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HomeMy WebLinkAboutOrdinance 5803113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 Ordinance: 5803 File Number: 2015-0433 CITY SALES AND USE TAX BONDS: AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF THE CITY'S SALES AND USE TAX CAPITAL IMPROVEMENT BONDS, SERIES 2015, FOR THE PURPOSE OF FINANCING A PORTION OF THE COSTS OF CERTAIN STREET IMPROVEMENTS; AUTHORIZING THE EXECUTION AND DELIVERY OF A FOURTH SUPPLEMENTAL TRUST INDENTURE PURSUANT TO WHICH THE BONDS WILL BE ISSUED AND SECURED; AUTHORIZING THE EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT PURSUANT TO WHICH THE BONDS WILL BE OFFERED; AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND PURCHASE AGREEMENT PROVIDING FOR THE SALE OF THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF A CONTINUING DISCLOSURE AGREEMENT; AND PRESCRIBING OTHER MATTERS RELATING THERETO WHEREAS, the City Council of the City of Fayetteville, Arkansas (the "City") has previously determined that there is a great need for a source of revenue to finance the costs of various street improvements within the City (the "2015 Project"); and WHEREAS, the City is authorized and empowered under the provisions of the Constitution and laws of the State of Arkansas, including particularly Amendment 62 to the Constitution of the State of Arkansas ("Amendment 62") and Arkansas Code Annotated (1998 Repl. & 2013 Supp.) Sections 14-164-301 et seq. (as from time to time amended, the "Local Government Bond Act"), to issue and sell its capital improvement bonds to finance the costs of various capital improvements such as those comprising the 2015 Project, which capital improvement bonds may be secured by and payable from the receipts of the special city-wide sales and use tax authorized by the Local Government Bond Act; and WHEREAS, pursuant to the provisions of Ordinance No. 4891 of the City, adopted and approved on June 20, 2006 (the "Election Ordinance"), there was submitted to the qualified electors of the City four questions regarding the issuance of an aggregate of not to exceed$] 10,000,000 in principal amount of capital improvement bonds pursuant to Amendment 62 and the Local Government Bond Act to finance the capital improvements described in the Election Ordinance, said bonds to be secured by a pledge of and lien upon Page 1 Printed on 1017115 Ordinance 5803 (i) all of the receipts of a special city-wide sales and use tax levied at, the rate of one-quarter of one percent (0.25%) pursuant to the Local Government Bond Act (the "0.25% Sales and Use Tax") and (ii) all of the receipts of a special city-wide sales and use tax levied at the rate of three-quarters of one percent (0.75%) pursuant to the Local Government Bond Act (the "0.75% Sales and Use Tax"); and WHEREAS, at a special election held September 12, 2006, a majority of the qualified electors of the City voting on the questions approved the issuance of capital improvement bonds in the principal amounts and for each of the specific purposes set forth on the ballot (and the corresponding levy of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax, and the pledge of the receipts thereof to the payment of the capital improvement bonds); and WHEREAS, as authorized under the provisions of Amendment 62 and the Local Government Bond Act and as approved by the qualified electors of the City, the City has now determined to issue and sell its Sales and Use Tax Capital Improvement Bonds, Series 2015, in the aggregate principal amount of $9,000,000 (the "Bonds"), in order to provide for the funding of the 2015 Project; and WHEREAS, as authorized by the provisions of the Election Ordinance, the City has previously made arrangements for the sale of the Bonds to Stephens Inc., Fayetteville, Arkansas (the "Underwriter"), pursuant to the terms of a Bond Purchase Agreement between the City and the Underwriter (the "Bond Purchase Agreement") in substantially the form presented to and before this meeting; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. Under the authority of the Constitution and laws of the State of Arkansas, including particularly Amendment 62 to the Constitution of the State of Arkansas and the Local Government Bond Act, there is hereby authorized the issuance of bonds of the City to be designated as "Sales and Use Tax Capital Improvement Bonds, Series 2015" (the `Bonds"). The Bonds shall be issued in the original aggregate principal amount of Nine Million Dollars ($9,000,000) and shall mature not later than November 1, 2025, in the principal amounts and bearing interest at the rates specified in the Bond Purchase Agreement. The entire aggregate principal amount of the Bonds hereby authorized shall be deemed to apply to the Street Project described in Question 3 of the ballot. The average yield on the Bonds as a whole shall not exceed 3.50%. The proceeds of the Bonds will be utilized to finance the costs of the 2015 Project, to establish a debt service reserve for the Bonds or to purchase a surety bond or debt service reserve insurance policy for reserve purposes, if deemed economically beneficial, to pay a premium for bond insurance, if deemed economically beneficial, and to pay printing, underwriting, legal and other expenses incidental to the issuance of the Bonds. The Bonds shall be issued in the form and denominations, shall be dated, shall be numbered, shall mature, shall be subject to redemption prior to maturity, and shall contain such other terms, covenants and conditions, all as set forth in the Fourth Supplemental Trust Indenture submitted to this meeting. Page 2 Printed on 100/15 Ordinance 5803 The Mayor is hereby authorized and directed to execute and deliver the Bonds in one or more series, each series to be in substantially the form thereof contained in the Fourth Supplemental Trust Indenture submitted to this meeting, and the City Clerk is hereby authorized and directed to execute and deliver the Bonds and to affix the seal of the City thereto, and the Mayor and City Clerk are hereby authorized and directed to cause the Bonds to be accepted and authenticated by the Trustee. The Mayor is hereby authorized to confer with the Trustee, the Underwriter and Kutak Rock LLP, Little Rock, Arkansas ("Bond Counsel"), in order to complete the Bonds in substantially the form contained in the Fourth Supplemental Trust Indenture submitted to this meeting, with such changes as shall be approved by such persons executing the Bonds, their execution to constitute conclusive evidence of such approval. Section 2. In order to pay the principal of and interest on the Bonds as they mature or are called for redemption prior to maturity, there is hereby pledged all of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax levied by the Election Ordinance. Such pledge securing the Bonds shall be made on a parity basis with the existing pledge of such receipts in favor of the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), the City's $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and the City's $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). The levy and collection of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax shall commence on the dates provided in the Local Government Bond Act and shall continue until such time as the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Bonds are no longer outstanding or sufficient funds are on deposit with the Trustee to redeem the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Bonds in full. The City covenants and agrees that all receipts from the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax will be accounted for separately as special funds on the books of the City, and receipts of said 0.25% Sales and Use Tax and 0.75% Sales and Use Tax will be deposited and will be used solely as provided in the Trust Indenture (as defined below). Section 3. To prescribe the terms and conditions upon which the Bonds are to be executed, authenticated, issued, accepted, held and secured, the Mayor is hereby authorized and directed to execute and acknowledge a Fourth Supplemental Trust Indenture (the "Fourth Supplemental Trust Indenture"), by and between the City and Simmons First Trust Company, N.A., Pine Bluff, Arkansas (the "Trustee"), and the City Clerk is hereby authorized and directed to execute and acknowledge the Fourth Supplemental Trust Indenture and to affix the seal of the City thereto, and the Mayor and the City Clerk are hereby authorized and directed to cause the Fourth Supplemental Trust Indenture to be accepted, executed and acknowledged by the Trustee. The Fourth Supplemental Trust Indenture supplements and amends a Trust Indenture dated as of November 1, 2006, as previously amended by a First Supplemental Trust Indenture dated as of October 1, 2007, a Second Supplemental Trust Indenture dated as of November 1, 2009, and a Third Supplemental Trust Indenture dated as of November I, 2013, each by and between the City and the Trustee (the "Original Indenture," and collectively with the Fourth Supplemental Trust Indenture, the "Trust Indenture"). The Fourth Supplemental Trust Indenture is hereby approved in substantially the form submitted to this meeting, including, without limitation, the provisions thereof pertaining to the pledge of 0.25% Sales and Use Tax Page 3 Printed on 1017115 Ordinance 5803 receipts and 0.75% Sales and Use Tax receipts and the terms of the Bonds. The Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Fourth Supplemental Trust Indenture in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Fourth Supplemental Trust Indenture, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Fourth Supplemental Trust Indenture in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 4. There is hereby authorized and approved a Preliminary Official Statement of the City, including the cover page and appendices attached thereto, relating to the Bonds. The Preliminary Official Statement is hereby "deemed final" by the City within the meaning of U.S. Securities and Exchange Commission Rule 15c2-12. The distribution of the Preliminary Official Statement is hereby approved. The Preliminary Official Statement, as amended to conform to the terms of the Bond Purchase Agreement, including Exhibit A thereto, and with such other changes and amendments as are mutually agreed to by the City and the Underwriter, is herein referred to as the "Official Statement," and the Mayor is hereby authorized to execute the Official Statement for and on behalf of the City. The Official Statement is hereby approved in substantially the form of the Preliminary Official Statement submitted to this meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Official Statement in substantially the form of the Preliminary Official Statement submitted to this meeting, with such changes as shall be approved by such persons, the Mayor's execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Preliminary Official Statement is on file with the City Clerk and is available for inspection by any interested person.) Section 5. In order to prescribe the terms and conditions upon which the Bonds are to be sold to the Underwriter, the Mayor is hereby authorized and directed to execute a Bond Purchase Agreement on behalf of the City, to be dated as of the date of its execution (the "Bond Purchase Agreement"), by and between the City and the Underwriter, and the Bond Purchase Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Underwriter and Bond Counsel in order to complete the Bond Purchase Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Bond Purchase Agreement, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Bond Purchase Agreement in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 6. In order to provide for continuing disclosure of certain financial and operating information with respect to the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax in compliance with the provisions of Rule 15c2-12 of the U. S. Securities and Exchange Commission, the Mayor is hereby authorized and directed to execute a Continuing Disclosure Agreement to be dated as of the date of its execution (the "Continuing Disclosure Agreement"), by and between the City and the Trustee, and the Mayor is hereby Page 4 Printed on 0017115 Ordinance 5803 authorized and directed to cause the Continuing Disclosure Agreement to be executed by the Trustee. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Continuing Disclosure Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Continuing Disclosure Agreement, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Continuing Disclosure Agreement in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 7. The Trust Indenture requires that a debt service reserve be funded in conjunction with the issuance of the Bonds' The Underwriter has proposed that the City consider the purchase of a surety bond or a debt service reserve insurance policy with a portion of the proceeds of the Bonds in order to fulfill such requirement. If deemed economically advantageous by the Mayor, upon the advice of the Underwriter, the Mayor is hereby authorized to execute an insurance commitment and to do any and all things necessary to accomplish the delivery of a surety bond or a debt service reserve insurance policy with respect to the Bonds. Section 8. In order to secure lower interest rates on the Bonds, the Underwriter has proposed that the City consider the purchase of a policy of bond insurance with a portion of the proceeds of the Bonds, which policy would guarantee the payment of the principal of and interest on the Bonds when due. If deemed economically advantageous by the Mayor, upon the advice of the Underwriter, the Mayor is hereby authorized to execute an insurance commitment and to do any and all things necessary to accomplish the delivery of a bond insurance policy with respect to the Bonds. Section 9. The Mayor and City Clerk, for and on behalf of the City, are hereby authorized and directed to do any and all things necessary to effect the issuance, sale, execution and delivery of the Bonds and to effect the execution and delivery of the Fourth Supplemental Trust Indenture, the Bond Purchase Agreement, the Official Statement, the Continuing Disclosure Agreement and a Tax Regulatory Agreement relating to the tax exemption of interest on the Bonds, and to perform all of the obligations of the City under and pursuant thereto. The Mayor and the City Clerk are further authorized and directed, for and on behalf of the City, to execute all papers, documents, certificates and other instruments that may be required for the carrying out of such authority or to evidence the exercise thereof. Section 10. As previously provided in the Election Ordinance, Kutak Rock LLP, Little Rock, Arkansas, is hereby confirmed as Bond Counsel on behalf of the City in connection with the issuance and sale of the Bonds. Section 11. The provisions of this Ordinance are hereby declared to be severable, and if any section, phrase or provision shall for any reason be declared to be illegal or invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions of this Ordinance.' Page 6 Printed on 10/7/15 Ordinance 5803 Section 12. All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. PASSED and APPROVED on 10/6/2015 Attest: i Sondra E. Smith, City Clerk Treasurer e, : FAYETTEVILLE *-"= �y� 9 5 •� ,s .;QkA NSP. Jap` Page 6 Printed on 10!//15 City of Fayetteville, Arkansas 113 West Mountain Street Fayetteville, AR 72701 m (479) 575-8323 Text File File Number: 2015-0433 Agenda Date: 10/6/2015 Version: 1 Status: Passed In Control: City Council Meeting File Type: Ordinance Agenda Number: C. 6 CITY SALES AND USE TAX BONDS: AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF THE CITY'S SALES AND USE TAX CAPITAL IMPROVEMENT BONDS, SERIES 2015, FOR THE PURPOSE OF FINANCING A PORTION OF THE COSTS OF CERTAIN STREET IMPROVEMENTS; AUTHORIZING THE EXECUTION AND DELIVERY OF A FOURTH SUPPLEMENTAL TRUST INDENTURE PURSUANT TO WHICH THE BONDS WILL BE ISSUED AND SECURED; AUTHORIZING THE EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT PURSUANT TO WHICH THE BONDS WILL BE OFFERED; AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND PURCHASE AGREEMENT PROVIDING FOR THE SALE OF THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF A CONTINUING DISCLOSURE AGREEMENT; AND PRESCRIBING OTHER MATTERS RELATING THERETO WHEREAS, the City Council of the City of Fayetteville, Arkansas (the "City") has previously determined that there is a great need for a source of revenue to finance the costs of various street improvements within the City (the "2015 Project"); and WHEREAS, the City is authorized and empowered under the provisions of the Constitution and laws of the State of Arkansas, including particularly Amendment 62 to the Constitution of the State of Arkansas ("Amendment 62") and Arkansas Code Annotated (1998 Repl. & 2013 Supp.) Sections 14-164-301 et seq. (as from time to time amended, the "Local Government Bond Act"), to issue and sell its capital improvement bonds to finance the costs of various capital improvements such as those comprising the 2015 Project, which capital improvement bonds may be secured by and payable from the receipts of the special city-wide sales and use tax authorized by the Local Government Bond Act; and WHEREAS, pursuant to the provisions of Ordinance No. 4891 of the City, adopted and approved on June 20, 2006 (the "Election Ordinance"), there was submitted to the qualified electors of the City four questions regarding the issuance of an aggregate of not to exceed $110,000,000 in principal amount of capital improvement bonds pursuant to Amendment 62 and the Local Government Bond Act to finance the capital improvements described in the Election Ordinance, said bonds to be secured by a pledge of and lien upon (i) all of the receipts of a special city-wide sales and use tax levied at the rate of one-quarter of one percent (0.25%) pursuant to the Local Government Bond Act (the "0.25% Sales and Use Ta)") and (ii) all of the receipts of a special city-wide sales and use tax levied at the rate of three-quarters of one percent (0.75%) pursuant to the Local Government Bond Act (the "0.75% Sales and Use Tax"); and WHEREAS, at a special election held September 12, 2006, a majority of the qualified electors of the City of Fayetteville, Arkansas Page 1 Printed on 1017/2015 File Number. 20160433 City voting on the questions approved the issuance of capital improvement bonds in the principal amounts and for each of the specific purposes set forth on the ballot (and the corresponding levy of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax, and the pledge of the receipts thereof to the payment of the capital improvement bonds); and WHEREAS, as authorized under the provisions of Amendment 62 and the Local Government Bond Act and as approved by the qualified electors of the City, the City has now determined to issue and sell its Sales and Use Tax Capital Improvement Bonds, Series 2015, in the aggregate principal amount of $9,000,000 (the "Bonds"), in order to provide for the funding of the 2015 Project; and WHEREAS, as authorized by the provisions of the Election Ordinance, the City has previously made arrangements for the sale of the Bonds to Stephens Inc., Fayetteville, Arkansas (the "Underwriter"), pursuant to the terms of a Bond Purchase Agreement between the City and the Underwriter (the "Bond Purchase Agreement') in substantially the form presented to and before this meeting; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE,ARKANSAS: Section 1. Under the authority of the Constitution and laws of the State of Arkansas, including particularly Amendment 62 to the Constitution of the State of Arkansas and the Local Government Bond Act, there is hereby authorized the issuance of bonds of the City to be designated as "Sales and Use Tax Capital Improvement Bonds, Series 2015" (the "Bonds"). The Bonds shall be issued in the original aggregate principal amount of Nine Million Dollars ($9,000,000) and shall mature not later than November 1, 2025, in the principal amounts and bearing interest at the rates specified in the Bond Purchase Agreement. The entire aggregate principal amount of the Bonds hereby authorized shall be deemed to apply to the Street Project described in Question 3 of the ballot. The average yield on the Bonds as a whole shall not exceed 3.50%. The proceeds of the Bonds will be utilized to finance the costs of the 2015 Project, to establish a debt service reserve for the Bonds or to purchase a surety bond or debt service reserve insurance policy for reserve purposes, if deemed economically beneficial, to pay a premium for bond insurance, if deemed economically beneficial, and to pay printing, underwriting, legal and other expenses incidental to the issuance of the Bonds. The Bonds shall be issued in the form and denominations, shall be dated, shall be numbered, shall mature, shall be subject to redemption prior to maturity, and shall contain such other terms, covenants and conditions, all as set forth in the Fourth Supplemental Trust Indenture submitted to this meeting. The Mayor is hereby authorized and directed to execute and deliver the Bonds in one or more series, each series to be in substantially the form thereof contained in the Fourth Supplemental Trust Indenture submitted to this meeting, and the City Clerk is hereby authorized and directed to execute and deliver the Bonds and to affix the seal of the City thereto, and the Mayor and City Clerk are hereby authorized and directed to cause the Bonds to be accepted and authenticated by the Trustee. The Mayor is hereby authorized to confer with the Trustee, the Underwriter and Kutak Rock LLP; Little Rock, Arkansas ("Bond Counsel"), in order to complete the Bonds in substantially the form contained in the Fourth Supplemental Trust Indenture submitted to this meeting, with such changes as shall be approved by such persons executing the Bonds, their execution to constitute conclusive evidence of such approval. Section 2. In order to pay the principal of and interest on the Bonds as they mature or are called for City of Fayetteville, Arkansas Page 2 Printed on 10172015 File Number 2015-0433 redemption prior to maturity, there is hereby pledged all of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax levied by the Election Ordinance. Such pledge securing the Bonds shall be made on a parity basis with the existing pledge of such receipts in favor of the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), the City's $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and the City's $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). The levy and collection of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax shall commence on the dates provided in the Local Government Bond Act and shall continue until such time as the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Bonds are no longer outstanding or sufficient funds are on deposit with the Trustee to redeem the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Bonds in full. The City covenants and agrees that all receipts from the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax will be accounted for separately as special funds on the books of the City, and receipts of said 0.25% Sales and Use Tax and 0.75% Sales and Use Tax will be deposited and will be used solely as provided in the Trust Indenture (as defined below). Section 3. To prescribe the terms and conditions upon which the Bonds are to be executed, authenticated, issued, accepted, held and secured, the Mayor is hereby authorized and directed to execute and acknowledge a Fourth Supplemental Trust Indenture (the "Fourth Supplemental Trust Indenture"), by and between the City and Simmons First Trust Company, N.A., Pine Bluff, Arkansas (the "Trustee"), and the City Clerk is hereby authorized and directed to execute and acknowledge the Fourth Supplemental Trust Indenture and to affix the seal of the City thereto, and the Mayor and the City Clerk are hereby authorized and directed to cause the Fourth Supplemental Trust Indenture to be accepted, executed and acknowledged by the Trustee. The Fourth Supplemental Trust Indenture supplements and amends a Trust Indenture dated as of November 1, 2006, as previously amended by a First Supplemental Trust Indenture dated as of October I, 2007, a Second Supplemental Trust Indenture dated as of November 1, 2009, and a Third Supplemental Trust Indenture dated as of November 1, 2013, each by and between the City and the Trustee (the "Original Indenture," and collectively with the Fourth Supplemental Trust Indenture, the "Trust Indenture"). The Fourth Supplemental Trust Indenture is hereby approved in substantially the form submitted to this meeting, including, without limitation, the provisions thereof pertaining to the pledge of 0.25% Sales and Use Tax receipts and 0.75% Sales and Use Tax receipts and the terms of the Bonds. The Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Fourth Supplemental Trust Indenture in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Fourth Supplemental Trust Indenture, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Fourth Supplemental Trust Indenture in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 4. There is hereby authorized and approved a Preliminary Official Statement of the City, including the cover page and appendices attached thereto, relating to the Bonds. The Preliminary Official Statement is hereby "deemed final" by the City within the meaning of U.S. Securities and Exchange Commission Rule 15c2-12. The distribution of the Preliminary Official Statement is hereby City of Fayetteville, Arkansas Page 3 Printed on 10/712015 File Number: 2015-0433 approved. The Preliminary Official Statement, as amended to conform to the terms of. the Bond Purchase Agreement, including Exhibit A thereto, and with such other changes and amendments as are mutually agreed to by the City and the Underwriter, is herein referred to as the "Official Statement," and the Mayor is hereby authorized to execute the Official Statement for and on behalf of the City. The Official Statement is hereby approved in substantially the form of the Preliminary Official Statement submitted to this meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Official Statement in substantially the form of the Preliminary Official Statement submitted to this meeting, with such changes as shall be approved by such persons, the Mayor's execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Preliminary Official Statement is on file with the City Clerk and is available for inspection by any interested person.) Section 5. In order to prescribe the terms and conditions upon which the Bonds are to be sold to the Underwriter, the Mayor is hereby authorized and directed to execute a Bond Purchase Agreement on behalf of the City, to be dated as of the date of its execution (the "Bond Purchase Agreement"), by and between the City and the Underwriter, and the Bond Purchase Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Underwriter and Bond Counsel in order to complete the Bond Purchase Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Bond Purchase Agreement, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Bond Purchase Agreement in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 6. In order to provide for continuing disclosure of certain financial and operating information with respect to the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax in compliance with the provisions of Rule 15c2-12 of the U. S. Securities and Exchange Commission, the Mayor is hereby authorized and directed to execute a Continuing Disclosure Agreement to be dated as of the date of its execution (the "Continuing Disclosure Agreement"), by and between the City and the Trustee, and the Mayor is hereby authorized and directed to cause the Continuing Disclosure Agreement to be executed by the Trustee. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Continuing Disclosure Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Continuing Disclosure Agreement, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Continuing Disclosure Agreement in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 7. The Trust Indenture requires that a debt service reserve be funded in conjunction with the issuance of the Bonds' The Underwriter has proposed that the City consider the purchase of a surety bond or a debt service reserve insurance policy with a portion of the proceeds of the Bonds in order to fulfill such requirement. If deemed economically advantageous by the Mayor, upon the advice of the Underwriter, the Mayor is hereby authorized to execute an insurance commitment and to do any and all City of FayeHewfle, Arkansas Page 4 Printed on 10!//2015 File Number: 2015-0433 things necessary to accomplish the delivery of a surety bond or a debt service reserve insurance policy with respect to the Bonds. Section 8. In order to secure lower interest rates on the Bonds, the Underwriter has proposed that the City consider the purchase of a policy of bond insurance with a portion of the proceeds of the Bonds, which policy would guarantee the payment of the principal of and interest on the Bonds when due. If deemed economically advantageous by the Mayor, upon the advice of the Underwriter, the Mayor is hereby authorized to execute an insurance commitment and to do any and all things necessary to accomplish the delivery of a bond insurance policy with respect to the Bonds. Section 9. The Mayor and City Clerk, for and on behalf of the City, are hereby authorized and directed to do any and all things necessary to effect the issuance, sale, execution and delivery of the Bonds and to effect the execution and delivery of the Fourth Supplemental Trust Indenture, the Bond Purchase Agreement, the Official Statement, the Continuing Disclosure Agreement and a Tax Regulatory Agreement relating to the tax exemption of interest on the Bonds, and to perform all of the obligations of the City under and pursuant thereto. The Mayor and the City Clerk are further authorized and directed, for and on behalf of the City, to execute all papers, documents, certificates and other instruments that may be required for the carrying out of such authority or to evidence the exercise thereof. Section 10. As previously provided in the Election Ordinance, Kutak Rock LLP, Little Rock, Arkansas, is hereby confirmed as Bond Counsel on behalf of the City in connection with the issuance and sale of the Bonds. Section IL The provisions of this Ordinance are hereby declared to be severable, and if any section, phrase or provision shall for any reason be declared to be illegal or invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions of this Ordinance.' Section 12. All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. City of Fayetteville, Arkansas Page 5 Printed on 10/7/2015 City of Fayetteville Staff Review Form 2015-0433 Legistar File ID 10/6/2015 City Council Meeting Date - Agenda Item Only N/A for Non -Agenda Item Marsha Hertweck 9/16/2015 Accounting & Audit / Finance & Internal Services Department Submitted By Submitted Date Division / Department Action Recommendation: Approval of an Ordinance authorizing the issuance and sale of the City's Sales and Use Tax Capital Improveniem Bonds, Series 2015 in the amount of approximately $9,000,000 for the purpose of financing a portion of certain street improvements. Account Number Project Number Budgeted Item? No Does item have a cost? No Budget Adjustment Attached? NA Budget Impact: Current Budget Funds Obligated Current Balance Item Cost Budget Adjustment Remaining Budget Fund Project Title O V20140710 Previous Ordinance or Resolution # Original Contract Number: Comments: ApprovalD. R�W. CITY OF aYe PIT le / ARKANSAS MEETING OF OCTOBER 6, 2015 TO: Mayor and City Council FROM: Paul Becker, Finance Director DATE: September 18, 2015 CITY COUNCIL AGENDA MEMO SUBJECT: Issuance of City Sales and Use Tax Bonds in the amount of approximately $9,000,000 PROPOSAL: On September 12, 2006 the voters of Fayetteville approved the issuance of up to $110,000,000 worth of sales tax bonds for -the following projects: WSIP - $42,000,000 Street Project - $65,900,000 Trails Project - $2,100,000 Subsequent to that referendum the City issued sales tax bonds in 2006, 2007, 2009 and 2013 as follows: WSIP — $39,340,000 Street Project - $56,900,000 Trails Project - $2,100,000 This bond issue, if approved, is expected to generate approximately $9,000,000 for the completion of the Street Bond Project which was approved by the voters in 2006. RECOMMENDATION: Staff recommends approval of an ordinance requesting the council to approve the issuance of up to $9,000,000 worth of sales tax bonds for the Street Programs. BUDGET/STAFF IMPACT: The approval of this ordinance will provide funds for continued work on the Street Bond Project. Mailing Address: 113 W. Mountain Street www.fayetteville-ar.gov Fayetteville, AR 72701 KUTAK ROCK LLP DRAFT 09/14/15 ORDINANCE NO. AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF THE CITY'S SALES AND USE TAX CAPITAL IMPROVEMENT BONDS, SERIES 2015, FOR THE PURPOSE OF FINANCING A PORTION OF THE COSTS OF CERTAIN STREET IMPROVEMENTS; AUTHORIZING THE EXECUTION AND DELIVERY OF A FOURTH SUPPLEMENTAL TRUST INDENTURE PURSUANT TO WHICH THE BONDS WILL BE ISSUED AND SECURED; AUTHORIZING THE EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT PURSUANT TO WHICH THE BONDS WILL BE OFFERED; AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND PURCHASE AGREEMENT PROVIDING FOR THE SALE OF THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF A CONTINUING DISCLOSURE AGREEMENT; AND PRESCRIBING OTHER MATTERS RELATING THERETO. WHEREAS, the City Council of the City of Fayetteville, Arkansas (the "City") has previously determined that there is a great need for a source of revenue to finance the costs of various street improvements within the City (the "2015 Project"); and WHEREAS, the City is authorized and empowered under the provisions of the Constitution and laws of the State of Arkansas, including particularly Amendment 62 to the Constitution of the State of Arkansas ("Amendment 62") and Arkansas Code Annotated (1998 Repl. & 2013 Supp.) Sections 14-164-301 et seq. (as from time to time amended, the "Local Government Bond Act"), to issue and sell its capital improvement bonds to finance the costs of various capital improvements such as those comprising the 2015 Project, which capital improvement bonds may be secured by and payable from the receipts of the special city-wide sales and use tax authorized by the Local Government Bond Act; and WHEREAS, pursuant to the provisions of Ordinance No. 4891 of the City, adopted and approved on June 20, 2006 (the "Election Ordinance"), there was submitted to the qualified electors of the City four questions regarding the issuance of an aggregate of not to exceed $110,000,000 in principal amount of capital improvement bonds pursuant to Amendment 62 and the Local Government Bond Act to finance the capital improvements described in the Election Ordinance, said bonds to be secured by a pledge of and lien upon (i) all of the receipts of a special city-wide sales and use tax levied at the rate of one-quarter of one percent (0.25%) pursuant to the Local Government Bond Act (the "0.25% Sales and Use Tax") and (ii) all of the receipts of a special city-wide sales and use tax levied at the rate of three-quarters of one percent (0.75%) pursuant to the Local Government Bond Act (the "0.75% Sales and Use Tax"); and WHEREAS, at a special election held September 12, 2006, a majority of the qualified electors of the City voting on the questions approved the issuance of capital improvement bonds in the principal amounts and for each of the specific purposes set forth on the ballot (and the corresponding levy of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax, and the pledge of the receipts thereof to the payment of the capital improvement bonds); and 4813-1697-9494.2 WHEREAS, as authorized under the provisions of Amendment 62 and the Local Government Bond Act and as approved by the qualified electors of the City, the City has now determined to issue and sell its Sales and Use Tax Capital Improvement Bonds, Series 2015, in the aggregate principal amount of $9,000,000 (the "Bonds"), in order to provide for the funding of the 2015 Project; and WHEREAS, as authorized by the provisions of the Election Ordinance, the City has previously made arrangements for the sale of the Bonds to Stephens Inc., Fayetteville, Arkansas (the "Underwriter"), pursuant to the terms of a Bond Purchase Agreement between the City and the Underwriter (the "Bond Purchase Agreement') in substantially the form presented to and before this meeting; NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Fayetteville, Arkansas that: Section 1. Under the authority of the Constitution and laws of the State of Arkansas, including particularly Amendment 62 to the Constitution of the State of Arkansas and the Local Government Bond Act, there is hereby authorized the issuance of bonds of the City to be designated as "Sales and Use Tax Capital Improvement Bonds, Series 2015" (the "Bonds"). The Bonds shall be issued in the original aggregate principal amount of Nine Million Dollars ($9,000,000) and shall mature not later than November 1, 2025, in the principal amounts and bearing interest at the rates specified in the Bond Purchase Agreement. The entire aggregate principal amount of the Bonds hereby authorized shall be deemed to apply to the Street Project described in Question 3 of the ballot. The average yield on the Bonds as a whole shall not exceed 3.S0%. The proceeds of the Bonds will be utilized to finance the costs of the 2015 Project, to establish a debt service reserve for the Bonds or to purchase a surety bond or debt service reserve insurance policy for reserve purposes, if deemed economically beneficial, to pay a premium for bond insurance, if deemed economically beneficial, and to pay printing, underwriting, legal and other expenses incidental to the issuance of the Bonds. The Bonds shall be issued in the form and denominations, shall be dated, shall be numbered, shall mature, shall be subject to redemption prior to maturity, and shall contain such other terms, covenants and conditions, all as set forth in the Fourth Supplemental Trust Indenture submitted to this meeting. The Mayor is hereby authorized and directed to execute and deliver the Bonds in one or more series, each series to be in substantially the form thereof contained in the Fourth Supplemental Trust Indenture submitted to this meeting, and the City Clerk is hereby authorized and directed to execute and deliver the Bonds and to affix the seal of the City thereto, and the Mayor and City Clerk are hereby authorized and directed to cause the Bonds to be accepted and authenticated by the Trustee. The Mayor is hereby authorized to confer with the Trustee, the Underwriter and Kutak Rock LLP, Little Rock, Arkansas ("Bond Counsel'), in order to complete the Bonds in substantially the form contained in the Fourth Supplemental Trust Indenture submitted to this meeting, with such changes as shall be approved by such persons executing the Bonds, their execution to constitute conclusive evidence of such approval. 2 4813-1697-9494.2 Section 2. In order to pay the principal of and interest on the Bonds as they mature or are called for redemption prior to maturity, there is hereby pledged all of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax levied by the Election Ordinance. Such pledge securing the Bonds shall be made on a parity basis with the existing pledge of such receipts in favor of the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), the City's $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and the City's $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). The levy and collection of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax shall commence on the dates provided in the Local Government Bond Act and shall continue until such time as the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Bonds are no longer outstanding or sufficient funds are on deposit with the Trustee to redeem the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Bonds in full. The City covenants and agrees that all receipts from the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax will be accounted for separately as special funds on the books of the City, and receipts of said 0.25% Sales and Use Tax and 0.75% Sales and Use Tax will be deposited and will be used solely as provided in the Trust Indenture (as defined below). Section 3. To prescribe the terms and conditions upon which the Bonds are to be executed, authenticated, issued, accepted, held and secured, the Mayor is hereby authorized and directed to execute and acknowledge a Fourth Supplemental Trust Indenture (the "Fourth Supplemental Trust Indenture"), by and between the City and Simmons First Trust Company, N.A., Pine Bluff, Arkansas (the "Trustee"), and the City Clerk is hereby authorized and directed to execute and acknowledge the Fourth Supplemental Trust Indenture and to affix the seal of the City thereto, and the Mayor and the City Clerk are hereby authorized and directed to cause the Fourth Supplemental Trust Indenture to be accepted, executed and acknowledged by the Trustee. The Fourth Supplemental Trust Indenture supplements and amends a Trust Indenture dated as of November 1, 2006, as previously amended by a First Supplemental Trust Indenture dated as of October 1, 2007, a Second Supplemental Trust Indenture dated as of November 1, 2009, and a Third Supplemental Trust Indenture dated as of November 1, 2013, each by and between the City and the Trustee (the "Original Indenture," and collectively with the Fourth Supplemental Trust Indenture, the "Trust Indenture"). The Fourth Supplemental Trust Indenture is hereby approved in substantially the form submitted to this meeting, including, without limitation, the provisions thereof pertaining to the pledge of 0.25% Sales and Use Tax receipts and 0.75% Sales and Use Tax receipts and the terms of the Bonds. The Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Fourth Supplemental Trust Indenture in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Fourth Supplemental Trust Indenture, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Fourth Supplemental Trust Indenture in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) 4813-1697-9494.2 Section 4. There is hereby authorized and approved a Preliminary Official Statement of the City, including the cover page and appendices attached thereto, relating to the Bonds. The Preliminary Official Statement is hereby "deemed final" by the City within the meaning of U.S. Securities and Exchange Commission Rule 15c2-12. The distribution of the Preliminary Official Statement is hereby approved. The Preliminary Official Statement, as amended to conform to the terms of the Bond Purchase Agreement, including Exhibit A thereto, and with such other changes and amendments as are mutually agreed to by the City and the Underwriter, is herein referred to as the "Official Statement," and the Mayor is hereby authorized to execute the Official Statement for and on behalf of the City. The Official Statement is hereby approved in substantially the form of the Preliminary Official Statement submitted to this meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Official Statement in substantially the form of the Preliminary Official Statement submitted to this meeting, with such changes as shall be approved by such persons, the Mayor's execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Preliminary Official Statement is on file with the City Clerk and is available for inspection by any interested person.) Section 5. In order to prescribe the terms and conditions upon which the Bonds are to be sold to the Underwriter, the Mayor is hereby authorized and directed to execute a Bond Purchase Agreement on behalf of the City, to be dated as of the date of its execution (the "Bond Purchase Agreement"), by and between the City and the Underwriter, and the Bond Purchase Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Underwriter and Bond Counsel in order to complete the Bond Purchase Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Bond Purchase Agreement, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Bond Purchase Agreement in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 6. In order to provide for continuing disclosure of certain financial and operating information with respect to the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax in compliance with the provisions of Rule 15c2-12 of the U. S. Securities and Exchange Commission, the Mayor is hereby authorized and directed to execute a Continuing Disclosure Agreement to be dated as of the date of its execution (the "Continuing Disclosure Agreement"), by and between the City and the Trustee, and the Mayor is hereby authorized and directed to cause the Continuing Disclosure Agreement to be executed by the Trustee. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Continuing Disclosure Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Continuing Disclosure Agreement, their execution to constitute conclusive evidence of such approval. 4 4813-1697-9494.2 (Advice is given that a copy of the Continuing Disclosure Agreement in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 7. The Trust Indenture requires that a debt service reserve be funded in conjunction with the issuance of the Bonds' The Underwriter has proposed that the City consider the purchase of a surety bond or a debt service reserve insurance policy with a portion of the proceeds of the Bonds in order to fulfill such requirement. If deemed economically advantageous by the Mayor, upon the advice of the Underwriter, the Mayor is hereby authorized to execute an insurance commitment and to do any and all things necessary to accomplish the delivery of a surety bond or a debt service reserve insurance policy with respect to the Bonds. Section 8. In order to secure lower interest rates on the Bonds, the Underwriter has proposed that the City consider the purchase of a policy of bond insurance with a portion of the proceeds of the Bonds, which policy would guarantee the payment of the principal of and interest on the Bonds when due. If deemed economically advantageous by the Mayor, upon the advice of the Underwriter, the Mayor is hereby authorized to execute an insurance commitment and to do any and all things necessary to accomplish the delivery of a bond insurance policy with respect to the Bonds. Section 9. The Mayor and City Clerk, for and on behalf of the City, are hereby authorized and directed to do any and all things necessary to effect the issuance, sale, execution and delivery of the Bonds and to effect the execution and delivery of the Fourth Supplemental Trust Indenture, the Bond Purchase Agreement, the Official Statement, the Continuing Disclosure Agreement and a Tax Regulatory Agreement relating to the tax exemption of interest on the Bonds, and to perform all of the obligations of the City under and pursuant thereto. The Mayor and the City Clerk are further authorized and directed, for and on behalf of the City, to execute all papers, documents, certificates and other instruments that may be required for the carrying out of such authority or to evidence the exercise thereof. Section 10. As previously provided in the Election Ordinance, Kutak Rock LLP, Little Rock, Arkansas, is hereby confirmed as Bond Counsel on behalf of the City in connection with the issuance and sale of the Bonds. Section 11. The provisions of this Ordinance are hereby declared to be severable, and if any section, phrase or provision shall for any reason be declared to be illegal or invalid, such declaration.shall not affect the validity of the remainder of the sections, phrases or provisions of this Ordinance.' 4813-1697.9494.2 Section 12. All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. ADOPTED AND APPROVED THIS DAY OF 2015. ATTEST: City Clerk (SEAL) APPROVED: 6 4813-1697-94942 Mayor 1a I I ,sl I. , I ,.I I i° "� ' i P,0. BOX '16C7. FAYETTEVILLE. AR, 72702 • 479-442-1700 • FAX: 479-69S-1118 • WWW.NWADG.COM AFFIDAVIT OF PUBLICATION I, Cathy Wiles, do solemnly swear that I am the Legal Clerk 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. 5803 Was inserted in the Northwest Arkansas Democrat Gazette on: October 15, 2015 Publication Charges: $ 836.57 W4�u Cathy Wiles Subscribed and sworn to before me This ZI day of Oct- , 2015. RECEIVED OCT 2 82015 CITYOCLEF y OFFICE SEE ATTACHED Notary Public v My Commission Expires: 712'Zf A` In rY Davis Arkanea; Waslxnpton County Notary Public - Commf 12694247 My Commission Expires Jul 2, 2025 **NOTE** Please do not pay from Affidavit. Invoice will be sent. ORDINANCE NO. ISM AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF THE CITY'S SALES aye ev le AND USE TAX CAPITAL IMPROVEMENT BONDS, SERIES 2015, FOR THE PURPOSE . OF FINANCING A PORTION OF THE COSTS OF CERTAIN STREET IMPROVEMENTS; AxnAesAs AUTHORIZING THE EXECUTION AND DELIVERY OF A FOURTH SUPPLEMENTAL TRUST INDENTURE PURSUANT TO WHICH THE BONDS WILL BE ISSUED AND SECURED; AUTHORIZING THE -EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT PURSUANT TO WHICH THE BONDS WILL BE OFFERED; AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND PURCHASE AGREEMENT PROVIDING FOR THE SALE OF THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF A CONTINUING DISCLOSURE AGREEMENT; 'ANDPRESCRIBING OTHER MATTERS RELATING THERETO. WHEREAS, the City Council of the City of Fayetteville, Arkansas (the "City') has previously determined that there is 'a great need for a source of revenue to finance the costs of'various street improvements within thwGity (the "2015 -.Project"); and - WHEREAS, the City is authorized and empowered under the provisions of the Constitution and laws of the State of 'Arkansas, including particularly Amendment 62 to theConstitutionof the State of Arkansas ("Amendment 62") and .Arkansas Code Annotated (1998 Repl. & 2013 Supp.) Sections 14-164301 at seq. (as from time to time amended, the -"Local Government Bond Act'), to issue and sell its capital improvement bons to finance the costs of various capital Improvements such as those comprising the 2015 Project, which capital improvement bonds may be secured by and payable from the receipts of the special city-wide sales and use tax authorized by the Local GovernmentBond Act; WHEREAS, pursuant to the provisions of Ordinance No. 4691 of the City, adopted and approved on June 20, 2006 (the "Election Ordinance"), there was submitted to the qualified electors of the City four questions regarding the issuance of an aggregate of not to exceed$110,000,000 in principal amount of capital improvement bonds pursuant to Amendment. 62 and the Local Government Bond Act to finance the capital improvements described in the Election Ordinance, said bonds to be secured by a pledge of and lien upon - !O all of the receipts of a special city-wide sales and use tax levied at the rate of one-quarter of one percent (0.25%) pursuant to the Local Government Bond Act (the "0.25°h Sales and Use Tari) and (ii) all of the receipts of a special city-wide sales and use tax levied at the rate of three-quarters of one percent (0.75%) pursuant to the Local Government '.Bond Act (the "0.75% Sales and Use Tax'); and WHEREAS, at a special election held September 12, 2006, a majority of the qualified electors of the City voting on the ;questions approved the issuance of capital improvement bonds in the principal amounts and for each of the specific :purposes set forth on the ballot (and the corresponding levy of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax, and the pledge of the receipts thereof to the payment of the capital improvement bonds); and `WHEREAS, as authorized under the provisions of Amendment 62 and the Local Government Bond Act and as approved by the qualified electors of the City, the City has now determined to Issue and sell its Sales and Use Tax Capital .Improvement Bonds, Series 2015, in the aggregate principal amount of $9,000,000 (the "Bonds'), in order to provide .for the funding of the 2015 Project; and -WHEREAS, as authorized by the provisions of the Election Ordinance, the City has previously made arrangements for the sale of the Bonds to Stephens Inc., Fayetteville, Arkansas (the "Underwriter'), pursuant to the terms of a Bond Purchase Agreement between the City and the Underwriter (the "Bond Purchase Agreement') in substantially the form presented to and before this meeting; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS - Section 1: Under the authority of the Constitution and laws of the State of Arkansas,including particularly Amendment '62 to the Constitution of the State of Arkansas and the Local Government Bond Act, there is hereby authorized the :.issuance of bonds of the City to be designated as "Sales and Use Tax Capital Improvement Bonds, Series 2015" (the ,"Bonds'). The Bonds shall be issued in the original aggregate principal amount of Nine Million Dollars ($9,000,000) and shall mature not later than November 1, 2025, in the principal amounts and bearing interest at the rates specified in the ' Bond Purchase Agreement. The entire aggregate principal amount of the Bonds hereby authorized shall be deemed Yo apply to the Street Project described in Question 3 of the ballot. The average yield on the Bonds as a whole shall not exceed 3.50%. The proceeds of the Bonds will be utilized to finance the costs of the 2015 Project, to establish a debt service reserve for the Bonds or to purchase a surety bond or debt "service reserve insurance policy for reserve purposes, if deemed economically beneficial, to pay a premium for bond ':insurance, if deemed economically beneficial, and to pay printing, underwriting, legal and other expenses incidental to the issuance of the Bonds. The Bonds shall be issued in the form and denominations, shall be dated, shall be numbered, shall mature, shall be subject to redemption prior to maturity, and shall contain such other terms, covenants and condi- tions, all as set forth in the Fourth Supplemental Trust Indenture submitted to this meeting. The Mayor is hereby authorized and directed to execute and deliver the Bonds in one or more series, each series to be vin substantially the form thereof contained in the Fourth Supplemental Trust Indenture submitted to this meeting, and the '.City Clerk is hereby authorized and directed to execute and deliver the Bonds and to affix the seal of the City thereto, +'and the Mayor and City Clerk are hereby authorized and directed to cause the Bonds to be accepted and authenticated ,by the Trustee. The Mayor is hereby authorized to confer with the Trustee, the Underwriter and Kutak Rock LLP, Little :Rock, Arkansas ("Bond Counsel'), in order to complete the Bonds in substantially the form contained in the Fourth "Supplemental Trust Indenture submitted to this meeting, with such changes as shall be approved by such persons executing the Bonds, their execution to constitute conclusive evidence of such approval. .Section 2: In order to pay the principal of and interest on the Bonds as they mature or are called for retlemption prior to maturity, there is hereby pledged all of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax levied by the Election Ordinance. Such pledge securing the Bonds shall be made on a parity basis with the existing =pledge of such receipts in favor of the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), the City's $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the t"Series 2007 Bonds'), the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series ,2009 Bonds'), and the City's $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds'). The levy and collection of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax shall commence ;on the dates provided in the Local Government Bond Act and shall continue until such time as the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Bonds are no longer outstanding or isufficient funds are on deposit with the Trustee to redeem the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Bonds in full. The City. covenants and agrees that all receipts from the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax will be accounted for separately as special funds on the books of the City, and receipts of said 0.25% Sales and Use Tax and 0.75% Sales and Use Tax will be deposited and will be used solely as provided in the Trust Indenture (as defined below). Section 3: To prescribe the terms and conditions upon which the Bonds are to be executed, authenticated, issued, .accepted, held and secured, the Mayor is hereby authorized and directed to execute and acknowledge a Fourth ' Supplemental Trust Indenture (the "Fourth Supplemental Trust Indenture"), by and between the City and Simmons First Trust Company, N.A., Pine Bluff, Arkansas (the "Trustee'), and the City Clerk is hereby authorized and directed to execute and acknowledge the Fourth Supplemental Trust Indenture and to affix the seal of the City thereto, and the Mayor and the City Clerk are hereby authorized and directed to cause the Fourth Supplemental Trust Indenture ,. to be accepted, executed and acknowledged by the Trustee. The Fourth Supplemental Trust Indenture supplements and amends a Trust Indenture dated as of November 1, 2006, as previously amended by a First Supplemental Trust Indenture dated as of October 1, 2007, a Second Supplemental Trust Indenture dated as of November 1, 2009, and a Third Supplemental Trust Indenture dated as of November 1, 2013, each by and between the City and the Trustee (the "Original Indenture," and collectively with the Fourth Supplemental Trust Indenture, the "Trust Indenture"). The Fourth Supplemental Trust Indenture is hereby approved in substantially the form submitted to this meeting, including, without limitation, the provisions thereof pertaining to the pledge of 0.25% Sales and Use Tax receipts and 0.75% Sales and Use - Tax receipts and the terms of the Bonds. The Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Fourth Supplemental Trust Indenture in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Fourth Supplemental Trust Indenture, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Fourth Supplemental Trust Indenture in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 4: There is hereby authorized and approved a Preliminary Official Statement of the City, including the cover ,page and appendices attached thereto, relating to the Bonds. The Preliminary Official Statement is hereby "deemed final" by the City within the meaning of U.S. Securities and Exchange Commission Rule 15c2-12. The distribution of the Preliminary Official Statement is hereby approved. The Preliminary Official Statement, as amended to conform to the terms of the Bond Purchase Agreement, including Exhibit A thereto, and with such other changes and amendments as are mutually agreed to by the City and the Underwriter, is herein referred to as the "Official Statement," and the Mayor is hereby authorized to execute the Official Statement for and on behalf of the City. The Official Statement is hereby approved in substantially the form of the Preliminary Official Statement submitted to this meeting, and the Mayor is here- by authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Official Statement in substantially the form of the Preliminary Official Statement submitted to this meeting, with such changes as shall be approved by such persons, the Mayor's execution to constitute conclusive evidence of such approval. .(Advice is given that a copy of the Preliminary Official Statement is on file with the City Clerk and is available for inspec- rtion by any interested person.) Section 5` In order to prescribe the terms and conditions upon which the Bonds are to be sold to the Underwriter, the Mayor is hereby authorized and directed to execute a Bond Purchase Agreement on behalf of the City, to be dated as of the date of its execution (the "Bond Purchase Agreement'), by and between the City and the Underwriter, and the Bond Purchase Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Underwriter and Bond Counsel in order to complete the Bond Purchase Agreement . in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Bond Purchase Agreement, their' execution to constitute conclusive evidence of such approval. ,(Advice is given that a copy of the Bond Purchase Agreement in substantially the form. authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) 'Section 6: In order to provide for continuing disclosure of certain financial and operating information with respect to the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax in compliance with the provisions of Rule 15c2-12 of the U. S. Securities and Exchange Commission, the Mayor is hereby authorized and directed to execute a Continuing Disclosure Agreement to be dated as of the date of its execution (the "Continuing Disclosure. Agreement"), by and .. between the City and the Trustee, and the Mayor is hereby authorized and directed to cause the Continuing Disclosure- ':: Agreement to be executed by the Trustee. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Continuing Disclosure Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Continuing Disclosure Agreement, their execu- tion to constitute conclusive evidence of such approval. (Advice is given that a copy of the Continuing Disclosure Agreement in substantially the forth authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) -. Section 7` The Trust Indenture requires that a debt service reserve be funded in conjunction with the issuance of the Bonds' The Underwriter has proposed that the City consider the purchase of a surety bond or a debt service reserve insurance policy with a portion of the proceeds of the Bonds in order to fulfill such requirement. If deemed economically advantageous by the Mayor, upon the advice of the Underwriter, the Mayor is hereby authorized to execute an insur- ance commitment and to do any and all things necessary to accomplish the delivery of a surety bond or a debt service -; reserve insurance policy with respect to the Bonds. - Section S: In order to secure lower interest rates on the Bonds, the Underwriter has proposed that the City consider the purchase of a policy of bond insurance with a portion of the proceeds of the Bonds, which policy would guarantee the payment of the principal of and interest on the Bonds when due. If deemed economically advantageous by the Mayor, upon the advice of the Underwriter, the Mayor is hereby authorized to execute an insurance commitment and to do any and all things necessary to accomplish the delivery of a bond insurance policy with respect to the Bonds. ". ,Section 99: The Mayor and City Clerk, for and on behalf of the City, are hereby authorized and directed to do any and all - things necessary to effect the issuance, sale, execution and delivery of the Bonds and to effect the execution and deliv- ery of eliv- eryof the Fourth Supplemental Trust Indenture, the Bond Purchase Agreement, the Official Statement, the Continuing Disclosure Agreement and a Tax Regulatory Agreement relating to the tax exemption of interest on the Bonds, and to 'perform all of the obligations of the City under and pursuant thereto. The Mayor and the City Clerk are further authorized and directed, for and on behalf of the City, to execute all papers, documents, certificates and other instruments that may be required for the carrying out of such authority or to evidence the exercise thereof. . -Section 10` As previously provided in the Election Ordinance, Kutak Rock LLP, Little Rock, Arkansas, is hereby con- firmed as Bond Counsel on behalf of the City in connection with the issuance and sale of the Bonds. Section 11: The provisions of this Ordinance are hereby declared to be severable, and if any section, phrase or provision shall for any reason be declared to be illegal or invalid, such declaration shall not affect the validity of the remainder of the sections; phrases or provisions of this Ordinance: Section 12: All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such PASSED and APPROVED this 6th day of October, 2015. APPROVED: - ATTEST: By: By: LIONELD JORDAN, Mayor SONDRA E. SMITH, City Clerk Treasurer $9,000,000 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2015 TRANSCRIPT OF PROCEEDINGS Dated as of November 12, 2015 Prepared By: KUTAK ROCK LLP 124 West Capitol, Suite 2000 Little Rock, Arkansas 72201 4815-5035-3190.3 $9,000,000 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2015 CLOSING INDEX TAB Proceedings and Certificates Related to Election Certificate of City of Fayetteville, Arkansas (the "City") as to Election Matters 1 Exhibit A - Ordinance No. 4891 adopted June 20, 2006, calling a special election and levying (i) a (0.25%) city-wide sales and use tax and (ii) a (0.75%) city-wide sales and use tax 2 Exhibit B - Minutes of City Council meeting held June 20, 2006, reciting adoption of Ordinance No. 4891 3 Exhibit C - Proof of Publication of Ordinance No. 4891 in the Northwest Arkansas edition of the Arkansas Democrat -Gazette on June 29, 2006 4 Exhibit D — Proof of Publication of Notice of Special Election in the Northwest Arkansas edition of the Arkansas Democrat -Gazette on August 30, 2006 5 Exhibit E — Mayor's Proclamation of Election Results and Proof of Publication in the Northwest Arkansas edition of the Arkansas Democrat -Gazette on October 2, 2006 6 Certificate of Washington County Board of Election Commissioners Ascertaining and Declaring Results of Special Election held September 12, 2006 7 4815-5035-3190.3 W Proceedings and Certificates Related to Bond Issuance Closing Certificate and Request of the City 8 Exhibit A - Ordinance No. 5803 adopted October 6, 2015, authorizing issuance of the Bonds and pledging receipts of (i) a (0.25%) city-wide sales and use tax and (ii) a (0.75%) city-wide sales and use tax 9 Exhibit B - Minutes of City Council meeting held October 6, 2015, reciting adoption of Ordinance No. 5803 10 Exhibit C - Proof of Publication of Ordinance No. 5803 in the Northwest Arkansas edition of the Arkansas Democrat -Gazette on October 15, 2015 11 Exhibit D — Schedule of Bond Issuance Costs to be Paid at Closing 12 Form 8038-G and Proof of Mailing to Internal Revenue Service 13 Principal Documents Trust Indenture dated as of November 1, 2006, by and between the City and Simmons First Trust Company, N.A., as trustee (the "Trustee") 14 First Supplemental Trust Indenture dated as of October 1, 2007, by and between the City and the Trustee 15 Second Supplemental Trust Indenture dated as of November 1, 2009, by and between the City and the Trustee 16 Third Supplemental Trust Indenture dated as of November 1, 2013, by and between the City and the Trustee 17 Fourth Supplemental Trust Indenture dated as of November 1, 2015, by and between the City and the Trustee 18 Tax Regulatory Agreement dated November 12, 2015, by and between the City and the Trustee 19 Continuing Disclosure Agreement dated November 12, 2015, by and between the City and the Trustee 20 Copies of Bonds 21 Bond Purchase Agreement dated October 21, 2015, by and between the City and Stephens Inc., as underwriter (the "Underwriter") 22 2 4815-5035-3190.3 TAB Preliminary Official Statement 23 Official Statement 24 Opinions Approving Opinion of Bond Counsel 25 Supplemental Opinion of Bond Counsel 26 Opinion of City Attorney 27 Debt Service Reserve Insurance Policy Series 2015 Municipal Bond Debt Service Reserve Insurance Policy 28 No Default and Tax Certificate of Reserve Insurer 29 Opinion of Counsel to Reserve Insurer 30 Miscellaneous Certificates of Arkansas Department of Finance and Administration and State Treasurer as to Sales and Use Taxes 31 Trustee's Certificate 32 Underwriter's Certificate 33 Underwriter's Receipt 34 Trustee's Receipt and Certificate as to Application of Funds 35 DTC Blanket Letter of Representations 36 Standard & Poor's Rating Letter 37 Coverage Certificate 38 Form of Requisition 39 3 4815-5035-3190.3 Transcripts delivered to: City of Fayetteville, Attn: Mr. Paul Becker (1 copy); Attn: Ms. Sondra Smith (1 CD) Simmons First Trust Company, Attn: Ms. Glenda Dean (1 original and 1 CD) Stephens Inc., Attn: Mr. Dennis Hunt (1 copy) Fayetteville City Attorney, Attn: Kit Williams, Esq. (1 copy) Assured Guaranty Municipal Corp., Attn: Records Department (3 cds) Kutak Rock LLP (1 original) 4 4815-5035-3190.3 CERTIFICATE OF CITY AS TO ELECTION MATTERS The undersigned Mayor and City Clerk of the City of Fayetteville, Arkansas, a duly organized municipality and political subdivision of the State of Arkansas (the "City"), do hereby certify and covenant as follows: 1. The undersigned are the duly elected, qualified and acting Mayor and City Clerk of the City, and as such officials have in their possession or have access to the official books and corporate records of the City. This Certificate is executed and delivered in connection with the issuance of the City's $9,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Series 2015 Bonds"). 2. Attached hereto as Exhibit A is a true, complete, and correct copy of Ordinance No. 4891 (the "Election Ordinance"), duly adopted by City Council of the City, at a regular meeting, open to the public, held June 20, 2006, pursuant to which there was submitted to the qualified electors of the City (i) the question of the levy of (I) a one-quarter of one percent (0.25%) city-wide sales and use tax (the "0.25% Sales and Use Tax") and (II) a three-quarter of one percent (0.75%) city-wide sales and use tax (the "0.75% Sales and Use Tax," and together with the 0.25% Sales and Use Tax, the "Sales and Use Taxes"), under the authority of Arkansas Code Annotated (1998 Repl. & Supp. 2005) Sections 14-164-301 et seq., and (ii) questions with respect to the issuance of up to $110,000,000 in aggregate principal amount of Bonds secured by receipts of the Sales and Use Taxes. Attached hereto as Exhibit B is a true, complete and correct copy of the minutes of a duly called regular meeting of the City Council, open to the public, held June 20, 2006, reciting the adoption of the Election Ordinance, as said minutes appear in the official records of the City; at the meeting a quorum was present and acted throughout; the Election Ordinance is in full force and effect and has not been altered, amended, or repealed as of the date hereof. No petition or petitions to refer the Election Ordinance to the people under Amendment No.7 to the Constitution of the State of Arkansas has been filed as of the date hereof and the City Council has not referred the Election Ordinance to the people for adoption or rejection. Attached hereto as Exhibit C is a true, complete, and correct copy of a publisher's affidavit showing publication of the Election Ordinance in the Northwest Arkansas edition of the Arkansas Democrat -Gazette on June 29, 2006. 3. The meeting of the City Council referred to in paragraph 2 hereof was open to the public in compliance with the provisions of Section 25-19-106 of the Arkansas Code Annotated, as amended and supplemented. 4. The City has not adopted any by-laws or rules of procedure relating to the conduct of its meetings. Regular meetings of the City Council are held on the first and third Tuesdays of each month. 6. In the City the time for filing a referendum petition is fixed at 31 days after the publication of local measures passed by the City Council of the City. 7. Attached hereto as Exhibit D is a true, complete and correct copy of a publisher's affidavit showing publication of a Notice of Special Election in the Northwest Arkansas edition of the Arkansas Democrat -Gazette on August 30, 2006. 4851-3823-8250.1 8. Attached hereto as Exhibit E is a true, complete and correct copy of a Mayor's Proclamation of Election Results declaring the results of the Special Election and a true, complete, and correct copy of a publisher's affidavit showing publication of the Proclamation in the Northwest Arkansas edition of the Arkansas Democrat- Gazette on October 2, 2006. IN WITNESS WHEREOF, the undersigned have hereunto set their hands this 12th day of November, 2015. CITY OF FAYETTEVILLE, ARKANSAS M Sondra Smith R, "I' FAYETTEVILLE - "1911111%%0 2 4851-3823-8250.1 :Zg,3�55 ORDINANCE NO. 4891 AN ORDINANCE CALLING AND. SETTING A DATE FOR A SPECIAL ELECTION ON THE QUESTIONS OF THE ISSUANCE BY THE CITY OF (1) NOT TO EXCEED $25,000,000 OF CAPITAL IMPROVEMENT BONDS FOR THE PURPOSE OF - FINANCING CERTAIN WASTEWATER SYSTEM IMPROVEMENTS, . (2) NOT TO EXCEED $17,000,000 OF CAPITAL IMPROVEMENT BONDS FOR THE PURPOSE OF DIRECTLY FINANCING OR REFUNDING REVENUE BONDS ISSUED TO FINANCE CERTAIN WASTEWATER SYSTEM IMPROVEMENTS, (3) NOT TO EXCEED $65,900,000 OF CAPITAL IMPROVEMENT BONDS FOR THE PURPOSE OF FINANCING CERTAIN STREET IMPROVEMENTS, AND (4) NOT TO EXCEED $2,100,000 OF CAPITAL IMPROVEMENT BONDS FOR THE PURPOSE OF FINANCING CERTAIN TRAIL SYSTEM IMPROVEMENTS; LEVYING A SPECIAL LOCAL SALES AND USE TAX AT THE RATE OF ONE-QUARTER OF ONE PERCENT (0.25%) AND LEVYING A REPLACEMENT SPECIAL LOCAL SALES AND USE TAX AT THE RATE OF THREE-QUARTERS OF ONE PERCENT (0.75%) FOR THE PURPOSE OF RETIRING SUCH BONDS; AND PRESCRIBING OTHER MATTERS PERTAINING THERETO ra 0 C= c.. rn N .a WHEREAS, the City Council of the City of Fayetteville, Arkansas (the "City") has determined that there is a critical need for an additional source of revenue to finance wastewater - .—ftillties and street -and trail .improvements within the City; and 1 � Xzrw-. WHEREAS, Amendment 62 to the Constitution of the State of Arkansas ("Amendment 62") and Title 14, Chapter -164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the `Local Government Bond Act") authorize the issuance of capital improvement bonds by municipalities, which bonds may be secured by the pledge of all of the receipts of the special citywide sates and use tax prescribed by the Local Government Bond Act; and WHEREAS, said special citywide sales and use taxes are to be levied and collected only on the first $2,500 of each single transaction; and WHEREAS, the City has previously issued and there are presently outstanding (i) its not to exceed $20,000,000 Sales and Use Tax Revenue Bond, Series 2006 (the "Series 2006 Bond"), (ii) its $27,000,000 Sales and Use Tax Refunding and Capital Improvement Bonds, Series 2005A (the "Series 2005A Bonds'% and (iii) its $43,995,000 Sales and Use Tax Capital Improvement Bonds, Series 2005B (the "Series 2005E Bonds," and together with the Series 2006 Bond and the Series 2005A Bonds, the "Prior Bonds'; and WHEREAS, the Prior Bonds are secured by and payable from the receipts of a three- quarters of one percent (0.751/o) special citywide sales and use tax previously levied under the authority of the Local Government Bond Act (the "Prior Tax!% and WHEREAS, if approved by the electors of the City, the City has determined to issue (1) its capital improvement bonds in principal amount not to exceed $25,000,000 for the purpose of financing certain wastewater system improvements, (2) its capital improvement bonds in principal amount not to exceed $17,000,000 for the purpose of financing certain additional wastewater system improvements or to refund water and wastewater revenue bonds originally issued to finance said improvements, (iii) its capital improvement bonds in principal amount not to exceed $65,900,000 for the purpose of financing certain street improvements, and (iv) its capital improvement bonds in principal amount not to exceed $2,100,000 for the purpose of financing certain trail system improvements (collectively, the "Bonds"), which Bonds are to be secured by (a) a pledge of and lien upon all of the receipts of a one-quarter of one percent (0.25%) special citywide sales and use tax (the "0.25% Sales and Use Tax') and (b) when all of the Prior Bonds have been retired from the receipts of the. Prior Tax, a pledge of and lien upon all. of the receipts of a three-quarter of one percent (0.75%) special citywide sales and use tax (the "0.75% Sales and Use Tax") replacing the Prior Tax, all as authorized by Amendment 62 and the :Local Government Bond Act; and WHEREAS, the purpose of this Ordinance"is to call a special election on the issuance of the Bonds by the City and for related purposes; NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Fayetteville, Arkansas: V -W: = Section 1. That under the authority of Amendment 62 and the Local Government B6nd Act' and subject to approval of the issuance of any series of the Bonds by the electors of the City as provided in Section 3 below, there are hereby levied (i) a sales tax at the rate of one-quarter of one percent (0.25%) and (ii) a sales tax at the rate of three-quarters of one percent (0.75%) on the gross receipts from the sale at retail within the City of all items and services which are subject to taxation under the Arkansas Gross Receipts Act of 1941, as amended (Arkansas Code of 1987 Annotated §26-52-101 et seq.), and (iii) an excise (or use) tax at the rate of one-quarter of one percent (0.25%) and (iv) an excise (or use) tax at the rate of three-quarters of one percent (0.75%) on the storage, use, distribution or other consumption within the City of tangible personal property or taxable services subject to taxation under the Arkansas Compensating Tax Act of 1949, as amended (Arkansas Code of 1987 Annotated §26-53-101 et seg.), on the sale price of the property or, in the case of leases or rentals, on the lease or rental price (collectively, 2 the "Sales and Use Tax"). The Sales and Use Tax shall be levied and collected only on the first $2,500 of each "single transaction" (as defined in Section 9 hereof). The levy and collection of the 0.25% Sales and Use Tax shall commence on and as of such date as provided in the Local Government Bond Act, and shall cease upon retirement in full of the Bonds. The levy and collection of the 0.75% Sales and Use Tax shall commence on the day following the date of expiration of the Prior Tax, and shall cease upon retirement in full of the Bonds. Any collections of the Prior Tax received after its expiration shall be used, if necessary or appropriate, to provide for the payment of debt service on the Bonds. Revenues resulting from the collection of the Sales and Use Tax shall be utilized solely for the payment of debt service on the Bonds. Section 2. That under the authority of Amendment 62 and the Local Government Bond Act and subject to approval by the electors of the City as provided in Section 3 below, there is hereby authorized (1) the issuance of the City's capital improvement bonds in the aggregate principal amount of not to exceed $25,000,000 for the purpose of financing all or a portion of the costs of acquisition, construction, reconstruction, extension and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities, .including right-of-way acquisition, (2) the issuance of the City's capital improvement bonds in the aggregate principal amount of not to exceed $17,000,000 for the purpose of directly financing all or a portion of the costs of acquisition, construction, reconstruction, extension and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities, including right-of-way acquisition, or, alternatively, for the purpose of refunding water and wastewater revenue bonds originally issued to finance said improvements, (3) the issuance of the City's capital improvement bonds in the aggregate principal amount of not to exceed $65,900,000 for the purpose of financing all or a portion of the costs of acquisition, _construction, reconstruction, repair, straightening and widening of certain City streets, which may include related sidewalk, traffic signal and control, curbing, guttering and drainage improvements and right-of-way acquisition, and (4) the issuance of the City's capital improvement bonds. in the aggregate principal amount of not to exceed $2,100,000 for the purpose of financing all or a portion of the costs of acquisition and construction of certain City trail system improvements, which may include related pedestrian signal and drainage improvements and right-of-way acquisition. If the issuance of any of the aforementioned capital improvement bonds (collectively, the "Bonds') is approved by the electors of the City, such Bonds may thereafter be issued in one or more series from time to time in an aggregate principal ount= not to excee! the respective -principal amounts) approved by the City's electors. approved by the electors of the City and issued, the Bonds shall be secured by a pledge of and a .lien upon all of the receipts of the Sales and Use Tax, as authorized by the Local Government Bond Act. Section 3. That there be, and there is hereby called, a special election to be held on Tuesday, September 12, 2006, at which election there shall be submitted to the electors of the City the questions of the issuance of the Bonds. Section 4. That the questions shall be placed on the ballot for the special election in substantially the following forms: The bonds described below that are approved may be combined into a single issue or may be issued in series from time to time. If the bonds for one or more of the purposes described below are approved, there will be levied (i) a one-quarter of one percent (0.25%) sales and use tax (the "0.25% Sales and Use Tax") and (ii) a three-quarter of one percent (0.75%) sales and use tax (the "0.75% Sales and Use Tax'), the net collections of which remaining after the State of Arkansas deducts its administrative charges will be used solely to retire the bonds and obligations of the City with respect thereto. The levy and collection of the 0.25% Sales and Use Tax will commence on January 1, 2007. The aforementioned 0.75% Sales and Use Tax will replace an existing three-quarters of one percent sales and use tax (the "Prior Tax'). The Prior Tax is pledged to the payment of certain existing indebtedness of the City and will continue to be levied and collected until such existing indebtedness is paid in full. The levy and collection of the 0.75% Sales and Use Tax shall commence on the day following the date of expiration of the Prior Tax. Ouestion One: There is submitted to the qualified electors of the City of Fayetteville, Arkansas, the question of the issuance of capital improvement bonds in principal amount not to exceed $25,000,000 (the "Wastewater Improvement Bonds") pursuant to Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Local Government Bond Act") for the purpose of financing all or a portion of the costs of acquisition, construction, reconstruction, .extension and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities. If the issuance of the Wastewater Improvement Bonds is approved, the Wastewater Improvement Bonds shall be secured by a pledge of and lien upon (i) all of the receipts of the 0.25% Sales and Use Tax and (ii) all of the receipts of the 0.75% Sales and Use Tax, each levied pursuant to the Local Government Bond Act. Vote on the question by placing an "X" in one of the squares following the question, either for or against: FOR the issuance of Wastewater Improvement Bonds in principal amount not to exceed $25000,000 for the purpose of financing all or a portion of the costs of acquisition, construction, reconstruction, extension and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities, including right-of-way acquisition ............................................❑ AGAINST the issuance of Wastewater Improvement Bonds in principal amount not to exceed $25,000,000 for the purpose of financing all or a portion of the costs of acquisition, construction, reconstruction; extension and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities, including right-of-way acquisition ........................................... Q 4 Question Two: There is submitted to the qualified electors of the City of Fayetteville, Arkansas, the question of the issuance of capital improvement bonds in principal amount not to exceed $17,000,000 (the "Wastewater hnprovement/Refunding Bonds') pursuant to the Local Government Bond Act for the purpose of directly financing all or a portion of the costs of acquisition, construction, reconstruction, extension and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities (the "Project') or, alternatively, for the purpose of refunding the City's water and wastewater revenue bonds originally issued to finance all or a portion of the Project. If the issuance of the Wastewater Improvement/Refunding Bonds is approved, the Wastewater Improvement/Refunding Bonds shall be secured by a pledge of and lien upon (i) all of the receipts of the 0.25% Sales and Use Tax and (ii) all of the receipts of the 0.75% Sales and Use Tax, each levied pursuant to the Local Government Bond Act. Vote on the question by placing an "X" in one of the squares following the question, either for or against: FOR the issuance of Wastewater bnprovement/Refunding Bonds in principal amount not to exceed $17,000,000 for the purpose of financing or refinancing all or a portion of the costs of acquisition, construction, reconstruction, extension and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities, including right-of-way acquisition ................0 AGAINST the issuance of Wastewater Improvement/Refunding Bonds in principal amount not to exceed $17,000,000 for the purpose of financing or refinancing all or a portion of the costs of acquisition, construction, reconstruction, extension and equipping of, the improvements to the City's wastewater treatment plants, sewerage and related facilities, including right-of- way acquisition.............................................................................❑ Question Three: ` There is subAtted to the qualified efectors.of the City of Fayetteville, Arkansas, the question of the issuance of capital improvement bonds in principal amount not to exceed $65,900,000 (the "Street Improvement Bonds' pursuant to the Local Government Bond Act for the purpose of financing all or a portion of the costs of acquisition, construction and equipping of certain street improvements. If the issuance of the Street Improvement Bonds is approved, the Street Improvement Bonds shall be secured by a pledge of and lien upon (i) all of the receipts of the 0.25% Sales and Use Tax and (ii) all of the receipts of the 0.75% Sales and Use Tax, each levied pursuant to the Local Government Bond Act. Vote on the question by placing an "X" in one of the squares following the question, either for or against: FOR the issuance of Street Improvement Bonds in principal amount not to exceed - $65,900,000 for the purpose of financing all or a portion of the costs of acquisition, construction, reconstruction, repair, straightening and widening of certain City streets, which may include related sidewalk, traffic signal and control, curbing, guttering and drainage improvements and right-of-way acquisition .....0 AGAINST the issuance of Street Improvement Bonds in principal amount not to exceed $65,900,000 for the purpose of financing all or a portion of the costs of acquisition, construction, reconstruction, repair, straightening and widening of certain City streets, which may include related sidewalk, traffic signal and control, curbing, guttering and drainage improvements and right-of-way acquisition .....❑ Question Four: There is submitted to the qualified electors of the City of Fayetteville, Arkansas, the question of the issuance of capital improvement bonds in principal amount not to exceed $2,100,000 (the "Trail Improvement Bonds'] pursuant to the Local Government Bond Act for the purpose of financing all or a portion of the costs of acquisition, construction and equipping of certain City trail system improvements. If the issuance of the Trail Improvement Bonds is approved, the Trail Improvement Bonds shall be secured by a pledge of and lien upon (i) all of the receipts of the 0.25% Sales and Use Tax and (ii) all of the receipts of the 0.75% Sales and Use Tax, each levied pursuant to the Local Government Bond Act. Vote on the question by placing an "X" in one of the squares following the question, either for or against: FOR the issuance of Trail Improvement Bonds in principal amount not to exceed $2,100,000 for the purpose of financing all or a portion of the costs of acquisition and construction of certain City trail system improvements, which may include related pedestrian signal and drainage improvements and right-of-way acquisition..................................................................................... 0 _ AGAINST the issuance of Trail Improvement Bonds in principal amount not to exceed $2,IM,000 for the purpose of financing aff or a portion of the costs of acquisition and construction of certain City trail system improvements, which may include related pedestrian signal and drainage improvements and right-of- way acquisition.............................................................................0 Section 5. That the election shall be held and conducted and the vote canvassed and the results declared under. the law and in the manner now provided for Arkansas municipal elections unless otherwise provided in the Local Government Bond Act and only qualified voters of the City shall have the right to vote at the election. The City Clerk is hereby directed to give notice of the special election by one advertisement in a newspaper of general circulation within the City, the publication to be not less than ten (10) days prior to the date of the election. 0 Section 6. That a copy of this Ordinance shall be given to the Washington County Board of Election Commissioners so that the necessary election officials and supplies may be provided. A certified copy of this Ordinance shall also be provided to the Director of the Department of Finance and Administration of the State of Arkansas as soon as practical. Section 7. That the results of the special election shall be proclaimed by the Mayor, and his proclamation shall be published one time in a newspaper of general circulation within the City. The proclamation shall advise that the results as proclaimed shall be conclusive unless attacked in the Circuit Court of Washington County within thirty (30) days after the date of publication of the proclamation. Section 8. That the Mayor and the City Clerk, for and on behalf of the City, be, and they hereby are authorized and directed to do any and all things necessary to call and hold the special election as herein provided and, if the issuance of any of the Bonds are approved by the electors, to cause the Sales and Use Tax to be collected in accordance with the Local Government Bond Act, and to perform all acts of whatever nature necessary to cant' out the authority conferred by this Ordinance. Section 9. That, for purposes of the Sales and Use Tax, the term "single transaction" is defined according to the nature of the goods purchased as follows: A. When two (2) or more devices in which, upon which or by which any person or property is, or may be, transported or drawn, including, but not limited to, on -road vehicles, off-road vehicles or farm vehicles, whether required to be licensed or not, airplanes, water vessels, motor vehicles, non -motorized vehicles or mobile homes, are sold to a person by a seller, each individual unit, whether part of a "fleet" sale or not, shall be treated as a single transaction for the purposes of the Sales and Use Tax; B. Charges for utility services which are subject to the Sales and Use Tax, and which are furnished on a continuous service basis, whether such services are paid for daily, weekly, monthly or annually, shall be computed in daily increments, and each such daily charge increment shall be considered to be a = " ' --" single transadffon for -the purposes bfthe Sales and Use Tax; C. For sales of building materials and supplies to contractors, builders or other persons, a single transaction, for the purposes of the Sales and Use Tax, shall be deemed to be any single sale which is reflected on a single invoice, receipt or statement, on which an aggregate sales (or use) tax figure has been reported and remitted to the State of Arkansas; D. When two (2) or more items of major household appliances, commercial appliances, major equipment or machinery are sold, each individual unit shall be treated as a single transaction for the purposes of the Sales and Use Tax; and 7 E. For groceries, drug items, dry goods and other tangible personal property and/or services not expressly covered in this Section 9, a single transaction, for the purposes of the Sales and Use Tax, shall be deemed to be any single sale which is reflected on a single invoice, receipt or statement, on which an aggregate sales tax figure has been reported and remitted to the State of Arkansas. In the event that the General Assembly of the State of Arkansas shall define "single transaction," the General Assembly's definition shall replace the one in this Section 9. Section 10. That the City considers this Ordinance to be its declaration of official intent to issue the Bonds and to make reimbursement to the City with a portion of the proceeds thereof for all original expenditures incurred by the City in acquiring, constructing or equipping the Projects approved by the voters between the date that is sixty (60) days prior to the date of this Ordinance and the date a series of Bonds is issued, plus a de minimis amount and preliminary expenditures, as such terms are defined in Section 1.150-2(f) of the Federal Income Tax Regulations. Section 11. That Kutak Rock LLP is hereby engaged as Bond Counsel and Stephens Inc. is hereby engaged as Underwriter with respect to the issuance of the Bonds. The fees and expenses of Bond Counsel and the Underwriter shall be a cost of issuance of the Bond to be paid with Bond proceeds. .Section 12. That the provisions of this Ordinance are hereby declared to be separable and if any provision shall for any reason be held illegal or invalid, such holding shall not affect the validity of the remainder of this Ordinance. Section 13. That all ordinances and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. <<���IIII r,,,, ....... .-.,° w PASSED an ,_. PROVED this 20" day of June, 2006. ATTEST: By By: DAN COODY, Mayor SONDRA SIVIITH, City Clerk WTR'ozpy �%. FAYETTEVILLE a 9a s•9,S,KANSP. The undersigned, City Clerk of the City of Fayetteville, Arkansas, hereby certifies that the foregoing is a true and perfect copy of an Ordinance adopted at a regular. meeting of the City Council of the City of Fayetteville, Arkansas, held at 6:00 p.m. on June 20, 2006. DATED: Ili n c20 , 2006 S®NDddA SWTH, City Clerk ."No�R'/TR,Fq'''°.. mFAYETTEVILLE® o %NGTON u 11,110`' CERTIFICATE OF RECORD StaW of Arkansas City of Fayetteville,_.._ 1. ss. 1, Sondra Smith, City Clerk/Treasurer for the City �.� of Fayetteville, do hereby certify that the foregoing instrument is a true a grrect COPY of the original - . , a c_ U I filed in my office on the a..L day of IAA�A/itness my sea(Chfs 9 City of Fayettev° a Arkansas City Council Meeting Minutes June 209 2006 City Council Meeting Minutes June 20, 2006 Page I of 10 Aldermen Ward 1 Position 1 - Robert Reynolds Ward 1 Position 2 - Brenda Thiel Ward 2 Position 1 - Kyle B. Cook Ward 2 Position 2 - Don Marr Ward 3 Position 1 - Robert K. Rhoad Ward 3 Position 2 — Robert Ferrell Ward 4 Position 1 - Shirley Lucas Ward 4 Position 2 - Lioneld Jordan A meeting of the Fayetteville City Council was held on. June 20, 2006 at 6:00 PM in Room 219 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. Mayor Coody called the meeting to order. PRESENT: Alderman Thiel, Cook, Marr,Rhoads, Ferrell, Lucas, Jordan, Mayor Coody, City Attorney Kit Williams, City Clerk Sondra Smith, Staff, Press, and Audience. ABSENT: Alderman Reynolds Pledge of Allegiance Police Department Presentation Reco>?nizing 12 members of the Fayetteville Citizen's Police Academy — Sergeant Shannon Gabbard Sergeant Gabbard presented the members of the Fayetteville Citizen's Policy academy a certificate and a shirt for their participation in the academy. The following were presented with Certificates and a shirt: William Jackson, Evelyn Jackson, Marie Mitchell, Marvin Mitchell Peggy Harp, Joe Woessner, Fred Cusanelli, Mya Fulton, Richard Guthrie, Bob Reilly, Trish Hollenbeck, and Danette Williams. Mayor Coody: I hope that all the people that participated in the Police Academy recognized the level of professionalsion that our Police Department has. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) arrPcefavF+t+PaiiiP nrn City Council Meeting Minutes June 20, 2006 Page 2 of 10 Nominatinl? Committee Report: Kyle Cook, Chairman Alderman Cook gave the Nominating Committee Report and thanked Amber Wood in the City Clerk's office for typing the report . A copy of the report is attached. Alderman Cook moved to approve the Nominating Committee Report. Alderman Marr seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. Approval of the June 6, 2006 City Council Meeting Minutes. Approved Rescind Res. 82-06 — McClelland Consulting Engineers 'Task Order #13: A resolution rescinding the budget adjustment approved by Resolution No. 82-06 of May 2, 2006. Resolution 110-06 as Recorded in the Office of the City Clerk Professional Turf Products of 'Tulsa — Bid # 06-38: A resolution awarding Bid # 06-38, and �-� approving the purchase of two (2) multi -deck turf mowers from Professional Turf Products of Tulsa in the amount of $43,987.00 for use by the Parks & Recreation Division. Resolution 111-06 as Recorded in the Office of the City Clerk Radisson Hotel Parking Space Lease Aitreement: A resolution approving a lease agreement with Radisson Hotel Fayetteville for the use of 178 parking spaces on Level One and Three of the Meadow Street Municipal Parking Garage. Resolution 112-06 as Recorded in the Office of the City Clerk. Alderman Ferrell moved to approve the Consent Agenda as read. Alderman Jordan seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. UNFINISHED BUSINESS: Crystal Springs IV Appeal: Appeal the approval of the PPL 06-1977 Preliminary Plat Crystal Springs 1V for property located north of Mt. Comfort Road, at the end of Raven Lane. This item was tabled at the June 6, 2006 City Council meeting to the June 20, 2006 City Council meeting Jeremy Pate, Director of Current Planning: The bridge will be constructed prior to any homes being built, it will be constructed with Phase one. That will be an additional condition of approval should you chose to affirm the Planning Commission's decision to uphold this 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfavetteville. ore City Council Meeting Minutes June 20, 2006 Page 3 of 10 preliminary plat. This was also tabled to discuss the connectivity issue and street connections to Woodlark and Raven. As it currently stands this project is connecting the two existing street stub outs, one to Woodlark Lane and one to Raven. Staffs position is that both connections are warranted and both are supported by -the City Council's policy of connectivity. We are recommending both connections at this time. Alderman Jordan: This is something Shirley and I have worked on with the neighborhood, owners and the developers and over the course of the last few weeks we have come to some compromises. The neighborhood, owners and developers are alright with making the connection through Raven and leaving the connectivity off Woodlark. The bridge will be installed and no houses will be built until the bridge is built. That seems to be agreeable to all parties at this point in time. Alderman Lucas: When you look at this development you have connectivity. We still need to correct Mount Comfort, there needs to be improvements to Mount Comfort. Wayland Barris, speaking on behalf of the residents of Bird Haven Subdivision: We are in agreement with what has been worked out. We would like to ask for approval of this tonight. Bili Overby a resident Woodlark Lane: Woodlark was never considered to be a through street. I appreciate connectivity, I believe we have it and I would strongly urge you to consider the recommendation of Alderman Jordan. Rick Reed, Woodlark Lane: At no point under any circumstance is any additional traffic welcomed to Bird Haven. You have north and south access through Salem Road and Deane Solomon. We urge you to please not allow this to happen. City Attorney blit Williams: In speaking to Alderman Jordan earlier he indicated that a possible solution had been arrived at so I prepared a resolution that would grant the appeal and approve the preliminary plat as slightly modified. It would make Raven the north south connection but not Woodlark. We also need to incorporate the language that Jeremy has that would require the building of the bridge prior to the sale of any house lot. A sidewalk would go where the street is currently platted. A revised resolution was passed out to the City Council. Alderman Cook: I always support connectivity but I certainly respect the Aldermen and their work on this issue, they have come to a good solution. Alderman Lucas moved to approve the revised resolution as prepared by City Attorney Kit Williams. Alderman Jordan seconded the motion. Upon roll call the resolution passed 7-0. Alderman Reynolds was absent. Resolution 113-06 as Recorded in the Office of the City Clerk. RZN 06-2028 Mountain Ranch RMF -18: An ordinance rezoning that property described in rezoning petition RZN 06-2028 for approximately 9.16 acres, located west of I-540 and south of 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfavetteville_ oro City Council Meeting Minutes June 20, 2006 Page 4 of 10 Betty Jo Drive, from C-1, Neighborhood Commercial and R -A, Residential -Agricultural to RMF -18, Residential Multi -Family, 18 units per acre. This ordinance was left on the first reading at the June 6, 2006 City Council ineeting. City Attorney Kit Williams: The petitioner has decided to request a different rezoning. Jeremy Pate: That is correct. The applicant has changed their request to a C-1 zoning. Alderman Jordan moved to amend the ordinance by changing the zoning to C-1. Alderman Marr seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. City Attorney Kit Williams read the ordinance Alderman Jordan moved to suspend the rules and go to the third and final reading. Alderman Lucas seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. City Attorney Kit Williams read the ordinance. Mayor Coody asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Reynolds was absent. Ordinance 4887 as Recorded in the Office of the City Clerk. West Fayetteville Annexation Election: An ordinance calling an election to determine whether approximately 2,000 acres contiguous to the western city limits should be annexed into Fayetteville. This ordinance was amended and left on the first reading at the June 6, 2006 City Council meeting. Alderman Jordan moved to suspend the rules and go to the second reading. Alderman Ferrell seconded the motion. Upon roll call the motion passed unanimously. City Attorney Kit Williams read the ordinance. Tim Conklin, Planning and Development Management Director: At your last meeting you indicated that you would like our Annexation Study Committee to meet with Farmington. They contacted us and we met. We asked Farmington what they would like the Fayetteville City Council to know with regard to their recommendation for an annexation line between the two cities. At our last Council meeting, City of Farmington Alderman Ernie Penn, indicated that if someone wants to be annexed into Fayetteville they would agree to allow that to happen. Mr. Conklin showed the Council a map with the proposed annexation area as requested by the City of Farmington. You also made a motion to have the Special Election during the General Election. I believe the Election Commission is here to discuss some of those issues with that election date. Staff would 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfavettevi I le. orQ City Council Meeting Minutes June 20, 2006 Page 5 of I0 recommend not placing the annexation election with the election for the wastewater treatment plant or the street bond program election. Alderman Lucas: I asked Farmington if there was any room for negotiation and they said there was not. Alderman Ferrell: How many acres will be included in the annexation election, if we went with what Farmington wanted as opposed to what we initially started out with. Tim Conklin: There would be around 500 acres less. Tim showed the City Council on the map where Fayetteville can grow to in the future on the west side. Alderman Lucas: We studied this and looked at all aspects of it. It is growing out there and would be a perfect place to put a commercial node and this area would service it. We are going to provide the services for this area so it should be in the City. We as a task force felt this was the appropriate area to bring in. A discussion followed on the proposed annexation area. John Burrow, Chairman of the Washington County Election Commission: We are here to ask you to help us out with this election. We are implementing a whole new scheme of things in election technology and the whole State of Arkansas is having an interesting experience with that. We are still running kind of scared for the General Election in November. It would be very desirable to have this election in December. That would enable us to get all of the other elections out of the way. You will make our job a whole lot easier for the General Election if we don't have this election going on during it. The biggest problem that we have with elections is the confusion the voting community has about where they are suppose to go and vote. We could potentially have a lot of residents who are confused about whether or not they are qualified to vote in the annexation election waiting in line for a considerable amount of time and then having to call the County Clerk's office. It would be a stressful experience for our polling places. Alderman Thiel: The money for these elections comes out of the City Clerk's budget. How many elections did you have budgeted. Sondra Smith, City Clerk/Treasurer: I budgeted for one special election and the General Election. The Library's Special Election was paid for with the money budgeted for a special election. Alderman Thiel: We are going to have the bond election which was not budgeted, would it be better to push this annexation election into next years budget. Sondra Smith: That is up to the Council. We have seen an increase in the cost of elections so it might be better to pay for it this year. Mayor Coody: We can always appropriate the money out of the General Fund surplus. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) acceccfavPtfP.,;li o..,... City Council Meeting Minutes June 20,2006 Page 6 of 10 Alderman 'Thiel moved to amend the date for the Special Election to December 12, 2006. Alderman Marr seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. Alderman Lucas: With this intent to annex does that protect that area from anyone else annexing it? City Attorney Vit Williams: My feeling is that probably the actual act of annexation is what controls. When it becomes annexed then no other city can come back and get it. Alderman Marr: Is there any other date earlier than December 12th that we canconsider. Alderman Lucas: That is developing out there and if we want to designate a commercial node we need to move forward. Alderman Thiel moved to reconsider the December 12, 2006 Special Election date. Alderman Ferrell seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. Alderman Thiel moved to amend the date for the Special Election to October 10, 2006. Alderman Marr seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. Alderman Cook: I think annexation is a mistake. Our Police and Fire Departments will need more money we will have to extend sewer service and trash service. I do not think annexation is a good idea. Alderman Marr: I think the citizens are going to decide if this is a good or bad thing, I am going to support the election for the citizens to help us make that decision. Alderman Marr moved to suspend the rules and go to the third and fmal reading. Alderman Jordan seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. City Attorney Kit Williams read the ordinance. Mayor Coody asked shall the ordinance pass. Upon roll call the ordinance passed 6-1. Alderman Cook voting no. Alderman Reynolds was absent. Ordinance 4888 as Recorded in the Office of the City ClerL NEW BUSINESS: r Amend Chapter 72 — Parking Garage Rate Adjustment: An ordinance amending § 72.58 (I), (1), City Parking Garage on Meadow Street, to adjust per visit rates. City Attorney Kit Williams read the ordinance. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) City Council Meeting Minutes June 20, 2006 Page 7 of 10 eolN Alderman Jordan moved to suspend the rules and go to the second reading. Alderman Ferrell seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. City Attorney Kit Williams rend the ordinance. Alderman Jordan moved to suspend the rules and go to the third and fmal reading. Alderman Marr seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. City Attorney Kit Williams read the ordinance. Mayor Coody asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Reynolds was absent. Ordinance 4889 Recorded in the Office of the City Clerk Duncan Associates Road Impact Fee Study: A resolution to accept and adopt the May 2006 Road Impact Fee Study by Duncan Associates. ' Tim Conklin: What is before you this evening is to adopt the Road Impact Fee Study that was updated in May, 2006. You are just adopting the study. The next step would be for our City Attorney's office to draft an Impact Fee Ordinance to be considered by the City Council. Our City Attorney has placed in the resolution a statement that impact fees if enacted will not include the right of way acquisition cost. Alderman Jordan: This has been through the Street Committee and we did agree to the study. Alderman Jordan moved to approve the resolution. Alderman Marr seconded the motion. Upon roll call the resolution passed 6-1. Alderman Ferrell voting no. Alderman Reynolds was absent. Resolution 114-06 as Recorded in the Office of the City Clerk. Duncan Associates Water & Wastewater Impact Fee Update: A resolution accepting a proposal from Duncan Associates in the amount of $110,000.00 to update the existing Water and Wastewater Impact Fees, to calculate fees for the collection system, and negotiate contracts with the cities of Elkins, Farmington and Greenland to pay for and provide potential Water and Wastewater Impact Fees within their corporate boundaries. Tim Conklin: I am working with the Mayors of three cities to have an agreement signed. The City Attorney's office has finalized that agreement and it has been sent to Elkins and Farmington. I will have it to Greenland tomorrow. I would ask that this be tabled until I can bring forward the actual contract. Alderman Ferrell: Tim I appreciate you going forward and visiting with the Mayors. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) arrPcefavvttt•�riitP ..�.+ City Council Meeting Minutes June 20, 2006 Page 8 of 10 Alderman Cook moved to table the resolution to the July 6, 2006 City Council meeting. Alderman Ferrell seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. This resolution was tabled to the July 6, 2006 City Council meeting. ADM 06-2093 - S,pringwoods C-PZD Amendment: An ordinance to amend the approved Commercial Planned Zoning District titled C-PZD 03-8.00, Springwoods, located at I-540 and Hwy 112, containing approximately 289.26 acres. City Attorney Kit Williams read the ordinance. Jeremy Pate: The staff and the Planning Commission are recommending this amendment. This would allow for three uses within the Use Unit 4, elder care, hospital and dormitory. Lot 6 was planned as a commercial type development lot and all of the use units for typical commercial developments have already been approved. Use Unit 4 Cultural and Recreational Facilities was not one of those and the applicant is indicating they would like to develop something that would fall within that specific use unit. Alderman Cook moved to suspend the rules and go to the second reading. Alderman Ferrell seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. City Attorney Kit Williams read the ordinance. Alderman Jordan moved to suspend the rules and go to the third and final reading. Alderman Lucas seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. City Attorney Kit Williams read the ordinance. Mayor Coody asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Reynolds was absent. Ordinance 4890 Recorded in the Office of the City Clerk. Special Election Capital Sales Tax Extension: An ordinance calling for a Special Election on September 12, 2006 to extend the current three quarter (3/) cent Capital Sales Tax and authorize a one quarter (%) cent Capital Sales Tax for a Total Sales Tax of one (1) cent, issue bonds and short-term debt to pay for additional cost of the Waste Water System Improvement Program and for Phase 1 of the Transportation Improvement Program as recommended by the Street Committee and the Water and Sewer Committee. City Attorney Kit Williams: The draft that we handed out had some blanks in it so we fine tuned it. We handed one out tonight that says final on the top of it. I would like a motion to amend the draft ordinance. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) arrPc efavP}fPvill.. ,,,.,, City Council Meeting Minutes June 20, 2006 Page 9 of 10 Alderman Jordan moved to amend the Draft Version of the ordinance to the Final Version of the ordinance. Alderman Rhoads seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. City Attorney Sit Williams read the ordinance. Alderman Marr moved to suspend the rules and go to the second reading. Alderman Jordan seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. City Attorney Sit Williams read the ordinance. Alderman Jordan moved to suspend the rules and go to the third and final reading. Alderman Ferrell seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. City Attorney Sit Williams read the ordinance. Mayor Coody asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Reynolds was absent. Ordinance 4891 Recorded in the Office of the City Clerk Planning, Commission Compensation: An ordinance to amend § 33.108 Compensation of Article VII Planning Commission of the Fayetteville Code to provide that Planning Commissioners shall be compensated. City Attorney Sit Williams read the ordinance. Alderman Marr: The City of Fayetteville is the last city in Northwest Arkansas to do this and normally we are a leader in these areas. Benton County pays $100 a meeting plus mileage, Rogers pays $300 a month, Springdale pays $300 a month, Bentonville pays $3,600 a year and Washington County pays $75 a meeting. I certainly think our commission is worth this in terms of the value of the position. The amount that I chose was based on where we are today, I do not think it is enough. Mayor Coody: The Planning Commissioners put in a tremendous amount of time and effort, they take a lot of heat as well. We appreciate all their service. I do think they need to be compensated. Alderman Marr moved to suspend the rules and go to the second reading. Alderman Jordan seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. City Attorney Sit Williams read the ordinance 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accecsfavettevil le_ my City Council Meeting Minutes June 20, 2006 Page 10 of 10 Alderman Marr moved to suspend the rules and go to the third and final reading. Alderman Jordan seconded the motion. Upon roll call the motion passed 7-0. Alderman Reynolds was absent. City Attorney lit Williams read the ordinance. Mayor Coody asked shall the ordinance pass. Upon roll call the ordinance passed 7=0. Alderman Reynolds was absent. Ordinance 4892 Recorded in the Office of the City Clerk. Nleetin Adjourn7(®r 7:35 PILI Dan Coody, Mayor CERTIFICATE OF RECORD State of Arkansas City of Fayetteville I ss. I, Sondra Smith, City Clerk/'t'reasurer for the City of Fayetteville, do hereby certify that the foregoing instru rlt is a true and eorrect copy of the original N filed in my office ort the day of ob fitness my ha and seal this ay.pf _ 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfavetteville nro tJORTkiE'r'Gs C /,RKALJSAS C[]ITIQtJ`; Northwest '- I,r,r.. Times Renton County [wily Record P. O. BOX 1607 FAYETTEVILLE, AR 72702 PHONE: 479-571-6415 1, Elizabeth Wax, do solemnly swear that I am Legal Clerk of the Arkansas Democrat Gazette newspaper. Printed and published in Benton County Arkansas, (Lowell) and that from my own personal knowledge and reference to the files of said publication, the advertisement of: Ordinance 4891 Was inserted in the Regular Editions: June 294 2006 Publication Charge: $843.15 Subscribed a worn to before me Thi,�Rday o 2006. Notary Public Vww RUW� My Commission Expires: Sharlene D. Williams Notary Public State of Arkansas My Commission Expires October 18, 2414 JUL 0 5' 2666 CrrY OF FAYETrEVILLE CITY CLERICS OFFICE WMMEAB, 9W Cdr Canto,T of tae OCy d FarOVALMkaraas tto'Mnhof 6"Mrad ata rostii Mare is a ddicel reed dor an additmd saxoe Of MWWA b bnencCa MAUWAMW 1«!W63 and stns ' Masten re . AGA1 There it ammdbd a the quaMod doctors of ria City of Forma Wo. AKelaesm the question of Ila A DAT@ DNS OF "d*&M Of Capitia knpdranrart hada in pinGPd mirmnt not b exceed 417.000p00 (Ila Sends) oxvis t b Ilio lad GW4mmaM Bald Act for astOT �J &W a +UnB as «a P«Uoa a ma oma d agWAbn. caxku n. rawrofnalocay ARENT Y7. agipA" lmprrmmmaseer CR war NSWmdpWvlg"oned CEP• ARKAMSAS Pmocr P." mW Mtaad tatWfa(sa'pragep')O; attomWwy, brMhe phspcRi droUntlk+p YW Cib•Ywat«xdiTB. (2)waram�r revmW bmdi barm0 b Ganes M m a OdfMm1 a oro Pro�c. 0 ars bseones ;ARTAL of the Y2ttlawse( . 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Tae ter Cbar l hereby dkadmd loom mikes d "-pad sew Wbo usod.9(acesaalr«eppopdaPLbprovab («Ilhe Ila by ores advaasenafahamvaslspera9anh«d dkotiegort wittrbaw cox oat ptblAa9ahbba awbap4+4Mion taadNotondMBdauWUse Setesk.This4GopyoepdOrdhoW "beQkWbo- d debt O f and 04 to Batas flecfhrh G. Toms VW d n IWthacs alta be ofro h biro Wad Moon bCOW*e qua i dal. d iBatbn iMmat 62 and 04 lea Govorhn+as Bond Ad all sMb• . c ofmlof PftO aO VW -ft ink aim ler tb *Md so wM aor'd 0 old pard of A waam u proNOmHSedt oggmo me Baa l MWyarhmmio b dopy d pile Oadtlanae`sha9 oleo � prosbod b an'Oroc, -. ,Ila Ospmtm.. a Famed ata venom lade h 9fa at9Ne0eb Ip >cfpst amxt d nes a All orra Ila-8tas o tie spoc a section 0 db pi , -...1. : . iwhdnp N « a para+ a 900 boas dw�iy�m don. Baden 7: `71W 91s'feoaAs a We tpacol ebcam anal be fM OV #On ft C� �� A11016 dcateht 01-01fnabaa Clykwabhwar .moomitidl abqalxa!amW Cnewwiq; o..ddMola9 be o6kht" WWft A11016 tail fgmptt•W4 echl.MM Cot t tanner Cou t ahaf Vq0 C oro r M V* y (30) do0 slow be tarhb of pu masse a l ft b ltheon horn K Pa agWpolk of the of amomt a not b exCood Seat n Lilts Ow C W oral t Mrsy a dip etd ea data ego Cit; be d and prodmaliat v dao w «s pmaon d 900 to ft CWU Waste aaatma f;amon e. HW the Mwy« end Moss d alt ter end on Mello cof og a Cbx r' aactw May anabY aro ro d Catch harovallaat RO Mo qay$ waraWimr Wal aWlmladd and.�dtaCad b d0 initial q Blha newelmY b cd ata add Ma spscW sedan of Potction, edL65.900.000paMW&WtRiVtaamdngal dporWnatacopseaoqutsrdn.dao- ' m+aaaancaauueYaaropdcakaigttadrgpWayMkrp 'd whinCatraaaa.wtatl.mayartluda massed sidewalk tm tsigml all „mad, 151Y N all dnkags big -w* and dot• d'Aw bootAsmon. ell (e) the iaouanloo a to O oepsd krov rima t mMb In ma DOW69aw d aO' nada neLoauvbancoad i�cot .000�r Par ft wPurposes N>PdroAoatata am ' ofW4 cogs pmdeatdM altl d!ethege xnPfaYnoMeall rigtedaaY aoWtsSba. s9ppAfa� pb�aumaedanyd to�cpbffw"Wewbe lewd in on* moo owis,hi dere In ano o. d Rosa py, such Bot1M ntyitlerodNt W (esWd b Ofd of moo sabsftore t� atsro h an spWo-. flarelfa Kia a d by Zetauro aadm" :tea M "mid, ins mispeam °`itool ka B>dua w'D�Oved by the :adt w, P�apdad aW s lien upon est d aha rodapW d to Setas all UseTD4 at ajar W;Dd by %o . Ooverohent BSxMeon 33. Thal 9hm be. and aero It hawby abed. A epaael a cUm to be ass m Tuadaa: • SWwnt wr 12, 2000 m wMdt diction Cam ens ba•wDmrad so.to abet" d she City Ba qws lion's a9a"NAW ddaBaa. Sootier a, Tera 9aQuts*m"a PWW on Ila bafal fa Na'tPccW dOcdmm In IX00SWCONY aro foloaeg arras: . TherbandsdtsaWdbagwyet«ogipmad aybocw6n*dksooangabxm«awbaksund h soda from Gro to Ione. 11 me•bma for one or moss d 94 taaPaat dadabgdibaow aro apprum.9,aowa be wlad (o a dnequat« adnt peronx (02b%) aN! all ase �ex{9a ro xf% $ita ad tad Toe) mW 00 a Nros-awW of ma paint {0.70%) seri and wi to mw Imi Saba she Use wx OM not coodion at viiat imorimi g a6n Ila Gleta d Menzel daaoh b a*rbktWaiMa canpes wen be used.mkh a raft Rio bonds all doNstdm d ill CW a#h retPwd ' .• tlamb. Ties bvY all collecbn d IM 0.2S1i oda entl Use iia 1w oariamama mJawry a. 2007. Tao elaramah9omxd 0.15% Sties all Ube lbs was (spas an'omtAvg 9toPgwnors done paroard sales and qua tax(thw'R1a Tax*). The Prior Tax l ptedgW b stn plytrgMdesrtdnmidtgktsaA. �Itm d coslecti0. 5%Sda'Wand t Tax 9W Cow -ante an (aCtrn000110 WO *Ah 09ft p q M dura of expkatm of tM Riot TD. Wootton Ora: Bto"m 9. Tw far pwmm of Ila Baa all !Ila T94 yes terra'sagb def Y b do"d mommug a Ila nerd of tins goods ptadmud a k0olm .. A. Whin « m WveMMore dddae in% it, WWech Or yMtUaNJ Period or ty.IR or May ,ba; bamportoa or drawn: LwhdbO.but da SYAsd la co -mad Yonkbe. 01140od vaNcas or tam via icts.thiolsm%4i*d late leveed«not*gftr4:wsW%u*la. maPewdinci fnen•agar- ked vmtaclee or moblb leans, we sold We Psfam by a Steal such individual uaL Wwdw tart d a9ka'YW'«nd.NWbo W*W a . ka+aoolim ter Rld9Wpmad ft SON and tbs Tmc B. Cwgw *)r.V '.anima wtdch a,.= rc a b 900 Baa all the TOL and vA*h aro lumWvd ons is(itaa bias,Wa(hw*upi seMon a a paid let dW wmftno" or orwMy NmfM ompWadh.dssy atcrc+eaas, all each woh duty dfmQe at maWt Shall be OW410WO to be It-WOWWwocMdn ser 04 ptk Om of 9n Stla and Use The G. Fprsaime d'DtAW ''ladermals a. aan� lramo lloi% Wile Pispoaa d to Sas NO We 142, arta be danced to be"skgb ala.atdh is rokismadat aakga kaam mob" of aatamaa, on af*b to A W WA sola(Of dna)amt aghxa Ras boon MPOW end (emend a ion Bide aMbamw . D. When fvvoyamea Nord ofmoof Iboaldnid oppfwla•'ooarndeclef aw"Mo t. ma(or aqufp• mai a" am 4W. Sod. Rich Whidual Wet Mdl be abated as a singtra e nedW ton for Ta P Pas avw Baa ata rota TSV all E. For grocados, ftgJara. dry DoodS and Wer WVkb p mW Pworty Andier:anises rat avies*'464W in min Socom 9, a shpe vorwolm. for Its purpaas of the soba all use Tam4 ata be dow.WW be tfy IT"waadh b M%Mdan a Wgb imam. retold retold d ststanas, on grpa wtdchanagelebstax gues txst team rapofad and rmi@albaa SisbaAdWges, In 900 event lhm Ila CgwW Asad6y of the Sub at Aekanxa dist ddno'argio hanSaaim.' as General AetmlWylsds&Wml sot violate Cha we In this BaMaaB. Sacsd and T1W ka.Cby fxnatlms tb a CIV h t b both daeianae ro o ds It hall b laic the Bot+a•aM b rtiaat•met+hbWwrwt b IM Oy with a por9bn d to proedvOs uarod ter N erlginel expatfihraa iraxrad by" cry in ee0u1hkh0. doroahrrlV or equipphp 900 Protects approved W 900 vows Oawasa,ta deregal l sky (60) dap pqr b the dna d Ihls Ordinaries w d kba qua a Sofa d Bonds is lmAd. OA a do rttrhhta emolxt all paemhnyexpm00W[s, xsuchtarda OM rdaheQh Bldiae 1.150-M of ta•Foarol Marta Tax Rf9WWorw Thea is suenabd to 900 amriled deems of Ila Coy of Fay WA* Amkone" Ila qualm of M seam t f. 71st KW* Rook LLP Is tardy afgapsd a Bond Cmaaa and Stephan Ion, is befaby iwance d Ripka bVw nwA bands b pindpd Wit nes *M to axcted 12S,0DVW (ft �onpapadsalAldtrra9avAbmood bkaoqun0adtlaemhda. Tins�essatWaxptdadSaW YAt%ftw (nprovanwt Bands] mouart b Tera 100.01MOV 164. &mdudar 3 a 9fb-Araaaas Cassa and 6% lkWarwtUt sW bs a Cosi d lsanros d UK Seta a be Pad wdh Bad proepeda p Coda d IW Arnotmod(00 ixY GmmdnM Bad Aar) t« 900 papers Of MId0fg OR«; Porgy . Smulm 12.'thM 914 WMWWMdMOr b *Wxo we Mnby doclrodtolas Npaable and Mpa .orw k tat of the cow of , bequMb comaudim, mwaNx9on. mdahaod and ewiP0Vq of M"vWM 90'W my roster be tole 15190 wift 0. wtlt ho(&V OW its &%W rho wieldy d 900 inera"donb to Bn 01ft wastewater Imeonot tlmkt sad related Willies. 9 Ila ram d tits Order +m. . •w d Ma w&ocw*W Itaprovahat 8mm issppraad. tht WasWmW klprdgnKM keds Section 0:11w of mt&ances aW torn *wad in ocdtla haa«Alf aro twety repeated b ft Oman a mood by a pbdgs.d all son upon 0) all of ft reeaptt.d.fM 025%Saki and Use Tax dtwM e«ifol. * ra d the 0.75% Sells arta Luc Tax, sem Wad Pwsum b o t>a Loc Bm .«.mp PA988P all APPROV90 eta sen day of JWm. 2006. APPROYM ATTSB'R Vbb an 900 Wamdhl ty Alarm; ad 'r In ora d Ila &Qwms 9 the Wasson, datW 1« or By: . egesta: •DAN GOODY, Moyer BONWIA WAYM, City Clark • FOR ft huxi ha d Waaawdor In owame ht Bonds n W44 aroWt at 10 Mood MAMA06 IORTMICATS • to Me pirgeas d &writing am «a Portion of tib 00sh'd.rwAlom conivocGon. rsCpm44Ve"I sdenowand auopalgacanolnwvviong"10 ftCRYtwagswel«MIRIAMplats,sti-Ve TMtnarafpnd,City C"of MCity dFayakvSs,AdKma.hereby are9a9+M9abrebdrvIs and fellow k0mia. lrwh g e*44 way e0qukffiona her ata Period COW 9f an Ordnmae 100014 a araptferrat" Of The coy CMM d:1114 CIIY b OF . MAN" addmCAOPAL mJab047006. ADAM 900 tistwn X d NRobhveor krQM' n WgLfiWor in pik VJ anbtat not 100 exdead- mom" tor "mom of randhp IN of e Patted of.9a voeb of loqulakort' .... �f!Yii�vta.•:=.. .: r•+.� taoonanhcIlorl, ehaaakxi 110 tax ,mnadLmQrovantrib b 900 CtYY StleTfli'./1ly;s>aera"• .r •r.r,. ' Nate,PerverepsaftiMKlsd•• 'dgN�MvwacW4hars._w,.___M_ .., . ,�.r"• - ..... AA , old dab hmprovmra+ma wlanh Pa Car: eW . AGA1 til aMidla WN Chapter, A4. MAnAoto (010,dnpa O WO&t62a9l ft MMmbdam I Chapter ter. £Mach 3 Ra AmaKas Cada d i>E7 An . slot SWA ds oYrrxxt . iaam many S Aa7 auagnm kid sUa e d Capitol tni kr4:1 *145M WNCOCal bond: W .water • ofa t o of ft Wada) 041nd Pret be eocvre0 by the Cedes d ser d Ila+deepa a n,a tamam ada'anW ass 1mr patmdbad be 2 . by tins toed Gauammpt 0014 Aai all Quo ' WOMMEAS, ad gmial d1ya6de idea andua legal are to be bvhdAnd collected"on Me kat TfaM 52500 d each shpb aantaka+: Md it" ' UMIAaRSAO, Iles CRY this Pm AN* Issued NO emcee to Osseine/ atsiah IkV 0) As nes b ebxtd WPM S2a=AW Soba all Ute Taff Revenue Bond. Sema 2006 (Mes 'Sorbs 20W Bond'. W as apart ' 527.000.000 Wet and rtes Tax (bAxhWho and CePtd bhpnadrwt Sada. Sgdm 2005A (000 'Serbs Kew • . 2005A•Bo dsi. all (14 ks Sa itm5A00 Saba all Uso Ter[ CX" aMww0ff res Balls. Subs 2w0058 (AWe lorim�Zp 38 Borer.' anal boatna:wah Ila SO0011 2006 Bond 04 tM Sod= ' aahM d PA ' jmmW i17A00A00 fortae pWpo or b maxW welx and it ceola imagooftoMat bonds a rnartdirwcamahaaedthtxotm« :DDD far 900 MOM of WAf.* B W Whatehg se ars Paton of Ra Cosh of ma ON rtara CUm4'magaiOnand scsipp'ng aka imomam"10 W coo wawa "-WPP- -W Ledws. mk.6v alta way somal minqd _ _D id WAVed deCtom of the CRy of kit aamo nt bonds in wk,*a wnmts M 10 ssswsd 9<b. MM (ft Sea xm qua on ea %MHOn by ptocb0 an `r baa d." wpAm t MAV as question. dear ter a cd • againal. I FOt9a lweneed WeatlirgaoWrtertfa«k of ptinel)miamamRnotle aseee0E�11o0.0llOtar9a Mr. .IpxppsgALrims a Porton of Ise 002bd adquIslim corml mut f, mcoahmom wpok. t b strowso"hp and ' d certain Ckv:kale. Wadh ray mcodo Msbd sWawosc sotto xiphd do . 4nd*W%oL VxWbD. all drainage all h Yoaiamad-._..D_ ,01 AGA0i6f aro leta�a6 d Strad Get BOtWa in pwrdpaR umW nat'a.amid�5.90D.0DD not i« Ila d 1' er a s porton 0100 colla of acghiWa4 moaKaudark um • spall � d caWn ORr wool: Wh may hUWa Wawea4 kelt no- , st9W.ar0aarol. -bhp. WAOA Q a d.d hplrommm and hiBefdf'xely scAubatan..n gtwr W d ora Daafa (0.25%) spadt(elywab sate" and sae ax Mm' V=16 Silos ata tato Tax? and (W an d d 900 Pala BonOs haver beat rmro0lan Ila realta d to Pfbr Tsc a fAtdWt of Oucmim F«Ir and ban upon at of era radial d a tt mogj da done paeans f,75%):pada o4ywfde soles and Tiarw b auMJKod b to gwtAM slttda a to Cay d fayatahsmo. Arkanse, tin¢ quoad d Ila use as (be ^M?S%Sales Wind Use Tax") rqt"hg to Rte TSL f" 800 VAhmize0 byAmatim apt 02 ,. btuamt at CMPW hoover ad:bmft h pbclool smoua Cetb *.Cftd S2.MM (aa Tra6 and the Lma Gowtmmant gond Am mW impnm Ovant Boob') pbmW t ata LOCd G"Wiihad Said Aa for 900 papa Of Marah9 at or 1Wl$RBAS,tap«pW0I pfd 0rdWMt5to CdlaspaWRobaoonat rid bstfaaediM Boat a•padbnditn Omttattpiiam,C«nauelan.aM 9gatppahgdanan( sat tysamkramdva• bYter CR/ and (Of related Phdpoaex: _ .. ;meMt.k Mn leaw+Obd9aTlm1lmproVsnhoM Bonds liappgro�kalatT Bads stove be sectored by a W"e of and asn open M m of to mc*ta of the 0.25% doln all Use Tax and NOW. THaRSWOM as IT OSPARN Oby the Wty Wwmlf of tine ORY see Fagrottwlffer (D see of to Ked(ds offt(I S010%afdUfa Tax. Oiled psawa b 1h8 LOW Government ANtansam Band AOL . s.; Sediont. RTW Uderaa amboaiy d An>analfnmr82'6M t» t;eeat doicrfsmnt cord Act all am• • 1Ade•on lino' asa6m' DY ploc4hg an'X' N•dmo d am anyi oar rot�0 iter afar « SSodpn 3 W P*WovW of vtto use hotrodbr l�wlod (q wft a edea U4 Bonds W rr� of one a oM p«f t„ (0.26%)and 00 a sola lax at Ma rub d aaaWalxa dons~(OJti%)cA Ila Wan W.610M FWtho fiaMiiee 4sra7 So* inWhclal areaMi•rat b macskd e2.10MOD for to um to ode all may wlatm bre ckCRyy d 005 aann and "Mcce W" «o (a mmumh tarda kb pupae of &Wckv d1 or a Portion of lino Cosa of aopdelSm ata saakuci6On of oatah CRY to Aransas,Omu Recaipta Act a•1941, as amaldod (Mmror Code of 1807 MMUW $24 62-110`1 - aydomNVboornef . Groh MW awfude-MkW pedestrian VWW all tliaha9a.hV iovm�nm And d sea.). all (p) an 6aDle (df use) in at as rate of onegmrbr d One Pmmmw {Ods%) all (M an erase (« Use) tat at Der ala Of 0-060 *s of We p&wd (0.74%) on Ila swam me, dshdxh ern a now omaurr otmw" Ila Cay of tenoba aorsond amp" or tasahb 001VIMa sobIW a AGAPW Ma hamam of Tian I n otowams Seta in pfoclod ararat not to mvees0 $2.100 ter we-Stla.and use Un Taw Stat all Use Tat pore be 404%4" abw*kk+--_-:__..__-.-..-�__._._�..._.,..._.__....... fa.Cala^mlptYarooc6oM(Riddiad3t6eameaent• .. tWs all Useias sIW canmmewm mW a Caber SDCWn 6. oaf ria abhzah Cat bo thoN end atidreFW and 900 vote CawbRia all Ila faVaa lAe4aM etW.eeaao tao!h mkmnpthaMdta BmWa. declaadWWa9m leer emtfhMa hrhanvbmrndepbrWadfor Adamafnaicba atectono hraab oto all qua Tmf chide nil d on 90 Aep�dab ' arwbe'par(dad h to teed (ibvemmat Bond ter all oily qumWd wbti a 900 CAx au4 aero hRi uPa+rotromat h AA d 900 Borhdi: VVy d ti by ww vase tt ne steam. Tae ter Cbar l hereby dkadmd loom mikes d "-pad sew Wbo usod.9(acesaalr«eppopdaPLbprovab («Ilhe Ila by ores advaasenafahamvaslspera9anh«d dkotiegort wittrbaw cox oat ptblAa9ahbba awbap4+4Mion taadNotondMBdauWUse Setesk.This4GopyoepdOrdhoW "beQkWbo- d debt O f and 04 to Batas flecfhrh G. Toms VW d n IWthacs alta be ofro h biro Wad Moon bCOW*e qua i dal. d iBatbn iMmat 62 and 04 lea Govorhn+as Bond Ad all sMb• . c ofmlof PftO aO VW -ft ink aim ler tb *Md so wM aor'd 0 old pard of A waam u proNOmHSedt oggmo me Baa l MWyarhmmio b dopy d pile Oadtlanae`sha9 oleo � prosbod b an'Oroc, -. ,Ila Ospmtm.. a Famed ata venom lade h 9fa at9Ne0eb Ip >cfpst amxt d nes a All orra Ila-8tas o tie spoc a section 0 db pi , -...1. : . iwhdnp N « a para+ a 900 boas dw�iy�m don. Baden 7: `71W 91s'feoaAs a We tpacol ebcam anal be fM OV #On ft C� �� A11016 dcateht 01-01fnabaa Clykwabhwar .moomitidl abqalxa!amW Cnewwiq; o..ddMola9 be o6kht" WWft A11016 tail fgmptt•W4 echl.MM Cot t tanner Cou t ahaf Vq0 C oro r M V* y (30) do0 slow be tarhb of pu masse a l ft b ltheon horn K Pa agWpolk of the of amomt a not b exCood Seat n Lilts Ow C W oral t Mrsy a dip etd ea data ego Cit; be d and prodmaliat v dao w «s pmaon d 900 to ft CWU Waste aaatma f;amon e. HW the Mwy« end Moss d alt ter end on Mello cof og a Cbx r' aactw May anabY aro ro d Catch harovallaat RO Mo qay$ waraWimr Wal aWlmladd and.�dtaCad b d0 initial q Blha newelmY b cd ata add Ma spscW sedan of Potction, edL65.900.000paMW&WtRiVtaamdngal dporWnatacopseaoqutsrdn.dao- ' m+aaaancaauueYaaropdcakaigttadrgpWayMkrp 'd whinCatraaaa.wtatl.mayartluda massed sidewalk tm tsigml all „mad, 151Y N all dnkags big -w* and dot• d'Aw bootAsmon. ell (e) the iaouanloo a to O oepsd krov rima t mMb In ma DOW69aw d aO' nada neLoauvbancoad i�cot .000�r Par ft wPurposes N>PdroAoatata am ' ofW4 cogs pmdeatdM altl d!ethege xnPfaYnoMeall rigtedaaY aoWtsSba. s9ppAfa� pb�aumaedanyd to�cpbffw"Wewbe lewd in on* moo owis,hi dere In ano o. d Rosa py, such Bot1M ntyitlerodNt W (esWd b Ofd of moo sabsftore t� atsro h an spWo-. flarelfa Kia a d by Zetauro aadm" :tea M "mid, ins mispeam °`itool ka B>dua w'D�Oved by the :adt w, P�apdad aW s lien upon est d aha rodapW d to Setas all UseTD4 at ajar W;Dd by %o . Ooverohent BSxMeon 33. Thal 9hm be. and aero It hawby abed. A epaael a cUm to be ass m Tuadaa: • SWwnt wr 12, 2000 m wMdt diction Cam ens ba•wDmrad so.to abet" d she City Ba qws lion's a9a"NAW ddaBaa. Sootier a, Tera 9aQuts*m"a PWW on Ila bafal fa Na'tPccW dOcdmm In IX00SWCONY aro foloaeg arras: . TherbandsdtsaWdbagwyet«ogipmad aybocw6n*dksooangabxm«awbaksund h soda from Gro to Ione. 11 me•bma for one or moss d 94 taaPaat dadabgdibaow aro apprum.9,aowa be wlad (o a dnequat« adnt peronx (02b%) aN! all ase �ex{9a ro xf% $ita ad tad Toe) mW 00 a Nros-awW of ma paint {0.70%) seri and wi to mw Imi Saba she Use wx OM not coodion at viiat imorimi g a6n Ila Gleta d Menzel daaoh b a*rbktWaiMa canpes wen be used.mkh a raft Rio bonds all doNstdm d ill CW a#h retPwd ' .• tlamb. Ties bvY all collecbn d IM 0.2S1i oda entl Use iia 1w oariamama mJawry a. 2007. Tao elaramah9omxd 0.15% Sties all Ube lbs was (spas an'omtAvg 9toPgwnors done paroard sales and qua tax(thw'R1a Tax*). The Prior Tax l ptedgW b stn plytrgMdesrtdnmidtgktsaA. �Itm d coslecti0. 5%Sda'Wand t Tax 9W Cow -ante an (aCtrn000110 WO *Ah 09ft p q M dura of expkatm of tM Riot TD. Wootton Ora: Bto"m 9. Tw far pwmm of Ila Baa all !Ila T94 yes terra'sagb def Y b do"d mommug a Ila nerd of tins goods ptadmud a k0olm .. A. Whin « m WveMMore dddae in% it, WWech Or yMtUaNJ Period or ty.IR or May ,ba; bamportoa or drawn: LwhdbO.but da SYAsd la co -mad Yonkbe. 01140od vaNcas or tam via icts.thiolsm%4i*d late leveed«not*gftr4:wsW%u*la. maPewdinci fnen•agar- ked vmtaclee or moblb leans, we sold We Psfam by a Steal such individual uaL Wwdw tart d a9ka'YW'«nd.NWbo W*W a . ka+aoolim ter Rld9Wpmad ft SON and tbs Tmc B. Cwgw *)r.V '.anima wtdch a,.= rc a b 900 Baa all the TOL and vA*h aro lumWvd ons is(itaa bias,Wa(hw*upi seMon a a paid let dW wmftno" or orwMy NmfM ompWadh.dssy atcrc+eaas, all each woh duty dfmQe at maWt Shall be OW410WO to be It-WOWWwocMdn ser 04 ptk Om of 9n Stla and Use The G. Fprsaime d'DtAW ''ladermals a. aan� lramo lloi% Wile Pispoaa d to Sas NO We 142, arta be danced to be"skgb ala.atdh is rokismadat aakga kaam mob" of aatamaa, on af*b to A W WA sola(Of dna)amt aghxa Ras boon MPOW end (emend a ion Bide aMbamw . D. When fvvoyamea Nord ofmoof Iboaldnid oppfwla•'ooarndeclef aw"Mo t. ma(or aqufp• mai a" am 4W. Sod. Rich Whidual Wet Mdl be abated as a singtra e nedW ton for Ta P Pas avw Baa ata rota TSV all E. For grocados, ftgJara. dry DoodS and Wer WVkb p mW Pworty Andier:anises rat avies*'464W in min Socom 9, a shpe vorwolm. for Its purpaas of the soba all use Tam4 ata be dow.WW be tfy IT"waadh b M%Mdan a Wgb imam. retold retold d ststanas, on grpa wtdchanagelebstax gues txst team rapofad and rmi@albaa SisbaAdWges, In 900 event lhm Ila CgwW Asad6y of the Sub at Aekanxa dist ddno'argio hanSaaim.' as General AetmlWylsds&Wml sot violate Cha we In this BaMaaB. Sacsd and T1W ka.Cby fxnatlms tb a CIV h t b both daeianae ro o ds It hall b laic the Bot+a•aM b rtiaat•met+hbWwrwt b IM Oy with a por9bn d to proedvOs uarod ter N erlginel expatfihraa iraxrad by" cry in ee0u1hkh0. doroahrrlV or equipphp 900 Protects approved W 900 vows Oawasa,ta deregal l sky (60) dap pqr b the dna d Ihls Ordinaries w d kba qua a Sofa d Bonds is lmAd. OA a do rttrhhta emolxt all paemhnyexpm00W[s, xsuchtarda OM rdaheQh Bldiae 1.150-M of ta•Foarol Marta Tax Rf9WWorw Thea is suenabd to 900 amriled deems of Ila Coy of Fay WA* Amkone" Ila qualm of M seam t f. 71st KW* Rook LLP Is tardy afgapsd a Bond Cmaaa and Stephan Ion, is befaby iwance d Ripka bVw nwA bands b pindpd Wit nes *M to axcted 12S,0DVW (ft �onpapadsalAldtrra9avAbmood bkaoqun0adtlaemhda. Tins�essatWaxptdadSaW YAt%ftw (nprovanwt Bands] mouart b Tera 100.01MOV 164. &mdudar 3 a 9fb-Araaaas Cassa and 6% lkWarwtUt sW bs a Cosi d lsanros d UK Seta a be Pad wdh Bad proepeda p Coda d IW Arnotmod(00 ixY GmmdnM Bad Aar) t« 900 papers Of MId0fg OR«; Porgy . Smulm 12.'thM 914 WMWWMdMOr b *Wxo we Mnby doclrodtolas Npaable and Mpa .orw k tat of the cow of , bequMb comaudim, mwaNx9on. mdahaod and ewiP0Vq of M"vWM 90'W my roster be tole 15190 wift 0. wtlt ho(&V OW its &%W rho wieldy d 900 inera"donb to Bn 01ft wastewater Imeonot tlmkt sad related Willies. 9 Ila ram d tits Order +m. . •w d Ma w&ocw*W Itaprovahat 8mm issppraad. tht WasWmW klprdgnKM keds Section 0:11w of mt&ances aW torn *wad in ocdtla haa«Alf aro twety repeated b ft Oman a mood by a pbdgs.d all son upon 0) all of ft reeaptt.d.fM 025%Saki and Use Tax dtwM e«ifol. * ra d the 0.75% Sells arta Luc Tax, sem Wad Pwsum b o t>a Loc Bm .«.mp PA988P all APPROV90 eta sen day of JWm. 2006. APPROYM ATTSB'R Vbb an 900 Wamdhl ty Alarm; ad 'r In ora d Ila &Qwms 9 the Wasson, datW 1« or By: . egesta: •DAN GOODY, Moyer BONWIA WAYM, City Clark • FOR ft huxi ha d Waaawdor In owame ht Bonds n W44 aroWt at 10 Mood MAMA06 IORTMICATS • to Me pirgeas d &writing am «a Portion of tib 00sh'd.rwAlom conivocGon. rsCpm44Ve"I sdenowand auopalgacanolnwvviong"10 ftCRYtwagswel«MIRIAMplats,sti-Ve TMtnarafpnd,City C"of MCity dFayakvSs,AdKma.hereby are9a9+M9abrebdrvIs and fellow k0mia. lrwh g e*44 way e0qukffiona her ata Period COW 9f an Ordnmae 100014 a araptferrat" Of The coy CMM d:1114 CIIY b OF . MAN" addmCAOPAL mJab047006. ADAM 900 tistwn X d NRobhveor krQM' n WgLfiWor in pik VJ anbtat not 100 exdead- mom" tor "mom of randhp IN of e Patted of.9a voeb of loqulakort' .... �f!Yii�vta.•:=.. .: r•+.� taoonanhcIlorl, ehaaakxi 110 tax ,mnadLmQrovantrib b 900 CtYY StleTfli'./1ly;s>aera"• .r •r.r,. ' Nate,PerverepsaftiMKlsd•• 'dgN�MvwacW4hars._w,.___M_ .., . ,�.r"• - ..... AA , j IT P1QftTHWFST ARKA;iSAS, �DiTIOt�I Northwest Arkansas TWe Benton County Daily Record P. O. BOX 1607 FAYETTEVILLE, AR 72702 PHONE: 479-571-6415 I, Elizabeth Wax, do solemnly swear that 1 am Legal Clerk of the Arkansas Democrat Gazette newspaper. Printed and published in Benton County Arkansas, (Lowell) and that from my own personal knowledge and reference to the files of said publication, the advertisement of: NOTICE OF SPECIAL ELECTION Was inserted in the )Regular Editions: �. August 30, 2006 Publication Charge: $306.60 Subscribed and sworn to before me Th(sq)day.of� 2006. Notary Public (§.Ao _. My Commission Expires: Sharlene Q. Williams Notary Public State of Arkansas MY Commission Expires October 18, 2014 RSC i\jD SEP ZN6 C" CLERKS FFICE ! t .u+hh Y I is 1 •e %t;r�n�1•y} AU I a 1 T . t. .111 111 rm"ma�vg. x�7t1 1 r „ X111 111 111 Pi�l ~ + t�'� �•�� .hlr •/�i141•/r k'R1 '� .k 111 ill ^•'^C1 �cM�el aia�;«�t.�x if.. y 11 +'r^�fltl�l 7 J„ly �t�l t'Ifly,! ii rt7�la1X.�11�ii{�; 1H fI lt. i4�1 }Trp yi0�p- 1.�� . , , ' ,��k�5'r4�. L't�.''ii`drt�fe,7�•, `�+ f ' { J« � �"q3r �� :II 111 fu ro .1 r. 9 ,1 11 ill } J. zn�� CITY C�EaK s FFICE WHEREAS, a Special Election was held on September 12, 2006, regarding the issuance of Capital Improvement Bonds (Wastewater Improvement Bonds) for the purpose of financing certain Wastewater System Improvements, the issuance of Capital Improvement Bonds (Wastewater Improvement/Refunding Bonds) for the purpose of financing or refinancing certain Wastewater System Improvements, Capital Improvement Bonds (Street Improvement Bonds) for the purpose of financing certain Street Improvements and the issuance of Capital Improvement Bonds (Trail Improvement Bonds) for the purpose of financing certain Trail System Improvements as set forth in Ordinance Number 4891. NOW, THEREFORE, I, Dan Coody, Mayor of the City of Fayetteville, by virtue of the authority vested in me by law, do hereby proclaim the following to be the results of the September 12, 2006 Special Election: 4,442 FOIL the issuance of Wastewater Improvement Bonds in principal amount not to exceed $25,000,000 for the purpose of financing all or a portion of the costs of acquisition, construction, reconstruction, extension and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities, including right-of-way acquisition. 1,384 AGAINST the issuance of Wastewater Improvement Bonds in principal amount not to exceed $25,000,000 for the purpose of financing all or a portion of the costs of acquisition, construction, reconstruction, extension and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities, including right-of-way acquisition. QUESTI®N TWO: 4,433 FOR the issuance of Wastewater Improvement/Refunding Bonds in principal amount not to exceed $17,000,000 for the purpose of financing or refinancing all or a portion of the costs of acquisition, construction, reconstruction, extension and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities, including right-of-way acquisition. 1,437 AGAINST the issuance of Wastewater Improvement/Refunding Bonds in principal amount not to exceed $17,000,000 for the purpose of financing or refinancing all or a portion of the costs of acquisition, construction, reconstruction, extension and equipping of the improvements to the City's wastewater treatment plants, sewerage and related facilities, including right-of-way acquisition. 4,274 FOR the issuance of Street Improvement Bonds in principal amount not to exceed $65,900,000 for the purpose of financing all or a portion of the costs of acquisition, construction, reconstruction, repair, straightening and widening of certain City streets, which may include related sidewalk, traffic signal and control, curbing, guttering and drainage improvements and right-of-way acquisition. 1,536 AGAINST the issuance of Street Improvement Bonds in principal amount not to exceed $65,900,000 for the purpose of financing all or a portion of the costs of acquisition, construction, reconstruction, repair, straightening and widening of certain City streets, which may include related sidewalk, traffic signal and control, curbing, guttering and drainage improvements and right-of-way acquisition. 3,532 FOR the issuance of Trail Improvement Bonds in principal amount not to exceed $2,100,000 for the purpose of financing all or a portion of the costs of acquisition and construction of certain City trail system improvements, which may include related pedestrian signal and drainage improvements and right-of-way acquisition. 2,271 AGAINST the issuance of Trail Improvement Bonds in principal amount not to exceed $2,100,000 for the purpose of financing all or a portion of the costs of acquisition and construction of certain City trail system improvements, which may include related pedestrian signal and drainage improvements and right-of-way acquisition. NOW, THEREFORE, ORE, I, Dan Coody, Mayor of the City of Fayetteville, do hereby notify all persons that the results of the election regarding Capital Improvement Bonds to be used for certain Wastewater Improvements, certain Street Improvements and certain Trail System Improvements shall be conclusive unless attacked in the courts within thirty (30) days. IN WITNESS WHEREOF, I have hereunto set my hand and caused the seal of my office to be affixed this day of September, 2006. SONDRA SMITH, City Clerk/Treasurer `.o%till if ��RK/TR�s., , FAYETTEVILLE ®all - R/,q sA • \ Xs,C •. • ";, SMG ,0VA 0e'"hil�, r N,O13THWESTARKgNSA5 E01TI0tJ Benton County Daily Record P. O. BOX 1607 FAYETTEVILLE, AR 72702 PHONE: 479-571-6415 I, Karen Caler, do solemnly swear that I am Legal Clerk of the Arkansas Democrat Gazette newspaper. Printed and published in Benton County Arkansas, (Lowell) and that from my own personal knowledge and reference to the files of said publication, the advertisement of: PUBLIC NOTICE Was inserted in the Regular Editions: .September 29, 2006 Publication Charge: $229.95 Subscribed and sworn to before me Tliisday of ' 20 2006. (Votary Public "'OI &"—, - My Commission Expires: Sharlene D. Williams Notary Public State of Arkansas My Commission Expires October 18, 2014 OCT 0 3 2006 CITY OF FAYETTEVILLE CITY CLERK'S OFFICE R f ::-�m Mra CERTIFICATE OF WASHINGTON COUNTY BOARD OF ELECTION COMMISSIONERS . ASCERTAINING AND DECLARING RESULTS OF SPECIAL ELECTION We, the undersigned members of the Board of Election Commissioners of WasNngton County, Arkansas, hereby certify that: o • ��� rn -li Returns of the votes of the City of Fayetteville special election held S ' r 1212401�= have been delivered to us by the Washington County Clerk. The returns s nu;�er votes for each ballot question. oc5 � We ascertain and declare the results of the election to be: cD On the question of the issuance of capital improvement bonds in principal amount not to exceed 525,000,000 (the "Wastewater Improvement Bonds') pursuant to Title 14,. Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Annotated (the "Local Government Bond Act") for the purpose of financing all or a portion of the costs of acquisition, construction, reconstruction, extension and equipping of certain -improvements to the City's wastewater treatment plants, sewerage and related facilities. FOR 4,442 votes AGAINST: 1,384 votes On the question of the issuance of capital improvement bonds in principal amount not to exceed $17,000,000 (the "Wastewater Improvement/Refimding Bonds") pursuant to the Local Government Bond Act for the purpose of directly "financing all or a portion of the • costs of acquisition, construction, reconstruction, extension and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities (the "Project") or, alternatively, for the purpose of refunding the City's water and wastewater revenue bonds originally issued to finance all or a portion of the Project. ' FOR _{t , 433 votes AGAINST: I, /A 37 votes On the question of the issuance of capital improvement bonds in principal amount not to exceed $65,900,000 (the "Street Improvement Bonds') pursuant to the Local Govemment Bond Act for the purpose of financing all or a portion of the costs of acquisition, construction and equipping of certain street improvements. FOR 4,274 votes AGAINST: 1,536 votes RECEIVE® SEP 2 7 2006 CITY OF FAYETMVILLE CITY CLERK'S OFFICE r s On the question of the issuance of capital improvement bonds in principal amount not to . exceed $2,106,000 (the 'Trail Improvement Bonds'? pursuant to the Local Government Bond Act for the purpose of financing all ora portion of the costs of acquisition, construction and equipping of certain City trail system improvements. FOR: 3,532 votes AGAINST: 2,271 votes WITNESS our hands this 27ttday of September , 2006. CERTIFICATE OF RECORD State of City ofSmitaylis f, Sondra Smith, City Cierfr/i'reasurer for the City � of Fayetteville, do hereby certify that the kmiOng instrument Is' ate and correct copy Commissioner of the original /• ��__,__ fl In y oNce on Nle day of h Pand sea( this ay Witness my CLOSING CERTIFICATE AND REQUEST OF THE CITY The undersigned Mayor and City Clerk of the City of Fayetteville, Arkansas, a duly organized municipality and political subdivision of the State of Arkansas (the "City"), do hereby certify, represent, covenant and request as follows: 1. The undersigned are the duly elected, qualified, and acting Mayor and City Clerk of the City, and as such officials have in their possession or have access to the official books and corporate records of the City. This Certificate is executed and delivered in connection with the issuance of the City's $9,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"). 2. Attached hereto as Exhibit A is a true, complete, and correct copy of Ordinance No. 5803 (the "Bond Ordinance"), duly adopted by a majority of the City Council at a duly called regular meeting of the City Council, open to the public, held October 6, 2015. The Bond Ordinance authorizes the issuance, sale and delivery of the Bonds, and the Bond Ordinance is in full force and effect and has not been altered, amended or repealed as of the date hereof. No petition or petitions to refer the Bond Ordinance to the people under Amendment No. 7 to the Constitution of the State of Arkansas have been filed as of the date hereof, and the City Council has not referred the Bond Ordinance to the people for adoption or rejection. Attached hereto as Exhibit B is a true, complete and correct copy of the minutes of a meeting of the City Council held October 6, 2015, showing adoption of the Bond Ordinance, as said minutes appear in the official records of the City. At said meeting a quorum was present and acted throughout. Attached hereto as Exhibit C is a true, complete, and correct copy of a publisher's affidavit showing publication of the Bond Ordinance in the Northwest Arkansas edition of the Arkansas Democrat -Gazette on October 15, 2015. No authority or proceeding in connection with the issuance, sale and delivery of the Bonds has been repealed, revoked or rescinded. 3. The following described instruments, as executed and delivered by the Mayor and/or City Clerk, are in substantially the same form and text as the copies of such instruments which were before and approved by the City Council at the October 6, 2015 meeting referred to in paragraph 2 above, with such changes not inconsistent with the Bond Ordinance as have been approved by the officials executing the same. Document Fourth Supplemental Trust Indenture Tax Regulatory Agreement 4834-9335-0186.2 = As of November 1, 2015 November 12, 2015 Other Party or Parties Simmons First Trust Company, N.A., as Trustee (the "Trustee") Trustee Continuing Disclosure Simmons First Trust Company, Agreement November 12, 2015 N.A., as dissemination agent Bond Purchase Agreement October 21, 2015 Stephens Inc. (the "Underwriter") Official Statement October 21, 2015 None The Fourth Supplemental Trust Indenture, the Tax Regulatory Agreement, the Continuing Disclosure Agreement, the Bond Purchase Agreement and the Official Statement are hereinafter collectively referred to as the "City Documents." 4. The persons named below were on the date or dates of the execution of the City Documents, and are on the date hereof, the duly qualified and acting incumbents of the offices of the City set opposite their respective names. The undersigned, or their successors in office, are the authorized representatives of the City for all purposes of the Bond Ordinance and the City Documents. Title Naive Mayor Lioneld Jordan City Clerk Sondra Smith 5. The undersigned Mayor of the City did manually execute each of the City Documents and the undersigned City Clerk of the City did manually attest the Fourth Supplemental Trust Indenture. The undersigned Mayor of the City did manually execute and the undersigned City Clerk did manually attest $9,000,000 aggregate principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2015, said series of bonds being initially issued in the form of nine fully registered bonds numbered from R15-1 upwards, initially dated as of November 12, 2015 (the "Bonds"). 