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HomeMy WebLinkAboutOrdinance 5619ORDINANCE NO.5619 AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF THE CITY'S SALES AND USE TAX CAPITAL IMPROVEMENT BONDS, SERIES 2013, FOR THE PURPOSE OF FINANCING A PORTION OF THE COSTS OF CERTAIN STREET IMPROVEMENTS; AUTHORIZING THE EXECUTION AND DELIVERY OF A THIRD 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 "2013 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. & 2011 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 2013 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 Page 2 Ordinance No. 5619 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 2013, in the aggregate principal amount of not to exceed $22,750,000 (the "Bonds"), in order to provide for the funding of the 2013 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 2013" (the "Bonds"). The Bonds shall be issued in the original aggregate principal amount of not to exceed Twenty -Two Million Seven Hundred Fifty Thousand Dollars ($22,750,000) 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 5.00%. The proceeds of the Bonds will be utilized to finance the costs of the 2013 Project, to establish a debt service reserve for the Bonds or to purchase a surety bond for reserve purposes, to pay a premium for bond insurance, if deemed economically beneficial, and to pay printing, underwriting, legal and other expenses incidental to the issuance of the Bonds. The Bonds shall be issued in the forms and denominations, shall be dated, shall be numbered, shall mature, shall be subject to redemption prior to maturity, and shall contain such other terms, covenants and conditions, all as set forth in the Third 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 Third 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 Page 3 Ordinance No. 5619 the Bonds in substantially the form contained in the Third 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"), and the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 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 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 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 Third Supplemental Trust Indenture (the "Third 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 Third 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 Third Supplemental Trust Indenture to be accepted, executed and acknowledged by the Trustee. The Third 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 and a Second Supplemental Trust Indenture dated as of November 1, 2009, each by and between the City and the Trustee (the "Original Indenture," and collectively with the Third Supplemental Trust Indenture, the "Trust Indenture"). The Third 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 Third Supplemental Trust Indenture in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Third Supplemental Trust Indenture, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Third 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.) Page 4 Ordinance No. 5619 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, the 0.75% Sales and Use Tax and the City in compliance with the provisions of Rule 15c2-12 of the U. S. Securities and Exchange Commission, the Mayor is hereby authorized and directed to execute a Continuing Disclosure Agreement to be dated as of the date of its execution (the "Continuing Disclosure Agreement"), by and between the City and the Trustee, and the Mayor is hereby authorized and directed to cause the Continuing Disclosure. Agreement to be executed by the Trustee. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Continuing Disclosure Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Continuing Disclosure Agreement, their execution to constitute conclusive evidence of such approval. Page 5 Ordinance No. 5619 (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. 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 8. 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 Third 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 9. 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 10. The provisions of this Ordinance are hereby declared to be severable, and if any section, phrase or provision shall for any reason be declared to be illegal or invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions of this Ordinance. Section 11. All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. PASSED and APPROVED this 17th day of September, 2013. APPROVED: ATTEST: By: K / �T f SONDRA E. SMITH, City Clerk/TreasiV`"&; G\AY O,c'•`;G< FAYETTEVILLE '�-Y, .A N City of Fayetteville Staff Review Form City Council Agenda Items and Contracts, Leases or Agreements 9/17/2013 City Council Meeting Date Agenda Items Only Paul A Becker Finance and Internal Services Finance and Internal Services Submitted By Division Department Action N/A $ Cost of this request Category / Project Budget Program Category / Project Name Account Number Funds Used to Date Program./ Project Category Name Project Number Remaining Balance Fund Name Budgeted Item Budget Adjustment Attached `"L-A ot, 3 -- J O _ 4013 Previous Ordinance or Resolution # Department Director Date q-3- 13 City AttorneyDate Finance and Internal Services Director Date -3-a Date / //,-? Date Original Contract Date: Original Contract Number: Received in City 0 8 -3 0- 1 3 R 0 4: 3 R J D Clerk's Office Received in n,31 Mayor's Office Revised January 15, 2009 •il .a e evlle �ARKANSAS� CITY COUNCIL AGENDA MEMO To: Mayor Lioneld Jordan and Fayetteville City Council From: Paul Becker, Finance Director Date: August 30, 2013 THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENT CORRESPONDENCE Subject: Issuance of City Sales and Use Tax Bonds in the amount of approximately $22,750,000 PROPOSAL: On September 12, 2006 the voters of Fayetteville approved the issuance of $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 and 2009 as follows: WSIP- $39,340,000 Street Project-$34,150,000 Trails Project-$2,100,000 This bond issue, if approved, is expected to generate approximately $22,000,000 for the continuation of the Street Bond Project which was approved by the voters in 2006. An additional $9,000,000 will remain to be issued in the future. RECOMMENDATION: Staff recommends approval of an ordinance requesting the council to approve the issuance of up to $22,750,000 worth of sales tax bonds for the Street Programs. BUDGET IMPACT: The approval of this ordinance will provide funds for continued work on the Street Bond Project. KUTAK ROCK LLP DRAFT 08/30/13 ORDINANCE NO. AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF THE CITY'S SALES AND USE TAX CAPITAL IMPROVEMENT BONDS, SERIES 2013, FOR THE PURPOSE OF FINANCING A PORTION OF THE COSTS OF CERTAIN STREET IMPROVEMENTS; AUTHORIZING THE EXECUTION AND DELIVERY OF A THIRD 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 "2013 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. & 2011 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 2013 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 4820-4769-2053.3 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 2013, in the aggregate principal amount of not to exceed $22,750,000 (the "Bonds"), in order to provide for the funding of the 2013 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 2013" (the "Bonds"). The Bonds shall be issued in the original aggregate principal amount of not to exceed Twenty -Two Million Seven Hundred Fifty Thousand Dollars ($22,750,000) 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 5.00%. The proceeds of the Bonds will be utilized to finance the costs of the 2013 Project, to establish a debt service reserve for the Bonds or to purchase a surety bond for reserve purposes, to pay a premium for bond insurance, if deemed economically beneficial, and to pay printing, underwriting, legal and other expenses incidental to the issuance of the Bonds. The Bonds shall be issued in the forms and denominations, shall be dated, shall be numbered, shall mature, shall be subject to redemption prior to maturity, and shall contain such other terms, covenants and conditions, all as set forth in the Third 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 Third 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 Third 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 2 4820-4769-2053.3 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"), and the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 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 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 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 Third Supplemental Trust Indenture (the "Third 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 Third 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 Third Supplemental Trust Indenture to be accepted, executed and acknowledged by the Trustee. The Third 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 and a Second Supplemental Trust Indenture dated as of November 1, 2009, each by and between the City and the Trustee (the "Original Indenture," and collectively with the Third Supplemental Trust Indenture, the "Trust Indenture"). The Third 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 Third Supplemental Trust Indenture in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Third Supplemental Trust Indenture, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Third 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 3 4820-4769-2053.3 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, the 0.75% Sales and Use Tax and the City in compliance with the provisions of Rule 15c2-12 of the U. S. Securities and Exchange Commission, the Mayor is hereby authorized and directed to execute a Continuing Disclosure Agreement to be dated as of the date of its execution (the "Continuing Disclosure Agreement"), by and between the City and the Trustee, and the Mayor is hereby authorized and directed to cause the Continuing Disclosure Agreement to be executed by the Trustee. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Continuing Disclosure Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Continuing Disclosure Agreement, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Continuing Disclosure Agreement in substantially the form authorized to be executed is on file with the City Clerk and is available for inspection by any interested person.) Section 7. 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 C! 4820-4769-2053.3 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 8. 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 Third 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 9. 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 10. The provisions of this Ordinance are hereby declared to be severable, and if any section, phrase or provision shall for any reason be declared to be illegal or invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions of this Ordinance. Section 11. All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. ADOPTED AND APPROVED THIS 1L DAY OF S r, 2013 ATTEST: City Clerk iifn,/ `����� •'GAT Y O,c'.�G�.' ^v; FAYETTEVILLE r �'.�s•'9;QKA NSP� •�' N f ;oN�;o4 AP PR ED: t ayor 5 4820-4769-2053.3 NORTHWEST ARKANSAS DEMOCRAT -GAZETTE NORTHWESTARKANSAS THE MORNING NEWS OF SPRINGDALE NEWSRM— E:DSLLC THE MORNING NEWS OF ROGERS TIMES NORTHWEST ARKAILY R D BENTON COUNTY DAILY RECORD 212 NORTH EAST AVENUE, FAYETTEVILLE, ARKANSAS 72701 1 P.O. BOX 1607, 72702 1 479-442-1700 1 WWW.NWANEWS.COM AFFIDAVIT OF PUBLICATION I, Holly Andrews, do solemnly swear that I am the Legal Clerk of the Northwest Arkansas Newspapers, LLC, printed and published in Washington and Benton County, Arkansas, bona fide circulation, that from my own personal knowledge and reference to the files of said publication, the advertisement of: City of Fayetteville - Ordinance 5619 Was inserted in the Regular Editions on: September 26, 2013 Publication Charges: $ 557.71 4 Holy Andrews Subscribed and sworn to before me This -Z& day of wed{- , 2013. klt� WI& Notary Public My Commission Expires:42W�7/0 % * *NOTE* * Please do not pay from Affidavit. Invoice will be sent. ORDINANCE NO. 5619 AN SALE OF THE AUTHORIZING G THE ISSUANCE USE AND SALE L I THE CITY'S SALES AND USEPe TAX CAPITAL IMPROVEMENT BONDS, SERIES 2013, FOR THE PURPOSE OF FINANCING ARKANSAS A PORTION OF THE COSTS OF CERTAIN STREET IMPROVEMENTS; AUTHORIZING THE ,EXECUTION AND DELIVERY OF A THIRD SUPPLEMENTAL TRUST INDENTURE NRSUANT TO WHICH, THE BONDS WILL BE ISSUED AND SECURED; AUTHORIZING THE EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT QRS,UANT TO WHICH THE BONDS WILL BE OFFERED; AUTHORIZING THE ELUTION AND DELIVERY OF ABOND PURCHASE AGREEMENT PROVIDING ORTHE SALE OF THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY O� .CONTINUING DISCLOSURE AGREEMENT; AND PRESCRIBING OTHER MATTERS RELATING THERETO. -_ WWHEREAS, 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 "2013 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. & 2011 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 2013 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 nd approved on June 20, 2006 (the "Election Ordinance"), there was submitted N 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 improve- ment 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 quali- fied 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 2013, in the aggregate principal amount of not to exceed $22,750,000 (the "Bonds"), in order to provide for the funding of the 2013 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 2013" (the "Bonds"). The Bonds shall be issued in the original aggregate principal amount of not to exceed Twenty -Two Million Seven Hundred Fifty Thousand Dollars ($22,750,000).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 5.00%. The proceeds -of the Bonds will be utilized to finance the costs of the 2013 Project, to establish a debt service reserve for the Bonds or to purchase a surety bond for reserve purpos- es, 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 forms and denominations, shall be dated, :shall be numbered, shall mature, shall be subject to redemption prior to maturity, and shall contain such other terms, covenants and conditions, all as set forth in the Third 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 Third 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 Third Supplemental Trust Indenture sub- mitted to this meeting, with such changes as shall be approved by such persons executing the Bonds, their execution to constitute conclusive evidence of such 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 par- ity 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"), and the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 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 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 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). Secoon 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 Third Supplemental Trust, Indenture (the "Third 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 Third 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 Third Supplemental Trust Indenture to be accepted, executed and acknowledged by the Trustee. The Third 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 and a Second Supplemental Trust Indenture dated as of November 1, 2009, each by and between the City and the Trustee (the "Original Indenture," and collectively with the Third Supplemental Trust Indenture, the "Trust Indenture"). The Third Supplemental Trust Indenture is hereby approved in substantially the form submitted to this meet- ing Saleincludins andthout Use Taxtreceipts anthe d 0.75%sthereof Sales and Use Tax receipts to the lande of 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 Third Supplemental Trust Indenture in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Third Supplemental Trust Indenture, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Third Supplemental Trust Indenture in substan- tially 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 i 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 y 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 tobe sold to the Underwriter, the Mayor is hereby authorized and directed to exe- ;cute 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, the 0.75% Sales and Use Tax and the City in compliance with the provisions of Rule 15c2 12 of the U. S. Securities and Exchange Commission, the Mayor is hereby authorized Arid 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 'ontinuing Disclosure Agreement to be executed by the Trustee. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to his meeting, and the Mayor is hereby authorized to confer with the Trustee, the Jnderwriter and Bond Counsel in order to complete the Continuing Disclosure kgreement in substantially the form submitted to this meeting, with such changes as ftlFbe approved by such persons executing the Continuing Disclosure Agreement, heir execution to constitute conclusive evidence of such approval. Advice is given that a copy of the Continuing Disclosure Agreement in substantially he form authorized to be executed is on file with the City Clerk and is available for Ispection by any interested person.) eotion 7. In order to secure lower interest rates on the Bonds, the Underwriter has iroposed that the City consider the purchase of a policy of bond insurance with a iortion of the proceeds of the Bonds, which policy would guarantee the payment fs,the principal of and interest on the Bonds when due. If deemed economi- 'Illy,advantageous by the Mayor, upon the advice of the Underwriter, the Mayor ;:'Hereby authorized to execute an insurance :commitment and to do any and all ngs necessary to accomplish the delivery of a bond insurance policy with respect i tha R-4. ection 8. The Mayor and City Clerk, for and on behalf of the City, are hereby ithorized and directed to do any and all things necessary to effect the issuance, le, execution and delivery of the Bonds and to effect the execution and delivery of id -Third Supplemental Trust Indenture, the Bond Purchase Agreement, the Official tatement, the Continuing Disclosure. Agreement and a Tax Regulatory Agreement dating to the tax exemption of interest on the Bonds, and to perform all of the obli- itions of the City under and pursuant thereto. The Mayor and the City Clerk are rfher authorized and directed, for and on behalf of the City, to execute all papers, �cuments, certificates and other instruments that may be required for the carrying it of such authority or to evidence the exercise thereof. action 9. As previously provided in the Election Ordinance, Kutak Rock LLP, Little )*Wkansas, is hereby confirmed as Bond Counsel on behalf of the City in con- ption with the issuance and sale of the Bonds. iction 10. The provisions of this Ordinance are hereby declared to be severable, d;if any section, phrase or provision shall for any reason be declared to be illegal invalid, such declaration shall not affect the validity of the remainder of the sec- ns, phrases or provisions of this Ordinance. ption11. All ordinances, resolutions and parts thereof in conflict herewith are reby repealed to the extent of such conflict. i ED and APPROVED this 17th day of September, 2013. PROVED: ATTEST: ELD JORDAN, Mayor SONDRA E. SMITH, City Clerk/Treasurer KUTAK ROCK LLP ATLANTA CHIC AGO SUITE 2000 DENVER I 124 WEST CAPITOL AVENUE VETTEVILLE IRVINE NORTHWEST ARKANSAS OFFICE LITTLE ROCK. AR 72201-3706 KANSAS CITY LITTLE ROCK SUITE 400 $01 -975-3000 L08 ANOELEB 234 EAST MILLSAP ROAD FACSIMILE 501 -975-3001 MINNEAPO LIB FAYETTEVILLE, ARKANSAS 72703.4099 OKLAHO MA CITY 479-073-4200 www.kutakrock.com OMAHA PHILADELPHIA RICHMOND SCOTTSDALE WASHINGTON GORDON M. WILSOURN December 4, 2013 WICHITA gordon*lboum Qkutakmck.com (501)975-3101 $22,750,000 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2013 TO THE ATTACHED DISTRIBUTION LIST: Ladies and Gentlemen: Enclosed is a copy of the final transcript with respect to the above -captioned matter. If you have any questions or require anything additional, please let me know. Sincerely, rdon M. Wilboum Js Enclosure 4850-2697-3207.1 KUTAK ROCK LLP DISTRIBUTION LIST $6,220,000 CITY OF FAYETTEVILLE, ARKANSAS PARKING REVENUE IMPROVEMENT BONDS SERIES 2012 City of Fayetteville Simmons First Trust Company, N.A. Stephens Inc. Fayetteville City Attorney Assured Guaranty Municipal Corp. Kutak Rock LLP Mr. Paul Becker (1 bound) Ms. Sondra Smith (1 CD) City of Fayetteville 113 West Mountain Fayetteville, AR 72701 Ms. Glenda Dean (I bound and 1 CD) Simmons First Trust Company 501 Main Pine Bluff, AR 71601 Dennis Hunt (1 bound) Stephens Inc. Suite 201 3425 North Futrall Drive Fayetteville, AR 72703 Mr. Kit Williams (1 bound) City of Fayetteville 113 West Mountain Fayetteville, AR 72701 Attn: Records Department (3 CDs) 31 West 52"d Street 27th Floor New York, NY 10019 Mr. Gordon Wilbourn (1 bound) Kutak Rock LLP 124 W. Capitol, Suite 2000 Little Rock, AR 72201 4850-2697-3207.1 $22,750,000 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2013 TRANSCRIPT OF PROCEEDINGS Dated as of November 1, 2013 Prepared By: KUTAK ROCK LLP 124 West Capitol, Suite 2000 Little Rock, Arkansas 72201 4840-4339-4325.2 $22,750,000 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2013 CLOSING INDEX Im 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 4840-43394325.2 om Proceedings and Certificates Related to Bond Issuance Closing Certificate and Request of the City 8 Exhibit A - Ordinance No. 5619 adopted September 17, 2013, 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 September 17, 2013, reciting adoption of Ordinance No. 5619 10 Exhibit C - Proof of Publication of Ordinance No. 5619 in the Northwest Arkansas edition of the Arkansas Democrat -Gazette on September 26, 2013 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 Tax Regulatory Agreement dated November 12, 2013, by and between the City and the Trustee 18 Continuing Disclosure Agreement dated November 12, 2013, by and between the City and the Trustee 19 Copies of Bonds 20 Bond Purchase Agreement dated October 22, 2013, by and between the City and Stephens Inc., as underwriter (the "Underwriter") 21 Preliminary Official Statement Official Statement 2 4840-4339-4325.2 22 23 "M Opinions Approving Opinion of Bond Counsel 24 Supplemental Opinion of Bond Counsel 25 Opinion of City Attorney 26 Debt Service Reserve Insurance Policy Series 2013 Municipal Bond Debt Service Reserve Insurance Policy 27 No Default and Tax Certificate of Reserve Insurer 28 Opinion of Counsel to Reserve Insurer 29 Miscellaneous Certificates of Arkansas Department of Finance and Administration and State Treasurer as to Sales and Use Taxes 30 Trustee's Certificate 31 Underwriter's Certificate 32 Underwriter's Receipt 33 Trustee's Receipt and Certificate as to Application of Funds 34 DTC Blanket Letter of Representations 35 Standard & Poor's Rating Letter 36 Certificate regarding Cash Flows 37 Form of Requisition 38 3 48404339-4325.2 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 1CD) 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) 3 4840-4339-4325.2 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 $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "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. 4834-2714-4982.1 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, 2013. CITY OF FAYETTEVILLE, ARKANSAS M. Sondra Smith, City Clerk 1) 4834-27144982.1 Wn, ORDINANCE NO.4891 g� 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 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 -jjF.4agilities and street-aml trail improvementswithin the City and M 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 sales 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 0 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 2005B 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 (0.75%) 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: Section 1. ISt under the authorify of Amendment 42 and the Local Government Bona"" 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 seq.), 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 ric�u`nt= not to ex6bM the respective -principal arnount(s) 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: 3 .j 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 (H) 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. Question 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 $25 000,000 for the purpose of financing all or a portion of the costs of UK 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...........................................0 n W 01) 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 Improvement/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 "Projeco 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 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 ................❑ 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- wayacquisition.............................................................................❑ Question Three: ` There is subAtted 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 $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: 5 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 .....❑ Ouestion 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 (h) 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..................................................................................... ❑ AGAINST the issuance of Trail Improvement Bonds in principal amount not to - exceed $2,IM,000 for the purpose of financing ail 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 - Wayacquisition........................................................ ...................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. r-i 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 carry 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 transac,on for -the purposes oflhe 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. PASSED and APPROVED this 20th day of June, 2006. APPROVED: WW A ATTEST: SMITH, City Clerk FAYETTEVILLt ; CERTIFICATE 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: , 2006 SONDRA SMITH, City Clerk -.FAYETCEVILLE : zz ;may• c,.�- TOtA G� "�u�uu►►++` CERTIFICATE OF RECORD StMe of Arkansas ss City -of Fayetteville...._ I * ' f, Sondra Smith, City CierklTreasurer for the City of Fayetteville, do hereby certify that the foregoing Instrument is a true al��t 'copy of the original �a ; P+� - filed in my officeon the zVn Adwe day of Witness my sea(Pt _.. > a4► �inr 9 t� C Mayor Dan Coody . City Attorney Kit Williams City Clerk Sondra Smith ARKANSAS City of Fayetteville Arkansas City Council Meeting Minutes June 20, 2006 City Council Meeting Minutes June 20, 2006 Page I of 10 Aldermen Ward I Position 1 - Robert Reynolds Ward I Position 2 -Brenda Thiel Ward 2 Position I - Kyle B. Cook Ward 2 Position 2 - Don Marr Ward 3 Position I - Robert K. Rhoad Ward 3 Position 2 — Robert Ferrell Ward 4 Position I - 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 Recognizing 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 professional sion that our Police Department has. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfavetteville.nro City Council Meeting Minutes June 20, 2006 Page 2 of 10 Nominating 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. CONSENT: Approval of the June 6, 2006 City Council Meetine Minutes. Approved Rescind Res. 82-06 — McClelland Consulting Engineers Task Order #13: 1 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 Agreement: 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 IV 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) accessfayetteville.ora City Council Meeting Minutes June 20, 2006 Page 3 of l0 preliminary plat. This was also tabled to discuss the connectivity issue and street connections to 1 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 Harris, 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. Bill 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 Kit 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 1-540 and south of 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfavettevi lle.ore City Council Meeting Minutes June20,2006 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 meeting. 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-I 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 rollcall 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) accessfavetteville.ore City Council Meeting Minutes June20,2006 Page 5 of 10 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) ACCP_CCfAVF.tfP.VlltP nro 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 Kit 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 12t1' 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. i111� 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 Clerk NEW BUSINESS: Amend Chapter 72 — Parking Garage Rate Adiustment: 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) urrxe£avMtn.�il— .._.. City Council Meeting Minutes June20,2006 Page 7 of 10 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 read the ordinance. Alderman Jordan moved to suspend the rules and go to the third and final 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) arrPecfavattn�rillA ..... 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 - Springwoods 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 (t/) 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) arrrecfavettevillP tiro 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 Kit 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 Kit Williams read the ordinance. Alderman Jordan moved to suspend the rules and go to the third and fmal 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. 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 Kit 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 Kit Williams read the ordinance. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfavettevil le.ore City Council Meeting Minutes June 20, 2006 Page 10 of 10 /+ Alderman Marr moved to suspend the rules and go to the third and fmal reading. 1 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 7=0. Alderman Reynolds was absent. Ordinance 4892 Recorded in the Office of the City Clerk. f at 7:35 PM Dan Coody, Mayor Sondra Smith, City Clerk/Treasurer CERTIFICATE OF RECORD State of Arkansas City of Fayetteville ss• I, Sondra Smith, City Clerk/Treasurer for the City of Fayetteville, do hereby certify that the foregoing instru nt is a true and 1 of the original ,� ;� filed in my office oa the_... day of oa itness my ha and seal this�Q%���. 113 West Mountain 72701 (479) 521-7700 (479) 575-8257 (Fax) accessfavetteville.ore AAmnso0emoaat7V(j0azdte Northwest Arkansas Times Benton County Daily Record P. O. BOX 1607 FAYETTEVILLE, AR 72702 PHONE: 479-571-6415 AFFIDAVIT OF PUBLICATION I, 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 4831 Was inserted in the Regular Editions: June 29, 2006 Publication Charge: $843.1 5 Subscribed z . before Thi R•. 2006. Notary Public C/vt� ald'o—, My Commission Expires: Sharlene D. Williams Notary Public State of Arkansas My Commission Expires October 18, 2814 RECEIVED JUL o' 209 CnY OF FAYMEVILLE CITY CL.ERn OFFICE AN 0.901NANCE CALLING AND SETTING A OAT! FOA A SPECIAL ELECTION ON THS OUESTIONS OF THE ISSUANCE BM THE CRY OF (1) NOT TO EXCEED SMAOOA00 OF CAPfMAL PAPAOVEIMENT SONM FOR THE PURPOSE OF FINANCING CFA, %WQ. ATE C SYSTEIA IMPROVF.LfENTS• hL A' EXCEED St7A00,000 OF CAPITAL ( 01AM FOR THE PURPOSE OF 003E ms ISSUED TO WWXE CERTAIN V44STEM ..EFD S65.911mom OF CAPTAL I.WAOVEMENT Cae1d Wms There Y a bftlM d to *vAnce Of capw NSA'$ G FIEVENIX fm NOT TO Son of Me (Me et W Pas Ise-mon. t-WG W THE RMPOSE OF FINANCING W-usol b the Lad Geadrnaad Bond AOL 100.000 OF CAPITAL WAOW. TAIL SYSTEM IMPROVEURM Ltm An ass q-6m by daoh0 an 9C in ons of M "eves UoMn9 fr fyheetbn, *Wh W or FOW-CUAFBER OF ONE PEW against . SALES AND USE TAX AT THE R)RPCE'E OF RETM G SJCH FOR Oro ksumu Of Wai%WdW ImppyCartAloluednp Bands in Onanebd W4W ra b sicoW ETO S17=0= W M pimoae of tm" q Wmwwnchg ltaaporkpn dMccafs of acgAmon.m. pausal so onaYVdam. o de skn' and egipi ft d orYh hpgwnaMa brie CIA wasm-to (M'C11')b ddol maned aM eoailihe`di>IWOA ovewsgs eldcsefad adder. Intlteh.''M1dl al-WraeQA(tin..-.4.__n t waebwsYr faclades ad skeal mead yea knipaeraeous WAtim the Coy: W . M W%.M "Wm d WMW*OW Bonds in pealed rrwpl no I At, Netalfket M Cm d M Sae axosed0nil Aon W M papcor d a pdren d M aced acw an anRary 14. Che hapax dcarl M Annotated(** Ima .Tmm Jef a le Mla°a»Cadedonds MrpWW(PttWft ntion of Me . WOW eeniobaPll MMnaovw.kbMm. stele u0la6-4MdoareDIUM Bo dACOntN.BWdapr enze M avert a apaal bonds bonds Mal pert. aaneh bonds reed Mined ragd Plants, . nefr waamt draw w.ra.rW Mrad 7rdralra irAwn. ipnto(.wy aaeAdbrt___JJ is of gold be s by o mdo stl by M deont d W d M necebts d M soeoiel ctywato saa'W vas tax pmsadW be he Local by the Bad Act. W Ousstim Tasu US two special W,500da,tidcporansocka false endue aasaAbbe howled and oodaded WyssNpinw Me City ofkCWamo fayeltjoo,AldSee, TMaootof amen CRY cadgdbMqusaisd als,0of iselmcoanpital baithl =(fondri (fea'Sbvm 5�.so has pmvk;W WM Ass M Cna ai and w rut b screed w p2mS ndktwsuarant Gomawf ont ftnotctcased feeppnereleO(Benda') PleVunt b M Locea GebawYlYral Bond Ad W M paapae d wneaq as t of 4C a --I°h9 S2Q= the Tax Aeatwe Bono Series N06 . S2a000AW Safe se Tax R gnuo . S 8000M (v) Its epaaond AOflsmakvdbe W agkdAq w ood. a and 4ede19 m t am 8mda. Sp3a 2005A (M 2M Capiales 517.0002 00 brit sod Was.4 w d 01 Sued 0 Sweet lrnpm lie &rod w,,W Bonds dl b BOMB Y eel Sived k b Id a� re W a d Use Ise OaW (00 is 9- n W Use TaK Cidtal hIV874 205a ish ieedwd by ffd W Wo 9.46 sing LI and daa0ee(end inn Won tt)" OOPtS, SMW Neal n (to And Un Sw,Iav Bonds (to •ludsi 20038 Balch.' W b.alhr.Tah M Srwc ROOa eeW erw M Saba con W oda a d sell ' Tcd o. GwTe: • d Moaned of fioaA[%•9Moa)rid 1ki Tun. eagh rRed perea!nd q.M Incd GO1e nxswa Bon *w m meat a Son 2005A .. .... .._.. ..• . . ...