HomeMy WebLinkAboutORDINANCE 6263113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
Ordinance: 6263
File 'dumber: 2019-0736
BONDHOLDER DIRECTED BOND TENDER PROGRAM:
AN ORDINANCE TO acknowledge the implementation of a bondholder directed bond tender
program; authorize the execution and delivery of a SUPPLEMENTAL trust indenture and A tender
agent agreement pursuant to which the bond tender program will be implemented; appoint a tender
agent; PRESCRIBE OTHER MATTERS RELATING THERETO; AND DECLARE AN
EMERGENCY
WHEREAS, on March 15, 2005, the City Council of the City of Fayetteville ("City Council')
authorized the issuance of the $3,725,000 Tax Increment Interest Accretion Bonds (Highway 71 East
Square Development District No. 1 Project), Series 2005 (the "Bonds") pursuant to Ordinance No.
4684 (the "Bond Ordinance") under the authority of Amendment No. 78 to the Arkansas
Constitution and Arkansas Code Annotated Sections 14-168-301 et seq., as from time to time
amended; and
WHEREAS, in connection with the issuance of the Bonds, the City of Fayetteville, Arkansas (the
"City") entered into that certain Trust Indenture ("Trust Indenture") dated April 15, 2005 with The
Bank of Fayetteville, N.A., predecessor to the current trustee, Bank OZK, Little Rock, Arkansas (the
"Trustee"); and
WHEREAS, the Trustee has received direction from the owners of 2/3rds of the aggregate principal
amount of the outstanding Bonds to hire counsel to create a recurring voluntary tender offer program to
offer owners of the Bonds ("Bondholders") the option to tender their Bonds on an annual basis at an
amount that is less than the Accreted Value (the "Bond Tender Program") and to modify the Trust
Indenture to modify the Trustee fee restrictions; and
WHEREAS, the Trustee has hired Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.
("Counsel") and the Bond Tender Program has been created which requires a supplement and
amendment to the Trust Indenture (the "First Supplemental Trust Indenture"), the appointment of a
Page 1 Printed on 11/20/19
File Number 2019-0736
Ordinance 6263
tender agent ("Tender Agent") and the execution of a tender agent agreement (the "Tender Agent
Agreement"); and
WHEREAS, pursuant to Section 1002 of the Trust Indenture, at the direction of 2/3rds in the
aggregate principal amount of the outstanding Bonds, the Trust Indenture may be modified, altered or
amended; and
WHEREAS, the City now desires to (i) acknowledge the creation and implementation of the Bond
Tender Program to begin with the next payment date of February 1, 2020, (ii) supplement and amend
the Trust Indenture to allow for the implementation of the Bond Tender Program and modify the
Trustee fee restrictions, (iii) authorize the appointment of Bank OZK as the Tender Agent and (iv)
authorize the execution and delivery of the Tender Agent Agreement.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1: There is hereby acknowledged and agreed to the creation and implementation of the Bond
Tender Program as directed by Bondholders, and Bank OZK is hereby appointed as the Tender Agent
to work cooperatively with the Trustee to maintain the Bond Tender Program on an annual basis.
Section 2: There is hereby authorized the First Supplemental Trust Indenture which incorporates
provisions for the implementation of the Bond Tender Program and modifies the Trustee fee
restrictions. The Mayor is authorized to execute and acknowledge the First Supplemental Trust
Indenture, and the City Clerk is hereby authorized to execute and acknowledge the First Supplemental
Trust Indenture and to affix the seal of the City thereto. The First Supplemental Trust Indenture is
hereby approved in substantially the form submitted to this meeting. The Mayor is hereby authorized to
confer with the Trustee, Counsel and City staff in order to complete the First Supplemental Trust
Indenture in substantially the form submitted to this meeting, with such changes as shall be approved by
such persons executing the First Supplemental Trust Indenture, their execution to constitute conclusive
evidence of such approval.
Section 3: There is hereby authorized the Tender Agent Agreement which prescribes the terms and
conditions of the Bond Tender Program. The Mayor is authorized to execute and acknowledge the
Tender Agent Agreement, and the City Clerk is hereby authorized to execute and acknowledge the
Tender Agent Agreement and to affix the seal of the City thereto. The Tender Agent Agreement is
hereby approved in substantially the form submitted to this meeting. The Mayor is hereby authorized to
confer with the Trustee, Tender Agent, Counsel and City staff in order to complete the Tender Agent
Agreement in substantially the form submitted to this meeting, with such changes as shall be approved
by such persons executing the Tender Agent Agreement, their execution to constitute conclusive
evidence of such approval.
Section 4: The Mayor and the City Clerk, for and on behalf of the City, are hereby authorized to do
any and all things necessary to effect the implementation of the Bond Tender Program and to effect the
execution of the First Supplemental Trust Indenture and Tender Agent Agreement, and to perform all
of the obligations of the City under and pursuant thereto. The Mayor and the City Clerk are further
Page 2 Printed on 11120119
File Number 2019-0736
Ordinance 6363
authorized, for and on behalf of the City, to execute all documents, agreements, certificates and other
instruments that may be necessary or required for the carrying out of such authority or the intent of this
Ordinance.
Section 5: The provisions of this Ordinance are hereby declared to be severable. In the event that any
section, paragraph, subdivision, clause, phrase or other provision or portion of this Ordinance shall be
adjudged illegal, invalid, unenforceable or unconstitutional, the same shall not affect the validity of this
Ordinance as a whole, or any part or provision thereof, other than the part so decided to be illegal,
invalid, unenforceable or unconstitutional, and the remaining provisions of this Ordinance shall be
construed as if such illegal, invalid, unenforceable or unconstitutional provision or provisions had never
been contained herein.
Section 6: All ordinances and resolutions or parts thereof, in conflict herewith are hereby repealed to
the extent of such conflict.
Section 7: Following adoption, this Ordinance shall be published in a newspaper of general circulation
in the City, at least one time, pursuant to Title 14, Chapter 55, subchapter 2 of the Arkansas Code of
1987 Annotated.
Emergency Clause: This Ordinance shall take effect and be enforced from and after its adoption. It is
hereby found and determined by the Fayetteville City Council that the implementation of the Bond
Tender Program beginning with the payment date of February 1, 2020, and authorization and
execution of the First Supplemental Trust Indenture and Tender Agent Program is immediately
necessary in order to preserve the public health, safety and welfare; THEREFORE, an emergency is
hereby declared to exist, and this Ordinance shall be in full force and effect from and after its passage
and approval.
PASSED and APPROVED on 11/19/2019
�ttit'`�ERK-
Approve 1IJ///�`` Attest:
•FAY
�; �E
ionel .lordan, {CI r Lisa Branson, Deputy Cifjr
c
Page 3 Printed on 11120119
City of Fayetteville, Arkansas 113 West Mountain Street
Fayetteville, AR 72701
(479) 575-8323
Text File
File Number: 2019-0736
Agenda Date: 11/19/2019 Version: 1 Status: Passed
In Control: City Council Meetinq File Type: Ordinance
Agenda Number: C 10
BONDHOLDER DIRECTED BOND TENDER PROGRAM:
AN ORDINANCE TO acknowledgE the implementation of a bondholder directed bond tender program;
authorizE the execution and delivery of a SUPPLEMENTAL trust indenture and A tender agent agreement
pursuant to which the bond tender program will be implemented; appoint a tender agent; PRESCRIBE
OTHER MATTERS RELATING THERETO; AND DECLARE AN EMERGENCY
WHEREAS, on March 15, 2005, the City Council of the City of Fayetteville ("City Council") authorized the
issuance of the $3,725,000 Tax Increment Interest Accretion Bonds (Highway 71 East Square Development
District No. 1 Project), Series 2005 (the "Bonds") pursuant to Ordinance No. 4684 (the "Bond Ordinance")
under the authority of Amendment No. 78 to the Arkansas Constitution and Arkansas Code Annotated
Sections 14-168-301 et seq., as from time to time amended; and
WHEREAS, in connection with the issuance of the Bonds, the City of Fayetteville, Arkansas (the "City")
entered into that certain Trust Indenture ("Trust Indenture") dated April 15, 2005 with The Bank of
Fayetteville, N.A., predecessor to the current trustee, Bank OZK, Little Rock, Arkansas (the "Trustee"); and
WHEREAS, the Trustee has received direction from the owners of 2/3rds of the aggregate principal amount of
the outstanding Bonds to hire counsel to create a recurring voluntary tender offer program to offer owners of
the Bonds ("Bondholders") the option to tender their Bonds on an annual basis at an amount that is less than
the Accreted Value (the "Bond Tender Program") and to modify the Trust Indenture to modify the Trustee
fee restrictions; and
WHEREAS, the Trustee has hired Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C. ("Counsel') and
the Bond Tender Program has been created which requires a supplement and amendment to the Trust
Indenture (the "First Supplemental Trust Indenture"), the appointment of a tender agent ("Tender Agent")
and the execution of a tender agent agreement (the "Tender Agent Agreement"); and
WHEREAS, pursuant to Section 1002 of the Trust Indenture, at the direction of 2/3rds in the aggregate
principal amount of the outstanding Bonds, the Trust Indenture may be modified, altered or amended; and
WHEREAS, the City now desires to (i) acknowledge the creation and implementation of the Bond Tender
Program to begin with the next payment date of February 1, 20205 (ii) supplement and amend the Trust
Indenture to allow for the implementation of the Bond Tender Program and modify the Trustee fee restrictions,
(iii) authorize the appointment of Bank OZK as the Tender Agent and (iv) authorize the execution and delivery
of the Tender Agent Agreement.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
City o/Fayetteville, Arkansas Page 1 Printed on 1112012019
File Number: 2019-0736
FAYETTEVILLE, ARKANSAS:
Section 1: There is hereby acknowledged and agreed to the creation and implementation of the Bond Tender
Program as directed by Bondholders, and Bank OZK is hereby appointed as the Tender Agent to work
cooperatively with the Trustee to maintain the Bond Tender Program on an annual basis.
Section 2: There is hereby authorized the First Supplemental Trust Indenture which incorporates provisions for
the implementation of the Bond Tender Program and modifies the Trustee fee restrictions. The Mayor is
authorized to execute and acknowledge the First Supplemental Trust Indenture, and the City Clerk is hereby
authorized to execute and acknowledge the First Supplemental Trust Indenture and to affix the seal of the City
thereto. The First Supplemental Trust Indenture is hereby approved in substantially the form submitted to this
meeting. The Mayor is hereby authorized to confer with the Trustee, Counsel and City staff in order to
complete the First Supplemental Trust Indenture in substantially the form submitted to this meeting, with such
changes as shall be approved by such persons executing the First Supplemental Trust Indenture, their execution
to constitute conclusive evidence of such approval.
Section 3: There is hereby authorized the Tender Agent Agreement which prescribes the terms and conditions
of the Bond Tender Program. The Mayor is authorized to execute and acknowledge the Tender Agent
Agreement, and the City Clerk is hereby authorized to execute and acknowledge the Tender Agent Agreement
and to affix the seal of the City thereto. The Tender Agent Agreement is hereby approved in substantially the
form submitted to this meeting. The Mayor is hereby authorized to confer with the Trustee, Tender Agent,
Counsel and City staff in order to complete the Tender Agent Agreement in substantially the form submitted to
this meeting, with such changes as shall be approved by such persons executing the Tender Agent Agreement,
their execution to constitute conclusive evidence of such approval.
Section 4: The Mayor and the City Clerk, for and on behalf of the City, are hereby authorized to do any and all
things necessary to effect the implementation of the Bond Tender Program and to effect the execution of the
First Supplemental Trust Indenture and Tender Agent Agreement, and to perform all of the obligations of the
City under and pursuant thereto. The Mayor and the City Clerk are further authorized, for and on behalf of the
City, to execute all documents, agreements, certificates and other instruments that may be necessary or required
for the carrying out of such authority or the intent of this Ordinance.
Section 5: The provisions of this Ordinance are hereby declared to be severable. In the event that any section,
paragraph, subdivision, clause, phrase or other provision or portion of this Ordinance shall be adjudged illegal,
invalid, unenforceable or unconstitutional, the same shall not affect the validity of this Ordinance as a whole, or
any part or provision thereof, other than the part so decided to be illegal, invalid, unenforceable or
unconstitutional, and the remaining provisions of this Ordinance shall be construed as if such illegal, invalid,
unenforceable or unconstitutional provision or provisions had never been contained herein.
Section 6: All ordinances and resolutions or parts thereof, in conflict herewith are hereby repealed to the extent
of such conflict.
Section 7: Following adoption, this Ordinance shall be published in a newspaper of general circulation in the
City, at least one time, pursuant to Title 14, Chapter 55, subchapter 2 of the Arkansas Code of 1987
Annotated.
Emergency Clause: This Ordinance shall take effect and be enforced from and after its adoption. It is hereby
found and determined by the Fayetteville City Council that the implementation of the Bond Tender Program
beginning with the payment date of February 1, 2020, and authorization and execution of the First
Supplemental Trust Indenture and Tender Agent Program is immediately necessary in order to preserve the
public health, safety and welfare; THEREFORE, an emergency is hereby declared to exist, and this Ordinance
shall be in full force and effect from and after its passage and approval.
Page 2 Printed on 1112012019
File Number: 2019-0736
City of Fayetteville, Arkansas Page 3
Printed on 11/20/2019
Paul Becker
Submitted By
City of Fayetteville Staff Review Form
2019-0736
Legistar File ID
11/19/2019
City Council Meeting Date - Agenda Item Only
N/A for Non -Agenda Item
11/1/2019 CHIEF FINANCIAL OFFICER (110)
Submitted Date Division / Department
Action Recommendation:
Approval of an Ordinance Acknowledging the Implementation of a Bondholder Directed Bond Tender Program for
the 2005 TIF Bonds.
Budget Impact:
Various
Account Number
Project Number
Budgeted Item? No Current Budget
Funds Obligated
Current Balance
Various
Fund
Project Title
i$
Does item have a cost? No Item Cost
Budget Adjustment Attached? No Budget Adjustment $ -
Remaining Budget $ -
V20160321
Purchase Order Number: Previous Ordinance or Resolution #
Change Order ivuiiiuer: Approvai Date:
Original Contract Number:
Comments:
CITY OF
FAYETTEVILLE
ARKANSAS
MEETING OF NOVEMBER 19, 2019
TO: Mayor and City Council
FROM: Paul A. Becker, Chief Financial Officer
DATE: November 12, 2019
CITY COUNCIL MEMO
SUBJECT: Council Authorization of a Tender Offer Program for the 2005 TIF Bonds
RECOMMENDATION:
This request is for the City Council to approve a Bond Tender Program to be
offered to the 2005 TIF District Bondholders. This program was requested by a
vote of the over 2/3 majority of the current bondholders.
Background:
In 2005 the City Council established the Highway 71 East Square Development
No. 1 District Project which was a TIF (Tax Incremental Financing) District and
issued Bonds under the Arkansas Community Redevelopment Financing Act. The
duration of those bonds was 25 years to end in 2029. The project to be financed
by the sale of the bonds was the purchase and demolition of blighted property
and some sidewalk construction in the district. The bonds issued were revenue
bonds which were to be redeemed by using increased property taxes generated
by the increased assessed value of the district over time. That is the increased
property taxes associated with an increase in assessed value for the district as
compared to the base year's valuation. It is important to understand that the
property owner does not pay more total taxes than would be paid if the TIF
District and bonds didn't exist. The increase in taxes generated by the increased
assessment on the property plus any newly constructed buildings or
improvements goes to the TIF District Debt Service Fund rather than the City or
County, Therefore, the net tax burden to the property owner is the same.
The most critical factors dictating the payment of debt service for the bonds is the
magnitude and speed of the total property value increases in the district.
Mailing Address:
113 W. Mountain Street www.fayetteville-ar.gov
Fayetteville, AR 72701
The type of bond issued is called an Accretion Bond. This is because as long as the
bond is outstanding interest accrues but is not paid until the bond is redeemed.
In summary, the redemption of bonds works in the following manner. Each year
the County determines the amount of the incremental taxes collected and sends
that amount to bond trustee. The bond trustee by lottery selects the maximum
number of bonds that can be redeemed based on their accreted value and
proceeds to redeem them. The rest of the bonds remain and increase in their
accreted value waiting on the next lottery. This continues until the end of the
duration period or until the bonds are liquidated.
Unfortunately, in the case of Highway 71 District East Square Development
District 1, accessed value has not increased anywhere near the estimates made at
the time the bonds were approved for issuance. In fact, the original bond liability
at the time of issuance of the bond has increased from $3,750,000 to $6,700,000
as of yearend in 2018.
As previously stated these are revenue bonds that are supported by the TIF
District Tax collections pledged for their redemption. They are not General
Obligation Bonds of the City and are thus not backed by the full faith and credit
of the City. Although the incremental tax collections cannot be perfectly
forecasted between now and 2029, it is in the best interest of the district and
bondholders to offer this Tender Offer Program at this time as a method to
reduce the TIF liability in the future.
BUDGET/STAFF IMPACT:
There is no direct financial budget or staff impact associated with this decision.
Attached: Summary of the Bonds and the Tender Program
2
$3,725,000
City of Fayetteville, Arkansas
Tax Increment Interest Accretion Bonds
(Highway 71 East Square Development District No. 1 Project)
Series 2005
SUMMARY OF THE BONDS AND THE TENDER PROGRAM
The Bonds.
The City of Fayetteville, Arkansas (the "City") issued its $3,725,000 Tax Increment
Interest Accretion Bonds (Highway 71 East Square Development District No. 1 Project), Series
2005 (the "Bonds") pursuant to the terms of a Trust Indenture dated April 15, 2005 (the "Trust
Indenture") between the City and The Bank of Fayetteville, N.A., predecessor to Bank OZK, the
current trustee (the "Trustee"). The Bonds were issued for the acquisition, construction,
reconstruction, improving, extension or equipping of City infrastructure improvements within the
Highway 71 East Square Redevelopment District No. 1 created by the City (the "District"). A
map of the District's boundaries is in Schedule 1 attached hereto. The Bonds are secured by and
payable from the Tax Increment. "Tax Increment" is determined by calculating the incremental
value (the difference between the base value and current value) of the taxable real property
within the District and multiplying it by the applicable ad valorem tax rate.
Tax Increment Financing.
The Bonds were originally issued under the Arkansas Community Redevelopment
Financing Act (Ark. Code Ann. §§ 14-168-304 et seq.) (the "Act"). Since the Act was enacted in
2003, there have been several amendments and ruling regarding amount to be included in the
Tax Increment and made available to pay debt service on the Bonds. Since the Bonds were
issued, courts have held that certain portions of the millage levied within the District is not
included in the Tax Increment and is not available to pay debt service on the Bonds.
Prior to the issuance of the Bonds certain assumptions were made related to the future
development of the property within the District, the growth of assessed values of the taxable real
property within the District and the amount of revenues available to pay the debt service on the
Bonds. Because of the rulings discussed above and various factors, including unanticipated
impairments in growth of assessed values of the taxable real property within the District and the
failure of certain anticipated development projects, the actual Tax Increment available to pay
debt service on the Bonds has not matched the prior assumptions. Currently, the Bonds are being
redeemed at a rate and in amounts less than was anticipated at the time the Bonds were issued.
In 2017 it was discovered that the Washington County Assessor had not included certain
tax parcels in the District in calculating the Tax Increment resulting in a shortfall to the District
in the amount of $92,000. This shortfall was corrected prior to the February 1, 2019 bond
redemptions which resulted in approximately $362,283.30 being paid to Bondholders to redeem
30 bonds. The inclusion of such tax parcels alone will not provide collections of Tax Increment
sufficient to meet the assumptions that existed at the time of the Bonds were issued.
It is expected that the amount of Tax Increment will remain constant for the remainder of
the term of the Bonds which mature on August 1, 2029 ("Maturity Date"). Without increases in
the Tax Increment collected it is anticipated that a significant portion of the Bonds will remain
outstanding on the Maturity Date.
Tender Program.
In response to the circumstances discussed above, a majority of the owners of the Bonds
("Bondholders") have requested that the Trustee hire counsel to create a recurring, voluntary
tender offer program to offer Bondholders the option of tendering their Bonds on an annual basis
at an amount that is less than the Accreted Value. The proposed tender program creates an
alternative for Bondholders to liquidate their Bonds. Currently, liquidation options available to
Bondholders are (1) random selection of Bonds through annual redemption under the Trust
Indenture using Tax Increment and (2) sales of Bonds on the open market.
Under the annual tender program, each Bondholder may voluntarily offer to sell all or a
portion of its Bonds at a price chosen by the Bondholder which is less than the Accreted Value of
such Bonds. After the offer period closes, the Tax Increment available to pay debt service on the
Bonds on the next principal payment date will be allocated between the properly offered Bonds
and the non -tendered Bonds in proportion of their respective principal amounts to the total
outstanding principal amount of the Bonds.
The tender agent selected by the City (the "Tender Agent") will then review all offers
received and select the lowest purchase prices that will allow the purchase of the greatest number
of offered Bonds at a total cost not to exceed the portion of Tax Increment allocated to the
offered Bonds. All or a portion of a Bondholder's offered Bonds may be selected for purchase.
The Tender Agent is not under any obligation to accept for purchase any of the offered Bonds.