6. The City has duly authorized, executed and delivered the Bonds and each of the City Documents by all necessary action and, as of the date hereof, the Bonds and each of the City Documents are in full force and effect and each constitutes the valid, binding and enforceable obligation of the City, except to the extent their enforceability may be limited by bankruptcy, insolvency or other similar laws affecting creditors' rights generally, or by the availability of equitable remedies, and the City is entitled to the benefits of the same. 7. Any certificate signed by any official of the City (including this certificate) delivered to the Trustee or the Underwriter shall be deemed a representation and warranty by the City to the Trustee or the Underwriter as to the statements made therein (and herein). 8. The seal affixed to this certificate is the legally adopted, proper and only official seal of the City, and has been duly affixed to the Bonds. 2 4834-9335-0186.2 9. The meeting of the City Council of the City referred to in paragraph 2 hereof was open to the public in compliance with the provisions of Section 25-19-106 of the Arkansas Code Annotated (2014 Repl.), as amended and supplemented. 10. The present officials of the City and their respective terms are as follows: Name Office Term Expires Lioneld Jordan Mayor 12/31/16 Kit Williams City Attorney 12/31/18 Sondra Smith City Clerk 12/31/16 Adella Gray Alderman 12/31/18 Mark Kinion Alderman 12/31/18 John La Tour Alderman 12/31/18 Alan Long Alderman 12/31/16 Sarah Marsh Alderman 12/31/16 Matthew Petty Alderman 12/31/16 Martin Schoppmeyer, Jr. Alderman 12/31/16 Justin Tennant Alderman 12/31/18 11. The Authorized Representative of the City for all purposes of the Trust Indenture dated as of November 1, 2006, as amended and supplemented by the First Supplemental Trust Indenture dated as of October 1, 2007, by the Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (the "Trust Indenture"), is Lioneld Jordan, Mayor, whose signature appears on page 6. Until further written notice to you, any instrument authorized by the Trust Indenture to be signed by an Authorized Representative of the City is to be honored if it contains the manual signature of this individual. 12. The City has not and will not engage in any activity which might result in the income of the Bonds becoming taxable to it or any interest on the Bonds becoming taxable to the recipients thereof under the Federal income tax laws. This covenant is made to all owners of the Bonds, their successors and assigns, as a further inducement for the purchase of the Bonds. 13. All of the conditions, covenants and agreements required in the Trust Indenture to be satisfied or performed by the City at or prior to the issuance and sale of the Bonds have been complied with, satisfied or performed in the manner and with the effect contemplated in the Bond Purchase Agreement and the Trust Indenture. The representations and warranties of the City contained in the Bond Purchase Agreement and the Trust Indenture are true and correct in all material respects on and as of the date of this Certificate as if made on the date of this Certificate. 14. The information contained in the Official Statement relating to the City, its organization, properties, operations and financial condition, and the description of the Bonds, the Trust Indenture, Ordinance No. 4891 of the City adopted June 20, 2006 (the "Election Ordinance"), the Bond Ordinance, the one-quarter of one percent (0.25%) special city-wide sales and use tax (the "0.25% Sales and Use Tax") and the three-quarters of one percent (0.75%) 3 4834-9335-0186.2 special city-wide sales and use tax (the "0.75% Sales and Use Tax", together with the 0.25% Sales and Use Tax, the "Sales and Use Taxes"), each levied pursuant to the Election Ordinance and pledged pursuant to the Bond Ordinance, is true and correct in all material respects. To the best of the knowledge of the undersigned, as of its issue date, the Official Statement does not contain any untrue or incorrect statement of a material fact and does not omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading in any material respect. 15. There are hereby delivered to the Trustee nine (9) typewritten Bonds in the aggregate principal amount of $9,000,000, to be registered in the name of Cede & Co. The Trustee is hereby requested to authenticate the Bonds and to receipt for and upon the order of the Underwriter on behalf of the City, deliver the Bonds to The Depository Trust Company, New York, New York, after authentication and upon payment therefor of $8,994,725.65, less $14,850.00 paid by the Underwriter to Assured Guaranty Municipal Corp. on behalf of the City for the 2015 Reserve Policy (as defined in the Trust Indenture), for a total purchase price of $8,979,875.65. The Trustee is hereby directed to deposit the Bond proceeds as follows: (i) Deposit $65,000.00 into the Costs of Issuance Fund and immediately pay those Costs of Issuance with respect to the Bonds set forth in Exhibit D hereto; and (ii) Deposit the remaining balance, in the amount of $8,914,875.65 into the Street Account of the Project Fund. 16. The City is a city of the first class pursuant to Title 14, Subtitle 3, Chapter 43 of the Arkansas Code Annotated. The City is operating under the mayor -council form of government pursuant to Title 14. 17. The City has not adopted any by-laws or rules of procedure relating to the conduct of its City Council meetings. 18. There is no action, suit, proceeding, inquiry or investigation involving the City before or by any court or public board or body pending or, to the knowledge of the undersigned, threatened wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the City or the titles of its officials to their respective offices, (ii) enjoin or restrain the issuance, sale or delivery of any of the Bonds or the City Documents, the levy or collection of the Sales and Use Taxes, or the pledge of the receipts thereof, or the accomplishment of the Projects (as defined in the Trust Indenture), (iii) in any way question or affect any of the rights, powers, duties or obligations of the City with respect to the Sales and Use Taxes, (iv) in any way question or affect any authority for the issuance, authorization, execution, authentication, sale or delivery of the Bonds or the validity or enforceability of the Bonds, the City Documents, the Sales and Use Taxes, the Election Ordinance, the Bond Ordinance, or the assignment by the City of any of the moneys, instruments or other rights pledged under the Trust Indenture, or (v) in any way question or affect the Official Statement or the transactions contemplated thereby, or any other agreement or instrument to which the City is a party and relating to the Bonds. 4 4834-9335-0186.2 19. The City will apply a portion of the proceeds from the sale of the Bonds to finance capital improvements of a public nature, as provided in the Trust Indenture. The Sales and Use Taxes authorized under the Act (as defined in the Trust Indenture) have been levied within the City pursuant to the Election Ordinance. The collection of the 0.25% Sales and Use Tax commenced on January 1, 2007, and the collection of the 0.75% Sales and Use Tax commenced on August 1, 2014. Receipts of the Sales and Use Taxes are not presently pledged or hypothecated in any manner or for any purpose other than for the payment of the Bonds as provided in the Trust Indenture. 20. In the City, the time for filing a referendum petition is fixed at 31 days after the publication of the measure upon which the referendum is sought. 21. The adoption of the Election Ordinance and the Bond Ordinance, the execution and delivery of the City Documents, the authorization, execution and delivery of the Bonds, and compliance with the provisions thereof under the circumstances contemplated thereby does not and will not in any material respect conflict with, or constitute on the part of the City a breach or default under, any agreement or other instrument to which the City is a party, or any existing law, administrative regulation, court order or consent decree to which the City is subject. 22. The City's employer tax identification number is 71-6018462. 23. The City Documents and the information supplied to Assured Guaranty Municipal Corp. in order to obtain the 2015 Reserve Policy do not contain any untrue or misleading statement of a material fact and do not fail to state a material fact required to be stated therein or necessary in order to make the information contained therein not misleading. [REMAINDER OF PAGE INTENTIONALLY BLANK] 5 4834-9335-0186.2 24. Lioneld Jordan, Mayor, hereby certifies that the signature of Sondra Smith, City Clerk, affixed hereto is her true and correct signature, and Sondra Smith, City Clerk, hereby certifies that the signature of Lioneld Jordan, Mayor, affixed hereto is his true and correct signature. IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of November 12, 2015. CITY OF FA TTE,YA 1,4E, ARKANSAS JoXan, Mayor By: e _alrr So ; ,5f�Clerk Al ®G\T Y O r 6-" ° FAYETTEVILLE °�� b /fANSP ti ®° ®®®®° °off®�®®� ®®�V®J ®td O 6 4834-9335-0186.2 of, FAYETTE. A� 0 JtiwB f' ARKANSAS . 113 West Mountain Street Fayetteville, AR 72701 (479) 575-8323 Ordinance: 5803 File Number: 2015-0433 CITY SALES AND USE TAX BONDS: AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF THE CITY'S SALES AND USE TAX CAPITAL IMPROVEMENT BONDS, SERIES 2015, FOR THE PURPOSE OF FINANCING A PORTION OF THE COSTS OF CERTAIN STREET IMPROVEMENTS; AUTHORIZING THE EXECUTION AND DELIVERY OF A FOURTH SUPPLEMENTAL TRUST INDENTURE PURSUANT TO WHICH THE BONDS WILL BE ISSUED AND SECURED; AUTHORIZING THE EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT PURSUANT TO WHICH THE BONDS WILL BE OFFERED; AUTHORIZING THE EXECUTION AND DELIVERY OF A BOND PURCHASE AGREEMENT PROVIDING FOR THE SALE OF THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF A CONTINUING DISCLOSURE AGREEMENT; AND PRESCRIBING OTHER MATTERS RELATING THERETO WHEREAS, the City Council of the City of Fayetteville, Arkansas (the "City") has previously determined that there is a great need for a source of revenue to finance the costs of various street improvements within the City (the "2015 Project"); and WHEREAS, the City is authorized and empowered under the provisions of the Constitution and laws of the State of Arkansas, including particularly Amendment 62 to the Constitution of the State of Arkansas ("Amendment 62") and Arkansas Code Annotated (1998 Repl. & 2013 Supp.) Sections 14-164-301 et seq. (as from time to time amended, the "Local Government Bond Act"), to issue and sell its capital improvement bonds to finance the costs of various capital improvements such as those comprising the 2015 Project, which capital improvement bonds may be secured by and payable from the receipts of the special city-wide sales and use tax authorized by the Local Government Bond Act; and WHEREAS, pursuant to the provisions of Ordinance No. 4891 of the City, adopted and approved on June 20, 2006 (the "Election Ordinance"), there was submitted to the qualified electors of the City four questions regarding the issuance of an aggregate of not to exceed$110,000,000 in principal amount of capital improvement bonds pursuant to Amendment 62 and the Local Government Bond Act to finance the capital improvements described in the Election Ordinance, said bonds to be secured by a pledge of and lien upon Page 1 Printed on 10/7/15 Ordinance 5603 (i) all of the receipts of a special city-wide sales and use tax levied at the rate of one-quarter of one percent (0.25%) pursuant to the Local Government Bond Act (the "0.25% Sales and Use Tax") and (ii) all of the receipts of a special city-wide sales and use tax levied at the rate of three-quarters of one percent (0.75%) pursuant to the Local Government Bond Act (the "0.75% Sales and Use Tax"); and WHEREAS, at a special election held September 12, 2006, a majority of the qualified electors of the City voting on the questions approved the issuance of capital improvement bonds in the principal amounts and for each of the specific purposes set forth on the ballot (and the corresponding levy of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax, and the pledge of the receipts thereof to the payment of the capital improvement bonds); and WHEREAS, as authorized under the provisions of Amendment 62 and the Local Government Bond Act and as approved by the qualified electors of the City, the City has now determined to issue and sell its Sales and Use Tax Capital Improvement Bonds, Series 2015, in the aggregate principal amount of $9,000,000 (the "Bonds"), in order to provide for the funding of the 2015 Project; and WHEREAS, as authorized by the provisions of the Election Ordinance, the City has previously made arrangements for the sale of the Bonds to Stephens Inc., Fayetteville, Arkansas (the "Underwriter"), pursuant to the terms of a Bond Purchase Agreement between the City and the Underwriter (the "Bond Purchase Agreement") in substantially the form presented to and before this meeting; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. Under the authority of the Constitution and laws of the State of Arkansas, including particularly Amendment 62 to the Constitution of the State of Arkansas and the Local Government Bond Act, there is hereby authorized the issuance of bonds of the City to be designated as "Sales and Use Tax Capital Improvement Bonds, Series 2015" (the "Bonds"). The Bonds shall be issued in the original aggregate principal amount of Nine Million Dollars ($9,000,000) and shall mature not later than November 1, 2025, in the principal amounts and bearing interest at the rates specified in the Bond Purchase Agreement. The entire aggregate principal amount of the Bonds hereby authorized shall be deemed to apply to the Street Project described in Question 3 of the ballot. The average yield on the Bonds as a whole shall not exceed 3.50%. The proceeds of the Bonds will be utilized to finance the costs of the 2015 Project, to establish a debt service reserve for the Bonds or to purchase a surety bond or debt service reserve insurance policy for reserve purposes, if deemed economically beneficial, to pay a premium for bond insurance, if deemed economically beneficial, and to pay printing, underwriting, legal and other expenses incidental to the issuance of the Bonds. The Bonds shall be issued in the form and denominations, shall be dated, shall be numbered, shall mature, shall be subject to redemption prior to maturity, and shall contain such other terms, covenants and conditions, all as set forth in the Fourth Supplemental Trust Indenture submitted to this meeting. Page 2 Printed on 1017115 Ordinance 5603 The Mayor is hereby authorized and directed to execute and deliver the Bonds in one or more series, each series to be in substantially the form thereof contained in the Fourth Supplemental Trust Indenture submitted to this meeting, and the City Clerk is hereby authorized and directed to execute and deliver the Bonds and to affix the seal of the City thereto, and the Mayor and City Clerk are hereby authorized and directed to cause the Bonds to be accepted and authenticated by the Trustee. The Mayor is hereby authorized to confer with the Trustee, the Underwriter and Kutak Rock LLP, Little Rock, Arkansas ("Bond Counsel"), in order to complete the Bonds in substantially the form contained in the Fourth Supplemental Trust Indenture submitted to this meeting, with such changes as shall be approved by such persons executing the Bonds, their execution to constitute conclusive evidence of such approval. Section 2. In order to pay the principal of and interest on the Bonds as they mature or are called for redemption prior to maturity, there is hereby pledged all of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax levied by the Election Ordinance. Such pledge securing the Bonds shall be made on a parity basis with the existing pledge of such receipts in favor of the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), the City's $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and the City's $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). The levy and collection of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax shall commence on the dates provided in the Local Government Bond Act and shall continue until such time as the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Bonds are no longer outstanding or sufficient funds are on deposit with the Trustee to redeem the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Bonds in full. The City covenants and agrees that all receipts from the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax will be accounted for separately as special funds on the books of the City, and receipts of said 0.25% Sales and Use Tax and 0.75% Sales and Use Tax will be deposited and will be used solely as provided in the Trust Indenture (as defined below). Section 3. To prescribe the terms and conditions upon which the Bonds are to be executed, authenticated, issued, accepted, held and secured, the Mayor is hereby authorized and directed to execute and acknowledge a Fourth Supplemental Trust Indenture (the "Fourth Supplemental Trust Indenture"), by and between the City and Simmons First Trust Company, N.A., Pine Bluff, Arkansas (the "Trustee"), and the City Clerk is hereby authorized and directed to execute and acknowledge the Fourth Supplemental Trust Indenture and to affix the seal of the City thereto, and the Mayor and the City Clerk are hereby authorized and directed to cause the Fourth Supplemental Trust Indenture to be accepted, executed and acknowledged by the Trustee. The Fourth Supplemental Trust Indenture supplements and amends a Trust Indenture dated as of November 1, 2006, as previously amended by a First Supplemental Trust Indenture dated as of October 1, 2007, a Second Supplemental Trust Indenture dated as of November 1, 2009, and a Third Supplemental Trust Indenture dated as of November 1, 2013, each by and between the City and the Trustee (the "Original Indenture," and collectively with the Fourth Supplemental Trust Indenture, the "Trust Indenture"). The Fourth Supplemental Trust Indenture is hereby approved in substantially the form submitted to this meeting, including, without limitation, the provisions thereof pertaining to the pledge of 0.25% Sales and Use Tax Page 3 Printed on 1017115 Ordinance 5803 receipts and 0.75% Sales and Use Tax receipts and the terms of the Bonds. The Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Fourth Supplemental Trust Indenture in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Fourth Supplemental Trust Indenture, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Fourth Supplemental Trust Indenture in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 4. There is hereby authorized and approved a Preliminary Official Statement of the City, including the cover page and appendices attached thereto, relating to the Bonds. The Preliminary Oficial Statement is hereby "deemed final" by the City within the meaning of U.S. Securities and Exchange Commission Rule 15c2-12. The distribution of the Preliminary Official Statement is hereby approved. The Preliminary Official Statement, as amended to conform to the terms of the Bond Purchase Agreement, including Exhibit A thereto, and with such other changes and amendments as are mutually agreed to by the City and the Underwriter, is herein referred to as the "Official Statement," and the Mayor is hereby authorized to execute the Official Statement for and on behalf of the City. The Official Statement is hereby approved in substantially the form of the Preliminary Official Statement submitted to this meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Official Statement in substantially the form of the Preliminary Official Statement submitted to this meeting, with such changes as shall be approved by such persons, the Mayor's execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Preliminary Official Statement is on file with the City Clerk and is available for inspection by any interested person.) Section 5. In order to prescribe the terms and conditions upon which the Bonds are to be sold to the Underwriter, the Mayor is hereby authorized and directed to execute a Bond Purchase Agreement on behalf of the City, to be dated as of the date of its execution (the "Bond Purchase Agreement"), by and between the City and the Underwriter, and the Bond Purchase Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Underwriter and Bond Counsel in order to complete the Bond Purchase Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Bond Purchase Agreement, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Bond Purchase Agreement in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 6. In order to provide for continuing disclosure of certain financial and operating information with respect to the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax in compliance with the provisions of Rule 15c2-12 of the U. S. Securities and Exchange Commission, the Mayor is hereby authorized and directed to execute a Continuing Disclosure Agreement to be dated as of the date of its execution (the "Continuing Disclosure Agreement"), by and between the City and the Trustee, and the Mayor is hereby Page 4 Printed on 10/7/15 Ordinance 5603 authorized and directed to cause the Continuing Disclosure Agreement to be executed by the Trustee. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Continuing Disclosure Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Continuing Disclosure Agreement, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Continuing Disclosure Agreement in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 7. The Trust Indenture requires that a debt service reserve be funded in conjunction with the issuance of the Bonds' The Underwriter has proposed that the City consider the purchase of a surety bond or a debt service reserve insurance policy with a portion of the proceeds of the Bonds in order to fulfill such requirement. If deemed economically advantageous by the Mayor, upon the advice of the Underwriter, the Mayor is hereby authorized to execute an insurance commitment and to do any and all things necessary to accomplish the delivery of a surety bond or a debt service reserve insurance policy with respect to the Bonds. Section 8. In order to secure lower interest rates on the Bonds, the Underwriter has proposed that the City consider the purchase of a policy of bond insurance with a portion of the proceeds of the Bonds, which policy would guarantee the payment of the principal of and interest on the Bonds when due. If deemed economically advantageous by the Mayor, upon the advice of the Underwriter, the Mayor is hereby authorized to execute an insurance commitment and to do any and all things necessary to accomplish the delivery of a bond insurance policy with respect to the Bonds. Section 9. The Mayor and City Clerk, for and on behalf of the City, are hereby authorized and directed to do any and all things necessary to effect the issuance, sale, execution and delivery of the Bonds and to effect the execution and delivery of the Fourth Supplemental Trust Indenture, the Bond Purchase Agreement, the Official Statement, the Continuing Disclosure Agreement and a Tax Regulatory Agreement relating to the tax exemption of interest on the Bonds, and to perform all of the obligations of the City under and pursuant thereto. The Mayor and the City Clerk are further authorized and directed, for and on behalf of the City, to execute all papers, documents, certificates and other instruments that may be required for the carrying out of such authority or to evidence the exercise thereof. Section 10. As previously provided in the Election Ordinance, Kutak Rock LLP, Little Rock, Arkansas, is hereby confirmed as Bond Counsel on behalf of the City in connection with the issuance and sale of the Bonds. Section 11. The provisions of this Ordinance are hereby declared to be severable, and if any section, phrase or provision shall for any reason be declared to be illegal or invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions of this Ordinance.' Page 5 Printed on 10/7/15 Ordinance 5603 Section 12. All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. PASSED and APPROVED on 10/6/2015 Attest: Sondra E. Smith, City Clerk Treasurer .01111►►►►iirf,'' ```��G ARK• / TR�.� .���. ��'� •'per FAYEITEVILLE 9CD ";'2GT0N.Cd```�� ;If1►►1►►N0 Page 6 Printed on 10/7/15 Alderman Adella Gray Ward I Position 1 Alderman Sarah Marsh Ward I Position 2 Alderman Mark Kinion Ward 2 Position 1 Alderman Matthew Petty Ward 2 Position 2 Mayor Lioneld Jordan City Attorney Kit Williams City Clerk Sondra E. Smith City of Fayetteville Arkansas City Council Meeting October 6, 2015 City Council Meeting Minutes October 6, 2015 Pagel of 33 Alderman Justin Tennant Ward 3 Position I Alderman Martin W. Schoppmeyer, Jr. Ward 3 Position 2 Alderman John La Tour Ward 4 Position I Alderman Alan T. Long Ward 4 Position 2 A meeting of the Fayetteville City Council was held on October 6, 2015 at 5:30 p.m. in Room 219 of the City Administration Building located at 113 West Mountain Street, Fayetteville, Arkansas. Mayor Jordan called the meeting to order. PRESENT: Alderman Adella Gray, Sarah Marsh, Mark Kinion, Matthew Petty, Justin Tennant, John La Tour, Alan Long, Mayor Lioneld Jordan, City Attorney Kit Williams, City Clerk Sondra Smith, Staff, Press, and Audience. ABSENT: Alderman Martin Schoppmeyer Pledge of Allegiance Mayor's Announcements, Proclamations and Recognitions: None City Council Meeting Presentations, Reports and Discussion Items: City Council Meeting Presentation — Fayetteville Natural Heritage Association check presentation related to Kessler Mountain Reserve. Jeremy Pate, Director of Development Services: In the spring of last year the city closed on more than 300 acres called Kessler Mountain, to preserve that land for ecological and recreational benefits. That added over 200 acres we already acquired for the Regional Park that is under construction. We had two funding partners in that acquisition. One was the Walton Family Foundation who graciously gave us $1.5 million for a one-to-one match for that purchase. In addition, Fayetteville Natural Heritage Association committed at least $300,000 for the purchase 113 West Mountain . Fayetteville, AR .72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 2 of 33 of that property. They came back to you earlier this year with a proposal to offset $120,000 roughly in benefits to Kessler Mountain. They committed almost $180,000 to bringing back in cash to you. Dr. and Mrs. Heinzelmann, as well as the Waltons, established the Fayetteville Natural Areas Foundation that has already paid to the city $10,000 as part of this commitment. Bob Caulk, Fayetteville Natural Heritage Association presented a check for $30,000. Mayor Jordan: This is not the first time that we have had a partnership with Fayetteville Natural Heritage Association. You have been excellent partners for this city. Thank you on behalf of myself, City Council, and the citizens of Fayetteville. City Council Meeting Presentation - Ozark Regional Transit Presentation: No presentation was made. Alzenda Additions: Mayor Jordan requested a walk-on to be added to the agenda. Alderman Petty moved to add: Proposal to Consolidate the Fayetteville Local Firemen's Pension Fund with LOPFI by the Local Firemen's Pension Board to the agenda. Alderman Gray seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. Consolidate the Fayetteville Local Firemen's Pension Fund with LOPFI: An ordinance transferring administration of retirement coverage for eligible members of the Fayetteville Fire Pension and Relief Fund to the Arkansas Local Police and Fire Retirement System (LOPFI) and authorizing the Mayor to enter into an irrevocable agreement with LOPFI and approving an emergency clause. Paul Becker, Finance Director: We have an old pension fund that funds the pension for the firefighters and police officers, prior to 1983 when LOPFI came on board. Years ago that pension fund was to provide 50% of the salary benefits for those police and firefighters who retired. After LOPFI came on board those pension funds went under the jurisdiction of the PRB, the State Pension Review Board which monitors those funds. The PRI3 could grant increases if it actuarially looked like it could be done, and they did this by what was called a cash flow study. If increases could be granted they would approve that recommendation to the trustees of the oversight board of the pension fund. That is a board here, not under city jurisdiction, which has members of retired police or firefighters, Mayor, and City Clerk. In 1996 a request was made to increase those benefits from 50% of retired salary to 65%. That was reviewed by the PRB actuary, Jody Carreiro. The increase was granted. In 2001 a request was made to again increase those benefits, and it went through the Pension Review Board. The actuary certified he felt that could be done and the pensions were raised to 90% of ending salary. In the late 80's investment returns were very strong. In 2003 a 3% COLA was temporarily approved for 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www..fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 3 of 33 three years. We hit times where earning increases were not as good. In 2007, an, increase was requested and PRB turned it down. They did not feel that the fund could support an increase. In 2009 we had tough economic times and the Fire Pension Fund was declared Projected Insolvent. In 2010, PRI3 made a presentation as to what they thought could save the fund. The projection was that it would take $250,000 to $350,000 per year over 15 and 25 years to save the fund. We here at the city, and based on my recommendation did not feel we had the funds to allocate to the old pension fund. At the trustees meeting it was recommended by the Mayor and City Clerk that pension amounts be reduced to the pensioners to save the fund. It was voted down. An Attorney General's opinion was requested, and he advised that he did not feel there was legislation to allow that to happen. City Attorney Kit Williams recommended and advised that the city was not liable for that pension fund. It was the responsibility of the pension fund and the trustees of that fund. Since that time, proposed legislation was presented to the legislature which would allow us or the trustees to legally reduce the pensions to pensioners if they felt it was necessary to save the fund. That was voted down in the legislature. We have a pension fund that is a liability of the trust fund as advised by our City Attorney and it looks like it is near certain to run dry in the future. As of 2014, that funds unfunded actuarially liability is $14 million. We are going to get money in from a levy that was approved by the voters of .4 mills in the future. We are going to get income into that fund so the liability would not be that large if in fact it failed. However, that is the unfunded liability calculated at this point. Mr. Becker did a scenarios overview of statistics for funding the pension fund that were previously presented at the September 29, 2015 City Council meeting. He stated there are three types of revenue coming in to the trust fund to pay the pensioners. He stated that the fund is generating around $700,000 and paying out about $1.1 million. He stated in trying to ascertain what the liability would be over time, it would be the variables of sources of income, property taxes increase, interest earnings being achieved, continuing to get premium taxes on property insurance, and the mortality table. He stated if the city does decide to send this to LOPFI and sign a contract saying we will pay whatever is necessary, they can raise that to what they need to pay those pensioners. We know what that would be in 2016, but with variables it could be raised as early as 2017. He believes we are taking on a risk. He stated the request before the City Council is coming from LOPFI and asking them to sign a contract to have LOPFI manage this, pay the current pension cost at the same level they are right now, and pay LOPFI what they need. He has reservations about an 8% interest earnings. He stated LOPFI will tell you they have earned an excess of 9% interest earnings over the life of the plan, and that is true. He reminded Council that the plan goes back to the 90's when interest earnings were very good. He expressed some options that the City Council has. He stated that they could subsidize the current plan, send it to LOPFI, leave it the way it is right now, ask the voters to extend the property taxes up to one mill, or pursue legislation to reduce the pension funds or manage them better. Alderman La Tour: Paul, one of the possible options for resolving the conflict is a millage rate increase we take to the public? Paul Becker: Yes. The statute allows up to one mill by voter referendum. We currently have 4/10 of a mill. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 4 of 33 Alderman La Tour: Have you run the numbers if we take it to a full one mill if the people vote to do that? Paul Becker: It should generate at least another $600,000 or more a year to the fund. It should be enough, from at least what the actuarially studies are, to save the fund. Alderman La Tour: If we were to assume the liability and send this to LOPFI, they aren't going to accept our net liabilities without some commitment, from our city. If we increase the millage that is coming from the people of Fayetteville, it lets them know what their government is doing. Of the options, that is my favorite. Paul Becker: You are right. LOPFI is not going to assume anything. LOPFI is going to manage the fund. They can take the fund and pool it with the investment resources and should be able to gain a greater return. The city assumes the liability. City Attorney Kit Williams read the ordinance. City Attorney Kit Williams: The agreement that is part of this states that we will have to pay a half percent for their investment cost every year, plus one percent of all the salary cost. For the fund to achieve 8% it would have to earn 8.5%. This is a contract saying what you must do and is not a negotiated contract. Paul Becker: Those cost were factored into the actuarial study. Alderman Tennant: State Representative Whitaker introduced legislation that was fought and defeated that would have enabled the funds legal authority to deal with their funds. Is that not correct? Paul Becker: That is correct. Alderman Tennant: It was fought harshly by the very group that I think would benefit from it. I don't understand why they fought something that would enable them to do the very thing they are asking the taxpayers now to do. Paul Becker: It was introduced and was defeated. City Attorney Kit Williams: Representative Whitaker requested that I go down to testify about this in front of a joint committee of the House and Senate, which it did pass in. There were representatives of the Fayetteville Fire Pension Relief Fund as well as the State Pension Relief Board that argued strenuously that they should not pass that. They did not want the authority to reduce their benefits regardless of whether it was voluntary. It did pass the House. They were able to get it defeated in the Senate to try and prevent them from having any authority to reduce benefits, even though the pension board is controlled by the pensioners with four out of six votes. Jody Carreiro was there explaining the predicaments of various pension funds. I was surprised that it was opposed. All it would have done was given them additional clear power. I believed they had 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 5 of 33 the power anyway, but the Attorney General disagreed with me. I thought a statute would clear that up, but that statute did not pass. Alderman Tennant: I was confused as to why they would fight it. I would think that would be the enablement that they would want to make those changes and give them power. Alderman Marsh: They have seen a 40% increase in benefits over the last 20 years, which seems a little out of step with the average earnings for active workers, but they don't have the authority to reduce their benefits. Is that correct? City Attorney Kit Williams: The Attorney General says they do not have that authority. I believe they do have the authority. No one will really know unless a judge says they do or do not have that authority. Alderman Petty: Is that still your opinion that they have the authority to reduce their benefits? City Attorney Kit Williams: Yes. I believe there is a particular statute that talks about prorating benefits. I don't believe that only takes affect when the fund has been driven into the ground with no money left. The Attorney General basically said, "You have to totally deplete the fund before you can start prorating the benefits." Alderman Petty: We have been told that historically the LOPFI returns have been in an excess of 9%? Paul Becker: That is correct, from their inception in 1983. Alderman Petty: What are the historical returns for the local fund? Paul Becker: I can only go back about.ten years and it's been 5%. Lately it has been under that. Alderman Petty: A few percentage points less than the LOPFI fund? Paul Becker: Yes. From the last report it was about 3.5%. The fund is a little over $4 million currently. Once a fund goes under $5 million dollars the law restricts where you can invest. When it was over $5 million the investment manager here for the Fire Pension Fund was fairly aggressive and could earn a better rate than that. It was earning 6% or 7% at times. LOPFI could earn a better return if there are returns to be had, but of course nobody knows that. Alderman Petty: You presented us one of the options that the people could raise taxes. If we consolidated with LOPFI and the scenario we've been presented didn't play out and we had additional obligations 15 years down the line, could we not also raise taxes at that point? Paul Becker: I don't see anything that would prevent it. That is a legal question. City Attorney Kit Williams: We have talked to the Pension Boards over the last several years that they have the right to go to the citizens if they felt like that is what they wanted to do. They 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 6 of 33 would not have to go all the way to a one mill. In 2001 the property taxes had been escalating so quickly, then Amendment 59 was violated. It required that the millage be rolled back to .4 mills, that's why it's .4, instead of .5. If the Pension Boards would go to the voters and ask to have that tenth of a mill back, that would increase their millage by 25% which is a pretty substantial amount. It would go a long way toward making their fiend more solvent. Even at this late date with the amount that has dwindled in their pension plan it's probably not enough to completely save them. The latest report from our Accounting Department shows their market value and assets are under $3.6 million. Looking at the amount of millage, about $250,000 of the millage hasn't been paid yet, which I assume will be paid in this quarter. Alderman Petty: We have some decisions based on the options Paul laid out. We could keep the fund local and fix it if the people raise taxes by some amount or we could consolidate it into LOPFI. If we were to consolidate it into LOPFI, raising taxes to fix a future problem is not off the table? City Attorney Kit Williams: I will have to research that. I don't know why it would be off the table. I think if the citizens wanted to tax themselves more to do this, then they probably have that power. Alderman Petty: This is a very difficult decision. I concur with Alderman La Tour's statement at our Special City Council meeting that we have a moral obligation to fund these pensions. What I'm struggling with is the fact that we have conflicting opinions if we can reduce benefits. I'm not concerned about the pensioners' benefits to themselves. It is at a level with our current employees. It's at around 90% and that is fine with me. The spousal benefits after death are a little unusual and may go a long way to fixing the problem, The enabling legislation that was proposed by Representative Whitaker and then opposed by our own pension board, if I was being cynical, I would say they are playing an all or nothing game and trying to paint us into a corner with this decision. I don't like being cynical, but the tactician in me might consider that game. I believe that is where we are at today. I am not particularly concerned that the actuarial predictions we were shown at the special meeting are too risky. There is an acceptable level of risk. We were told that if they only earn 7% we would be okay. There is that assumption. We were also told that we have to earn 3% on property tax revenue, we have to appreciate it 3%. I am bullish about property tax more than the average person. I see Northwest Arkansas continuing to grow and play a competitive game on the national stage in terms of bringing new residents to the region. I don't see us annexing more land. There are a variety of other factors that is going to make property taxes appreciate more quickly than they have historically. There is an acceptable level of risk in the actuarial projections if we were to consolidate. This conversation is only about the Fire Pension. We have a Police Pension that is almost in the same boat. Whatever decision we make today is going to strike a precedent for the decision we have to make about the Police Pension. I don't like the all or nothing position we have been put in. I would prefer to strike a deal with the Pension Board and say, we understand there is a legal risk if you reduce your spousal benefits. If you guys were to say today we will vote to reduce our spousal benefits, I would be more inclined to vote to consolidate and to share that legal risk with you and be on your team. As it stands I don't perceive that we are on the same team. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 7 of 33 Alderman La Tour: At the special meeting I expressed a sentiment that I think is shared by most people on this City Council. Fire and Police put their lives on the line every day and I appreciate that. What gives me concern is that I don't like writing blank checks. If we send this to LOPFI, someone else is going to dictate to our city how much money we have to send them. That is the big unknown. It is hard to commit to $150,000 to $350,000. Whether we send it to LOPFI or we keep it and we finance ourselves, the money is all coming from the Fayetteville taxpayers one way or another. I like the idea, if it is legally permissible, to go directly to the people of Fayetteville and let them vote on it. You would be free to make your case to the people of Fayetteville. We appreciate the service you have provided to our families. It seems like you would have a fairly easy case to make with the public. Taxes are not popular with anyone, but that is the most honest way I can think to do this. If we go to court and a judge rules that we owe it to you, it is still coming from the people of Fayetteville. LOPFI is not going to take on these liabilities without a commitment from us to pay the difference. We want to do it all, but we don't have the wherewithal to do it all. Our budget has to give somewhere. Mayor Jordan gave the rules for the public to speak. He requested for the Council to not vote on the item so that David Clark, Executive Director of LOPFI and PRB could attend the next City Council meeting to speak. Peter Reagan, Fireman's Pension Board: David Clark could not be with us tonight. He can be here at the October 20, 2015 meeting. If we can send this to the next meeting, I will give you my remarks then. Mayor Jordan: It will .stay where it is and then it automatically goes to the October 20, 2015 meeting. Alderman Petty: Is there a member of the audience that was present at the committee meetings where the enabling legislation was discussed? Peter Regan: I was there. Alderman Petty: Was the City Attorney's account right that you opposed the legislation? Peter Reagan: Yes. I want to clarify one thing. I was not there as a Pension Board member. I was asked to be there and make a presentation by the president of the Arkansas Professional Firefighters, the position I formerly held. Alderman Petty: That is why you opposed the legislation? Peter Reagan: I was asked to speak against the legislation. No one wants to reduce benefits. The liability of the fund is held with the city. The city is required to carry the unfunded liability on its books. That's a GASB, Governmental Accounting Standards Board. Is that not right, Paul? Paul Becker: Yes. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 8 of 33 Peter Reagan: The Mayor is named in state statute as Chairman. Alderman Petty: In your official role as a member of the Pension Board, is that your position? Peter Reagan: Yes, it is. Alderman Marsh: We carry the liability for the funds, but then we don't have the authority to regulate benefits. Is that correct? City Attorney Kit Williams: I am not going to comment on the accounting rules for GASB that requires us to have it on the books. That is not the same thing in my opinion as legal liability. The legal liability argument is that they have a pension established by the state and you can't end it even though you don't have any power as a city to control it. I found this out when I was on the Council and tried to do something about it. One of the sections of the statute states what happens if it runs out of money. It says, "The benefits will be prorated until they are exhausted that year and then you wait to the next year for the millage to come in." It says nothing about the city having to make up and pay anybody. I don't believe there is liability regardless of what might be on the city books for accounting purposes. The key is what a court would say. If they do run out of money, they will probably sue us and then we will find out. Paul Becker: Our auditors require us to book it. The criteria is a reasonable possibility that we would be responsible, therefore we book it. That does not mean that there is an absolute liability. They can't make that determination. Alderman La Tour: A company called Enron was fond of taking their liabilities and putting it on other entities books to hide things. Our accounting profession today is real concerned about that issue. They maybe go too far this direction to book everything so that it will show full disclosure. It doesn't mean we are legally liable. It is a conservative way to present it just in case we are liable. This ordinance was left on the First Reading. Consent: Approval of the September 15, 2015 City Council meeting minutes. Approved 2015 Justice Assistance Grant Local Solicitation Award: A resolution authorize acceptance of a 2015 Justice Assistance Grant Local Solicitation award in the amount of $72,774.00, of which $29,576.00 will be used by the Fayetteville Police Department, with $28,943.00 to be disbursed to the City of Springdale and $14,255.00 to Washington County, and to approve a budget adjustment. Resolution 171-I5 as recorded in the office of the City Clerk 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 9 of 33 2015 Bulletproof Vest Partnership Program Matching Grant Award: A resolution to authorize acceptance of a fifty percent (50%) matching grant award from the 2015 Bulletproof Vest Partnership Program in the amount of $6,056.00 for the replacement of body armor vests for Fayetteville Police officers, and to approve a budget adjustment. Resolution 172-15 as recorded in the office of the City Clerk Fayetteville Police Department Policies: A resolution to approve Fayetteville Police Department policies 1.1.1, Law Enforcement Role; 1.2.3, Bias Based Profiling Prohibited; 1.3.4, Less- Lethal Weapons and Defensive Tactics; 12.1.1, Organizational Structure, Functions and Direction; 12.2.1, Policies, Procedures and Rules Development and Review Procedures; 22.2.8, Military Activations; 25.1, Grievance Procedures; 33.1, Training; 35.1.1, Performance Evaluations/Personnel Early Warning System; 41.2.5, Missing Persons; 41.2.7, Department Response to Mentally Ill Subjects; 41.3.5, Grooming and Uniform Requirements; 42.1.1, Criminal Investigations; 44.1.1, Juvenile Operations; and 84.1.1, Property Management, Acquired and In - Custody. Resolution 173-15 as recorded in the office of the City Clerk Bid No. 15-48 Alliance Pump & Mechanical, Inc.: A resolution to award Bid No. 15-48 and authorize a contract with Alliance Pump & Mechanical, Inc. in the amount of $78,950.00 plus applicable taxes to rebuild seven (7) gearboxes at the Noland Wastewater Treatment Plant. Resolution 174-15 as recorded in the office of the City Clerk Blueingreen, LLC Change Order No. 1: A resolution to approve Change Order No. 1 to the contract with Blueingreen, LLC in the total amount of $58,269.06 to fund the sales taxes for ozone equipment necessary for the project and an increase of Blueingreen, LLC's warranty bond from one year to two years, and to approve a budget adjustment. Resolution 175-15 as recorded in the office of the City Clerk Trimark Strategic Equipment, Inc.: A resolution to authorize the purchase of a hydrovection oven from Trimark Strategic Equipment, Inc. in the amount of $21,848.40 plus applicable taxes, pursuant to a National Joint Powers Alliance cooperative purchasing agreement, for use by the Fayetteville Senior Center. Resolution 176-15 as recorded in the office of the City Clerk Garver, LLC Task Order No. 4: A resolution to approve Task Order No. 4 with Garver, LLC in the amount of $27,500.00 for design, bidding and construction oversight services for the Drake Field Airfield Roof Rehabilitation Project. Resolution 177-I5 as recorded in the office of the City Clerk 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 10 of 33 Hi -Lite Airfield Services, LLC Change Order No. l: A resolution to approve Change Order No. 1 to the contract with Hi -Lite Airfield Services, LLC in the amount of $8,895.00 to increase the quantities of airfield pavement markings to be rehabilitated. Resolution 178-15 as recorded in the office of the City Clerk Washington County Video Services Contract: A resolution to approve a one year video services contract with Washington County in the amount of $750.00 per month for the City's Media Services Division to record, telecast, stream and archive meetings of the Washington County Quorum Court and certain committees, and to approve a 0.25 full time equivalent position increase. Resolution 179-15 as recorded in the office of the City Clerk SWEPCO Utility Relocations: A resolution to approve a utility relocation agreement with AEP/SWEPCO for utility relocations as part of the Old Wire Road/Highway 45 Intersection Improvements Project, with the total amount to be paid by the City of Fayetteville not to exceed $46,718.86. Resolution 180-15 as recorded in the office of the City Clerk Alderman Marsh moved to accept the Consent Agenda as read. Alderman Long seconded the motion. Upon roll call the motion passed 7-0. Alderman-Schoppmeyer was -absent...-..____ _ .. Unfinished Business: ADM 15-5093 (UDC Chapters 161,164 and 172 — Single Family and Two Family Infill): An ordinance amending Title XV Unified Development Code of the City of Fayetteville to Amend Chapters 161, 164 and 172 to modify the bulk and area regulations to encourage small lot single family and two family infill in multi -family zoning districts and to include minimum design standards for this type of development. At the August 4, 2015 City Council meeting, this ordinance was tabled to the October 6, 2015 City Council meeting. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. He stated the Board of Adjustment was supportive of the proposal. He requested the ordinance and exhibits presented in the packet be amended to reflect the latest draft. City Attorney Kit Williams requested it to be amended before he read the ordinance. Alderman Marsh: Previously I had asked you to look at eliminating the minimum lot width. What was the rationale for keeping those? Jeremy Pate: We looked at both Neighborhood Conservation and RSF-8. In order to keep a zoning district in tact that has a minimum zoning there has to be some underlying lot area or lot width. Reducing those even further would increase the density of the underlying zoning, such that 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 11 of 33 those zones would then become much more dense than what they are zoned currently. Our proposal to alleviate that was to create this new zoning district with a much higher density. Alderman Marsh: I was looking for the ability to cluster developments in the smaller land areas in order to preserve open space for wildlife habitat or stormwater infiltration. Smaller house types are becoming more popular and it seems like these lot minimum widths seem quite large to do any kind of innovative housing types. By doing that we are ensuring there is uniform pattern of development over a piece of property as opposed to a cluster and an open space. Jeremy Pate: It doesn't really prevent that and that's a common perception about zoning. These are minimum standards so this allows for a great variety if a developer chooses to do so. The Multi - Family Zoned Districts have been difficult to develop in except for a multi -family product because it has been so restrictive in terms of the lot area and width. Alderman Marsh: This is a big improvement over what we've got, but I still think we have work to do on it. I'm willing to support it. Robert Sharp, 4th Street stated his appreciation for the staff in updating the ordinance. He spoke in favor of the ordinance. Alderman Petty moved to amend the ordinance. Alderman La Tour seconded the motion. Upon roll call the motion to amend passed 7-0. Alderman Schoppmeyer was absent. Alderman Petty moved to suspend the rules and go to the second reading. Alderman Tennant seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Alderman Petty moved to suspend the rules and go to the third and final reading. Alderman Marsh seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Alderman Petty: There are a lot of people in the community that have been involved in a national reform of zoning codes and they have done a lot of good to bring about change. Fayetteville participated in that trend starting with our Downtown Master Plan. This ordinance is a good ordinance, but we should not mistake it for a solution for underlying problems in our code. RSF- 18 fills an important gap, but doesn't fill all the gaps. It leaves some wide open, particularly when we start looking at land uses outside of residential. If we were to wade into the details of lot width by designation basis from RSF-4 to RSF-8 through all the RMF's, reasonable people can disagree about how those should be constructed. This ordinance isn't perfect. It makes our existing Unified Development Code better. It needs to be tweaked and we need to be cognitive of that going forward. It does not benchmark well against the best zoning codes across the nation anymore like it did when we first started this process after the Downtown Master Plan. Other cities have leap 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 12 of 33 frogged us in the way they write and amend these codes. They are offering far more certainty to their development community, especially the traditional small scale development community, at the same time maintaining their protections for existing neighborhoods. This is an ordinance that makes our code better, not an ordinance that fixes the problem with our code. Staff should continue to be as aggressive as they have been with this and much more so. Aubrey Shepherd, Fayetteville Citizen stated he needed clarification of the ordinance. A discussion followed reviewing the ordinance to clarify any confusion and discussed the benefits of the new ordinance. Aubrey Shepherd stated his dissatisfaction with the ordinance due to environmental issues. Alderman Kinion: There is a possibility of a multi -family construction at this type of density. I look at this as the possibility for home ownership that is more affordable. It is going to allow us to conserve more of the green space since 50% of the land area has to be green space as it is developed. We are offering a more urban opportunity with density. We need density to get to our transportation goals. We are allowing the infill that is necessary as. we develop our urban center. Alderman Petty hit it so directly. We have a lot to work on in our code to make it more comprehensive, diverse, and more easily understood by individuals who want to develop. This is one step forward to reach those goals. Rezoning is one of the toughest decisions we make on the City Council because it makes an impact on the future. We are seeing the impact of runoff, the management of stormwater, and the high velocity we get with high density development. It all has to be managed responsibly. This is a step towards a solution in managing this. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Schoppmeyer was absent. Ordinance 5800 as Recorded in the office of the City Clerk Amend 172.05 (ADM 15-5088 UDC Amendment Chapter 172.05 Non -Residential Parking Requirements: An ordinance to amend section 172.05 of the Unified Development Code to remove minimum parking standards for non-residential uses. At the September 1, 2015 City Council meeting, this ordinance was left on the first reading. At the September 15, 2015 City Council meeting, this ordinance was left on the second reading. Alderman Gray moved to suspend the rules and go to the third and final reading. Alderman Marsh seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. He had an amendment for consideration. He stated the ordinance read tonight included staff's original proposed amendment which removes parking standards or requirements for non-residential 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 13 of 33 development anywhere within the city. He stated what was read was what the Planning Commission originally voted upon. Staff supports either option. Mayor Jordan: The amendment would let staff decide whether to use a variance for the parking spaces instead of it being a unified ordinance. Is that correct? Jeremy Pate: Correct. Exhibit A shows that you would still utilize the base line parking ratios. In Section E it would allow for further administrative reductions based on availability of public or shared private parking, potential adverse impacts on parking or neighborhoods, proximity to alternative transportation, multi -use trails, and any other relevant considerations. We added particular consideration should be given to redevelopments where there is an adaptive reuse of an existing structure, preservation of historic structures, accessory outdoor uses, low impact development techniques or replacement of the footprint of an existing structure. Those are the items we added for this potential amendment. Alderman Petty: If we are going to vote tonight, I'm not going to be able to support the amendment. This proposal is something we need to be sensitive to in Fayetteville, which is certainty in the development process, especially in small scale development processes. Small scale development is how our city was built. Before we had a zoning code, it was the retired and the neighbor who built our city increment by increment. For those who have to do most of their planning on the cheap, who don't have the money to design a project, we need to provide certainty within the code as to what they can expect. This does not do that. I understand the City Attorney's concern that we may be removing the ability of a future City Council to reinstitute these requirements. I am not concerned with that. If the small town builders go to the bank and want to build a neighborhood corner store and don't have any parking spaces provided for it, except for what is already on the street, you know what the first question the lending officer is going to ask? They will say, "Justify it. Tell me why you can succeed with this development without any parking spaces." This is one area of the market that is efficient. We should signal to small scale developers and the community that they get to make that decision with their team. We don't have liability at the city for this. If we do vote to amend this I would suggest that we send it back to the Planning Commission to consider. This is an approach that they did not see. They had a strong consensus in support of the original proposal. Alderman Marsh: I would agree with Alderman Petty. I support the original proposal and not the amendment. I worry that the amendment puts too much responsibility on our Planning staff. Parking spaces are money and to have a staff member being responsible for direct impacts on the cost of development is risky and opens us up to allegations of favoritism or impropriety. I don't believe our office would do that but it opens us up. If it is such a concern that we maintain some ability to regulate parking I would be in favor of reducing the requirement to one space per property if that would achieve the same result. We need to keep our development codes simple and make approval quick. If you were to invest in a piece of property for development, you need to be able to predict how many units you can fit on the lot or what use units you are allowed. If you have to go back and forth with the Planning staff, this adds a lot of time and effort that people may not be willing to invest when they are considering small scale development. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 14 of 33 Alderman Kinion: There needs to be more review. Alderman Marsh and Alderman Petty have valid points of view which I think we are going to get too. It is a big change. I am approaching it with a cautionary point of view and that's why I would offer the amendment. We did get the advice from our City Attorney that there is no turning back if we don't have something as a fail-safe measure. I don't like that it goes to an administrative review to the city staff, but I don't know what the option would be otherwise. We have a lot of things that are reviewed by city staff. This is why I support the amendment. Alderman Tennant: I agree with almost every point that Alderman Petty and Alderman Marsh made. I like the original more than the amended one. I don't like adding any more power to the city staff or telling business people how much parking they need. We should leave that to the business owners. I wouldn't be in favor of the amendment. Alderman La Tour: The market place is very capable of allocating scarce goods and resources such as parking places across the nation. People will do what is in their best interest. Bankers don't want to lend money on losing propositions. The market provides ample incentives to have a reasonable number of parking places. I view the amendment as taking a step backwards. City Attorney Kit Williams: There is a thing, called The Tragedy of the Commons. When you have a part of something you don't own, but it is common with everybody else, you will overuse that until it is exhausted. Parking can be like that. We aren't just talking about small businesses, this says every business. If the City Council wants to try to protect the small businesses, this could be somewhat changed to try to do that. I grew up in Fayetteville. In the 1960's and 1970's the square was suffering terribly. It was suffering because of lack of parking. The people that built the businesses didn't build extra parking. The square was not able to recover until the parking you see now was built. Some were built by the parking authority and some by the city. This is one of the reasons that the Town Center was built so that we could have a parking deck on the square, to rejuvenate the square, and it worked. We have had parking problems in Fayetteville that has required great efforts to solve. What concerns me is that we have a lot of mixed use zoning with existing homes in neighborhoods, but you could have a restaurant. Somebody could decide to put a restaurant in a house and not provide any parking, because they can park in the neighbor's street. It would save a lot of money not putting a parking lot in. They are inflicting their parking problems on the neighborhood. Maybe this won't happen. It makes sense for the Planning Department to look at the situation and decide if there is enough parking to handle the proposed business. If after a few years with this variance procedure, if there hasn't been any problems, then you could take it away and be safe that you aren't going to need to reinstitute it. People would use up the commons of parking for their own private businesses because they can make more money, and the City Council in the future will have its hands tied by this City Council. You cannot do that in the future, because to do that you would be violating the Personal Property Protection Act. You would be taking more than 20% of somebody's value of their property if you required them to put a parking lot in. It is a very dangerous thing. You are closing the door and locking it against any future regulation if you pass the original proposal. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 15 of 33 Alderman Petty: I want to talk about how we got our parking minimums in the first place. Jeremy, were those based on any kind of local survey? Jeremy Pate: No, they were not. Alderman Petty: Do we know where we got the numbers? Jeremy Pate: No. Most of the parking standards you look at across the country are very similar. The charts you see in our ordinance are very similar to many other cities across the country. They are based on a handful of studies that have been conducted across the nation. Alderman Petty: These parking defaults have been debunked by contemporary research. They have no bearing whatsoever on the actual use that occurs within the building. How do we know that every 300 square feet of retail space requires one parking spot? Look at Dickson Street. A 1000 square feet means every retail space down there requires three parking spots. A traditional main street is served only by its on -street spaces in front of the building. They share spaces. It is far more accurate to talk about The Tragedy of the Commons in terms of our gross land area. We have about three parking spaces for every car. That is not unusual across the country. The tax revenue on a parking space is pretty close to zero. We just had a conversation about how we need to gain our property tax appreciation over time for our pension funds. This is part of that problem. How we use our land is the core of the property tax appreciation conundrum that we face with our pension funds, along with the rest of our budget. The notion that the square was failing simply from parking could stand some critique. From the 1950's to the 1980's, Fayetteville grew its land area through annexation at a rate of three times its population growth. We call this sprawl now. Fayetteville grew historically when these parking minimums were instituted in an environment that is much different than what we have today. On a housing basis, Fayetteville and Northwest Arkansas are affordable. The Northwest Arkansas Council in 2010 commissioned a study looking at our transportation cost. When you look at a housing and transportation basis, we are not affordable at all, even though our homes are cheaper. We instituted parking minimums because our commercial spaces were isolated from our homes and neighborhoods. The only way to get to them was to drive. If we want to fix that we have to adopt policies like this proposal. We have to allow commercial spaces to reintegrate back into the neighborhoods they once occupied. To Council members who are hesitant about adopting the original full proposal. We may not be able to reinstitute parking minimums we have today if we abolish them as our City Attorney has advised us. We can reinstitute them up to the limits of the state law he's citing. We can reinstitute them up to 20%. Alderman Kinion: In the 1960's I saw everyone flee from the square. I have a different point of view. I have to look at our neighborhoods that somehow need to be protected. We do have a parking crisis in some of our neighborhoods. It is evident as we get higher density that people are not getting rid of their cars. Offering this amendment is reasonable. In a year or so we might want to visit this again and throw it out. I don't want to move forward so rapidly that we don't have the opportunity to evaluate the impact until it is too late. It is heartbreaking to see empty parking lots in Fayetteville, such as Evelyn Hills. There was a time that Evelyn Hills was filled completely. There is a balance at looking at historical experience that I've seen in our city. This is why I am 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 16 of 33 offering some cautionary step. If we need to take this back to be reviewed, I am all for that. Parking is probably the biggest complaint that any Alderman sees in an area where there isn't any. We see it around Wilson Park all the time. Maybe we should go back to the drawing board and look at a step that will protect us that is not as dramatic as the original. that was offered without an amendment. Alderman Long: Parking in neighborhoods is one of the biggest complaints I get as representative for the area around the University of Arkansas. I get a complaint at least once a day. It happens around schools and apartment buildings. I would hate to see us make a hasty decision to just get more complaints because we have no parking standards for small business that go in and around neighborhoods. The average of three parking spaces per car is in part due to places like Evelyn Hills and Fiesta Square. Zoning isn't done the same way anymore, so we can't just use that statistic in Fayetteville. We have parking standards, a Planning Commission, and Planning Department that evaluate every new thing that is developed in the City of Fayetteville. Someone made the point that this put too much power in one staff member, but our codes are written that way so when we put people in those positions, we should trust them. If a parcel is divided into two zoning categories, our Planning Director, Andrew Garner can administratively extend one of those zoning categories 50 feet along the entire parcel. We put a lot of faith and power in our staff members. We pay them to make the decisions. There shouldn't be any problems with being cautious. The City Attorney has given us advice. We usually listen to good advice from our elected City Attorney. Our budget is tight. We are talking about increasing the mills to pay for fire and police. Are we going to be talking about increasing the mills or sales tax to pay for residential parking districts to be monitored? We don't even have all of our staff positions filled right now. I would support sending the entire ordinance to Ordinance Review or to the Planning Commission to reevaluate some of these elements. I can't support this ordinance without the amendment. Alderman Marsh: We need to pass the original ordinance and we need to pass it now. We need to do that because we have a serious lack of affordable business space, small retail space, and affordable housing space. The study Alderman Petty referenced regarding housing and transportation identified that residents of Northwest Arkansas are spending more on transportation than they are on housing. When you look at Downtown infill development, each space runs in the neighborhood of $20,000 to $40,000. When you are trying to create affordable business space, having this parking requirement creates a huge barrier to doing that. We are not tampering with the residential requirements. Any new residential development still has a parking requirement. There are environmental benefits of reducing parking area. Alderman Gray: I am leaning strongly to voting for the amendment. All these wonderful things that are being mentioned are great ideas, but I can see those beginning to happen under the amendment. Is that correct? City Attorney Kit Williams: With the amendment it can go down to zero if that is what Planning thinks is proper. Alderman Gray: Exactly. I see no problem taking this first big step. It doesn't make sense to take this movement to such an extreme in the first step. I will be supporting the amendment. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayettevil le-ar, gov City Council Meeting Minutes October 6, 2015 Page 17 of 33 Rob Sharp, 4a' Street stated the amendment is a good idea to try and work through it more slowly, but as a society we should be thinking about how much we want to dedicate to the car. He stated there is no guarantee of a bed to sleep in or a roof over your head, but if you have a car there is always a parking space for you. He believes these priorities should be changed. Lorraine O'Neal, 2001 West Wedington spoke in opposition of the amendment. Alderman Kinion moved to amend the ordinance as published. Alderman Long seconded the motion. Upon roll call the motion to amend failed 3-4. Alderman Long, Gray, and Kinion voting yes. Alderman La Tour, Marsh, Petty, and Tennant voting no. Alderman Schoppmeyer was absent. Lorraine O'Neal, 2001 West Wedington spoke in favor of passing the ordinance. Alderman Kinion: I am going to support this and we need to move forward. I wish we could had moved forward with the caution I presented through the proposed amendment. Alderman Long: I see the city having to be involved in a lot more complaints and going through our Code Enforcement Department. That is going to cost money. I will not be supporting the ordinance in this form. A discussion followed about what would happen if in the future problems occurred with citizen complaints. Alderman La Tour stated he liked for people to be able to have freedom of choice. He stated he is in favor of the ordinance. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 5-2. Alderman La Tour, Marsh, Kinion, Petty, and Tennant voting yes. Alderman Long and Gray voting no. Alderman Schoppmeyer was absent. Ordinance 5801 as Recorded in the office of the City Clerk 2015 Millage Levy: An ordinance levying a tax on the real and personal property within the City of Fayetteville, Arkansas, for the year 2015 fixing the rate thereof at 2.3 mills for General Fund Operations, 0.4 mills for the Firemen's Pension and Relief Fund, 0.4 mills for the Policemen's Pension and Relief Fund and 1.0 mill for the Fayetteville Public Library; and certifying the same to the County Clerk of Washington County, Arkansas. At the September 15, 2015 City Council meeting, this ordinance was left on the first reading. Alderman Long moved to suspend the rules and go to the second reading. Alderman Tennant seconded the motion. Upon roll call the motion passed 6-1. Alderman La Tour voting no. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 18 of 33 Paul Becker, Finance Director gave a brief of description of the ordinance. Alderman La Tour moved to amend the ordinance to state, the Finance Director will calculate the additional tax revenue raised by the millage increase set forth in this Ordinance on an annual basis, and report the same to the City Council. This amount shall be added incrementally to the budgeted amount for the Police and Fire Departments in fiscal year 2016 and beyond, and not diverted to other budget uses or functions. City Attorney Kit Williams: There are problems with your proposed amendment from a legal point of view. When you talk about it must be budgeted for the police in the future and thereafter, this City Council can't bind the hands of a future City Council on what they are going to use the general operating millage for. It has to be enacted every year. The budget is enacted every year. I have tried to make sure that the various branches of government do not step on each other's toes. When there has been a proposal in the past that would direct the Mayor or a Director by the Council, I believe that is beyond the power of the Council.. The amendment failed for lack of a second. Alderman La Tour stated with his proposed amendment he was trying to ensure that the police and fire were the ones who would really get the money. He stated he is skeptical if the money that is in the General Fund will actually go to police and fire. Alderman Long: To borrow some words from Alderman La Tour, "Good fire and police protection are part of the reason that Fayetteville grows." With Fayetteville growing, I doubt that the need for fire and police, that we are dedicating this money to, will ever go away. I doubt that the millage would ever be used for something else. The cost of the police force is not going to decrease over time. Paul Becker: 60% of the General Fund expenditures are on police and fire. This shows the Mayor and Council's commitment to public safety. We are audited every year. Those numbers are in our annual audit on what we expend. Every year we come before the Council to discuss budgeting. At any point the Council feels there is a need or not a need, they can change the millage. Lorraine O'Neal, 2001 West Wedington stated she agreed with Alderman La Tour's concerns. Aubrey Shepherd: Can someone give a statement about how much this will help the pension funds? Mayor Jordan: This won't do anything for the pension funds. This is to hire 19 new fire and police personnel. Peter Tonnessen, Ward 3: If the city is growing and the tax base is increasing, why doesn't that, at a given millage rate allow for the growth of the Police and Fire Departments? 113 West Mountain Fayetteville, AR 72701 (479) 575-8323. www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 19 of 33 Paul Becker: The amount of dollars that we generate from property taxes is about $1.3 million. It does grow, but it doesn't grow at a fast enough rate to take care of the increases in our needs. Alderman Long moved to suspend the rules and go to the third and final reading. Alderman Marsh seconded the motion. Upon roll call the motion passed 6-1. Alderman La Tour voting no. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Alderman La Tour stated his dissatisfaction on increasing the tax burden on citizens who are barely getting by. Alderman Petty gave a brief history of prior City Councils when dealing with trying to balance the budget. He stated there are only two ways to pay for staff increases, the first is to raise taxes in the manner being proposed, and the second option is to find an equivalent amount elsewhere in the budget and eliminate the program. Alderman Marsh: The median home value in Fayetteville is about $160,000. The impact of this tax would be a little over $30 per year. I would be willing to spend that to have the fire and police respond to my house in less than five minutes. Alderman Long: When the Chief of Police and Fire Chief say they need something, those are the things you respond to first. I've never seen either of those two people come to Council and ask for something to protect the citizens of Fayetteville. No one likes tax increases, but $2.50 a month is not a large tax burden for the outcome. Alderman La Tour: Five months ago when we were discussing making a $50,000 grant to the Walton Arts Center, I brought up that we had four or five unfunded and frozen positions on our Police and Fire Departments. Both Chiefs appeared before us and said, "We are making it just fine without those. We will do it with overtime." Five months later when we want a tax increase, they come back and tell us they need this. It looks like a manufactured need to accommodate this tax increase. I would like to hear my colleagues on the Council say they are firmly committed in making sure this money goes to fire and police. Mayor Jordan: There will be an easy way of tracking it if we put on 19 fire and police positions. If we don't, then you can come back and hold me responsible. Don Marr, Chief of Staff: Last year in the budget discussion, Alderman Long presented a request for a ninth beat to the city. At that time we did have both Chiefs come forward and talk about the fact that we thought we could continue it at the current levels. We were seeing a trend, but three months or six months doesn't make a trend. We wanted to see more time before we went to the citizens to ask for increases from their pocketbooks. We had been doing it through cuts. We are in the 13th additional month from the first discussion of this information. We have 13 more months of upward trend brought to us by our Chiefs. The commitment that was made to the Council by the Mayor, me, Paul Becker, Chief Tabor, and Chief Dayringer was that when we believe that there would be a need, we would bring that need immediately to the Council. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 20 of 33 Another item we talked about was that the Council would need to do policy discussion changes and funding from the funds that we pay some of these other areas. When talking about the Walton Arts Center, it is parking fund revenues controlled by the Council where those funds go, which today are limited to parking. That wasn't a viable option for funding at the time or now, until someone brings that forward as a discussion, which has not been done by the administration and would need to come from the Council. It is the first time since 2005 that a request has been made for public safety. We have hit the 10 year threshold with a significant population change as the fastest growing municipality in the State of Arkansas during that period. Alderman Long gave a brief history of a resolution that he co-sponsored to ask the administration to study the impact of the growing population compared to the police force. He stated the data at that time didn't support an increase. The Police Chief told him that if there was a time that the data changed that we would do exactly what we are asking for now. Alderman Long expressed his appreciation for the Chiefs' and administration for keeping public safety as their top priority. Mayor Jordan stated there are few politicians that run on, I'm going to raise your taxes platform. He stated there comes a time when there is a need. He stated we studied this and made a commitment that we would be reviewing this. He stated the top priority of any administration is to keep a city safe. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 6-1. Alderman La Tour voting no. Alderman Schoppmeyer was absent. Ordinance 5802 as Recorded in the office of the City Clerk New Business: Nabholz of Bixby, Oklahoma: A resolution to authorize the purchase of a rotary lift system from Nabholz of Bixby, Oklahoma in the amount of $45,990.85 plus applicable taxes pursuant to a National Joint Powers Alliance cooperative purchasing agreement for use by Fleet Operations. Jesse Beeks, Fleet Operations Superintendent gave a brief description of the resolution. Alderman Long moved to approve the resolution. Alderman Marsh seconded the motion. Upon roll call the resolution passed 7-0. Alderman Schoppmeyer was absent. Resolution 181-15 as recorded in the office of the City Clerk Bid No. 15-47 Peterbilt of Fort Smith: A resolution to award Bid No. 15-47 and authorize the purchase of a Peterbilt 320 diesel truck with Labrie/Wittke superduty front loader from Peterbilt of Fort Smith in the amount of $243,520.00 for use by the Recycling and Trash Collection Division. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 21 of 33 Jesse Beeks, Fleet Operations Superintendent gave a brief description of the resolution. Mayor Jordan: Have these gone through the Equipment Committee? Alderman Gray: They have. Alderman La Tour: Why do we need this? Jesse Beeks: It picks up containers at businesses. Alderman La Tour: How many of these trucks do we have right now? Jesse Beeks: Seven. Alderman La Tour: They are wearing out? Jesse Beeks: We rotate them throughout their life. We keep newer units and we don't replace them all at one time. Alderman Petty moved to approve the resolution. Alderman Long seconded the motion. Upon roll call the resolution passed 7-0. Alderman Schoppmeyer was absent. Resolution 182-15 as recorded in the office of the City Clerk Bid No. LSC -2015 Benchmark Construction: A resolution to award Bid No. LSC -2015 and authorize a contract with Benchmark Construction in the amount of $37,000.00 for a kitchen rehabilitation project at Lifesource International using Community Development Block Grant funds. Yolanda Fields, Community Resources Director stated she could answer any questions. Alderman Gray moved to approve the resolution. Alderman Long seconded the motion. Upon roll call the resolution passed 6-1. Alderman La Tour voting no. Alderman Schoppmeyer was absent. Resolution 18345 as recorded in the office of the City Clerk Apple Seeds, Inc.: A resolution to authorize the sale of approximately 0.75 acre of city -owned real property located at 2648 Old Wire Road to Apple Seeds, Inc. for the amount of $200,000.00, and to approve a twenty (20) year lease agreement with Apple Seeds, Inc. for approximately two (2) acres on the north end of Gulley Park for the purpose of operating a teaching farm. Connie Edmonston, Parks & Recreation director gave a brief description of the resolution. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 22 of 33 Mary Thompson, Apple Seeds: We are a non-profit. Our mission is to inspire healthy living through garden based education. We have a teaching farm on College that serves over a 1000 students each year. We host a variety of programs. We grow organic produce that goes to the schools for the students to host their own farmer's market stands at their school. They encourage healthy eating habits at a young age. Establishing a teaching farm at Gulley Park would allow Apple Seeds to expand to reach more students and to be an educational resource for. our community. Mayor Jordan: It is a great organization. Alderman Tennant: This is great for the city. I appreciate the effort and creativity in the use of this land. Thank you. Aubrey Shepherd spoke in favor of the resolution. Alderman Tennant moved to approve the resolution. Alderman Marsh seconded the motion. Upon roll call the resolution passed 6-1. Alderman La Tour voting no. Alderman Schoppmeyer was absent. Resolution 184-15 as recorded in the office of the City Clerk Brett Michael Maguire and Kimberly Ann Maguire Real Estate Contract: A resolution to authorize the sale of approximately 0.50 acre of city -owned real property located at 2634 Old Wire Road to Brett Michael Maguire and Kimberly Ann Maguire for the amount of $111,500.00. Connie Edmonston, Parks & Recreation director gave a brief description of the resolution. She stated she would recommend approval of the sale of the home. Alderman Gray moved to approve the resolution. Alderman Long seconded the motion. Upon roll call the resolution passed 7-0. Alderman Schoppmeyer was absent. Resolution 185-15 as recorded in the office of the City Clerk City Sales and Use Tax Bonds: An ordinance authorizing the issuance and sale of the City's Sales and Use Tax Capital Improvement Bonds, Series 2015, for the purpose of financing a portion of the costs of certain street improvements; authorizing the execution and delivery of a Fourth Supplemental Trust Indenture pursuant to which the bonds will be issued and secured; authorizing the execution and delivery of an Official Statement pursuant to which the bonds will be offered; authorizing the execution and delivery of a Bond Purchase Agreement providing for the sale of the bonds; authorizing the execution and delivery of a Continuing Disclosure Agreement; and prescribing other matters relating thereto. City Attorney Kit Williams read the ordinance. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 23 of 33 Paul Becker, City Finance Director gave a brief description of the ordinance. Don Marr, Chief of Staff thanked Dennis Hunt and Bo Bittle with Stephens, Inc. and Gordon Wilbourn with Kutak Rock for helping the city through numerous bond issues and their guidance to city staff. Alderman Gray moved to suspend the rules and go to the second reading. Alderman Petty seconded the motion. Upon roll call the motion passed 6-0. Alderman Long was absent during the vote. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Alderman Gray moved to suspend the rules and go to the third and final reading. Alderman Marsh seconded the motion. Upon roll call the motion passed 6-0. Alderman Long was absent during the vote. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. City Attorney Kit Williams stated his appreciation for the team at Kutak Rock and Stephens, Inc. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Schoppmeyer was absent. Ordinance 5803 as Recorded in the office of the City Clerk Theatre Squared City Council Support: A resolution to express the City Council's support of Theatre Squared and its intent to lease 0.8 acre of city property at the southeast corner of West and Spring as Theatre Squared's new permanent performance facility. Jeremy Pate, Director of Development Services gave a brief description of the resolution. He stated staff is in support of the resolution. Jamey McGaugh, Theatre Squared Director of Development: We have had an amazing kickoff to our season. We are operating at 94% capacity and still several years away from our new facility. Over the last ten years we have had over a 100,000 people come to Downtown Fayetteville for these shows. We are excited about the opportunity to work with the City of Fayetteville on this project. Alderman Petty: Thank you for pursuing this. There are a lot of investments lining up for School Avenue/West Avenue area. Because of these kinds of investments, the Downtown is the heart beat of the city. Over the next few years, as organizations like Theatre Squared and the library ramp up their efforts, we should be prepared to match their efforts with attendant infrastructure improvements that will be necessary to make sure they are successful. Mayor Jordan: I look forward to working with you and getting a permanent home for you all. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 24 of 33 Alderman Long moved to approve the resolution. Alderman Marsh seconded the motion. Upon roll call the resolution passed 7-0. Alderman Schoppmeyer was absent. Resolution 186-15 as recorded in the office of the City Clerk RZN 15-5179 (324 N. Hornsby Dr./Markham Hili Rezone): An ordinance to rezone that property described in Rezoning Petition RZN 15-5179, for approximately 1.39 acres from RSF-4, Residential Single Family, 4 Units Per Acre to NC, Neighborhood Conservation, and RSF-8, Residential Single Family, 8 Units Per Acre. City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. The Planning Commission voted 9-0 in favor of the request. Staff is recommending in favor. Rob Sharp spoke on behalf of applicant Brian Reindl, that the project would maintain a single family quality. Alderman Long expressed his appreciation for Rob Sharp's presentation at the Ward 4 meeting and the Bill of Assurance he submitted. He stated that everyone he has spoken with likes the project. Alderman Marsh moved to suspend the rules and go to the second reading. Alderman Long seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Alderman Gray moved to suspend the rules and go to the third and final reading. Alderman Marsh seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Schoppmeyer was absent. Ordinance 5804 as Recorded in the office of the City Clerk RZN 15-5156 (1220 W. Cleveland St./Expired PZD 12-4079): An ordinance to rezone that property described in Rezoning Petition RZN 15-5156, for approximately 2.71 acres, located at 1220 and 1226 W. Cleveland Street and 725, 727 and 805 Hall Avenue from R-PZD, Residential Planned Zoning District to RSF-4, Residential Single Family, 4 Units Per Acre and P-1, Institutional. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 25 of 33 City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. The Planning Commission voted 9-0 in favor of the request. Staff is recommending in favor. Alderman Gray moved to suspend the rules and go to the second reading. Alderman Tennant seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Alderman Gray moved to suspend the rules and go to the third and final reading. Alderman Marsh seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Schoppmeyer was absent. Ordinance 5805 as Recorded in the office of the City Clerk RZN 15-5165 (1118 S. Dunn Ave./Pearson Development): An ordinance to rezone that property described in Rezoning Petition RZN 15-5165, for approximately 0.23 acres, located at 1118 S. Dunn Avenue from I-1, Heavy Commercial and Light Industrial to NC, Neighborhood Conservation. City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. The Planning Commission voted 9-0 in favor of the request. Staff is recommending in favor. Alderman Marsh moved to suspend the rules and go to the second reading. Alderman Long seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Alderman Tennant moved to suspend the rules and go to the third and fmal reading. Alderman Long seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 26 of 33 Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Schoppmeyer was absent. Ordinance 5806 as Recorded in the office of the City Clerk RZN 15-5174 (S. End of Rupple Rd./Striker Development): An ordinance to rezone that property described in Rezoning Petition RZN 15-5174, for approximately 102 acres, located at the southern end of Rupple Road from NC, Neighborhood Conservation; CS, Community Services; R -A, Residential -Agricultural; RSF-4, Residential Single Family, 4 Units Per Acre; and RSF-2, Residential Single Family, 2 Units Per Acre to R -A, Residential -Agricultural; RSF-2, Residential Single Family, 2 Units Per Acre; RSF-4, Residential Single Family, 4 Units Per Acre; NC, Neighborhood Conservation and CS, Community Services. City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. The Planning Commission voted 9-0 in favor of the request. Staff is recommending in favor. Blake Jorgensen, Jorgensen & Associates expressed his excitement for the project. He stated he agrees with staff. Alderman Long: How long have the signs been up about the rezoning? Jeremy Pate: The requirement by the code is at least 15 days prior to a Planning Commission hearing. Alderman Long: It's a very large area. Would it slow you all down or impact your project timeline if we held it for one more City Council meeting? Blake Jorgensen: When we did the groundbreaking for Rupple Road, the sign posting was prominently displayed in the background. This is something we have been working on since 2007. Breaking ground would be advantageous for us. We have been working with staff for a very long time. It's gone through several rezonings and this isn't the first request. You can send anyone my contact information and I would talk to them anytime. A discussion followed about rezoning signs. Alderman Marsh moved to suspend the rules and go to the second reading. Alderman Long seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayefteville-ar.gov Alderman Marsh moved to suspend the Alderman La Tour seconded the motion. Schoppmeyer was absent. City Council Meeting Minutes October 6, 2015 Page 27 of 33 rules and go to the third and final reading. Upon roll call the motion passed 7-0. Alderman City Attorney Kit Williams read the ordinance. Mayor Jordan: I remember this piece of property when I was on the Council. It is going to be great to see that developed in that area. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Schoppmeyer was absent. Ordinance 5807 as Recorded in the office of the City Clerk VAC 15-5087 (1005 E. Rockwood Trail/ L & F Construction): An ordinance to approve VAC 15-5087 submitted by Fred Patrick for property located at 1005 Rockwood Trail to vacate an alley right of way. City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. The Planning Commission voted 7-0 in favor of the request. Staff is recommending in favor. Alderman Long: What was the purpose of the vacation? Jeremy Pate: It is an old platted right-of-way that is along the rear of their property. It does not fully connect streets. They wish to return the property back to the adjacent property owners. Alderman Long: The property owners are requesting it through a construction company. Are they planning on building something? Jeremy Pate: There is a home that is already constructed there that the builder still owns. Alderman Long: Is there a problem with the city maintaining the right-of-way and is it going to change anything? Jeremy Pate: Not physically. They are requesting it to be as part of their yard now to be owned by them, as opposed to a potential alley connection along Rockwood Trail. Alderman Long: I've spent the last two weeks working with the utility companies and some property owners on Rockwood Trail. That is a very narrow street and could see the city possibly needing utility easements and right-of-ways in that area in the future. Jeremy Pate: This would be maintained as a utility easement per the conditions of the ordinance. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 28 of 33 Mayor Jordan: Have you received any calls on it? Alderman Gray and Alderman Marsh: No. Alderman Gray moved to suspend the rules and go to the second reading. Alderman Marsh seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Alderman Gray moved to suspend the rules and go to the third and final reading. Alderman Marsh seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Schoppmeyer was absent. Ordinance 5808 as Recorded in the office of the City Clerk VAC 15-5157 (688 N. Whitham Ave./lst Western Bank): An ordinance to approve VAC 15- 5157 submitted by Gene Buescher for property located at 688 Whitham Avenue to vacate an alley right of way. City Attorney Kit Williams read the ordinance. Jeremy Pate, 'Director of Development Services gave a brief description of the ordinance. The Planning Commission voted 7-0 in favor of the request. Staff is recommending in favor. Alderman Long: Is this not valuable property? We own the property? City Attorney Kit Williams: We only own a right -of way that was dedicated to us. We don't own the underlying property. Alderman Gray moved to suspend the rules and go to the second reading. Alderman Long seconded the motion. Upon roll call the motion passed 6-0. Alderman Marsh was absent during the vote. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Alderman Tennant moved to suspend the rules and go to the third and final reading. Alderman La Tour seconded the motion. Upon roll call the motion passed 6-0. Alderman Marsh was absent during the vote. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 29 of 33 Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 6-0. Alderman Marsh was absent during the vote. Alderman Schoppmeyer was absent. Ordinance 5809 as Recorded in the office of the City Clerk VAC. 15-5161 (2055 E. Signal Hill Depot/Butterfield Trail Village): An ordinance to approve VAC 15-5161 submitted by Joe Perme for property located at 2055 E. Signal Hill Depot to vacate a portion of a utility easement. City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. The Planning Commission voted 7-0 in favor of the request. Staff is recommending approval. Alderman Marsh moved to suspend the rules and go to the second reading. Alderman Long seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Alderman Long moved to suspend the rules and go to the third and final reading. Alderman Tennant seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Schoppmeyer was absent. Ordinance 5810 as Recorded in the office of the City Clerk VAC 15-5176 (Mark Mills Lane/Summit Place SD): An ordinance to approve VAC 15-5176 submitted by Blew & Associates, Inc. for property located along Mark Mills Lane to vacate portions of a conservation easement. City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. The Planning Commission voted 7-0 in favor of the request. Staff is recommending approval. Alderman Marsh moved to suspend the rules and go to the second reading. Alderman Gray seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 36 of 33 City Attorney Kit Williams read the ordinance. Alderman Gray moved to suspend the rules and go to the third and final reading. Alderman Marsh seconded the motion. Upon roll call the motion passed 6-1. Alderman Long voting no. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 6-1. Alderman Long voting no. Alderman Schoppmeyer was absent. Ordinance 5811 as Recorded in the office of the City Clerk VAC 15-5177 (1375 N. Leverett Ave./Noble Oaks Apts.): An ordinance to approve VAC 15- 5177 submitted by Jorgensen & Associates, Inc. for property located at 1375 N. Leverett Avenue to vacate a portion of a utility easement. City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. The Planning Commission voted in favor of the request. Staff is recommending approval. Alderman Gray moved to suspend the rules and go to the second reading. Alderman Long seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Alderman Long moved to suspend, the rules and go to the third and final reading. Alderman La Tour seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Schoppmeyer was absent. Ordinance 5812 as Recorded in the office of the City Clerk VAC 15-5178 (SW Corner Joyce & Steele Blvds./CMN Lots 3 & 4): An ordinance to approve VAC 15-5178 submitted by Jorgensen & Associates, Inc. for property located at the southwest corner of Joyce & Steele Boulevards to vacate portions of utility, drainage and trail easements. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 31 of 33 City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. The Planning Commission voted 7-0 in favor of the request. Staff is recommending approval. Alderman Long moved to suspend the rules and go to the second reading. Alderman Gray seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Alderman Petty moved to suspend the rules and go to the third and final reading. Alderman Long seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Schoppmeyer was absent. Ordinance 5813 as Recorded in the office of the City Clerk Amend §156.03 Development, Parking and Loading: An ordinance to amend §156.03 Development, Parking and Loading of the variances chapter of the Unified Development Code to establish a variance procedure for Commercial, Office and Mixed Use Design and Development Standards. City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. The Planning Commission voted 8-0 in favor of the request. Staff is recommending approval. City Attorney Kit Williams: I am partly responsible for this change. I had suggested one of the design standards should follow all the other design standards by saying, "it should be done", instead of saying, "it shall be done", on the prominent entry way. I support this variance procedure. Alderman Long: The City Council can still appeal these decisions? Jeremy Pate: Correct. Alderman Marsh moved to suspend the rules and go to the second reading. Alderman Long seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteviIle-ar.gov City Council Meeting Minutes October 6, 2015 Page 32 of 33 Alderman Gray moved to suspend the rules and go to the third and final reading. Alderman Marsh seconded the motion. Upon roll call the motion passed 7-0. Alderman Schoppmeyer was absent. City Attorney Kit Williams read the ordinance. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Schoppmeyer was absent. Ordinance 5814 as Recorded in the office of the City Clerk Parking Division Full Time Equivalent Position: A resolution to authorize the addition of 1.0 full time equivalent position to the Parking Division to provide four part time employees to staff event parking in the Spring Street Parking Deck. Peter Nierengarten, Sustainability & Resilience Director gave a brief description of the resolution. Alderman Marsh: My primary concern is the low wages that is on this position. I know these are part time positions with no benefits, but this is the kind of job that people combine three jobs and still can't make a living. In order to meet the affordability threshold for the average one bedroom apartment in Fayetteville, we would need to be paying at least $12 an hour. I see that the bottom salary is $10.10 per hour. I would like to see us raise that to set a better example and providing for these people who are providing these services. Mayor Jordan: I took that to staff and there were some complications with that. Don Marr, Chief of Staff: We have current event parking staff that is being paid at the level that is being proposed today. We could potentially have pay inequity issues between existing staff and the new positions unless we changed all of them. We have a compensation study as part of our budget proposal for 2016. If we want to address minimums higher than the market set minimums or the minimum wage, federally or state, that is the time to talk about it from a comprehensive perspective. We have other positions that fall into this arena. The rates are currently set based on the market rates. We don't think it is fair to hire four new people at a wage, higher than we have individuals working in the city today. Peter Nierengarten: The event parking position tend to be filled by college students. We have four parking enforcement staff that are full time at $32,000 with benefits and overtime. Two of those four started in event parking. It can serve as a nice stepping stone into full time employment at a handsome wage within the Parking Division. A discussion followed about addressing the issue during budget discussions. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov City Council Meeting Minutes October 6, 2015 Page 33 of 33 Alderman Gray moved to approve the resolution. Alderman Marsh seconded the motion. Upon roll call the resolution passed 7-0. Alderman Schoppmeyer was absent. Resolution 187-15 as recorded in the office of the City Clerk Announcements: Alderman Gray: We are currently taking applications for the Civil Rights Commission. Don Marr, Chief of Staff: The Utility Division is releasing the new utility pay system on October 13, 2015. Mr. Marr gave the final two fall bulky waste cleanup dates. The business license renewal deadline is October 31, 2015. The city is taking applications for the 2016 food truck and trailer permit lottery. Applications are being accepted through October 30, 2015. The Hero Half Marathon is October 10, 2015. A free fishing weekend will be October 10-11, 2015. Jeremy Pate congratulated City of Fayetteville employee, Alison Jumper for running in the Arkansas Traveler 100 mile race in Central Arkansas. He stated she finished as 1St female and 7th overall in the race out of 165 participants. City Council Agenda Session Presentations: None City Council Tour: None Sondra E. Smith, City Clerk Treasurer 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 www.fayetteville-ar.gov NORTHWIESTARKANsAs Democrat 70(f)azette F.O. BOX 1607. FAYETTEVILLE. AR, 72702 ^ 479-4412-1700 • FAX: 479-695-1118 - WWW.N'WADG.COM AFFIDAVIT OF PUBLICATION I, Cathy Wiles, do solemnly swear that I am the Legal Clerk 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. 5803 Was inserted in the Northwest Arkansas Democrat Gazette on: October 15, 2015 Publication Charges: $ 836.57 Y Cathy Wiles Subscribed and sworn to before me This ZI day of Oct , 2015. RECEIVED OCT 2 8 2015 SEE ATTACHED Notary Public v My Commission Expires: 71Z 1Z5— A` 1i FY DAVIS Arkan, ;ai. Washington County Notary Public - Comm# 12694247 My Commission Expires Jul 2, 2025 **NOTE** E -- Please do not pay from Affidavit. Invoice will be sent. CIT �Cl _RKTO'F ORDINANCE NO. 5803 AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF THE CITY'S SALES] jn ��� AND USE TAX CAPITAL IMPROVEMENT BONDS, SERIES 2015, FOR THE PURPOSE {Jjy" OF FINANCING A PORTION OF THE COSTS OF CERTAIN STREET IMPROVEMENTS; /J AgKANSAS AUTHORIZING THE EXECUTION AND DELIVERY OF A FOURTH SUPPLEMENTAL TRUST INDENTURE PURSUANT TO WHICH THE BONDS WILL BE ISSUED AND SECURED; AUTHORIZING THE EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT PURSUANT TO WHICH THE BONDS WILL BE OFFERED; AUTHORIZING THE EXECUTION AND DELIVERY OFA BOND PURCHASE AGREEMENT PROVIDING FOR THE SALE OF THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY OF A CONTINUING DISCLOSURE AGREEMENT; AND PRESCRIBING OTHER MATTERS RELATING THERETO. "WHEREAS, the City Council of the City of Fayetteville, Arkansas (the "City') has previously determined that there is a great need for a source of revenue to finance the costs of'various street improvements within the -City (the "2015 Project"); and 1NHEREAS, the City is authorized and empowered under.the provisions of the Constitution and laws of the State of "Arkansas, including particularly Amendment 62 to the'Constitution of the State of Arkansas ("Amendment 62") and ,,Arkansas Code Annotated (1998 Repl. & 2013 Supp.) Sections 14-164-301 at seq. (as from time to time amended, the -"Local Government Bond Act"), to issue and sell its capital improvement bonds to finance,the costs of various capital improvements such as those comprising the 2015 Project, whlch capital improvement bonds may be secured by and Payable from the receipts of the special city-wide sales and use tax authorized by the Local Government`Bond Act; WHEREAS, pursuant to the provisions of Ordinance No. 4891 of the City, adopted and approved on June 20, 2006 (the ."Election Ordinance"), there was submitted to the qualified electors of the City four questions regarding the issuance of an aggregate of not to exceed$110,000,000 in principal amount of capital improvement bonds pursuant to Amendment 62 and the Local Government Bond Act to finance the capital improvements described in the Election Ordinance, said bonds to be secured by a pledge of and lien upon rO all of the receipts of a special city-wide sales'and use tax levied at the rate of one-quarter of one percent (0.25%) ?;pursuant to the Local Government Bond Act (the "0.25% Sales and Use Ta)') and (i) all of the receipts of a special ;city-wide sales and use tax levied at the rate of three-quarters of one percent (0.75%) pursuant to the Local Government :Bond Act (the "0.75% Sales and Use Tax'); and WHEREAS, at a special election held September 12, 2006, a majority of the,qualified electors of the City voting on the questions approved the issuance of capital improvement bonds in the principal amounts and for each of the specific F ;purposes set forth on the ballot (and the corresponding levy of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax, and the pledge of the receipts thereof to the payment of the capital improvement bonds); and `WHEREAS, as authorized under the provisions of Amendment 62 and the Local Government Bond Act and as approved the qualified electors -of the City, the City has now determined to Issue and sell its Sales and Use Tax Capital I; `.Improvement Bonds, Series 2015, in the aggregate princlpal amount of $9,000,000 (the "Bonds"), in order to provide '—for the funding of the 2015 Project; and " _WHEREAS, as authorized by the provisions of the Election Ordinance, the City has previously made arrangements for the sale of the Bonds to Stephens Inc., Fayetteville, Arkansas (the "Underwriter'), pursuant to the terms of a Bond .Purchase Agreement between the City and the Underwriter (the "Bond Purchase Agreement") in substantially the form presented to and before this meeting; ;'' -NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: :;Section 1: Under the authority of the Constitution and laws of the State of Arkansas,. including particularly Amendment 62 to the Constitution of the State of Arkansas and the Local Government Bond Act, there is hereby authorized the ;;issuance of bonds of the City to be designated as "Sales and Use Tax Capital Improvement Bonds, Series 2015" (the "Bonds"). The Bonds shall be issued in the original aggregate principal amount of Nine Million Dollars ($9,000,000) and shall mature not later than November 1, 2025, in the principal amounts and bearing interest,at the rates specified in the '',Bond Purchase Agreement. The entire aggregate principal amount of the Bonds hereby authorized shall be deemed to apply to the Street Project described in Questlon 3 of the ballot. The average yield on the Bonds as a whole shall not exceed 3.50%. The proceeds of the Bonds will be utllized to finance the costs of the 2015 Project, to establish a debt service reserve for the Bonds or to purchase a surety bond or debt service reserve insurance policy for reserve purposes, if deemed economically beneficial, to pay a premium for bond (''insurance, If deemed economically beneficial, and to pay printing, underwriting, legal and other expenses incidental to the issuance of the.Bonds. The Bonds shall be issued in the form and denominations, shall be dated, shall be numbered, shall mature, shall be subject to redemption prior to maturity, and shall contain such other terms, covenants and condi- tlons, all as set forth in the Fourth Supplemental Trust Indenture submitted to this meeting. The Mayor is hereby authorized and directed to execute and deliver the Bonds in one or more series, each series to be siin substantially the form thereof contalned In the Fourth Supplemental Trust Indenture submitted to this meeting, and the !City Clerk is hereby authorized and directed to.execute and deliver the Bonds and to affix the seal of the City thereto, `aiid the Mayor and City Clerk are hereby authorized and directed to Cause the Bonds to be accepted and authenticated by.the Trustee. The Mayor is hereby authorized to confer with the Trustee, the Underwriter and Kutak Rock LLP, Little .Rock, Arkansas ("Bond Counsel"), in order to complete the Bonds in substantially the form contained in the Fourth `Supplemental Trust Indenture submitted to this meeting, with such changes as shall be approved by such persons ,executing the Bonds, their execution to constitute conclusive evidence of such approval. Section 2: In order to pay the principal of and interest on the Bonds as they mature or are called for redemption prior to maturity, there is hereby pledged all of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax levied by the Election Ordinance. Such pledge securing the Bonds shall be made on a parity basis wlth the existing pledge of such receipts in favor of the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A ;•(the, "Series 2006A Bonds'), the City's $14,340,000 Sales and Use Tax Capital Improvement Bonds,, Series 2007 (the ;'`Series 2007 Bonds"), the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series ;2009 Bonds"), and the City's $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). The levy and collection of the 0.259/6 Sales and Use Tax and the 0.75% Sales and Use Tax shall commence ;:on ,the dates provided in the Local Government Bond Act and shall continue until such time as the Series 2006A Bonds, ,the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Bonds are no longer outstanding or ,.sufficient funds are on deposit with the Trustee to redeem the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Bonds in full. The City, covenants and agrees that all receipts from the .0.25% Sales and Use Tax and the 0.75% Sales and Use Tax will be accounted for separately as special funds on the 'looks of the City, and receipts of said 0.25% Sales and Use Tax and 0.75% Sales and Use Tax will be deposited and ;;Will be used solely as provided in the Trust Indenture.(as.defined below). Section : To prescribe the terms and conditions upon which the Bonds are to be executed, authenticated, issued accepted, held and secured, the Mayor is hereby authorized and directed to execute and acknowledge a Fourtl Supplemental Trust Indenture (the "Fourth Supplemental Trust Indenture"), by and between the City and Simmon: :.First Trust Company, N.A., Pine Bluff, Arkansas (the "Trustee"), and the City Clerk is hereby authorized and directee to execute and acknowledge the Fourth Supplemental Trust Indenture and to affix the seal of the City thereto, ani the Mayor and the City Clerk are hereby authorized and directed to cause the Fourth Supplemental Trust Indentun to be accepted, executed and acknowledged by the Trustee. The Fourth Supplemental Trust Indenture supplement; and amends a Trust Indenture dated as of November 1, 2006, as previously amended by a First Supplemental Trus Indenture dated as of October 1, 2007, a Second Supplemental Trust Indenture dated as of November 1, 2009, and Third Supplemental Trust Indenture dated as of November 1, 2013, each by and between the City and the Trustee (the "Original Indenture," and collectively with the Fourth Supplemental Trust Indenture, the "Trust Indenture"). The Fourtt Supplemental Trust Indenture is hereby approved in substantially the form submitted to this meeting, including, withou limitation, the provisions thereof pertaining to the pledge of 0.25% Sales and Use Tax receipts and 0.75% Sales and Use -Tax receipts and the terms of the Bonds: The Mayor is hereby authorized to confer with the Trustee, the Underwriter an( P- Bond Counsel In order to complete the Fourth Supplemental Trust Indenture in substantially the form submitted to thio meeting, with such changes as shall be approved by such persons executing the Fourth Supplemental Trust Indenture heir execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Fourth Supplemental Trust Indenture in substantially the form authorized to be 'executed is on file with the City Clerk and is available for inspection by any interested person.) Section 4: There is hereby authorized and approved a Preliminary Official Statement of the City, including the cove page and appendices attached thereto, relating to the Bonds. The Preliminary Official Statement is hereby "deemec final" by the City within the meaning of U.S. Securities and Exchange Commission Rule 15c2-12. The distribution of the Preliminary Official Statement is hereby. approved. The Preliminary Official Statement, as amended to conform to the -t„ :terms of the Bond Purchase Agreement, including Exhibit A thereto, and with such other changes and amendments a: are mutually agreed to by the City and the Underwriter, is herein referred to as the "Official Statement," and the Mayoi is hereby authorized to execute the Official Statement for and on behalf of the City. The Official Statement Is hereby ,approved in substantially the form of the Preliminary Official Statement submitted to this meeting, and the Mayor is here. by authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Official Statemen " in substantially the form of the Preliminary Official Statement submitted to this meeting, with such changes as shall be approved by such persons, the Mayor's execution to constitute conclusive evidence of such approval. I (Advice is given that a copy of the Preliminary Official Statement is on file with the City Clerk and is available for inspec `tion by any interested person.) Section 5: In order to prescribe the terms and conditions upon which the Bonds are to be sold to the Underwriter, the Mayor is hereby authorized'and directed to execute a Bond Purchase Agreement on behalf of the City, to be dated w of the date of its execution (the "Bond Purchase Agreement"), by and between the City and the Underwriter, and the Bond Purchase Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor ie hereby authorized to confer with the Underwriter and Bond Counsel in order to complete the Bond Purchase Agreemen' in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Bond Purchase Agreement, their'execution to constitute conclusive evidence of such approval.. „(Advice is given that a copy of the Bond Purchase Agreement in substantially the form, authorized to be executed is or file with the City Clerk and is available for inspection by any interested person.) actio 6: In order to provide for continuing disclosure of certain financial and operating information with respect tc the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax in compliance with the provisions of Rule 15c2-12 o the U. S, Securities and Exchange Commission, the Mayor is hereby authorized and directed to execute a Continuing Disclosure Agreement to be dated as of the date of its executlon (the "Continuing Disclosure. Agreement"), by anc between the City and the Trustee, and the Mayor is hereby authorized and directed to cause the Continuing Disclosure Agreement to be executed by the Trustee. The Continuing Disclosure Agreement is hereby approved in substantially the a :form submitted to this meeting, and the'Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bonc Counsel in order to complete the Continuing Disclosure Agreement in substantially the form submitted to this meeting with such changes as shall be approved by such persons executing the Continuing Disclosure Agreement, their execu- tion to constitute conclusive evidence of such approval. (Advice is given that a copy of the Continuing Disclosure Agreement in substantially the form authorized to be executec is on file with the City Clerk and Is available for inspection by any interested person.) Section 7: The Trust Indenture requires that a debt service reserve be funded in conjunction with the issuance of the Bonds The Underwriter has proposed that the City consider the purchase of a surety bond. or a debt service reserve insurance policy with a portion of the proceeds of the Bonds in order to fulfill such requirement. If deemed economically 3S ;advantageous by the Mayor, upon the advice of the Underwriter, the Mayor is hereby authorized to execute an insur- 8nce commitment and to do any and all things necessary to accomplish the delivery of a surety bond or a debt service reserve insurance policy with respect to the Bonds, ..Section 8: In order to secure lower interest rates on the Bonds, the Underwriter has proposed that the City consider the purchase of a policy of bond insurance with a portion of the proceeds of the Bonds, which policywould guarantee the !C payment of the principal of and interest on the Bonds when due. If deemed economically advantageous by the Mayor, .upon the advice of the Underwriter, the Mayor is hereby authorized to execute an insurance commitment and to do any and all things necessary to accomplish the delivery of a bond insurance policy with respect to the Bonds. " -Section 9: The Mayor and City Clerk, for and on behalf of the City, are hereby authorized and directed to do any and al' things necessary to effect the Issuance, sale, execution and delivery of the Bonds and to effect the execution and deliv- efy of the Fourth Supplemental Trust Indenture, the Bond Purchase Agreement, the Official Statement, the Continuing Disclosure Agreement and a Tax Regulatory Agreement relating to the tax exemption of interest on the Bonds, and tc perform all of the obligations of the City under and pursuant thereto. The Mayor and the City Clerk are further authorizec and directed, for and on behalf of the City, to execute all papers, documents, certificates and other Instruments that may be required for the carrying out of such authority or to evidence the exercise thereof. Section 10: As previously provided in the Election Ordinance, Kutak Rock LLP, Little Rock, Arkansas, is hereby con- firmed as Bond Counsel on behalf of the City in connection with the issuance and sale of the Bonds. Section 11: The provisions of this Ordinance are hereby declared to be severable, and if any section, phrase or provisior shall for any reason be declared to be illegal or invalid, such declaration shall not affect the validity of the remainder of the sections; phrases or provisions of this Ordinance: Section 12: All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. --- PASSED and APPROVED this 6th day of October, 2015, APPROVED: ATTEST: By: By: LIONELD JORDAN, Mayor SONDRA E. SMITH, City Clerk Treasurer EXHIBIT D COSTS OF ISSUANCE Bond Counsel Fee and Expenses (estimated through closing and transcript preparation) Kutak Rock LLP 124 West Capitol Avenue, Suite 2000 Little Rock, AR 72201 Rating Fee Standard & Poor's Corporation 2542 Collection Center Drive Chicago, IL 60693 Trustee Acceptance Fee Simmons First Trust Company, N.A. 501 Main Street Pine Bluff, AR 71601 Reimbursement for Ordinance Publication Expenses City of Fayetteville 113 West Mountain Fayetteville, AR 72701 Attn: Finance Director Underwriting Expenses Stephens Inc. 3425 North Futrall Drive, Suite 201 Fayetteville, AR 72703 Total: D-1 4834-9335-0186.2 $40,000.00 16,000.00 2,500.00 Etle1OS791 2,936.70 $62,273.27 KUTAK ROCK LLP LITTLE ROCK, ARKANSAS Telephone 501-975-3000 Facsimile 501-975-3001 Federal ID 47-0597598 November 12, 2015 City of Fayetteville, Arkansas Fayetteville, AR Check Remit To: Kutak Rock LLP PO Box 30057 Omaha, NE 68103-1157 Wire Transfer Remit To: ABA # 104000016 First National Bank of Omaha Kutak Rock LLP A/C # 24-690470 Invoice No. 2119892 Matter No. 1123401-27 $9,000,000 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2015 For Professional Legal Services Rendered and Expenses Incurred as Bond Counsel to the City of Fayetteville, Arkansas in connection with the issuance of the captioned bonds Total: 4843-9602-7178.1 '! 1,111 11 & POD R'S Standard & Poor's Financial Services, LLC Invoice No.: 10379217 1�0STANDARD RATINGS SERVICES Federal I.D.: 26 - 3740348 Customer No.: 1000098461 Invoice Date: 10/13/15 McGRAW HILL FINANCIAL Tax Exempt No.: Page No.: 1 Print Date: 10/13/15 0201 MR. BO BITTLE STEPHENS 3425 NORTH FUTRALL DRIVE, SUIT FAYETTEVILLE AR 72703 Description of Services 101011 ANALYTICAL SERVICES RENDERED IN CONNECTION WITH: US$9,000,000 Fayetteville, Arkansas, Sales And Use Tax Capital Improvement Bonds, Series 2015, dated: Date of Delivery, due: November 1, 2024 FOR INQUIRIES PLEASE CONTACT: SREEKANTH MADDALA SREEKANTH.MADDALA@STANDARDANDPOORS.CCM PHONE: 1-800-767-1896 EXT #6 FAX: 1-212-438-5178 For inquiries contact the client services representative listed on this invoice. Do not return it or direct any inquiries about the invoice to credit ratings analysts. S&P maintains a separation of commercial and analytical activities. Please note that our credit ratings analysts are not permitted to communicate, negotiate, arrange or collect credit rating fees. Please reference invoice or statement number on all checks and wire transfers This Invoice Due and Payable As Of: 10/13/15 Make Checks Payable To: STANDARD&POOR'S RATINGS SERVICES McGRAW HILL FINANCIAL Amount $16,000.00 INVOICE TOTAL $16,000.00 USD Standard & Poor's Financial Services, LLC Invoice No.: 10379217 Federal I.D.: 26-3740348 Customer No.: 1000098461 Invoice Date: 10/13/15 Billed To: Wire Transfer To: 0201 Remit To: MR. BO BITTLE Please include invoice # STANDARD AND POOR'S STEPHENS Bank of America -San Francisco CA 2542 COLLECTION CENTER DRIVE 3425 NORTH FUTRALL DRIVE, SUIT Standard & Poor's CHICAGO, IL 60693 FAYETTEVILLE AR 72703 Account # 12334-02500 ABA # 0260-0959-3 Or E-mail: cashapps@mhfi.com TOTAL AMOUNT DUE: $16,000.00 USD 10000984618 10379217 01600000 1 700 10 07 1015 6 AMOUNT ENCLOSED: NoRTHwESTARKANsAs Democrat7V (A ) azette P.O. 90X 1607. FAYETTEVILLE. AR. 72702 - 479-442-1700 a FAX: 470-69S-1118 < WWW,NWADG.COM AFFIDAVIT OF PUBLICATION I, Cathy Wiles, do solemnly swear that I am the Legal Clerk 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. 5803 Was inserted in the Northwest Arkansas Democrat Gazette on: October 15, 2015 Publication Charges: $ 836.57 RECEIVE[ 11 OCT 282015 & SEE ATTACHED Cathy Wiles V Subscribed and sworn to before me This 21 day of Oc-t 2015. Ah Notary Public My Commission Expires: 71Z 1Z5" A" M FYDAVIS Ark;ane;{„ Washington County Notary Public - COmm# 12694247 My Commission Expires Jul 2, 2025 **NOTE** Please do not pay from Affidavit. Invoice will be sent. CIT pCL' K90FFICE $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2015 Clearing: CUSIP Service Breau DTC I-Preo Misc. (Postage, Federal Express, Ticket Charges) Day Loan Wire Instructions: Total Bank of America ABA: 026009593 Credit: Stephens Inc. A/C #: 000089203828 FFC: Fayetteville, Arkansas (362083) Attn: Michele Casavechia (501-377-2297) Stephens Inc 111 Center Street 501-377-2000 (t) Little Rock, AR 72201 501-377-2666 (f) 800-643-9691 Stephens Jackson T. Stephens, 1923-200; Chairman Emeritus in Perpetuity $522.50 840.00 701.20 623.00 250.00 $2,936.70 www.stephens.com VIA CERTIFIER MAIL RETURN RECEIPT REQUESTEL Internal Revenue Service Center Ogden Utah 84201 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS, SERIES 2015 Dear Sir or Madame: I have enclosed for filing the original and one copy of IRS Form 8038-G with respect to the above -captioned matter. Please return the copy to me, showing your file -mark, using the enclosed prepaid self addressed envelope. If you have any questions or require additional information, please do not hesitate to contact me. Sincerely, or on M. Wilbourn js enclosure 4834-8856-4011.1 KUTAK ROCK LLP ATLANTA CHICAGO SUITE 2000 DENVER 124 WEST CAPITOL AVENUE FAYETTEVILLE IRVINE NORTHWEST ARKANSAS OFFICE LITTLE ROCK, AR 72201-3706 KANSAS CITY SUITE 400 LITTLE ROCK 234 EAST MILLSAP ROAD 501-975-3000 LOS ANGELES FAYETTEVILLE, ARKANSAS 72703-4099 FACSIMILE 501-975-3001 MINNEAPOLIS OKLAHOMA CITY 479-973-4200 www.kutakrock.com OMAHA PHILADELPHIA RICHMOND SCOTTSDALE GORDON M. WILBOURN gordon.wilbourn@kutakrock.com November 13, 2015 WASHINGTON WASHINGTON (501) 975-3101 WICHITA VIA CERTIFIER MAIL RETURN RECEIPT REQUESTEL Internal Revenue Service Center Ogden Utah 84201 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS, SERIES 2015 Dear Sir or Madame: I have enclosed for filing the original and one copy of IRS Form 8038-G with respect to the above -captioned matter. Please return the copy to me, showing your file -mark, using the enclosed prepaid self addressed envelope. If you have any questions or require additional information, please do not hesitate to contact me. Sincerely, or on M. Wilbourn js enclosure 4834-8856-4011.1 F.I.8038-G Information Return for Tax -Exempt Governmental Obligations (Rev. September 2011) ® Under Internal Revenue Code section 149(e) OMB No. 1545-0720 ®See separate instructions. Department of the Treasury Internal Revenue Service Caution: If the issue price is under $100,000, use Form 8038 -GC. ;Fii4Reportina Authoritv if Amended Retui n. check here I> I I 1 Issuer's name 2 Issuer's employer identification number (EIN) City of Fayetteville, Arkansas 71 6018462 3a Name of person (other than issuer) with whom the IRS may communicate about this return (see instructions) 3b Telephone number of other person shown on 3a Gordon M. Wilbourn, Kutak Rock LLP, bond counsel 501-975-3000 4 Number and street (or P.O. box if mail is not delivered to street address) Room/suite 5 Report number (For IRS Use Only) 113 West Mountain Street 17 131 1 6 City, town, or post office, state, and ZIP code 7 Date of issue Fayetteville, AR 72701 11-12-15 8 Name of issue 9 CUSIP number Sales and Use Tax Capital Improvement Bonds, Series 2015 312673 EXO 10a Name and title of officer or other employee of the issuer whom the IRS may call for more information (see 10b Telephone number of officer or other instructions) employee shown on 10a Description of Obligations. Complete for the entire issue for which this form is being filed. (a) Final maturity date (b) Issue price (c) Stated redemption (d) Weightedprice at maturity average maturity (e) Yield 21 Type of Issue (enter the issue price). See the instructions and attach schedule. 1 $ 9,080,2261 11 12 13 14 15 16 17 18 Education . . . . . . . . . . . . . . . . . . . . . . . . Health and hospital . . . . . . . . . . . . . . . . . . . . . . . . Transportation . . . . . . . . . . . . ... . . . . . . . . . . . . Public safety . . . . . . . . . . . . . . . . . . . . . . . . . . . Environment (including sewage bonds) . . . . . . . . . . . . . . . . . Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other. Describe Ian streets . . . . . . . . . . . . 11 12 13 14 15 16 17 18 9,080,226 00 19 20 If obligations are TANS or RANs, check only box 19a . . . . . . . . . . . . . If obligations are BANS, check only box 19b . . . . . . . . . . . . . . . . if obligations are in the form of a lease or installment sale, check box . . . . . . . . 0- ❑ 0- ❑ ® ❑ 23 Description of Obligations. Complete for the entire issue for which this form is being filed. (a) Final maturity date (b) Issue price (c) Stated redemption (d) Weightedprice at maturity average maturity (e) Yield 21 11-1-24 1 $ 9,080,2261 $ 9,000,0001 5.067 years 1 1.447 % Uses of Proceeds of Bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest . . . . . . . . . . . . . . . . . 22 0 23 9,080,226 23 Issue price of entire issue (enter amount from line 21, column (b)) . . . . . 24 Proceeds used for bond issuance costs (including underwriters' discount) . . 24 150,500 25 Proceeds used for credit enhancement . . . . . . . . . . . . 25 0 26 Proceeds allocated to reasonably required reserve or replacement fund . 26 14,850 27 Proceeds used to currently refund prior issues . . . . . . . . . 27 0 28 Proceeds used to advance refund prior issues . . . . . . . . . 28 0 29 Total (add lines 24 through 28) . . . . . . . . . . . . . . . . . . . . . . . 29 165,350 30 1 8,914,876 30 Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) . . Description of Refunded Bonds. Complete this part only for refunding bonds. 31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . . ® years 32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . . . ® years 33 Enter the last date on which the refunded bonds will be called (MM/DD/YYYY) . . . . . . Do - 34 Enter the date(s) the refunded bonds were issued ® (MM/DD/YYYY) For Paperwork Reduction Act Notice, see separate instructions. cat. No. 63773S Form 8038-G (Rev. 9-2011) Form 8038-G (Rev. 9-2011) Page 2 Miscellaneous 35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . . . 35 0 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC) (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . 36a 0 b Enter the final maturity date of the GIC Do- c Enter the name of the GIC provider llio- 37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans to other governmental units . . . . . . . . . . . . . . . . . . . . . . . . 37 38a If this issue is a loan made from the proceeds of another tax-exempt issue, check box ® ❑ and enter the following information: b Enter the date of the master pool obligation Do- c Enter the EIN of the issuer of the master pool obligation d Enter the name of the issuer of the master pool obligation 39 If the issuer has designated the issue under section 265(b)(3)(B)(i)(III) (small issuer exception), check box . . . . 0. ✓❑ 40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . . . . . > ❑ 41a If the issuer has identified a hedge, check here ® ❑ and enter the following information: b Name of hedge provider c Type of hedge d Term of hedge Do - 42 If the issuer has superintegrated the hedge, check box . . . . . . . . . . . . . . . . . . . . . ® ❑ 43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated according to the requirements under the Code and Regulations (see instructions), check box . . . . . . . . ® ❑✓ 44 if the issuer has established written procedures to monitor the requirements of section 148, check box . ® R 45a if some portion of the proceeds was used to reimburse expenditures, check here ® ❑ and enter the amount of reimbursement . . . . . . . . . Bo- b Enter the date the official intent was adopted Oo- Under penaltie - f perjury, I Signature and belief, t are true, co, and proc re urn, to the Consent of that I have examined this return and accompanying schedules and statements, and to the best of my knowledge complete. Iher declare that I consent to the IRS's disclosure of the issuer's return information, as necessary to !rave have auth ¢ed above. Paid . -. - . _ r -,_. _. _ ._ _ Preparer Gordon M. Wilbourn Use Only Firm's name P. Kutak Rock LLP Firm's address ► 124 W. Capitol, � i Lioneld Jordon, Mayor tive Date Type or print name and title 're Knatu e Date Check ❑ if PTIN l p �, self-employed P01079125 Firm's EIN ► 47-0597598 2000, L�ttle Rock, AR 72201 Phone no. 501-975-3000 Form 8038-G (Rev. 9-2011) Im 4827-9893-8625.6 to SIMMONS FIRST TRUST COMPANY, N.A. as Trustee Dated as of November 1, 2006 Providing for: $50,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2006A Prepared by: Kutak Rock LLP 124 West Capitol Avenue, Suite 2000 Little Rock, Arkansas 72201 EXECUTION COPY 0 (This Table of Contents is not a part of the Trust Indenture and is only for convenience of reference.) Page No. Parties.............................................................................................................................................. l Recitals............................................................................................................................................ l GrantingClauses............................................................................................................................. 2 ARTICLE I DEFINITIONS Section101. Definitions........................................................................................................4 Section 102. Use of Words.................................................................................................12 ARTICLE H THE BONDS Section 201. Security for the Bonds...................................................................................12 Section 202. Authorized Amount.......................................................................................13 Section 203. Details of Bonds............................................................................................. 13 Section204. Form............................................................................................................... 14 Section205. Payment..........................................................................................................14 Section206. Execution....................................................................................................... 14 Section 207. Authentication................................................................................................ 15 Section 208. Delivery of the Bonds....................................................................................15 Section 209. Mutilated, Destroyed or Lost Bonds.............................................................. 16 .Section 210. Registration and Transfer of Bonds...............................................................17 .:Section 211. Cancellation................................................................................................... 18 Section 212. Additional Bonds and Drawdowns Under RLF Loans..................................18 Section 213. Superior Obligations Prohibited....................................................................19 Section214. [RESERVED]................................................................................................19 Section215. Temporary Bonds........................................................................................... 19 Section 216. Book -Entry Bonds; Securities Depository.....................................................19 ARTICLE III REDEMPTION OF BONDS BEFORE MATURITY Section 301. Redemption of Bonds.................................................................................... 21 Section302. Notice............................................................................................................. 21 Section 303. Selection of Bonds to be Redeemed.............................................................. 21 Section 304. Surrender of Bonds Upon Redemption.......................................................... 22 Section 305. Redemption in Part ........................................................................................ 22 Section 306. Redemption of Additional Bonds.................................................................. 22 ARTICLE IV GENERAL COVENANTS AND REPRESENTATIONS Section 401. Payment of Principal, Premium, if any, and Interest ..................................... 22 Section 402. Performance of Covenants............................................................................. 23 Section 403. Instruments of Further Assurance.................................................................. 23 Section 404. Recordation and Filing................................................................................... 23 Section 405. Inspection of Books....................................................................................... 23 Section406. Tax Covenants............................................................................................... 23 4827-9893-8625.6 i LZ Section 407. Trustee's and Paying Agent's Fees and Expenses ......................................... 24 Section 408. Construction of Projects; Certification of Completion Dates ........................ 24 Section 409. Encumbrances................................................................................................ 24 Section 410. Continuing Disclosure................................................................................... 24 ARTICLE V FUNDS AND DEPOSITS Section 501. Creation of Funds and Accounts.................................................................... 25 Section502. Project Fund................................................................................................... 25 Section 503. Revenue Fund................................................................................................ 26 Section504. Bond Fund...................................................................................................... 27 Section 505. Cost of Issuance Fund.................................................................................... 28 Section 506. Redemption Fund........................................................................................... 28 Section507. Rebate Fund................................................................................................... 29 Section 508. Debt Service Reserve Fund............................................................................ 30 Section 509. Cessation of Fund Deposits........................................................................... 30 Section 510. Separate Accounts Authorized....................................................................... 31 Section 811. ARTICLE VI 37 INVESTMENTS Section 601. Investment of Moneys.................................................................................... 31 Section 602. Investment Earnings....................................................................................... 31 Section 603. Valuation of Funds......................................................................................... 31 Section 604. Responsibility of Trustee............................................................................. 32 ARTICLE VII DISCHARGE OF LIEN Section 701. Discharge of Lien........................................................................................... 32 Section 702. Bonds Deemed Paid....................................................................................... 32 Section 703. Non -Presentment of Bonds............................................................................ 33 ARTICLE VIII DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS Section 801. Events of Default........................................................................................... 33 Section802. Acceleration................................................................................................... 34 Section 803. Other Remedies; Rights of Bondholders....................................................... 34 Section 804. Right of Bondholders to Direct Proceedings ................................................. 35 Section 805. Appointment of Receiver............................................................................... 35 Section806. Waiver............................................................................................................ 35 Section 807. Application of Moneys.................................................................................. 35 Section 808. Remedies Vested in Trustee........................................................................... 36 Section 809. Rights and Remedies of Bondholders............................................................ 36 Section 810. Termination of Proceedings........................................................................... 37 Section 811. Waivers of Events of Default......................................................................... 37 4827-9893-8625.6 ii G\ Section 1001. Supplemental Indentures Not Requiring Consent of Bondholders ................ 44 Section 1002. Supplemental Indentures Requiring Consent of Bondholders ....................... 45 Section 1003. Effect of Supplemental Indentures................................................................. 45 ARTICLE XI PROVISIONS RELATING TO 2006A BOND POLICY AND 2006A RESERVE POLICY Section 1101. Consents, Approvals and Directions of 2006A Insurer ................................. 46 Section 1102. Disclosures to 2006A Insurer......................................................................... 47 Section 1103. Defeasance and Discharge of Series 2006A Bonds ....................................... 48 Section 1104. Claims Upon 2006A Bond Policy and Payments by and to 2006A ARTICLE IX 49 Section 1105. TRUSTEE AND PAYING AGENTS 51 Section 901. Acceptance of Trusts...................................................................................... 38 Section 902. Fees, Charges and Expenses of Trustee and Paying Agents; Trustee's 52 PriorLien....................................................................................................... 40 Section 903. Additional Duties of Trustee.......................................................................... 40 Section 904. Notice to Bondholders of Default.................................................................. 41 Section 905. Intervention by Trustee.................................................................................. 41 Section 906. Merger or Consolidation of Trustee............................................................... 41 Section 907. Resignation by Trustee.................................................................................. 42 Section 908. Removal of Trustee........................................................................................ 42 Section 909. Appointment of Successor Trustee................................................................ 42 Section 910. Concerning Any Successor Trustee............................................................... 42 Section 911. Reliance Upon Instruments............................................................................ 42 Section 912. Appointment of Co-Trustee........................................................................... 43 Section 913. Designation and Succession of Paying Agents .............................................. 43 ARTICLE X SUPPLEMENTAL INDENTURES G\ Section 1001. Supplemental Indentures Not Requiring Consent of Bondholders ................ 44 Section 1002. Supplemental Indentures Requiring Consent of Bondholders ....................... 45 Section 1003. Effect of Supplemental Indentures................................................................. 45 ARTICLE XI PROVISIONS RELATING TO 2006A BOND POLICY AND 2006A RESERVE POLICY Section 1101. Consents, Approvals and Directions of 2006A Insurer ................................. 46 Section 1102. Disclosures to 2006A Insurer......................................................................... 47 Section 1103. Defeasance and Discharge of Series 2006A Bonds ....................................... 48 Section 1104. Claims Upon 2006A Bond Policy and Payments by and to 2006A 4827-9893-8625.6 iii Insurer............................................................................................................ 49 Section 1105. Provisions Relating to Additional Bonds ....................................................... 51 Section 1106. Miscellaneous Provisions Relating to 2006A Bond Policy ........................... 52 Section 1107. 2006A Reserve Policy Provisions.................................................................. 52 ARTICLE XII MISCELLANEOUS Section 1201. Consents, etc. of Bondholders....................................................................... 54 Section1202. Notices........................................................................................................... 54 Section 1203. Limitation of Rights....................................................................................... 54 Section1204. Severability....................................................................................................55 Section 1205. Applicable Provisions of Law........................................................................ 55 Section1206. Counterparts...................................................................................................55 Section 1207. Successors and Assigns.................................................................................. 55 Section1208. Captions......................................................................................................... 55 Section 1209. Photocopies and Reproductions..................................................................... 