HomeMy WebLinkAbout112-94 RESOLUTIONRESOLUTION NO. 112-94
A RESOLUTION AUTHORIZING THE MAYOR AND CITY
CLERK TO EXECUTE A BOND PURCHASE AGREEMENT
WITH LLAMA COMPANY TO PURCHASE WATER AND
SEWER SYSTEM REVENUE BONDS, SERIES 1994 IN AN
AMOUNT NOT TO EXCEED $5 500,000.00.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1. That the Mayor and City Clerk execute a Bond Purchase Agreement with
Llama Company to purchase Water and Sewer System Revenue Bonds, Series 1994 in an amount
not to exceed $5,500,000.00. A copy of the agreement is attached hereto marked Exhibit "A"
and made a part hereof.
PASSED AND APPROVED this 20th day of September , 1994.
ATTEST:
By:
Traci Paul, City Clerk
APPROVED:
By:
Fred Hanna, Mayor
EXHIBIT A
$5,500,000
City of Fayetteville, Arkansas
Water and Sewer System Revenue Bonds,
Series 1994
BOND PURCHASE AGREEMENT
September 20, 1994
The undersigned Llama Company (the "Underwriter") offers to enter into
the following agreement with the City of Fayetteville, Arkansas (the "City")
which, upon the City's acceptance of this offer, will be binding upon the City
and the Underwriter. This offer is made subject to the City's acceptance of this
Bond Purchase Agreement on or before 10:00 p.m., Little Rock, Arkansas time,
on the date first written above, and if not so accepted, will be subject to
withdrawal by the Underwriter upon written notice delivered to the City at any
time prior to acceptance hereof by the City.
On the basis of the representations, warranties and agreements and upon
the terms and conditions contained herein, the Underwriter hereby offers to
purchase the $5,500,000 City of Fayetteville Water and Sewer System Revenue
Bonds, Series 1994 (the 'Bonds"), to be issued by the City, a political subdivision
organized and existing under the laws of the State of Arkansas, under and
pursuant to an Ordinance of the City adopted September 20, 1994 (the
"Authorizing Ordinance"), pursuant to which Bank of Oklahoma, N.A., Tulsa,
Oklahoma, will act as trustee, registrar and paying agent (the ' Trustee") for the
Bonds. The Bonds are to be issued by the City pursuant to and in accordance
with the provisions of Arkansas Code Annotated 014-234-201 et seq., Arkansas
Code Annotated 014-235-201 et seq., Arkansas Code Annotated 014-164-401
et seq., and Arkansas Code Annotated §§19-9-601 et seq., (the "Act"). The
Bonds will constitute special obligations of the City secured solely by a pledge
of the net revenues (the "Net Revenues) of the City's water and sewer system
(the "System") and a debt service reserve fund, as more particularly described
in the Authorizing Ordinance. The Bonds do not constitute an indebtedness of
the City within the meaning of any constitutional or statutory limitation or
restriction.
The Bonds shall be issued in the forms and denominations set forth in the
Authorizing Ordinance; shall be dated October 1, 1994; shall be numbered as
provided in the Authorizing Ordinance; shall mature annually on August 15 of
the years 1995 through 2008, inclusive, as set forth in Exhibit A hereto; shall
bear interest payable semiannually on February 15 and August 15 of each year
commencing February 15, 1995, at the rates set forth in the Authorizing
Ordinance and in Exhibit A hereto; and shall be subject to redemption prior to
maturity upon the terms and conditions set forth in the Authorizing Ordinance.
The proceeds of the Bonds will be used, along with other available
moneys, to finance the acquisition, construction and equipping of certain
capital improvements to the System, to fund a debt service reserve and to pay
costs of issuance of the Bonds.
SECTION 1. REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS.
By execution hereof, the City hereby represents to, and agrees with, the
Underwriter that:
(a) The City is a city of the first class and political subdivision
duly organized and existing under the Constitution and laws of the State of
Arkansas. The City is authorized by the provisions of the Act and the
Authorizing Ordinance to issue, sell and deliver the Bonds for the purposes
specified above, to adopt and perform its obligations under the Authorizing
Ordinance and this Bond Purchase Agreement (this "Agreement"), and to pledge
the Net Revenues to the payment of the principal of and interest on the Bonds
as provided in the Authorizing Ordinance.