Offered Bonds selected by the Tender Agent to be purchased for less than the Accreted
Value will be paid on the next principal payment date or the date that all conditions of the tender
program, i.e. conversion of Bonds to direct registered bonds, are satisfied. Bonds not offered to
be tendered will be eligible for redemption at 100% accreted interest and outstanding principal in
accordance with the Trust Indenture and subject to that portion of Tax Increment allocated to the
non -tendered Bonds. Bondholders may elect to participate or not participate in the tender
program in any year prior to the Maturity Date. Offered Bond not selected to be purchased may
be offered again in subsequent years.
Because Bonds may be purchased at an amount less than the Accreted Value of such
Bonds, potentially more Bonds will be redeemed and/or purchased each year reducing the
amount of Bonds which may remain outstanding on the Maturity Date.
DISTRICT BOUNDARIES MAP
RECEIVFn
NORTHWEST ARKANSAS DEC
Democrat vonefte ZITY.OF
TIT ;
AFFIDAVIT OF PUBLICATION
09 2019
1,
Cathy Staggs, do solemnly swear that I am the Accounting Manager of the Northwest
Arkansas Democrat- Gazette, printed and published in Washington and Benton
County, Arkansas, and of bona fide circulation, that from my own personal knowledge
and reference to the files of said publication, the advertisement of:
CITY OF FAYETTEVILLE
Ord, 6263
Was inserted in the Regular Editions on:
November 27, 2019
Publication Cost:
$ 403.00
' h
Cathy St gs t
Subscribed and sworn to before me
This 3,a day of jk, 2019.
Notary Public %--
My Commission Expires: 3_14,Zr
?.60 0, .
P�B���
Xi�f��
**NOTE** Please do not pay from Affidavit
Invoice will be sent.
Ordinance: 6263
File Number: 2019-0736
BONDHOLDER DIRECTED
BOND TENDER PROGRAM:
AN ORDINANCE TO
acknowledge the implementation
of a bondholder directed bond
tender program; authorize the
execution and delivery of a
SUPPLEMENTAL trust indenture
and A tender agent agreement
pursuant to which the bond tender
program will be implemented;
appoint a tender agent;
PRESCRIBE OTHER MATTERS
RELATING THERETO; AND
DECLARE AN EMERGENCY
WHEREAS, on March 15, 2005,
the City Council of the City of
Fayetteville ("City Council")
authorized the issuance ofthe
$3,725,000 Tax Increment Interest
Accretion Bonds (Highway 71
East Square Development District
No. 1 Project), Series 2005 (the
"Bonds") pursuant to Ordinance
No. 4684 (the 'Bond Ordinance")
under the authority of Amendment
No. 78 to the Arkansas
Constitution and Arkansas Code
'Annotated Sections 14-168-301 et
seq., as from time to time
amended; and
WHEREAS, in connection with
the issuance of the Bonds, the City
of Fayetteville, Arkansas (the
"City") entered into that certain
Trust Indenture ("Trust Indenture")
dated April 15, 2005 with The
Bank of Fayetteville, N.A.,
predecessor to the current trustee,
Bank OZK, Little Rock, Arkansas
(the "Trustee"); and
WHEREAS, the Trustee has
received direction from the owners
of 2/3rds of the aggregate principal
amount of the outstanding Bonds
to hire counsel to create a
recurring voluntary tender offer
program to offer owners of the
Bonds ('Bondholders") the option
to tender their Bonds on an annual
basis at an amount that is less than
the Accreted Value (the 'Bond
Tender Program") and to modify
the Trust Indenture to modify the
Trustee fee restrictions; and
WHEREAS, the Trustee has hired
Mitchell, Williams, Selig, Gates &
Woodyard, P.L.L.C. ("Counsel')
and the Bond Tender Program has
been created which requires a
supplement and amendment to the
Trust Indenture (the "First
Supplemental Trust Indenture"),
the appointment of a tender agent
("Tender Agent") and the
execution of a tender agent
agreement (the "Tender Agent
Agreement"); and
WHEREAS, pursuant to Section 1002
of the Trust Indenture, at the direction
of 2/3rds in the aggregate principal
amount of the outstanding Bonds, the
Trust Indenture may be modified,
altered or amended; and
WHEREAS, the City now desires to (i)
acknowledge the creation and
implementation of the Bond Tender
Program to begin with the next
payment date of February 1, 2020, (ii)
supplement and amend the Trust
Indenture to allow for the
implementation of the Bond Tender
Program and modify the Trustee fee
restrictions, (iii) authorize the
appointment of Bank OZK as the
Tender Agent and (iv) authorize the
execution and delivery of the Tender
Agent Agreement.
NOW THEREFORE, BE IT
ORDAINED BY THE CITY
COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1: There is hereby
acknowledged and agreed to the
creation and implementation of the
Bond Tender Program as directed by
Bondholders, and Bank OZK is hereby
appointed as the Tender Agent to work
cooperatively with the Trustee to
maintain the Bond Tender Program on
an annual basis.
Section 2: There is hereby authorized
the First Supplemental Trust Indenture
which incorporates provisions for the
implementation of the Bond Tender
Program and modifies the Trustee fee
restrictions. The Mayor is authorized to
execute and acknowledge the First
Supplemental Trust Indenture, and the
City Clerk is hereby authorized to
execute and acknowledge the First
Supplemental Trust Indenture and to
affix the seal of the City thereto. The
First Supplemental Trust Indenture is
hereby approved in substantially the
form submitted to this meeting. The
Mayor is hereby authorized to confer
with the Trustee, Counsel and City
staff in order to complete the First
Supplemental Trust Indenture in
substantially the form submitted to this
meeting, with such changes as shall be
approved by such persons executing
the First Supplemental Trust Indenture,
their execution to constitute conclusive
evidence ofsuch approval.
Section 3: There is hereby authorized
the Tender Agent Agreement which
prescribes the terms and conditions of
the Bond Tender Program. The Mayor
is authorized to execute and
acknowledge the Tender Agent
Agreement, and the City Clerk is
hereby authorized to execute and
acknowledge the Tender Agent
Agreement and to affix the seal of the
City thereto. The Tender Agent
Agreement is hereby approved in
substantially the form submitted to this
meeting. The Mayor is hereby
authorized to confer with the Trustee,
Tender Agent, Counsel and City staff in
order to complete the Tender Agent
Agreement in substantially the form
submitted to this meeting, with such
changes as shall be approved by such
persons executing the Tender Agent
Agreement, their execution to
constitute conclusive evidence of such
approval.
Section 4: The Mayor and the City
Clerk, for and on behalf of the City, are
hereby authorized to do any and all
things necessary to effect the
implementation of the Bond Tender
Program and to effect the execution of
the First Supplemental Trust Indenture
and Tender Agent Agreement, and to
perform all of the obligations of the
City under and pursuant thereto. The
Mayor and the City Clerk are further
authorized, for and on behalf of the
City, to execute all documents,
agreements, certificates and other
instruments that may be necessary or
required for the carrying out of such
authority or the intent of this
Ordinance.
Section 5: The provisions of this
Ordinance are hereby declared to be
severable. In the event that any section,
paragraph, subdivision, clause, phrase
or other provision or portion of this
Ordinance shall be adjudged illegal,
invalid, unenforceable or
unconstitutional, the same shall not
affect the validity of this Ordinance as a
whole, or any part or provision thereof,
other than the part so decided to be
illegal, invalid, unenforceable or
unconstitutional, and the remaining
provisions of this Ordinance shall be
construed as if such illegal, invalid,
unenforceable or unconstitutional
provision or provisions had never been
contained herein.
Section 6: All ordinances and
resolutions or parts thereof, in conflict
herewith are hereby repealed to the
extent of such conflict.
Section 7: Following adoption, this
Ordinance shall be published in a
newspaper of general circulation in the
City, at least one time, pursuant to Title
14, Chapter 55, subchapter 2 of the
Arkansas Code of 1987 Annotated.
Emergency Clause: This Ordinance
shall take effect and be enforced from
and after its adoption. It is hereby
found and determined by the
Fayetteville City Council that the
implementation of the Bond Tender
Program beginning with the payment
date of February 1, 2020, and
authorization and execution of the First
Supplemental Trust Indenture and
Tender Agent Program is immediately
necessary in order to preserve the
public health, safety and welfare;
THEREFORE, an emergency is hereby
declared to exist, and this Ordinance
shall be in full force and effect from
and after its passage and approval.
PASSED and APPROVED on
11/19/2019
Approved:
Lioneld Jordan, Mayor
Attest:
Lisa Branson, Deputy City Clerk
75162921 Nov. 27, 2019
City of Fayetteville Staff Review Form
2019-0922
Legistar File ID
N/A
City Council Meeting Date - Agenda Item Only
N/A for Non -Agenda Item
Paul Becker 12/12/2019 CHIEF FINANCIAL OFFICER (110)
Submitted By Submitted Date Division / Department
Action Recommendation:
Request for the Mayor to sign the attached First Supplemental Trust Indenture and the Tender Agent Agreement as
authorized by the City Council pursuant to Ordinance 6263 dated 11/19/2019.
Budget Impact:
Various
Account Number
Project Number
Budgeted Item? No Current Budget
Funds Obligated
Current Balance
Does item have a cost? No Item Cost
Budget Adjustment Attached? No Budget Adjustment
Remaining Budget
Various
Fund
Project Title
S -
5
V20180321
Purchase Order Number: Previous Ordinance or Resolution #
Change Order Number:
Original Contract Number:
Comments:
Approval Date:
FIRST SUPPLEMENTAL
TRUST INDENTURE
Between
CITY OF FAYETTEVILLE, ARKANSAS
And
BANK OZK
(FORMERLY KNOWN AS BANK OF THE OZARKS)
As Trustee
Effective as of December 20, 2019
Relating to
$3,725,000
City of Fayetteville, Arkansas
Tax Increment Interest Accretion Bonds
(Highway 71 East Square Redevelopment District No. 1 Project)
Series 2005
This FIRST SUPPLEMENTAL TRUST INDENTURE is effective as of December 20,
2019 (this "Supplement"), 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") and
BANK OZK, a banking corporation organized and existing under the laws of the State of
Arkansas, as trustee, and its successors in trust and assignees, as ultimate successor trustee to
The Bank of Fayetteville, N.A. (the "Trustee") under a Trust Indenture, dated as of April 15,
2005 (as amended, modified or supplemented from time to time, the "Indenture"), between the
City and the Trustee.
WITNESSETH:
WHEREAS, pursuant to the Indenture, the City has previously issued its Tax Increment
Interest Accretion Bonds (Highway East Square Redevelopment District No. 1 Project) Series
2005 in the original principal amount of $3,725,000 (the "Bonds"), for the purpose of (i)
financing the costs of acquisition of certain real property within the City, the demolition of
existing structures thereon, site preparation in connection therewith, and the construction of
sidewalk and crosswalk improvements, and (ii) paying certain expenses in connection with the
issuance of the Bonds; and
WHEREAS, holders of more than two-thirds (2/3) of the aggregate principal amount of
the Bonds outstanding have asked the Trustee to enter into this Supplement to make certain
modifications to the terms of the Bonds among other things as more fully described herein; and
WHEREAS, Section 1002 of the Indenture provides that the Indenture can be modified
for such purposes by a supplemental trust indenture accompanied by the consent of the holders
of not less than two-thirds (2/3) of the aggregate principal amount of the Bonds then outstanding
and upon delivery of an opinion of Bond Counsel; and
NOW, THEREFORE, in consideration of the foregoing and subject to the requirements
of Section 1002 of the Indenture, the City and the Trustee, hereby agree to amend, modify and
supplement the Indenture as follows:
ARTICLE I
Section 1.01 Definitions. Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Indenture, as amended hereby.
(a) Five (5) new defined terms are hereby added to the Indenture as follows:
"Bond Purchase Fund" means the fund by that name established in the Tender
Agent Agreement.
"Purchase Price" means the price offered by a Bondholder and accepted by the
Tender Agent on behalf of the City to purchase such Bondholder's Bonds
pursuant to the Tender Program.
"Tender Agent" means the Tender Agent identified in the Tender Agent
Agreement.
"Tender Agent Agreement" means that certain Tender Agent Agreement of even
date herewith between the City and the Tender Agent setting forth the terms of the
implementation and maintenance of the Tender Program.
"Tender Program" means the modified "Dutch Auction" which allows
Bondholders to offer to sell their Bonds on an annual basis at a Purchase Price
selected by the Bondholder which is less than the Accreted Value.
ARTICLE II
THE AMENDMENTS
Section 2.01 Amendment of Section 210. Section 210. "Registration and Transfer of
Bonds" is amended to by adding the following at the end thereof.
In connection with the Tender Program, Bonds will be converted to direct registered
bonds held by a safekeeping agent of each offering Bondholder's choice. Trustee will register
such converted Bonds in the name of each safekeeping agent on behalf of the Bondholders
participating in the Tender Program and such safekeeping agent shall be deemed and regarded as
the absolute owner thereof for all purposes and payment of or on account of the principal of,
premium, and interest on any such Bonds 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 affectual to satisfy and
discharge the liability upon such Bond to the extent of the sum or sums so paid.
Section 2.02 Amendment of Article III. Article III "REDEMPTION OF BONDS
BEFORE MATURITY" is amended by adding the following Section 308. "Tender Program" at
the end thereof:
Section 308. Tender Program. (a) The Trustee has been directed by two-thirds (2/3)
of the holders of the outstanding Bonds to create the Tender Program giving Bondholders the
option to offer to tender their Bonds (the "Offered Bonds") at a Purchase Price that is less than
the Accreted Value. The Tender Program provides Bondholders with an option for liquidity other
than redemption of Bonds under this Indenture. Bank OZK has agreed to serve as the initial
Tender Agent for the purpose of implementing and maintaining the Tender Program pursuant to
the terms of the Tender Agent Agreement. Trustee shall act as Bond registrar for the City and
shall keep books for the registration and for the transfer of the Bonds after Offered Bonds are
converted to direct registered Bonds as provided in the Tender Agent Agreement at the principal
corporate office of the Trustee.
(b) Trustee agrees to assist the Tender Agent in the implementation and maintenance
of the Tender Program as provided herein. Once available to Trustee, Trustee agrees to provide
2
by written notice to the Tender Agent, the total amount of the Tax Increment currently available.
Under the Tender Agent Agreement, Tender Agent will calculate the allocation of the Tax
Increment between the Offered Bonds and the non -offered Bonds. Trustee shall receive from
Tender Agent by written notice ("Purchase Notice") such calculation which will confirm the
amount of Tax Increment allocated to the Offered Bonds (the "Offered Bonds Increment").
Trustee agrees to transfer from the Redemption Fund, within five days of receipt of the Purchase
Notice, the Offered Bonds Increment to the Tender Agent.
(c) Trustee shall be protected and shall incur no liability in acting or proceeding in
good faith upon the direction of Tender Agent pursuant hereto and the Tender Agent Agreement
or upon the written opinion of any attorney believed by the Trustee to be qualified in relation to
the subject matter hereof. In the absence of gross negligence or willful misconduct on the part of
the Trustee, the Trustee may conclusively rely as to the truth of statements expressed therein
upon any document furnished to the Trustee, and the Trustee may rely and shall be protected in
acting upon any document believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Trustee shall not be liable for any error or judgement made in
good faith by a responsible agent of the Trustee unless the Trustee, or its agents, was negligent in
ascertaining the pertinent facts.
(d) Anything herein to the contrary notwithstanding, the Trustee shall have no
liability for any act or omission except as shall result from the gross negligence or willful
misconduct or the Trustee or its agents.
Section 2.03. Amendment of Section 506. Subsection (c) of Section 506 "Redemption
Fund" is amended and restated in its entirety as follows:
"(c) Moneys in the Redemption Fund shall be transferred by the
Trustee first, to the Bond Purchase Fund held with the Tender Agent under the
terms of the Tender Agent Agreement in an amount equal to the Offered Bonds
Increment, then to the corresponding Accounts within 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 in minimum
authorized principal amounts.
Section 2.04 Amendment to Section 1102. Section 1102 of the Indenture is hereby
amended by deleting the notice address for the Trustee and replacing it with the following notice
address:
"Trustee: Bank OZK
P.O. Box 8811
Little Rock, Arkansas 72231-8811
Attention: Corporate Trust Office"
3
ARTICLE III
MISCELLANEOUS
Section 3.01 Supplement as Part of Indenture. This Supplement shall be construed in
connection with and as a part of the Indenture to the extent of the provisions herein that are
amendatory thereof or supplemental thereto.
Section 3.02 Severability. If any provision of this Supplement shall be held or deemed
to be, or shall, in fact, be, illegal, inoperative or unenforceable, the same shall not affect any
other provision herein contained or render the same invalid, inoperative or unenforceable to any
extent whatsoever.
Section 3.03 Counterparts; Electronic Signatures. This Supplement may be
simultaneously executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument. To the fullest extent permitted by
applicable law, signatures transmitted by facsimile or other electronic means shall constitute
original signatures for all purposes hereunder.
Section 3.04 Rules of Interpretation. Unless expressly indicated otherwise, references
to Sections or Articles are to be construed as references to Sections or Articles of this instrument
as originally executed. Use of the words "herein," "hereby," "hereunder," "hereof,"
"hereinbefore," "hereinafter" and other equivalent words refer to this Supplement as a whole,
and not solely to the particular portion in which any such word is used.
Section 3.05 Captions. The captions and headings in this Supplement are for
convenience only and in no way define, limit or describe the scope or intent of any provisions or
Sections of this Supplement.
Section 3.06 Governing Law. This Supplement shall be governed by the internal laws
of the State of Arkansas, without regard to conflict of law principles.
Section 3.07 Successor and Assigns. This Supplement shall inure to the benefit of, and
shall be binding upon, the City and its successors and assigns, and the Trustee, any successor
trustee and their respective successors and assigns. In addition, this Supplement shall be binding
upon the current Owners of the Bonds and all future Owners from time to time of the Bonds and
their respective successors and assigns.
Section 3.08 Tax Matters. The City certifies that the federal tax -related representations
of the City contained in the Indenture and in the Tax Regulatory Agreement dated April 19, 2005
(the "Tax Regulatory Agreement") delivered in connection with the issuance of the Bonds,
remain true and correct in all material respects as of the date hereof and that the City is not in
material default under or breach of any covenants contained in the Tax Regulatory Agreement or
any of the federal tax -related covenants of the City contained in the Indenture.
[Signature Page Follows]
4
IN WITNESS WHEREOF, the City has caused this First Supplemental Trust Indenture
to be executed and delivered by its duly authorized representatives, all as of the date first above
written.
ATTEST:
11'�Z4 Lpr
City Clerk-
CITY OF FAVVTTEX,LE, ARKANSAS
M.
[Signature Page to First Supplemental Trust Indenture]
IN WITNESS WHEREOF, the Trustee has caused this First Supplemental Trust
Indenture to be executed and delivered by its duly authorized representatives, all as of the date
first above written.
BANK OZK, as trustee
By:
Name: -Sheila Mayden
Title: Executive Vice
ATTEST:
B
N J ffer S Maryp
Title:
[Signature Page to First Supplemental Trust Indenture]
TENDER AGENT AGREEMENT
$3,725,000
CITY OF FAYETTEVILLE, ARKANSAS
TAX INCREMENT INTEREST ACCRETION BONDS
(HIGHWAY 71 EAST SQUARE REDEVELOPMENT DISTRICT NO. I PROJECT)
SERIES 2005
THIS TENDER AGENT AGREEMENT, effective as of December 20, 2019 (this
"Agreement"), by and among BANK OZK, as trustee (in such capacity, the "Trustee"), CITY
OF FAYETTEVILLE, ARKANSAS (the "City"); and BANK OZK, as tender agent (in such
capacity, the "Tender Agent").
WHEREAS, the City issued the above -referenced bonds (the "Bonds") pursuant to the
terms of a Trust Indenture dated as of April 15, 2005 (the "Original Indenture"), between the
City and the Trustee as successor trustee to The Bank of Fayetteville, N.A.; and
WHEREAS, the Trustee has been directed by the owners of more than two-thirds (2/3) of
the aggregate principal amount of the outstanding Bonds (the "Bondholders") to hire legal
counsel for the purpose of creating a recurring voluntary tender offer program to offer
Bondholders the option to offer to sell their Bonds on an annual basis at an amount that is less
than the Accreted Value (defined in the Original Indenture) (the "Tender Program"); and
WHEREAS, pursuant to the terms of that certain Notice to Bondholders and Invitation to
Tender Bonds dated December 9, 2019 (an "Invitation" as defined below and attached hereto as
Exhibit A), the Trustee, City and Tender Agent are entering into that certain First Supplemental
Trust Indenture dated as of even date herewith ("First Supplement" and with the Original
Indenture, the "Indenture") and this Agreement to create and implement the Tender Program,
among other things;
NOW THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and in order to
provide for the coordination of such arrangements, the parties hereto do hereby agree as follows:
Section 1. Defined Terms. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings assigned to them in the Indenture and the
Invitation.
Section 2. Appointment of Tender Agent. For the purposes hereinafter described and
upon the terms and subject to the conditions hereinafter set forth, Bank OZK shall serve as
Tender Agent hereunder. The Tender Agent hereby agrees to assume and perform the duties
contemplated hereunder.
Section 3. Tender Program.