�, ZOOSA Bonds; M'Pdcr'Bonee'): oaf WHafrAf,rrt'rioi Boneswceewod byW pgebbamhpw llosipodafnetawbcsdee t! -for " . ...: volomMdrWmbl Wch.r1'7f"haedTe agwea foaavrq MquaNiet. earrWc pwoed ta75%) perid c ya dr seats and use rx PWAOoly aged order dWmblho Ty of br'Lcci ' agak 1. .. . Gmmmwt Bond Act (we'Prb Tn'k and WHtet9WV&ppaTredby ass atlKbred Me Crlt rr XYMS deWmhodio kwad(i) ill tepaal FGRarkwulao(ae Ihp'o'finert Blsdsh plixpal omeaanasournai6&9o0.000tdr Tn slot fatralptn6nyq Cafe •1ultl+atr ilgaoreflrAk. (B} is c1p4a((epo+drtlenl titildi'In-palcEPdrrotat not W strata CIy aMek. vlJpn neT-+rJude edMed iWM9aC a�O >ipu dais !sMwgxWer �rnMMa .andtar'MiOE.+u{YtO.Oyat!aq and draM9e wptpM7WkaM aiya 0i-wpyo4ASMaC �._-J], orto(a217A00J)OOWMDVrPON wwlw W bonds O!ahetldrmd I* Vanes a b kairod•b /trrxye said iMrg+rrleae. (i) semis bands onpot okex! a bands I- W a peaIt+1 iepwaeaeef banes n prindpoi aneea'not b esoeld 505.900.000 W AM IAaPose d M taaarrs d &fIs YnpWjWkta tkadi h pielgl agent ferbw«tisrdf65.900A0 tat cerfrsnfeetNMaepmnaat.fk(xkaPaalvas e2,1h 4epfig Jos Me rhoMpuyaedT Ma opONandkyeelsdacguiWlo Ieoask. 'atpkaatbaantl0�ddrah(Jp'e91al1, itkYdpdwstat. Wdmlbank..ft(7a baxaad go IDasome OW16WMpapaedRWy4a Grleandand eht . meptcdwfAM a er• 'Ronda'). Web Bosch(01n%) season by (q a pledgm d W Wwupop laq(Meeoand kw MaoAMry aclMe taH • pV W. W Azdd cor6kKM f)aad10 W.dakrga hipmvousnk W alpaat.way roguMbo..n U md �,e twu %Pdw dt,ewal v'f0 d w a Ncofr ea Edrdetm roYrod ak.. adie Tisza P�YdJ�a vwids /rdpE. Outaaa FbtK and 60n open n d M rooads d a rare*-Q r of aid p"cwa'Mns) spacidalyade siYsW Teat k nLmWd b M gaalad dsdcns of Me Cal' of FaystYlels. Aawwsi, Me gtquM of th use tax (oo'a75% Saks W Ua Tax') replacing ass Rtea Tax• tip as wA tori ed by Arwm*n ss tit .• ktuanoe d cApar :npwuaeea:bons h principal scroumt ybtte steed S2.TOUW (M Ta and M local GOve-ent Bad Act and Wexamnent Bads'l MmWr am the Local G"Wei d seed Ad f°r Me PAPM of Ikrneh. as t WKSAXAS, Me Wpasof lot Oldsmar" 1,bcada q>/W1aiedornm fie ksnaftadM8ahb a.pabo d Use 0046 of ecgetillon, C0000dm.and OWR*q of wain Call Yea syeave invecot br ins pry and br lowed Papoose; _ .. _ .. ... .mNM.MMfsawroealMTaAUaptwmnt9ads aappnrmd,MTtY Ia7rilstiBerlecta '-seeded by a pktlpe ofand son upm.W all of Mae Wokets of M 0.%% Itshas and Um Tax sr WWA TNawmitr.s[IT Oil DAIN"by the CRy Cannon of the CRY of reyett"Uta (1)84 ofMe reabis dshe a7S% Sdef u1d Use To. 40chVY d pYNvt b the LOW GoatmMc Arfaaww Red AOL ' SeoUaraL Thal adsMatdeaydMhltndfnontT84'W Mloon ()oirnwtBad Ad and aft•• S;• Wae'm M'qus'skaA!;by P"W' rIn. M squwe to"Q Mgaa6aL WtIr W< SAY Ones Worls W as °" of ite i Wr M Meefsea all: ' •' :..::.•, an�hieby°f sS.abbn a G7w , sW/40 MM rise of " of ad vacanty gX26%) and th a asks end Me raft of Voto-qualas of as Paad M25%)•m the Obi noecrMo PWft Ifafmiico of YW 6phoes mil Bonds In Wncod WdWi -nol b MOW 112.10a000 for W tom Mosel. m rrd tm UY City ofa Item[ algid t&V40a as to taxation ads ate papas of&Wcjv at or a portion of M tad of acwlxw and oanpnctba ofcrab CRY we moon so, Bfpa Readpa Ad of'1041. as arna tied (Addaaa Code of /907 Atuotesed 101 • eyeless W000p ems• Mich aa01 Tz1ud0 iddac Podaykn signal and dWoi"-Lnpov TWm ass d ata.1. and oil n oxdee (ass eattax a M too of awgW W of ass pawner (0.75%) SO Oy as . rigM•oGaay acg40m._.__..___.__.._.__.__ _�.�. axelce(a uss) Isla M law d lb- a VYd doe Prow (aid%) m M SEaags. w. dkkiX. don a dhr 00"Woo" W" M City orWootoo RrM sonat pmpoa t.." MMoee atroEect b 1'kmawor M AfMrai Cmipmashq Tex Ad d 1949. as wooded (Jvkama C0dod19B7 AGAINST the hrroaoe Of Use WAWW1w Bmra I. Pl WpO inaAV roe b 4x00&152.10a the .1. .1 Scamidaq Na apo°Im.1 riatosaducluoifm and caykodmof.( ndred 5653. 101 at erq.), m M safe pnco of Me pwpaM« to terse of l ssm a roaek, sysmi htpbrrtwtts; Wkh myw(u kd° 10" PsdaYYs algalW cyswkmi ge pgw 90 kenW w" prtee (aNeCkawy. to • Woo.rd Use Tana The Sons led Use Tax shwa be o9m4 a my MOWtam___-..__. id and cobctedafi/m M lied SUMofsch"shple yamaoCwC(a°afied in Sa6m 9 hens. The ten red coaodim d Me OYS%$else and Use 70SW cmmwfce mad so of each dale Section& That lneskctim paste Mtl afd ooaluewawMwYerwaasod and Me payahed ddebt to hol,on Me Bads. Raveags Wt*kV WnfM OOaCfand Me Sons Val limo neelea tl+wn rt1(tOj drys pIW bdeCawdM Wtam. laz else tr ufaZed may krM pa>,nwdtlWtsallos:onlM Oads. Bx4pn& That a spy of WS Wroace pale be Oh" b'M Vftshk on Cony Bard of 60 Section R That mdoc M awaortyciAeaaanot tit wd Jr )ACM GmMm*ra Swaim and oWe• . Comeasobrwe ea Uhel M rotwwy aYC1YaeMWk W eVpdw Any W psgtdo0. Am lad Jo appmvtl bYM aYeras d MCM 4 Pmhwed h SidbhJ balowt tern k hsmbyaudndaae ropy d Ass OWkireco'ther also lea prOMtlad b M'dlscta'd M Oedwkaril d Fthenps V=Wnwt Oorft WANVOlp and (OWAd adWO6 hokfdng **Qlo wY OCWAW (% M fat hrnn om nestles drat ldNaa aM M reVAs'as pecMbod -halt be C& CW" Ieaa oae"00 Y1 M co' of M Cli t adW bproveamt binds h Me 19g"- p"d* anent a not b e oved Cotet d.Waeargbr Cansy14M Mkil, M days ON M dab of puUaSm of MapOOlmrtio SI7A)"m WM papas ddrocty swicinC ON a a Pero+ of Me 00w of acgWdren. 000dw Sao6m& T)yf the MeyorWM�yCWEIWWmbeMrdMCffA be. sad y'ey tlemM� Yeti r corral aeedl edantim and ppaa9 d certain WVVA Ydt to M dyr wselaswfrbW MAaafmd Sod 4kvcWd fo d0 Fry wf N lisps momry b pal W hold M WOCW dedbs matpMts. aewaegeand Moon raelMp, Mcludkq dpldd•dwlequWtim.«alYsdY.ay. tarrb hrikt poNded rw,r Car iewraced any of roMBordsw appwhed by ale O"Wa. b aVdo as . paporwh nokAg asset wmrwaer vnVe DmdaabNaly keyed In ante sold levy • Sake nd Use Nut f0"be ooehded n ecardarhes visa M Local Gowrwa BOW Act. Val le y Nv".(3)Me ktuwaco of Me00c1;*W enpnevrnled taws" Me ipyapasaVVKW ansoent of lama ills of oldster pWm rdewry to canyotf M wdedty mdrned by ftk ONkw" rat to exceed 96.90f1 M for 00PnmOf Vwmhg Maa pekes deacon dsogAsror. eon- Seam 9.Tha. Wpapaot dproson rw Use$; Me Wm "a" Vraad>m' Is we ' et 40M rororaYuofene. Wak arowaraq and of rkh Ctytseots. Mammy hdude accemgbfr opus d en goods gadmW a letba'a: .. eked swlelalk. tnaAeagnal wed txxssd, wWTO�q me aahepe Ytyowarlids and ei.k- d-very eogMXYr W(a1M ass decodMC agW arynavemaa bawr h till SOWOO&Y A. Wean all. asses daMas an Mace, Won ajyy*WAay Psama• IFav apdPar a adrabe�e«du.IooAoolaMpvPaeoE.r» etpaaaporrmdukoaa be. lismpa.11a&"vklnckdr_EAAnawrwwa•wadwmka.0f.aad°waa�..a+s drwWduatland construction darafnCOY time sysamlmVsoW n*oichMrrkxbdoalWd w/ados,ot,~M%~lot&110weWan«atowsakWSW Natey,moMWhic mW-W and a lie epm aid rir smelts of Me Soon and UaTcL as 49"zfd by M Loeol Gmmmea beat-ftie"Yawtytln for M p(kOm of M Sons and Use Tan Red All- C. Fprala d1WI0kq'PdlariaYaM WPlefea b caarrdai. Wbra of der rs, priea aµNnppYs Section 3. That Mums be. andOwe Ishedby [fecal. A ped#efedlm tobe arm Tutttloy. a VanOsoil lei *W piApoaof Me Sala W sthe Tax, *M be dears to to rs( skga seta wtach • Sepsrw coI 20A at Mach section tent Ray to'auhrr#Mdb(o M siectes of go City M qw- Isapeaadm abiVW kwSmseeapa a °• slamrm which so aW"VA sans(d aa)laxEWaa tiara of to of the to kwRds. ha Dose aPara irw remTYd b M Stale dArkrwt>; ` ' Socoon s. 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Tea Xulok ROUT LLP ts irony 1a.apW a bond cmnw wel Stsplawas lee. is netNey : kwfanee d esdw WVa;y mesa bonds h pndpO nbtrat not b "cold s25A00i0W (Me •en.r.adse lAldrlhtfrllab typed b rr:arroad Me Borda. The lea sod O*wA eel Bona } vniraaw btpaarnrd eawa�prxaela bTtr tr. C+hlptr lN.SWMpW 7dfr HFwWt Cm"md to lydenotosfraber*MCI Wise "offt8ad Jobs pddwsBwncipbcosa. Code of 1967 Mwtmd OW %000 OovwvnM eon° ACO to els papas d MVCYq at e a pon: . Sebdm l2. TIM Pittpw4Wnsof fak OHance we aaby dee4mdto be apmeabie WO tl,vey Pee - Ilan of M eats ofaoquWbm conrVucllon, mwkauekrl wMabn and aOWpp'np oftutaim wlm saal'for eM mdon be hold ffe.a aifaald. wale horde. go het sfYd M YOGW of to rM nawnardrr oranwxa_ s- aMJokwMpowNr klprca,aaisY armr�4i�MQt'a°rsYadadBW. 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AGAINST M kwpnce of W4sYweer knipaelwoo t. inWindpol entail net 1. eeayise d.MmsY'd '... atiYfY(.G-.. n.J; smo00A00 for M putaa of rornekq M a a Om iOChAdIbM1"eanMJcda4 teeallallleeplt, ea+ra+'xIarty red ar(WLtTparrMtl b M CIHt wisUahhrer yijy��}���! _ artiTllf,O(Ir;O{�att"' �.0���, P�j,�`,'f•„ PYMs. aMi nrNttad YCWak; eagWMYM1.�...__ ,( trala.e .'V•dphE'd'aM _ .. MR Arkansas Democrat VOazette Northwest Arkansas Times Benton County Daily Record P. O. BOX 1607 FAYETTEVILLE, AR 72702 PHONE: 479-571-6415 AFFIDAVIT OF PUBLICATION 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: NOTICE OF SPECIAL ELECTION Was inserted in the Regular Editions: August 30, 2006 Publication Charge: $306.60 Subscribed and sworn to before me Thttday.of � 2006. Notary Public W-1u0 . 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Cjr(y Of: FAYETTEVILLE CilCLERKS OFFOE CITY OF FAYETTEVILLE, ARKANSAS DECLARING THE RESULTS OF ELECTION OFFICE OF THE MAYOR OF THE CITY OF FAYETTEVILLE, ARKANSAS TO THE PEOPLE OF THE CITY OF FAYETTEVILLE, ARKANSAS, GREETINGS: 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 4531. 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 FOR 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. QUESTION 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/Ref ending 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, 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 a7 day of September, 2006. SONDRA SMITH, City Clerk/Treasurer TR'Ej Y 0'°G,p� i ° - ° e ® FAYETTEVILLE a ®C.I ,ti';1,"%e�G e ` &on NORTHWEST ARKANSAS EDITION Northwest Arkansas Times Benton County Daily Record P. O. BOX 1607 FAYETTEVILLE, AR 72702 PHONE: 479-571-6415 AFFIDAVIT OF PUBLICATION 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 r sworn to before me This day of / 2006. Notary S"'O. I& My Commission Expires: Sharlene D. Williams Notary Public State of Arkansas my Commission Expires October 18, 2014 RECEIVED OCT 0 3 2006 CITY OF FAYE17EVILLE CITY CLERK'S OFFICE �.. � �',. p "'� CERTIFICATE OF WASHINGTON COUNTYBOARD OF ELECTION COMMISSIONERS . PON ASCERTAINING AND DECLARING RESULTS OF SPECIAL ELECTION We, the undersigned members of the Board of Election Commissioners of Wa*ngton County, Arkansas, hereby certify that: g 2 ran Returns of the votes of the City of Fayetteville special election held S 12.-200(�= have been delivered to us by the Washington County Clerk The returns s nuier of votes for each ballot question. f We ascertain and declare the results of the election to be: to On 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. FOR: 4,442 votes AGAINST: 1,384 votes On the question of the issuance of capital improvement bonds in principal amount not to exceed 517,000,000 (the "Wastewater Improvement/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. FOR: 4,433 votes AGAINST: 1J37 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 Government 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 483G 40b4M.t RECEIVED SEP 2 7 2006 CITY OFFAYETTEVILLE CITY CLERK'S OFFICE 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 or.a 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 27t1day of September , 2006. CERTIFICATE OF RECORD State of Arkansas City of Fayetteville 1, Sondra Smith, City Clerk/Treasurer for the City Of Fayetteville, do hereby certify that the foregoing instrument is, a t and correct copy of the original ,.l�:5 fi min` roy office wt the d of —�3�tt� aetlAsas_ ,. Witnessymy ftarnd sea(this ay of SM" Uft cey anwrtuaw '4630.3406-=.1. 2 Commissioner 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 $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Bonds"). 2. Attached hereto as Exhibit A is a true, complete, and correct copy of Ordinance No. 5619 (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 September 17, 2013. 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 September 17, 2013, 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 September 26, 2013. 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 September 17, 2013 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 Third Supplemental Trust Indenture Tax Regulatory Agreement Date As of November 1, 2013 November 12, 2013 Other Party or Parties Simmons First Trust Company, N.A., as Trustee (the "Trustee") Trustee 4811-7785-0629.2 Continuing Disclosure Agreement November 12, 2013 Trustee Bond Purchase Agreement October 22, 2013 Stephens Inc. (the "Underwriter") Official Statement October 22, 2013 None The Third 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 Name 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 Third Supplemental Trust Indenture. The undersigned Mayor of the City did manually execute and the undersigned City Clerk did manually attest $22,750,000 aggregate principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2013, said series of bonds being initially issued in the form of five fully registered bonds numbered from R13-1 upwards, initially dated as of November 1, 2013 (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 4811-7785-0629.2 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 (2002 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 12/31/14 Sondra Smith City Clerk 12/31/16 Rhonda Adams Alderman 12/31/14 Adella Gray Alderman 12/31/14 Mark Kinion Alderman 12/31/14 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 12/31/14 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, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (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 4811-7785-0629.2 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 five (5) typewritten Bonds in the aggregate principal amount of $22,750,000, 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 $22,449,550.00, plus accrued interest to the date of delivery in the amount of $20,574.43, and less $56,875.00 paid by the Underwriter to Assured Guaranty Municipal Corp. on behalf of the City for the 2013 Reserve Policy (as defined in the Trust Indenture), for a total purchase price of $22,413,249.43. The Trustee is hereby directed to deposit the Bond proceeds as follows: (i) Deposit the accrued interest ($20,574.43) received on the Bonds into the Interest Account of the Bond Fund; (ii) Deposit $22,311,675.00 into the Street Account of the Project Fund; and (iii) Deposit the remaining balance, in the amount of $81,000.00, into the Costs of Issuance Fund and immediately pay those Costs of Issuance with respect to the Bonds set forth in Exhibit D hereto. 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 4 4811-7785-0629.2 Statement or the transactions contemplated thereby, or any other agreement or instrument to which the City is a party and relating to the Bonds. 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 will commence on the first day of the first month following cessation of the Existing Tax (as defined in the Trust Indenture). 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 2013 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. 5 4811-7785-0629.2 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, 2013. CITY OF FAYETTEVILLE, ARKANSAS Lionel for , Mayor �J/ Sondra Smith, City Clerk 6 4841-2123-6758.1 ORDINANCE NO.5619 AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE OF THE CITY'S SALES AND USE TAX CAPITAL IMPROVEMENT BONDS, SERIES 2013, FOR THE PURPOSE OF FINANCING A PORTION OF THE COSTS OF CERTAIN STREET IMPROVEMENTS; AUTHORIZING THE EXECUTION AND DELIVERY OF A THIRD 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 "2013 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. & 2011 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 2013 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 Page 2 Ordinance No. 5619 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 2013, in the aggregate principal amount of not to exceed $22,750,000 (the "Bonds"), in order to provide for the funding of the 2013 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 2013" (the "Bonds"). The Bonds shall be issued in the original aggregate principal amount of not to exceed Twenty -Two Million Seven Hundred Fifty Thousand Dollars ($22,750,000) 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 5.00%. The proceeds of the Bonds will be utilized to finance the costs of the 2013 Project, to establish a debt service reserve for the Bonds or to purchase a surety bond for reserve purposes, to pay a premium for bond insurance, if deemed economically beneficial, and to pay printing, underwriting, legal and other expenses incidental to the issuance of the Bonds. The Bonds shall be issued in the forms and denominations, shall be dated, shall be numbered, shall mature, shall be subject to redemption prior to maturity, and shall contain such other terms, covenants and conditions, all as set forth in the Third 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 Third 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 Page 3 Ordinance No. 5619 the Bonds in substantially the form contained in the Third 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"), and the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 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 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 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 Third Supplemental Trust Indenture (the "Third 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 Third 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 Third Supplemental Trust Indenture to be accepted, executed and acknowledged by the Trustee. The Third 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 and a Second Supplemental Trust Indenture dated as of November 1, 2009, each by and between the City and the Trustee (the "Original Indenture," and collectively with the Third Supplemental Trust Indenture, the "Trust Indenture"). The Third 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 Third Supplemental Trust Indenture in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Third Supplemental Trust Indenture, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Third 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.) Page 4 Ordinance No. 5619 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, the 0.75% Sales and Use Tax and the City in compliance with the provisions of Rule 15c2-12 of the U. S. Securities and Exchange Commission, the Mayor is hereby authorized and directed to execute a Continuing Disclosure Agreement to be dated as of the date of its execution (the "Continuing Disclosure Agreement"), by and between the City and the Trustee, and the Mayor is hereby authorized and directed to cause the Continuing Disclosure. Agreement to be executed by the Trustee. The Continuing Disclosure Agreement is hereby approved in substantially the form submitted to this meeting, and the Mayor is hereby authorized to confer with the Trustee, the Underwriter and Bond Counsel in order to complete the Continuing Disclosure Agreement in substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Continuing Disclosure Agreement, their execution to constitute conclusive evidence of such approval. Page 5 Ordinance No. 5619 (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. 