(b) The City has full power and authority to consummate all
transactions contemplated by this Agreement, the Bonds, the Authorizing
Ordinance and any and all other agreements relating thereto to which the City
is a party.
(c) The City has duly authorized all action necessary under the
Act or otherwise to be taken by it or on its behalf for: (i) the issuance and
delivery of the Bonds upon the terms set forth in the Act, the Authorizing
Ordinance, this Agreement and the Official Statement (as hereinafter defined);
(ii) the execution and delivery by it of this Agreement; (iii) the pledge of the Net
Revenues as set forth in the Authorizing Ordinance and described in the Official
Statement; and (iv) the adoption of the Authorizing Ordinance and the
performance of its duties thereunder.
(d) The City has previously provided the Underwriter with copies
of its Preliminary Official Statement, including the cover page, dated September
12, 1994, relating to the Bonds (the 'Preliminary Official Statement"). As of its
date, the Preliminary Official Statement has been "deemed final" by the City for
purposes of SEC Rule 15c2 -12(b)(1). The Preliminary Official Statement, as
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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."
(e) Except as described in the Official Statement, there is no
action, suit, proceeding, inquiry or investigation at law or in equity or before
or by any court, public board or body pending or, to the knowledge of the City,
threatened against or affecting it (or, to its knowledge, any basis therefor)
wherein an unfavorable decision, ruling or finding would adversely affect the
transactions contemplated by this Agreement or would adversely affect the
validity of the Bonds, the Authorizing Ordinance, this Agreement or any
agreement or instrument to which the City is a party and which is used or
contemplated for use in the consummation of the transactions contemplated
hereby.
(f) The financial statements of the City referred to and contained
in Appendix A to the Official Statement present fairly the financial position of
the City and the System as of the dates indicated therein and the results of
operations for the periods specified therein, and the financial statements
therein have been prepared in conformity with generally accepted accounting
principles consistently applied, except as may be noted in the Official
Statement, in all material respects with respect to the periods involved.
(g) The descriptions and information contained in the Official
Statement, including the Appendices thereto, relating to the City, the System,
its organization, properties, operations and financial condition and the
descriptions of the Bonds, the Authorizing Ordinance and the Net Revenues are,
and at the Closing Date (as defined in this Agreement and used hereinafter) will
be, true and do not contain, any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
(h) Since December 31, 1993, there has not been any material
adverse change in the properties, financial position or results of operations of
the City or the System, whether or not arising from transactions arising in the
ordinary course of business, other than any such changes which are disclosed
in the Official Statement, and since such date the City has not entered into any
transaction or incurred any liability materially adverse to the City or the
System, except as disclosed in the Official Statement.
(i) The City will not take or omit to take any action that will in
any way result in the proceeds from the sale of the Bonds being applied in a
manner inconsistent with the provisions of the Authorizing Ordinance.
0) The Bonds, when issued and delivered by the City, will
constitute special obligations of the City enforceable in accordance with their
terms, except to the extent that enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally and by the
application of general principles of equity.
(k) The Authorizing Ordinance and this Agreement, when
adopted, executed and delivered by the City, will be the legal, valid and binding
obligations of the City enforceable in accordance with their respective terms,
except to the extent that enforcement thereof may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally and by the
application of general principles of equity.
(1) The execution and delivery of the Bonds and this Agreement,
the adoption of the Authorizing Ordinance, and the performance by the City of
its obligations under the aforementioned, do not and will not violate the Act or
any court order by which the City is bound, and such actions do not and will not
constitute a default under any existing resolution, agreement, indenture,
mortgage, lease, note or other obligation or instrument to which the City is a
party, and no approval or other action by any governmental authority or agency
is required in connection therewith.
(m) 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.
SECTION 2. PURCHASE, SALE, AND DELIVERY OF THE BONDS.
On the basis of, and in reliance upon, the warranties, representations and
agreements of the City contained herein and in the other documents and
agreements referred to herein and subject to the terms and conditions herein
set forth, at the Closing Time, the Underwriter agrees to purchase from the
City, and the City agrees to sell to the Underwriter, the Bonds at a price of
$5,425,750 (98.65% of the principal amount) plus accrued interest from the
date of the Bonds to the date of payment and delivery.