55 Section 1210. Bonds Owned by the City.............................................................................. 55 4827-9893-8625.6 iii Exhibit A Form of Series 2006A Bond......................................................................... A-1 Exhibit B Form of Coverage Certificate....................................................................... B-1 Exhibit C Requisition Form.......................................................................................... C-1 4827-9893-8625.6 iv TRUSTINDENTURE THIS TRUST INDENTURE dated as of November 1, 2006, by and between the CITE' OF FAYET'TEVILLE, ARKANSAS (the "City"), a city of the first class organized under and existing by virtue of the laws of the State of Arkansas, and SEM40NS FIRST TRUST COMPANY, N.A., as trustee (the "Trustee"), a national banking association organized under and existing by virtue of the laws of the United States of America and having its principal corporate trust office in Pine Bluff, Arkansas; WITNESSETIT: WHEREAS, the City Council of the City has previously determined that there is a great need for a source of revenue to finance all or a portion of the costs of (i) the acquisition, construction, reconstruction, extension, improving and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities (the "Wastewater Project"), (ii) the acquisition, construction, reconstruction, repair, straightening and widening of certain City streets and related improvements (the "Street Project"), and (iii) the acquisition, construction and equipping of certain City trail system improvements (the "Trail Project"); and WHEREAS, the people of the State of Arkansas (the "State") by the adoption of Amendment No. 62 to the Constitution of the State, approved November 6, 1984 ("Amendment 62"), have authorized cities and counties in the State to issue bonds, upon voter approval, to finance certain capital improvements of a public nature, and to secure said bonds by a pledge of the proceeds of certain taxes; and WHEREAS, the provisions of Amendment 62 have been implemented by the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2005) Sections 14-164-301 et seq. (as from time to time amended, the "Act"); and WHEREAS, pursuant to the provisions of Ordinance No. 4891, duly adopted by the City Council of the City on June 20, 2006 (the "Election Ordinance"), there was submitted to the qualified electors of the City four questions regarding the issuance of an aggregate of not to exceed $110,000,000 in principal amount of capital improvement bonds pursuant to Amendment 62 and the Act to finance the capital improvements described in the Election Ordinance, including the Wastewater Project, the Street Project and the Trail Project; and WHEREAS, pursuant to the Election Ordinance, said capital improvement bonds are to be secured by a pledge of and lien upon (i) all of the receipts of a special city-wide sales and use tax at the rate of one-quarter of one percent (0.25%) (the "0.25% Sales and Use Tax"), and (ii) all of the receipts of a special city-wide sales and use tax at the rate of three-quarters of one percent (0.75%) (the "0.75% Sales and Use Tax"), each levied pursuant to the Act; and WHEREAS, at a special election held September 12, 2006, a majority of the qualified electors of the City voting on each of the aforementioned questions approved the issuance of capital improvement bonds in the principal amounts and for the specific purposes set forth on the ballot (and the corresponding levy of the 0.25% Sales and Use Tax and the 0.75% Sales and Use 4827-9893-8625.6 Tax, and the pledge of the receipts thereof to the payment of said capital improvement bonds); and WHEREAS, pursuant to the provisions of Ordinance No. 4936 of the City, adopted by the City Council on October 3, 2006 (the "Authorizing Ordinance"), and in accordance with the provisions of Amendment 62 and the Act, the City proposes to issue its Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), in the aggregate principal amount of $50,000,000, in order to provide for the financing of a portion of the costs of the Wastewater Project, the Street Project and the Trail Project; and WHEREAS, the City has further determined to enter into this Indenture to authorize the issuance of and to secure the Series 2006A Bonds by granting to the Trustee a pledge and assignment of the interests and other rights herein contained, and certain funds and. accounts created hereby; and WHEREAS, the regularly scheduled payment of principal of and interest on the Series 2006A Bonds when due will be guaranteed under an insurance policy (the "2006 Bond Policy") to be issued concurrently with the delivery of the Series 2006A Bonds by Financial Security Assurance Inc. (the "2006A Insurer"); and WHEREAS, the Series 2006A Bonds are to be dated, bear interest, mature and be subject to redemption as hereinafter in this Indenture set forth in detail; and AS, provision is made in this Indenture for the issuance of Additional Bonds (hereinafter defined) and the incurring of RLF Loans (hereinafter defined) upon compliance with certain conditions set forth herein; and WHEREAS, the execution and delivery of this Indenture and the issuance of the Series 2006A Bonds have been in all respects duly and validly confirmed, authorized and approved under the provisions of the Authorizing Ordinance; and WHEREAS, all things necessary to make the Series 2006A Bonds, when authenticated by the Trustee and issued as in this Indenture provided, the valid, binding and legal obligations of the City according to the import thereof, and to constitute this Indenture a valid pledge of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax to the payment of the principal of, premium, if any, and interest on the Series 2006A Bonds, as specified in and in accordance with the provisions hereof, have been done and performed, and the creation, execution and delivery of this Indenture and the creation, execution, issuance and delivery of the Series 2006A Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE9 KNOW ALL MEN BY THESE PRESENTS, INDENTURE WITNESSETH: That the City, in consideration of the premises and the acceptance by the Trustee of the trusts hereby created, the issuance of the 2006A Bond Policy and the 2006A Reserve Policy (hereinafter defined) by the 2006A Insurer, and of the purchase and acceptance of the Series 2006A Bonds by the Holders and owners thereof, and the sum of Ten Dollars ($10.00), lawful money of the United States of America, to it duly paid by the Trustee, at or before the execution 4827-9893-8625.6 2 and delivery of these presents, and for other good and valuable consideration, the receipt of which is hereby acknowledged, and in order to secure the payment of the principal of, premium, if any, and interest on the Series 2006A Bonds and all Additional Bonds (hereinafter defined)and RLF Loans (hereinafter defined), if any, according to their tenor and effect, to secure the reimbursement to the 2006A Insurer of all amounts reimbursable pursuant to the 2006A Bond Policy and the 2006A Reserve Policy, and to secure the performance and observance by the City of all the covenants expressed or implied herein and in the Series 2006A Bonds, Additional Bonds and RLF Loans (collectively, the "Bonds"), subject to all of the provisions hereof, does hereby grant, bargain, sell, convey, mortgage, assign, transfer and pledge unto the Trustee, and unto its successor or successors in trust, and to them and their assigns forever, for the securing of the performance of the obligations of the City hereinafter set forth the following: Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, (i) the proceeds of the sale of the Bonds, (ii) all receipts from the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax, which are hereby irrevocably assigned and pledged to secure all obligations under this Indenture, and (iii) the Revenue Fund, Bond Fund, Debt Service Reserve Fund (subject to the limitations set forth in Section 508 hereof), Project Fund and Redemption Fund established by this Indenture, including the investment earnings thereon, if any. 2. Any and all other properties, rights and interests of every kind and nature from time to time which have been, are hereby, or hereafter are, by delivery or by writing or transfer of any kind, conveyed, mortgaged, pledged, assigned or transferred, as and for additional security hereunder, by the City or by any other Person, firm or corporation, or with the written consent of the City, to the Trustee, which is hereby authorized to receive any and all such properties, rights and interests at any time and at all times and to hold and apply the same subject to the terms hereof. TO HAVF, AND TO HOLD all the same (the "Trust Estate") with all privileges and appurtenances hereby conveyed and assigned, or agreed or intended so to be, to the Trustee and its successors in said trusts and to them and their assigns forever; IN TRUST NE` RTHELESS, upon the terms and trusts herein set forth for the equal and proportionate benefit, security and protection of all owners of the said Bonds issued under and secured by this Indenture without privilege, priority or distinction as to lien or otherwise of any of the Bonds over any of the other Bonds; provided, however, that if the City, its successors or assigns, shall well and truly pay, or cause to be paid, the principal of, premium, if any, and interest due on the Bonds, at the times and in the manner provided in the Bonds, according to the true intent and meaning thereof, and shall make the payments as required under this Indenture or shall provide, as permitted hereby, for the payment thereof by depositing or causing to be deposited with the Trustee the entire amount due or to become due thereon, and shall well and Ph- truly keep, perform and observe all of the covenants and conditions pursuant to the terms of this Indenture to be kept, and shall pay to the Trustee all sums of money due or to become due to it in 4827-9893-8625.6 accordance with the terms and provisions hereof, and shall pay all amounts due to the 2006A Insurer by way of reimbursement or otherwise, then upon such final payments or deposits this Indenture and the lien and rights hereby granted shall cease, determine and be void; otherwise, this Indenture is to be and remain in full force and effect. THIS INDENTURE FURTHER WITNESSETH that, and it is expressly declared that, all Bonds issued and secured hereunder are to be issued, authenticated and delivered and all revenues and income hereby pledged are to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as hereinafter expressed, and the City has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the respective owners from time to time of the Bonds or any part thereof, as follows, that is to say: Section 101. Definitions. In addition to the words and terms elsewhere defined in this Indenture, the following words and terms as used in this Indenture shall have the following meanings: "Account" means an Account established by Article V of this Indenture. "Act" means the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2005) Sections 14-164-301 et seq., as from time to time amended. "Additional Bonds" mean Bonds in addition to the Series 2006A Bonds which are issued under the provisions of Section 212 of this Indenture. "Amendment 62" means Amendment No. 62 to the Constitution of Arkansas, approved by the voters of the State on November 6, 1984. "Annual Debt Service" means, with respect to all or any particular amount of Bonds (including any RLF Loan), the Debt Service for any particular Fiscal Year required to be paid or set aside during such Fiscal Year, less the amount of such payment which is provided from the proceeds of the sale of Bonds or which is drawn under an RLF Loan or from sources other than Sales and Use Tax receipts. "Authorized Representative" means either the Mayor or the Finance Director of the City and such additional persons as from time to time may be designated to act on behalf of the City by a Certificate furnished to the Trustee containing the specimen signature thereof and executed on behalf of the City by its Mayor. "Authorizing Ordinance" means Ordinance No. 4936, adopted by the City on October 3, 2006, which authorized the issuance of the Series 2006A Bonds pursuant to this Indenture. 4827-9893-8625.6 4 `Beneficial Owner" means any Person who acquires beneficial ownership interest in a Bond held by the Securities Depository. In determining the Beneficial Owner of any Bond, the Trustee may rely exclusively upon written representations made and information given to the Trustee by the Securities Depository or its Participants with respect to any Bond held by the Securities Depository in which a beneficial ownership interest is claimed. "Bond Counsel" means any firm of nationally recognized municipal bond counsel selected by the City and acceptable to the Trustee. "Bond Fund" means the fund by that name created and established in Section 501 of this Indenture. "2006A Bond Policy" means the insurance policy issued by the 2006A Insurer guaranteeing the scheduled payment of principal of and interest on the Series 2006A Bonds when due. "Bonds" means the Series 2006A Bonds and all Additional Bonds issued, and all RLF Loans incurred, by the City pursuant to this Indenture. Except to the extent provided in Section 209 hereof and except for refunding bonds issued under the provisions of Section 212 hereof, the aggregate principal amount of Bonds issued hereunder and any RLF Loan incurred by the City shall not exceed $110,000,000. "Book -Entry System" means the book -entry system maintained by the Securities Depository described in Section 216 of this Indenture. "Business Day" means any day other than (a) a Saturday or Sunday, (b) a day on which commercial banks in New York, New York, or the city in which the corporate trust office of the Trustee is located are authorized or required by law or executive order to close, or (c) a day on which the New York Stock Exchange or the Securities Depository is closed. "Certificate" means a document signed by an Authorized Representative of the City attesting to or acknowledging the circumstances or other matters therein stated. "City" means the City of Fayetteville, Arkansas, a municipality and political subdivision under the laws of the State of Arkansas. "City Clerk" means the person holding the office and performing the duties of the City Clerk of the City. "Closing Date" means, with respect to any series of Bonds, the date upon which there is an exchange of such series of Bonds for the proceeds representing the purchase price for such series of Bonds by the Original Purchaser or Purchasers thereof. "Code" means the Internal Revenue Code of 1986, as from time to time amended, and applicable regulations issued or proposed thereunder. "Completion Date" means the date upon which a particular Project (or portion thereof) is first ready for normal continuous operation, as determined by a Qualified Engineer. 4827-9893-8625.6 5 M 10 "Continuing Disclosure Agreement" means, collectively, each Continuing Disclosure Agreement between the City and the Trustee, dated the date of issuance and delivery of a series of Bonds, as originally executed and as amended from time to time in accordance with the terms thereof. "Costs of Issuance" means all items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale and issuance of the Bonds, including, but not limited to, underwriting discounts, fees and expenses, election expenses, publication expenses, expenses of printing, reproducing, filing and recording documents, initial fees and charges of the Trustee and any Paying Agent, fees and expenses for legal, accounting and other professional services, rating fees, costs of securing any credit enhancement for the Bonds, costs of execution, transportation and safekeeping of the Bonds, and other costs, charges and fees incurred in connection with the foregoing. "Costs of Issuance Fund" means the fund by that name created and established in Section 501 of this Indenture. "Debt Service" means, with respect to all or any particular amount of Bonds or any RLF Loan, as the case may be, the total as of any particular date of computation and for any particular period of the scheduled amount of interest and amortization of principal payable on such Bonds and any RLF Loan, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. "Debt Service Reserve Fund" means the fund by that name created and established in Section 501 of this Indenture. "Election Ordinance" means Ordinance No. 4891, adopted by the City Council on June 20, 2006, pursuant to which there was submitted to the qualified electors of the City the four questions relating to the issuance of the Bonds. "Event of Default" means any event of default specified in Section 801 hereof. "Existing Indebtedness" means, collectively, the City's (i) $27,000,000 Sales and Use Tax Refunding and Capital Improvement Bonds, Series 2005A, (ii) $45,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2005B, and (iii) $20,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006 RLF Loan. "Existing Tax" means the three-quarter of one percent (0.75%) city-wide sales and use tax authorized by the Act and presently being levied and collected within the City for the purpose of securing the payment of the Existing Indebtedness. "Fiscal Year" means the 12 -month period used, at any time, by the City for accounting purposes, which may be the calendar year. "Fund" means a fund established by Article V of this Indenture. ".Government Securities" means direct obligations of the United States of America (including obligations issued or held in book -entry form on the books of the Department of the 4827-9893-8625.6 6 Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. "Holder" or `Bondholder" or "owner of the Bonds" means the registered owner of any "Indenture" means this Trust Indenture dated as of November 1, 2006, between the City and the Trustee, pursuant to which the Bonds are issued, and any amendments and supplements hereto. "2006A Insurer" means Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto or assignee thereof. "Investment Securities" means, if and to the extent the same are at the time legal for investment of Funds and Accounts held under this Indenture: (a) Government Securities; (b) bonds, debentures, notes or other evidence of indebtedness issued or generated by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): eolll (1) U.S. Export -Import Bank (Eximbank) — direct obligations or fully guaranteed certificates of beneficial ownership; (2) Farmers Home Administration (FmHA) — certificates of beneficial ownership; (3) Federal Financing Bank.; (4) Federal Housing Administration Debentures (FHA); (S) General Services Administration — participation certificates; (6) Government National Mortgage Association (GNMA or "Ginnie Mae") — (a) GNMA — guaranteed mortgage-backed bonds (b) GNMA — guaranteed pass-through obligations; (7) U.S. Maritime Administration — guaranteed Title XI financing; and (8) U.S. Department of Housing and Urban Development (HUD) — Project Notes; Local Authority Bonds; New Communities Debentures — U.S. government guaranteed debentures; U.S. Public Housing Notes and Bonds — U.S. government guaranteed public housing notes and bonds; 4827-9893-8625.6 7 11 M (c) bonds, debentures, notes or other evidences of indebtedness issued or guaranteed by any of the following non -full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): (1) Federal Home Loan Bank System — senior debt obligations; (2) Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") — participation certificates and senior debt obligations; (3) Federal National Mortgage Association (FNMA or "Fannie Mae") — mortgage-backed securities and senior debt obligations; (4) Student Loan Marketing Association (SLMA or "Sallie Mae") — senior debt obligations; (5) Resolution Funding Corp, (REFCOPR) obligations; and (6) Farm Credit System — consolidated systemwide bonds and notes; (d) money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G, AAA -m or AA -m, and if rated by Moody's rated Aaa, Aal or Aa2; (e) certificates of deposit secured at all times by collateral described in (a) and/or (b) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral; (f) certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF; (g) bonds or notes issued by any state or municipality which are rated by Moody's and S&P in one of the two highest rating categories assigned by such agencies; and (h) other forms of investments approved in writing by the 2006A Insurer, including the 2006A Reserve Policy. "Mayor" means the person holding the office and performing the duties of the Mayor of the City. "Original Purchaser" means the first purchaser(s) of a series of Bonds from the City. "Outstanding" means, as of any date of computation, Bonds theretofore or thereupon being delivered under this Indenture, except: 4827-9893-8625.6 9 (a) Bonds cancelled at or prior to such date or delivered to or acquired by the Trustee at or prior to such date for cancellation; (b) Bonds deemed to be paid in accordance with Article VII of this Indenture; and (c) Bonds in lieu of or in exchange or substitution for which other Bonds shall have been authenticated and delivered pursuant to this Indenture. "Participants" means those financial institutions for whom the Securities Depository effects book -entry transfers and pledges of securities deposited with the Securities Depository in the Book -Entry System, as such listing of Participants exists at the time of such reference. "Paying Agent" means any bank or trust company named by the City as the place at which the principal of and premium, if any, and interest on the Bonds are payable. "Person" means any natural person, firm, association, corporation, limited liability company, partnership, joint stock company, joint venture, trust, unincorporated organization or firm, or a government or any agency or political subdivision thereof or other public body. "Projects" means, collectively, the Street Project, the Trail Project and the Wastewater Project. "Project Costs" means, to the extent permitted by the Act or other applicable laws, with respect to the Projects, all costs of planning, designing, purchasing, acquiring, constructing, improving, enlarging, extending, repairing, financing and placing in operation, including obtaining governmental approvals, certificates, permits and licenses with respect thereto, heretofore or hereafter paid or incurred by or on behalf of the City and which shall include, but shall not be limited to: (a) interest accruing in whole or in part on the Bonds prior to and during construction of the Projects, including all amounts required by this Indenture to be paid from the proceeds of the Bonds into the Bond Fund; (b) preliminary investigation and development costs, engineering fees, contractors' fees, labor costs, the cost of materials, equipment, utility services and supplies, costs of obtaining permits, licenses and approvals, costs of real property, insurance premiums, legal and financing fees and costs, administrative and general costs, and all other costs properly allocable to the acquisition, construction and equipping of the Projects and placing the same in operation; (c) all costs relating to injury and damage claims arising out of the acquisition, construction or equipping of the Projects; (d) all other costs incurred in connection with, and properly allocable to, the W acquisition, construction and equipping of the Projects; and 4827-9893-8625.6 9 (e) amounts to pay or reimburse the City or any City fund for expenses of the City incident and properly allocable to such planning, designing, purchasing, acquiring, constructing, improving, enlarging, extending, repairing, financing and placing in operation of the Projects. "Project Fund" means the fund by that name created and established in Section 501 of this Indenture. "Qualified Engineer" means an independent consulting engineer or firm of independent consulting engineers not in the regular employ of the City. "Rating Agency" means Moody's Investors Service, Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc., or Fitch, Inc., and their respective successors and assigns. If any such corporation ceases to act as a securities rating agency, the City may appoint any nationally recognized securities rating agency as a replacement. "Rebate Fund" means the fund by that name created and established in Section 501 of this Indenture. "Record Date" means the fifteenth day of the calendar month preceding the calendar month in which an interest payment date on the Bonds occurs. "Redemption Fund" means the fund by that name established in Section 501 of this Indenture. "Requisition" means a written requisition of the City, consecutively numbered, signed by an Authorized Representative including, without limitation, the following with respect to each payment requested: (i) the name of the person or party to whom payment is to be made and the purpose of the payment, (ii) the amount to be paid thereunder; (iii) that such amount has not been previously paid by the City and is justly due and owing to the person(s) named therein as a proper payment or reimbursement of a Project Cost; and (iv) that no Event of Default exists under the Indenture and that, to the knowledge of the Authorized Representative, no event has occurred and continues which with notice or lapse of time or both would constitute an Event of Default under the Indenture. "2006A Reserve Policy" means the municipal bond debt service reserve insurance policy, issued by the 2006A Insurer and deposited into the Series 2006A Account of the Debt Service Reserve Fund with respect to the Series 2006A Bonds. 4827-9893-8625.6 t® "Reserve Requirement" means, with respect to each series of Bonds, an amount equal to 5% of the original principal amount of such series of Bonds. There is no Reserve Requirement in connection with RLF Loans. For all purposes of this Indenture, the Reserve Requirement may be satisfied by cash or by Investment Securities, including the 2006A Reserve Policy. "Revenue Fund" means the fund by that name created and established in Section 501 of this Indenture. "RLF Loan" means any loan to the City under the Arkansas Natural Resources Commission Revolving Loan Fund Program, which loan is to be secured by receipts of the Sales and Use Taxes on a parity basis with the Bonds. RLF Loans may only be incurred with respect to the Wastewater Project. Any RLF Loan may, but need not, be structured in the form of an Additional Bond or Additional Bonds issued hereunder. "0.25% Sales and Use Tax" means the one-quarter of one percent (0.25%) city-wide sales and use tax authorized under the Act which has been levied within the City pursuant to the Election Ordinance and approved by the voters of the City, the collection of which tax will commence on January 1, 2007. "0.75% Sales and Use Tax" means the three-quarters of one percent (0.75%) city-wide sales and use tax authorized under the Act which has been levied within the City pursuant to the Election Ordinance and approved by the voters of the City, the collection of which tax will commence on the first day following the date of expiration of the Existing Tax securing the eoN Existing Indebtedness. "Sales and Use Taxes" mean, collectively, the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax. Receipts of the Sales and Use Taxes are pledged to the payment of Debt Service on the Bonds. "Securities Depository" means The Depository Trust Company, New York, New York, or its nominee, and its successors and assigns, or any other depository institution appointed by the City or the Trustee to act as depository for the Bonds in connection with the Book -Entry System. "Series 2006A Bonds" means the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A, issued under and secured by this Indenture in the aggregate principal amount of $50,000,000. "State" means the State of Arkansas. "Street Project" means the acquisition, construction, reconstruction, repair, straightening and widening of certain City streets and related improvements, as described in the Election Ordinance and eligible for financing with the proceeds of the Bonds in aggregate principal amount not to exceed $65,900,000. "Supplemental Indenture" means any indenture supplemental to or amendatory of this Indenture, adopted by the City in accordance with Article X hereof. 4827-9893-8625.6 11 hereof. "Surplus Tax Receipts" shall have the meaning ascribed to such term in Section 503 "Tax Regulatory Agreement" means with respect to any series of Bonds, that Tax Regulatory Agreement of the City relating to maintenance of the excludability of interest on such Bonds from gross income for federal income tax purposes, delivered in connection with the issuance of such series of Bonds. "Trail Project" means the acquisition, construction and equipping of certain City trail system improvements, as described in the Election Ordinance and eligible for financing with the proceeds of the Bonds in aggregate principal amount not to exceed $2,100,000. "Trustee" means the banking corporation or association designated as Trustee in the Indenture, and its successor or successors as such Trustee. The original Trustee is Simmons First Trust Company, N.A. "Trust Estate" means the property described in the granting clauses of this Indenture. "Wastewater Project" means the acquisition, construction, reconstruction, extension, improving and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities, as described in the Election Ordinance and eligible for financing with the proceeds of the Bonds in aggregate principal amount not to exceed $42,000,000. Section 102. Use of Words. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, the words "Bond", "owner", "holder" and "person" shall include the plural, as well as the singular, number. Vic, 111 -M -1130 -IM Section 201. Security for the Bonds. (a) The Bonds are special and limited obligations of the City payable as to principal, premium, if any, and interest solely out of the Trust Estate. The Trust Estate is hereby pledged, appropriated and assigned to the payment of the principal of, premium, if any, and interest on the Bonds, all in accordance with their terms and the provisions of this Indenture. The Bonds do not constitute an indebtedness for which the faith and credit of the State of Arkansas or the City is pledged within the meaning of any Constitutional or statutory limitation. The Bonds shall never constitute an obligation of or a charge against the general credit or general taxing powers of the City. (b) The pledge, charge, lien, trusts and assignments made herein with respect to the Trust Estate shall be valid and binding, and shall be deemed continuously perfected from the time of issuance of the Series 2006A Bonds, and the Trust Estate shall thereupon be immediately subject to the pledge, charge, lien, trust and assignment created hereby upon receipt thereof by or lb- for the City or by the Trustee or the Paying Agent hereunder, without any physical delivery, segregation thereof or further act, and such pledge, charge, lien, trust and assignment shall be 4827-9893-8625.6 12 valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the City, irrespective of whether such parties have notice thereof. (c) The Bonds shall be equally and ratably payable and secured hereunder without priority by reason of date of adoption of this Indenture or any Supplemental Indenture authorizing their issuance or by reason of their series, number, date, date of issue, execution, authentication or sale, or otherwise; provided, however, upon the issuance of any series of Additional Bonds, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such Surplus Tax Receipts shall be allocated to the redemption of the various series of Additional Bonds in such proportion as shall be set forth in a Supplemental Indenture. (d) So long as any Bonds are Outstanding under the provisions of this Indenture, all receipts derived from the Sales and Use Taxes shall be deemed to be necessary to accomplish the purposes of the City and shall be subject to the covenants and agreements set forth in this Indenture, and no such revenues or receipts shall ever be used or deposited otherwise except as herein expressly permitted. (e) The City covenants, as permitted by the Act, that while any of the Bonds are Outstanding it will use due diligence in causing the collection of the Sales and Use Taxes. Nothing herein shall prohibit the City from increasing any sales and use tax from time to time, to the extent permitted by law, and' no part of the revenues or receipts derived by the City from any such increase shall become part of the receipts derived from the Sales and Use Taxes unless authorized and pledged by a Supplemental Indenture. Section 202. Authorized Amount. There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2006A" in the principal amount of Fifty Million Dollars ($50,000,000) (the "Series 2006A Bonds"). No Bonds may be issued under the provisions of this Indenture except in accordance with this Article 11. The total principal amount of Bonds that may be issued hereunder and any RLF Loans that may be incurred by the City is hereby expressly limited to $110,000,000, except as provided in Section 209 and except for refunding bonds issued under the provisions of Section 212 hereof. Section 203. Details of Bonds. (a) The Series 2006A Bonds (i) shall be designated "City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2006A," (ii) shall be in the aggregate principal amount of $50,000,000, (iii) shall be dated as of November 1, 2006, (iv) shall bear interest from such date at the rates hereinafter provided until paid, payable semiannually on May 1 and November 1 of each year, commencing November 1, 2007, (v) shall be issued in denominations of $5,000 each, or any integral multiple thereof, (vi) shall be numbered from R06A-1 upwards in order of issuance according to the records of the Trustee, and (vii) shall mature, unless sooner redeemed in the manner in this Indenture set forth, on November 1 in each of the years and in the amounts set forth in the following table, which table also sets forth the interest rates for the Series 2006A Bonds: 4827-9893-8625.6 13 Year (November 1) Principal Amount Interest Rate 2015 $6,175,000 5.000% 2016 6,485,000 5.000% 2017 6,810,000 5.000% 2018 7,150,000 4.750% 2019 7,490,000 4.500% 2020 7,830,000 3.000% 2021 8,060,000 4.000% Section 204. Form. (a) The Series 2006A Bonds shall be initially issued as fully registered Bonds, without coupons, in the form of seven typewritten bond certificates (one for each maturity) to be delivered to the Securities Depository. Each such certificate shall be initially registered in the name of the nominee of the Securities Depository, and no Beneficial Owner will receive a certificate representing his interest in the Series 2006A Bonds, except upon the occurrence of the events described in Section 216 hereof. Beneficial Owners shall be deemed to have waived any right to receive a bond certificate except under the circumstances described in Section 216. The Series 2006A Bonds and the Trustee's certificate of authentication to be endorsed thereon shall be in substantially the form set forth in Exhibit A hereto, with appropriate variations, insertions and omissions as permitted or required by this Indenture. rN Section 205. Payment. The Bonds shall be payable, with respect to principal, premium, :if any, and interest in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. The principal of and premium, if any, on the Bonds shall be payable upon surrender thereof at the principal corporate trust office of the Trustee. Payment of interest on each Bond shall be made by check or draft mailed to the registered owner of such Bond as of the applicable Record Date at his address as it appears on the registration books maintained by the Trustee. For purposes of this Indenture, interest on the Bonds shall be deemed to accrue on the basis of a 360 -day year of twelve 30 -day months. So long as the Securities Depository or its nominee is the sole registered owner of the Bonds, payment of interest thereon shall be made by wire transfer of immediately available funds by the Paying Agent to the Securities Depository or its nominee. Section 206. Execution. The Bonds shall be executed on behalf of the City by the manual or facsimile signatures of its Mayor and City Clerk and shall have impressed or imprinted thereon the seal of the City. A facsimile signature shall have the same force and effect as if manually signed. In case any officer whose manual signature or a facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of such Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such official had remained in office until delivery. Section 207. authentication. Only such Bonds as shall have endorsed thereon a certificate of authentication substantially in the form set forth in Exhibit A attached hereto duly executed by the Trustee shall be entitled to any right or benefit under this Indenture. No Bond shall be valid and obligatory for any purpose unless and until such certificate of authentication 4827-9893-8625.6 14 shall have been duly executed by the Trustee, and such certificate of the Trustee upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Indenture. The Trustee's certificate of authentication on any Bond shall be deemed to have been executed if signed by an authorized officer of the Trustee, but it shall not be necessary that the same officer sign the certificate of authentication on all of the Bonds issued hereunder. Section 208. Delivery of the Bonds. The City shall execute and deliver to the Trustee and the Trustee shall authenticate the Bonds of any series and deliver said Bonds to the Securities Depository as may be directed in this Section 208, in Section 212 hereof or in any Supplemental Indenture. (a) Prior to the delivery or original issuance by the Trustee of any authenticated Bonds of any series, there shall be delivered to the Trustee: (1) An original executed counterpart of this Indenture or, in the case of Additional Bonds, a Supplemental Indenture by and between the City and the Trustee setting forth the details concerning such Additional Bonds; (2) Original executed counterparts of the Continuing Disclosure Agreement and the Tax Regulatory Agreement applicable to such series of Bonds; (3) A Certificate directing the Trustee to authenticate the Bonds and containing instructions as to the delivery of the Bonds upon payment to the Trustee, for the account of the City, of a sum specified in such Certificate; (4) A copy, duly certified by the City Clerk, of the proceedings of the City authorizing the levy of the Sales and Use Taxes and the issuance of the Bonds; (5) A written opinion of Bond Counsel approving the legality of the Bonds; (6) In the case of any series of Additional Bonds, a Certificate signed by the Mayor of the City certifying that (i) the City is not then in default in the performance of any of the covenants, conditions, agreements or provisions contained in this Indenture, and (ii) the City is current as to all required deposits at that time in all the Funds and Accounts described in Article V of this Indenture or hereafter created by Supplemental Indentures, or if the City is in default or is not so current, certifying in the case of (i) or (ii) as to that fact and that, upon the application of the proceeds of the sale of such Additional Bonds as provided in the Supplemental Indenture authorizing the issuance thereof, the City will not be in default or will be current thereafter; (7) In the case of any series of Additional Bonds, a written opinion of Bond Counsel to the effect that the exemption from federal income tax of the interest on the Series 2006A Bonds and any Additional Bonds theretofore issued will not be adversely affected by the issuance of the Additional Bonds being issued; and (8) Such further documents and certificates as may be required by the Original Purchaser of such series of Bonds. 4827-9893-8625.6 15 (b) Simultaneously with the delivery of the Series 2006A Bonds, the Trustee shall apply the proceeds thereof as follows: (1) The amount, if any, received as accrued interest on the Series 2006A Bonds shall be deposited in the Interest Account of the Bond Fund; (2) $37,500.00 shall be transferred to the 2006A Insurer in payment of the premium on the 2006A Reserve Policy, which 2006A Reserve Policy shall be deposited in the Series 2006A Account of the Debt Service Reserve Fund; (3) $213,775.80 shall be transferred to the 2006A Insurer in payment of the premium on the 2006A Bond Policy; (4) An amount equal to $24,581,590.00 shall be deposited in the Street Account of the Project Fund; (5) An amount equal to $812,615.00 shall be deposited in the Trail Account of the Project Fund; (6) An amount equal to $25,394,201.00 shall be deposited in the Wastewater Account of the Project Fund; and (7) The balance of said proceeds in the amount of $110,004.75 shall be deposited in the Costs of Issuance Fund for payment of Costs of Issuance as directed by a Certificate of the City. Section 209. Mutilated, Destroyed or Lost Bonds. In case any Bond issued hereunder shall become mutilated or be destroyed or lost, the City shall, if not then prohibited by law, cause to be executed and the Trustee may authenticate and deliver a new Bond of like series, date, number, maturity and tenor in exchange and substitution for and upon cancellation of such mutilated Bond, or in lieu of and in substitution for such Bond destroyed or lost, upon the Holder's paying the reasonable expenses and charges of the City and the Trustee in connection therewith, and, in the case of a Bond destroyed or lost, filing by the Holder with the Trustee evidence satisfactory to the Trustee that such Bonds were destroyed or lost, and of the Holder's ownership thereof, and furnishing the City and Trustee with indemnity satisfactory to them. The Trustee is hereby authorized to authenticate any such new Bond. In the event any such Bonds shall have matured, instead of issuing a new Bond, the City may pay the same without the surrender thereof. Upon the issuance of a new Bond under this Section 209, the City may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Section 210. Registration and Transfer of Bonds. The City hereby constitutes and appoints the Trustee as Bond registrar of the City, and as Bond registrar the Trustee shall keep books for the registration and for the transfer of the Bonds as provided in this Indenture at the principal corporate trust office of the Trustee. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes and payment of or on account of the principal of and interest on any such Bond shall be made only to 4827-9893-8625.6 16 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 effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. Bonds may be transferred on the books of registration kept by the Trustee by the registered owner in person or by the owner's duly authorized attorney, upon surrender thereof, together with a written instrument of transfer duly executed by the registered owner or the owner's duly authorized attorney. Upon surrender for transfer of any Bond at the principal corporate office of the Trustee, the City shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds of the same series and in the same aggregate principal amount and of any authorized denomination or denominations. Bonds may be exchanged at the principal corporate trust office of the Trustee for an equal aggregate principal amount of Bonds of any other authorized denomination or denominations of the same series with corresponding maturities. The City shall execute and the Trustee shall authenticate and deliver Bonds which the Bondholder making the exchange is entitled to receive, bearing numbers not contemporaneously then outstanding. The execution by the City of any Bond of any denomination shall constitute full and due authorization of such denomination and the Trustee shall thereby be authorized to authenticate and deliver such Bond. Such transfers of registration or exchanges of Bonds shall be without charge to the Holders of such Bonds, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the Holder of the Bond requesting such transfer or exchange as a condition precedent to the exercise of such privilege. The Trustee shall not be required to transfer or exchange any Bond during the period from and including a Record Date to the next succeeding interest payment date of such Bond nor to transfer or exchange any Bond after the mailing of notice calling such Bond for redemption has been made, and prior to such redemption. If the Securities Depository or its nominee is the sole registered owner of the Bonds, transfers of ownership and exchanges shall be effected on the records of the Securities Depository and its Participants pursuant to rules and procedures established by the Securities Depository and its Participants. In such case, the Trustee shall deal with the Securities Depository as representative of the Beneficial Owners of the Bonds for purposes of exercising the rights of Bondholders hereunder, and the rights of the Beneficial Owners of such Bonds held by the Securities Depository or its nominee shall be limited to those established by law and agreements between such Beneficial Owners and the Securities Depository and its Participants. Requests, consents and directions from, and votes of, the Securities Depository or its nominee as representative shall not be deemed inconsistent if they are made with respect to different Participants or Beneficial Owners. Section 211. Cancellation. All Bonds surrendered for payment, redemption, transfer or exchange, if surrendered to the Trustee, shall be promptly cancelled by it, and, if surrendered to any person other than the Trustee, shall be delivered to the Trustee and, if not already cancelled, 4827-9893-8625.6 17 shall be promptly cancelled by it. The City may at any time deliver to the Trustee for cancellation any Bonds previously authenticated and delivered hereunder, which the City may have acquired in any manner whatsoever, and all Bonds so delivered shall be promptly cancelled by the Trustee. All cancelled Bonds held by the Trustee shall be disposed of as directed by the City. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the City of any Bonds, the Trustee may, upon the written request of the City, in lieu of such cancellation and delivery, destroy such Bonds in the presence of any officer of the City (but only if the City shall so require), and deliver a certificate of such destruction to the City. Section 212. Additional Bonds and Drawdowns Under RIF Loans. To the extent authority remains under the Election Ordinance, the City may issue from time to time one or more series of Additional Bonds and incur RLF Loans for the purpose of (i) financing Project Costs in connection with the acquisition, construction, reconstruction, extension, improving or equipping of any of the Projects, (ii) refunding the Series 2006A Bonds or any series of Additional Bonds or any RLF Loan, in whole or in part, or (iii) any combination thereof. Additional Bonds and RLF Loans shall be secured equally and ratably with the Series 2006A Bonds and any other series of Additional Bonds theretofore issued or any RLF Loan theretofore incurred and then Outstanding, except insofar as any terms or conditions of redemption or purchase established under this Indenture may afford additional benefit or security for the Bonds of any particular series and except for the security afforded by any municipal bond insurance obtained with respect to a particular series of Bonds; provided, however, that RLF Loans structured as Additional Bonds shall not be secured by the Debt Service Reserve Fund. Before any Additional Bonds are authenticated and prior to any drawdown on an RLF Loan, there shall be delivered to the Trustee the items required for the issuance of Bonds by Section 208 hereof, plus a Certificate of the Finance Director of the City (in the form attached as Exhibit C hereto) certifying that, based upon the most recent twelve (12) months of Sales and Tax collections, (i) receipts of the 0.25% Sales and Use Tax were not less than 125% of the maximum Annual Debt Service. for each of the years ending November 1, 2007 through November 1, 2014, on all then Outstanding Bonds and any RLF Loan theretofore incurred, plus the Additional Bonds then proposed to be issued or the amount of the additional RLF Loan to be incurred, and (ii) receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax were not less than 125% of the maximum Annual Debt Service for each of the years ending November 1, 2015 and thereafter, on all then Outstanding Bonds and any RLF Loan theretofore incurred, plus the Additional Bonds then proposed to be issued or the amount of the additional RLF Loan to be incurred. For the purpose of making the aforementioned certifications in connection with the issuance of Additional Bonds or drawdowns under RLF Loans, receipts of the Existing Tax may be included in total receipts of the 0.75% Sales and Use Tax for all or any portion of the most recent twelve (12) month period during which the 0.75% Sales and Use Tax was not being collected. RLF Loans may only be incurred to finance Project Costs associated with the Wastewater Project. The aggregate principal amount of Additional Bonds that may be issued and RLF Loans incurred is limited to $60,000,000, except for refunding bonds issued hereunder. Notwithstanding anything herein to the contrary, no Additional Bonds shall be issued and no RLF Loan shall be incurred unless there is no default at the time of issuance under this Indenture. 4827-9893-8625.6 18 Section 213. Superior Obligations Prohibited. Except to the extent permitted in Section 212 hereof for the issuance of Additional Bonds, from and after the issuance of any of the Bonds and for so long as any of the Bonds are Outstanding, the City shall not create or permit the creation of any indebtedness, or issue any bonds, notes, warrants, certificates or other obligations or evidences of indebtedness payable in any manner from the receipts of the Sales and Use Taxes or otherwise from the Trust Estate which (i) will in any way be superior to or rank on a parity with the Bonds, or (ii) will in any way be secured by alien and charge on the receipts of the Sales and Use Taxes or on the moneys deposited in or to be deposited in the Revenue Fund, prior to or equal with the lien, pledge and charge created herein for the security of the Bonds, or (iii) will be payable prior to or equal with the payments to be made from the receipts of the Sales and Use Taxes and the Revenue Fund into the Bond Fund, Debt Service Reserve Fund and Redemption Fund or from said Bond Fund, Debt Service Reserve Fund and Redemption Fund for the payment of the Bonds. Section 214. [RESERVED]. Section 215. Temporary Bonds. Until Bonds in definitive form are ready for delivery, the City may execute, and upon the request of the City, the Trustee shall authenticate and deliver, subject to the provisions, limitations and conditions set forth herein, one or more Bonds in temporary form, whether printed, typewritten, lithographed or otherwise produced, substantially in the form of the definitive Bonds, with appropriate omissions, variations and insertions, and in authorized denominations. Until exchanged for Bonds in definitive form, such Bond in temporary form shall be entitled to the lien and benefit of this Indenture. Upon the presentation and surrender of any Bond or Bonds in temporary form, the City shall, without unreasonable delay, prepare, execute and deliver to the Trustee and the Trustee shall authenticate and deliver, in exchange therefor, a Bond or Bonds in definitive form. Such exchange shall be made by the Trustee without making any charge therefor to the Holder of such Bond in temporary form. Section 216. Book -Entry Bonds; Securities Repository. The Bonds shall initially be registered to Cede & Co., the nominee for The Depository Trust Company, New York, New York (the "Securities Depository"), and no Beneficial Owner will receive certificates representing their respective interests in the Bonds, except in the event the Trustee issues replacement bonds as provided in this Section 216. It is anticipated that during the term of the Bonds, the Securities Depository will make book -entry transfers among its Participants and receive and transmit payment of principal of, premium, if any, and interest on, the Bonds to the Participants until and unless the Trustee authenticates and delivers replacement bonds to the Beneficial Owners as described in the following paragraph. If the City or the Trustee determines (A) that the Securities Depository is unable to properly discharge its responsibilities, or (B) that the Securities Depository is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, or (C) that the continuation of a Book -Entry System to the exclusion of any Bonds being issued to any Bondholder other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds, or (2) if the Trustee receives written notice from Participants representing interests in not less than 50% of the Bonds Outstanding, as shown on the records of the Securities Depository (and certified to such effect by the Securities Depository), that the continuation of a Book -Entry System to the exclusion of any Bonds being 4827-9893-8625.6 19 issued to any Bondholder other than Cede & Co. is no longer in the best interests of the Beneficial Owners of the Bonds, then the Trustee shall notify the Bondholders of such determination or such notice and of the availability of certificates to Bondholders requesting the same, and the Trustee shall register in the name of and authenticate and deliver replacement bonds to the Beneficial Owners or their nominees in principal amounts representing the interest of each; provided, that in the case of a determination under (A) or (B) of this paragraph, the City or the Trustee may select a successor securities depository in accordance with the following paragraph to effect book -entry transfers. In such event, all references to the Securities Depository herein shall relate to the period of time when the Securities Depository has possession of at least one Bond. Upon the issuance of replacement bonds, all references herein to obligations imposed upon or to be performed by the Securities Depository shall be deemed to be -imposed upon and performed by the Trustee, to the extent applicable with respect to such replacement bonds. If the Securities Depository resigns and the City, the Trustee or Bondholders are unable to locate a qualified successor of the Securities Depository in accordance with the following paragraph, then the Trustee shall authenticate and cause delivery of replacement bonds to Bondholders, as provided herein. The Trustee may rely conclusively on information from the Securities Depository and its Participants as to the names and addresses of the Beneficial Owners of the Bonds. The cost of printing, registration, authentication, and delivery of replacement bonds shall be paid for by the City. In the event the Securities Depository resigns, is unable to properly discharge its responsibilities, or is no longer qualified to act as a securities depository and registered clearing agency under the Securities and Exchange Act of 1934, as amended, the City may appoint a successor Securities Depository provided the Trustee receives written evidence satisfactory to the Trustee with respect to the ability of the successor Securities Depository to discharge its responsibilities. Any such successor Securities Depository shall be a securities depository which is a registered clearing agency under the Securities and Exchange Act of 1934, as amended, or other applicable statute or regulation that operates a securities depository upon reasonable and customary terms. The Trustee upon its receipt of a Bond or Bonds for cancellation shall cause the delivery of Bonds to the successor Securities Depository in appropriate denominations and form as provided herein. Section 301. Redemption of Bonds: (a) The Series 2006A Bonds shall be subject to redemption prior to maturity as follows: (1) The Series 2006A Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from Project Fund moneys in excess of the amount needed to complete a Project, which moneys shall be transferred to the Redemption Fund pursuant to Section 502 hereof. 4827-9893-8625.6 20 (2) The Series 2006A Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from Surplus Tax Receipts deposited in the Redemption Fund pursuant to Section 503 hereof. Upon the issuance of any series of Additional Bonds, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such Surplus Tax Receipts shall be allocated to the various series of Additional Bonds in such proportion as shall be set forth in a Supplemental Indenture. (3) The Series 2006A Bonds are subject to redemption at the option of the City, Qommunicated in -a written notice to the Trustee not less than sixty_ (60) days prior to the date fixed for redemption, in whole or in part on any date on or after November 1, 2016, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed plus accrued interest to the date of redemption. Section 302. Notice. Notice of the call for any redemption, identifying the Bonds or portions thereof being called and the date on which they shall be presented for payment, shall be mailed by the Trustee by first class mail (or, so long as the Securities Depository or its nominee is the sole registered owner of the Bonds, by any other means acceptable to the Securities Depository, including facsimile) to the registered owner of each such Bond addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure to give such notice by mailing, or any defect therein, shall not affect the validity of any proceeding for the redemption of any Bond with respect to which no such failure or defect has occurred. Any notice mailed as provided in this Section 302 shall be conclusively presumed to have been duly given, whether or not the registered owner receives the notice. Section 303. Selection of Bonds to be Redeemed. If less than all of the Bonds of like series, maturity, interest rate and otherwise identical payment terms shall be called for redemption, the particular Bonds or portions of Bonds to be redeemed shall be selected by lot by the Trustee in such manner as the Trustee in its discretion may deem fair and appropriate; provided, however, that the portion of any Bond of a denomination of larger than the minimum denomination may be redeemed in the principal amount of such minimum denomination or a multiple thereof, and that for purposes of selection and redemption, any such Bond of a denomination larger than the minimum denomination shall be considered to be that number of separate Bonds of such minimum denomination which is obtained by dividing the principal amount of such Bond by such minimum denomination. So long as the Securities Depository or its nominee is the sole registered owner of a series of Bonds, the procedures established by the Securities Depository shall control with respect to the selection of the particular Bonds of such series to be redeemed. Section 304. Surrender of Bonds Upon Redemption. Notice having been given in the manner and under the conditions hereinabove provided, and moneys for payment of the redemption price being held by the Trustee as provided in this Indenture (i) the Bonds or portions of Bonds so called for redemption shall, on the date fixed for redemption designated in such 4827-9893-8625.6 21 notice, become due and payable at the redemption price provided for redemption of such Bonds, and interest on such Bonds or portions of Bonds so called for redemption shall cease to accrue, (ii) upon surrender of the Bonds or portions of Bonds so called for redemption in accordance with such notice, such Bonds or portions of Bonds shall be paid at the applicable redemption price, (iii) such Bonds or portions of Bonds shall cease to be entitled to any lien, benefit or security under this Indenture, and (iv) the owners of said Bonds or portions of Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof. Section 305. Redemption in Pari. Any Bond which is to be redeemed only in part shall be surrendered to the Trustee (with, if the City or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the City and the Trustee duly executed by, the -owner thereof or his., attorney duly authorized in writing), and th-. appropriate officials of the City shall execute and the Trustee shall authenticate and deliver to the owner of such Bond, without service charge, a new Bond or Bonds of the same series, of any authorized denomination or denominations, having the same maturity and interest rate as requested by such owner, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered. Section 306. Redemption of Additional Bonds. Additional Bonds may be made subject to optional, extraordinary and mandatory sinking fund redemption, in whole or in part, in such manner, at such times and at such prices as may be provided in the Supplemental Indenture providing for their issuance. �� . r X11-�i►i� Section 401. Payment of Principal, Premium, if any, and Interest. The City covenants that it will promptly pay or cause to be paid the principal of and premium, if any, and interest on every Bond issued under this Indenture at the place, on the dates and in the manner provided herein and in the Bonds according to the true intent and meaning thereof. The principal, premium, if any, and interest (except interest paid from the proceeds from the sale of the Bonds and accrued interest) are payable solely from the Trust Estate which is hereby specifically pledged to the payment thereof in the manner and to the extent herein specified, and nothing in the Bonds or this Indenture should be considered as assigning or pledging any funds or assets of the City other than the Trust Estate. Anything in this Indenture to the contrary notwithstanding, it is understood that whenever the City makes any covenants involving financial commitments it pledges no funds or assets other than the Trust Estate in the manner and to the extent herein specified, but nothing herein shall be construed as prohibiting the City from using any other funds or assets. The City covenants to use due diligence in causing the collection of the Sales and Use Taxes. Section 402. Performance of Covenants. The City covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Indenture, in any and every Bond executed, authenticated and delivered hereunder, and in all ordinances pertaining hereto. The City covenants that it is duly authorized under the Constitution and laws of the State of Arkansas, including particularly and without limitation 4827-9893-8625.6 22 Amendment 62 and the Act, to issue the Bonds authorized hereby and to execute this Indenture and to make the pledge of the receipts of the Sales and Use Taxes and to make the covenants in the manner and to the extent herein set forth, that all action on its part for the issuance of the Bonds and the execution and delivery of this Indenture has been duly and effectively taken, and that the Bonds in the hands of the Holders and owners thereof are and will be valid and enforceable obligations of the City according to the import thereof. Section 403. Instruments of Further Assurance. At any and all times the City shall, so far as it may be authorized by law, pass, make, do, execute, acknowledge and deliver, all and every such further resolutions, ordinances, acts, deeds, conveyances, assignments, transfers and assurances as may be necessary or desirable for the better assuring, conveying, granting, pledging, assigning and confirming of all and singular the receipts from_the Sales and Use Taxes and all other moneys hereby pledged or assigned, or intended so to be, or which the City may become bound to pledge or assign. Section 404. Recordation and Filing. To the extent necessary, the City covenants that it will cause this Indenture, such security agreements, financing statements, and all supplements thereto and other instruments as may be required from time to time to be kept, to be recorded and filed in such manner and in such places as may be required by law in order to fully preserve and protect the security of the owners of the Bonds and the rights of Trustee hereunder, and to perfect the security interest created by this Indenture. Section 405. Inspection of Books. The City shall keep proper books of record and account (separate from all other records and accounts) in which complete and correct entries shall .be made of its transactions relating to the Project and the Funds and Accounts established 'by this Indenture. Section 406. Tax Covenants. The City shall not use or permit the use of any Bond proceeds or any other funds of the City, directly or indirectly, in any manner, and will not take or permit to be taken any other action or actions which would adversely effect the exclusion of interest on any Bond from gross income for federal income tax purposes. No part of the proceeds of the Bonds shall at any time be used, directly or indirectly, to acquire securities or obligations the acquisition of which would cause any of such Bonds to be an "arbitrage bond" as defined in Sections 148(a) and (b) of the Code. The City agrees that so long as any of the Bonds remain Outstanding, it will comply with the provisions of each applicable Tax Regulatory Agreement. Section 407. T'rustee's and Paying Agent's Fees and Expenses. Subject to the provisions of Section 902 hereof, the City hereby agrees and covenants to make payments for the fees, expenses and charges of the Trustee and Paying Agent, if any, as authorized and provided by this Indenture. The City is to make payments on statements rendered by the Trustee and Paying Agent either (i) directly to the Trustee and Paying Agent or (ii) pursuant to Section 503(b) hereof. Section 405. Construction of Projects; Certification of Completion Dates. The City 04hereby covenants to use its best efforts to acquire, construct and equip each portion of the Projects being financed with proceeds of the Bonds with all reasonable dispatch and to use its 4827-9893-8625.6 23 best efforts to cause the acquisition, construction and equipping of such portion of each Project to be completed as soon as may be practicable, but in any case within a period not to exceed three years after the issuance of the applicable series of Bonds, delays caused by force majeure only excepted, but if for any reason such acquisition, construction and equipping is not completed within said period, there shall be no diminution or postponement of payments required hereunder to be made by the City. Promptly after each such Completion Date, the City shall submit to the Trustee the certificate of a Qualified Engineer which shall specify the Completion Date and shall state that acquisition, construction and equipping of the portion of the Project being financed with a particular series of Bond proceeds has been completed and the Project Costs have been paid, except for any Project Costs which have been incurred but are not then due and payable, or the liability for the payment of which is being contested or disputed by the City; --and for the -payment of which the Trustee is directed to retain- specified amounts. of moneys in the Project Fund. Notwithstanding the foregoing, such certificate may state that it is given without prejudice to any rights against third parties which exist at the date thereof or which may subsequently come into being. Section 409. Encumbrances. The City covenants that it will not create or suffer to be created any lien or charge upon the Trust Estate, except in accordance with the provisions of this Indenture. Section 410. Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this Indenture to the contrary, failure of the City or the Trustee to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default hereunder; however, the Trustee may (and at the request of the Original Purchaser of a series of Bonds, the owners of at least 25% in aggregate Outstanding principal amount of such series of Bonds, shall) or any Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City or the Trustee, as the case may be, to comply with its obligations under this Section 410. For purposes of this Section 410 only, `Beneficial Owner" shall mean any Person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including Persons holding Bonds through nominees, depositories or other intermediaries) or (b) is treated as the owner of Bonds for federal income tax purposes. Section 501. Creation of Funds and Accounts. (a) There are hereby created and established the following Funds and Accounts: (i) Project Fund, and a Street Account, Trail Account and Wastewater Account therein; (ii) Revenue Fund; 4827-9893-8625.6 24 therein; Bond Fund, and an Interest Account and a Principal Account Redemption Fund; Debt Service Reserve Fund, and a Series 2006A Account therein; Cost of Issuance Fund; and Rebate Fund. (b) All Funds and Accounts shall be held by the Trustee,_ which shall hold and maintain said Funds and Accounts in trust, for the use and benefit of the Bondholders and the City, but subject to the permitted applications expressed herein. Section 502. Project Fund. (a) The Trustee shall deposit a portion of the proceeds of the Series 2006A Bonds to the credit of various Accounts in the Project Fund in accordance with the written directions of the City given as provided in Section 208 of this Indenture. (b) Moneys credited to the Project Fund shall be expended only as set forth in this Section 502. (c) Amounts in each Account of the Project Fund shall be expended and applied only for the payment of Project Costs related to the applicable Project. Disbursements shall be made from the Project Fund on the basis of consecutively .numbered Requisitions in the form attached hereto as Exhibit C signed by an Authorized Representative. Requisitions may be submitted to the Trustee by certified mail, first class mail or facsimile transmission. If the Trustee deems that a Requisition submitted by the City is sufficient pursuant to this Section 502, the amount requested thereunder shall be disbursed in payment of the Project Costs set forth therein, or in reimbursement of such Project Costs, within two (2) business days of the date of receipt of such Requisition by the Trustee. Each Requisition shall specify: (i) the name of the person or party to whom payment is to be made and the purpose of the payment; (ii) the amount to be paid thereunder; (iii) that such amount has not been previously paid by the City and is justly due and owing to the person(s) named therein as a proper payment or reimbursement of a Project Cost; and (iv) that no Event of Default exists under the Indenture and that, to the knowledge of the Authorized Representative, no event has occurred and continues which with notice or lapse of time or both would constitute an Event of Default under the Indenture. 4827-9893-8625.6 25 (d) The Trustee shall keep full and complete records concerning and reflecting all disbursements from the Project Fund and shall file an accounting of said disbursements if and when requested by the City. The Trustee shall only make payments from the Project Fund pursuant to and in accordance with Requisitions. In making payments from the Project Fund, the Trustee may rely on any Requisitions delivered to it pursuant to this Section 502, and the Trustee shall be relieved of all liability relating to payments made in accordance with such Requisitions and any supporting certificate or certificates requested by the Trustee without physical inspection of the applicable Project. Within ninety (90) days following completion of the portion of a Project being financed with a particular series of Bonds, the City shall deliver to the Trustee its Certificate stating that the applicable portion of such Project is complete and the Trustee shall `transfer the remaining moneys in the applicable Account of the Project Fund relating to such series of Bonds (save and except moneys needed to satisfy unpaid Project Costs) to the Redemption Fund for application to the retirement of Bonds by redemption or purchase, as provided by Section 301(a) and Section 506 hereof. (e) Upon the occurrence and continuance of an Event of Default or the occurrence and continuance of an event which with notice or lapse of time or both would constitute an Event of Default, amounts on deposit in the Project Fund shall not be disbursed but shall instead be applied to the payment of Debt Service or the redemption price of the Bonds. Section 503. Revenue Fund. (a) There shall be deposited to the credit of the Revenue Fund, as and when received, all receipts derived from the Sales and Use Taxes. For the purposes of financial reporting by the City with respect to the Sales and Use Taxes, "receipts" and "revenues" shall have the same meaning. (b) Upon receipt, but in no event later than the last day of each month in which receipts of the Sales and Use Taxes are deposited in the Revenue Fund, commencing no later than March 30, 2007, there shall be transferred from the Revenue Fund, in the following order, the amounts set forth below: FIRST: For deposit to the Interest Account of the Bond Fund, an amount equal to one-sixth (1/6) of the interest on the Outstanding Bonds due on the next interest payment date and an amount equal to the interest component of any monthly payment prescribed with respect to any RLF Loan (provided, however, with respect to the deposits to be made to the Interest Account during the months of March; 2007 through October, 2007, such deposits shall be in an amount equal to one-seventh (I/7) of the interest due on the Series 2006A Bonds on November 1, 2007); SECOND: For deposit to the Principal Account of the Bond Fund, an amount equal to one -twelfth (1/12) of the next scheduled principal maturity of Outstanding Bonds (including mandatory sinking fund redemptions) and an amount equal to the principal component of any monthly payment prescribed with respect to any RLF Loan (provided, however, with respect to the Series 2006A Bonds, such deposits shall not commence until November, 2014); 4827-9893-8625.6 26 :+ THIRD: For deposit to the Debt Service Reserve Fund, an amount sufficient to cure any deficiency in the Debt Service Reserve Fund (including reimbursement to the 2006A Insurer for amounts advanced under the 2006A Reserve Policy); FOURTH: For payment to the 2006A Insurer, an amount equal to interest incurred on amounts advanced under the 2006A Reserve Policy. FIFTH: For deposit to the Rebate Fund, an amount sufficient to satisfy the City's obligations under Section 507 hereof; SIXTH: For payment to the Trustee and Paying Agent, the amount, if any, necessary to pay or reimburse the Trustee and Paying Agent for fees and expenses related to the Bonds or any RLF Loan; and SEVENTH: All remaining moneys ("Surplus Tax Receipts") will be transferred to the Redemption Fund and shall be applied to call Bonds or RLF Loans for redemption prior to maturity as provided in Section 301(b) and Section 506 hereof. (c) Required deposits into the Accounts of the Bond Fund and the Debt Service Reserve Fund shall be reduced by investment earnings, if any, in said Funds and Accounts and, with respect to required deposits to the Interest Account of the Bond Fund only, by any accrued interest deposited to the Interest Account of the Bond Fund upon the initial sale of a series of Bonds. In the event there shall be insufficient moneys in the Revenue Fund in a particular month to make the required transfers described above, then any deficiencies shall be added to the required deposits during the next month. Section 504. Bond Fund. (a) There shall be deposited to the credit of the appropriate Account of the Bond Fund all moneys required to be transferred thereto pursuant to Sections 208, 503, 505, 506 and 508 of this Indenture and all other moneys received for said Fund. (b) Moneys credited to the Bond Fund shall be expended only as set forth in this Section 504. (c) (i) On each interest payment date for any of the Bonds Outstanding or any RLF Loan, the Trustee shall pay out of moneys credited to the Interest Account of the Bond Fund the amounts required for the payment of interest on the Bonds or the RLF Loan due on such date, and on each redemption date, the amounts required for the payment of accrued interest on Bonds or the RLF Loan then to be redeemed or purchased unless the payment of such accrued interest shall be otherwise provided for, and such amounts shall be applied to such payments. (ii) On each principal payment or redemption date for any of the Bonds Outstanding or any RLF Loan, the Trustee shall pay out of moneys credited to the Principal Account of the Bond Fund the amounts required for the payment of principal and premium, if any, due on the Bonds or the RLF Loan on such date and such amounts shall be applied to such payments. 4827-9893-8625.6 27 (iii) If there shall be insufficient moneys in the Bond Fund to pay in full interest, principal or premium, if any, due on the Bonds or any RLF Loan on any interest or principal payment or redemption date, the Trustee shall, one day prior to such date, transfer an amount equal to the deficiency into the appropriate Account of the Bond Fund from the Funds indicated in the following order: FIRST: the Revenue Fund; SECOND: the Redemption Fund; and T the corresponding Account of the Debt Service Reserve Fund (for payment of principal and interest on the Bonds on anyinterest or principal payment date only). (d) All payments made pursuant to this Section 504 shall be made in immediately available funds. Section 505. Cost of Issuance Fund. There shall be deposited to the credit of the Cost of Issuance Fund all moneys received for said Fund pursuant to Section 208 hereof. The Trustee shall pay those Costs of Issuance as directed by the City pursuant to a Certificate delivered on a Closing Date. After all Costs of Issuance have been paid (and in any event not later than January 1, 2007 with respect to the Series 2006A Bonds), any remaining moneys in the Cost of Issuance Fund shall be transferred to the Interest Account of the Bond Fund. Section 506. Redemption Fund. (a) There shall be deposited to the credit of the Redemption Fund all moneys required to be transferred thereto pursuant to Section 502 and Section 503 of this Indenture. (b) Moneys credited to the Redemption Fund shall be expended only as set forth in this Section 506. (c) Moneys in the Redemption Fund shall be transferred to the Principal Account of the Bond Fund at such times as may be necessary to effectuate, on the first available date, redemptions of Bonds required by Section 301(a) and (b) of this Indenture. Upon the issuance of any series of Additional Bonds, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such Surplus Tax Receipts shall be allocated to the various series of Additional Bonds in such proportion as shall be set forth in a Supplemental Indenture. (d) The amounts accumulated in the Redemption Fund, if so directed by the City by means of a Certificate delivered to the Trustee, shall be applied by the Trustee to the purchase of Bonds of the maturities which would otherwise be redeemed pursuant to Section 301(a) and (b) and this Section 506 but for the provisions of this subsection (d), at prices directed by the City not exceeding the applicable redemption prices of the Bonds which would be redeemed but for the operation of this sentence. Interest accrued on the Bonds so purchased shall be paid from moneys credited to the Interest Account of the Bond Fund. 4827-9893-8625.6 29 ofti Section 507. Rebate Fund. (a) The Trustee shall establish and maintain, separate and apart from any other Funds and Accounts established and maintained hereunder, a Fund to be designated as the Rebate Fund, which Fund is not pledged to the payment of any Bonds. Subject to the transfer provisions provided in subsection (c) below, all moneys at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Amount (as defined in each Tax Regulatory Agreement), for payment to the United States of America, and neither the City nor the Owner of any Bond shall have any rights in or claim to such money. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Section 507, by Section 406, and by each Tax Regulatory Agreement (which are incorporated herein by reference). (b) As provided in -Section 503(b) hereof, there shall be deposited in the Rebate Fund the amount of all income or gain on moneys deposited in any of the Funds and Accounts established by this Indenture which is required to be rebated to the United States and is designated for deposit therein, as calculated by the City to be owing to the United States pursuant to the Tax Regulatory Agreement, which shall be delivered by the City concurrently with the issuance of a series of Bonds. (c) The Trustee, upon receipt of written instructions from the Mayor or Finance Director of the City, shall pay to the United States out of amounts in the Rebate Fund such amounts as are required pursuant to each Tax Regulatory Agreement. Oft(d) Any moneys remaining in the Rebate Fund after payment to the United States, within sixty (60) days after the date on which the last Bond is redeemed, of one hundred percent (100%) of the rebate amount as described in Section 148(f)(2) of the Code, shall be transferred to the Revenue Fund. (e) The Trustee, as instructed by Certificate of the City, shall invest all amounts held in the Rebate Fund in Investment Securities, subject to the restrictions set forth in the applicable Tax Regulatory Agreement. Money shall not be transferred from the Rebate Fund except as provided in subsection (c). (f) Notwithstanding any other provision of this Indenture, the obligation to remit the Rebate Amount to the United States and to comply with all other requirements of this Section 507, Section 406 and each Tax Regulatory Agreement shall survive the defeasance or payment in full of the Bonds. Section 508. Debt Service Reserve Fund. As provided in Section 208 hereof, upon the issuance of each series of Bonds, there shall be deposited into the appropriate Account of the Debt Service Reserve Fund, from proceeds of the Bonds, an amount sufficient to cause the amounts on deposit therein to be equal to the Reserve Requirement; provided, however, that no proceeds of RLF Loans will be deposited in the Debt Service Reserve Fund and the Debt Service Reserve Fund will not secure RLF Loans, whether or not structured as Additional Bonds. Each Account within the Debt Service Reserve Fund shall be maintained in an amount equal to the Reserve Requirement. Amounts on deposit in Accounts within the Debt Service Reserve Fund shall be used solely to pay the principal of and interest on the corresponding series of Outstanding Bonds for which there are no available funds in the Bond Fund to make such 4827-9893-8625.6 29 payments, as the same become due at maturity (including mandatory sinking fund redemption). If any Account of the Debt Service Reserve Fund, by virtue of any such payment, is reduced below the Reserve Requirement, it shall be reimbursed in the amount of any such deficiency as provided in Section 503. Notwithstanding the above provisions of this Section 508, the amount on deposit in an Account of the Debt Service Reserve Fund may be used, together with other available funds, to provide for the payment at maturity or to redeem prior to maturity all, but not less than all, of the related series of Outstanding Bonds. If an excess shall exist in an Account in the Debt Service Reserve Fund over and above the Reserve Requirement, such excess shall be transferred to the Interest Account of the Bond Fund. Section 509. Cessation of Fund Deposits. When the moneys in the Revenue Fund, the Bond Fund, the Debt Service Reserve Fund (except that investments in surety bonds and insurance policies shall not be counted for this purpose) and the Redemption Fund shall be and remain sufficient to pay in full the principal and interest on all Bonds then Outstanding in accordance with Article VII of this Indenture, together with the required fees and expenses to be paid or reimbursed to the Trustee and any Paying Agent, the City shall have no further obligation to make further payments into said Funds. Pursuant to Arkansas Code Annotated Section 14- 164-329(c)(2), the Sales and Use Taxes shall be abolished on the first day of the calendar month subsequent to the expiration of thirty (30) days from the date there is filed with the Director of the Arkansas Department of Finance and Administration a written statement signed by the Mayor and the Trustee wherein either (a) the Trustee certifies that it has or will have sufficient funds on hand to pay the principal of and interest on the Bonds and any RLF Loan at maturity or upon redemption prior to maturity, and the Mayor certifies that the Sales and Use Taxes are not pledged to any other indebtedness of the City, or (b) the Mayor certifies that there are no longer any Bonds or any RLF Loan outstanding payable from receipts of the Sales and Use Taxes. Section 510. Separate Accounts Authorized. A Supplemental Indenture authorizing the issuance of Additional Bonds may provide for the creation of separate Accounts within the Bond Fund, Debt Service Reserve Fund, Project Fund, Costs of Issuance Fund and Rebate Fund for such series of Bonds and such other Accounts as the City may direct; provided, that the creation of such separate Accounts shall be solely for the ease of administration and shall in no event affect the equal and ratable security of the Bonds of each series. If any Supplemental Indenture authorizing the issuance of Additional Bonds provides for the establishment of separate Accounts for a series of Bonds, then such Supplemental Indenture shall require that the receipts of the Sales and Use Taxes received by the City shall be deposited pursuant to written direction of the City into each of the Accounts within the Bond Fund and Debt Service Reserve Fund for each series of Bonds on the basis of the installments of principal, premium, if any, and interest on each series of Bonds and the amounts required to be deposited in the Accounts within. the Debt Service Reserve Fund during the applicable period, to the end that the Bonds of each series shall be equally and ratable secured by the receipts of the Sales and Use Taxes. Any Supplemental Indenture authorizing the issuance of Additional Bonds may provide that any proceeds of such series of Bonds and investment earnings thereon remaining after some specified date, or after the construction of all facilities to be financed with the proceeds of such series of Bonds, shall be applied to the redemption of such series of Bonds. 4827-9893-8625.6 30 ARTICLE VI INVESTMENTS Section 601. Investment of Moneys. At the direction of the City or absent such direction, the Trustee shall invest moneys in Funds or Accounts held by the Trustee in Investment Securities with maturity or redemption dates consistent with the times at which said moneys will be required for the purposes provided in this Indenture; provided, however, the stated maturity dates of Investment Securities of Debt Service Reserve Fund moneys (other than surety bonds) shall not exceed five years from the date of investment therein. Moneys in separate Funds or Accounts may be commingled for the purpose of investment. Section 602. Investment Earnings. Subject to the provisions of the Tax Regulatory Agreement and Article V hereof, Investment Securities purchased with moneys held in or attributable to any Fund or Account held by the Trustee under the provisions of this Indenture shall be deemed at all times to be a part of such Fund or Account and the income or interest earned, profits realized or losses suffered by a Fund or Account due to the investment thereof shall be retained in, credited or charged, as the case may be, to such Fund or Account unless otherwise provided pursuant to this Indenture. Section 603. Valuation of Funds. In determining the value of any Fund or Account held by the Trustee under this Indenture, the Trustee shall credit Investment Securities at the fair market value thereof, as determined by the Trustee by any method selected by the Trustee in its reasonable discretion. No less frequently than annually, and in any event within thirty (30) days .prior to the end of each Fiscal Year, the Trustee shall determine the value of each Fund and Account held hereunder and shall report such determination to the City. The Trustee shall sell or present for redemption any Investment Securities as necessary in order to provide money for the purpose of making any payment required hereunder, and the Trustee shall not be liable for any loss resulting from any such sale. Section 604. Responsibility of Trustee. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of moneys made by it at the direction of the City. Section 701. Discharge of hien. If the City shall pay or cause to be paid to the owners of the Bonds the principal, premium, if any, and interest to become due thereon at the times and in the manner stipulated therein, and if the City shall keep, perform and observe all and singular the covenants and promises in the Bonds and in this Indenture expressed as to be kept, performed and observed by it on its part, then these presents and the estate and rights hereby granted shall cease, determine and be void, and thereupon the Trustee shall cancel and discharge the lien of this Indenture, and execute and deliver to the City such instruments in writing as shall be requisite to satisfy the lien hereof, and reconvey to the City the estate hereby conveyed, and 4827-9893-8625.6 31 assign and deliver to the City any property at the time subject to the lien of this Indenture which may then be in its possession, except moneys or Government Securities held by it for the payment of the principal of and premium, if any, and interest on the Bonds. Section 702. Bonds Deemed Paid. Any Bond shall be deemed to be paid within the meaning of this Article VII when payment of the principal of and premium, if any, and interest on such Bond (whether at maturity or upon redemption as provided in this Indenture, or otherwise), either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for by irrevocably depositing with the Trustee, in trust and irrevocably set aside exclusively for such payment, (1) moneys sufficient to make such payment or (2) Government Securities (provided that such deposit will not affect the tax-exempt status of the interest on any of the Bonds or cause any of the Bonds to be classified as "arbitrage bonds" within the meaning of Section 148(a) of the Code, as reflected in an opinion of Bond Counsel delivered to the Trustee), maturing as to principal and interest in such amount and at such times as will provide sufficient moneys to make such payment, and all necessary and proper fees, compensation and expenses of the Trustee and any Paying Agent pertaining to the Bonds with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee and any said Paying Agent. In the case of "any defeasance of Bonds pursuant to subsection (ii) above, the dates of redemption of such Bonds and the principal amounts and maturities of Bonds to be redeemed on such dates will be determined by taking into consideration the applicable mandatory redemption OW requirements with respect to the Bonds to be defeased and the receipts of the Sales and Use Taxes for the most recent twelve months. Section 703. Ston -Presentment of Bonds. In the event any Bonds shall not be presented for payment when the principal thereof becomes due, either at maturity or otherwise, or at the date fixed for redemption thereof, if there shall have been deposited with the Trustee for that purpose, or left in trust if previously so deposited, funds sufficient to pay the principal thereof, and premium, if any, together with all interest unpaid and due thereon, to the due date thereof, for the benefit of the Holder thereof, all liability of the City to the Holder thereof for the payment of the principal thereof, premium if any, and interest thereon, shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such fund or funds, without liability for interest thereon, for the benefit of the Holder of such Bonds, who shall thereafter be restricted exclusively to such fund or funds, for any claim of whatever nature on his part under this Indenture or on, or with respect to, the Bonds. Mel am ' i l Section 801. Events of Default. Each of the following events shall constitute and is referred to in this Indenture as an "Event of Default": (a) Default in the due and punctual payment of any interest on any Bond; 4827-9893-8625.6 32 (b) Default in the due and punctual payment of the principal of or premium, if any, on any Bond, whether at the stated maturity thereof, or upon proceedings for redemption thereof, or upon the maturity thereof by declaration; (c) Default in the payment of any other amount required to be paid under this Indenture or the performance or observance of any other of the covenants, agreements or conditions contained in this Indenture, or in the Bonds issued hereunder, and continuance thereof for a period of sixty (60) days after written notice specifying such failure and requesting that it be remedied shall have been given to the City by the Trustee, which may give such notice in its discretion and shall give such notice at the written request of Bondholders of not less than 51% in aggregate principal amount of the Bonds then Outstanding, unless the Trustee, or -the Trustee and Holders of an aggregate principal amount of Bonds not less than the aggregate principal amount of Bonds the Holders of which requested such notice, as the case may be, shall agree in writing to an extension of such period prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Trustee will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the City within such period and is being diligently pursued; (d) The filing of a petition in bankruptcy by or against the City under the United States Bankruptcy Code or the commencement of a proceeding by or against the City under any other law concerning insolvency, reorganization or bankruptcy; and (e) If the State has limited or altered the rights of the City pursuant to the Act, as in force on the date of this Indenture, to fulfill the terms of any agreements made with the Trustee or the Bondholders or in any way impaired the rights and remedies of the Trustee or the Bondholders while any Bonds are Outstanding. The term "default" as used in clauses (a), (b) and (c) above shall mean default by the City in the performance or observance of any of the covenants, agreements or conditions on its part contained in this Indenture or in the Bonds Outstanding hereunder, exclusive of any period of grace required to constitute a default an "Event of Default" as hereinabove provided. Section 502. acceleration. Upon the occurrence of an Event of Default, the Trustee may, and upon the written request of the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding hereunder shall, by notice in writing delivered to the City, declare the principal of all Bonds then Outstanding, together with the interest accrued thereon, immediately due and payable, and such principal and interest shall thereupon become and be immediately due and payable. Section 503. Other Remedies; Rights of Bondholders. Upon the occurrence of an Event of Default, the Trustee may, as an alternative, pursue any available remedy by suit at law or in equity, including, without limitation, mandamus to enforce the payment of the principal of and premium, if any, and interest on the Bonds then Outstanding hereunder. If an Event of Default shall have occurred, and if it shall have been requested so to do by the Holders of not less than 51 % in aggregate principal amount of Bonds Outstanding hereunder 4827-9893-8625.6 33 and if it shall have been indemnified as provided in Section 901 (1) hereof, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred upon it by this Section 803 as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Bondholders. No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the Bondholders) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient. No waiver of any default or Event of Default hereunder, whether by the Trustee or by the Bondholders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any rights or remedies consequent thereon. Section 804. Right of Bondholders to Direct Proceedings. Anything in this Indenture to the contrary notwithstanding, the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding hereunder shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture, or for the appointment of a receiver or any other proceeding hereunder; provided that such direction shall not be otherwise than in accordance with the provisions of law and of this Indenture. Section 805. Appointment of Receiver. Upon the occurrence of an Event of Default, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Bondholders under this Indenture, the Trustee shall be entitled to the appointment of a receiver or receivers of the Trust Estate and of the tolls, rents, revenues, issues, earnings, income, products and profits thereof, including, without limitation, the receipts of the Sales and Use Taxes, pending such proceedings with such powers as the court making such appointment shall confer. Section 806. Waiver. In case of an Event of Default on its part, as aforesaid, to the extent that such rights may then lawfully be waived, neither the City nor anyone claiming through the City or under the City shall or will set up, claim or seek to take advantage of any appraisement, valuation, stay, extension or redemption laws now or thereafter in force, in order to prevent or hinder the enforcement of this Indenture, but the City, for itself and all who may claim through or under it, hereby waives, to the extent that it lawfully may do so, the benefit of all such laws and all right of appraisement and redemption to which it may be entitled under the laws of the State. Section 807. Application of Moneys. Available moneys remaining after discharge of costs, charges and liens prior to this Indenture shall be applied by the Trustee as follows: 4827-9893-8625.6 34 (a) Unless the principal of all the Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied: First: To the payment to the Persons entitled thereto of all installments of interest then due, in the order of the maturity of the installments of such interest, and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Persons entitled thereto, without any discrimination or privilege; Second: To the payment to the Persons entitled thereto of the unpaid principal of any of the Bonds which shall have become due (other than Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of this Indenture), in the order of their due dates, with interest on such Bonds from the respective dates upon which they become due, and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then to the payment ratably, according to the amount of principal due on such date, to the Persons entitled thereto without any discrimination or privilege of any Bond over any other Bond and without preference or priority of principal over interest or of interest over principal; and Third: To the payment of the interest on and the principal of the Bonds, and to the redemption of Bonds, all in accordance with the provisions of Article V of this Indenture. (b) If the principal of all the Bonds shall have become due or shall have been declared due and payable, all such moneys shall be applied first to the payment of the interest then due and unpaid upon the Bonds, and then to the payment of the principal then due and unpaid upon the Bonds, in each case without preference or priority of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the Persons entitled thereto. (c) If the principal of all the Bonds shall have been declared due and payable, and if such declaration shall -thereafter have been rescinded and annulled under the provisions of this Article VIII then, subject to the provisions of paragraph (b) of this Section 807, in the event that the principal of all the Bonds shall later become due or be declared due and payable, the moneys shall be applied in accordance with the provisions of paragraph (a) of this Section 807. Whenever moneys are to be applied by the Trustee pursuant to the provisions of this Section 807, such moneys shall be applied by it at such times, and from time to time, as it shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date (which shall be an interest payment date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the deposit with it of any such 4827-9893-8625.6 35 0110 moneys and of the fixing of any such date and shall not be required to make payment to the Holder of any Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Section 808. Remedies Vested in Trustee. All rights of action (including the right to file proof of claim) under this Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceeding relating thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its name as Trustee, without the necessity of joining as plaintiffs or defendants any Bondholders hereby secured, and any recovery of judgment shall be for the equal benefit of the Holders of all Outstanding Bonds. Section 809. Rights and Remedies of Bondholders. No Bondholder shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other remedy hereunder, unless a default has occurred of which the Trustee has been notified as provided in subsection (g) of Section 901, or of which by said subsection it is deemed to have notice, nor unless such default shall have become an Event of Default and the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding hereunder shall have made written request to the Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, nor unless also they have offered to the Trustee indemnity as provided in subsection (1) of Section 901, nor unless the Trustee shall thereafter fail or refuse to exercise the powers hereinbefore granted, or to institute such action, suit or proceeding in its own name; and such notification, request and offer of indemnity are hereby declared in every such case, at the option of the Trustee, to be conditions precedent to the execution of the powers and trusts of this Indenture, and to any action or cause of action for the enforcement of this Indenture or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more Holders of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Indenture by action of the Holder or Holders or to enforce any right hereunder except in the manner herein provided, and that all proceedings at law or in equity shall be instituted, held and maintained in the manner herein provided for the equal benefit of the Holders of all Bonds Outstanding hereunder. Nothing in this Indenture contained shall, however, affect or impair the right of any Bondholders to enforce the payment of the principal of and premium, if any, and interest on any Bonds at and after the maturity thereof, or the obligation of the City to pay the principal of and premium, if any, and interest on each of the Bonds issued hereunder to the respective Holders thereof at the time and place in said Bonds expressed. Section 810. Termination of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the City and the Trustee shall be restored to their former positions and rights hereunder with respect to the property herein conveyed, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken, except to the extent the Trustee is legally bound by such adverse determination. 4827-9893-8625.6 36 Section 811. Waivers of Events of Default. The Trustee may, and upon the written request of the Holders of not less than 51% in - principal amount of all Bonds Outstanding hereunder shall, waive any Event of Default hereunder and its consequences and rescind any declaration of maturity of principal; provided, however, there shall not be waived any Event of Default described in clause (a) or (b) of the first paragraph of Section 801 hereof, unless prior to such waiver or rescission all arrears of principal (due otherwise than by declaration) and interest, and all expenses of the Trustee and Paying Agent, shall have been paid or provided for. In case of any such waiver or rescission the City, Trustee and the Bondholders shall be restored to their former positions and rights hereunder respectively, but no such waiver or rescission shall extend to any subsequent or other default, or impair any right subsequent thereon. Section 901. Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it by this Indenture and agrees to perform said trusts, but only upon and subject to the following expressed terms and conditions: (a) The Trustee may execute any of the trusts or powers hereof and perform any duties required of it by or through attorneys, agents, receivers or employees, and shall be entitled to advice of counsel concerning all matters of trusts hereof and its duties hereunder, and may in all cases pay reasonable compensation to all such attorneys, agents, receivers and employees as may reasonably be employed in connection with the trusts hereof. Reimbursement of such compensation paid by the Trustee is subject to the provisions of Section 902 hereof. The Trustee may act upon the opinion or advice of any attorney, surveyor, engineer or accountant selected by it in the exercise of reasonable care, or, if selected or retained by the City prior to the occurrence of a default of which the Trustee has been notified as provided in subsection (g) of this Section 901, or of which by said subsection the Trustee is deemed to have notice, approved by the Trustee in the exercise of such care. The Trustee shall not be responsible for any loss or damage resulting from an action or nonaction in accordance with any such opinion or advice. (b) The Trustee shall not be responsible for any recital herein, or in the Bonds (except in respect to the certificate of authentication of the Trustee endorsed on such Bonds), or for the validity of the execution by the City of this Indenture or of any Supplemental Indentures or instruments of further assurance, or for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, or for the value of the title of the property herein conveyed or otherwise as to the maintenance of the security hereof; except that in the event the Trustee enters into possession of a part or all of the property herein conveyed pursuant to any provision of this Indenture, it shall use due diligence in preserving such property; and the Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions and agreements aforesaid as to the condition of the property herein conveyed. (c) The Trustee may become the owner of Bonds secured hereby with the same rights which it would have if not Trustee. 4827-9893-8625.6 37 (d) The Trustee shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or document believed by it, in the exercise of reasonable care, to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of the owner of any Bond secured hereby, shall be conclusive and binding upon all future owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. (e) As to the existence or nonexistence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a Certificate of the City signed by its Mayor and attested by the City Clerk as sufficient evidence of the facts therein contained and, pfior to the occurrence of a default of which it has been notified as provided in subsection (g) of this Section 901, or of which by that subsection it is deemed to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction, or action is necessary or expedient, but may at its discretion, at the reasonable expense of the City, in every case secure such further evidence as it may think necessary or advisable but shall in no case be bound to secure the same. The Trustee may accept a certificate of the City Clerk of the City under its seal to the effect that a resolution in the form therein set forth has been adopted by the City as conclusive evidence that such resolution has been duly adopted, and is in full force and effect. (f) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty of the Trustee, and the Trustee shall be answerable only for its own gross negligence or willful misconduct. (g) The Trustee shall not be required to take notice or be deemed to have notice of any default hereunder (except for defaults under clause (a) or (b) of the first paragraph of Section 801 hereof as to which the Trustee shall be deemed to have notice) unless the Trustee shall be specifically notified in writing of such default by the City or by the Holders of at least 10% in aggregate principal amount of Bonds Outstanding hereunder, and all notices or other instruments required by this Indenture to be delivered to the Trustee must, in order to be effective, be delivered to the principal corporate trust office of the Trustee, and in the absence of such notice so delivered, the Trustee may conclusively assume there is no such default except as aforesaid. (h) [Reserved]. (i) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect any and all of the property herein conveyed, including all books, papers and records of the City pertaining to the receipts of the Sales and Use Taxes and the Bonds, and to take such memoranda from and in regard thereto as may be desired. 0) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises. 4827-9893-8625.6 38 OVIN (k) Notwithstanding anything elsewhere in this Indenture contained, the Trustee shall have the right, but shall not be required, to demand, in respect of the authentication of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Indenture, any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required as a condition of such action by the Trustee, deemed desirable for the purpose of establishing the right of the City to the authentication of any Bonds, the withdrawal of any cash, the release of any property, or the taking of any other action by the Trustee. (1) Before taking such action hereunder, the Trustee may require that it be furnished an indemnity bond satisfactory to it for the reimbursement to it of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from the gross negligence or willful misconduct of the Trustee, by reason of any action so taken by the Trustee. Section 902. .Fees, Charges and Expenses of Trustee and Paying Agents, Trustee's Prior Lien. (a) Subject to subsection (b) of this Section 902, the City shall, from moneys lawfully available therefor, pay to the Trustee and any Paying Agent reasonable compensation for all services performed hereunder and also all reasonable expenses, charges and other disbursements and those of their attorneys, agents and employees incurred in and about the administration and execution of the trusts hereby created and the performance of the powers and OW duties hereunder and, to the extent permitted by law and from moneys lawfully available therefor, shall indemnify and save the Trustee harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder. With respect to the Series 2006A Bonds, the Trustee's initial authentication fee shall be $3,500 and the annual administration fee of the Trustee shall be $4,000 annually prior to the final Completion Date with respect to any of the Projects, and $3,500 annually thereafter. If the City shall fail to make any payment required by this subsection (a), the Trustee may make such payment from any moneys in its possession under the provisions of this Indenture and shall be entitled to a preference therefor over any of the Bonds Outstanding hereunder. The City shall not be required to indemnify the Trustee against any liabilities which the Trustee may incur as a result of negligent or wrongful acts or omissions of the Trustee. (b) The City shall pay to the Trustee compensation for its services as described in Section 902(a), provided that such compensation, together with all expenses, charges and other disbursements of the Trustee and its attorneys, agents and employees and all reimbursements to the Trustee for all costs and other disbursements as described in Section 901(a) hereof shall not exceed $7,500 annually (not including the initial authentication fee) without the prior written approval of the City, which approval shall not be unreasonably withheld. If the Trustee wishes to consult with or retain counsel for any purpose hereunder whose anticipated fees, together with all other compensation, disbursements and reimbursements of the Trustee and its attorneys, agents and employees to be paid by the City hereunder, shall exceed $10,000 annually, then such counsel shall have to be acceptable to the City and such fees shall have to be approved by the City as described above. 4827-9893-8625.6 39 Section 903. Additional Duties of Trustee. (a) In addition to the other duties of the Trustee described in this Indenture, it shall be the duty of the Trustee, on or before the tenth day of each month after the month in which the Series 2006A Bonds are delivered, to file with the City a statement setting forth in respect of the preceding calendar month: (i) the amount withdrawn or transferred by it and the amount deposited with it on account of each Fund and Account held by it under the provisions of this Indenture; (ii) the amount on deposit with it at the end of such month to the credit of each such Fund and Account; (iii) a brief description of all obligations held by it as an investment of moneys in each such Fund and Account; (iv) the amount applied to the purchase or redemption of Bonds under the provisions of this Indenture and a description of the Bonds or portions of Bonds so purchased or redeemed; and (v) any other information that the City may reasonably request, including; but not limited to, submittal of monthly statements of activity relating to the Bonds and any RLF Loan. Such information shall also be provided at the direction of the City to one additional designated entity. All records and files pertaining to each such Fund and Account in the custody of the Trustee hereunder shall be open at all reasonable times to the inspection of the City and its agents and representatives, and the City may make copies thereof. (b) The Trustee additionally shall be responsible for the preparation and timely distribution of any and all forms and reports required by law to all Bondholders, the State and the Internal Revenue Service in connection with the payment to the Bondholders of interest on the Bonds. Section 904. Notice to .Bondholders of Default. If a default occurs of which the Trustee is pursuant to the provisions of Section 901(8) deemed to have or is given notice, the Trustee shall promptly make demand upon the City and give notice to each owner of Bonds then Outstanding. Section 905. Intervention by Trustee. In any judicial proceeding to which the City is a party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of Holders of Bonds issued hereunder, the Trustee may intervene on behalf of Bondholders and shall do so if requested in writing by the Holders of at least 51% of the aggregate principal amount of Bonds Outstanding hereunder. The rights and obligations of the Trustee under this Section 905 are subject to the approval of the court having jurisdiction in the premises. Section 906. Merger or Consolidation of Trustee. Any bank or trust company to which the Trustee may be merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any bank or trust 4827-9893-8625.6 40 company resulting from any such sale, merger, consolidation or transfer to which it is a party, ipso facto, shall be and become successor trustee hereunder and vested with all of the title to the whole property or Trust Estate and all the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed, or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, however, that such successor trustee shall have capital and surplus of at least $40 million. Section 907. Designation by Trustee. The Trustee and any successor trustee may at any time resign from the trusts hereby created by giving written notice to the City and the Bondholders, and such resignation shall take effect upon the appointment of a successor trustee by the Bondholders or by the City. Such notice may be served personally or sent by registered mail (to the City) or first class mail (to the Bondholders). Section 908. Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Trustee and to the City, and signed by the Holders of not less than 51 % in aggregate principal amount of Bonds Outstanding hereunder. Section 909. Appointment of Successor Trustee. In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by the court, a successor may be appointed by the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding hereunder, by an instrument or concurrent instruments in writing signed by such Holders, or by their attorneys in fact, duly authorized; provided, nevertheless, that in case of such vacancy the City by an instrument executed and signed by its Mayor and attested by its City Clerk under its seal, shall appoint a temporary trustee to fill such vacancy until a successor trustee shall be appointed by the Bondholders in the manner above provided. Any such temporary trustee appointed by the City shall immediately and without further act be superseded by the trustee appointed by such Bondholders. Every such temporary trustee and every such successor trustee shall be a trust company or bank in good standing, having capital and surplus of not less than $40 million. Section 910. Concerning Any Successor Trustee. Every successor or temporary trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the City an instrument in writing accepting such appointment hereunder, and thereupon such successor or temporary trustee, without any further act or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the written request of the City or of its successor trustee, execute and deliver an instrument transferring to such successor all the estate, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor trustee shall deliver all securities, moneys and any other property held by it as trustee hereunder to its successor. Should any instrument in writing from the City be required by any successor trustee for more fully and certainly vesting in such successor the estates, rights, powers and duties hereby vested or intended to be vested in the predecessor trustee, any and all such instruments in writing shall, on request, be executed, acknowledged, and delivered by the City. 4827-9893-8625.6 41 Section 911. Reliance Upon Instruments. The resolutions, opinions, certificates and other instruments provided for in this Indenture may be accepted and relied upon by the Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warrant, protection and authority to the Trustee for its actions taken hereunder. Section 912. Appointment of Co -Trustee. The City and the Trustee shall have power to appoint, and upon the request of the Trustee the City shall for such purpose join with the Trustee in the execution of all instruments necessary or proper to appoint, another corporation or one or more Persons approved by the Trustee, either to act as co -trustee or co -trustees jointly with the Trustee of all or any of the property subject to the lien hereof, with such powers as may be provided in the instrument of appointment and to vest in such corporation or Person or Persons as such co -trustee any property, title, right or power deemed necessary or desirable. In the event that the City shall not have joined in such appointment within fifteen (15) days after the receipt by it of a request so to do, the Trustee alone shall have the power to make such appointment. Should any deed, conveyance or instrument in writing from the City be required by the co -trustee so appointed for more fully and certainly vesting in and confirming to such co - trustee such properties, rights, powers, trusts, duties and obligations, any and all such deeds, conveyances and instruments in writing shall, on request, be executed, acknowledged and delivered by the City. Every such co -trustee shall, to the extent permitted by law, be appointed subject to the following provisions and conditions, namely: (1) The Bonds shall be authenticated and delivered, and all powers, duties, OM obligations and rights conferred upon the Trustee in respect of the custody of all money and securities pledged or deposited hereunder, shall be exercised solely by the Trustee; and (2) The Trustee, at any time by an instrument in writing, may remove any such separate Trustee or co -trustee. Every instrument, other than this Indenture, appointing any such co -trustee shall refer to this Indenture and the conditions of this Article IX expressed, and upon the acceptance in writing by such co -trustee, the co -trustee shall be vested with the estate or property specified in such instrument, jointly with the Trustee (except insofar as local law makes it necessary for any separate trustee to act alone), subject to all the trusts, conditions and provisions of this Indenture. Any such co -trustee may at any time, by an instrument in writing, constitute the Trustee as the co -trustee's agent or attorney-in-fact with full power and authority, to the extent authorized by law, to do all acts and things and exercise all discretion authorized or permitted by the co -trustee, for and on behalf of the co -trustee and in the co -trustee's name. In case any co -trustee shall die, become incapable of acting, resign or be removed, all the estate, properties, rights, powers, trusts, duties and obligations of said co -trustee shall vest in and be exercised by the Trustee until the appointment of a new trustee or a successor to such co -trustee. Section 913. Designation and Succession of Paying Agents. The Trustee and any other banks or trust companies designated as Paying Agent or Paying Agents in any Supplemental Indenture or in an instrument appointing a successor Trustee shall be the Paying Agent or Paying Agents for the Bonds. 4827-9893-8625.6 42 Any bank or trust company with which or into which any Paying Agent may be merged or consolidated, or to which the assets and business of such Paying Agent may be sold, shall be deemed the successor of such Paying Agent for the purposes of this Indenture. If the position of Paying Agent shall become vacant for any reason, the City shall, within thirty (30) days thereafter, appoint such bank or trust company as shall be specified by the City as such Paying Agent to fill such vacancy; provided, however, that, if the City shall fail to appoint such Paying Agent within said period, the Trustee shall make such appointment. The Paying Agents shall enjoy the same protective provisions in the performance of its duties hereunder as are specified in Section 901 hereof with respect to the Trustee insofar as such provisions may be applicable. Section 1001. Supplemental Indentures Not Requiring Consent of Bondholders. The City and the Trustee may, from time to time and at any time, without the consent of or notice to the Bondholders, enter into Supplemental Indentures as follows: (a) to cure any formal defect, omission, inconsistency or ambiguity in this Indenture; (b) to grant to or confer or impose upon the Trustee for the benefit of the Bondholders any additional rights, remedies, powers, authority, security, liabilities or duties which may lawfully be granted, conferred or imposed and which are not contrary to or inconsistent with this Indenture as theretofore in effect, provided that no such additional liabilities or duties shall be imposed upon the Trustee without its consent; (c) to add to the covenants and agreements of, and limitations and restrictions upon, the City in this Indenture other covenants, agreements, limitations and restrictions to be observed by the City which are not contrary to or inconsistent with this Indenture as theretofore in effect; (d) to confirm, as further assurance, any pledge under, and the subjection to any claim, lien or pledge created or to be created by, this Indenture, of the Trust Estate or of any other moneys, securities or funds; (e) to comply with the requirements of the Trust Indenture Act of 1939, as from time to time amended; (f) to authorize the issuance and sale of one or more series of Additional Bonds; (g) to make such additions, deletions or modifications as may be necessary to assure compliance with Section 148(f) of the Code relating to required rebate to the United States or otherwise as may be necessary to assure exemption from federal income taxation of interest on the Bonds; or 4827-9893-8625.6 43 0 (h) to modify, alter, amend or supplement this Indenture in any other respect which is not materially adverse to the Bondholders and which does not involve a change described in clause (a), (b), (c), (d), (e) or (f) of Section 1002 hereof and which, in the judgment of the Trustee, is not to the prejudice of the Trustee. Section 1002. Supplemental Indentures Requiring Consent of Bondholders. Subject to the terms and provisions contained in this Section 1002, and not otherwise, the Holders of not less than 2/3 in aggregate principal amount of the Bonds then Outstanding shall have the right, from time to time, anything contained in this Indenture to the contrary notwithstanding, to consent to and approve the execution by the City and the Trustee of such indenture or indentures supplemental hereto as shall be deemed necessary and desirable by the City for the purpose of modifying, altering, amending, adding to, or rescinding, in any particular, any of the terms or provisions contained in this Indenture or in any Supplemental Indenture; provided, however, that nothing herein contained shall permit or be construed as permitting (a) an extension of the maturity (or mandatory redemption date) of the principal of or the interest on any Bond issued hereunder, or (b) a reduction in the principal amount of or redemption premium or rate of interest on any Bond issued hereunder, or (c) the creation of any lien on the Trust Estate or any part thereof, except as hereinbefore expressly permitted, or (d) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (e) a reduction in the aggregate principal amount of the Bonds required for consent to such Supplemental Indenture, or (f) depriving the Holder of any Bond then Outstanding of the lien hereby created on the Trust Estate. Nothing herein contained, however, shall be construed as making necessary the approval of Bondholders of the execution of any Supplemental Indenture as provided in Section 1001 of this Article X. If, at any time the City shall request the Trustee to enter into any Supplemental Indenture for any of the purposes of this Section, the Trustee shall, at the expense of the City, cause notice of the proposed execution of such Supplemental Indenture to be mailed by first class mail to each registered owner of the Bonds. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that copies thereof are on file at the principal office of the Trustee for inspection by Bondholders. The Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such Supplemental Indenture when consented to and approved as provided in this Section 1002. If the Holders of not less than 2/3 in aggregate principal amount of the Bonds Outstanding at the time of the execution of any such Supplemental Indenture shall have consented to and approved the execution thereof as herein provided, no Holder of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the City from executing the same or from taking any action pursuant to the provisions thereof. Section 1003. Effect of Supplemental Indentures. Upon the execution of any Supplemental Indenture entered into pursuant to Section 1001 or 1002 hereof, this Indenture shall be deemed to be modified and amended in accordance therewith. 4827-9893-8625.6 44 rN TICLE XI F9 3, TIATIM-TUT299-f YNXIM YOU My, I- 31-TITITIM-WIT111 2N5 W." Notwithstanding any provision to the contrary contained in this Indenture, so long as the 2006A Bond Policy and/or the 2006A Reserve Policy remain in full force and effect (or any amounts are owed to the 2006A Insurer in connection therewith), the provisions of this Article XI shall control where applicable. Section 1101. Consents, Approvals and Directions of 2006A Insurer. (a) The 2006A _Insurer shall be deemed to be the sole Holder of the Series 2006A- Bonds for the purpose of exercising any voting right or privilege or giving any direction or taking any other action that the Holders of the Series 2006A Bonds are entitled to take pursuant tot Article VIII of this Indenture or relating to the duties and obligations of the Trustee set forth in Article IX of this Indenture. (b) Any amendment, supplement, modification to, or waiver of, this Indenture or any other document relating to the issuance of, of security for, the Series 2006A Bonds (each a "Related Document"), that requires the consent of Bondholders or adversely affects the rights and interests of the 2006A Insurer shall be subject to the prior written consent of the 2006A Insurer. (c) The rights granted to the 2006A Insurer under this Indenture or any other Related Document to request, consent to or direct any action are rights granted to the 2006A Insurer in consideration of its issuance of the 2006A Bond Policy and the 2006A Reserve Policy. Any exercise by the 2006A Insurer of such rights is merely an exercise of the 2006A Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit, or on behalf, of the Bondholders and such action does not evidence any position of the 2006A Insurer, affirmative or negative, as to whether the consent of the Bondholders or any other person is required in addition to the consent of the 2006A Insurer. (d) No contract shall be entered into or any action taken by which the rights of the 2006A Insurer or security for or sources of payment of the 2006A Bonds may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of the 2006A Insurer. (e) Notwithstanding the provisions of Section 801(c) hereof, no grace period for a covenant default shall exceed thirty (30) days or be extended for more than sixty (60) days, without the prior written consent of the 2006A Insurer. No grace period shall be permitted for payment defaults under Section 801(a) or (b) hereof. (f) Notwithstanding the provisions of Section 802 hereof, the Series 2006A Bonds shall not be accelerated without the consent of the 2006A Insurer and in the event the Series 2006A Bonds are accelerated, the 2006A Insurer may elect, in its sole discretion, to pay accelerated principal and interest accrued, on such principal to the date of acceleration (to the extent unpaid by the City) and the Trustee shall be required to accept such amounts. Upon payment of such accelerated principal and interest accrued to the acceleration date as provided 4827-9893-8625.6 45 above, the 2006A Insurer's obligations under the 2006A Bond Policy with respect to such Series 2006A Bonds shall be fully discharged. (g) Unless the 2006A Insurer otherwise directs, upon the occurrence and continuance of an Event of Default or an event which with notice or lapse of time would constitute an Event of Default, amounts on deposit in the Project Fund relating to the Series 2006A Bonds shall not be disbursed, but shall instead be applied to the payment of debt service or redemption price of the Series 2006A Bonds. (h) The prior written consent of the 2006A Insurer shall be a condition precedent to the deposit of any credit instrument provided in lieu of a cash deposit into the Series 2006A Account of the Debt Service Reserve Fund, if any. Notwithstanding anything to the contrary set forth in this Indenture, amounts on deposit in the Series 2006A Account of the Debt Service Reserve Fund shall be applied solely to the payment of debt service due on the Series 2006A Bonds. (i) Upon the occurrence of an extraordinary optional, special or extraordinary mandatory redemption of the Series 2006A Bonds in part in accordance with the provisions of Article III hereof, the selection of Series 2006A Bonds to be redeemed shall be subject to the approval of the 2006A Insurer. The exercise of any provision of this Indenture which permits the purchase of Series 2006A Bonds in lieu of redemption shall require the prior written approval of the 2006A Insurer if any Series 2006A Bond so purchased is not cancelled upon purchase. (j) In determining whether any amendment, consent, waiver or other action to be taken, or any failure to take action, under this Indenture would adversely affect the security for the Series 2006A Bonds or the rights of the Bondholders, the Trustee shall consider the effect of any such amendment, consent, waiver, action or inaction as if there were no 2006A Bond Policy. Section 1102. Disclosures to 2006A Insurer. (a) The 2006A Insurer shall be provided with the following information by the City or the Trustee, as the case may be: (i) Annual audited financial statements within 180 days after the end of the City's fiscal year (together with a certification of the City that it is not aware of any default or Event of Default under the Indenture), and the City's annual budget within 30 days after the approval thereof together with such other information, data or reports as the 2006A Insurer shall reasonably request from time to time; (ii) Notice of any draw upon the Debt Service Reserve Fund within two (2) Business Days after knowledge thereof other than (i) withdrawals of amounts in excess of the Reserve Requirement and (ii) withdrawals in connection with a refunding of Bonds; (iii) Notice of any default known to the Trustee or the City within five (5) Business Days after knowledge thereof; (iv) Prior notice of the advance refunding or redemption of any of the Series 2006A Bonds, including the principal amount, maturities and CUSIP numbers thereof; 4827-9893-8625.6 46 (v) Notice of the resignation or removal of the Trustee and Bond Registrar and the appointment of, and acceptance of duties by, any successor thereto; (vi) Notice of the commencement of any proceeding by or against the City commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding"); (vii) Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Series 2006A Bonds; (viii) A full original transcript of all proceedings relating to the execution of any amendment, supplement, or waiver to this Indenture or the Related Documents; and (ix) All reports, notices and correspondence to be delivered to Bondholders under the terms of this Indenture or the Related Documents. (b) The notice address of the 2006A Insurer is: Financial Security Assurance Inc., 31 West 52nd Street, New York. New York 10019, Attention: Managing Director --Surveillance, Re: Policy No. 207605-N, Telephone: (212) 826-0100; Telecopier: (212) 339-3556. In each case in which notice or other communication refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED." Section 1103. Defeasance and Discharge of Series 2006A Bonds. (a) Only (1) cash, (2) non -callable direct obligations of the United States of America ("Treasuries"), (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (4) subject to the prior written consent of the 2006A Insurer, pre -refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively, or (5) subject to the prior written consent of the 2006A Insurer, securities eligible for "AAA" defeasance under then existing criteria of S&P or any combination thereof, shall be used to effect defeasance of the Series 2006A Bonds unless the 2006A Insurer otherwise approves. (b) To accomplish defeasance of the Series 2006A Bonds, the City shall cause to be delivered (i) a report of an independent firm of nationally recognized certified public accountants or such other accountant as shall be acceptable to the 2006A Insurer ("Accountant") verifying the sufficiency of the escrow established to pay the Series 2006A Bonds in full on the maturity or redemption date ('Verification"), (ii) an Escrow Deposit Agreement (which shall be acceptable in form and substance to the 2006A Insurer), (iii) an opinion of nationally recognized bond counsel to the effect that the Series 2006A Bonds are no longer Outstanding under the Indenture, and (iv) a certificate of discharge of the Trustee with respect to the Series 2006A Bonds; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the City, the Trustee and 2006A Insurer. The 2006A Insurer shall be provided with final drafts of 4827-9893-8625.6 47 00) the above -referenced documentation not less than five (5) Business Days prior to the funding of the escrow. (c) Series 2006A Bonds shall be deemed Outstanding under the Indenture unless and until they are in fact paid and retired or the above criteria are met. Section 1104. Claims Upon 2006A Bond Policy and Payments by and to 2006A Insurer. (a) If, on the third Business Day prior to the related scheduled interest payment date or principal payment date with respect to the Series 2006A Bonds ("Payment Date") there is not on deposit with the Trustee, after making all transfers and deposits required under this Indenture, moneys sufficient to pay the principal of and interest on the Series 2006A Bonds due on such Payrnent Date, the Trustee shall give notice to the 2006A Insurer ani to its designated -agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and interest on the Series 2006A Bonds due on such Payment Date, the Trustee shall make a claim under the 2006A Bond Policy and give notice to the 2006A Insurer and the Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the Series 2006A Bonds and the amount required to pay principal of the Series 2006A Bonds, confirmed in writing to the 2006A Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the 2006A Bond Policy. (b) The Trustee shall designate any portion of payment of principal on the Series 2006A Bonds paid by the 2006A Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Series 2006A Bonds registered to the then current Bondholder, whether DTC or its nominee or otherwise, and shall issue a replacement Series 2006A Bond to the 2006A Insurer, registered in the name of the 2006A Insurer in a principal amount equal to the amount of principal so paid (without regard to authorized denominations): provided that the Trustee's failure to so designate any payment or issue any replacement Series 2006A Bond shall have no effect on the amount of principal or interest payable by the City on any Series 2006A Bond or the subrogation rights of the 2006A Insurer. (c) The Trustee shall keep a complete and accurate record of all funds deposited by the 2006A Insurer into the Policy Payments Account (defined below) and the allocation of such funds to payment of interest on and principal of any Series 2006A Bond. The 2006A Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Trustee. (d) Upon payment of a claim under the 2006A Bond Policy, the Trustee shall establish a separate special purpose trust account for the benefit of the Holders of the Series 2006A Bonds referred to herein as the "Policy Payments Account" and over which the Trustee shall have exclusive control and sole right of withdrawal. The Trustee shall receive any amount paid under the 2006A Bond Policy in trust on behalf of the Holders of the Series 2006A Bonds and shall deposit any such amount in the Policy Payments Account and distribute such amount 4827-9893-8625.6 48 only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Trustee to Holders of the Series 2006A Bonds in the same manner as principal and interest payments are to be made with respect to the Series 2006A Bonds under the sections hereof regarding payment of the Series 2006A Bonds. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Notwithstanding anything herein to the contrary, the City agrees to pay to the 2006A Insurer (i) a sum equal to the total of all amounts paid by the 2006A Insurer under the 2006A Bond Policy (the "Insurer Advances"); and (ii) interest on such Insurer Advances from the date paid by the 2006A Insurer until payment thereof in full, payable to the 2006A Insurer at the Late Payment Rate per annum (collectively, the "Insurer Reimbursement Amounts'). "Late Payment Rate" means the lesser of (a) the greater of (i) the per annum rate- of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate (any change in such rate of interest to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the Series 2006A Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. The City hereby covenants and agrees that the Insurer Reimbursement Amounts are secured by a lien on and pledge of the Trust Estate and payable from such Trust Estate on a parity with debt service due on the Series 2006A Bonds. (e) Funds held in the Policy Payments Account shall not be invested by the Trustee and may not be applied to satisfy any costs, expenses or liabilities of the Trustee. Any funds remaining in the Policy Payments Account following a Payment Date with respect to the Series 2006A Bonds shall promptly be remitted to the 2006A Insurer. (f) Amounts paid by the 2006A Insurer under the 2006A Bond Policy shall not be deemed paid for purposes of the Indenture and the Series 2006A Bonds relating to such payments shall remain Outstanding and continue to be due and owing until paid by the City in accordance with the Indenture. The Indenture shall not be discharged unless all amounts due or to become due to the 2006A Insurer have been paid in full or duly provided for. (g) The 2006A Insurer shall, to the extent it makes any payment of principal of or interest on the Series 2006A Bonds, become subrogated. to the rights of the recipients of such payments in accordance with the terms of the 2006A Bond Policy. Each obligation of the City to the 2006A Insurer under the Related Documents shall survive discharge or termination of such Related Documents. (h) The City shall pay or reimburse the 2006A Insurer any and all charges, fees, costs and expenses that the 2006A Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in any Related Document; (ii) the pursuit of any remedies under the Indenture or any other Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Indenture or any other Related Document whether or not executed or completed, or (iv) any litigation or other dispute in connection with the Indenture or any other Related Document or the transactions contemplated thereby, other than costs resulting from the failure of the 2006A Insurer to honor its obligations under the 2006A Bond Policy or 2006A 4827-9893-8625.6 49 Reserve Policy. The 2006A Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Indenture or any other Related Document. (i) The 2006A Insurer shall be entitled to pay principal or interest on the Series 2006A Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the City (as such terms are defined in the Insurance Policy) and any amounts due on the Series 2006A Bonds as a result of acceleration of the maturity thereof in accordance with the Indenture, whether or not the 2006A Insurer has received a Notice of Nonpayment (as such terms are defined in the Insurance Policy) or a claim upon the 2006A Bond Policy. -Section 1105. Provisions Relating to Additional Bonds. (a) - The principal on any Additional Bonds issued under the Indenture (other than RLF Loans) shall be payable on November 1 of the years provided in the Supplemental Indenture authorizing such Additional Bonds. (b) As a condition to the issuance of Additional Bonds secured on a parity basis with the Series 2006A Bonds, the City shall provide to the 2006A Insurer a copy of certified cash flows evidencing that the Existing Indebtedness will be repaid in full no later than November 1, 2014. Such cash flows shall assume that all of the permitted Existing Indebtedness unissued on the date the cash flows are provided has in fact been issued. Alternatively, the City may covenant to the 2006A Insurer not to issue all or any portion of the unissued Existing Indebtedness and omit that portion of the Existing Indebtedness from the cash flows. (c) Notwithstanding satisfaction of the other conditions to the issuance of Additional Bonds set forth in Article II of this Indenture, no such issuance may occur (1) if an Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) exists unless such default shall be cured upon such issuance and (2) unless the Debt Service Reserve Fund is fully funded at the Reserve Requirement (including the Reserve Requirement relating to the proposed issue) upon the issuance of such Additional Bonds, in either case unless otherwise permitted by the 2006A Insurer. (d) In addition to the coverage required in Section 212 hereof relating to the issuance of Additional Bonds, the Certificate delivered by the Finance Director shall also show coverage of at least one times on Policy Costs then due and owing. (e) With respect to drawdowns on RLF Loans as permitted by Section 212 hereof, the Certificate of the Finance Director required therein shall be modified to certify that, based upon the most recent twelve (12) months of Sales and Use Tax collections (i) receipts of the 0.25% Sales and Use Tax were not less than 125% of the maximum Annual Debt Service for each of the years ending November, 1, 2007 through November 1, 2015, on all the Outstanding Bonds and any RLF Loan theretofore incurred, plus the amount of the additional RLF Loan to be incurred, and (ii) receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax were not less than 125% of the maximum Annual Debt Service for each of the years ending November 1, 2016 and thereafter, on all then Outstanding Bonds and any RLF Loan theretofore incurred, plus the amount of the additional RLF Loan to be incurred. All other provisions of Section 212 relating 4827-9893-8625.6 50 to drawdowns under RLF Loans shall continue to be applicable, and the modification set forth above shall not relate to the issuance of Additional Bonds. Section 1106. Miscellaneous Provisions Relating to 2006A Bond Policy. (a) Unless the 2006A Insurer shall otherwise consent, the City hereby covenants not to issue any debt secured by a lien on the Existing Tax except for (i) the approximately $76,000,000 outstanding principal amount of Existing. Indebtedness currently secured thereby, and (ii) up to $15,000,000 principal amount of additional Existing Indebtedness in the form of an RLF Loan bearing interest at a rate not in excess of 3% (collectively, the "Prior Debt"). (b) The City hereby covenants not to amend (i) the mandatory redemption provisions for the Prior Debt or (ii) any provisions relating to coverage or other regairements associated with the issuance of additional indebtedness that constitutes Prior Debt. (c) The City and the Trustee covenant and agree to take such action (including, as applicable, filing of UCC financing statements and continuations thereof) as is necessary from time to time to preserve the priority of the pledge of the Trust Estate under applicable law. (d) After payment of reasonable expenses of the Trustee, the application of funds realized upon a default shall be applied to the payment of expenses of the City or to rebate only after that payment of past due and current debt service on the Series 2006A Bonds and amounts required to restore the Series 2006A Account of the Debt Service Reserve Fund to the level of the applicable Reserve Requirement. (e) The 2006A Insurer is hereby declared to be a third party beneficiary to this Indenture. Section 1107. 2006A Reserve Policy Provisions. (a) The City shall repay any draws under the 2006A Reserve Policy and pay all related reasonable expenses incurred by the 2006A Insurer relating thereto. Interest shall accrue and be payable on such draws and expenses from the date of payment by the 2006A Insurer at the Late Payment Rate. "Late Payment Rate" means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate ("Prime Rate") (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the Series 2006A Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such national bank as the 2006A Insurer shall specify. (b) Repayment of draws and payment of expenses relating to the 2006A Reserve Policy and accrued interest thereon at the Late Payment Rate (collectively, "Reserve Policy Costs") shall commence in the first month following each draw, and each such monthly payment shall be in an amount at least equal to 1/12 of the aggregate of Reserve Policy Costs related to 011 such draw. 4827-9893-8625.6 54 (c) Amounts in respect of Reserve Policy Costs paid to the 2006A Insurer shall be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to the 2006A Insurer on account of principal due, the coverage under the 2006A Reserve Policy will be increased by a like amount, subject to the terms of the 2006A Reserve Policy. (d) All cash and investments in the Series 2006A Account of the Debt Service Reserve Fund established for the Series 2006A Bonds (the "Reserve Fund") shall be transferred to the Bond Fund for payment of debt service on the Series 2006A Bonds before any drawing may be made on the 2006A Reserve Policy or any other credit facility credited to the Reserve Fund in lieu of cash ("Credit Facility"). Payment of any Reserve Policy Costs shall be made prior to replenishment of any such cash amounts. Draws on all Credit Facilities -(including the 2006A Reserve Policy) on which there is available coverage shall be made on a pro -rata basis (calculated by reference to the coverage then available thereunder) after applying all available cash and investments in the Reserve Fund. Payment of Reserve Policy Costs and reimbursement of amounts with respect to other Credit Facilities shall be made on a pro -rata basis prior to replenishment of any cash drawn from the Reserve Fund. Upon payment of the Series 2006A Bonds from amounts paid under the 2006A Reserve Policy, such Series 2006A Bonds shall be deemed to remain Outstanding under the Indenture and the 2006A Insurer shall be subrogated to the rights of the Holders of such Series 2006A Bonds. (e) If the City shall fail to pay any Reserve Policy Costs in accordance with the pw requirements of paragraphs (a), (b), (c) and (d) above, the 2006A Insurer shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under the Indenture other than (i) acceleration of the maturity of the Series 2006A Bonds or (ii) remedies which would adversely affect owners of the Series 2006A Bonds. (f) The Indenture shall not be discharged until all Reserve Policy Costs owing to the 2006A Insurer, shall have been paid in full. The City's obligation to pay such amounts shall expressly survive payment in full of the Series 2006A Bonds. (g) The Trustee is required to ascertain the necessity for a claim upon the 2006A Reserve Policy and to provide notice to the 2006A Insurer in accordance with the terms of the 2006A Reserve Policy at least five (5) Business Days prior to each date upon which interest or principal is due on the Series 2006A Bonds. The Trustee shall give notice to the 2006A Insurer of any failure of the City to make timely payment in full of required deposits to the Revenue Fund and Bond Fund within two (2) Business Days of the date due. MISCELLANEOUS Section 1201. Consents, etc. of Bondholders. Any request, direction, objection or other instrument required by this Indenture to be signed and executed by the Bondholders may be in any number of concurrent writings of similar tenor and may be signed or executed by such Bondholders in person or by agent appointed in writing. Proof of the execution of any such request, direction, objection or other instrument or of the writing appointing any such agent and 4827-9893-8625.6 52 of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any action taken by it under such request or other instrument, namely: (a) The fact and date of the execution by any Person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the Person signing such writing acknowledged before such officer the execution thereof, or by an affidavit of any witness to such execution. (b) The fact of ownership of Bonds and the amount or amounts, numbers, and other identification of such Bonds, and the date of holding the same shall -be proved by - the registration books of the City maintained by the Trustee, as Bond registrar. Section 1202. Notices. Except as otherwise provided in this Indenture, all notices, certificates or other communications shall be sufficiently given and shall be deemed given when mailed by registered or certified mail, postage prepaid, to the City or the Trustee. Notices, certificates or other communications shall be sent to the following addresses: City: City of Fayetteville City Administration Building 113 West Mountain Fayetteville, Arkansas 72701 Attention: Mayor Trustee: Simmons First Trust Company, N.A. 501 Main Street Pine Bluff, Arkansas 71601 Attention: Glenda L. Dean, Corporate Trust Either of the foregoing may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 1203. Limitation of Rights. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture, or the Bonds issued hereunder, is intended or shall be construed to give to any person or company other than the parties hereto, and the Holders of the Bonds secured by this Indenture any legal or equitable rights, remedy, or claim under or in respect to this Indenture or any covenants, conditions, and provisions hereof being intended to be and being for the sole exclusive benefit of the parties hereto and the Holders of the Bonds hereby secured as herein provided. Section 1204. Severability. If any provisions of this Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to any extent whatever. 4827-9893-8625.6 53 001) The invalidity of any one or more phrases, sentences, clauses or paragraphs in this Indenture contained shall not affect the remaining portions of this Indenture or any part thereof. Section 1205. Applicable Provisions of Law. This Indenture shall be considered to have been executed in the State of Arkansas and it is the intention of the parties that the substantive law of the State of Arkansas govern as to all questions of interpretation, validity and effect. Section 1206. Counterparts. This Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 1207. Successors and Assigns. All the covenants, stipulations, provisions, agreements, rights, remedies and claims of the parties hereto in this Indenture contained shall bind and inure to the benefit of their successors and assigns. Section 1208. Captions. The captions or headings in this Indenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Indenture. Section 1209. Photocopies and Reproductions. A photocopy or other reproduction of this Indenture may be filed as a financing statement pursuant to the Uniform Commercial Code, although the signatures of the City and the Trustee in such reproduction are not original manual ORN signatures. Section 1210. Bonds Owned by the City. In determining whether Bondholders of the requisite aggregate principal amount of the Bonds have concurred in any direction, consent or waiver under this Indenture, Bonds which are owned by the City shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Bonds which the Trustee knows are so owned shall be so disregarded. Bonds so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Bonds and that the pledgee is not the City. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 4827-9893-8625.6 54 110-1 IN WITNESS WHEREOF, the City has caused these presents to be signed in its name and behalf by its Mayor and its corporate seal to be hereunto affixed and attested by its City Clerk, and, to evidence its acceptance of the trust hereby created, the Trustee has caused these presents to be signed in its behalf by its duly authorized officers and its corporate seal to be hereto affixed. ATTEST: IQC21�� City Clerk (SEAL)It ERWrR wVo ®7D; ° FNYETTEVILLE o �® ° q s®9,QkA14 J�o`r ���nrrufu+ecce ATTEST: By: ` i� Title: Asst. VP & Corporate Trust Officer (SEAL) Q' �PORq •: 70 C o rF . ar: ° ® _ SEAL 4827-9893-8625.4 CITY OF FAYETTEVILLE, ARKANSAS SIMMONS FIRST TRUST COMPANY, N.A., as Trust By: Title: Corporate Trust Officer STATE OF ARKANSAS ss. COUNTY OF WASHINGTON Before me a Notary Public, duly commissioned, qualified and acting within and for the State and county aforesaid, appeared in person the within named Dan Coody and Sondra Smith, Mayor and City Clerk, respectively, of the City of Fayetteville, Arkansas, to me personally known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the City, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this � day of November, 2006. Notary Public My Commission expires: QQ.-N- a00r7 (SEAL) OFFICIAL L Kelly S. Thomas NOTARY PUBLIC - ARKANSAS WASHINGTON COUNTY EXPIRES 02/14/2007 [ACKNOWLEDGEMENT TO TRUST INDENTURE] 4827-9893-8625.6 0 • .� � ��� rlfif� 7 • u`!7 �i��� 111 STATE OF ARKANSAS ) ) ss. COUNTY OF JEFFERSON ) Before me a Notary Public, duly commissioned, qualified and acting within and for the State and county aforesaid, appeared in person the within named Glenda L. Dean and Rita Gronwald, the Corporate Trust Officer and the Assistant Vice President & Corporate Trust Officer, respectively, of Simmons First Trust Company, N.A., to me personally known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the Trust Company, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this � day of November, 2006. My Commission expires: .�-17-ono SEAL' 4827-9893-8625.4 e Notary Public [ACKNOWLEDGEMENT TO TRUST INDENTURE] 07 I X.74 _So : 172, 1 to , 01011. L X11It Form of Series 2006A Bond Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SERIES 2006A Interest Rate: % Date of Bond: November 1, 2006 Registered Owner: CEDE & CO. Principal Amount: KNOW ALL MEN BY THESE PRESENTS: REGISTERED Maturity Date: November 1, 20_ CUSIP: DOLLARS That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing November 1, 2007, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment. date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or 4827-9893-8625.6 A. i draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2006A", is one of a series of bonds aggregating Fifty Million Dollars ($50,000,000) (the `Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of (i) the acquisition, construction, reconstruction, extension, improving and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities (the "Wastewater Project"), (ii) the acquisition, construction, reconstruction, repair, straightening and widening of certain City streets and related improvements (the "Street Project"), (iii) the acquisition, construction and equipping of certain City trail system improvements (the "Trail Project," and together with the Wastewater Project and the Street Project, the "Projects"). Bond proceeds will be utilized to pay Project costs, to fund a debt service reserve, to purchase a policy of municipal bond insurance, and to pay the costs of issuance of the Bonds. The Bonds are issued under and are secured by and entitled to the protection of a Trust Indenture dated as of November 1, 2006 (the "Indenture"), by and between the City and the Trustee, which Indenture is available for inspection at the principal corporate trust office of the Trustee. Reference is hereby made to the Indenture and to all indentures supplemental thereto for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the City, the Trustee and the owners of the Bonds, and the terms upon which the Bonds are issued and secured. The Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas, including particularly Amendment No. 62 to the Constitution of Arkansas, as implemented by the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2005) §§14-164-301 et seq. (as from time to time amended, the "Local Government Bond Act"), Ordinance No. 4936 of the City adopted October 3, 2006, which ordinance authorized the execution and delivery of the Indenture, and a special election duly held on September 12, 2006, at which a majority of the qualified electors of the City voting approved the issuance of the Bonds. In accordance with the Local Government Bond Act, the City has pledged all receipts from (i) a one-quarter of one percent (0.25%) local sales and use tax (the "0.25% Sales and Use Tax") and (ii) a three-quarters of one percent (0.75%) local sales and use tax (the "0.75% Sales and Use Tax"), each levied by the City pursuant to Ordinance No. 4891, adopted by the City on June 20, 2006, to provide funds for the repayment of the Bonds. The pledge of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax (collectively, the "Tax Receipts") presently secure payment of the Bonds only, but such Tax Receipts may additionally be pledged to secure the payment of up to $60,000,000 in aggregate principal amount of (i) Additional Bonds issued under the provisions of the Indenture and (ii) loans obtained under the Arkansas Natural Resources Commission Revolving Loan Program ("RLF Loans"). The Indenture provides that the City may hereafter issue Additional Bonds and incur RLF Loans from time to time under certain terms and conditions contained in the Indenture and, if issued or incurred, such Additional Bonds and RLF Loans will rank on a parity of security with the Bonds and be equally and ratably secured by and entitled to the protection of the Indenture (except that RLF Loans will not be secured by the debt service reserve). 4827-9893-8625.6 A-2 The Bonds are not general obligations of the City, but are special obligations secured by an irrevocable pledge of and lien on the Tax Receipts, as more particularly described in the Indenture. In no event shall the Bonds constitute an indebtedness of the City within the meaning of any constitutional or statutory limitation. Financial Security Assurance Inc. ("Financial Security"), New York, New York, has delivered its municipal bond insurance policy with respect to the scheduled payments due of principal of and interest on this Bond to Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor, as paying agent for the Bonds (the "Paying Agent"). Said Policy is on file and available for inspection at the principal office of the Paying Agent and a copy thereof may be obtained from Financial Security or the Paying Agent. The holder of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds and Additional Bonds, if any, issued under the Indenture and then outstanding may be declared and may become due and payable before the stated maturity thereof, together with accrued interest thereon. Modifications or alterations of the Indenture, or of any indenture supplemental thereto, may be made only to the extent and in the circumstances permitted by the Indenture. The Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from Project Fund moneys in excess of the amount needed to complete the Projects. The Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption; from Surplus Tax Receipts. "Surplus Tax Receipts" are Tax Receipts in excess of the amount necessary to (i) insure the prompt payment of scheduled debt service on the Bonds, Additional Bonds and any RLF Loan, (ii) maintain the debt service reserve fund at the required level, (iii) pay any arbitrage rebate due under Section 148(f) of the Internal Revenue Code of 1986, as amended, with respect to the Bond or any Additional Bonds, and (iv) pay the fees and expenses of the Trustee and any paying agent. Upon the issuance of any series of Additional Bonds, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Bonds and the remaining 50% of such Surplus Tax Receipts shall be allocated to the various series of Additional Bonds in such proportion as shall be set forth in a Supplemental Indenture. The Bonds are subject to redemption at the option of the City, communicated in a written notice to the Trustee not less than sixty (60) days prior to the date fixed for redemption, in whole or in part on any date on or after November 1, 2016, in inverse order of maturity and by lot in 4827-9893-8625.6 A-3 such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed plus accrued interest to the date of redemption. Notwithstanding the foregoing, so long as DTC or its nominee is the sole registered owner of the Bonds, the particular Bonds or portions thereof to be redeemed in part within a maturity shall be selected by lot by DTC in such manner as DTC shall determine. In selecting Bonds for redemption prior to maturity, in the case any outstanding Bond is in a denomination greater than $5,000, each $5,000 of face value of such Bond shall be treated as a separate Bond of the denomination of $5,000. In the event any of the Bonds or portions thereof (which shall be $5,000 or any integral multiple thereof) are called for redemption, notice thereof shall be given by the Trustee by -first- class mail to the registered owner of each such Bond addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure to give such notice by mailing, or any defect therein, shall not affect the validity of the proceedings for the redemption of any Bond with respect to which no such failure or defect has occurred. Each notice shall identify the Bonds or portions thereof being called, and the date on which they shall be presented for payment. After the date specified in such call notice, the Bond or Bonds so called for redemption will cease to bear interest provided funds sufficient for their redemption have been deposited with the Trustee, and, except for the purpose of payment, shall no longer be protected by the Indenture and shall not be deemed to be outstanding under the provisions of the Indenture. This Bond may be transferred on the books of registration kept by the Trustee by the registered owner or by his duly authorized attorney upon surrender hereof, together with a written instrument of transfer duly executed by the registered owner or his duly authorized attorney. The Bonds are issuable as registered bonds without coupons in denominations of $5,000 and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations. No recourse shall be had for the payment of the principal of or premium, if any, or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Bonds or the Indenture against any past, present or future alderman, officer or employee of the City, or any successor, as such, either directly or through the City or any successor of the City, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such alderman, officer or employee as such is hereby expressly waived and released as a condition of and consideration for the issuance of any of the Bonds. This Bond is issued with the intent that the laws of the State of Arkansas will govern its construction. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the Bonds 4827-9893-8625.6 A-4 do exist, have happened and have been performed in due time, form and manner as required by law; that the indebtedness represented by the Bonds, together with all obligations of the City, does not exceed any constitutional or statutory limitation; and that the revenues pledged to the payment of the principal of and premium, if any, and interest on the Bonds as the same become due and payable will be sufficient in amount for that purpose. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture until the Certificate of Authentication hereon shall have been signed by the Trustee. IN WITNESS WHEREOF, the City of Fayetteville, Arkansas has caused this Bond to be executed by its Mayor and tCity Clerk, thereunto. duly authorized (by their manual or facsimile signatures), and its corporate seal to be affixed or imprinted hereon, all as of the date hereof shown above. CITY OF FAYETTEVILLE, ARKANSAS Mayor ATTEST: By: City Clerk (SEAQ 4827-9893-8625.6 A-5 0 (Form of Trustee's Certificate) This bond is one of the Bonds of the issue described in and issued under the provisions of the within mentioned Indenture. Attached hereto is the complete text of the opinion of Kutak Rock LLP, a signed original of which is on file with the undersigned, delivered and dated the date of the original delivery of and payment for the Bonds. SIMMONS FIRST TRUST COMPANY, N.A., as Trustee By: Authorized Signature 4827-9893-8625.6 A-6 C (Form of Assignment) FOR VALUE RECEIVED, , hereby sells, assigns, and transfers unto , the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. DATE: , 20 Transferor GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by an institution satisfactory to the Trustee or other transfer agent. 4827-9893-8625.6 A-7 EXHIBIT B TO TRUST INDENTURE COVERAGE CERTIFICATE City of Fayetteville, Arkansas Series 2006A Sales and Use Tax Capital Improvement Bonds Date: TO: Simmons First Trust Company, as Trustee This certificate is provided pursuant to the provisions of Section 212 of the Trust Indenture dated as of November 1, 2006 (the "Indenture"), by and between the City of Fayetteville, Arkansas (the "Issuer") and you, as trustee, in connection with (i) the proposed issuance of Additional Bonds or (ii) a drawdown under an RLF Loan. In connection with such issuance or drawdown, the undersigned certifies as follows: (a) Receipts of the 0.25% Sales and Use Tax for preceding twelve (12) months: $ (b) Maximum Annual Debt Service For each of the years ending 11/1/07 through 11/1/14 on all Outstanding Bonds and RLF Loans, plus (i) the proposed Additional Bonds or (ii) following the drawdown on the RLF Loan: $ (c) (a) divided by (b) _ % (which is greater than 125%) and (d) Receipt of the Sales and Use Taxes for preceding twelve (12) months*: $ (e) Maximum Annual Debt Service for each of the years ending 11/1/15 and thereafter on all Outstanding Bonds and RLF Loans, plus (i) the proposed Additional Bonds or (ii) following the drawdown on the RLF Loan: $ (f) (d) divided by (e) _ % (which is greater than 125%) *Receipt of the Existing Tax (as defined in the Indenture) may be included as receipts of the 0.75% Sales and Use Tax for all or any portion of the most recent twelve (12) month period during which the 0.75% Sales and Use Tax (as defined in the Indenture) was not being collected. 4827-9893-8625.6 B-1 0 The undersigned hereby certifies that he is authorized to deliver this Certificate on behalf of the Issuer. No Event of Default exists under the Indenture and, to the knowledge of the undersigned, no event has occurred and continues which with notice or lapse of time or both would constitute an Event of Default under the Indenture. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture. 1 ON 4827-9893-8625.6 2 Finance Director 0 ENJIMIT C TO TRUST E14DENTURE REQUISITION City of Fayetteville, Arkansas Series 2006A Sales and Use Tax Capital Improvement Bonds Date: Requisition No.: TO: Simmons First Trust Company, as Trustee Pursuant to the provisions of Section 502 of the Trust Indenture dated as of November 1, 2006 (the "Indenture"), by and between the City of Fayetteville, Arkansas (the "Issuer") and you, as trustee, you are authorized to make the following described payment directly to the Payee named below from the Account of the Project Fund: Name and Address of Payee: Amount of Payment: $ General Classification of the Expenditures: The undersigned hereby certifies that he is authorized to deliver this Requisition on behalf of the Issuer. The amount requested hereunder has not been the basis for any previous Requisition by the Issuer and is justly due and owing to the person(s) named herein as a proper payment or reimbursement of a Project Cost with respect to the Project. No Event of Default exists under the Indenture and, to the knowledge of the undersigned, no event has occurred and continues which with notice or lapse of time or both would constitute an Event of Default under the Indenture. CaZ� !`moi : ' � � �% !I a _ . _. ►� Authorized Representative 4827-9893-8625.6 C-1 D Fn 3 to SIMMONS FIRST T TRUST COMPANY, N.A. as Trustee Dated as of October 1, 2007 EXECUTION COPY This First Supplemental Trust Indenture supplements and amends a Trust Indenture dated as of November 1, 2006, by and between the City of Fayetteville, Arkansas and Simmons First Trust Company, N.A., as Trustee. The Trust Indenture, as supplemented and amended hereby, secures the City's $50,000,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2006A, and the City's $14,340,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2007. 4848-3917-7473.4 Prepared by: Kutak Rock LLP 124 West Capitol Avenue, Suite 2000 Little Rock, Arkansas 72201 FIRST SUPPLEMENTAL TRUST INDENTURE THIS FIRST SUPPLEMENTAL TRUST INDENTURE dated as of October 1, 2007, by and between the CI'T'Y OF FAYETTEVILLE, ARKANSAS (the "City'), a city of the first class organized under and existing by virtue of the laws of the State of Arkansas, and SIMMONS FIRST TRUST COMPANY, N.A., as trustee (the "Trustee"), a national banking association organized under and existing by virtue of the laws of the United States of America and having its principal corporate trust office located in Pine Bluff, Arkansas; WITNESSETII: WHEREAS, the City Council of the City has previously determined that there is a great need for a source of revenue to finance all or a portion of the costs of (i) the acquisition, construction, reconstruction, extension, improving and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities (the "Wastewater Project"), (ii) the acquisition, construction, reconstruction, repair, straightening and widening of certain City streets and related improvements (the "Street Project"), and (iii) the acquisition, construction and equipping of certain City trail system improvements (the "Trail Project"); and WHEREAS, the people of the State of Arkansas (the "State") by the adoption of Amendment No. 62 to the Constitution of the State, approved November 6, 1984 ("Amendment 62"), have authorized cities and counties in the State to issue bonds, upon voter approval, to finance certain capital improvements of a public nature, and to secure said bonds by a pledge of the proceeds of certain taxes; and WHEREAS, the provisions of Amendment 62 have been implemented by the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2005) Sections 14-164-301 et seq. (as from time to time amended, the "Act"); and WHEREAS, pursuant to the provisions of Ordinance No. 4891, duly adopted by the City Council of the City on June 20, 2006 (the "Election Ordinance"), there was submitted to the qualified electors of the City four questions regarding the issuance of an aggregate of not to exceed $110,000,000 in principal amount of capital improvement bonds pursuant to Amendment 62 and the Act to finance the capital improvements described in the Election Ordinance, including the Wastewater Project, the Street Project and the Trail Project; and WHEREAS, pursuant to the Election Ordinance, said capital improvement bonds are to be secured by a pledge of and lien upon (i) all of the receipts of a special city-wide sales and use tax at the rate of one-quarter of one percent (0.25%) (the "0.25% Sales and Use Tax"), and (ii) all of the receipts of a special city-wide sales and use tax at the rate of three-quarters of one percent (0.75%) (the "0.75% Sales and Use Tax"), each levied pursuant to the Act; and WHEREAS, at a special election held September 12, 2006, a majority of the qualified electors of the City voting on each of the aforementioned questions approved the issuance of capital improvement bonds in the principal amounts and for the specific purposes set forth on the ballot (and the corresponding levy of the 0.25% Sales and Use Tax and the 0.75% Sales and Use 4848-3917-7473.4 Tax, and the pledge of the receipts thereof to the payment of said capital improvement bonds); and WHEREAS, pursuant to the provisions of Ordinance No. 4936 of the City, adopted and approved by the City Council on October 3, 2006, and in accordance with Amendment 62 and the Act, the City has previously issued its $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), for the purpose of financing a portion of the costs of the Wastewater Project, the Street Project and the Trail Project; and WHEREAS, the City and the Trustee have previously entered into a Trust Indenture dated as of November 1, 2006 (the "Original Indenture"), pursuant to which the Series 2006A Bonds were issued and secured; and WHEREAS, in order to secure additional funds to pay a portion of the costs of another component of the Wastewater Project, to fund a debt service reserve, and to pay legal and other expenses incidental to the issuance of sales and use tax capital improvement bonds for such purposes, it has been determined appropriate and necessary that the City authorize the issuance of its $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), pursuant to the provisions of Amendment 62 and the Act, such Series 2007 Bonds to be payable from and secured by a pledge of the receipts of the Sales and Use Taxes (as defined in the Original Indenture) on a parity with the pledge of the receipts of the Sales and Use Taxes securing the Series 2006A Bonds; and WHEREAS, the conditions for the issuance of Additional Bonds, as set forth in the Original Indenture, have been satisfied; and WHEREAS, the regularly scheduled payment of principal of and interest on the Series 2007 Bonds when due will be guaranteed under an insurance policy (the "2007 Bond Policy") to be issued concurrently with the delivery of the Series 2007 Bonds by Financial Security Assurance Inc. (the "2007 Insurer"); and WHEREAS, the Series 2007 Bonds are to be dated, bear interest, mature and be subject to redemption as hereinafter in this First Supplemental Trust Indenture set forth in detail; and WHEREAS, the execution and delivery of this First Supplemental Trust Indenture and the issuance of the Series 2007 Bonds have been in all respects duly and validly confirmed, authorized and approved by Ordinance No. 5054 adopted and approved by the City Council of the City on August 23, 2007; and WHEREAS, all things necessary to make the Series 2007 Bonds, when authenticated by the Trustee and issued as in this First Supplemental Trust Indenture provided, the valid, binding and legal obligations of the City according to the import thereof, and to constitute the Indenture (as defined below) a valid pledge of the receipts of the Sales and Use Taxes to the payment of the principal of, premium, if any, and interest on the Series 2006A Bonds, the Series 2007 Bonds and all Additional Bonds (as defined below), if any, to be issued on a parity therewith (the Series 2006A Bonds, the Series 2007 Bonds and such Additional Bonds are hereinafter referred to as the "Bonds"), have been done and performed, and the creation, execution and delivery of this 4848-3917-7473.4 2 First Supplemental Trust Indenture and the creation, execution, issuance and delivery of the Series 2007 Bonds, subject to the terms hereof, have in all respects been duly authorized; and WHEREAS, in order to make proper provision for the security of the Series 2007 Bonds, it is necessary that the Original Indenture be amended and supplemented as effected hereby; NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THIS FIRST SUPPLEMENTAL TRUST INDENTUREWITNESSETH: Section 1.01. It is understood and agreed that the provisions of the Original Indenture shall extend to and apply to the security and benefit of the Series 2007 Bonds and that the term "Bonds" as used in the Original Indenture is hereby recognized to include and shall be deemed to refer to (where applicable) the Series 2007 Bonds. Section 1.02. Section 101 of the Original Indenture is hereby amended by adding thereto the following definitions (and by striking any definitions which are supplanted by the definitions set forth below): "Additional Bonds" mean Bonds in addition to the Series 2006A Bonds and the Series 2007 Bonds which are issued under the provisions of Section 212 of this Indenture. "Authorizing Ordinance" means, collectively, (i) Ordinance No. 4936, adopted by the City on October 3, 2006, which authorized the issuance of the Series 2006A Bonds pursuant to this Indenture, and (ii) Ordinance No. 5054, adopted by the City on August 23, 2007, which authorized the issuance of the Series 2007 Bonds pursuant to this Indenture. "2007 Bond Policy" means the insurance policy issued by the 2007 Insurer guaranteeing the scheduled payment of principal of and interest on the Series 2007 Bonds when due. "Bonds" mean the Series 2006A Bonds, the Series 2007 Bonds and all Additional Bonds issued by the City pursuant to this Indenture. Except to the extent provided in Section 209 hereof and except for refunding bonds issued under the provisions of Section 212 hereof, the aggregate principal amount of Bonds issued hereunder shall not exceed $110,000,000. "Indenture" means this Trust Indenture dated as of November 1, 2006, as amended and supplemented by a First Supplemental Trust Indenture dated as of October 1, 2007, each by and between the City and the Trustee, pursuant to which the Bonds are issued, and any further amendments and supplements thereto. "2007 Insurer" means Financial Security Assurance Inc., a New York stock insurance company, or any successor thereto or assignee thereof. "2007 Reserve Policy" means the municipal bond debt service reserve insurance policy, issued by the 2007 Insurer and deposited into the Series 2007 Account of the Debt Service Reserve Fund with respect to the Series 2007 Bonds. "Reserve Requirement" means, with respect to each series of Bonds, an amount equal to 5% of the original principal amount of such series of Bonds. For all purposes of this Indenture, 4848-3917-7473.4 3 the Reserve Requirement may be satisfied by cash or by Investment Securities, including the 2006A Reserve Policy and the 2007 Reserve Policy. "Series 2007 Bonds" means City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2007, issued under and secured by this Indenture in the aggregate principal amount of $14,340,000. Section 2.01. Section 201(c) of the Original Indenture is hereby amended and supplemented to read as follows: "(c) The Bonds shall be equally and ratably payable and secured hereunder without priority by reason of date of adoption of this Indenture or any Supplemental Indenture authorizing their issuance or by reason of their series, number, date, date of issue, execution, authentication or sale, or otherwise; provided, however, (i) while the Series 2006A Bonds are Outstanding, 50% of Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds and any other series of Additional Bonds (including RLF Loans) hereafter issued, and (ii) following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds and any other Series of Additional Bonds." Section 2.02. Section 202 of the Original Indenture is hereby amended and supplemented to read as follows: "Section 202. Authorized Amount. There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2006X" in the principal amount of Fifty Million Dollars ($50,000,000) (the "Series 2006A Bonds"). There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2007" in the principal amount of Fourteen Million Three Hundred Forty Thousand Dollars ($14,340,000) (the "Series 2007 Bonds"). No Bonds may be issued under the provisions of this Indenture except in accordance with this Article II. The total principal amount of Bonds that may be issued hereunder and any RLF Loans that may be incurred by the City is hereby expressly limited to $110,000,000, except as provided in Section 209 and except for refunding bonds issued under the provisions of Section 212 hereof." Section 2.03. Article II of the Original Indenture is hereby amended by adding at the end thereof the following sections: "Section 217. Retails of Series 2007 Bonds. The Series 2007 Bonds (i) shall be designated "City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2007," (ii) shall be in the aggregate principal amount of $14,340,000, (iii) shall be dated as of October 1, 2007, (iv) shall bear interest from such date at the ® rates hereinafter provided until paid, payable semiannually on May 1 and November 1 of each year, commencing May 1, 2008, (v) shall be issued in denominations of $5,000 4848-3917-7473.4 4 each, or any integral multiple thereof, (vi) shall be numbered from R07-1 upwards in order of issuance according to the records of the Trustee, and (vii) shall mature, unless sooner redeemed in the manner in this Indenture set forth, on November 1 in each of the years and in the amounts set forth in the following table, which table also sets forth the interest rates for the Series 2007 Bonds: Year (November 1) Principal Amount Interest Rate 2017 $2,940,000 4.000% 2018 1,060,000 4.000% 2019 1,100,000 4.100% 2020 1,145,000 4.125% 2021 1,195,000 5.000% 2022 1,255,000 5.000% 2023 1,315,000 5.000% 2024 1,385,000 4.250% 2025 1,440,000 4.250% 2026 1,505,000 4.125% Section 215. Form of Series 2007 Bonds. The Series 2007 Bonds shall be initially issued as fully registered bonds, without coupons, in the form of ten typewritten bond certificates (one for each maturity) to be delivered to the Securities Depository. ' Each such certificate shall be initially registered in the name of the nominee of the Securities Depository, and no Beneficial Owner will receive a certificate representing his interest in the Series 2007 Bonds, except upon the occurrence of the events described in Section 216 of this Indenture. Beneficial Owners shall be deemed to have waived any right to receive a bond certificate except under the circumstances described in Section 216. The Series 2007 Bonds and the Trustee's certificate of authentication to be endorsed thereon shall be in substantially the form set forth in Exhibit A to the First Supplemental Trust Indenture, with appropriate variations, insertions and omissions as permitted or required by this Indenture. Section 219. Delivery of Series 2007 Bonds. Simultaneously with the delivery of the Series 2007 Bonds, the Trustee shall apply the proceeds thereof as follows: (a) The amount, if any, received as accrued interest on the Series 2007 Bonds, shall be deposited in the Interest Account of the Bond Fund; (b) $10,755.00 shall be transferred to the 2007 Insurer in payment of the premium on the 2007 Reserve Policy, which 2007 Reserve Policy shall be deposited in the Series 2007 Account of the Debt Service Reserve Fund; (c) $74,197.30 shall be transferred to the 2007 Insurer in payment of the premium on the 2007 Bond Policy; 4848-3917-7473.4 5 (d) $14,107,048.89 shall be deposited in the Series 2007 Wastewater Subaccount of the Project Fund; and (e) The balance of said proceeds in the amount of $60,629.01 shall be deposited in the Costs of Issuance Fund for payment of Costs of Issuance of the Series 2007 Bonds as directed by a Certificate of the City." Section 3.01. Article III of the Original Indenture is hereby amended by adding at the end thereof the following section: "Section 307. Redemption of Series 2007 Bonds. (a) The Series 2007 Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from moneys in the Series 2007 Wastewater Subaccount of the Project Fund in excess of the amount needed to complete the portion of the Wastewater Project intended to be funded with the Series 2007 Bonds, which moneys shall be transferred to the Redemption Fund pursuant to Section 502 hereof. (b) The Series 2007 Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed,, plus accrued interest to the date of redemption, from Surplus Tax Receipts deposited in the Redemption Fund pursuant to Section 503 hereof. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds and any series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds and any other Series of Additional Bonds. (c) The Series 2007 Bonds are subject to redemption at the option of the City, communicated in a written notice to the Trustee not less than sixty (60) days prior to the date fixed for redemption, in whole or in part on any date on or after November 1, 2015, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed plus accrued interest to the date of redemption." (d) The Series 2007 Bonds maturing November 1, 2017 are subject to mandatory redemption, to be selected by lot in such manner as the Trustee shall determine, on November 1 in the years and the amounts set forth below, at a 4848-3917-7473.4 6 ia redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption. Date Principal Amount November 1, 2015 $ 940,000 November 1, 2016 980,000 November 1, 2017 (maturity) 1,020,000 Section 4.01. Section 501(a) of the Original Indenture is hereby amended and restated to read as follows: "(a) There are hereby created and established the following Funds and Accounts: (i) Project Fund, and a Street Account, Trail Account and Wastewater Account (with a Series 2006A Subaccount and a Series 2007 Subaccount) therein; therein; (ii) Revenue Fund; (iii) Bond Fund, and an Interest Account and a Principal Account (iv) Redemption Fund; (v) Debt Service Reserve Fund, and a Series 2006A Account and a Series 2007 Account therein; (vi) Cost of Issuance Fund; and (vii) Rebate Fund." Section 4.02. Section 503(b) of the Original Indenture is hereby amended and restated to read as follows: "(b) Upon receipt, but in no event later than the last day of each month in which receipts of the Sales and Use Taxes are deposited in the Revenue Fund, commencing no later than March 30, 2007, there shall be transferred from the Revenue Fund, in the following order, the amounts set forth below: 4848-3917-7473.4 FIRST: For deposit to the Interest Account of the Bond Fund, an amount equal to one-sixth (1/6) of the interest on the Outstanding Bonds due on the next interest payment date; provided, however, (i) with respect to the deposits to be made to the Interest Account relating to the Series 2006A Bonds during the months of March, 2007 through October, 2007, such deposits shall be in an amount equal to one-seventh (1/7) of the interest due on the Series 2006A Bonds on November 1, 2007, and (ii) with respect to the deposits to be made to the Interest Account relating to the Series 2007 Bonds during the months of October, 19 2007 through April, 2008, such deposits shall be in an amount equal to one- seventh (1/7) of the interest due on the Series 2007 Bonds on May 1, 2008; SEC® For deposit to the Principal Account of the Bond Fund, an amount equal to one -twelfth (1/12) of the next scheduled principal maturity of Outstanding Bonds (including mandatory sinking fund redemptions); provided, however, with respect to the Series 2006A Bonds and the Series 2007 Bonds, such deposits shall not commence until November 2014; THIRD: For deposit to the Debt Service Reserve Fund, an amount sufficient to cure any deficiency in the Debt Service Reserve Fund (including any reimbursement to the 2006A Insurer under the 2006A Reserve Policy and any reimbursement to the 2007 Insurer under the 2007 Reserve Policy); FOURTH: For deposit to the Rebate Fund, an amount sufficient to satisfy the City's obligations under Section 507 hereof; FIFTH: For payment to the Trustee and Paying Agent, the amount, if any, necessary to pay or reimburse the Trustee and Paying Agent for fees and expenses related to the Bonds; and SIXTH: All remaining moneys ("Surplus Tax Receipts") will be transferred to the Redemption Fund and shall be applied to call Bonds for redemption prior to maturity as provided in Section 301(b) and Section 506 of the Indenture." Section 4.03. Section 505 of the Original Indenture is hereby amended and supplemented to read as follows: "Section 505. Cost of Issuance Fund. There shall be deposited to the credit of the Cost of Issuance Fund all moneys received for said Fund pursuant to Section 208 and Section 219 hereof. The Trustee shall pay those Costs of Issuance as directed by the City pursuant to a Certificate delivered on a Closing Date. After all Costs of Issuance have been paid (and in any event not later than January 1, 2007 with respect to the Series 2006A Bonds and December 1, 2007 with respect to the Series 2007 Bonds), any remaining moneys in the Cost of Issuance Fund shall be transferred to the Interest Account of the Bond Fund." Section 4.04. Section 506 of the Original Indenture is hereby amended and supplemented to read as follows: "Section 506. Redemption Fund. (a) There shall be deposited to the credit of the Redemption Fund all moneys required to be transferred thereto pursuant to Section 502 and Section 503 of this Indenture. (b) Moneys credited to the Redemption Fund shall be expended only as set forth in this Section 506. 4848-3917-7473.4 8 ,�- (c) Moneys in the Redemption Fund shall be transferred to the Principal Account of the Bond Fund at such times as may be necessary to effectuate, on the first available date, redemptions of Bonds required by Section 301(a) and (b) and Section 307(a) and (b) of this Indenture. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds and any series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds and any other Series of Additional Bonds. (d) The amounts accumulated in the Redemption Fund, if so directed by the City by means of a Certificate delivered to the Trustee, shall be applied by the Trustee to the purchase of Bonds of the maturities which would otherwise be redeemed pursuant to Section 301(a) and (b), Section 307(a) and (b) and this Section 506 but for the provisions of this subsection (d), at prices directed by the City not exceeding the applicable redemption prices of the Bonds which would be redeemed but for the operation of this sentence. Interest accrued on the Bonds so purchased shall be paid from moneys credited to the Interest Account of the Bond Fund." i Section 5.01. Section 902(a) of the Original Indenture is hereby amended and supplemented to read as follows: "(a) Subject to subsection (b) of this Section 902, the City shall, from moneys lawfully available therefor, pay to the Trustee and any Paying Agent reasonable compensation for all services performed hereunder and also all reasonable expenses, charges and other disbursements and those of their attorneys, agents and employees incurred in and about the administration and execution of the trusts hereby created and the performance of the powers and duties hereunder and, to the extent permitted by law and from moneys lawfully available therefor, shall indemnify and save the Trustee harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder. With respect to the Series 2006A Bonds, the Trustee's initial authentication fee shall be $3,500 and the annual administration fee of the Trustee shall be $4,000 annually prior to the final Completion Date with respect to any of the Projects, and $3,500 annually thereafter. With respect to the Series 2007 Bonds, the Trustee's initial authentication fee shall be $1,500 and the annual administration fee of the Trustee shall be $1,500 annually prior to the final Completion Date with respect to any of the Projects, and $1,500 annually thereafter. If the City shall fail to make any payment required by this subsection (a), the Trustee may make such payment from any moneys in its possession under the provisions of this Indenture and shall be entitled to a preference therefor over any of the Bonds Outstanding hereunder. The City shall not be required to indemnify the Trustee against any liabilities which the Trustee may incur as a result of negligent or wrongful acts or omissions of the Trustee." 4848-3917-7473.4 9 Section 6.01. The Original Indenture is hereby amended and supplemented by adding at the end thereof the following Article: "ARTICLE XIII Notwithstanding any provision to the contrary contained in this Indenture, so long as the 2007 Bond Policy and/or the 2007 Reserve Policy remain in full force and effect (or any amounts are owed to the 2007 Insurer in connection therewith), the provisions of this Article XIII shall control where applicable. Section 1301. Consents, Approvals and Directions of 2007 Insurer. (a) The 2007 Insurer shall be deemed to be the sole Holder of the Series 2007 Bonds for the purpose of exercising any voting right or privilege or giving any direction or taking any other action that the Holders of the Series 2007 Bonds are entitled to take pursuant tot Article VIII of this Indenture or relating to the duties and obligations of the Trustee set forth in Article IX of this Indenture. (b) Any amendment, supplement, modification to, or waiver of, this Indenture or any other document relating to the issuance of, of security for, the Series 2007 Bonds (each a "Related Document"), that requires the consent of Bondholders or adversely affects the rights and interests of the 2007 Insurer shall be subject to the prior written consent of the 2007 Insurer. (c) The rights granted to the 2007 Insurer under this Indenture or any other Related Document to request, consent to or direct any action are rights granted to the 2007 Insurer in consideration of its issuance of the 2007 Bond Policy and the 2007 Reserve Policy. Any exercise by the 2007 Insurer of such rights is merely an exercise of the 2007 Insurer's contractual rights and shall not be construed or deemed to be taken for the benefit, or on behalf, of the Bondholders and such action does not evidence any position of the 2007 Insurer, affirmative or negative, as to whether the consent of the Bondholders or any other person is required in addition to the consent of the 2007 Insurer. (d) No contract shall be entered into or any action taken by which the rights of the 2007 Insurer or security for or sources of payment of the 2007 Bonds may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of the 2007 Insurer. (e) Notwithstanding the provisions of Section 801(c) hereof, no grace period for a covenant default shall exceed thirty (30) days or be extended for more than sixty (60) days, without the prior written consent of the 2007 Insurer. No grace period shall be permitted for payment defaults under Section 801(a) or (b) hereof. ro (f) Notwithstanding the provisions of Section 802 hereof, the Series 2007 Bonds shall not be accelerated without the consent of the 2007 Insurer and in the event 4848-3917-7473.4 [El 10� the Series 2007 Bonds are accelerated, the 2007 Insurer may elect, in its sole discretion, to pay accelerated principal and interest accrued, on such principal to the date of acceleration (to the extent unpaid by the City) and the Trustee shall be required to accept such amounts. Upon payment of such accelerated principal and interest accrued to the acceleration date as provided above, the 2007 Insurer's obligations under the 2007 Bond Policy with respect to such Series 2007 Bonds shall be fully discharged. (g) Unless the 2007 Insurer otherwise directs, upon the occurrence and continuance of an Event of Default or an event which with notice or lapse of time would constitute an Event of Default, amounts on deposit in the Project Fund relating to the Series 2007 Bonds shall not be disbursed, but shall instead be applied to the payment of debt service or redemption price of the Series 2007 Bonds. (h) The prior written consent of the 2007 Insurer shall be a condition precedent to the deposit of any credit instrument provided in lieu of the 2007 Reserve Policy or a cash deposit into the Series 2007 Account of the Debt Service Reserve Fund, if any. Notwithstanding anything to the contrary set forth in this Indenture, amounts on deposit in the Series 2007 Account of the Debt Service Reserve Fund shall be applied solely to the payment of debt service due on the Series 2007 Bonds. (i) Upon the occurrence of an extraordinary optional, special or extraordinary mandatory redemption of the Series 2007 Bonds in part in accordance with the provisions of Article III hereof, the selection of Series 2007 Bonds to be redeemed shall be subject to the approval of the 2007 Insurer. The exercise of any provision of this Indenture which permits the purchase of Series 2007 Bonds in lieu of redemption shall require the prior written approval of the 2007 Insurer if any Series 2007 Bond so purchased is not cancelled upon purchase. 0) In determining whether any amendment, consent, waiver or other action to be taken, or any failure to take action, under this Indenture would adversely affect the security for the Series 2007 Bonds or the rights of the Bondholders, the Trustee shall consider the effect of any such amendment, consent, waiver, action or inaction as if there were no 2007 Bond Policy. Section 1302. Disclosures to 2007 Insurer. (a) The 2007 Insurer shall be provided with the following information by the City or the Trustee, as the case may be: (i) Annual audited financial statements within 180 days after the end of the City's fiscal year (together with a certification of the City that it is not aware of any default or Event of Default under the Indenture), and the City's annual budget within 30 days after the approval thereof together with such other information, data or reports as the 2007 Insurer shall reasonably request from time to time; (ii) Notice of any draw upon the Debt Service Reserve Fund within two (2) Business Days after knowledge thereof other than (i) withdrawals of amounts in excess of the Reserve Requirement and (ii) withdrawals in connection with a refunding of Bonds; 4848-3917-7473.4 11 0 (iii) Notice of any default known to the Trustee or the City within five (5) Business Days after knowledge thereof; (iv) Prior notice of the advance refunding or redemption of any of the Series 2007 Bonds, including the principal amount, maturities and CUSIP numbers thereof, (v) Notice of the resignation or removal of the Trustee and Bond Registrar and the appointment of, and acceptance of duties by, any successor thereto; (vi) Notice of the commencement of any proceeding by or against the City commenced under the United States Bankruptcy Code or any other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an "Insolvency Proceeding"); (vii) Notice of the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal of, or interest on, the Series 2007 Bonds; (viii) A full original transcript of all proceedings relating to the execution of any amendment, supplement, or waiver to this Indenture or the Related Documents; and (ix) All reports, notices and correspondence to be delivered to Bondholders under the terms of this Indenture or the Related Documents. (b) The notice address of the 2007 Insurer is: Financial Security Assurance Inc., 31 West 52nd Street, New York. New York 10019, Attention: Managing Director -- Surveillance, Re: Policy No. 207605-N, Telephone: (212) 526-0100; Telecopier: (212) 339-3556. In each case in which notice or other communication refers to an Event of Default, then a copy of such notice or other communication shall also be sent to the attention of the General Counsel and shall be marked to indicate "URGENT MATERIAL ENCLOSED." Section 1303. Defeasance and Discharge of Series 2007 Bonds. (a) Only (1) cash, (2) non -callable direct obligations of the United States of America ("Treasuries"), (3) evidences of ownership of proportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated, (4) subject to the prior written consent of the 2007 Insurer, pre -refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody's, respectively, or (5) subject to the prior written consent of the 2007 Insurer, securities eligible for "AAA" defeasance under then existing criteria of S&P or any combination thereof, shall be used to effect defeasance of the Series 2007 Bonds unless the 2007 Insurer otherwise approves. (b) To accomplish defeasance of the Series 2007 Bonds, the City shall cause to be delivered (i) a report of an independent firm of nationally recognized certified public accountants or such other accountant as shall be acceptable to the 2007 Insurer 4848-3917-7473.4 12 ("Accountant") verifying the sufficiency of the escrow established to pay the Series 2007 Bonds in full on the maturity or redemption date ('Verification"), (ii) an Escrow Deposit Agreement (which shall be acceptable in form and substance to the 2007 Insurer), (iii) an opinion of nationally recognized bond counsel to the effect that the Series 2007 Bonds are no longer Outstanding under the Indenture, and (iv) a certificate of discharge of the Trustee with respect to the Series 2007 Bonds; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the City, the Trustee and 2007 Insurer. The 2007 Insurer shall be provided with final drafts of the above -referenced documentation not less than five (5) Business Days prior to the funding of the escrow. (c) Series 2007 Bonds shall be deemed Outstanding under the Indenture unless and until they are in fact paid and retired or the above criteria are met. Section 1304. Claims Upon 2007 Bond Policy and Payments by and to 2007 Insurer. (a) If, on the third Business Day prior to the related scheduled interest payment date or principal payment date with respect to the Series 2007 Bonds ("Payment Date") there is not on deposit with the Trustee, after making all transfers and deposits required under this Indenture, moneys sufficient to pay the principal of and interest on the Series 2007 Bonds due on such Payment Date, the Trustee shall give notice to the 2007 Insurer and to its designated agent (if any) (the "Insurer's Fiscal Agent") by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Business Day. If, on the second Business Day prior to the related Payment Date, there continues to be a deficiency in the amount available to pay the principal of and interest on the Series 2007 Bonds due on such Payment Date, the Trustee shall make a claim under the 2007 Bond Policy and give notice to the 2007 Insurer and the Insurer's Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay interest on the Series 2007 Bonds and the amount required to pay principal of the Series 2007 Bonds, confirmed in writing to the 2007 Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such second Business Day by filling in the form of Notice of Claim and Certificate delivered with the 2007 Bond Policy. (b) The Trustee shall designate any portion of payment of principal on the Series 2007 Bonds paid by the 2007 Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of maturity, on its books as a reduction in the principal amount of Series 2007 Bonds registered to the then current Bondholder, whether DTC or its nominee or otherwise, and shall issue a replacement Series 2007 Bond to the 2007 Insurer, registered in the name of the 2007 Insurer in a principal amount equal to the amount of principal so paid (without regard to authorized denominations): provided that the Trustee's failure to so designate any payment or issue any replacement Series 2007 Bond shall have no effect on the amount of principal or interest payable by the City on any Series 2007 Bond or the subrogation rights of the 2007 Insurer. (c) The Trustee shall keep a complete and accurate record of all funds deposited by the 2007 Insurer into the Policy Payments Account (defined below) and the allocation of such funds to payment of interest on and principal of any Series 2007 Bond. 4848-3917-7473.4 13 The 2007 Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Trustee. (d) Upon payment of a claim under the 2007 Bond Policy, the Trustee shall establish a separate special purpose trust account for the benefit of the Holders of the Series 2007 Bonds referred to herein as the "Policy Payments Account" and over which the Trustee shall have exclusive control and sole right of withdrawal. The Trustee shall receive any amount paid under the 2007 Bond Policy in trust on behalf of the Holders of the Series 2007 Bonds and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Trustee to Holders of the Series 2007 Bonds in the same manner as principal and interest payments are to be made with respect to the Series 2007 Bonds under the sections hereof regarding payment of the Series 2007 Bonds. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to pay debt service with other funds available to make such payments. Notwithstanding anything herein to the contrary, the City agrees to pay to the 2007 Insurer (i) a sum equal to the total of all amounts paid by the 2007 Insurer under the 2007 Bond Policy (the "Insurer Advances"); and (ii) interest on such Insurer Advances from the date paid by the 2007 Insurer until payment thereof in full, payable to the 2007 Insurer at the Late Payment Rate per annum (collectively, the "Insurer Reimbursement Amounts'). "Late Payment Rate" means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate (any change in such rate of interest to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the Series 2007 Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. The City hereby covenants and agrees that the Insurer Reimbursement Amounts are secured by a lien on and pledge of the Trust Estate and payable from such Trust Estate on a parity with debt service due on the Series 2007 Bonds. (e) Funds held in the Policy Payments Account shall not be invested by the Trustee and may not be applied to satisfy any costs, expenses or liabilities of the Trustee. Any funds remaining in the Policy Payments Account following a Payment Date with respect to the Series 2007 Bonds shall promptly be remitted to the 2007 Insurer. (f) Amounts paid by the 2007 Insurer under the 2007 Bond Policy shall not be deemed paid for purposes of the Indenture and the Series 2007 Bonds relating to such payments shall remain Outstanding and continue to be due and owing until paid by the City in accordance with the Indenture. The Indenture shall not be discharged unless all amounts due or to become due to the 2007 Insurer have been paid in full or duly provided for. (g) The 2007 Insurer shall, to the extent it makes any payment of principal of or interest on the Series 2007 Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the 2007 Bond Policy. Each obligation of 4848-3917-7473.4 14 le- the City to the 2007 Insurer under the Related Documents shall survive discharge or termination of such Related Documents. (h) The City shall pay or reimburse the 2007 Insurer any and all charges, fees, costs and expenses that the 2007 Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in any Related Document; (ii) the pursuit of any remedies under the Indenture or any other Related Document or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, the Indenture or any other Related Document whether or not executed or completed, or (iv) any litigation or other dispute in connection with the Indenture or any other Related Document or the transactions contemplated thereby, other than costs resulting from -the failure of the 2007 Insurer to honor its obligations under the 2007 Bond Policy or 2007 Reserve Policy. The 2007 Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the indenture or any other Related Document. (i) The 2007 Insurer shall be entitled to pay principal or interest on the Series 2007 Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the City (as such terms are defined in the Insurance Policy) and any amounts due on the Series 2007 Bonds as a result of acceleration of the maturity thereof in accordance with the Indenture, whether or not the 2007 Insurer has received a Notice of Nonpayment (as such terms are defined in the Insurance Policy) or a claim upon the 2007 Bond Policy. Section 1305. Provisions Relating to Additional Bonds. (a) The principal on any Additional Bonds issued under the Indenture (other than RLF Loans) shall be payable on November 1 of the years provided in the Supplemental Indenture authorizing such Additional Bonds. (b) As a condition to the issuance of Additional Bonds secured on a parity basis with the Series 2006A Bonds and the Series 2007 Bonds, the City shall provide to the 2007 Insurer a copy of certified cash flows evidencing that the Existing Indebtedness will be repaid in full no later than November 1, 2014. Such cash flows shall assume that all of the permitted Existing Indebtedness unissued on the date the cash flows are provided has in fact been issued. Alternatively, the City may covenant to the 2007 Insurer not to issue all or any portion of the unissued Existing Indebtedness and omit that portion of the Existing Indebtedness from the cash flows. (c) Notwithstanding satisfaction of the other conditions to the issuance of Additional Bonds set forth in Article H of this Indenture, no such issuance may occur (1) if an Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) exists unless such default shall be cured upon such issuance and (2) unless the Debt Service Reserve Fund is fully funded at the Reserve Requirement (including the Reserve Requirement relating to the proposed issue) upon the issuance of such Additional Bonds, in either case unless otherwise permitted by the 2007 Insurer. 4848-3917-7473.4 15 (d) In addition to the coverage required in Section 212 hereof relating to the issuance of Additional Bonds, the Certificate delivered by the Finance Director shall also show coverage of at least one times on Policy Costs then due and owing. (e) With respect to drawdowns on RLF Loans as permitted by Section 212 hereof, the Certificate of the Finance Director required therein shall be modified to certify that, based upon the most recent twelve (12) months of Sales and Use Tax collections (i) receipts of the 0.25% Sales and Use Tax were not less than 125% of the maximum Annual Debt Service for each of the years ending November 1, 2007 through November 1, 2015, on all the Outstanding Bonds and any RLF Loan theretofore incurred, plus the amount of the additional RLF Loan to be incurred, and (ii) receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax were not less than 125% of the maximum Annual Debt Service for each of the years ending November 1. 2016 and thereafter, on all then Outstanding Bonds and any RLF Loan theretofore incurred, plus the amount of the additional RLF Loan to be incurred. All other provisions of Section 212 relating to drawdowns under RLF Loans shall continue to be applicable, and the modification set forth above shall not relate to the issuance of Additional Bonds. Section 1306. Miscellaneous Provisions Relating to 2007 Bond Policy. (a) Unless the 2007 Insurer shall otherwise consent, the City hereby covenants not to issue any debt secured by a lien on the Existing Tax except for (i) the approximately $62,000,000 outstanding principal amount of Existing Indebtedness currently secured 01— thereby, and (ii) up to $20,000,000 principal amount of additional Existing Indebtedness in the form of an RLF Loan bearing interest at a rate not in excess of 3% (collectively, the "Prior Debt"). (b) The City hereby covenants not to amend (i) the mandatory redemption provisions for the Prior Debt or (ii) any provisions relating to coverage or other requirements associated with the issuance of additional indebtedness that constitutes Prior Debt. (c) The City and the Trustee covenant and agree to take such action (including, as applicable, filing of UCC financing statements and continuations thereof) as is necessary from time to time to preserve the priority of the pledge of the Trust Estate under applicable law. (d) After payment of reasonable expenses of the Trustee, the application of funds realized upon a default shall be applied to the payment of expenses of the City or to rebate only after that payment of past due and current debt service on the Series 2007 Bonds and amounts required to restore the Series 2007 Account of the Debt Service Reserve Fund to the level of the applicable Reserve Requirement. (e) The 2007 Insurer is hereby declared to be a third party beneficiary to this Indenture. ph Section 1307. 2007 Reserve Policy Provisions. (a) The City shall repay any draws under the 2007 Reserve Policy and pay all related reasonable expenses incurred by 4848-3917-7473.4 16 the 2007 Insurer relating thereto. Interest shall accrue and be payable on such draws and expenses from the date of payment by the 2007 Insurer at the Late Payment Rate. "Late Payment Rate" means the lesser of (a) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate ("Prime Rate") (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate of interest on the Series 2007 Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such national bank as the 2007 Insurer shall specify. (b) Repayment of draws and payment of expenses relating to the 2007 Reserve Policy and accrued interest thereon at the Late Payment Rate (collectively, "Reserve Policy Costs") shall commence in the first month following each draw, and each such monthly payment shall be in an amount at least equal to 1/12 of the aggregate of Reserve Policy Costs related to such draw. (c) Amounts in respect of Reserve Policy Costs paid to the 2007 Insurer shall be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to the 2007 Insurer on account of principal due, the coverage under the 2007 Reserve Policy will be increased by a like amount, subject to the terms of the 2007 Reserve Policy. (d) All cash and investments in the Series 2007 Account of the Debt Service Reserve Fund established for the Series 2007 Bonds (the "Reserve Fund") shall be transferred to the Bond Fund for payment of debt service on the Series 2007 Bonds before any drawing may be made on the 2007 Reserve Policy or any other credit facility credited to the Reserve Fund in lieu of cash ("Credit Facility"). Payment of any Reserve Policy Costs shall be made prior to replenishment of any such cash amounts. Draws on all Credit Facilities (including the 2007 Reserve Policy) on which there is available coverage shall be made on a pro -rata basis (calculated by reference to the coverage then available thereunder) after applying all available cash and investments in the Reserve Fund. Payment of Reserve Policy Costs and reimbursement of amounts with respect to other Credit Facilities shall be made on a pro -rata basis prior to replenishment of any cash drawn from the Reserve Fund. Upon payment of the Series 2007 Bonds from amounts paid under the 2007 Reserve Policy, such Series 2007 Bonds shall be deemed to remain Outstanding under the Indenture and the 2007 Insurer shall be subrogated to the rights of the Holders of such Series 2007 Bonds. (e) If the City shall fail to pay any Reserve Policy Costs in accordance with the requirements of paragraphs (a), (b), (c) and (d) above, the 2007 Insurer shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under the Indenture other than (i) acceleration of the maturity of the Series 4848-3917-7473.4 17 0 2007 Bonds or (ii) remedies which would adversely affect owners of the Series 2007 Bonds. (f) The Indenture shall not be discharged until all Reserve Policy Costs owing to the 2007 Insurer shall have been paid in full. The City's obligation to pay such amounts shall expressly survive payment in full of the Series 2007 Bonds. (g) The Trustee is required to ascertain the necessity for a claim upon the 2007 Reserve Policy and to provide notice to the 2007 Insurer in accordance with the terms of the 2007 Reserve Policy at least five (5) Business Days prior to each date upon which interest or principal is due on the Series 2007 Bonds. The Trustee shall give notice to the 2007 Insurer of any failure of the City to make timely payment in full of required deposits to the Revenue Fund and Bond Fund within two (2) Business Days of the date due." Section 7.01. Severability. (a) If any provisions of this First Supplemental Trust Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to any extent whatever. (b) The invalidity of any one or more phrases, sentences, clauses or paragraphs in this First Supplemental Trust Indenture contained shall not affect the remaining portions of this First Supplemental Trust Indenture or any part thereof. Section 7.02. Applicable Provisions of Law. This First Supplemental Trust Indenture shall be considered to have been executed in the State of Arkansas and it is the intention of the parties that the substantive law of the State of Arkansas govern as to all questions of interpretation, validity and effect. Section 7.03. Counterparts. This First Supplemental Trust Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.04. Ratification of Original Indenture. As supplemented and amended hereby, the Original Indenture is hereby ratified and confirmed. 4848-3917-7473.4 18 Ide IN WITNESS WHEREOF, the City has caused these presents to be signed in its name and behalf by its Mayor and its corporate seal to be hereunto affixed and attested by its City Clerk, and to evidence its acceptance of the trust hereby created, the Trustee has caused these presents to be signed in its behalf by its duly authorized officers and its corporate seal to be hereto affixed. Cil 0 ATTEST: By: "�2t� City Clerk 0,till►����� (SEAL) `�,a f,��Y Oe. FAYETiEVILLE m e SIMMONS FI NY T TRUST COMPANY, X.A., ° as Trustee kA ti TOtA ",jiu111110, 0 By: Title: Corporate Trust O cer ATTEST: By: ' Title: Assistant Vice President and Corporate Trust Officer (SEAL),� V go' � S A . [SIGNATURE PAGE TO FIRST SUPPLEMENTAL TRUST INDENTURE] 4848-3917-7473.4 ACKNOWLEDGMENT STATE OF ARKANSAS ) ) ss. COUNTY OF WASHINGTON ) Before me a Notary Public, duly commissioned, qualified and acting within and for the State and county aforesaid, appeared in person the within named Dan Coody and Sondra Smith, Mayor and City Clerk, respectively, of the City of Fayetteville, Arkansas, to me personally known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the City, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this Aday of October, 2007. y,- My Commission expires: (SEAL) 4 Y�a- �' Notary Public OFFICIAL. SEAL. BONNIE J. PRUETi NOTARY PUBLIC .ARKANSAS WASHINGTON COUNTY COMMISSION EXP. 05/01/2013 [ACKNOWLEDGEMENT TO FIRST SUPPLEMENTAL TRUST INDENTURE] 4848-3917-7473.4 0 I«;1►U]�.'/iM WIZ , ►l�i�►l1{I STATE OF ARKANSAS ) ) ss. COUNTY OF JEFFERSON ) Before me a Notary Public, duly commissioned, qualified and acting within and for the State and county aforesaid, appeared in person the within named Glenda Dean and Rita Gronwald, the Corporate Trust Officer and the Assistant Vice President and Corporate Trust Officer, respectively, of Simmons First Trust Company, N.A., to me personally known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the Trust Company, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal thist4ay of October, 2007. P �Nw ffiznzema- - --- — , I= My Commission expires: =4$ LA off (SEAL) [ACKNOWLEDGEMENT TO FIRST SUPPLEMENTAL TRUST INDENTURE] 4848-3917-7473.4 ,e-- EXHIBIT A TO FIRST SUPPLEMENTAL TRUST INDENTURE 0 Form of Series 2007 Bond Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED REGISTERED No. R07- S UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND 013 W": lffi Interest Rate: % Date of Bond: October 1, 2007 Registered Owner: CEDE & CO. Principal Amount: KNOW ALL MEN BY THESE PRESENTS: Maturity Date: November 1, 20_ CUSIP: DOLLARS That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2008, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. 4848-3917-7473.4 A-1 0 This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2007", is one of a series of bonds aggregating Fourteen Million Three Hundred Forty Thousand Dollars ($14,340,000) (the `Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of the extension and betterment of wastewater pipelines and related facilities (the "Wastewater Project"). Bond proceeds will be utilized to pay Project costs, to fund a debt service reserve, to purchase a policy of municipal bond insurance, and to pay the costs of issuance of the Bonds. The Bonds are issued under and are secured by and entitled to the protection of a Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007 (as supplemented and amended, the "Indenture', by and between the City and the Trustee, which Indenture is available for inspection at the principal corporate trust office of the Trustee. Reference is hereby made to the Indenture and to all indentures supplemental thereto for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the City, the Trustee and the owners of the Bonds, and the terms upon which the Bonds are issued and secured. The Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas, including particularly Amendment No. 62 to the Constitution of Arkansas, as implemented by the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2005) §§14-164-301 et seq. (as from time to time' amended, the "Local Government Bond Act"), Ordinance No. 5054 of the City adopted August 23, 2007, which ordinance authorized the execution and delivery of the First Supplemental Trust Indenture, and a special election duly held on September 12, 2006, at which a majority of the qualified electors of the City voting approved the issuance of the Bonds. In accordance with the Local Government Bond Act, the City has pledged all receipts from (i) a one-quarter of one percent (0.25%) local sales and use tax (the "0.25% Sales and Use Tax") and (ii) a three-quarters of one percent (0.75%) local sales and use tax (the "0.75% Sales and Use Tax"), each levied by the City pursuant to Ordinance No. 4891, adopted by the City on June 20, 2006, to provide funds for the repayment of the Bonds. The pledge of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax (collectively, the "Tax Receipts") presently secures payment of the Bonds and the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"). Such Tax Receipts may additionally be pledged to secure the payment of up to $45,660,000 in aggregate principal amount of Additional Bonds issued under the provisions of the Indenture. The Indenture provides that the City may hereafter issue Additional Bonds from time to time under certain terms and conditions contained in the Indenture and, if issued or incurred, such Additional Bonds will rank on a parity of security with the Bonds and be equally and ratably secured by and entitled to the protection of the Indenture. The Bonds are not general obligations of the City, but are special obligations secured by an irrevocable pledge of and lien on the Tax Receipts, as more particularly described in the Indenture. In no event shall the Bonds constitute an indebtedness of the City within the meaning of any constitutional or statutory limitation. 4848-3917-7473.4 A-2 STATEMENT OF INSURANC2, Financial Security Assurance Inc. ("Financial Security'), New York, New York, has delivered its municipal bond insurance policy with respect to the scheduled payments due of principal of and interest on this Bond to Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor, as paying agent for the Bonds (the "Paying Agent"). Said Policy is on file and available for inspection at the principal office of the Paying Agent and a copy thereof may be obtained from Financial Security or the Paying Agent. The holder of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds and Additional Bonds, if any, issued under the Indenture and then outstanding may be declared and may become due and payable before the stated maturity thereof, together with accrued interest thereon. Modifications or alterations of the Indenture, or of any indenture supplemental thereto, may be made only to the extent and in the circumstances permitted by the Indenture. The Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from moneys in the Project Fund in excess of the amount needed to complete the portion of the Project to be funded with the Bonds. The Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from surplus Tax Receipts deposited in the Redemption Fund pursuant to the Indenture. So long as the Series 2006A Bonds are outstanding, 50% of the surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Bonds and any series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Bonds and any other series of Additional Bonds. The Bonds are subject to redemption at the option of the City, communicated in a written notice to the Trustee not less than sixty (60) days prior to the date fixed for redemption, in whole or in part on any date on or after November 1, 2015, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed plus accrued interest to the date of redemption. The Bonds maturing November 1, 2017 are subject to mandatory redemption, to be selected by lot in such manner as the Trustee shall determine, on November 1 in the years and 4848-3917-7473.4 A-3 the amounts set forth below, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption. Date Principal Amount November 1, 2015 $ 940,000 November 1, 2016 980,000 November 1, 2017 (maturity) 1,020,000 Notwithstanding the foregoing, so long as DTC or its nominee is the sole registered owner of the Bonds, the particular Bonds or portions thereof to be redeemed in part within a maturity shall be selected by lot by DTC in such manner as DTC shall determine. In selecting Bonds for redemptionprior to maturity, in the case any outstanding Bond is in a denomination greater than $5,000, each $5,000 of face value of such Bond shall be treated as a separate Bond of the denomination of $5,000. In the event any of the Bonds or portions thereof (which shall be $5,000 or any integral multiple thereof) are called for redemption, notice thereof shall be given by the Trustee by first class mail to the registered owner of each such Bond addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure to give such notice by mailing, or any defect therein, shall not affect the validity of the proceedings for the redemption of any Bond with respect to which no such failure or defect has occurred. Each notice shall identify the Bonds or portions thereof being called, and the date on which they shall be presented for payment. After the date specified in such call notice, the Bond or Bonds so called for redemption will cease to bear interest provided funds sufficient for their redemption have been deposited with the Trustee, and, except for the purpose of payment, shall no longer be protected by the Indenture and shall not be deemed to be outstanding under the provisions of the Indenture. This Bond may be transferred on the books of registration kept by the Trustee by the registered owner or by his duly authorized attorney upon surrender hereof, together with a written instrument of transfer duly executed by the registered owner or his duly authorized attorney. The Bonds are issuable as registered bonds without coupons in denominations of $5,000 and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations. No recourse shall be had for the payment of the principal of or premium, if any, or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Bonds or the Indenture against any past, present or future alderman, officer or employee of the City, or any successor, as such, either directly or through the City or any successor of the City, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such alderman, officer or employee as such is hereby expressly waived and released as a condition of and consideration for the issuance of any of the Bonds. 4848-3917-7473.4 A-4 AOON This Bond is issued with the intent that the laws of the State of Arkansas will govern its construction. W 0 IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law; that the indebtedness represented by the Bonds, together with all obligations of the City, does not exceed any constitutional or statutory limitation; and that the revenues pledged to the payment of the principal of and premium, if any, and interest on the Bonds as the same become due and payable will be sufficient in amount for that purpose. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture until the Certificate of Authentication hereon shall have been signed by the Trustee. 4848-3917-7473.4 A-5 IN WITNESS WHEREOF, the City of Fayetteville, Arkansas has caused this Series 2007 Bond to be executed by its Mayor and City Clerk, thereunto duly authorized (by their manual or facsimile signatures), and its corporate seal to be affixed or imprinted hereon, all as of the date hereof shown above. ATTEST: By: City Clerk (SEAL) CITY OF FAYETTEYILLE, ARKANSAS By: Mayor (Form of Trustee's Certificate) /0111- This bond is one of the Series 2007 Bonds of the issue described in and issued under the provisions of the within mentioned Indenture. 0 Attached hereto is the complete text of the opinion of Kutak Rock LLP, a signed original of which is on file with the undersigned, delivered and dated the date of the original delivery of and payment for the Series 2007 Bonds. Date: SIMMONS FIRST TRUST COMPANY, N.A., as Trustee Authorized Signature 4848-3917-7473.4 A-6 W MW 0 (Form of Assignment) FOR VALUE RECEIVED, , hereby sells, assigns, and transfers unto the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. DATE: , 20 Transferor GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by an institution satisfactory to the Trustee or other transfer agent. 4848-3917-7473.4 A-7 Ri c Simmons First Trust Company, N.A., Pine Bluff, Arkansas, as trustee for $14,340,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Bonds"), hereby certifies that: 1. Pursuant to the provisions of a Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust indenture dated as of October 1, 2007 (as supplemented and amended, the "Trust Indenture") each by and between the City of Fayetteville, Arkansas (the "City") and Simmons First Trust Company, N.A., arrangements have been made for Simmons First Trust Company, N.A. to serve as trustee and paying agent (the "Trustee") with respect to the Bonds. The Trustee hereby accepts such appointment. 2. Pursuant to the provisions of the Trust Indenture and directions from the City, Glenda L. Dean, Corporate Trust Officer, has duly authenticated the initial Bonds in the aggregate principal amount of $14,340,000, being in the form of ten typewritten registered bonds, numbered R07-1 through R07-10, inclusive. 3. Each person who, on behalf of the Trustee, authenticated the initial Bonds or executed the First Supplemental Trust Indenture, the Tax Regulatory Agreement dated as of October 4, 2007, or the Continuing Disclosure Agreement dated as of October 4, 2007, with respect to the Bonds was at the date thereof and is now duly elected, appointed or authorized, qualified and acting as an officer or authorized signatory of the Trustee and is duly authorized to perform such acts at the respective times of such acts, and the signatures of such persons appearing on such documents are their genuine signatures. 4. The following are names, titles and specimen signatures of each of the above- mentioned officers of the Trustee: Name Office Signature Glenda L. Dean Corporate Trust Officer Rita Gronwald Asst. Vice President & Corporate Trust Officer 5. The Trustee is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America. The Trustee has all requisite power and authority to carry out its obligations as Trustee under the Trust Indenture. IN WITNESS WHEREOF, SIMMONS FIRST TRUST COMPANY, N.A., has caused this certificate to be executed in its corporate name by an officer thereunto duly authorized. Dated: October 4, 2007 SMMONS FIRST TRUST COMPANY, N.A. Pine Bluff, Arkansas By:_ Name: Title: 4832-1513-9585.1 EXECUTION COPY CITY OF FAYETTEVILLE, ARKANSAS to SIMMONS FIRST TRUST COMPANY, N.A. as Trustee SECOND SUPPLEMENTAL TRUST INDENTURE Dated as of November 1, 2009 This Second Supplemental Trust Indenture supplements and amends a Trust Indenture dated as of November 1, 2006, as previously supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, each by and between the City of Fayetteville, Arkansas and Simmons First Trust Company, N.A., as Trustee. The Trust Indenture, as supplemented and amended hereby, secures (i) the City's $50,000,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2006A, (ii) the City's $14,340,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2007, and (iii) the City's $11,250,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2009. Prepared by: Kutak Rock LLP 124 West Capitol Avenue, Suite 2000 Little Rock, Arkansas 72201 4823-2826-9828.4 SECOND SUPPLEMENTAL TRUST INDENTURE THIS SECOND SUPPLEMENTAL TRUST INDENTURE dated as of November 1, 2009, by and between the CITY OF FAYETTEVILLE, ARKANSAS (the "City"), a city of the first class organized under and existing by virtue of the laws of the State of Arkansas, and SIMMONS FIRST TRUST COMPANY, N.A., as trustee (the "Trustee"), a national banking association organized under and existing by virtue of the laws of the United States of America and having its principal corporate trust office located in Pine Bluff, Arkansas; WITNESSETH: WHEREAS, the City Council of the City has previously determined that there is a great need for a source of revenue to finance all or a portion of the costs of (i) the acquisition, construction, reconstruction, extension, improving and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities (the "Wastewater Project"), (ii) the acquisition, construction, reconstruction, repair, straightening and widening of certain City streets and related improvements (the "Street Project"), and (iii) the acquisition, construction and equipping of certain City trail system improvements (the "Trail Project"); and WHEREAS, the people of the State of Arkansas (the "State") by the adoption of Amendment No. 62 to the Constitution of the State, approved November 6, 1984 ("Amendment 62"), have authorized cities and counties in the State to issue bonds, upon voter approval, to finance certain capital improvements of a public nature, and to secure said bonds by a pledge of the proceeds of certain taxes; and WHEREAS, the provisions of Amendment 62 have been implemented by the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2005) Sections 14-164-301 et seq. (as from time to time amended, the "Act"); and WHEREAS, pursuant to the provisions of Ordinance No. 4891, duly adopted by the City Council of the City on June 20, 2006 (the "Election Ordinance"), there was submitted to the qualified electors of the City four questions regarding the issuance of an aggregate of not to exceed $110,000,000 in principal amount of capital improvement bonds pursuant to Amendment 62 and the Act to finance the capital improvements described in the Election Ordinance, including the Wastewater Project, the Street Project and the Trail Project; and WHEREAS, pursuant to the Election Ordinance, said capital improvement bonds are to be secured by a pledge of and lien upon (i) all of the receipts of a special city-wide sales and use tax at the rate of one-quarter of one percent (0.25%) (the "0.25% Sales and Use Tax"), and (ii) all of the receipts of a special city-wide sales and use tax at the rate of three-quarters of one percent (0.75%) (the "0.75% Sales and Use Tax"), each levied pursuant to the Act; and WHEREAS, at a special election held September 12, 2006, a majority of the qualified electors of the City voting on each of the aforementioned questions approved the issuance of capital improvement bonds in the principal amounts and for the specific purposes set forth on the ballot (and the corresponding levy of the 0.25% Sales and Use Tax and the 0.75% Sales and Use 4823-2826-9828.4 Tax, and the pledge of the receipts thereof to the payment of said capital improvement bonds); and WHEREAS, pursuant to the provisions of Ordinance No. 4936 of the City, adopted and approved by the City Council on October 3, 2006, and in accordance with Amendment 62 and the Act, the City has previously issued its $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), for the purpose of financing a portion of the costs of the Wastewater Project, the Street Project and the Trail Project; and WHEREAS, pursuant to the provisions of Ordinance No. 5504 of the City, adopted and approved by the City Council on August 23, 2007, and in accordance with Amendment 62 and the Act, the City has previously issued its $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), for the purpose of financing a portion of the costs of the Wastewater Project; and WHEREAS, the City and the Trustee have previously entered into a Trust Indenture dated as of November 1, 2006, as previously supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007 (as supplemented and amended, the "Original Indenture"), pursuant to which the Series 2006A Bonds and the Series 2007 Bonds were issued and secured; and WHEREAS, in order to secure additional funds to pay a portion of the costs of additional components of the Street Project and the Trail Project, to fund a debt service reserve, and to pay legal and other expenses incidental to the issuance of sales and use tax capital improvement bonds for such purposes, it has been determined appropriate and necessary that the City authorize the issuance of its $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), pursuant to the provisions of Amendment 62 and the Act, such Series 2009 Bonds to be payable from and secured by a pledge of the receipts of the Sales and Use Taxes (as defined in the Original Indenture) on a parity with the pledge of the receipts of the Sales and Use Taxes securing the Series 2006A Bonds and the Series 2007 Bonds; and WHEREAS, the conditions for the issuance of Additional Bonds, as set forth in the Original Indenture, have been satisfied; and WHEREAS, the regularly scheduled payment of principal of and interest on the Series 2009 Bonds when due will be guaranteed under a financial guaranty insurance policy (the "2009 Bond Policy") to be issued concurrently with the delivery of the Series 2009 Bonds by Assured Guaranty Corp. (the "2009 Insurer"); and WHEREAS, the Series 2009 Bonds are to be dated, bear interest, mature and be subject to redemption as hereinafter in this Second Supplemental Trust Indenture set forth in detail; and WHEREAS, the execution and delivery of this Second Supplemental Trust Indenture and the issuance of the Series 2009 Bonds have been in all respects duly and validly confirmed, authorized and approved by Ordinance No. 5277 adopted and approved by the City Council of the City on October 6, 2009; and WHEREAS, all things necessary to make the Series 2009 Bonds, when authenticated by the Trustee and issued as in this Second Supplemental Trust Indenture provided, the valid, 4823-2826-9828.4 2 binding and legal obligations of the City according to the import thereof, and to constitute the Indenture (as defined below) a valid pledge of the receipts of the Sales and Use Taxes to the payment of the principal of, premium, if any, and interest on the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds and all Additional Bonds (as defined below), if any, to be issued on a parity therewith (the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds and such Additional Bonds are hereinafter referred to as the "Bonds"), have been done and performed, and the creation, execution and delivery of this Second Supplemental Trust Indenture and the creation, execution, issuance and delivery of the Series 2009 Bonds, subject to the terms hereof, have in all respects been duly authorized; and WHEREAS, in order to make proper provision for the security of the Series 2009 Bonds, it is necessary that the Original Indenture be amended and supplemented as effected hereby; NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THIS SECOND SUPPLEMENTAL TRUST INDENTURE WITNESSETH: Section 1.01. It is understood and agreed that the provisions of the Original Indenture shall extend to and apply to the security and benefit of the Series 2009 Bonds and that the term "Bonds" as used in the Original Indenture is hereby recognized to include and shall be deemed to refer to (where applicable) the Series 2009 Bonds. Section 1.02. Section 101 of the Original Indenture is hereby amended by adding thereto the following definitions (and by striking any definitions which are supplanted by the definitions set forth below): "Additional Bonds" mean Bonds in addition to the Series 2006A Bonds, the Series 2007 Bonds and the Series 2009 Bonds which are issued under the provisions of Section 212 of this Indenture. "Authorizing Ordinance" means, collectively, (i) Ordinance No. 4936, adopted by the City on October 3, 2006, which authorized the issuance of the Series 2006A Bonds pursuant to this Indenture, (ii) Ordinance No. 5054, adopted by the City on August 23, 2007, which authorized the issuance of the Series 2007 Bonds pursuant to this Indenture, and (iii) Ordinance No. 5277, adopted by the City on October 6, 2009, which authorized the issuance of the Series 2009 Bonds pursuant to this Indenture. "2009 Bond Policy" means the financial guaranty insurance policy issued by the 2009 Insurer guaranteeing the scheduled payment of principal of and interest on the Series 2009 Bonds when due. "Bonds" mean the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds and all Additional Bonds issued by the City pursuant to this Indenture. Except to the extent provided in Section 209 hereof and except for refunding bonds issued under the provisions of Section 212 hereof, the aggregate principal amount of Bonds issued hereunder shall not exceed $110,000,000. "Government Securities" means (a) direct obligations (other than an obligation subject to variation in principal repayment) of the United States of America, (b) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of 4823-2826-9828.4 3 America, (c) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or instrumentality of the United States of America when such obligations are backed by the full faith and credit of the United States of America, or (d) evidences of ownership of proportionate interests in future interest and principal payments on obligations described above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying government obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated. "Indenture" means this Trust Indenture dated as of November 1, 2006, as amended and supplemented by a First Supplemental Trust Indenture dated as of October 1, 2007, and by a Second Supplemental Trust Indenture dated as of November 1, 2009, each by and between the City and the Trustee, pursuant to which the Bonds are issued, and any further amendments and supplements thereto. "2009 Insurer" means Assured Guaranty Corp., a Maryland -domiciled insurance corporation, or any successor thereto or assignee thereof. "Investment Securities" means, if and to the extent the same are at the time legal for investment of Funds and Accounts held under this Indenture: (a) cash (fully insured by the Federal Deposit Insurance Corporation); (b) Government Securities; (c) Federal Housing Administration debentures; (d) The obligations of the following government-sponsored agencies which are not backed by the full faith and credit of the United States of America: (1) Federal Home Loan Mortgage Corporation (FHLMC) senior debt obligations and Participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); (2) Farm Credit System (formerly Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) consolidated system -wide bonds and notes; (3) Federal Home Loan Banks (FHL Banks) consolidated debt obligations; and (4) Federal National Mortgage Association (FNMA) senior debt obligations and mortgage-backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); (e) Unsecured certificates of deposit, time deposits, and bankers' acceptances (having maturities of not more than 365 days) of any bank the short-term obligations of which are rated "A-1+" or better by S&P and "Prime -1" by Moody's; (f) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation, in banks which have capital and surplus of at least $15 million; (g) Commercial paper (having original maturities of not more than 270 days) rated "A-1+" by S&P and "Prime -1" by Moody's; 4823-2826-9828.4 4 (h) Money market funds rated "Aam" or "AAm-G" by S&P, or better and if rated by Moody's rated "Aa2" or better; (i) "State Obligations", which means: (1) Direct general obligations of any state of the United States of America or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated at least "A3" by Moody's and at least "A-" by S&P, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated; (2) Direct general short-term obligations of any state agency or subdivision or agency thereof described in (a) above and rated "A-1+" by S&P and "MIG -1" by Moody's; and (3) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state or state agency described in (b) above and rated "AA-" or better by S&P and "Aa3" or better by Moody's; 0) Pre -refunded municipal obligations rated "AAA" by S&P and "Aaa" by Moody's meeting the following requirements: (1) the municipal obligations are (I) not subject to redemption prior to maturity or (II) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions; (2) the municipal obligations are secured by cash or U.S. Treasury Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations; (3) the principal of and interest on the U.S. Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations ("Verification Report"); (4) the cash or U.S. Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations; (5) no substitution of a U.S. Treasury Obligation shall be permitted except with another U.S. Treasury Obligation and upon delivery of a new Verification Report; and (6) the cash or U.S. Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent; and (k) other forms of investments approved in writing by the 2009 Insurer, including the 2009 Reserve Policy. 4823-2826-9828.4 5 "2009 Reserve Policy" means the financial guaranty insurance policy issued by the 2009 Insurer and deposited into the Series 2009 Account of the Debt Service Reserve Fund with respect to the Series 2009 Bonds. "Reserve Requirement" means, with respect to each series of Bonds, an amount equal to 5% of the original principal amount of such series of Bonds. For all purposes of this Indenture, the Reserve Requirement may be satisfied by cash or by Investment Securities, including the 2006A Reserve Policy, the 2007 Reserve Policy and the 2009 Reserve Policy. "Series 2009 Bonds" means City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2009, issued under and secured by this Indenture in the aggregate principal amount of $11,250,000. Section 2.01. Section 201(c) of the Original Indenture is hereby amended and supplemented to read as follows: "(c) The Bonds shall be equally and ratably payable and secured hereunder without priority by reason of date of adoption of this Indenture or any Supplemental Indenture authorizing their issuance or by reason of their series, number, date, date of issue, execution, authentication or sale, or otherwise; provided, however, (i) while the Series 2006A Bonds are Outstanding, 50% of Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds and any other series of Additional Bonds (including RLF Loans) hereafter issued, and (ii) following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds and any other Series of Additional Bonds." Section 2.02. Section 202 of the Original Indenture is hereby amended and supplemented to read as follows: "Section 202. Authorized Amount. There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2006A" in the principal amount of Fifty Million Dollars ($50,000,000) (the "Series 2006A Bonds"). There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2007" in the principal amount of Fourteen Million Three Hundred Forty Thousand Dollars ($14,340,000) (the "Series 2007 Bonds"). There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2009" in the principal amount of Eleven Million Two Hundred Fifty Thousand Dollars ($11,250,000) (the "Series 2009 Bonds"). No Bonds may be issued under the provisions of this Indenture except in accordance with this Article II. The total principal amount of Bonds that may be issued hereunder and any RLF Loans that may be incurred by the City is hereby expressly limited to $110,000,000, except as provided in Section 209 and except for refunding bonds issued under the provisions of Section 212 hereof." 4823-2826-9828.4 6 Section 2.03. Article II of the Original Indenture is hereby amended by adding at the end thereof the following sections: "Section 220. Details of Series 2009 Bonds. The Series 2009 Bonds (i) shall be designated "City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2009," (ii) shall be in the aggregate principal amount of $11,250,000, (iii) shall be dated as of November 1, 2009, (iv) shall bear interest from such date at the rates hereinafter provided until paid, payable semiannually on May 1 and November 1 of each year, commencing May 1, 2010, (v) shall be issued in denominations of $5,000 each, or any integral multiple thereof, (vi) shall be numbered from R09-1 upwards in order of issuance according to the records of the Trustee, and (vii) shall mature, unless sooner redeemed in the manner in this Indenture set forth, on November 1 in each of the years and in the amounts set forth in the following table, which table also sets forth the interest rates for the Series 2009 Bonds: Year (November 1) Principal Amount Interest Rate 2015 $1,450,000 3.000% 2016 1,495,000 3.250% 2017 1,545,000 3.500% 2018 1,600,000 3.625% 2019 1,655,000 3.750% 2021 3,505,000 4.000% Section 221. Form of Series 2009 Bonds. The Series 2009 Bonds shall be initially issued as fully registered bonds, without coupons, in the form of six typewritten bond certificates (one for each maturity) to be delivered to the Securities Depository. Each such certificate shall be initially registered in the name of the nominee of the Securities Depository, and no Beneficial Owner will receive a certificate representing his interest in the Series 2009 Bonds, except upon the occurrence of the events described in Section 216 of this Indenture. Beneficial Owners shall be deemed to have waived any right to receive a bond certificate except under the circumstances described in Section 216. The Series 2009 Bonds and the Trustee's certificate of authentication to be endorsed thereon shall be in substantially the form set forth in Exhibit A to the Second Supplemental Trust Indenture, with appropriate variations, insertions and omissions as permitted or required by this Indenture. Section 222. Delivery of Series 2009 Bonds. Simultaneously with the delivery of the Series 2009 Bonds, the Trustee shall apply the proceeds thereof as follows: (a) The amount, if any, received as accrued interest on the Series 2009 Bonds, shall be deposited in the Interest Account of the Bond Fund; (b) $21,093.75 shall be transferred to the 2009 Insurer in payment of the premium on the 2009 Reserve Policy, which 2009 Reserve Policy shall be deposited in the Series 2009 Account of the Debt Service Reserve Fund; 4823-2826-9828.4 7 (c) $79,711.67 shall be transferred to the 2009 Insurer in payment of the premium on the 2009 Bond Policy; (d) $9,633,373.53 shall be deposited in the Series 2009 Street Subaccount of the Project Fund; (e) $1,259,179.08 shall be deposited in the Series 2009 Trail Subaccount of the Project Fund; and (f) The balance of said proceeds in the amount of $59,517.17 shall be deposited in the Costs of Issuance Fund for payment of Costs of Issuance of the Series 2009 Bonds as directed by a Certificate of the City." Section 3.01. Article III of the Original Indenture is hereby amended by adding at the end thereof the following section: "Section 308. Redemption of Series 2009 Bonds. (a) The Series 2009 Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Tiustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from moneys in the Series 2009 Street Subaccount or the Series 2009 Trail Subaccount of the Project Fund in excess of the amount needed to complete the portion of the Street Project and the Trail Project intended to be funded with the Series 2009 Bonds, which moneys shall be transferred to the Redemption Fund pursuant to Section 502 hereof. (b) The Series 2009 Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from Surplus Tax Receipts deposited in the Redemption Fund pursuant to Section 503 hereof. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds and any series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds and any other series of Additional Bonds. (c) The Series 2009 Bonds are subject to redemption at the option of the City, communicated in a written notice to the Trustee not less than sixty (60) days prior to the date fixed for redemption, in whole or in part on any date on or after November 1, 2015, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% 4823-2826-9828.4 8 of the principal amount being redeemed plus accrued interest to the date of redemption. (d) The Series 2009 Bonds maturing November 1, 2021 are subject to mandatory redemption, to be selected by lot in such manner as the Trustee shall determine, on November 1 in the years and the amounts set forth below, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption. Date Principal Amount November 1, 2020 $1,720,000 November 1, 2021 (maturity) 1,785,000 Section 4.01. Section 501(a) of the Original Indenture is hereby amended and restated to read as follows: "(a) There are hereby created and established the following Funds and Accounts: (i) Project Fund, and a Street Account (with a Series 2006A and a Series 2009 Subaccount), a Trail Account (with a Series 2006A and a Series 2009 Subaccount) and a Wastewater Account (with a Series 2006A Subaccount and a Series 2007 Subaccount) therein; therein; (ii) Revenue Fund; (iii) Bond Fund, and an Interest Account and a Principal Account (iv) Redemption Fund; (v) Debt Service Reserve Fund, and a Series 2006A Account, a Series 2007 Account and a Series 2009 Account therein; (vi) Cost of Issuance Fund; and (vii) Rebate Fund." Section 4.02. Section 503(b) of the Original Indenture is hereby amended and restated to read as follows: "(b) Upon receipt, but in no event later than the last day of each month in which receipts of the Sales and Use Taxes are deposited in the Revenue Fund, commencing no later than March 30, 2007, there shall be transferred from the Revenue Fund, in the following order, the amounts set forth below: FIRST: For deposit to the Interest Account of the Bond Fund, an amount equal to one-sixth (1/6) of the interest on the Outstanding Bonds due on the next interest payment date; provided, however, (i) with respect to the deposits to be made to the Interest Account relating to the Series 2006A Bonds during the 4823-2826-9828.4 9 months of March, 2007 through October, 2007, such deposits shall be in an amount equal to one-seventh (1/7) of the interest due on the Series 2006A Bonds on November 1, 2007, and (ii) with respect to the deposits to be made to the Interest Account relating to the Series 2007 Bonds during the months of October, 2007 through April, 2008, such deposits shall be in an amount equal to one- seventh (1/7) of the interest due on the Series 2007 Bonds on May 1, 2008; SECOND: For deposit to the Principal Account of the Bond Fund, an amount equal to one -twelfth (1/12) of the next scheduled principal maturity of Outstanding Bonds (including mandatory sinking fund redemptions); provided, however, with respect to the Series 2006A Bonds, the Series 2007 Bonds and the Series 2009 Bonds, such deposits shall not commence until November 2014; THIRD: For deposit to the Debt Service Reserve Fund, an amount sufficient to cure any deficiency in the Debt Service Reserve Fund (including any reimbursement to the 2006A Insurer under the 2006A Reserve Policy, any reimbursement to the 2007 Insurer under the 2007 Reserve Policy, and any reimbursement to the 2009 Insurer under the 2009 Reserve Policy); FOURTH: For deposit to the Rebate Fund, an amount sufficient to satisfy the City's obligations under Section 507 hereof, FIFTH: For payment to the Trustee and Paying Agent, the amount, if any, necessary to pay or reimburse the Trustee and Paying Agent for fees and expenses related to the Bonds; and SIXTH: All remaining moneys ("Surplus Tax Receipts") will be transferred to the Redemption Fund and shall be applied to call Bonds for redemption prior to maturity as provided in Section 301(b) and Section 506 of the Indenture." Section 4.03. Section 505 of the Original Indenture is hereby amended and supplemented to read as follows: "Section 505. Cost of Issuance Fund. There shall be deposited to the credit of the Cost of Issuance Fund all moneys received for said Fund pursuant to Section 208 and Section 219 hereof. The Trustee shall pay those Costs of Issuance as directed by the City pursuant to a Certificate delivered on a Closing Date. After all Costs of Issuance have been paid (and in any event not later than January 1, 2007 with respect to the Series 2006A Bonds, December 1, 2007 with respect to the Series 2007 Bonds, and December 1, 2009 with respect to the Series 2009 Bonds), any remaining moneys in the Cost of Issuance Fund shall be transferred to the Interest Account of the Bond Fund." Section 4.04. Section 506 of the Original Indenture is hereby amended and supplemented to read as follows: "Section 506. Redemption Fund. (a) There shall be deposited to the credit of the Redemption Fund all moneys required to be transferred thereto pursuant to Section 502 and Section 503 of this Indenture. 4823-2826-9828.4 10 (b) Moneys credited to the Redemption Fund shall be expended only as set forth in this Section 506. (c) Moneys in the Redemption Fund shall be transferred to the Principal Account of the Bond Fund at such times as may be necessary to effectuate, on the first available date, redemptions of Bonds required by Section 301(a)(1) and (2), Section 307(a) and (b), and Section 308(a) and (b) of this Indenture. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds and any series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds and any other series of Additional Bonds. (d) The amounts accumulated in the Redemption Fund, if so directed by the City by means of a Certificate delivered to the Trustee, shall be applied by the Trustee to the purchase of Bonds of the maturities which would otherwise be redeemed pursuant to Section 301(a)(1) and (2), Section 307(a) and (b), Section 308(a) and (b) and this Section 506 but for the provisions of this subsection (d), at prices directed by the City not exceeding the applicable redemption prices of the Bonds which would be redeemed but for the operation of this sentence. Interest accrued on the Bonds so purchased shall be paid from moneys credited to the Interest Account of the Bond Fund." Section 5.01. Section 902(a) of the Original Indenture is hereby amended and supplemented to read as follows: "(a) Subject to subsection (b) of this Section 902, the City shall, from moneys lawfully available therefor, pay to the Trustee and any Paying Agent reasonable compensation for all services performed hereunder and also all reasonable expenses, charges and other disbursements and those of their attorneys, agents and employees incurred in and about the administration and execution of the trusts hereby created and the performance of the powers and duties hereunder and, to the extent permitted by law and from moneys lawfully available therefor, shall indemnify and save the Trustee harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder. With respect to the Series 2006A Bonds, the Trustee's initial authentication fee shall be $3,500 and the annual administration fee of the Trustee shall be $4,000 annually prior to the final Completion Date with respect to any of the Projects, and $3,500 annually thereafter. With respect to the Series 2007 Bonds, the Trustee's initial authentication fee shall be $1,500 and the annual administration fee of the Trustee shall be $1,500 annually prior to the final Completion Date with respect to any of the Projects, and $1,500 annually thereafter. With respect to the Series 2009 Bonds, the Trustee's initial authentication fee shall be $1,000 and the annual administration fee of the Trustee shall be $1,500 annually prior to the final Completion Date with respect to any of the Projects, and $1,000 annually thereafter. If the City shall fail to make any payment required by this subsection (a), the Trustee may make such 4823-2826-9828.4 11 payment from any moneys in its possession under the provisions of this Indenture and shall be entitled to a preference therefor over any of the Bonds Outstanding hereunder. The City shall not be required to indemnify the Trustee against any liabilities which the Trustee may incur as a result of negligent or wrongful acts or omissions of the Trustee." Section 6.01. The Original Indenture is hereby amended and supplemented by adding at the end thereof the following Article: "ARTICLE XIV PROVISIONS RELATING TO 2009 BOND POLICY AND 2009 RESERVE POLICY Notwithstanding any provision to the contrary contained in this Indenture, so long as the 2009 Bond Policy and/or the 2009 Reserve Policy remain in full force and effect (or any amounts are owed to the 2009 Insurer in connection therewith), the provisions of this Article XIV shall control where applicable. Section 1401. Consents, Approvals and Directions of 2009 Insurer. (a) The 2009 Insurer shall be deemed to be the sole Holder of the Series 2009 Bonds for the purpose of (i) exercising all remedies and directing the Trustee to take actions or for any other purposes following an Event of Default, and (ii) granting any consent, waiver, direction or approval or taking any action permitted or required under this Indenture to be granted to or taken by the Holders of the Series 2009 Bonds. (b) With respect to any amendment, supplement, modification to, or waiver of, this Indenture or any other document relating to the issuance of, of security for, the Series 2009 Bonds not requiring the consent of Bondholders, prior written notice thereof must be provided to the 2009 Insurer. The 2009 Insurer's prior written consent is required for any amendment, supplement, modification to, or waiver of, this Indenture or any other document relating to the issuance of, of security for, the Series 2009 Bonds that does require. Copies of any amendment, supplement, modification or waiver requiring the consent of the 2009 Insurer must be provided to all rating agencies that have assigned a rating to the Series 2009 Bonds. (c) In addition to the requirements in (b) above, in any other case requiring the consent of all Bondholders, the prior written consent of the 2009 Insurer shall also be required. (d) Any provision of the Indenture expressly recognizing or granting rights in or to the 2009 Insurer may not be amended in any manner that affects the rights of the 2009 Insurer hereunder without the prior written consent of the 2009 Insurer. (e) No removal or resignation of the Trustee (or Paying Agent) shall take effect until a successor, acceptable to the 2009 Insurer, shall be appointed. The Trustee (or Paying Agent) may be removed at any time, at the request of the 2009 Insurer, for any breach of its obligations under this Indenture. 4823-2826-9828.4 12 (f) Upon the occurrence and continuance of an Event of Default, the 2009 Insurer shall be entitled to control and direct the enforcement of all rights and remedies granted to the Bondholders or the Trustee for the benefit of the Bondholders under this Indenture, including, without limitation, (i) the right to accelerate the principal of the Series 2009 Bonds and (ii) the right to annul any declaration of acceleration. The 2009 Insurer shall also be entitled to approve all waivers of Events of Default. (g) Upon the occurrence of an Event of Default, the Trustee may, with the prior written consent of the 2009 Insurer, and shall at the direction of the 2009 Insurer or the Bondholders with the prior written consent of the 2009 Insurer, declare the principal of the Series 2009 Bonds to be immediately due and payable, whereupon that portion of the principal of the Series 2009 Bonds thereby coming due and the interest accrued thereon to the date of payment shall, without further action, become and be immediately due and payable, anything in this Indenture or in the Series 2009 Bonds to the contrary notwithstanding. (h) The prior written consent of the 2009 Insurer shall be a condition precedent to the deposit of any credit instrument provided in lieu of the 2009 Reserve Policy or a cash deposit into the Series 2009 Account of the Debt Service Reserve Fund, if any. Notwithstanding anything to the contrary set forth in this Indenture, amounts on deposit in the Series 2009 Account of the Debt Service Reserve Fund shall be applied solely to the payment of debt service due on the Series 2009 Bonds. (i) The exercise of any provision of this Indenture which permits the purchase of Series 2009 Bonds in lieu of redemption shall require the prior written approval of the 2009 Insurer if any Series 2009 Bond so purchased is not redeemed, defeased or cancelled upon purchase. 0) In determining whether the rights of Bondholders will be adversely affected by any action taken pursuant to the terms and provisions of this Indenture, the Trustee (or Paying Agent) shall consider the effect on the Bondholders as if there were no 2009 Bond Policy. (k) Any reorganization or liquidation plan with respect to the City must be acceptable to the 2009 Insurer. In the event of any such reorganization or liquidation, the 2009 Insurer shall have the right to vote on behalf of all Bondholders who hold Series 2009 Bonds guaranteed by the 2009 Insurer absent a payment default by the 2009 Insurer under the 2009 Bond Policy. Section 1402. Disclosures to 2009 Insurer. (a) The 2009 Insurer shall be provided with the following information by the City or the Trustee, as the case may be: (i) Annual audited financial statements prepared by a certified public accountant within 180 days after the end of the City's fiscal year (together with a certification of the City that it is not aware of any default or Event of Default under the Indenture), and the City's annual budget within 30 days after the approval thereof, together with such other information, data or reports as the 2009 Insurer shall reasonably request from time to time; 4823-2826-9828.4 13 (ii) Immediate notice of any draw upon the Debt Service Reserve Fund other than (1) withdrawals of amounts in excess of the Reserve Requirement and (2) withdrawals in connection with a refunding of Bonds; (iii) Prior to issuing Additional Bonds, any disclosure document or financing agreement relating thereto, which disclosure document or financing agreement shall include the applicable maturity schedule, interest rate(s), redemption and security provision pertaining to said Additional Bonds; (iv) Prior written notice of any name change of the Trustee (or Paying Agent) or the resignation or removal of the Trustee (or Paying Agent); (v) Within thirty (30) days following the commencement of any litigation or investigation that may have a material adverse effect on the ability of the City to comply with its obligations under this Indenture, notice of such litigation or investigation; and (vi) All reports and notices required to be delivered to the Bondholders, the Trustee or any entity designated pursuant to Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission shall also be provided to the 2009 Insurer simultaneously with the delivery of said reports or notices. (b) All demands, notices and other information required to be given to the 2009 Insurer hereunder shall be in writing and shall be mailed by registered or certified mail or personally delivered, emailed or telecopied to the 2009 Insurer as follows: Assured Guaranty Corp. 31 West 52°a Street New York, New York 10019 Attn: Risk Management Department (Re: Policy No: D-2009-1478) Telecopy No. (212) 581-3268 Email: riskmanagementdept@assured ug arant com In each case in which notice or other communication refers to an Event of Default, a claim on the 2009 Policy or any event with respect to which failure on the part of the 2009 Insurer to respond shall be deemed to constitute consent or acceptance, then such demand, notice or other communication shall be marked to indicate "URGENT MATERIAL ENCLOSED" and shall also be sent to the attention of the General Counsel at the same address and telecopy above and to generalcounselgassured uaranty com. (c) The City will permit the 2009 Insurer to discuss the affairs, finances and accounts of the City or any information the 2009 Insurer may reasonably request regarding the security for the Series 2009 Bonds with appropriate members of the City staff and will use commercially reasonable efforts to enable the 2009 Insurer to have access to the facilities, books and records of the City on any business day upon reasonable prior notice. 4823-2826-9828.4 14 (d) The Trustee shall notify the 2009 Insurer of any failure by the City to provide notices, certificates and other information under this Indenture. Section 1403. Defeasance and Discharge of Series 2009 Bonds. (a) In the event that the principal and/or interest due on the Series 2009 Bonds shall be paid by the 2009 Insurer pursuant to the 2009 Policy, the Series 2009 Bonds shall remain Outstanding for all purposes, shall not be defeased or otherwise satisfied and shall not be considered paid by the City, and the assignment and pledge of the Trust Estate and all covenants, agreements and other obligations of the City to the registered owners shall continue to exist and shall run to the benefit of the 2009 Insurer, and the 2009 Insurer shall be subrogated to the rights of such registered owners including, without limitation, any rights that such owners may have in respect of securities law violations arising from the offer and sales of the Series 2009 Bonds. (b) In the event of any defeasance of the Series 2009 Bonds in accordance with the provisions of Article VII of this Indenture, the following items shall be provided to the Trustee and to the 2009 Insurer: (i) An opinion of Bond Counsel to the effect (1) that the defeasance will not adversely impact the exclusion from gross income for federal income tax purposes of interest on the Series 2009 Bonds, and (2) that the Series 2009 Bonds are no longer Outstanding under the Indenture; and (ii) If the Series 2009 Bonds are being advance refunding (within the meaning of the Code) through a net defeasance, a refunding trust or escrow agreement (the "Escrow Agreement") and an opinion of counsel regarding the validity and enforceability thereof. The Escrow Agreement shall provide that: (1) any substitution of securities in the escrow will require verification by an independent certified public accountant and the prior written consent of the 2009 Insurer: (2) the City will not exercise any optional redemption rights with the respect to the Series 2009 Bonds secured by the Escrow Agreement or any other redemption rights other than mandatory sinking fund redemptions unless (I) the right to make any such redemption has been expressly reserved in the Escrow Agreement and such reservation has been disclosed in detail in the official statement for any refunding bonds used to fund the escrow, and (II) as a condition of any such redemption, there shall be provided to the 2009 Insurer a verification of an independent certified public accountant as to the sufficiency of escrow receipts without reinvestment to meet the escrow requirements remaining following such redemption; and (3) the City shall not amend the Escrow Agreement or enter into a forward purchase agreement or other agreement with respect to rights in the escrow without the prior written consent of the 2009 Insurer. Section 1404. Claims Upon 2009 Bond Policy and Payments by and to 2009 Insurer. (a) At least two (2) Business Days prior to each payment date on the Series 2009 Bonds, the Trustee will determine whether there will be sufficient funds to pay all principal of and interest on the Series 2009 Bonds due on the related payment date and shall immediately notify the 2009 Insurer or its designee on the same Business Day by telephone or electronic mail, confirmed in writing by registered or certified mail, of the 4823-2826-9828.4 15 amount of any deficiency. Such notice shall specify the amount of the anticipated deficiency, the Series 2009 Bonds to which such deficiency is applicable and whether such Series 2009 Bonds will be deficient as to principal or interest or both. If the deficiency is made up in whole or in part prior to or on the payment date, the. Trustee shall so notify the 2009 Insurer or its designee. (b) The Trustee shall, after giving notice to the 2009 Insurer as provided above, make available to the 2009 Insurer and, at the 2009 Insurer's direction, to any fiscal agent, the registration books of the City maintained by the Trustee and ail records relating to the funds maintained under the Indenture. (c) The Trustee shall provide the 2009 Insurer and any fiscal agent with a list of registered owners of the Series 2009 Bonds entitled to receive principal or interest payments from the 2009 Insurer under the terms of the 2009 Policy, and shall make arrangements with the 2009 Insurer, the fiscal agent or another designee of the 2009 Insurer to (i) mail checks or drafts to the registered owners of the Series 2009 Bonds entitled to :receive full or partial interest payments from the 2009 Insurer and (ii) pay principal upon the Series 2009 Bonds surrendered to the 2009 Insurer, the fiscal agent or another designee of the 2009 Insurer by the registered owners of the Series 2009 Bonds entitled to receive full or partial principal payments from the 2009 Insurer. (d) The Trustee shall, at the time it provides notice to the 2009 Insurer of any deficiency pursuant to clause (a) above, notify registered owners of the Series 2009 Bonds entitled to receive the payment of principal or interest thereon from the 2009 Insurer (i) as to such deficiency and its entitlement to receive principal or interest, as applicable, (ii) that the 2009 Insurer will remit to them all or a part of the interest payments due on the related payment date upon proof of its entitlement thereto and delivery to the 2009 Insurer or any fiscal agent, in form satisfactory to the 2009 Insurer, of an appropriate assignment of the registered owner's right to payment, (iii) that, if they are entitled to receive partial payment of principal from the 2009 Insurer, they must surrender the related Series 2009 Bonds for payment first to the Trustee, which will note on such Series 2009 Bonds the portion of the principal paid by the Trustee, and second to the 2009 Insurer or its designee, together with an appropriate assignment, in form satisfactory to the 2009 Insurer, to permit ownership of such Series 2009 Bonds to be registered in the name of the 2009 Insurer, which will then pay the unpaid portion of principal, and (iv) that, if they are entitled to receive full payment of principal from the 2009 Insurer, they must surrender the related Series 2009 Bonds for payment to the 2009 Insurer or its designee, rather than the Trustee, together with the an appropriate assignment, in form satisfactory to the 2009 Insurer, to permit ownership of such Series 2009 Obligations to be registered in the name of the 2009 Insurer. (e) In addition, if the Trustee has notice that any Holder of the Series 2009 Bonds has been required to disgorge payments of principal or interest on the Series 2009 Bonds previously Due for Payment pursuant to a final non -appealable order by a court of competent jurisdiction that such payment constitutes an avoidable preference to such holder within the meaning of any applicable bankruptcy laws, then the Trustee shall notify the 2009 Insurer or its designee of such fact by telephone or electronic notice, confirmed in writing by registered or certified mail. 4823-2826-9828.4 16 (f) The Trustee will be hereby irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for holders of the Series 2009 Bonds as follows: (i) If and to the extent there is a deficiency in amounts required to pay interest on the Series 2009 Bonds, the Trustee shall (1) execute and deliver to the 2009 Insurer, in form satisfactory to the 2009 Insurer, an instrument appointing the 2009 Insurer as agent for such holders in any legal proceeding related to the payment of such interest and an assignment to the 2009 Insurer of the claims for interest to which such deficiency relates and which are paid by the 2009 Insurer, (2) receive as designee of the respective holders (and not as Trustee) in accordance with the tenor of the 2009 Bond Policy payment from the 2009 Insurer with respect to the claims for interest so assigned, and (3) disburse the same to such respective holders; and (ii) If and to the extent of a deficiency in amounts required to pay principal of the Series 2009 Bonds, the Trustee shall (1) execute and deliver to the 2009 Insurer, in form satisfactory to the 2009 Insurer, an instrument appointing the 2009 Insurer as agent for such holder in any legal proceeding related to the payment of such principal and an assignment to the 2009 Insurer of the Series 2009 Bonds surrendered to the 2009 Insurer in an amount equal to the principal amount thereof as has not previously been paid or for which moneys are not held by the Trustee and available for such payment (but such assignment shall be delivered only if payment from the 2009 Insurer is received), (2) receive as designee of the respective holders (and not as Trustee) in accordance with the tenor of the 2009 Bond Policy payment therefore from the 2009 Insurer, and (3) disburse the same to such holders. (g) Payments with respect to claims for interest on and principal of Series 2009 Bonds disbursed by the Trustee from proceeds of the 2009 Bond Policy shall not be considered to discharge the obligation of the City with respect to such Series 2009 Bonds, and the 2009 Insurer shall become the owner of such unpaid Series 2009 Bonds and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. (h) Irrespective of whether any such assignment is executed and delivered, the City and, the Trustee hereby agree for the benefit of the 2009 Insurer that: (i) they recognize that to the extent the 2009 Insurer makes payments, directly or indirectly (e.g., by paying through the Trustee), on account of principal of or interest on the Series 2009 Bonds, the 2009 Insurer will be subrogated to the rights of such holders to receive the amount of such principal and interest from the City, with interest thereon as provided and solely from the sources stated in this Indenture and the Series 2009 Bonds; and (ii) they will accordingly pay to the 2009 Insurer the amount of such principal and interest, with interest thereon as provided in this Indenture and the Series 2009 Bonds, but only from the sources and in the manner provided herein for the payment of principal of and interest on the Series 2009 Bonds to holders, and 4823-2826-9828.4 17 will otherwise treat the 2009 Insurer as the owner of such rights to the amount of such principal and interest. (i) The 2009 Insurer shall be entitled to pay principal or interest on the Series 2009 Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment (as such terms are defined in the 2009 Bond Policy) and any amounts due on the Obligations as a result of acceleration of the maturity thereof in accordance with this Indenture, whether or not the 2009 Insurer has received a Notice (as defined in the 2009 Bond Policy) of Nonpayment or a claim upon the 2009 Bond Policy. 0) In addition, the 2009 Insurer shall, to the extent it makes any payment of principal or interest on the Series 2009 Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the 2009 Bond Policy, and to evidence such subrogation (1) in the case of claims for interest, the Trustee shall note the 2009 Insurer's rights as subrogee on the registration books of the City maintained by the Trustee, upon receipt of proof of payment of interest thereon to the registered holders of the Series 2009 Bonds, and (2) in the case of claims for principal, the Trustee, if any, shall note the 2009 Insurer's rights as subrogee on the registration books of the City maintained by the Trustee, upon surrender of the Series 2009 Bonds together with receipt of proof of payment of principal thereof. (k) The City hereby agrees to pay or reimburse the 2009 Insurer (i) all amounts paid by the 2009 Insurer under the 2009 Bond Policy, and (ii) to the extent permitted by law, any and all charges, fees, costs and expenses which the 2009 Insurer may reasonably pay or incur, including, but not limited to, fees and expenses of attorneys, accountants, consultants and auditors and reasonable costs of investigations, in connection with (1) any accounts established to facilitate payments under the 2009 Bond Policy, (2) the administration, enforcement, defense or preservation of any rights in respect of this Indenture or any other financing agreement relating to the Series 2009 Bonds, including defending, monitoring or participating in any litigation or proceeding (including any bankruptcy proceeding in respect of the City or any affiliate thereof) relating to this Indenture or any such financing agreement, any party to this Indenture or any other such financing agreement or the transaction contemplated by this Indenture, (3) the foreclosure against, sale or other disposition of any collateral securing any obligations under this Indenture or any such other financing agreement, or the pursuit of any remedies under this Indenture or any other such financing agreement, to the extent such costs and expenses are not recovered from such foreclosure, sale or other disposition, or (4) any amendment, waiver or other action with respect to, or related to, this Indenture or any other financing agreement whether or not executed or completed; costs and expenses shall include a reasonable allocation of compensation and overhead attributable to time of employees of the 2009 Bond Insurer spent in connection with the actions described in clauses (2) - (4) above. In addition, the 2009 Bond Insurer, the City recognizes that the 2009 Bond Insurer has reserved the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of this Indenture or any other financing agreement. The City will pay interest on the amounts owed in this paragraph from the date of any payment due or paid, at the lesser of (x) the maximum rate of interest permitted by then applicable law, or (y) the per annum rate of interest publicly announced from time to time by JP Morgan Chase Bank, National Association at its principal office in New York, New York as its prime lending 4823-2826-9828.4 18 rate (any change in such prime rate of interest to be effective on the date such change is announced by JPMorgan Chase Bank, National Association), plus three percent (3%) per annum (the "Reimbursement Rate"). The Reimbursement Rate shall be calculated on the basis of the actual number of days elapsed over a 360 -day year. In the event JPMorgan Chase Bank ceases to announce its prime rate publicly, the prime rate shall be the publicly announced prime rate or base lending rate of such national bank as the 2009 Bond Insurer shall specify. (1) In addition to any and all rights of reimbursement, subrogation and any other rights pursuant hereto or under law or in equity, the City agrees to pay or reimburse the 2009 Insurer, to the extent permitted by law, any and all charges, fees, costs, claims, losses, liabilities (including penalties), judgments, demands, damages and expenses which the 2009 Insurer or its officers, directors, shareholders, employees, agents and each Person, if any, who controls the 2009 Insurer within the meaning of either Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended, may reasonably pay or incur, including, but not limited to, fees and expenses of attorneys, accountants, consultants and auditors and reasonable costs of investigations, of any nature in connection with, in respect of or relating to the transactions contemplated by this Indenture or any other financing agreement relating to the Series 2009 Bonds, by reason of: (i) any omission or action (other than of or by the 2009 Insurer) in connection with the offering, issuance, sale, remarketing or delivery of the Series 2009 Bonds; (ii) the negligence, bad faith, willful misconduct, misfeasance, malfeasance or theft committed by any director, officer, employee or agent of the City in connection with any transaction arising from or relating to this Indenture or any other financing. agreement; (iii) the violation by the City of any law, rule or regulation; or any judgment, order or decree applicable to it; (iv) the breach by the City of any representation, warranty or covenant under this Indenture or any other financing agreement relating to the Series 2009 Bonds, or the occurrence, in respect. of the City, under this Indenture or any other such financing agreement of any "event of default" or any event which, with the giving of notice or lapse of time or both, would constitute any "event of default"; or (v) any untrue statement or alleged untrue statement of a material fact contained in any official statement relating to the Series 2009 Bonds, if any, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such claims arise out of or are based upon any untrue statement or omission in information included in an official statement, if any, and furnished by the 2009 Insurer in writing expressly for use therein. 4823-2826-9828.4 19 Section 1405. Provisions Relating to Additional Bonds. (a) The principal on any Additional Bonds issued under the Indenture shall be payable on November 1 of the years provided in the Supplemental Indenture authorizing such Additional Bonds. (b) As a condition to the issuance of Additional Bonds secured on a parity basis with the Series 2006A Bonds, the Series 2007 Bonds and the Series 2009 Bonds, the City shall provide to the 2009 Insurer a copy of certified cash flows evidencing that the Existing Indebtedness will be repaid in full no later than November 1, 2014. Such cash flows shall assume that all of the permitted Existing Indebtedness unissued on the date the cash flows are provided has in fact been issued. Alternatively, the City may covenant to the 2009 Insurer not to issue all or any portion of the unissued Existing Indebtedness and omit that portion of the Existing Indebtedness from the cash flows. (c) Notwithstanding satisfaction of the other conditions to the issuance of Additional Bonds set forth in Article II of this Indenture, no such issuance may occur (i) if an Event of Default (or any event which, once all notice or grace periods have passed, would constitute an Event of Default) exists unless such default shall be cured upon such issuance and (ii) unless the Debt Service Reserve Fund is fully funded at the Reserve Requirement (including the Reserve Requirement relating to the proposed issue) upon the issuance of such Additional Bonds, in either case unless otherwise permitted by the 2009 Insurer. (d) In addition to the coverage required in Section 212 hereof relating to the issuance of Additional Bonds, the Certificate delivered by the Finance Director shall also show coverage of at least one times on Policy Costs then due and owing. Section 1406. Miscellaneous Provisions Relating to 2009 Bond Policy. (a) Unless the 2009 Insurer shall otherwise consent, the City hereby covenants not to issue any additional debt secured by a lien on the Existing Tax. (b) The 2009 Insurer is explicitly recognized as being a third party beneficiary to this Indenture and may enforce any right, remedy or claim conferred, given or granted hereunder. (c) The City shall not enter into (i) any variable rate indebtedness on a parity with or subordinate to the Series 2009 Bonds, or (ii) any derivative instruments in connection with the Series 2009 Bonds and any parity or subordinate obligations, in each case subsequent to the date hereof and so long as any Series 2009 Bonds insured by the 2009 Insurer remain outstanding." Section 7.01. Severability. (a) If any provisions of this Second Supplemental Trust Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to any extent whatever. 4823-2826-9828.4 20 (b) The invalidity of any one or more phrases, sentences, clauses or paragraphs in this Second Supplemental Trust Indenture contained shall not affect the remaining portions of this Second Supplemental Trust Indenture or any part thereof. Section 7.02. Applicable Provisions of Law. This Second Supplemental Trust Indenture shall be considered to have been executed in the State of Arkansas and it is the intention of the parties that the substantive law of the State of Arkansas govern as to all questions of interpretation, validity and effect. Section 7.03. Counterparts. This Second Supplemental Trust Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.04. Ratification of Original Indenture. As supplemented and amended hereby, the Original Indenture is hereby ratified and confirmed. 4823-2826-9828.4 21 IN WITNESS WHEREOF, the City has caused these presents to be signed in its name and behalf by its Mayor and its corporate seal to be hereunto affixed and attested by its City Clerk, and to evidence its acceptance of the trust hereby created, the Trustee has caused these presents to be signed in its behalf by its duly authorized officers and its corporate seal to be hereto affixed. ATTEST: City.Clerk �a`�6rsrrrrrrroyao ;1=AYETTEVILLE 1 "�B6�E�G ATTEST: Bv: Title: Vice President (SEAL) CITY OF FAY�ETTEVILLE, ARKANSAS By: yds yor SIMMONS FIRST TRUST COMPANY, N.A., as Trustee By: Title: Assistant Vice President [SIGNATURE PAGE TO SECOND SUPPLEMENTAL TRUST INDENTURE] 4823-2826-9828.4 IN WITNESS WHEREOF, the City has caused these presents to be signed in its name and behalf by its Mayor and its corporate seal to be hereunto affixed and attested by its City Clerk, and to evidence its acceptance of the trust hereby created, the Trustee has caused these presents to be signed in its behalf by its duly authorized officers and its corporate seal to be hereto affixed. CITE' OF FAYETTEVILLE, ARKANSAS Mayor ATTEST: By: City Clerk (SEAL) SIMMONS FIRST TRUST COMPANY, N.A., as Trustee 1 } By: Title: Assistant Vice Pre ident ATTEST: By: 4 11. Title: Vice lyresident (SEAL) C6; QO [SIGNATURE PAGE TO SECOND SUPPLEMENTAL TRUST INDENTURE] 4823-2826-9828.4 STATE OF ARKANSAS ) ) ss. COUNTY OF WASHINGTON ) Before me a Notary Public, duly commissioned, qualified and acting within and for the State and county aforesaid, appeared in person the within named Lioneld Jordan and Sondra Smith, Mayor and City Clerk, respectively, of the City of Fayetteville, Arkansas, to me personally known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the City, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this r `� -day of November, 2009. Notary Public My Commission expires: DENISE S. BOUGAE WASHINGTON COUNTY PPOBQC AFiMAS My Commission Expires June 19, 2o19 (SEA Commission No. 12371952 [ACKNOWLEDGEMENT TO SECOND SUPPLEMENTAL TRUST INDENTURE] 4823-2826-9828.4 ACKNOWLEDGMENT STATE OF ARKANSAS ) ) ss. COUNTY OF JEFFERSON ) Before me a Notary Public, duly commissioned, qualified and acting within and for the State and county aforesaid, appeared in person the within named Glenda Dean and Roy Ferrell, the Assistant Vice President and the Vice President, respectively, of Simmons First Trust Company, N.A., to me personally known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the Trust Company, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this y of November, 2009. &R�'-< � - Ootary�ublic My Commission expires: LAUMW oai,,.....--'-1�SA.S NOTARY PUBLIC, A DREW COUNTY COMMISSION #12372803 y CpN[NIIS 31ON EXP. 08-07-2019 [ACKNOWLEDGEMENT TO SECOND SUPPLEMENTAL TRUST INDENTURE] 4823-2826-9828.4 Form of Series 2009 Bond Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. �u UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2009 Interest Rate: % Maturity Date: November 1, 20_ Date of Bond: November 1, 2009 Registered Owner: CEDE & CO. Principal Amount: KNOW ALL MEN BY THESE PRESENTS: CUSIP: DOLLARS That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2010, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. 4823-2826-9828.4 A-1 This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2009", is one of a series of bonds aggregating Eleven Million Two Hundred Fifty Thousand Dollars ($11,250,000) (the "Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of (i) the acquisition, construction, reconstruction, repair, straightening and widening of certain City streets and related improvements (the "Street Project"), and (ii) the acquisition, construction and equipping of certain City trail system improvements (the "Trail Project"). Bond proceeds will be utilized to pay Project costs, to fund a debt service reserve, to purchase a policy of municipal bond insurance, and to pay the costs of issuance of the Bonds. The Bonds are issued under and are secured by and entitled to the protection of a Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, and by a Second Supplemental Trust Indenture dated as of November 1, 2009 (as supplemented and amended, the "Indenture"), by and between the City and the Trustee, which Indenture is available for inspection at the principal corporate trust office of the Trustee. Reference is hereby made to the Indenture and to all indentures supplemental thereto for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the City, the Trustee and the owners of the Bonds, and the terms upon which the Bonds are issued and secured. The Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas, including particularly Amendment No. 62 to the Constitution of Arkansas, as implemented by the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2005) §§14-164-301 et seq. (as from time to time amended, the "Local Government Bond Act"), Ordinance No. 5277 of the City adopted October 6, 2009, which ordinance authorized the execution and delivery of the Second Supplemental Trust Indenture, and a special election duly held on September 12, 2006, at which a majority of the qualified electors of the City voting approved the issuance of the Bonds. In accordance with the Local Government Bond Act, the City has pledged all receipts from (i) a one-quarter of one percent (0.25%) local sales and use tax (the "0.25% Sales and Use Tax") and (ii) a three-quarters of one percent (0.75%) local sales and use tax (the "0.75% Sales and Use Tax"), each levied by the City pursuant to Ordinance No. 4891, adopted by the City on June 20, 2006, to provide funds for the repayment of the Bonds. The pledge of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax (collectively, the "Tax Receipts") presently secures payment of the Bonds and (i) the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), and (ii) the City's $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"). Such Tax Receipts may additionally be pledged to secure the payment of up to $34,410,000 in aggregate principal amount of Additional Bonds issued under the provisions of the Indenture. The Indenture provides that the City may hereafter issue Additional Bonds from time to time under certain terms and conditions contained in the Indenture and, if issued or incurred, such Additional Bonds will rank on a parity of security with the Bonds, the Series 2006A Bonds and the Series 2007 Bonds and will be equally and ratably secured by and entitled to the protection of the Indenture. The Bonds are not general obligations of the City, but are special obligations secured by an irrevocable pledge of and lien on the Tax Receipts, as more particularly described in the 4823-2826-9828.4 A-2 Indenture. In no event shall the Bonds constitute an indebtedness of the City within the meaning of any constitutional or statutory limitation. STATEMENT OF INSURANCE Assured Guaranty Corp. ("Assured Guaranty"), a Maryland -domiciled insurance company, has delivered its financial guaranty insurance policy with respect to the scheduled payments of principal of and interest on this Bond to Simmons First Trust Company, N.A., Pine Bluff, Arkansas, as paying agent on behalf of the holders of the Bonds (the "Paying Agent"). Said Policy is on file and available for inspection at the principal office of the Paying Agent and a copy thereof may be obtained from Assured Guaranty or the Paying Agent. All payments required to be made under the Policy shall be made in accordance with the provisions thereof. The owner of this bond acknowledges and consents to the subrogation rights of Assured Guaranty as more fully set forth in the Policy. The holder of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds and Additional Bonds, if any, issued under the Indenture and then outstanding may be declared and may become due and payable before the stated maturity thereof, together with accrued interest thereon. Modifications or alterations of the Indenture, or of any indenture supplemental thereto, may be made only to the extent and in the circumstances permitted by the Indenture. The Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from moneys in the Project Fund in excess of the amount needed to complete the portions of the Projects to be funded with the Bonds. The Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from surplus Tax Receipts deposited in the Redemption Fund pursuant to the Indenture. So long as the Series 2006A Bonds are outstanding, 50% of the surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Bonds and any series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Bonds and any other series of Additional Bonds. The Bonds are subject to redemption at the option of the City, communicated in a written notice to the Trustee not less than sixty (60) days prior to the date fixed for redemption, in whole 4823-2826-9828.4 A-3 or in part on any date on or after November 1, 2015, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed plus accrued interest to the date of redemption. The Bonds maturing November 1, 2021 are subject to mandatory redemption, to be selected by lot in such manner as the Trustee shall determine, on November 1 in the years and the amounts set forth below, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption. Date Principal Amount November 1, 2020 $1,720,000 November 1, 2021 (maturity) 1,785,000 Notwithstanding the foregoing, so long as DTC or its nominee is the sole registered owner of the Bonds, the particular Bonds or portions thereof to be redeemed in part within a maturity shall be selected by lot by DTC in such manner as DTC shall determine. In selecting Bonds for redemption prior to maturity, in the case any outstanding Bond is in a denomination greater than $5,000, each $5,000 of face value of such Bond shall be treated as a separate Bond of the denomination of $5,000. In the event any of the Bonds or portions thereof (which shall be $5,000 or any integral multiple thereof) are called for redemption, notice thereof shall be given by the Trustee by first class mail to the registered owner of each such Bond addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure to give such notice by mailing, or any defect therein, shall not affect the validity of the proceedings for the redemption of any Bond with respect to which no such failure or defect has occurred. Each notice shall identify the Bonds or portions thereof being called, and the date on which they shall be presented for payment. After the date specified in such call notice, the Bond or Bonds so called for redemption will cease to bear interest provided funds sufficient for their redemption have been deposited with the Trustee, and, except for the purpose of payment, shall no longer be protected by the Indenture and shall not be deemed to be outstanding under the provisions of the Indenture. This Bond may be transferred on the books of registration kept by the Trustee by the registered owner or by his duly authorized attorney upon surrender hereof, together with a written instrument of transfer duly executed by the registered owner or his duly authorized attorney. The Bonds are issuable as registered bonds without coupons in denominations of $5,000 and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations. No recourse shall be had for the payment of the principal of or premium, if any, or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Bonds or the Indenture against any past, present or future alderman, officer or employee of the City, or any successor, as such, either directly or through the City or 4823-2826-9828.4 A-4 any successor of the City, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such alderman, officer or employee as such is hereby expressly waived and released as a condition of and consideration for the issuance of any of the Bonds. The City has designated this Bond as a "qualified tax-exempt obligation" within the meaning of Section 265(b) of the Internal Revenue Code of 1986, as amended. This Bond is issued with the intent that the laws of the State of Arkansas will govern its construction. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law; that the indebtedness represented by the Bonds, together with all obligations of the City, does not exceed any constitutional or statutory limitation; and that the revenues pledged to the payment of the principal of and premium, if any, and interest on the Bonds as the same become due and payable will be sufficient in amount for that purpose. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture until the Certificate of Authentication hereon shall have been signed by the Trustee. 4823-2826-9828.4 A-5 IN WITNESS WHEREOF, the City of Fayetteville, Arkansas has caused this Series 2009 Bond to be executed by its Mayor and City Clerk, thereunto duly authorized (by their manual or facsimile signatures), and its corporate seal to be affixed or imprinted hereon, all as of the date hereof shown above. ATTEST: By: City Clerk (SEAL) CITY OF FAYETTEVILLE, ARKANSAS IN Mayor (Form of Trustee's Certificate) This bond is one of the Series 2009 Bonds of the issue described in and issued under the provisions of the within mentioned Indenture. Attached hereto is the complete text of the opinion of Kutak Rock LLP, a signed original of which is on file with the undersigned, delivered and dated the date of the original delivery of and payment for the Series 2009 Bonds. Date: SIMMONS FIRST TRUST COMPANY, N.A., as Trustee Authorized Signature 4823-2826-9828.4 A-6 (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, , hereby sells, assigns, and transfers unto , the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. DATE: 20 Transferor GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by an institution satisfactory to the Trustee or other transfer agent. 4823-2826-9828.4 A-7 EXECUTION COPY CITY OF FAYETTEVILLE, ARKANSAS to SIMMONS FIRST TRUST COMPANY, N.A. as Trustee THIRD SUPPLEMENTAL TRUST INDENTURE Dated as of November 1, 2013 This Third Supplemental Trust Indenture supplements and amends a Trust Indenture dated as of November 1, 2006, as previously supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007 and by a Second Supplemental Trust Indenture dated as of November 1, 2009, each by and between the City of Fayetteville, Arkansas and Simmons First Trust Company, N.A., as Trustee. The Trust Indenture, as supplemented and amended hereby, secures (i) the City's $50,000,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2006A, (ii) the City's $14,340,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2007, (iii) the City's $11,250,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2009, and (iv) the City's $22,750,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2013. Prepared by: Kutak Rock LLP 124 West Capitol Avenue, Suite 2000 Little Rock, Arkansas 72201 4845-0358-9397.5 THIRD SUPPLEMENTAL TRUST INDENTURE THIS THIRD SUPPLEMENTAL TRUST INDENTURE dated as of November 1, 2013, by and between the CITY OF FAYETTEVILLE, ARKANSAS (the "City"), a city of the first class organized under and existing by virtue of the laws of the State of Arkansas, and SIMMONS FIRST TRUST COMPANY, N.A., as trustee (the "Trustee"), a national banking association organized under and existing by virtue of the laws of the United States of America and having its principal corporate trust office located in Pine Bluff, Arkansas; WITNESSETH: WHEREAS, the City Council of the City has previously determined that there is a great need for a source of revenue to finance all or a portion of the costs of (i) the acquisition, construction, reconstruction, extension, improving and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities (the "Wastewater Project"), (ii) the acquisition, construction, reconstruction, repair, straightening and widening of certain City streets and related improvements (the "Street Project"), and (iii) the acquisition, construction and equipping of certain City trail system improvements (the "Trail Project"); and WHEREAS, the people of the State of Arkansas (the "State") by the adoption of Amendment No. 62 to the Constitution of the State, approved November 6, 1984 ("Amendment 62"), have authorized cities and counties in the State to issue bonds, upon voter approval, to finance certain capital improvements of a public nature, and to secure said bonds by a pledge of the proceeds of certain taxes; and WHEREAS, the provisions of Amendment 62 have been implemented by the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2013) Sections 14-164-301 et seq. (as from time to time amended, the "Act"); and WHEREAS, pursuant to the provisions of Ordinance No. 4891, duly adopted by the City Council of the City on June 20, 2006 (the "Election Ordinance"), there was submitted to the qualified electors of the City four questions regarding the issuance of an aggregate of not to exceed $110,000,000 in principal amount of capital improvement bonds pursuant to Amendment 62 and the Act to finance the capital improvements described in the Election Ordinance, including the Wastewater Project, the Street Project and the Trail Project; and WHEREAS, pursuant to the Election Ordinance, said capital improvement bonds are to be secured by a pledge of and lien upon (i) all of the receipts of a special city-wide sales and use tax at the rate of one-quarter of one percent (0.25%) (the "0.25% Sales and Use Tax"), and (ii) all of the receipts of a special city-wide sales and use tax at the rate of three-quarters of one percent (0.75%) (the "0.75% Sales and Use Tax"), each levied pursuant to the Act; and WHEREAS, at a special election held September 12, 2006, a majority of the qualified electors of the City voting on each of the aforementioned questions approved the issuance of capital improvement bonds in the principal amounts and for the specific purposes set forth on the ballot (and the corresponding levy of the 0.25% Sales and Use Tax and the 0.75% Sales and Use 4845-0358-9397.5 Tax, and the pledge of the receipts thereof to the payment of said capital improvement bonds); and WHEREAS, pursuant to the provisions of Ordinance No. 4936 of the City, adopted and approved by the City Council on October 3, 2006, and in accordance with Amendment 62 and the Act, the City has previously issued its $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), for the purpose of financing a portion of the costs of the Wastewater Project, the Street Project and the Trail Project; and WHEREAS, pursuant to the provisions of Ordinance No. 5504 of the City, adopted and approved by the City Council on August 23, 2007, and in accordance with Amendment 62 and the Act, the City has previously issued its $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), for the purpose of financing a portion of the costs of the Wastewater Project; and WHEREAS, pursuant to the provisions of Ordinance No. 5277 of the City, adopted and approved by the City Council on October 6, 2009, and in accordance with Amendment 62 and the Act, the City has previously issued its $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), for the purpose of financing a portion of the costs of the Street Project and the Trail Project; and WHEREAS, the City and the Trustee have previously entered into a Trust Indenture dated as of November 1, 2006, as previously supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007 and by a Second Supplemental Trust Indenture dated as of November 1, 2009 (as supplemented and amended, the "Original Indenture"), pursuant to which the Series 2006A Bonds, the Series 2007 Bonds and the Series 2009 Bonds were issued and secured; and WHEREAS, in order to secure additional funds to pay a portion of the costs of additional components of the Street Project, to fund a debt service reserve, and to pay legal and other expenses incidental to the issuance of sales and use tax capital improvement bonds for such purposes, it has been determined appropriate and necessary that the City authorize the issuance of its $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"), pursuant to the provisions of Amendment 62 and the Act, such Series 2013 Bonds to be payable from and secured by a pledge of the receipts of the Sales and Use Taxes (as defined in the Original Indenture) on a parity with the pledge of the receipts of the Sales and Use Taxes securing the Series 2006A Bonds, the Series 2007 Bonds and the Series 2009 Bonds; and WHEREAS, the conditions for the issuance of Additional Bonds, as set forth in the Original Indenture, have been satisfied; and WHEREAS, the Series 2013 Bonds are to be dated, bear interest, mature and be subject to redemption as hereinafter in this Third Supplemental Trust Indenture set forth in detail; and WHEREAS, the execution and delivery of this Third Supplemental Trust Indenture and the issuance of the Series 2013 Bonds have been in all respects duly and validly confirmed, authorized and approved by Ordinance No. 5619 adopted and approved by the City Council of the City on September 17, 2013; and 2 4845-0358-9397.5 WHEREAS, all things necessary to make the Series 2013 Bonds, when authenticated by the Trustee and issued as in this Third Supplemental Trust Indenture provided, the valid, binding and legal obligations of the City according to the import thereof, and to constitute the Indenture (as defined below) a valid pledge of the receipts of the Sales and Use Taxes to the payment of the principal of, premium, if any, and interest on the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and all Additional Bonds (the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and such Additional Bonds are hereinafter referred to as the "Bonds"), have been done and performed, and the creation, execution and delivery of this Third Supplemental Trust Indenture and the creation, execution, issuance and delivery of the Series 2013 Bonds, subject to the terms hereof, have in all respects been duly authorized; and WHEREAS, in order to make proper provision for the security of the Series 2013 Bonds, it is necessary that the Original Indenture be amended and supplemented as effected hereby; NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THIS THIRD SUPPLEMENTAL TRUST INDENTURE WITNESSETH: Section 1.01. It is understood and agreed that the provisions of the Original Indenture shall extend to and apply to the security and benefit of the Series 2013 Bonds and that the term "Bonds" as used in the Original Indenture is hereby recognized to include and shall be deemed to refer to (where applicable) the Series 2013 Bonds. Section 1.02. Section 101 of the Original Indenture is hereby amended by adding thereto the following definitions (and by striking any definitions which are supplanted by the definitions set forth below): "Additional Bonds" mean Bonds in addition to the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds and the Series 2013 Bonds which are issued under the provisions of Section 212 of this Indenture. "Authorizing Ordinance" means, collectively, (i) Ordinance No. 4936, adopted by the City on October 3, 2006, which authorized the issuance of the Series 2006A Bonds pursuant to this Indenture, (ii) Ordinance No. 5054, adopted by the City on August 23, 2007, which authorized the issuance of the Series 2007 Bonds pursuant to this Indenture, (iii) Ordinance No. 5277, adopted by the City on October 6, 2009, which authorized the issuance of the Series 2009 Bonds pursuant to this Indenture, and (iv) Ordinance No. 5619, adopted by the City on September 17, 2013, which authorized the issuance of the Series 2013 Bonds pursuant to this Indenture. "Bonds" mean the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and all Additional Bonds issued by the City pursuant to this Indenture. Except to the extent provided in Section 209 hereof and except for refunding bonds issued under the provisions of Section 212 hereof, the aggregate principal amount of Bonds issued hereunder shall not exceed $107,340,000. "Government Securities" means (a) direct obligations (other than an obligation subject to variation in principal repayment) of the United States of America, (b) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of 3 4845-0358-9397.5 America, (c) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or instrumentality of the United States of America when such obligations are backed by the full faith and credit of the United States of America, or (d) evidences of ownership of proportionate interests in future interest and principal payments on obligations described above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying government obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated. "Indenture" means this Trust Indenture dated as of November 1, 2006, as amended and supplemented by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, and by a Third Supplemental Trust Indenture dated as of November 1, 2013, each by and between the City and the Trustee, pursuant to which the Bonds are issued, and any further amendments and supplements thereto. "Investment Securities" means, if and to the extent the same are at the time legal for investment of Funds and Accounts held under this Indenture: (a) cash (fully insured by the Federal Deposit Insurance Corporation); (b) Government Securities; (c) Federal Housing Administration debentures; (d) The obligations of the following government-sponsored agencies which are not backed by the full faith and credit of the United States of America: (1) Federal Home Loan Mortgage Corporation (FHLMC) senior debt obligations and Participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); (2) Farm Credit System (formerly Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) consolidated system -wide bonds and notes; (3) Federal Home Loan Banks (FHL Banks) consolidated debt obligations; and (4) Federal National Mortgage Association (FNMA) senior debt obligations and mortgage-backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); (e) Unsecured certificates of deposit, time deposits, and bankers' acceptances (having maturities of not more than 365 days) of any bank the short-term obligations of which are rated "A-1+" or better by S&P and "Prime -1" by Moody's; (f) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation, in banks which have capital and surplus of at least $15 million; (g) Commercial paper (having original maturities of not more than 270 days) rated "A-1+" by S&P and "Prime -1" by Moody's; (h) Money market funds rated "Aam" or "AAm-G" by S&P, or better and if rated by Moody's rated "Aa2" or better; 4 4845-0358-9397.5 (i) "State Obligations", which means: (1) Direct general obligations of any state of the United States of America or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated at least "A3" by Moody's and at least "A-" by S&P, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated; (2) Direct general short-term obligations of any state agency or subdivision or agency thereof described in (a) above and rated "A-1+" by S&P and "MIG -1" by Moody's; and (3) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state or state agency described in (b) above and rated "AA-" or better by S&P and "Aa3" or better by Moody's; 0) Pre -refunded municipal obligations rated "AAA" by S&P and "Aaa" by Moody's meeting the following requirements: (1) the municipal obligations are (I) not subject to redemption prior to maturity or (II) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions; (2) the municipal obligations are secured by cash or U.S. Treasury Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations; (3) the principal of and interest on the U.S. Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations ("Verification Report"); (4) the cash or U.S. Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations; (5) no substitution of a U.S. Treasury Obligation shall be permitted except with another U.S. Treasury Obligation and upon delivery of a new Verification Report; and (6) the cash or U.S. Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent; and (k) the 2013 Reserve Policy. "2013 Reserve Insurer" means Assured Guaranty Municipal Corp., a New York stock insurance company, or any successor thereto or assignee thereof. "2013 Reserve Policy" means the municipal bond debt service reserve insurance policy issued by the 2013 Reserve Insurer and deposited into the Series 2013 Account of the Debt Service Reserve Fund with respect to the Series 2013 Bonds. 5 4845-0358-9397.5 "Reserve Requirement" means, with respect to each series of Bonds, an amount equal to 5% of the original principal amount of such series of Bonds. For all purposes of this Indenture, the Reserve Requirement may be satisfied by cash or by Investment Securities, including the 2006A Reserve Policy, the 2007 Reserve Policy, the 2009 Reserve Policy and the 2013 Reserve Policy. "Series 2013 Bonds" means City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2013, issued under and secured by this Indenture in the aggregate principal amount of $22,750,000. Section 2.01. Section 201(c) of the Original Indenture is hereby amended and supplemented to read as follows: "(c) The Bonds shall be equally and ratably payable and secured hereunder without priority by reason of date of adoption of this Indenture or any Supplemental Indenture authorizing their issuance or by reason of their series, number, date, date of issue, execution, authentication or sale, or otherwise; provided, however, (i) while the Series 2006A Bonds are Outstanding, 50% of Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and any other series of Additional Bonds hereafter issued, and (ii) following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and any other series of Additional Bonds hereafter issued." Section 2.02. Section 202 of the Original Indenture is hereby amended and supplemented to read as follows: "Section 202. Authorized Amount. There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2006A" in the principal amount of Fifty Million Dollars ($50,000,000) (the "Series 2006A Bonds"). There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2007' in the principal amount of Fourteen Million Three Hundred Forty Thousand Dollars ($14,340,000) (the "Series 2007 Bonds"). There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2009" in the principal amount of Eleven Million Two Hundred Fifty Thousand Dollars ($11,250,000) (the "Series 2009 Bonds"). There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2013" in the principal amount of Twenty Two Million Seven Hundred Fifty Thousand Dollars ($22,750,000) (the "Series 2013 Bonds"). No Bonds may be issued under the provisions of this Indenture except in accordance with this Article II. The total principal amount of Bonds that may be issued hereunder by the City is hereby expressly limited to $107,340,000, except as provided in Section 209 and except for refunding bonds issued under the provisions of Section 212 hereof." 6 4845-0358-9397.5 Section 2.03. Article II of the Original Indenture is hereby amended by adding at the end thereof the following sections: "Section 223. Details of Series 2013 Bonds. The Series 2013 Bonds (i) shall be designated "City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2013," (ii) shall be in the aggregate principal amount of $22,750,000, (iii) shall be dated as of November 1, 2013, (iv) shall bear interest from such date at the rates hereinafter provided until paid, payable semiannually on May 1 and November 1 of each year, commencing May 1, 2014, (v) shall be issued in denominations of $5,000 each, or any integral multiple thereof, (vi) shall be numbered from R13-1 upwards in order of issuance according to the records of the Trustee, and (vii) shall mature, unless sooner redeemed in the manner in this Indenture set forth, on November 1 in each of the years and in the amounts set forth in the following table, which table also sets forth the interest rates for the Series 2013 Bonds: Year (November 1) Principal Amount Interest Rate 2014 $2,500,000 2.000% 2021 1,280,000 3.000% 2022 5,780,000 3.125% 2023 7,000,000 3.300% 2024 6,190,000 2.800% Section 224. Form of Series 2013 Bonds. The Series 2013 Bonds shall be initially issued as fully registered bonds, without coupons, in the form of five typewritten bond certificates (one for each maturity) to be delivered to the Securities Depository. Each such certificate shall be initially registered in the name of the nominee of the Securities Depository, and no Beneficial Owner will receive a certificate representing his interest in the Series 2013 Bonds, except upon the occurrence of the events described in Section 216 of this Indenture. Beneficial Owners shall be deemed to have waived any right to receive a bond certificate except under the circumstances described in Section 216. The Series 2013 Bonds and the Trustee's certificate of authentication to be endorsed thereon shall be in substantially the form set forth in Exhibit A to the Third Supplemental Trust Indenture, with appropriate variations, insertions and omissions as permitted or required by this Indenture. Section 225. Delivery of Series 2013 Bonds. Simultaneously with the delivery of the Series 2013 Bonds, the Trustee shall apply the proceeds thereof as follows: (a) The amount, if any, received as accrued interest on the Series 2013 Bonds, shall be deposited in the Interest Account of the Bond Fund; (b) $56,875.00 shall be transferred to the 2013 Reserve Insurer in payment of the premium on the 2013 Reserve Policy, which 2013 Reserve Policy shall be deposited in the Series 2013 Account of the Debt Service Reserve Fund; 7 4845-0358-9397.5 (c) $22,311,675.00 shall be deposited in the Series 2013 Street Subaccount of the Project Fund; and (d) The balance of said proceeds in the amount of $81,000.00 shall be deposited in the Costs of Issuance Fund for payment of Costs of Issuance of the Series 2013 Bonds as directed by a Certificate of the City." Section 3.01. Article III of the Original Indenture is hereby amended by adding at the end thereof the following section: "Section 309. Redemption of Series 2013 Bonds. (a) The Series 2013 Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from moneys in the Series 2013 Street Subaccount of the Project Fund in excess of the amount needed to complete the portion of the Street Project intended to be funded with the Series 2013 Bonds, which moneys shall be transferred to the Redemption Fund pursuant to Section 502 hereof. (b) The Series 2013 Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from Surplus Tax Receipts deposited in the Redemption Fund pursuant to Section 503 hereof. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and any other series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and any other series of Additional Bonds." Section 4.01. Section 501(a) of the Original Indenture is hereby amended and restated to read as follows: "(a) There are hereby created and established the following Funds and Accounts: (i) Project Fund, and a Street Account (with a Series 2006A, a Series 2009 Subaccount and a Series 2013 Subaccount), a Trail Account (with a Series 2006A and a Series 2009 Subaccount) and a Wastewater Account (with a Series 2006A Subaccount and a Series 2007 Subaccount) therein; (ii) Revenue Fund; 8 4845-0358-9397.5 therein; (iii) Bond Fund, and an Interest Account and a Principal Account (iv) Redemption Fund; (v) Debt Service Reserve Fund, and a Series 2006A Account, a Series 2007 Account, a Series 2009 Account and a Series 2013 Account therein; (vi) Cost of Issuance Fund; and (vii) Rebate Fund." Section 4.02. Section 503(b) of the Original Indenture is hereby amended and restated to read as follows: "(b) Upon receipt, but in no event later than the last day of each month in which receipts of the Sales and Use Taxes are deposited in the Revenue Fund, commencing no later than March 30, 2007, there shall be transferred from the Revenue Fund, in the following order, the amounts set forth below: FIRST: For deposit to the Interest Account of the Bond Fund, an amount equal to one-sixth (1/6) of the interest on the Outstanding Bonds due on the next interest payment date; provided, however, (i) with respect to the deposits to be made to the Interest Account relating to the Series 2006A Bonds during the months of March, 2007 through October, 2007, such deposits shall be in an amount equal to one-seventh (1/7) of the interest due on the Series 2006A Bonds on November 1, 2007, and (ii) with respect to the deposits to be made to the Interest Account relating to the Series 2007 Bonds during the months of October, 2007 through April, 2008, such deposits shall be in an amount equal to one- seventh (1/7) of the interest due on the Series 2007 Bonds on May 1, 2008; SECOND: For deposit to the Principal Account of the Bond Fund, an amount equal to one -twelfth (1/12) of the next scheduled principal maturity of Outstanding Bonds (including mandatory sinking fund redemptions); provided, however, with respect to the Series 2006A Bonds, the Series 2007 Bonds and the Series 2009 Bonds, such deposits shall not commence until November 2014; THIRD: For deposit to the Debt Service Reserve Fund, an amount sufficient to cure any deficiency in the Debt Service Reserve Fund (including any reimbursement to the 2006A Insurer under the 2006A Reserve Policy, any reimbursement to the 2007 Insurer under the 2007 Reserve Policy, any reimbursement to the 2009 Insurer under the 2009 Reserve Policy, and any reimbursement to the 2013 Reserve Insurer under the 2013 Reserve Policy); FOURTH: For deposit to the Rebate Fund, an amount sufficient to satisfy the City's obligations under Section 507 hereof, 9 4845-0358-9397.5 FIFTH: For payment to the Trustee and Paying Agent, the amount, if any, necessary to pay or reimburse the Trustee and Paying Agent for fees and expenses related to the Bonds; and SIXTH: All remaining moneys ("Surplus Tax Receipts") will be transferred to the Redemption Fund and shall be applied to call Bonds for redemption prior to maturity as provided in Section 301(b) and Section 506 of the Indenture." Section 4.03. Section 505 of the Original Indenture is hereby amended and supplemented to read as follows: "Section 505. Cost of Issuance Fund. There shall be deposited to the credit of the Cost of Issuance Fund all moneys received for said Fund pursuant to Section 208, Section 219, Section 222 and Section 225 hereof. The Trustee shall pay those Costs of Issuance as directed by the City pursuant to a Certificate delivered on a Closing Date. After all Costs of Issuance have been paid (and in any event not later than January 1, 2007 with respect to the Series 2006A Bonds, December 1, 2007 with respect to the Series 2007 Bonds, December 1, 2009 with respect to the Series 2009 Bonds, and December 1, 2013 with respect to the Series 2013 Bonds), any remaining moneys in the Cost of Issuance Fund shall be transferred to the Interest Account of the Bond Fund." Section 4.04. Section 506 of the Original Indenture is hereby amended and supplemented to read as follows: "Section 506. Redemption Fund. (a) There shall be deposited to the credit of the Redemption Fund all moneys required to be transferred thereto pursuant to Section 502 and Section 503 of this Indenture. (b) Moneys credited to the Redemption Fund shall be expended only as set forth in this Section 506. (c) Moneys in the Redemption Fund shall be transferred to the Principal Account of the Bond Fund at such times as may be necessary to effectuate, on the first available date, redemptions of Bonds required by Section 301(a)(1) and (2), Section 307(a) and (b), Section 308(a) and (b), and Section 309(a) and (b) of this Indenture. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and any series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and any series of Additional Bonds. (d) The amounts accumulated in the Redemption Fund, if so directed by the City by means of a Certificate delivered to the Trustee, shall be applied by 10 4845-0358-9397.5 the Trustee to the purchase of Bonds of the maturities which would otherwise be redeemed pursuant to Section 301(a)(1) and (2), Section 307(a) and (b), Section 308(a) and (b), Section 309(a) and (b) and this Section 506 but for the provisions of this subsection (d), at prices directed by the City not exceeding the applicable redemption prices of the Bonds which would be redeemed but for the operation of this sentence. Interest accrued on the Bonds so purchased shall be paid from moneys credited to the Interest Account of the Bond Fund." Section 5.01. Section 902(a) of the Original Indenture is hereby amended and supplemented to read as follows: "(a) Subject to subsection (b) of this Section 902, the City shall, from moneys lawfully available therefor, pay to the Trustee and any Paying Agent reasonable compensation for all services performed hereunder and also all reasonable expenses, charges and other disbursements and those of their attorneys, agents and employees incurred in and about the administration and execution of the trusts hereby created and the performance of the powers and duties hereunder and, to the extent permitted by law and from moneys lawfully available therefor, shall indemnify and save the Trustee harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder. With respect to the Series 2006A Bonds, the Trustee's initial authentication fee shall be $3,500 and the annual administration fee of the Trustee shall be $4,000 annually prior to the final Completion Date with respect to any of the Projects, and $3,500 annually thereafter. With respect to the Series 2007 Bonds, the Trustee's initial authentication fee shall be $1,500 and the annual administration fee of the Trustee shall be $1,500 annually prior to the final Completion Date with respect to any of the Projects, and $1,500 annually thereafter. With respect to the Series 2009 Bonds, the Trustee's initial authentication fee shall be $1,000 and the annual administration fee of the Trustee shall be $1,500 annually prior to the final Completion Date with respect to any of the Projects, and $1,000 annually thereafter. With respect to the Series 2013 Bonds, the Trustee's initial authentication fee shall be $3,000 and the annual administration fee of the Trustee shall be $3,000 annually prior to the final Completion Date with respect to the Street Project, and $2,500 annually thereafter. If the City shall fail to make any payment required by this subsection (a), the Trustee may make such payment from any moneys in its possession under the provisions of this Indenture and shall be entitled to a preference therefor over any of the Bonds Outstanding hereunder. The City shall not be required to indemnify the Trustee against any liabilities which the Trustee may incur as a result of negligent or wrongful acts or omissions of the Trustee." Section 6.01. The Original Indenture is hereby amended and supplemented by adding at the end thereof the following Article: "ARTICLE XV PROVISIONS RELATED TO 2013 RESERVE POLICY Section 15.01. Provisions Related to 2013 Reserve Policy. Notwithstanding any provision to the contrary contained in the Indenture, so long as the 2013 Reserve Policy remains in full force and effect (or any amounts are 11 4845-0358-9397.5 owed the 2013 Reserve Insurer in connection therewith), the provisions of this Article XV shall control where applicable. (a) The prior written consent of the 2013 Reserve Insurer shall be a condition precedent to the deposit of any credit facility (a "Credit Facility") to the Series 2013 Account of the Debt Service Reserve Fund established for the Series 2013 Bonds (for purposes of this Article XV, the "Reserve Fund") in lieu of a cash deposit into the Reserve Fund. Amounts drawn under the 2013 Reserve Policy shall be available only for the payment of scheduled principal and interest on the Series 2013 Bonds when due. (b) The City shall repay any draws under the 2013 Reserve Policy and pay all related reasonable expenses incurred by the 2013 Reserve Insurer and shall pay interest thereon from the date of payment by the 2013 Reserve Insurer at the Late Payment Rate. "Late Payment Rate" means the lesser of (x) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate ("Prime Rate") (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank) plus 5%, and (ii) the then -applicable highest rate of interest on the Series 2013 Bonds and (y) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such national bank as the 2013 Reserve Insurer shall specify. If the interest provisions of this subparagraph (b) shall result in an effective rate of interest which, for any period, exceeds the limit of the usury or any other laws applicable to the indebtedness created herein, then all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice between or by any party hereto, be applied as additional interest for any later periods of time when amounts are outstanding hereunder to the extent that interest otherwise due hereunder for such periods plus such additional interest would not exceed the limit of the usury or such other laws, and any excess shall be applied upon principal immediately upon receipt of such moneys by the 2013 Reserve Insurer, with the same force and effect as if the City had specifically designated such extra sums to be so applied and the 2013 Reserve Insurer had agreed to accept such extra payment(s) as additional interest for such later periods. In no event shall any agreed -to or actual exaction as consideration for the indebtedness created herein exceed the limits imposed or provided by the law applicable to this transaction for the use or detention of money or for forbearance in seeking its collection. Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate (collectively, "Policy Costs") shall commence in the first month following each draw, and each such monthly payment shall be in an amount at least equal to 1/12 of the aggregate of Policy Costs related to such draw. 12 4845-0358-9397.5 Amounts in respect of Policy Costs paid to the 2013 Reserve Insurer shall be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to the 2013 Reserve Insurer on account of principal due, the coverage under the 2013 Reserve Policy will be increased by a like amount, subject to the terms of the 2013 Reserve Policy. The obligation to pay Policy Costs shall be secured by a valid lien on all revenues and other collateral pledged as security for the Series 2013 Bonds (subject only to the priority of payment provisions set forth under the Indenture). All cash and investments in the Reserve Fund shall be transferred to the Bond Fund for payment of debt service on Series 2013 Bonds before any drawing may be made on the 2013 Reserve Policy or any other Credit Facility credited to the Reserve Fund in lieu of cash. Payment of any Policy Costs shall be made prior to replenishment of any such cash amounts. Draws on all Credit Facilities (including the 2013 Reserve Policy) on which there is available coverage shall be made on a pro -rata basis (calculated by reference to the coverage then available thereunder) after applying all available cash and investments in the Reserve Fund. Payment of Policy Costs and reimbursement of amounts with respect to other Credit Facilities shall be made on a pro -rata basis prior to replenishment of any cash drawn from the Reserve Fund. For the avoidance of doubt, "available coverage" means the coverage then available for disbursement pursuant to the terms of the applicable alternative credit instrument without regard to the legal or financial ability or willingness of the provider of such instrument to honor a claim or draw thereon or the failure of such provider to honor any such claim or draw. (c) Upon a failure to pay Policy Costs when due or any other breach of the terms of this Article XV, the 2013 Reserve Insurer shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under the Indenture, other than (i) acceleration of the maturity of the Series 2013 Bonds or (ii) remedies which would adversely affect owners of the Series 2013 Bonds. (d) The Indenture shall not be discharged until all Policy Costs owing the 2013 Reserve Insurer shall have been paid in full. The City's obligation to pay such amounts shall expressly survive payment in full of the Series 2013 Bonds. (e) The City shall include any Policy Costs then due and owing the 2013 Reserve Insurer in the calculation of the additional bonds test in the Indenture. (f) The Trustee shall ascertain the necessity for a claim upon the 2013 Reserve Policy in accordance with the provisions of subparagraph (b) hereof and to provide notice to the 2013 Reserve Insurer in accordance with the terms of the 2013 Reserve Policy at least five Business Days prior to each date upon which interest or principal is due on the Series 2013 Bonds. Where deposits are required to be made by the City with the Trustee to the Bond Fund for the Series 2013 Bonds more often than semi-annually, the Trustee shall be instructed to give 13 4845-0358-9397.5 notice to the 2013 Reserve Insurer of any failure of the City to make timely payment in full of such deposits within two Business Days of the date due. (g) The City will pay or reimburse the 2013 Reserve Insurer any and all charges, fees, costs, losses, liabilities and expenses which the 2013 Reserve Insurer may pay or incur, including, but not limited to, fees and expenses of attorneys, accountants, consultants and auditors and reasonable costs of investigations, in connection with (i) any accounts established to facilitate payments under the 2013 Reserve Policy, (ii) the administration, enforcement, defense or preservation of any rights in respect of the Indenture or any document executed in connection with the Series 2013 Bonds (the "Related Documents"), including defending, monitoring or participating in any litigation or proceeding (including any bankruptcy proceeding in respect of the City) relating to the Indenture or any other Related Document, any party to the Indenture or any other Related Document or the transactions contemplated by the Related Documents, (iii) the foreclosure against, sale or ether disposition of any collateral securing any obligations under the Indenture or any other Related Document, if any, or the pursuit of any remedies under the Indenture or any other Related Document, to the extent such costs and expenses are not recovered from such foreclosure, sale or other disposition, (iv) any amendment, waiver or other action with respect to, or related to the Indenture, the 2013 Reserve Policy or any other Related Document whether or not executed or completed, or (v) any action taken by the 2013 Reserve Insurer to cure a default or termination or similar event (or to mitigate the effect thereof) under the Indenture or any other Related Document; costs and expenses shall include a reasonable allocation of compensation and overhead attributable to time of employees of the 2013 Reserve Insurer spent in connection with the actions described in clauses (ii) through (v) above. The 2013 Reserve Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Indenture or any other Related Document. Amounts payable by the City hereunder shall bear interest at the Late Payment Rate from the date such amount is paid or incurred by the 2013 Reserve Insurer until the date the 2013 Reserve Insurer is paid in full. (h) The obligation of the City to pay all amounts due to the 2013 Reserve Insurer shall be an absolute and unconditional obligation of the City and will be paid or performed strictly in accordance with the provisions of this Article XV, irrespective of (i) any lack of validity or enforceability of or any amendment or other modifications of, or waiver with respect to the Series 2013 Bonds, the Indenture or any other Related Document; (ii) any amendment or other modification of, or waiver with respect to the 2013 Reserve Policy; (iii) any exchange, release or non -perfection of any security interest in property securing the Series 2013 Bonds, the Indenture or any other Related Document; (iv) whether or not such Series 2013 Bonds are contingent or matured, disputed or undisputed, liquidated or unliquidated; (v) any amendment, modification or waiver of or any consent to departure from the 2013 Reserve Policy, the Indenture or any of the other Related Documents; (vi) the existence of any claim, setoff, defense (other than the defense of payment in full), reduction, abatement or other 14 4845-0358-9397.5 right which the City may have at any time against the Trustee or any other person or entity other than the 2013 Reserve Insurer, whether in connection with the transactions contemplated herein or in any other Related Documents or any unrelated transactions; (vii) any statement or any other document presented under or in connection with the 2013 Reserve Policy proving in any and all respects invalid, inaccurate, insufficient, fraudulent or forged or any statement therein being untrue or inaccurate in any respect; or (viii) any payment by the 2013 Reserve Insurer under the 2013 Reserve Policy against presentation of a certificate or other document which does not strictly comply with the terms of the 2013 Reserve Policy. (i) The City shall fully observe, perform, and fulfill each of the provisions (as each of those provisions may be amended, supplemented, modified or waived with the prior written consent of the 2013 Reserve Insurer) of the Indenture applicable to it, each of the provisions thereof being expressly incorporated into this Article XV by reference solely for the benefit of the 2013 Reserve Insurer as if set forth directly herein. No provision of the Indenture or any other Related Document shall be amended, supplemented, modified or waived, without the prior written consent of the 2013 Reserve Insurer, in any material respect or otherwise in a manner that could adversely affect the payment obligations of the City hereunder or the priority accorded to the reimbursement of Policy Costs under the Indenture. The 2013 Reserve Insurer is hereby expressly made a third party beneficiary of the Indenture and other Related Documents. 0) The City covenants to provide to the 2013 Reserve Insurer, promptly upon request, any information regarding the Series 2013 Bonds or the financial condition and operations of the City as reasonably requested by the 2013 Reserve Insurer. The City will permit the 2013 Reserve Insurer to discuss the affairs, finances and accounts of the City or any information the 2013 Reserve Insurer may reasonably request regarding the security for the Series 2013 Bonds with appropriate officers of the City and will use commercially reasonable efforts to enable the 2013 Reserve Insurer to have access to the facilities, books and records of the City on any business day upon reasonable prior notice. (k) Notices and other information to the 2013 Reserve Insurer shall be sent to the following address (or such other address as the 2013 Reserve Insurer may designate in writing): Assured Guaranty Municipal Corp., 31 West 52nd Street, New York, New York, 10019, Attention: Managing Director — Surveillance, Re: Policy No. 215825-S." Section 7.01. Severability. (a) If any provisions of this Third Supplemental Trust Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to any extent whatever. 15 4845-0358-9397.5 (b) The invalidity of any one or more phrases, sentences, clauses or paragraphs in this Third Supplemental Trust Indenture contained shall not affect the remaining portions of this Third Supplemental Trust Indenture or any part thereof. Section 7.02. Applicable Provisions of Law. This Third Supplemental Trust Indenture shall be considered to have been executed in the State of Arkansas and it is the intention of the parties that the substantive law of the State of Arkansas govern as to all questions of interpretation, validity and effect. Section 7.03. Counterparts. This Third Supplemental Trust Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.04. Ratification of Original Indenture. As supplemented and amended hereby, the Original Indenture is hereby ratified and confirmed. 16 4845-0358-9397.5 IN WITNESS WHEREOF, the City has caused these presents to be signed in its name and behalf by its Mayor and its corporate seal to be hereunto affixed and attested by its City Clerk, and to evidence its acceptance of the trust hereby created, the Trustee has caused these presents to be signed in its behalf by its duly authorized officers and its corporate seal to be hereto affixed. ATTEST: By: 'z' ha City Clerk (SEAL) -T y o0 X FAYE'FTFVII A NS 11C'o IN TON 1IM111LO ATTEST: CITY OF FAYETTEVILLE, ARKANSAS SIMMONS FIRST TRUST COMPANY, N.A., as Trustee By: Title: Vice President and eor-porate Trust Officer /IN By:- 't2lins Title: Vice Presid8nt and Corporate Trust Officer (SEAL) 0 [SIGNATURE PAGE TO THIRD SUPPLEMENTAL TRUST INDENTURE] 4845-0358-9397.5 ACKNOWLEDGMENT STATE OF ARKANSAS ) ) ss. COUNTY OF WASHINGTON ) Before me a Notary Public, duly commissioned, qualified and acting within and for the State and county aforesaid, appeared in person the within named Lioneld Jordan and Sondra Smith, Mayor and City Clerk, respectively, of the City of Fayetteville, Arkansas, to me personally known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the City, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal thisday of November, 2013. e, Newry .Ni -c' My Commission expires: N0.1 (SEAL) [ACKNOWLEDGEMENT TO THIRD SUPPLEMENTAL TRUST INDENTURE] 4845-0358-9397.5 ACKNOWLEDGMENT STATE OF ARKANSAS ) ) ss. COUNTY OF JEFFERSON ) Before me a Notary Public, duly commissioned, qualified and acting within and for the State and county aforesaid, appeared in person the within named Glenda Dean and Roy Ferrell, the Vice President and Corporate Trust Officer and the Vice President and Corporate Trust Officer, respectively, of Simmons First Trust Company, N.A., to me personally known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the Trust Company, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this 03 - day of November, 2013. Notary Public My Commission expires: 1 ('�) � '-2,q (2-0 z. 2, OFFICIAL SEAL DONNA HERRIN NOTARY PUBLIC, ARKANSAS JEFFERSON COUNTY COMMISSION #12390428 MY COMMISSION EXP. I0-24-2022 [ACKNOWLEDGEMENT TO THIRD SUPPLEMENTAL TRUST INDENTURE] 4845-0358-9397.5 EXHIBIT A TO THIRD SUPPLEMENTAL TRUST INDENTURE Form of Series 2013 Bond Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED No. R13 - UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2013 Interest Rate: % Date of Bond: November 1, 2013 Registered Owner: CEDE & CO. Principal Amount: KNOW ALL MEN BY THESE PRESENTS: Maturity Date: November 1, 20 CUSIP: 312673 DOLLARS That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2014, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. A-1 4845-0358-9397.5 This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2013", is one of a series of bonds aggregating Twenty Two Million Seven Hundred Fifty Thousand Dollars ($22,750,000) (the "Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of the acquisition, construction, reconstruction, repair, straightening and widening of certain City streets and related improvements (the "Project"). Bond proceeds will be utilized to pay Project costs, to fund a debt service reserve, and to pay the costs of issuance of the Bonds. The Bonds are issued under and are secured by and entitled to the protection of a Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (as supplemented and amended, the "Indenture"), by and between the City and the Trustee, which Indenture is available for inspection at the principal corporate trust office of the Trustee. Reference is hereby made to the Indenture and to all indentures supplemental thereto for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the City, the Trustee and the owners of the Bonds, and the terms upon which the Bonds are issued and secured. The Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas, including particularly Amendment No. 62 to the Constitution of Arkansas, as implemented by the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2013) §§14-164-301 et seq. (as from time to time amended, the "Local Government Bond Act"), Ordinance No. 5619 of the City adopted September 17, 2013, which ordinance authorized the execution and delivery of the Third Supplemental Trust Indenture, and a special election duly held on September 12, 2006, at which a majority of the qualified electors of the City voting approved the issuance of the Bonds. In accordance with the Local Government Bond Act, the City has pledged all receipts from (i) a one-quarter of one percent (0.25%) local sales and use tax (the "0.25% Sales and Use Tax") and (ii) a three-quarters of one percent (0.75%) local sales and use tax (the "0.75% Sales and Use Tax"), each levied by the City pursuant to Ordinance No. 4891, adopted by the City on June 20, 2006, to provide funds for the repayment of the Bonds. The pledge of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax (collectively, the "Tax Receipts") presently secures payment of the Bonds and (i) the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) the City's $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), and the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"). Such Tax Receipts may additionally be pledged to secure the payment of up to $9,000,000 in aggregate principal amount of Additional Bonds issued under the provisions of the Indenture. The Indenture provides that the City may hereafter issue Additional Bonds from time to time under certain terms and conditions contained in the Indenture and, if issued or incurred, such Additional Bonds will rank on a parity of security with the Bonds, the Series 2006A Bonds, the Series 2007 Bonds and the Series 2009 Bonds and will be equally and ratably secured by and entitled to the protection of the Indenture. A-2 4845-0358-9397.5 The Bonds are not general obligations of the City, but are special obligations secured by an irrevocable pledge of and lien on the Tax Receipts, as more particularly described in the Indenture. In no event shall the Bonds constitute an indebtedness of the City within the meaning of any constitutional or statutory limitation. The holder of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds issued under the Indenture and then outstanding may be declared and may become due and payable before the stated maturity thereof, together with accrued interest thereon. Modifications or alterations of the Indenture or of any indenture supplemental thereto, may be made only to the extent and in the circumstances permitted by the Indenture. The Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from moneys in the Project Fund in excess of the amount needed to complete the portions of the Project to be funded with the Bonds. The Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from surplus Tax Receipts deposited in the Redemption Fund pursuant to the Indenture. So long as the Series 2006A Bonds are outstanding, 50% of the surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Bonds and any series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007, Bonds, the Series 2009 Bonds, the Bonds and any series of Additional Bonds. Notwithstanding the foregoing, so long as DTC or its nominee is the sole registered owner of the Bonds, the particular Bonds or portions thereof to be redeemed in part within a maturity shall be selected by lot by DTC in such manner as DTC shall determine. In selecting Bonds for redemption prior to maturity, in the case any outstanding Bond is in a denomination greater than $5,000, each $5,000 of face value of such Bond shall be treated as a separate Bond of the denomination of $5,000. In the event any of the Bonds or portions thereof (which shall be $5,000 or any integral multiple thereof) are called for redemption, notice thereof shall be given by the Trustee by first class mail to the registered owner of each such Bond addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure to give such notice by A-3 4845-0358-9397.5 mailing, or any defect therein, shall not affect the validity of the proceedings for the redemption of any Bond with respect to which no such failure or defect has occurred. Each notice shall identify the Bonds or portions thereof being called, and the date on which they shall be presented for payment. After the date specified in such call notice, the Bond or Bonds so called for redemption will cease to bear interest provided funds sufficient for their redemption have been deposited with the Trustee, and, except for the purpose of payment, shall no longer be protected by the Indenture and shall not be deemed to be outstanding under the provisions of the Indenture. This Bond may be transferred on the books of registration kept by the Trustee by the registered owner or by his duly authorized attorney upon surrender hereof, together with a written instrument of transfer duly executed by the registered owner or his duly authorized attorney. The Bonds are issuable as registered bonds without coupons in denominations of $5,000 and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations. No recourse shall be had for the payment of the principal of or premium, if any, or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Bonds or the Indenture against any past, present or future alderman, officer or employee of the City, or any successor, as such, either directly or through the City or any successor of the City, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such alderman, officer or employee as such is hereby expressly waived and released as a condition of and consideration for the issuance of any of the Bonds. This Bond is issued with the intent that the laws of the State of Arkansas will govern its construction. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law; that the indebtedness represented by the Bonds, together with all obligations of the City, does not exceed any constitutional or statutory limitation; and that the revenues pledged to the payment of the principal of and premium, if any, and interest on the Bonds as the same become due and payable will be sufficient in amount for that purpose. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture until the Certificate of Authentication hereon shall have been signed by the Trustee. A-4 4845-0358-9397.5 IN WITNESS WHEREOF, the City of Fayetteville, Arkansas has caused this Bond to be executed by its Mayor and City Clerk, thereunto duly authorized (by their manual or facsimile signatures), and its corporate seal to be affixed or imprinted hereon, all as of the date hereof shown above. ATTEST: By: City Clerk (SEAL) CITY OF FAYETTEVILLE, ARKANSAS Mayor (Form of Trustee's Certificate) TRUSTEE'S CERTIFICATE OF AUTHENTICATION This bond is one of the Series 2013 Bonds of the issue described in and issued under the provisions of the within mentioned Indenture. Attached hereto is the complete text of the opinion of Kutak Rock LLP, a signed original of which is on file with the undersigned, delivered and dated the date of the original delivery of and payment for the Series 2013 Bonds. Date: SIMMONS FIRST TRUST COMPANY, N.A., as Trustee ME Authorized Signature A-5 4845-0358-9397.5 (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, , hereby sells, assigns, and transfers unto , the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. DATE: , 20 Transferor GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by an institution satisfactory to the Trustee or other transfer agent. A-6 4845-0358-9397.5 EXECUTION COPY CITY OF FAYETTEVILLE, ARKANSAS to SIMMONS FIRST TRUST COMPANY, N.A. as Trustee FOURTH SUPPLEMENTAL TRUST INDENTURE Dated as of November 1, 2015 This Fourth Supplemental Trust Indenture supplements and amends a Trust Indenture dated as of November 1, 2006, as previously supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007; by a Second Supplemental Trust Indenture dated as of November 1, 2009; and by a Third Supplemental Trust Indenture dated as of November 1, 2013, each by and between the City of Fayetteville, Arkansas and Simmons First Trust Company, N.A., as Trustee. The Trust Indenture, as supplemented and amended hereby, secures (i) the City's $50,000,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2006A, (ii) the City's $14,340,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2007, (iii) the City's $11,250,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2009, (iv) the City's $22,750,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2013, and (v) the City's $9,000,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2015. Prepared by: Kutak Rock LLP 124 West Capitol Avenue, Suite 2000 Little Rock, Arkansas 72201 4810-8222-9542.4 FOURTH SUPPLEMENTAL TRUST INDENTURE THIS FOURTH SUPPLEMENTAL TRUST INDENTURE dated as of November 1, 2015, by and between the CITY OF FAYETTEVILLE, ARKANSAS (the "City"), a city of the first class organized under and existing by virtue of the laws of the State of Arkansas, and SIMMONS FIRST TRUST COMPANY, N.A., as trustee (the "Trustee"), a national banking association organized under and existing by virtue of the laws of the United States of America and having its principal corporate trust office located in Pine Bluff, Arkansas; WITNESSETH: WHEREAS, the City Council of the City has previously determined that there is a great need for a source of revenue to finance all or a portion of the costs of (i) the acquisition, construction, reconstruction, extension, improving and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities (the "Wastewater Project"), (ii) the acquisition, construction, reconstruction, repair, straightening and widening of certain City streets and related improvements (the "Street Project"), and (iii) the acquisition, construction and equipping of certain City trail system improvements (the "Trail Project"); and WHEREAS, the people of the State of Arkansas (the "State") by the adoption of Amendment No. 62 to the Constitution of the State, approved November 6, 1984 ("Amendment 62"), have authorized cities and counties in the State to issue bonds, upon voter approval, to finance certain capital improvements of a public nature, and to secure said bonds by a pledge of the proceeds of certain taxes; and WHEREAS, the provisions of Amendment 62 have been implemented by the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2013) Sections 14-164-301 et seq. (as from time to time amended, the "Act"); and WHEREAS, pursuant to the provisions of Ordinance No. 4891, duly adopted by the City Council of the City on June 20, 2006 (the "Election Ordinance"), there was submitted to the qualified electors of the City four questions regarding the issuance of an aggregate of not to exceed $110,000,000 in principal amount of capital improvement bonds pursuant to Amendment 62 and the Act to finance the capital improvements described in the Election Ordinance, including the Wastewater Project, the Street Project and the Trail Project; and WHEREAS, pursuant to the Election Ordinance, said capital improvement bonds are to be secured by a pledge of and lien upon (i) all of the receipts of a special city-wide sales and use tax at the rate of one-quarter of one percent (0.25%) (the "0.25% Sales and Use Tax"), and (ii) all of the receipts of a special city-wide sales and use tax at the rate of three-quarters of one percent (0.75%) (the "0.75% Sales and Use Tax"), each levied pursuant to the Act; and WHEREAS, at a special election held September 12, 2006, a majority of the qualified electors of the City voting on each of the aforementioned questions approved the issuance of capital improvement bonds in the principal amounts and for the specific purposes set forth on the ballot (and the corresponding levy of the 0.25% Sales and Use Tax and the 0.75% Sales and Use 4810-8222-942.4 Tax, and the pledge of the receipts thereof to the payment of said capital improvement bonds); and WHEREAS, pursuant to the provisions of Ordinance No. 4936 of the City, adopted and approved by the City Council on October 3, 2006, and in accordance with Amendment 62 and the Act, the City has previously issued its $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), for the purpose of financing a portion of the costs of the Wastewater Project, the Street Project and the Trail Project; and WHEREAS, pursuant to the provisions of Ordinance No. 5504 of the City, adopted and approved by the City Council on August 23, 2007, and in accordance with Amendment 62 and the Act, the City has previously issued its $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), for the purpose of financing a portion of the costs of the Wastewater Project; and WHEREAS, pursuant to the provisions of Ordinance No. 5277 of the City, adopted and approved by the City Council on October 6, 2009, and in accordance with Amendment 62 and the Act, the City has previously issued its $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), for the purpose of financing a portion of the costs of the Street Project and the Trail Project; and WHEREAS, pursuant to the provisions of Ordinance No. 5619 of the City, adopted and approved by the City Council on September 17, 2013, and in accordance with Amendment 62 and the Act, the City has previously issued its $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"), for the purpose of financing a portion of the costs of the Street Project; and WHEREAS, the City and the Trustee have previously entered into a Trust Indenture dated as of November 1, 2006, as previously supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (as supplemented and amended, the "Original Indenture"), pursuant to which the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds and the Series 2013 Bonds were issued and secured; and WHEREAS, in order to secure additional funds to pay a portion of the costs of additional components of the Street Project, to fund a debt service reserve, and to pay legal and other expenses incidental to the issuance of sales and use tax capital improvement bonds for such purposes, it has been determined appropriate and necessary that the City authorize the issuance of its $9,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Series 2015 Bonds"), pursuant to the provisions of Amendment 62 and the Act, such Series 2015 Bonds to be payable from and secured by a pledge of the receipts of the Sales and Use Taxes (as defined in the Original Indenture) on a parity with the pledge of the receipts of the Sales and Use Taxes securing the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds and the Series 2013 Bonds; and WHEREAS, the conditions for the issuance of Additional Bonds, as set forth in the Original Indenture, have been satisfied; and 2 4810-8222-9542.4 WHEREAS, the Series 2015 Bonds are to be dated, bear interest, mature and be subject to redemption as hereinafter in this Fourth Supplemental Trust Indenture set forth in detail; and WHEREAS, the execution and delivery of this Fourth Supplemental Trust Indenture and the issuance of the Series 2015 Bonds have been in all respects duly and validly confirmed, authorized and approved by Ordinance No. 5803 adopted and approved by the City Council of the City on October 6, 2015; and WHEREAS, all things necessary to make the Series 2015 Bonds, when authenticated by the Trustee and issued as in this Fourth Supplemental Trust Indenture provided, the valid, binding and legal obligations of the City according to the import thereof, and to constitute the Indenture (as defined below) a valid pledge of the receipts of the Sales and Use Taxes to the payment of the principal of, premium, if any, and interest on the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and all Additional Bonds (the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and such Additional Bonds are hereinafter referred to as the "Bonds"), have been done and performed, and the creation, execution and delivery of this Fourth Supplemental Trust Indenture and the creation, execution, issuance and delivery of the Series 2015 Bonds, subject to the terms hereof, have in all respects been duly authorized; and WHEREAS, in order to make proper provision for the security of the Series 2015 Bonds, it is necessary that the Original Indenture be amended and supplemented as effected hereby; NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THIS FOURTH SUPPLEMENTAL TRUST INDENTURE WITNESSETH: Section 1.01. It is understood and agreed that the provisions of the Original Indenture shall extend to and apply to the security and benefit of the Series 2015 Bonds and that the term "Bonds" as used in the Original Indenture is hereby recognized to include and shall be deemed to refer to (where applicable) the Series 2015 Bonds. Section 1.02. Section 101 of the Original Indenture is hereby amended by adding thereto the following definitions (and by striking any definitions which are supplanted by the definitions set forth below): "Additional Bonds" mean Bonds in addition to the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds which are issued under the provisions of Section 212 of this Indenture. "Authorizing Ordinance" means, collectively, (i) Ordinance No. 4936, adopted by the City on October 3, 2006, which authorized the issuance of the Series 2006A Bonds pursuant to this Indenture, (ii) Ordinance No. 5054, adopted by the City on August 23, 2007, which authorized the issuance of the Series 2007 Bonds pursuant to this Indenture, (iii) Ordinance No. 5277, adopted by the City on October 6, 2009, which authorized the issuance of the Series 2009 Bonds pursuant to this Indenture, (iv) Ordinance No. 5619, adopted by the City on September 17, 2013, which authorized the issuance of the Series 2013 Bonds pursuant to this Indenture, and (v) Ordinance No. 5803, adopted by the City on October 6, 2015, which authorized the issuance of the Series 2015 Bonds pursuant to this Indenture. 3 4810-8222-9542.4 "Bonds" mean the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and all Additional Bonds issued by the City pursuant to this Indenture. Except to the extent provided in Section 209 hereof and except for refunding bonds issued under the provisions of Section 212 hereof, the aggregate principal amount of Bonds issued hereunder shall not exceed $107,340,000. "Indenture" means this Trust Indenture dated as of November 1, 2006, as amended and supplemented by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015, each by and between the City and the Trustee, pursuant to which the Bonds are issued, and any further amendments and supplements thereto. "Investment Securities" means, if and to the extent the same are at the time legal for investment of Funds and Accounts held under this Indenture: (a) cash (fully insured by the Federal Deposit Insurance Corporation); (b) Government Securities; (c) Federal Housing Administration debentures; (d) The obligations of the following government-sponsored agencies which are not backed by the full faith and credit of the United States of America: (1) Federal Home Loan Mortgage Corporation (FHLMC) senior debt obligations and Participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); (2) Farm Credit System (formerly Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) consolidated system -wide bonds and notes; (3) Federal Home Loan Banks (FHL Banks) consolidated debt obligations; and (4) Federal National Mortgage Association (FNMA) senior debt obligations and mortgage-backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); (e) Unsecured certificates of deposit, time deposits, and bankers' acceptances (having maturities of not more than 365 days) of any bank the short-term obligations of which are rated "A-1+" or better by S&P and "Prime -1" by Moody's; (f) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation, in banks which have capital and surplus of at least $15 million; (g) Commercial paper (having original maturities of not more than 270 days) rated "A-1+" by S&P and "Prime -1" by Moody's; (h) Money market funds rated "Aam" or "AAm-G" by S&P, or better and if rated by Moody's rated "Aa2" or better; (i) "State Obligations", which means: 4 4810-8222-9542.4 (1) Direct general obligations of any state of the United States of America or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated at least "A3" by Moody's and at least "A-" by S&P, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated; (2) Direct general short-term obligations of any state agency or subdivision or agency thereof described in (a) above and rated "A-1+" by S&P and "MIG -1" by Moody's; and (3) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state or state agency described in (b) above and rated "AA-" or better by S&P and "Aa3" or better by Moody's; 0) Pre -refunded municipal obligations rated "AAA" by S&P and "Aaa" by Moody's meeting the following requirements: (1) the municipal obligations are (I) not subject to redemption prior to maturity or (II) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions; (2) the municipal obligations are secured by cash or U.S. Treasury Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations; (3) the principal of and interest on the U.S. Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations ("Verification Report"); (4) the cash or U.S. Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations; (5) no substitution of a U.S. Treasury Obligation shall be permitted except with another U. S. Treasury Obligation and upon delivery of a new Verification Report; and (6) the cash or U.S. Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent; and (k) the 2013 Reserve Policy and the 2015 Reserve Policy. 2015 Reserve Insurer" means Assured Guaranty Municipal Corp., a New York stock insurance company, or any successor thereto or assignee thereof. "2015 Reserve Policy" means the municipal bond debt service reserve insurance policy issued by the 2015 Reserve Insurer and deposited into the Series 2015 Account of the Debt Service Reserve Fund with respect to the Series 2015 Bonds. 5 4810-8222-9542.4 "Reserve Requirement" means, with respect to each series of Bonds, an amount equal to 5% of the original principal amount of such series of Bonds. For all purposes of this Indenture, the Reserve Requirement may be satisfied by cash or by Investment Securities, including the 2006A Reserve Policy, the 2007 Reserve Policy, the 2009 Reserve Policy, the 2013 Reserve Policy and the 2015 Reserve Policy. "Series 2015 Bonds" means City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015, issued under and secured by this Indenture in the aggregate principal amount of $9,000,000. Section 2.01. Section 201(c) of the Original Indenture is hereby amended and supplemented to read as follows: "(c) The Bonds shall be equally and ratably payable and secured hereunder without priority by reason of date of adoption of this Indenture or any Supplemental Indenture authorizing their issuance or by reason of their series, number, date, date of issue, execution, authentication or sale, or otherwise; provided, however, (i) while the Series 2006A Bonds are Outstanding, 50% of Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any other series of Additional Bonds hereafter issued, and (ii) following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any other series of Additional Bonds hereafter issued." Section 2.02. Section 202 of the Original Indenture is hereby amended and supplemented to read as follows: "Section 202. Authorized Amount. There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2006A" in the principal amount of Fifty Million Dollars ($50,000,000) (the "Series 2006A Bonds"). There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2007" in the principal amount of Fourteen Million Three Hundred Forty Thousand Dollars ($14,340,000) (the "Series 2007 Bonds"). There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2009" in the principal amount of Eleven Million Two Hundred Fifty Thousand Dollars ($11,250,000) (the "Series 2009 Bonds"). There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2013" in the principal amount of Twenty Two Million Seven Hundred Fifty Thousand Dollars ($22,750,000) (the "Series 2013 Bonds"). There is hereby authorized the issuance of bonds of the City to be designated "Sales and Use Tax Capital Improvement Bonds, Series 2015" in the principal amount of Nine Million Dollars ($9,000,000) (the "Series 2015 Bonds"). No Bonds may be issued under the provisions of this Indenture except in accordance with this Article II. The total principal amount of Bonds that may be issued hereunder by the 6 4810-8222-9542.4 City is hereby expressly limited to $107,340,000, except as provided in Section 209 and except for refunding bonds issued under the provisions of Section 212 hereof." Section 2.03. Article II of the Original Indenture is hereby amended by adding at the end thereof the following sections: "Section 226. Details of Series 2015 Bonds. The Series 2015 Bonds (i) shall be designated "City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015," (ii) shall be in the aggregate principal amount of $9,000,000, (iii) shall be dated as of the date of their delivery, (iv) shall bear interest from such date at the rates hereinafter provided until paid, payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, (v) shall be issued in denominations of $5,000 each, or any integral multiple thereof, (vi) shall be numbered from R15-1 upwards in order of issuance according to the records of the Trustee, and (vii) shall mature, unless sooner redeemed in the manner in this Indenture set forth, on November 1 in each of the years and in the amounts set forth in the following table, which table also sets forth the interest rates for the Series 2015 Bonds: Year (November 1) Principal Amount Interest Rate 2016 $ 930,000 2.000% 2017 945,000 2.000% 2018 965,000 2.000% 2019 980,000 2.000% 2020 1,000,000 1.600% 2021 1,020,000 1.700% 2022 1,035,000 1.800% 2023 1,055,000 1.550% 2024 1,070,000 1.000% Section 227. Form of Series 2015 Bonds. The Series 2015 Bonds shall be initially issued as fully registered bonds, without coupons, in the form of nine typewritten bond certificates (one for each maturity) to be delivered to the Securities Depository. Each such certificate shall be initially registered in the name of the nominee of the Securities Depository, and no Beneficial Owner will receive a certificate representing his interest in the Series 2015 Bonds, except upon the occurrence of the events described in Section 216 of this Indenture. Beneficial Owners shall be deemed to have waived any right to receive a bond certificate except under the circumstances described in Section 216. The Series 2015 Bonds and the Trustee's certificate of authentication to be endorsed thereon shall be in substantially the form set forth in Exhibit A to the Fourth Supplemental Trust Indenture, with appropriate variations, insertions and omissions as permitted or required by this Indenture. Section 228. Delivery of Series 2015 Bonds. Simultaneously with the delivery of the Series 2015 Bonds, the Trustee shall apply the proceeds thereof as follows: 7 4810-8222-9542.4 (a) $14,850.00 shall be transferred to the 2015 Reserve Insurer in payment of the premium on the 2015 Reserve Policy, which 2015 Reserve Policy shall be deposited in the Series 2015 Account of the Debt Service Reserve Fund; (b) $65,000.00 shall be deposited in the Costs of Issuance Fund for payment of Costs of Issuance of the Series 2015 Bonds as directed by a Certificate of the City; and (c) The balance of said proceeds in the amount of $8,914,875.65 shall be deposited in the Series 2015 Street Subaccount of the Project Fund." Section 3.01. Article III of the Original Indenture is hereby amended by adding at the end thereof the following section: "Section 310. Redemption of Series 2015 Bonds. (a) The Series 2015 Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from moneys in the Series 2015 Street Subaccount of the Project Fund in excess of the amount needed to complete the portion of the Street Project intended to be funded with the Series 2015 Bonds, which moneys shall be transferred to the Redemption Fund pursuant to Section 502 hereof. (b) The Series 2015 Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from Surplus Tax Receipts deposited in the Redemption Fund pursuant to Section 503 hereof. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any other series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any other series of Additional Bonds." Section 4.01. Section 501(a) of the Original Indenture is hereby amended and restated to read as follows: "(a) There are hereby created and established the following Funds and Accounts: (i) Project Fund, and a Street Account (with a Series 2006A, a Series 2009 Subaccount, a Series 2013 Subaccount and a Series 2015 Subaccount), a Trail Account (with a Series 2006A and a Series 2009 Subaccount) and a 8 4810-8222-9542.4 Wastewater Account (with a Series 2006A Subaccount and a Series 2007 Subaccount) therein; therein; (ii) Revenue Fund; (iii) Bond Fund, and an Interest Account and a Principal Account (iv) Redemption Fund; (v) Debt Service Reserve Fund, and a Series 2006A Account, a Series 2007 Account, a Series 2009 Account, a Series 2013 Account and a Series 2015 Account therein; (vi) Cost of Issuance Fund; and (vii) Rebate Fund." Section 4.02. Section 503(b) of the Original Indenture is hereby amended and restated to read as follows: "(b) Upon receipt, but in no event later than the last day of each month in which receipts of the Sales and Use Taxes are deposited in the Revenue Fund, commencing no later than March 30, 2007, there shall be transferred from the Revenue Fund, in the following order, the amounts set forth below: FIRST: For deposit to the Interest Account of the Bond Fund, an amount equal to one-sixth (1/6) of the interest on the Outstanding Bonds due on the next interest payment date; provided, however, (i) with respect to the deposits to be made to the Interest Account relating to the Series 2006A Bonds during the months of March, 2007 through October, 2007, such deposits shall be in an amount equal to one-seventh (1/7) of the interest due on the Series 2006A Bonds on November 1, 2007, and (ii) with respect to the deposits to be made to the Interest Account relating to the Series 2007 Bonds during the months of October, 2007 through April, 2008, such deposits shall be in an amount equal to one- seventh (1/7) of the interest due on the Series 2007 Bonds on May 1, 2008; SECOND: For deposit to the Principal Account of the Bond Fund, an amount equal to one -twelfth (1/12) of the next scheduled principal maturity of Outstanding Bonds (including mandatory sinking fund redemptions); provided, however, with respect to the Series 2006A Bonds, the Series 2007 Bonds and the Series 2009 Bonds, such deposits shall not commence until November 2014; THIRD: For deposit to the Debt Service Reserve Fund, an amount sufficient to cure any deficiency in the Debt Service Reserve Fund (including any reimbursement to the 2006A Insurer under the 2006A Reserve Policy, any reimbursement to the 2007 Insurer under the 2007 Reserve Policy, any reimbursement to the 2009 Insurer under the 2009 Reserve Policy, any 9 4810-8222-9542.4 reimbursement to the 2013 Reserve Insurer under the 2013 Reserve Policy, and any reimbursement to the 2015 Reserve Insurer under the 2015 Reserve Policy); FOURTH: For deposit to the Rebate Fund, an amount sufficient to satisfy the City's obligations under Section 507 hereof, FIFTH: For payment to the Trustee and Paying Agent, the amount, if any, necessary to pay or reimburse the Trustee and Paying Agent for fees and expenses related to the Bonds; and SIXTH: All remaining moneys ("Surplus Tax Receipts") will be transferred to the Redemption Fund and shall be applied to call Bonds for redemption prior to maturity as provided in Section 301(b) and Section 506 of the Indenture." Section 4.03. Section 505 of the Original Indenture is hereby amended and supplemented to read as follows: "Section 505. Cost of Issuance Fund. There shall be deposited to the credit of the Cost of Issuance Fund all moneys received for said Fund pursuant to Section 208, Section 219, Section 222, Section 225 and Section 228 hereof. The Trustee shall pay those Costs of Issuance as directed by the City pursuant to a Certificate delivered on a Closing Date. After all Costs of Issuance have been paid (and in any event not later than January 1, 2007 with respect to the Series 2006A Bonds, December 1, 2007 with respect to the Series 2007 Bonds, December 1, 2009 with respect to the Series 2009 Bonds, December 1, 2013 with respect to the Series 2013 Bonds, and December 1, 2015 with respect to the Series 2015 Bonds), any remaining moneys in the Cost of Issuance Fund shall be transferred to the Interest Account of the Bond Fund." Section 4.04. Section 506 of the Original Indenture is hereby amended and supplemented to read as follows: "Section 506. Redemption Fund. (a) There shall be deposited to the credit of the Redemption Fund all moneys required to be transferred thereto pursuant to Section 502 and Section 503 of this Indenture. (b) Moneys credited to the Redemption Fund shall be expended only as set forth in this Section 506. (c) Moneys in the Redemption Fund shall be transferred to the Principal Account of the Bond Fund at such times as may be necessary to effectuate, on the first available date, redemptions of Bonds required by Section 301(a)(1) and (2), Section 307(a) and (b), Section 308(a) and (b), Section 309(a) and (b), and Section 310(a) and (b) of this Indenture. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of 10 4810-8222-9542.4 Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of Additional Bonds. (d) The amounts accumulated in the Redemption Fund, if so directed by the City by means of a Certificate delivered to the Trustee, shall be applied by the Trustee to the purchase of Bonds of the maturities which would otherwise be redeemed pursuant to Section 301(a)(1) and (2), Section 307(a) and (b), Section 308(a) and (b), Section 309(a) and (b), Section 310(a) and (b) and this Section 506 but for the provisions of this subsection (d), at prices directed by the City not exceeding the applicable redemption prices of the Bonds which would be redeemed but for the operation of this sentence. Interest accrued on the Bonds so purchased shall be paid from moneys credited to the Interest Account of the Bond Fund." Section 5.01. Section 902(a) of the Original Indenture is hereby amended and supplemented to read as follows: "(a) Subject to subsection (b) of this Section 902, the City shall, from moneys lawfully available therefor, pay to the Trustee and any Paying Agent reasonable compensation for all services performed hereunder and also all reasonable expenses, charges and other disbursements and those of their attorneys, agents and employees incurred in and about the administration and execution of the trusts hereby created and the performance of the powers and duties hereunder and, to the extent permitted by law and from moneys lawfully available therefor, shall indemnify and save the Trustee harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder. With respect to the Series 2006A Bonds, the Trustee's initial authentication fee shall be $3,500 and the annual administration fee of the Trustee shall be $4,000 annually prior to the final Completion Date with respect to any of the Projects, and $3,500 annually thereafter. With respect to the Series 2007 Bonds, the Trustee's initial authentication fee shall be $1,500 and the annual administration fee of the Trustee shall be $1,500 annually prior to the final Completion Date with respect to any of the Projects, and $1,500 annually thereafter. With respect to the Series 2009 Bonds, the Trustee's initial authentication fee shall be $1,000 and the annual administration fee of the Trustee shall be $1,500 annually prior to the final Completion Date with respect to any of the Projects, and $1,000 annually thereafter. With respect to the Series 2013 Bonds, the Trustee's initial authentication fee shall be $3,000 and the annual administration fee of the Trustee shall be $3,000 annually prior to the final Completion Date with respect to the Street Project, and $2,500 annually thereafter. With respect to the Series 2015 Bonds, the Trustee's initial authentication fee shall be $2,500 and the annual administration fee of the Trustee shall be $3,000 annually prior to the final Completion Date with respect to the Street Project, and $2,500 annually thereafter. If the City shall fail to make any payment required by this subsection (a), the Trustee may make such payment from any moneys in its possession under the provisions of this Indenture and shall be entitled to a preference therefor over any of the Bonds Outstanding hereunder. The City shall not be required to indemnify the Trustee against any liabilities 11 4810-8222-9542.4 which the Trustee may incur as a result of negligent or wrongful acts or omissions of the Trustee." Section 6.01. The Original Indenture is hereby amended and supplemented by adding at the end thereof the following Article: "ARTICLE XVI PROVISIONS RELATED TO 2015 RESERVE POLICY Section 16.01. Provisions Related to 2015 Reserve Policy. Notwithstanding any provision to the contrary contained in the Indenture, so long as the 2015 Reserve Policy remains in full force and effect (or any amounts are owed the 2015 Reserve Insurer in connection therewith), the provisions of this Article XVI shall control where applicable. (a) The prior written consent of the 2015 Reserve Insurer shall be a condition precedent to the deposit of any credit facility (a "Credit Facility") to the Series 2015 Account of the Debt Service Reserve Fund established for the Series 2015 Bonds (for purposes of this Article XVI, the "Reserve Fund") in lieu of a cash deposit into the Reserve Fund. Amounts drawn under the 2015 Reserve Policy shall be available only for the payment of scheduled principal and interest on the Series 2015 Bonds when due. (b) The City shall repay any draws under the 2015 Reserve Policy and pay all related reasonable expenses incurred by the 2015 Reserve Insurer and shall pay interest thereon from the date of payment by the 2015 Reserve Insurer at the Late Payment Rate. "Late Payment Rate" means the lesser of (x) the greater of (i) the per annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office in the City of New York, as its prime or base lending rate ("Prime Rate") (any change in such Prime Rate to be effective on the date such change is announced by JPMorgan Chase Bank) plus 5%, and (ii) the then applicable highest rate of interest on the Series 2015 Bonds, and (y) the maximum rate permissible under applicable usury or similar laws limiting interest rates. The Late Payment Rate shall be computed on the basis of the actual number of days elapsed over a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate shall be the publicly announced prime or base lending rate of such national bank as the 2015 Reserve Insurer shall specify. If the interest provisions of this subparagraph (b) shall result in an effective rate of interest which, for any period, exceeds the limit of the usury or any other laws applicable to the indebtedness created herein, then all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice between or by any party hereto, be applied as additional interest for any later periods of time when amounts are outstanding hereunder to the extent that interest otherwise due hereunder for such periods plus such additional interest would not exceed the limit of the usury or such other laws, and any excess shall be applied upon principal immediately upon receipt of such moneys by the 2015 Reserve Insurer, with the same force and effect as if the City had specifically designated such extra sums to be so applied 12 4810-8222-9542.4 and the 2015 Reserve Insurer had agreed to accept such extra payment(s) as additional interest for such later periods. In no event shall any agreed -to or actual exaction as consideration for the indebtedness created herein exceed the limits imposed or provided by the law applicable to this transaction for the use or detention of money or for forbearance in seeking its collection. Repayment of draws and payment of expenses and accrued interest thereon at the Late Payment Rate (collectively, "Policy Costs") shall commence in the first month following each draw, and each such monthly payment shall be in an amount at least equal to 1/12 of the aggregate of Policy Costs related to such draw. Amounts in respect of Policy Costs paid to the 2015 Reserve Insurer shall be credited first to interest due, then to the expenses due and then to principal due. As and to the extent that payments are made to the 2015 Reserve Insurer on account of principal due, the coverage under the 2015 Reserve Policy will be increased by a like amount, subject to the terms of the 2015 Reserve Policy. The obligation to pay Policy Costs shall be secured by a valid lien on all revenues and other collateral pledged as security for the Series 2015 Bonds (subject only to the priority of payment provisions set forth under the Indenture), and there is hereby granted to the Trustee in favor of the 2015 Reserve Insurer a security interest in the Trust Estate (subject only to the priority of payment provisions set forth herein). All cash and investments in the Reserve Fund shall be transferred to the Bond Fund for payment of debt service on Series 2015 Bonds before any drawing may be made on the 2015 Reserve Policy or any other Credit Facility credited to the Reserve Fund in lieu of cash. Payment of any Policy Costs shall be made prior to replenishment of any such cash amounts. Draws on all Credit Facilities (including the 2015 Reserve Policy) on which there is available coverage shall be made on a pro -rata basis (calculated by reference to the coverage then available thereunder) after applying all available cash and investments in the Reserve Fund. Payment of Policy Costs and reimbursement of amounts with respect to other Credit Facilities shall be made on a pro -rata basis prior to replenishment of any cash drawn from the Reserve Fund. For the avoidance of doubt, "available coverage" means the coverage then available for disbursement pursuant to the terms of the applicable alternative credit instrument without regard to the legal or financial ability or willingness of the provider of such instrument to honor a claim or draw thereon or the failure of such provider to honor any such claim or draw. (c) Upon a failure to pay Policy Costs when due or any other breach of the terms of this Article XVI, the 2015 Reserve Insurer shall be entitled to exercise any and all legal and equitable remedies available to it, including those provided under the Indenture, other than (i) acceleration of the maturity of the Series 2015 Bonds or (ii) remedies which would adversely affect owners -of the Series 2015 Bonds. (d) The Indenture shall not be discharged until all Policy Costs owing the 2015 Reserve Insurer shall have been paid in full. The City's obligation to 13 4810-8222-9542.4 pay such amounts shall expressly survive payment in full of the Series 2015 Bonds. (e) The City shall include any Policy Costs then due and owing the 2015 Reserve Insurer in the calculation of the additional bonds test in the Indenture. (f) The Trustee shall ascertain the necessity for a claim upon the 2015 Reserve Policy in accordance with the provisions of subparagraph (b) hereof and will provide notice to the 2015 Reserve Insurer in accordance with the terms of the 2015 Reserve Policy at least five Business Days prior to each date upon which interest or principal is due on the Series 2015 Bonds. Where deposits are required to be made by the City with the Trustee to the Bond Fund for the Series 2015 Bonds more often than semi-annually, the Trustee shall be instructed to give notice to the 2015 Reserve Insurer of any failure of the City to make timely payment in full of such deposits within two Business Days of the date due. (g) The City will pay or reimburse the 2015 Reserve Insurer any and all charges, fees, costs, losses, liabilities and expenses which the 2015 Reserve Insurer may pay or incur, including, but not limited to, fees and expenses of attorneys, accountants, consultants and auditors and reasonable costs of investigations, in connection with (i) any accounts established to facilitate payments under the 2015 Reserve Policy, (ii) the administration, enforcement, defense or preservation of any rights in respect of the Indenture or any document executed in connection with the Series 2015 Bonds (the "Related Documents"), including defending, monitoring or participating in any litigation or proceeding (including any bankruptcy proceeding in respect of the City) relating to the Indenture or any other Related Document, any party to the Indenture or any other Related Document or the transactions contemplated by the Related Documents, (iii) the foreclosure against, sale or ether disposition of any collateral securing any obligations under the Indenture or any other Related Document, if any, or the pursuit of any remedies under the Indenture or any other Related Document, to the extent such costs and expenses are not recovered from such foreclosure, sale or other disposition, (iv) any amendment, waiver or other action with respect to, or related to the Indenture, the 2015 Reserve Policy or any other Related Document whether or not executed or completed, or (v) any action taken by the 2015 Reserve Insurer to cure a default or termination or similar event (or to mitigate the effect thereof) under the Indenture or any other Related Document; costs and expenses shall include a reasonable allocation of compensation and overhead attributable to time of employees of the 2015 Reserve Insurer spent in connection with the actions described in clauses (ii) through (v) above. The 2015 Reserve Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of the Indenture or any other Related Document. Amounts payable by the City hereunder shall bear interest at the Late Payment Rate from the date such amount is paid or incurred by the 2015 Reserve Insurer until the date the 2015 Reserve Insurer is paid in full. 14 4810-8222-9542.4 (h) The obligation of the City to pay all amounts due to the 2015 Reserve Insurer shall be an absolute and unconditional obligation of the City and will be paid or performed strictly in accordance with the provisions of this Article XVI, irrespective of (i) any lack of validity or enforceability of or any amendment or other modifications of, or waiver with respect to the Series 2015 Bonds, the Indenture or any other Related Document; (ii) any amendment or other modification of, or waiver with respect to the 2015 Reserve Policy; (iii) any exchange, release or non -perfection of any security interest in property securing the Series 2015 Bonds, the Indenture or any other Related Document; (iv) whether or not such Series 2015 Bonds are contingent or matured, disputed or undisputed, liquidated or unliquidated; (v) any amendment, modification or waiver of or any consent to departure from the 2015 Reserve Policy, the Indenture or any of the other Related Documents; (vi) the existence of any claim, setoff, defense (other than the defense of payment in full), reduction, abatement or other right which the City may have at any time against the Trustee or any other person or entity other than the 2015 Reserve Insurer, whether in connection with the transactions contemplated herein or in any other Related Documents or any unrelated transactions; (vii) any statement or any other document presented under or in connection with the 2015 Reserve Policy proving in any and all respects invalid, inaccurate, insufficient, fraudulent or forged or any statement therein being untrue or inaccurate in any respect; or (viii) any payment by the 2015 Reserve Insurer under the 2015 Reserve Policy against presentation of a certificate or other document which does not strictly comply with the terms of the 2015 Reserve Policy. (i) The City shall fully observe, perform, and fulfill each of the provisions (as each of those provisions may be amended, supplemented, modified or waived with the prior written consent of the 2015 Reserve Insurer) of the Indenture applicable to it, each of the provisions thereof being expressly incorporated into this Article XVI by reference solely for the benefit of the 2015 Reserve Insurer as if set forth directly herein. No provision of the Indenture or any other Related Document shall be amended, supplemented, modified or waived, without the prior written consent of the 2015 Reserve Insurer, in any material respect or otherwise in a manner that could adversely affect the payment obligations of the City hereunder or the priority accorded to the reimbursement of Policy Costs under the Indenture. The 2015 Reserve Insurer is hereby expressly made a third party beneficiary of the Indenture and other Related Documents. 0) The City covenants to provide to the 2015 Reserve Insurer, promptly upon request, any information regarding the Series 2015 Bonds or the financial condition and operations of the City as reasonably requested by the 2015 Reserve Insurer. The City will permit the 2015 Reserve Insurer to discuss the affairs, finances and accounts of the City or any information the 2015 Reserve Insurer may reasonably request regarding the security for the Series 2015 Bonds with appropriate officers of the City and will use commercially reasonable efforts to enable the 2015 Reserve Insurer to have access to the facilities, books and records of the City on any business day upon reasonable prior notice. 15 4810-8222-9542.4 (k) Notices and other information to the 2015 Reserve Insurer shall be sent to the following address (or such other address as the 2015 Reserve Insurer may designate in writing): Assured Guaranty Municipal Corp., 31 West 52nd Street, New York, New York 10019 Attention: Managing Director -Surveillance; Re: Policy No. 217208-5." Section 7.01. Severability. (a) If any provisions of this Fourth Supplemental Trust Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions or any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to any extent whatever. (b) The invalidity of any one or more phrases, sentences, clauses or paragraphs in this Fourth Supplemental Trust Indenture contained shall not affect the remaining portions of this Fourth Supplemental Trust Indenture or any part thereof. Section 7.02. Applicable Provisions of Law. This Fourth Supplemental Trust Indenture shall be considered to have been executed in the State of Arkansas and it is the intention of the parties that the substantive law of the State of Arkansas govern as to all questions of interpretation, validity and effect. Section 7.03. Counterparts. This Fourth Supplemental Trust Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 7.04. Ratification of Original Indenture. As supplemented and amended hereby, the Original Indenture is hereby ratified and confirmed. 16 4810-8222-9542.4 IN WITNESS WHEREOF, the City has caused these presents to be signed in its name and behalf by its Mayor and its corporate seal to be hereunto affixed and attested by its City Clerk, and to evidence its acceptance of the trust hereby created, the Trustee has caused these presents to be signed in its behalf by its duly authorized officers and its corporate seal to be hereto affixed. CITY OF FOETTEVIL�E, ARKANSAS 0, ATTEST: By: City Clerk��.� fill °I (SEA) yJ ®� SIMMONS FIRST TRUST COMPANY, N.A., Z as Trustee ®s By: Title: Vice President & Corporate Trust Officer ATTEST: By: Title: Sr. Vice President & Corporate Trust Officer (SEAL) [SIGNATURE PAGE TO FOURTH SUPPLEMENTAL TRUST INDENTURE] 4810-8222-9542.4 IN WITNESS WHEREOF, the City has caused these presents to be signed in its name and behalf by its Mayor and its corporate seal to be hereunto affixed and attested by its City Clerk, and to evidence its acceptance of the trust hereby created, the Trustee has caused these presents to be signed in its behalf by its duly authorized officers and its corporate seal to be hereto affixed. CITY OF FAYETTEVILLE, ARKANSAS Mayor ATTEST: By: City Clerk (SEAL) SIMMONS FIRST TRUST COMPANY, N.A., as Trustee By. Title: Vice President & Corporate Trust Officer ATTEST: By: Title: Sr. Vice gresident & Trust Officer (SEAI)at�ST TgUS `14, ct5. 'GORPO C� \42999 .... _a [SIGNATURE PAGE TO FOURTH SUPPLEMENTAL TRUST INDENTURE] 4810-8222-9542.4 ACKNOWLEDGMENT STATE OF ARKANSAS ) ) ss. COUNTY OF WASHINGTON ) Before me a Notary Public, duly commissioned, qualified and acting within and for the State and county aforesaid, appeared in person the within named Lioneld Jordan and Sondra Smith, Mayor and City Clerk, respectively, of the City of Fayetteville, Arkansas, to me personally known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the City, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. //��� IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this �ay of November, 2015. U Notary Public My Comb#expires:' ®�®mQ4®�SS0 #IP3�m ap���Q� A R Y66'.� •Bli� (SIR pug��G sv 2 •®�Aiies 2-1��•®��`® s�®®®`� 'O 6 e'� [ACKNOWLEDGEMENT TO FOURTH SUPPLEMENTAL TRUST INDENTURE] 4810-8222-9542.4 ACKNOWLEDGMENT STATE OF ARKANSAS ss. COUNTY OF JEFFERSON Before me a Notary Public, duly commissioned, qualified and acting within and for the State and county aforesaid, appeared in person the within named Glenda Dean and Roy Ferrell, the Vice President and Corporate Trust Officer and the Senior Vice President and Corporate Trust Officer, respectively, of Simmons First Trust Company, N.A., to me personally known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the Trust Company, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this 12th day of November, 2015. Notary Public My Commission expires: fro k� L.2oA"0-%1 I. y kb Ark JeffersonArkansas [ACKNOWLEDGEMENT TO FOURTH SUPPLEMENTAL TRUST INDENTURE] 4810-8222-9542.4 EXHIBIT A TO FOURTH SUPPLEMENTAL TRUST INDENTURE Form of Series 2015 Bond Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED No. R15 - REGISTERED UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2015 Interest Rate: % Date of Bond: November , 2015 Registered Owner: CEDE & CO. Principal Amount: KNOW ALL MEN BY THESE PRESENTS: Maturity Date: November 1, 20_ CUSIP: 312673 DOLLARS That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. A-1 4810-8222-9542.4 This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2015", is one of a series of bonds aggregating Nine Million Dollars ($9,000,000) (the "Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of the acquisition, construction, reconstruction, repair, straightening and widening of certain City streets and related improvements (the "Project"). Bond proceeds will be utilized to pay Project costs, to fund a debt service reserve, and to pay the costs of issuance of the Bonds. The Bonds are issued under and are secured by and entitled to the protection of a Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), by and between the City and the Trustee, which Indenture is available for inspection at the principal corporate trust office of the Trustee. Reference is hereby made to the Indenture and to all indentures supplemental thereto for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the City, the Trustee and the owners of the Bonds, and the terms upon which the Bonds are issued and secured. The Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas, including particularly Amendment No. 62 to the Constitution of Arkansas, as implemented by the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2013) §§14-164-301 et seq. (as from time to time amended, the "Local Government Bond Act"), Ordinance No. 5803 of the City adopted October 6, 2015, which ordinance authorized the execution and delivery of the Fourth Supplemental Trust Indenture, and a special election duly held on September 12, 2006, at which a majority of the qualified electors of the City voting approved the issuance of the Bonds. In accordance with the Local Government Bond Act, the City has pledged all receipts from (i) a one-quarter of one percent (0.25%) local sales and use tax (the "0.25% Sales and Use Tax") and (ii) a three-quarters of one percent (0.75%) local sales and use tax (the "0.75% Sales and Use Tax"), each levied by the City pursuant to Ordinance No. 4891, adopted by the City on June 20, 2006, to provide funds for the repayment of the Bonds. The pledge of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax (collectively, the "Tax Receipts") presently secures payment of the Bonds and (i) the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) the City's $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), (iii) the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and (iv) the City's $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). The Indenture provides that the City may hereafter issue Additional Bonds from time to time under certain terms and conditions contained in the Indenture and, if issued or incurred, such Additional Bonds will rank on a parity of security with the Bonds, the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds and the Series 2013 Bonds and will be equally and ratably secured by and entitled to the protection of the Indenture. A-2 4810-8222-9542.4 The Bonds are not general obligations of the City, but are special obligations secured by an irrevocable pledge of and lien on the Tax Receipts, as more particularly described in the Indenture. In no event shall the Bonds constitute an indebtedness of the City within the meaning of any constitutional or statutory limitation. The holder of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds issued under the Indenture and then outstanding may be declared and may become due and payable before the stated maturity thereof, together with accrued interest thereon. Modifications or alterations of the Indenture or of any indenture supplemental thereto, may be made only to the extent and in the circumstances permitted by the Indenture. The Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from moneys in the Project Fund in excess of the amount needed to complete the portions of the Project to be funded with the Bonds. The Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from surplus Tax Receipts deposited in the Redemption Fund pursuant to the Indenture. So long as the Series 2006A Bonds are outstanding, 50% of the surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of such surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Bonds and any series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Bonds and any series of Additional Bonds. Notwithstanding the foregoing, so long as DTC or its nominee is the sole registered owner of the Bonds, the particular Bonds or portions thereof to be redeemed in part within a maturity shall be selected by lot by DTC in such manner as DTC shall determine. In selecting Bonds for redemption prior to maturity, in the case any outstanding Bond is in a denomination greater than $5,000, each $5,000 of face value of such Bond shall be treated as a separate Bond of the denomination of $5,000. In the event any of the Bonds or portions thereof (which shall be $5,000 or any integral multiple thereof) are called for redemption, notice thereof shall be given by the Trustee by first class mail to the registered owner of each such Bond addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure to give such notice by A-3 4810-8222-9542.4 mailing, or any defect therein, shall not affect the validity of the proceedings for the redemption of any Bond with respect to which no such failure or defect has occurred. Each notice shall identify the Bonds or portions thereof being called, and the date on which they shall be presented for payment. After the date specified in such call notice, the Bond or Bonds so called for redemption will cease to bear interest provided funds sufficient for their redemption have been deposited with the Trustee, and, except for the purpose of payment, shall no longer be protected by the Indenture and shall not be deemed to be outstanding under the provisions of the Indenture. This Bond may be transferred on the books of registration kept by the Trustee by the registered owner or by his duly authorized attorney upon surrender hereof, together with a written instrument of transfer duly executed by the registered owner or his duly authorized attorney. The Bonds are issuable as registered bonds without coupons in denominations of $5,000 and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations. No recourse shall be had for the payment of the principal of or premium, if any, or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Bonds or the Indenture against any past, present or future alderman, officer or employee of the City, or any successor, as such, either directly or through the City or any successor of the City, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such alderman, officer or employee as such is hereby expressly waived and released as a condition of and consideration for the issuance of any of the Bonds. This Bond is issued with the intent that the laws of the State of Arkansas will govern its construction. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law; that the indebtedness represented by the Bonds, together with all obligations of the City, does not exceed any constitutional or statutory limitation; and that the revenues pledged to the payment of the principal of and premium, if any, and interest on the Bonds as the same become due and payable will be sufficient in amount for that purpose. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture until the Certificate of Authentication hereon shall have been signed by the Trustee. A-4 4810-8222-9542.4 IN WITNESS WHEREOF, the City of Fayetteville, Arkansas has caused this Bond to be executed by its Mayor and City Clerk, thereunto duly authorized (by their manual or facsimile signatures), and its corporate seal to be affixed or imprinted hereon, all as of the date hereof shown above. ATTEST: By: City Clerk (S E A L) CITY OF FAYETTEVILLE, ARKANSAS Mayor (Form of Trustee's Certificate) TRUSTEE'S CERTIFICATE OF AUTHENTICATION This bond is one of the Series 2015 Bonds of the issue described in and issued under the provisions of the within mentioned Indenture. Attached hereto is the complete text of the opinion of Kutak Rock LLP, a signed original of which is on file with the undersigned, delivered and dated the date of the original delivery of and payment for the Series 2015 Bonds. Date: SIMMONS FIRST TRUST COMPANY, N.A., as Trustee No Authorized Signature A-5 4810-8222-9542.4 (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, , hereby sells, assigns, and transfers unto , the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. DATE: , 20 Transferor GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by an institution satisfactory to the Trustee or other transfer agent. A-6 4810-8222-9542.4 COVERAGE CERTIFICATE City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Date: November 12, 2015 TO: Simmons First Trust Company, as Trustee This certificate is provided pursuant to the provisions of Section 212 of the Trust Indenture dated as of November 1, 2006, as subsequently supplemented and amended (the "Indenture"), by and between the City of Fayetteville, Arkansas (the "Issuer") and you, as trustee, in connection with the proposed issuance of Additional Bonds pursuant to the Indenture. In connection with such issuance, the undersigned certifies as follows: (a) Receipts of the Sales and Use Tax for preceding twelve (12) months: $19,298,680 (b) Maximum Annual Debt Service on all Outstanding Bonds and RLF Loans, plus the proposed Additional Bonds: $12,809,466 (c) (a) divided by (b) = 1.51% (which is greater than 125%) The undersigned hereby certifies that he is authorized to deliver this Certificate on behalf of the Issuer. No Event of Default exists under the Indenture and, to the knowledge of the undersigned, no event has occurred and continues which with notice or lapse of time or both would constitute an Event of Default under the Indenture. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture. CITY OF FAYETTEVILLE, ARKANSAS f Finance Director 4844-0149-222.1 TAX REGULATORY AGREEMENT between CITY OF FAYETTEVILLE, ARKANSAS and SIMMONS FIRST TRUST COMPANY, N.A. as Trustee Dated as of November 12, 2015 Relating to: $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2015 Prepared by: Kutak Rock LLP 124 West Capitol Avenue Suite 2000 Little Rock, Arkansas 72201 4835-4867-6902.1 EXECUTION COPY TAX REGULATORY AGREEMENT THIS TAX REGULATORY AGREEMENT (this "Tax Regulatory Agreement) is made and dated as of November 12, 2015, by and between the CITY OF FAYETTEVILLE, ARKANSAS, a city of the first class and political subdivision of the State of Arkansas (the "Issuer"), and SIMMONS FIRST TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States of America, not in its individual capacity but solely in its capacity as the trustee (the "Trustee") named under that certain Trust Indenture dated as of November 1, 2006, as supplemented and amended by that certain First Supplemental Trust Indenture dated as of October 1, 2007, by that certain Second Supplemental Trust Indenture dated as of November 1, 2009, by that Third Supplemental Trust Indenture dated as of November 1, 2013, and by that Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), each by and between the Issuer and the Trustee. WITNESSETH: WHEREAS, pursuant to the Constitution and laws of the State of Arkansas, including particularly Amendment 62 and Arkansas Code Annotated §§ 14-164-301 et seq. (as from time to time amended, the "Authorizing Legislation"), the Issuer has authorized the issuance of $9,000,000 principal amount of its Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"), pursuant to the Indenture and Ordinance No. 5803, adopted and approved on October 6, 2015 (the "Authorizing Ordinance"), for the purposes of providing the funds (i) to acquire, construct, reconstruct, repair, straighten and widen certain City streets and related improvements (the "Project"), (ii) to pay the premium on a debt service reserve insurance policy for deposit in a debt service reserve, and (iii) to pay the costs of issuance of the Bonds; and WHEREAS, the Issuer has determined that the issuance, sale and delivery of the Bonds is necessary in order to provide a portion of the financing for the Project and WHEREAS, this Tax Regulatory Agreement has been entered into by the Issuer and the Trustee to provide for compliance with the provisions of the Internal Revenue Code of 1986, as amended, and the Regulations promulgated thereunder; and WHEREAS, this Tax Regulatory Agreement is executed in part for the purpose of setting forth the facts, estimates and expectations of the Issuer on the date hereof as to future events regarding the Bonds; NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Issuer and the Trustee hereby agree as follows: 4835-4867-6902.1 ARTICLE I DEFINITIONS Section LL Definitions. The following words and phrases shall have the following meanings. Any capitalized word or term used herein but not defined herein shall have the same meaning given in the Indenture. "Adjusted Fair Market Value " of an investment means the Fair Market Value plus the sum of all adjustments, if any, made to the issue price of such investment under Section 1272 of the Code, since the date the investment became a Nonpurpose Obligation. "Arbitrage Rebate Consultant" means an accounting firm or a firm of attorneys or another person or firm with knowledge of or experience in advising bond trustees with respect to the provisions of Section 148(f) of the Code. "Bond Counsel" means Kutak Rock LLP or an attorney or firm of attorneys recognized as having expertise in matters relating to the issuance of tax-exempt obligations reasonably acceptable to the Trustee. "Bonds" means the Issuer's $9,000,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2015. "Bond Year " means the one-year period beginning on the day after expiration of the preceding bond year. The first Bond Year begins on the date of issue of the Bonds and ends November 1, 2016. "Code " means the Internal Revenue Code of 1986, as amended, and the Regulations thereunder. "Computation Period" means each period from the date of issue through the date on which a determination of the Rebate Amount is made. "Costs of Issuance " means all costs incurred in connection with the borrowing. Examples of costs of issuance include (but are not limited to): (a) underwriter's spread (whether realized directly or derived through purchase of the Bonds at a discount below the price at which a substantial number of Bonds are sold to the public); (b) counsel fees (including bond counsel, underwriter's counsel, issuer's counsel, trustee's counsel and any other specialized counsel fees incurred in connection with the borrowing); (c) financial advisor fees (including the Issuer's financial advisor) incurred in connection with the borrowing; (d) rating agency fees; (e) trustee fees incurred in connection with the borrowing; 2 4835-4867-6902.1 (f) paying agent and certifying and authenticating agent fees related to issuance of the Bonds; (g) accountant fees related to issuance of the Bonds; (h) printing costs (for the Bonds and of preliminary and final offering materials); and (i) costs incurred in connection with the required public approval process (e.g., publication costs for public notices generally and costs of any public hearing or voter referendum or election expense). "Fair Market Value" of an investment means the fair market value, including accrued interest, of such investment at the time it becomes a Nonpurpose Obligation. "Gross Proceeds " means: (a) Sale proceeds (as defined in Section 1.148-1(b) of the Regulations); (b) Investment proceeds (as defined in Section 1.148-1(b) of the Regulations); (c) Transferred proceeds (as defined in Section 1.148-9 of the Regulations); (d) Any amounts held as a sinking fund for the Bonds; (e) Any amounts held in a pledged fund or reserve fund for the Bonds; and (f) Any other replacement proceeds (as defined in Section 1.148-1(c) of the Regulations). "Net Sale Proceeds" means sale proceeds, less the portion of those sales proceeds invested in a reasonably required reserve or replacement fund under Section 148(d) of the Code. "Nonpurpose Obligation" means any investment property, as defined in Section 148(b) of the Code, in which Gross Proceeds are invested and which is not acquired to carry out the governmental purpose of the issue. "Project" means the various street improvements to be financed with proceeds of the Bonds. "Qualified Project Costs" means Project Costs (as defined in the Indenture); provided, however, that (i) Project Costs paid or incurred more than sixty (60) days prior to June 20, 2006 shall not be deemed to be Qualified Project Costs (except for costs under the de minimis and preliminary expenditure exceptions set forth in Section 1.150-2 of the U.S. Treasury Regulations), (ii) Costs of Issuance shall not be deemed to be Qualified Project Costs, and (iii) interest prior to the Completion Date (as defined in the Indenture) of the Project, letter of credit fees, and municipal bond insurance premiums which represent a transfer of credit risk must be allocated between Qualified Project Costs and other costs and expenses to be paid with Bond proceeds. "Rebate Amount" means, with respect to the Bonds, the amount computed as described in Section 4.13 hereof. 3 4835-4867-6902.1 "Regulation " or "Regulations" means the temporary, proposed or final Income Tax Regulations promulgated by the Department of the Treasury and applicable to the Bonds. "State " means the State of Arkansas. "Tax Regulatory Agreement" means this Tax Regulatory Agreement. "Trustee" means Simmons First Trust Company, N.A., a national banking association organized and existing under the laws of the United States of America, or any successor trustee under the Indenture. "Underwriter" means Stephens Inc. "Yield" means, with respect to the Bonds, yield computed under Section 1.148-4 of the Regulations, and with respect to an investment, yield computed under Section 1.148-5 of the Regulations. Section 1.2. Reliance on Issuer Information. Bond Counsel and the Trustee shall be permitted to rely upon the contents of this Tax Regulatory Agreement and any certification, document or instructions provided pursuant to this Tax Regulatory Agreement and shall not be responsible or liable in any way for the accuracy of their contents or the failure of the Issuer to deliver any required information. ARTICLE II REPRESENTATIONS AND COVENANTS BY THE ISSUER Section 2.1. Organization and Authority. The Issuer hereby represents that it (1) is a political subdivision duly organized and existing under the laws of the State of Arkansas, and (2) has lawful power and authority to issue the Bonds for the purposes set forth in the Indenture, to enter into, execute and deliver the Indenture and this Tax Regulatory Agreement, and to carry out its obligations under such documents, and (3) by all necessary action has been duly authorized to execute and deliver the Indenture and this Tax Regulatory Agreement, acting by and through its duly authorized officials. Section 2.2. Use of Bond Proceeds; Ownership of the Project. The Issuer hereby represents and warrants for the benefit of the Bond Counsel, the Trustee and holders of the Bonds that the proceeds of the Bonds will be used to finance or reimburse a portion of the costs of the acquisition, construction, reconstruction, extending, improving and equipping of the Project (except those limited proceeds which are used to pay a debt service reserve insurance premium and to pay Costs of Issuance) and that all of the Project financed with proceeds of the Bonds will be, or will continue to be, owned and operated by the Issuer. The Issuer further represents and warrants that it will not use or permit the use of any of the proceeds of the Bonds or any other funds of the Issuer, directly or indirectly, in any manner, and will not take or permit to be taken any other action, including use of the Project, that would cause interest on the Bonds to be included in the gross income of the owners thereof for federal income tax purposes. In particular, the Issuer will not use, or permit the use of, any portion of the Project in a manner that 4 4835-4867-6902.1 would cause the Bonds to be deemed "private activity bonds" within the meaning of Section 141 of the Code. Section 2.3. Change in Use or Ownership of the Project. The Issuer represents that it intends to own and operate the Project at all times during the term of the Bonds. The Issuer does not know of any reason why the Project will not be so used in the absence of (i) supervening circumstances not now anticipated by it, (ii) adverse circumstances beyond its control, or (iii) obsolescence of such insubstantial parts or portions thereof as may occur as a result of normal wear and tear. The Issuer covenants that it will not change the use, ownership or nature of any portion of the Project so long as any of the Bonds are outstanding unless, in the written opinion of Bond Counsel, such change will not result in the inclusion of interest on the Bonds in the gross income of the recipient thereof for purposes of federal income taxation, except that the Issuer may, without an opinion, sell or otherwise dispose of minor parts or portions of the Project as may be necessary or desirable due to normal wear, tear or obsolescence. The Issuer will monitor the use of the Project in order to assure that interest on the Bonds remains excludable from the gross income of the recipients thereof for purposes of federal income taxation, and the Issuer will consult with Bond Counsel as necessary to determine whether, and to what extent, if as a result of the change in use or purpose of the Project any remedial action is required under the Code or the Regulations. Section 2.4. Bonds in Registered Form. The Bonds will be issued in registered form as required by Section 149(a) of the Code. Section Z.S. Information Reporting. Section 149(e) of the Code requires as a condition to qualification for tax -exemption that the Issuer provide to the Secretary of the Treasury certain information with respect to the Bonds and the application of the proceeds derived therefrom. The Issuer hereby represents, for the benefit of Bond Counsel and the owners of the Bonds, that it has reviewed the Internal Revenue Code Form 8038-G (Information Return for Tax -Exempt Governmental Obligations) prepared by Bond Counsel and that the information contained therein is true, complete and correct to the best knowledge of the Issuer as of the date of issuance of the Bonds. Section 2.6. No Federal Guarantee. The Issuer represents and covenants that it has not taken and will not take, or permit to be taken, any action that will cause the Bonds to be "federally guaranteed" within the meaning of § 149(b) of the Code. Section 2.7. Bonds Not Hedge Bonds. The Issuer represents that it reasonably expects to expend at least 85 percent of the "spendable proceeds" of the Bonds for the specific purposes for which the Bonds are issued within three years of the date hereof and not more than 50 percent of the proceeds of the Bonds will be invested in Nonpurpose Obligations having substantially guaranteed Yields for four years or more. Section 2.8. Reimbursement. The Issuer acknowledges its understanding that if any proceeds of the Bonds are used to reimburse the Issuer for costs relating to the Project that were paid prior to the date of issuance of the Bonds, such costs shall be deemed Qualified Project Costs eligible for requisition from the Project Fund by the Issuer only if the reimbursement is valid under § 1.150-2 of the Regulations. The Issuer further acknowledges its understanding that, 5 4835-4867-6902.1 in general, a reimbursement is valid only if (A) such costs were paid no sooner than sixty (60) days prior to June 20, 2006, the date the Issuer adopted an ordinance expressing its official intent to issue tax-exempt bonds to finance the Project, and (B) Bond proceeds are allocated to reimburse such costs within eighteen (18) months after the later of the date such expenditures were made or the date the Project is placed in service, but in no event later than three (3) years after the original expenditure was paid. Series 2.9. No Replacement. No portion of the amounts received from the sale of the Bonds will be used as a substitute for other funds which were otherwise to be used as a source of financing for the Project, and which will be used to acquire, directly or indirectly, investment obligations producing a Yield in excess of the Yield on the Bonds. Section 2.10. No Abusive Arbitrage Device. The Issuer represents that the Bonds are not and will not be part of a transaction or series of transactions that has the effect of (1) enabling the Issuer to exploit the difference between tax-exempt and taxable interest rates to gain a material financial advantage, and (2) overburdening the tax-exempt bond market. Section 2.11. Single Issue. The Issuer represents that the Bonds constitute a single "issue" under §1.150-1(c) of the Regulations. No other obligations of the Issuer (1) are being sold within fifteen (15) days of the sale of the Bonds, (2) are being sold pursuant to the same plan of financing as the Bonds, and (3) are expected to be paid from substantially the same source of funds (disregarding guaranties from third parties, such as bond insurance) as the Bonds. Section 2.12. Representations as to Limits on the Use of Proceeds. The amount of Bond proceeds to be utilized to pay the premium on the 2015 Reserve Policy (as defined in the Indenture) for deposit to the Debt Service Reserve Fund shall not exceed the lesser of (i) 10 percent of the initial stated principal amount of the Bonds, (ii) the maximum annual debt service on the Bonds, or (iii) 125 percent of the average annual debt service on the Bonds. Section 2.13. Reliance on Representations of Issuer; Survival. The Issuer understands and acknowledges that Bond Counsel is relying on the various representations, warranties and covenants of the Issuer contained in this Tax Regulatory Agreement for purposes of delivering its approving opinion. All representations and certifications of the Issuer contained in this Tax Regulatory Agreement will survive the execution and delivery of this Tax Regulatory Agreement and the issuance, sale and delivery of the Bonds, as representations of facts existing as of the date of the execution and delivery of this Tax Regulatory Agreement. The covenants and warranties of the Issuer contained in this Article II will remain in full force and effect notwithstanding the defeasance of the Bonds and the discharge of the Indenture, until the final maturity date of all Bonds Outstanding and payment of such Bonds. ARTICLE III COVENANTS OF THE TRUSTEE Section 3.1. Covenants of the Trustee. The Trustee covenants to the Issuer that it will comply with all applicable provisions of this Tax Regulatory Agreement and any written letter or opinion of Bond Counsel which sets forth any action necessary by the Trustee to preserve 6 4835-4867-6902.1 interest on the Bonds from the gross income of the recipients thereof for federal income tax purposes. Such covenant will remain in full force and effect notwithstanding the defeasance of the Bonds and the discharge of the Indenture, until the final maturity date of all Bonds Outstanding and payment of such Bonds. The Trustee shall keep records of the expenditure of Gross Proceeds of the Bonds for the term of this Tax Regulatory Agreement. Such records, if any, as are maintained by the Trustee may, at the option of the Trustee, be maintained by electronic filing or record keeping systems. ARTICLE IV ARBITRAGE AND REBATE Section 4.1. Purpose. The purpose of this Article IV is to certify, pursuant to § 1.148- 2(b) of the Regulations, the reasonable expectations of the Issuer as to the sources, uses and investment of Bond proceeds and other moneys in order to support the Issuer's conclusion that the Bonds will not be deemed to be "arbitrage bonds" within the meaning of §148 of the Code. The person executing this Tax Regulatory Agreement on behalf of the Issuer is an officer of the Issuer responsible for issuing and delivering the Bonds. The Issuer has not been notified of any listing or proposed listing of the Issuer by the Internal Revenue Service as an issuer that may not certify its bonds. Section 4.2. Reasonable Expectations. The facts, estimates, expectations and representations of the Issuer set forth in this Article IV are based upon the Issuer's understanding of various documents and certificates executed in connection with the issuance of the Bonds, including (1) the Indenture, (2) this Tax Regulatory Agreement, and (3) a certificate of the Underwriter (in the form attached hereto as Exhibit A). To the Issuer's knowledge, the facts, estimates and expectations set forth in this Tax Regulatory Agreement are reasonable. The Issuer has no knowledge that would cause it to believe that the representations, warranties and certifications described herein are unreasonable or inaccurate or may not be relied upon. Section 4.3. Authority and Purpose for Bonds. The Issuer is issuing and delivering the Bonds simultaneously with the execution of this Tax Regulatory Agreement, pursuant to the Authorizing Legislation, the Indenture and the Authorizing Ordinance. The Bonds are being issued for the purposes of providing a portion of the funds needed for (i) the acquisition, construction, reconstruction, repair, straightening and widening of the City streets and related improvements comprising the Project, (ii) paying the premium on the 2015 Reserve Policy (as defined in the Indenture) for deposit in a debt service reserve, and (iii) paying Costs of Issuance of the Bonds. The proceeds of the Bonds to be used to acquire, construct, reconstruct, repair, straighten and widen the Project, together with other available moneys and investment earnings on such moneys and proceeds, do not exceed the amount necessary to provide for such purposes. Section 4.4. Funds and Accounts. The following funds and accounts have been established with the Trustee pursuant to the Indenture in connection with the Bonds: Project Fund, and a Street Account therein; Revenue Fund; 7 4835-4867-6902.1 Bond Fund, and an Interest Account and Principal Account therein; Redemption Fund; Debt Service Reserve Fund, and a Series 2015 Account therein; Costs of Issuance Fund; and Rebate Fund. Section 4.5. Source and Disbursement of Bond Proceeds. The Bonds will be sold to the public at a purchase price equal to $9,080,225.65 (representing the $9,000,000.00 par amount of the Bonds plus an original offering premium of $80,225.65). The Underwriter will retain an underwriting discount of $85,500.00. Accordingly, the net amount of proceeds of the Bonds to be received by the Issuer shall be $8,994,725.65, which amount shall be deposited and expended as follows: (i) $14,850.00 will be paid to the 2015 Insurer for the premium on the 2015 Reserve Policy (as defined in the Indenture), which 2015 Reserve Policy shall be deposited in the Series 2015 Account of the Debt Service Reserve Fund; (ii) $8,914,875.65 will be deposited into the Street Account of the Project Fund and will be used to pay Qualified Project Costs with respect to the Street Project; and (iii) the remaining $65,000.00 of the proceeds will be deposited into the Cost of Issuance Fund and used to pay Costs of Issuance of the Bonds. Section 4.6. Costs of Issuance Fund The Indenture creates the Costs of Issuance Fund which will be initially funded with $65,000.00 of Bond proceeds. Moneys in the Cost of Issuance Fund will be used to pay Costs of Issuance associated with the Bonds. Proceeds of the Bonds deposited in the Costs of Issuance Fund shall be spent within a one-year period beginning on the date of issuance of the Bonds and may be invested until expended in Nonpurpose Obligations that bear a Yield that is materially higher than the Yield on the Bonds. The earnings on such investments will be subject to the rebate requirements described in Section 4.13 of this Tax Regulatory Agreement unless the Issuer qualifies under one of the rebate exemptions described in the Code and the Regulations. Section 4.7. Revenue Fund, Bond Fund and Redemption Fund The Indenture creates the Revenue Fund, the Bond Fund and the Redemption Fund. Moneys will be transferred to the Revenue Fund, and from the Revenue Fund to the Bond Fund as described in the Indenture, to provide for the payment of principal of and interest on the Bonds as due. Moneys will be transferred from the Revenue Fund to the Redemption Fund as described in the Indenture to provide for the payment prior to maturity of the principal of the Bonds. Moneys deposited in the Revenue Fund, the Bond Fund and the Redemption Fund will be spent within a 13 -month period beginning on the date of the original deposit in the Revenue Fund, and any amount received from investment of moneys held in the Revenue Fund, the Bond Fund or the Redemption Fund will be spent within a one-year period beginning on the date of receipt. The Revenue Fund, the Bond Fund and the Redemption Fund will be completely depleted at least once a year. Accordingly, the Revenue Fund, the Bond Fund and the Redemption Fund 8 4835-4867-6902.1 constitute "bona fide debt service funds" for the Bonds. Amounts in the Revenue Fund, Bond Fund and Redemption Fund may be invested until expended in Nonpurpose Obligations that bear a Yield that is materially higher than the Yield on the Bonds. The earnings on such investments will be subject to the rebate requirements described in Section 4.13 of this Tax Regulatory Agreement for any year in which the sum of such investment earnings equals or exceeds $100,000 unless the Issuer qualifies under one of the other rebate exemptions described in the Code and the Regulations. Section 4.8. Debt Service Reserve Fund. The Indenture creates the Debt Service Reserve Fund into which $14,850.00 of the proceeds of the Bond proceeds will be deposited for the payment of the premium on the 2015 Reserve Policy (as defined in the Indenture). Moneys and investments in the Debt Service Reserve Fund will be expended solely to pay principal of and interest on the Bonds when the same become due, when and if there is a deficiency in the Bond Fund available to make such payments. The Debt Service Reserve Fund will be maintained in an amount equal to the Reserve Requirement (as defined in the Indenture). The Issuer is of the opinion, based on representations of the Underwriter, that the amount deposited in the Debt Service Reserve Fund is reasonably required for the purposes for which such fund is established. Accordingly, the Debt Service Reserve Fund is a "reasonably required reserve fund" for the Bonds within the meaning of the Code and the Regulations. Amounts in the Debt Service Reserve Fund may be invested until expended in Nonpurpose Obligations that bear a Yield that is materially higher than the Yield on the Bonds. The earnings on such investments will be subject to the rebate requirements described in Section 4.13 of this Tax Regulatory Agreement unless the Issuer qualifies under one of the rebate exemptions described in the Code and the Regulations. Section 4.9. Project Fund The Indenture creates the Project Fund which will be initially funded with $8,914,875.65 of Bond proceeds. Moneys in the Project Fund will be used to pay costs associated with the acquisition, construction, reconstruction, repair, straightening and widening of the City streets and related improvements comprising the Project. The Issuer has incurred, or will incur within six (6) months of the date of issuance of the Bonds, a substantial binding obligation to a third party to spend at least 5% of the Net Sale Proceeds on the Project. The completion of the Project and the allocation of Net Sale Proceeds to expenditures will proceed with due diligence. Completion of the Project is expected to occur on or before November 12, 2018. At least 85% of the Net Sale Proceeds will be allocated to Project expenditures within three (3) years from the date of issuance of the Bonds. Until November 12 2018, the Net Sale Proceeds of the Bonds deposited in the Project Fund may be invested until expended in Nonpurpose Obligations that bear a Yield that is materially higher than the Yield on the Bonds. The earnings on such investments will be subject to the rebate requirements described in Section 4.13 of this Tax Regulatory Agreement unless the Issuer qualifies under one of the rebate exemptions described in the Code and the Regulations. Section 4.10. Yield on the Bonds. (a) The Underwriter has certified (i) that the initial offering price of the Bonds, as set forth in Section 4.5 of this Tax Regulatory Agreement, represents the maximum initial offering price at which a substantial amount of each maturity of the Bonds were offered for sale and sold to purchasers (exclusive of bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) through a bona fide offering, (ii) that such initial offering prices were established by a bona fide bid without regard to Y5 4835-4867-6902.1 any amounts which would increase the Yield on any maturity of the Bonds above its market yield, and (iii) that the description of interest rates and Yields contained in the final Official Statement with respect to the Bonds constitutes a true and correct summary thereof. (b) The Yield on the Bonds has been calculated by the Underwriter to be not less than 1.4474218%. The calculation of Yield has been made on the basis of semiannual compounding using a 360 -day year and upon the assumption that payments are made on the last day of each semiannual interest payment period. For purposes of computing Yield on Nonpurpose Obligations, the purchase price of any such obligation is equal to the Fair Market Value as of the date of a binding contract to acquire such obligation. Section 4.11. Arbitrage Representations. Pursuant to the issuance of the Bonds, the Issuer hereby represents, certifies and warrants as follows: (a) Other than Revenue Fund, the Bond Fund, the Redemption Fund, the Project Fund, the Debt Service Reserve Fund and the Costs of Issuance Fund created under the Indenture, there has not been created or established and the Issuer does not expect that there will be created or established, any sinking fund, pledged fund or similar fund, including, without limitation, any arrangement under which money, securities or obligations are pledged directly or indirectly to secure the Bonds or any contract securing the Bonds or any arrangement providing for compensating balances to be maintained by the Issuer with any holder of the Bonds. (b) All funds established pursuant to the Indenture will be invested pursuant to the Indenture and this Tax Regulatory Agreement. (c) The Issuer will instruct the Trustee with respect to investment of the various funds held under the Indenture. (i) The Issuer will not instruct the Trustee to invest in any Nonpurpose Obligation unless at Fair Market Value. The Fair Market Value of a Nonpurpose Obligation shall be the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's-length transaction determined as of the date on which the contract to buy or sell the investment is entered into. (ii) If a Nonpurpose Obligation is acquired or sold or disposed of in an arm's length transaction without regard to any amount paid to reduce the Yield on the Nonpurpose Obligation, or any reduction in sale or disposition price to reduce the Rebate Amount, the Fair Market Value of the Nonpurpose Obligation shall be the amount paid for, or the amount realized upon the sale or disposition of, the Nonpurpose Obligation. (iii) If a United States Treasury obligation is acquired directly from or sold or disposed of directly to the United States Treasury, such acquisition or sale or disposition shall be treated as establishing a market for the obligation and as establishing the Fair Market Value of the obligation. 10 4835-4867-6902.1 (iv) The purchase or sale of a certificate of deposit issued by a commercial bank will be at Fair Market Value if the Yield at which it is purchased is not less than (i) the Yield of comparable United States Treasury Obligations and (ii) the highest Yield posted by such provider on comparable deposits to the public. (v) The Trustee, on behalf of the Issuer, may not purchase or sell Nonpurpose Obligations pursuant to any investment contract or repurchase agreement unless (i) it receives at least three bids from persons other than those with an interest in the Bonds, (ii) a certification is provided by the person whose bid is accepted stating the administrative costs that are reasonably expected to be paid to third parties in connection with the investment contract, (iii) a certification is provided by the person whose bid is accepted stating that the Yield of the investment contract is not less than the Yield of comparable investment contracts to other persons who do not utilize proceeds of tax-exempt bonds to purchase such contracts, (iv) the Yield on the investment contract is at least equal to the Yield offered under the highest bid received from a noninterested party, (v) the bidding for the investment contract takes into account as a significant factor the expected drawdown schedule of the Bond proceeds, and (vi) any collateral security requirements of the investment contract are reasonable. Section 4.12. Arbitrage Compliance. The Issuer acknowledges that the continued exclusion of interest on the Bonds from gross income of the recipients for purposes of federal income taxation depends, in part, upon compliance with the arbitrage limitations imposed by Section 148 of the Code, including the rebate requirement described in Sections 4.13, 4.14 and 4.15 below. The Issuer hereby agrees and covenants that it shall not permit at any time or times any of the proceeds of the Bonds or other funds of the Issuer to be used, directly or indirectly, to acquire any asset or obligation, the acquisition of which would cause the Bonds to be "arbitrage bonds" for purposes of Section 148 of the Code. The Issuer further agrees and covenants that it shall do and perform all acts and things necessary in order to ensure that the requirements of Section 148 of the Code are met. To that end, the Issuer hereby agrees to take the actions described in Sections 4.13 through 4.15 below with respect to the investment of Gross Proceeds on deposit in the funds and accounts established under the Indenture and to direct the Trustee to make the required transfers and dispositions described in Sections 4.13, 4.14 and 4.15, below. The Issuer will monitor the investment of proceeds of the Bonds to assure compliance with Section 148 of the Code, and the Issuer will consult with Bond Counsel periodically with respect to arbitrage issues and compliance. Section 4.13. Rebate Fund; Calculation of Rebate Amount. Section 148(f) of the Code requires the payment to the United States of the excess of the amount earned on the investment of Gross Proceeds in Nonpurpose Obligations over the amount that would have been earned on such investments had the amount so invested been invested at a rate equal to the Yield on the Bonds, together with any income attributable to such excess. The Cost of Issuance Fund, the Project Fund, the Revenue Fund, the Bond Fund, the Redemption Fund, the Debt Service Reserve Fund and the Rebate Fund (defined below) are subject to this rebate requirement. 