(a) Invitation. Each year prior to the Payment Date of the Bonds, Tender Agent will
invite each Bondholder to offer to sell all or a portion of its Bonds by delivering to the
Bondholders an invitation to tender (an "Invitation"). Each Invitation shall be substantially in the
form attached hereto as Exhibit A. Tender Agent will disseminate each Invitation through a
filing made on the Electronic Marketplace Access database (www.emma.com) ("EMMA") and
such other methods determined by the Tender Agent.
(b) Offer. Bondholders wishing to offer to sell their Bonds for less than the Accreted
Value thereof must submit an offer (an "Offer") to the Tender Agent substantially in the form
attached to the Invitation. Each Offer must include the CUSIP number and the principal amounts
of the Offered Bonds (in $5,000 denominations) and the Purchase Price. All Offers must be
received by Tender Agent prior to the expiration date ("Expiration Date") stated in the Invitation.
Offers may not be with withdrawn. Bondholders may submit an Offer for some but not all of the
Bonds they own. A Bondholder will determine, in its sole discretion, the principal amount (in
increments of $5,000) of its Bonds to offer for purchase. Properly -tendered Bonds are referred
to herein as "Offered Bonds."
(c) Purchase Price. The Tender Program is a procedure commonly called a modified
"Dutch Auction" which allows each Bondholder to select the amount it will accept in exchange
for its Bonds ("Purchase Price"). The Purchase Price must be less than the Accreted Value of
such Bonds in order for it to be an "Offer" under the Tender Program.
(d) Calculation of Tax Increment Allocated to Offered Bonds. Pursuant to the
Indenture, Tender Agent will receive notification from the Trustee of the amount of the Tax
Increment available to purchase or redeem Bonds for the year of the Invitation. After the
Expiration Date but prior to reviewing the Offers, Tender Agent will calculate the percentage of
Offered Bonds and the percentage of Bonds not offered for such year based on the principal
amount of each related to the principal amount of all outstanding Bonds. Tender Agent will then
allocate the Tax Increment to the Offered Bonds ("Offered Bonds Increment") and the non -
tendered Bonds in their respective percentages. Tender Agent will send to Trustee written notice
("Purchase Notice") confirming the amount of the Offered Bonds Increment for the applicable
year. The Offered Bonds Increment will be transferred by the Trustee to the Tender Agent and
will be deposited and held by the Tender Agent in the Bond Purchase Fund created and
maintained pursuant to Section 4 hereof. The portion of Tax Increment allocated to the non -
offered Bonds will be retained and applied by the Trustee in accordance with the Indenture.
(e) Selection of Properly Tendered Bonds. After Tender Agent provides the Purchase
Notice to the Trustee, Tender Agent will review all Purchase Prices offered by the Bondholders
for all Offered Bonds. Tender Agent will select the lowest Purchase Prices that will allow the
most Offered Bonds to be purchased for a total cost not exceeding the Offered Bonds Increment
after payment of all fees, costs and expenses set forth in Section 5 hereof. Tender Agent may
reject any and all Offers received by any Bondholder whether or not it complies with the terms
of the Invitation. Offered Bonds not converted to direct registered bonds may not be selected for
purchase. All or a portion of a Bondholder's Offered Bonds may be selected for purchase by the
Tender Agent. The Purchase Price for any partial selection of Offered Bonds shall be calculated
by multiplying the Purchase Price by a fraction the numerator of which is the principal amount of
the Offered Bonds partially selected for purchase and the denominator of which is the total
principal amount of the Offered Bonds.
-2-
(f) Notification of Selected Bonds. Once the Offered Bonds to be purchased have
been selected, Tender Agent will notify the Bondholders by 5:00 p.m. January 10, 2020 via
EMMA and such other methods determined by the Tender Agent. The notification must state the
principal amounts and CUSIP numbers of the Offered Bonds selected for purchase and of the
Offered Bonds not selected for purchase as well as the range of Purchase Prices selected by the
Tender Agent.
(g) Conversion of Bonds. Offering Bondholders are required to convert their Offered
Bonds to direct registered Bonds to be held by the safekeeping agent selected by the Bondholder.
Pursuant to the terms of the Indenture, Trustee will act as Registrar for the City and shall keep
books for the registration and for the transfer of the Bonds after Offered Bonds are converted to
direct registered Bonds as provided in this Agreement at the principal corporate office of the
Trustee. Tender Agent agrees to provide all information necessary for Trustee to act as Registrar
for the Bonds. The person in whose name any converted 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, premium and interest on any such Bond shall be made only to the or
upon the order of the registered owner thereof, or the owner's legal representative. All such
payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the
extent of the sum or sums so paid.
(h) Payment of Tendered Amount. On each payment date of the Bonds ("Payment
Date"), Tender Agent shall pay the Purchase Price for each Offered Bond selected for purchase
via check or wire transfer. Offered Bonds selected for purchase will be redeemed in ascending
order until the Tax Increment allocated to the Offered Bonds is fully depleted or is insufficient to
purchase additional Offered Bonds. In purchasing the Offered Bonds, the Tender Agent shall be
acting as a conduit and shall not be purchasing the Offered Bonds for its own account, and in the
absence of written notice to the contrary, shall be entitled to assume that any Offered Bond so
tendered to it, or deemed tendered to it for purchase, is entitled hereunder and the Indenture to be
purchased.
Section 4. Creation of the Bond Purchase Fund. (a) Pursuant to the terms hereof,
there is hereby created and established with the Tender Agent an escrow fund designated the
"Bond Purchase Fund." Only proceeds received from the Trustee as the Offered Bonds
Increment shall be deposited into the Bond Purchase Fund and such moneys will not be
commingled with moneys derived from any other sources hereunder or under the Indenture.
(b) Moneys credited to the Bond Purchase Fund shall be expended only as set forth
herein. All amounts deposited into the Bond Purchase Fund shall be used by the Tender Agent,
in the following order, as follows:
FIRST: For payment of the costs, fees and expenses set forth in Section 5
herein; and
SECOND: All remaining moneys shall be applied as set forth in Section 3
hereof for the purchase of the Offered Bonds selected to be purchased under the Tender Program.
(c) The Tender Agent shall have no responsibility with respect to the source of any
funds provided to it for the purpose of paying the Purchase Price of the Offered Bonds selected
-3-
for purchase, but shall be responsible for seeing that funds deposited with it pursuant to this
Agreement are transferred to and expended as provided herein. The Tender Agent shall have no
obligation to expend its own funds in connection with any such purchase of Offered Bonds, and
shall have no obligation to pay the Purchase Price in any type of funds other than that received
by the Tender Agent for such purpose as aforesaid. Moneys held by the Tender Agent in the
Bond Purchase Fund shall not be invested.
Section 5. Fees, Charges, and Expenses of the Tender Program. All reasonable fees,
costs, and expenses of the Tender Agent, consultants, and counsel associated with the
implementation and maintenance of the Tender Program shall be paid solely from the Offered
Bonds Increment. Specifically, the Tender Agent shall be entitled to payment and/or
reimbursement for reasonable fees for the services of the Tender Agent rendered hereunder, and
all advances, attorneys' fees, and other expenses of the Tender Agent reasonably made or
incurred by the Tender Agent in connection with such services of the Tender Agent, and in the
event that the Tender Agent performs extraordinary services, it shall be entitled to reasonable
extra compensation therefor and to reimbursement for reasonable expenses in connection
therewith; provided that, if such extraordinary services or expenses related thereto are the result
of the negligence or willful misconduct of the Tender Agent, it shall not be entitled to
compensation or reimbursement therefor. Amounts paid to the Tender Agent for its services as
described above, together with all expenses, charges and other disbursements of the Tender
Agent and all reimbursements to the Tender Agent for all costs and other disbursements shall not
exceed $5,000 annually without the prior approval of the City. Payments to the Tender Agent's
attorneys, agents and employees shall not exceed $10,000 annually without the prior written
consent of the City. Notwithstanding any other provision hereof, at all times while any Bonds are
outstanding, payments for all reasonable fees, costs, and expenses of the Tender Agent,
consultants, and counsel associated with the implementation and maintenance of the Tender
Program hereunder shall be superior to the payment of the Purchase Price for the Offered Bonds,
and shall have a first and prior lien on the funds held by the Tender Agent hereunder.
Section 6. Indemnification. In addition to the lien set forth above for its reasonable
fees, costs and expenses, the Tender Agent, its officers, directors, employees, attorneys, and
agents shall be indemnified and held harmless by the tendering Bondholders against any liability
or loss, cost or expense, including attorney's fees, which they may incur in the exercise and
performance of the duties hereunder through a lien on and charge against the Offered Bonds
Increment. This indemnification shall not be effective to relieve any indemnified party from its
own gross negligence or willful misconduct.
Section 7. Notices. Except as otherwise provided herein, all notices, requests and
other communications to any party hereunder shall be in writing (including bank wire, telecopy,
telex or similar writing) at the addresses provided below. Each such written notice, request or
other communication shall be effective when delivered by hand or received by telex or telecopier
or registered first class mail, postage prepaid. Each party may, by notice given to the other
parties under this Agreement, designate other addresses to which subsequent notices, requests,
reports or other communications shall be directed.
-4-
To City: The City of Fayetteville, Arkansas
113 West Mountain
Fayetteville, Arkansas 72701
Attention: Mayor
To Tender Agent: Bank OZK
P.O. Box 8811
Little Rock, Arkansas 72231-8811
Attention: Corporate Trust Department
To Trustee Bank OZK
P.O. Box 8811
Little Rock, Arkansas 72231-8811
Attention: Corporate Trust Department
Section 8. Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Arkansas.
Section 9. Tender Agent. (a) Bank OZK hereby accepts its appointments as Tender
Agent upon the terms and conditions hereof and in the Indenture, including, without limitation,
the following:
(i) The Tender Agent shall be paid its fees for performing its duties as Tender
Agent and shall be reimbursed for any out-of-pocket expenses (including reasonable legal
expenses) incurred by the Tender Agent in connection with such performance.
(ii) The duties and obligations of the Tender Agent shall be determined solely
by the express provisions of this Agreement and no implied duties or obligations or
covenants shall be read into this Agreement or the Indenture on the part of the Tender
Agent.
(iii) In the absence of gross negligence or willful misconduct on the part of the
Tender Agent, the Tender Agent may conclusively rely as to the truth of the statements
expressed therein upon any document furnished to the Tender Agent, and the Tender
Agent may rely and shall be protected in acting upon any document believed by it to be
genuine and to have been signed or presented by the proper party or parties. The Tender
Agent shall not be liable for any error or judgment made in good faith by a responsible
agent of the Tender Agent unless the Tender Agent, or its agents, was negligent in
ascertaining the pertinent facts.
(iv) The Tender Agent shall be protected and shall incur no liability in acting
or proceeding in good faith upon the written opinion of any legal counsel believed by the
Tender Agent to be qualified in relation to the subject matter thereof.
(v) The Tender Agent may become the owner of, or acquire any interest in,
any of the City's obligations (including, without limitation, the Bonds) with the same
rights that it would have if it were not the Tender Agent hereunder, and may engage or be
interested in any financial or other transaction with the City, and may act for, or as
-5-
depositary, trustee or agent for, any holders of any obligations of the City, or any
committee or body of such holders, as freely as if it were not the Tender Agent
hereunder.
(vi) Anything herein to the contrary notwithstanding, the Tender Agent shall
have no liability hereunder for any act or omission except as shall result from the gross
negligence or willful misconduct of the Tender Agent or of its agents.
(vii) Bank OZK is a commercial bank with trust powers duly organized under
the laws of the State of Arkansas. Bank OZK is authorized by law to perform all the
duties imposed upon it by this Agreement.
(b) Successor Tender Agent. Any corporation or association into which the
Tender Agent may be converted or merged, or with which it may be consolidated, or to
which it may sell, lease, or transfer its corporate trust business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any such
conversion, sale, merger, consolidation, or transfer to which it is a party, ipso facto, shall
be and become successor tender agent hereunder and vested with all the trusts, powers,
rights, obligations, duties, remedies, discretions, immunities, privileges, and all other
matters as was its predecessor, without the execution or filing of any instruments or any
further act, deed, or conveyance on the part of any of the parties hereto, anything herein
to the contrary notwithstanding.
(c) Resignation by the Tender Agent. The Tender Agent and any successor
Tender Agent may at any time resign from the trusts hereby created by giving thirty (30)
days' written notice to the City and Trustee, and, by first-class (postage prepaid) mail, to
each Bondholder shown on the books of the Tender Agent, and such resignation shall
take effect at the appointment of a successor tender agent pursuant to the provisions
hereof and acceptance by the successor tender agent. Such notice to the City and Trustee
may be served personally or sent by registered or certified mail. If no successor tender
agent shall have been so appointed by the Bondholders pursuant hereto within thirty (30)
days after delivery of such notice, a temporary tender agent may be appointed by the City
pursuant hereto. In the event that no successor tender agent shall have been appointed
and shall have accepted appointment within thirty (30) days of the giving of written
notice by the resigning tender agent as aforesaid, the resigning tender agent may petition
any court of competent jurisdiction for the appointment of a successor tender agent.
(d) The Tender Agent may be removed at any time (i) by the City or twenty-
five percent (25%) of the Bondholders, for failure or refusal to act as tender agent, or (ii)
by an instrument or concurrent instruments in writing delivered to the Tender Agent, to
the Trustee and to the City and signed by a majority of the Bondholders. Removal of the
Tender Agent shall not be effective until a successor or temporary tender agent shall have
been appointed pursuant hereto, and the Tender Agent shall have been paid for all
services rendered hereunder and for all expenses of the Tender Agent incurred hereunder
prior to the date of removal.
(e) (i) In case the Tender Agent hereunder shall (a) resign or be removed
or (b) be dissolved or shall be in the course of dissolution or liquidation, or (c) in case it
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shall be taken under the control of any public officer or officers or of a receiver appointed
by a court or otherwise become incapable of acting hereunder, a successor may be
appointed by an instrument executed and signed by the City; provided, that if a successor
tender agent shall not be so appointed within ten (10) days after notice of resignation
shall have been mailed or an instrument of removal shall have been delivered as provided
hereunder, or within ten (10) days of the City's knowledge of any of the events specified
in (ii) hereinabove, then twenty-five percent (25%) of the Bondholders, by an instrument
or concurrent instruments in writing signed by or on behalf of such Owners, delivered
personally or sent by registered or certified mail to the City and Trustee, may designate a
successor tender agent. Until a successor tender agent shall be appointed by the
Bondholders in the manner above provided, the City shall appoint a temporary tender
agent to fill such vacancy, and any such temporary tender agent so appointed by the City
shall immediately and without further act be superseded by the successor tender agent so
appointed by the Bondholders. Notice of the appointment of a successor tender agent
shall be given in the same manner as provided herein with respect to the resignation of
the Tender Agent. Every such successor tender agent appointed pursuant to the
provisions of this Section shall be a trust company or bank organized under the laws of
the United States of America or any state thereof that is in good standing within or
outside the State of Arkansas, shall be eligible to serve as tender agent under applicable
law, shall be duly authorized to exercise trust powers and subject to examination by
federal or state authority, shall have a reported combined capital, surplus, and undivided
profits of not less than Seventy -Five Million Dollars ($75,000,000), and shall be an
institution willing, qualified, and able to accept the trusteeship upon the terms and
conditions hereof.
(ii) In case at any time the Tender Agent shall resign and no appointment of a
successor tender agent shall be made pursuant to the foregoing provisions of this Section
prior to the date specified in the notice of resignation as the date when such resignation
shall take effect, the Owner of any Bond or the resigning Tender Agent may apply to any
court of competent jurisdiction to appoint a successor tender agent. Such court may
thereupon, after such notice, if any, as it may deem proper, appoint a successor tender
agent.
Section 10. Term. This Agreement shall remain in full force and effect until the
earlier of (i) such time as the principal of and premium, if any, and interest on the Bonds shall
have been paid or provision for such payment shall have been made in accordance with the
Indenture, and (ii) termination of the Tender Program by the consent of the required amount of
Bondholders as set forth in the Indenture, whereupon this Agreement shall terminate.
Section 11. Amendments. This Agreement may not be amended without the written
consent of each of the parties hereto. In addition, this Agreement may not be amended so as to
adversely affect the right of the owners of Bonds to deliver such Bonds to the Tender Agent for
purchase hereunder without the written consent of the, owners of each such Bond so affected.
Section 12. Successors. The rights, duties and obligations of the City, the Trustee and
the Tender Agent hereunder shall inure, without further act, to their respective successors and
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permitted assigns; provided, however, that the Tender Agent may not assign its obligations under
this Agreement without the prior written consent of the City.
Section 13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Section 14. Applicable Time. Whenever any time of day or particular hour is
specified herein, such time or hour shall be determined on the basis of Central Standard Time or
Central Daylight Savings Time, whichever is then in effect in Little Rock, Arkansas.
(Remainder of this page intentionally left blank)
In
IN WITNESS WHEREOF, the parties hereto have caused this Tender Agent Agreement
to be duly executed by their duly authorized officers as of the day and year first above written.
(Se
AT
Signature Page to
Tender Agent Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Tender Agent Agreement
to be duly executed by their duly authorized officers as of the day and year first above written.
ATTEST:
B•
Nam : Je ery arfin
Title: 'r. Vice President
BANK OZK, as Trustee
By
Na
Tit
Signature Page to
Tender Agent Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Tender Agent Agreement
to be duly executed by their duly authorized officers as of the day and year first above written.
BANK OZK, as Tender Agent
ATTEST:
y:
Na e: Jce$$e �1
Title: Sr. Vice PresirjA,,t
Signature Page to
Tender Agent Agreement
EXHIBIT A
NOTICE TO BONDHOLDERS AND
INVITATION TO TENDER BONDS DATED DECEMBER 9, 2019
NOTICE TO BONDHOLDERS
AND INVITATION TO TENDER BONDS
$3,725,000
City of Fayetteville, Arkansas
Tax Increment Interest Accretion Bonds
(Highway 71 East Square Development District No. 1 Project)
Series 2005
Base CUSIP No: 312684
Date: December 9, 2019
URGENT
IMPORTANT BONDHOLDER NOTICE — ACTION REQUIRED
BEFORE DECEMBER 20, 2019
Bank OZK (formerly known as Bank of the Ozarks) is communicating the following to you in its capacity
as the successor trustee (the "Trustee") under the Trust Indenture dated as of April 15, 2005 (the
"Indenture") by and between the City of Fayetteville, Arkansas, as Issuer, (the "Issuer"), and Bank OZK
(formerly known as Bank of the Ozarks), as successor trustee to Regions Bank who succeeded The Bank
of Fayetteville, N.A., as trustee. Capitalized terms used herein but not defined herein shall have the
respective meanings set forth in the Indenture.
NOTICE TO BONDHOLDERS
(this "Notice")
As previously disclosed, Trustee has received direction from the requisite number of owners of the Bonds
outstanding (the "Bondholders") to hire counsel for the purpose of creating a recurring voluntary tender
offer program to offer Bondholders the option to tender their Bonds on an annual basis at an amount that
is less than the Accreted Value (the "Tender Program").
Trustee hereby notifies Bondholders that Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., Little
Rock, Arkansas, has been hired as counsel to create the Tender Program for the Bondholders and is
presenting the Tender Program in this Notice.
Trustee hereby provides Bondholders the Supplemental Trust Indenture (the "Supplemental Indenture")
attached hereto as Exhibit A, which revises the redemption provisions to allow for the Tender Program
and provides for other necessary changes related thereto. The Supplemental Indenture will be executed
and delivered by the Issuer and the Trustee on or about December 20, 2019.
6372842.9
INVITATION TO TENDER BONDS
(this "Invitation")
General
Pursuant to this Invitation to Tender Bonds, each owner (a "Bondholder") of the outstanding Bonds is
invited to submit an offer ("Offer") to sell all or a portion of its Bonds to the Issuer at the purchase price
("Purchase Price") chosen by such Bondholder. Upon the terms and subject to the conditions of this
Invitation, the Tender Agent (as defined hereinafter) on behalf of the Issuer, will review, and may accept
or reject, any Offers in accordance with the procedures set forth in this Invitation.
To make an informed decision as to whether, and how, to offer its Bonds, a Bondholder must read the
following documents carefully and consult with its broker, financial advisor, consultants, and/or other
financial, legal, or tax professional:
(1) This Invitation,
(2) The Supplemental Trust Indenture (the "Supplemental Indenture") attached
hereto as Exhibit A,
(3) The Tender Agent Agreement (the "Tender Agent Agreement") attached hereto
as Exhibit B,
(4) The Questions and Answers attached hereto as Exhibit C (the "Questions and
Answers"),
(5) The Disclosure Statement dated December 9, 2019 attached hereto as Exhibit D
(the "Disclosure Statement"),
(6) The Bondholder's Instructions attached hereto as Exhibit E (the "Bondholder's
Instructions").
The Supplemental Indenture, Tender Agent Agreement, the Questions and Answers, the Disclosure
Statement and the Bondholder's Instructions are collectively referred to herein as the "Other Tender
Materials." This Invitation and the Other Tender Materials and such other information with respect to
this Invitation are and will be available from Bank OZK, as the Tender Agent ("Tender Agent"), by
calling Sheila Mayden at 501-978-2218 or by emailing Sheila Mayden at smayden@ozk.com.
None of the Issuer, the Trustee or Tender Agent or their respective legal counsels make any
recommendation that any Bondholder tender or refrain from tendering all or any portion of its Bonds.