The Bonds shall be issued under and secured as provided in the
Authorizing Ordinance, and the Bonds shall have the maturities and interest
rates and be subject to redemption as set forth in the Authorizing Ordinance
and in Exhibit A hereto.
Payment for the Bonds shall be made by certified check or official bank
check or draft, wire transfer, or otherwise in funds immediately available to the
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City on the same day, at the offices of Gill Law Firm, Little Rock, Arkansas, at
10:00 a.m. on October 25, 1994, or at such other place, date and hour as shall
be mutually agreed upon between the City and the Underwriter. The date of
such delivery and payment is herein called the "Closing Date," and the hour and
date of such delivery and payment is herein called the "Closing Time."
The Bonds shall be printed or lithographed on steel engraved borders,
shall bear CUSIP numbers, shall be prepared and delivered as fully registered
bonds in denominations of $5,000 or integral multiples thereof in such names
as the Underwriter may request at least five business days prior to the Closing
Date, and shall be made available to the Underwriter at least three business
days before the Closing Date for purposes of inspection and packaging.
SECTION 3. CONDITIONS TO THE UNDERWRITER'S OBLIGATIONS.
The Underwriter's obligations hereunder shall be subject to the due
performance by the City of its obligations and agreements to be performed
hereunder at or prior to the Closing Time and to the accuracy of and
compliance with the representations and warranties of the City contained
herein, as of the date hereof and as of the Closing Time, and the Underwriter's
obligations hereunder are also subject to the following:
(a) The City shall have received from Standard & Poor's Ratings
Group, a Division of McGraw-Hill, Inc. the rating of "A" on the Bonds and a
letter evidencing such rating shall have been delivered to the Underwriter.
(b) The Bonds shall have been duly authorized, executed and
delivered in the form heretofore approved by the City in the Authorizing
Ordinance with only such changes therein as the Underwriter and the City shall
mutually agree upon.
(c) At the Closing Time, the Underwriter shall receive two
counterpart originals of the following documents, in each case satisfactory in
form and substance to the Underwriter:
(1) The Official Statement, executed on behalf of the City
by its Mayor;
(2) The Authorizing Ordinance, certified by the City Clerk
as a true, correct and complete copy of the Authorizing Ordinance duly
adopted by the City Council that has not been amended, modified or
repealed and is in full force and effect as of the Closing Date;
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(3) The opinions dated as of the Closing Date of (A) Jerry
Rose, City Attorney, in substantially the form and substance as that
attached hereto as Exhibit B and (B) Gill Law Firm, Bond Counsel, in
substantially the form and substance as attached hereto as Exhibits C and
D;
(4) A certificate, in form and substance satisfactory to the
Underwriter, its counsel and Bond Counsel, of the Mayor of the City or
any duly authorized officer or official of the City satisfactory to the
Underwriter, its counsel and Bond Counsel, dated as of the Closing Date,
to the effect that:
(i) each of the City's representations contained herein
are true and correct as of the Closing Time,
(ii) the City has authorized, by all action necessary
under the Act, the adoption of the Authorizing Ordinance and the
execution, delivery and due performance of the Bonds, this
Agreement, and the pledging of the Net Revenues;
(iii) the Authorizing Ordinance has not been amended,
modified or repealed and is in full force and effect as of the Closing
Date;
(iv) except as described in the Official Statement, no
litigation is pending or, to his knowledge threatened, to restrain or
enjoin the issuance or sale of the Bonds or in any way affecting any
authority for or the validity of the Authorizing Ordinance, this
Agreement, or the pledge of the Net Revenues;
(v) the Bonds, as executed by the City, are in the form
or in substantially the form approved for such execution by
appropriate proceedings of the City;
(vi) since December 31, 1993, there has not been any
material adverse change in the properties, financial position or
results of operations of the City or the System, whether or not
arising from transactions in the ordinary course of business, other
than such changes that are disclosed in the Official Statement, and
since such date the City has not entered into any transaction or
incurred any liability materially adverse as to the City or the
System except as disclosed in the Official Statement;
(vii) there are not pending or, to his knowledge,
threatened, legal proceedings that are not disclosed in the Official
Statement and that are material to the City or the System, or to
which the City or the System is a party, or of which property of the
City or the System is subject, or that will adversely affect the
transactions contemplated hereby or by the Official Statement;