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 8. 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 Third 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 9. 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 10. The provisions of this Ordinance are hereby declared to be severable, and if any section, phrase or provision shall for any reason be declared to be illegal or invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions of this Ordinance. Section 11. All ordinances, resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. PASSED and APPROVED this 17'' day of September, 2013. APPROVED: am ATTEST: SONDRA .SMITH, City Clerk/Trea S�;. FF�YETTEVILLE' , '�';'�t' 9'�'KANSP• Jam' Mayor Lioneld Jordan City Attorney Kit Williams City Clerk Sondra Smith City of Fayetteville Arkansas City Council Meeting Minutes September 17, 2013 City Council Meeting Minutes September 17, 2013 Page 1 of 18 Aldermen Ward 1 Position 1—AdellaGray Ward 1 Position 2 — Sarah Marsh Ward 2 Position 1— Mark Kinion Ward 2 Position 2 — Matthew Petty Ward 3 Position 1 — Justin Tennant Ward 3 Position 2 — Martin W. Schoppmeyer, Jr. Ward 4 Position 1 — Rhonda Adams Ward 4 Position 2 — Alan T. Long A meeting of the Fayetteville City Council was held on September 17, 2013 at 6:00 PM 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 Sarah Marsh, Mark Kinion, Matthew Petty, Justin Tennant, Martin Schoppmeyer, Rhonda Adams, Alan Long, Mayor Lioneld Jordan, City Attorney Kit Williams, City Clerk Sondra Smith, Staff, Press, and Audience. ABSENT: Alderman Adella Gray Pledge of Allegiance Mayor's Announcements, Proclamations and Recognitions: City Council Meeting Presentations, Reports and Discussion Items: Advertising and Promotion Commission Appointment & Historic District Commission Appointment The Advertising and Promotion Commission recommends the appointment of Tim Freeman term ending 03/31/16. A copy of the report is attached.. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDDn TY (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 2 of 18 The Mayor recommends the appointment Laura Chioldi to the Historic District Commission term ending 06/30/14 and Steven Kay 06/30/16. A copy of the report is attached. Alderman Kinion moved to approve the Advertising and Promotion Appointment and the Historic District Commission appointment. Alderman Adams seconded the motion. Upon roll call the motion passed 7-0. Alderman Gray was absent. Nominating Committee Retort Alderman Adams read the Nominating Committee Report and recommended the appointments as submitted. A copy of the report is attached. Alderman Petty moved to approve the Nominating Committee Report. Alderman Schoppmeyer seconded the motion. Upon roll call the motion passed 7-0. Alderman Gray was absent: Agenda Additions: None Consent: Approval of the September 03, 2013 City Council meeting minutes. Removed from the agenda Alderman Adams moved to remove the minutes from the agenda. Alderman Petty seconded the motion. Upon roll call the motion passed 7-0. Alderman Gray was absent. Bid #13-46 Fochtman Enterprises, Inc.: A resolution awarding Bid #13-46 and authorizing a contract with Fochtman Enterprises, Inc. in the amount of $711,833.70 for water and sewer improvements along Razorback Road from Martin Luther King Jr. Boulevard to Nettleship Street, approving a project contingency of $75,000.00, and approving a budget adjustment. Resolution I89-13 as recorded in the office of the City Clerk Sprint/Nextel Property Services Amendment No. 1: A resolution approving Amendment No. 1 to the communication site lease agreement with Sprint/Nextel Property Services for cell antenna space on the Markham Water Tank on Sang Avenue. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDD/TTY (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 3 of 18 Resolution 190-13 as recorded in the office of the City Clerk Bid 913-48 B & A Property Maintenance: A resolution awarding Bid 913-48 and authorizing a contract with B & A Property Maintenance in the amount of $28,220.00 for tree planting and maintenance, and approving a ten percent (10%) project contingency. Resolution 191-13 as recorded in the office of the City Clerk 21d Quarter Animal Services Donation Revenue: A resolution approving a budget adjustment in the total amount of $21,243.00 representing donation revenue to the Animal Services Division. Resolution 192-13 as recorded in the office of the City Clerk 2013 Edward Byrne Memorial JAG Local Assistance Award: A resolution authorizing acceptance of the 2013 Edward Byrne Memorial JAG Local Assistance Award in the total amount of $69,977.00, and approving a budget adjustment. Resolution 193-13 as recorded in the office of the City Clerk Hazmat Services Revenue: A resolution approving a budget adjustment in the total amount of $6,610.00 to recognize hazmat services revenue through August 2013 and to increase the related expense budget. Resolution 194-13 as recorded in the office of the City Clerk azmat Services Revenue: A resolution approving a budget adjustment in the total amount of .$3,314.82 representing hazmat services revenue received through August 2013 and increasing the related expense budget. Resolution 195-13 as recorded in the office of the City Clerk Fayetteville Fire Department Administrative Operating Procedures: A resolution to approve and adopt the Fayetteville Fire Department Administrative Operating Procedures. Resolution 196--13 as recorded in the office of the City Clerk Solid Waste and Recycling Extension Agreements: A resolution to approve one year extension agreements with DefFenbaugh Industries, Hog Box, Waste Management of Northwest Arkansas, and Allied Waste Services of Bella Vista to haul and dispose of solid waste and recycling in Fayetteville in exchange for a franchise fee of 10% and to authorize or ratify Mayor Jordan's execution of such contracts. Resolution 197-13 as recorded in the office of the City Clerk 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDDTFIY (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 4 of 18 Alderman Petty moved to approve the Consent Agenda as read with the minutes removed. Alderman Long seconded the motion. Upon roll call the motion passed 7-0. Alderman Gray was absent. Unfinished Business: None Public Hearing: Public Facilities Resolution Ratification: A resolution ratifying the resolution of the Fayetteville Public Facilities Board which approved a Revenue Bond (Butterfield Trail Village Project), Series 2013 in a principal amount of not to exceed $8,000,000; and prescribing other matters pertaining thereto. Mayor Jordan opened the Public Hearing City Attorney Kit Williams gave a brief description of the resolution. Jim McCord, Fayetteville Public Facilities Board: The law requires a public hearing on the proposed bond issue before the City Council considers the resolution which would ratify the action taken by the Fayetteville Public Facilities Board on September 3, 2013, which was a resolution authorizing the issuance of $8,000,000.00 in revenue bonds for improvements to Butterfield Trail Village. Dennis Hunt, Stephens: We serve as the Financial Advisor to Butterfield Trail Village. We have been working with them for several months trying to put together financing. The financing will be ten years with Arvest Bank and Butterfield Trail will have to fulfill the debt obligation associated with it. The amount will be $8,000,000.00 and there has been a loan commitment already agreed too by Arvest Bank. Under the tax code, 501(c)(3) which Butterfield Trail is, they have to come to a governmental body and the governmental body has to approve that this is something of public benefit to our community. Butterfield Trail has helped a great number people in our community. Mayor Jordan: You have to come to us for approval, but we have no financial responsibility? Is that correct? Dennis Hunt: Yes, that is correct. You have to determine if there is some public benefit. There was no public comment Mayor Jordan closed the Public Hearing 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDD(fTY (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 5 of 18 Alderman Long moved to approve the resolution. Alderman Tennant seconded the motion. Upon roll call the motion passed unanimously 7-0. Alderman Gray was absent. Resolution 198-13 as recorded in the office of the City Clerk New Business: RZN 13-4461 (123 E. Cleburn St./Stover): An ordinance rezoning the property described in rezoning petition RZN 13-4461, for approximately 0.20 acres, located at 123 E. Cleburn Street from C-2, Thoroughfare Commercial, to DG, Downtown General. City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. Alderman Tennant 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 Gray 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 Tennant seconded the motion. Upon roll call the motion passed 7-0. Alderman Gray 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 Gray was absent. Ordinance 5614 as recorded in the office of the City Clerk VAC 13-4459 (201 W Mountain St.): An ordinance approving VAC 13-4459 submitted by William Rudasill for property located at 201 W Mountain Street, to vacate a portion of a right- of-way and utility easement, a total of 413 square feet. City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. Alderman Tennant moved to suspend the rules and go to the second reading. Alderman Adams seconded the motion. Upon roll call the motion passed 7-0. Alderman Gray was absent. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDD/TTY (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 6 of 18 City Attorney Kit Williams read the ordinance. Alderman Long moved to suspend the rules and go to the third and final reading. Alderman Petty seconded the motion. Upon roll call the motion passed 7-0. Alderman Gray 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 Gray was absent. Ordinance 5615 as recorded in the office of the City Clerk VAC 13-4460 (423 Prairie Ave): An ordinance approving VAC 13-4460 submitted by Jacobs Newell Company for property located at 423 Prairie Street, to vacate an access easement, a total of 0.02 acres. City Attorney Kit Williams read the ordinance. Jeremy Pate, Director of Development Services gave a brief description of the ordinance. Alderman Tennant 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 Gray was absent. City Attorney Kit Williams read the ordinance. Alderman Adams moved to suspend the rules and go to the third and final reading. Alderman Petty seconded the motion. Upon roll call the motion passed 7-0. Alderman Gray 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 Gray was absent. Ordinance 5616 as recorded in the office of the City Clerk Beaver Watershed Alliance: An ordinance waiving the requirement for bids by applying §34.23(F) Purchases and Contracts Not in Excess of $20,000.00 of the Fayetteville Code of Ordinances and approving a contract with the Beaver Watershed Alliance in the amount of $10,000.00 to assist in the improvement of water quality in the Beaver Lake Watershed.. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayettevi Ile. org Telecommunications Device for the Deaf TDDrM (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 7 of 18 City Attorney Kit Williams read the ordinance. Chris Brown, City Engineer gave a brief description of the ordinance. John Pennington, Executive Director of Beaver Watershed Alliance: We are the organization with the mission to look after Beaver Lake to proactively protect, enhance and sustain the quality of water at Beaver Lake through outreach, education, best management practice implementation, and scientific investigation. We have several projects that are of great value to everyone that drinks water from Beaver Lake. The programs are the West Fork Opportunity Assessment and War Eagle Outreach Program and these are our focus programs over the next. year. We are looking to engage communities within the West Fork Watershed from Winslow to Fayetteville. We want to let people know what the issues are in the watershed and to make sure they understand. We would like to see what kind of input they can offer that will help us to identify the conservation opportunities in the watershed. Land conservation is a very big best management practice in the watershed protection strategy that was developed by the Northwest Arkansas Council. We are hoping to find some willing landowners that would like to enter their land into conservation easements and we would also like to find some landowners that would like to have their streambank restored. We are partnering with the Arkansas Land Trust to carry out this program. They have unique expertise in land conservation and streambank restoration. We are trying to increase awareness that Beaver Lake is the drinking water source of Northwest Arkansas. We had a survey last year and the results of the survey indicated that more than half of the residents that live in the watershed do not think that they can impact water quality. We need to overcome that thought with our educational programming. We need to monitor the water quality to make sure improvements are being made through time. We have to continue to reassess what we have done, how it worked and what we need to do better in order to achieve our goals for the benefit of Northwest Arkansas. Alderman Adams: It has been exciting to hear John speak and to learn what we are able to do with a small amount of money. I know that a lot of us are hearing things right now at budget time on what we should spend money on. There is nothing more important that we could do than to protect our water supply. I appreciate the great work you are doing John and I have learned a lot. Alderman Tennant: There aren't too many things that effect about every single one of our citizens and thank you. Mayor Jordan: This is a very important program. A very wise environmentalist once told me that everything goes back to two sources and that is water and air. We need to protect them and that is what this program does. Alderman Tennant moved to suspend the rules and go to the second reading. Alderman Adams seconded the motion. Upon roll call the motion passed 7-0. Alderman Gray was absent. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDD/TTY (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 8 of 18 City Attorney Kit Williams read the ordinance. 