Each Bondholder must make this decision independently in his, her or its sole and absolute discretion and
should read this Invitation and the Other Tender Materials and consult with his, her or its broker, financial
advisors, consultants and/or other financial, legal, or tax professionals in making this decision.
This Invitation is not conditioned upon any minimum number of Bondholders selling their Bonds, nor
upon any minimum number of Bonds being purchased. The Tender Agent will evaluate all Offers
properly received. Subject to the satisfaction of the conditions described herein and in the Other Tender
Materials, the properly tendered Bonds (the "Offered Bonds") accepted by the Tender Agent for purchase
will be paid for on the later of (i) February 1, 2020, the next scheduled principal payment date for the
Bonds or (ii) the date that all conditions of this Invitation and the Bondholder's Instructions with respect
to the Offered Bonds have been satisfied, including, but not limited to the conversion of Offered Bonds
from book -entry -only bonds to direct registered bonds (the "Payment Date").
All Offers by Bondholders to sell Bonds are irrevocable upon submission and may not be withdrawn.
None of the Issuer, the Trustee or Tender Agent is under any obligation to accept for purchase all or any
of the Offered Bonds. Less than all of the Offered Bonds may be purchased depending on the amount of
Tax Increment (as defined hereinafter) that is available to pay debt service on the Bonds on the Payment
Date.
The Invitation will expire at 5:00 p.m., Central Time, on December 20, 2019.
Federal and State Securities Law
This Invitation has not been approved or disapproved by the Securities and Exchange Commission or any
state securities commission nor has the Securities and Exchange Commission or any state securities
commission passed upon the fairness or merits of this Invitation or upon the accuracy or adequacy of the
information contained in this Invitation. Any representation to the contrary is a criminal offense.
This Invitation is not being made to, and Offers will not be accepted from or on behalf of, Bondholders in
any jurisdiction in which this Invitation or the acceptance thereof would not be in compliance with the
laws of such jurisdiction.
No dealer, salesperson or other person has been authorized to give any information or to make any
representation contained in this Invitation and the Other Tender Materials and, if given or made, such
information or representation may not be relied upon as having been authorized by the Issuer, the Trustee
or the Tender Agent.
The delivery of this Invitation and the Other Tender Materials shall not under any circumstances create
any implication that the information contained herein and therein is correct at any time subsequent to the
date hereof or that there has been no change in the information set forth herein and therein or in any
attachments hereto or thereto or materials delivered herewith or therewith or in the affairs of the Issuer
since the date thereof.
This Invitation and the Other Tender Materials contain statements relating to future results that are
"forward-looking statements." When used in this Invitation and the Other Tender Materials, the words
"estimate," "anticipate," "forecast," "project," "intend," "propose," "plan," "expect," and similar
expressions identify forward-looking statements. Such statements are subject to risk and uncertainties
that could cause actual results to differ materially from those contemplated in such forward-looking
statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop
the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there
are likely to be differences between forecasts and actual results, and those differences may be material.
PURPOSE OF THE TENDER PROGRAM
The purpose of the Tender Program is to create an alternative for Bondholders to liquidate their Bonds
through the implementation of a recurring voluntary tender offer program permitting Bondholders the
option to tender their Bonds on an annual basis at an amount that is less than the Accreted Value. SEE
"SCHEDULE I TO THE DISCLOSURE STATEMENT — ACCRETED VALUES" for the Accreted
Value over the life of the Bonds. Currently, the primary liquidation options available to Bondholders are
(i) random selection of Bonds through annual redemption using the Tax Increment provided in the
Indenture or (ii) sales of Bonds on the open market.
The Bonds were originally issued under the Arkansas Community Redevelopment Financing Act (Ark.
Code Ann. §§ 14-168-304 et seq.) (the "Act') which provides that the debt service of the Bonds will be
paid by the Issuer from the Tax Increment collected in the District. The "District' is the Highway 71 East
Square Redevelopment District No. I created by the Issuer. The "Tax Increment' is determined by
calculating the incremental value (the difference between the base value and current value) of the taxable
real property within the District and multiplying it by the applicable ad valorem tax rate.
Since the Act was enacted in 2003, there have been several amendments and rulings regarding amounts to
be included in the Tax Increment and made available to pay debt service on the Bonds. Since the Bonds
were issued, courts have held that certain portions of the millage levied within the District is not included
in the Tax Increment and is not available to pay debt service on the Bonds. As mentioned in the
disclosure to Bondholders dated November 7, 2017, because of these rulings and various factors outside
the control of the Issuer, including, but not limited to, unanticipated impairments in the growth of
assessed values of the property within the District and the failure of certain anticipated development
projects, based on current projections, it appears that the amount of Tax Increment available will not be
sufficient to pay the Accreted Value on all of the Bonds prior to their maturity on August 1, 2029
("Maturity Date"). Based on historical receipts of the Tax Increment, at maturity it is anticipated that
approximately 37.72% of the Bonds will remain outstanding. As requested by a majority of the
Bondholders, the development and implementation of the modified "Dutch Auction" tender offer, as set
forth herein, represents a mechanism to provide Bondholders with an opportunity to obtain liquidity with
respect to all or a portion of their Bonds from a portion of the Tax Increment available to pay the debt
service on the Bonds.
While the Issuer expects to continue to receive the Tax Increment after maturity if Bonds remain
outstanding, the Act is subject to legal interpretation, and to date, a court has not opined on whether
receipt of the Tax Increment after maturity is the correct legal interpretation of the Act. Various
individuals and entities likely have standing to initiate an action challenging the continued collection of
the Tax Increment after maturity of the Bonds. None of the Issuer, the Trustee, the Tender Agent or their
legal counsel can or will give any assurances as to how a court might interpret the Act. The Tax
Increment is the only source of funds to which Bondholders may look for payment of the Purchase Price
or Accreted Value of the Bonds. If a court interprets the Act as prohibiting the collection of the Tax
Increment beyond the maturity date of the Bonds or beyond another date that precedes payment in full of
the Bonds, no other revenues are available to Bondholders, and any Bonds that remain outstanding at that
time are unlikely to receive any other payments.
TRUSTEE AND TENDER AGENT
Bank OZK has agreed to act as the tender agent ("Tender Agent") to implement and manage the Tender
Program in accordance with the terms of the Tender Agent Agreement. The Trustee and Tender Agent
will work cooperatively to redeem the Bonds as provided in the Indenture and to purchase Offered Bonds
as provided in the Tender Agent Agreement with the Tax Increment that is available each year until the
Maturity Date of the Bonds.
Trustee and Tender Agent Fees
The Trustee and Tender Agent will each be entitled to receive fees for the services provided by them
under the Indenture and the Tender Agent Agreement, respectively. The Trustee's fees will be paid from
the Tax Increment prior to allocation between the Offered Bonds pool and the non -offered Bonds pool as
provided under the Indenture, as amended and supplemented. The Tender Agent's fees will be paid from
the portion of the Tax Increment allocated to the Offered Bond pool but prior to payment of the Purchase
Price for any Offered Bonds selected for purchase. See "TRUSTEE AND TENDER AGENT FEES"
below in the Disclosure Statement.
PURCHASED BONDS TO BE CANCELLED
Any Offered Bond for which the Purchase Price is paid will be cancelled.
TERMS OF THIS INVITATION
General
The Trustee and the Tender Agent may contact Bondholders regarding this Invitation. No other persons
have been employed, retained, or compensated to make solicitations in connection with this Invitation.
Any questions regarding the Bonds or this Invitation should be directed to Shelia Mayden, as
Officer of the Trustee and the Tender Agent, at the address or email address given on the last page
of this Invitation. Responses to substantive questions will be disseminated to all Bondholders through
filings on the Electronic Municipal Market Access system operated by the Municipal Securities
Rulemaking Board ("EMMA").
None of the Issuer, the Trustee, the Tender Agent or their legal counsels has made or will make any
recommendations to any Bondholder as to whether to offer to sell their Bonds. Bondholders must make
their own decisions whether to offer to sell their Bonds, and if so, the price at which such offer will be
made by such Bondholders.
Copies of this Invitation and the Other Tender Materials, along with the Bondholder's Instructions, are
being posted to EMMA, through The Depository Trust Company ("DTC"), and mailed and/or e-mailed to
all Bondholders that have submitted a Certificate of Beneficial Ownership to the Trustee. The Issuer, the
Trustee, and the Tender Agent have no obligation to ensure that a Bondholder actually receives any
information posted on EMMA, through DTC, or mailed or e-mailed by the Trustee.
This Invitation is not conditioned on any minimum number of Bondholders offering to sell their Bonds,
nor upon any minimum number of Bonds being purchased through the Tender Program. It is, however,
limited to the portion of the Tax Increment that is available and allocated to the Offered Bonds.
Offer to Sell Bonds
A Bondholder may only offer to sell Bonds it owns. By submitting an Offer, each Bondholder warrants
that it has, at the time of submitting the Offer, and will have on the Payment Date, full authority to
transfer and sell such Offered Bonds, and that it owns good title to its Bonds, free and clear of all liens,
charges, encumbrances, conditional sales agreements or other obligations or adverse claims. All Offers
shall survive the death or incapacity of the tendering Bondholder.
Procedure for Offering to Sell Bonds
For Bondholders to validly offer to sell Bonds pursuant to this Invitation, a properly completed
Bondholder's Instruction signed by the offering Bondholder, must be received by the Tender Agent at the
address given on the Bondholder's Instruction on or before the Expiration Date. Each Offer must include
the CUSIP number and the principal amounts of the Offered Bonds (in $5,000 denominations) and the
Purchase Price. A Bondholder should consult its broker, financial advisor, consultants, or other financial,
legal, and tax professionals as it deems necessary when making an Offer and refer to the form of
Bondholder's Instructions attached hereto and posted on EMMA.
Offered Bonds may not be withdrawn. An Offer, validly made pursuant to this Invitation, is effective
when received by the Tender Agent and is irrevocable.
Purchase Price
Each Bondholder may voluntarily offer to sell their Bonds at a price chosen by such Bondholder. After
the Expiration Date, the Tender Agent will determine which Bonds have been offered without
consideration of the Purchase Price at which such Bonds are offered.
Offered Bonds that are selected as set forth below in "TERMS OF THE INVITATION — Selection of
Offered Bonds" will be purchased from the Bondholders at the Purchase Price chosen by the
Bondholder; therefore, Offered Bonds will be purchased at different prices in ascending order. The
Purchase Price will be paid to the Bondholders in cash on the later of (i) February 1, 2020, the next
principal payment date of the Bonds or (ii) the date that all conditions of this Invitation and the
Bondholder's Instructions with respect to the Offered Bonds have been satisfied, including, but not
limited to the conversion of Offered Bonds from book -entry -only bonds to direct registered bonds (the
"Payment Date"). See "Conversion to Registered Bonds" herein and "THE TENDER PROGRAM —
Conversion of Offered Bonds" below in the Disclosure Statement.
Expiration Date
The Expiration Date of this Invitation is 5:00 p.m., Central Time, on December 20, 2019
("Expiration Date"). Offers to sell any Bonds received after 5:00 p.m., Central Time on the Expiration
Date will not be considered.
The choice of method of delivery of the Bondholder's Instructions to the Tender Agent is at Bondholder's
option and risk. In all delivery methods, sufficient time should be allowed to assure timely delivery of the
Bondholder's Instructions to the Tender Agent prior to the Expiration Date.
Allocation of Tax Increment
The Tax Increment available to pay debt service on the Bonds on February 1, 2020 will be allocated
between the properly Offered Bonds and the non -offered Bonds in proportion of their respective principal
amount to the total outstanding principal amount of the Bonds. Based on historical receipts, the portion
of the Tax Increment allocated to Offered Bonds and non -offered Bonds will NOT be sufficient to pay all
Bondholders in each respective pool. See "PURPOSE OF THE TENDER PROGRAM" above for
information about amounts available to pay the Bonds.
Selection of Offered Bonds
The Tender Agent will then review all Purchase Prices submitted by the Bondholders for the Offered
Bonds. The Tender Agent will then select the lowest Purchase Prices that will allow the Tender Agent to
purchase the greatest number of Offered Bonds at a total cost not to exceed the portion of the Tax
Increment allocated to the Offered Bonds. See "TERMS OF THIS INVITATION — Allocation of Tax
Increment" above. Offered Bonds not converted to direct registered bonds cannot be selected for
purchase by the Tender Agent. The Bondholder and its broker control the process of converting the
Offered Bonds. None of the Issuer, the Trustee or the Tender Agent can control or influence the
conversion process. See "TERMS OF THIS INVITATION -Conversion to Registered Bonds" below.
Tender Agent may select all or a portion of a Bondholder's Offered Bonds. The Purchase Price for any
partial selection of an Offered Bond will be calculated by multiplying the Purchase Price by the fraction
the numerator of which is the principal amount of the Offered Bond partially selected by Tender Agent
and the denominator of which is the total principal amount of the Offered Bond.
Neither the Issuer, the Trustee nor the Tender Agent shall be under any obligation to accept for purchase
any Offered Bond. The Tender Agent will determine which Offered Bonds, if any, will be accepted for
purchase. The Tender Agent has the right to select for purchase all, none or some of the Offered Bonds.
Offered Bonds will be selected at the lowest Purchase Price to the extent of the amount of Tax Increment
available to purchase Offered Bonds on the Payment Date. See "TERMS OF THIS INVITATION —
Allocation of Tax Increment" above.
Notification to Bondholders
The acceptance or rejection of Offered Bonds will be made by notification to the Bondholders by the
Tender Agent on or before January 15, 2020 (the "Record Date"). Notifications to individual
Bondholders will be disseminated by the Tender Agent in the manner elected by such Bondholder in the
Bondholder's Instructions. A cumulative notification stating the aggregate principal amount and the
CUSIP numbers of the Offered Bonds selected for purchase, and the aggregate principal amount and
CUSIP numbers of the Offered Bonds not selected for purchase will be delivered to Bondholders via
EMMA, DTC or mail or e-mail as determined by the Tender Agent in its sole discretion.
Bondholders whose Offered Bonds are not accepted for purchase by the Tender Agent will have the
option to (1) offer to sell their Bonds during the next annual invitation to tender or (2) participate in the
non -offered Bond pool. See "ANNUAL TENDER INVITATION" below for more information
regarding future and recurring opportunities to offer to sell Bonds.
Conversion to Registered Bonds
The Bonds were issued as book -entry -only bonds held by The Depository Trust Company, as registered
owner of all the Bonds. Once the Bondholder submits an Offer to the Tender Agent, the Bondholder will
be obligated to initiate the process of converting all of Bondholder's Offered Bonds to direct registered
bonds. Such Bonds will be held for safekeeping by the financial institution of Bondholder's choice or, in
the alternative, by Crews & Associates, Inc., at no charge to the Bondholders. Each direct registered bond
will be in the name of the specific Bondholder thereof, and Trustee will maintain the Registrar of direct
registered bonds. Offered Bonds not converted to direct registered bonds by the offering
Bondholder before the Record Date (January 15, 2020) cannot be selected for purchase by the
Tender Agent and will be eligible for redemption in accordance with the terms of the Indenture.
The Bondholder and its broker control the process of converting the Offered Bonds. None of the Issuer,
the Trustee or the Tender Agent can control or influence the conversion process. All Offered Bonds
converted to direct registered bonds will remain direct registered bonds whether or not such Offered
Bonds are selected for purchase by the Tender Agent until such Bond is redeemed pursuant to the
Indenture or purchased as part of the Tender Program. Conversion to direct registered bonds will not
impact the Bondholder's option to participate or not participate in the Tender Program on an annual basis
or if not participating in the Tender Program in subsequent years, and if not participating in the Tender
Program, will not impact the Bondholder's chance of being randomly selected for redemption under the
terms of the Indenture.
Acceptance for Payment of Bonds and Payment of Purchase Price
Upon the terms and subject to the conditions of this Invitation, once the Tender Agent has selected the
Offered Bonds to be purchased, the Tender Agent will notify the Trustee of the aggregate amount of the
Purchase Price needed to purchase the selected Offered Bonds and Trustee will transfer such funds to
Tender Agent. Tender Agent will pay the Purchase Price for the selected Offered Bonds in cash via
check or bank wire on the Payment Date. See "EXTENSION OF THE INVITATION OR PAYMENT
DATE" below. Offered Bonds selected by the Tender Agent to be purchased will be redeemed in
7
ascending order until the Tax Increment allocated to the Offered Bonds is fully depleted or, the amount
remaining is not sufficient to purchase additional Offered Bonds, or the Purchase Price has been paid for
all Offered Bonds. Any remainder will be retained and applied to expenses or the purchase of Offered
Bonds in subsequent years. See "Purchase Price" herein for more information on the Purchase Price of
any Offered Bonds.
The Tender Agent reserves the absolute right to reject any and all Offers, whether or not they comply
with the terms of this Invitation and other related materials.
CONDITIONS TO PURCHASE
Notwithstanding any notice of acceptance for purchase of any Offered Bonds, the Tender Agent will not
be required to purchase any such Offered Bonds, and will incur no liability as a result, if, before payment
for such Offered Bonds: (i) by 1:00 p.m., Central Time, on the Payment Date, sufficient funds from the
Tax Increment are not available to pay for the Purchase Price of such Offered Bonds, (ii) litigation or
another proceeding is pending or threatened which the Issuer, Trustee and/or Tender Agent believe may,
directly or indirectly, have an adverse impact on this Invitation or the expected benefits of this Invitation
to the Issuer, Trustee and/or Tender Agent or the Bondholders, or (iii) a war, national emergency, banking
moratorium, suspension of payments by banks, a general suspension of trading on the New York Stock
Exchange exists and the Issuer believes this fact makes it inadvisable to proceed with the purchase of
such Offered Bonds.
The conditions described in subsection (i) and (ii) above are conditions that cannot be waived by the
Issuer, the Trustee, or the Tender Agent, individually or collectively. If any such conditions are present
on or prior to the Payment Date, the Tender Agent will not purchase any Offered Bonds, and all Bonds
will be treated as non -offered Bonds and be subject to redemption pursuant to the terms of the Indenture.
The conditions described in section (iii) above is for the sole benefit of the Issuer, the Trustee, or the
Tender Agent, individually or collectively, and may be asserted by the Issuer, the Trustee, or the Tender
Agent, individually or collectively, on or prior to the Payment Date, regardless of the circumstances
giving rise to any such condition or may be waived by the Issuer, the Trustee, or the Tender Agent,
individually or collectively, in whole or in part at any time and from time to time in their discretion. The
failure of the Issuer, the Trustee, or the Tender Agent, individually or collectively, at any time to exercise
any of these rights with respect to such conditions will not be deemed a waiver of any of these rights, and
the waiver of these rights with respect to particular facts and other circumstances will not be deemed to be
a waiver of these rights for all or any other facts and circumstances. Each of these rights will be
considered an ongoing right of the Issuer, the Trustee, or the Tender Agent, individually or collectively,
which may be asserted at any time and from time to time prior to the Payment Date. If, on or prior to the
Payment Date, the Issuer, the Trustee, or the Tender Agent, individually or collectively, asserts any of its
rights with respect to such conditions, the Tender Agent will have the absolute right to cancel the
obligations to pay the Purchase Price for the purchase of any Offered Bonds, and all Bonds will be treated
as non -offered Bonds and be subject to redemption pursuant to the terms of the Indenture, without any
liability to any Bondholder.
EXTENSION OF THE INVITATION OR PAYMENT DATE
The Tender Agent has the right to extend the Expiration Date of this Invitation, and any subsequent
Invitation, to any date in its sole discretion, provided that a notice of any extension of the Expiration Date
is given to the Bondholders via EMMA, DTC or such other methods Tender Agent determines is
appropriate. See "TERMS OF THIS INVITATION — Expiration Date" above.
The Tender Agent may be required to extend the Payment Date depending on the process of converting
the Offered Bonds to direct registered bonds; provided that, a notice of any extension is given to the
Bondholders of the Offered Bonds via EMMA, DTC or such other methods Tender Agent determines is
appropriate. See "Conversion to Registered Bonds" herein. Offered Bonds not converted to direct
registered bonds before the Record Date (January 15, 2020) cannot be purchased by the Tender
Agent and will be eligible for redemption in accordance with the Indenture.
No extension of the Expiration Date or the Payment Date will change the Tender Agent's right to decline
to purchase any Offered Bonds without liability. See "CONDITIONS TO PURCHASE" above.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences to a Bondholder whose offer to sell Bonds for less than their
Accreted Value is accepted, if any, will depend upon many factors that are unique to each Bondholder,
including, but not limited to, such Bondholder's particular tax status and other items of income or
deduction, and previous actions and tax elections of such Bondholder. Neither the Issuer, the Trustee, the
Tender Agent nor their respective legal counsels express any opinion or offer any advice to the
Bondholders regarding any such consequences. Bondholders are hereby notified that any discussion of
federal income tax issues contained or referred to herein is not intended or written to be used, and cannot
be used by Bondholders, for the purposes of avoiding penalties that may be imposed on them under the
Internal Revenue Code of 1986, as amended. BONDHOLDERS SHOULD NOT RELY ON THIS
GENERAL DISCUSSION OF FEDERAL INCOME TAX CONSEQUENCES AND ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR FEDERAL AND STATE
INCOME TAX CONSEQUENCES OF OFFERING TO SELL THE BONDS PURSUANT TO THIS
INVITATION AND THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN
TAX LAWS AND RECENT CHANGES IN APPLICABLE TAX LAWS.