(viii) the information contained in the Official
Statement relating to the City and the System, their organization,
properties, operations and financial condition and the descriptions
of the Bonds, the Authorizing Ordinance and the Net Revenues are
true and correct in all material respects and do not contain any
untrue or incorrect statement of a material fact and do not omit to
state a material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were
made, not misleading, and
(ix) the City has duly authorized by all necessary action
the signing of the Official Statement by its Mayor;
(5) An arbitrage certificate of the City, in form satisfactory
to Bond Counsel, signed by the Mayor;
(6) A letter dated within five (5) days of the Closing Date,
addressed to the City, Underwriter and Bond counsel from Arthur
Andersen & Co., Dallas, Texas, independent certified public accountants,
consenting to the use of the City's audited financial statements for the
year ended December 31, 1993 and to the references to such firm in the
Official Statement;
(7) A letter dated as of the Closing Date, addressed to the
City, the Underwriter and Bond counsel from Black & Veatch, Engineers -
Architects, Kansas City, Missouri, consenting to the use of their report
dated September 7, 1994 and to the references to such firm in the Official
Statement;
(8) Such additional certificates and other documents as the
Underwriter may reasonably request to evidence performance of or
compliance with the provisions of this Agreement and the transactions
contemplated hereby and by the Official Statement, all such certificates
and other documents to be satisfactory in form and substance to the
Underwriter and Bond Counsel.
(d) Ordinance No. 3491 adopted by the City on July 17, 1990,
setting the rates for the sale of water, and Ordinance No. 3637 adopted by the
City on August 18, 1992, setting the rates for sewer service (the 'Rate
Ordinances"), shall be in full force and effect and shall not be the subject of any
referendum petition pursuant to Amendment 7 to the Constitution of the State
of Arkansas.
SECTION 4. THE UNDERWRITER'S RIGHT TO CANCEL.
The Underwriter shall have the right to cancel its obligation to purchase
the Bonds hereunder by notifying the City in writing or by telegram of its
election to do so between the date hereof and the Closing Time, if at any time
hereafter and prior to the Closing Time.
(a) Legislation shall be introduced, by amendment or otherwise,
in, or be enacted by the House of Representatives or the Senate, or be
recommended to the Congress of the United States for passage by the President
of the United States, or a decision by a court established under Article III of the
Constitution of the United States or by the Tax Court of the United States, shall
be rendered, or a ruling, regulation or order of the Treasury Department of the
United States or the Internal Revenue Service shall be made or proposed having
the purpose or effect of imposing federal income taxation, or any other event
shall have occurred that results in the imposition of federal income taxation,
upon revenues of the System or upon the interest received on obligations of the
general character of the Bonds, or the Bonds, which, in the Underwriter's
opinion, materially adversely affects the market price of the Bonds;
(b) Any legislation, ordinance, rule or regulation shall be
introduced in or be enacted by any department or agency of the State of
Arkansas, or a decision by any court of competent jurisdiction within the State
of Arkansas shall be rendered that, in the Underwriter's opinion, materially
adversely affects the mai ket price of the Bonds;
(c) Legislation shall be introduced, by amendment or otherwise,
in, or be enacted by the House of Representatives or the Senate of the Congress
of the United States, or a decision by a court of the United States shall be
rendered, or a stop order, ruling, regulation or official statement by, or on
behalf of the Securities and Exchange Commission or other governmental
agency having jurisdiction of the subject matter shall be made or proposed, to
the effect that the issuance, offering, or sale of obligations of the general
character of the Bonds or the Bonds, as contemplated hereby or by the Official
Statement, is or would be in violation of any provision of the Securities Act of
1933, as amended and as then in effect, or the Securities Exchange Act of 1934,
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as amended and as then in effect, or the Trust Indenture Act of 1939, as
amended and as then in effect, or with the purpose or effect of otherwise
prohibiting the issuance, offering, or sale of obligations of the general character
of the Bonds, as contemplated hereby or by the Official Statement;
(d) Any event shall have occurred or information become known
that, in the Underwriter's opinion, makes untrue, incorrect or misleading in
any material respect any statement or information contained in the Official
Statement (or any appendices thereto) as originally circulated, or has the effect
that the Official Statement (or any appendices thereto) as originally circulated,