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 7-0. Alderman Gray 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 Gray was absent. Ordinance 5617 as recorded in the office of the City Clerk Amend Chapter 34 Finance and Revenue: An ordinance amending Chapter 34: Finance and Revenue of the Fayetteville Code to enact §34.10 Temporary Cash Transfers Related to Reimbursable Grants to provide a cash flow mechanism for reimbursable grants. City Attorney Kit Williams read the ordinance. Marsha Hertweck, Accounting Director gave a brief description of the ordinance. Alderman Long: Is there a limit on the amount of funds that can be transferred? Marsha Hertweck: You could put a limit on it. If you want to put a limit on it, then we might have to come back to Council if we had a big grant and making big payments. This is probably unlikely. This is a $200,000.00 grant and I am assuming the payments will be pretty regular and they wouldn't be large amounts, but if you want to do that we can. Alderman Long: Have we made any efforts to change our terms with our vendors to accommodate this instead of doing temporary cash transfers? Marsha Hertweck: No, we have not and we could pursue that too if you would like. On this particular NEA grant we have two vendors, the University of Arkansas and the Walton Arts Center. Those are the two vendors that we would be asking to wait four to six weeks for their payments. Alderman Long: We have not asked them to change their terms at all, so we don't know if they would be willing to wait the four to six weeks? Marsha Hertweck: That is correct. Alderman Adams: Maybe the University and Walton Arts Center could wait, but I grew up in Fayetteville in the family of Bedford Camera and Video and we really couldn't wait on money sometimes. I remember moments when my father was really hoping that money would come very fast to pay the next bill. How many vendors might be in that position that does not have the 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDDlf7Y (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 9 of 18 deep pockets like the University of Arkansas and do we have some businesses that need a quick turn around? Marsha Hertweck: Yes, it is kind of unusual to have a grant that is the University and the Walton Arts Center. Many of our grants would be all kinds of small vendors that would probably need the cash flow a lot quicker. Alderman Adams: This would be a vote in your opinion to support our small businesses? Marsha Hertweck: Yes. Don Marr, Chief of Staff: One of the reasons that this was brought forward was because historically we had put all the grants in the General Fund and we were able to make those kinds of cash flow movements. We are now doing our policy where grants are in a stand alone_ fund related only to that grant and because of that we need the ability to move the money from the General Fund into these stand alone grant funds to cover the short term cash flow issues. We are doing that to get greater accountability and transparency of the grant that we received and how we spent it and to assist us in the auditing and activity of those grants. Alderman Kinion moved to suspend the rules and go to the second reading. Alderman Adams seconded the motion. Upon roll call the motion passed 7-0. Alderman Gray was absent. City Attorney Kit Williams read the ordinance. Alderman Kinion moved to suspend the rules and go to the third and fmal reading. Alderman 'Pennant seconded the motion. Upon roll call the motion passed 7-0. Alderman Gray 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 Gray was absent. Ordinance 5618 as recorded in the office of the City Clerk 2013 Millage Levy: An ordinance levying a tax on the real and personal property within the City of Fayetteville, Arkansas, for the year 2013 fixing the rate thereof at 1.3 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. City Attorney Kit Williams read the ordinance. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayettevi Ile. org Telecommunications Device for the Deaf TDDTM (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 10 of 18 Marsha Hertweck, Accounting Director gave a brief description of the ordinance. Alderman Kinion moved to suspend the rules and go to the second reading. Alderman Adams seconded the motion. Upon roll call the motion passed 6-1. Alderman Petty voting no. Alderman Gray was absent. City Attorney Kit Williams read the ordinance. Alderman Petty: I don't have any problem with the proposal, but it is just my policy to never vote to advance such a substantial budget item in one night. Mayor Jordan: If you want, we can wait two weeks. Alderman Long: I think we should wait. City Attorney Kit Williams: We have had two readings, so we will be on the third for the next meeting. Sales and Use Tax Capital Improvement Bonds, Series 2013: An ordinance authorizing the issuance and sale of the City's Sales and Use Tax Capital Improvement Bonds, Series 2013, for the purpose of financing a portion of the costs of certain street improvements; authorizing the execution and delivery of a Third 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. Marsha Hertweck, Accounting Director gave a brief description of the ordinance. Dennis Hunt, Stephens: Do you have any specific questions I could answer? I think Mr. Becker explained it fully during Agenda Session and this is just a continuation of what voters approved in 2006. Don Marr: This third phase bond issue that was authorized by voters is not the full remaining amount. The amount we are talking about today has been reduced in order for us to spend the proceeds, design the projects and have construction completed within a time period without having to get into an issue of refunding bonds. There could be an additional one done for any final projects and this addresses the question about why the amount is less than the remaining originally approved totals. Fran Alexander: Would this be defined as a General Obligation Bond? 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfa yettevi I le.org Telecommunications Device for the Deaf TDDffTY (479) 52171316 City Council Meeting Minutes September 17, 2013 Page 11 of 18 City Attorney Kit Williams: No, it is an obligation that is only satisfied by the sales and use tax. Fran Alexander: I was wondering when it went to market how it was defined. I know it is not revenue. I thought it might be General Obligation, but it goes into sales and use and is that a category on its own? City Attorney Kit Williams: I would like to defer to our bond counsel that is here tonight. Gordon Wilbourn, Kutak Rock: I have been serving as bond counsel on this series of bonds and that is correct. It is kind of like a hybrid. It is not a Revenue Bond because taxes aren't revenues, but it is not a General Obligation to a special tax bonds secured only by the three quarter and the quarter cent. Mayor Jordan: Does that answer your question? Fran Alexander: It does in a way. The tax pledge is essentially coming from the citizens who would have voted on a General Obligation Bond. The City Council has the power to approve this kind of bond issue and so in a way it is a General Obligation. City Attorney Kit Williams: No, it is not a General Obligation Bond which probably would be an obligation upon a General Fund. This money never really goes into the General Fund. It always goes to the trustee to pay off the bond and the city could not seize any of that money. Is that correct Gordon? Gordon Wilbourn: That is correct. The voters approved a hundred and ten million of bonds in 2006 and these have been issued in series over time and this is a part of that. Alderman Minion 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 Gray 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 Gray 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 Gray was absent. Ordinance 5619 as recorded in the office of the City Clerk 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDDfTTY (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 12 of 18 Kum & Go, L.C.: A resolution to approve the Third Amendment to land sale agreement with Kum & Go, L.C. to extend the closing date to no later than February 12, 2014 and to agree to equally share the costs of a new traffic signal. City Attorney Kit Williams gave a brief description of the resolution. Alderman Marsh: I do think it is appropriate for us to extend the closing date since Kum & Go accommodated our extended demolition timeline. I voted against the sale publically and this gas station. I do not want any part of this decision and I will be abstaining from this vote. Alderman Kinion moved to approve the resolution. Alderman Long seconded the motion. Upon roll call the motion passed 6-0. Alderman Marsh abstained. Alderman Gray was absent. Resolution 199-13 as recorded in the office of the City Clerk Economic Development Contract for Services Renewal: An ordinance to waive formal competitive bidding, to approve a two year Economic Development Services contract with the Fayetteville Chamber of Commerce in the total amount of $330,000.00 and to approve a budget adjustment. City Attorney Kit Williams read the ordinance. Icon Marr, Chief of Staff gave a brief description of the ordinance. Steve Clark, Fayetteville Chamber of Commerce: We enjoy working for you, and in partnership with you. A great deal of the success that has been credited to us is the direct result of your leadership by giving us the tools and the opportunity to go to the market and say to existing businesses there is a reason to expand and they have. We have contacted new businesses and stated there is a reason to locate here and they have. We would like to continue this relationship and we thank you for your support. Fran Alexander stated she would like to encourage the Chamber of Commerce to put some of the Economic Development money to Green Infrastructure for the betterment of the community and not to think only about jobs, but about the quality of life here. Alderman Marsh: I think we have seen a very good return on our investment and I appreciate the efforts the Chamber of Commerce has put into this. I know there has been emphasis on attracting clean living wage jobs and that is definitely part of the Economic Development Plan that they have outlined for the future. 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 Gray was absent. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDDrM (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 13 of 18 City Attorney Kit Williams read the ordinance. Alderman Adams 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 Gray was absent. City Attorney Kit Williams read the ordinance. Alderman Kinion: Seldom have we seen a return on the investment we have made in the community quite as impressive as this. I would like to commend the work that we have seen with our collaboration with the Chamber of Commerce and the impact that they have had in the Economic Development and the measurable impact of this investment. Mayor Jordan: I would like to thank the Chamber of Commerce. Many of the jobs we have brought here have been green jobs. I have made that an emphasis since I've been in this office and they have worked with me very well. They have the Greenway Program for green businesses throughout the city and they have done many things. I hope to continue the great partnership that we have established. Mayor Jordan asked shall the ordinance pass. Upon roll call the ordinance passed 7-0. Alderman Gray was absent. Ordinance 5620 as recorded in the office of the City Clerk Amend §164.11 Height and Setback Regulations; Exceptions: An ordinance to Amend § 164.11 Height and Setback Regulations; Exceptions to enhance livability through appropriate transitions in building scale and to protect access to air and sunlight and to enact an emergency clause. City Attorney Kit Williams read the ordinance. Alderman Marsh gave a brief description of the ordinance and asked for the Council to take public comment and to leave the item on the First Reading. Alderman Petty: What direction are you headed in? Jeremy Pate: One of the things we recognize is that this particular proposal is a one size fits all and it doesn't really look at the scale. For instance, a two story walk up unit has the same standard applied as a large three to five acre six story building. A two story walk up unit may even be smaller in scale than the adjacent single family home. We want to look carefully at how those are applied, particularly on the smaller lots we see as the most impacted by a 15 foot setback. We have a number of 40 and 50 foot wide lots within our Downtown area some of which have single family adjacent, but also allow for different uses. We have identified cases where it would prohibit any kind of use except for single family development. This proposal is a 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDDIM (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 14 of 18 little too broad in context of overall encouragement of infill projects and we would like to take a look at that. Alderman Marsh: We are looking at three general conditions. We are looking at small, medium and large scale and making sure that we are sensitive to all those needs. Alderman Petty: Can you tell me how setbacks are applied, specifically the objects that get constructed ranging from buildings, parking lots, decks to outbuildings, including sheds or chicken coops? Jeremy Pate stated that anything over 30 inches in height above the ground plane has to meet building setbacks and continued to list the different districts that essentially have a zero foot side setback and cases having a zero foot rear setback. Alderman Petty: The bottom line is that it applies to everything constructed that is taller than 30 inches? Jeremy Pate: Correct. Alderman Petty: In most of our Mixed Use Zones we don't have a minimum lot width for any thing except for a Single Family District which I believe in many of our Form Based Zones is 18 feet for a single family home. If you walk down Dickson Street there are plenty of buildings that are less than 18 feet wide. Will this be addressed when this is amended and are you going to institute minimum lot widths? Is that going to be your proposal or are you going to try to allow development to still occur on small lots? Jeremy Pate: We haven't got to that point of looking at changing any kind of lot widths. Alderman Marsh: We want to specifically target lots that are directly adjacent to an occupied single family home. We absolutely wouldn't want to prohibit development in that circumstance. Michael Carr: I live in the Wilson Park area. I moved back to Fayetteville a few years ago for family and because .of the character of Fayetteville. I spent 16 years teaching architecture and historic preservation at the University of Oregon. I believe the city needs to densify and to grow up and not out as much as possible. This is the best way for a city to grow and also the most sustainable way to grow. From the preservation side this growth has to be managed to protect the heritage that we have and the character that defines this town. Mr. Carr continued to voice his opinion and spoke in favor of the proposed ordinance. Nina Shirkey: I addressed the Council on June 18, 2013 regarding my concern about the lack of setback requirements around my home. I would like to point out that it isn't just Block Street. It is also the area on Church Street and west of the Square which are some the oldest neighborhoods in Fayetteville and those houses are in the Downtown General Plan. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayettevi lie. org Telecommunications Device for the Deaf TDD/TTY (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 15 of 18 I would like to speak about one line in the opening paragraph. in the ordinance that says helping to enrich our built environment by promoting the compatibility of new development with historic structures. I would suggest that the term be amended to say existing structures or historic and existing. The term historic can sometimes have a very strict definition and it wouldn't maybe apply to all the single family houses. Alderman Petty: Your house is famous in Fayetteville and I was hoping you could tell us a little bit about the legacy. What has made it so special to the community and could you please tell us some of the events that have taken place there? Nina Shirkey: There have been some mayoral candidate election parties, funerals, weddings, and my mother taught ballet there for 15_years. There have also been a lot of community events such as concerts, art shows and everything else you can think of. It is a really important space, but I think this amendment to the ordinance goes beyond my house and I think it really speaks to Fayetteville. I do think Fayetteville would be at a loss if my house was lost due to development. Alderman Petty: Could you tell me about how many times back in the day the house was open to the public? Nina Shirkey: I am not sure, but it was once a week at least. It is a single family residence and it would be continued to be used that way. It wouldn't be a business if that is what you are getting at. Alderman Petty: It is and it seems that your structure is being used for more than just living for a generation at least. Nina Shirkey: I was born and raised in the house and I plan on continuing to live there. Fran Alexander voiced her opinion that a precedent needs to be set as to how high and how close the city wants buildings to be. She stated the she was supporting the amendment in whatever final form it finally takes and hopes it is workable. She believes it is important to recognize the historic value of Fayetteville. Kathy Voight, a new resident to Fayetteville stated she lives next door to a three story, six condo that was built with zero setbacks and knew that when she purchased her home. However, when she tries to back out of her driveway she needs to have someone standing in the street to help her. She would appreciate some thought towards the setback issue and is supportive to the amendment. Mary Lowe lives by Wilson Park and stated she was at a City Council meeting 20 months ago and a developer was asking for a height