The Tender Agent will issue to Bondholders whose Offered Bonds are selected by the Tender Agent to be
purchased an IRS Form 1099-Misc to evidence the total amount paid to the Bondholders of such Bonds,
without any allocation of principal or interest.
REPRESENTATIONS BY TENDERING BONDHOLDERS
By making an Offer, a Bondholder is representing to and agreeing with the Issuer, the Trustee, and the
Tender Agent, individually or collectively, that: (a) the Bondholder has made its, his or her own
independent decision to make an Offer, to the terms thereof, and whether the Offer is appropriate for the
Bondholder; (b) such decisions were based on the Bondholder's own judgment and upon advice from
such advisors as the Bondholder has consulted; (c) the Bondholder is not relying on any communication
from the Issuer, Trustee or Tender Agent as investment advice or as a recommendation to make an Offer,
it being understood that the information from the Issuer, Trustee and Tender Agent related to the terms
and conditions of this Invitation shall not be considered investment advice or a recommendation to make
an Offer; (d) the Bondholder is capable of assessing the merits of and understanding, and does understand
and accept, the terms and conditions of this Invitation; and (e) the Bondholder has received, and has had
the opportunity to review, this Invitation and the Other Tender Materials prior to making the decision as
to whether or not the Bondholder should offer to sell his, her or its Bonds.
ANNUAL TENDER INVITATION
Bondholders will be invited on a recurring annual basis to offer to sell their outstanding Bonds.
Bondholders will have the option to elect to offer to sell their Bonds in each year that the Tax Increment
is available to pay debt service until the redemption and/or cancellation of all outstanding Bonds on,
before or after the maturity of the Bonds on August 1, 2029. See "ADDITIONAL
CONSIDERATIONS — Treatment of Bonds Not Offered for Purchase by Issuer" below.
DISCLOSURE STATEMENT
Certain information regarding the Issuer, the Bonds, the District, the Tax Increment, and the Tender
Program is set forth in the Disclosure Statement, which is attached hereto as Exhibit D and is incorporated
herein by reference. To make an informed decision as to whether and how to offer any Bonds, a
Bondholder is advised to read the entire Disclosure Statement, in addition to this Invitation and the Other
Tender Materials.
ADDITIONAL CONSIDERATIONS
In deciding whether to offer any Bonds pursuant to this Invitation, each Bondholder should consider
carefully, in addition to the other information contained in this Invitation and the Other Tender Materials,
the following:
Market for the Bonds
The Bonds are not listed on any national or regional securities exchange or reported on a national
quotation system. To the extent that the Bonds are traded, their prices may fluctuate greatly depending on
the trading volume and the balance between buy and sell orders. Bondholders may be able to effect a sale
of the Bonds at prices higher than the Purchase Prices selected by the Tender Agent as described in this
Invitation. None of the Issuer, the Trustee, or the Tender Agent makes any recommendation that
any Bondholder tender or refrain from tendering all or any portion of its Bonds or makes any
representation that the Purchase Prices selected by the Tender Agent for purchase are indicative of
market prices.
Treatment of Bonds Not Offered
Bonds held by Bondholders who elect not to sell their Bonds will be eligible for redemption in the same
manner as provided by the Indenture and, if selected for redemption pursuant to the terms of the
Indenture, will receive 100% accreted interest and outstanding principal subject to the portion of the Tax
Increment allocated to the non -offered Bonds.
Bonds not offered (and Offered Bonds not selected for purchase) will continue to accrete interest as
provided in the Indenture. Bond not tendered and Offered Bonds not purchased prior to maturity of the
Bonds on August 1, 2029, may or may not receive any portion of accreted interest or outstanding
principal on such date subject to the Tax Increment available for payment of debt service on the Bond for
such year. Based on historical amounts of Tax Increment, if the Tender Program is not established and
implemented, at maturity of the Bonds, 37.72% of the principal amount of the Bonds may remain
outstanding. See "THE TENDER PROGRAM" above and "HISTORY OF TAX INCREMENT
BONDS" "HISTORICAL TAX INCREMENT" and "FORECASTED TAX INCREMENT" in the
Disclosure Statement.
Future Tax Increment Receipts
While the Issuer expects to continue to receive the Tax Increment after maturity if Bonds remain
outstanding, the Act is subject to legal interpretation, and to date, a court has not opined on whether
receipt of the Tax Increment after maturity is the correct legal interpretation of the Act. Various
individuals and entities likely have standing to initiate an action challenging the continued collection of
In
the Tax Increment after maturity of the Bonds. None of the Issuer, the Trustee, the Tender Agent or their
legal counsel can or will give any assurances as to how a court might interpret the Act. The Tax
Increment is the only source of funds to which Bondholders may look for payment of the Purchase Price
or Accreted Value of the Bonds. If a court interprets the Act as prohibiting the collection of the Tax
Increment beyond the maturity date of the Bonds or beyond another date that precedes payment in full of
the Bonds, no other revenues are available to Bondholders, and any Bonds that remain outstanding at that
time are unlikely to receive any other payments.
This Notice is provided for informational purposes only. None of the Issuer, Trustee, the Tender
Agent, or their respective legal counsels is giving any legal, financial or tax advice regarding the Bonds or
the matters described herein. Bondholders should consult their own professional advisors regarding the
Bonds and the matters described in this Invitation.
The Trustee is acting solely as dissemination agent. None of the Issuer, the Trustee nor the
Tender Agent has or will review, analyze or assess the information provided, and none makes any
representations as to its accuracy or completeness. Neither the Trustee nor the Tender Agent will request
updates or status reports with regard to the information provided herein. Bondholders should consult
their own professional advisors regarding the information provided.
Date: December 9, 2019 By: Bank OZK, as Trustee
All communications to the Trustee should be directed to:
Bank OZK
Attn: Sheila Mayden
P.O. Box 8811
Little Rock, Arkansas 7223 1-8811
sheila.mayden@ozk.com
Fax: 501.978.2237
All questions regarding this Invitation and the Tender Program should be directed to Tender Agent
at:
Bank OZK
Attn: Sheila Mayden
P.O. Box 8811
Little Rock, Arkansas 72231-8811
sheila.mayden@ozk.com
Fax: 501.978.2237
11
EXHIBIT A
SUPPLEMENTAL TRUST INDENTURE
Exhibit A
FIRST SUPPLEMENTAL
TRUST INDENTURE
Between
CITY OF FAYETTEVILLE, ARKANSAS
And
BANK OZK
(FORMERLY KNOWN AS BANK OF THE OZARKS)
As Trustee
Effective as of December 20, 2019
Relating to
$3,725,000
City of Fayetteville, Arkansas
Tax Increment Interest Accretion Bonds
(Highway 71 East Square Redevelopment District No. 1 Project)
Series 2005
This FIRST SUPPLEMENTAL TRUST INDENTURE is effective as of December 20,
2019 (this "Supplement"), 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") and
BANK OZK, a banking corporation organized and existing under the laws of the State of
Arkansas, as trustee, and its successors in trust and assignees, as ultimate successor trustee to
The Bank of Fayetteville, N.A. (the "Trustee") under a Trust Indenture, dated as of April 15,
2005 (as amended, modified or supplemented from time to time, the "Indenture"), between the
City and the Trustee.
WITNESSETH:
WHEREAS, pursuant to the Indenture, the City has previously issued its Tax Increment
Interest Accretion Bonds (Highway East Square Redevelopment District No. 1 Project) Series
2005 in the original principal amount of $3,725,000 (the "Bonds"), for the purpose of (i)
financing the costs of acquisition of certain real property within the City, the demolition of
existing structures thereon, site preparation in connection therewith, and the construction of
sidewalk and crosswalk improvements, and (ii) paying certain expenses in connection with the
issuance of the Bonds; and
WHEREAS, holders of more than two-thirds (2/3) of the aggregate principal amount of
the Bonds outstanding have asked the Trustee to enter into this Supplement to make certain
modifications to the terms of the Bonds among other things as more fully described herein; and
WHEREAS, Section 1002 of the Indenture provides that the Indenture can be modified
for such purposes by a supplemental trust indenture accompanied by the consent of the holders
of not less than two-thirds (2/3) of the aggregate principal amount of the Bonds then outstanding
and upon delivery of an opinion of Bond Counsel; and
NOW, THEREFORE, in consideration of the foregoing and subject to the requirements
of Section 1002 of the Indenture, the City and the Trustee, hereby agree to amend, modify and
supplement the Indenture as follows:
ARTICLE I
Section 1.01 Definitions. Capitalized terms not otherwise defined herein shall have the
meaning ascribed to them in the Indenture, as amended hereby.
(a) Five (5) new defined terms are hereby added to the Indenture as follows:
"Bond Purchase Fund" means the fund by that name established in the Tender
Agent Agreement.
"Purchase Price" means the price offered by a Bondholder and accepted by the
Tender Agent on behalf of the City to purchase such Bondholder's Bonds
pursuant to the Tender Program.
"Tender Agent" means the Tender Agent identified in the Tender Agent
Agreement.
"Tender Agent Agreement" means that certain Tender Agent Agreement of even
date herewith between the City and the Tender Agent setting forth the terms of the
implementation and maintenance of the Tender Program.
"Tender Program" means the modified "Dutch Auction" which allows
Bondholders to offer to sell their Bonds on an annual basis at a Purchase Price
selected by the Bondholder which is less than the Accreted Value.
ARTICLE II
THE AMENDMENTS
Section 2.01 Amendment of Section 210. Section 210. "Registration and Transfer of
Bonds" is amended to by adding the following at the end thereof:
In connection with the Tender Program, Bonds will be converted to direct registered
bonds held by a safekeeping agent of each offering Bondholder's choice. Trustee will register
such converted Bonds in the name of each safekeeping agent on behalf of the Bondholders
participating in the Tender Program and such safekeeping agent shall be deemed and regarded as
the absolute owner thereof for all purposes and payment of or on account of the principal of,
premium, and interest on any such Bonds 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 affectual to satisfy and
discharge the liability upon such Bond to the extent of the sum or sums so paid.
Section 2.02 Amendment of Article III. Article III "REDEMPTION OF BONDS
BEFORE MATURITY" is amended by adding the following Section 308. "Tender Program" at
the end thereof-
Section
hereof
Section 308. Tender Program. (a) The Trustee has been directed by two-thirds (2/3)
of the holders of the outstanding Bonds to create the Tender Program giving Bondholders the
option to offer to tender their Bonds (the "Offered Bonds") at a Purchase Price that is less than
the Accreted Value. The Tender Program provides Bondholders with an option for liquidity other
than redemption of Bonds under this Indenture. Bank OZK has agreed to serve as the initial
Tender Agent for the purpose of implementing and maintaining the Tender Program pursuant to
the terms of the Tender Agent Agreement. Trustee shall act as Bond registrar for the City and
shall keep books for the registration and for the transfer of the Bonds after Offered Bonds are
converted to direct registered Bonds as provided in the Tender Agent Agreement at the principal
corporate office of the Trustee.
(b) Trustee agrees to assist the Tender Agent in the implementation and maintenance
of the Tender Program as provided herein. Once available to Trustee, Trustee agrees to provide
by written notice to the Tender Agent, the total amount of the Tax Increment currently available.
Under the Tender Agent Agreement, Tender Agent will calculate the allocation of the Tax
Increment between the Offered Bonds and the non -offered Bonds. Trustee shall receive from
Tender Agent by written notice ("Purchase Notice") such calculation which will confirm the
amount of Tax Increment allocated to the Offered Bonds (the "Offered Bonds Increment").
Trustee agrees to transfer from the Redemption Fund, within five days of receipt of the Purchase
Notice, the Offered Bonds Increment to the Tender Agent.
(c) Trustee shall be protected and shall incur no liability in acting or proceeding in
good faith upon the direction of Tender Agent pursuant hereto and the Tender Agent Agreement
or upon the written opinion of any attorney believed by the Trustee to be qualified in relation to
the subject matter hereof. In the absence of gross negligence or willful misconduct on the part of
the Trustee, the Trustee may conclusively rely as to the truth of statements expressed therein
upon any document furnished to the Trustee, and the Trustee may rely and shall be protected in
acting upon any document believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Trustee shall not be liable for any error or judgement made in
good faith by a responsible agent of the Trustee unless the Trustee, or its agents, was negligent in
ascertaining the pertinent facts.
(d) Anything herein to the contrary notwithstanding, the Trustee shall have no
liability for any act or omission except as shall result from the gross negligence or willful
misconduct or the Trustee or its agents.
Section 2.03. Amendment of Section 506. Subsection (c) of Section 506 "Redemption
Fund" is amended and restated in its entirety as follows:
"(c) Moneys in the Redemption Fund shall be transferred by the
Trustee first, to the Bond Purchase Fund held with the Tender Agent under the
terms of the Tender Agent Agreement in an amount equal to the Offered Bonds
Increment, then to the corresponding Accounts within 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 in minimum
authorized principal amounts.
Section 2.04 Amendment to Section 1102. Section 1102 of the Indenture is hereby
amended by deleting the notice address for the Trustee and replacing it with the following notice
address:
"Trustee: Bank OZK
P.O. Box 8811
Little Rock, Arkansas 72231-8811
Attention: Corporate Trust Office"
ARTICLE III
MISCELLANEOUS
Section 3.01 Supplement as Part of Indenture. This Supplement shall be construed in
connection with and as a part of the Indenture to the extent of the provisions herein that are
amendatory thereof or supplemental thereto.
Section 3.02 Severability. If any provision of this Supplement shall be held or deemed
to be, or shall, in fact, be, illegal, inoperative or unenforceable, the same shall not affect any
other provision herein contained or render the same invalid, inoperative or unenforceable to any
extent whatsoever.
Section 3.03 Counterparts, Electronic Signatures. This Supplement may be
simultaneously executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument. To the fullest extent permitted by
applicable law, signatures transmitted by facsimile or other electronic means shall constitute
original signatures for all purposes hereunder.
Section 3.04 Rules of Interpretation. Unless expressly indicated otherwise, references
to Sections or Articles are to be construed as references to Sections or Articles of this instrument
as originally executed. Use of the words "herein," "hereby," "hereunder," "hereof,"
"hereinbefore," "hereinafter" and other equivalent words refer to this Supplement as a whole,
and not solely to the particular portion in which any such word is used.
Section 3.05 Captions. The captions and headings in this Supplement are for
convenience only and in no way define, limit or describe the scope or intent of any provisions or
Sections of this Supplement.
Section 3.06 Governing Law. This Supplement shall be governed by the internal laws
of the State of Arkansas, without regard to conflict of law principles.
Section 3.07 Successor and Assigns. This Supplement shall inure to the benefit of, and
shall be binding upon, the City and its successors and assigns, and the Trustee, any successor
trustee and their respective successors and assigns. In addition, this Supplement shall be binding
upon the current Owners of the Bonds and all future Owners from time to time of the Bonds and
their respective successors and assigns.
Section 3.08 Tax Matters. The City certifies that the federal tax -related representations
of the City contained in the Indenture and in the Tax Regulatory Agreement dated April 19, 2005
(the "Tax Regulatory Agreement") delivered in connection with the issuance of the Bonds,
remain true and correct in all material respects as of the date hereof and that the City is not in
material default under or breach of any covenants contained in the Tax Regulatory Agreement or
any of the federal tax -related covenants of the City contained in the Indenture.
[Signature Page Follows]
4
IN WITNESS WHEREOF, the City has caused this First Supplemental Trust Indenture
to be executed and delivered by its duly authorized representatives, all as of the date first above
written.
ATTEST:
City Clerk
(SEAL)
CITY OF FAYETTEVILLE, ARKANSAS
Mayor
[Signature Page to First Supplemental Trust Indenture]
IN WITNESS WHEREOF, the Trustee has caused this First Supplemental Trust
Indenture to be executed and delivered by its duly authorized representatives, all as of the date
first above written.
ATTEST:
By:_
Name:
Title:
BANK OZK, as trustee
By:
Name: Sheila Mayden
Title: Executive Vice President
[Signature Page to First Supplemental Trust Indenture]
EXHIBIT B
TENDER AGENT AGREEMENT
Exhibit B
TENDER AGENT AGREEMENT
$3,725,000
CITY OF FAYETTEVILLE, ARKANSAS
TAX INCREMENT INTEREST ACCRETION BONDS
(HIGHWAY 71 EAST SQUARE REDEVELOPMENT DISTRICT NO. I PROJECT)
SERIES 2005
THIS TENDER AGENT AGREEMENT, effective as of December 20, 2019 (this
"Agreement"), by and among BANK OZK, as trustee (in such capacity, the "Trustee"), CITY
OF FAYETTEVILLE, ARKANSAS (the "City"); and BANK OZK, as tender agent (in such
capacity, the "Tender Agent").
WHEREAS, the City issued the above -referenced bonds (the "Bonds") pursuant to the
terms of a Trust Indenture dated as of April 15, 2005 (the "Original Indenture"), between the
City and the Trustee as successor trustee to The Bank of Fayetteville, N.A.; and
WHEREAS, the Trustee has been directed by the owners of more than two-thirds (2/3) of
the aggregate principal amount of the outstanding Bonds (the "Bondholders") to hire legal
counsel for the purpose of creating a recurring voluntary tender offer program to offer
Bondholders the option to offer to sell their Bonds on an annual basis at an amount that is less
than the Accreted Value (defined in the Original Indenture) (the "Tender Program"); and
WHEREAS, pursuant to the terms of that certain Notice to Bondholders and Invitation to
Tender Bonds dated December 9, 2019 (an "Invitation" as defined below and attached hereto as
Exhibit A), the Trustee, City and Tender Agent are entering into that certain First Supplemental
Trust Indenture dated as of even date herewith ("First Supplement" and with the Original
Indenture, the "Indenture") and this Agreement to create and implement the Tender Program,
among other things;
NOW THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, and in order to
provide for the coordination of such arrangements, the parties hereto do hereby agree as follows:
Section 1. Defined Terms. Capitalized terms used in this Agreement and not
otherwise defined herein shall have the meanings assigned to them in the Indenture and the
Invitation.
Section 2. Appointment of Tender Agent. For the purposes hereinafter described and
upon the terms and subject to the conditions hereinafter set forth, Bank OZK shall serve as
Tender Agent hereunder. The Tender Agent hereby agrees to assume and perform the duties
contemplated hereunder.
Section 3. Tender Program.
(a) Invitation. Each year prior to the Payment Date of the Bonds, Tender Agent will
invite each Bondholder to offer to sell all or a portion of its Bonds by delivering to the
Bondholders an invitation to tender (an "Invitation"). Each Invitation shall be substantially in the
form attached hereto as Exhibit A. Tender Agent will disseminate each Invitation through a
filing made on the Electronic Marketplace Access database (www.emma.com) ("EMMA") and
such other methods determined by the Tender Agent.
(b) Offer. Bondholders wishing to offer to sell their Bonds for less than the Accreted
Value thereof must submit an offer (an "Offer") to the Tender Agent substantially in the form
attached to the Invitation. Each Offer must include the CUSIP number and the principal amounts
of the Offered Bonds (in $5,000 denominations) and the Purchase Price. All Offers must be
received by Tender Agent prior to the expiration date ("Expiration Date") stated in the Invitation.
Offers may not be with withdrawn. Bondholders may submit an Offer for some but not all of the
Bonds they own. A Bondholder will determine, in its sole discretion, the principal amount (in
increments of $5,000) of its Bonds to offer for purchase. Properly -tendered Bonds are referred
to herein as "Offered Bonds."
(c) Purchase Price. The Tender Program is a procedure commonly called a modified
"Dutch Auction" which allows each Bondholder to select the amount it will accept in exchange
for its Bonds ("Purchase Price"). The Purchase Price must be less than the Accreted Value of
such Bonds in order for it to be an "Offer" under the Tender Program.
(d) Calculation of Tax Increment Allocated to Offered Bonds. Pursuant to the
Indenture, Tender Agent will receive notification from the Trustee of the amount of the Tax
Increment available to purchase or redeem Bonds for the year of the Invitation. After the
Expiration Date but prior to reviewing the Offers, Tender Agent will calculate the percentage of
Offered Bonds and the percentage of Bonds not offered for such year based on the principal
amount of each related to the principal amount of all outstanding Bonds. Tender Agent will then
allocate the Tax Increment to the Offered Bonds ("Offered Bonds Increment") and the non -
tendered Bonds in their respective percentages. Tender Agent will send to Trustee written notice
("Purchase Notice") confirming the amount of the Offered Bonds Increment for the applicable
year. The Offered Bonds Increment will be transferred by the Trustee to the Tender Agent and
will be deposited and held by the Tender Agent in the Bond Purchase Fund created and
maintained pursuant to Section 4 hereof. The portion of Tax Increment allocated to the non -
offered Bonds will be retained and applied by the Trustee in accordance with the Indenture.
(e) Selection of Properly Tendered Bonds. After Tender Agent provides the Purchase
Notice to the Trustee, Tender Agent will review all Purchase Prices offered by the Bondholders
for all Offered Bonds. Tender Agent will select the lowest Purchase Prices that will allow the
most Offered Bonds to be purchased for a total cost not exceeding the Offered Bonds Increment
after payment of all fees, costs and expenses set forth in Section 5 hereof. Tender Agent may
reject any and all Offers received by any Bondholder whether or not it complies with the terms
of the Invitation. Offered Bonds not converted to direct registered bonds may not be selected for
purchase. All or a portion of a Bondholder's Offered Bonds may be selected for purchase by the
Tender Agent. The Purchase Price for any partial selection of Offered Bonds shall be calculated
by multiplying the Purchase Price by a fraction the numerator of which is the principal amount of
the Offered Bonds partially selected for purchase and the denominator of which is the total
principal amount of the Offered Bonds.