contains an untrue, incorrect or misleading statement of a material fact or
omits to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading;
(e) Additional material restrictions not in force as of the date
hereof shall have been imposed upon trading in securities generally by any
governmental authority or by any national securities exchange;
(f) A general banking moratorium shall have been established
by federal or Arkansas authorities;
(g) A default shall have occurred with respect to the obligations
of, or proceedings have been instituted under the federal bankruptcy laws or
any similar state laws by or against, any state of the United States or any city
located in the United States having a population in excess of one million
persons or any entity issuing obligations on behalf of such a city or state that,
in the Underwriter's opinion, materially adversely affects the market price of
the Bonds;
(h) Any rating of the Bonds shall have been downgraded or
withdrawn by a national rating service; or
(i) A war involving the United States shall have been declared,
or any conflict involving the armed forces of the United States shall have
escalated into armed conflict, or any other national emergency relating to the
effective operation of government or the financial community shall have
occurred that, in the Underwriter's opinion, materially adversely affects the
market price of the Bonds.
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it
SECTION 5. CONDITIONS TO THE OBLIGATIONS OF THE CITY.
The obligations of the City hereunder are subject to the Underwriter's
performance of its obligations hereunder, and the further condition that at the
Closing Time the Underwriter shall receive the opimons described in Section
3(c) (3) hereof.
SECTION 6. INDEMNIFICATION.
To the extent permitted by law, the City agrees to indemnify and hold
harmless the Underwriter, any member, officer, official or employee of the
Underwriter, and each person, if any, who controls the Underwriter within the
meaning of Section 15 of the Securities Act of 1933, as amended (collectively,
the "Indemnified Parties"), against any and all losses, claims, damages,
liabilities or expenses whatsoever caused by any untrue statement or
misleading statement or allegedly misleading statement of a material fact
contained in the Official Statement or caused by any omission or alleged
omission from the Official Statement of any material fact necessary in order to
make the statements made therein, in light of the circumstances under which
they were made, not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by any such untrue or misleading statement
or omission or allegedly untrue or misleading statement or omission in the
information contained under the caption "UNDERWRITING."
In case any action shall be brought against one or more of the
Indemnified Parties based upon the Official Statement and in respect of which
indemnity may be sought against the City, the Indemnified Parties shall
promptly notify the City in writing and, to the extent permitted by law, the City
shall promptly assume the defense thereof, including the employment of
counsel, the payment of all expenses and the right to negotiate and consent to
settlement. Any one or more of the Indemnified Parties shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Parties unless employment of such counsel has been
specifically authorized by the City. The City shall not be liable for any
settlement of any such action effected without its consent by any of the
Indemnified Parties, but if settled with the consent of the City or if there be a
final judgment for the plaintiff in any such action against the City or any of the
Indemnified Parties, with or without the consent of the City, the City agrees to
indemnify and hold harmless the Indemnified Parties to the extent provided in
this Agreement and to the extent permitted by law.
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SECTION 7. DELIVERY OF OFFICIAL STATEMENT.
The City shall supply to the Underwriter a final Official Statement, in
form satisfactory to the Underwriter, within seven business days of the date
hereof and in time to accompany any confirmation that requests payment from
any customer, and in a sufficient quantity to comply with SEC Rule 15c2-12 (b)
(4) and the rules of the Municipal Securities Rulemaking Board. Such Official
Statement shall be signed on behalf of the City by its Mayor. The City hereby
authorizes the use of copies of the Authorizing Ordinance and the Official
Statement and the information therein contained by the Underwriter in
connection with the public offering and the sale of the Bonds. The City ratifies
and confirms the use by the Underwriter prior to the date hereof of the
Preliminary Official Statement in connection with the public offering of the
Bonds.
SECTION 8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE
DELIVERY.
All representations and agreements of the City shall remain operative and
in full force and effect, regardless of any investigations made by or on the
Underwriter's behalf, and shall survive delivery of the Bonds to the
Underwriter.