variance for a complex on West Maple. She remembered them saying that the complex wouldn't block the view of Old Main, but would frame it. The complex brought 1,200 students and she knows that student housing is needed. She believes that in our glee of having more tax revenue we are letting developers come into Fayetteville and dramatically affect the quality and the nature of living here. She stated that developers are 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDD/TTY (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 16 of 18 squeezing every dollar they can get out of every square inch they buy without setback and height variances and believes that it is changing the quality of life in this town. Mayor Jordan: We are going to leave this on the First Reading and we will look at it in two weeks. Alderman Petty: I am glad to hear this amendment is going to continue to be worked on. There are many businesses currently in Fayetteville that wouldn't have been able to be built years ago by this proposed amendment. I know people are going to see me as against height limits. I am for height limits and they are important. When you don't have height limits and your town has a demand for 100 new. housing units and one developer comes in and builds all 100 units and according to the market nobody else gets to build for the rest of the year or longer. This means there is a missing piece for our city that will never get filled in or may never get repaired and that is why height limits are important. When you don't have limits, extraordinarily tall buildings get built and take all the development potential away. The person who owns the vacant lot next to that development now thinks that their lot is worth that, but the market is gone for it so they hold out and speculation continues to reinforce that missing piece condition. I am not for broad brushes and it makes me wonder if the justification for this is sunlight and fresh air. That is great and deserves our attention in a profound way, but what about a home that exists that has 50 foot setbacks already that sits on an acre in the middle of town? Does it need to be protected. like. this? I'm not sure that it does. Nationwide only 18% of households are going to have kids in 2030. In a college town the number is even less. Households with kids are the biggest driver for demand for single family homes. I think that begs the question, is this approach prejudicial against the other 80% of households. Don't renters deserve protection as well? I think they do. The way that this is written out it really takes the little guy out of the opportunity for Downtown development and this is already the case to build anything in most communities. You have to have access to out of state capital, huge contracting firms and you just can't really do it in most cases if you are a small family operated business that just wants to build in your community. This makes that situation worse. I am not saying zero lot line development is right, but I can't say that it is wrong. I don't have that kind of confidence with the issue so I hope when you work on this the next two weeks it is a totally different framework that still addresses the issues. Alderman Marsh: I would like to thank the public and Alderman Petty for their comments. This is the kind of feedback we are looking for as we move forward with developing this ordinance. This ordinance was left on the First Reading. Cleveland Street Improvements Appeal: A resolution to grant the appeal of Alderman Alan Long concerning a recommendation of the City Council Transportation Committee concerning Cleveland Street Improvements. 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDD(TfY (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 17 of 18 Alderman Long moved to table the appeal indefinitely. Alderman Marsh seconded the motion. Upon roll call the motion passed 7-0. Alderman Gray was absent. City Council Agenda Session Presentations: General Fund Budget Discussion —Paul Becker, Finance Director and Internal Services Director City Council Tour: Announcements: Don Marr: There will be a Ward 1 meeting on Thursday, September 26, 2013 at 6:00 p.m. at YRCC. Bikes, Blues and Barbeque will begin on Wednesday, September 18, 2013 and runs through Sunday, September 22, 2013.We encourage riders to ride quietly and enjoy their time here in town. The City of Fayetteville, Washington County, AT & T and all of our public safety departments are encouraging you to join our "It Can Wart' campaign which is September 19, 2013 to pledge to not text and drive. If you are willing to take the pledge, we have stickers that you can add to your vehicles and they can be picked up around the community. The next Town Hall meeting will be Monday, September 30, 2013 and will be a joint Mayor's Town Hall meeting and a Ward 4 meeting for the month of September. It will be at St. James Missionary Baptist Church on the corner of Leverett and North Street. The Ward 4 clean up is on October 5, 2013 and will be at Owl Creek on Rupple Road and Holcomb Elementary on Salem Road. On September 19, 2013 through September 21, 2013 is the Northwest Arkansas Electronic Recycling event taking place at the Arvest Ballpark in Springdale. The new Marion Ortin recycling facility opens this week on North Street. We plan to have hours that are seasonal in nature. This will be a staffed site to help citizens. We would like citizens to reserve the date for the Southeast Fayetteville Community Center 2" Annual, Celebrate Our Kids Banquet on October 1, 2013. The program is called, Three Big Shots. U.S. Reed, Charles Balentine and Scotty Thurman will be the speakers at the event as well as Coach Nolan Richardson. This will benefit the Yvonne Richardson Community Center. It will 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayetteville.org Telecommunications Device for the Deaf TDDTFFY (479) 521-1316 City Council Meeting Minutes September 17, 2013 Page 18 of 18 be at the Fayetteville Town Center with social hour starting at 6:00 p.m. and dinner with program beginning at 7:00 p.m. Adjournment: 7:55 p.m. AMAo' Lioneld Jorda ayor Sondra E. Smith, City CIerk/Treasurer 113 West Mountain Fayetteville, AR 72701 (479) 575-8323 accessfayettevi Ile. org Telecommunications Device for the. Deaf TDDl7TY (479) 521-1316 NORTHWEST ARKANSAS DEMOCRAT -GAZETTE NORTHWESTARKANSAS THE MORNING NEWS OFSPRINGDALE NEWS-P-M-E16LLC THE MORNING NEWS OF ROGERS NORTHWEST ARKANSAS TIMES BENTON COUNTY DAILY RECORD 212 NORTH EAST AVENUE, FAYETTEVILLE, ARKANSAS 72701 1 P.O. BOX 1607, 72702 1 479-442.1700 1 WWW.NWANEWS.COM AFFIDAVIT OF PUBLICATION I, Holly Andrews, do solemnly swear that I am the Legal Clerk of the Northwest Arkansas Newspapers, LLC, printed and published in Washington and Benton County, Arkansas, bona fide circulation, that from my own personal knowledge and reference to the files of said publication, the advertisement of: City of Fayetteville - Ordinance 5619 Was inserted in the Regular Editions on: September 26, 2013 Publication Charges: $ 557.71 6-y Andrews Subscribed and sworn to before me This Z(o day of , 2013. OWL, V V4 Notary Public My Commission Expires:2�?���Dl� CATHY J. IV `� =) UAj Ca... rssion'=xp re.. * *NOTE* * Please do not pay from Affidavit. Invoice will be sent. A--r-rk'O' ORDINANCE NO. 5619 s )RDINANCEAUTHORIZINGTHE ISSUANCE SALE THE CIIY'S SALES AND USE aye evl e CAPITALL IMPROVEMENT BONDS, SERIES 1, FOR THE PURPOSE OF FINANCING ARKANSAS ORTION OF THE COSTS OF CERTAIN =ET IMPROVEMENTS; AUTHORIZING THE UTION AND DELIVERY OF: A THIRD SUPPLEMENTAL TRUST INDENTURE SUANT TO' WHICH:THE BONDS WILL BE ISSUED AND SECURED; HORIZING:THE EXECUTION AND DELIVERY OF AN OFFICIAL STATEMENT S.UANT:.TO..WHICN THE BONDS. WILL BE OFFERED; AUTHORIZING THE "UT10N AND, DELIVERY.:OF:A BOND PURCHASE AGREEMENT PROVIDING TIE:SALE OF THE BONDS; AUTHORIZING THE EXECUTION AND DELIVERY 4,-GONTINUING DISCLOSURE AGREEMENT: AND PRESCRIBING OTHER WHEREAS, :tfie City Cpuncil of the City of Fayetteville, Arkansas (the "City") has :previously determined that there'ls a great need for a source of revenue to finance the costs of various street improvements within the City (the "2013 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. & 2011 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 2013 Project, which capital improvement bonds may ' ,tiesecured 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 Magrid approved on June 20, 2006 (the "Election Ordinance"), there was submitted Mad qualified electors of the City four questions regarding the issuance of an ggregate:of_not to exceed $110,000,000 in principal amount of capital improve- ment bonds pursuant to Amendment 62 and the Local Government Bond Act to fpance the capital improvements described in the Election Ordinance, said bonds to =tie. 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% 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 quail- fied. 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 r ;.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 2013, in the aggregate principal amount of not to exceed $22,750,000 '(the "Bonds"), in order to provide for the funding of the 2013 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 tii6terms 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 2013" (the 'Bonds'). The Bonds shall be issued in the original aggregate principal amount of not to exceed Twenty -Two Million Seven Hundred 'Fifty Thousand Dollars ($22,750,000).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 5.00%. The proceeds ofdhe.Bonds will be utilized to finance the costs of the 2013 Project, to establish a debt service reserve for the Bonds or to purchase a surety bond for reserve purpos- as; 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 forms and denominations, shall be dated, :'shall be numbered, shall mature, shall be subject to redemption prior to maturity, and shall contain such other terms, covenants and conditions, all as set forth in the Third 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 Third 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 ':ir substantially the form contained in the Third Supplemental Trust Indenture sub- tt itted 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 par- ity basis with the existing pledge of such receipts in favor of the City's $50,000,000 Sales and Use Tex Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds', the C ty'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 'Tak Capital Improvement Bonds, Series 2009 (the "Series 2009 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 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 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 i. 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 becuon 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 Third Supplemental Trust . Indenture (the "Third Supplemental Trust Indenture"), by and between the City i and Simmons Rrst Trust Company, N.A., Pine Bluff, Arkansas (the "Trustee"), and the City Clerk is hereby authorized and directed to execute and acknowledge the 'Third 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 Third;* Supplemental Trust Indenture to be accepted, executed and acknowledged by the Trustee. The Third 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 and a Second . Supplemental Trust Indenture dated as of November 1, 2009, each by and between the City and the Trustee (the "Original Indenture," and collectively with the Third Supplemental Trust Indenture, the 'Trust Indenture"). The 'Third Supplemental Trust Indenture is hereby approved in substantially the form submitted to this meet- Ing, 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 i terms of the Bonds. The Mayor is hereby authorized to confer with the Trustee, the :Underwriter and Bond Counsel in order to complete the Third Supplemental Trust 'Indenture In substantially the form submitted to this meeting, with such changes as shall be approved by such persons executing the Third Supplemental Trust . Indenture, their execution to constitute conclusive evidence of such approval. (Advice is given that a copy of the Third Supplemental Trust Indenture in substan- tially 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 1502- 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 exe- -cute'a Bond Purchase Agreement on behalf of the City, to be dated as of the date ;of,lts execution (She "Bond Purchase Agreement"), by and between the City and the .Underwriter, and the Bond Purchase Agreement is hereby approved in substantially =Ithe 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 xQgreement 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 "jo'rm authorized to be executed is on file with the City Clerk and is available for 1 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, the 0.75% Sales. and Use Tax and the City in compliance with the provisions of Rule 15c2 12 of the U. S. Securities and Exchange Commission, the Mayor is hereby authorized Qd 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 riiils meeting, and the Mayor is hereby authorized to confer with the Trustee, the AJ, nderwriter and Bond Counsel In order to complete the Continuing Disclosure Agreement In substantially the form submitted to this meeting, with such changes as tSt all;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. 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 oftthe principal of and interest on the Bonds when due. If deemed economi- cally advantageous by the Mayor, upon the advice of the Underwriter,. the Mayor tlshereby authorized to execute an insurance .commitment and to do any and all , thingsnecessary to accomplish the delivery of a bond insurance policy with respect ition 8. The Mayor and City Clerk, for and on behalf of the City, are hereby iorized and directed to do any and all things necessary to effect the issuance, i; execution and delivery of the Bonds and to effect the execution and delivery of Third Supplemental Trust Indenture, the Bond Purchase Agreement, the Official Cement, the Continuing Disclosure.Agreement and a Tax Regulatory Agreement Ping to the tax exemption of interest on the Bonds, and to perform all of the obli- ons of the City under and pursuant thereto. The Mayor and the City Clerk are ner authorized and directed, for and on behalf of the City, to execute all papers, oments, certificates and other instruments that may be required for the carrying of such authority or to evidence the exercise thereof. tion 9. As previously provided in the Election Ordinance, Kutak Rock LLP, Little U,fAikansas, is hereby confirmed as Bond Counsel on behalf of the City in con- tion. with the issuance and sale of the Bonds. Von'10. The provisions of this Ordinance are hereby declared to be severable, if -any section, phrase or provision shall for any reason be declared to be illegal rvalid, such declaration shall not affect the validity of the remainder of the sec- s, phrases or provisions of this Ordinance. tion' 11. All ordinances, resolutions and parts thereof in conflict herewith are ;by repealed to the extent of such conflict. iBED and APPROVED this 17th day of September, 2013. iROVED: ATTEST: By: NEW 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: 4841-2123-6758.1 $52,000.00 20,000.00 3,000.00 557.71 2,459.95 78 017.66 KUTAK ROCK LLP LITTLE ROCK, ARKANSAS Telephone: (501) 975-3000 Facsimile: (501) 975-3001 Federal ID 47-0597598 November 12, 2013 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 Reference Invoice No. 1902491 Client Matter No.: 1123401-24 City of Fayetteville, Arkansas Fayetteville, Arkansas Invoice No. 1902491 1123401-24 $22,750,000 CITY OF I+AYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2013 Fees and expenses for serving as Bond Counsel to the City of Fayetteville TOTAL CURRENT AMOUNT DUE PRIVILEGED AND CONFIDENTIAL ATTORNEY -CLIENT COMMUNICATION AND/OR WORK PRODUCT 4836-6176-3862.1 $52,000.00 52 000.00 ®STANDARD & POOR'S Standard & Poor's Financial Services, LLC Invoice No.: 10332818 RATINGS SERVICES Federal I.D.: 26-3740348 Customer No.: 1000073473 McGRAW HILL FINANCIAL Invoice Date: 10/02/13 Page No.: 1 Print Date: 10/02/13 0201 MR. DENNIS HUNT STEPHENS, INC. 3425 N. FUTRALL, SUITE 201 FAYETTEVILLE AR 72703 101011 ANALYTICAL SERVICES RENDERED IN CONNECTION WITH: $20,000.00 US$22,750,000 City of Fayetteville, Arkansas, Sales and Use Tax Capital Improvement Bonds, Series 2013, dated: November 01, 2013, due: November 01, 2023 FOR BILLING INQUIRIES PLEASE CALL: 1-800-767-1896 EMAIL: PFFEESVCS@STANDARDANDPOORS.COM 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: 10/02/13 INVOICE TOTAL $20,000.00 USD Make Checks Payable To: STANDARD&POOR'S RATINGS SERVICES WGRAW HILL FINANCIAL 0201 Billed To: Standard & Poor's Financial Services, LLC Federal I.D.: 26 - 3740348 Wire -Transfer To: Invoice No.: 10332818 Customer No.: 1000073473 Invoice Date: 10/02/13 Remit To: MR. DENNIS HUNT Please include invoice # STANDARD AND POOR'S STEPHENS, INC. Bank of America -San Francisco CA 2542 COLLECTION CENTER DRIVE 3425 N. FUTRALL, SUITE 201 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: $20,000.00 USD 10000734731 10332818 02000000 1 700 10 07 1013 0 AMOUNT ENCLOSED: NORTHWEST ARKANSAS DEMOCRAT -GAZETTE NORTHWESTARKANSAS THE MORNING NEWS OFSPRINGDALE NEWS-PAPE16 THE MORNING NEWS OF ROGERS ORTHWEST ARKANSASTMES TON COUNTY LLC g NDAILY RECORD 212 NORTH EAST AVENUE, FAYETTEVILLE. ARKANSAS 72701 1 P.O. BOX 1607, 72702 1 479.442.1700 1 WWW.NWANEWS.COM AFFIDAVIT OF PUBLICATION I, Holly Andrews, do solemnly swear that I am the Legal Clerk of the Northwest Arkansas Newspapers, LLC, printed and published in Washington and Benton County, Arkansas, bona fide circulation, that from my own personal knowledge and reference to the files of said publication, the advertisement of: City of Fayetteville - Ordinance 5619 Was inserted in the Regular Editions on: September 26, 2013 Publication Charges: $ 557.71 Ho11y Andrews Subscribed and sworn to before me This day of , 2013. VV Notary Public My Commission Expires: ';'� :•: �� riiSS!UIl 1_XPi11(,.. -777 * *NOTE* * Please do not pay from Affidavit. Invoice will be sent. j-' rA-C ' Stephens Jackson T. Stephens, 1923-2005 Chairman Emeritus in Perpetuity $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Bonds Series 2013 Clearing: CUSIP Service Bureau DTC I-Preo Total Stephens Inc. 111 Center Street 501-377-2000 t Little Rock, AR 72201 501-377-2666 f 800-643-9691 $ 374.00 520.00 1,565.95 $2,459.95 www.stephens.com K U TA K ROCK L L P ATLANTA CHICAGO SUITE 2000 DENVER 124 WEST CAPITOL AVENUE FAYETTEVILLE IRVINE NORTHWEST ARKANSAS OFFICE LITTLE ROCK, AR 72201-3706 KANSAS CITY LITTLE ROCK SUITE 400 501-975-3000 LOS ANGELES 234 EAST MILLSAP ROAD FACSIMILE 501 -975-3001 POLIS FAYETTEVILLE, ARKANSAS 72703-4099 MA KLAHCITY OKLAHO MC 479-973-4200 www.kutakrock.com OMAHA PHILADELPHIA RICHMOND SCOTTSDALE TON WCHITA GORDON M. WILBOURN gordon.wilbourn@kutakrock.com November 13, 2013 WICHITA (501)975-3101 7011 3500 0001 2965 7599 VIA CERTIFIED MAIL ---- ---- - -- ----- - - ---- --- --- RETURN RECEIPT REQUESTED Internal Revenue Service Center Ogden Utah 84201 $22,750,000,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement bonds Series 2013 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, d F `. don M.