11 4835-4867-6902.1 In accordance with the requirements set out in the Code, the Rebate Fund (the "Rebate Fund") has been created in the Indenture with respect to the Bonds to be held by the Trustee and used as provided in this Section 4.13. The Rebate Fund shall be held and disbursed in accordance with the following: (a) All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, except as may otherwise be directed in writing by the Issuer, for payment to the federal government of the United States of America. All amounts deposited into or on deposit in the Rebate Fund shall be governed by this Tax Regulatory Agreement. The Trustee shall be deemed conclusively to have complied with this Tax Regulatory Agreement if it follows the directions of the Issuer or an Arbitrage Rebate Consultant engaged by the Issuer, and shall have no liability or responsibility to enforce compliance by the Issuer with the terms of this Tax Regulatory Agreement. (b) (i) Any funds remaining in the Rebate Fund after redemption and payment of all the Bonds and the final payment to the United States of America described in Section 4.14 below, or provision made therefor including accrued interest and payment of any applicable fees and expenses to the Trustee and any Arbitrage Rebate Consultant and satisfaction of the payment of the Rebate Amount in accordance with directions from the Issuer, shall be withdrawn by the Trustee upon written instructions from the Issuer and remitted to the Issuer. (ii) Notwithstanding anything to the contrary in this Tax Regulatory Agreement, any amount received from the investments of amounts held in the Rebate Fund which represents an amount earned shall be credited to and retained in the Rebate Fund upon the receipt thereof. (iii) In the event that on the first day of any Bond Year the amount on deposit in the Rebate Fund exceeds the aggregate Rebate Amount as certified by an Arbitrage Rebate Consultant engaged by or on behalf of the Issuer, the Trustee, upon written instructions from the Issuer, shall withdraw the excess from the Rebate Fund, pay any amounts then due and payable under the Indenture and pay any remaining excess to the Issuer. (iv) For purposes of crediting amounts to the Rebate Fund or withdrawing amounts from the Rebate Fund, Nonpurpose Obligations shall be valued in the manner provided in this Tax Regulatory Agreement. (c) On or before 30 days following the end of the fifth Bond Year, upon the Issuer's written direction, an amount shall be deposited to the Rebate Fund by the Trustee from deposits made by the Issuer, if and to the extent required, so that the balance of the Rebate Fund shall equal the aggregate Rebate Amount required as of the end of such fifth Bond Year. (d) In order to meet the Issuer's obligations in complying with the rebate requirement of Section 148(f) of the Code, the Trustee and the Issuer agree and covenant to take the following actions: 12 4835-4867-6902.1 (i) For each investment of amounts held with respect to the Bonds (other than investments in obligations described in Section 103(a) of the Code, including amounts so treated) in the (I) Costs of Issuance Fund, (II) Project Fund, (III) Revenue Fund, (IV) Bond Fund, (V) Redemption Fund, (VI) Debt Service Reserve Fund, and (VII) Rebate Fund, the Trustee shall record the purchase date of such investment, its purchase price, the accrued interest due on its purchase date, its face amount, its coupon rate, the frequency of its interest payment, and if disposed of, its disposition price, accrued interest due on its disposition date and its disposition date. If so engaged by the Issuer, an Arbitrage Rebate Consultant shall calculate the Fair Market Value for such investments and the Yield thereon. The Yield for an investment shall be calculated by using as its purchase price its Fair Market Value on the purchase date of such investment or on the date on which it becomes a Nonpurpose Obligation, whichever is later. (ii) Any Arbitrage Rebate Consultant shall determine the amount of earnings received on all investments described in paragraph (i) above, other than investments in obligations described in Section 103(a) of the Code (including amounts so treated) which are not defined by the Code as "investment property" or amounts in the Revenue Fund, Bond Fund and Redemption Fund if the earnings on the Revenue Fund, Bond Fund and Redemption Fund do not, in the aggregate, exceed $100,000 for any Bond Year, during the Computation Periods ending with the following determination dates: (I) the last day of the first Bond Year and each succeeding last day of each Bond Year; (II) the maturity date of the Bonds; and (III) if all outstanding Bonds are redeemed prior to the maturity date of the Bonds, the date on which all Bonds are redeemed. In addition, where Nonpurpose Obligations are retained by the Trustee after retirement of the Bonds, any unrealized gains or losses as of the date of retirement of the Bonds must be taken into account in calculating the earnings on such Nonpurpose Obligations with each such obligation treated as sold for its Fair Market Value. In calculating the earnings described above, earnings received in a Bond Year shall include amounts which would be treated as income under Section 1272 of the Code regarding the accrual of original issue discount. In addition, earnings received in any Bond Year within the Computation Period shall include the gain or loss on the sale of any investment determined by subtracting the Adjusted Fair Market Value of the investment from the disposition price of the investment. For purposes of assisting the Issuer or an Arbitrage Rebate Consultant engaged by or on behalf of the Issuer in making such determinations, the Trustee shall provide to the Issuer or Arbitrage Rebate Consultant all information requested by the Issuer or Arbitrage Rebate Consultant in the possession of the Trustee. (iii) For each Computation Period specified in paragraph (ii) above, the Issuer or an Arbitrage Rebate Consultant engaged by the Issuer shall determine the amount of earnings on all investments held in the Rebate Fund during the Computation Period. In calculating the earnings, earnings within the Computation Period shall include amounts which would be treated as income under Section 1272 of the Code regarding the accrual of original issue discount. In addition, earnings in any Bond Year within the Computation Period shall 13 4835-4867-6902.1 include the gain or loss on the sale of any investment determined by subtracting the Adjusted Fair Market Value of the investment from the disposition price of the investment. (iv) For each Computation Period specified in paragraph (ii) above, the Issuer or an Arbitrage Rebate Consultant engaged by the Issuer shall calculate the Rebate Amount by any appropriate method described in the Code and Regulations applicable or which become applicable to the Bonds. (v) For each Computation Period specified in paragraph (ii) above and within 30 days of the end of each such Computation Period, the Issuer or an Arbitrage Rebate Consultant engaged by the Issuer shall calculate the Rebate Amount and notify the Issuer (if the calculation is made by an Arbitrage Rebate Consultant) and the Trustee in writing of the Rebate Amount. If the Rebate Amount (less amounts previously rebated to the United States) exceeds the amount on deposit in the Rebate Fund, the Issuer shall immediately pay such amount to the Trustee for deposit into the Rebate Fund. If the Issuer does not pay such amount within 20 days of notice of the Rebate Amount to the Trustee, the Trustee shall withdraw and transfer such amount, first, from amounts on deposit in the funds and accounts under the Indenture (and the Trustee, without direction from the Issuer, and without making demand on, but with notice to, the Issuer, shall immediately withdraw such amount from such funds and accounts) and, if such amounts are insufficient, second, from any other source. Section 4.14. Payment to United States. (a) Within 45 days after the end of the fifth Bond Year and after every fifth Bond Year thereafter, the Issuer shall direct the Trustee to pay to the United States, not later than 45 days after the end of the fifth Bond Year, and not later than five years after each preceding payment was due or would have been due if a Rebate Amount existed at that time, an amount equal to not less than the excess of (i) 90% of the sum of the balance, if any, in the Rebate Fund at such time plus all previous payments made to the United States, over (ii) all previous payments made to the United States. The Issuer shall direct the Trustee and the Trustee, in accordance with such directions, shall pay to the United States, not later than 60 days after the last outstanding Bonds are paid or redeemed, 100% of the Rebate Amount as of the end of the final Computation Period less all previous payments made to the United States. (b) Each payment of Rebate Amount shall be mailed by the Trustee to the Internal Revenue Service Center, Ogden, Utah 84201. Each payment shall be accompanied by a copy of the Form 8038-T and the statement summarizing the determination of the Rebate Amount. (c) If during any Computation Period, the aggregate amount earned on Nonpurpose Obligations in which the Gross Proceeds of the Bonds are invested is less than the amount that would have been earned if the obligations had been invested at a rate equal to the Yield on the Bonds, such deficit may at the request of the Issuer be withdrawn from the Rebate Fund and paid to the Issuer. The Issuer may direct that any overpayment of rebate may be recovered from any Rebate Amount previously paid to the United States under any procedure that may, after the date of this Tax Regulatory Agreement, be permitted by the Code or the Regulations. 14 4835-4867-6902.1 (d) The Issuer shall provide to the Trustee all information and calculations necessary for the Trustee to fulfill its obligations under this Section 4.14. Section 4.15. Recordkeeping. In connection with the rebate requirement, the Trustee and the Issuer shall maintain the following records: (a) The Trustee and the Issuer shall record all amounts paid to the United States pursuant to Section 4.14. (b) The Trustee and the Issuer shall retain records of any rebate calculations until six years after the retirement of the last obligation of the issue. Section 4.16. Payment to Arbitrage Rebate Consultant. The Issuer shall pay the fees and expenses of any Arbitrage Rebate Consultant. If at any time when the Issuer has retained and is required to pay an Arbitrage Rebate Consultant and the Issuer does not make sufficient payment, the Trustee, 20 days after receiving from the Arbitrage Rebate Consultant a demand for such payment, shall withdraw from the funds and accounts established under the Indenture (except for the Rebate Fund) such amount as may be needed to pay the fees and expenses of the Arbitrage Rebate Consultant. ARTICLE V TERM OF TAX REGULATORY AGREEMENT Section 5.1. Term. Including all representations, warranties and covenants herein, this Tax Regulatory Agreement shall be effective from the date of issuance of the Bonds through the date that is six years after the last Bond is redeemed, paid or deemed paid pursuant to the Indenture. ARTICLE VI AMENDMENTS Section 6.1. Amendments. Notwithstanding any other provision hereof, any provision of this Tax Regulatory Agreement may be deleted or modified at any time at the option of the Issuer if the Issuer has provided to the Trustee an opinion of Bond Counsel, in form and substance satisfactory to the Trustee, that such deletion or modification will not adversely affect the exclusion of interest on the Bonds from the gross income of the recipients for purposes of federal income taxation. 15 4835-4867-6902.1 ARTICLE VII EVENTS OF DEFAULT; REMEDIES Section 7.1. Events of Default. The failure of either party to this Tax Regulatory Agreement to perform any of its required duties under any provision hereof shall constitute an Event of Default under this Tax Regulatory Agreement. Section 7.2. Remedies for an Event of Default. Upon an occurrence of an Event of Default under Section 7.1 hereof, the Issuer or the Trustee may, in their discretion, proceed to protect and enforce their rights and the rights of the holders of the Bonds by pursuing any available remedy, including a suit at law or in equity. ARTICLE VIII PROTECTION OF TRUSTEE Section 8.1. Protection of Trustee. (a) It is hereby recognized and agreed that the Trustee is entering into this Tax Regulatory Agreement in its respective capacity as Trustee under the Indenture, and the Trustee shall, with respect to this Tax Regulatory Agreement, be entitled to all of the same rights, protections and immunities hereunder as are afforded to the Trustee under the Indenture. (b) The parties hereto acknowledge that the Trustee has no liabilities with respect to compliance with the Code except to take administrative actions as directed by the Issuer pursuant to this Tax Regulatory Agreement. (c) The Issuer hereby agrees to indemnify and hold the Trustee harmless for, from and against any and all claims, losses, damages, judgments, costs and expenses incurred by the Trustee relating to this Tax Regulatory Agreement except for claims caused by the negligence, breach of trust or willful misconduct of the Trustee. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.] 16 4835-4867-6902.1 IN WITNESS WHEREOF, the Issuer and the Trustee have caused this Tax Regulatory Agreement to be executed in their respective names and by their proper officers thereunto duly authorized, all as of the day and year first written above. SIMMONS FIRST TRUST COMPANY, N.A., as Trustee By: Title: Vice P esident and Co orate Trust Officer [SIGNATURE PAGE TO TAX REGULATORY AGREEMENT] 17 4835-4867-6902.1 EXHIBIT A TO TAX REGULATORY AGREEMENT UNDERWRITER'S CERTIFICATE The undersigned officer of Stephens Inc., the Underwriter (defined below) for the $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"), hereby makes the certifications set forth below in connection with the execution and delivery of the Bonds. All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Tax Regulatory Agreement to which this certificate is attached as an exhibit. (1) Stephens Inc. has served as underwriter (the "Underwriter") and has been involved in the structuring and marketing of the Bonds, including particularly, the establishment of the issue size, the computation of Yield and weighted average maturity, and other factors relating to compliance with Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder. (2) The offering price of the Bonds referenced in Section 4.5 of the Tax Regulatory Agreement represents the maximum initial offering price at which a substantial amount of each maturity of the Bonds was offered for sale to the public (exclusive of bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) through a bona fide offering, and such initial offering price was established by a bona fide bid without regard to any amounts which would increase the Yield on any maturity of the Bonds above its market Yield, and the description of the interest rates and Yields contained in the final Official Statement dated October 21, 2015 (the "Official Statement") with respect to the Bonds constitute a true and correct summary thereof. (3) The Yield on the Bonds is 1.4474218%. For purposes of calculating the Yield on the Bonds, the Bonds sold at substantial premiums have been treated as called on their earliest call date resulting in the lowest Yield. (4) The establishment of the Debt Service Reserve Fund is reasonably required to obtain the issuance of the Bonds at an economic interest rate for the Issuer, and is, in the judgment of the undersigned, established at a funding level comparable to that found for obligations similar to the Bonds issued within the past year. (5) To the best knowledge of the undersigned, the representations of the Issuer contained in the Tax Regulatory Agreement are true and correct. The undersigned understands that this certificate shall form a part of the basis for the opinion, dated the date hereof, of Kutak Rock LLP, to the effect that interest with respect to the Bonds is excluded from the gross income of the recipient thereof for purposes of federal income taxation under existing laws, regulations, rulings and judicial decisions. A-1 4835-4867-6902.1 IN WITNESS WHEREOF, the undersigned has set his hand as of the date set forth below. Dated: November 12, 2015 STEPHENS INC. By: _ Title: A-2 4835-4867-6902.1 EXECUTION COPY CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (this "Disclosure Agreement") is executed and delivered by the City of Fayetteville, Arkansas (the "City") and Simmons First Trust Company, N.A., a national banking association, as dissemination agent (the "Dissemination Agent"), in connection with the issuance of $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"). The Bonds are being issued pursuant to the terms and provisions of Ordinance No. 5803 duly approved by the City Council of the City on October 6, 2015, and pursuant to the terms and provisions of a Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), by and between the City and Simmons First Trust Company, N.A., a national banking association, as trustee (the "Trustee"). In connection with the issuance and delivery of the Bonds, the City and the Dissemination Agent covenant and agree as follows: Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the City for the benefit of the Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with SEC Rule 15c2 -12(b)(5) (the "Rule"). The City is an "obligated person" within the meaning of the Rule. The Dissemination Agent shall have no liability with respect to the content of any disclosure provided hereunder, and shall be liable only to the City for sending notices hereunder. As required by the Rule, this Disclosure Agreement is enforceable by Beneficial Owners of the Bonds pursuant to Section 7 hereof. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement, the following capitalized terms shall have the following meanings: "Annual Financial Information " means the financial information and operating data described in Exhibit I. "Annual Financial Information Disclosure " means the dissemination of disclosure concerning Annual Financial Information and the dissemination of the Audited Financial Statements as set forth in Section 4. "Audited Financial Statements" means the audited consolidated financial statements of the City, prepared pursuant to the standards and as described in Exhibit I. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. "Commission" means the U.S. Securities and Exchange Commission. 4825-0868-6118.3 "Dissemination Agent" shall mean Simmons First Trust Company, N.A., acting in its capacity as a dissemination agent hereunder, or any successor dissemination agent designated in writing by the City and which has filed with the Trustee a written acceptance of such designation. "EMMA " means the Electronic Municipal Market Access facility for municipal securities disclosure of the MSRB. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Fiscal Year " shall mean the 12 -month period used, at any time, by the City for accounting purposes, which may be the calendar year. "Material Event" means the occurrence of any of the events with respect to the Bonds set forth in Exhibit II. "Material Events Disclosure " means dissemination of a notice of a Material Event as set forth in Section 5. "MSRB" shall mean the Municipal Securities Rulemaking Board established in accordance with the provisions of Section 1513(b)(1) of the 1934 Act. "Participating Underwriter " means each broker, dealer or municipal securities dealer acting as an underwriter in any primary offering of the Bonds. "Prescribed Form" means, with regard to the filing of Annual Financial Information, Audited Financial Statements and notices of Material Events with the MSRB at www.emma.msrb.org (or such other address or addresses as the MSRB may from time to time specify), such electronic format, accompanied by such identifying information, as shall have been prescribed by the MSRB and which shall be in effect on the date of filing of such information. "Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission ("SEC") under the Exchange Act, as the same may be amended from time to time. "0.25% Sales and Use Tax" shall mean the one-quarter of one percent (0.25%) city-wide sales and use tax authorized under the Act which has been levied within the City pursuant to Ordinance No. 4891 adopted by the City on June 20, 2006, the collection of which tax commenced on January 1, 2007, as approved by the voters of the City. "0.75% Sales and Use Tax" shall mean the three-quarters of one percent (0.75%) city- wide sales and use tax authorized under the Act which has been levied within the City pursuant to Ordinance No. 4891 adopted by the City on June 20, 2006, and approved by the voters of the City. The collection of the 0.75% Sales and Use Tax will commence on the first day following the date of expiration of an existing three-quarters of one percent (0.75%) city-wide sales and use tax authorized under the Act and securing certain currently outstanding indebtedness of the City. 2 4825-0868-6118.3 "Sales and Use Taxes" shall mean, collectively, the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax. "State" means the State of Arkansas. "Undertaking" means the obligations of the City pursuant to Sections 4 and 5. Section 3. CUSIP Number/Final Official Statement. The CUSIP Number of the final maturity of the Bonds is 312673 EXO. The final Official Statement relating to the Bonds is dated October 21, 2015 (the "Final Official Statement"). Section 4. Annual Financial Information Disclosure. Subject to Section 9 of this Disclosure Agreement, the City hereby covenants that it will disseminate, or will cause the Dissemination Agent to disseminate, the Annual Financial Information and the Audited Financial Statements (in the form and by the dates set forth below and in Exhibit 1) by delivering such Annual Financial Information and the Audited Financial Statements to the MSRB within 180 days of the completion of the City's fiscal year. The City is required to deliver or cause delivery of such information in Prescribed Form and by such time so that such entities receive the information by the dates specified. If any part of the Annual Financial Information can no longer be generated because the operations to which it is related have been materially changed or discontinued, the City will disseminate or cause dissemination of a statement to such effect as part of its Annual Financial Information for the year in which such event first occurs. If any amendment is made to this Disclosure Agreement, the Annual Financial Information for the year in which such amendment is made (or in any notice or supplement provided to the MSRB) shall contain a narrative description of the reasons for such amendment and its impact on the type of information being provided. Section 5. Material Events Disclosure. Subject to Section 9 of this Disclosure Agreement, the City hereby covenants that it will disseminate or cause dissemination in a timely manner, not in excess of ten (10) business days after the occurrence of the event, Material Events Disclosure to the MSRB in Prescribed Form. Notwithstanding the foregoing, notice of optional or unscheduled redemption of any Bonds or defeasance of any Bonds need not be given under this Disclosure Agreement any earlier than the notice (if any) of such redemption or defeasance is given to the owners of the Bonds pursuant to the Indenture. The City is required to deliver or cause delivery of such Material Events Disclosure in the same manner as provided by Section 4 of this Disclosure Agreement. Section 6. Duty to Update EMMA/MSRB. The Dissemination Agent shall determine, in the manner it deems appropriate, whether there has occurred a change in the MSRB's e-mail address or filing procedures and requirements under EMMA each time it is required to file information with the MSRB. Section 7. Consequences of Failure of the City to Provide Information. The City shall give notice in a timely manner or shall cause such notice to be given by the Dissemination 3 4825-0868-6118.3 Agent, not in excess of ten (10) business days after the occurrence of the event, to the MSRB in substantially the form set forth in Exhibit III hereto or in the form prescribed by the MSRB of any failure to provide Annual Financial Information Disclosure when the same is due hereunder. In the event of a failure of the City to comply with any provision of this Disclosure Agreement, the Beneficial Owner of any Bond may seek specific performance by court order to cause the City to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture or any other agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the City or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. Section 8. Amendments; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the City and the Dissemination Agent may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, if: (i) The amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the City or type of business conducted; (ii) This Disclosure Agreement, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; (iii) The amendment or waiver does not materially impair the interests of the Beneficial Owners of the Bonds, as determined either by parties unaffiliated with the City (such as the Trustee) or by an approving vote of the Beneficial Owners of the Bonds holding a majority of the aggregate principal amount of the Bonds (excluding Bonds held by or on behalf of the City or its affiliates) pursuant to the terms of the Indenture at the time of the amendment; or (iv) The amendment or waiver is otherwise permitted by the Rule. Section 9. Termination of Undertaking. The Undertaking of the City shall be terminated hereunder when the City shall no longer have any legal liability for any obligation on or relating to the repayment of the Bonds. The City shall give notice to the MSRB, or shall cause the Dissemination Agent to give notice, in a timely manner and in Prescribed Form if this Section is applicable. Section 10. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. A Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the City pursuant to this Disclosure Agreement. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent for the City. 4 4825-0868-6118.3 Section 11. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Financial Information Disclosure or notice of occurrence of a Material Event, in addition to that which is required by this Disclosure Agreement. If the City chooses to include any information from any document or notice of occurrence of a Material Event in addition to that which is specifically required by this Disclosure Agreement, the City shall not have any obligation under this Disclosure Agreement to update such information or include it in any future disclosure or notice of the occurrence of a Material Event. Section 12. Beneficiaries. This Disclosure Agreement has been executed in order to assist the Participating Underwriter in complying with the Rule; however, this Disclosure Agreement shall inure solely to the benefit of the City, the Dissemination Agent, if any, the Trustee and the Beneficial Owners of the Bonds, and shall create no rights in any other person or entity. Section 13. Recordkeeping. The City and the Dissemination Agent shall maintain records of all Annual Financial Information Disclosure and Material Events Disclosure, including the content of such disclosure, the names of the entities with whom such disclosure was filed and the date of filing such disclosure. Section 14. Past Compliance. The City represents that while certain filings required by continuing disclosure undertakings entered into by it pursuant to the Rule in connection with previous financings to which the Rule was applicable were not made on a timely basis, all such filings are currently in place and the City has implemented procedures to assure verifiable future compliance with its continuing disclosure obligations. Section 15. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent (if other than the Trustee or the Trustee in its capacity as Dissemination Agent) shall have only such duties as are specifically set forth in this Disclosure Agreement, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise of performance of its powers and duties under this Disclosure Agreement, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's gross negligence or willful misconduct. Such indemnification obligation of the City shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Section 16. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. 5 4825-0868-6118.3 Section 17. Governing Law. This Disclosure Agreement shall be governed by and construed in accordance with the laws of the State, provided that to the extent this Disclosure Agreement addresses matters of federal securities laws, including the Rule, this Disclosure Agreement shall be construed in accordance with such federal securities laws and official interpretations thereof. Dated: November 12, 2015 SIMMONS FIRST TRUST COMPANY, N.A., as Dissemina ' Agent By: a/ Title. Vice resident and orporate Trust Officer 6 4825-0868-6118.3 EXHIBIT I ANNUAL FINANCIAL INFORMATION AND TIMING AND AUDITED FINANCIAL STATEMENTS "Annual Financial Information" means receipts of the Sales and Use Taxes for the latest Fiscal Year and for the four previous Fiscal Years, if available. All or a portion of the Annual Financial Information and the Audited Financial Statements as set forth below may be included by reference to other documents which have been submitted to the MSRB or filed with the Commission. The City shall clearly identify each such item of information included by reference. Annual Financial Information will be provided to the MSRB within 180 days after the last day of the City's fiscal year. Audited Financial Statements as described below should be filed at the same time as the Annual Financial Information. If Audited Financial Statements are not available when the Annual Financial Information is filed, unaudited financial statements shall be included, and Audited Financial Statements will be provided to the MSRB within 10 business days after availability to the City. Audited Financial Statements will be prepared in accordance with generally accepted accounting principles in the United States as in effect from time to time. If any change is made to the Annual Financial Information as permitted by Section 4 of the Disclosure Agreement, including for this purpose a change made to the fiscal year-end of the City, the City will disseminate a notice to the MSRB of such change in Prescribed Form as required by such Section 4. I-1 EXHIBIT II EVENTS WITH RESPECT TO THE BONDS FOR WHICH MATERIAL EVENTS DISCLOSURE IS REQUIRED 1. Principal and interest payment delinquencies 2. Nonpayment -related defaults, if material 3. Unscheduled draws on debt service reserves reflecting financial difficulties 4. Unscheduled draws on credit enhancements reflecting financial difficulties 5. Substitution of credit or liquidity providers, or their failure to perform 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security 7. Modifications to rights of security holders, if material 8. Bond calls, if material, and tender offers 9. Defeasances 10. Release, substitution or sale of property securing repayment of the securities, if material 11. Rating changes 12. Bankruptcy, insolvency, receivership or similar event of the City* 13. The consummation of a merger, consolidation or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the City in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City. EXHIBIT III NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Fayetteville, Arkansas Name of Bond Issue: City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015 Date of Issuance: November 12, 2015 NOTICE IS HEREBY GIVEN that an Annual Report with respect to the above-named Bonds has not been provided as required by the Continuing Disclosure Agreement between the Issuer and the undersigned dated November 12, 2015. Dated: SIMMONS FIRST TRUST COMPANY, N.A., Authorized Officer III - 1 4847-5492-1769.3 1 ` n Cd' ` _ .... b Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED No. R15-1 REGISTERED $930,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2015 Interest Rate: 2.000% Date of Bond: November 12, 2015 Registered Owner: CEDE & CO. Maturity Date: November 1, 2016 Principal Amount: NINE HUNDRED THIRTY THOUSAND DOLLARS KNOW ALL MEN BY THESE PRESENTS: CUSIP: 312673 EP7 That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2015", is one of a series of bonds aggregating Nine Million Dollars ($9,000,000) (the "Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of the acquisition, construction, reconstruction, repair, straightening and widening of certain City 4811-1098-4746.1 r Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED No. R15-2 REGISTERED $945,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2015 Interest Rate: 2.000% Date of Bond: November 12, 2015 Registered Owner: CEDE & CO. Maturity Date: November 1, 2017 CUSIP: 312673 EQ5 Principal Amount: NINE HUNDRED FORTY-FIVE THOUSAND DOLLARS KNOW ALL MEN BY THESE PRESENTS: That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2015", is one of a series of bonds aggregating Nine Million Dollars ($9,000,000) (the "Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of the acquisition, construction, reconstruction, repair, straightening and widening of certain City 4811-1098-4746.1 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED No. R15-3 REGISTERED $965,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2015 Interest Rate: 2.000% Date of Bond: November 12, 2015 Registered Owner: CEDE & CO. Maturity Date: November 1, 2018 CUSIP: 312673 ER3 Principal Amount: NINE HUNDRED SIXTY-FIVE THOUSAND DOLLARS KNOW ALL MEN BY THESE PRESENTS: That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2015", is one of a series of bonds aggregating Nine Million Dollars ($9,000,000) (the "Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of the acquisition, construction, reconstruction, repair, straightening and widening of certain City 4811-1098-4746.1 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED REGISTERED No. R15-4 $980,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2015 Interest Rate: 2.000% Date of Bond: November 12, 2015 Registered Owner: CEDE & CO. Maturity Date: November 1, 2019 Principal Amount: NINE HUNDRED EIGHTY THOUSAND DOLLARS KNOW ALL MEN BY THESE PRESENTS: CUSIP: 312673 ES 1 That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2015", is one of a series of bonds aggregating Nine Million Dollars ($9,000,000) (the "Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of the acquisition, construction, reconstruction, repair, straightening and widening of certain City 4811-1098-4746.1 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name, as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED No. R15-5 REGISTERED $1,000,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2015 Interest Rate: 1.600% Maturity Date: November 1, 2020 Date of Bond: November 12, 2015 CUSIP: 312673 ET9 Registered Owner: CEDE & CO. Principal Amount: ONE MILLION DOLLARS KNOW ALL MEN BY THESE PRESENTS: That the City of Fayetteville, Arkansas, a municipality and political subdivision orga_lized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owmer shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2015", is one of a series of bonds aggregating Nine Million Dollars ($9,000;000) (the `Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of the acquisition, construction, reconstruction, repair, straightening and widening of certain City 4811-1098-4746.1 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative: of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED No. R15-6 REGISTERED $1,020,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2015 Interest Rate: 1.700% Date of Bond: November 12, 2015 Registered Owner: CEDE & CO. Maturity Date: November 1, 2021 Principal Amount: ONE MILLION TWENTY THOUSAND DOLLARS KNOW ALL MEN BY THESE PRESENTS: CUSIP: 312673 EU6 That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record. Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2015", is one of a series of bonds aggregating Nine Million Dollars ($9,000,000) (the "Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of the acquisition, construction, reconstruction, repair, straightening and widening of certain City 4811-1098-4746.1 --- - --- COPY Unless this certificate is presented by an authorized representative of The Depository T.-ust Company, a New York corporation ("'DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED No. R15-7 REGISTERED $1,035,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2015 Interest Rate: 1.800% Date of Bond: November 12, 2015 Registered Owner: CEDE & CO. Maturity Date: November 1, 2022 CUSIP: 312673 EV4 Principal Amount: ONE MILLION THIRTY-FIVE THOUSAND DOLLARS KNOW ALL MEN BY THESE PRESENTS: That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2015", is one of a series of bonds aggregating Nine Million Dollars ($9,000,000) (the "Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of the acquisition, construction, reconstruction, repair, straightening and widening of certain City 4811-1098-4746.1 COPY Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED No. R15-8 REGISTERED $1,055,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT POND SERIES 2015 Interest Rate: 1.550% Date of Bond: November 12, 2015 Registered Owner: CEDE & CO. Maturity Date: November 1, 2023 CUSIP: 312673 EW2 Principal Amount: ONE MILLION FIFTY-FIVE THOUSAND DOLLARS KNOW ALL MEN BY THESE PRESENTS: That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2015", is one of a series of bonds aggregating Nine Million Dollars ($9,000,000) (the "Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of the acquisition, construction, reconstruction, repair, straightening and widening of certain City 4811-1098-4746.1 Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC'), to the City or its agent for registration of transfer, exchange or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by the authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), any transfer, pledge or other use hereof for value or otherwise by or to any person is wrongful inasmuch as the registered owner hereof, Cede & Co., has an interest herein. REGISTERED No. R15-9 REGISTERED $1,070,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2015 Interest Rate: 1.000% Date of Bond: November 12, 2015 Registered Owner: CEDE & CO. Maturity Date: November 1, 2024 Principal Amount: ONE MILLION SEVENTY THOUSAND DOLLARS KNOW ALL MEN BY THESE PRESENTS: CUSIP: 312673 EXO That the City of Fayetteville, Arkansas, a municipality and political subdivision organized and existing by virtue of the laws of the State of Arkansas (the "City"), for value received, promises to pay to the Registered Owner shown above, or registered assigns, on the Maturity Date shown above, but solely from the source and in the manner hereinafter set forth, the Principal Amount shown above, and in like manner to pay interest on said amount from the date hereof until payment of such Principal Amount has been made or duly provided for, at the Interest Rate per annum shown above, such interest to be payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, except as the provisions hereinafter set forth with respect to redemption of this bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of Simmons First Trust Company, N.A., Pine Bluff, Arkansas, or its successor or successors, as trustee (the "Trustee"). So long as Cede & Co. or another nominee of DTC is the registered owner of this bond, payment of interest hereon shall be made by wire transfer of immediately available funds by the Trustee to the Registered Owner as of the fifteenth day of the calendar month preceding the calendar month in which such interest payment date shall fall (the "Record Date"). At any time thereafter, payment of interest hereon shall be made by check or draft of the Trustee to the Registered Owner as of the applicable Record Date, at the owner's address as it appears on the bond registration books of the City kept by the Trustee. This bond, designated "Sales and Use Tax Capital Improvement Bond, Series 2015", is one of a series of bonds aggregating Nine Million Dollars ($9,000,000) (the "Bonds"). The Bonds are being issued for the purpose of financing all or a portion of the costs of the acquisition, construction, reconstruction, repair, straightening and widening of certain City 4811-1098-4746.1 streets and related improvements (the "Project"). Bond proceeds will be utilized to pay Project costs, to fund a debt service reserve, and to pay the costs of issuance of the Bonds. The Bonds are issued under and are secured by and entitled to the protection of a Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), by and between the City and the Trustee, which Indenture is available for inspection at the principal corporate trust office of the Trustee. Reference is hereby made to the Indenture and to all indentures supplemental thereto for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the City, the Trustee and the owners of the Bonds, and the terms upon which the Bonds are issued and secured. The Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas, including particularly Amendment No. 62 to the Constitution of Arkansas, as implemented by the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2015) §§14-164-301 et seq. (as from time to time amended, the "Local Government Bond Act"), Ordinance No. 5803 of the City adopted October 6, 2015, which ordinance authorized the execution and delivery of the Fourth Supplemental Trust Indenture, and a special election duly held on September 12, 2006, at which a majority of the qualified electors of the City voting approved the issuance of the Bonds. In accordance with the Local Government Bond Act, the City has pledged all receipts from (i) a one-quarter of one percent (0.25%) local sales and use tax (the "0.25% Sales and Use Tax") and (ii) a three-quarters of one percent (0.75%) local sales and use tax (the "0.75% Sales and Use Tax"), each levied by the City pursuant to Ordinance No. 4891, adopted by the City on June 20, 2006, to provide funds for the repayment of the Bonds. The pledge of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax (collectively, the "Tax Receipts") presently secures payment of the Bonds and (i) the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) the City's $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), (iii) the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and (iv) the City's $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). The Indenture provides that the City may hereafter issue Additional Bonds from time to time under certain terms and conditions contained in the I.ndenture and, if issued or incurred, such Additional Bonds will rank on a parity of security with the Bonds, the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds and the Series 2013 Bonds and will be equally and ratably secured by and entitled to the protection of the Indenture. The Bonds are not general obligations of the City, but are special obligations secured by an irrevocable pledge of and lien on the Tax Receipts, as more particularly described in the Indenture. In no event shall the Bonds constitute an indebtedness of the City within the meaning of any constitutional or statutory limitation. 2 4811-1098-4746.1 COPY The holder of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Indenture, or to institute, appear in or defend any suit or other proceeding with respect thereto, except as provided in the Indenture. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds issued under the Indenture and then outstanding may be declared and may become due and payable before the stated maturity thereof, together with accrued interest thereon. Modifications or alterations of the Indenture or of any indenture supplemental thereto, may be made only to the extent and in the circumstances permitted by the Indenture. The Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from moneys in the Project Fund in excess of the amount needed to complete the portions of the Project to be funded with the Bonds. The Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from surplus Tax Receipts deposited in the Redemption Fund pursuant to the Indenture. So long as the Series 2006A Bonds are outstanding, 50% of the surplus Tax Receipts shall be allocated to the redemption of the Series 200�A Bonds and the remaining 50% of such surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Bonds and any series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Bonds and any series of Additional Bonds. Notwithstanding the foregoing, so long as DTC or its nominee is the sole registered owner of the Bonds, the particular Bonds or portions thereof to be redeemed in part within a maturity shall be selected by lot by DTC in such manner as DTC shall determine. In selecting Bonds for redemption prior to maturity, in the case any outstanding Bond is in a denomination greater than $5,000, each $5,000 of face value of such Bond shall be treated as a separate Bond of the denomination of $5,000. In the event any of the Bonds or portions thereof (which shall be $5,000 or any integral multiple thereof) are called for redemption, notice thereof shall be given by the Trustee by first class mail to the registered owner of each such Bond addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure to give such notice by mailing, or any defect therein, shall not affect the validity of the proceedings for the redemption of any Bond with respect to which no such failure or defect has occurred. Each notice shall identify the Bonds or portions thereof being called, and the date on which they shall be presented for payment. After the date specified in such call notice, the Bond or Bonds so called for redemption will cease to bear interest provided funds sufficient for their redemption have been 4811-1098-4746.1 deposited with the Trustee, and, except for the purpose of payment, shall no longer be protected by the Indenture and shall not be deemed to be outstanding under the provisions of the Indenture. This Bond may be transferred on the books of registration kept by the Trustee by the registered owner or by his duly authorized attorney upon surrender hereof, together with a written instrument of transfer duly executed by the registered owner or his duly authorized attorney. The Bonds are issuable as registered bonds without coupons in denominations of $5,000 and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations. No recourse shall be had for the payment of the principal of or premium, if any, or interest on any of the Bonds or for any claim based thereon or upon any obligation, covenant or agreement contained in the Bonds or the Indenture against any past, present or fixture alderman, officer or employee of the City, or any successor, as such, either directly or through the City or any successor of the City, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such alderman, officer or employee as such is hereby expressly waived and released as a condition of and consideration for the issuance of any of the Bonds. This Bond is issued with the intent that the laws of the State of Arkansas will govern its construction. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law; that the indebtedness represented by the Bonds, together with all obligations of the City, does not exceed any constitutional or statutory limitation; and that the revenues pledged to the payment of the principal of and premium, if any, and interest on the Bonds as the same become due and payable will be sufficient in amount for that purpose. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Indenture until the Certificate of Authentication hereon shall have been signed by the Trustee. 4 4811-1098-4746.1 IN WITNESS WHEREOF, the City of Fayetteville, Arkansas has caused this Bond to be executed by its Mayor and City Clerk, thereunto duly authorized (by their manual or facsimile signatures), and its corporate seal to be affixed or imprinted hereon, all as of the date hereof shown above. CITY OF MYETTEVILLE, ARKANSAS yor ATTEST: By: ' City Cleig,�-. mac,• .�-� ETTEvjLLE `'= (SE�I�� FAYc` r r�t� 9n r �� • �`� • ' 7'``tA IV � C /;"GTC',lNtiC;;"(Form of Trustee's Certificate) TRUSTEE'S CERTIFICATE OF AUTHENTICATION This bond is one of the Series 2015 Bonds of the issue described in and issued under the provisions of the within mentioned Indenture. Attached hereto is the complete text of the opinion of Kutak Rock LLP, a signed original of which is on file with the undersigned, delivered and dated the date of the original delivery of and payment for the Series 2015 Bonds. Date: SIMMONS FIRST TRUST COMPANY, N.A., as Trustee By: oriz Signature 4811-1098-4746.1 COPY (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, , hereby sells, assigns, and transfers unto , the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. DATE: , 20_. Transferor GUARANTEED BY: NOTICE: Signature(s) must be guaranteed by an institution satisfactory to the Trustee or other transfer agent. 6 4811-1098-4746.1 BOND PURCHASE AGREEMENT October 21, 2015 City of Fayetteville City Administration Building 113 West Mountain Fayetteville, Arkansas 72701 $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015 Ladies and Gentlemen: EXECUTION COPY On the basis of the representations, warranties and agreements and upon the terins and conditions contained herein, the undersigned, Stephens Inc. (the "Underwriter"), hereby offers to enter into this Bond Purchase Agreement (this `Bond Purchase Agreement") with the City of Fayetteville, Arkansas (the "City") which, upon your acceptance of this offer, will be binding upon you and upon the Underwriter. Terms not otherwise defined herein shall have the same meanings as set forth in the Indenture defined and described below. This offer is made subject to your acceptance of this Bond Purchase Agreement on or before midnight on October 21, 2015. 1. General. Upon the terns and conditions and in reliance upon the respective representations, warranties and covenants herein, the Underwriter hereby agrees to purchase from the City, and the City hereby agrees to sell to the Underwriter, all (but not less than all) of $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015 (the `Bonds"), at the purchase price (the "Purchase Price") of $8,994,725.65 (equal to the par amount of the Bonds plus a reoffering premium of $80,225.65 and less underwriter's discount of $85,500.00). The Bonds shall be issued by the City pursuant to the provisions of the Constitution and laws of the State of Arkansas, including, particularly, Amendment 62 to the Constitution and Arkansas Code Annotated (1998 Repl. & Supp. 2015) §§14-164-301 et seq. (the "Act"). The Bonds will constitute special and limited obligations of the City, secured solely by and payable solely from (1) a pledge of and lien on the receipts from (A) a one-quarter of one percent (0.25%) city-wide sales and use tax (the "0.25% Sales and Use Tax) and (B) a three- quarters of one percent (0.75%) city-wide sales and use tax (the "0.75% Sales and Use Tax"), each authorized under the Act and levied within the City pursuant to Ordinance No. 4891 of the City Council of the City which was adopted on June 20, 2006 (the "Election Ordinance"), which levies were approved by the voters of the City at a special election held September 12, 2006, and 4326-7653-9350.3 (2) moneys or investments on deposit in the Revenue Fund, Bond Fund, Redemption Fund and Debt Service Reserve Fund established by a Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), by and between the City and Simmons First Trust Company, N.A., Pine Bluff, Arkansas, as trustee (the "Trustee"), all as more particularly described in the Indenture. The pledge of receipts from the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax is made on a parity basis with the existing pledge of such receipts securing (i) the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), (iii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and (iv) the City's Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"), pursuant to the Indenture. The Bonds shall be issued and secured pursuant to Ordinance No. 5803 of the City Council of the City which was adopted on October 6, 2015 (the "Authorizing Ordinance"), and pursuant to the hldenture. The Bonds shall have the maturities and interest rates as set forth in Exhibit A hereto. The Bonds shall be subject to redemption as set forth in the Indenture and in the Official Statement (hereinafter defined). The proceeds of the Bonds will be utilized (i) to finance a portion of the costs of the Street Project (as defined in the Indenture), (ii) to purchase a municipal bond debt service reserve insurance policy for deposit in the Debt Service Reserve Fund, and (iii) to pay the costs of issuance of the Bonds. The City will undertake, pursuant to a Continuing Disclosure Agreement to be dated as of the date of delivery of the Bonds (the "Continuing Disclosure Agreement"), to provide certain annual financial and operating information and notices of the occurrence of certain events, if material, as required by Section (b)(5)(i) of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended (the "Rule"). A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official Statement (each hereinafter defined). Although certain of its past filings of annual financial and operating information were not been made on or before the dates required by the City's continuing disclosure undertakings, as described in the Official Statement (hereinafter defined), the City represents that all such filings have now been made through the EMMA system of the Municipal Securities Rulemaking Board and that it has undertaken steps to ensure future compliance with its continuing disclosure undertakings. In order to ensure compliance with the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the City will enter into a Tax Regulatory Agreement dated as of the date of delivery of the Bonds (the "Tax Regulatory Agreement"). 2. Bona Fide Public Offering. The Underwriter agrees to make a bona fide public offering of all of the Bonds at the offering prices set forth on the cover of the final Official Statement described below. 2 4826-7658-9350.3 I . Delivery of Official Statement. (a) The City has previously provided the Underwriter with copies of its Preliminary Official Statement, including the cover page and the appendices thereto, dated October 13, 2015, relating to the Bonds (the "Preliminary Official Statement"). As of its date, the Preliminary Official Statement is "deemed final" by the City for purposes of SEC Rule 15c2 -12(b)(1). The Preliminary Official Statement, as amended to conform to the terms of this Bond Purchase Agreement, including Exhibit A hereto, and with such other changes and amendments as are mutually agreed to by the City and the Underwriter, is herein referred to as the "Official Statement." (b) The City agrees to deliver to the Underwriter, at such address as the Underwriter shall specify, as many copies of the final Official Statement dated October 21, 2015, relating to the Bonds as the Underwriter shall reasonably request as necessary to comply with paragraph (b)(4) of the Rule (as defined above) and with Rule G-32 and all other applicable rules of the Municipal Securities Rulemaking Board. The City agrees to deliver such final Official Statement within seven (7) business days after the execution hereof. (c) The City hereby authorizes and approves the Preliminary Official Statement and the final Official Statement, consents to their distribution and use by the Underwriter and authorizes the execution of the final Official Statement by a duly authorized officer of the City. The City ratifies and confines the use of the Preliminary Official Statement by the Underwriter prior to the date hereof in connection with the public offering of the Bonds. (d) The Underwriter shall give notice to the City on the date after which no participating underwriter, as such term is defined in the Rule, remains obligated to deliver final Official Statements pursuant to paragraph (b)(4) of the Rule. 4. City's Representations and Warranties. The City represents and warrants to the Underwriter that: (a) The City is a duly organized and existing political subdivision under the Constitution and laws of the State of Arkansas (the "State"). The City is authorized by the provisions of the Act to issue the Bonds for the purpose of financing a portion of the Street Project. (b) The City has the full legal right, power and authority (i) to adopt the Election Ordinance levying the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax (collectively, the "Sales and Use Taxes"), (ii) to adopt the Authorizing Ordinance authorizing the issuance of and sale of the Bonds, (iii) to enter into this Bond Purchase Agreement, the Fourth Supplemental Trust Indenture, the Continuing Disclosure Agreement and the Tax Regulatory Agreement, (iv) to levy the Sales and Use Taxes, (v) to issue, sell and deliver the Bonds to the Underwriter as provided herein, (vi) to pledge irrevocably the receipts of the Sales and Use Taxes to the payment of the principal of, premium, if any, and interest on the Bonds, and (vii) to carry out and consummate all other transactions contemplated by each of the aforesaid documents, and the City has 4826-7658-9350.3 complied with all provisions of applicable law, including the Act, in all matters relating to such transactions. (c) The City has duly authorized (i) the execution and delivery of the Bonds and the execution, delivery and due performance of this Bond Purchase Agreement, the Fourth Supplemental Trust Indenture, the Continuing Disclosure Agreement and the Tax Regulatory Agreement, (ii) the distribution and use of the Preliminary Official Statement and the execution, delivery and distribution of the final Official Statement, and (iii) the taking of any and all such actions as may be required on the part of the City to carry out, give effect to and consummate the transactions contemplated by such instruments. All consents or approvals necessary to be obtained by the City in connection with the foregoing have been received, and the consents or approvals so received remain still in full force and effect. (d) The Election Ordinance and the Authorizing Ordinance have been duly adopted by City Council of the City, are each in full force and effect and each constitutes the legal, valid and binding act of the City; and this Bond Purchase Agreement, the Fourth Supplemental Trust Indenture, the Continuing Disclosure Agreement and the Tax Regulatory Agreement, when executed and delivered, will constitute legal, valid and binding obligations of the City, and this Bond Purchase Agreement, the Fourth Supplemental Trust Indenture, the Continuing Disclosure Agreement and the Tax Regulatory Agreement are enforceable against the City in accordance with their respective terms, except as enforceability thereof may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally. (e) When delivered to or at the direction of the Underwriter, the Bonds will have been duly authorized, executed, authenticated, issued and delivered and will constitute legal, valid and binding obligations of the City in conformity with the laws of the State of Arkansas, including the Act, and will be entitled to the benefit and security of the Authorizing Ordinance and the Indenture. (f) The City has duly approved and authorized the distribution and use of the Preliminary Official Statement and the execution, delivery and distribution of the Official Statement. (g) The information contained in the Preliminary Official Statement is, and as of the Closing Date such information in the final Official Statement will be, true and correct in all material respects, and the Preliminary Official Statement does not and the final Official Statement will not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (h) If, at any time prior to the earlier of (i) receipt of notice from the Underwriter pursuant to Section 3(d) hereof that Official Statements are no longer required to be delivered under the Rule or (ii) 25 days after the Closing Date, any event occurs as a result of which the Official Statement, as then amended or supplemented, might include an untrue statement of a material fact, or omit to state any material fact 4 4826-7658-9350.3 necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the City shall promptly notify the Underwriter in writing of such event. Any information supplied by the City for inclusion in any amendments or supplements to the Official Statement will not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Upon the request of the Underwriter therefor, the City shall prepare and deliver to the Underwriter, at the City's expense, as many copies of an amendment or supplement to the Official Statement which will correct any untrue statement or omission therein as the Underwriter may reasonably request. (i) Neither the adoption of the Authorizing Ordinance or the Election Ordinance, the execution and delivery of this Bond Purchase Agreement, the Bonds, the Fourth Supplemental Trust Indenture, the Continuing Disclosure Agreement or the Tax Regulatory Agreement, nor the consummation of the transactions contemplated herein or therein or the compliance with the provisions hereof or thereof will conflict with, or constitute on the part of the City a violation of, or a breach of or default under, (i) any statute, indenture, mortgage, commitment, note or other agreement or instrument to which the City is a party or by which it is bound, (ii) any provision of the Constitution of the State of Arkansas, or (iii) any existing law, rule, regulation, ordinance, judgment, order or decree to which the City (or the members of its City Council or any of its officers in their respective capacities as such) is subject. All consents, approvals, authorizations and orders of governmental or regulatory authorities, if any, which are required for the City's execution and delivery of, consummation of the transactions contemplated by, and compliance with the provisions of this Bond Purchase Agreement, the Authorizing Ordinance, the Election Ordinance, the Bonds, the Fourth Supplemental Trust Indenture, the Continuing Disclosure Agreement and the Tax Regulatory Agreement have been obtained. (j) Except as is specifically disclosed in the Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending or, to the best knowledge of the City, threatened, which in any way questions the powers of the City referred to in subparagraph 4(b) above, or the validity of any proceeding taken by the City in connection with the issuance of the Bonds or the levy of the Sales and Use Taxes, or wherein an unfavorable decision, ruling or finding could materially adversely affect the transactions contemplated by this Bond Purchase Agreement, or of any other document or instrument required or contemplated by the Bond financing, or which, in any way, could adversely affect the validity or enforceability of the Authorizing Ordinance, the Election Ordinance, the Bonds, the Indenture, the Continuing Disclosure Agreement, the Tax Regulatory Agreement or this Bond Purchase Agreement or, to the knowledge of the City, which in any way questions the exclusion from gross income of the recipients thereof of the interest on the Bonds for federal income tax purposes or in any other way questions the status of the Bonds under federal or State of Arkansas tax laws or regulations. 5 4826-7658-9350.3 (k) Any certificate signed by any official of the City and delivered to the Underwriter shall be deemed a representation and warranty by the City to the Underwriter as to the truth of the statements therein contained. (1) The City has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. (m) The collection history with respect to the City's previously levied sales and use taxes set forth in the Preliminary Official Statement under the caption entitled "HISTORICAL SALES AND USE TAX COLLECTIONS" is fair, accurate and complete. (n) The City will not knowingly take or omit to take any action, which action or omission will in any way cause the proceeds from the sale of the Bonds to be applied in a manner other than as provided in the Indenture, or which would cause the interest on the Bonds to be includable in gross income for federal income tax purposes. 5. City's Covenants. The City covenants with the Underwriter as follows: (a) The City will cooperate with the Underwriter in qualifying the Bonds for offer and sale under the securities or Blue Sky laws of such jurisdictions of the United States as the Underwriter may request; provided, however, that the City shall not be required to consent to suit or to service of process in any jurisdiction. The City consents to the use by the Underwriter in the course of its compliance with the securities or Blue Sky laws of the various jurisdictions of the documents relating to the Bonds, subject to the right of the City to withdraw such consent for cause by written notice to the Underwriter. (b) Prior to the earlier of (i) receipt of notice from the Underwriter pursuant to Section 3(d) hereof that final Official Statements are no longer required under the Rule or (ii) 25 days after the Closing Date, the City shall provide the Underwriter with such information regarding the City, the receipts from the Sales and Use Taxes, and the current financial condition and ongoing operations of the City, all as the Underwriter may reasonably request. 6. Closing. At 10:00 a.m. Fayetteville time on November 12, 2015, or at such other time and/or date as shall have been mutually agreed upon by the City and the Underwriter (the "Closing Date"), the City will deliver the Bonds, or cause the Bonds to be delivered, to or at the direction of the Underwriter, said Bonds to be in definitive form duly executed by the City and authenticated by Simmons First Trust Company, N.A., Pine Bluff, Arkansas, as trustee (the "Trustee"), together with the other documents hereinafter mentioned; and the Underwriter will accept such delivery and pay the Purchase Price of the Bonds by making a wire transfer of federal funds payable to the order of the Trustee for the account of the City. The Bonds shall be delivered to The Depository Trust Company in New York, New York, and the activities relating to the final execution and delivery of the Authorizing Ordinance, the Election Ordinance, the Fourth Supplemental Trust Indenture, the Continuing 6 4826-7658-9350.3 Disclosure Agreement and the Tax Regulatory Agreement and the other documents related to the Bonds and the payment for the Bonds and the delivery of the certificates, opinions and other instruments as described in Section 8 of this Bond Purchase Agreement shall occur in the offices of Kutak Rock LLP, 234 East Millsap Road, Suite 400, Fayetteville, Arkansas (`Bond Counsel") or at such other place as shall have been mutually agreed upon between the City and the Underwriter. The payment for the Bonds and simultaneous delivery of the Bonds to or at the direction of the Underwriter is herein referred to as the "Closing." 7. Underwriter's Right to Cancel. The Underwriter shall have the right to cancel its obligation to purchase the Bonds hereunder by notifying the City in writing or by telegram of its election to do so between the date hereof and the Closing, if at any time hereafter and prior to the Closing: (i) the House of Representatives or the Senate of the Congress of the United States, or a committee of either, shall have pending before it, or shall have passed or recommended favorably, legislation introduced previous to the date hereof, which legislation, if enacted in its fonn as introduced or as amended, would have the purpose or effect of imposing federal income taxation upon revenues or other income of the general character to be derived by the City or by any similar body under the Authorizing Ordinance or the Indenture or similar documents or upon interest received on obligations of the general character of the Bonds or the Bonds, or of causing interest on obligations of the general character of the Bonds, or the Bonds, to be includable in gross income for purposes of federal income taxation, and such legislation, in the Underwriter's opinion, materially adversely affects the market price of the Bonds; or (ii) a tentative decision with respect to legislation shall be reached by a committee of the House of Representatives or the Senate of the Congress of the United States, or legislation shall be favorably reported or rereported by such a committee or be introduced, by amendment or otherwise, in or be passed by the House of Representatives or the Senate, or recommended to the Congress of the United States for passage by the President of the United States, or be enacted or a decision by a federal court of the United States or the United States Tax Court shall have been rendered, or a ruling, release, order, regulation or official statement by or on behalf of the United States Treasury Department, the Internal Revenue Service or other governmental agency shall have been made or proposed to be made having the purpose or effect, or any other action or event shall have occurred which has the purpose or effect, directly or indirectly, of adversely affecting the federal income tax consequences of owning the Bonds or of any of the transactions contemplated in comlection herewith, including causing interest on the Bonds to be included in gross income for purposes of federal income taxation, or imposing federal income taxation upon revenues or other income of the general character to be derived by the City or by any similar body under the Authorizing Ordinance or the Indenture or similar documents or upon interest received on obligations of the general character of the Bonds, or the Bonds which, in the opinion of the Underwriter, materially adversely affects the market price of or market for the Bonds; or (iii) legislation shall have been enacted, or actively considered for enactment with an effective date prior to the Closing, or a decision by a court of the United States shall 7 4826-7658-9350.3 have been rendered, the effect of which is that the Bonds, including any underlying obligations, or the Indenture, as the case may be, is not exempt from the registration, qualification or other requirements of the Securities Exchange Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or (iv) a stop order, ruling, regulation or official statement by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall have been issued or made or any other event occurs, the effect of which is that the issuance, offering or sale of the Bonds, including any underlying obligations, or the execution and delivery of the Indenture as contemplated hereby or by the Official Statement, is or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or (v) any event shall have occurred or any information shall have become known to the Underwriter which causes the Underwriter to reasonably believe that the Official Statement as then amended or supplemented includes an untrue statement of a material fact, or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or (vi) there shall have occurred any outbreak of hostilities or any national or international calamity or crisis, including a financial crisis, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds; or (vii) there shall be in force a general suspension of trading on the New York Stock Exchange, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds; or (viii) a general banking moratorium shall have been declared by federal, New York or State authorities; or (ix) any proceeding shall be pending or threatened by the Securities and Exchange Commission against the City; or (x) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any govermnental authority or by any national securities exchange; or (xi) the New York Stock Exchange or other national securities exchange, or any governmental authority, shall impose, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of the Underwriter. 8 4826-7658-9350.3 S. Conditions to Underwriter's Obligations. The obligation of the Underwriter to purchase the Bonds shall be subject (a) to the perfonnance by the City of its obligations to be performed hereunder at and prior to the Closing, (b) to the accuracy of the representations and warranties of the City herein as of the date hereof and as of the time of the Closing, and (c) to the following conditions, including the delivery by the City of such documents as are enumerated herein in form and substance satisfactory to the Underwriter: (a) The Bonds shall have been duly authorized, executed and delivered in the forms approved by the City in the Fourth Supplemental Trust Indenture with only such changes therein as the Underwriter and the City shall mutually agree upon, which shall in all instances be as described in the final Official Statement; (b) At the time of Closing, (i) the Official Statement, this Bond Purchase Agreement, the Fourth Supplemental Trust Indenture, the Authorizing Ordinance, the Election Ordinance, the Continuing Disclosure Agreement and the Tax Regulatory Agreement shall be in full force and effect and shall not have been amended, modified or supplemented from the date hereof, except as may have been agreed to in writing by the Underwriter, (ii) the proceeds of the sale of the Bonds and other funds shall be deposited and applied as described in the Indenture, (iii) no default or event of default under the Indenture shall have occurred and be continuing, and (iv) no material adverse change affecting the City or the Sales and Use Taxes shall have occurred, nor shall any development involving a prospective and material adverse change in, or affecting the business, financial condition, results of operations, prospects or properties of the City have occurred; (c) Receipt of frilly executed originals of the Fourth Supplemental Trust Indenture, the Continuing Disclosure Agreement and the Tax Regulatory Agreement at or prior to the Closing; (d) At or prior to the Closing, the Underwriter shall receive the following documents in such number of counterparts as shall be mutually agreeable to the Underwriter and Bond Counsel: (1) A final approving opinion of Bond Counsel, dated the Closing Date, in substantially the fonm set forth in Exhibit B hereto; (2) A supplemental opinion of Bond Counsel, addressed to the City, the Trustee and the Underwriter and dated the Closing Date, in substantially the form set forth in Exhibit C hereto; (3) The Official Statement executed by a duly authorized officer of the City; (4) Certified copies of the Authorizing Ordinance and the Election Ordinance and all other ordinances and resolutions of the City relating to the Bonds; 9 4826-7658-9350.3 (5) Certified copies of the Notice of Election and Mayor's Proclamation of Election Results, together with proofs of publication thereof, (6) Photocopies of the Bonds as executed and delivered; (7) A letter from Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc., to the effect that the Bonds have been assigned a rating of no less than "AA-" (stable outlook), which rating shall be in effect as of the Closing Date; (8) A municipal bond debt service reserve insurance policy (the "DSR Policy") issued by Assured Guaranty Municipal Corp. ("AGM") for deposit in the Debt Service Reserve Fund, together with such supporting certificates of AGM and an opinion of counsel to AGM as shall be satisfactory to Bond Counsel; (9) A certificate, in form and substance satisfactory to the Underwriter, of any duly authorized officer or official of the City satisfactory to the Underwriter, dated as of the Closing Date, to the effect that: (i) each of the City's representations, warranties and covenants contained herein are true and correct as of the Closing Date; (ii) the City has duly adopted the Authorizing Ordinance and the Election Ordinance by all action necessary under the Act and the laws and Constitution of the State of Arkansas, and has duly authorized the execution, delivery and due performance of the Bonds, the Fourth Supplemental Trust Indenture, the Continuing Disclosure Agreement, the Tax Regulatory Agreement, the Official Statement and this Bond Purchase Agreement; (iii) no litigation is pending, or to the knowledge of the officer or official of the City signing the certificate after due investigation and inquiry, threatened, to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the validity of the Bonds, the Sales and Use Taxes, the Official Statement, the Authorizing Ordinance, the Election Ordinance, the Indenture, the Continuing Disclosure Agreement, the Tax Regulatory Agreement, or this Bond Purchase Agreement; (iv) the Bonds, the Fourth Supplemental Trust Indenture, this Bond Purchase Agreement, the Continuing Disclosure Agreement and the Tax Regulatory Agreement, as executed and delivered by the City, are in the form or in substantially the form approved for such execution by appropriate proceedings of the City; (v) since December 31, 2014, there has not been any material adverse change in the financial condition or results of operations of the City whether or not arising in the ordinary course of business, other than as set forth in the Official Statement; (vi) neither the Authorizing Ordinance nor the Election Ordinance have been amended, modified or repealed as of the Closing Date, and the Authorizing Ordinance and the Election Ordinance remain in full force and effect; (vii) none of the proceedings of the City taken preliminary to the issuance of the Bonds, as certified in such certificate, including the levy of the Sales and Use Taxes, have been in any manner repealed, amended or changed; (viii) the City has complied in all respects with the provisions of the Act and has full legal right, power and authority to levy the Sales and Use Taxes and to issue the Bonds for the purposes stated in the Act and to enter into this Bond Purchase Agreement, to 10 4826-7658-9350.3 adopt the Authorizing Ordinance and the Election Ordinance, to issue, sell and deliver the Bonds as provided in this Bond Purchase Agreement, and to carry out and consummate all other transactions contemplated by this Bond Purchase Agreement, the Authorizing Ordinance, the Election Ordinance, the hldenture, the Continuing Disclosure Agreement and the Tax Regulatory Agreement; (ix) neither the Official Statement nor any amendment or supplement thereto contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading; and (x) to the best knowledge of the officer or official of the City signing the certificate, no event affecting the City or the Sales and Use Taxes has occurred since the date of the Official Statement which should be disclosed in the Official Statement for the purposes for which it is used that is necessary to disclose therein in order to make the statements and information therein not misleading in any respect; (10) An opinion of Kit Williams, Esq., City Attorney, dated the Closing Date and addressed to the Underwriter, Bond Counsel and the Trustee, to the effect that (i) the City is a duly organized and validly existing political subdivision and city of the first class, organized under the laws of the State of Arkansas, with full power and authority to adopt the Authorizing Ordinance and Election Ordinance, to levy the Sales and Use Taxes, and to execute and deliver the Bonds, the Fourth Supplemental Trust Indenture, the Continuing Disclosure Agreement, the Tax Regulatory Agreement and this Bond Purchase Agreement; (ii) the City has duly approved the Preliminary Official Statement and the Official Statement; (iii) the Authorizing Ordinance and the Election Ordinance have been duly adopted by the City by all action necessary under the Act and the laws and Constitution of the State of Arkansas, and each remains in full force and effect; (iv) the Fourth Supplemental Trust hldenture, the Continuing Disclosure Agreement, the Tax Regulatory Agreement and this Bond Purchase Agreement have been duly authorized, approved, executed and delivered by the City and, subject to the extent that the enforceability of the rights and remedies set forth therein may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally, constitute valid and binding agreements of the City enforceable in accordance with their ter-rns; (v) the information in the Official Statement under the captions "THE STREET PROJECT," "THE CITY" and "LEGAL MATTERS" (apart from financial or statistical data contained or incorporated therein, as to which no view need be expressed) is fair, accurate and complete and does not omit any matter which, in such counsel's opinion, for the purposes for which the Official Statement is to be used, should be included or referred to therein; (vi) excepting those matters discussed in the Official Statement, there is no action, suit or proceeding at law or in equity before or by any court, public board or body, pending or threatened, against or affecting the City, challenging the validity of the transactions contemplated by the Official Statement or the validity of the Bonds, the Sales and Use Taxes, the Authorizing Ordinance, the Election Ordinance, the Indenture, the Continuing Disclosure Agreement, the Tax Regulatory Agreement or this Bond Purchase Agreement and, to the best of such counsel's knowledge, there is no investigation, pending or 11 4826-7658-9350.3 threatened, and no threatened action, suit or proceeding involving any of the matters hereinabove mentioned in this clause (vi); (vii) the execution and delivery of the Authorizing Ordinance, the Election Ordinance, the Fourth Supplemental Trust Indenture, the Continuing Disclosure Agreement, the Tax Regulatory Agreement and this Bond Purchase Agreement, and compliance with the provisions hereof and thereof, under the circumstances contemplated hereby and thereby, do not and will not in any material respect conflict with or constitute on the part of the City a breach of or default under any agreement or other instrument to which the City is a party or any existing law, regulation, court order or consent decree to which the City is subject; and (viii) based upon the examinations which such counsel has made as counsel to the City, which shall be specified, nothing has come to such counsel's attention which would lead such counsel to believe that the Official Statement (except for the financial statements and other financial data included in the Official Statement, as to which no view need be expressed) contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (11) Evidence that Federal Form 8038-G has been executed by the City and is ready for filing with the Internal Revenue Service. (12) The Coverage Certificate of the City's Finance Director in the form required by Section 212 of the hldenture-, (13) Evidence that, except as disclosed in the Official Statement, all necessary approvals, whether legal or administrative, have been obtained from applicable federal, state and local entities and agencies; and (14) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter and Bond Counsel may reasonably request to evidence compliance by the City with legal requirements, the truth and accuracy, as of the time of Closing, of the representations of the City herein contained and the due performance or satisfaction by the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied. If the City shall be unable to satisfy the conditions to.the obligations of the Underwriter contained in this Bond Purchase Agreement, or if the obligation of the Underwriter to purchase and accept delivery of the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the Underwriter nor the City shall be under further obligation hereunder; except that the respective obligations to pay expenses, as provided in Section 12 hereof, shall continue in full force and effect. 9. Conditions to Obligations of the City. The obligations of the City hereunder are subject to the perfonnance by the Underwriter of its obligations hereunder. 12 4826-7658-9350.3 10. Survival. All representations, warranties and agreements of the City shall remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriter, and shall survive the Closing. The obligations of the City under Sections 11 or 12 hereof shall survive any termination of this Bond Purchase Agreement by the Underwriter pursuant to the terms hereof. 11. Indemnification. The City, to the extent permitted by law, agrees to indemnify and hold hannless the Underwriter, each member, officer, director, partner or employee of the Underwriter and each person who controls the Underwriter within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended (collectively called the "Indemnified Parties"), against any and all losses, claims, damages, liabilities or expenses (including any legal or other expenses incurred by an Indemnified Party in connection with investigating any claims against an Indemnified Party and defending any actions) whatsoever caused by any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact contained in the Official Statement or caused by any omission or alleged omission from the Official Statement of any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading insofar as such losses, claims, damages, liabilities or expenses are caused by any such untrue or misleading statement or omission or alleged untrue or misleading statement or omission in the information contained in the Official Statement; provided, however, that the City shall not be liable to an Indemnified Party in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any of such documents in reliance upon and in conforinity with written information furnished to the City by the Underwriter specifically for use therein. No hndemnified Parties shall be indemnified hereunder for any losses, claims, damages or liabilities resulting from the negligence of such Indemnified Parties. In case any action shall be brought against one or more of the Indemnified Parties based upon the Official Statement and in respect of which indemnity may be sought against the City, the Indemnified Parties shall promptly notify the City in writing, and, to the extent permitted by law, the City shall pronnptly assume the defense thereof, including the employment of counsel, the payment of all expenses and the right to negotiate and consent to settlement. Any one or more of the Indemnified Parties shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless employment of such counsel has been specifically authorized by the City. The City shall not be liable for any settlement of any such action effected without its consent by any of the Indemnified Parties, but if settled with the consent of the City, the City agrees to indemnify and hold harmless the Indemnified Parties to the extent provided in this Bond Purchase Agreement and to the extent pennitted by law. 12. Payment of Expenses. The City will pay or cause to be paid all reasonable expenses incident to the performance of its obligations under this Bond Purchase Agreement, including, but not limited to, expenses of mailing or delivery of the Bonds, legal publication costs, costs for obtaining CUSIP numbers on the Bonds, fees payable to The Depository Trust Company relating to the Bonds, Federal Funds charges, costs of printing the Bonds, the Preliminary and final Official Statements, any amendment or supplement to the Preliminary or 13 4826-7658-9350.3 final Official Statement and this Bond Purchase Agreement, fees and disbursements of Bond Counsel, accountants" fees and expenses, any fees charged by investment rating agencies for the rating of the Bonds, bond insurance premiums, if any, fees of the Trustee and any paying agent fees, and any fees and disbursements in connection with the qualification of the Bonds for sale under the securities or "Blue Sky" laws of the various jurisdictions and the preparation of "Blue Sky" memoranda. In the event this Bond Purchase Agreement shall terminate because of the default of the Underwriter, the City will, nevertheless, pay, or cause to be paid, all of the expenses specified above. The Underwriter shall pay all advertising expenses in connection with the public offering of the Bonds, and all other expenses incurred by it in connection with the public offering and distribution of the Bonds, including the fees and expenses of any counsel retained by the Underwriter. If the City defaults under this Bond Purchase Agreement, the Underwriter may bring whatever legal action it may have against the City to recover damages, if any, incurred by the Underwriter. 13. Notices. Any notice or other communication to be given to the City under this Bond Purchase Agreement may be given by delivering the same in writing to the Mayor at the address set forth above, and any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to Stephens Inc., 3425 North Futrall, Suite 201, Fayetteville, AR 72703, Attention: Mr. Dennis Hunt. 14. Nonassign ability. This Bond Purchase Agreement is made solely for the benefit of the City and the Underwriter (including any successor or assign of the Underwriter), and no other person, including any purchaser of the Bonds, shall acquire or have any right hereunder or by virtue hereof. 15. Applicable Law. This Bond Purchase Agreement shall be governed by and construed in accordance with the laws of the State of Arkansas. 16. Counterparts. This Bond Purchase Agreement shall become effective upon your acceptance hereof and may be executed in counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. Very truly yours, STEPHENS INC. By: Authorized Representative Accepted and agreed to as of the date first above written: CITY OF IYAY'ETTEV` i' LE, ARKANSAS C, ra 14 4826-7658-9350.3 (November 1) Maturity 2016 2017 2018 2019 2020 2021 2022 2023 2024 EXHIBIT A MATURITY SCHEDULE Principal Amount 930,000 945,000 965,000 980,000 1,000,000 1,020,000 1,035,000 1,055,000 1,070,000 Interest Rate 2.000% 2.000% 2.000% 2.000% 1.600% 1.700% 1.800% 1.550% 1.000% A-1 4826-7658-9350.3 Yield Price 0.500% 101.448% 0.950% 102.043% 1.150% 102.474% 1.375% 102.406% 1.600% 100.000% 1.700% 100.000% 1.800% 100.000% 1.550% 100.000% 1.000% 100.000% EXHIBIT B PROPOSED FORM OF BOND COUNSEL APPROVING OPINION Upon delivery of the Bonds in definitive form, Kutak Rock LLP, Little Rock, Arkansas, proposes to deliver its approving opinion in substantially the following form: November , 2015 City of Fayetteville, Arkansas Fayetteville, Arkansas Simmons First Trust Company, N.A., as Trustee Pine Bluff, Arkansas Stephens Inc. Fayetteville, Arkansas Assured Guaranty Municipal Corp. New York, New York $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2015 Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance and sale by the City of Fayetteville, Arkansas (the "City"), a political subdivision of the State of Arkansas, of its $9,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2015 (the `Bonds"). The Bonds are being issued pursuant to the provisions of the Constitution and laws of the State of Arkansas, including, particularly, Amendment 62 and Arkansas Code Annotated (1998 Repl. & Supp. 2015) §§14-164-301 et seq. (as from time to time amended, the "Act"), pursuant to Ordinance No. 5803 of the City, duly adopted and approved on October 6, 2015 (the "Authorizing Ordinance"), and pursuant to a Trust Indenture dated as of November 1, 2006, as amended and supplemented by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as amended and supplemented, the "Indenture"), by and between the City and Simmons First Trust Company, N.A., as trustee (the "Trustee"). Reference is hereby made to the Indenture and to all indentures supplemental thereto for the provisions, among others, with respect to the conditions for the issuance of parity indebtedness by the City, with respect to the nature and extent of the security for the Bonds, the rights, duties B-1 4826-7658-9350.3 and obligations of the City, the Trustee and the Holders of the Bonds, and the teens upon which the Bonds are issued and secured. Reference is made to an opinion of even date herewith of Kit Williams, Esq., City Attorney, a copy of which is on file with the Trustee, with respect, among other matters, to the status and valid existence of the City, the power of the City to adopt the Election Ordinance and the Authorizing Ordinance and to enter into and perforrn its obligations under the Indenture, the valid adoption of the Election Ordinance and the Authorizing Ordinance, and the due authorization, execution and delivery of the Indenture by the City, and with respect to the Indenture being enforceable upon the City. We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the City contained in the Election Ordinance, the Authorizing Ordinance and the Indenture and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The City is duly created and validly existing as a municipal corporation of the State of Arkansas. Pursuant to the Constitution and laws of the State of Arkansas, including, particularly, Amendment 62 and the Act, the City is empowered to adopt the Election Ordinance and the Authorizing Ordinance, to execute and deliver the hldenture, to perforin the agreements on its part contained therein, and to issue the Bonds. 2. The Authorizing Ordinance has been duly adopted by the City and constitutes a valid and binding obligation of the City enforceable upon the City in accordance with its teams. 3. The hldenture has been duly authorized, executed and delivered by the City and is a valid and binding obligation of the City enforceable upon the City in accordance with its terms. 4. The Bonds have been duly authorized, executed and delivered by the City and are valid and binding limited obligations of the City payable from and secured by a valid lien on and pledge of the Trust Estate (as defined in the Indenture), including receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax (each as defined in the hldenture), in the manner and to the extent provided in the Indenture. Such lien and pledge are made on a parity basis with the existing lien and pledge of the Trust Estate securing (i) the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A, (ii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2007, (iii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2009, and (iv) the City's Sales and Use Tax Capital Improvement Bonds, Series 2013. The City is duly authorized to pledge such Trust Estate, and no further action on the part of the City or any other party is required to perfect the same or the interest of the owners of the Bonds therein. 5. The 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax have been validly adopted in accordance with the Constitution and laws of the State of Arkansas, including Amendment 62 and the Act, and may be validly pledged to secure the Bonds. Levy and B-2 4826-7658-9350.3 collection of the 0.25% Sales and Use Tax commenced as of January 1, 2007, and levy and collection of the 0.75% Sales and Use Tax commenced as of August 1, 2014. 6. Interest on the Bonds is excluded from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. The opinion described in the preceding sentence assumes the accuracy of certain representations and compliance by the City with covenants designed to satisfy the requirements of the Internal Revenue Code of 1986, as amended, that must be met subsequent to the issuance of the Bonds. Failure to comply with such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City has covenanted to comply with such requirements. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 7. The interest on the Bonds is exempt from all state, county and municipal taxes in the State of Arkansas. 8. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Indenture is not required to be qualified under the Trust Indenture Act of 1939, as amended, in connection with the offer and sale of the Bonds. It is to be understood that the rights of the registered owners of the Bonds and the enforceability of the Bonds, the Authorizing Ordinance and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Very truly yours, B-3 4826-7658-9350.3 EXHIBIT C PROPOSED FORM OF BOND COUNSEL SUPPLEMENTAL OPINION November , 2015 City of Fayetteville, Arkansas Fayetteville, Arkansas Simmons First Trust Company, N.A., as Trustee Pine Bluff, Arkansas Stephens Inc. Fayetteville, Arkansas Assured Guaranty Municipal Corp. New York, New York $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2015 Ladies and Gentlemen: This opinion supplements our bond approving opinion, dated the date hereof, relating to the above -captioned bonds (the 'Bonds"). Except as otherwise defined herein, the terms used herein shall have the meanings prescribed for them in said opinion. We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the City contained in the Indenture and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. In addition to the documents specifically mentioned in the approving opinion, in connection with this opinion we have also examined: (a) An executed counterpart of the Bond Purchase Agreement dated October 21, 2015 (the `Bond Purchase Agreement"), by and between the City and Stephens Inc., as underwriter (the "Underwriter"); (b) An executed counterpart of the Continuing Disclosure Agreement dated November 12, 2015 (the "Disclosure Agreement"), by and between the City and Simmons First Trust Company, N.A., as trustee (the "Trustee"); C-1 4326-7653-9350.3 (c) An executed counterpart of the Tax Regulatory Agreement dated November 12, 2015 (the "Tax Regulatory Agreement"), by and between the City and the Trustee; (d) An executed counterpart of the Insurance Agreement dated November 12, 2015 (the "Insurance Agreement'), by and between the City and Assured Guaranty Municipal Corp. ("AGM"); (e) The Official Statement dated October 21, 2015, with respect to the Bonds (the "Official Statement'); and (t) The Municipal Bond Debt Service Reserve Insurance Policy (the "DSR Policy") issued and delivered by AGM concurrently with the issuance of the Bonds for deposit in the Debt Service Reserve Fund (as defined in the hldenture). Based on our examination, we are of the opinion, as of the date hereof and under existing law, as follows: 1. The Bond Purchase Agreement has been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the Underwriter, the Bond Purchase Agreement constitutes the valid and binding agreement of the City enforceable in accordance with its terms. 2. The Disclosure Agreement has been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the Trustee, the Disclosure Agreement constitutes the valid and binding agreement of the City enforceable in accordance with its terns. 3. The Tax Regulatory Agreement has been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the Trustee, the Tax Regulatory Agreement constitutes the valid and binding agreement of the City enforceable in accordance with its terns. 4. The hlsurance Agreement has been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by AGM, the Insurance Agreement constitutes the valid and binding agreement of the City, enforceable in accordance with its terms. 5. To the best of our knowledge, there is no litigation or other proceeding pending or threatened in any court, agency or other administrative body (either State or Federal) which could have a material adverse effect on (a) the financial condition of the City, (b) the ability of the City to perform its obligations under the Authorizing Ordinance, the Indenture, the Bond Purchase Agreement, the Continuing Disclosure Agreement, the Tax Regulatory Agreement or the Insurance Agreement (collectively, the "Related Documents"), (c) the security for the Bonds, or (d) the transactions contemplated by the Related Documents. C-2 4826-7658-9350.3 6. Nothing has come to our attention which would cause us to believe that, as of the date hereof, the Official Statement (excluding financial and statistical data and information which is contained or incorporated in the Official Statement, as to which no view is expressed) contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 7. The DSR Policy constitutes an Investment Security (as defined in the Indenture) eligible for deposit in the Debt Service Reserve Fund under the provisions of the Indenture. The enforceability of the respective obligations of the parties to the documents and other items described above, and the availability of certain rights and remedies provided for therein, may be limited by bankruptcy, receivership, insolvency, reorganization, moratorium, marshalling or other similar statutes or rules of law affecting creditors' rights and remedies, to general principles of equity and to the discretion of any count in granting any relief or issuing any order, whether the proceeding is considered a proceeding at law or equity. In particular, the right to indemnification under any of the documents or other items described above may be limited by federal of state securities laws or by the public policy underlying such laws. This opinion is being rendered to you solely for your use and benefit and may not be relied upon in any mariner, nor used, by any other person. Very truly yours, C-3 4826-7658-9350.3 _ T 4 d =_ y y v L y o � 4 e0 s a .0 0 V V d y u A Q T o= o T O E >, C, C, � = o o c w T O O - U y � U 00 .; N � h o " c � U c � r y L v � = a r3 c E a, ' o E _ 0 o =i U fns U g � V � v� `o c� c c i_••o a L — to 2 E Eag cs `o U _ � O y w 3 c E- t2 •= o o 3 cF3 c Cs v � V N = O o 'a E 9 44 ,8 IU w c c U e t � t F 3 PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 13, 2015 NEW ISSUE BOOK -ENTRY ONLY *RATING: S&P "AA-" (stable outlook) In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Series 2015 Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel is also of the opinion that the Series 2015 Bonds are "qualified tax-exempt obligations" under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. Under existing laws, regulations, rulings and judicial decisions, Bond Counsel is of the opinion that the Series 2015 Bonds and the interest thereon are exempt from all state, county and municipal taxes in the State of Arkansas. For a more complete description, see the caption "TAX MATTERS" herein. $9,000,000** CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2015 Dated: Date of Delivery Due: November 1, as shown on inside front cover The Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Series 2015 Bonds"), are being issued by the City of Fayetteville, Arkansas (the "City") for the purpose of (i) financing a portion of the costs of certain City street improvements, (ii) purchasing a municipal bond debt service reserve insurance policy for deposit in the debt service reserve, and (iii) paying certain expenses in connection with the issuance of the Series 2015 Bonds. See the captions "ESTIMATED SOURCES AND USES OF FUNDS" and "THE STREET PROJECT" herein. The Series 2015 Bonds are issuable only as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York, to which principal, premium, if any, and interest payments on the Series 2015 Bonds will be made so long as Cede & Co. is the registered owner of the Series 2015 Bonds. Individual purchases of the Series 2015 Bonds will be made only in book -entry form, in denominations of $5,000 or integral multiples thereof. Individual purchasers (`Beneficial Owners") of Series 2015 Bonds will not receive physical delivery of bond certificates. See the caption "BOOK -ENTRY ONLY SYSTEM" herein. The Series 2015 Bonds shall bear interest from the date of their delivery, payable on May 1 and November 1 of each year, commencing May 1, 2016. All such interest payments shall be payable to the persons in whose name such Series 2015 Bonds are registered on the bond registration books maintained by Simmons First Trust Company, N.A., Pine Bluff, Arkansas as trustee (the "Trustee"), as of the fifteenth day of the calendar month preceding the calendar month in which the applicable interest payment date falls. Principal of and premium, if any, on the Series 2015 Bonds shall be payable at the principal corporate trust office of the Trustee. So long as DTC or its nominee is the registered owner of the Series 2015 Bonds, disbursement of such payments to DTC Participants is the responsibility of DTC, and the disbursement of such payments to Beneficial Owners is the responsibility of DTC Participants or Indirect Participants, as more fully described herein. Pursuant to a Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), between the City and the Trustee, the payment of the principal of, premium, if any, and interest on the Series 2015 Bonds is secured by a pledge of the receipts from (i) a one-quarter of one percent (0.25%) city-wide sales and use tax (the "0.25% Sales and Use Tax") and (ii) a three-quarters of one percent (0.75%) city-wide sales and use tax (the "0.75% Sales and Use Tax," and together with the 0.25% Sales and Use Tax, the "Sales and Use Taxes"). Such pledge is made on a parity basis with the existing pledge of receipts of the Sales and Use Taxes securing (i) $42,200,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) $10,865,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), (iii) $9,340,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and (iv) $18,465,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). See the caption "SECURITY FOR THE BONDS" herein. The Series 2015 Bonds are subject to mandatory redemption prior to maturity as more fully described herein under the caption "THE SERIES 2015 BONDS - Redemption." The Series 2015 Bonds are special obligations of the City secured by and payable solely from receipts of the Sales and Use Taxes. The Series 2015 Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restriction. The issuance of the Series 2015 Bonds shall not directly, indirectly or contingently obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the payment of the Series 2015 Bonds, except as described herein with respect to the Sales and Use Taxes. The Series 2015 Bonds are offered when, as and if issued by the City and are subject to the final approving opinion of Kutak Rock LLP, Little Rock, Arkansas, Bond Counsel. Certain matters will be passed upon for the City by its counsel, Kit Williams, Esq., City Attorney. It is expected that the Series 2015 Bonds will be available for delivery in New York, New York, on or about November 12, 2015. * See the caption "RATING" herein. ** Preliminary; subject to change. Stephens Inc. The date of this Official Statement is October _ .--, 2015. MATURITY SCHEDULE* Maturity Principal Interest (November 1) Amount Rate Yield 2016 $ 920,000 % % 2017 940,000 % % 2018 960,000 % % 2019 980,000 % % 2020 995,000 % % 2021 1,015,000 % % 2022 1,040,000 % % 2023 1,060,000 % % 2024 1,090,000 % % Preliminary; subject to change. CITY OF FAYETTEVILLE, ARKANSAS Issuer City Council Lioneld Jordan, Mayor Adella Gray Mark Kinion John La Tour Alan Long Sarah Marsh Matthew Petty Martin Schoppmeyer, Jr. Justin Tennant Paul Becker, Finance Director Sondra Smith, City Clerk Kit Williams, City Attorney SIMMONS FIRST TRUST COMPANY, N.A. Pine Bluff, Arkansas Trustee and Paying Agent KUTAK ROCK LLP Little Rock, Arkansas Bond Counsel STEPHENS INC. Fayetteville, Arkansas Underwriter No dealer, broker, salesman or other person has been authorized by the City or by Stephens Inc. (the "Underwriter") to give any information or to make any representations, other than those contained herein; and, if given or made, such other information or representations must not be relied upon as having been authorized by either of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of any Series 2015 Bonds in any jurisdiction in which such offer is not authorized, or in which the person making such offer, solicitation or sale is not qualified to do so, or to any person to whom it is unlawful to make such offer, solicitation or sale. The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. THE SERIES 2015 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE TRUST INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON CERTAIN EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION CONTAINED IN SUCH LAWS. CERTAIN INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM THE CITY, THE DEPOSITORY TRUST COMPANY AND OTHER SOURCES WHICH ARE BELIEVED TO BE RELIABLE. THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH, AND AS PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITER DOES NOT GUARANTY THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2015 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. TABLE OF CONTENTS Introductory Statement .................................................... The Series 2015 Bonds .................................................... Security for the Bonds ..................................................... Book -Entry Only System ................................................ The Street Project............................................................ Historical Sales and Use Tax Collections ....................... Estimated Sources and Uses of Funds ............................. Estimated Debt Service Requirements ............................ Estimated Debt Service Coverage ................................... Projected Mandatory Redemptions ................................. TheCity........................................................................... The Sales and Use Taxes ................................................... Summary of the Indenture ............................................... Summary of the Continuing Disclosure Agreement ........ Underwriting................................................................... TaxMatters..................................................................... Rating............................................................................... LegalMatters.................................................................. Miscellaneous.................................................................. Accuracy and Completeness of Official Statement ......... Page ...................................................................................... 1 ...................................................................................... 2 ...................................................................................... 4 ...................................................................................... 5 ...................................................................................... 8 ...................................................................................... 8 ...................................................................................... 9 ...................................................................................... 9 ...................................................................................... 10 ...................................................................................... 11 ...................................................................................... 12 ...................................................................................... 15 ...................................................................................... 15 ...................................................................................... 20 ...................................................................I.................. 23 ...................................................................................... 23 ...................................................................................... 25 ...................................................................................... 25 ...................................................................................... 26 ...................................................................................... 26 APPENDIX A - Form of Bond Counsel Opinion.................................................................................................A-1 APPENDIX B - Definitions of Certain Terms......................................................................................................B-1 APPENDIX C - The Sales and Use Taxes............................................................................................................0-1 [THIS PAGE INTENTIONALLY BLANK] OFFICIAL STATEMENT $9,000,000* CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2015 The following introductory statement is subject in all respects to the more complete information set forth in this Official Statement. All descriptions and summaries of documents hereinafter set forth are qualified in their entirety by reference to each such document. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in "Appendix B -- DEFINITIONS OF CERTAIN TERMS". This Official Statement, including the cover page and the Appendices hereto, is furnished in connection with the offering by the City of Fayetteville, Arkansas (the "City") of its Sales and Use Tax Capital Improvement Bonds, Series 2015, in the principal amount of $9,000,000* (the "Series 2015 Bonds"). The City is a city of the first class organized and existing under the laws of the State of Arkansas (the "State"). The City is authorized under Amendment 62 to the Constitution of the State ("Amendment 62") and Arkansas Code Annotated (1998 Repl. & 2015 Supp.) §§14-164-301 et seq. (as from time to time amended, the "Act"), to issue and sell bonds for the purpose of financing the cost of capital improvements of a public nature. The Series 2015 Bonds are to be issued by the City pursuant to Amendment 62, the Act and Ordinance No. 5803, adopted and approved on October 6, 2015 (the "Authorizing Ordinance"), for the purpose of (i) financing a portion of the costs of acquiring, constructing, reconstructing, repairing, straightening and widening certain streets and related improvements (the "Street Project"), (ii) purchasing a municipal bond debt service reserve insurance policy for deposit in the debt service reserve, and (iii) paying certain expenses in connection with the issuance of the Series 2015 Bonds. See the captions "ESTIMATED SOURCES AND USES OF FUNDS" and "THE STREET PROJECT" herein. The Series 2015 Bonds are not general obligations of the City, but are special obligations payable solely from and secured by a pledge of the receipts of (i) a special city-wide sales and use tax levied pursuant to the Act at the rate of one-quarter of one percent (0.25%) (the "0.25% Sales and Use Tax") and (ii) a special city-wide sales and use tax levied pursuant to the Act at the rate of three-quarters of one percent (0.75%) (the "0.75% Sales and Use Tax," and together with the 0.25% Sales and Use Tax, the "Sales and Use Taxes"). Such pledge shall be made on a parity basis with the existing pledge of receipts of the Sales and Use Taxes securing (i) $42,200,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) $10,865,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), (iii) $9,340,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and (iv) $18,365,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). See the captions "SECURITY FOR THE BONDS," "HISTORICAL SALES AND USE TAX COLLECTIONS," and "RATING" herein. The faith and credit of the City are not pledged to the payment of the Series 2015 Bonds, and the Series 2015 Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restriction. The issuance of the Series 2015 Bonds shall not directly, indirectly or contingently obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the payment of the Series 2015 Bonds, except as described herein with respect to the Sales and Use Taxes. Preliminary; subject to change. The Series 2015 Bonds are subject to redemption from excess moneys in the Street Account of the Project Fund following completion of the portions of the Street Project to be financed with the Series 2015 Bonds and from Surplus Tax Receipts. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of Additional Bonds hereafter issued as provided under the caption "THE SERIES 2015 BONDS — Additional Bonds" herein. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any other series of Additional Bonds. See the captions "THE SERIES 2015 BONDS — Redemption" and "PROJECTED MANDATORY REDEMPTIONS" herein. Pursuant to the provisions of a Continuing Disclosure Agreement dated as of the date of delivery of the Series 2015 Bonds, by and between the City and Simmons First Trust Company, N.A., Pine Bluff, Arkansas, as dissemination agent (the "Continuing Disclosure Agreement"), the City has undertaken certain obligations with respect to providing ongoing disclosure of certain financial and operating data concerning the City and the Sales and Use Taxes and of the occurrence of certain material events. See the caption "SUMMARY OF THE CONTINUING DISCLOSURE AGREEMENT" herein. This Official Statement contains brief descriptions or summaries of, among other matters, the City, the Series 2015 Bonds, the Sales and Use Taxes, the Continuing Disclosure Agreement, and the Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), by and between the City and Simmons First Trust Company, N.A., Pine Bluff, Arkansas, as trustee (the "Trustee"), pursuant to which the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds are issued and secured. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture and the Continuing Disclosure Agreement are qualified in their entirety by reference to each such document, and all references to the Series 2015 Bonds are qualified in their entirety by reference to the definitive forms thereof and the information with respect thereto included in the Indenture. Copies of the Continuing Disclosure Agreement, the Indenture, and the form of Series 2015 Bond included therein, are available from the City by writing to the attention of the Finance Director, City of Fayetteville, City Administration Building, 113 West Mountain, Fayetteville, Arkansas 72701 and, during the initial offering period only, from the Underwriter, Stephens Inc., 3425 North Futrall, Suite 201, Fayetteville, Arkansas 72703. Certain financial and operating data has been provided by the City from the audited records of the City and certain demographic information has been obtained from other sources which are believed to be reliable. G Il.i0F.Y5lii �f. ; 1 i ���1l7 Description. The Series 2015 Bonds will be initially dated as of the date of their delivery, and will bear interest payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, at the rates set forth on the inside cover page hereof. The Series 2015 Bonds will mature on November 1 in the years and in the principal amounts set forth on the inside cover page hereof. The Series 2015 Bonds are issuable only in the form of fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York, to which principal, premium, if any, and interest payments on the Series 2015 Bonds will be made so long as Cede & Co. is the registered owner of the Series 2015 Bonds. Individual purchases of the Series 2015 Bonds will be made only in book -entry form, in denominations of $5,000 or integral multiples thereof. Individual purchasers ("Beneficial Owners") of Series 2015 Bonds will not receive physical delivery of bond certificates. See the caption "BOOK -ENTRY ONLY SYSTEM" herein. All interest payments on the Series 2015 Bonds shall be payable to the persons in whose name such Series 2015 Bonds are registered on the bond registration books maintained by the Trustee, as of the fifteenth day of the calendar month preceding the calendar month in which the applicable interest payment date falls. Principal of and premium, if any, on the Series 2015 Bonds shall be payable at the principal corporate trust office of the Trustee. All 2 such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2015 Bond to the extent of the sum or sums so paid. So long as DTC or its nominee is the registered owner of the Series 2015 Bonds, disbursement of such payments to DTC Participants is the responsibility of DTC, and the disbursement of such payments to Beneficial Owners is the responsibility of DTC Participants or Indirect Participants, as more fully described herein. Redemption. The Series 2015 Bonds are subject to redemption prior to maturity as follows: (i) The Series 2015 Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from moneys in the Street Account of the Project Fund in excess of the amount needed to complete the Street Project. (ii) The Series 2015 Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from Surplus Tax Receipts. "Surplus Tax Receipts" are collections of the Sales and Use Taxes in excess of the amount necessary to (i) insure the prompt payment of the principal of and interest on Outstanding Bonds, (ii) maintain the Debt Service Reserve Fund in an amount equal to the Reserve Requirement, (iii) pay any arbitrage rebate due under Section 148(f) of the Internal Revenue Code of 1986, as amended (the "Code"), and (iv) pay Trustee and Paying Agent fees and expenses. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of Additional Bonds hereafter issued as provided under the caption "THE SERIES 2015 BONDS —Additional Bonds" herein. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any other series of Additional Bonds. See the caption "PROJECTED MANDATORY REDEMPTIONS" herein. In the case of any defeasance of the Series 2015 Bonds, the dates of redemption, the principal amounts and the maturities of the Series 2015 Bonds to be redeemed will be determined by taking into consideration the mandatory redemption requirements set forth above and the receipts of the Sales and Use Taxes for the most recent twelve months. Partial Redemption of a Series 2015 Bond. If less than all of the Series 2015 Bonds of a maturity are called for redemption, the particular Series 2015 Bonds or portions of Series 2015 Bonds to be redeemed shall be selected by lot in such manner as the Trustee in its discretion may deem fair and appropriate. So long as DTC or its nominee is the sole registered owner of the Series 2015 Bonds, the procedures established by DTC shall control with respect to the selection of the particular Series 2015 Bonds to be redeemed. Notice of Redemption. Notice of the call for any redemption, identifying the Series 2015 Bonds or portions thereof being called and the date on which they shall be presented for payment, shall be mailed by the Trustee by first class mail (or, so long as DTC or its nominee is the sole registered owner of the Series 2015 Bonds, by any other means acceptable to DTC, including facsimile) to the registered owner of each such Series 2015 Bond addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure to give such notice by mailing, or any defect therein, shall not affect the validity of any proceeding for the redemption of any Series 2015 Bond with respect to which no such failure or defect has occurred. Any notice mailed as provided above shall be conclusively presumed to have been duly given, whether or not the registered owner receives the notice. Additional Bonds. The City may issue from time to time one or more series of Additional Bonds for the purpose of refunding the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds or any series of Additional Bonds, in whole or in part. Additional Bonds shall be secured equally and ratably with the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any other series of Additional Bonds theretofore issued and then Outstanding, except insofar any terms or conditions of redemption or purchase established under the Indenture may afford additional benefit or security for the Bonds of any particular series and except for the security afforded by any municipal bond insurance obtained with respect to a particular series of Bonds. Before any Additional Bonds are authenticated, there shall be delivered to the Trustee a certificate of the City's Finance Director certifying that, based upon the most recent twelve (12) months of Sales and Use Tax collections, receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax were not less than 125% of the maximum Annual Debt Service on all the Outstanding Bonds, plus the Additional Bonds to be issued. Notwithstanding anything described above to the contrary, no Additional Bonds shall be issued unless there is no default at the time of issuance under the Indenture. Transfer or Exchange. The Series 2015 Bonds may be transferred on the books of registration kept by the Trustee by the registered owner in person or by the owner's duly authorized attorney, upon surrender thereof, together with a written instrument of transfer duly executed by the registered owner or the owner's duly authorized attorney. Upon surrender for transfer of any Series 2015 Bond at the principal corporate office of the Trustee, the City shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Series 2015 Bond or Bonds in the same aggregate principal amount and of any authorized denomination or denominations. Transfers of registration or exchanges of Series 2015 Bonds shall be without charge to the Holders of such Series 2015 Bonds, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the Holder of the Series 2015 Bond requesting such transfer or exchange as a condition precedent to the exercise of such privilege. The Trustee shall not be required to transfer or exchange any Series 2015 Bond during the period from and including a Record Date to the next succeeding interest payment date of such Series 2015 Bond nor to transfer or exchange any Series 2015 Bond after the mailing of notice calling such Series 2015 Bond for redemption has been made, and prior to such redemption. So long as DTC or its nominee is the sole registered owner of the Series 2015 Bonds, transfers of beneficial interests in the Series 2015 Bonds shall be in accordance with the rules and procedures of DTC and its direct and indirect participants. See the caption "BOOK -ENTRY ONLY SYSTEM" herein. General. The Series 2015 Bonds are special obligations of the City secured by and payable from the receipts of (i) a special city-wide sales and use tax levied pursuant to the Act at the rate of one-quarter of one percent (0.25%) (the "0.25% Sales and Use Tax") and (ii) a special city-wide sales and use tax levied pursuant to the Act at the rate of three-quarters of one percent (0.75%) (the "0.75% Sales and Use Tax," and together with the 0.25% Sales and Use Tax, the "Sales and Use Taxes"). The Sales and Use Taxes were levied under Ordinance No. 4891, duly adopted by the City Council of the City on June 20, 2006 (the "Election Ordinance"). Pursuant to the Election Ordinance, a special election was held on September 12, 2006, at which time the qualified electors of the City approved the issuance of capital improvement bonds in principal amount not to exceed $110,000,000 and the corresponding levy of the Sales and Use Taxes. The receipts of the Sales and Use Taxes were pledged to secure the payment of Debt Service on the Series 2015 Bonds pursuant to Ordinance No. 5803, duly adopted by the City Council of the City on October 6, 2015 (the "Authorizing Ordinance"). Such pledge is made on a parity basis with an existing pledge on such receipt securing (i) $42,200,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) $10,865,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), (iii) $9,340,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and (iv) $18,465,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). Pursuant to the terms of the Election Ordinance, the collection of the 0.25% Sales and Use Tax commenced on January 1, 2007. At such time an existing three-quarters of one percent (0.75%) special city-wide sales and use tax (the "Existing Tax") was pledged to the payment of certain indebtedness of the City originally authorized in the aggregate principal amount of $92,000,000 (the "Existing Indebtedness"). The Existing Indebtedness was paid in full on July 1, 2014, the levy of the Existing Tax ceased on August 1, 2014, and the collection of the 0.75% Sales L! and Use Tax commenced simultaneously therewith. See the captions "THE SALES AND USE TAXES" and "HISTORICAL SALES AND USE TAX COLLECTIONS" herein. The Series 2015 Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restriction. The issuance of the Series 2015 Bonds shall not directly, indirectly or contingently obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the payment of the Series 2015 Bonds, except as described herein with respect to the Sales and Use Taxes. Debt Service Reserve. From the proceeds of the Series 2015 Bonds, there shall be deposited into the Series 2015 Account of the Debt Service Reserve Fund an amount sufficient to cause the amounts on deposit therein to be equal to 5% of the aggregate principal amount of the Series 2015 Bonds (the "Reserve Requirement"). Amounts on deposit in the Series 2015 Account of the Debt Service Reserve Fund shall be used solely to pay the principal of and interest on the Outstanding Series 2015 Bonds as due for which there are no available funds in the Bond Fund to make such payments. The Reserve Requirement may be satisfied by cash or by Investment Securities, including the Reserve Fund Insurance Policy (as defined below). If the amount in the Debt Service Reserve Fund is ever reduced below the Reserve Requirement, it shall be reimbursed to an amount equal to the Reserve Requirement through monthly payments, beginning not later than the last day of the month in which the Debt Service Reserve Fund was reduced below the Reserve Requirement, and continuing not later than the last day of each month thereafter until such reimbursement shall have been accomplished, from any funds in the Revenue Fund (after making the required deposits into the Interest Account and Principal Account of the Bond Fund, as provided in the Indenture). If a surplus shall exist in the Debt Service Reserve Fund over and above the Reserve Requirement, such surplus shall be deposited into the Interest Account of the Bond Fund. Assured Guaranty Municipal Corp., a New York stock insurance company ("AGM"), has made a commitment to issue a municipal bond debt service reserve insurance policy for the Debt Service Reserve Fund with respect to the Series 2015 Bonds (the "Reserve Fund Insurance Policy"), effective as of the date of issuance of such Series 2015 Bonds. Under the terms of the Reserve Fund Insurance Policy, AGM will unconditionally and irrevocably guarantee to pay that portion of the scheduled principal and interest on the Series 2015 Bonds that becomes due for payment but shall be unpaid by reason of nonpayment by the City (the "Insured Payments"). AGM will pay each portion of an Insured Payment that is due for payment and unpaid by reason of nonpayment by the City to the Trustee or Paying Agent, as beneficiary of the Reserve Fund Insurance Policy on behalf of the holders of the Series 2015 Bonds, on the later to occur of (i) the business day on which such scheduled principal or interest becomes due for payment or (ii) the business day next following the business day on which AGM receives a notice of nonpayment in accordance with the terms of the Reserve Fund Insurance Policy. No payment shall be made under the Reserve Fund Insurance Policy in excess of $450,000 (the "Reserve Fund Insurance Policy Limit"). Pursuant to the terms of the Reserve Fund Insurance Policy, the amount available at any particular time to be paid to the Trustee or Paying Agent shall automatically be reduced to the extent of any payment made by AGM under the Reserve Fund Insurance Policy, provided, that, to the extent of the reimbursement of such payment to AGM, the amount available under the Reserve Fund Insurance Policy shall be reinstated in full or in part, in an amount not to exceed the Reserve Fund Insurance Policy Limit. The Reserve Fund Insurance Policy does not insure against nonpayment caused by the insolvency or negligence of the Trustee or Paying Agent. The Reserve Fund Insurance Policy is not covered by the property/casualty insurance security fund specified in Article 76 of New York insurance law. 1114101cle OWN V WAL0101 W6111 The Series 2015 Bonds will be issued only as one fully registered Series 2015 Bond for each maturity, in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"), as registered owner of all the Series 2015 Bonds. The fully registered Series 2015 Bonds will be retained and immobilized in the custody of DTC. DTC (or any successor securities depository) or its nominee will be considered by the City and the Trustee to be the owner or holder of the Series 2015 Bonds for all purposes under the Indenture. Owners of any book entry interests in the Series 2015 Bonds (the "book entry interest owners") described below, will not receive or have the right to receive physical delivery of the Series 2015 Bonds, and will not be considered by the City and the Trustee to be, and will not have any rights as, owners or holders of the Series 2015 Bonds under the bond proceedings and the Indenture except to the extent, if any, expressly provided thereunder. CERTAIN INFORMATION REGARDING DTC AND DIRECT PARTICIPANTS IS SET FORTH BELOW. THIS INFORMATION HAS BEEN PROVIDED BY DTC. THE CITY, THE UNDERWRITER AND BOND COUNSEL ASSUME NO RESPONSIBILITY FOR THE ACCURACY OF SUCH STATEMENTS. DTC, the world's largest depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book - entry transfers and pledges among Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, the National Securities Clearing Corporation and the Fixed Income Clearing Corporation, all of which are registered agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The DTC Rules applicable to its Direct and Indirect Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.or(. Purchases of Series 2015 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2015 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2015 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2015 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2015 Bonds, except in the event that use of the Book -Entry System for the Series 2015 Bonds is discontinued. To facilitate subsequent transfers, all Series 2015 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2015 Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2015 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2015 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Series 2015 Bonds within a maturity are to be redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series 2015 Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the Record Date. The Omnibus Proxy will assign Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2015 Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy). Payment of debt service and redemption proceeds with respect to the Series 2015 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or the Trustee on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and debt service to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. BENEFICIAL OWNERS SHOULD CONSULT WITH THE DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS FROM WHOM THEY PURCHASE A BOOK ENTRY INTEREST TO OBTAIN INFORMATION CONCERNING THE SYSTEM MAINTAINED BY SUCH DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS TO RECORD SUCH INTERESTS, TO MAKE PAYMENTS, TO FORWARD NOTICES OF REDEMPTION AND OF OTHER INFORMATION. THE CITY AND THE TRUSTEE HAVE NO RESPONSIBILITY OR LIABILITY FOR ANY ASPECTS OF THE RECORDS OR NOTICES RELATING TO, OR PAYMENTS MADE ON ACCOUNT OF, BOOK ENTRY INTEREST OWNERSHIP, OR FOR MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO THAT OWNERSHIP. The Trustee and the City, so long as a book entry method of recording and transferring interest in the Series 2015 Bonds is used, will send any notice of redemption or of any Indenture amendment or supplement or other notices to Bondholders under the Indenture only to DTC (or any successor securities depository) or its nominee. Any failure of DTC to advise any Direct Participants, or of any Direct Participants or Indirect Participants to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity of the redemption of the Series 2015 Bonds called for redemption, the Indenture amendment or supplement, or any other action premised on notice given under the Indenture. The City and the Trustee cannot and do not give any assurances that DTC, Direct Participants, Indirect Participants or others will distribute payments of debt service on the Series 2015 Bonds made to DTC or its nominee as the registered owner of the Series 2015 Bonds, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or that DTC will serve and act in a manner described in this Official Statement. DTC may discontinue providing its services as securities depository with respect to the Series 2015 Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, bond certificates are required to be printed and delivered. In addition, the City may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, bond certificates will be printed and delivered. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] NNHWIVRDIDNr , Approximately $8,895,000* of the proceeds of the Series 2015 Bonds will be deposited into the Street Account of the Project Fund to finance a portion of the costs of acquiring, constructing, reconstructing, repairing, straightening and widening certain streets and related improvements (the "Street Project"). * Preliminary; subject to change. Pursuant to the terms of the Election Ordinance, the collection of the 0.25% Sales and Use Tax commenced on January 1, 2007. At such time an existing three-quarters of one percent (0.75%) special city-wide sales and use tax (the "Existing Tax") was pledged to the payment of certain indebtedness of the City originally authorized in the aggregate principal amount of $92,000,000 (the "Existing Indebtedness"). The Existing Indebtedness was paid in full on July 1, 2014, the levy of the Existing Tax ceased on August 1, 2014, and the collection of the 0.75% Sales and Use Tax commenced simultaneously therewith. Set forth below is a table showing receipts of the 0.25% Tax and the Existing Tax over the last seven years. Combined collections of the 0.25% Tax and the 0.75% Tax received by the City for the most recent twelve-month period (October 1, 2014 through September 30, 2015) were $19,298,680, a 6.26% increase over the amount of collections from the 0.25% Tax and the Existing Tax received by the City during the previous twelve-month period (October 1, 2013 to September 30, 2014). Reflects collections of the Existing Tax through September 30, 2014 and collections of the 0.75% Sales and Use Tax from October 1, 2014 through December 31, 2014. Sales and use tax receipts are remitted by the Treasurer of the State of Arkansas to the City in the second month following the month of their collection. (2) Reflects collections of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax for the nine months ended September 30, 2015. Source: Arkansas State Treasurer [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] Historical Collections Combined Collections of 0.25% Sales and Historical Collections of of 0.25% Tax and Growth Year Use Tax Existing Tax (0.75%) Existing Tax (0.75%) Percentage 2009 $ 3,927,564 $11,782,692 $15,710,256 n/a 2010 3,917,717 11,753,150 15,670,867 -0.25% 2011 4,129,686 12,389,060 16,518,746 5.41% 2012 4,389,519 13,168,559 17,558,078 6.29% 2013 4,513,873 13,541,618 18,055,491 2.83% 2014(1) 4,604,085 13,812,257 18,416,342 2.00% 2015(2) 3,630,557 10,891,670 14,522,227 n/a Reflects collections of the Existing Tax through September 30, 2014 and collections of the 0.75% Sales and Use Tax from October 1, 2014 through December 31, 2014. Sales and use tax receipts are remitted by the Treasurer of the State of Arkansas to the City in the second month following the month of their collection. (2) Reflects collections of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax for the nine months ended September 30, 2015. Source: Arkansas State Treasurer [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] The proceeds of the Series 2015 Bonds are expected to be used as follows: Sources of Funds(l) Par Amount of Series 2015 Bonds $ 9,000,000 Net Original Issue [Discount] [Premium] Total Sources: $ Uses of Funds(i) Deposit to Street Account of Project Fund $ 8,895,000 Costs of Issuance, including Underwriter's Discount 169,500 Reserve Policy Premium Total Uses: (1) Preliminary; subject to change. As of the date of closing, the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds will constitute the only debt obligations secured by receipts of the Sales and Use Taxes. The following table sets forth the amounts required to pay scheduled principal of and interest on the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds during each year: Series 2006A, Series 2006A, 2007, 2009 & 2007 & 2009 and Series 2015 Series 2015 Total Debt Year 2013 Principal 2013 Interest Principal(" Interest(l) Service 2016 $ 8,960,000 $ 2,885,934 $ 920,000 $ 195,458 $ 12,961,392 2017 9,375,000 2,473,896 940,000 177,057 12,965,953 2018 9,810,000 2,038,521 960,000 158,258 12,966.779 2019 10,245,000 1,598,496 980,000 139,057 12,962,553 2020 10,570,000 1,154,284 995,000 119,458 12,838,742 2021 2,735,000 808,353 1,015,000 99,557 4,657,910 2022 7,035,000 699,802 1,040,000 78,750 8,853,552 2023 8,315,000 456,428 1,060,000 54,310 9,885,738 2024 5,260,000 159,677 1,090,000 28,340 6,538,017 Totals: $72,305,000 $1227-5 391 $9,000,000 $1 050,245 636 $94,6M636 (1) Preliminary; subject to change. Assuming for purposes of this Preliminary Official Statement an average coupon rate on the Series 2015 Bonds of 2.272% per annum. Set forth below is a table showing estimated debt service coverage with respect to the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds. Combined collections of the 0.25% Tax and the 0.75% Tax during the twelve-month period ended September 30, 2015 were utilized for the purpose of making the coverage calculations. See the caption "HISTORICAL SALES AND USE TAX COLLECTIONS" herein. Historical Tax Receipts of 0.25% and 0.75% TaxesM $19,298,680 Maximum Annual Debt Service (2) $12,966,779 Maximum Annual Debt Service Coverage 1.49 X Actual combined collections of the 0.25% Tax and the 0.75% during the last twelve-month period ending September 30, 2015. See the caption "HISTORICAL SALES AND USE TAX COLLECTIONS" herein. (2) Preliminary; subject to change, and representing debt service on the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds in 2016-2024. See the caption "ESTIMATED DEBT SERVICE REQUIREMENTS" herein. THE COVERAGE NUMBERS SET FORTH ABOVE ARE BASED ON HISTORICAL RECEIPTS OF THE 0.25% TAX AND THE 0.75% TAX. ACTUAL RECEIPTS OF THE SALES AND USE TAXES WILL DEPEND ON NUMEROUS FACTORS, AND THERE CAN BE NO ASSURANCE THAT FUTURE RECEIPTS OF THE SALES AND USE TAXES AVAILABLE TO PAY DEBT SERVICE ON THE SERIES 2006A BONDS, THE SERIES 2007 BONDS, THE SERIES 2009 BONDS, THE SERIES 2013 BONDS AND THE SERIES 2015 BONDS WILL APPROXIMATE SUCH HISTORICAL RESULTS. See the caption "THE SALES AND USE TAXES — Future Receipt of the Sales and Use Taxes" herein. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] 10 The table under the caption "ESTIMATED DEBT SERVICE REQUIREMENTS" does not reflect possible mandatory redemptions of the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds from Surplus Tax Receipts, if available. Surplus Tax Receipts are all receipts of the Sales and Use Taxes in excess of the amount necessary (i) to assure the prompt payment of the principal of and interest on Outstanding Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of Additional Bonds, (ii) to maintain the Debt Service Reserve Fund in an amount equal to the Reserve Requirement, (iii) to pay any arbitrage rebate due under Section 148(f) of the Code, and (iv) to pay Trustee and Paying Agent fees and expenses. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of Additional Bonds hereafter issued as provided under the caption "THE SERIES 2015 BONDS –Additional Bonds" herein. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any other series of Additional Bonds. THERE CAN BE NO ASSURANCE GIVEN THAT RECEIPTS OF THE SALES AND USE TAXES WILL BE REALIZED IN THE AMOUNTS ASSUMED IN THE TABLE BELOW. See the caption "THE SALES AND USE TAXES — Future Sales and Use Tax Receipts" herein. "' Series 2015 Bonds are subject to mandatory redemption from Surplus Tax Receipts on each May 1 and November 1. See the caption "THE SERIES 2015 BONDS — Redemption" herein. (Z) Assuming annual receipts of the Sales and Use Taxes of $19,298,680. (3) Projected mandatory redemptions related to Series 2015 Bonds maturing November 1, 2020 through November 1, 2024. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] 11 Series 2015 Bonds Series 2015 Redeemed Prior to Total Series 2015 Date(l) Principal Due Maturity 2)(3) Principal Retired 5-1-16 $ -- $ 325,000 $ 325,000 11-1-16 920,000 320,000 1,240,000 5-1-17 -- 330,000 330,000 11-1-17 940,000 320,000 1,260,000 5-1-18 -- 325,000 325,000 11-1-18 960,000 315,000 1,275,000 5-1-19 -- 485,000 485,000 11-1-19 980,000 1,350,000 2,330,000 5-1-20 -- 1,430,000 1,430,000 Totals: $3,800,000 $5,200,000 $9,000,000 "' Series 2015 Bonds are subject to mandatory redemption from Surplus Tax Receipts on each May 1 and November 1. See the caption "THE SERIES 2015 BONDS — Redemption" herein. (Z) Assuming annual receipts of the Sales and Use Taxes of $19,298,680. (3) Projected mandatory redemptions related to Series 2015 Bonds maturing November 1, 2020 through November 1, 2024. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] 11 THE CITY General. The City is a city of the first class organized and existing under the laws of the State of Arkansas. The City is the seat of government of Washington County (the "County") and is the fourth largest city in the State. The City is located in the Metropolitan Statistical Area of Fayetteville/Springdale/Rogers (the "MSA"), which includes all of Washington and Benton Counties in the northwest corner of the State and is approximately 185 miles northwest of Little Rock, Arkansas, 125 miles east of Tulsa, Oklahoma, and 210 miles south of Kansas City, Missouri. The City is served by U.S. Interstate 49, U.S. Highways 62 and 71, and State Highways 16, 45, 112, 156, 180 and 265. The Burlington Northern Railroad has several lines running through the City, and a general aviation airport with a 6,006 -foot runway is available for limited commuter travel. The Northwest Arkansas Regional Airport is located approximately 40 minutes from downtown Fayetteville and provides daily flights to numerous venues. Government. The City currently operates under the Mayor -Council form of government pursuant to which a mayor, city attorney, city clerk and eight aldermen are elected, two from each of the City's four wards. The mayor, city attorney and city clerk are full-time positions elected to four year terms. Aldermen also serve four year terms. The City's elected officials and the dates on which their respective terms expire are as follows: Name Office Term Expires Lioneld Jordan Mayor 12/31/16 Kit Williams City Attorney 12/31/18 Sondra Smith City Clerk 12/31/16 Adella Gray Alderman 12/31/18 Mark Kinion Alderman 12/31/18 John La Tour Alderman 12/31/18 Alan Long Alderman 12/31/16 Sarah Marsh Alderman 12/31/16 Matthew Petty Alderman 12/31/16 Martin Schoppmeyer, Jr. Alderman 12/31/16 Justin Tennant Alderman 12/31/18 Population. The following is a table of population changes for the City, the MSA and the State of Arkansas, according to the United States Census Bureau: 12 City of State of Year Fayetteville MSA Arkansas 1960 20,274 92,069 1,786,272 1970 30,729 127,846 1,923,322 1980 36,608 178,609 2,286,435 1990 42,099 210,908 2,350,624 2000 58,047 311,121 2,673,400 2010 73,580 463,204 2,915,918 12 Economic Data. Per capita personal income figures for the MSA and the State of Arkansas are as follows: State of Year MSA Arkansas 2005 $28,685 $27,908 2006 30,168 29,459 2007 31,586 31,517 2008 32,537 32,257 2009 32,313 31,688 2010 33,309 32,373 2011 34,130 33,740 2012 36,985 34,723 2013 37,863 36,698 2014 n/a 37,751 Source: Discover Arkansas, Data Analysis. Retail sales figures for the MSA and the State are as follows: Does not include McDonald County, Missouri Source: Demographics USA. For years through 2008; Nielson Consumer Buying Power for 2009-2013. The following table shows the total assessed value of non-utility real and personal property within the City for the years indicated: Year Real Property State of Year MSA Arkansas 2000 $3,526,791,000 $28,488,033,000 2001 3,806,422,000 29,652,693,000 2002 3,841,326,000 29,269,775,000 2003 3,968,812,000 29,920,716,000 2004 4,610,051,000 31,463,983,000 2005 5,287,158,000 34,290,412,000 2006 7,251,810,000 38,843,312,000 2007 8,250,140,000 43,504,752,000 2008 8,291,415,000 43,820,789,000 2009 5,527,678,000' 35,498,326,000 2010 6,133,565,000' 35,247,629,000 2011 7,236,224,000' 42,160,822,000 2012 7,231,740,000' 42,262,644,000 2013 8,849,969,401"' 45,797,494,447 2014 10,299,545,949«) 51,904,796,678 Does not include McDonald County, Missouri Source: Demographics USA. For years through 2008; Nielson Consumer Buying Power for 2009-2013. The following table shows the total assessed value of non-utility real and personal property within the City for the years indicated: Year Real Property Personal Property Total 2005 $ 729,172,106 $ 212,694,254 $ 941,866,260 2006 802,306,156 198,469, 816 1,000,775,972 2007 942,667,570 203,094,564 1,145,762,134 2008 1,026,022, 871 203, 311,701 1,232,334,572 2009 1,067,947,653 191,973,349 1,299,921,002 2010 1,025,933,870 188,130,198 1,214,064,068 2011 1,046,174,941 199,900,209 1,246,075,150 2012 1,063,617,013 203,289,225 1,266,906,238 2013 1,084,550,127 260,194,656 1,344,744,783 2014 1,115,992, 871 274,972,663 1,390,965,534 Source: Washington County Tax Assessor's Office. The assessed value represents 20% of the appraised value of property. 