SECTION 9. PAYMENT OF EXPENSES.
If the Underwriter accepts delivery of and pays for the Bonds as set forth
herein, all expenses and costs to effect the authorization, preparation, issuance,
delivery and sale of the Bonds (including, without limitation, the fees and
disbursements of Gill Law Firm, as Bond Counsel, rating agency fees and
expenses incurred in connection therewith, and the expenses and costs for the
preparation, printing, photocopying, execution and delivery of the Bonds, the
Preliminary Official Statement, the Official Statement, the Authorizing
Ordinance, and all other agreements and documents contemplated thereby)
shall be paid out of the proceeds of the Bonds.
Whether or not the Underwriter accepts delivery of and pays for the
Bonds as set forth herein, the Underwriter shall pay all costs and disbursements
incurred by it in connection with the transaction including, without limitation,
fees and expenses of any counsel for the Underwriter and Blue Sky fees.
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SECTION 10. NOTICE.
Any notice or other communication to be given to the City under this
Agreement may be given by mailing or delivering the same in writing to the
Administrative Services Director, City of Fayetteville City Hall, 113 West
Mountain, Fayetteville, Arkansas 72701; and any notice or other
communication to be given to the Underwriter under this Agreement may be
given by delivering the same in writing to Llama Company, One Mcllroy Plaza,
Suite 302, Fayetteville, Arkansas 72701, Attention: David Hausam.
SECTION 11. APPLICABLE LAW; NONASSIGNABILITY.
This Agreement shall be governed by the laws of the State of Arkansas
and shall not be assigned by the City or the Underwriter.
SECTION 12. EXECUTION OF COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which
shall be regarded as an original and all of which shall constitute one and the
same document
SECTION 13. SEVERABILITY.
In the event any provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall not
invalidate or render unenforceable any other provision hereof.
Attest:
By:
glad /k<.e.
City Clerk
CITY OFJAYETTTVILLE, ARKANSAS
°/ /�
By: /', :i.;i. LVUw
M9yor
(SEAL) LLAMK COMP
By:I .1k \ 21 1J
Authorized Representative
774\ 1997\bondpur 1.bpa
12
Year
EXHIBIT A
MATURITY SCHEDULE
Principal Interest
1995 $ 315,000 4.05%
1996 290,000 4.45
1997 305,000 4.70
1998 320,000 4.90
1999 335,000 5.05
2000 350,000 5.15
2001 3 70, 000 5.25
2002 390,000 5.35
2003 410,000 5.45
2004 430,000 5.55
2008w 1,985,000 6.00
* Sinking Fund Maturity
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EXHIBIT B
FORM OF OPINION OF JERRY ROSE, CITY ATTORNEY
Bank of Oklahoma
Bank of Oklahoma Tower
P.O. Box 880
Tulsa, Oklahoma 74101-0880
Gill Law Firm
3801 TCBY Tower
Capital at Broadway
Little Rock, Arkansas 72201
Llama Company
One McIh'oy Plaza, Suite 302
Fayetteville, Arkansas 72701
Ladies and Gentlemen:
, 1994
I am City Attorney for the City of Fayetteville, Arkansas (the "City"), and
have acted in that capacity in connection with the issuance and sale by the City
of its $5,500,000 Water and Sewer System Revenue Bonds, Series 1994 (the
"Bonds"), which Bonds are being sold pursuant to a Bond Purchase Agreement
dated September 20, 1994 (the "Bond Purchase Agreement"), between Llama
Company (the "Underwriter") and the City. The terms defined in the Bond
Purchase Agreement are used in this letter with the meaning assigned to them
in the Bond Purchase Agreement.
In this connection, I have reviewed certain documents with respect to the
Bonds, and such records, certificates and other documents as I have considered
necessary or appropriate for the purposes of this opinion, including Ordinance
No. 3491 adopted by the City on July 17, 1990, Ordinance No. 3637 adopted by
the City on August 18, 1992 (collectively, the Rate Ordinance"), Ordinance No.
