bonds do not
constitute an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restriction. The issuance of the Series
2003 Bonds shall not directly, indirectly or contingently obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the
e `o payment of the Series 2003 Bonds, except as described herein with respect to the Tax.
� h 6
. d MATURITY SCHEDULE**
Maturity Principal Interest Maturity Principal Interest
(October11 Amount Rate Price (October I1 Amount Rate Price
2004 $ % % 2010 $ % %
°o c 2005 2011
2006 2012
2007 2013
2008 2014
$ € 0 2009 2015
(Accrued interest from July 1, 2003 to be added)
tt
v u. o The Series 2003 Bonds are offered when, as and if issued by the City and are subject to the final approving opinion of Kutak Rock LLP, Little Rock,
E E " Arkansas, Bond Counsel. Certain matters will be passed upon for the City by its counsel, Kit Williams, Esq., City Attorney. It is expected that the Series 2003
rnc Bonds will be available for delivery in New York, New York, on or about July 10, 2003.
a „
Stephens Inc.
The date of this Official Statement is June , 2003.
* See the caption "RATING " herein.
ti .� ** Preliminary; subject to change.
H_ U
O r.3
CITY OF FAYETTEVILLE, ARKANSAS
Issuer
City Council
Dan Coody, Mayor
Kyle Cook
Bob Davis
Lioneld Jordan
Shirley Lucas
Don Marr
Robert Reynolds
Robert Rhoades
Brenda Thiel
Hugh Earnest, Chief Administrative Officer
Stephen Davis, Finance & Internal Services Director
Sondra Smith, City Clerk
Kit Williams, City Attorney
t
Fayetteville Advertising and Promotion` Commission
Bob Davis, Chairman
e, Dan Coody
Neal Crawford
Pat Gazzola
David McGeady
Ching Mong
Curtis Shipley
BANK OF OKLAHOMA, N.A.
Tulsa, Oklahoma
Trustee and Paying Agent
KUTAK ROCK LLP
Little Rock, Arkansas
Bond Counsel
STEPHENSINC.
Fayetteville, Arkansas
Underwriter
•
10-47615.3
No dealer, broker, salesman or other person has been authorized by the City or by Stephens Inc. (the
• "Underwriter") to give any information or to make any representations, other than those contained herein; and, if
given or made, such other information or representations must not be relied upon as having been authorized by
either of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to
buy, nor shall there be any sale of any Series 2003 Bonds in any jurisdiction in which such offer is not authorized, or
in which the person making such offer, solicitation or sale is not qualified to do so, or to any person to whom it is
unlawful to make such offer, solicitation or sale. The information and expressions of opinion contained herein are
subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder
shall, under any circumstances, create any implication that there has been no change in the affairs of the City since
the date hereof.
THE SERIES 2003 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, NOR HAS THE TRUST INDENTURE BEEN QUALIFIED UNDER THE TRUST
INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON CERTAIN EXEMPTIONS FROM SUCH
REGISTRATION AND QUALIFICATION CONTAINED IN SUCH LAWS.
CERTAIN INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM THE CITY, THE
DEPOSITORY TRUST COMPANY AND OTHER SOURCES WHICH ARE BELIEVED TO BE RELIABLE.
THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN
ACCORDANCE WITH, AND AS PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE
FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS
TRANSACTION, BUT THE UNDERWRITER DOES NOT GUARANTY THE ACCURACY OR
COMPLETENESS OF SUCH INFORMATION.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2003 BONDS
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.- SUCH
STABILIZING, IF COMMENCED, MAYBE DISCONTINUED AT ANY TIME.
• TABLE OF CONTENTS
Page
IntroductoryStatement......................................................................................................................................... I
TheSeries 2003 Bonds......................................................................................................................................... 2
Securityfor the Bonds.......................................................................................................................................... 4
Book -Entry Only System...................................................................................................................................... 5
RefundingProgram............................................................................................................................................... 7
Estimated Sources and Uses of Funds.................................................................................................................. 8
Estimated Debt Service Requirements.................................................................................................................. 8
Estimated Debt Service Coverage........................................................................................................................ 9
TheCity................................................................................................................................................................ 9
TheCommission................................................................................................................................................... 12
Definitionsof Certain Terms................................................................................................................................ 12
Summaryof the Indenture.................................................................................................................................... 16
Summary of the Continuing Disclosure Agreement............................................................................................. 20
Underwriting......................................................................................................................................................... 22
TaxExemption...................................................................................................................................................... 22
Rating..................................................................................................................................................................... 22
LegalMatters........................................................................................................................................................ 23
Miscellaneous....................................................................................................................................................... 23
Accuracy and Completeness of Official Statement.............................................................................................. 23
APPENDIX A - Form of Bond Counsel Opinion................................................................................................. A-
•
1047615.3
S
PRELIMINARY OFFICIAL STATEMENT
CITY OF FAYETTEVILLE, ARKANSAS
HOTEL AND RESTAURANT GROSS RECEIPTS TAX REFUNDING BONDS
SERIES 2003
INTRODUCTORY STATEMENT
The following introductory statement is subject in all respects to the more complete information set forth in
this Official Statement. All descriptions and summaries of documents hereinafter set forth are qualified in their
entirety by reference to each such document. Capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms under the caption "DEFINITIONS OF CERTAIN TERMS" herein.
This Official Statement, including the cover page and the Appendix hereto, is furnished in connection with
the offering of Hotel and Restaurant Gross Receipts Tax Refunding Bonds, Series 2003, in the principal amount of
$ * (the "Series 2003 Bonds"), by the City of Fayetteville, Arkansas (the "City").
The City is a city of the first class organized and existing under the laws of the State of Arkansas (the
"State"). The City is authorized under the laws of the State, including particularly, the Advertising and Promotion
Commission Act, Arkansas Code Annotated (1997 Repl.) §§26-75-601 et seq. (as from time to time amended, the
"Act"), to issue and sell its bonds for the purpose of financing and refinancing the cost of convention center projects.
Pursuant to the Act, the City has previously issued and there are currently outstanding (i) its Hotel and Restaurant
Gross Receipts Tax Refunding Bonds, Series 1995 (the "Series 1995 Bonds") and (ii) its Hotel and Restaurant Gross
Receipts Tax Bonds, Series 1998 (the "Series 1998 Bonds").
The Series 2003 Bonds are to be issued by the City pursuant to the Act and Ordinance No. _, adopted and
approved by the City Council on _, 2003 (the "Authorizing Ordinance"); for the purpose of financing a portion
of the costs of (i) redeeming all of the outstanding Series 1998 Bonds, (ii) establishing a debt service reservetforthe
• Series 2003 Bonds, and (iii) paying the costs of issuing the Series 2003 Bonds. See the captions "ESTIMATED
SOURCES AND USES OF FUNDS" and `REFUNDING PROGRAM" herein. The issuance of the Series 1998
Bonds was approved by a majority of the qualified electors of the City at a special election held August 5, 1997, for
the purpose of financing a portion of the costs of constructing the Fayetteville Town Center. ,
The Series 2003 Bonds are not general obligations of the City, but are special obligations payable solely
from and secured by a pledge of the revenues derived by the City from a one percent (1%) tax (the "Tax") originally
levied in 1977 upon (i) the gross receipts and gross proceeds derived from renting, leasing or otherwise furnishing
hotel or motel accommodations for profit within the boundaries of the City, and (ii) the portion of gross receipts or
gross proceeds received by restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out restaurants, concession
stands, convenience stores, grocery store -restaurants and similar businesses from the sale of prepared food and
beverages for on -premises and off -premises consumption. The pledge of the receipts of the Tax (the "Tax
Receipts") securing the Series 2003 Bonds is subject and subordinate to a prior pledge of said Tax Receipts securing
the Series 1995 Bonds. See the caption "SECURITY FOR THE BONDS" herein.
The faith and credit of the City are not pledged to the payment of the Series 2003 Bonds, and the
Series 2003 Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or
statutory debt limitation or restriction. The issuance of the Series 2003 Bonds shall not directly, indirectly or
contingently obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the
payment of the Series 2003 Bonds, except as described herein with respect to the Tax Receipts.
Additional Bonds may be issued on a parity of security with the Series 2003 Bonds under certain
circumstances set forth in the Indenture (hereinafter defined). The Series 2003 Bonds and any such Additional
Bonds are herein collectively referred to as the "Bonds." The City has covenanted in the Indenture not to issue any
additional bonds under the indenture securing the Series 1995 Bonds or any other indebtedness secured on a senior
basis to the Series 2003 Bonds. See the caption "THE SERIES 2003 BONDS - Additional Bonds" and " — Superior
Obligations Prohibited" herein.
•
Preliminary; subject to change.
10-47615.3
The Series 2003 Bonds are subject to redemption at the option of the City as provided under the caption
"THE SERIES 2003 Bonds — "Redemption" herein.
• Pursuant to the provisions of a Continuing Disclosure Agreement dated as of the date of delivery of the
Series 2003 Bonds, by and between the City and the Trustee (the "Continuing Disclosure Agreement"), the City has
undertaken certain obligations with respect to providing ongoing disclosure of certain financial and operating data
concerning the City and the Tax Receipts and of the occurrence of certain material events. See the caption
"SUMMARY OF THE CONTINUING DISCLOSURE AGREEMENT" herein.
This Official Statement contains brief descriptions or summaries of, among other matters, the City, the
Series 2003 Bonds, the Tax Receipts, the Continuing Disclosure Agreement, and the Trust Indenture dated as of July
1, 2003, (the "Indenture"), by and between the City and Bank of Oklahoma, N.A., Tulsa, Oklahoma, as trustee and
paying agent (the "Trustee"), pursuant to which the Series 2003 Bonds are issued and secured. Such descriptions
and information do not purport to be comprehensive or definitive. All references herein to the Indenture and the
Continuing Disclosure Agreement are qualified in their entirety by reference to each such documents, and all
references to the Series 2003 Bonds are qualified in their entirety by reference to the definitive form thereof and the
information with respect thereto included in the Indenture. Copies of the Continuing Disclosure Agreement,'the
Indenture, and the form of Series 2003 Bond included therein, are available from the City by writing to the attention
of the City Clerk, City of Fayetteville, City Administration Building, 113 West Mountain, Fayetteville, Arkansas
72701 and, during the initial offering period only, from the Underwriter, Stephens Inc., 3425 North Futrall, Suite
201, Fayetteville, Arkansas 72703. Tax Receipt data has been provided by the City from the audited records of the
City and certain demographic information has been obtained from other sources which are believed to be reliable.