-2-
(f) Notification of Selected Bonds. Once the Offered Bonds to be purchased have
been selected, Tender Agent will notify the Bondholders by 5:00 p.m. January 10, 2020 via
EMMA and such other methods determined by the Tender Agent. The notification must state the
principal amounts and CUSIP numbers of the Offered Bonds selected for purchase and of the
Offered Bonds not selected for purchase as well as the range of Purchase Prices selected by the
Tender Agent.
(g) Conversion of Bonds. Offering Bondholders are required to convert their Offered
Bonds to direct registered Bonds to be held by the safekeeping agent selected by the Bondholder.
Pursuant to the terms of the Indenture, Trustee will act as Registrar for the City and shall keep
books for the registration and for the transfer of the Bonds after Offered Bonds are converted to
direct registered Bonds as provided in this Agreement at the principal corporate office of the
Trustee. Tender Agent agrees to provide all information necessary for Trustee to act as Registrar
for the Bonds. The person in whose name any converted 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, premium and interest on any such Bond shall be made only to the or
upon the order of the registered owner thereof, or the owner's legal representative. All such
payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the
extent of the sum or sums so paid.
(h) Payment of Tendered Amount. On each payment date of the Bonds ("Payment
Date"), Tender Agent shall pay the Purchase Price for each Offered Bond selected for purchase
via check or wire transfer. Offered Bonds selected for purchase will be redeemed in ascending
order until the Tax Increment allocated to the Offered Bonds is fully depleted or is insufficient to
purchase additional Offered Bonds. In purchasing the Offered Bonds, the Tender Agent shall be
acting as a conduit and shall not be purchasing the Offered Bonds for its own account, and in the
absence of written notice to the contrary, shall be entitled to assume that any Offered Bond so
tendered to it, or deemed tendered to it for purchase, is entitled hereunder and the Indenture to be
purchased.
Section 4. Creation of the Bond Purchase Fund. (a) Pursuant to the terms hereof,
there is hereby created and established with the Tender Agent an escrow fund designated the
"Bond Purchase Fund." Only proceeds received from the Trustee as the Offered Bonds
Increment shall be deposited into the Bond Purchase Fund and such moneys will not be
commingled with moneys derived from any other sources hereunder or under the Indenture.
(b) Moneys credited to the Bond Purchase Fund shall be expended only as set forth
herein. All amounts deposited into the Bond Purchase Fund shall be used by the Tender Agent,
in the following order, as follows:
FIRST: For payment of the costs, fees and expenses set forth in Section 5
herein; and
SECOND: All remaining moneys shall be applied as set forth in Section 3
hereof for the purchase of the Offered Bonds selected to be purchased under the Tender Program.
(c) The Tender Agent shall have no responsibility with respect to the source of any
funds provided to it for the purpose of paying the Purchase Price of the Offered Bonds selected
-3-
for purchase, but shall be responsible for seeing that funds deposited with it pursuant to this
Agreement are transferred to and expended as provided herein. The Tender Agent shall have no
obligation to expend its own funds in connection with any such purchase of Offered Bonds, and
shall have no obligation to pay the Purchase Price in any type of funds other than that received
by the Tender Agent for such purpose as aforesaid. Moneys held by the Tender Agent in the
Bond Purchase Fund shall not be invested.
Section 5. Fees, Charges, and Expenses of the Tender Program. All reasonable fees,
costs, and expenses of the Tender Agent, consultants, and counsel associated with the
implementation and maintenance of the Tender Program shall be paid solely from the Offered
Bonds Increment. Specifically, the Tender Agent shall be entitled to payment and/or
reimbursement for reasonable fees for the services of the Tender Agent rendered hereunder, and
all advances, attorneys' fees, and other expenses of the Tender Agent reasonably made or
incurred by the Tender Agent in connection with such services of the Tender Agent, and in the
event that the Tender Agent performs extraordinary services, it shall be entitled to reasonable
extra compensation therefor and to reimbursement for reasonable expenses in connection
therewith; provided that, if such extraordinary services or expenses related thereto are the result
of the negligence or willful misconduct of the Tender Agent, it shall not be entitled to
compensation or reimbursement therefor. Amounts paid to the Tender Agent for its services as
described above, together with all expenses, charges and other disbursements of the Tender
Agent and all reimbursements to the Tender Agent for all costs and other disbursements shall not
exceed $5,000 annually without the prior approval of the City. Payments to the Tender Agent's
attorneys, agents and employees shall not exceed $10,000 annually without the prior written
consent of the City. Notwithstanding any other provision hereof, at all times while any Bonds are
outstanding, payments for all reasonable fees, costs, and expenses of the Tender Agent,
consultants, and counsel associated with the implementation and maintenance of the Tender
Program hereunder shall be superior to the payment of the Purchase Price for the Offered Bonds,
and shall have a first and prior lien on the funds held by the Tender Agent hereunder.
Section 6. Indemnification. In addition to the lien set forth above for its reasonable
fees, costs and expenses, the Tender Agent, its officers, directors, employees, attorneys, and
agents shall be indemnified and held harmless by the tendering Bondholders against any liability
or loss, cost or expense, including attorney's fees, which they may incur in the exercise and
performance of the duties hereunder through a lien on and charge against the Offered Bonds
Increment. This indemnification shall not be effective to relieve any indemnified party from its
own gross negligence or willful misconduct.
Section 7. Notices. Except as otherwise provided herein, all notices, requests and
other communications to any party hereunder shall be in writing (including bank wire, telecopy,
telex or similar writing) at the addresses provided below. Each such written notice, request or
other communication shall be effective when delivered by hand or received by telex or telecopier
or registered first class mail, postage prepaid. Each party may, by notice given to the other
parties under this Agreement, designate other addresses to which subsequent notices, requests,
reports or other communications shall be directed.
ME
To City: The City of Fayetteville, Arkansas
113 West Mountain
Fayetteville, Arkansas 72701
Attention: Mayor
To Tender Agent: Bank OZK
P.O. Box 8811
Little Rock, Arkansas 72231-8811
Attention: Corporate Trust Department
To Trustee Bank OZK
P.O. Box 8811
Little Rock, Arkansas 72231-8811
Attention: Corporate Trust Department
Section 8. Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Arkansas.
Section 9. Tender Agent. (a) Bank OZK hereby accepts its appointments as Tender
Agent upon the terms and conditions hereof and in the Indenture, including, without limitation,
the following:
(i) The Tender Agent shall be paid its fees for performing its duties as Tender
Agent and shall be reimbursed for any out-of-pocket expenses (including reasonable legal
expenses) incurred by the Tender Agent in connection with such performance.
(ii) The duties and obligations of the Tender Agent shall be determined solely
by the express provisions of this Agreement and no implied duties or obligations or
covenants shall be read into this Agreement or the Indenture on the part of the Tender
Agent.
(iii) In the absence of gross negligence or willful misconduct on the part of the
Tender Agent, the Tender Agent may conclusively rely as to the truth of the statements
expressed therein upon any document furnished to the Tender Agent, and the Tender
Agent may rely and shall be protected in acting upon any document believed by it to be
genuine and to have been signed or presented by the proper party or parties. The Tender
Agent shall not be liable for any error or judgment made in good faith by a responsible
agent of the Tender Agent unless the Tender Agent, or its agents, was negligent in
ascertaining the pertinent facts.
(iv) The Tender Agent shall be protected and shall incur no liability in acting
or proceeding in good faith upon the written opinion of any legal counsel believed by the
Tender Agent to be qualified in relation to the subject matter thereof.
(v) The Tender Agent may become the owner of, or acquire any interest in,
any of the City's obligations (including, without limitation, the Bonds) with the same
rights that it would have if it were not the Tender Agent hereunder, and may engage or be
interested in any financial or other transaction with the City, and may act for, or as
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depositary, trustee or agent for, any holders of any obligations of the City, or any
committee or body of such holders, as freely as if it were not the Tender Agent
hereunder.
(vi) Anything herein to the contrary notwithstanding, the Tender Agent shall
have no liability hereunder for any act or omission except as shall result from the gross
negligence or willful misconduct of the Tender Agent or of its agents.
(vii) Bank OZK is a commercial bank with trust powers duly organized under
the laws of the State of Arkansas. Bank OZK is authorized by law to perform all the
duties imposed upon it by this Agreement.
(b) Successor Tender Agent. Any corporation or association into which the
Tender Agent may be converted or merged, or with which it may be consolidated, or to
which it may sell, lease, or transfer its corporate trust business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any such
conversion, sale, merger, consolidation, or transfer to which it is a party, ipso facto, shall
be and become successor tender agent hereunder and vested with all the trusts, powers,
rights, obligations, duties, remedies, discretions, immunities, privileges, and all other
matters as was its predecessor, without the execution or filing of any instruments or any
further act, deed, or conveyance on the part of any of the parties hereto, anything herein
to the contrary notwithstanding.
(c) Resignation by the Tender Agent. The Tender Agent and any successor
Tender Agent may at any time resign from the trusts hereby created by giving thirty (30)
days' written notice to the City and Trustee, and, by first-class (postage prepaid) mail, to
each Bondholder shown on the books of the Tender Agent, and such resignation shall
take effect at the appointment of a successor tender agent pursuant to the provisions
hereof and acceptance by the successor tender agent. Such notice to the City and Trustee
may be served personally or sent by registered or certified mail. If no successor tender
agent shall have been so appointed by the Bondholders pursuant hereto within thirty (30)
days after delivery of such notice, a temporary tender agent may be appointed by the City
pursuant hereto. In the event that no successor tender agent shall have been appointed
and shall have accepted appointment within thirty (30) days of the giving of written
notice by the resigning tender agent as aforesaid, the resigning tender agent may petition
any court of competent jurisdiction for the appointment of a successor tender agent.
(d) The Tender Agent may be removed at any time (i) by the City or twenty-
five percent (25%) of the Bondholders, for failure or refusal to act as tender agent, or (ii)
by an instrument or concurrent instruments in writing delivered to the Tender Agent, to
the Trustee and to the City and signed by a majority of the Bondholders. Removal of the
Tender Agent shall not be effective until a successor or temporary tender agent shall have
been appointed pursuant hereto, and the Tender Agent shall have been paid for all
services rendered hereunder and for all expenses of the Tender Agent incurred hereunder
prior to the date of removal.
(e) (i) In case the Tender Agent hereunder shall (a) resign or be removed
or (b) be dissolved or shall be in the course of dissolution or liquidation, or (c) in case it
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shall be taken under the control of any public officer or officers or of a receiver appointed
by a court or otherwise become incapable of acting hereunder, a successor may be
appointed by an instrument executed and signed by the City; provided, that if a successor
tender agent shall not be so appointed within ten (10) days after notice of resignation
shall have been mailed or an instrument of removal shall have been delivered as provided
hereunder, or within ten (10) days of the City's knowledge of any of the events specified
in (ii) hereinabove, then twenty-five percent (25%) of the Bondholders, by an instrument
or concurrent instruments in writing signed by or on behalf of such Owners, delivered
personally or sent by registered or certified mail to the City and Trustee, may designate a
successor tender agent. Until a successor tender agent shall be appointed by the
Bondholders in the manner above provided, the City shall appoint a temporary tender
agent to fill such vacancy, and any such temporary tender agent so appointed by the City
shall immediately and without further act be superseded by the successor tender agent so
appointed by the Bondholders. Notice of the appointment of a successor tender agent
shall be given in the same manner as provided herein with respect to the resignation of
the Tender Agent. Every such successor tender agent appointed pursuant to the
provisions of this Section shall be a trust company or bank organized under the laws of
the United States of America or any state thereof that is in good standing within or
outside the State of Arkansas, shall be eligible to serve as tender agent under applicable
law, shall be duly authorized to exercise trust powers and subject to examination by
federal or state authority, shall have a reported combined capital, surplus, and undivided
profits of not less than Seventy -Five Million Dollars ($75,000,000), and shall be an
institution willing, qualified, and able to accept the trusteeship upon the terms and
conditions hereof.
(ii) In case at any time the Tender Agent shall resign and no appointment of a
successor tender agent shall be made pursuant to the foregoing provisions of this Section
prior to the date specified in the notice of resignation as the date when such resignation
shall take effect, the Owner of any Bond or the resigning Tender Agent may apply to any
court of competent jurisdiction to appoint a successor tender agent. Such court may
thereupon, after such notice, if any, as it may deem proper, appoint a successor tender
agent.
Section 10. Term. This Agreement shall remain in full force and effect until the
earlier of (i) such time as the principal of and premium, if any, and interest on the Bonds shall
have been paid or provision for such payment shall have been made in accordance with the
Indenture, and (ii) termination of the Tender Program by the consent of the required amount of
Bondholders as set forth in the Indenture, whereupon this Agreement shall terminate.
Section 11. Amendments. This Agreement may not be amended without the written
consent of each of the parties hereto. In addition, this Agreement may not be amended so as to
adversely affect the right of the owners of Bonds to deliver such Bonds to the Tender Agent for
purchase hereunder without the written consent of the owners of each such Bond so affected.
Section 12. Successors. The rights, duties and obligations of the City, the Trustee and
the Tender Agent hereunder shall inure, without further act, to their respective successors and
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permitted assigns; provided, however, that the Tender Agent may not assign its obligations under
this Agreement without the prior written consent of the City.
Section 13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Section 14. Applicable Time. Whenever any time of day or particular hour is
specified herein, such time or hour shall be determined on the basis of Central Standard Time or
Central Daylight Savings Time, whichever is then in effect in Little Rock, Arkansas.
(Remainder of this page intentionally left blank)
In
IN WITNESS WHEREOF, the parties hereto have caused this Tender Agent Agreement
to be duly executed by their duly authorized officers as of the day and year first above written.
(Seal)
ATTEST:
City Clerk
CITY OF FAYETTEVILLE, ARKANSAS
By:
Mayor
Signature Page to
Tender Agent Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Tender Agent Agreement
to be duly executed by their duly authorized officers as of the day and year first above written.
ATTEST:
By:
Name:
BANK OZK, as Trustee
By:
Name:
Title:
Signature Page to
Tender Agent Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Tender Agent Agreement
to be duly executed by their duly authorized officers as of the day and year first above written.
ATTEST:
By:
Name:
Title:
BANK OZK, as Tender Agent
By:
Name:
Title:
Signature Page to
Tender Agent Agreement
EXHIBIT A
NOTICE TO BONDHOLDERS AND
INVITATION TO TENDER BONDS DATED DECEMBER 9, 2019
EXHIBIT C
QUESTIONS AND ANSWERS
Summary of the Invitation
This summary is being provided for the convenience of Bondholders and highlights certain material
information regarding the Tender Program but does not describe all of the details of this Invitation.
Bondholders are encouraged to read the entire Invitation and the Other Tender Materials.
1. Why am I being invited to offer to sell my Bonds?
Owners of more than two-thirds (2/3) of the aggregate principal amounts of the outstanding
Bonds have directed the Trustee to hire counsel to create a recurring voluntary bond tender offer
program to provide Bondholders with an opportunity to obtain liquidity with respect to all or a
portion of their Bonds. As a Bondholder you are eligible to participate in the bond tender offer.
The Invitation (defined below) provides necessary information to Bondholders to be able to
participate in the bond tender offer program.
2. What did I receive in this package and why have I received it?
You should have received the following items in this package:
(a) The Notice to Bondholders and Invitation to Tender Bonds dated December 9,
2019 ("Invitation"),
(b) The Supplemental Trust Indenture ("Supplemental Indenture") attached to the
Invitation as Exhibit A and Tender Agent Agreement ("Tender Agent
Agreement") attached to the Invitation as Exhibit B,
(c) These Questions and Answers,
(d) A Disclosure Statement dated December 9, 2019 attached to the Invitation as
Exhibit D ("Disclosure Statement"), and
(e) The Bondholder's Instructions attached to the Invitation as Exhibit E
("Bondholder's Instructions").
Capitalized terms used but not defined herein have the meanings ascribed to them in the Invitation.
You are an owner ("Bondholder") of certain Tax Increment Interest Accretion Bonds (the "Bonds")
issued by the Issuer pursuant to that certain Trust Indenture dated April 5, 2005, as supplemented and
amended. These Questions and Answers, the Invitation and the Other Tender Materials describe an
invitation to tender Bonds for cash.
3. What is the Invitation, and what are the Bondholder's options?
Bondholders are invited to submit offers ("Offers") to sell all or a portion of their Bonds at the purchase
price chosen by each Bondholder submitting an Offer. Offers to sell Bonds must be received by the
Tender Agent on or before 5:00 p.m., Central Time, on December 20, 2019 (the "Expiration Date").
Offers to sell Bonds received after 5:00 p.m., Central Time, on the Expiration Date will not be considered.
The properly tendered Bonds ("Offered Bonds") accepted for purchase will be paid for on the Payment
Date.
Exhibit C-1
Bondholder Options:
(i) Make an Offer to sell all or a portion of your Bonds at the purchase price of your
choosing on or before the Expiration Date. (See Question 18 below for information on how to submit
your Offer to the Tender Agent.) After the Expiration Date, the Tender Agent will determine if all, a
portion, or none of your Offered Bonds will be purchased.
Subject to the acceptance of your Offered Bonds for purchase and satisfaction of all conditions
described in the Invitation and the Other Tender Materials, your Offered Bonds will be purchased on the
Payment Date. See Question 21 for information on how and when the Tender Agent will inform you of
its decision to purchase Offered Bonds.
(ii) Not make an Offer and keep your Bonds. (See Question 17 below for information
regarding Bonds not offered for purchase.)
4. What is the purpose of the Offer?
The purpose of the Offer is to create an alternative for Bondholders to liquidate their Bond holdings
through the implementation of a recurring voluntary tender offer program permitting Bondholders the
option to tender their Bonds on an annual basis at an amount that is less than the Accreted Value.
Currently, liquidation options available to Bondholders are (i) random selection of Bonds through the
annual redemption of Bonds using the Tax Increment as provided in the Indenture or (ii) sales of Bonds
on the open market.
Because of certain events outside of the control of the Issuer, including, but not limited to, unanticipated
impairments in the growth of assessed values of the property within the District and the failure of certain
anticipated development projects, based on current projections, it appears that there will be insufficient
amount of Tax Increment available to pay the Accreted Value on all of the Bonds prior to their maturity
on August 1, 2029. Based on historical receipts of the Tax Increment, at maturity it is anticipated that
approximately 37.72% of the Bonds will remain outstanding. See "HISTORICAL TAX
INCREMENT" and "FORECASTED TAX INCREMENT" in the Disclosure Statement. As requested
by a majority of the Bondholders, the development and implementation of the modified "Dutch Auction"
tender offer program, as set forth in the Invitation, represents a mechanism to provide Bondholders with
an opportunity to obtain liquidity with respect to all or a portion of their Bonds from the portion of the
Tax Increment available to pay the debt service on the Offered Bonds.
While the Issuer expects to continue to receive the Tax Increment after maturity if Bonds remain
outstanding, the Act is subject to legal interpretation, and to date, a court has not opined on whether
receipt of the Tax Increment after maturity is the correct legal interpretation of the Act. Various
individuals and entities likely have standing to initiate an action challenging the continued collection of
the Tax Increment after maturity of the Bonds. None of the Issuer, the Trustee, the Tender Agent or their
legal counsel can or will give any assurances as to how a court might interpret the Act. The Tax
Increment is the only source of funds to which Bondholders may look for payment of the Purchase Price
or Accreted Value of the Bonds. If a court interprets the Act as prohibiting the collection of the Tax
Increment beyond the maturity date of the Bonds or beyond another date that precedes payment in full of
the Bonds, no other revenues are available to Bondholders, and any Bonds that remain outstanding at that
time are unlikely to receive any other payments.
Exhibit C-2
5. What will the purchase price be, and what will be the form of payment for the Bonds?
The Invitation is a procedure commonly called a modified "Dutch Auction" which allows Bondholders to
select a purchase price less than the Accreted Value of the Bonds ("Purchase Price") at which they are
willing to sell their Bonds.
After the Invitation expires, the Tender Agent will review all Offers received. The Tender Agent will
then select the lowest Purchase Price that will allow the Tender Agent to purchase the greatest number of
Offered Bonds at a total cost not to exceed the portion of the Tax Increment allocated to the Offered
Bonds. See "TERMS OF THIS INVITATION — Allocation of Tax Increment" in the Invitation.
Tender Agent may select all or a portion of a Bondholder's Offered Bonds. The Purchase Price for any
partial selection of an Offered Bond will be calculated by multiplying the Purchase Price by the fraction
the numerator of which is the principal amount of Offered Bond partially selected by Tender Agent and
the denominator of which is the total principal amount of the Offered Bond. If all or a portion of your
Offered Bonds are purchased, the Tender Agent will pay the Purchase Price in cash via check or bank
wire on the Payment Date. See Question 7 on information regarding the Payment Date.