13 Building permits issued by the City(l) are shown below for the years indicated: 2011 2012 2013 2014 2015«1 Residential Building 273 394 379 289 244 Permits Commercial Building 29 18 24 17 18 Permits Value of All Building Permits $81,146,187 $251,041,427 $157,970,433 $139,775,340 $187,615,391 (1) Does not include building activity of the University of Arkansas, school permits and additions/alterations to existing structures. (2) Through July 31, 2015. Source: City of Fayetteville. Unemployment figures for the MSA and the State of Arkansas, according to the U.S. Bureau of Labor Statistics, are as follows: Year MSA State of Arkansas 2005 3.3% 5.3% 2006 3.6 5.4 2007 3.9 5.4 2008 3.8 5.2 2009 6.1 7.4 2010 6.5 7.9 2011 6.2 8.0 2012 5.6 7.3 2013 4.9 7.5 2014 4.6 6.1 2015* 3.6 5.0 adjusted. August, 2015 only; preliminary and not seasonally Employment and Industry. The principal campus of the University of Arkansas is located in the City and has total enrollment for the Fall semester of 2015 of approximately 26,754. On the Fayetteville campus, the University employs approximately 8,500 faculty, administrative, secretarial, clerical and maintenance personnel in both full-time and part-time positions, making the University the largest employer in the City. Other major employers in the City, their products or services and approximate number of employees are set forth below: Employer Product or Service Employees University of Arkansas Education 12,689 Washington Regional Med. Ctr. Medical 1,500 Veterans Admin. Med. Ctr. Medical 1,442 Washington County Gov't Government 1,386 Fayetteville School District Education 1,340 Superior Industries Cast aluminum wheels 822 City of Fayetteville Government 731 Wal-Mart #9149 (optical lab) Optical products 670 Tyson Mexican Original Food 631 Wal-Mart #144 Retail 550 Source: 2014 City of Fayetteville CAFR 14 THE SALES AND USE TAXES Generally. The Sales and Use Taxes are levied under the Election Ordinance pursuant to the authority of the Act. The Sales and Use Taxes are taxes levied within the City on all items which are subject to taxation under The Arkansas Gross Receipts Act of 1941 and taxes levied on the receipts from storing, using or consuming tangible personal property under The Arkansas Compensating (Use) Tax Act of 1949. The Sales and Use Taxes are collected only on the first $2,500 of gross receipts, gross proceeds or sales price from any single transaction. Pursuant to the Indenture and the Authorizing Ordinance, the City has pledged the receipts of the Sales and Use Taxes to the payment of the Series 2015 Bonds. Pursuant to the terms of the Election Ordinance, the collection of the 0.25% Sales and Use Tax commenced on January 1, 2007. At such time an existing three-quarters of one percent (0.75%) special city-wide sales and use tax (the "Existing Tax") was pledged to the payment of certain indebtedness of the City originally authorized in the aggregate principal amount of $92,000,000 (the "Existing Indebtedness"). The Existing Indebtedness was paid in full on July 1, 2014, the levy of the Existing Tax ceased on August 1, 2014, and the collection of the 0.75% Sales and Use Tax commenced simultaneously therewith. See "Appendix C — THE SALES AND USE TAXES" for a detailed description of the property and services subject to sales and use taxation and the exemptions therefrom. Administration. Pursuant to the State law, the Commissioner of Revenues of the State (the "Commissioner") performs all functions incidental to the administration, collection, enforcement and operation of the Sales and Use Taxes. All receipts of the Sales and Use Taxes collected, less certain charges payable and retainage due the Commissioner for administrative services in the amount of 3% of the gross receipts of the Sales and Use Taxes, shall be remitted by the State Treasurer to the Trustee monthly. See the caption "SUMMARY OF THE INDENTURE — Application of Sales and Use Tax Receipts" herein. In an effort to simplify and modernize the sales and use tax collection process, the State of Arkansas has opted to participate in the Streamlined Sales Tax Agreement, a cooperative effort among states, local governments and the business community. Future Receipts of the Sales and Use Taxes. Receipts of the Sales and Use Taxes will be contingent upon the sale and use of property and services within the City, which activity is generally dependent upon economic conditions within the City and the surrounding trade area. Also, receipts of the Sales and Use Taxes may be affected by changes to transactions exempted from the Sales and Use Taxes made by legislation adopted by the General Assembly of the State or by the people of the State in the form of a constitutional amendment or initiated act. In the past the General Assembly of the State has considered new exemptions to sales and use taxes, such as food sales, which, if adopted, would materially reduce receipts of the Sales and Use Taxes. The City has no control over actions of the General Assembly or the people of the State and cannot predict whether changes to the Sales and Use Taxes may be made. Accordingly, the City cannot predict with certainty the expected amount of receipts of the Sales and Use Taxes to the be received and, therefore, there can be no assurance that receipts of the Sales and Use Taxes will be sufficient to pay the principal of and interest on the Series 2015 Bonds. a Vogl 116,111 kifftm The following statements are brief summaries of certain provisions of the Indenture. The statements do not purport to be complete, and reference is made to the Indenture, copies of which are available for examination at the offices of the Finance Director of the City, for a full statement thereof. Funds and Accounts. Receipts of the Sales and Use Taxes arepledged by the Indenture to the payment of the principal of and interest on the Bonds. The following Funds and Accounts have been established with the Trustee in connection with the issuance of the Bonds: Funds and Accounts Revenue Fund Bond Fund, and an Interest Account and a Principal Account therein Debt Service Reserve Fund, and Series 2006A, Series 2007, Series 2009, Series 2013 and Series 2015 Accounts therein Redemption Fund Project Fund, and a Street Account, Trail Account and Wastewater Account therein 15 Cost of Issuance Fund Rebate Fund Application of Receipts of the Sales and Use Taxes. The application of receipts of the Sales and Use Taxes is as follows: (a) Revenue Fund. All receipts from the Sales and Use Taxes shall, as and when received, be deposited into the Revenue Fund. All moneys at any time in the Revenue Fund shall be applied on a monthly basis to the payment of Debt Service on the Bonds, to the maintenance of the Debt Service Reserve Fund, to the payment of any arbitrage rebate due under Section 148(f) of the Code, to the payment of fees and expenses of the Trustee and any Paying Agent, and to the early redemption of the Bonds, at the times and in the amounts set forth as follows: (b) Bond Fund. Upon receipt, but in no event later than the last day of each month in which receipts of the Sales and Use Taxes are deposited in the Revenue Fund, there shall be transferred from the Revenue Fund (i) into the Interest Account of the Bond Fund, an amount equal to 1/6 of the interest on the Outstanding Bonds due on the next interest payment date, and (ii) into the Principal Account of the Bond Fund, an amount equal to 1/12 of the next scheduled principal maturity of Outstanding Bonds. Moneys in the Bond Fund shall be used solely for the purpose of paying Annual Debt Service on the Bonds or for redemption of Bonds, as provided in the Indenture. The Trustee shall withdraw from the Bond Fund, on the date of any principal or interest payment, an amount equal to such payment for the sole purpose of paying the same. If receipts of the Sales and Use Taxes in the Revenue Fund are insufficient to make the required monthly payment into the Bond Fund, the amount of any such deficiency in the payment made shall be added to the amount otherwise required to be paid into the Bond Fund not later than last day of the next succeeding month. When the moneys held in the Revenue Fund, the Bond Fund, the Debt Service Reserve Fund and the Redemption Fund shall be and remain sufficient to pay in full the principal of and interest on all Bonds then Outstanding in accordance with the Indenture, together with the required fees and expenses to be paid or reimbursed to the Trustee and any Paying Agent, the City shall have no further obligation to make payments into such Funds and the levy of the Sales and Use Taxes shall cease. (c) Debt Service Reserve Fund. See the caption "SECURITY FOR THE BONDS — Debt Service Reserve" herein. (d) Rebate Fund. The Trustee shall establish and maintain, separate and apart from any other Funds and Accounts established and maintained under the Indenture, the Rebate Fund, which Fund is not pledged to the payment of any Bonds. Subject to transfer to the United States in payment of any arbitrage rebate due under Section 148(f) of the Code, all moneys at any time deposited in the Rebate Fund shall be held by the Trustee in trust, and neither the City nor the Owner of any Bond shall have any rights in or claim to such money. Any amounts remaining in the Rebate Fund after payment in full of the rebate amount owing to the United States, within sixty (60) days after the date on which the last Bond is redeemed, shall be transferred to the Revenue Fund. (e) Redemption Fund. After making the required deposits into the Bond Fund, into the Debt Service Reserve Fund, and into the Rebate Fund, and after paying the fees and expenses of the Trustee and any Paying Agent, there shall be paid from the Revenue Fund into the Redemption Fund all remaining moneys in the Revenue Fund (the "Surplus Tax Receipts"). Moneys in the Redemption Fund shall be transferred to the appropriate Principal Account(s) of the Bond Fund at such times as may be necessary to effectuate redemptions of Bonds on the first available redemption date. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of Additional Bonds. See the captions "THE SERIES 2015 BONDS — Redemption" and "PROJECTED MANDATORY REDEMPTIONS" herein. (f) Project Fund. A portion of the proceeds of the Series 2015 Bonds shall be deposited in the Street Account of the Project Fund. See the captions "ESTIMATED SOURCES AND USES OF FUNDS" and "THE 16 STREET PROJECT" herein. Amounts in the Street Account in the Project Fund shall be expended only for the payment of Project Costs related to the applicable portion of the Street Project being financed with the Series 2015 Bonds upon the submission of Requisitions by the City to the Trustee. The Trustee shall only make payments from the Project Fund pursuant to and in accordance with Requisitions. Within ninety (90) days following completion of the portion of a Project being financed with a particular series of Bonds, the City shall deliver to the Trustee its Certificate stating that the applicable portion of such Project is complete and the Trustee shall transfer the remaining moneys in the applicable Account of the Project Fund relating to such series of Bonds (save and except moneys needed to satisfy unpaid Project Costs) to the Redemption Fund for application to the retirement of the corresponding series of Bonds by redemption or purchase. See the caption "THE SERIES 2015 BONDS — Redemption" herein. (g) Cost of Issuance Fund. A portion of the proceeds of the Series 2015 Bonds shall be deposited to the credit of the Cost of Issuance Fund. The Trustee shall pay those Costs of Issuance as directed by the City pursuant to a Certificate delivered on a Closing Date. After all Costs of Issuance have been paid with respect to the Series 2015 Bonds (and in any event not later than December 1, 2015), any remaining moneys in the Cost of Issuance Fund shall be transferred to the Interest Account of the Bond Fund. Investment of Funds. At the direction of the City or absent such direction, the Trustee shall invest moneys in Funds or Accounts held by the Trustee in Investment Securities with maturity or redemption dates consistent with the times at which said moneys will be required for the purposes provided in the Indenture. Moneys in separate Funds or Accounts may be commingled for the purpose of investment. Valuation of Funds and Accounts. In determining the value of any Fund or Account held by the Trustee under the Indenture, the Trustee shall credit Investment Securities at the fair market value thereof, as determined by the Trustee by any method selected by the Trustee in its reasonable discretion. No less frequently than annually, and in any event within thirty (30) days prior to the end of each Fiscal Year, the Trustee shall determine the value of each Fund and Account held under the Indenture and shall report such determination to the City. The Trustee shall sell or present for redemption any Investment Securities as necessary in order to provide money for the purpose of making any payment required under the Indenture, and the Trustee shall not be liable for any loss resulting from any such sale. Responsibility of Trustee. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of moneys made by it at the direction of the City. Instruments of Further Assurance. At any and all times the City shall, so far as it may be authorized by law, pass, make, do, execute, acknowledge and deliver, all and every such further resolutions, ordinances, acts, deeds, conveyances, assignments, transfers and assurances as may be necessary or desirable for the better assuring, conveying, granting, pledging, assigning and confirming of all and singular the receipts from the Sales and Use Taxes and all other moneys pledged or assigned by the Indenture, or intended so to be, or which the City may become bound to pledge or assign. Tax Covenants. The City shall not use or permit the use of any Series 2015 Bond proceeds or any other funds of the City, directly or indirectly, in any manner, and will not take or permit to be taken any other action or actions which would adversely affect the exclusion of interest on any Series 2015 Bond from gross income for federal income tax purposes. No part of the proceeds of the Series 2015 Bonds shall at any time be used, directly or indirectly, to acquire securities or obligations the acquisition of which would cause any of such Series 2015 Bonds to be an "arbitrage bond" as defined in Sections 148(a) and (b) of the Code. The City agrees that so long as any of the Series 2015 Bonds remain Outstanding, it will comply with the provisions of the Tax Regulatory Agreement. Defeasance. Any Bond shall be deemed to be paid within the meaning of the Indenture when payment of the principal of and premium, if any, and interest on such Bond (whether at maturity or upon redemption as provided in the Indenture, or otherwise), either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for by irrevocably depositing with the Trustee, in trust and irrevocably set aside exclusively for such payment, (1) moneys sufficient to make such payment or (2) Government Securities (provided that such deposit will not affect the tax-exempt status of the interest on any of the Bonds or cause any of the Bonds to be classified as "arbitrage bonds" within the meaning of Section 148(a) of the Code, as reflected in an opinion of Bond Counsel delivered to the Trustee), maturing as to principal and interest in such amounts and at such times as will provide sufficient moneys to make such payment, and all necessary and proper fees, compensation and expenses of the Trustee and any Paying Agent pertaining to the Bonds with respect to which such deposit is made 17 shall have been paid or the payment thereof provided for to the satisfaction of the Trustee and any said Paying Agent. In the case of any defeasance of Series 2015 Bonds, the dates of redemption of such Series 2015 Bonds and the principal amounts and maturities of Series 2015 Bonds to be redeemed on such dates will be determined by taking into consideration the applicable redemption requirements with respect to the Series 2015 Bonds to be defeased and the receipts of the Sales and Use Taxes for the most recent twelve months. Events of Default. Each of the following events shall constitute and is referred to in the Indenture as an "Event of Default": (a) Default in the due and punctual payment of any interest on any Bond; (b) Default in the due and punctual payment of the principal of or premium, if any, on any Bond, whether at the stated maturity thereof, or upon proceedings for redemption thereof, or upon the maturity thereof by declaration; (c) Default in the payment of any other amount required to be paid under the Indenture or the performance or observance of any other of the covenants, agreements or conditions contained in the Indenture, or in the Bonds issued under the Indenture, and continuance thereof for a period of sixty (60) days after written notice specifying such failure and requesting that it be remedied, shall have been given to the City by the Trustee, which may give such notice in its discretion and shall give such notice at the written request of Holders of not less than fifty-one percent (51%) in aggregate principal amount of the Bonds then Outstanding, unless the Trustee, or the Trustee and Holders of an aggregate principal amount of Bonds not less than the aggregate principal amount of Bonds the Holders of which requested such notice, as the case may be, shall agree in writing to an extension of such period prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Trustee will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the City within such period and is being diligently pursued; (d) The filing of a petition in bankruptcy by or against the City under the United States Bankruptcy Code or the commencement of a proceeding by or against the City under any other law concerning insolvency, reorganization or bankruptcy; and (e) If the State has limited or altered the rights of the City pursuant to the Act, as in force on the date of the Indenture, to fulfill the terms of any agreements made with the Trustee or the Bondholders or in any way impaired the rights and remedies of the Trustee or the Bondholders while any Bonds are Outstanding. The term "default" as used in clauses (a), (b) and (c) above shall mean default by the City in the performance or observance of any of the covenants, agreements or conditions on its part contained in the Indenture, or in the Bonds Outstanding thereunder, exclusive of any period of grace required to constitute a default an "Event of Default" as described above. Acceleration. Upon the occurrence of an Event of Default, the Trustee may, and upon the written request of the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding shall, by notice in writing delivered to the City, declare the principal of all Bonds then Outstanding, together with any premium and the interest accrued thereon, immediately due and payable, and such principal and interest shall thereupon become and be immediately due and payable. Other Remedies; Rights of Bondholders. Upon the occurrence of an Event of Default, the Trustee may, as an alternative, pursue any available remedy by suit at law or in equity, including, without limitation, mandamus to enforce the payment of the principal of and premium, if any, and interest on the Bonds then Outstanding. If an Event of Default shall have occurred, and if it shall have been requested so to do by the Holders of 51% in aggregate principal amount of Bonds Outstanding and if it shall have been indemnified as provided in the Indenture, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred upon it by the Indenture as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Bondholders. No remedy by the terms of the Indenture conferred upon or reserved to the Trustee (or to the Bondholders) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given under the Indenture or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or 18 acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient. No waiver of any default or Event of Default under the Indenture, whether by the Trustee or by the Bondholders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any rights or remedies consequent thereon. Rights and Remedies of Bondholders. No Holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of the Indenture or for the execution of any trust thereof or for the appointment of a receiver or any other remedy thereunder, unless a default has occurred of which the Trustee has been notified as provided in the Indenture, or of which by the Indenture it is deemed to have notice, nor unless such default shall have become an Event of Default and the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding shall have made written request to the Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers granted or to institute such action, suit, or proceeding in its own name, nor unless also they have offered to the Trustee indemnity as provided in the Indenture nor unless the Trustee shall thereafter fail or refuse to exercise the powers granted, or to institute such action, suit, or proceeding in its own name; and such notification, request and offer of indemnity are declared in every such case at the option of the Trustee to be conditions precedent to the execution of the powers and trusts of the Indenture, and to any action or cause of action for the enforcement of the Indenture or for the appointment of a receiver or for any other remedy thereunder; it being understood and intended that no one or more Holders of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of the Indenture by action of the Holder or Holders or to enforce any right under the Indenture except in the manner therein provided, and that all proceedings at law or in equity shall be instituted, held and maintained in the manner therein provided for the equal benefit of the Holders of all Bonds Outstanding thereunder. Nothing in the Indenture contained shall, however, affect or impair the right of any Bondholders to enforce the payment of the principal of and premium, if any, and interest on any Bonds at and after the maturity thereof, or the obligation of the City to pay the principal of and premium, if any, and interest on each of the Bonds issued under the Indenture to the respective Holders thereof at the time and place in said Bonds expressed. Supplemental Indentures Not Requiring Consent of Bondholders. The City and the Trustee may, from time to time and at any time, without the consent of or notice to the Bondholders, enter into Supplemental Indentures as follows: (a) to cure any formal defect, omission, inconsistency or ambiguity in the Indenture; (b) to grant to or confer or impose upon the Trustee for the benefit of the Bondholders any additional rights, remedies, powers, authority, security, liabilities or duties which may lawfully be granted, conferred or imposed and which are not contrary to or inconsistent with the Indenture as theretofore in effect, provided that no such additional liabilities or duties shall be imposed upon the Trustee without its consent; (c) to add to the covenants and agreements of, and limitations and restrictions upon, the City in the Indenture other covenants, agreements, limitations and restrictions to be observed by the City which are not contrary to or inconsistent with the Indenture as theretofore in effect; (d) to confirm, as further assurance, any pledge under, and the subjection to any claim, lien or pledge created or to be created by, the Indenture, of the Trust Estate or of any other moneys, securities or funds; (e) to comply with the requirements of the Trust Indenture Act of 1939, as from time to time amended; (f) to authorize the issuance and sale of one or more series of Additional Bonds; (g) to make such additions, deletions or modifications as may be necessary to assure compliance with Section 148(f) of the Code relating to required rebate to the United States or otherwise as may be necessary to assure exemption from federal income taxation of interest on the Bonds; or (h) to modify, alter, amend or supplement the Indenture in any other respect which is not materially adverse to the Bondholders and which does not involve a change described in clause (a), (b), (c), (d), (e) or (f) above and which, in the judgment of the Trustee, is not to the prejudice of the Trustee. Supplemental Indentures Requiring Consent of Bondholders. Subject to the terms and provisions contained in this paragraph, and not otherwise, the Holders of not less than 2/3 in aggregate principal amount of the Bonds 19 then Outstanding shall have the right, from time to time, anything contained in the Indenture to the contrary notwithstanding, to consent to and approve the execution by the City and the Trustee of such indenture or indentures supplemental to the Indenture as shall be deemed necessary and desirable by the City for the purpose of modifying, altering, amending, adding to, or rescinding, in any particular, any of the terms or provisions contained in the Indenture or in any Supplemental Indenture; provided, however, that nothing contained in the Indenture shall permit or be construed as permitting (a) an extension of the maturity (or mandatory redemption date) of the principal of or the interest on any Bond issued thereunder, or (b) a reduction in the principal amount of or redemption premium or rate of interest on any Bond issued thereunder, or (c) the creation of any lien on the Trust Estate or any part thereof, except as expressly permitted in the Indenture, or (d) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (e) a reduction in the aggregate principal amount of the Bonds required for consent to such Supplemental Indenture, or (f) depriving the Holder of any Bond then Outstanding of the lien created on the Trust Estate. If, at any time the City shall request the Trustee to enter into any Supplemental Indenture for any of the purposes described above, the Trustee shall, at the expense of the City, cause notice of the proposed execution of such Supplemental Indenture to be mailed by first class mail to each registered owner of the Bonds. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that copies thereof are on file at the principal office of the Trustee for inspection by Bondholders. The Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such Supplemental Indenture when consented to and approved as provided above. If the Holders of not less than 2/3 in aggregate principal amount of the Bonds Outstanding at the time of the execution of any such Supplemental Indenture shall have consented to and approved the execution thereof, no Holder of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the City from executing the same or from taking any action pursuant to the provisions thereof. The City has entered into an undertaking in the form of the Continuing Disclosure Agreement as required by the Indenture for the benefit of the Beneficial Owners of the Series 2015 Bonds to cause certain financial information to be sent to certain information repositories annually and to cause notice to be sent to such information repositories of certain specified events, pursuant to the requirements of Section (b)(5)(i) of Rule 15c2-12 of the Securities Exchange Act of 1934, as amended (the "Rule"). The City is a party to multiple continuing disclosure agreements for various bond issues of the City secured by different repayment sources. During the past five years, the City has identified certain instances in which filings were not made as required by such agreements. A listing of such instances, which may not be inclusive, is set forth below. With respect to the City's continuing disclosure obligations relating to certain series of bonds secured by sales and use tax receipts, certain notices of mandatory redemption from excess sales tax receipts were not posted. With respect to the City's continuing disclosure obligations relating to a series of bonds secured by receipts of a special hotel, motel and restaurant gross receipts tax (which bonds have now been refunded), the City's audited financial statements and supplemental financial data for fiscal years 2010 and 2011 were not posted on a timely basis (posted 7/30/14). Ratings changes with respect to the insurer of said bonds were not posted. With respect to the City's continuing disclosure obligations for certain bonds secured by water and sewer revenues which are no longer outstanding, audited financial statements and supplemental operating and financial data for fiscal years 2010 and 2011 were not posted on a timely basis. Said audited financial statements and supplemental operating and financial data were timely posted on EMMA for one issue of the City's water and sewer revenue bonds. A ratings upgrade with respect to one series of water and sewer revenue bonds (no longer outstanding) was not posted. Supplemental financial data for fiscal years 2010 and 2011 was timely filed but incomplete (remedied 6/27/13) for an issue of the City's tax increment finance bonds. The City makes no representation as to the materiality of the continuing disclosure delinquencies and omissions described above. 20 The City has undertaken steps to ensure future compliance with its continuing disclosure obligations. The Continuing Disclosure Agreement contains the following covenants and provisions: (a) The City covenants that it will disseminate, or will cause the Dissemination Agent to disseminate, the Annual Financial Information and the Audited Financial Statements (in the form and by the dates set forth in Exhibit I to the Continuing Disclosure Agreement) by delivering such Annual Financial Information and the Audited Financial Statements to the MSRB within 180 days of the completion of the City's fiscal year. The City is required to deliver or cause delivery of such information in Prescribed Form and by such time so that such entities receive the information by the dates specified. (b) If any part of the Annual Financial Information can no longer be generated because the operations to which it is related have been materially changed or discontinued, the City will disseminate or cause dissemination of a statement to such effect as part of its Annual Financial Information for the year in which such event first occurs. (c) If any amendment is made to the Continuing Disclosure Agreement, the Annual Financial Information for the year in which such amendment is made (or in any notice or supplement provided to the MSRB) shall contain a narrative description of the reasons for such amendment and its impact on the type of information being provided. (d) The City covenants that it will disseminate or cause dissemination in a timely manner, not in excess of ten (10) business days after the occurrence of the event, of Material Events Disclosure to the MSRB in Prescribed Form. Notwithstanding the foregoing, notice of optional or unscheduled redemption of any Series 2015 Bonds or defeasance of any Series 2015 Bonds need not be given under the Continuing Disclosure Agreement any earlier than the notice (if any) of such redemption or defeasance is given to the owners of the Series 2015 Bonds pursuant to the Indenture. The City is required to deliver or cause delivery of such Material Events Disclosure in the same manner as provided for Annual Financial Information and Audited Financial Statements. (e) The City shall give notice in a timely manner or shall cause such notice to be given by the Dissemination Agent, not in excess of ten (10) business days after the occurrence of the event, to the MSRB in Prescribed Form of any failure to provide Annual Financial Information Disclosure when the same is due. (f) The Continuing Disclosure Agreement has been executed in order to assist the Participating Underwriter in complying with the Rule; however, the Continuing Disclosure Agreement shall inure solely to the benefit of the City, the Dissemination Agent, if any, the Trustee and the Beneficial Owners of the Series 2015 Bonds, and shall create no rights in any other person or entity. In the event of a failure of the City to comply with any provision of the Continuing Disclosure Agreement, the Beneficial Owner of any Series 2015 Bond may seek specific performance by court order to cause the City to comply with its obligations under the Continuing Disclosure Agreement. A default under the Continuing Disclosure Agreement shall not be deemed an Event of Default under the Indenture or any other agreement, and the sole remedy under the Continuing Disclosure Agreement in the event of any failure of the City or the Dissemination Agent to comply with the Continuing Disclosure Agreement shall be an action to compel performance. (g) The Undertaking of the City pursuant to the Continuing Disclosure Agreement shall be terminated when the City shall no longer have any legal liability for any obligation on or relating to the repayment of the Series 2015 Bonds. The City shall give notice to the MSRB, or shall cause the Dissemination Agent to give such notice, in a timely manner and in Prescribed Form in such event. (h) The City and the Dissemination Agent may amend the Continuing Disclosure Agreement, and any provision of the Continuing Disclosure Agreement may be waived, if (i) the amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the City or type of business conducted; (ii) the Continuing Disclosure Agreement, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; (iii) the amendment or waiver does not materially impair the interests of the Beneficial Owners of the Series 2015 Bonds, as determined either by parties unaffiliated with the City (such as the Trustee) or by an approving vote of the Beneficial Owners of the Series 2015 Bonds holding a majority of the aggregate principal amount of the Series 2015 Bonds (excluding Series 2015 Bonds held by or on behalf of the City or its affiliates) pursuant to the terms of the Indenture at the time of the amendment; or (iv) the amendment or waiver is otherwise permitted by the Rule. 21 (i) The following terms used under this caption shall have the meanings set forth below: "Annual Financial Information" means receipts of the Sales and Use Taxes for the latest Fiscal Year and for the four previous Fiscal Years. "Annual Financial Information Disclosure" means the dissemination of disclosure concerning Annual Financial Information and the dissemination of the Audited Financial Statements as set forth in subsection (a) above. "Audited Financial Statements" means the audited consolidated financial statements of the City, prepared pursuant to generally accepted accounting standards and as described in Exhibit I to the Continuing Disclosure Agreement. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2015 Bonds (including persons holding Series 2015 Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Series 2015 Bonds for federal income tax purposes. "Commission" means the U.S. Securities and Exchange Commission. "Dissemination Agent" shall mean Simmons First Trust Company, N.A., acting in its capacity as a dissemination agent under the Continuing Disclosure Agreement, or any successor dissemination agent designated in writing by the City and which has filed with the Trustee a written acceptance of such designation. MSRB. Bonds: "EMMA" means the Electronic Municipal Market Access facility for municipal securities disclosure of the "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Material Event" means the occurrence of any of the following events with respect to the Series 2015 (i) Principal and interest payment delinquencies; (ii) Nonpayment -related defaults, if material; (iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; (vii) Modifications to rights of security holders, if material; (viii) Bond calls, if material, and tender offers; (ix) Defeasances; (x) Release, substitution or sale of property securing repayment of the securities, if material; (xi) Rating changes; (xii) Bankruptcy, insolvency, receivership or similar event of the City; (xiii) The consummation of a merger, consolidation or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material. "Material Events Disclosure" means dissemination of a notice of a Material Event as set forth in subsection (d) above. 22 "MSRB" shall mean the Municipal Securities Rulemaking Board established in accordance with the provisions of Section 1513(b)(1) of the 1934 Act. "Participating Underwriter" means each broker, dealer or municipal securities dealer acting as an underwriter in any primary offering of the Series 2015 Bonds. "Prescribed Form" means, with regard to the filing of Annual Financial Information, Audited Financial Statements and notices of Material Events with the MSRB at www.emma.msrb.org (or such other address or addresses as the MSRB may from time to time specify), such electronic format, accompanied by such identifying information, as shall have been prescribed by the MSRB and which shall be in effect on the date of filing of such information. "Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission ("SEC") under the Exchange Act, as the same may be amended from time to time. "State" means the State of Arkansas. "Undertaking" means the obligations of the City pursuant to subsections (a) and (d) above. Under a bond purchase agreement entered into by and among the City and Stephens Inc. (the "Underwriter"), the Series 2015 Bonds are being purchased at a purchase price of $ (representing the stated principal amount of the Series 2015 Bonds [less][plus] a net reoffering [discount][premium] of $ and less an underwriting discount of $ ). The bond purchase agreement provides that the Underwriter will purchase all of the Series 2015 Bonds if any are purchased. The obligation of the Underwriter to accept delivery of the Series 2015 Bonds is subject to various conditions contained in the bond purchase agreement, including the absence of pending or threatened litigation questioning the validity of the Series 2015 Bonds or any proceedings in connection with the issuance thereof, and the absence of material adverse changes in the financial condition of the City. Mark C. Doramus, Chief Financial Officer of the Underwriter, serves on the Board of Directors of the Trustee. The Underwriter intends to offer the Series 2015 Bonds to the public initially at the offering prices as set forth on the inside cover page of this Official Statement, which offering prices (or bond yields establishing such offering prices) may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the Series 2015 Bonds to the public, and may offer the Series 2015 Bonds to such dealers and other underwriters at a price below the public offering price. The City has agreed to indemnify the Underwriter against certain civil liabilities in connection with the offering and sale of the Series 2015 Bonds, including certain liabilities under federal securities laws. TAX MATTERS Federal Income Taxes. In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions, interest on the Series 2015 Bonds is excluded from the gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. The opinion described in the preceding sentence assumes the accuracy of certain representations and compliance by the City with covenants designed to satisfy the requirements of the Code that must be met subsequent to the issuance of the Series 2015 Bonds. Failure to comply with such requirements could cause interest on the Series 2015 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2015 Bonds. The City has covenanted to comply with such requirements. Notwithstanding Bond Counsel's opinion that interest on the Series 2015 Bonds is not a specific preference item for purposes of the federal alternative minimum tax, such interest will be included in adjusted current earnings of certain corporations, and such corporations are required to include in the calculation of alternative minimum taxable income 75% of the excess of such corporation's adjusted current earnings over their alternative minimum taxable income (determined without regard to such adjustment and prior to reduction for certain net operating losses). 23 Bank Qualification. The City has represented that it does not reasonably anticipate issuing greater than $10,000,000 of tax-exempt obligations in calendar year 2015 (excluding certain private activity and refunding bonds) and that it has designated the Series 2015 Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code. Accordingly, Bond Counsel is of the opinion that in the case of certain banks, thrift institutions or other financial institutions owning the Series 2015 Bonds, a deduction is allowed for 80% of that portion of such institutions' interest expense allocable to interest on the Series 2015 Bonds. Bond Counsel has expressed no opinion with respect to any deduction for federal income tax purposes of interest incurred or continued by a holder of the Series 2015 Bonds or a related person to purchase or carry the Series 2015 Bonds Original Issue Discount. The Series 2015 Bonds maturing November 1, 20_ and 20_ (the "Discount Bonds") are being sold at an original issue discount. The difference between the initial public offering prices of such Discount Bonds and their stated amounts to be paid at maturity constitutes original issue discount treated in the same manner for federal income tax purposes as interest, as described above. The amount of original issue discount which is treated as having accrued with respect to a Discount Bond is added to the cost basis of the owner in determining, for federal income tax purposes, gain or loss upon disposition of such Discount Bond (including its sale, redemption or payment at maturity). Amounts received upon disposition of such Discount Bond which are attributable to accrued original issue discount will be treated as tax-exempt interest, rather than as taxable gain, for federal income tax purposes. Original issue discount is treated as compounding semiannually, at a rate determined by reference to the yield to maturity of each individual Discount Bond, on days which are determined by reference to the maturity date of such Discount Bond. The amount treated as original issue discount on such Discount Bond for a particular semiannual accrual period is equal to the product of (i) the yield to maturity for such Discount Bond (determined by compounding at the close of each accrual period) and (ii) the amount which would have been the tax basis of such Discount Bond at the beginning of any particular accrual period if held by the original purchaser, less the amount of any interest payable for such Discount Bond during the accrual period. The tax basis is determined by adding to the initial public offering price on such Discount Bond the sum of the amounts which have been treated as original issue discount for such purposes during all prior periods. If such Discount Bond is sold between semiannual compounding dates, original issue discount which would have been accrued for that semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period. Owners of Discount Bonds should consult their tax advisors with respect to the determination and treatment of original issue discount accrued as of any date and with respect to the state and local tax consequences of owning a Discount Bond. Original Issue Premium. The Series 2015 Bonds maturing November 1, 20_ and 20_ (the "Premium Bonds") are being sold at a premium. An amount equal to the excess of the issue price of a Premium Bond over its stated redemption price at maturity constitutes premium on such Premium Bond. An initial purchaser of a Premium Bond must amortize any premium over such Premium Bond's term using constant yield principles, based on the purchaser's yield to maturity (or, in the case of Premium Bonds callable prior to their maturity, by amortizing the premium to the call date, based on the purchaser's yield to the call date and giving effect to the call premium). As premium is amortized, the amount of the amortization offsets a corresponding amount of interest for the period and the purchaser's basis in such Premium Bond is reduced by a corresponding amount resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Premium Bond prior to its maturity. Even though the purchaser's basis may be reduced, no federal income tax deduction is allowed. Purchasers of the Premium Bonds should consult their tax advisors with respect to the determination and treatment of premium for federal income tax purposes and with respect to the state and local tax consequences of owning a Premium Bond. Bond Counsel has expressed no opinion regarding other federal tax consequences arising with respect to the Series 2015 Bonds. The accrual or receipt of interest on the Series 2015 Bonds may otherwise affect the federal income tax liability of the owners of the Series 2015 Bonds. The extent of these other tax consequences will depend upon such owner's particular tax status and other items of income or deduction. Bond Counsel has expressed no opinion regarding any such consequences. Purchasers of the Series 2015 Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property or 24 casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of Social Security or Railroad Retirement benefits, taxpayers otherwise entitled to claim the earned income credit, or taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, should consult their tax advisors as to the tax consequences of purchasing or owning the Series 2015 Bonds. Backup Withholding. As a result of the enactment of the Tax Increase Prevention and Reconciliation Act of 2005, interest on tax-exempt obligations such as the Series 2015 Bonds is subject to information reporting in a manner similar to interest paid on taxable obligations. Backup withholding may be imposed on payments made after March 31, 2007 to any bondholder who fails to provide certain required information, including an accurate taxpayer identification number, to any person required to collect such information pursuant to Section 6049 of the Code. The new reporting requirement does not in and of itself affect or alter the excludability of interest on the Series 2015 Bonds from gross income for federal income purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations. State Taxes. Bond Counsel is of the opinion that, under existing law, the interest on the Series 2015 Bonds is exempt from all state, county and municipal taxes in the State of Arkansas. Changes in Federal and State Tax Law. From time to time, there are legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to above or adversely affect the market value of the Series 2015 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value of the Series 2015 Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular lawsuit will be resolved, or whether the Series 2015 Bonds or the market value thereof would be impacted thereby. Purchasers of the Series 2015 Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial authorities as of the date of issuance and delivery of the Series 2015 Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending legislation, regulatory initiatives or litigation. Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"), has assigned a rating of "AA-" (stable outlook) to the Series 2015 Bonds. Such rating reflects only the view of S&P at the time such rating was given. An explanation of the significance of the rating may be obtained from S&P. There is no assurance that such rating will continue for any given period of time or that the rating will not be revised downward or withdrawn entirely by S&P if in its judgment circumstances so warrant. Any downward revision or withdrawal of the rating may have an adverse effect on the market price of the Series 2015 Bonds. Neither the City nor the Underwriter has undertaken any responsibility subsequent to the issuance of the Series 2015 Bonds to assure the maintenance of the rating or to oppose any revision or withdrawal of the rating. No application has been made to any Rating Agency other than S&P for a rating on the Series 2015 Bonds. LEGAL MATTERS Legal Opinions. Legal matters incident to the authorization and issuance of the Series 2015 Bonds are subject to the unqualified approving opinion of Kutak Rock LLP, Little Rock, Arkansas, Bond Counsel, a copy of whose approving opinion will be delivered with the Series 2015 Bonds and a form of which is attached hereto as Appendix A. Certain legal matters will be passed upon for the City by its counsel, Kit Williams, Esq., City Attorney. Litigation. There is no litigation pending seeking to restrain or enjoin the issuance or delivery of the Series 2015 Bonds or questioning or affecting the legality of the Series 2015 Bonds or the proceedings and authority under which the Series 2015 Bonds are to be issued, or questioning the right of the City to issue the Series 2015 Bonds. There is no action, suit or proceeding known to be pending or threatened, restraining or enjoining the City in any way which could have a material adverse effect on the Sales and Use Taxes or the City's ability to pay debt service with respect to the Series 2015 Bonds. 25 Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or owners of any of the Series 2015 Bonds. The information contained in this Official Statement has been taken from sources considered to be reliable, but is not guaranteed. To the best of the knowledge of the City, this Official Statement does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated herein, or necessary to make the statements herein, in light of the circumstances under which they were made, not misleading. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] The execution and delivery of this Official Statement has been duly authorized by the City of Fayetteville, Arkansas. CITY OF FAYETTEVILLE, ARKANSAS M. Mayor 27 Proposed Form of Bond Counsel Opinion Upon delivery of the Series 2015 Bonds in definitive form, Kutak Rock LLP, Little Rock, Arkansas, proposes to deliver its approving opinion in substantially the following form: November , 2015 City of Fayetteville, Arkansas Fayetteville, Arkansas Simmons First Trust Company, N.A., as Trustee Pine Bluff, Arkansas Stephens Inc. Fayetteville, Arkansas Assured Guaranty Municipal Corp. New York, New York $9,000,000* City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2015 Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance and sale by the City of Fayetteville, Arkansas (the "City"), a political subdivision of the State of Arkansas, of its $9,000,000* Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"). The Bonds are being issued pursuant to the provisions of the Constitution and laws of the State of Arkansas, including, particularly, Amendment 62 and Arkansas Code Annotated (1998 Repl. & Supp. 2015) §§14- 164-301 et seq. (as from time to time amended, the "Act"), pursuant to Ordinance No. 5803 of the City, duly adopted and approved on October 6, 2015 (the "Authorizing Ordinance"), and pursuant to a Trust Indenture dated as of November 1, 2006, as amended and supplemented by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as amended and supplemented, the "Indenture"), by and between the City and Simmons First Trust Company, N.A., as trustee (the "Trustee"). Reference is hereby made to the Indenture and to all indentures supplemental thereto for the provisions, among others, with respect to the conditions for the issuance of parity indebtedness by the City, with respect to the nature and extent of the security for the Bonds, the rights, duties and obligations of the City, the Trustee and the Holders of the Bonds, and the terms upon which the Bonds are issued and secured. Reference is made to an opinion of even date herewith of Kit Williams, Esq., City Attorney, a copy of which is on file with the Trustee, with respect, among other matters, to the status and valid existence of the City, the power of the City to adopt the Election Ordinance and the Authorizing Ordinance and to enter into and perform its obligations under the Indenture, the valid adoption of the Election Ordinance and the Authorizing Ordinance, and the due authorization, execution and delivery of the Indenture by the City, and with respect to the Indenture being enforceable upon the City. We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the City contained in the Election Ordinance, the Authorizing Ordinance and the Indenture and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Preliminary; subject to change. A-1 Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The City is duly created and validly existing as a municipal corporation of the State of Arkansas. Pursuant to the Constitution and laws of the State of Arkansas, including, particularly, Amendment 62 and the Act, the City is empowered to adopt the Election Ordinance and the Authorizing Ordinance, to execute and deliver the Indenture, to perform the agreements on its part contained therein, and to issue the Bonds. 2. The Authorizing Ordinance has been duly adopted by the City and constitutes a valid and binding obligation of the City enforceable upon the City in accordance with its terms. 3. The Indenture has been duly authorized, executed and delivered by the City and is a valid and binding obligation of the City enforceable upon the City in accordance with its terms. 4. The Bonds are payable from and security by a valid lien on and pledge of the Trust Estate (as defined in the Indenture), including receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax (each as defined in the Indenture), in the manner and to the extent provided in the Indenture. Such lien and pledge are made on a parity basis with the existing lien and pledge of the Trust Estate securing (i) the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A, (ii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2007, (iii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2009, and (iv) the City's Sales and Use Tax Capital Improvement Bonds, Series 2013. The City is duly authorized to pledge such Trust Estate, and no further action on the part of the City or any other party is required to perfect the same or the interest of the owners of the Bonds therein. 5. The 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax have been validly adopted in accordance with the Constitution and laws of the State of Arkansas, including Amendment 62 and the Act, and may be validly pledged to secure the Bonds. Levy and collection of the 0.25% Sales and Use Tax commenced as of January 1, 2007, and levy and collection of the 0.75% Sales and Use Tax commenced as of August 1, 2014. 6. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. The opinions described in the preceding sentences assume the accuracy of certain representations and compliance by the City with covenants designed to satisfy the requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be met subsequent to the issuance of the Bonds. Failure to comply with certain of such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City has covenanted to comply with such requirements. The Bonds are "qualified tax- exempt obligations" within the meaning of Section 265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for eighty percent (80%) of that portion of such financial institution's interest expense allocable to interest on the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 7. The interest on the Bonds is exempt from all state, county and municipal taxes in the State of Arkansas. 8. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Indenture is not required to be qualified under the Trust Indenture Act of 1939, as amended, in connection with the offer and sale of the Bonds. It is to be understood that the rights of the registered owners of the Bonds and the enforceability of the Bonds, the Authorizing Ordinance and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Very truly yours, A-2 APPENDIX ►,, The following are definitions of certain terms used in this Official Statement: "Account" means an Account established by Article V of the Indenture. "Act" means the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2015) Sections 14-164-301 et seq., as from time to time amended. "Additional Bonds" means Bonds in addition to the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds which are issued under the provisions of the Indenture. "Amendment 62" means Amendment No. 62 to the Constitution of Arkansas, approved by the voters of the State on November 6, 1984. "Annual Debt Service" means, with respect to all or any particular amount of Bonds, the Debt Service for any particular Fiscal Year required to be paid or set aside during such Fiscal Year, less the amount of such payment which is provided from the proceeds of Bonds or from sources other than Sales and Use Tax receipts. "AGM" means Assured Guaranty Municipal Corp., a New York stock insurance company, or any successor thereto or assignee thereof. "Authorized Representative" means either the Mayor or the Finance Director of the City and such additional persons as from time to time may be designated to act on behalf of the City by a Certificate furnished to the Trustee containing the specimen signature thereof and executed on behalf of the City by its Mayor. "Authorizing Ordinance" means, collectively, (i) Ordinance No. 4936, adopted by the City on October 3, 2006, which authorized the issuance of the Series 2006A Bonds pursuant to the Indenture, (ii) Ordinance No. 5054, adopted by the City on August 23, 2007, which authorized the issuance of the Series 2007 Bonds pursuant to the Indenture, (iii) Ordinance No. 5277, adopted by the City on October 6, 2009, which authorized the issuance of the Series 2009 Bonds pursuant to the Indenture, (iv) Ordinance No. 5619, adopted by the City on September 17, 2013, which authorized the issuance of the Series 2013 Bonds pursuant to the Indenture, and (v) Ordinance No. 5803, adopted by the City on October 6, 2015, which authorized the issuance of the Series 2015 Bonds pursuant to the Indenture. "Beneficial Owner" means any Person who acquires beneficial ownership interest in a Bond held by the Securities Depository. In determining the Beneficial Owner of any Bond, the Trustee may rely exclusively upon written representations made and information given to the Trustee by the Securities Depository or its Participants with respect to any Bond held by the Securities Depository in which a beneficial ownership interest is claimed. "Bond Counsel" means any firm of nationally recognized municipal bond counsel selected by the City and acceptable to the Trustee. "Bond Fund" means the fund by that name created and established in the Indenture. "Bonds" means the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and all Additional Bonds issued by the City pursuant to the Indenture. "Book -Entry System" means the book -entry system maintained by the Securities Depository and described in the Indenture. "Business Day" means any day other than (a) a Saturday or Sunday, (b) a day on which commercial banks in New York, New York, or the city in which the corporate trust office of the Trustee is located are authorized or required by law or executive order to close, or (c) a day on which the New York Stock Exchange or the Securities Depository is closed. "Certificate" means a document signed by an Authorized Representative of the City attesting to or acknowledging the circumstances or other matters therein stated. "City" means the City of Fayetteville, Arkansas, a municipality and political subdivision under the laws of the State of Arkansas. "City Clerk" means the person holding the office and performing the duties of the City Clerk of the City. "Closing Date" means, with respect to any series of Bonds, the date upon which there is an exchange of such series of Bonds for the proceeds representing the purchase price for such series of Bonds by the Original Purchaser or Purchasers thereof. "Code" means the Internal Revenue Code of 1986, as from time to time amended, and applicable regulations issued or proposed thereunder. "Completion Date" means the date upon which a particular Project (or portion thereof) is first ready for normal continuous operation, as determined by a Qualified Engineer. "Continuing Disclosure Agreement" means the Continuing Disclosure Agreement between the City and the Trustee, dated the date of issuance and delivery of the Series 2015 Bonds, as originally executed and as amended from time to time in accordance with the terms thereof. "Costs of Issuance" means all items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale and issuance of the Bonds, including, but not limited to, underwriting discounts, fees and expenses, election expenses, publication expenses, expenses of printing, reproducing, filing and recording documents, initial fees and charges of the Trustee and any Paying Agent, fees and expenses for legal, accounting and other professional services, rating fees, costs of securing any credit enhancement for the Bonds, costs of execution, transportation and safekeeping of the Bonds, and other costs, charges and fees incurred in connection with the foregoing. "Costs of Issuance Fund" means the fund by that name created and established in the Indenture. "Debt Service" means, with respect to all or any particular amount of Bonds, the total as of any particular date of computation and for any particular period of the scheduled amount of interest and amortization of principal payable on such Bonds, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. "Debt Service Reserve Fund" means the fund by that name created and established in the Indenture. "Election Ordinance" means Ordinance No. 4891, adopted by the City Council on June 20, 2006, pursuant to which there was submitted to the qualified electors of the City the four questions relating to the issuance of the Bonds. "Event of Default" means any event of default specified in Section 801 of the Indenture. "Fiscal Year" means the 12 -month period used, at any time, by the City for accounting purposes, which may be the calendar year. "Fund" means a fund established by the Indenture. "Government Securities" means (a) direct obligations (other than an obligation subject to variation in principal repayment) of the United States of America, (b) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of America, (c) obligations fully and unconditionally U uaranteed as to timely payment of principal and interest by any agency or instrumentality of the United States of America when such obligations are backed by the full faith and credit of the United States of America, or (d) evidences of ownership of proportionate interests in future interest and principal payments on obligations described above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying government obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated. "Holder" or "Bondholder" or "owner of the Bonds" means the registered owner of any Bond. "Indenture" means the Trust Indenture dated as of November 1, 2006, as amended and supplemented by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015, each by and between the City and the Trustee, pursuant to which the Bonds are issued, and any amendments and supplements thereto. IM "Investment Securities" means, if and to the extent the same are at the time legal for investment of Funds and Accounts held under the Indenture: (a) cash (fully insured by the Federal Deposit Insurance Corporation); (b) Government Securities; (c) Federal Housing Administration debentures; (d) The obligations of the following government-sponsored agencies which are not backed by the full faith and credit of the United States of America: 1) Federal Home Loan Mortgage Corporation (FHLMC) senior debt obligations and Participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); 2) Farm Credit System (formerly Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) consolidated system -wide bonds and notes; 3) Federal Home Loan Banks (FHL Banks) consolidated debt obligations; and 4) Federal National Mortgage Association (FNMA) senior debt obligations and mortgage-backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); (e) Unsecured certificates of deposit, time deposits, and bankers' acceptances (having maturities of not more than 365 days) of any bank the short-term obligations of which are rated "A-1+" or better by S&P and "Prime -I" by Moody's; (f) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation, in banks which have capital and surplus of at least $15 million; (g) Commercial paper (having original maturities of not more than 270 days) rated "A-1+" by S&P and "Prime -1" by Moody's; (h) Money market funds rated "Aam" or "AAm-G" by S&P, or better and if rated by Moody's rated "Aa2" or better; (i) "State Obligations", which means: 1) Direct general obligations of any state of the United States of America or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated at least "A3" by Moody's and at least "A-" by S&P, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated; 2) Direct general short-term obligations of any state agency or subdivision or agency thereof described in (a) above and rated "A -W' by S&P and "MIG -1" by Moody's; and 3) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state or state agency described in (b) above and rated "AA-" or better by S&P and "Aa3" or better by Moody's; 0) Pre -refunded municipal obligations rated "AAA" by S&P and "Aaa" by Moody's meeting the following requirements: 1) the municipal obligations are (1) not subject to redemption prior to maturity or (2) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions; 2) the municipal obligations are secured by cash or U.S. Treasury Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations; 3) the principal of and interest on the U.S. Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations ("Verification Report"); 4) the cash or U.S. Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations; 5) no substitution of a U.S. Treasury Obligation shall be permitted except with another U.S. Treasury Obligation and upon delivery of a new Verification Report; and 6) the cash or U.S. Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent; and (k) the Reserve Fund Insurance Policy. "Mayor" means the person holding the office and performing the duties of the Mayor of the City. "Original Purchaser" means the first purchaser(s) of a series of the Bonds from the City. "Outstanding" means, as of any date of computation, Bonds theretofore or thereupon being delivered under the Indenture, except: (a) Bonds cancelled at or prior to such date or delivered to or acquired by the Trustee at or prior to such date for cancellation; (b) Bonds deemed to be paid in accordance with Article VII of the Indenture; and (c) Bonds in lieu of or in exchange or substitution for which other Bonds shall have been authenticated and delivered pursuant to the Indenture. "Participants" means those financial institutions for whom the Securities Depository effects book -entry transfers and pledges of securities deposited with the Securities Depository in the Book -Entry System, as such listing of Participants exists at the time of such reference. "Paying Agent" means any bank or trust company named by the City as the place at which the principal of and premium, if any, and interest on the Bonds are payable. "Person" means any natural person, firm, association, corporation, limited liability company, partnership, joint stock company, joint venture, trust, unincorporated organization or firm, or a government or any agency or political subdivision thereof or other public body. "Projects" means, collectively, the Street Project, the Trail Project and the Wastewater Project. "Project Costs" means, to the extent permitted by the Act or other applicable laws, with respect to the Projects, all costs of planning, designing, purchasing, acquiring, constructing, improving, enlarging, extending, repairing, financing and placing in operation, including obtaining governmental approvals, certificates, permits and licenses with respect thereto, heretofore or hereafter paid or incurred by or on behalf of the City and which shall include, but shall not be limited to: (a) interest accruing in whole or in part on the Bonds prior to and during construction of the Projects, including all amounts required by the Indenture to be paid from the proceeds of the Bonds into the Bond Fund; (b) preliminary investigation and development costs, engineering fees, contractors' fees, labor costs, the cost of materials, equipment, utility services and supplies, costs of obtaining permits, licenses and approvals, costs of real property, insurance premiums, legal and financing fees and costs, administrative and general costs, and all other costs properly allocable to the acquisition, construction and equipping of the Projects and placing the same in operation; (c) all costs relating to injury and damage claims arising out of the acquisition, construction or equipping of the Projects; (d) all other costs incurred in connection with, and properly allocable to, the acquisition, construction and equipping of the Projects; and (e) amounts to pay or reimburse the City or any City fund for expenses of the City incident and properly allocable to such planning, designing, purchasing, acquiring, constructing, improving, enlarging, extending, repairing, financing and placing in operation of the Projects. "Project Fund" means the fund by that name created and established in the Indenture. "Qualified Engineer" means an independent consulting engineer or firm of independent consulting engineers not in the regular employ of the City. "Rating Agency" means Moody's Investors Service, Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc., or Fitch, Inc., and their respective successors and assigns. If any such corporation ceases to act as a securities rating agency, the City may appoint any nationally recognized securities rating agency as a replacement. "Rebate Fund" means the fund by that name created and established in the Indenture. "Record Date" means the fifteenth day of the calendar month preceding the calendar month in which an interest payment date on the Bonds occurs. "Redemption Fund" means the fund by that name established in the Indenture. "Requisition" means a written requisition of the City, consecutively numbered, signed by an Authorized Representative including, without limitation, the following with respect to each payment requested: (i) the name of the Person or party to whom payment is to be made and the purpose of the payment; (ii) the amount to be paid thereunder; (iii) that such amount has not been previously paid by the City and is justly due and owing to the Person(s) named therein as a proper payment or reimbursement of a Project Cost; and (iv) that no Event of Default exists under the Indenture and that, to the knowledge of the Authorized Representative, no event has occurred and continues which with notice or lapse of time or both would constitute an Event of Default under the Indenture. "Reserve Requirement" means, with respect to each series of Bonds, an amount equal to 5% of the original principal amount of such series of Bonds. For all purposes of the Indenture, the Reserve Requirement may be satisfied by the deposit of cash or by the deposit of Investment Securities, including the Reserve Fund Insurance Policy. "Revenue Fund" means the fund by that name created and established in the Indenture. "Reserve Fund Insurance Policy" means the municipal bond debt service reserve insurance policy issued by AGM and deposited in the Debt Service Reserve Fund. "0.25% Sales and Use Tax" means the one-quarter of one percent (0.25%) city-wide sales and use tax authorized under the Act which has been levied within the City pursuant to the Election Ordinance and approved by the voters of the City, the collection of which tax commenced on January 1, 2007. "0.75% Sales and Use Tax" means the three-quarters of one percent (0.75%) city-wide sales and use tax authorized under the Act which has been levied within the City pursuant to the Election Ordinance and approved by the voters of the City, the collection of which tax will commenced as of August 1, 2014. "Sales and Use Taxes" mean, collectively, the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax. Receipts of the Sales and Use Taxes are pledged to the payment of Debt Service on the Bonds. "Securities Depository" means The Depository Trust Company, New York, New York, or its nominee, and its successors and assigns, or any other depository institution appointed by the City or the Trustee to act as depository for the Bonds in connection with the Book -Entry System. "Series 2006A Bonds" means the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A, issued in the original aggregate principal amount of $50,000,000. "Series 2007 Bonds" means the City's Sales and Use Tax Capital Improvement Bonds, Series 2007, issued in the original aggregate principal amount of $14,340,000. "Series 2009 Bonds" means the City's Sales and Use Tax Capital Improvement Bonds, Series 2009, issued in the original aggregate principal amount of $11,250,000. "Series 2013 Bonds" means the City's Sales and Use Tax Capital Improvement Bonds, Series 2013, issued in the original aggregate principal amount of $22,750,000. "Series 2015 Bonds" means the City's Sales and Use Tax Capital Improvement Bonds, Series 2015, issued in the original aggregate principal amount of $9,000,000*. "State" means the State of Arkansas. "Street Project" means the acquisition, construction, reconstruction, repair, straightening and widening of certain City streets and related improvements, as described in the Election Ordinance and eligible for financing with the proceeds of the Bonds in aggregate principal amount not to exceed $65,900,000. "Supplemental Indenture" means any indenture supplemental to or amendatory of the Indenture. "Surplus Tax Receipts" shall have the meaning ascribed to such term in Section 503 of the Indenture. "Tax Regulatory Agreement" means that Tax Regulatory Agreement of the City relating to maintenance of the excludability of interest on the Series 2015 Bonds from gross income for federal income tax purposes, delivered in connection with the issuance of the Series 2015 Bonds. "Trail Project" means the acquisition, construction and equipping of certain City trail system improvements, as described in the Election Ordinance and eligible for financing with the proceeds of the Bonds in aggregate principal amount not to exceed $2,100,000. "Trustee" means the banking corporation or association designated as Trustee in the Indenture, and its successor or successors as such Trustee. The original Trustee is Simmons First Trust Company, N.A. "Trust Estate" means the property described in the granting clauses of the Indenture. "Wastewater Project" means the acquisition, construction, reconstruction, extension, improving and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities, as described in the Election Ordinance and eligible for financing with the proceeds of the Bonds in aggregate principal amount not to exceed $39,340,000. * Preliminary; subject to change. Iwo THE SALES AND USE TAX Sales Tax. The sales tax portion of the Sales and Use Taxes is generally levied upon the gross proceeds and receipts derived from all sales to any Person within the City of the following: (a) Tangible personal property; (b) Natural or artificial gas, electricity, water, ice, steam, or any other utility or public service except transportation services, sewer services and sanitation or garbage collection services; (c) (i) Service by telephone, telecommunications and telegraph companies to subscribers or users, including transmission of messages or images, whether local or long distance, including all service, installation, construction and rental charges having any connection with transmission of any message or image; (ii) Service of furnishing rooms, suites, condominiums, townhouses, rental houses or other accommodations by hotels, apartment hotels, lodging houses, tourist camps, tourist courts, property management companies, or any other provider of accommodations to transient guests; (iii) Service of cable television, community antenna television, and any and all other distribution of television, video, or radio services with or without the use of wires provided to subscribers, paying customers or users, including installation, service, rental, repair and other charges having any connection with the providing of the said services; provided, however, sales taxes are not levied on services purchased by radio or television providers for use in providing their services; (iv) Service or alteration, addition, cleaning, refinishing, replacement and repair of motor vehicles, aircraft, farm machinery and implements, motors of all kinds, tires and batteries, boats, electrical appliances and devices, furniture, rugs, upholstery, household appliances, televisions and radios, jewelry, watches and clocks, engineering instruments, medical and surgical instruments, machinery of all kinds, bicycles, office machines and equipment, shoes, tin and sheet metal, mechanical tools and shop equipment; however, the tax does not apply to (A) coin operated car washes, (B) the maintenance or repair of railroad parts, railroad cars and equipment brought into the City solely and exclusively for the purpose of being repaired, refurbished, modified, or converted within the City, (C) the service of alteration, addition, cleaning, refinishing, replacement or repair of commercial jet aircraft or commercial jet aircraft components or subcomponents, (D) the repair or remanufacture of industrial metal rollers or platens that have a remanufactured non-metallic material covering on all or a part of the roller or platen surface, or (E) the alteration, addition, cleaning, refinishing, replacement or repair of non-mechanical, passive or manually operated components of buildings or other improvements or structures affixed to real estate; (v) Service of providing transportation or delivery of money, property or valuables by armored car; service of.providing cleaning or janitorial work; service of pool cleaning and servicing; pager services; telephone answering services; landscaping and non-residential lawn care services; service of parking a motor vehicle or allowing a motor vehicle to be parked; service of storing a motor vehicle; service of storing furs; service of providing indoor tanning at a tanning salon; wrecker and towing services; service of collecting and disposing of solid waste; parking lot and gutter cleaning services; dry cleaning and laundry services; industrial laundry services; mini warehouse and self storage rental services; body piercing, tattooing and electrolysis services; pest control services; security and alarm monitoring services; boat storage and docking fees; furnishing campground spaces or trailer spaces at public or privately owned campgrounds, except for federal campgrounds, on less than a month-to-month basis; locksmith services; pet grooming and kennel services; and the new installation and replacement labor for hardwood, vinyl, ceramic tile or other types of flooring; and (vi) Initial installation services relating to motor vehicles, aircraft, farm machinery and implements, motors of all kinds, tires and batteries, boats, electrical appliances and devices, furniture, rugs, C-1 flooring, upholstery, household appliances, television and radio, jewelry, watches and clocks, engineering instruments, medical and surgical instruments, machinery of all kinds, bicycles, office machines and equipment, shoes, tin and sheet metal, mechanical tools and shop equipment; provided, however, if the item being installed is specifically exempted from the imposition of the sales tax, the service of installation will also be exempt; (d) Printing of all kinds, types and characters, including the service of overprinting, and photography of all kinds; (e) Tickets or admissions to places of amusement, to athletic, entertainment, recreational events, or fees for the privilege of having access to or the use of amusement, entertainment, athletic or recreational facilities, including free or complimentary passes and tickets, admissions, dues or fees; (f) Dues and fees to health spas, health clubs and fitness clubs; dues and fees to private clubs which hold any permit from the Alcoholic Beverage Control Board allowing the sale, dispensing or serving of alcoholic beverages of any kind on the premises; (g) Lease or rental of motor vehicles, other than diesel trucks rented for residential moving or commercial shipping or farm machinery rented or leased for a commercial purpose, for a period less than 30 days, or purchase of motor vehicles for rental or lease regardless of the length of the rental or lease; (h) Orders by telegraph, telephone or other means of communication transmitted by florists; (i) Sales of beer, wine, liquor or any intoxicating beverages; 0) Proceeds derived from the operation or use of coin-operated pinball machines, coin- operated music machines, coin-operated mechanical games, and similar devices; (k) Contracts, including service contracts, maintenance agreements and extended warranties, which in whole or in part provide for the future performance of or payment for services which are subject to the sales tax; (1) Receipts derived from the retail sale of any device used in playing bingo and any charge for admittance to facilities or for the right to play bingo or other games of chance regardless of whether such activity might otherwise be permitted by law; and (m) The first $50,000 of the purchase price from the sale of machinery or equipment and related attachments that are sold to or used by a person engaged primarily in the harvesting of timber. Exemptions from Sales Tax. As summarized below, several types of transactions have been exempted from the sales tax by the General Assembly of the State. Some of the current exemptions include the sale of: (a) New or used house trailers, mobile homes, aircraft, motor vehicles, trailers -or semi -trailers and a used house trailer, mobile home, aircraft, motor vehicle, trailer or semi -trailer is taken as a credit or part payment of the purchase price, when the total consideration is less than certain set dollar amounts ($4,000 in the case of new or used motor vehicles, trailers or semitrailers); (b) Aircraft held for resale and used for rental or charter, whether by a business or an individual for a period not to exceed one year from the date of purchase of aircraft; (c) Tangible personal property or services by churches, except where such organizations may be engaged in business for profit; (d) Tangible personal property, or service by charitable organizations, except where such organizations may be engaged in business for profit; (e) Food in public, common, high school or college cafeterias and lunchrooms operated primarily for teachers and pupils, and not operated primarily for the public or for profit; (f) Newspapers; (g) Property or services to the United States Government; motor vehicles and adaptive equipment to disabled veterans who have purchased said vehicles or equipment with financial assistance of the Veterans Administration; tangible personal property to the Salvation Army, Heifer Project International, Inc., Habitat for C-2 Humanities, the Boy Scouts of America, the Girl Scouts of America or any of the Scout Councils in the State; tangible personal property or service to the Boys Clubs of America or any local councils or organizations of the Boys Clubs of America, the Girls Clubs of America or any local councils or organizations of the Girls Clubs of America, to the Poets' Roundtable of Arkansas, to 4-H Clubs and FFA Clubs, to the Arkansas 4-H Foundation, to the Arkansas Future Farmers of America Foundation and the Arkansas Future Farmers of America Association, to qualified museums and to the Arkansas Symphony Orchestra, Inc.; (h) Gasoline or motor vehicle fuel on which the motor vehicle fuel or gasoline tax has been paid to the State and special fuel or petroleum products sold for consumption by vessels, barges and other commercial watercraft and railroads; (i) Property resales to persons regularly engaged in the business of reselling the articles purchased; 0) Advertising space in newspapers and publications and billboard advertising services; (k) Gate admissions at State, district, county or township fairs or at any rodeo if the receipts derived from gate admissions to the rodeo are used exclusively for the improvement, maintenance and operation of such rodeo, and if no part of the net earnings thereof inures to the benefit of any private stockholder or individual; (1) Property or services which the State is prohibited by the constitution or laws of the United States or by the constitution of the State from taxing or further taxing and tangible personal property exempted from taxation by the Arkansas Compensating (Use) Tax Act of 1949, as amended; (m) Isolated sales not made by an established business; (n) Cotton, seed cotton, lint cotton, bated cotton, whether compressed or not, or cotton seed in its original condition; seed for use in commercial production of an agricultural product or of seed; raw products from the farm, orchard or garden, where such sale is made by the producer of such raw products directly to the consumer and user; livestock, poultry, poultry products and dairy products of producers owning not more than five cows; and baby chickens; (o) Foodstuffs to governmental agencies for free distribution to any public, penal and eleemosynary institutions or for free distribution to the poor and needy, and the rental or sale of medical equipment, for the benefit of Persons enrolled in and eligible for Medicare or Medicaid programs; (p) Tangible personal property or services provided to any hospital or sanitarium operated for charitable and nonprofit purposes or any nonprofit organization whose sole purpose is to provide temporary housing to the family members of patients in a hospital or sanitarium; (q) Used tangible personal property when the used property was (1) traded in and accepted by the seller as part of the sale of other tangible personal property and (2) the Arkansas Gross Receipts Tax was collected and paid on the total amount of consideration for the sale of the other tangible personal property without any deduction or credit for the value of the used tangible personal property; provided, however, this exemption does not apply to transactions involving used automobiles, used mobile homes, or used aircraft; (r) Unprocessed crude oil; (s) Tangible personal property consisting of machinery and equipment used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce at (i) new manufacturing or processing plants or facilities in the State or (ii) existing manufacturing or processing plants or facilities in the State if the tangible personal property is used to replace existing machinery and equipment; (t) Property consisting of machinery and equipment required by State law or regulation to be installed and utilized by manufacturing or processing plants or facilities to prevent or reduce air and/or water pollution or contamination; (u) Electricity used in the manufacture of aluminum metal by the electrolytic reduction process and sale of articles sold on the premises of the Arkansas Veterans Home; (v) Automobile parts which constitute "core charges," which are received for the purpose of securing a trade-in for the article purchased; (w) Bagging and other packaging and tie materials sold to and used by cotton gins for packaging and/or tying baled cotton and from the sale of twine which is used in the production of tomato crops; C-3 W Prescription drugs by licensed pharmacists, hospitals, oncologists or dispensing physicians, and oxygen sold for human use on prescription of a licensed physician; (y) Property or services to humane societies; (z) Vessels, barges and towboats of at least fifty tons load displacement and parts and labor used in the repair and construction of the same; (aa) Property or sales to all orphans' homes, or children's homes, which are not operated for profit and whether operated by a church, religious organization or other benevolent charitable association; (bb) Agricultural fertilizer, agricultural limestone and agricultural chemicals; (cc) Sale of tickets or admissions, by municipalities, to places of amusement, to athletic entertainment, recreational events, or fees for the privilege of having access to or the use of amusement, entertainment, athletic or recreational facilities, including free or complimentary passes, tickets, admissions, dues or fees; (dd) Rental and/or lease of specialized equipment used in the filming of a motion picture; (cc) New and used farm machinery and equipment; (ff) New automobiles to a veteran of the United States Armed Services who is blind as a result of a service connected injury; (gg) Motor vehicles sold to municipalities, counties, school districts, and state supported colleges and universities; (hh) School buses sold to school districts and, in certain cases, to other purchasers providing school bus service to school districts; (ii) Natural gas, LP gas, or electricity sold to a processor or mining company engaging in open pit and underground mining or processing of bauxite; 0j) Feedstuffs used in the commercial production of livestock or poultry; (kk) New and used mobile homes and custom manufactured homes; (11) The first 500 kilowatt hours of electricity per month and the total franchise taxes billed to each residential customer whose household income is less than $12,000 per year; (mm) Waste fuel used in producing, manufacturing, fabricating, assembling, processing, finishing, or packaging of articles of commerce at manufacturing or processing plants or facilities in the State; (nn) Electricity and natural gas to qualified steel and wall and floor tile manufacturers; (oo) Electricity used for the production of chlorine and other chemicals using a chlor -alkali manufacturing process; (pp) Tangible personal property lawfully purchased with food stamps, food coupons, food instruments or vouchers in connection with certain Federal programs; (qq) Publications sold through regular subscriptions; (rr) Tickets for admission to athletic events and interscholastic activities of public and private elementary and secondary schools in the State and tickets for admission to athletic events at public and private colleges and universities in the State; (ss) Prescriptive durable medical equipment, mobility enhancing equipment and prescriptive disposable medical equipment; (tt) Insulin and test strips for testing blood sugar levels in humans; (uu) Telephone instruments sent into the State for refurbishing or repair and then shipped back to the state of origin; (vv) Industrial metal rollers sent into the State for repair or remanufacture and then shipped back to the state of origin; C-4 (ww) New motor vehicles purchased by non-profit organizations and used for the performance of contracts with the Department of Human Services, and new motor vehicles purchased with Urban Mass Transit Administration funds if (i) the vehicles are purchased in lots of ten vehicles, (ii) meet minimum State specifications, and (iii) vehicles are used for transportation under the Department of Human Services' programs for the aging, disabled, mentally ill, and children and family services; (xx) Motor fuels to owners or operators of motor buses operated on designated streets according to regular schedule and under municipal franchise which are used for municipal transportation purposes; (yy) Parts or other tangible personal property incorporated into or which become a part of commercial jet aircraft component or subcomponent; (zz) Transfer of fill material by a business engaged in transporting or delivering fill material; (aaa) Long-term leases, thirty days or more, of commercial trucks used for interstate transportation of goods under certain conditions; (bbb) Foodstuffs to nonprofit agencies; (ccc) Tangible personal property consisting of forms constructed of plaster, cardboard, fiberglass, natural fibers, synthetic fibers or composites and which are destroyed or consumed during the manufacture of the item; (ddd) Natural gas used as a fuel in the process of manufacturing glass; (eee) Sales to Fort Smith Clearinghouse; (fff) Substitute fuel used in producing, manufacturing, fabrication, assembling, processing, finishing or packaging of articles at manufacturing facilities or processing plants in the State; (ggg) Railroad rolling stock used in transporting persons or property in interstate commerce; (hhh) Parts or other tangible personal property which become a part of railroad parts, railroad cars and equipment brought into the State for the purpose of being repaired, refurbished, modified or converted within the State; (iii) Fire protection and emergency equipment to be owned by and exclusively used by a volunteer fire department, and supplies and materials to be used in the construction and maintenance of volunteer fire departments; (jjj) Gas produced from biomass and sold for the purpose of generating energy to be sold to the gas producer; (kkk) Parts or other tangible personal property incorporated into or that become part of commercial jet aircraft components or subcomponents, and the services required to incorporate the parts or other tangible personal property into the commercial aircraft components or subcomponents; (111) Catalysts, chemicals, reagents and solutions which are consumed or used in producing, manufacturing, processing or finishing articles of commerce at manufacturing or processing plants in the State; (mmm) Fuel packaging materials sold to persons engaged in the business of processing hazardous and non -hazardous waste materials into fuel products; (nnn) Instructional materials used in public schools; (000) Livestock reproduction equipment and substances used in livestock reproduction; (ppp) Water purchased from a public surface -water delivery project to reduce or replace water used for in -ground irrigation or to reduce dependence on ground water used for agriculture; (qqq) Property or services to the Arkansas Black Hall of Fame Foundation, Inc.; (rrr) Gross receipts derived from the sale of Class Six and Class Seven Trucks if the vehicle is registered with the International Registration Plan and engaged in interstate commerce; (sss) Gross receipts derived from the sale of all semitrailers and offsets general revenues lost as a result of the exemption with revenues from distillate motor fuel taxes; C-5 (ttt) Kegs used to sell beer wholesale; (uuu) During the first weekend in August of each year only, items of clothing costing less than $100, clothing accessories and equipment costing less than $50, school art supplies, school instructional materials and school supplies; (vvv) Machinery and equipment required by state or federal law or regulations to be installed and utilized by manufacturing and processing plants or facilities in the refining of petroleum-based products to remove sulphur pollutants; (www) Expendable supplies for farm machinery that are used for baling, packaging, tying, wrapping or sealing animal feed products; (xxx) Electricity, liquefied petroleum gas and natural gas used by grain drying and storage facilities, qualifying agricultural structures and qualifying aquaculture and horticulture equipment; (yyy) Timber harvesting machinery, equipment and related attachments; (zzz) Dental appliances sold to or by dentists, orthodontists, oral surgeons, maxillofacial surgeons and endodontists; and (aaaa) Property or services to nonprofit blood donations organizations. Reference is made to "The Arkansas Gross Receipts Act of 1941," Title 26, Chapter 52 of the Arkansas Code of 1987 Annotated, for more information concerning the sales tax. Use Tax. The use tax portion of the Sales and Use Taxes is levied on every Person for the privilege of storing, using, distributing or consuming in the City any article of tangible personal property purchased for storage, use, distribution or consumption. The use tax applies to the use, distribution, storage or consumption of every article of tangible personal property except as hereinafter provided. The use tax does not apply to aircraft equipment, and railroad parts, cars, and equipment, nor to tangible personal property owned or leased by aircraft, automotive or railroad companies brought into the City solely and exclusively for refurbishing, conversion, or modification within the City or storage for use outside or inside the City regardless of the length of time any such property is so stored in the City. The use tax is levied on the following described tangible personal property: (a) Tractors, trailers, semi -trailers, trucks, buses and other rolling stock, including replacement tires, used directly in the transportation of persons or property in intrastate or interstate common carrier transportations; (b) Property (except fuel) consumed in the operation of railroad rolling stock; (c) Transmission lines and pumping or pressure control equipment used directly in or connected to the primary pipeline facility engaged in intrastate or interstate common carrier transportation of property; (d) Airplanes and navigation instruments used directly in or becoming a part of flight aircraft engaged in transportations of persons or property in regular scheduled intrastate or interstate common carrier transportation; (e) Exchange equipment, lines, boards and all accessory devices used directly in and connected to the primary facility engaged in the transmission of messages; (f) Transmission and distribution pipelines in pumping or pressure control and equipment used in connection therewith used directly in primary pipeline facility for the purpose of transporting and delivering natural gas; (g) Transmission and distribution lines, pumping machinery and controls used in connection therewith in cleaning or treating equipment of primary water distribution system; (h) Property of public electric power companies consisting of all machinery and equipment including reactor cores and related accessory devices used in the generation and production of electric power and energy and transmission facilities consisting of the lines, including poles, towers and other supporting structures, transmitting electric power and energy together with substations located on or attached to such lines; and (i) Computer software. Exemptions from Use Tax. Some of the property exempted from the use tax by the General Assembly of the State is as follows: C-6 (a) Property, the storage, use or consumption of which the State is prohibited from taxing under the Constitution or laws of the United States of America or the State; (b) Sales of tangible personal property in which the tax under the Arkansas Gross Receipts Act of 1941 is levied; (c) Tangible personal property which is exempted from the sales tax under the Arkansas Gross Receipts Act of 1941; (d) Feedstuffs used in the commercial production of livestock or poultry in the State; (e) Unprocessed crude oil; (f) Machinery and equipment used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce at manufacturing or processing plants or facilities in the State, including facilities and plants for manufacturing feed, processing of poultry and/or eggs and livestock and the hatching of poultry and such equipment is either (1) purchased to create or expand manufacturing or processing plants in the State, (2) purchased to replace existing machinery and used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce at manufacturing or processing plants in the State, or (3) required by State law to be installed and utilized by manufacturing or processing plants to prevent or reduce air and/or water pollution or contamination; (g) Modular homes constructed with materials on which the sales or use tax has once been paid; (h) Aircraft, aircraft equipment, railroad parts, cars, and equipment, and tangible personal property owned or leased by aircraft, airmotive, or railroad companies, brought into the State solely and exclusively for refurbishing, conversion, or modification or for storage for use outside or inside the State; (i) Vessels, barges, and towboats of at least 50 tons load displacement and parts and labor used in the repair and construction of them; 0) Motor fuels to the owners or operators of motor buses operated on designated streets according to regular schedule, under municipal franchise, which are used for municipal transportation purposes; (k) Agricultural fertilizer, agricultural limestone and agricultural chemicals; (1) Water purchased from a public surface -water delivery project to reduce or replace water used for in -ground irrigation or to reduce dependence on ground water used for agriculture; (m) All new and used motor vehicles, trailers or semi -trailers that are purchased for a total consideration of less than $4,000; (n) Any tangible personal property used, consumed, distributed, or stores in this State upon which a like tax, equal to or greater than the Arkansas Compensating (Use) Tax, has been paid in another state; (o) Property or services to the Arkansas Black Hall of Fame Foundation, Inc.; (p) Gross receipts derived from the sale of Class Six and Class Seven Trucks if the vehicle is registered with the International Registration Plan and engaged in interstate commerce; (q) Gross receipts derived from the sale of all semitrailers and offsets general revenues lost as a result of the exemption with revenues from distillate motor fuel taxes; (r) Kegs used to sell beer wholesale; (s) During the first weekend in August of each year only, items of clothing costing less than $100, clothing accessories and equipment costing less than $50, school art supplies, school instructional materials and school supplies; (t) Machinery and equipment required by state or federal law or regulations to be installed and utilized by manufacturing and processing plants or facilities in the refining of petroleum-based products to remove sulphur pollutants; (u) Expendable supplies for farm machinery that are used for baling, packaging, tying, wrapping or sealing animal feed products; C-7 M Electricity, liquefied petroleum gas and natural gas used by grain drying and storage facilities, qualifying agricultural structures and qualifying aquaculture and horticulture equipment; (w) Timber harvesting machinery, equipment and related attachments; (x) Dental appliances sold to or by dentists, orthodontists, oral surgeons, maxillofacial surgeons and endodontists; and (y) Property or services to nonprofit blood donations organizations. Reference is made to "The Arkansas Compensation (Use) Tax Act of 1949," Title 26, Chapter 53 of the Arkansas Code of 1987 Annotated, for more information concerning the use tax. M OFFICIAL STATEMENT NEW ISSUE BOOK -ENTRY ONLY "RATING: S&P "AA" (stable outlook) In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Series 2015 Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel is also of the opinion that the Series 2015 Bonds are "qualified tax-exempt obligations" under- Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. Under existing laws, regulations, rulings and judicial decisions, Bond Counsel is of the opinion that the Series 2015 Bonds and the interest thereon are exempt from all state, county and municipal taxes in the State of Arkansas. Fora more complete description, see the caption "TAX MATTERS" herein. Dated: Date of Delivery $9,000,000 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2015 Due: November 1, as shown on inside front cover The Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Series 2015 Bonds"), are being issued by the City of Fayetteville, Arkansas (the "City") for the purpose of (i) financing a portion of the costs of certain City street improvements, (ii) purchasing a municipal bond debt service reserve insurance policy for deposit in the debt service reserve, and (iii) paying certain expenses in connection with the issuance of the Series 2015 Bonds. See the captions "SOURCES AND USES OF FUNDS" and "THE STREET PROJECT" herein. The Series 2015 Bonds are issuable only as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York, to which principal, premium, if any, and interest payments on the Series 2015 Bonds will be made so long as Cede & Co. is the registered owner of the Series 2015 Bonds. Individual purchases of the Series 2015 Bonds will be made only in book -entry form, in denominations of $5,000 or integral multiples thereof. Individual purchasers ("Beneficial Owners") of Series 2015 Bonds will not receive physical delivery of bond certificates. See the caption "BOOK -ENTRY ONLY SYSTEM" herein. The Series 2015 Bonds shall bear interest from the date of their delivery, payable on May 1 and November 1 of each year, commencing May 1, 2016. All such interest payments shall be payable to the persons in whose name such Series 2015 Bonds are registered on the bond registration books maintained by Simmons First Trust Company, N.A., Pine Bluff, Arkansas as trustee (the "Trustee"), as of the fifteenth day of the calendar month preceding the calendar month in which the applicable interest payment date falls. Principal of and premium, if any, on the Series 2015 Bonds shall be payable at the principal corporate trust office of the Trustee. So long as DTC or its nominee is the registered owner of the Series 2015 Bonds, disbursement of such payments to DTC Participants is the responsibility of DTC, and the disbursement of such payments to Beneficial Owners is the responsibility of DTC Participants or Indirect Participants, as more fully described herein. Pursuant to a Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), between the City and the Trustee, the payment of the principal of, premium, if any, and interest on the Series 2015 Bonds is secured by a pledge of the receipts from (i) a one-quarter of one percent (0.25%) city-wide sales and use tax (the "0.25% Sales and Use Tax") and (ii) a three-quarters of one percent (0.75%) city-wide sales and use tax (the "0.75% Sales and Use Tax," and together with the 0.25% Sales and Use Tax, the "Sales and Use Taxes"). Such pledge is made on a parity basis with the existing pledge of receipts of the Sales and Use Taxes securing, as of November 1, 2015, (i) $34,190,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) $9,410,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), (iii) $7,445,000,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and (iv) $17,585,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). See the caption "SECURITY FOR THE BONDS" herein. The Series 2015 Bonds are subject to mandatory redemption prior to maturity as more fully described herein under the caption "THE SERIES 2015 BONDS - Redemption." The Series 2015 Bonds are special obligations of the City secured by and payable solely from receipts of the Sales and Use Taxes. The Series 2015 Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restriction. The issuance of the Series 2015 Bonds shall not directly, indirectly or contingently obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the payment of the Series 2015 Bonds, except as described herein with respect to the Sales and Use Taxes. The Series 2015 Bonds are offered when, as and if issued by the City and are subject to the final approving opinion of Kutak Rock LLP, Little Rock, Arkansas, Bond Counsel. Certain matters will be passed upon for the City by its counsel, Kit Williams, Esq., City Attorney. It is expected that the Series 2015 Bonds will be available for delivery in New York, New York, on or about November 12, 2015. The date of this Official Statement is October 21, 2015. * See the caption "RATING" herein. MATURITY SCHEDULE Maturity Principal Interest (November 1) Amount Rate Yield CUSIP 2016 $ 930,000 2.000% 0.500% 312673 EP7 2017 945,000 2.000% 0.950% 312673 EQ5 2018 965,000 2.000% 1.150% 312673 ER3 2019 980,000 2.000% 1.375% 312673 ESI 2020 1,000,000 1.600% 1.600% 312673 ET9 2021 1,020,000 1.700% 1.700% 312673 EU6 2022 1,035,000 1.800% 1.800% 312673 EV4 2023 1,055,000 1.550% 1.550% 312673 EW2 2024 1,070,000 1.000% 1.000% 312673 EXO CITY OF FAYETTEVILLE, ARKANSAS Issuer City Council Lioneld Jordan, Mayor Adella Gray Mark Kinion John La Tour Alan Long Sarah Marsh Matthew Petty Martin Schoppmeyer, Jr. Justin Tennant Paul Becker, Finance Director Sondra Smith, City Clerk Kit Williams, City Attorney SIMMONS FIRST TRUST COMPANY, N.A. Pine Bluff, Arkansas Trustee and Paying Agent KUTAK ROCK LLP Little Rock, Arkansas Bond Counsel STEPHENS INC. Fayetteville, Arkansas Underwriter No dealer, broker, salesman or other person has been authorized by the City or by Stephens Inc. (the "Underwriter") to give any information or to make any representations, other than those contained herein; and, if given or made, such other information or representations must not be relied upon as having been authorized by either of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of any Series 2015 Bonds in any jurisdiction in which such offer is not authorized, or in which the person making such offer, solicitation or sale is not qualified to do so, or to any person to whom it is unlawful to make such offer, solicitation or sale. The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. THE SERIES 2015 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE TRUST INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON CERTAIN EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION CONTAINED IN SUCH LAWS. CERTAIN INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED FROM THE CITY, THE DEPOSITORY TRUST COMPANY AND OTHER SOURCES WHICH ARE BELIEVED TO BE RELIABLE. THE UNDERWRITER HAS REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH, AND AS PART OF, ITS RESPONSIBILITIES TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITER DOES NOT GUARANTY THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2015 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. TABLE OF CONTENTS Introductory Statement The Series 2015 Bonds.............................................................. Security for the Bonds............................................................... Book -Entry Only System.......................................................... TheStreet Project...................................................................... Historical Sales and Use Tax Collections ................................. Sources and Uses of Funds ........................................................ Debt Service Requirements....................................................... Estimated Debt Service Coverage ............................................. Projected Mandatory Redemptions ........................................... TheCity..................................................................................... The Sales and Use Taxes............................................................. Summary of the Indenture......................................................... Summary of the Continuing Disclosure Agreement .................. Underwriting............................................................................. TaxMatters............................................................................... Rating......................................................................................... LegalMatters............................................................................ Miscellaneous............................................................................ Accuracy and Completeness of Official Statement ................... Page ............................................................................ 1 ............................................................................ 2 ............................................................................ 4 ............................................................................ 5 ............................................................................ 8 ............................................................................ 8 ............................................................................ 9 ............................................................................ 9 ............................................................................ 10 ............................................................................ 11 ............................................................................ 12 ............................................................................ 15 ............................................................................ 15 ............................................................................ 20 ............................................................................ 23 ............................................................................ 23 ............................................................................ 25 ............................................................................ 25 ............................................................................ 25 ............................................................................ 25 APPENDIX A - Form of Bond Counsel Opinion.................................................................................................A-1 APPENDIX B - Definitions of Certain Terms......................................................................................................B-1 APPENDIX C - The Sales and Use Taxes............................................................................................................0-1 [THIS PAGE INTENTIONALLY BLANK] OFFICIAL STATEMENT $9,000,000 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2015 The following introductory statement is subject in all respects to the more complete information set forth in this Official Statement. All descriptions and summaries of documents hereinafter set forth are qualified in their entirety by reference to each such document. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in "Appendix B -- DEFINITIONS OF CERTAIN TERMS". This Official Statement, including the cover page and the Appendices hereto, is furnished in connection with the offering by the City of Fayetteville, Arkansas (the "City") of its Sales and Use Tax Capital Improvement Bonds, Series 2015, in the principal amount of $9,000,000 (the "Series 2015 Bonds"). The City is a city of the first class organized and existing under the laws of the State of Arkansas (the "State"). The City is authorized under Amendment 62 to the Constitution of the State ("Amendment 62") and Arkansas Code Annotated (1998 Repl. & 2015 Supp.) §§14-164-301 et seq. (as from time to time amended, the "Act"), to issue and sell bonds for the purpose of financing the cost of capital improvements of a public nature. The Series 2015 Bonds are to be issued by the City pursuant to Amendment 62, the Act and Ordinance No. 5803, adopted and approved on October 6, 2015 (the "Authorizing Ordinance"), for the purpose of (i) financing a portion of the costs of acquiring, constructing, reconstructing, repairing, straightening and widening certain streets and related improvements (the "Street Project"), (ii) purchasing a municipal bond debt service reserve insurance policy for deposit in the debt service reserve, and (iii) paying certain expenses in connection with the issuance of the Series 2015 Bonds. See the captions "SOURCES AND USES OF FUNDS" and "THE STREET PROJECT" herein. The Series 2015 Bonds are not general obligations of the City, but are special obligations payable solely from and secured by a pledge of the receipts of (i) a special city-wide sales and use tax levied pursuant to the Act at the rate of one-quarter of one percent (0.25%) (the "0.25% Sales and Use Tax") and (ii) a special city-wide sales and use tax levied pursuant to the Act at the rate of three-quarters of one percent (0.75%) (the "0.75% Sales and Use Tax," and together with the 0.25% Sales and Use Tax, the "Sales and Use Taxes"). Such pledge shall be made on a parity basis with the existing pledge of receipts of the Sales and Use Taxes securing, as of November 1, 2015, (i) $34,190,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) $9,410,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), (iii) $7,445,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and (iv) $17,585,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). See the captions "SECURITY FOR THE BONDS," "HISTORICAL SALES AND USE TAX COLLECTIONS," and "RATING" herein. The faith and credit of the City are not pledged to the payment of the Series 2015 Bonds, and the Series 2015 Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restriction. The issuance of the Series 2015 Bonds shall not directly, indirectly or contingently obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the payment of the Series 2015 Bonds, except as described herein with respect to the Sales and Use Taxes. The Series 2015 Bonds are subject to redemption from excess moneys in the Street Account of the Project Fund following completion of the portions of the Street Project to be financed with the Series 2015 Bonds and from Surplus Tax Receipts. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of Additional Bonds hereafter issued as provided under the caption "THE SERIES 2015 BONDS — Additional Bonds" herein. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any other series of Additional Bonds. See the captions "THE SERIES 2015 BONDS — Redemption" and "PROJECTED MANDATORY REDEMPTIONS" herein. Pursuant to the provisions of a Continuing Disclosure Agreement dated as of the date of delivery of the Series 2015 Bonds, by and between the City and Simmons First Trust Company, N.A., Pine Bluff, Arkansas, as dissemination agent (the "Continuing Disclosure Agreement'), the City has undertaken certain obligations with respect to providing ongoing disclosure of certain financial and operating data concerning the City and the Sales and Use Taxes and of the occurrence of certain material events. See the caption "SUMMARY OF THE CONTINUING DISCLOSURE AGREEMENT' herein. This Official Statement contains brief descriptions or summaries of, among other matters, the City, the Series 2015 Bonds, the Sales and Use Taxes, the Continuing Disclosure Agreement, and the Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), by and between the City and Simmons First Trust Company, N.A., Pine Bluff, Arkansas, as trustee (the "Trustee"), pursuant to which the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds are issued and secured. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture and the Continuing Disclosure Agreement are qualified in their entirety by reference to each such document, and all references to the Series 2015 Bonds are qualified in their entirety by reference to the definitive forms thereof and the information with respect thereto included in the Indenture. Copies of the Continuing Disclosure Agreement, the Indenture, and the form of Series 2015 Bond included therein, are available from the City by writing to the attention of the Finance Director, City of Fayetteville, City Administration Building, 113 West Mountain, Fayetteville, Arkansas 72701 and, during the initial offering period only, from the Underwriter, Stephens Inc., 3425 North Futrall, Suite 201, Fayetteville, Arkansas 72703. Certain financial and operating data has been provided by the City from the audited records of the City and certain demographic information has been obtained from other sources which are believed to be reliable. 111611010 Description. The Series 2015 Bonds will be initially dated as of the date of their delivery, and will bear interest payable semiannually on May 1 and November 1 of each year, commencing May 1, 2016, at the rates set forth on the inside cover page hereof. The Series 2015 Bonds will mature on November 1 in the years and in the principal amounts set forth on the inside cover page hereof. The Series 2015 Bonds are issuable only in the form of fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), New York, New York, to which principal, premium, if any, and interest payments on the Series 2015 Bonds will be made so long as Cede & Co. is the registered owner of the Series 2015 Bonds. Individual purchases of the Series 2015 Bonds will be made only in book -entry form, in denominations of $5,000 or integral multiples thereof. Individual purchasers ("Beneficial Owners") of Series 2015 Bonds will not receive physical delivery of bond certificates. See the caption "BOOK -ENTRY ONLY SYSTEM" herein. All interest payments on the Series 2015 Bonds shall be payable to the persons in whose name such Series 2015 Bonds are registered on the bond registration books maintained by the Trustee, as of the fifteenth day of the calendar month preceding the calendar month in which the applicable interest payment date falls. Principal of and premium, if any, on the Series 2015 Bonds shall be payable at the principal corporate trust office of the Trustee. All PA such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2015 Bond to the extent of the sum or sums so paid. So long as DTC or its nominee is the registered owner of the Series 2015 Bonds, disbursement of such payments to DTC Participants is the responsibility of DTC, and the disbursement of such payments to Beneficial Owners is the responsibility of DTC Participants or Indirect Participants, as more fully described herein. Redemption. The Series 2015 Bonds are subject to redemption prior to maturity as follows: (i) The Series 2015 Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from moneys in the Street Account of the Project Fund in excess of the amount needed to complete the Street Project. (ii) The Series 2015 Bonds shall be redeemed prior to maturity, in whole or in part, on any interest payment date, in inverse order of maturity and by lot in such manner as the Trustee shall determine within a maturity, at a redemption price equal to 100% of the principal amount being redeemed, plus accrued interest to the date of redemption, from Surplus Tax Receipts. "Surplus Tax Receipts" are collections of the Sales and Use Taxes in excess of the amount necessary to (i) insure the prompt payment of the principal of and interest on Outstanding Bonds, (ii) maintain the Debt Service Reserve Fund in an amount equal to the Reserve Requirement, (iii) pay any arbitrage rebate due under Section 148(f) of the Internal Revenue Code of 1986, as amended (the "Code"), and (iv) pay Trustee and Paying Agent fees and expenses. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of Additional Bonds hereafter issued as provided under the caption "THE SERIES 2015 BONDS — Additional Bonds" herein. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any other series of Additional Bonds. See the caption "PROJECTED MANDATORY REDEMPTIONS" herein. In the case of any defeasance of the Series 2015 Bonds, the dates of redemption, the principal amounts and the maturities of the Series 2015 Bonds to be redeemed will be determined by taking into consideration the mandatory redemption requirements set forth above and the receipts of the Sales and Use Taxes for the most recent twelve months. Partial Redemption of a Series 2015 Bond. If less than all of the Series 2015 Bonds of a maturity are called for redemption, the particular Series 2015 Bonds or portions of Series 2015 Bonds to be redeemed shall be selected by lot in such manner as the Trustee in its discretion may deem fair and appropriate. So long as DTC or its nominee is the sole registered owner of the Series 2015 Bonds, the procedures established by DTC shall control with respect to the selection of the particular Series 2015 Bonds to be redeemed. Notice of Redemption. Notice of the call for any redemption, identifying the Series 2015 Bonds or portions thereof being called and the date on which they shall be presented for payment, shall be mailed by the Trustee by first class mail (or, so long as DTC or its nominee is the sole registered owner of the Series 2015 Bonds, by any other means acceptable to DTC, including facsimile) to the registered owner of each such Series 2015 Bond addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure to give such notice by mailing, or any defect therein, shall not affect the validity of any proceeding for the redemption of any Series 2015 Bond with respect to which no such failure or defect has occurred. Any notice mailed as provided above shall be conclusively presumed to have been duly given, whether or not the registered owner receives the notice. Additional Bonds. The City may issue from time to time one or more series of Additional Bonds for the purpose of refunding the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds or any series of Additional Bonds, in whole or in part. Additional Bonds shall be secured equally and ratably with the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any other series of Additional Bonds theretofore issued and then Outstanding, except insofar any terms or conditions of redemption or purchase established under the Indenture may afford additional benefit or security for the Bonds of any particular series and except for the security afforded by any municipal bond insurance obtained with respect to a particular series of Bonds. Before any Additional Bonds are authenticated, there shall be delivered to the Trustee a certificate of the City's Finance Director certifying that, based upon the most recent twelve (12) months of Sales and Use Tax collections, receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax were not less than 125% of the maximum Annual Debt Service on all the Outstanding Bonds, plus the Additional Bonds to be issued. Notwithstanding anything described above to the contrary, no Additional Bonds shall be issued unless there is no default at the time of issuance under the Indenture. Transfer or Exchange. The Series 2015 Bonds may be transferred on the books of registration kept by the Trustee by the registered owner in person or by the owner's duly authorized attorney, upon surrender thereof, together with a written instrument of transfer duly executed by the registered owner or the owner's duly authorized attorney. Upon surrender for transfer of any Series 2015 Bond at the principal corporate office of the Trustee, the City shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Series 2015 Bond or Bonds in the same aggregate principal amount and of any authorized denomination or denominations. Transfers of registration or exchanges of Series 2015 Bonds shall be without charge to the Holders of such Series 2015 Bonds, but any taxes or other governmental charges required to be paid with respect to the same shall be paid by the Holder of the Series 2015 Bond requesting such transfer or exchange as a condition precedent to the exercise of such privilege. The Trustee shall not be required to transfer or exchange any Series 2015 Bond during the period from and including a Record Date to the next succeeding interest payment date of such Series 2015 Bond nor to transfer or exchange any Series 2015 Bond after the mailing of notice calling such Series 2015 Bond for redemption has been made, and prior to such redemption. So long as DTC or its nominee is the sole registered owner of the Series 2015 Bonds, transfers of beneficial interests in the Series 2015 Bonds shall be in accordance with the rules and procedures of DTC and its direct and indirect participants. See the caption "BOOK -ENTRY ONLY SYSTEM" herein. General. The Series 2015 Bonds are special obligations of the City secured by and payable from the receipts of (i) a special city-wide sales and use tax levied pursuant to the Act at the rate of one-quarter of one percent (0.25%) (the "0.25% Sales and Use Tax") and (ii) a special city-wide sales and use tax levied pursuant to the Act at the rate of three-quarters of one percent (0.75%) (the "0.75% Sales and Use Tax," and together with the 0.25% Sales and Use Tax, the "Sales and Use Taxes"). The Sales and Use Taxes were levied under Ordinance No. 4891, duly adopted by the City Council of the City on June 20, 2006 (the "Election Ordinance"). Pursuant to the Election Ordinance, a special election was held on September 12, 2006, at which time the qualified electors of the City approved the issuance of capital improvement bonds in principal amount not to exceed $110,000,000 and the corresponding levy of the Sales and Use Taxes. The receipts of the Sales and Use Taxes were pledged to secure the payment of Debt Service on the Series 2015 Bonds pursuant to Ordinance No. 5803, duly adopted by the City Council of the City on October 6, 2015 (the "Authorizing Ordinance"). Such pledge is made on a parity basis with an existing pledge on such receipt securing, as of November 1, 2015, (i) $34,190,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) $9,410,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), (iii) $7,445,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), and (iv) $17,585,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"). Pursuant to the terms of the Election Ordinance, the collection of the 0.25% Sales and Use Tax commenced on January 1, 2007. At such time an existing three-quarters of one percent (0.75%) special city-wide sales and use tax (the "Existing Tax") was pledged to the payment of certain indebtedness of the City originally authorized in the aggregate principal amount of $92,000,000 (the "Existing Indebtedness"). The Existing Indebtedness was paid in full on July 1, 2014, the levy of the Existing Tax ceased on August 1, 2014, and the collection of the 0.75% Sales 4 and Use Tax commenced simultaneously therewith. See the captions "THE SALES AND USE TAXES" and "HISTORICAL SALES AND USE TAX COLLECTIONS" herein. The Series 2015 Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restriction. The issuance of the Series 2015 Bonds shall not directly, indirectly or contingently obligate the City to levy or pledge any taxes whatsoever or to make any appropriation for the payment of the Series 2015 Bonds, except as described herein with respect to the Sales and Use Taxes. Debt Service Reserve. From the proceeds of the Series 2015 Bonds, there shall be deposited into the Series 2015 Account of the Debt Service Reserve Fund an amount sufficient to cause the amounts on deposit therein to be equal to 5% of the aggregate principal amount of the Series 2015 Bonds (the "Reserve Requirement"). Amounts on deposit in the Series 2015 Account of the Debt Service Reserve Fund shall be used solely to pay the principal of and interest on the Outstanding Series 2015 Bonds as due for which there are no available funds in the Bond Fund to make such payments. The Reserve Requirement may be satisfied by cash or by Investment Securities, including the Reserve Fund Insurance Policy (as defined below). If the amount in the Debt Service Reserve Fund is ever reduced below the Reserve Requirement, it shall be reimbursed to an amount equal to the Reserve Requirement through monthly payments, beginning not later than the last day of the month in which the Debt Service Reserve Fund was reduced below the Reserve Requirement, and continuing not later than the last day of each month thereafter until such reimbursement shall have been accomplished, from any funds in the Revenue Fund (after making the required deposits into the Interest Account and Principal Account of the Bond Fund, as provided in the Indenture). If a surplus shall exist in the Debt Service Reserve Fund over and above the Reserve Requirement, such surplus shall be deposited into the Interest Account of the Bond Fund. Assured Guaranty Municipal Corp., a New York stock insurance company ("AGM"), has made a commitment to issue a municipal bond debt service reserve insurance policy for the Debt Service Reserve Fund with respect to the Series 2015 Bonds (the "Reserve Fund Insurance Policy"), effective as of the date of issuance of such Series 2015 Bonds. Under the terms of the Reserve Fund Insurance Policy, AGM will unconditionally and irrevocably guarantee to pay that portion of the scheduled principal and interest on the Series 2015 Bonds that becomes due for payment but shall be unpaid by reason of nonpayment by the City (the "Insured Payments"). AGM will pay each portion of an Insured Payment that is due for payment and unpaid by reason of nonpayment by the City to the Trustee or Paying Agent, as beneficiary of the Reserve Fund Insurance Policy on behalf of the holders of the Series 2015 Bonds, on the later to occur of (i) the business day on which such scheduled principal or interest becomes due for payment or (ii) the business day next following the business day on which AGM receives a notice of nonpayment in accordance with the terms of the Reserve Fund Insurance Policy. No payment shall be made under the Reserve Fund Insurance Policy in excess of $450,000 (the "Reserve Fund Insurance Policy Limit'). Pursuant to the terms of the Reserve Fund Insurance Policy, the amount available at any particular time to be paid to the Trustee or Paying Agent shall automatically be reduced to the extent of any payment made by AGM under the Reserve Fund Insurance Policy, provided, that, to the extent of the reimbursement of such payment to AGM, the amount available under the Reserve Fund Insurance Policy shall be reinstated in full or in part, in an amount not to exceed the Reserve Fund Insurance Policy Limit. The Reserve Fund Insurance Policy does not insure against nonpayment caused by the insolvency or negligence of the Trustee or Paying Agent. The Reserve Fund Insurance Policy is not covered by the property/casualty insurance security fund specified in Article 76 of New York insurance law. The Series 2015 Bonds will be issued only as one fully registered Series 2015 Bond for each maturity, in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"), as registered owner of all the Series 2015 Bonds. The fully registered Series 2015 Bonds will be retained and immobilized in the custody of DTC. DTC (or any successor securities depository) or its nominee will be considered by the City and the Trustee to be the owner or holder of the Series 2015 Bonds for all purposes under the Indenture. Owners of any book entry interests in the Series 2015 Bonds (the "book entry interest owners") described below, will not receive or have the right to receive physical delivery of the Series 2015 Bonds, and will not be considered by the City and the Trustee to be, and will not have any rights as, owners or holders of the Series 2015 Bonds under the bond proceedings and the Indenture except to the extent, if any, expressly provided thereunder. CERTAIN INFORMATION REGARDING DTC AND DIRECT PARTICIPANTS IS SET FORTH BELOW. THIS INFORMATION HAS BEEN PROVIDED BY DTC. THE CITY, THE UNDERWRITER AND BOND COUNSEL ASSUME NO RESPONSIBILITY FOR THE ACCURACY OF SUCH STATEMENTS. DTC, the world's largest depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book - entry transfers and pledges among Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, the National Securities Clearing Corporation and the Fixed Income Clearing Corporation, all of which are registered agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The DTC Rules applicable to its Direct and Indirect Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. Purchases of Series 2015 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2015 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2015 Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2015 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2015 Bonds, except in the event that use of the Book -Entry System for the Series 2015 Bonds is discontinued. To facilitate subsequent transfers, all Series 2015 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2015 Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2015 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2015 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Series 2015 Bonds within a maturity are to be redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the Series 2015 Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the Record Date. The Omnibus 0 Proxy will assign Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Series 2015 Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy). Payment of debt service and redemption proceeds with respect to the Series 2015 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City or the Trustee on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds and debt service to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. BENEFICIAL OWNERS SHOULD CONSULT WITH THE DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS FROM WHOM THEY PURCHASE A BOOK ENTRY INTEREST TO OBTAIN INFORMATION CONCERNING THE SYSTEM MAINTAINED BY SUCH DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS TO RECORD SUCH INTERESTS, TO MAKE PAYMENTS, TO FORWARD NOTICES OF REDEMPTION AND OF OTHER INFORMATION. THE CITY AND THE TRUSTEE HAVE NO RESPONSIBILITY OR LIABILITY FOR ANY ASPECTS OF THE RECORDS OR NOTICES RELATING TO, OR PAYMENTS MADE ON ACCOUNT OF, BOOK ENTRY INTEREST OWNERSHIP, OR FOR MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO THAT OWNERSHIP. The Trustee and the City, so long as a book entry method of recording and transferring interest in the Series 2015 Bonds is used, will send any notice of redemption or of any Indenture amendment or supplement or other notices to Bondholders under the Indenture only to DTC (or any successor securities depository) or its nominee. Any failure of DTC to advise any Direct Participants, or of any Direct Participants or Indirect Participants to notify any Beneficial Owner, of any such notice and its content or effect will not affect the validity of the redemption of the Series 2015 Bonds called for redemption, the Indenture amendment or supplement, or any other action premised on notice given under the Indenture. The City and the Trustee cannot and do not give any assurances that DTC, Direct Participants, Indirect Participants or others will distribute payments of debt service on the Series 2015 Bonds made to DTC or its nominee as the registered owner of the Series 2015 Bonds, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis, or that DTC will serve and act in a manner described in this Official Statement. DTC may discontinue providing its services as securities depository with respect to the Series 2015 Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, bond certificates are required to be printed and delivered. In addition, the City may decide to discontinue use of the system of book -entry transfers through DTC (or a successor securities depository). In that event, bond certificates will be printed and delivered. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] Approximately $8,914,876 of the proceeds of the Series 2015 Bonds will be deposited into the Street Account of the Project Fund to finance a portion of the costs of acquiring, constructing, reconstructing, repairing, straightening and widening certain streets and related improvements (the "Street Project"). I awl 00101W.11 IL", MWIX11101 Pursuant to the terms of the Election Ordinance, the collection of the 0.25% Sales and Use Tax commenced on January 1, 2007. At such time an existing three-quarters of one percent (0.75%) special city-wide sales and use tax (the "Existing Tax") was pledged to the payment of certain indebtedness of the City originally authorized in the aggregate principal amount of $92,000,000 (the "Existing Indebtedness"). The Existing Indebtedness was paid in full on July 1, 2014, the levy of the Existing Tax ceased on August 1, 2014, and the collection of the 0.75% Sales and Use Tax commenced simultaneously therewith. Set forth below is a table showing receipts of the 0.25% Tax and the Existing Tax over the last seven years. Combined collections of the 0.25% Tax and the 0.75% Tax received by the City for the most recent twelve-month period (October 1, 2014 through September 30, 2015) were $19,298,680, a 6.26% increase over the amount of collections from the 0.25% Tax and the Existing Tax received by the City during the previous twelve-month period (October 1, 2013 to September 30, 2014). "' Reflects collections of the Existing Tax through September 30, 2014 and collections of the 0.75% Sales and Use Tax from October 1, 2014 through December 31, 2014. Sales and use tax receipts are remitted by the Treasurer of the State of Arkansas to the City in the second month following the month of their collection. (2) Reflects collections of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax for the nine months ended September 30, 2015. Source: Arkansas State Treasurer [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] Historical Collections Combined Collections of 0.25% Sales and Historical Collections of of 0.25% Tax and Growth Year Use Tax Existing Tax (0.75%) Existing Tax (0.75%) Percentage 2009 $ 3,927,564 $11,782,692 $15,710,256 n/a 2010 3,917,717 11,753,150 15,670,867 -0.25% 2011 4,129,686 12,389,060 16,518,746 5.41% 2012 4,389,519 13,168,559 17,558,078 6.29% 2013 4,513,873 13,541,618 18,055,491 2.83% 2014') 4,604,085 13,812,257 18,416,342 2.00% 2015(2) 3,630,557 10,891,670 14,522,227 n/a "' Reflects collections of the Existing Tax through September 30, 2014 and collections of the 0.75% Sales and Use Tax from October 1, 2014 through December 31, 2014. Sales and use tax receipts are remitted by the Treasurer of the State of Arkansas to the City in the second month following the month of their collection. (2) Reflects collections of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax for the nine months ended September 30, 2015. Source: Arkansas State Treasurer [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] The proceeds of the Series 2015 Bonds are expected to be used as follows: Sources of Funds Par Amount of Series 2015 Bonds $9,000,000 Net Original Issue Premium 80,226 Total Sources: $9,080,226 TT -P,- of Finck Deposit to Street Account of Project Fund $8,914,876 Costs of Issuance, including Underwriter's Discount 150,500 Reserve Policy Premium 14,850 Total Uses: $9,080,226 As of the date of closing, the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds will constitute the only debt obligations secured by receipts of the Sales and Use Taxes. The following table sets forth the amounts required to pay scheduled principal of and interest on the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds during each year: (1) As of November 1, 2015. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] Series 2006A, Series 2006A, 2007, 2009 & 2007 & 2009 and Series 2015 Series 2015 Total Debt Year 2013 Principal") 2013 Interest(l) Principal Interest Service 2016 $ 8,960,000 $ 2,763,956 $ 930,000 $ 150,673 $ 12,804,629 2017 9,375,000 2,351,919 945,000 136,823 12,808,742 2018 9,810,000 1,916,544 965,000 117,922 12,809,466 2019 10,245,000 1,476,519 980,000 98,623 12,800,142 2020 8,550,000 1,032,306 1,000,000 79,022 10,661,328 2021 2,475,000 751,425 1,020,000 63,023 4,309,448 2022 7,035,000 653,275 1,035,000 45,682 8,768,957 2023 8,315,000 409,900 1,055,000 27,053 9,806,953 2024 3,865,000 113,150 1,070,000 10,700 5,058,850 Totals: $68.630.000 $11,468,994 $9,000,000 L129 $89,828,515 (1) As of November 1, 2015. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] Set forth below is a table showing estimated debt service coverage with respect to the Series 2006A Bonds, 21 the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds. Combined collections of the 0.25% Tax and the 0.75% Tax during the twelve-month period ended September 30, 2015 were utilized for the purpose of making the coverage calculations. See the caption "HISTORICAL SALES AND USE TAX COLLECTIONS" herein. Historical Tax Receipts of 0.25% and 0.75% TaxesM $19,298,680 Maximum Annual Debt Service (z) $12,809,466 Maximum Annual Debt Service Coverage 1.51 X Actual combined collections of the 0.25% Tax and the 0.75% during the last twelve-month period ending September 30, 2015. See the caption "HISTORICAL SALES AND USE TAX COLLECTIONS" herein. (2) Representing debt service on the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds in 2018. See the caption "DEBT SERVICE REQUIREMENTS" herein. THE COVERAGE NUMBERS SET FORTH ABOVE ARE BASED ON HISTORICAL RECEIPTS OF THE 0.25% TAX AND THE 0.75% TAX. ACTUAL RECEIPTS OF THE SALES AND USE TAXES WILL DEPEND ON NUMEROUS FACTORS, AND THERE CAN BE NO ASSURANCE THAT FUTURE RECEIPTS OF THE SALES AND USE TAXES AVAILABLE TO PAY DEBT SERVICE ON THE SERIES 2006A BONDS, THE SERIES 2007 BONDS, THE SERIES 2009 BONDS, THE SERIES 2013 BONDS AND THE SERIES 2015 BONDS WILL APPROXIMATE SUCH HISTORICAL RESULTS. See the caption "THE SALES AND USE TAXES — Future Receipt of the Sales and Use Taxes" herein. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] 10 The table under the caption "DEBT SERVICE REQUIREMENTS" does not reflect possible mandatory redemptions of the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds from Surplus Tax Receipts, if available. Surplus Tax Receipts are all receipts of the Sales and Use Taxes in excess of the amount necessary (i) to assure the prompt payment of the principal of and interest on Outstanding Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of Additional Bonds, (ii) to maintain the Debt Service Reserve Fund in an amount equal to the Reserve Requirement, (iii) to pay any arbitrage rebate due under Section 148(f) of the Code, and (iv) to pay Trustee and Paying Agent fees and expenses. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of Additional Bonds hereafter issued as provided under the caption "THE SERIES 2015 BONDS –Additional Bonds" herein. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any other series of Additional Bonds. THERE CAN BE NO ASSURANCE GIVEN THAT RECEIPTS OF THE SALES AND USE TAXES WILL BE REALIZED IN THE AMOUNTS ASSUMED IN THE TABLE BELOW. See the caption "THE SALES AND USE TAXES — Future Sales and Use Tax Receipts" herein. (1) Series 2015 Bonds are subject to mandatory redemption from Surplus Tax Receipts on each May 1 and November 1. See the caption "THE SERIES 2015 BONDS — Redemption" herein. (Z) Assuming annual receipts of the Sales and Use Taxes of $19,298,680. (3) Projected mandatory redemptions related to Series 2015 Bonds maturing November 1, 2020 through November 1, 2024. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] 11 Series 2015 Bonds Series 2015 Redeemed Prior to Total Series 2015 Date(l) Principal Due Maturity«)(3) Principal Retired 5-1-16 $ -- $ 335,000 $ 335,000 11-1-16 930,000 330,000 1,260,000 5-1-17 -- 335,000 335,000 11-1-17 945,000 330,000 1,275,000 5-1-18 -- 335,000 335,000 11-1-18 965,000 320,000 1,285,000 5-1-19 -- 515,000 515,000 11-1-19 980,000 1,405,000 2,385,000 5-1-20 -- 1,275,000 1,275,000 Totals: $3,820,000 $5,180,000 $9,000,000 (1) Series 2015 Bonds are subject to mandatory redemption from Surplus Tax Receipts on each May 1 and November 1. See the caption "THE SERIES 2015 BONDS — Redemption" herein. (Z) Assuming annual receipts of the Sales and Use Taxes of $19,298,680. (3) Projected mandatory redemptions related to Series 2015 Bonds maturing November 1, 2020 through November 1, 2024. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] 11 . MS General. The City is a city of the first class organized and existing under the laws of the State of Arkansas. The City is the seat of government of Washington County (the "County") and is the fourth largest city in the State. The City is located in the Metropolitan Statistical Area of Fayetteville/Springdale/Rogers (the "MSA"), which includes all of Washington and Benton Counties in the northwest corner of the State and is approximately 185 miles northwest of Little Rock, Arkansas, 125 miles east of Tulsa, Oklahoma, and 210 miles south of Kansas City, Missouri. The City is served by U.S. Interstate 49, U.S. Highways 62 and 71, and State Highways 16, 45, 112, 156, 180 and 265. The Burlington Northern Railroad has several lines running through the City, and a general aviation airport with a 6,006 -foot runway is available for limited commuter travel. The Northwest Arkansas Regional Airport is located approximately 40 minutes from downtown Fayetteville and provides daily flights to numerous venues. Government. The City currently operates under the Mayor -Council form of government pursuant to which a mayor, city attorney, city clerk and eight aldermen are elected, two from each of the City's four wards. The mayor, city attorney and city clerk are full-time positions elected to four year terms. Aldermen also serve four year terms. The City's elected officials and the dates on which their respective terms expire are as follows: Name Office Term Expires Lioneld Jordan Mayor 12/31/16 Kit Williams City Attorney 12/31/18 Sondra Smith City Clerk 12/31/16 Adella Gray Alderman 12/31/18 Mark Kinion Alderman 12/31/18 John La Tour Alderman 12/31/18 Alan Long Alderman 12/31/16 Sarah Marsh Alderman 12/31/16 Matthew Petty Alderman 12/31/16 Martin Schoppmeyer, Jr. Alderman 12/31/16 Justin Tennant Alderman 12/31/18 Population. The following is a table of population changes for the City, the MSA and the State of Arkansas, according to the United States Census Bureau: 12 City of State of Year Fayetteville MSA Arkansas 1960 20,274 92,069 1,786,272 1970 30,729 127,846 1,923,322 1980 36,608 178,609 2,286,435 1990 42,099 210,908 2,350,624 2000 58,047 311,121 2,673,400 2010 73,580 463,204 2,915,918 12 Economic Data. Per capita personal income figures for the MSA and the State of Arkansas are as follows: State of Year MSA Arkansas 2005 $28,685 $27,908 2006 30,168 29,459 2007 31,586 31,517 2008 32,537 32,257 2009 32,313 31,688 2010 33,309 32,373 2011 34,130 33,740 2012 36,985 34,723 2013 37,863 36,698 2014 n/a 37,751 Source: Discover Arkansas, Data Analysis. Retail sales figures for the MSA and the State are as follows: (1) Does not include McDonald County, Missouri Source: Demographics USA. For years through 2008; Nielson Consumer Buying Power for 2009-2013. The following table shows the total assessed value of non-utility real and personal property within the City for the years indicated: Year Real Property State of Year MSA Arkansas 2000 $3,526,791,000 $28,488,033,000 2001 3,806,422,000 29,652,693,000 2002 3,841,326,000 29,269,775,000 2003 3,968,812,000 29,920,716,000 2004 4,610,051,000 31,463,983,000 2005 5,287,158,000 34,290,412,000 2006 7,251,810,000 38,843,312,000 2007 8,250,140,000 43,504,752,000 2008 8,291,415,000 43,820,789,000 2009 5,527,678,000' 35,498,326,000 2010 6,133,565,000' 35,247,629,000 2011 7,236,224,0001" 42,160,822,000 2012 7,231,740,0001 42,262,644,000 2013 8,849,969,401... 45,797,494,447 2014 10,299,545,94911) 51,904,796,678 (1) Does not include McDonald County, Missouri Source: Demographics USA. For years through 2008; Nielson Consumer Buying Power for 2009-2013. The following table shows the total assessed value of non-utility real and personal property within the City for the years indicated: Year Real Property Personal Property Total 2005 $ 729,172,106 $ 212,694,254 $ 941,866,260 2006 802,306,156 198,469,816 1,000,775,972 2007 942,667,570 203,094,564 1,145,762,134 2008 1,026,022, 871 203, 311,701 1,232, 334,572 2009 1,067,947,653 191,973,349 1,299,921,002 2010 1,025,933,870 188,130,198 1,214,064,068 2011 1,046,174,941 199,900,209 1,246,075,150 2012 1,063,617,013 203,289,225 1,266,906,238 2013 1,084,550,127 260,194,656 1,344,744,783 2014 1,115,992,871 274,972,663 1,390,965,534 Source: Washington County Tax Assessor's Office. The assessed value represents 20% of the appraised value of property. 