THE SERIES 2003 BONDS
Description. The Series 2003 Bonds will be initially dated as of July 1, 2003, and will bear interest payable
semiannually on April I and October 1 of each year, commencing October 1, 2003, at the rates set forth on the cover
page hereof. The Series 2003 Bonds will mature on October 1 in the years and in the principal amounts set forth on
the cover page hereof. - c
The Series.2003 Bonds are issuable only in the form of fully registered bonds and, when issued, will be
••, registered in the name of Cede & Co., as nominee of The Depository .Trust Company ("DTC"), New York,
New York, to which principal, premium, if any, and interest payments on the Series 2003 Bonds will be made so
•long as Cede & Co: is the registered owner of the Series 2003 Bonds. Individual purchases of the Series 2003
Bonds will be made only in book -entry form, in denominations of $5,000 or integral multiples thereof. Individual
purchasers ("Beneficial Owners") of Series 2003 Bonds will not receive physical delivery of bond certificates. See
the caption "BOOK -ENTRY ONLY SYSTEM" herein.
All interest payments on the Series 2003 Bonds shall be payable to the persons in whose name such Series
2003 Bonds are registered on the bond registration books maintained by the Trustee, as of the fifteenth day of the
calendar month next preceding the calendar month in which the applicable interest payment date falls. Principal of
and premium, if any, on the Series 2003 Bonds shall be payable at the principal corporate trust office of the Trustee.
All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2003 Bond to
the extent of the sum or sums so paid. So long as DTC or its nominee is the registered owner of the Series 2003
Bonds, disbursement of such payments to DTC Participants is the responsibility of DTC, and the disbursement of
such payments to Beneficial Owners is the responsibility of DTC Participants or Indirect Participants, as more fully
described herein.
Redemption. The Series 2003 Bonds are subject to redemption prior to maturity at the election of the City,
on and after October 1, 2008, in whole or in part (in inverse order of maturities and by lot within a maturity) at any
time, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date
of redemption.
Partial Redemption of a Series 2003 Bond. If less than all of the Series 2003 Bonds of a maturity are called
for redemption, the particular Series 2003 Bonds or portions of Series 2003 Bonds to be redeemed shall be selected
by lot in such manner as the Trustee in its discretion may deem fair and appropriate. So long as DTC or its nominee
is the sole registered owner of the Series 2003 Bonds, the procedures established by DTC shall control with respect
to the selection of the particular Series 2003 Bonds to be redeemed.
• Notice of Redemption. Notice of the call for any redemption, identifying the Series 2003 Bonds or portions
thereof being called and the date on which they shall be presented for payment, shall be mailed by the Trustee by
first class mail (or, so long as DTC or its nominee is the sole registered owner of the Series 2003 Bonds, by any
10-47615.3
other means acceptable to DTC, including facsimile) to the registered owner of each such Series 2003 Bond
addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) nor more
• than sixty (60) days prior to the date fixed for redemption; provided, however, that failure to give such notice by
mailing, or any defect therein, shall not affect the validity of any proceeding for the redemption of any Series 2003
Bond with respect to which no such failure or defect has occurred. Any notice mailed as provided above shall be
conclusively presumed to have been duly given, whether or not the registered owner receives the notice.
Additional Bonds. The City may issue from time to time one or more series of Additional Bonds for the
purpose of (i) financing Project costs in connection with the acquisition, construction and/or equipping of a Project,
(ii) refunding the Series 2003 Bonds or any series of Additional Bonds, in whole or in part, or (iii) any combination
thereof. Additional Bonds shall be secured equally and ratably with the Series 2003 Bonds and any other series of
Additional Bonds theretofore issued and then Outstanding, except insofar as any terms or conditions of redemption
or purchase established under the Indenture may afford additional benefit or security for the Bonds of any particular
series and except for the security afforded by any municipal bond insurance obtained with respect to any particular
series of Bonds. Before any Additional Bonds are authenticated, there shall be delivered to the Trustee the items
required for the issuance of Bonds by the Indenture, plus a Certificate of the Finance & Internal Services Director of
the City certifying that, based upon necessary investigation, the Tax Receipts deposited into the Revenue Fund
during the most recent twelve (12) months were not less than (i) 125% of the maximum Annual Debt Service on all
then Outstanding Bonds and Series 1995 Bonds, plus the Additional Bonds then proposed to be issued, and (ii) the
amount, if any, needed to make required deposits to the Debt Service Reserve Fund. No Additional Bonds shall be
issued unless there is no default at the time of issuance under the Indenture.
Superior Obligations Prohibited. Except to the extent as provided above with respect to the issuance of
Additional Bonds, so long as Bonds are Outstanding under the Indenture, the City has covenanted not to create or
permit the creation of any indebtedness, or to issue any bonds, notes, warrants, certificates or other obligations or
evidences of indebtedness payable in any manner from the Tax Receipts or otherwise from the Trust Estate which
• (i) will in any way be superior to or rank on a parity with the Bonds, or (ii) will in any way be secured by a lien and
charge on the Tax Receipts or on the moneys deposited in or to be deposited in the Revenue Fund, prior to or. equal
• with the lien, pledge and charge created in the Indenture for.the security of the Bond's, or (iii) will be payable prior
to or equal with the payments to be made from the Tax Receipts or the Revenue Fund into the Bond Fund or Debt
Service Reserve Fund, or from said Bond Fund or Debt Service Reserve Fund for the payment of the Bonds. To that
end, the City specifically covenants not to issue any additional bonds under the provisions of the trust indenture
securing the Series 1995 Bonds. The City is not prohibited or restricted from issuing bonds payable from Tax
Receipts so long as use of the Tax Receipts in favor of said bonds shall be made expressly subject and subordinate to
the pledge and use of Tax Receipts to pay principal of and premium, if any, and interest on the Bonds and to make
all required deposits into all funds held by the Trustee pursuant to the Indenture.
Transfer or Exchange. The Bonds may be transferred on the books of registration kept by the Trustee by
the registered owner in person or by the owner's duly authorized attorney, upon surrender thereof, together with a
written instrument of transfer duly executed by the registered owner or the owner's duly authorized attorney. Upon
surrender for transfer of any Bond at the principal corporate office of the Trustee, the City shall execute and the
Trustee shall authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds of the same
series and in the same aggregate principal amount and of any authorized denomination or denominations.
Transfers of registration or exchanges of Bonds shall be without charge to the Holders of such Bonds, but
any taxes or other governmental charges required to be paid with respect to the same shall be paid by the Holder of
the Bond requesting such transfer or exchange as a condition precedent to the exercise of such privilege.
The Trustee shall not be required to transfer or exchange any Bond during the period from and including a
Record Date to the next succeeding interest payment date of such Bond nor to transfer or exchange any Bond after
the mailing of notice calling such Bond for redemption has been made, and prior to such redemption.
So long as DTC or its nominee is the sole registered owner of the Series 2003 Bonds, transfers of beneficial
interests in the Series 2003 Bonds shall be in accordance with the rules and procedures of DTC and its direct and
indirect participants. See the caption "BOOK -ENTRY ONLY SYSTEM" herein.
•
1047615.3
SECURITY FOR THE BONDS
• Tax Receipts. The Bonds, including the Series 2003 Bonds, are special obligations of the City secured by
and payable from the revenues derived by the City from a one percent (1%) tax (the "Tax") levied upon (i) the gross
receipts and gross proceeds derived from renting, leasing or otherwise furnishing hotel or motel accommodations for
profit within the boundaries of the City, and (ii) the portion of gross receipts or gross proceeds received by
restaurants, cafes, cafeterias, delis, drive-in restaurants, carry -out restaurants, concession stands, convenience stores,
grocery store -restaurants and similar businesses from the sale of prepared food and beverages for on -premises and
off -premises consumption. The pledge of the receipts of the Tax (the "Tax Receipts") securing the Series 2003
Bonds is subject and subordinate to a prior pledge of said Tax Receipts securing the Series 1995 Bonds. The Series
1995 Bonds are presently outstanding in the aggregate principal amount of $700,000 and have a final maturity date
of October 1, 2004.
Pursuant to the Act, the City levied the Tax in 1977. The Tax is limited by statute to 3% of the amount of
such gross receipts and proceeds. Pursuant to the Act and the Indenture, the City has pledged the Tax Receipts to
the payment of the Bonds. The Advertising and Promotion Commission of the City of Fayetteville, Arkansas (the
"Commission") has approved such pledge, as required by statute. The City has continuously collected the Tax since
June 1, 1977, following approval by the citizens of the City in a special election held on May 3, 1977.
The City has covenanted in the Indenture that, for so long as there are Outstanding Bonds, the Tax will not
be repealed and the current Tax rate of 1% will not be reduced. In addition, the City has further covenanted that all
necessary action will be taken, from time to time, to collect such tax in full amount due and to apply the Tax
Receipts in the manner provided in the Indenture.
The following table shows Tax Receipts for the years 1977 through 2002. The amounts in the table do not
include the Parks Tax.
Calendar Year Total Receipts
1977 $ 90,102
1978 185,514
1979 210,583
1980 235,547
1981 276,336
1982 - 303,269
1983 344,217
1984 394,034
1985 394,818
1986 437,419
1987 452,387
1988 470,323
1989 513,094
1990 555,694
1991 578,348
1992 659,193
1993 736,097
1994 866,253
1995 932,916
1996 956,093
1997 992,939
1998 1,094,521
1999 1,170,114
2000 1,254,310
2001 1,316,096
2002" 1,489,011
t11 Unaudited
• Source: City records.
10-47615.3
The faith
and
credit of the
City are not pledged to the
payment of the Series
2003 Bonds, and the
Series 2003 Bonds
do
not constitute
an indebtedness of the City
within the meaning of
any constitutional or
• statutory debt limitation or restriction. The issuance of the Series 2003 Bonds shall not directly, indirectly or
contingently obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the
payment of the Series 2003 Bonds, except as described herein with respect to the Tax Receipts.
Debt Service Reserve. From the proceeds of sale of each series of Bonds issued pursuant to the Indenture,
there shall be deposited into the Debt Service Reserve Fund an amount which, together with the amounts then on
deposit therein, will be equal to the least of (a) 10% of the face amount of [all] [each series of] Outstanding Bonds,
(b) the maximum Annual Debt Service on [all] [each series of] Outstanding Bonds, or (c) 1.25 times the average
Annual Debt Service on [all] [each series of] Outstanding Bonds. For all purposes of this Indenture, the Reserve
Requirement may be satisfied by cash or by Investment Obligations. The Debt Service Reserve Fund shall be used
solely to pay the principal of and interest on Outstanding Bonds as due for which there are no available funds in the
Bond Fund to make such payments.