3829 adopted by the City on September 20, 1994 (the "Authorizing Ordinance"),
the Preliminary Official Statement dated September 12, 1994, and the final
Official Statement dated September 20, 1994, with respect to the Bonds
(collectively with the Preliminary Official Statement, the "Official Statement"),
and a closing certificate of the City. Based on such review and such other
considerations of law and fact as I believe to be relevant, I am of the opinion
that:
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1. The City has been properly formed and is validly existing as a city of
the first class and political subdivision of the State of Arkansas and had the full
power and authority to adopt the Rate Ordinance and the Authorizing
Ordinance and to execute and deliver the Bonds, the Official Statement and the
Bond Purchase Agreement.
2 The adoption of the Rate Ordinance and the Authorizing Ordinance,
the issuance of the Bonds, and the Bond Purchase Agreement, and the
Performance of the City's obligations thereunder did not, do not and will not in
any material respect conflict with or constitute on the part of the City a breach
of or a default under any indenture, deed of trust, or other instrument to which
the City is a party, or conflict with, violate, or result in a breach of any statute
or court decree applicable to the City.
3. Excepting those matters discussed in the Official Statement, the City
is not in violation of any provision of any agreement or instrument the violation
of or default of which would materially and adversely affect the business,
properties, assets, liabilities, or condition (financial or other) of the City.
4. Excepting those matters discussed in the Official Statement, there are
no legal or governmental actions, proceedings, inquiries or investigations
pending or threatened by governmental authorities or to which the City is a
party or to which any property of the City is subject which, if determined
adversely, would individually or in the aggregate (i) materially and adversely
affect the validity or the enforceability of the Bonds or the Bond Purchase
Agreement, (ii) otherwise materially and adversely affect the ability of the City
to comply with its obligations on the Bonds or under the Authorizing Ordinance
or the Bond Purchase Agreement, or (iii) materially adversely affect the
transactions contemplated by the Official Statement to be engaged in by the
City.
5. I have reviewed and considered the information contained in the
Official Statement under the captions "THE IMPROVEMENTS," "THE CITY'S
WATER AND SEWER SYSTEM," "THE CITY," and "LEGAL MATTERS -Litigation"
therein, and nothing has come to my attention that leads me to believe that
those captioned sections of the Official Statement contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
I hereby consent to the references made to me in the Official Statement.
Very truly yours,
Jerry Rose
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EXHIBIT C
FORM OF APPROVING OPINION OF BOND COUNSEL
City Council of the
City of Fayetteville
City Hall
113 West Mountain
Fayetteville, Arkansas 72701
Bank of Oklahoma
Bank of Oklahoma Tower
P.O. Box 880
Tulsa, Oklahoma 74101-0880
Ladies and Gentlemen:
, 1994
Llama Company
One McIlroy Plaza, Suite 302
Fayetteville, Arkansas 72701
We have acted as bond counsel in connection with the issuance by the City
of Fayetteville, Arkansas (the 'City"), of its $5,500,000 aggregate principal
amount of Water and Sewer System Revenue Bonds, Series 1994, dated October
1, 1994 (the "Bonds"). The Bonds are being issued for the purpose of providing
a portion of the funds necessary to finance the costs of acquiring, constructing
and equipping certain capital improvements to the City's water and sewer
system (the "System"), to fund a debt service reserve and to pay certain costs of
issuing the Bonds.
The Bonds are being issued 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 Title 14, Chapter 234, Subchapter 2,
Title 14, Chapter 235, Subchapter 2, Title 14, Chapter 164, Subchapter 4 and
Title 19, Chapter 9, Subchapter 6 of the Arkansas Code of 1987 Annotated
(collectively the "Authorizing Legislation"), and pursuant to Ordinance No. 3829
of the City adopted by the City Council of the City on September 20, 1994 (the
"Ordinance"), under which the City has pledged the net revenues of the System
(such net revenues as are more particularly defined in the Ordinance being
called the "Net Revenues") to the payment of the Bonds.
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We have examined certified copies of the legal proceedings, including the
Ordinance, and certain other proofs submitted relative to the authorization and
issuance of the Bonds. Regarding questions of fact material to our opinion, we
have relied upon the certified proceedings and other certifications of public
officials furnished to us without undertaking to verify such facts by
independent investigation. In giving this opinion, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals, the conformity to originals of all documents submitted to us as
certified, photostatic or conformed copies and the authenticity of the originals
of all such latter documents. We have also assumed the accuracy of the factual
matters contained in the documents and records we have examined.