13 Building permits issued by the City(1) are shown below for the years indicated: 2011 2012 2013 2014 2015 12) Residential Building 273 394 379 289 244 Permits Commercial Building 29 18 24 17 18 Permits Value of All Building Permits $81,146,187 $251,041,427 $157,970,433 $139,775,340 $187,615,391 (1) Does not include building activity of the University of Arkansas, school permits and additions/alterations to existing structures. (2) Through July 31, 2015. Source: City of Fayetteville. Unemployment figures for the MSA and the State of Arkansas, according to the U.S. Bureau of Labor Statistics, are as follows: Year MSA State of Arkansas 2005 3.3% 5.3% 2006 3.6 5.4 2007 3.9 5.4 2008 3.8 5.2 2009 6.1 7.4 2010 6.5 7.9 2011 6.2 8.0 2012 5.6 7.3 2013 4.9 7.5 2014 4.6 6.1 2015* 3.6 5.0 August, 2015 only; preliminary and not seasonally adjusted. Employment and Industry. The principal campus of the University of Arkansas is located in the City and has total enrollment for the Fall semester of 2015 of approximately 26,754. On the Fayetteville campus, the University employs approximately 8,500 faculty, administrative, secretarial, clerical and maintenance personnel in both full-time and part-time positions, making the University the largest employer in the City. Other major employers in the City, their products or services and approximate number of employees are set forth below: Employer Product or Service Employees University of Arkansas Education 12,689 Washington Regional Med. Ctr. Medical 1,500 Veterans Admin. Med. Ctr. Medical 1,442 Washington County Gov't Government 1,386 Fayetteville School District Education 1,340 Superior Industries Cast aluminum wheels 822 City of Fayetteville Government 731 Wal-Mart #9149 (optical lab) Optical products 670 Tyson Mexican Original Food 631 Wal-Mart #144 Retail 550 Source: 2014 City of Fayetteville CAFR 14 Generally. The Sales and Use Taxes are levied under the Election Ordinance pursuant to the authority of the Act. The Sales and Use Taxes are taxes levied within the City on all items which are subject to taxation under The Arkansas Gross Receipts Act of 1941 and taxes levied on the receipts from storing, using or consuming tangible personal property under The Arkansas Compensating (Use) Tax Act of 1949. The Sales and Use Taxes are collected only on the first $2,500 of gross receipts, gross proceeds or sales price from any single transaction. Pursuant to the Indenture and the Authorizing Ordinance, the City has pledged the receipts of the Sales and Use Taxes to the payment of the Series 2015 Bonds. Pursuant to the terms of the Election Ordinance, the collection of the 0.25% Sales and Use Tax commenced on January 1, 2007. At such time an existing three-quarters of one percent (0.75%) special city-wide sales and use tax (the "Existing Tax") was pledged to the payment of certain indebtedness of the City originally authorized in the aggregate principal amount of $92,000,000 (the "Existing Indebtedness"). The Existing Indebtedness was paid in full on July 1, 2014, the levy of the Existing Tax ceased on August 1, 2014, and the collection of the 0.75% Sales and Use Tax commenced simultaneously therewith. See "Appendix C — THE SALES AND USE TAXES" for a detailed description of the property and services subject to sales and use taxation and the exemptions therefrom. Administration. Pursuant to the State law, the Commissioner of Revenues of the State (the "Commissioner") performs all functions incidental to the administration, collection, enforcement and operation of the Sales and Use Taxes. All receipts of the Sales and Use Taxes collected, less certain charges payable and retainage due the Commissioner for administrative services in the amount of 3% of the gross receipts of the Sales and Use Taxes, shall be remitted by the State Treasurer to the Trustee monthly. In addition, receipts of the Sales and Use Taxes collected with respect to the sale of aviation fuel at the local airport within the City are required by federal and state law to be retained by the Commission and remitted to the airport to be expended for airport capital or operating costs. See the caption "SUMMARY OF THE INDENTURE — Application of Sales and Use Tax Receipts" herein. In an effort to simplify and modernize the sales and use tax collection process, the State of Arkansas has opted to participate in the Streamlined Sales Tax Agreement, a cooperative effort among states, local governments and the business community. Future Receipts of the Sales and Use Taxes. Receipts of the Sales and Use Taxes will be contingent upon the sale and use of property and services within the City, which activity is generally dependent upon economic conditions within the City and the surrounding trade area. Also, receipts of the Sales and Use Taxes may be affected by changes to transactions exempted from the Sales and Use Taxes made by legislation adopted by the General Assembly of the State or by the people of the State in the form of a constitutional amendment or initiated act. In the past the General Assembly of the State has considered new exemptions to sales and use taxes, such as food sales, which, if adopted, would materially reduce receipts of the Sales and Use Taxes. The City has no control over actions of the General Assembly or the people of the State and cannot predict whether changes to the Sales and Use Taxes may be made. Accordingly, the City cannot predict with certainty the expected amount of receipts of the Sales and Use Taxes to the be received and, therefore, there can be no assurance that receipts of the Sales and Use Taxes will be sufficient to pay the principal of and interest on the Series 2015 Bonds. The following statements are brief summaries of certain provisions of the Indenture. The statements do not purport to be complete, and reference is made to the Indenture, copies of which are available for examination at the offices of the Finance Director of the City, for a full statement thereof. Funds and Accounts. Receipts of the Sales and Use Taxes are pledged by the Indenture to the payment of the principal of and interest on the Bonds. The following Funds and Accounts have been established with the Trustee in connection with the issuance of the Bonds: Funds and Accounts Revenue Fund Bond Fund, and an Interest Account and a Principal Account therein Debt Service Reserve Fund, and Series 2006A, Series 2007, Series 2009, Series 2013 and Series 2015 Accounts therein 15 Redemption Fund Project Fund, and a Street Account, Trail Account and Wastewater Account therein Cost of Issuance Fund Rebate Fund Application of Receipts of the Sales and Use Taxes. The application of receipts of the Sales and Use Taxes is as follows: (a) Revenue Fund. All receipts from the Sales and Use Taxes shall, as and when received, be deposited into the Revenue Fund. All moneys at any time in the Revenue Fund shall be applied on a monthly basis to the payment of Debt Service on the Bonds, to the maintenance of the Debt Service Reserve Fund, to the payment of any arbitrage rebate due under Section 148(f) of the Code, to the payment of fees and expenses of the Trustee and any Paying Agent, and to the early redemption of the Bonds, at the times and in the amounts set forth as follows: (b) Bond Fund. Upon receipt, but in no event later than the last day of each month in which receipts of the Sales and Use Taxes are deposited in the Revenue Fund, there shall be transferred from the Revenue Fund (i) into the Interest Account of the Bond Fund, an amount equal to 1/6 of the interest on the Outstanding Bonds due on the next interest payment date, and (ii) into the Principal Account of the Bond Fund, an amount equal to 1/12 of the next scheduled principal maturity of Outstanding Bonds. Moneys in the Bond Fund shall be used solely for the purpose of paying Annual Debt Service on the Bonds or for redemption of Bonds, as provided in the Indenture. The Trustee shall withdraw from the Bond Fund, on the date of any principal or interest payment, an amount equal to such payment for the sole purpose of paying the same. If receipts of the Sales and Use Taxes in the Revenue Fund are insufficient to make the required monthly payment into the Bond Fund, the amount of any such deficiency in the payment made shall be added to the amount otherwise required to be paid into the Bond Fund not later than last day of the next succeeding month. When the moneys held in the Revenue Fund, the Bond Fund, the Debt Service Reserve Fund and the Redemption Fund shall be and remain sufficient to pay in full the principal of and interest on all Bonds then Outstanding in accordance with the Indenture, together with the required fees and expenses to be paid or reimbursed to the Trustee and any Paying Agent, the City shall have no further obligation to make payments into such Funds and the levy of the Sales and Use Taxes shall cease. (c) Debt Service Reserve Fund. See the caption "SECURITY FOR THE BONDS — Debt Service Reserve" herein. (d) Rebate Fund. The Trustee shall establish and maintain, separate and apart from any other Funds and Accounts established and maintained under the Indenture, the Rebate Fund, which Fund is not pledged to the payment of any Bonds. Subject to transfer to the United States in payment of any arbitrage rebate due under Section 148(f) of the Code, all moneys at any time deposited in the Rebate Fund shall be held by the Trustee in trust, and neither the City nor the Owner of any Bond shall have any rights in or claim to such money. Any amounts remaining in the Rebate Fund after payment in full of the rebate amount owing to the United States, within sixty (60) days after the date on which the last Bond is redeemed, shall be transferred to the Revenue Fund. (e) Redemption Fund. After making the required deposits into the Bond Fund, into the Debt Service Reserve Fund, and into the Rebate Fund, and after paying the fees and expenses of the Trustee and any Paying Agent, there shall be paid from the Revenue Fund into the Redemption Fund all remaining moneys in the Revenue Fund (the "Surplus Tax Receipts"). Moneys in the Redemption Fund shall be transferred to the appropriate Principal Account(s) of the Bond Fund at such times as may be necessary to effectuate redemptions of Bonds on the first available redemption date. So long as the Series 2006A Bonds are outstanding, 50% of the Surplus Tax Receipts shall be allocated to the redemption of the Series 2006A Bonds and the remaining 50% of Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any series of Additional Bonds. Following payment in whole of the Series 2006A Bonds at maturity or upon redemption prior to maturity, all Surplus Tax Receipts shall be allocated ratably (based on relative outstanding principal amounts) to the redemption of the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and any 16 series of Additional Bonds. See the captions "THE SERIES 2015 BONDS — Redemption" and "PROJECTED MANDATORY REDEMPTIONS" herein. (f) Project Fund. A portion of the proceeds of the Series 2015 Bonds shall be deposited in the Street Account of the Project Fund. See the captions "SOURCES AND USES OF FUNDS" and "THE STREET PROJECT" herein. Amounts in the Street Account in the Project Fund shall be expended only for the payment of Project Costs related to the applicable portion of the Street Project being financed with the Series 2015 Bonds upon the submission of Requisitions by the City to the Trustee. The Trustee shall only make payments from the Project Fund pursuant to and in accordance with Requisitions. Within ninety (90) days following completion of the portion of a Project being financed with a particular series of Bonds, the City shall deliver to the Trustee its Certificate stating that the applicable portion of such Project is complete and the Trustee shall transfer the remaining moneys in the applicable Account of the Project Fund relating to such series of Bonds (save and except moneys needed to satisfy unpaid Project Costs) to the Redemption Fund for application to the retirement of the corresponding series of Bonds by redemption or purchase. See the caption "THE SERIES 2015 BONDS — Redemption" herein. (g) Cost of Issuance Fund. A portion of the proceeds of the Series 2015 Bonds shall be deposited to the credit of the Cost of Issuance Fund. The Trustee shall pay those Costs of Issuance as directed by the City pursuant to a Certificate delivered on a Closing Date. After all Costs of Issuance have been paid with respect to the Series 2015 Bonds (and in any event not later than December 1, 2015), any remaining moneys in the Cost of Issuance Fund shall be transferred to the Interest Account of the Bond Fund. Investment of Funds. At the direction of the City or absent such direction, the Trustee shall invest moneys in Funds or Accounts held by the Trustee in Investment Securities with maturity or redemption dates consistent with the times at which said moneys will be required for the purposes provided in the Indenture. Moneys in separate Funds or Accounts may be commingled for the purpose of investment. Valuation of Funds and Accounts. In determining the value of any Fund or Account held by the Trustee under the Indenture, the Trustee shall credit Investment Securities at the fair market value thereof, as determined by the Trustee by any method selected by the Trustee in its reasonable discretion. No less frequently than annually, and in any event within thirty (30) days prior to the end of each Fiscal Year, the Trustee shall determine the value of each Fund and Account held under the Indenture and shall report such determination to the City. The Trustee shall sell or present for redemption any Investment Securities as necessary in order to provide money for the purpose of making any payment required under the Indenture, and the Trustee shall not be liable for any loss resulting from any such sale. Responsibility of Trustee. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of moneys made by it at the direction of the City. Instruments of Further Assurance. At any and all times the City shall, so far as it may be authorized by law, pass, make, do, execute, acknowledge and deliver, all and every such further resolutions, ordinances, acts, deeds, conveyances, assignments, transfers and assurances as may be necessary or desirable for the better assuring, conveying, granting, pledging, assigning and confirming of all and singular the receipts from the Sales and Use Taxes and all other moneys pledged or assigned by the Indenture, or intended so to be, or which the City may become bound to pledge or assign. Tax Covenants. The City shall not use or permit the use of any Series 2015 Bond proceeds or any other funds of the City, directly or indirectly, in any manner, and will not take or permit to be taken any other action or actions which would adversely affect the exclusion of interest on any Series 2015 Bond from gross income for federal income tax purposes. No part of the proceeds of the Series 2015 Bonds shall at any time be used, directly or indirectly, to acquire securities or obligations the acquisition of which would cause any of such Series 2015 Bonds to be an "arbitrage bond" as defined in Sections 148(a) and (b) of the Code. The City agrees that so long as any of the Series 2015 Bonds remain Outstanding, it will comply with the provisions of the Tax Regulatory Agreement. Defeasance. Any Bond shall be deemed to be paid within the meaning of the Indenture when payment of the principal of and premium, if any, and interest on such Bond (whether at maturity or upon redemption as provided in the Indenture, or otherwise), either (i) shall have been made or caused to be made in accordance with the terms thereof, or (ii) shall have been provided for by irrevocably depositing with the Trustee, in trust and irrevocably set aside exclusively for such payment, (1) moneys sufficient to make such payment or (2) Government Securities (provided that such deposit will not affect the tax-exempt status of the interest on any of the Bonds or cause any of 17 the Bonds to be classified as "arbitrage bonds" within the meaning of Section 148(a) of the Code, as reflected in an opinion of Bond Counsel delivered to the Trustee), maturing as to principal and interest in such amounts and at such times as will provide sufficient moneys to make such payment, and all necessary and proper fees, compensation and expenses of the Trustee and any Paying Agent pertaining to the Bonds with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee and any said Paying Agent. In the case of any defeasance of Series 2015 Bonds, the dates of redemption of such Series 2015 Bonds and the principal amounts and maturities of Series 2015 Bonds to be redeemed on such dates will be determined by taking into consideration the applicable redemption requirements with respect to the Series 2015 Bonds to be defeased and the receipts of the Sales and Use Taxes for the most recent twelve months. Events of Default. Each of the following events shall constitute and is referred to in the Indenture as an "Event of Default": (a) Default in the due and punctual payment of any interest on any Bond; (b) Default in the due and punctual payment of the principal of or premium, if any, on any Bond, whether at the stated maturity thereof, or upon proceedings for redemption thereof, or upon the maturity thereof by declaration; (c) Default in the payment of any other amount required to be paid under the Indenture or the performance or observance of any other of the covenants, agreements or conditions contained in the Indenture, or in the Bonds issued under the Indenture, and continuance thereof for a period of sixty (60) days after written notice specifying such failure and requesting that it be remedied, shall have been given to the City by the Trustee, which may give such notice in its discretion and shall give such notice at the written request of Holders of not less than fifty-one percent (51%) in aggregate principal amount of the Bonds then Outstanding, unless the Trustee, or the Trustee and Holders of an aggregate principal amount of Bonds not less than the aggregate principal amount of Bonds the Holders of which requested such notice, as the case may be, shall agree in writing to an extension of such period prior to its expiration; provided, however, if the failure stated in the notice cannot be corrected within the applicable period, the Trustee will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the City within such period and is being diligently pursued; (d) The filing of a petition in bankruptcy by or against the City under the United States Bankruptcy Code or the commencement of a proceeding by or against the City under any other law concerning insolvency, reorganization or bankruptcy; and (e) If the State has limited or altered the rights of the City pursuant to the Act, as in force on the date of the Indenture, to fulfill the terms of any agreements made with the Trustee or the Bondholders or in any way impaired the rights and remedies of the Trustee or the Bondholders while any Bonds are Outstanding. The term "default" as used in clauses (a), (b) and (c) above shall mean default by the City in the performance or observance of any of the covenants, agreements or conditions on its part contained in the Indenture, or in the Bonds Outstanding thereunder, exclusive of any period of grace required to constitute a default an "Event of Default" as described above. Acceleration. Upon the occurrence of an Event of Default, the Trustee may, and upon the written request of the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding shall, by notice in writing delivered to the City, declare the principal of all Bonds then Outstanding, together with any premium and the interest accrued thereon, immediately due and payable, and such principal and interest shall thereupon become and be immediately due and payable. Other Remedies; Rights of Bondholders. Upon the occurrence of an Event of Default, the Trustee may, as an alternative, pursue any available remedy by suit at law or in equity, including, without limitation, mandamus to enforce the payment of the principal of and premium, if any, and interest on the Bonds then Outstanding. If an Event of Default shall have occurred, and if it shall have been requested so to do by the Holders of 51% in aggregate principal amount of Bonds Outstanding and if it shall have been indemnified as provided in the Indenture, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred upon it by the Indenture as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Bondholders. 18 No remedy by the terms of the Indenture conferred upon or reserved to the Trustee (or to the Bondholders) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given under the Indenture or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient. No waiver of any default or Event of Default under the Indenture, whether by the Trustee or by the Bondholders, shall extend to or shall affect any subsequent default or Event of Default or shall impair any rights or remedies consequent thereon. Rights and Remedies of Bondholders. No Holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of the Indenture or for the execution of any trust thereof or for the appointment of a receiver or any other remedy thereunder, unless a default has occurred of which the Trustee has been notified as provided in the Indenture, or of which by the Indenture it is deemed to have notice, nor unless such default shall have become an Event of Default and the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding shall have made written request to the Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers granted or to institute such action, suit, or proceeding in its own name, nor unless also they have offered to the Trustee indemnity as provided in the Indenture nor unless the Trustee shall thereafter fail or refuse to exercise the powers granted, or to institute such action, suit, or proceeding in its own name; and such notification, request and offer of indemnity are declared in every such case at the option of the Trustee to be conditions precedent to the execution of the powers and trusts of the Indenture, and to any action or cause of action for the enforcement of the Indenture or for the appointment of a receiver or for any other remedy thereunder; it being understood and intended that no one or more Holders of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of the Indenture by action of the Holder or Holders or to enforce any right under the Indenture except in the manner therein provided, and that all proceedings at law or in equity shall be instituted, held and maintained in the manner therein provided for the equal benefit of the Holders of all Bonds Outstanding thereunder. Nothing in the Indenture contained shall, however, affect or impair the right of any Bondholders to enforce the payment of the principal of and premium, if any, and interest on any Bonds at and after the maturity thereof, or the obligation of the City to pay the principal of and premium, if any, and interest on each of the Bonds issued under the Indenture to the respective Holders thereof at the time and place in said Bonds expressed. Supplemental Indentures Not Requiring Consent of Bondholders. The City and the Trustee may, from time to time and at any time, without the consent of or notice to the Bondholders, enter into Supplemental Indentures as follows: (a) to cure any formal defect, omission, inconsistency or ambiguity in the Indenture; (b) to grant to or confer or impose upon the Trustee for the benefit of the Bondholders any additional rights, remedies, powers, authority, security, liabilities or duties which may lawfully be granted, conferred or imposed and which are not contrary to or inconsistent with the Indenture as theretofore in effect, provided that no such additional liabilities or duties shall be imposed upon the Trustee without its consent; (c) to add to the covenants and agreements of, and limitations and restrictions upon, the City in the Indenture other covenants, agreements, limitations and restrictions to be observed by the City which are not contrary to or inconsistent with the Indenture as theretofore in effect; (d) to confirm, as further assurance, any pledge under, and the subjection to any claim, lien or pledge created or to be created by, the Indenture, of the Trust Estate or of any other moneys, securities or funds; (e) to comply with the requirements of the Trust Indenture Act of 1939, as from time to time amended; (f) to authorize the issuance and sale of one or more series of Additional Bonds; (g) to make such additions, deletions or modifications as may be necessary to assure compliance with Section 148(f) of the Code relating to required rebate to the United States or otherwise as may be necessary to assure exemption from federal income taxation of interest on the Bonds; or 19 (h) to modify, alter, amend or supplement the Indenture in any other respect which is not materially adverse to the Bondholders and which does not involve a change described in clause (a), (b), (c), (d), (e) or (f) above and which, in the judgment of the Trustee, is not to the prejudice of the Trustee. Supplemental Indentures Requiring Consent of Bondholders. Subject to the terms and provisions contained in this paragraph, and not otherwise, the Holders of not less than 2/3 in aggregate principal amount of the Bonds then Outstanding shall have the right, from time to time, anything contained in the Indenture to the contrary notwithstanding, to consent to and approve the execution by the City and the Trustee of such indenture or indentures supplemental to the Indenture as shall be deemed necessary and desirable by the City for the purpose of modifying, altering, amending, adding to, or rescinding, in any particular, any of the terms or provisions contained in the Indenture or in any Supplemental Indenture; provided, however, that nothing contained in the Indenture shall permit or be construed as permitting (a) an extension of the maturity (or mandatory redemption date) of the principal of or the interest on any Bond issued thereunder, or (b) a reduction in the principal amount of or redemption premium or rate of interest on any Bond issued thereunder, or (c) the creation of any lien on the Trust Estate or any part thereof, except as expressly permitted in the Indenture, or (d) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (e) a reduction in the aggregate principal amount of the Bonds required for consent to such Supplemental Indenture, or (f) depriving the Holder of any Bond then Outstanding of the lien created on the Trust Estate. If, at any time the City shall request the Trustee to enter into any Supplemental Indenture for any of the purposes described above, the Trustee shall, at the expense of the City, cause notice of the proposed execution of such Supplemental Indenture to be mailed by first class mail to each registered owner of the Bonds. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that copies thereof are on file at the principal office of the Trustee for inspection by Bondholders. The Trustee shall not, however, be subject to any liability to any Bondholder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such Supplemental Indenture when consented to and approved as provided above. If the Holders of not less than 2/3 in aggregate principal amount of the Bonds Outstanding at the time of the execution of any such Supplemental Indenture shall have consented to and approved the execution thereof, no Holder of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the City from executing the same or from taking any action pursuant to the provisions thereof. The City has entered into an undertaking in the form of the Continuing Disclosure Agreement as required by the Indenture for the benefit of the Beneficial Owners of the Series 2015 Bonds to cause certain financial information to be sent to certain information repositories annually and to cause notice to be sent to such information repositories of certain specified events, pursuant to the requirements of Section (b)(5)(i) of Rule 15c2-12 of the Securities Exchange Act of 1934, as amended (the "Rule"). The City is a party to multiple continuing disclosure agreements for various bond issues of the City secured by different repayment sources. During the past five years, the City has identified certain instances in which filings were not made as required by such agreements. A listing of such instances, which may not be inclusive, is set forth below. With respect to the City's continuing disclosure obligations relating to certain series of bonds secured by sales and use tax receipts, certain notices of mandatory redemption from excess sales tax receipts were not posted. With respect to the City's continuing disclosure obligations relating to a series of bonds secured by receipts of a special hotel, motel and restaurant gross receipts tax (which bonds have now been refunded), the City's audited financial statements and supplemental financial data for fiscal years 2010 and 2011 were not posted on a timely basis (posted 7/30/14). Notices of late filings and notices of ratings changes with respect to the insurer of said bonds were not posted. With respect to the City's continuing disclosure obligations for certain bonds secured by water and sewer revenues which are no longer outstanding, audited financial statements and supplemental operating and financial data for fiscal years 2010 and 2011 were not posted on a timely basis. Said audited financial statements and supplemental operating and financial data were timely posted on EMMA for one issue of the City's water and sewer 20 revenue bonds. A ratings upgrade with respect to one series of water and sewer revenue bonds (no longer outstanding) was not posted. Supplemental financial data for fiscal years 2010 and 2011 was timely filed but incomplete (remedied 6/27/13) for an issue of the City's tax increment finance bonds. The City makes no representation as to the materiality of the continuing disclosure delinquencies and omissions described above. The City has undertaken steps to ensure future compliance with its continuing disclosure obligations. The Continuing Disclosure Agreement contains the following covenants and provisions: (a) The City covenants that it will disseminate, or will cause the Dissemination Agent to disseminate, the Annual Financial Information and the Audited Financial Statements (in the form and by the dates set forth in Exhibit I to the Continuing Disclosure Agreement) by delivering such Annual Financial Information and the Audited Financial Statements to the MSRB within 180 days of the completion of the City's fiscal year. The City is required to deliver or cause delivery of such information in Prescribed Form and by such time so that such entities receive the information by the dates specified. (b) If any part of the Annual Financial Information can no longer be generated because the operations to which it is related have been materially changed or discontinued, the City will disseminate or cause dissemination of a statement to such effect as part of its Annual Financial Information for the year in which such event first occurs. (c) If any amendment is made to the Continuing Disclosure Agreement, the Annual Financial Information for the year in which such amendment is made (or in any notice or supplement provided to the MSRB) shall contain a narrative description of the reasons for such amendment and its impact on the type of information being provided. (d) The City covenants that it will disseminate or cause dissemination in a timely manner, not in excess of ten (10) business days after the occurrence of the event, of Material Events Disclosure to the MSRB in Prescribed Form. Notwithstanding the foregoing, notice of optional or unscheduled redemption of any Series 2015 Bonds or defeasance of any Series 2015 Bonds need not be given under the Continuing Disclosure Agreement any earlier than the notice (if any) of such redemption or defeasance is given to the owners of the Series 2015 Bonds pursuant to the Indenture. The City is required to deliver or cause delivery of such Material Events Disclosure in the same manner as provided for Annual Financial Information and Audited Financial Statements. (e) The City shall give notice in a timely manner or shall cause such notice to be given by the Dissemination Agent, not in excess of ten (10) business days after the occurrence of the event, to the MSRB in Prescribed Form of any failure to provide Annual Financial Information Disclosure when the same is due. (f) The Continuing Disclosure Agreement has been executed in order to assist the Participating Underwriter in complying with the Rule; however, the Continuing Disclosure Agreement shall inure solely to the benefit of the City, the Dissemination Agent, if any, the Trustee and the Beneficial Owners of the Series 2015 Bonds, and shall create no rights in any other person or entity. In the event of a failure of the City to comply with any provision of the Continuing Disclosure Agreement, the Beneficial Owner of any Series 2015 Bond may seek specific performance by court order to cause the City to comply with its obligations under the Continuing Disclosure Agreement. A default under the Continuing Disclosure Agreement shall not be deemed an Event of Default under the Indenture or any other agreement, and the sole remedy under the Continuing Disclosure Agreement in the event of any failure of the City or the Dissemination Agent to comply with the Continuing Disclosure Agreement shall be an action to compel performance. (g) The Undertaking of the City pursuant to the Continuing Disclosure Agreement shall be terminated when the City shall no longer have any legal liability for any obligation on or relating to the repayment of the Series 2015 Bonds. The City shall give notice to the MSRB, or shall cause the Dissemination Agent to give such notice, in a timely manner and in Prescribed Form in such event. (h) The City and the Dissemination Agent may amend the Continuing Disclosure Agreement, and any provision of the Continuing Disclosure Agreement may be waived, if (i) the amendment or waiver is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the City or type of business conducted; (ii) the Continuing Disclosure Agreement, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the 21 primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; (iii) the amendment or waiver does not materially impair the interests of the Beneficial Owners of the Series 2015 Bonds, as determined either by parties unaffiliated with the City (such as the Trustee) or by an approving vote of the Beneficial Owners of the Series 2015 Bonds holding a majority of the aggregate principal amount of the Series 2015 Bonds (excluding Series 2015 Bonds held by or on behalf of the City or its affiliates) pursuant to the terms of the Indenture at the time of the amendment; or (iv) the amendment or waiver is otherwise permitted by the Rule. (i) The following terms used under this caption shall have the meanings set forth below: "Annual Financial Information" means receipts of the Sales and Use Taxes for the latest Fiscal Year and for the four previous Fiscal Years. "Annual Financial Information Disclosure" means the dissemination of disclosure concerning Annual Financial Information and the dissemination of the Audited Financial Statements as set forth in subsection (a) above. "Audited Financial Statements" means the audited consolidated financial statements of the City, prepared pursuant to generally accepted accounting standards and as described in Exhibit I to the Continuing Disclosure Agreement. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2015 Bonds (including persons holding Series 2015 Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Series 2015 Bonds for federal income tax purposes. "Commission" means the U.S. Securities and Exchange Commission. "Dissemination Agent" shall mean Simmons First Trust Company, N.A., acting in its capacity as a dissemination agent under the Continuing Disclosure Agreement, or any successor dissemination agent designated in writing by the City and which has filed with the Trustee a written acceptance of such designation. MSRB. Bonds: "EMMA" means the Electronic Municipal Market Access facility for municipal securities disclosure of the "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Material Event" means the occurrence of any of the following events with respect to the Series 2015 (i) Principal and interest payment delinquencies; (ii) Nonpayment -related defaults, if material; (iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security; (vii) Modifications to rights of security holders, if material; (viii) Bond calls, if material, and tender offers; (ix) Defeasances; (x) Release, substitution or sale of property securing repayment of the securities, if material; (xi) Rating changes; (xii) Bankruptcy, insolvency, receivership or similar event of the City; 22 (xiii) The consummation of a merger, consolidation or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (xiv) Appointment of a successor or additional trustee or the change of name of a trustee, if material. "Material Events Disclosure" means dissemination of a notice of a Material Event as set forth in subsection (d) above. "MSRB" shall mean the Municipal Securities Rulemaking Board established in accordance with the provisions of Section 1513(b)(1) of the 1934 Act. "Participating Underwriter" means each broker, dealer or municipal securities dealer acting as an underwriter in any primary offering of the Series 2015 Bonds. "Prescribed Form" means, with regard to the filing of Annual Financial Information, Audited Financial Statements and notices of Material Events with the MSRB at www.emma.msrb.org (or such other address or addresses as the MSRB may from time to time specify), such electronic format, accompanied by such identifying information, as shall have been prescribed by the MSRB and which shall be in effect on the date of filing of such information. "Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission ("SEC") under ZD the Exchange Act, as the same may be amended from time to time. "State" means the State of Arkansas. "Undertaking" means the obligations of the City pursuant to subsections (a) and (d) above. i Under a bond purchase agreement entered into by and among the City and Stephens Inc. (the "Underwriter"), the Series 2015 Bonds are being purchased at a purchase price of $8,994,725.65 (representing the stated principal amount of the Series 2015 Bonds plus a reoffering premium of $80,225.65 and less an underwriting discount of $85,500.00). The bond purchase agreement provides that the Underwriter will purchase all of the Series 2015 Bonds if any are purchased. The obligation of the Underwriter to accept delivery of the Series 2015 Bonds is subject to various conditions contained in the bond purchase agreement, including the absence of pending or threatened litigation questioning the validity of the Series 2015 Bonds or any proceedings in connection with the issuance thereof, and the absence of material adverse changes in the financial condition of the City. Mark C. Doramus, Chief Financial Officer of the Underwriter, serves on the Board of Directors of the Trustee. The Underwriter intends to offer the Series 2015 Bonds to the public initially at the offering prices as set forth on the inside cover page of this Official Statement, which offering prices (or bond yields establishing such offering prices) may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the Series 2015 Bonds to the public, and may offer the Series 2015 Bonds to such dealers and other underwriters at a price below the public offering price. The City has agreed to indemnify the Underwriter against certain civil liabilities in connection with the offering and sale of the Series 2015 Bonds, including certain liabilities under federal securities laws. UV1Z►1IYW9D] Federal Income Taxes. In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions, interest on the Series 2015 Bonds is excluded from the gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. The opinion described in the preceding sentence assumes the accuracy of certain representations and compliance by the City with covenants designed to satisfy the requirements of the Code that must be met subsequent to the issuance of the Series 2015 Bonds. Failure to comply with such requirements could cause interest on the Series 2015 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2015 Bonds. The City has covenanted to comply with such requirements. 23 Notwithstanding Bond Counsel's opinion that interest on the Series 2015 Bonds is not a specific preference item for purposes of the federal alternative minimum tax, such interest will be included in adjusted current earnings of certain corporations, and such corporations are required to include in the calculation of alternative minimum taxable income 75% of the excess of such corporation's adjusted current earnings over their alternative minimum taxable income (determined without regard to such adjustment and prior to reduction for certain net operating losses). Bank Qualification. The City has represented that it does not reasonably anticipate issuing greater than $10,000,000 of tax-exempt obligations in calendar year 2015 (excluding certain private activity and refunding bonds) and that it has designated the Series 2015 Bonds as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code. Accordingly, Bond Counsel is of the opinion that in the case of certain banks, thrift institutions or other financial institutions owning the Series 2015 Bonds, a deduction is allowed for 80% of that portion of such institutions' interest expense allocable to interest on the Series 2015 Bonds. Bond Counsel has expressed no opinion with respect to any deduction for federal income tax purposes of interest incurred or continued by a holder of the Series 2015 Bonds or a related person to purchase or carry the Series 2015 Bonds Original Issue Premium. The Series 2015 Bonds maturing November 1, 2016, 2017, 2018 and 2019 (the "Premium Bonds") are being sold at a premium. An amount equal to the excess of the issue price of a Premium Bond over its stated redemption price at maturity constitutes premium on such Premium Bond. An initial purchaser of a Premium Bond must amortize any premium over such Premium Bond's term using constant yield principles, based on the purchaser's yield to maturity (or, in the case of Premium Bonds callable prior to their maturity, by amortizing the premium to the call date, based on the purchaser's yield to the call date and giving effect to the call premium). As premium is amortized, the amount of the amortization offsets a corresponding amount of interest for the period and the purchaser's basis in such Premium Bond is reduced by a corresponding amount resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Premium Bond prior to its maturity. Even though the purchaser's basis may be reduced, no federal income tax deduction is allowed. Purchasers of the Premium Bonds should consult their tax advisors with respect to the determination and treatment of premium for federal income tax purposes and with respect to the state and local tax consequences of owning a Premium Bond. Bond Counsel has expressed no opinion regarding other federal tax consequences arising with respect to the Series 2015 Bonds. The accrual or receipt of interest on the Series 2015 Bonds may otherwise affect the federal income tax liability of the owners of the Series 2015 Bonds. The extent of these other tax consequences will depend upon such owner's particular tax status and other items of income or deduction. Bond Counsel has expressed no opinion regarding any such consequences. Purchasers of the Series 2015 Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of Social Security or Railroad Retirement benefits, taxpayers otherwise entitled to claim the earned income credit, or taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, should consult their tax advisors as to the tax consequences of purchasing or owning the Series 2015 Bonds. Backup Withholding. As a result of the enactment of the Tax Increase Prevention and Reconciliation Act of 2005, interest on tax-exempt obligations such as the Series 2015 Bonds is subject to information reporting in a manner similar to interest paid on taxable obligations. Backup withholding may be imposed on payments made after March 31, 2007 to any bondholder who fails to provide certain required information, including an accurate taxpayer identification number, to any person required to collect such information pursuant to Section 6049 of the Code. The new reporting requirement does not in and of itself affect or alter the excludability of interest on the Series 2015 Bonds from gross income for federal income purposes or any other federal tax consequence of purchasing, holding or selling tax-exempt obligations. State Taxes. Bond Counsel is of the opinion that, under existing law, the interest on the Series 2015 Bonds is exempt from all state, county and municipal taxes in the State of Arkansas. Changes in Federal and State Tax Law. From time to time, there are legislative proposals in the Congress and in the states that, if enacted, could alter or amend the federal and state tax matters referred to above or adversely affect the market value of the Series 2015 Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted it would apply to bonds issued prior to enactment. In addition, regulatory 24 actions are from time to time announced or proposed and litigation is threatened or commenced which, if implemented or concluded in a particular manner, could adversely affect the market value of the Series 2015 Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular lawsuit will be resolved, or whether the Series 2015 Bonds or the market value thereof would be impacted thereby. Purchasers of the Series 2015 Bonds should consult their tax advisors regarding any pending or proposed legislation, regulatory initiatives or litigation. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial authorities as of the date of issuance and delivery of the Series 2015 Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending legislation, regulatory initiatives or litigation. Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"), has assigned a rating of "AA-" (stable outlook) to the Series 2015 Bonds. Such rating reflects only the view of S&P at the time such rating was given. An explanation of the significance of the rating may be obtained from S&P. There is no assurance that such rating will continue for any given period of time or that the rating will not be revised downward or withdrawn entirely by S&P if in its judgment circumstances so warrant. Any downward revision or withdrawal of the rating may have an adverse effect on the market price of the Series 2015 Bonds. Neither the City nor the Underwriter has undertaken any responsibility subsequent to the issuance of the Series 2015 Bonds to assure the maintenance of the rating or to oppose any revision or withdrawal of the rating. No application has been made to any Rating Agency other than S&P for a rating on the Series 2015 Bonds. LEGAL MATTERS Legal Opinions. Legal matters incident to the authorization and issuance of the Series 2015 Bonds are subject to the unqualified approving opinion of Kutak Rock LLP, Little Rock, Arkansas, Bond Counsel, a copy of whose approving opinion will be delivered with the Series 2015 Bonds and a form of which is attached hereto as Appendix A. Certain legal matters will be passed upon for the City by its counsel, Kit Williams, Esq., City Attorney. Litigation. There is no litigation pending seeking to restrain or enjoin the issuance or delivery of the Series 2015 Bonds or questioning or affecting the legality of the Series 2015 Bonds or the proceedings and authority under which the Series 2015 Bonds are to be issued, or questioning the right of the City to issue the Series 2015 Bonds. There is no action, suit or proceeding known to be pending or threatened, restraining or enjoining the City in any way which could have a material adverse effect on the Sales and Use Taxes or the City's ability to pay debt service with respect to the Series 2015 Bonds. MISCELLANEOUS Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or owners of any of the Series 2015 Bonds. The information contained in this Official Statement has been taken from sources considered to be reliable, but is not guaranteed. To the best of the knowledge of the City, this Official Statement does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated herein, or necessary to make the statements herein, in light of the circumstances under which they were made, not misleading. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] 25 The execution and delivery of this Official Statement has been duly au)horized by the City of Fayetteville, Arkansas. CITY O fAYET 26 � Proposed Form of Bond Counsel Opinion Upon delivery of the Series 2015 Bonds in definitive form, Kutak Rock LLP, Little Rock, Arkansas, proposes to deliver its approving opinion in substantially the following form: November _, 2015 City of Fayetteville, Arkansas Fayetteville, Arkansas Simmons First Trust Company, N.A., as Trustee Pine Bluff, Arkansas Stephens Inc. Fayetteville, Arkansas Assured Guaranty Municipal Corp. New York, New York $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2015 Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance and sale by the City of Fayetteville, Arkansas (the "City"), a political subdivision of the State of Arkansas, of its $9,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"). The Bonds are being issued pursuant to the provisions of the Constitution and laws of the State of Arkansas, including, particularly, Amendment 62 and Arkansas Code Annotated (1998 Repl. & Supp. 2015) §§14- 164-301 et seq. (as from time to time amended, the "Act"), pursuant to Ordinance No. 5803 of the City, duly adopted and approved on October 6, 2015 (the "Authorizing Ordinance"), and pursuant to a Trust Indenture dated as of November 1, 2006, as amended and supplemented by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as amended and supplemented, the "Indenture"), by and between the City and Simmons First Trust Company, N.A., as trustee (the "Trustee"). Reference is hereby made to the Indenture and to all indentures supplemental thereto for the provisions, among others, with respect to the conditions for the issuance of parity indebtedness by the City, with respect to the nature and extent of the security for the Bonds, the rights, duties and obligations of the City, the Trustee and the Holders of the Bonds, and the terms upon which the Bonds are issued and secured. Reference is made to an opinion of even date herewith of Kit Williams, Esq., City Attorney, a copy of which is on file with the Trustee, with respect, among other matters, to the status and valid existence of the City, the power of the City to adopt the Election Ordinance and the Authorizing Ordinance and to enter into and perform its obligations under the Indenture, the valid adoption of the Election Ordinance and the Authorizing Ordinance, and the due authorization, execution and delivery of the Indenture by the City, and with respect to the Indenture being enforceable upon the City. We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the City contained in the Election Ordinance, the Authorizing Ordinance and the Indenture and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. A-1 Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The City is duly created and validly existing as a municipal corporation of the State of Arkansas. Pursuant to the Constitution and laws of the State of Arkansas, including, particularly, Amendment 62 and the Act, the City is empowered to adopt the Election Ordinance and the Authorizing Ordinance, to execute and deliver the Indenture, to perform the agreements on its part contained therein, and to issue the Bonds. 2. The Authorizing Ordinance has been duly adopted by the City and constitutes a valid and binding obligation of the City enforceable upon the City in accordance with its terms. 3. The Indenture has been duly authorized, executed and delivered by the City and is a valid and binding obligation of the City enforceable upon the City in accordance with its terms. 4. The Bonds are payable from and security by a valid lien on and pledge of the Trust Estate (as defined in the Indenture), including receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax (each as defined in the Indenture), in the manner and to the extent provided in the Indenture. Such lien and pledge are made on a parity basis with the existing lien and pledge of the Trust Estate securing (i) the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A, (ii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2007, (iii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2009, and (iv) the City's Sales and Use Tax Capital Improvement Bonds, Series 2013. The City is duly authorized to pledge such Trust Estate, and no further action on the part of the City or any other party is required to perfect the same or the interest of the owners of the Bonds therein. 5. The 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax have been validly adopted in accordance with the Constitution and laws of the State of Arkansas, including Amendment 62 and the Act, and may be validly pledged to secure the Bonds. Levy and collection of the 0.25% Sales and Use Tax commenced as of January 1, 2007, and levy and collection of the 0.75% Sales and Use Tax commenced as of August 1, 2014. 6. Interest on the Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. The opinions described in the preceding sentences assume the accuracy of certain representations and compliance by the City with covenants designed to satisfy the requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be met subsequent to the issuance of the Bonds. Failure to comply with certain of such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City has covenanted to comply with such requirements. The Bonds are "qualified tax- exempt obligations" within the meaning of Section 265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for eighty percent (80%) of that portion of such financial institution's interest expense allocable to interest on the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 7. The interest on the Bonds is exempt from all state, county and municipal taxes in the State of Arkansas. 8. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Indenture is not required to be qualified under the Trust Indenture Act of 1939, as amended, in connection with the offer and sale of the Bonds. It is to be understood that the rights of the registered owners of the Bonds and the enforceability of the Bonds, the Authorizing Ordinance and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Very truly yours, Fall ' E11 DIX Z: The following are definitions of certain terms used in this Official Statement: "Account" means an Account established by Article V of the Indenture. "Act" means the Local Government Bond Act of 1985, codified as Arkansas Code Annotated (1998 Repl. & Supp. 2015) Sections 14-164-301 et seq., as from time to time amended. "Additional Bonds" means Bonds in addition to the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds and the Series 2015 Bonds which are issued under the provisions of the Indenture. "Amendment 62" means Amendment No. 62 to the Constitution of Arkansas, approved by the voters of the State on November 6, 1984. "Annual Debt Service" means, with respect to all or any particular amount of Bonds, the Debt Service for any particular Fiscal Year required to be paid or set aside during such Fiscal Year, less the amount of such payment which is provided from the proceeds of Bonds or from sources other than Sales and Use Tax receipts. "AGM" means Assured Guaranty Municipal Corp., a New York stock insurance company, or any successor thereto or assignee thereof. "Authorized Representative" means either the Mayor or the Finance Director of the City and such additional persons as from time to time may be designated to act on behalf of the City by a Certificate furnished to the Trustee containing the specimen signature thereof and executed on behalf of the City by its Mayor. "Authorizing Ordinance" means, collectively, (i) Ordinance No. 4936, adopted by the City on October 3, 2006, which authorized the issuance of the Series 2006A Bonds pursuant to the Indenture, (ii) Ordinance No. 5054, adopted by the City on August 23, 2007, which authorized the issuance of the Series 2007 Bonds pursuant to the Indenture, (iii) Ordinance No. 5277, adopted by the City on October 6, 2009, which authorized the issuance of the Series 2009 Bonds pursuant to the Indenture, (iv) Ordinance No. 5619, adopted by the City on September 17, 2013, which authorized the issuance of the Series 2013 Bonds pursuant to the Indenture, and (v) Ordinance No. 5803, adopted by the City on October 6, 2015, which authorized the issuance of the Series 2015 Bonds pursuant to the Indenture. "Beneficial Owner" means any Person who acquires beneficial ownership interest in a Bond held by the Securities Depository. In determining the Beneficial Owner of any Bond, the Trustee may rely exclusively upon written representations made and information given to the Trustee by the Securities Depository or its Participants with respect to any Bond held by the Securities Depository in which a beneficial ownership interest is claimed. "Bond Counsel" means any firm of nationally recognized municipal bond counsel selected by the City and acceptable to the Trustee. "Bond Fund" means the fund by that name created and established in the Indenture. "Bonds" means the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds, the Series 2015 Bonds and all Additional Bonds issued by the City pursuant to the Indenture. "Book -Entry System" means the book -entry system maintained by the Securities Depository and described in the Indenture. "Business Day" means any day other than (a) a Saturday or Sunday, (b) a day on which commercial banks in New York, New York, or the city in which the corporate trust office of the Trustee is located are authorized or required by law or executive order to close, or (c) a day on which the New York Stock Exchange or the Securities Depository is closed. "Certificate" means a document signed by an Authorized Representative of the City attesting to or acknowledging the circumstances or other matters therein stated. "City" means the City of Fayetteville, Arkansas, a municipality and political subdivision under the laws of the State of Arkansas. M. "City Clerk" means the person holding the office and performing the duties of the City Clerk of the City. "Closing Date" means, with respect to any series of Bonds, the date upon which there is an exchange of such series of Bonds for the proceeds representing the purchase price for such series of Bonds by the Original Purchaser or Purchasers thereof. "Code" means the Internal Revenue Code of 1986, as from time to time amended, and applicable regulations issued or proposed thereunder. "Completion Date" means the date upon which a particular Project (or portion thereof) is first ready for normal continuous operation, as determined by a Qualified Engineer. "Continuing Disclosure Agreement" means the Continuing Disclosure Agreement between the City and the Trustee, dated the date of issuance and delivery of the Series 2015 Bonds, as originally executed and as amended from time to time in accordance with the terms thereof. "Costs of Issuance" means all items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale and issuance of the Bonds, including, but not limited to, underwriting discounts, fees and expenses, election expenses, publication expenses, expenses of printing, reproducing, filing and recording documents, initial fees and charges of the Trustee and any Paying Agent, fees and expenses for legal, accounting and other professional services, rating fees, costs of securing any credit enhancement for the Bonds, costs of execution, transportation and safekeeping of the Bonds, and other costs, charges and fees incurred in connection with the foregoing. "Costs of Issuance Fund" means the fund by that name created and established in the Indenture. "Debt Service" means, with respect to all or any particular amount of Bonds, the total as of any particular date of computation and for any particular period of the scheduled amount of interest and amortization of principal payable on such Bonds, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. "Debt Service Reserve Fund" means the fund by that name created and established in the Indenture. "Election Ordinance" means Ordinance No. 4891, adopted by the City Council on June 20, 2006, pursuant to which there was submitted to the qualified electors of the City the four questions relating to the issuance of the Bonds. "Event of Default" means any event of default specified in Section 801 of the Indenture. "Fiscal Year" means the 12 -month period used, at any time, by the City for accounting purposes, which may be the calendar year. "Fund" means a fund established by the Indenture. "Government Securities" means (a) direct obligations (other than an obligation subject to variation in principal repayment) of the United States of America, (b) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by the United States of America, (c) obligations fully and unconditionally guaranteed as to timely payment of principal and interest by any agency or instrumentality of the United States of America when such obligations are backed by the full faith and credit of the United States of America, or (d) evidences of ownership of proportionate interests in future interest and principal payments on obligations described above held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying government obligations are not available to any person claiming through the custodian or to whom the custodian may be obligated. "Holder" or "Bondholder" or "owner of the Bonds" means the registered owner of any Bond. "Indenture" means the Trust Indenture dated as of November 1, 2006, as amended and supplemented by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015, each by and between the City and the Trustee, pursuant to which the Bonds are issued, and any amendments and supplements thereto. IM "Investment Securities" means, if and to the extent the same are at the time legal for investment of Funds and Accounts held under the Indenture: (a) cash (fully insured by the Federal Deposit Insurance Corporation); (b) Government Securities; (c) Federal Housing Administration debentures; (d) The obligations of the following government-sponsored agencies which are not backed by the full faith and credit of the United States of America: 1) Federal Home Loan Mortgage Corporation (FHLMC) senior debt obligations and Participation certificates (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); 2) Farm Credit System (formerly Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives) consolidated system -wide bonds and notes; 3) Federal Home Loan Banks (FHL Banks) consolidated debt obligations; and 4) Federal National Mortgage Association (FNMA) senior debt obligations and mortgage-backed securities (excluded are stripped mortgage securities which are purchased at prices exceeding their principal amounts); (e) Unsecured certificates of deposit, time deposits, and bankers' acceptances (having maturities of not more than 365 days) of any bank the short-term obligations of which are rated "A-1+" or better by S&P and "Prime -1" by Moody's; (f) Deposits the aggregate amount of which are fully insured by the Federal Deposit Insurance Corporation, in banks which have capital and surplus of at least $15 million; (g) Commercial paper (having original maturities of not more than 270 days) rated "A -W' by S&P and "Prime -1" by Moody's; (h) Money market funds rated "Aam" or "AAm-G" by S&P, or better and if rated by Moody's rated "Aa2" or better; (i) "State Obligations", which means: 1) Direct general obligations of any state of the United States of America or any subdivision or agency thereof to which is pledged the full faith and credit of a state the unsecured general obligation debt of which is rated at least "A3" by Moody's and at least "A-" by S&P, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured general obligation debt is so rated; 2) Direct general short-term obligations of any state agency or subdivision or agency thereof described in (a) above and rated "A-1+" by S&P and "MIG -1" by Moody's; and 3) Special Revenue Bonds (as defined in the United States Bankruptcy Code) of any state or state agency described in (b) above and rated "AA-" or better by S&P and "Aa3" or better by Moody's; 0) Pre -refunded municipal obligations rated "AAA" by S&P and "Aaa" by Moody's meeting the following requirements: 1) the municipal obligations are (1) not subject to redemption prior to maturity or (2) the trustee for the municipal obligations has been given irrevocable instructions concerning their call and redemption and the issuer of the municipal obligations has covenanted not to redeem such municipal obligations other than as set forth in such instructions; 2) the municipal obligations are secured by cash or U.S. Treasury Obligations which may be applied only to payment of the principal of, interest and premium on such municipal obligations; 3) the principal of and interest on the U.S. Treasury Obligations (plus any cash in the escrow) has been verified by the report of independent certified public accountants to be sufficient to pay in full all principal of, interest, and premium, if any, due and to become due on the municipal obligations ("Verification Report"); 4) the cash or U.S. Treasury Obligations serving as security for the municipal obligations are held by an escrow agent or trustee in trust for owners of the municipal obligations; 5) no substitution of a U.S. Treasury Obligation shall be permitted except with another U.S. Treasury Obligation and upon delivery of a new Verification Report; and 6) the cash or U.S. Treasury Obligations are not available to satisfy any other claims, including those by or against the trustee or escrow agent; and (k) the Reserve Fund Insurance Policy. "Mayor" means the person holding the office and performing the duties of the Mayor of the City. "Original Purchaser" means the first purchaser(s) of a series of the Bonds from the City. "Outstanding" means, as of any date of computation, Bonds theretofore or thereupon being delivered under the Indenture, except: (a) Bonds cancelled at or prior to such date or delivered to or acquired by the Trustee at or prior to such date for cancellation; (b) Bonds deemed to be paid in accordance with Article VII of the Indenture; and (c) Bonds in lieu of or in exchange or substitution for which other Bonds shall have been authenticated and delivered pursuant to the Indenture. "Participants" means those financial institutions for whom the Securities Depository effects book -entry transfers and pledges of securities deposited with the Securities Depository in the Book -Entry System, as such listing of Participants exists at the time of such reference. "Paying Agent" means any bank or trust company named by the City as the place at which the principal of and premium, if any, and interest on the Bonds are payable. "Person" means any natural person, firm, association, corporation, limited liability company, partnership, joint stock company, joint venture, trust, unincorporated organization or firm, or a government or any agency or political subdivision thereof or other public body. "Projects" means, collectively, the Street Project, the Trail Project and the Wastewater Project. "Project Costs" means, to the extent permitted by the Act or other applicable laws, with respect to the Projects, all costs of planning, designing, purchasing, acquiring, constructing, improving, enlarging, extending, repairing, financing and placing in operation, including obtaining governmental approvals, certificates, permits and licenses with respect thereto, heretofore or hereafter paid or incurred by or on behalf of the City and which shall include, but shall not be limited to: me (a) interest accruing in whole or in part on the Bonds prior to and during construction of the Projects, including all amounts required by the Indenture to be paid from the proceeds of the Bonds into the Bond Fund; (b) preliminary investigation and development costs, engineering fees, contractors' fees, labor costs, the cost of materials, equipment, utility services and supplies, costs of obtaining permits, licenses and approvals, costs of real property, insurance premiums, legal and financing fees and costs, administrative and general costs, and all other costs properly allocable to the acquisition, construction and equipping of the Projects and placing the same in operation; (c) all costs relating to injury and damage claims arising out of the acquisition, construction or equipping of the Projects; (d) all other costs incurred in connection with, and properly allocable to, the acquisition, construction and equipping of the Projects; and (e) amounts to pay or reimburse the City or any City fund for expenses of the City incident and properly allocable to such planning, designing, purchasing, acquiring, constructing, improving, enlarging, extending, repairing, financing and placing in operation of the Projects. "Project Fund" means the fund by that name created and established in the Indenture. "Qualified Engineer" means an independent consulting engineer or firm of independent consulting engineers not in the regular employ of the City. "Rating Agency" means Moody's Investors Service, Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc., or Fitch, Inc., and their respective successors and assigns. If any such corporation ceases to act as a securities rating agency, the City may appoint any nationally recognized securities rating agency as a replacement. "Rebate Fund" means the fund by that name created and established in the Indenture. "Record Date" means the fifteenth day of the calendar month preceding the calendar month in which an interest payment date on the Bonds occurs. "Redemption Fund" means the fund by that name established in the Indenture. "Requisition" means a written requisition of the City, consecutively numbered, signed by an Authorized Representative including, without limitation, the following with respect to each payment requested: (i) the name of the Person or party to whom payment is to be made and the purpose of the payment; (ii) the amount to be paid thereunder; (iii) that such amount has not been previously paid by the City and is justly due and owing to the Person(s) named therein as a proper payment or reimbursement of a Project Cost; and (iv) that no Event of Default exists under the Indenture and that, to the knowledge of the Authorized Representative, no event has occurred and continues which with notice or lapse of time or both would constitute an Event of Default under the Indenture. "Reserve Requirement" means, with respect to each series of Bonds, an amount equal to 5% of the original principal amount of such series of Bonds. For all purposes of the Indenture, the Reserve Requirement may be satisfied by the deposit of cash or by the deposit of Investment Securities, including the Reserve Fund Insurance Policy. "Revenue Fund" means the fund by that name created and established in the Indenture. "Reserve Fund Insurance Policy" means the municipal bond debt service reserve insurance policy issued by AGM and deposited in the Debt Service Reserve Fund. "0.25% Sales and Use Tax" means the one-quarter of one percent (0.25%) city-wide sales and use tax authorized under the Act which has been levied within the City pursuant to the Election Ordinance and approved by the voters of the City, the collection of which tax commenced on January 1, 2007. "0.75% Sales and Use Tax" means the three-quarters of one percent (0.75%) city-wide sales and use tax authorized under the Act which has been levied within the City pursuant to the Election Ordinance and approved by the voters of the City, the collection of which tax will commenced as of August 1, 2014. "Sales and Use Taxes" mean, collectively, the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax. Receipts of the Sales and Use Taxes are pledged to the payment of Debt Service on the Bonds. "Securities Depository" means The Depository Trust Company, New York, New York, or its nominee, and its successors and assigns, or any other depository institution appointed by the City or the Trustee to act as depository for the Bonds in connection with the Book -Entry System. "Series 2006A Bonds" means the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A, issued in the original aggregate principal amount of $50,000,000. "Series 2007 Bonds" means the City's Sales and Use Tax Capital Improvement Bonds, Series 2007, issued in the original aggregate principal amount of $14,340,000. "Series 2009 Bonds" means the City's Sales and Use Tax Capital Improvement Bonds, Series 2009, issued in the original aggregate principal amount of $11,250,000. "Series 2013 Bonds" means the City's Sales and Use Tax Capital Improvement Bonds, Series 2013, issued in the original aggregate principal amount of $22,750,000. "Series 2015 Bonds" means the City's Sales and Use Tax Capital Improvement Bonds, Series 2015, issued in the original aggregate principal amount of $9,000,000. "State" means the State of Arkansas. "Street Project" means the acquisition, construction, reconstruction, repair, straightening and widening of certain City streets and related improvements, as described in the Election Ordinance and eligible for financing with the proceeds of the Bonds in aggregate principal amount not to exceed $65,900,000. "Supplemental Indenture" means any indenture supplemental to or amendatory of the Indenture. "Surplus Tax Receipts" shall have the meaning ascribed to such term in Section 503 of the Indenture. "Tax Regulatory Agreement" means that Tax Regulatory Agreement of the City relating to maintenance of the excludability of interest on the Series 2015 Bonds from gross income for federal income tax purposes, delivered in connection with the issuance of the Series 2015 Bonds. "Trail Project" means the acquisition, construction and equipping of certain City trail system improvements, as described in the Election Ordinance and eligible for financing with the proceeds of the Bonds in aggregate principal amount not to exceed $2,100,000. "Trustee" means the banking corporation or association designated as Trustee in the Indenture, and its successor or successors as such Trustee. The original Trustee is Simmons First Trust Company, N.A. "Trust Estate" means the property described in the granting clauses of the Indenture. "Wastewater Project" means the acquisition, construction, reconstruction, extension, improving and equipping of certain improvements to the City's wastewater treatment plants, sewerage and related facilities, as described in the Election Ordinance and eligible for financing with the proceeds of the Bonds in aggregate principal amount not to exceed $39,340,000. THE SALES AND USE TAX Sales Tax. The sales tax portion of the Sales and Use Taxes is generally levied upon the gross proceeds and receipts derived from all sales to any Person within the City of the following: (a) Tangible personal property; (b) Natural or artificial gas, electricity, water, ice, steam, or any other utility or public service except transportation services, sewer services and sanitation or garbage collection services; (c) (i) Service by telephone, telecommunications and telegraph companies to subscribers or users, including transmission of messages or images, whether local or long distance, including all service, installation, construction and rental charges having any connection with transmission of any message or image; (ii) Service of furnishing rooms, suites, condominiums, townhouses, rental houses or other accommodations by hotels, apartment hotels, lodging houses, tourist camps, tourist courts, property management companies, or any other provider of accommodations to transient guests; (iii) Service of cable television, community antenna television, and any and all other distribution of television, video, or radio services with or without the use of wires provided to subscribers, paying customers or users, including installation, service, rental, repair and other charges having any connection with the providing of the said services; provided, however, sales taxes are not levied on services purchased by radio or television providers for use in providing their services; (iv) Service or alteration, addition, cleaning, refinishing, replacement and repair of motor vehicles, aircraft, farm machinery and implements, motors of all kinds, tires and batteries, boats, electrical appliances and devices, furniture, rugs, upholstery, household appliances, televisions and radios, jewelry, watches and clocks, engineering instruments, medical and surgical instruments, machinery of all kinds, bicycles, office machines and equipment, shoes, tin and sheet metal, mechanical tools and shop equipment; however, the tax does not apply to (A) coin operated car washes, (B) the maintenance or repair of railroad parts, railroad cars and equipment brought into the City solely and exclusively for the purpose of being repaired, refurbished, modified, or converted within the City, (C) the service of alteration, addition, cleaning, refinishing, replacement or repair of commercial jet aircraft or commercial jet aircraft components or subcomponents, (D) the repair or remanufacture of industrial metal rollers or platens that have a remanufactured non-metallic material covering on all or a part of the roller or platen surface, or (E) the alteration, addition, cleaning, refinishing, replacement or repair of non-mechanical, passive or manually operated components of buildings or other improvements or structures affixed to real estate; (v) Service of providing transportation or delivery of money, property or valuables by armored car; service of providing cleaning or janitorial work; service of pool cleaning and servicing; pager services; telephone answering services; landscaping and non-residential lawn care services; service of parking a motor vehicle or allowing a motor vehicle to be parked; service of storing a motor vehicle; service of storing furs; service of providing indoor tanning at a tanning salon; wrecker and towing services; service of collecting and disposing of solid waste; parking lot and gutter cleaning services; dry cleaning and laundry services; industrial laundry services; mini warehouse and self storage rental services; body piercing, tattooing and electrolysis services; pest control services; security and alarm monitoring services; boat storage and docking fees; furnishing campground spaces or trailer spaces at public or privately owned campgrounds, except for federal campgrounds, on less than a month-to-month basis; locksmith services; pet grooming and kennel services; and the new installation and replacement labor for hardwood, vinyl, ceramic tile or other types of flooring; and (vi) Initial installation services relating to motor vehicles, aircraft, farm machinery and implements, motors of all kinds, tires and batteries, boats, electrical appliances and devices, furniture, rugs, C - I flooring, upholstery, household appliances, television and radio, jewelry, watches and clocks, engineering instruments, medical and surgical instruments, machinery of all kinds, bicycles, office machines and equipment, shoes, tin and sheet metal, mechanical tools and shop equipment; provided, however, if the item being installed is specifically exempted from the imposition of the sales tax, the service of installation will also be exempt; (d) Printing of all kinds, types and characters, including the service of overprinting, and photography of all kinds; (e) Tickets or admissions to places of amusement, to athletic, entertainment, recreational events, or fees for the privilege of having access to or the use of amusement, entertainment, athletic or recreational facilities, including free or complimentary passes and tickets, admissions, dues or fees; (f) Dues and fees to health spas, health clubs and fitness clubs; dues and fees to private clubs which hold any permit from the Alcoholic Beverage Control Board allowing the sale, dispensing or serving of alcoholic beverages of any kind on the premises; (g) Lease or rental of motor vehicles, other than diesel trucks rented for residential moving or commercial shipping or farm machinery rented or leased for a commercial purpose, for a period less than 30 days, or purchase of motor vehicles for rental or lease regardless of the length of the rental or lease; (h) Orders by telegraph, telephone or other means of communication transmitted by florists; (i) Sales of beer, wine, liquor or any intoxicating beverages; (j) Proceeds derived from the operation or use of coin-operated pinball machines, coin- operated music machines, coin-operated mechanical games, and similar devices; (k) Contracts, including service contracts, maintenance agreements and extended warranties, which in whole or in part provide for the future performance of or payment for services which are subject to the sales tax; (1) Receipts derived from the retail sale of any device used in playing bingo and any charge for admittance to facilities or for the right to play bingo or other games of chance regardless of whether such activity might otherwise be permitted by law; and (m) The first $50,000 of the purchase price from the sale of machinery or equipment and related attachments that are sold to or used by a person engaged primarily in the harvesting of timber. Exemptions from Sales Tax. As summarized below, several types of transactions have been exempted from the sales tax by the General Assembly of the State. Some of the current exemptions include the sale of: (a) New or used house trailers, mobile homes, aircraft, motor vehicles, trailers or semi -trailers and a used house trailer, mobile home, aircraft, motor vehicle, trailer or semi -trailer is taken as a credit or part payment of the purchase price, when the total consideration is less than certain set dollar amounts ($4,000 in the case of new or used motor vehicles, trailers or semitrailers); (b) Aircraft held for resale and used for rental or charter, whether by a business or an individual for a period not to exceed one year from the date of purchase of aircraft; (c) Tangible personal property or services by churches, except where such organizations may be engaged in business for profit; (d) Tangible personal property, or service by charitable organizations, except where such organizations may be engaged in business for profit; (e) Food in public, common, high school or college cafeterias and lunchrooms operated primarily for teachers and pupils, and not operated primarily for the public or for profit; (f) Newspapers; (g) Property or services to the United States Government; motor vehicles and adaptive equipment to disabled veterans who have purchased said vehicles or equipment with financial assistance of the Veterans Administration; tangible personal property to the Salvation Army, Heifer Project International, Inc., Habitat for C-2 Humanities, the Boy Scouts of America, the Girl Scouts of America or any of the Scout Councils in the State; tangible personal property or service to the Boys Clubs of America or any local councils or organizations of the Boys Clubs of America, the Girls Clubs of America or any local councils or organizations of the Girls Clubs of America, to the Poets' Roundtable of Arkansas, to 4-H Clubs and FFA Clubs, to the Arkansas 4-H Foundation, to the Arkansas Future Farmers of America Foundation and the Arkansas Future Farmers of America Association, to qualified museums and to the Arkansas Symphony Orchestra, Inc.; (h) Gasoline or motor vehicle fuel on which the motor vehicle fuel or gasoline tax has been paid to the State and special fuel or petroleum products sold for consumption by vessels, barges and other commercial watercraft and railroads; (i) Property resales to persons regularly engaged in the business of reselling the articles purchased; 0) Advertising space in newspapers and publications and billboard advertising services; (k) Gate admissions at State, district, county or township fairs or at any rodeo if the receipts derived from gate admissions to the rodeo are used exclusively for the improvement, maintenance and operation of such rodeo, and if no part of the net earnings thereof inures to the benefit of any private stockholder or individual; (1) Property or services which the State is prohibited by the constitution or laws of the United States or by the constitution of the State from taxing or further taxing and tangible personal property exempted from taxation by the Arkansas Compensating (Use) Tax Act of 1949, as amended; (m) Isolated sales not made by an established business; (n) Cotton, seed cotton, lint cotton, bated cotton, whether compressed or not, or cotton seed in its original condition; seed for use in commercial production of an agricultural product or of seed; raw products from the farm, orchard or garden, where such sale is made by the producer of such raw products directly to the consumer and user; livestock, poultry, poultry products and dairy products of producers owning not more than five cows; and baby chickens; (o) Foodstuffs to governmental agencies for free distribution to any public, penal and eleemosynary institutions or for free distribution to the poor and needy, and the rental or sale of medical equipment, for the benefit of Persons enrolled in and eligible for Medicare or Medicaid programs; (p) Tangible personal property or services provided to any hospital or sanitarium operated for charitable and nonprofit purposes or any nonprofit organization whose sole purpose is to provide temporary housing to the family members of patients in a hospital or sanitarium; (q) Used tangible personal property when the used property was (1) traded in and accepted by the seller as part of the sale of other tangible personal property and (2) the Arkansas Gross Receipts Tax was collected and paid on the total amount of consideration for the sale of the other tangible personal property without any deduction or credit for the value of the used tangible personal property; provided, however, this exemption does not apply to transactions involving used automobiles, used mobile homes, or used aircraft; (r) Unprocessed crude oil; (s) Tangible personal property consisting of machinery and equipment used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce at (i) new manufacturing or processing plants or facilities in the State or (ii) existing manufacturing or processing plants or facilities in the State if the tangible personal property is used to replace existing machinery and equipment; (t) Property consisting of machinery and equipment required by State law or regulation to be installed and utilized by manufacturing or processing plants or facilities to prevent or reduce air and/or water pollution or contamination; (u) Electricity used in the manufacture of aluminum metal by the electrolytic reduction process and sale of articles sold on the premises of the Arkansas Veterans Home; (v) Automobile parts which constitute "core charges," which are received for the purpose of securing a trade-in for the article purchased; (w) Bagging and other packaging and tie materials sold to and used by cotton gins for packaging and/or tying baled cotton and from the sale of twine which is used in the production of tomato crops; C-3 (x) Prescription drugs by licensed pharmacists, hospitals, oncologists or dispensing physicians, and oxygen sold for human use on prescription of a licensed physician; (y) Property or services to humane societies; (z) Vessels, barges and towboats of at least fifty tons load displacement and parts and labor used in the repair and construction of the same; (aa) Property or sales to all orphans' homes, or children's homes, which are not operated for profit and whether operated by a church, religious organization or other benevolent charitable association; (bb) Agricultural fertilizer, agricultural limestone and agricultural chemicals; (cc) Sale of tickets or admissions, by municipalities, to places of amusement, to athletic entertainment, recreational events, or fees for the privilege of having access to or the use of amusement, entertainment, athletic or recreational facilities, including free or complimentary passes, tickets, admissions, dues or fees; (dd) Rental and/or lease of specialized equipment used in the filming of a motion picture; (ee) New and used farm machinery and equipment; (fl') New automobiles to a veteran of the United States Armed Services who is blind as a result of a service connected injury; (gg) Motor vehicles sold to municipalities, counties, school districts, and state supported colleges and universities; (hh) School buses sold to school districts and, in certain cases, to other purchasers providing school bus service to school districts; (ii) Natural gas, LP gas, or electricity sold to a processor or mining company engaging in open pit and underground mining or processing of bauxite; 0j) Feedstuffs used in the commercial production of livestock or poultry; (kk) New and used mobile homes and custom manufactured homes; (11) The first 500 kilowatt hours of electricity per month and the total franchise taxes billed to each residential customer whose household income is less than $12,000 per year; (mm) Waste fuel used in producing, manufacturing, fabricating, assembling, processing, finishing, or packaging of articles of commerce at manufacturing or processing plants or facilities in the State; (nn) Electricity and natural gas to qualified steel and wall and floor tile manufacturers; (oo) Electricity used for the production of chlorine and other chemicals using a chlor -alkali manufacturing process; (pp) Tangible personal property lawfully purchased with food stamps, food coupons, food instruments or vouchers in connection with certain Federal programs; (qq) Publications sold through regular subscriptions; (rr) Tickets for admission to athletic events and interscholastic activities of public and private elementary and secondary schools in the State and tickets for admission to athletic events at public and private colleges and universities in the State; (ss) Prescriptive durable medical equipment, mobility enhancing equipment and prescriptive disposable medical equipment; (tt) Insulin and test strips for testing blood sugar levels in humans; (uu) Telephone instruments sent into the State for refurbishing or repair and then shipped back to the state of origin; (vv) Industrial metal rollers sent into the State for repair or remanufacture and then shipped back to the state of origin; C-4 (ww) New motor vehicles purchased by non-profit organizations and used for the performance of contracts with the Department of Human Services, and new motor vehicles purchased with Urban Mass Transit Administration funds if (i) the vehicles are purchased in lots of ten vehicles, (ii) meet minimum State specifications, and (iii) vehicles are used for transportation under the Department of Human Services' programs for the aging, disabled, mentally ill, and children and family services; (xx) Motor fuels to owners or operators of motor buses operated on designated streets according to regular schedule and under municipal franchise which are used for municipal transportation purposes; (yy) Parts or other tangible personal property incorporated into or which become a part of commercial jet aircraft component or subcomponent; (zz) Transfer of fill material by a business engaged in transporting or delivering fill material; (aaa) Long-term leases, thirty days or more, of commercial trucks used for interstate transportation of goods under certain conditions; (bbb) Foodstuffs to nonprofit agencies; (ccc) Tangible personal property consisting of forms constructed of plaster, cardboard, fiberglass, natural fibers, synthetic fibers or composites and which are destroyed or consumed during the manufacture of the item; (ddd) Natural gas used as a fuel in the process of manufacturing glass; (eee) Sales to Fort Smith Clearinghouse; (fff) Substitute fuel used in producing, manufacturing, fabrication, assembling, processing, finishing or packaging of articles at manufacturing facilities or processing plants in the State; (ggg) Railroad rolling stock used in transporting persons or property in interstate commerce; (hhh) Parts or other tangible personal property which become a part of railroad parts, railroad cars and equipment brought into the State for the purpose of being repaired, refurbished, modified or converted within the State; (iii) Fire protection and emergency equipment to be owned by and exclusively used by a volunteer fire department, and supplies and materials to be used in the construction and maintenance of volunteer fire departments; Ojj) Gas produced from biomass and sold for the purpose of generating energy to be sold to the gas producer; (kkk) Parts or other tangible personal property incorporated into or that become part of commercial jet aircraft components or subcomponents, and the services required to incorporate the parts or other tangible personal property into the commercial aircraft components or subcomponents; (Ill) Catalysts, chemicals, reagents and solutions which are consumed or used in producing, manufacturing, processing or finishing articles of commerce at manufacturing or processing plants in the State; (mmm) Fuel packaging materials sold to persons engaged in the business of processing hazardous and non -hazardous waste materials into fuel products; (mm) Instructional materials used in public schools; (000) Livestock reproduction equipment and substances used in livestock reproduction; (ppp) Water purchased from a public surface -water delivery project to reduce or replace water used for in -ground irrigation or to reduce dependence on ground water used for agriculture; (qqq) Property or services to the Arkansas Black Hall of Fame Foundation, Inc.; (rrr) Gross receipts derived from the sale of Class Six and Class Seven Trucks if the vehicle is registered with the International Registration Plan and engaged in interstate commerce; (sss) Gross receipts derived from the sale of all semitrailers and offsets general revenues lost as a result of the exemption with revenues from distillate motor fuel taxes; C-5 (ttt) Kegs used to sell beer wholesale; (nun) During the first weekend in August of each year only, items of clothing costing less than $100, clothing accessories and equipment costing less than $50, school art supplies, school instructional materials and school supplies; (vvv) Machinery and equipment required by state or federal law or regulations to be installed and utilized by manufacturing and processing plants or facilities in the refining of petroleum-based products to remove sulphur pollutants; (www) Expendable supplies for farm machinery that are used for baling, packaging, tying, wrapping or sealing animal feed products; (xxx) Electricity, liquefied petroleum gas and natural gas used by grain drying and storage facilities, qualifying agricultural structures and qualifying aquaculture and horticulture equipment; (yyy) Timber harvesting machinery, equipment and related attachments; (zzz) Dental appliances sold to or by dentists, orthodontists, oral surgeons, maxillofacial surgeons and endodontists; and (aaaa) Property or services to nonprofit blood donations organizations. Reference is made to "The Arkansas Gross Receipts Act of 1941," Title 26, Chapter 52 of the Arkansas Code of 1987 Annotated, for more information concerning the sales tax. Use Tax. The use tax portion of the Sales and Use Taxes is levied on every Person for the privilege of storing, using, distributing or consuming in the City any article of tangible personal property purchased for storage, use, distribution or consumption. The use tax applies to the use, distribution, storage or consumption of every article of tangible personal property except as hereinafter provided. The use tax does not apply to aircraft equipment, and railroad parts, cars, and equipment, nor to tangible personal property owned or leased by aircraft, automotive or railroad companies brought into the City solely and exclusively for refurbishing, conversion, or modification within the City or storage for use outside or inside the City regardless of the length of time any such property is so stored in the City. The use tax is levied on the following described tangible personal property: (a) Tractors, trailers, semi -trailers, trucks, buses and other rolling stock, including replacement tires, used directly in the transportation of persons or property in intrastate or interstate common carrier transportations; (b) Property (except fuel) consumed in the operation of railroad rolling stock; (c) Transmission lines and pumping or pressure control equipment used directly in or connected to the primary pipeline facility engaged in intrastate or interstate common carrier transportation of property; (d) Airplanes and navigation instruments used directly in or becoming a part of flight aircraft engaged in transportations of persons or property in regular scheduled intrastate or interstate common carrier transportation; (e) Exchange equipment, lines, boards and all accessory devices used directly in and connected to the primary facility engaged in the transmission of messages; (f) Transmission and distribution pipelines in pumping or pressure control and equipment used in connection therewith used directly in primary pipeline facility for the purpose of transporting and delivering natural gas; (g) Transmission and distribution lines, pumping machinery and controls used in connection therewith in cleaning or treating equipment of primary water distribution system; (h) Property of public electric power companies consisting of all machinery and equipment including reactor cores and related accessory devices used in the generation and production of electric power and energy and transmission facilities consisting of the lines, including poles, towers and other supporting structures, transmitting electric power and energy together with substations located on or attached to such lines; and (i) Computer software. Exemptions from Use Tax. Some of the property exempted from the use tax by the General Assembly of the State is as follows: C-6 (a) Property, the storage, use or consumption of which the State is prohibited from taxing under the Constitution or laws of the United States of America or the State; (b) Sales of tangible personal property in which the tax under the Arkansas Gross Receipts Act of 1941 is levied; (c) Tangible personal property which is exempted from the sales tax under the Arkansas Gross Receipts Act of 1941; (d) Feedstuffs used in the commercial production of livestock or poultry in the State; (e) Unprocessed crude oil; (f) Machinery and equipment used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce at manufacturing or processing plants or facilities in the State, including facilities and plants for manufacturing feed, progessing of poultry and/or eggs and livestock and the hatching of poultry and such equipment is either (1) purchased to create or expand manufacturing or processing plants in the State, (2) purchased to replace existing machinery and used directly in producing, manufacturing, fabricating, assembling, processing, finishing or packaging of articles of commerce at manufacturing or processing plants in the State, or (3) required by State law to be installed and utilized by manufacturing or processing plants to prevent or reduce air and/or water pollution or contamination; (g) Modular homes constructed with materials on which the sales or use tax has once been paid; (h) Aircraft, aircraft equipment, railroad parts, cars, and equipment, and tangible personal property owned or leased by aircraft, airmotive, or railroad companies, brought into the State solely and exclusively for refurbishing, conversion, or modification or for storage for use outside or inside the State; (i) Vessels, barges, and towboats of at least 50 tons load displacement and parts and labor used in the repair and construction of them; 0) Motor fuels to the owners or operators of motor buses operated on designated streets according to regular schedule, under municipal franchise, which are used for municipal transportation purposes; (k) Agricultural fertilizer, agricultural limestone and agricultural chemicals; (1) Water purchased from a public surface -water delivery project to reduce or replace water used for in -ground irrigation or to reduce dependence on ground water used for agriculture; (m) All new and used motor vehicles, trailers or semi -trailers that are purchased for a total consideration of less than $4,000; (n) Any tangible personal property used, consumed, distributed, or stores in this State upon which a like tax, equal to or greater than the Arkansas Compensating (Use) Tax, has been paid in another state; (o) Property or services to the Arkansas Black Hall of Fame Foundation, Inc.; (p) Gross receipts derived from the sale of Class Six and Class Seven Trucks if the vehicle is registered with the International Registration Plan and engaged in interstate commerce; (q) Gross receipts derived from the sale of all semitrailers and offsets general revenues lost as a result of the exemption with revenues from distillate motor fuel taxes; (r) Kegs used to sell beer wholesale; (s) During the first weekend in August of each year only, items of clothing costing less than $100, clothing accessories and equipment costing less than $50, school art supplies, school instructional materials and school supplies; (t) Machinery and equipment required by state or federal law or regulations to be installed and utilized by manufacturing and processing plants or facilities in the refining of petroleum-based products to remove sulphur pollutants; (u) Expendable supplies for farm machinery that are used for baling, packaging, tying, wrapping or sealing animal feed products; C-7 M Electricity, liquefied petroleum gas and natural gas used by grain drying and storage facilities, qualifying agricultural structures and qualifying aquaculture and horticulture equipment; (w) Timber harvesting machinery, equipment and related attachments; (x) Dental appliances sold to or by dentists, orthodontists, oral surgeons, maxillofacial surgeons and endodontists; and (y) Property or services to nonprofit blood donations organizations. Reference is made to "The Arkansas Compensation (Use) Tax Act of 1949," Title 26, Chapter 53 of the Arkansas Code of 1987 Annotated, for more information concerning the use tax. C-8 NORTHWEST ARKANSAS OFFICE SUITE 400 234 EAST MILLSAP ROAD FAYETTEVILLE, ARKANSAS 72703-4099 479-973-4200 GORDON M. WILBOURN gordon,wiIbourn@kutakrock.com (501)975-3101 City of Fayetteville, Arkansas Fayetteville, Arkansas KUTAK ROCK LLP ATLANTA CHICAGO SUITE 2000 DENVER 124 WEST CAPITOL AVENUE FAYETTEVILLEIRVINE LITTLE ROCK, AR 72201-3706 KANSAS CITY LITTLE ROCK 501-975-3000 LOS ANGELES FACSIMILE 501-975-3001 MINNEAPOLIS OKLAHOMA CITY www.kutakrock.com OMAHA PHILADELPHIA RICHMOND SCOTTSDALE WASHINGTON WICHITA November 12, 2015 Simmons First Trust Company, N.A., as Trustee Pine Bluff, Arkansas Stephens Inc. Fayetteville, Arkansas Assured Guaranty Municipal Corp. New York, New York $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2015 Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance and sale by the City of Fayetteville, Arkansas (the "City"), a political subdivision of the State of Arkansas, of its $9,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"). The Bonds are being issued pursuant to the provisions of the Constitution and laws of the State of Arkansas, including, particularly, Amendment 62 and Arkansas Code Annotated (1998 Repl. & Supp. 2015) §§14-164-301 et seq. (as from time to time amended, the "Act"), pursuant to Ordinance No. 5803 of the City, duly adopted and approved on October 6, 2015 (the "Authorizing Ordinance"), and pursuant to a Trust Indenture dated as of November 1, 2006, as amended and supplemented by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as amended and supplemented, the "Indenture"), by and between the City and Simmons First Trust Company, N.A., as trustee (the "Trustee"). Reference is hereby made to the Indenture and to all indentures supplemental thereto for the provisions, among others, with respect to the conditions for the issuance of parity indebtedness 4840-6705-2330.1 KUTAK ROCK LLP Approving Opinion November 12, 2015 Page 2 by the City, with respect to the nature and extent of the security for the Bonds, the rights, duties and obligations of the City, the Trustee and the Holders of the Bonds, and the terms upon which the Bonds are issued and secured. Reference is made to an opinion of even date herewith of Kit Williams, Esq., City Attorney, a copy of which is on file with the Trustee, with respect, among other matters, to the status and valid existence of the City, the power of the City to adopt the Election Ordinance and the Authorizing Ordinance and to enter into and perform its obligations under the Indenture, the valid adoption of the Election Ordinance and the Authorizing Ordinance, and the due authorization, execution and delivery of the Indenture by the City, and with respect to the Indenture being enforceable upon the City. We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the City contained in the Election Ordinance, the Authorizing Ordinance and the Indenture and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The City is duly created and validly existing as a municipal corporation of the State of Arkansas. Pursuant to the Constitution and laws of the State of Arkansas, including, particularly, Amendment 62 and the Act, the City is empowered to adopt the Election Ordinance and the Authorizing Ordinance, to execute and deliver the Indenture, to perform the agreements on its part contained therein, and to issue the Bonds. 2. The Authorizing Ordinance has been duly adopted by the City and constitutes a valid and binding obligation of the City enforceable upon the City in accordance with its terms. 3. The Indenture has been duly authorized, executed and delivered by the City and is a valid and binding obligation of the City enforceable upon the City in accordance with its terms. 4. The Bonds have been duly authorized, executed and delivered by the City and are valid and binding limited obligations of the City payable from and secured by a valid lien on and pledge of the Trust Estate (as defined in the Indenture), including receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax (each as defined in the Indenture), in the manner and to the extent provided in the Indenture. Such lien and pledge are made on a parity basis with the existing lien and pledge of the Trust Estate securing (i) the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A, (ii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2007, (iii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2009, and (iv) the City's Sales and Use Tax Capital Improvement Bonds, Series 2013. The City is duly 4840-6705-2330.1 KUTAK ROCK LLP Approving Opinion November 12, 2015 Page 3 authorized to pledge such Trust Estate, and no further action on the part of the City or any other party is required to perfect the same or the interest of the owners of the Bonds therein. 5. The 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax have been validly adopted in accordance with the Constitution and laws of the State of Arkansas, including Amendment 62 and the Act, and may be validly pledged to secure the Bonds. Levy and collection of the 0.25% Sales and Use Tax commenced as of January 1, 2007, and levy and collection of the 0.75% Sales and Use Tax commenced as of August 1, 2014. 6. Interest on the Bonds is excluded from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. The opinion described in the preceding sentence assumes the accuracy of certain representations and compliance by the City with covenants designed to satisfy the requirements of the Internal Revenue Code of 1986, as amended, that must be met subsequent to the issuance of the Bonds. Failure to comply with such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City has covenanted to comply with such requirements. The Bonds are "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code, and, in the case of certain financial institutions (within the meaning of Section 265(b)(5) of the Code), a deduction is allowed for eighty percent (80%) of that portion of such financial institution's interest expense allocable to interest on the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 7. The interest on the Bonds is exempt from all state, county and municipal taxes in the State of Arkansas. 8. The Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended, and the Indenture is not required to be qualified under the Trust Indenture Act of 1939, as amended, in connection with the offer and sale of the Bonds. It is to be understood that the rights of the registered owners of the Bonds and the enforceability of the Bonds, the Authorizing Ordinance and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable and that their enforcement may also be subject to the exercise of judicial discretion in appropriate cases. Very truly yours, "W\ I-11 4840-6705-2330.1 NORTHWEST ARKANSAS OFFICE SUITE 400 234 EAST MILLSAP ROAD FAYETTEVILLE, ARKANSAS 72703-4099 479-973-4200 GORDON M. WILBOURN gordon.wiIbourn@kutakrock.com (501)975-3101 City of Fayetteville, Arkansas Fayetteville, Arkansas K U TA K ROCK LLP ATLANTA CHICAGO SUITE 2000 DENVER FAYETTEVILLE 124 WEST CAPITOL AVENUE IRVINE LITTLE ROCK, AR 72201-3706 KANSAS CITY LITTLE ROCK 501-975-3000 LOS ANGELES FACSIMILE 501-975-3001 MINNEAPOLIS OKLAHOMA CITY www.kutakrock.com OMAHA PHILADELPHIA RICHMOND SCOTTSDALE WASHINGTON WICHITA November 12, 2015 Simmons First Trust Company, N.A., as Trustee Pine Bluff, Arkansas Stephens Inc. Fayetteville, Arkansas Assured Guaranty Municipal Corp. New York, New York $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2015 Ladies and Gentlemen: This opinion supplements our bond approving opinion, dated the date hereof, relating to the above -captioned bonds (the "Bonds"). Except as otherwise defined herein, the terms used herein shall have the meanings prescribed for them in said opinion. We have examined the law and such certified proceedings and other papers as we have deemed necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon the representations of the City contained in the Indenture and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. In addition to the documents specifically mentioned in the approving opinion, in connection with this opinion we have also examined: (a) An executed counterpart of the Bond Purchase Agreement dated October 21, 2015 (the "Bond Purchase Agreement"), by and between the City and Stephens Inc., as underwriter (the "Underwriter"); 4811-8222-3146.2 KUTAK ROCK LLP Supplemental Opinion November 12, 2015 Page 2 (b) An executed counterpart of the Continuing Disclosure Agreement dated November 12, 2015 (the "Disclosure Agreement"), by and between the City and Simmons First Trust Company, N.A., as trustee (the "Trustee"); (c) An executed counterpart of the Tax Regulatory Agreement dated November 12, 2015 (the "Tax Regulatory Agreement"), by and between the City and the Trustee; (d) The Official Statement dated October 21, 2015, with respect to the Bonds (the "Official Statement"); and (e) The Municipal Bond Debt Service Reserve Insurance Policy (the "DSR Policy") issued and delivered by Assured Guaranty Municipal Corp. ("AGM") concurrently with the issuance of the Bonds for deposit in the Debt Service Reserve Fund (as defined in the Indenture). Based on our examination, we are of the opinion, as of the date hereof and under existing law, as follows: 1. The Bond Purchase Agreement has been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the Underwriter, the Bond Purchase Agreement constitutes the valid and binding agreement of the City enforceable in accordance with its terms. 2. The Disclosure Agreement has been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the Trustee, the Disclosure Agreement constitutes the valid and binding agreement of the City enforceable in accordance with its terms. 3. The Tax Regulatory Agreement has been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the Trustee, the Tax Regulatory Agreement constitutes the valid and binding agreement of the City enforceable in accordance with its terms. 4. To the best of our knowledge, there is no litigation or other proceeding pending or threatened in any court, agency or other administrative body (either State or Federal) which could have a material adverse effect on (a) the financial condition of the City, (b) the ability of the City to perform its obligations under the Authorizing Ordinance, the Indenture, the Bond Purchase Agreement, the Continuing Disclosure Agreement or the Tax Regulatory Agreement (collectively, the "Related Documents"), (c) the security for the Bonds, or (d) the transactions contemplated by the Related Documents. 4811-8222-3146.2 KUTAK ROCK LLP Supplemental Opinion November 12, 2015 Page 3 5. Nothing has come to our attention which would cause us to believe that, as of the date hereof, the Official Statement (excluding financial and statistical data and information which is contained or incorporated in the Official Statement, as to which no view is expressed) contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 6. The DSR Policy constitutes an Investment Security (as defined in the Indenture) eligible for deposit in the Debt Service Reserve Fund under the provisions of the Indenture. The repayment obligations of the City to AGM in connection with the DSR Policy are secured by a valid lien on and pledge of the receipts of the 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax. The enforceability of the respective obligations of the parties to the documents and other items described above, and the availability of certain rights and remedies provided for therein, may be limited by bankruptcy, receivership, insolvency, reorganization, moratorium, marshalling or other similar statutes or rules of law affecting creditors' rights and remedies, to general principles of equity and to the discretion of any court in granting any relief or issuing any order, whether the proceeding is considered a proceeding at law or equity. In particular, the right to indemnification under any of the documents or other items described above may be limited by federal of state securities laws or by the public policy underlying such laws. This opinion is being rendered to you solely for your use and benefit and may not be relied upon in any manner, nor used, by any other person. Very truly yours, 4811-8222-3146.2 Blake E. Pennington Assistant City Attorney Patti T. Mulford Paralegal Phone 479.575.8313 cityattorney@fayetteville-ar.gov KIT WILLIAMS FAYETTEVILLE CITY ATTORNEY November 10, 2015 Simmons First Trust Company, N.A., as trustee Pine Bluff, Arkansas Stephens Inc. Little Rock, Arkansas Assured Guaranty Municipal Corp. New York, New York Kutak Rock LLP Little Rock, Arkansas Re: $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015 Ladies and Gentlemen: 113 W. Mountain Street, Suite 302 Fayetteville, AR 72701-6083 I am City Attorney for the City of Fayetteville, Arkansas (the "City") and have acted in that capacity in connection with the issuance and sale by the City of its $9,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"), which Bonds are being sold pursuant to the terms of the Bond Purchase Agreement dated. October 21, 2015, by and between Stephens Inc. and the City. The terms defined in the Bond Purchase Agreement are used in this opinion with the meanings assigned to them in the Bond Purchase Agreement. In this connection, I have reviewed certain documents with respect to the Bonds, and have examined such records, certificates and other documents as I have considered necessary or appropriate for the purposes of this opinion, including Ordinance No. 4891 adopted by the City Council on June 20, 2006 (the "Election Ordinance"), Ordinance No. 5803 adopted by the City Council on October 6, 2015 (the "Bond Ordinance"), the Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), each by and between the City and Simmons First Trust Company, N.A., as trustee (the "Trustee'), the Tax Regulatory Agreement dated November 12, 2015, by and between the City and the Trustee, the Continuing Disclosure Agreement dated November 12, 2015, by and between the City and Simmons First Trust Company, N.A., as dissemination agent (the "Dissemination Agent"), the Preliminary Official Statement dated October 13, 2015, and the Official Statement dated October 21, 2015 relating to the offering of the Bonds, and closing certificates of the City. Based on such review and such other considerations of law and fact as I believe to be relevant, I am of the opinion that: 1. The City is a duly organized and validly existing municipal corporation and City of the First Class, organized under the laws of the State of Arkansas, with full power and authority to adopt the Election Ordinance and the Bond Ordinance, to levy the Sales and Use Taxes, and to execute and deliver the Bonds, the Indenture, the Tax Regulatory Agreement, the Disclosure Agreement and the Bond Purchase Agreement. 2. The City has duly approved the Preliminary Official Statement and the Official Statement 3. The Election Ordinance and the Bond Ordinance have been duly adopted by the City by all action necessary under the Act and the laws and Constitution of the State of Arkansas, and each remains in full force and effect. 4. The 0.25% Sales and Use Tax and the 0.75% Sales and Use Tax have been validly adopted in accordance with the Constitution and laws of the State of Arkansas, including Amendment 62 and the Act, and may be validly pledged to secure the Bonds. 5. The Indenture, the Tax Regulatory Agreement, the Disclosure Agreement and the Bond Purchase Agreement have been duly authorized, approved, executed and delivered by the City and, subject to the extent that the enforceability of the rights and remedies set forth therein may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally, constitute valid and binding agreements of the City enforceable in accordance with their terms. 6. The information in the Official Statement under the captions "THE STREET PROJECT," "THE CITY" and "LEGAL MATTERS" (apart from financial or statistical data contained or incorporated therein, as to which no view is expressed) is fair, accurate and complete and does not omit any matter which, in my opinion, for the purposes for which the Official Statement is to be used, should be included or referred to therein. 2 7. There is no action, suit or proceeding at law or in equity before or by any court, public board or body, pending or threatened, against or affecting the City, challenging the validity of the transactions contemplated by the Official Statement, the Bonds, the Sales and Use Taxes, the Election Ordinance, the Bond Ordinance, the Indenture, the Tax Regulatory Agreement, the Disclosure Agreement or the Bond Purchase Agreement and, to the best of my knowledge, there is no investigation, pending or threatened, and no threatened action, suit or proceeding involving any of the matters hereinabove mentioned in this paragraph 7. 8. The adoption of the Election Ordinance and the Bond Ordinance and the execution and delivery of the Indenture, the Tax Regulatory Agreement, the Disclosure Agreement and the Bond Purchase Agreement, and compliance with the provisions thereof, under the circumstances contemplated thereby, do not and will not in any material respect conflict with or constitute on the part of the City a breach of or default under any agreement or other instrument to which the City is a party or any existing law, regulation, court order or consent decree to which the City is subject. 9. Based upon the examinations which I have made as Fayetteville City Attorney, nothing has come to my attention which would lead me to believe that the Official Statement (except for financial and statistical data contained or incorporated in the Official Statement, as to which no view is expressed) contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. I hereby consent to the references made to me in the Official Statement. CC: Mayor Jordan Sincerely, _.._- KIT WILLIAMS Fayetteville City Attorney 9 AssURED U MUNICIPAL ISSUER: City of Fayetteville, Arkansas MUNICIPAL BOND DEBT SERVICE RESERVE INSURANCE POLICY Policy No.: 217208-S BONDS: Sales and Use Tax Capital Improvement Bonds, Effective Date: November 12, 2015 Series 2015 Premium: $14,850.00 Termination Date: The earlier of November 1, 2024 or the date the Bonds are no longer oustanding ASSURED GUARANTY MUNICIPAL CORP. ("AGM"), for consideration received, hereby UNCONDITIONALLY AND IRREVOCABLY agrees to pay to the trustee (the "Trustee") or paying agent (the "Paying Agent") as set forth in the documentation (the "Bond Document") providing for the issuance of and securing the Bonds, for the benefit of the Owners, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer. AGM will make payment as provided in this Policy to the Trustee or Paying Agent on the later of the Business Day on which such principal and interest becomes Due for Payment or the Business Day next following the Business Day on which AGM shall have received Notice of Nonpayment, in a form reasonably satisfactory to it. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by AGM is incomplete, it shall be deemed not to have been received by AGM for purposes of the preceding sentence and AGM shall promptly so advise the Trustee, Paying Agent or Issuer, as appropriate, who may submit an amended Notice of Nonpayment. Payment by AGM to the Trustee or Paying Agent for the benefit of the Owners shall, to the extent thereof, discharge the obligation of AGM under this Policy. Upon such payment, AGM shall become entitled to reimbursement of the amount so paid (together with interest and expenses) pursuant to the Bond Document. The amount available under this Policy for payment shall not exceed the Policy Limit. The amount available at any particular time to be paid to the Trustee or Paying Agent under the terms of this Policy shall automatically be reduced by any payment under this Policy. However, after such payment, the amount available under this Policy shall be reinstated in full or in part, but only up to the Policy Limit, to the extent of the reimbursement of such payment (exclusive of interest and expenses) to AGM by or on behalf of the Issuer. Within three Business Days of such reimbursement, AGM shall provide the Trustee, the Paying Agent and the Issuer with notice of the reimbursement and reinstatement. Payment under this Policy shall not be available with respect to (a) any Nonpayment that occurs prior to the Effective Date or after the Termination Date of this Policy or (b) Bonds that are not outstanding under the Bond Document. If the amount payable under this Policy is also payable under another insurance policy or surety bond insuring the Bonds, payment first shall be made under this Policy to the extent of the amount available under this Policy up to the Policy Limit. In no event shall AGM incur duplicate liability for the same amounts owing with respect to the Bonds that are covered under this Policy and any other insurance policy or surety bond that AGM has issued. Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. "Business Day" means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York are, or the Insurer's Fiscal Agent is, authorized or required by law or executive order to remain closed. "Due for Payment" means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity unless AGM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration and (b) when referring to interest on a Bond, payable on the Page 2 of 2 Policy No. 217208-S stated date for payment of interest. "Nonpayment" means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. "Nonpayment" shall also include, in respect of a Bond, any payment of principal or interest that is Due for Payment made to an Owner by or on behalf of the Issuer that has been recovered from such Owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with a final, nonappealable order of a court having competent jurisdiction. "Notice" means telephonic or telecopied notice, subsequently confirmed in a signed writing, or written notice by registered or certified mail, from the Issuer, the Trustee or the Paying Agent to AGM which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount and (d) the date such claimed amount became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment of principal or interest thereunder, except that "Owner" shall not include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds. "Policy Limit" shall be the dollar amount of the debt service reserve fund required to be maintained for the Bonds by the Bond Document from time to time (the "Debt Service Reserve Requirement"), but in no event shall the Policy Limit exceed $450,000. The Policy Limit shall automatically and irrevocably be reduced from time to time by the amount of each reduction in the Debt Service Reserve Requirement, as provided in the Bond Document. AGM may appoint a fiscal agent (the "Insurer's Fiscal Agent") for purposes of this Policy by giving written notice to the Trustee and the Paying Agent specifying the name and notice address of the Insurer's Fiscal Agent. From and after the date of receipt of such notice by the Trustee and the Paying Agent, (a) copies of all notices required to be delivered to AGM pursuant to this Policy shall be simultaneously delivered to the Insurer's Fiscal Agent and to AGM and shall not be deemed received until received by both and (b) all payments required to be made by AGM under this Policy may be made directly by AGM or by the Insurer's Fiscal Agent on behalf of AGM. The Insurer's Fiscal Agent is the agent of AGM only and the Insurer's Fiscal Agent shall in no event be liable to any Owner for any act of the Insurer's Fiscal Agent or any failure of AGM to deposit or cause to be deposited sufficient funds to make payments due under this Policy. To the fullest extent permitted by applicable law, AGM agrees not to assert, and hereby waives, only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses (including, without limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to AGM to avoid payment of its obligations under this Policy in accordance with the express provisions of this Policy. This Policy sets forth in full the undertaking of AGM, and shall not be modified, altered or affected by any other agreement or instrument, including any modification or amendment thereto. Except to the extent expressly modified by an endorsement hereto, (a) any premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity and (b) this Policy may not be cancelled or revoked. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. In witness whereof, ASSURED GUARANTY MUNICIPAL CORP. has caused this Policy to be executed on its behalf by its Authorized Officer. ASSURED GUARANTY MUNICIPAL CORP. By Authorized Officer A subsidiary. of Assured Guaranty Municipal Holdings Inc. (212) 974-0100 31 West 52M Street, New York, N.Y. 10019 Form 501 NY (6/90) NO DEFAULT AND TAX CERTIFICATE OF ASSUMED GUARANTY MUNICIPAL CORP. The undersigned hereby certifies on behalf of Assured Guaranty Municipal Corp_ ("AGM"), in connection with the issuance by AGM of its Policy No. 217208-S (the "Policy") in respect of the City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds") that: (f) AGM is not currently in default nor has AGM ever been in default under any policy or obligation guaranteeing the payment of principal of or interest on an obligation, (ii) the insurance premium of $14,850.00 (the "Premium") is a charge for the transfer of credit risk and was determined in arm's length negotiations and is required to be paid to AGM as a condition to the issuance of the Policy, (Ili) no portion of such Premium represents an indirect payment of costs of issuance, including rating agency fees, other than fees paid by AGM to maintain its ratings, which, together with all other overhead expenses of AGM, are taken into account in the formulation of its rate structure, or for the provision of additional services by us, nor the direct or indirect payment for a cost, risk or other element that is not customarily borne by insurers of tax-exempt bonds (in transactions in which the guarantor has no involvement other than as a guarantor), (iv) AGM is not providing any services in connection with the Bonds other than providing the Policy, and except for the Premium, AGM will not use any portion of the Bond proceeds; provided, however, that AGM or its affiliates may independently provide a guaranteed investment contract for the investment of all or a portion of the proceeds of the Bonds, (v) except for payments under the Policy in the case of Nonpayment by the Issuer, there is no obligation to pay any amount of principal or interest on the Bonds by AGM, (vi) AGM does not expect that a claim will be made on the Policy, (vii) the Issuer is not entitled to a refund of the premium for the Policy in the event a Bond is retired before the final maturity date, and (viii) AGM would not have issued the Policy unless the authorizing or security agreement for the Bonds provided for a debt service reserve account funded and maintained in an amount at least equal to, as of any particular date of computation, the reserve requirement as set forth in such agreement. AGM makes no representation as to the nature of the interest to be paid on the Bonds or the treatment of the Policy under Section 1.148-4(f) of the Income Tax Regulations. AS .,., ANTY MUNICIPAL CORP. By: Authorized O Dated: November 12, 2015 November 12, 2015 Municipal Bond Debt Service Reserve Insurance Policy No. 217208-S With Respect to City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015, Ladies and Gentlemen: I am Counsel of Assured Guaranty Municipal Corp., a New York stock insurance company ("AGM"). You have requested my opinion in such capacity as to the matters set forth below in connection with the issuance by AGM of its above -referenced policy (the "Policy"). In that regard, and for purposes of this opinion, I have examined such corporate records, documents and proceedings as I have deemed necessary and appropriate. Based upon the foregoing, I am of the opinion that: AGM is a stock insurance company duly organized and validly existing under the laws of the State of New York and authorized to transact financial guaranty insurance business therein. 2. The Policy has been duly authorized, executed and delivered by AGM. 3. The Policy constitutes the valid and binding obligation of AGM, enforceable in accordance with its terms, subject, as to the enforcement of remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium and other similar laws affecting the enforceability of creditors' rights generally applicable in the event of the bankruptcy or insolvency of AGM and to the application of general principles of equity. I am a member of the Bar of the State of New York, and do not express any opinion as to any law other than the laws of the State of Pew York. City of Fayetteville, Arkansas, 113 W. Mountain, Fayetteville, Arkansas 72701. Stephens, as Representative of the Underwriters, 3425 North Futrall, Suite 201, Fayetteville, Arkansas 72703. Assured Guaranty Municipal Corp. CERTIFICATE OF ARKANSAS DEPARTMENT OF FINANCE AND ADMINISTRATION The undersigned hereby certifies as follows: 1. The undersigned is the duly qualified and acting Sales & Use Tax Manager of the Department of Finance and Administration of the State of Arkansas. 2. This Certificate is executed in connection with the issuance of $9,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"), by the City of Fayetteville, Arkansas (the "City"). 3. There has been filed in this office (A) a certified copy of Ordinance No. 4891 of the City, adopted June 20, 2006, (B) a proclamation declaring the results of an election held September 12, 2006, within the City, (C) a copy of a proof of publication of such proclamation, and (D) a certified copy of Ordinance No. 5803 of the City, adopted October 6, 2015, all relating to the levy by the City of (i) a one-quarter of one percent (0.25%) city-wide sales and use tax (the "0.25% Tax") and (ii) a three-quarters of one percent (0.75%) city-wide sales and use tax (the "0.75% Tax"), each under the authority of Arkansas Code Annotated Sections 14-164-301 et seq. (the "Act"), and the pledge of the receipts from the 0.25% Tax and the 0.75% Tax to the payment of the Bonds and to the payment of the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A, the City's $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007, the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009, and the City's $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013. 4. The collection of the 0.25% Tax commenced as of January 1, 2007, and the collection of the 0.75% Tax commenced as of August 1, 2014. t Certified this 11( day of r 12015. DEPARTMENT OF FINANCE AND ADMINISTRATION �(t, By: Title:TKitvCY .0 4830-6231-9914.1 CERTIFICATE OF TREASURER OF THE STATE OF ARKANSAS The undersigned hereby certifies as follows: 1. The undersigned is a duly qualified officer acting on behalf of the Treasurer of the State of Arkansas. 2. This Certificate is executed in connection with the issuance of $9,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"), by the City of Fayetteville, Arkansas (the "City"). 3. There has been filed in the office of the Treasurer of the State of Arkansas (A) a certified copy of Ordinance No. 4891 of the City, adopted June 20, 2006, (B) a proclamation declaring the results of an election held September 12, 2006, within the City, (C) a copy of a proof of publication of such proclamation, and (D) a certified copy of Ordinance No. 5803 of the City, adopted October 6, 2015, all relating to the levy by the City of (i) a one-quarter of one percent (0.25%) city-wide sales and use tax (the "0.25% Tax") and (ii) a three-quarters of one percent (0.75%) city-wide sales and use tax (the "0.75% Tax"), each under the authority of Arkansas Code Annotated Sections 14-164-301 et seq. (the "Act"), and the pledge of the receipts from the 0.25% Tax and the 0.75% Tax to the payment of the Bonds and to the payment of the City's $50,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2006A, the City's $14,340,000 Sales and Use Tax Capital Improvement Bonds, Series 2007, the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009, and the City's $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013. Certified this LA day of &AYLK00 2015. TREASURER OF THE STATE OF ARKANSAS By: VAMW kw-, Title:. b04MVli #A4-5UWjUA MW(,6M 4843-8817-8730.1 TRUSTEE'S CERTIFICATE Simmons First Trust Company, N.A., Pine Bluff, Arkansas, as trustee for $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"), hereby certifies that: 1. Pursuant to the provisions of a Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Trust Indenture") each by and between the City of Fayetteville, Arkansas (the "City") and Simmons First Trust Company, N.A., arrangements have been made for Simmons First Trust Company, N.A. to serve as trustee and paying agent (the "Trustee") with respect to the Bonds. The Trustee hereby accepts such appointment. 2. Pursuant to the provisions of the Trust Indenture and directions from the City, Glenda L. Dean, Assistant Vice President, has duly authenticated the initial Bonds in the aggregate principal amount of $9,000,000, being in the form of nine (9) typewritten registered bonds, numbered R15-1 through R15-9, inclusive. 3. Each person who, on behalf of the Trustee, authenticated the initial Bonds or executed the Fourth Supplemental Trust Indenture, the Tax Regulatory Agreement dated as of November 12, 2015, or the Continuing Disclosure Agreement dated as of November 12, 2015, with respect to the Bonds was at the date thereof and is now duly elected, appointed or authorized, qualified and acting as an officer or authorized signatory of the Trustee and is duly authorized to perform such acts at the respective times of such acts, and the signatures of such persons appearing on such documents are their genuine signatures. 4. The following are names, titles and specimen signatures of each of the above- mentioned officers of the Trustee: Name Office Si na e Glenda L. Dean Vice President Roy Ferrell Senior Vice President 5. The Trustee is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America. The Trustee has all requisite power and authority to carry out its obligations as Trustee under the Trust Indenture. IN WITNESS WHEREOF, SIMMONS FIRST TRUST COMPANY, N.A., has caused this certificate to be executed in its corporate name by an officer thereunto duly authorized. Dated: November 12, 2015 SIMMONS FIRST TRUST COMPANY, N.A. Pine Bluff, Arkansas By: 'lie Clement, President 4844-8923-5242.2 UNDERWRITER'S CERTIFICATE The undersigned officer of Stephens Inc., the Underwriter (defined below) for the $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"), hereby makes the certifications set forth below in connection with the execution and delivery of the Bonds. All capitalized terms used but not defined herein shall have the meanings ascribed to them in the Tax Regulatory Agreement to which this certificate is attached as an exhibit. (1) Stephens Inc. has served as underwriter (the "Underwriter") and has been involved in the structuring and marketing of the Bonds, including particularly, the establishment of the issue size, the computation of Yield and weighted average maturity, and other factors relating to compliance with Section 148 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder. (2) The offering price of the Bonds referenced in Section 4.5 of the Tax Regulatory Agreement represents the maximum initial offering price at which a substantial amount of each maturity of the Bonds was offered for sale to the public (exclusive of bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) through a bona fide offering, and such initial offering price was established by a bona fide bid without regard to any amounts which would increase the Yield on any maturity of the Bonds above its market Yield, and the description of the interest rates and Yields contained in the final Official Statement dated October 21, 2015 (the "Official Statement") with respect to the Bonds constitute a true and correct summary thereof. (3) The Yield on the Bonds is 1.4474218%. For purposes of calculating the Yield on the Bonds, the Bonds sold at substantial premiums have been treated as called on their earliest call date resulting in the lowest Yield. (4) The establishment of the Debt Service Reserve Fund is reasonably required to obtain the issuance of the Bonds at an economic interest rate for the Issuer, and is, in the judgment of the undersigned, established at a funding level comparable to that found for obligations similar to the Bonds issued within the past year. (5) To the best knowledge of the undersigned, the representations of the Issuer contained in the Tax Regulatory Agreement are true and correct. The undersigned understands that this certificate shall form a part of the basis for the opinion, dated the date hereof, of Kutak Rock LLP, to the effect that interest with respect to the Bonds is excluded from the gross income of the recipient thereof for purposes of federal income taxation under existing laws, regulations, rulings and judicial decisions. 4823-2569-5274.1 IN WITNESS WHEREOF, the undersigned has set his hand as of the date set forth below. Dated: November 12, 2015 STEPHENS INC. By: M -U'.' &. Title: 2 4823-2569-5274.1 UNDERWRITER'S RECEIPT The undersigned, on behalf of Stephens Inc., as purchaser (the "Purchaser") of $9,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"), hereby acknowledges receipt of each and all of the Bonds, said Bonds being in the form of nine (9) typewritten fully registered bonds in the name of Cede & Co., as nominee of The Depository Trust Company, in authorized denominations, bearing interest and containing such other terms and provisions as set forth in that certain Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), each by and between the City of Fayetteville, Arkansas (the "City") and Simmons First Trust Company, N.A., as trustee (the "Trustee"). The Bonds have been checked, inspected and approved by the Purchaser. The Purchaser further acknowledges the receipt of, or waives the requirement for, each opinion, document and certificate contemplated by the Bond Purchase Agreement dated October 21, 2015, between the City and the Purchaser, and acknowledges that each such opinion, document and certificate, to the extent received, is satisfactory to the Purchaser as to form and substance. Dated: November 12, 2015 STEPHENS INC. By: Title: V 4842-0533-3290.1 TRUSTEE'S RECEIPT AND CERTIFICATE AS TO APPLICATION OF FUNDS The undersigned, Simmons First Trust Company, N.A., as trustee (the "Trustee") under a Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), each by and between City of Fayetteville, Arkansas (the "City") and the Trustee, with respect to the City's $9,000,000 Sales and Use Tax Capital Improvement Bonds, Series 2015 (the "Bonds"), hereby certifies that: 1. The Trustee has received this date, on behalf of the City, from Stephens Inc. (the "Underwriter"), $8,979,875.65, that being the agreed purchase price of the Bonds, pursuant to the Bond Purchase Agreement dated October 21, 2015, between the City and the Underwriter (less $14,850.00 paid by the Underwriter on behalf of the City for the premium on a debt service reserve insurance policy). 2. The total proceeds of the sale of the Bonds (i.e., $8,979,875.65) have been deposited or will be applied, in accordance with the written directions of the City, as follows: (i) $65,000.00 shall be deposited in the Costs of Issuance Fund for payment of Costs of Issuance as directed by a Certificate of the City; and (ii) The balance of said proceeds, in the amount of $8,914,875.65, shall be deposited in the Street Account of the Project. Dated: November 12, 2015. SIMMONS FIRST TRUST COMPANY, N.A., as Trustee By: Title: Vice president V corporate Trust Officer 4846-2371-5114.2 ll—tz—vd Gz:ZI:M HOM BIC UMERWRITING 0� Itt !Planket Issuer Leder of Representations (to be .• Civ of Ea3Mttevilleo AR CNMW of rel • 4 a 01 C, •. 4.1 ,.-". T-7 F,:• �l. •it ..a q.�.-.tic' -rc �_,....-• .. a. .L -'. r.� �, _-w- •: _' ,. Ia :: ' I t.n:' ..�..�. 3 '3 . � r ••,.c • • i � � Tat ', - - � • �.�.. � - • . 1 . .'1 <�'. .. • srw' 'r ii•r. � „x . � � ..-..: ! ::� .J . �'iTv •- -_� Y .' a' �_ �` JFI 1!-- i- se ;a�sr ..r.� ►2 Yi7a '. �,,.. ".,�� � . ► •z.' ^ s .S_ �_',. • .�.. ,iia.r . „ "- . .-1+�•�--=.•. r„ `ice--- iiw = �._ -.moi_ 'iY:r'. is "••c. .. • �. 4 . w ••I• .� . 7m li�w_.u�• t ' .meati.^may .s g� r /f ,�-..:. :,..t... , @'de SA-OFFREWNG DOM. 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Alp •.... ! - ._•.. z Irr-. \, •:�:.: • 1 is u.• 91, STANDARD & POOR'S h RATINGS SERVICES WGRAW HILL FINANCIAL Summary: '0 Primary Credit Analyst: Ann M Richardson, Dallas (214) 765-5878; ann.richardson@standardandpoors.com Secondary Contact: Jennifer K Garza (Mann), Dallas (1) 214-871-1422; jennifer.garza@standardandpoors.com Table Of Contents Rationale Outlook Related Criteria And Research WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 9, 2015 1 1463037 1302177082 US$9.0 mil sales and use tax cap imp bnds ser 2015 due 11/01/2024 Long Term Rating AA -/Stable New Fayetteville sales tax Long Term Rating AA -/Stable Upgraded Fayetteville sales tax (ASSURED GTY) Unenhanced Rating AA-(SPUR)/Stable Upgraded Fayetteville sales tax Unenhanced Rating AA-(SPUR)/Stable Upgraded Many issues are enhanced by bond insurance. Rationale Standard & Poor's Ratings Services raised its underlying ratings (SPUR) on the City of Fayetteville, Ark.'s series 2006, 2007, 2009, and 2013 sales and use capital improvement bonds one notch to 'AA-' from 'A+'. At the same time, Standard & Poor's assigned its 'AA-' long-term rating to the city's series 2015 sales and use tax capital improvement bond, which we view as on parity with the city's sales and use bonds outstanding. The outlook on all the bonds is stable. The upgrade reflects our view of improved coverage now that the senior -lien debt has been defeased, and our understanding that no additional debt will be issued that could take priority status over the bonds outstanding. In addition, Standard & Poor's withdrew its 'AA-' rating on the city's series 2005B sale and use tax refunding and capital improvement bonds as those had been called. Pledges of a dedicated 0.25% citywide sales and use tax, which the electorate authorized on Sept. 12, 2006, and a 0.75% dedicated sales and use tax, originally authorized on Nov. 6, 2001, secure the bonds. The existing 0.75% special city-wide sales and use tax was pledged to the payment of the city's existing indebtedness, originally authorized in the aggregate principal amount of $92 million. Therefore, we previously had viewed this debt as having a senior lien hold over the city's 2006 authorization; however, the existing indebtedness from the 2001 authorization was paid in full on July 1, 2014. The levy on the existing tax ceased on Aug. 1, 2014, and the collection of the 0.75% sales and used tax commenced simultaneously on bonds outstanding from the 2006 authorization as provided in the trust indenture. Electors from the 2006 election approved the issuance of capital improvement bonds in principal amount not to exceed $110 million and the corresponding levy of the sales and use taxes. We understand that the series 2015 bonds will be the final installment of this authorized debt, and will be used to fund various capital projects throughout the city. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 9, 2015 2 1463037 1302177082 Summary: Fayetteville, Arkansas; Sales Tax The ratings reflect our view of the city's: • Position as a regional retail and service center, which is anchored by the University of Arkansas; • Fiscal 2014 pledged revenue providing a good 1.42x maximum annual debt service (MADS) coverage; and • Very strong bond provisions, including a closed lien and a mandatory use of surplus revenues for principal prepayment to shorten the maturity. An offsetting rating factor includes the city's relatively small sales tax base with retail competition from neighboring municipalities. Fayetteville, with a population of about 80,000, is located in the rapidly growing Northwest Arkansas metropolitan statistical area, which includes Rogers and Springdale. University of Arkansas, with about 8,500 employees and has a student population nearing 27,000, is the largest employer and anchors the economy. In our opinion, the city's median household income is adequate, at 88% of the national level, but we recognize that the significant student population dampens income levels. Per capita retail sales are very strong at 132% of the national level. Fayetteville's unemployment rate for July 2015 was 4.3%, lower than both the state and national averages. The student population and the university have expanded in recent years, and continued growth is expected. As a result, the city has experienced an increased demand for building permits, new retail and restaurants, and high-end apartments, all of which have had a positive impact on increasing sales tax revenue. Based on the city's fiscal 2014 audit, collections from the dedicated 0.75% and 0.25% sales and use tax totaled $18.4 million and provided 1.42x maximum annual debt service (MADS) coverage, which is scheduled to occur in fiscal 2018. Previously, in fiscal 2013, combined coverage of the senior- and subordinate -debt liens provided just 1.1x MADS coverage. The combined 1% sales tax revenues have demonstrated strong growth over the past two fiscal years, increasing by a cumulative 5%. The year-to-date collections for fiscal 2015 are up 7% compared with the same period the previous year. For fiscal 2015, officials are expecting the sales tax revenues to increase to about $19.1 million, providing a 1.47x MADS coverage, and conservatively assumed a 2% growth rate for the 2016 budget. Given that no authorized debt on par with the pledged revenues remains, and our expectation that the growing economy will lead to further sales tax growth, we believe that coverage levels will continue to improve over the next two years. Legal provisions are exceptionally strong due to state statutory requirements that require tax receipts be used solely to pay principal, interest, and administrative fees. As a result, management will use any surplus net revenues to pay down its debt outstanding in inverse order of bond maturity, as required, rather than making it available for transfers or other lawful purposes. According to the debt service schedule, all bonds outstanding secured by the receipts of the sales and use taxes are scheduled to mature by 2024; with the early redemption feature, however, officials expect to pay off the bonds by 2020, assuming no tax revenue growth. A debt service reserve funded at 5% of the aggregate principal amount provides additional bondholder liquidity. The city may issue the additional authorized parity bonds if the most recent 12 months of pledged sales and use tax revenues provide a minimum 1.25x coverage of MADS; however, additional bonds secured by the pledged revenues can only be used for the purpose of refunding the existing bonds outstanding secured by the 0.25% and 0.75% sales and use tax. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 9, 2015 3 1463037 1302177082 Summary: Fayetteville, Arkansas; Sales Tax Outlook The stable outlook reflects our expectation that pledged sales tax revenues will remain steady and continue to provide good MADS coverage, and that we will not change the rating during the two-year outlook period. Fayetteville's stable local economy and minimal history of significant revenue fluctuation support the expectation of steady pledged revenues. the expectation of steady pledged revenues. Upside scenario If the city's economic base were to expand, resulting in significantly higher coverage levels, we could raise the rating. Downside scenario Should pledge revenues decline due to an economic downturn, which results in debt service coverage weakening to levels that we no longer consider comparable with peers, the rating could be negatively pressured. Related Criteria And Research Related Criteria • Criteria: Use of CreditWatch And Outlooks, Sept. 14, 2009 • USPF Criteria: Special Tax Bonds, June 13, 2007 Related Research • Special Tax Bonds: U.S. Recovery Underpins The Sector's Stability, Sept. 14, 2015 Complete ratings information is available to subscribers of RatingsDirect at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column. 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WWW.STANDARDANDPOORS.COM/RATINGSDIRECT OCTOBER 9, 2015 5 1463037 1302177082 COVERAGE CERTIFICATE City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Date: November 12, 2015 TO: Simmons First Trust Company, as Trustee This certificate is provided pursuant to the provisions of Section 212 of the Trust Indenture dated as of November 1, 2006, as subsequently supplemented and amended (the "Indenture"), by and between the City of Fayetteville, Arkansas (the "Issuer") and you, as trustee, in connection with the proposed issuance of Additional Bonds pursuant to the Indenture. In connection with such issuance, the undersigned certifies as follows: (a) Receipts of the Sales and Use Tax for preceding twelve (12) months: $19,298,680 (b) Maximum Annual Debt Service on all Outstanding Bonds and RLF Loans, plus the proposed Additional Bonds: $12,809,466 (c) (a) divided by (b) = 1.51 % (which is greater than 125%) The undersigned hereby certifies that he is authorized to deliver this Certificate on behalf of the Issuer. No Event of Default exists under the Indenture and, to the knowledge of the undersigned, no event has occurred and continues which with notice or lapse of time or both would constitute an Event of Default under the Indenture. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture. CITY OF FAYETTEVILLE, ARKANSAS By: ` G'A 4 -- Finance Director 4844-0149-2522.1 REQUISITION City of Fayetteville, Arkansas Series 2015 Sales and Use Tax Capital Improvement Bonds Date: Requisition No.: TO: Simmons First Trust Company, as Trustee Pursuant to the provisions of Section 502 of the Trust Indenture dated as of November 1, 2006, as supplemented and amended by a First Supplemental Trust Indenture dated as of October 1, 2007, by a Second Supplemental Trust Indenture dated as of November 1, 2009, by a Third Supplemental Trust Indenture dated as of November 1, 2013, and by a Fourth Supplemental Trust Indenture dated as of November 1, 2015 (as supplemented and amended, the "Indenture"), each by and between the City of Fayetteville, Arkansas (the "Issuer") and you, as trustee, you are authorized to make the following described payment directly to the Payee named below from the Street Account of the Project Fund: Name and Address of Payee: Amount of Payment: $ General Classification of the Expenditures: The undersigned hereby certifies that he is authorized to deliver this Requisition on behalf of the Issuer. The amount requested hereunder has not been the basis for any previous Requisition by the Issuer and is justly due and owing to the person(s) named herein as a proper payment or reimbursement of a Project Cost with respect to the Street Project. No Event of Default exists under the Indenture and, to the knowledge of the undersigned, no event has occurred and continues which with notice or lapse of time or both would constitute an Event of Default under the Indenture. CITY OF FAYETTEVILLE, ARKANSAS Authorized Representative 4811-1819-4474.1