If the amount in the Debt Service Reserve Fund is ever reduced below the Reserve Requirement, it shall be
reimbursed to an amount equal to the Reserve Requirement through monthly payments, beginning not later than the
fifteenth day of the month following the month in which the Debt Service Reserve Fund was reduced below the
Reserve Requirement, and continuing not later than the fifteenth day of each month thereafter until such
reimbursement shall have been accomplished, from any funds in the Revenue Fund (after making the required
deposits into the Interest Account and Principal Account of the Bond Fund, as provided in the Indenture). If a
surplus shall exist in the Debt Service Reserve Fund over and above the Reserve Requirement, such surplus shall be
transferred to the Interest Account of the Bond Fund.
The moneys on deposit in the Debt Service Reserve Fund may be used, together with other available funds,
to provide for the payment at maturity or to redeem prior to maturity all, but not less than all, of the Outstanding
Bonds.
BOOK -ENTRY ONLY SYSTEM
• The Series 2003 Bonds will be issued only as one fully registered Series 2003 Bond for each maturity, in
the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"), as
registered owner of all the Series 2003 Bonds. The fully registered Series 2003 Bonds will be retained and
immobilized in the custody of DTC.
DTC (or any successor securities depository) or its nominee for all purposes under the Indenture will be
considered by the City and the Trustee to be the owner or holder of the Series 2003 Bonds.
Owners of any book entry interests in the Series 2003 Bonds (the "book entry interest owners") described
below, will not receive or have the right to receive physical delivery of the Series 2003 Bonds, and will not be
considered by the City and the Trustee to be, and will not have any rights as, owners or holders of the Series 2003
Bonds under the bond proceedings and the Indenture except to the extent, if any, expressly provided thereunder.
CERTAIN INFORMATION REGARDING DTC AND DIRECT PARTICIPANTS IS SET FORTH
BELOW. THIS INFORMATION HAS BEEN PROVIDED BY DTC. THE CITY, THE UNDERWRITER AND
BOND COUNSEL ASSUME NO RESPONSIBILITY FOR THE ACCURACY OF SUCH STATEMENTS.
DTC, the world's largest depository, is a limited -purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934. DTC holds and provides asset servicing for over two million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues and money market instruments from over 85 countries that DTC's participants
("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants
of sales and other securities transactions in deposited securities, through electronic computerized book -entry
transfers and pledges among Direct Participants' accounts. This eliminates the need for physical movement of
securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks,
trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The
Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants
• of DTC and
by Members of the National Securities
Clearing Corporation, Government
Securities Clearing
Corporation,
MBS Clearing Corporation and Emerging Markets
Clearing Corporation (NSCC,
GSCC, MBSCC and
EMCC, also
subsidiaries of DTCC), as well as by the
New York Stock Exchange, Inc.,
the American Stock
10-47615.3
Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available
to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing
• corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The DTC Rules applicable to its Direct and Indirect Participants are on file with
the Securities and Exchange Commission. More information about DTC can be found at www.dtc.com.
Purchases of Series 2003 Bonds under the DTC system must be made by or through Direct Participants,
which will receive a credit for the Series 2003 Bonds on DTC's records. The ownership interest of each actual
purchaser of each Series 2003 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but
Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Series 2003 Bonds are to be accomplished by
entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership interests in Series 2003 Bonds, except in the event
that use of the Book -Entry System for the Series 2003 Bonds is discontinued.
To facilitate subsequent transfers, all Series 2003 Bonds deposited by Direct Participants with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an
authorized representative of DTC. The deposit of Series 2003 Bonds with DTC and their registration in the name of
Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Series 2003 Bonds, DTC's records reflect only the identity of the Direct Participants
to whose accounts such Series 2003 Bonds are credited, which may or may not be the Beneficial Owners. The
Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to
Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to
time. Redemption notices shall be sent to DTC. If less than all of the Series 2003 Bonds within a maturity are to be
• redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such
maturity to be redeemed.
Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series
2003 Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual
procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the Record Date. The Omnibus
Proxy will assign Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series
2003 Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy).
Payment of debt service and redemption proceeds with respect to the Series 2003 Bonds will be made to
Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is
to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the
City or the Trustee on payable date in accordance with their respective holdings shown on DTC's records.
Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC, the Trustee or the City, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and debt service to
Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the
responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of
Direct and Indirect Participants.
BENEFICIAL OWNERS SHOULD CONSULT WITH THE DIRECT PARTICIPANTS OR INDIRECT
PARTICIPANTS FROM WHOM THEY PURCHASE A BOOK ENTRY INTEREST TO OBTAIN
INFORMATION CONCERNING THE SYSTEM MAINTAINED BY SUCH DIRECT PARTICIPANTS OR
INDIRECT PARTICIPANTS TO RECORD SUCH INTERESTS, TO MAKE PAYMENTS, TO FORWARD
NOTICES OF REDEMPTION AND OF OTHER INFORMATION.
• THE CITY AND THE TRUSTEE HAVE NO RESPONSIBILITY OR LIABILITY FOR ANY ASPECTS
OF THE RECORDS OR NOTICES RELATING TO, OR PAYMENTS MADE ON ACCOUNT OF, BOOK
ENTRY INTEREST OWNERSHIP, OR FOR MAINTAINING, SUPERVISING OR REVIEWING ANY
RECORDS RELATING TO THAT OWNERSHIP.
10-47615.3
The Trustee and the City, so long as a book entry method of recording and transferring interest in the Series
2003 Bonds is used, will send any notice of redemption or of any Indenture amendment or supplement or other
notices to Bondholders under the Indenture only to DTC (or any successor securities depository) or its nominee.
Any failure of DTC to advise any Direct Participants, or of any Direct Participants or Indirect Participants to notify
any Beneficial Owner, of any such notice and its content or effect will not affect the validity of the redemption of
the Series 2003 Bonds called for redemption, the Indenture amendment or supplement, or any other action premised
on notice given under the Indenture.
The City and the Trustee cannot and do not give any assurances that DTC, Direct Participants, Indirect
Participants or others will distribute payments of debt service on the Series 2003 Bonds made to DTC or its nominee
as the registered owner of the Series 2003 Bonds, or any redemption or other notices, to the Beneficial Owners, or
that they will do so on a timely basis, or that DTC will serve and act in a manner described in this Official
Statement.
DTC may discontinue providing its services as securities depository with respect to the Series 2003 Bonds
at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a
successor securities depository is not obtained, bond certificates are required to be printed and delivered.
In addition, the City may decide to discontinue use of the system of book -entry transfers through DTC (or a
successor securities depository). In that event, bond certificates will be printed and delivered.
IS3_D10111il_1JIi;[ ' ` ll"73M]
Purpose. A portion of the proceeds of the Series 2003 Bonds will be utilized, along with other available
moneys, to effect a current refunding of $6,620,000 outstanding principal amount of the City's Hotel and Restaurant
Gross Receipts Tax Bonds, Series 1998 (the "Series 1998 Bonds"). The Series 1998 Bonds were originally issued to
finance a portion of the costs of construction of the Fayetteville Town Center, a multipurpose civic center located on
the south side of the downtown square.
Refunded Bonds. The Series 1998 Bonds will be called for redemption by the City on October 1, 2003,
• pursuant to the provisions of the trust indenture under which the Series 1998 Bonds were issued, and will be paid
from funds•deposited with the Bank of Oklahoma, N.A., Tulsa, Oklahoma, as escrow trustee (the "Escrow Trustee")
under the provisions of an Escrow Deposit Agreement to be dated as of the date of delivery of the Series 2003
Bonds (the "Escrow Agreement"), between the City and the Escrow Trustee.
The Indenture provides that a portion of the proceeds from the sale of the Series 2003 Bonds, together with
moneys released from the bond fund and the debt service reserve fund relating to the Series 1998 Bonds, will be
held by the Escrow Trustee under the Escrow Agreement in an escrow fund (the "Escrow Fund") and used to
purchase direct obligations of the United States of America (or their equivalents) (the "Defeasance Securities"). The
Underwriter will verify at the time of delivery of the Series 2003 Bonds that the Defeasance Securities will mature
and yield interest in such amounts which, together with uninvested funds, if any, in the Escrow Fund will be
sufficient to pay, when due, the principal of and interest on the Series 1998 Bonds.
Pursuant to the terms of the Escrow Agreement, the Escrow Fund is irrevocably pledged to the payment of
the principal of and interest on the Series 1998 Bonds.
By the deposit of Defeasance Securities and uninvested cash with the Escrow Trustee pursuant to the
Escrow Agreement, the City will have defeased the Series 1998 Bonds. In the opinion of Bond Counsel, the Series
1998 Bonds will no longer be payable from, or secured by a pledge of, the Tax Receipts, but will be payable solely
from the principal of and the interest on the Defeasance Securities and uninvested cash held for such purpose by the
Escrow Trustee, and the pledge of Tax Receipts securing the Series 1998 Bonds, together with all other obligations
of the City to the holders of the Series 1998 Bonds under the trust indenture securing the Series 1998 Bonds, will be
discharged.
C1
10-47615.3
ESTIMATED SOURCES AND USES OF FUNDS
• The proceeds of the Series 2003 Bonds are expected to be used as follows:
Sources of Fundsltl
Series 2003
Bond
Proceeds
$
Series 1998
Bond
Fund and Reserve Fund
Total Sources: $
Uses of Funds('
Transfer to Escrow Trustee $
[Debt Service Reserve Fund Deposit) [Purchase of Surety Bond]
[Bond Insurance Premium]
Costs of Issuance and Underwriter's Discount
Contingency
Total Uses
Preliminary; subject to change.
ESTIMATED DEBT SERVICE REQUIREMENTS
As of the date of closing, the Series 1995 Bonds and the Series 2003 Bonds will constitute the only debt
obligations secured by the Tax Receipts. The following table sets forth estimates of the amounts required to pay
scheduled principal of and interest on the Series 1995 Bonds and the Series 2003 Bonds during each year:
• Series 1995 Series 1995 Series 2003 Series 2003 Total Debt
Year . Principal Interest Principal Interest ltl Service
2003 $ 340,000 $ 36,581 $ $ $
2004 360,000 18,900
2005 - -
2006 - -
2007 - -
2008 - -
2009 - -
2010 - -
2011 - -
2012 - -
2013 - -
2014 - -
2015 - -
ttLILIXIII1,
(U Preliminary; subject to change. Assuming for purposes of this Preliminary Official State, an average coupon rate on the Series 2003
Bonds of % per annum.
r
LJ
10-47615.3 8
ESTIMATED DEBT SERVICE COVERAGE
The following table shows estimated maximum annual debt service coverage with respect to the Series
• 1995 Bonds and the Series 2003 Bonds utilizing Tax Receipts for the year ended December 31, 2002.