\Wilbourn js Enclosure 4817-8842-2422.1 Form 8038-G Information Return for Tax -Exempt Governmental Obligations (Rev. September2011) ►Under Internal Revenue Code section 149(e) OMB No. 1545-0720 Department of the Treasury ► See separate instructions. Internal Revenue Service Caution: If the issue price is under$100,000, use Form 8038-GC. ■ i■ Heportlnq Authority If Amended Return. check here ► I 1 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 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 3 6 City, town, or post office, state, and ZIP code 7 Date of issue Fayetteville, AR 72701 11-12-13 8 Name of issue 9 CUSIP number Sales and Use Tax Capital Improvement Bonds, Series 2013 312673 EN2 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 Gordon M. Wilbourn, bond counsel 501-975-3000 ■:FT.i1f f voe of Issue (enter the issue nricel. See the instructions and attach grhPdulP._ 11 12 13 14 15 16 17 18 Education . . . . . . . . . . . . . . . . . . . . . . . . Health and hospital . . . . . . . . . . . . . . . . . . . . Transportation . . . . . . . . . . . . . . . . . . . . . . Public safety . . . . . . . . . . . . . . . . . . . . . . . Environment (including sewage bonds) . . . . . . . . . . . . . . Housing . . . . . . . . . . . . . . . . . . . . . . . . Utilities . . . . . . . . . . . . . . . . . . . . . . . Other. Describe ® streets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 12 13 14 15 16 17 18 22,745,300 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 . . . . . . . . ® ❑ . . . . ® ❑ . . . . to. ❑ 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 price at maturity (d) Weighted average maturity (e) Yield 21 11-1-24 1 $ 22,745,3001 $ 22,750,0001 8.903 vears 1 3.0915 % LiULM uses of Proceeds of bond Issue (including underwriters' discount) 22 Proceeds used for accrued interest . . . . . . . . . . . . . . . . . . . . . 22 20,574 00 23 22,745,300 00 23 Issue price of entire issue (enter amount from line 21, column (b)) . . . . . 24 Proceeds used for bond issuance costs (including underwriters' discount) . . 24 376,750 00 25 Proceeds used for credit enhancement . . . . . . . . . . . . 25 0 26 Proceeds allocated to reasonably required reserve or replacement fund . 26 56,875 00 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) . . . . . . . . . . . . . . . . . . . . . . 29 433,625 00 30 22,311,675 00 30 Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here) I MEDescription 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) . . . . . . 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 36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract (GIC) (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . 36a b Enter the final maturity date of the GIC ► c Enter the name of the GIC provider III 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 ► c Enter the EIN of the issuer of the master pool obligation Po- 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 . . . . ► ❑ 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 ► 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 . . . . . . . . ► Fv] 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 . . . . . . . . . ► b Enter the date the official intent was adopted 0- Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge Signature and belief, thgy are true, correct, and complete. I further declare that I consent to the IRS's disclosure of the issuer's return information, as necessary to and process this eturn, to the ersoh that I have auth6hzed above. Consent r i'if : 0 \ .� ` _% -_. < `F c r' Lioneld Jordan, Mayor f` � . �° vX Y S gna ure of issuer's aotfiorized r presentative °Date Type or print name and title Paid PrinVType preparer's n&me-=- —1 Prep rer's signature Date Check ❑ if PTIN Preparer Gordon M. Wilbourn 30��kk- L L—k 3 self-employed P01079125 Use Only IFirm's name ® Kutak Rock LLP Firm's EIN > 47-0597598 Firm's address 111� 124 W. Capitol, Suite 200 , ' le Rock, AR 72201 1 Phone no. 501-975-3000 Form 8038-G (Rev. 9-2011) U.S. Postal ServiceTM CERTIFIED MAIL. RECEIPT (Domestic Mail Only; No Insurance Coverage Provided) For delivery information visit our website at WWW.usps.com® ere 2013 PS Form 7800, August 2006 SENDER: COMPLETE ■ Complete items 1, 2,,and 3. Also complete item 4 if Rgstricted Delivery'is desired. ■ Print you['iiame and address on the reverse so thOWe can return the card to you. • Attachthiscard to the back of the mailpiece; or on the #ipr}t if -space permits. 1. Article Adt se8 tole A. 'Signature X 0 Agent ❑ Addressee B, Received by (Printed Name) C. Date of Delivery D Is delive. add t ❑ Ye If YES', de iveryaddressfbelo No N NOV 202013 0 3. Se ceTy ertifled Mail ❑ Express Mail ❑ Registered ❑ Return Receipt for Merchandise ❑ In. Mail. ❑ C.O.D. 4. Restricted Delivery? (Extra Fee) ❑Yes 2. Article Number . O (Transfer from service /abed (' 35�i O �� I Z� / S Z ✓cicl PS Form 3811. February 2004 Dorrlestic Return Receipt W _ .._ 10259F�-02-M f54 CITY OF FAYETTEVILLE, AR.KANSAS to SIMMONS FIRST TRUST COMPANY, N.A. as Trustee TRUST INDENTURE 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 4827-9893-8625.6 TABLE OF CONTENTS (This Table of Contents is not a part of the Trust Indenture and is only for convenience of reference.) Page No. Parties.............................................................................................................................................. I Recitals.............................................................................................................................................1 GrantingClauses ............................................................................................................................. 2 ARTICLE I DEFINITIONS Section101. Definitions........................................................................................................4 Section102. Use of Words.................................................................................................12 ARTICLE II 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 Section207. Authentication................................................................................................15 Section 208. Delivery of the Bonds.................................................................................... 15 vat 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 Section 214. [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 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 Section 502. 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 j und................................................................................................... 29 Section 508. Debt Service Reserve Fund............................................................................ 30 Section 509. Cessation of Fund Deposits........................................................................... 30 Section 510. Separate Accounts Authorized....................................................................... 31 ARTICLE VI INVESTMENTS Section 601. Investment of Moneys.................................................................................... 31 Section 602. Investment Earnings....................................................................................... 31 Section 603. Valuation of Funds......................................................................................... 31 Section 604. Responsibility of Trustee ............. ......................... 001*� ARTICLE VII DISCHARGE OF LIEN Section 701. Discharge of Lien........................................................................................... 32 Section 702. Bonds Deemed Paid....................................................................................... 32 Section 703. Non -Presentment of Bonds............................................................................ 33 k ARTICLE VIII DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS Section 801. Events of Default........................................................................................... 33 Section 802. ................... 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 ARTICLE IX TRUSTEE AND PAYING AGENTS ,ON Section 901. Acceptance of Trusts...................................................................................... 38 Section 902. Fees, Charges and Expenses of Trustee and Paying Agents; Trustee's 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....................................................... 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 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 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 Section 1204. 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 Ill Exhibit A Form of Series 2006A Bond......................................................................... A-1 Exhibit B Form of Coverage Certificate........................................................... Exhibit C Requisition Form.......................................................................................... C-1 4827-9893-8625.6 iv TRUST INDENTURE THIS TRUST INDENTURE dated as of November 1, 2006, 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 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 bond' in the principal amounts and for the specific purposes set forth on the ballot (and the correspondQ 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 WHEREAS, 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, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THIS INDENTURE WITNESSETH: That the City, in consideration of the premises and the acceptance by the Trustee of the trusts hereby created, 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: 1. 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 HAVE AND TO FOLD all the same (the "Trust Estate") with all privileges and appurtenances hereby conveyed and assigned, or agreed or intended so to be, to the Trustee and its successors in said trusts and to them and their assigns forever; IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and proportionate benefit, security and protection of all owners of the said Bonds issued under and secured by this Indenture without privilege, priority or distinction as to lien or otherwise of any of 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 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 3 accordance with the terms and provisions hereof, and shall pay all amounts due to the 2006A Insurer by way of reimbursement or otherwise, them 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: ARTICLE I DEFINITIONS Section 101. Definitions. In addition to the words and terms elsewhere defined in this Indenture, the following words and terms as used in this Indenture shall have the following meanings: "Account" means an Account established by Article V of this Indenture. `"*N "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 "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. 00*11N "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): 'N (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); (5) 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 (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 Mortgagee 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_CorQ (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 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 10 "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 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 ON 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. M*N Section 102. Use of Words. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, the words "Bond", "owner", "holder" and "person" shall include the plural, as well as the singular, number. ARTICLE II THE BONDS Section 201. Security for the Bonds. (a) The Bonds are special and limitedobligations 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 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 ON 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 oft� 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 H. 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 l) 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. WN 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 ON 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 ON 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 famishing 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 RLF 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 a lien 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 00�1 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 Depository. The Bonds shall initially be registered to Cede & Co., the nominee for The Depository Trust Company, New York, New York (the "Securities Depository"), and no Beneficial Owner will receive certificates representing their respective interests in the Bonds, except in the event the Trustee issues replacement bonds as provided in this Section 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: -unposed 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. ARTICLE III REDEMPTION OF BONDS BEFORE MATURITY 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, ,communicated in -a written notice to the Trustee not less than sbity_(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 insuch 4827-9893-8625.6 21 poll notice, become due and payable at the redemption price provided for redemption of such Bonds, and interest on such Bonds or portions of Bonds so called for redemption shall cease to accrue, (ii) upon surrender of the Bonds or portions of Bonds so called for redemption in accordance with such notice, such Bonds or portions of Bonds shall be paid at the applicable redemption price, (iii) such Bonds or portions of Bonds shall cease to be entitled to any lien, benefit or security under this Indenture, and (iv) the owners of said Bonds or portions of Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof. Section 305. Redemption in Part. Any Bond which is to be redeemed only in part shall be surrendered to the Trustee (with, if the City or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the City and the Trustee duly executed by, the -owner thereof or his attorney duly authorized in writing), and the. appropriate officials of the City shall execute and the Trustee shall authenticate and deliver to the owner of such Bond, without service charge, a new Bond or Bonds of the same series, of any authorized denomination or denominations, having the same maturity and interest rate as requested by such owner, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered. 