Based on our examination, we are of the opinion, as of the date hereof and
under existing law, that:
1. In reliance on the opinion of Jerry E. Rose, Esquire, City Attorney,
of even date herewith, the City is duly created and validly existing as a city of
the first class of the State of Arkansas, with the power to adopt the Ordinance
and to issue the Bonds.
2. Pursuant to the Authorizing Legislation the Bonds have been duly
authorized and issued by the City and are valid and binding special obligations
of the City, enforceable in accordance with their terms, and the principal of and
interest and any redemption premium on the Bonds are secured by a pledge of
and payable solely from the Net Revenues to the extent and in the manner
provided in the Ordinance. The principal of and interest and any redemption
premium on the Bonds may aLso be paid as provided in the Ordinance from
other moneys in the Debt Service Reserve Fund and certain other funds
established thereby, including any income received from the investment of
moneys deposited in such funds.
The City is not obligated to pay the principal of and interest and any
redemption premium on the Bonds and such other indebtedness except from
the Net Revenues pledged under the Ordinance, and such principal, interest
and premium shall not constitute an indebtedness of the City within the
meaning of any constitutional or statutory debt limitation.
3. The interest on the Bonds (including any original issue discount
properly allocable to a holder thereof) (a) is excluded from gross income for
federal income tax purposes and (b) is not an item of tax preference for
purposes of the federal alternative minimum tax imposed on individuals and
corporations; however, it should be noted that with respect to corporations (as
defined for federal income tax purposes), such interest is taken into account in
determining adjusted current earnings for the purpose of computing the
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alternative minimum tax and the environmental tax imposed on such
corporations. The opinion set forth in clause (a) above is subject to the
condition that the City comply with all requirements of the Internal Revenue
Code of 1986, as amended (the "Code'), that must be satisfied subsequent to the
issuance of the Bonds in order that interest thereon be (or continue to be)
excluded from gross income for federal income tax purposes. Failure to comply
with certain of such requirements could cause the interest on the Bonds to be
so included in gross income retroactive to the date of issuance of the Bonds.
The City has covenanted to comply with all such requirements. We express no
opinion regarding other federal tax consequences arising with respect to the
Bonds except as set forth in paragraph 4 below.
4. The Code prohibits the deduction of interest on indebtedness incurred
or continued by a bank or other financial institution to purchase or carry tax-
exempt obligations, such as the Bonds. The Code, however, contains a limited
exception to this provision that permits an 80 percent deduction for interest for
financial institutions to the extent that they purchase directly or in the
secondary market obligations of certain governmental units (i) that, together
with all subordinate entities thereof, do not reasonably expect to issue in the
aggregate more than $10,000,000 of tax-exempt obligations (not counting
private -activity bonds except for qualified 501(c)(3) bonds) in a calendar year
and (ii) that designate such obligations as qualifying for such exception. In the
Ordinance the City has (i) represented that it reasonably expects that it and all
subordinate entities thereof will not issue more than $10,000,000 of tax-exempt
obligations (not counting private -activity bonds) during calendar year 1994
and (ii) designated the Bonds as qualifying for such exception.
Based on certain representations of the City described above and
assuming continuing compliance with such representations, 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 institutions' interest expense allocable to interest on
the Bonds.
5. Under existing law, the Bonds and the interest thereon are exempt
from all state, county and municipal taxes in the State of Arkansas.
6. The Bonds are exempt from registration under the Securities Act of
1933, and State of Arkansas securities law. The Resolution is exempt from
qualification under the Trust Indenture Act of 1939.
7. We are of the opinion that the offer, sale and delivery of the Bonds
under the circumstances contemplated do not require registration of the Bonds
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under the Securities Act of 1933, as amended, and do not require qualification
of the Authorizing Ordinance under the Trust Indenture Act of 1939, as
amended.
8. The rights of the owners of the Bonds and the enforceability thereof
may be subject to bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights heretofore and hereafter enacted
to the extent constitutionally applicable and their enforcement may also be
subject to the exercise of judicial discretion in appropriate cases.
Respectfully submitted,
Gill Law Firm
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