Historical Tax Receipts('! $1,489,011
Maximum Annual Debt Service Requirement on the Series 1995
Bonds and the Series 2003 Bonds(2)
Maximum Annual Debt Service Coverage X
See the caption "SECURITY FOR THE BONDS — Tax Receipts" herein.
(2) Preliminary; subject to change. See the caption "ESTIMATED DEBT SERVICE REQUIREMENTS" herein.
THE COVERAGE NUMBERS SET FORTH ABOVE ARE BASED ON HISTORICAL COLLECTIONS OF TAX
RECEIPTS. ACTUAL COLLECTIONS OF TAX RECEIPTS WILL DEPEND ON NUMEROUS FACTORS,
AND THERE CAN BE NO ASSURANCE THAT FUTURE TAX RECEIPTS AVAILABLE TO PAY DEBT
SERVICE ON THE SERIES 1995 BONDS AND THE SERIES 2003 BONDS WILL APPROXIMATE SUCH
HISTORICAL RESULTS.
THE CITY
General. The City is a city of the first class organized and existing under the laws of the State of Arkansas.
The City is the seat of government of Washington County (the "County") and is the fourth largest city in the State.
The City is located in the Metropolitan Statistical Area of Fayetteville/Springdale/Rogers (the "MSA"), which
includes all of Washington and Benton Counties in the northwest corner of the State and is approximately 185 miles
northwest of Little Rock, Arkansas, 125 miles east of Tulsa, Oklahoma, and 210 miles south of Kansas City,
Missouri.
The City is served by U.S. Interstate 540, U.S. Highways 62 and 71, and State Highways 16, 45, 112, 156,
180 and 265. The Burlington Northern Railroad has several lines running through the City, and a general aviation
airport with a 6,006 -foot runway is available for limited commuter travel. The Northwest Arkansas Regional
Airport is located approximately 40 minutes from downtown Fayetteville and provides daily flights to numerous
venues.
Government. The City currently operates under the Mayor -Council form of government pursuant to which
a mayor, city attorney, city clerk and eight aldermen are elected, two from each of the City's four wards. The
mayor, city attorney and city clerk are full-time positions elected to four year terms. Aldermen also serve four year
terms.
The City's elected officials and the dates on which their respective terms expire are as follows:
Name Office Term Expires
Dan Coody
Mayor
12/31/04
Kit Williams
City Attorney
12/31/06
Sondra Smith
City Clerk
12/31/04
Kyle Cook
Alderman
12/31/06
Bob Davis
Alderman
12/31/04
Lioneld Jordan
Alderman
12/31/04
Shirley Lucas
Alderman
12/31/06
Don Marr
Alderman
12/31/04
Robert Reynolds
Alderman
12/31/06
Robert Rhoades
Alderman
12/31/06
Brenda Thiel
Alderman
12/31/04
•
10-47615.3
Population. The following is a table of population changes for the City, the MSA and the State of
Arkansas, according to the United States Census Bureau:
• City of State of
Year Fayetteville MSA Arkansas
1960 20,274 92,069 1,786,272
1970 30,729 127,846 1,923,322
1980 36,608 178,609 2,286,435
1990 42,099 210,908 2,350,624
2000. 58,047 311,121 2,673,400
Economic Data. Per capita personal income figures for the MSA and the State of Arkansas are as follows:
State of
Year MSA Arkansas
1992 $18,260 $16,425
1993 18,765 16,995
1994 19,590 17,750
1995 20,193 18,546
1996 20,870 19,442
1997 21,586 20,228
1998 22,893 21,256
1999 24,213 22,223
2000 23,316 21,995
Source: Bureau of Economic Analysis.
Retail sales figures for the MSA and the State are as follows:
State of MSA as % of
Year MSA Arkansas State of Arkansas
• 1993 $1,880,105,000 $16,997,721,000 11.06%
1994 2,217,229,000 19,090,516,000 11.61
1995 2,486,425,000 20,998,923,000 11.84
1996 2,692,554,000 22,053,022,000 12.21
1997 2,845,968,000 22,872,236,000 12.44
1998 3,018,896,000 23,944,647,000 12.61
1999* n/a n/a n/a
2000 3,526,791,000 28,488,033,000 12.38
2001 3,806,422,000 29,652,693,000 12.84
2002 3,841,326,000 29,269,775,000 13.12
* Methodology changed to calendar year basis. No reliable information is available for 1999.
Source: Sales and Marketing Management Survey of Buyer Power.
The following table shows the total assessed value of non -utility real and personal property within the City
for the years indicated:
Year Real Property Personal Property Total
1994 $245,093,513 $ 86,322,277 $331,415,790
1995 340,593,452 101,274,620 441,868,072
1996 359,369,202 113,157,365 472,526,567
1997 382,798,143 120,064,627 502,862,770
1998 401,001,338 127,575,096 528,576,434
1999 413,648,415 137,404,499 551,052,914
2000 432,951,171 145,147,891 578,099,062
2001 486,853,822 155,794,579 642,648,401
2002
Source: Washington County Tax Assessor's Office. The assessed value represents 20% of the appraised value of
property.
10-47615.3 10
Building permits issued by the Citylll are shown below for the years indicated:
• 1998 1999 2000 2001 2002
Residential Building Permits 304 451 361 339 328
Commercial Building Permits 41 59 27 38 35
Value of All Building Permits $58,948.911 $100,744,816 $121,887,263 $85,262,302 $100,809,486
Ill Does not include building activity of the University of Arkansas, school permits and additions/alterations to existing structures.
Source: City of Fayetteville.
Unemployment figures for the MSA and the State of Arkansas, according to the U.S. Bureau of Labor
Statistics, are as follows:
Year MSA State of Arkansas
1994 2.4% 5.3%
1995 2.4 4.9
1996 2.9 5.4
1997 3.0 5.3
1998 3.2 5.5
1999 2.4 4.5
2000 2.1 .4.4
2001 1.7 5.1
2002 2.4 5.4
2003* 2.6 4.9
* February 2003 only; preliminary.
Source: Arkansas Employment Security Department
' Employment and Industry. The principal campus of the University of Arkansas is located in the City and
had total enrollment for the Spring semester of 2003 of approximately 15,068. For the 2002-03 fiscal year ending
June 30, 2003, the University has an operating budget in excess of $318 million, which does not include the
agricultural experimentation station or other associated operations. On the Fayetteville campus, the University
employs approximately 2,522 faculty, administrative, secretarial, clerical and maintenance personnel in both full-
time and part-time positions, making the University the largest employer in the City.
Other major employers in the City, their products or services and approximate number of employees are set
forth below:
Employer Product or Service Employee Range
Pinnacle Foods, International
Frozen Dinners
1,000-2,499
Superior Industries
Cast Aluminum Wheels
1,000-2,499
Washington Regional Medical Center
Medical
1,000-2,499
Fayetteville School District
Education
500-999
Tyson's Mexican Original
Mexican Food Products
500-599
Arkansas Western Gas Co.
Utilities
300-499
Ayrshire Electronics
Manufacturing
300-499
City of Fayetteville
Government
300-499
Dillards Department Store
Retail
300-499
Hanna's
Potpourri, Soup, Candles
300499
McClinton -Anchor Co.
Limestone & Hot Mix
300-499
Tyson's Entr�e Div.
Frozen Dinner Entrees
300-499
Veteran's Admin. Medical Center
Medical
300-499
•
Source: Fayetteville Chamber of Commerce.
10-47615.3
11
THE COMMISSION
• Pursuant to the authority of the Act, the Advertising and Promotion Commission of the City of Fayetteville,
Arkansas (the "Commission") was created by ordinance of the City dated March 1, 1977. The,Coinmission is
responsible for the advertising and promotion of the City and its environs and oversees the leasing of certain City -
owned convention facilities to the Board of Trustees of the University of Arkansas. The Commission is composed
of four members appointed by the City Council, who are hotel, motel or restaurant owners or managers. The three
remaining members are two aldermen on the City Council and one member from the public at large. The present
members of the Commission are as follows:
Member Term Expires
Bob Davis, Chairman
Dan Coody
Neal Crawford
Pat Gazzola
David McGeady
Ching Mong
Curtis Shipley
(City Council Member)
(Mayor)
4/1/07
4/1/06
4/1/04
4/1/05
4/1/05
DEFINITIONS OF CERTAIN TERMS
The following are definitions of certain terms used in this Official Statement:
"Account" means an Account established by Article V of the Indenture.
"Act" means the Advertising and Promotion Commission Act, codified as Arkansas Code Annotated (1997
Repl.) Sections 26-75-601 et seq., as from time to time amended.
"Additional Bonds" means Bonds in addition to the Series 2003 Bonds which are issued under the
provisions of Section 212 of the Indenture.
• "Additional Convention Facilities" means land, buildings, structures, machinery, furniture, fixtures,
equipment and all related or necessary tangible property constituting convention center improvements which are
permitted to be financed under the provisions of the Act.
"Annual Debt Service" means, with respect to all or any particular amount of Bonds, the Debt Service for
any particular Fiscal Year required to be paid or set aside during such Fiscal Year, less the amount of such payment
which is provided from the proceeds of the sale of Bonds or from sources other than Tax Receipts.
"Authorized Representative" means either the Mayor or the Finance & Internal Services Director of the
City and such additional persons as from time to time may be designated to act on behalf of the City by a Certificate
furnished to the Trustee containing the specimen signature thereof and executed on behalf of the City by its Mayor.
"Authorizing Ordinance" means Ordinance No._, adopted by the City on , 2003, which
authorized the issuance of the Series 2003 Bonds pursuant to the Indenture.
`Beneficial Owner" means any Person who acquires beneficial ownership interest in a Bond held by the
Securities Depository. In determining the Beneficial Owner of any Bond, the Trustee may rely exclusively upon
written representations made and information given to the Trustee by the Securities Depository or its Participants
with respect to any Bond held by the Securities Depository in which a beneficial ownership interest is claimed.
"Bond Counsel" means any firm of nationally recognized municipal bond counsel selected by the City and
acceptable to the Trustee.