6. How will the Purchase Price for the Bonds be paid?
The Tax Increment available to pay debt service on the Bonds on February 1, 2020 will be allocated
between the properly Offered Bonds and the non -offered Bonds in proportion of their respective principal
amount to the total outstanding principal amount of the Bonds. After the Invitation expires, the Tender
Agent will calculate the amount of Tax Increment to be allocated for payment of the Purchase Prices of
the Offered Bonds selected for purchase and the amount of Tax Increment to be allocated for payment of
the Accreted Value of the Bonds not offered and randomly selected for redemption pursuant to the terms
of Indenture.
7. When will selected Offered Bonds be purchased? Can this date be changed by the Tender
Agent?
Once the Offered Bonds are selected for purchase, Tender Agent will pay the Purchase Price of
each selected Offered Bond to the Bondholder in whose name such selected Offered Bonds is listed on
the books of the Trustee in cash via check or bank wire on the later of (i) February 1, 2020, the next
principal payment date of the Bonds, or (ii) the date that all conditions of the Invitation and the
Bondholder's Instructions with respect to the Offered Bonds have been satisfied, including, but not
limited to the conversion of the Offered Bonds from book -entry -only bonds to direct registered bonds
("Payment Date"). Therefore, the date that the Tender Agent pays the Purchase Price to each Bondholder
may be different depending on the timing of the satisfaction of the conditions of the Invitation and the
Bondholder's Instructions for each selected Offered Bond.
8. Can a Bondholder submit an Offer for some, but not all, of its Bonds?
Yes. A Bondholder can offer all or any portion of its Bonds for purchase.
9. What are the benefits of submitting an Offer?
Each Bondholder should determine whether or not submitting an Offer is beneficial to the Bondholder.
Each Bondholder must make this decision independently in its sole and absolute discretion and should
read the Invitation and Other Tender Materials and consult with its broker, financial advisors, consultants
and/or other financial, legal, or tax professionals in making this decision.
Exhibit C-3
10. What is the deadline for submitting my Offer to the Tender Agent?
Offers must be given as described in Question 18 below by 5:00 p.m. Central time on the Expiration Date
(December 20, 2019, or as may be extended by the Tender Agent). Offers received after 5:00 p.m.,
Central Time on the Expiration Date will not be considered. The Offered Bonds must be delivered as
described in the Invitation in order for the Purchase Price to be paid.
The Tender Agent has the right to extend the deadline to submit Offers to any date in its sole discretion,
provided that a notice of any extension of the Expiration Date is given to the Bondholders via EMMA,
DTC or mail or e-mail as determined by the Tender Agent in its sole discretion.
11. Can an Offer be rejected?
Yes. The Tender Agent reserves the absolute right to reject any and all Offers, whether or not they
comply with the terms of the Invitation.
12. How will Offered Bonds be selected for redemption?
The Tender Agent will select which Offered Bonds to purchase based on the lowest Purchase Price
offered by the Bondholder in the Offer. Offered Bonds selected by the Tender Agent for purchase will be
redeemed in ascending order until the Tax Increment available for debt service allocated to the Offered
Bonds is fully depleted or is insufficient to pay the Purchase Price for additional Offered Bonds.
13. How often can a Bondholder elect to tender its Bonds?
In compliance with the direction received from Bondholders, it is anticipated that Bondholders will be
invited to tender their Bonds on an annual basis. Bondholders have the option of tendering their Bonds in
any year that the tender offer program is available whether or not the Bondholder chose to tender his, her
or its Bonds pursuant to a previous invitation.
14. How will Tender Agent pay the Offered Bonds that are selected for tender?
When a Bondholder submits an Offer to the Tender Agent, the Bondholder will begin the process of
converting the Offered Bonds from book -entry only bonds held by The Depository Trust Company, to
direct registered bonds to be held for safekeeping by the agent chosen by the Bondholder, or if no other
available option, the direct registered Bonds may be held for safekeeping by Crews & Associates, Inc. at
no charge. See "THE TENDER PROGRAM — Conversion of Offered Bonds" in the Disclosure
Statement. The direct registered Bonds will be identified on the register created and maintained by the
Trustee in the name of the Bondholders. Offered Bonds not converted to direct registered bonds by
the offering Bondholder before the Record Date (January 15, 2020) cannot be selected for purchase
by the Tender Agent and will be eligible for redemption in accordance with the terms of the
Indenture. The Bondholder and its broker control the process of converting the Offered Bonds. None of
the Issuer, the Trustee or the Tender Agent can control or influence the conversion process. Once an
Offered Bond is converted to a direct registered bond, such Offered Bond will remain a direct registered
bond even if such Offered Bond is not selected for purchase or whether or not offered for purchase in
subsequent years.
Once Tender Agent has selected the Offered Bonds to be purchased, Tender Agent will notify Trustee of
the total Purchase Price to be paid for the Offered Bonds. Trustee will transfer the funds to Tender Agent.
Tender Agent will send the Purchase Price to each Bondholder whose Offered Bonds were selected for
purchase via check or bank wire on the Payment Date.
Exhibit C-4
15. Who will hold my Offered Bonds for safekeeping?
You will need to make arrangements for your Offered Bonds to be held for safekeeping by your financial
representative or other financial institution once they are converted to direct registered Bonds. Bonds not
converted to direct registered bonds before the Record Date (January 15, 2020) cannot be selected
for purchase and will be eligible for redemption in accordance with the Indenture. Such
representative or institution may charge you fees for the safekeeping of your direct registered Offered
Bonds. In the alternative, Crews & Associates, Inc. may hold Offered Bonds, once converted to direct
registered Bonds, for any Bondholder at no charge. Contact Butch Lomax with Crews & Associates, Inc.,
at (501) 978-7915 for more information about safekeeping your Offered Bonds. You and your financial
advisor control the conversion process.
16. What happens to Bonds not purchased or redeemed before maturity of the Bonds on
August 1, 2029?
Bonds not redeemed or purchased prior to maturity will remain outstanding. Based on historical Tax
Increment received, there is uncertainty as to the availability of the Tax Increment for payment of the
Bonds that remain outstanding at maturity. See "RISK FACTORS — Uncertainties with respect to the
Collection of the Tax Increment after Maturity" in the Disclosure Statement. (See Question 4 for
information regarding the purpose of the Invitation.)
17. How will non -offered Bonds be redeemed?
Non -offered Bonds will be selected for redemption in the same manner as provided in the Indenture and,
if selected, will receive 100% of accreted interest and outstanding principal, subject to the Tax Increment
available for debt service as allocated to the non -offered Bonds. (See Question 16 for information
regarding the effect on Bonds not purchased or redeemed before maturity.)
18. How do Bondholders offer to sell their Bond?
Bondholders wishing to offer to sell their Bonds must complete the Bondholder's Instructions attached to
the Invitation as Exhibit E and deliver such Bondholder's Instructions to the Tender Agent by 5:00 p.m.,
Central Time, on the Expiration Date. Bondholders may contact the Tender Agent for assistance.
The contact information for the Tender Agent is provided at the end of the Invitation and the
Bondholder's Instructions.
19. Once Bonds have been offered, can such Offered Bonds be withdrawn?
No. Offered Bonds may not be withdrawn. An Offer, if validly made pursuant to the Invitation, is
effective when received by the Tender Agent and is irrevocable.
20. What are the U.S. federal income tax consequences of offering to sell Bonds?
The extent of federal income tax consequences of offering to sell the Bonds, if any, will depend upon
such Bondholder's particular tax status and other items of income or deduction unique to each
Bondholder. Neither the Issuer, the Tender Agent, the Trustee nor their respective legal counsels has
expressed any opinion or offer any advice to the Bondholders regarding any such consequences. Each
Bondholder should consult their tax advisors as to the tax consequences of tendering the Bonds pursuant
to the Offer.
Exhibit C-5
The Trustee will issue to Bondholders whose Offered Bonds are selected for purchase an IRS Form 1099-
Misc to document all amounts paid to the Bondholders of such Offered Bonds.
21. When and how will Bondholders learn whether their offers have been accepted or rejected?
The acceptance and rejection of Offered Bonds will be made by notification to the Bondholders by the
Tender Agent by 5:00 p.m., Central Time, on or before the Record Date (January 15, 2020). The
notification will state the aggregate principal amounts of the Offered Bonds that are selected for purchase
and the Offered Bonds that will not be purchased. This notification will be delivered to Bondholders via
EMMA, DTC or mail or e-mail as determined by the Trustee or Tender Agent, as applicable, in its sole
discretion.
22. Has the Issuer and its governing body adopted a position on the Invitation?
No. The Issuer has taken all necessary legislative action to facilitate the direction to the Trustee from the
Bondholders. However, none of the Issuer, the Trustee, the Tender Agent, or their respective legal
counsels, is making any recommendation to Bondholders as to whether the Bonds should or should not be
offered or as to the Purchase Price to be chosen by the Bondholders for their Bonds. Bondholders must
make their own decision as to whether to offer to sell their Bonds, and if so, the Purchase Price at which
such Bonds should be offered. In doing so the Bondholders should read carefully the information in the
Invitation and the Other Tender Materials provided herewith and consult their own professional advisors.
23. Will I be required to pay a commission or fee if I make an Offer?
You will not be required to pay a fee or commission to the Issuer, Tender Agent, Trustee or their
respective agents. Costs and fees for the services provided by the Tender Agent and counsel to the
Trustee hired to implement the Tender Program will be paid out of the portion of the Tax Increment
allocated to the Offered Bonds. You should check with your financial representative to determine
whether they will charge you a fee or commission related to an Offer to sell Bonds or related to the
conversion of Offered Bonds to direct registered Bonds or the safekeeping of direct registered Bonds on
your behalf.
24. To whom can Bondholders direct questions?
Bondholders are encouraged to direct any questions regarding the Invitation and the Other Tender
Materials to the Tender Agent. The Tender Agent's contact information is available at the end of the
Invitation and the Bondholder's Instructions.
[Remainder of page intentionally left blank.]
Exhibit C-6
EXHIBIT D
DISCLOSURE STATEMENT
RELATING TO
INVITATION TO TENDER BONDS
$3,725,000
City of Fayetteville, Arkansas
Tax Increment Interest Accretion Bonds
(Highway 71 East Square Development District No. 1 Project)
Series 2005
Pursuant to the Invitation to Tender Bonds dated December 9, 2019, (the "Invitation"), each owner
("Bondholder") of those certain outstanding bonds referenced above (the "Bonds") is invited to submit
offers to sell all or a portion of the Bonds held by each Bondholder at a purchase price chosen by the
Bondholder ("Purchase Price"), subject to the conditions and upon the terms specified in the Invitation.
Bondholders should read this Disclosure Statement, the Invitation and other materials described in the
Invitation carefully and consult with their brokers, financial advisors, consultants and/or other financial,
legal, or tax professionals in order to make an informed decision as to whether, and how, to offer their
Bonds. This Disclosure Statement, the Invitation and other material described in the Invitation are and
will be available from the Tender Agent through the Electronic Municipal Market Access system
("EMMA"), The Depository Trust Company ("DTC") and by mail or e-mail.
None of the Issuer, the Trustee, the Tender Agent, or any of their respective legal counsels, is making any
recommendation as to whether or not Bondholders should tender all or any portion of their Bonds
pursuant to the Invitation. Bondholders must make their own decisions as to whether to tender their
Bonds, and if so, the amount of their Bonds to tender and the Purchase Price at which such Bonds should
be offered.
Any Bondholder wishing to offer its Bonds pursuant to the Invitation should follow the procedures more
fully described in the Invitation. Investors and their brokers, financial advisors, consultants and/or other
financial, legal, or tax professionals with questions about the Invitation should contact the Tender Agent.
The Tender Agent for the Invitation is:
Bank OZK
ATTN: Sheila Mayden
P.O. Box 8811
Little Rock, Arkansas 72231-8811
sheila.mayden@ozk.com
Fax: 501.978.2237
Date of this Disclosure Statement: December 9, 2019
Exhibit D-1
Certain statements contained in this Disclosure Statement, reflect not historical facts but rather forecasts
and "forward-looking statements." Such forward-looking statements can be identified, in some cases, by
the terminology used, such as "may," "will," "should," "expects," "intends," "plans," "anticipates,"
"believes," "estimates," "projects," "predicts," "potential," "illustrate," "example," and "continue," or the
singular, plural, negative or other derivations of these or other comparable terms. Bondholders should not
place undue reliance on forward-looking statements. All forward-looking statements included in this
Disclosure Statement are based on information available on the date hereof, and neither the Issuer, the
Trustee, nor the Tender Agent assumes any obligation to update any such forward-looking statements.
Actual results could differ materially from those discussed in such forward-looking statements.
The forward-looking statements included herein are necessarily based on various assumptions and
estimates and are inherently subject to various risks and uncertainties, including, but not limited to, the
risks and uncertainties described herein and risks and uncertainties relating to the possible invalidity of
the underlying assumptions and estimates and possible changes or developments in geopolitical, military,
social, economic, business, industry, market, legal or regulatory circumstances, and conditions or actions
taken or omitted to be taken by third parties, including customers, suppliers, and business partners, and
legislative, judicial, and other governmental authorities and officials. Accordingly, actual results may vary
from the projections, forecasts and estimates contained in this Disclosure Statement and such variations
may be material, which could affect the Issuer's ability to fulfill some or all of their respective obligations
under the Invitation or the Bonds.
No party that has provided information for this Disclosure Statement has any obligation to update or
otherwise revise any projections, forecasts and estimates, including any revisions to reflect changes in
conditions or circumstances arising after the date of this Disclosure Statement, or to reflect the occurrence
of unanticipated events. Assumptions related to the foregoing involve judgments with respect to, among
other things, future economic, competitive, business and market conditions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the Issuer, the Trustee
and/or the Tender Agent or any of their legal counsel. Any of such assumptions could be inaccurate and,
therefore, there can be no assurance that the forward-looking statements included in this Disclosure
Statement will prove to be accurate. New factors emerge from time to time and it is not possible for the
Issuer, the Trustee and/or the Tender Agent or any of their legal counsel to predict all of such factors.
Further, none of the Issuer, the Trustee and/or the Tender Agent nor any of their legal counsel can assess
the impact of each such factor on its business or the extent to which any factor, or combination of factors,
may cause actual results to differ materially from those contained in any forward-looking statements.
All projections, forecasts, assumptions, expressions of opinions, estimates, and other forward-looking
statements are expressly qualified in their entirety by the foregoing and the other cautionary statements
set forth in this Disclosure Statement.
Exhibit D-2
INTRODUCTION
The following introductory statement is subject in all respects to the more complete information set forth
in this Disclosure Statement, the Invitation and the other materials described in the Invitation. The
descriptions and summaries of various documents hereinafter set forth do not purport to be
comprehensive or definitive and are qualified in their entirety by reference to each document. Capitalized
terms used in this Disclosure Statement that are not otherwise defined herein have the meanings set forth
in Invitation or the Indenture.
Purpose of this Disclosure Statement
This Disclosure Statement, including the cover page, is provided to furnish information in connection
with the Invitation to Tender Bonds (the "Invitation") by which each owner (a "Bondholder") of the
$3,725,000 City of Fayetteville, Arkansas Tax Increment Accretion Bonds (Highway 71 East Square
Development District No. 1 Project) Series 2005 (the "Bonds") issued by the City of Fayetteville,
Arkansas (the "Issuer"), is invited to submit offers ("Offers") to sell all or a portion of the Bonds held by
such Bondholder at the purchase price ("Purchase Price") chosen by the individual Bondholders for their
Bonds, subject to the conditions and upon the terms specified in the Invitation.
Availability of Documents
The descriptions and summaries of various documents set forth in this Disclosure Statement do not
purport to be conclusive or definitive and reference is made to each such document for the complete
details of all terms and conditions hereof. All references herein to the Invitation, the Supplemental Trust
Indenture and Tender Agent Agreement are qualified in their entirety by such documents, copies of which
this Disclosure Statement is attached.
HISTORY OF TAX INCREMENT BONDS
The Bonds were originally issued under the Arkansas Community Redevelopment Financing Act (Ark.
Code Ann. §§ 14-168-304 et seq.) (the "Act") which provides that the debt service of the Bonds will be
paid by the Issuer from the Tax Increment collected in the District. The "District" is the Highway 71 East
Square Redevelopment District No. I created by the Issuer. The "Tax Increment" is determined by
calculating the incremental value (the difference between the base value and current value) of the taxable
real property within the District and multiplying it by the applicable ad valorem tax rate.
Since the Act was enacted in 2003, there have been several amendments and rulings regarding amounts to
be included in the Tax Increment and made available to pay debt service on the Bonds. Since the Bonds
were issued, courts have held that certain portions of the millage levied within the District is not included
in the Tax Increment and is not available to pay debt service on the Bonds. As mentioned in the
disclosure to Bondholders dated November 7, 2017, because of these rulings and various factors outside
the control of the Issuer, including, but not limited to, unanticipated impairments in the growth of
assessed values of the property within the District and the failure of certain anticipated development
projects, based on current projections, it appears there will be an insufficient amount of Tax Increment
available to pay the Accreted Value on all of the Bonds prior to their maturity on August 1, 2029. See
"PROJECTED TAX INCREMENT" below. Based on historical receipts of the Tax Increment, at
maturity it is anticipated that approximately 37.72% of the Bonds may remain outstanding. See
"HISTORICAL TAX INCREMENT" below. As requested by a majority of the Bondholders, the
development and implementation of the modified "Dutch Auction" tender offer program, as set forth
herein, represents a mechanism to provide Bondholders with an opportunity to obtain liquidity with
Exhibit D-3
respect to all or a portion of their Bonds from the Tax Increment available to pay the debt service on the
Bonds. See "RISK FACTORS" below.
THE TENDER PROGRAM
Bank OZK, as Trustee under the Trust Indenture dated April 5, 2005 (the "Indenture"), has received
direction from the requisite number of Bondholders to hire counsel for the purpose of creating a recurring
voluntary tender offer program to offer Bondholders the option to tender their Bonds on an annual basis at
an amount less than the Accreted Value. Counsel has proposed a modified "Dutch Auction" which
allows Bondholders to select the Purchase Price at which they are willing to sell their Bonds (the "Tender
Program"). The Tender Program provides an alternative for Bondholders to liquidate their Bonds on an
annual basis at an amount that is less than the Accreted Value. Currently, the primary liquidation options
available to the Bondholders are (i) random selection of Bonds through the annual redemption of Bonds
using the Tax Increment as provided in the Indenture or (ii) sales of Bonds on the open market. See
"RISK FACTORS" below.
Offers.
Bondholders wishing to make an Offer to sell their Bonds will submit an Offer to the Tender Agent as
provided in the Invitation. The Bondholder will determine the principal amount (in increments of $5,000)
and the Purchase Price at which it is willing to offer its Bonds. The Tax Increment available to pay debt
service on the Bonds for each year will be allocated among the properly offered Bonds (the "Offered
Bonds") and the non -offered Bonds based on the principal amount of each pool in relation to the total
outstanding principal amount of the Bonds. See "USE OF TAX INCREMENT" below.
Conversion of Offered Bonds.
The Bonds were originally issued as book -entry only bonds held by The Depository Trust Company, as
registered owner of all the Bonds. After a Bondholder submits an Offer to the Tender Agent, the
Bondholder should initiate the process of converting all Offered Bonds to direct registered bonds. See
"RISK FACTORS — Payment Date Extension" below. Such Bonds will be held for safekeeping by (i)
the financial agent of Bondholder's choice upon terms agreed to by such agent and Bondholder or, (ii) in
the alternative, by Crews & Associates, Inc., at no charge to the Bondholders, but subject to compliance
with Crews & Associates, Inc.'s internal policies and procedures. Each direct registered bond will be in
the name of the specific Bondholder thereof in the Bond register created and maintained by the Trustee.
Offered Bonds not converted to direct registered bonds by the offering Bondholder before the
Record Date (January 15, 2020) cannot be selected for purchase by the Tender Agent. The
Bondholder and its broker control the process of converting the Offered Bonds. None of the Issuer, the
Trustee or the Tender Agent can control or influence the conversion process. All Offered Bonds
converted to direct registered bonds will remain direct registered bonds whether or not such Offered
Bonds are selected for purchase. Conversion to direct registered bonds will not impact the Bondholder's
option to participate or not participate in the Tender Program on an annual basis or if not participating in
the Tender Program, Bondholder's chance of being randomly selected for redemption under the terms of
the Indenture.
Selection of Offered Bonds.
The Tender Agent will select the Offered Bonds to purchase based on the lowest Purchase Price that will
allow for the purchase of the greatest number of Offered Bonds at a total cost not to exceed the portion of
Tax Increment allocated to the Offered Bond pool. The Offered Bonds selected for purchase will be paid
in cash via check or bank wire on the Payment Date. The non -offered Bonds will be selected for
Exhibit D-4
redemption in the same manner as provided by the Indenture and, if selected for redemption, will receive
the Accreted Value for its Bonds from the portion of Tax Increment allocated to the non -offered Bond
pool. See "TENDER PROGRAM'S AFFECT ON CERTAIN BONDS" below.
HISTORICAL TAX INCREMENT USED TO REDEEM BONDS
The following table sets forth the historical Tax Increment used to redeem the Bonds since the date of
issuance.