"Bond Fund" means the fund by that name created and established in the Indenture.
"Bonds" mean the Series 2003 Bonds and all Additional Bonds, if any, issued by the City pursuant to the
Indenture.
"Book -Entry System" means the book -entry system maintained by the Securities Depository and described
in the Indenture.
• "Certificate" means a document signed by an Authorized Representative of the City attesting to or
acknowledging the circumstances or other matters therein stated.
10-47615.3 12
"City" means the City of Fayetteville, Arkansas, a municipality and political subdivision under the laws of
the State of Arkansas.
• "City Clerk" means the person holding the office and performing the duties of the City Clerk of the City.
"Closing Date" means, with respect to any series of Bonds, the date upon which there is an exchange of
such series of Bonds for the proceeds representing the purchase price for such series of Bonds by the Original
Purchaser or Purchasers thereof.
"Code" means the Internal Revenue Code of 1986, as from time to time amended, and applicable
regulations issued or proposed thereunder.
"Commission" means the Advertising and Promotion Commission of the City of Fayetteville, Arkansas, or
any successor thereto.
"Continuing Disclosure Agreement" means, collectively, each Continuing Disclosure Agreement between
the City and the Trustee, dated the date of issuance and delivery of a series of Bonds, as originally executed and as
amended from time to time in accordance with the terms thereof.
"Cost of Issuance Fund" means the fund by that name created and established in the Indenture.
"Costs of Issuance" means all items of expense payable or reimbursable directly or indirectly by the City
and related to the authorization, sale and issuance of the Bonds, including, but not limited to, underwriting
discounts, fees and expenses, election expenses, publication expenses, expenses of printing, reproducing, filing and
recording documents, initial fees and charges of the Trustee and any Paying Agent, fees and expenses for legal,
accounting and other professional services, rating fees, costs of securing any credit enhancement for the Bonds,
costs of execution, transportation and safekeeping of the Bonds, and other costs, charges and fees incurred in
connection with the foregoing.
"Debt Service" means, with respect to all or any particular amount of Bonds for any Payment Period, the
amount required to pay the sum of the interest on such Bonds payable during the Payment Period and the principal
of, and any other amount required to effect any mandatory redemption of, such Bonds, if any, during the Payment
• Period.
• "Debt Service Reserve Fund" means the fund by that name created and established in the Indenture.
"Event of Default" means any event of default specified in Section 801 of the Indenture.
"Fiscal Year" means the 12 -month period used, at any time, by the City for accounting purposes, which
may be the calendar year.
"Fund" means a fund confirmed or established by the Indenture.
"Government Securities" means (i)bonds, notes, certificates of indebtedness, treasury bills or other
securities constituting direct obligations of, or obligations on which the full and timely payment of principal and
interest is fully and unconditionally guaranteed by, the United States of America (including any such securities
issued or held in book -entry form on the books of the Department of Treasury of the United States of America), and
(ii)evidences of direct ownership or proportionate or individual interest in future interest or principal payments on
specified direct obligations of, or obligations on which the full and timely payment of principal and interest is fully
and unconditionally guaranteed by, the United States of America, which obligations are held by a bank or trust
company organized and existing under the laws of the United States of America or any state thereof in the capacity
of custodian in form and substance satisfactory to the Trustee.
"Holder" or "Bondholder" or "Owner of the Bonds" means the registered owner of any Bond.
"Indenture" means the Trust Indenture dated as of July!, 2003, between the City and the Trustee, pursuant
to which the Bonds are issued, and any amendments and supplements thereto.
"Interest Payment Date" means any date on which interest is payable on the Bonds.
"Investment Obligations" means, if and to the extent the same are at the time legal for investment of Funds
and Accounts held under the Indenture:
• (a) Government Securities;
10-47615.3 13
(b) bonds, notes or other obligations of any state of the United States of America or any
• political subdivision of any state, which at the time of their purchase are rated in either of the two highest
rating categories by a nationally recognized Rating Agency;
(c) certificates of deposit or time or demand deposits constituting direct obligations of any
bank, bank holding company, savings and loan association or trust company organized under the laws of
the United States of America or any state thereof (including the Trustee or any of its affiliates), except that
investments may be made only in certificates of deposit or time or demand deposits which are:
(1) insured by the Federal Deposit Insurance Corporation, or any other similar
United States Government deposit insurance program then in existence; or
(2) continuously and fully secured by Government Securities, which have a market
value, exclusive of accrued interest, at all times at least equal to the principal amount of such
certificates of deposit or time or demand deposits;
(d) short term discount obligations of the Federal National Mortgage Association and the
Government National Mortgage Association;
(e) money market mutual funds (1)that invest in Government Securities or that are registered
with the federal Securities and Exchange Commission (SEC), meeting the requirements of Rule 2a-7 under
the Investment Company Act of 1940, and (2)that are rated in either of the two highest categories by a
nationally recognized Rating Agency; and
[(f) with respect to the Debt Service Reserve Fund only, the Surety Bond.]
"Mayor" means the person holding the office and performing the duties of the Mayor of the City.
"Original Purchaser" means the first purchaser(s) of a series of Bonds from the City.
"Outstanding" means, as of any date of computation. Bonds theretofore or thereupon being delivered under
• the Indenture, except:
(a) Bonds cancelled at or prior to such date or delivered to or acquired by the Trustee at or
prior to such date for cancellation;
(b)
Bonds deemed to
be
paid in accordance with Article
VII of the Indenture;
and
(c)
Bonds in lieu of
or
in exchange or substitution for
which other Bonds
shall have been
authenticated and delivered pursuant to the Indenture.
"Participants" means those financial institutions for whom the Securities Depository effects book -entry
transfers and pledges of securities deposited with the Securities Depository in the Book -Entry System, as such
listing of Participants exists at the time of such reference.
"Payment Period" means a period from, but not including, a Principal Payment Date up to, and including,
the next succeeding Principal Payment Date.
"Person" means any natural person, firm, association, corporation, limited liability company, partnership,
joint stock company, joint venture, trust, unincorporated organization or firm, or a government or any agency or
political subdivision thereof or other public body.
"Principal Payment Date" means any date on which principal is payable on the Bonds, whether at maturity,
by operation of the mandatory sinking fund, or otherwise.
"Project" means the 1998 Project and any Additional Convention Facilities that may be acquired,
constructed and equipped in the future with the proceeds of Bonds.
"1998 Project" means the construction of the Fayetteville Town Center, financed in part with the proceeds
of the Series 1998 Bonds.
"Qualified Engineer" means an independent consulting engineer or firm of independent consulting
• engineers not in the regular employ of the City.
"Rating Agency" means Moody's Investors Service, Standard & Poor's Ratings Services, a Division of
The McGraw-Hill Companies, Inc., or Fitch, Inc., and their respective successors and assigns. If any such
10-47615.3 14
corporation ceases to act as a securities rating agency, the City may appoint any nationally recognized securities
rating agency as a replacement.
• "Rebate Fund" means the fund by that name created and established in the Indenture.
"Record Date" means the close of business on the fifteenth day of the calendar month next preceding each
Interest Payment Date on the Bonds or, if such day shall not be a business day, the immediately preceding business
day.
"Redemption Fund" means the fund by that name established in the Indenture.
"Reserve Requirement" means, at any particular time, an amount equal to the least of (a) 10% of the face
amount of [all] [each series of] Outstanding Bonds, (b) the maximum Annual Debt Service on [all] [each series of]
Outstanding Bonds, or (c) 1.25 times the average Annual Debt Service on [all] [each series of] Outstanding Bonds.
"Revenue Fund" means the fund by that name confirmed and continued in the Indenture.
"Securities Depository" means The Depository Trust Company, a limited -purpose trust company organized
under the laws of the State of New York, or its nominee, and its successors and assigns, or any other depository
institution appointed by the City to act as depository for the Bonds in connection with the Book -Entry System..
"Series 1995 Bonds" means the $2,675,000 City of Fayetteville, Arkansas Hotel and Restaurant Gross
Receipts Tax Refunding Bonds, Series 1995, dated October 1, 1995, of which $700,000 in principal amount
presently remains Outstanding.
"Series 1998 Bonds" means the $6,950,000 City of Fayetteville, Arkansas Hotel and Restaurant Gross
Receipts Tax Bonds, Series 1998, dated November 1, 1998, of which $6,620,000 in principal amount presently
remains Outstanding.
"Series 2003 Bonds" means the City of Fayetteville, Arkansas Hotel and Restaurant Gross Receipts Tax
Refunding Bonds, Series 2003, dated July 1, 2003, issued under and secured by the Indenture in the aggregate
principal amount of $
• "State" means the State of Arkansas.
"Supplemental Indenture" means any indenture supplemental to or amendatory of the Indenture.
["Surety Bond" means the Surety Bond issued by guaranteeing certain payments into
the Debt Service Reserve Fund with respect to the Series 2003 Bonds as provided therein and subject to the
limitations set forth therein.]
"Tax" means the one percent (1%) tax (the "Tax") originally levied in 1977 upon (i) the gross receipts and
gross proceeds derived from renting, leasing or otherwise furnishing hotel or motel accommodations for profit
within the boundaries of the City, and (ii) the portion of gross receipts or gross proceeds received by restaurants,
cafes, cafeterias, delis, drive-in restaurants, carry -out restaurants, concession stands, convenience stores, grocery
store -restaurants and similar businesses from the sale of prepared food and beverages for on -premises and off -
premises consumption.
"Tax Receipts" means receipts derived by the City from the levy of the Tax.
"Tax Regulatory Agreement" means with respect to any series of Bonds, that Tax Regulatory Agreement of
the City relating to maintenance of the excludability of interest on such Bonds from gross income for federal income
tax purposes, delivered in connection with the issuance of such series of Bonds.
"Trustee" and "Paying Agent" means the trustee and paying agent for the time being, whether original or
successor, with the same institution to always occupy both positions, and with the original Trustee and Paying Agent
being Bank of Oklahoma, N.A., Tulsa, Oklahoma.
"Trust Estate" means the property described in the granting clauses of the Indenture.
Preliminary; subject to change.
10-07615.3 I5
:YIDSlan:i'(I]aY11alN1Ilal.ltIJt1t
• The following statements are brief summaries of certain provisions of the Indenture. The statements do not
purport to be complete, and reference is made to the Indenture, copies of which are available for examination at the
offices of the City Clerk, for a full statement thereof.
Funds and Accounts. The Tax Receipts are pledged by the Indenture to the payment of the principal of and
interest on the Bonds. The Indenture confirms and continues the Revenue Fund established by the trust indenture
securing the Series 1995 Bonds. In addition, the following Funds and Accounts are established with the Trustee in
connection with the Bonds: _
Funds and Accounts
Bond Fund, and a Principal Account and an Interest Account therein
Debt Service Reserve Fund
Redemption Fund
Cost of Issuance Fund
Rebate Fund
Application of Tax Receipts. The application of Tax Receipts is as follows:
(a) Revenue Fund. All Tax Receipts shall, as and when received, be deposited into the Revenue
Fund. The Revenue Fund is maintained by the City as a segregated fund. Moneys at any time on deposit in the
Revenue Fund are to be applied, as needed, on a monthly basis (following any necessary application to the bond
fund and debt service reserve fund for the Series 1995 Bonds) to provide for the payment of Debt Service on the
Bonds, to the maintenance of the Debt Service Reserve Fund, to the payment of any arbitrage rebate due under
Section 148(I) of the Code, and to the payment of fees and expenses of the Trustee and any Paying Agent, at the
times and in the amounts set forth as follows:
• (b) Bond Fund. On or before the fifteenth day of each month, commencing July 15, 2003, there shall
be transferred from the Revenue Fund (1) into the Interest Account of the Bond Fund, an amount equal to 1/6 of the
interest on the Bonds due on the next Interest Payment Date, and (ii) into the Principal Account of the Bond Fund,
an amount equal to 1/12 of the principal on the Bonds due on the next Principal Payment Date. Moneys in the Bond
Fund shall be used solely for the purpose of paying Annual Debt Service on the Bonds, as provided in the Indenture.
The Trustee shall withdraw from the Bond Fund, on the date of any principal or interest payment, an amount equal
to such payment for the sole purpose of paying the same.
If Tax Receipts in the Revenue Fund are insufficient to make the required monthly payment into the Bond
Fund, the amount of any such deficiency in the payment made shall be added to the amount otherwise required to be
paid into the Bond Fund in the next succeeding month.
When the moneys held in the Bond Fund, the Debt Service Reserve Fund and the Redemption Fund shall
be and remain sufficient to pay in full the principal of and interest on all Bonds then Outstanding in accordance with
the Indenture, together with the required fees and expenses to be paid or reimbursed to the Trustee and Paying
Agent, the City shall have no further obligation to make payments into such Funds.
(c) Debt Service Reserve Fund. See the caption "SECURITY FOR THE BONDS — Debt Service
Reserve" herein.
(d) Redemption Fund. There shall be deposited to the credit of the Redemption Fund the moneys
necessary to effect an optional redemption of the Bonds. Moneys in the Redemption Fund shall be transferred to the
Principal Account of the Bond Fund at such times as may be necessary to effectuate redemptions of the Bonds on
the first available redemption date. See the caption "THE SERIES 2003 BONDS — Redemption" herein.
(e) Cost of Issuance Fund. A portion of the proceeds of the Series 2003 Bonds shall be deposited to
the credit of the Cost of Issuance Fund. The Trustee shall pay those Costs of Issuance as directed by the City
pursuant to a Certificate delivered on a Closing Date. After all Costs of Issuance have been paid with respect to a
series of Bonds, any remaining moneys in the Cost of Issuance Fund shall be transferred to the Interest Account of
. the Bond Fund.
(f) Rebate Fund. The Trustee shall establish and maintain, separate and apart from any other Funds
and Accounts established and maintained under the Indenture, the Rebate Fund, which Fund is not pledged to the
10-47615.3 16
payment of an Bonds. Subject to transfer to the United States in payment of any arbitrage rebate due under Section
148(t) of the Code, all moneys at any time deposited in the Rebate Fund shall be held by the Trustee in trust, and
. neither the City nor the Owner of any Bond shall have any rights in or claim to such money. Any amounts
remaining in the Rebate Fund after payment in full of the rebate amount owing to the United States, within sixty
(60) days after the date on which the last Bond is redeemed, shall be transferred to the Revenue Fund.
Any moneys remaining in the Revenue Fund following the required transfers described above may be used
for any lawful purpose as determined by the Commission.
Investment of Funds. At the direction of the City or absent such direction, the Trustee shall invest moneys
in Funds or Accounts held by the Trustee in Investment Obligations with maturity or redemption dates consistent
with the times at which said moneys will be required for the purposes provided in the Indenture; provided, however,
the stated maturity dates of Investment Obligations of Debt Service Reserve Fund moneys shall not exceed five
years from the date of investment therein. Moneys in separate Funds or Accounts may be commingled for the
purpose of investment.
Obligations purchased as an investment of moneys in any Fund or Account created by the Indenture shall
be deemed at all times to be a part of such Fund or Account, and any income or loss due to an investment thereof
shall be charged to the respective Fund or Account for which the investment was made except as otherwise provided
in the Indenture.
Valuation of Funds and Accounts. Investments in any Fund or Account shall be evaluated monthly by the
Trustee. For the purpose of determining the amount in any Fund or Account, the City and the Trustee shall value all
Investment Obligations credited to such Fund or Account at the price at which such Investment Obligations are
redeemable by the Holders or owners thereof at their option if so redeemable, or, if not so redeemable, at the lesser
of (i)the cost of such Investment Obligations minus the amortization of any premium or plus the amortization of any
discount thereon and (ii)the market value of such Investment Obligations, provided that Investment Obligations
credited to the Debt Service Reserve Fund, if not so redeemable, shall be valued at the cost thereof minus the
amortization of any premium or plus the amortization of any discount thereon.
The Trustee shall sell or present for redemption any Investment Obligations as necessary in order to
• provide money for the purpose of making any payment required under the Indenture, and the Trustee shall not be
liable for any loss resulting from any such sale.
Responsibility of Trustee. The Trustee shall not be responsible or liable for any loss suffered in connection
with any investment of moneys made by it at the direction of the City.
Instruments of Further Assurance. At the request of the Trustee,
authorized by law, pass, make, do, execute, acknowledge and deliver, all
ordinances, acts, deeds, conveyances, assignments, transfers and assurances as
better assuring, conveying, granting, pledging, assigning and confirming of all
other moneys pledged or assigned by the Indenture, or intended so to be, or
pledge or assign.
the City shall, so far as it may be
and every such further resolutions,
may be necessary or desirable for the
and singular the Tax Receipts and all
which the City may become bound to
Tax Covenants. The City shall not use or permit the use of any Bond proceeds or any other funds of the
City, directly or indirectly, in any manner, and will not take or permit to be taken any other action or actions which
would adversely effect the exclusion of interest on any Bond from gross income for federal income tax purposes.
No part of the proceeds of the Bonds shall at any time be used, directly or indirectly, to acquire securities or
obligations the acquisition of which would cause any of such Bonds to be an "arbitrage bond" as defined in Sections
148(a) and (b) of the Code. The City agrees that so long as any of the Bonds remain Outstanding, it will comply
with the provisions of each applicable Tax Regulatory Agreement.
Defeasance. Any Bond shall be deemed to be paid within the meaning of the Indenture when payment of
the principal of and premium, if any, and interest on such Bond (whether at maturity or upon redemption as provided
in the Indenture, or otherwise), either (i)shall have been made or caused to be made in accordance with the terms
thereof, or (ii)shall have been provided for by irrevocably depositing with the Trustee, in trust and irrevocably set
aside exclusively for such payment, (1)moneys sufficient to make such payment or (2)Government Securities
(provided that such deposit will not affect the tax-exempt status of the interest on any of the Bonds or cause any of
the Bonds to be classified as "arbitrage bonds" within the meaning of Section 148(a) of the Code, as reflected in an
• opinion of Bond Counsel delivered to the Trustee), maturing as to principal and interest in such amounts and at such
times as will provide sufficient moneys to make such payment, and all necessary and proper fees, compensation and
expenses of the Trustee and any Paying Agent pertaining to the Bonds with respect to which such deposit is made
1047615.3 17
shall have been paid or the payment thereof provided for to the satisfaction of the Trustee and any said Paying
Agent.
Events of Default. Each of the following events shall constitute and is referred to in the Indenture as an
"Event of Default":
(a) Default in the due and punctual payment of any interest on any Bond;
(b) Default in the due and punctual payment of the principal of or premium, if any, on any Bond,
whether at the stated maturity thereof, or upon proceedings for redemption thereof, or upon the maturity thereof by
declaration;
(c) Default in the payment of any other amount required to be paid under the Indenture or the
performance or observance of any other of the covenants, agreements or conditions contained in the Indenture, or in
the Bonds issued under the Indenture, and continuance thereof for a period of sixty (60) days after written notice
specifying such failure and requesting that it be remedied, shall have been given to the City by the Trustee, which
may give such notice in its discretion and shall give such notice at the written request of Holders of not less than
fifty-one percent (51%) in aggregate principal amount of the Bonds then Outstanding, unless the Trustee, or the
Trustee and Holders of an aggregate principal amount of Bonds not less than the aggregate principal amount of
Bonds the Holders of which requested such notice, as the case may be, shall agree in writing to an extension of such
period prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the
applicable period, the Trustee will not unreasonably withhold its consent to an extension of such time if corrective
action is instituted by the City within such period and is being diligently pursued;
(d) The filing of a petition in bankruptcy by or against the City under the United States Bankruptcy
Code or the commencement of a proceeding by or against the City under any other law concerning insolvency,
reorganization or bankruptcy; and
(e) If the State has limited or altered the rights of the City pursuant to the Act, as in force on the date
of the Indenture, to fulfill the terms of any agreements made with the Trustee or the Bondholders or in any way
impaired the rights and remedies of the Trustee or the Bondholders while any Bonds are Outstanding.
• The term "default" as used • in clauses (a), (b) and (c) above shall mean default by the City in the
performance or observance of any of the covenants, agreements or conditions on its part contained in the Indenture,
or in the Bonds Outstanding thereunder, exclusive of any period of grace required to constitute a default an "Event
of Default" as described above.
Acceleration. Upon the occurrence of an Event of Default, the Trustee may, and upon the written request
of the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding shall, by notice in writing
delivered to the City, declare the principal of all Bonds then Outstanding, together with any premium and the
interest accrued thereon, immediately due and payable, and such principal and interest shall thereupon become and
be immediately due and payable.
Other Remedies; Rights of Bondholders. Upon the occurrence of an Event of Default, the Trustee may, as
an alternative, pursue any available remedy by suit at law or in equity, including, without limitation, mandamus to
enforce the payment of the principal of and premium, if any, and interest on the Bonds then Outstanding.