Date
Historical Bond Redemptions
TIF Revenues Principal of Accreted
used for Bonds Interest
Redemption Redeemed Paid
Remaining
Principal Bond
Balance
$3,725,000.00
2/1/2008
$131,452.42
$110,000.00
$21,452.42
3,615,000.00
2/1/2009
191,094.30
150,000.00
41,094.30
3,465,000.00
2/1/2010
61,115.13
45,000.00
16,115.13
3,420,000.00
2/1/2011
108,586.95
75,000.00
33,586.95
3,345,000.00
2/1/2012
146,629.08
95,000.00
51,629.08
3,250,000.00
2/1/2013
90,498.10
55,000.00
35,498.10
3,195,000.00
2/1/2014
114,017.15
65,000.00
49,017.15
3,130,000.00
2/1/2015
130,898.60
70,000.00
60,898.60
3,060,000.00
2/1/2016
149,512.80
75,000.00
74,512.80
2,985,000.00
2/1/2017
159,388.95
75,000.00
84,388.95
2,910,000.00
2/1/2018
226,556.80
100,000.00
126,556.80
2,810,000.00
2/1/2019
362,283.60*
150,000.00
212,283.60
2,660,000.00
* The TIF Revenue for 2019 included approximately $92,000 extraordinary payment
from Washington
County due to parcels previously
not counted in the TIF District as
explained below.
The chart above reflects an increase in Tax Increment on February 1, 2019 which is attributable to an
extra payment of Tax Increment receipts to the Issuer by the Washington County Tax Collector. It was
Exhibit D-5
discovered that the Assessor had not included certain tax parcels in the District in calculating the Tax
Increment resulting in a shortfall in Tax Increment receipts in the amount of $92,000. The County
Collector paid the shortfall to the Issuer ("Correction Payment") to correct this mistake. This Correction
Payment is included in the Tax Increment Receipts for February 1, 2019 in the above chart and was used
by the Trustee to redeem outstanding Bonds on February 1, 2019 resulting in approximately $362,283.37
being paid to Bondholders to redeem $150,000 in principal amount of the Bonds as shown in the chart
above. The inclusion of such tax parcels in the calculation of the Tax Increment receipts alone will not
provide collections sufficient to meet the assumptions that existed at the time of the Bonds were issued.
Certain historical financial information is included in this Disclosure Statement. There can be no
assurance that the amount of Tax Increment receipts collected in the future will be similar to historical
collections, and the collection information is expressly qualified in its entirety by the disclaimers set forth
in such collection information and the disclosure in this Disclosure Statement. Such future collections will
vary from historical collections, and actual variations may be material. Therefore, the historical
collections of Tax Increment receipts contained in this Disclosure Statement cannot be viewed as a
representation that sufficient receipts will be generated in the future to purchase Offered Bonds or to
redeem Bonds as set forth in the Indenture. See "RISK FACTORS — Tax Increment" and "RISK
FACTORS — Real Property Value Growth" below.
FORECASTED TAX INCREMENT
The following table sets forth the forecasted Tax Increment' receipts through maturity of the Bonds:
[Chart begins on the next page.]
' Forecasted Tax Increment information was calculated by Crew & Associates, Inc. as underwriter for the Bonds,
and assumed a 5% annual increase in the increment.
Exhibit D-6
Estimated Bond Redemptions to Maturity
(Based on a 5% Annual Increase in the TIF Increment)
** The $1,405,000 Remaining Principal Bond Balance at 2/1/2019 represents 37.72%
of the original Bonds that would still be outstanding at the original maturity date.
The chart above shows a possible outcome in the event that no Bondholders offer to sell their Bonds
through the Tender Program. If the assumptions set out in the chart above prove accurate, and the Tax
Increment is available after maturity, the Bonds may be fully paid in approximately the year 2046. In the
event Bondholders do offer to sell their Bonds prior to maturity of the Bonds, and the Offer is accepted,
and the Purchase Price paid for such Offered Bonds, the amount of Tax Increment available to redeem
Bonds as set out in the Indenture will be reduced. Therefore, the amount of Bonds to be redeemed
pursuant to the process set forth in the Indenture will be reduced. However, because Offered Bonds will
be purchased for less than the Accreted Value, the aggregate amount of outstanding Bonds will be
incrementally reduced in such year. See "TENDER PROGRAM'S AFFECT ON CERTAIN BONDS"
below.
Exhibit D-7
Estimated *
Principal of
Accreted
Remaining
Date
TIF
Revenue for
Bonds to
Interest to
Principal Bond
Redemption
Redeem
Pay
Balance
2/1/2020
$339,000.00
$130,000.00
$204,719.32
$2,530,000.00
2/1/2021
355,230.68
125,000.00
218,105.50
2,405,000.00
2/1/2022
380,117.39
125,000.00
240,769.75
2,280,000.00
2/1/2023
408,470.91
130,000.00
275,528.24
2,150,000.00
2/1/2024
426,837.12
125,000.00
290,688.25
2,025,000.00
2/1/2025
454,327.85
125,000.00
318,147.25
1,900,000.00
2/1/2026
483,224.84
125,000.00
347,419.75
1,775,000.00
2/1/2027
513,191.17
125,000.00
378,626.00
1,650,000.00
2/1/2028
513,415.89
125,000.00
378,942.25
1,525,000.00
2/1/2029
570,586.69
120,000.00
429,464.64
1,405,000.00 **
* The estimate is based upon a
5% annual increase in TIF revenue plus any excess
from the previous year, less estimated Trustee expenses.
** The $1,405,000 Remaining Principal Bond Balance at 2/1/2019 represents 37.72%
of the original Bonds that would still be outstanding at the original maturity date.
The chart above shows a possible outcome in the event that no Bondholders offer to sell their Bonds
through the Tender Program. If the assumptions set out in the chart above prove accurate, and the Tax
Increment is available after maturity, the Bonds may be fully paid in approximately the year 2046. In the
event Bondholders do offer to sell their Bonds prior to maturity of the Bonds, and the Offer is accepted,
and the Purchase Price paid for such Offered Bonds, the amount of Tax Increment available to redeem
Bonds as set out in the Indenture will be reduced. Therefore, the amount of Bonds to be redeemed
pursuant to the process set forth in the Indenture will be reduced. However, because Offered Bonds will
be purchased for less than the Accreted Value, the aggregate amount of outstanding Bonds will be
incrementally reduced in such year. See "TENDER PROGRAM'S AFFECT ON CERTAIN BONDS"
below.
Exhibit D-7
The projections above assume an increase of five percent (5%) in the Tax Increment receipts each year
until maturity of the Bonds. This is only an estimate of such increase. The actual increase in Tax
Increments receipts in any year may not be accurately projected and could decrease. The actual Tax
Increment receipts will differ from the projected Tax Increment receipts estimated in the above chart, and
such difference may be material. Bondholders are cautioned not to place undue reliance upon the
projections or forecasts of Tax Increment receipts. See "RISK FACTORS — Tax Increment" and
"RISK FACTORS - Real Property Value Growth" below.
The information provided in this Disclosure Statement relies upon certain assumptions and projections
regarding future collection of Tax Increment receipts, some of which are those of the County Assessor or
County Tax Collector. Projected Tax Increment receipts may not be indicative of future receipts; actual
receipts will differ from those included herein, and such difference may be material. None of the Issuer,
the Trustee or the Tender Agent can give any assurance that the events assumed will materialize or that
actual receipts will match those projected, and any such differences may be material. No representation is
made or intended, nor should any representation be inferred, with respect to the likely existence of any
particular future set of facts or circumstances, and Bondholders are cautioned not to place undue reliance
upon the projections or forecasts of Tax Increment receipts or growth of property values within the
District. See "RISK FACTORS — Tax Increment" and "RISK FACTORS — Real Property Value
Growth" below.
TRUSTEE AND TENDER AGENT FEES
As provided in the Indenture, the Tax Increment will be deposited into the Revenue Fund held by the
Trustee and distributed in accordance with the terms and provisions of the Indenture, as amended. After
the appropriate deposit into the Rebate Fund, if any, Trustee will use the moneys in the Revenue Fund for
payment to the Trustee in an amount necessary to pay or reimburse the Trustee for fees and expenses
related to the Bonds. The remaining moneys in the Revenue Fund will be transferred to separate accounts
within the Redemption Fund and applied to call Bonds for redemption as provided in the Indenture, as
amended, or used to purchase Offered Bonds as provided in the Tender Agent Agreement. Prior to
transferring the remaining moneys to the Redemption Fund, Tender Agent will notify the Trustee of the
amount of Tax Increment to be allocated to the Offered Bond pool to be used to purchase some or all of
the Offered Bonds. See "THE TENDER PROGRAM" above. Such amount will be transferred to the
Tender Agent to be held in the Bond Purchase Fund and used to pay the Purchase Price of the Offered
Bonds and direct expenses of the Tender Program in accordance with the Tender Agent Agreement. Prior
to payment to the Bondholders of the Purchase Price, Tender Agent will use the moneys in the Bond
Purchase Account for payment to the Tender Agent in an amount necessary to pay or reimburse the
Tender Agent for fees and expenses related to the tendering of the Bonds and the fees payable to the legal
counsel hired to implement the Tender Program. See "Supplemental Trust Indenture" attached as
Exhibit A to the Invitation and "Tender Agent Agreement" attached as Exhibit B to the Invitation.
USE OF TAX INCREMENT
After payment by the Trustee of the portion of the Tax Increment allocated to the Offered Bonds to the
Tender Agent, any moneys remaining in the Redemption Fund shall be applied to call Bonds for
redemption prior to maturity in accordance with the terms of the Indenture. See "THE TENDER
PROGRAM" above.
TENDER PROGRAM'S AFFECT ON CERTAIN BONDS
Bonds not offered or offered but not selected for purchase pursuant to the Invitations will remain
outstanding until maturity, redemption, purchase or defeasance. Non -offered Bonds will be selected for
Exhibit D-8
redemption in the same manner as provided in the Indenture, and Bondholders owning Bonds called for
redemption will receive the Accreted Value. Bonds not purchased or redeemed before August 1, 2029
may or may not be purchased or redeemed upon maturity, subject to the amount of Bonds outstanding
upon maturity and the Tax Increment available to pay the debt service on the Bonds outstanding at such
time. Based on historical amounts of the Tax Increment, if no Bondholders elect to participate in the
Tender Program, at maturity of the Bonds, approximately 37.72% of the Bonds may be outstanding. See
"PROJECTED TAX INCREMENT" herein.
The Tender Program may decrease or eliminate the percentage of Bonds outstanding at maturity
RISK FACTORS
Introduction
In making a decision whether to tender their Bonds, Bondholders should consider certain risks and
investment considerations. These risks and investment considerations are discussed throughout this
Disclosure Statement. Certain of these risks and considerations are set forth in this section, but this
section is not intended to be comprehensive or to be a compilation of all possible risks and investment
considerations, nor a substitute for an independent evaluation of the information set forth in this
Disclosure Statement, the Invitation or Other Tender Materials, which each Bondholder should read in its
entirety in order to make an informed investment decision.
Additional risks and uncertainties not currently known or that are not currently considered as being
material, or that are generally applicable to all municipalities and their ability to repay obligations, may
exist. Any one or more of the factors discussed herein, and other factors not described herein, could lead
to a decrease in the market value or liquidity of the Bonds or decrease the amount of the Tax Increment.
There can be no assurance that other risk factors not discussed below will not become material in the
future. Bondholders are advised to consider the following risk factors, among others, and to review the
other information incorporated by reference into this Disclosure Statement when evaluating whether to
tender the Bonds.
Payment Date Extension
The Payment Date for individual Bondholders may be extended in the event that the process of converting
the Offered Bonds from book -entry only bonds to direct registered bonds is not completed prior to
January 15, 2020 (the "Record Date"). The process of converting Offered Bonds to direct registered
bonds must be initiated by the Bondholder and its investment broker. The amount of time to complete the
conversion process will depend upon the requirements of the Bondholder's preferred safekeeping agent of
the Bondholder's Offered Bonds. There can be no assurance as to how long the process will take. The
Bondholder and its broker control the process of converting the Offered Bonds. None of the Issuer, the
Trustee or the Tender Agent can control or influence the conversion process. Offered Bonds not
converted before the Record Date (January 15, 2020) cannot be purchased by the Tender Agent
and will be eligible for redemption in accordance with the Indenture.
Tax Increment
There can be no assurance that Tax Increment receipts deposited to the Revenue Fund under the Indenture
will be available or sufficient in amount to pay the Purchase Price for the Offered Bonds or the Accreted
Value of the Bonds at maturity or upon redemption prior to maturity. In the event there are insufficient
Tax Increment receipts to pay all of the debt service on the Bonds in a timely manner, the City has no
obligation to utilize any other moneys to pay such debt service and in some instances is specifically
Exhibit D-9
prohibited by law from using other moneys for that purpose. See "HISTORICAL TAX INCREMENT"
and "PROJECTED TAX INCREMENT" above.
Real Property Value Growth
The ability to purchase Offered Bonds through the Tender Program or to redeem Bonds in accordance
with the Indenture is dependent on the growth in assessed valuation of the real property within the
District. See "PROJECTED TAX INCREMENT" herein. There are many factors beyond the control
of the Issuer, the Trustee and the Tender Agent which could have a significant impact on the level of such
growth. A number of events could occur which would have a material adverse effect upon property
values, and thus on the amount of Tax Increment receipts projected to be collected, including, but not
limited to: (i) damage to or the destruction of significant components of real property within the District;
(ii) a general economic downturn resulting in business closings or contributing to an inability of property
owners to pay ad valorem taxes; and (iii) the enactment or approval of additional legislation or additional
constitutional amendments which further limit the amount of annual increases in real property values or
further restrict millages which are to be included within the applicable ad valorem rate (as defined in the
Act). Any reassessment of the property within the District may or may not affect the amount of Tax
Increment receipts in the year of reassessment as the increase in assessed value is limited to 10% in any
one tax year. Assessed value increases in excess of 10% are incrementally added to the property's
assessed value each tax year until the total increase has been added to the property's assessed value.
Bondholders should not place undue reliance on the growth of property values or the increases in assessed
values within the District in determining whether or not to offer to sell Bonds under the Tender Program.
Lack of Liquidity and Pricing
There is no assurance that an active secondary market for the Bonds will develop or be maintained, so
Bondholders might not be able to sells their Bonds in the future. If a secondary market does develop,
prices of Bonds traded in the secondary market are subject to adjustment upward and downward in
response to changes in the credit markets. As a result, Bondholders may not be able to liquidate their
investment quickly, at an attractive price, or at all.
Uncertainties with respect to the Collection of the Tax Increment after Maturity
While the Issuer expects to continue to receive the Tax Increment after maturity if Bonds remain
outstanding, the Act is subject to legal interpretation, and to date, a court has not opined on whether
receipt of the Tax Increment after maturity is the correct legal interpretation of the Act. Various
individuals and entities likely have standing to initiate an action challenging the continued collection of
the Tax Increment after maturity of the Bonds. None of the Issuer, the Trustee, the Tender Agent or their
legal counsel can or will give any assurances as to how a court might interpret the Act. The Tax
Increment is the only source of funds to which Bondholders may look for payment of the Purchase Price
or Accreted Value of the Bonds. If a court interprets the Act as prohibiting the collection of the Tax
Increment beyond the maturity date of the Bonds or beyond another date that precedes payment in full of
the Bonds, no other revenues are available to Bondholders, and any Bonds that remain outstanding at that
time are unlikely to receive any other payments.
OTHER MATTERS
The summaries and explanations herein of provisions of the Invitation, the Supplemental Indenture, the
Tender Agent Agreement and other materials are brief summaries of certain provisions thereof. Such
Exhibit D-10
summaries do not purport to be complete and reference is made to such instruments, documents and other
materials for full and complete statements of the provisions thereof.
The information contained in this Disclosure Statement has been compiled or prepared from sources
deemed to be reliable and, while not guaranteed as to completeness or accuracy, is believed to be correct
as of this date. Any statements involving matters of opinion, whether or not expressly so stated, are
intended as such and not as representations of fact.
Exhibit D-11
SCHEDULEI
TO DISCLOSURE STATEMENT
ACCRETED VALUES
4-19-05
$5,000.00
8-1-05
5,092.08
2-1-06
5,257.58
8-1-06
5,428.45
2-1-07
5,604.87
8-1-07
5,787.03
2-1-08
5,975.11
8-1-08
6,169.30
2-1-09
6,369.80
8-1-09
6,576.82
2-1-10
6,790.57
8-1-10
7,011.26
2-1-11
7,239.14
8-1-11
7,474.40
2-1-12
7,717.32
8-1-12
7,968.13
2-1-13
8,227.09
8-1-13
8,494.47
2-1-14
8,770.54
8-1-14
9,055.59
2-1-15
9,349.89
8-1-15
9,653.76
2-1-16
9,967.51
8-1-16
10,291.46
2-1-17
10,625.93
8-1-17
10,971.27
2-1-18
11,327.84
8-1-18
11,695.99
2-1-19
12,076.11
8-1-19
12,468.59
2-1-20
12,873.81
8-1-20
13,292.21
2-1-21
13,724.21
8-1-21
14,170.25
2-1-22
14,630.78
8-1-22
15,106.28
2-1-23
15 597.23
8-1-23
16,104.15
2-1-24
16,627.33
8-1-24
17,167.92
2-1-25
17,725.88
8-1-25
18,301.97
2-1-26
18,896.79
8-1-26
19 510.93
2-1-27
20,145.04
8-1-27
20,799.75
2-1-28
21,475.74
8-1-28
22,173.71
2-1-29
22,894.35
8-1-29
23,638.42
Schedule I
to EXHIBIT D - Disclosure Statement
EXHIBIT E
BONDHOLDER'S INSTRUCTIONS
$3,725,000
City of Fayetteville, Arkansas
Tax Increment Interest Accretion Bonds
(Highway 71 East Square Development District No. I Project)
Series 2005
To: Bank OZK ("Tender Agent") Date:
ATTN: Sheila Mayden
P.O. Box 8811
Little Rock, Arkansas 72231-8811
Email: sheila.mayden@ozk.com
Fax: 501.978.2237
THIS INVITATION WILL EXPIRE AT 5:00 P.M. CENTRAL TIME
ON DECEMBER 20, 2019.
The undersigned represents and warrants that it is the beneficial owner of, the duly authorized
officer of the beneficial owner of, or the authorized agent for the beneficial owner of the principal amount
of the Bonds identified below.
The undersigned does hereby acknowledge receipt of the Notice to Bondholders and Invitation to
Tender Bonds dated December 9, 2019 (the "Notice") in connection with the Invitation to Bondholders to
sell for cash outstanding Bonds at the Purchase Price less than the Accreted Value chosen by individual
Bondholders.
The undersigned hereby instructs the Tender Agent that the undersigned is offering to sell the par
amount of its Bonds identified below at the purchase prices set forth below. The undersigned hereby
acknowledges that its offer must be made in accordance with, and are subject to the terms and conditions
of the Invitation, and hereby agrees that it will abide by the terms of the Invitation.
The undersigned acknowledges and agrees that it is the undersigned's sole obligation to
convert the Bonds offered hereunder to direct registered bonds prior to the Record Date (January
15, 20201 and select a safekeeping agent of the undersigned's choice. Offered Bonds not converted
prior to the Record Date cannot be selected for purchase by the Tender Agent and will be eligible
for redemption in accordance with the terms of the Indenture. Undersigned may contact Butch
Lomax with Crews & Associates, Inc. at (501) 978-7915 for Crews & Associates, Inc. to act as
safekeeping agent of the undersigned's Bonds at no cost to the undersigned.
The terms of the undersigned's offer are as follows:
CUSIP Number of
Offered Bonds
Par Amount of Offered
Bonds
Total Purchase Price
of Offered Bonds
Purchase Price per
$5,000 of Principal
312684 AA 1
$
$
$
312684 AA 1
$
$
$
312684 AA 1
$
$
$
312684 AA l
$
$
$
Page 1
of Bondholder's Instructions
I understand that the Tender Agent will purchase Offered Bonds in order from the lowest purchase
price to the highest purchase price to the extent of available Tax Increment allocated to the Offered
Bonds.
I HEREBY ACKNOWLEDGE THAT PURCHASE OF MY OFFERED BONDS BY THE TENDER
AGENT ON BEHALF OF THE ISSUER IS CONDITIONED UPON THE FOLLOWING
AGREEMENT, WHICH I HEREBY MAKE BY MY SIGNATURE BELOW:
BY TENDERING THE PRINCIPAL AMOUNT OF MY BONDS REFERENCED
ABOVE FOR PURCHASE, AND UPON THE CONSUMMATION OF THE
PURCHASE THEREOF, I MAY BE SELLING BONDS FOR LESS THAN THE
REDEMPTION PRICE THEREOF, AND I FORGIVE AND RELEASE ALL PARTIES
FROM ALL LIABILITIES OF ANY SORT WITH RESPECT TO THE BONDS SO
OFFERED AND PURCHASED.
Please complete the information below with the contact information for the person the Tender Agent will
need to contact to arrange for the tender:
Name:
Phone Number:
Email:
Please provide the name and contact information for the safekeeping agent selected by Beneficial
Owner.
Beneficial Holder's Safekeeping Agent:
Phone Number:
IT IS HEREBY AUTHORIZED AND AGREED:
(Print Beneficial Holder Name)
(Signature of Person Authorized to Sign
on Behalf of Beneficial Holder)
Title:
Phone:
These Bonds are held under DTC Participant #:
through the Depository Trust Company.
Email:
Date:
[Name]
Page 2
of Bondholder's Instructions