If an Event of Default shall have occurred, and if it shall have been requested so to do by the Holders of
51% in aggregate principal amount of Bonds Outstanding and if it shall have been indemnified as provided in the
Indenture, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred upon it by
the Indenture as the Trustee, being advised by counsel, shall deem most expedient in the interests of the
Bondholders.
No remedy by the terms of the Indenture conferred upon or reserved to the Trustee (or to the Bondholders)
is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in
addition to any other remedy given under the Indenture or now or hereafter existing at law or in equity or by statute.
No delay or omission to exercise any right or power accruing upon any default or Event of Default shall
impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or
acquiescence therein; and every such right and power may be exercised from time to time and as often as may be
deemed expedient.
• No waiver of any default or Event of Default under the Indenture, whether by the Trustee or by the
Bondholders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any rights or
remedies consequent thereon.
10-07615.3 18
Rights and
Remedies
of Bondholders. No Holder
of any Bond shall
have any right to institute any suit,
action or proceeding
in equity
or at law for the enforcement
of the Indenture or
for the execution of any trust thereof
• or for the appointment of a receiver or any other remedy thereunder, unless a default has occurred of which the
Trustee has been notified as provided in the Indenture, or of which by the Indenture it is deemed to have notice, nor
unless such default shall have become an Event of Default and the Holders of not less than 51% in aggregate
principal amount of Bonds Outstanding shall have made written request to the Trustee and shall have offered it
reasonable opportunity either to proceed to exercise the powers granted or to institute such action, suit, or
proceeding in its own name, nor unless also they have offered to the Trustee indemnity as provided in the Indenture
nor unless the Trustee shall thereafter fail or refuse to exercise the powers granted, or to institute such action, suit, or
proceeding in its own name; and such notification, request and offer of indemnity are declared in every such case at
the option of the Trustee to be conditions precedent to the execution of the powers and trusts of the Indenture, and to
any action or cause of action for the enforcement of the Indenture or for the appointment of a receiver or for any
other remedy thereunder; it being understood and intended that no one or more Holders of the Bonds shall have any
right in any manner whatsoever to affect, disturb or prejudice the lien of the Indenture by action of the Holder or
Holders or to enforce any right under the Indenture except in the manner therein provided, and that all proceedings
at law or in equity shall be instituted, held and maintained in the manner therein provided for the equal benefit of the
Holders of all Bonds Outstanding thereunder. Nothing in the Indenture contained shall, however, affect or impair
the right of any Bondholders to enforce the payment of the principal of and premium, if any, and interest on any
Bonds at and after the maturity thereof, or the obligation of the City to pay the principal of and premium, if any, and
interest on each of the Bonds issued under the Indenture to the respective Holders thereof at the time and place in
said Bonds expressed.
Supplemental Indentures Not Requiring Consent of Bondholders. The City and the Trustee may, from time
to time and at any time, without the consent of or notice to the Bondholders, enter into Supplemental Indentures as
follows:
(a) to cure any formal defect, omission; inconsistency or ambiguity in the Indenture;
(b) to gran[ to or confer or impose upon the Trustee for the benefit of the Bondholders any additional
rights, remedies, powers, authority, security, liabilities or duties which may lawfully be granted, conferred or
• imposed and which are not contrary to or inconsistent with the Indenture as theretofore in effect, provided that no
such additional liabilities or duties shall be imposed upon the Trustee without its consent;
(c) to add to the covenants and agreements of, and limitations and restrictions upon, the City in the
Indenture other covenants, agreements, limitations and restrictions to be observed by the City which are not contrary
to or inconsistent with the Indenture as theretofore in effect;
(d) to confirm, as further assurance, any pledge under, and the subjection to any claim, lien or pledge
created or to be created by, the Indenture, of the Trust Estate or of any other moneys, securities or funds;
(e) to comply with the requirements of the Trust Indenture Act of 1939, as from time to time
amended;
(f) to authorize the issuance and sale of one or more series of Additional Bonds;
(g) to make such additions, deletions or modifications as may be necessary to assure compliance with
Section 148(f) of the Code relating to required rebate to the United States or otherwise as may be necessary to assure
exemption from federal income taxation of interest on the Bonds; or
(h) to modify, alter, amend or supplement the Indenture in any other respect which is not materially
adverse to the Bondholders and which does not involve a change described in clause (a), (b), (c), (d), (e) or (1) below
and which, in the judgment of the Trustee, is not to the prejudice of the Trustee.
Supplemental Indentures Requiring Consent of Bondholders. Subject to the terms and provisions contained
in this paragraph, and not otherwise, the Holders of not less than 2/3 in aggregate 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 and 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 Supplemental Indenture; provided, however, that nothing contained in the Indenture shall permit
• or be construed as permitting (a)an extension of the maturity (or mandatory redemption date) of the principal of or
the interest on any Bond issued thereunder, or (b)a reduction in the principal amount of or redemption premium or
rate of interest on any Bond issued thereunder, or (c)the creation of any lien on the Trust Estate or any part thereof,
10-47615.3 19
except as expressly permitted in the Indenture, or (d)a privilege or priority of any Bond or Bonds over any other
Bond or Bonds, or (e)a reduction in the aggregate principal amount of the Bonds required for consent to such
. Supplemental Indenture, or (f)depriving the Holder of any Bond then Outstanding of the lien created on the Trust
Estate.
If, at any time the City shall request the Trustee to enter into any Supplemental Indenture for any of the
purposes described above, the Trustee shall, at the expense of the City, cause notice of the proposed execution of
such Supplemental Indenture to be mailed by first class mail to each registered owner of the Bonds. Such notice
shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that copies thereof are on file
at the principal office of the Trustee for inspection by Bondholders. The Trustee shall not, however, be subject to
any liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall not affect the
validity of such Supplemental Indenture when consented to and approved as provided above. If the Holders of not
less than 2/3 in aggregate principal amount of the Bonds Outstanding at the time of the execution of any such
Supplemental Indenture shall have consented to and approved the execution thereof, no Holder of any Bond shall
have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any
manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the City from
executing the same or from taking any action pursuant to the provisions thereof.
SUMMARY OF THE CONTINUING DISCLOSURE AGREEMENT
The City has entered into an undertaking in the form of the Continuing Disclosure Agreement as required
by the Indenture for the benefit of the Beneficial Owners of the Series 2003 Bonds to cause certain financial
information to be sent to certain information repositories annually and to cause notice to be sent to such information
repositories of certain specified events, pursuant to the requirements of Section(b)(5)(i) of Rule15c2-12 of the
Securities Exchange Act of 1934, as amended (the "Rule"). The City has not failed to comply with any previous
undertaking pursuant to the Rule.
The Continuing Disclosure Agreement contains the following covenants and provisions:
(a)
The City shall, not later
than August 1 of each
year, commencing August 1, 2003, provide to each
Repository
and the Trustee its Annual
Financial Information
consistent with the requirements of subsection (d)
below.
•
(b) If, on the date specified in subsection (a) above for providing the Annual Financial Information to
Repositories, the Trustee has not received a copy of the Annual Financial Information, the Trustee shall contact the
Disclosure Representative to determine if the City is in compliance with subsection(a).
(c) If the Trustee is unable to verify that the Annual Financial Information has been provided to the
Repositories by the date required within subsection (a), the Trustee shall file a notice to such effect with the
Repositories and the MSRB.
(d) The City's Annual Financial Information shall contain or incorporate by reference the following:
(i) Tax Receipts for the latest Fiscal Year and for the four previous Fiscal Years;
and.
(ii) The City's audited financial statements for the prior Fiscal Year, prepared in
accordance with accounting principles generally accepted in the United States ("GAAP") as such
principles are modified by the governmental accounting standards promulgated by the
Government Accounting Standards Board ("GASB") and by mandated principles of the State of
Arkansas, if any, as in effect from time to time, which financial statements have been audited by
such auditor as shall then be required or permitted by the laws of the State of Arkansas. If the
City's audited financial statements are not available by the time its Annual Financial Information
is required to be filed pursuant to subsection (a) above, the Annual Financial Information shall
contain the unaudited financial statements of the City, and the audited financial statements shall be
filed in the same manner as the Annual Financial Information when they become available.
(e) The City has agreed to instruct the Trustee to deliver to each National Repository, or the MSRB
and the Arkansas State Repository, notice of the occurrence of any of the following Specified Events, if deemed
material:
• (i) Principal and interest payment delinquencies;
(ii) Non-payment related defaults;
10-47615.3 1 20
(iii) Unscheduled draws on any debt service reserve reflecting financial difficulties;
• (iv) Unscheduled draws on any credit enhancement reflecting financial difficulties;
(v) Substitution of any credit or liquidity providers, or their failure to perform;
(vi) Adverse tax opinions or events affecting the tax-exempt status of the Series 2003 Bonds;
(vii) Modifications to rights of Bondowners;
(viii) Bond calls;
(ix) Defeasances;
(x) Release, substitution or sale of property securing payment of the Series 2003 Bonds; or
(xi) Rating changes.
(f) The City has agreed that the foregoing undertakings shall be for the benefit of the Beneficial
Owners of the Series 2003 Bonds, and shall be enforceable by any Beneficial Owner of the Series 2003 Bonds in an
action for specific performance against the City.
• (g) The continuing obligation of the City to provide Annual Financial Information and notice of the
occurrence of Specified Events, if material, will terminate if the City is no longer an "obligated person" within the
meaning of the Rule or upon the maturity, defeasance, prior redemption or payment in full of the Series 2003 Bonds.
The City and the Trustee may amend the Continuing Disclosure Agreement, and any provision of the Continuing
Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel,
reasonably acceptable to each of the City and the Trustee, to the effect that such amendment or waiver would not, in
and of itself, cause the undertakings under the Continuing Disclosure Agreement to violate the Rule, taking into
account any subsequent change in or official interpretation of the Rule.
(h) The following terms used under this caption shall have the meanings set forth below:
"Annual Financial Information" means the annual financial information to be provided by the City of the
• type described in the Continuing Disclosure Agreement.
"Arkansas State Repository" means any public or private repository or entity as may be designated by the
State of Arkansas as a state repository for purposes of the Rule and recognized as such by the SEC. As of the date
of the Continuing Disclosure Agreement, there is no Arkansas State Repository.
"Beneficial Owner" means any Person which has the power, directly or indirectly, to vote or consent with
respect to, or to dispose of ownership of, any Series 2003 Bonds, including Persons holding Series 2003 Bonds
through nominees or depositories.
"Disclosure Representative" means the City's Finance & Internal Services Director or his or her designee,
or such other officer or employee as the City shall designate in writing to the Trustee from time to time.
"Fiscal Year" means the 12 -month period used, at any time, by the City for accounting purposes, which
may be the calendar year. The City's fiscal year presently ends on December 31.
"MSRB" means the Municipal Securities Rulemaking Board.
"National Repository" means any nationally recognized municipal securities information repository for
purposes of the Rule.
"Participating Underwriter" means Stephens Inc.
"Repository" means each National Repository and the Arkansas State Repository.
"Specified Events" means each of the events with respect to the Series 2003 Bonds listed in subsection(e)
above.
(i) A failure by the City to comply with the provisions of the Continuing Disclosure Agreement will
not constitute an Event of Default under the Indenture, and the sole remedy in such an event shall be an action to
compel specific performance. Nevertheless, such a failure to comply must be reported in accordance with the Rule
• and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or
sale of the Series 2003 Bonds in the secondary market. Consequently, such a failure may adversely affect the
transferability and liquidity of the Series 2003 Bonds.
10-47615.3 21
UNDERWRITING
• Under a bond purchase agreement entered into by and between the City and Stephens Inc., Fayetteville,
Arkansas (the "Underwriter"), the Series 2003 Bonds are being purchased at a purchase price of $
(representing the stated principal amount of the Series 2003 Bonds less an underwriting discount of $ ) plus
accrued interest from July 1, 2003 to the date of delivery of the Series 2003 Bonds. The bond purchase agreement
provides that the Underwriter will purchase all of the Series 2003 Bonds if any are purchased. The obligation of the
Underwriter to accept delivery of the Series 2003 Bonds is subject to various conditions contained in the bond
purchase agreement, including the absence of pending or threatened litigation questioning the validity of the Series
2003 Bonds or any proceedings in connection with the issuance thereof, and the absence of material adverse changes
in the financial condition of the City.
The Underwriter intends to offer the Series 2003 Bonds to the public initially at the offering prices as set
forth on the cover page of this Official Statement, which offering prices (or bond yields establishing such offering
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 2003 Bonds to the public, and may offer the Series 2003
Bonds to such dealers and other underwriters at a price below 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 2003 Bonds, including certain liabilities under federal securities laws.
TAX EXEMPTION
Federal Income Taxes. In the opinion of Kutak Rock LLP, Bond Counsel, under existing law, the interest
on the Series 2003 Bonds is excludable from the gross income of the owners thereof for federal income tax purposes
and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and
corporations; it should be noted, however, that for purposes of computing the alternative minimum tax imposed on
corporations (as defined for federal income tax purposes), such interest is taken into account in determining adjusted
current earnings and profits. The opinions set forth in the preceding sentence are subject to the condition that the
City comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2003
. Bonds in order that the interest thereon be, or continue to be, excludable from gross income for federal income tax
purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such
requirements may cause the inclusion of interest on the Series 2003 Bonds in gross income for federal income tax
purposes to be retroactive to the date of issuance of the Series 2003 Bonds.
Bond Counsel is also of the opinion that the Series 2003 Bonds are "qualified tax-exempt obligations"
within the meaning of Section265(b)(3) of the Code, and, in the case of certain financial institutions (within the
meaning of the Section265(b)(5) of the Code), a deduction is allowed for 80percent of that portion of such financial
institution's interest expense allocable to interest on the Series 2003 Bonds.
Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the
Series 2003 Bonds.
Prospective purchasers of the Series 2003 Bonds should be aware that 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 Subchapter 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 2003 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 interest on the Series 2003 Bonds
is exempt from all state, county and municipal taxes in the State of Arkansas.
RATING
Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc. ("S&P"), has given
the Series 2003 Bonds the rating of""[BASED [BASED ON THE DELIVERY OF THE POLICY BY ].
Such rating reflects only the view of S&P at the time such rating was given. An explanation of the significance of
• the rating may be obtained from S&P. There is no assurance that such rating will continue for any given period of
time or that the rating will not be revised downward or withdrawn entirely by S&P if in its judgment circumstances
so warrant. Any downward revision or withdrawal of the rating may havean adverse effect on the market price of
the Series 2003 Bonds.
10-47615.3 22
Neither the City nor the Underwriter have undertaken any responsibility subsequent to the issuance of the
Series 2003 Bonds to assure the maintenance of the rating or to oppose any revision or withdrawal of the rating. No
• application has been made to any Rating Agency other than S&P for a rating on the Series 2003 Bonds.
LEGAL MATTERS
Legal Opinions. Legal matters incident to the authorization and issuance of the Series 2003 Bonds are
subject to the unqualified approving opinion of Kutak Rock LLP, Little Rock, Arkansas, Bond Counsel, a copy of
whose approving opinion will be delivered with the Series 2003 Bonds and a form of which is attached hereto as
Appendix A. Certain legal matters will be passed upon for the City by its counsel, Kit Williams, Esq., City
Attorney.
Litigation. There is no litigation pending seeking to restrain or enjoin the issuance or delivery of the Series
2003 Bonds or questioning or affecting the legality of the Series 2003 Bonds or the proceedings and authority under
which the Series 2003 Bonds are to be issued, or questioning the right of the City to issue the Series 2003 Bonds or
to levy the Tax or pledge the Tax Receipts.
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 representations 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 2003 Bonds.
ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT
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 City, this 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 herein, or
necessary to make the statements herein, 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 of Fayetteville,
Arkansas.
CITY OF FAYETTEVILLE, ARKANSAS
Mayor
0
10-47615.3 23
• APPENDIX A
Proposed Form of Bond Counsel Opinion
Kutak Rock LLP, Bond Counsel, will render an opinion with respect to the Series 2003 Bonds, dated the
date of issuance and delivery thereof, in substantially the following form:
July_, 2003
City of Fayetteville, Arkansas
Fayetteville, Arkansas
Bank of Oklahoma, N.A., as Trustee
Tulsa, Oklahoma
Stephens Inc.
Fayetteville, Arkansas
City of Fayetteville, Arkansas
Hotel and Restaurant Gross Receipts Tax Refunding Bonds
Series 2003
Ladies and Gentlemen:
• We have acted as bond counsel in connection with the issuance and sale by the City of Fayetteville,
Arkansas (the "City"), a political subdivision of the State of Arkansas, of its $ * Hotel and Restaurant
Gross Receipts Tax Refunding Bonds, Series 2003 (the "Bonds").
The Bonds are being issued pursuant to the provisions of the Constitution and laws of the State of
Arkansas, including, particularly, the Advertising and Promotion Commission Act, Arkansas Code Annotated (1997
Repl.) §§26-75-601 er seq. (as from time to time amended, the "Act"), pursuant to Ordinance No. _ of the City,
duly adopted and approved on , 2003 (the "Authorizing Ordinance"), and pursuant to a Trust Indenture
dated as of July!, 2003 (the "Indenture"), by and between the City and Bank of Oklahoma, N.A., as trustee (the
"Trustee"). Reference is hereby made to the Indenture and to all indentures supplemental thereto for the provisions,
among others, with respect to the conditions for the issuance of parity indebtedness by the City, the nature and
extent of the security for the Bonds, the rights, duties and obligations of the City, the Trustee and the Holders of the
Bonds, and the terms upon which the Bonds are issued and secured.
Reference is made to an opinion of even date herewith of Kit Williams, Esq., City Attorney, a copy of
which is on file with the Trustee, with respect, among other matters, to the status and valid existence of the City, the
power of the City to adopt the Authorizing Ordinance and to enter into and perform its obligations under the
Indenture, the valid adoption of the Authorizing Ordinance, and the due authorization, execution and delivery of the
Indenture by the City, and with respect to the Indenture being enforceable upon the City.
We have examined the law and such certified proceedings and other papers as we have deemed necessary
to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the
City contained in the Authorizing Ordinance and the Indenture and in the certified proceedings and other
certifications of public officials furnished to us, without undertaking to verify the same by independent
investigation.
• * Preliminary; subject to change.
10-47615.3 A -I
Based upon the foregoing, we are of the opinion, under existing law, as follows:
• 1. The City is duly created and validly existing as a municipal corporation of the State of Arkansas.
Pursuant to the Constitution and laws of the State of Arkansas, including, particularly, the Act, the City is
empowered to adopt the Authorizing Ordinance, to execute and deliver the Indenture, to perform the agreements on
its part contained therein, and to issue the Bonds.
2. The Authorizing Ordinance has been duly adopted by the City and constitutes a valid and binding
obligation of the City enforceable upon the City in accordance with its terms.
3. The Indenture has been duly authorized, executed and delivered by the City and is a valid and
binding obligation of the City enforceable upon the City in accordance with its terms.
4. The Bonds have been validly authorized, executed, issued and delivered by the City and represent
valid and binding special obligations of the City. The principal, premium, if any, and interest on the Bonds shall be
payable from, and shall be secured by an assignment and pledge by the City to the Trustee of the Tax Receipts (as
defined in the Indenture).
5. The Tax Receipts have been duly and validly assigned and pledged to the Trustee under the
Indenture, and the Indenture creates, as security for the Bonds, a valid security interest in the Tax Receipts.
6. The interest on the Bonds is excluded from gross income for federal income tax purposes and is
not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and
corporations; it should be noted, however, that, for the purpose of computing the alternative minimum tax imposed
on corporations (as defined for federal income tax purposes), such interest is taken into account in determining
adjusted current earnings for purposes of such alternative minimum tax. The opinions set forth in the preceding
sentence are subject to the condition that the City comply with all requirements of the Internal Revenue Code of
• 1986, as amended, that must be satisfied prior to or subsequent to the issuance of the Bonds in order that the interest
thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City has
covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause
the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of
issuance of the Bonds. The Bonds are "qualified tax-exempt obligations" within the meaning of Section 265(b)(3)
of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a
deduction is allowed for 80 percent of that portion of such financial institution's interest expense allocable to interest
on the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds.
7. The interest on the Bonds is exempt from all state, county and municipal taxes in the State of
Arkansas.
8. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and
the Indenture is not required to be qualified under the Trust Indenture Act of 1939, as amended, in connection with
the offer and sale of the Bonds.
It is to be understood that the rights of the registered owners of the Bonds and the enforceability of the
Bonds, the Authorizing Ordinance and the Indenture may be subject to bankruptcy, insolvency, reorganization,
moratorium and other 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,
•
10-47615.3 A-2