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. ARTICLE IV GENERAL COVENANTS AND REPRESENTATIONS 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 *N 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. Trustee's and Paying Agent's Fees and Expenses. Subject to the provisions of Section 902 hereof, the City hereby agrees and covenants to make payments for the fees, expenses and charges of the Trustee and Paying Agent, if any, as authorized and provided by this Indenture. The City is to make payments on statements rendered by the Trustee and Paying Agent either (i) directly to the Trustee and Paying Agent or (ii) pursuant to Section 503(b) hereof. Section 408. Construction of Projects; Certification of Completion Dates. The City hereby covenants to use its best efforts to acquire, construct and equip each portion of the s 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. iMI MMM FUNDS AND DEPOSITS 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; (iii) Bond Fund, and an Interest Account and a Principal Account (iv) Redemption Fund; (v) Debt Service Reserve Fund, and a Series 2006A Account therein; (vi) Cost of Issuance Fund; and (vii) Rebate Fund. (b) All Funds and Accounts shall be held by the Trustee,_ which shall hold and mainiain 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 (1/7) 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 004 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 THIRD: the corresponding Account of the Debt Service Reserve Fund (for payment of principal and interest on the Bonds on any `interest or principal payment date only). (d) All payments made pursuant to this Section 504 shall be made in immediately available funds. Section 505. Cost of Issuance Fund. There shall be deposited to the credit of the Cost of Issuance Fund all moneys received for said Fund pursuant to Section 208 hereof. The Trustee shall pay those Costs of Issuance as directed by the City pursuant to a Certificate delivered on a Closing Date. After all Costs of Issuance have been paid (and in any event not later than 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 28 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. (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 94 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 fin-ther 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 1k 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. ARTICLE VII DISCHARGE OF LIEN Section 701. Discharge of Lien. If the City shall pay or cause to be paid to the owners of the Bonds the principal, premium, if any, and interest to become due thereon at the times and in the manner stipulated therein, and if the City shall keep, perform and observe all and singular the covenants and promises in the Bonds and in this Indenture expressed as to be kept, performed and observed by it on its part, then these presents and the estate and rights. hereby granted shall cease, determine and be void, and thereupon the Trustee shall cancel and discharge the lien of \ this Indenture, and execute and deliver to the City such instruments in writing as shall be requisite to satisfy the lien hereof, and reconvey to the City the estate hereby conveyed, and 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 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. Non -Presentment of Bonds. In the event any Bonds shall not be presented for payment when the principal thereof becomes due, either at maturity or otherwise, or at the date fixed for redemption thereof, if there shall have been deposited with the Trustee for that purpose, or left in trust if previously so deposited, funds sufficient to pay the principal thereof, and premium, if any, together with all interest unpaid and due thereon, to the due date thereof, for the benefit of the Holder thereof, all liability of the City to the Holder thereof for the payment of the principal thereof, premium if any, and interest thereon, shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such fund or funds, without liability for interest thereon, for the benefit of the Holder of such Bonds, who shall thereafter be restricted exclusively to such fund or funds, for any claim of whatever nature on his part under this Indenture or on, or with respect to, the Bonds. ARTICLE VIH DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS Section 801. Events of Default. Each of the following events shall constitute and is referred to in this Indenture as an "Event of Default": N (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 802. Acceleration. Upon the occurrence of an Event of Default, the Trustee may, and upon the written request of the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding hereunder shall, by notice in writing delivered to the City, declare the principal of all Bonds then Outstanding, together with the interest accrued thereon, immediately due and payable, and such principal and interest shall thereupon become and be immediately due and payable. Section 803. Other Remedies; Rights of Bondholders. Upon the occurrence of an Event of Default, the Trustee may, as an alternative, pursue any available remedy by suit at law or in equity, including, without limitation, mandamus to enforce the payment of the principal of and premium, if any, and interest on the Bonds then Outstanding hereunder. !� If an Event of Default shall have occurred, and if it shall have been requested so to do by the Holders of not less than 51% in aggregate principal amount of Bonds Outstanding hereunder 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 whichshallhave 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 ON 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 VIR 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 d 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 09 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. ARTICLE IX TRUSTEE AND PAYING AGENTS 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 dutiesrequired 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 ON 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. lk (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, prior to the occurrence of a default of which it has been notified as provided in subsection (g) of this Section 901, or of which by that subsection it is deemed to have notice, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction, or action is necessary or expedient, but may at its discretion, at the reasonable expense of the City, in every case secure such further evidence as it may think necessary or advisable but shall in no case be bound to secure the same. The Trustee may accept a certificate of the City Clerk of the City under its seal to the effect that a resolution 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 1k the execution of the said trusts and powers or otherwise in respect of the premises. 4827-9893-8625.6 38 (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 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 kk 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(g) deemed to have or is given notice, the Trustee shall promptly make demand upon the City and give notice to each owner of Bonds then Outstanding. Section 905. Intervention by Trustee. In any judicial proceeding to which the City is a party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of Holders of Bonds issued hereunder, the Trustee may intervene on behalf of Bondholders and shall do so if requested in writing by the Holders of at least 51% of the aggregate principal amount of Bonds Outstanding hereunder. The rights and obligations of the Trustee under this Section 905 are subject to the approval of the court having jurisdiction in the premises. Section 906. Merger or Consolidation of Trustee. Any bank or trust company to which the Trustee may be merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any bank or trust 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. Resignation by Trustee. The Trustee and any successor trustee may at any time resign from the trusts hereby created by giving written notice to the City and the Bondholders, and such resignation shall take effect upon the appointment of a successor trustee by the Bondholders or by the City. Such notice may be served personally or sent by registered mail (to the City) or first class mail (to the Bondholders). Section 908. Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Trustee and to the City, and signed by the Holders of not less than 51 % in aggregate principal amount of Bonds Outstanding hereunder. Section 909. Appointment of Successor Trustee. In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by the court, a successor may be appointed by the Holders of not less than 51 % in aggregate principal amount of Bonds Outstanding hereunder, by an instrument or concurrent instruments in writing signed by such Holders, or by their attorneys in fact, duly authorized; provided, nevertheless, that in case of such vacancy the City by an instrument executed and signed by its Mayor and attested by its City Clerk under its seal, shall appoint a temporary trustee to fill such vacancy until a successor trustee shall be appointed by the Bondholders in the manner above provided. Any such temporary trustee appointed by the City shall immediately and without further act be superseded by the trustee appointed by such Bondholders. Every such temporary trustee and every such successor trustee shall be a trust company or bank in good standing, having capital and surplus of not less than $40 million. Section 910. Concerning Any Successor Trustee. Every successor or temporary trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the City an instrument in writing accepting such appointment hereunder, and thereupon such successor or temporary trustee, without any further act or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor; 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, 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 49% 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. ARTICLE X SUPPLEMENTAL INDENTURES Section 1001. Supplemental Indentures Not Requiring Consent of Bondholders. The City and the Trustee may, from time to time and at any time, without the consent of or notice to the Bondholders, enter into Supplemental Indentures as follows: (a) to cure any formal defect, omission, inconsistency or ambiguity in this Indenture; PIN (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 (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 A (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 ARTICLE XI PROVISIONS RELATING TO 2006A BOND POLICY AND 2006A RESERVE POLICY 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. 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 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 kk 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 ON 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 i 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 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 Payment Date, the Trustee shall give notice to the 2006A Insurer an -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 lk 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 ok� 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 A 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 11 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 Ovi 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 JPMorganChase 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 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 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 clue. ARTICLE XII 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 OWN 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 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 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 0 0 1k 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 presents to be hereto affixed. ATTEST: evidence its acceptance of the trust hereby created, the Trustee has caused these signed in its behalf by its duly authorized officers and its corporate seal to be City Clerk (SEAL) Bann►►ua -b j Y : FAYETTEVILLE: 9�kA.NSPS�� TOS ATTEST: By: ` Title: Asst. VP & Corporate Trust Officer (SEAL) -�•�poSTC�'�'.o o� y9� CITY OF FAYETTEVILLE, ARKANSAS LIM SIMMONS FIRST TRUST COMPANY, N.A., as Trust By: Title: Corporate Trust Officer 4827-9893-8625.4 1k STATE OF ARKANSAS COUNTY OF WASHINGTON ACKNOWLEDGMENT ss. } 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 mo 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 ]_(p day of November, 2006. My Commission expires: oa-N- aOO-- (SEAL) OFFICIAL SEAL Kelly S. Thomas NOTARY PUBLIC - ARKANSAS WASHINGTON COUNTY EXPIRES 02/14/2007 Notary Public [ACKNOWLEDGEMENT TO TRUST INDENTURE] 4827-9893-8625.6 k 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: Notary Public [ACKNOWLEDGEMENT TO TRUST INDENTURE] 4827-9893-8625.4 EXHIBIT A TO TRUST INDENTURE 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. REGISTERED REGISTERED No. R06A- $ UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2006A Interest Rate: % Maturity Date: November 1, 20_ Date of Bond: November 1, 2006 CUSIP: Registered Owner: CEDE & CO. Principal Amount: 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 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-1 04 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. STATEMENT OF INSURANCE 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 Ik 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 ON 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. N 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 City Clerk, thereunto. duly authorized (by their manual or facsirriile 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 LIM Mayor 4827-9893-8625.6 A-5 01 (Form of Trustee's Certificate) TRUSTEE'S CERTIFICATE OF AUTHENTICATION 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 W N (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 NOTICE: Signature(s) must be guaranteed by an institution satisfactory to the Trustee or other transfer agent. 4827-9893-8625.6 A-7 00 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 l l/l/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 1111115 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. 2 No Event of Default exists under the Indenture and, to the knowledge of the undersigned, no event has occurred and continues which with notice or lapse of time or both would constitute an Event of Default under the Indenture. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture. CITY OF FAYETTEVILLE, ARKANSAS Finance Director 4827-9893-8625.6 2 EXHIBIT C TO TRUST INDENTURE 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. CITY OF FAYETTEVH LE, ARKANSAS In Authorized Representative 4827-9893-8625.6 C-1 EXECUTION COPY CITY OF FAYETTEVILLE, ARKANSAS to SIMMONS FIRST TRUST COMPANY, N.A. as Trustee FIRST SUPPLEMENTAL TRUST INDENTURE Dated as of October 1, 2007 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. Prepared by: Kutak Rock LLP 124 West Capitol Avenue, Suite 2000 Little Rock, Arkansas 72201 4948-3917-7473.4 AN FIRST SUPPLEMENTAL TRUST INDENTURE THIS FIRST SUPPLEMENTAL TRUST INDENTURE dated as of October 1, 2007, 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 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 fiend 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 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 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 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 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"). No Bonds may be issued under the provisions of this Indenture except in accordance with this Article H. 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. Details 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 218. 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 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; (ii) Revenue Fund; (iii) Bond Fund, and an Interest Account and a Principal Account therein; (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: 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, 4848-3917-7473.4 7 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 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." 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 PROVISIONS RELATING TO 2007 BOND POLICY AND 2007 RESERVE POLICY 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 VUI 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. (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 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 ON (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) 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 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 s� ("Accountant") verifying the sufficiency of the escrow established to pay the Series 2007 1 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 13 091, 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 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 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. 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 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 ,.� 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: City Clerk (SEAL)=.��G••�\ZY O,c•.G�� FAYETT EVI LLE ; ATTEST: SIMMONS FIRST TRUST COMPANY, N.A., as Trustee By: Title: Corporate Trust Officer By: Title: Assistant Vice President and Corporate Trust Officer (SEAL)FtU S T [SIGNATURE PAGE TO FIRST SUPPLEMENTAL TRUST INDENTURE] 4848-3917-7473.4 ACKNOWLEDGMENT STATE OF ARICANSAS ) ) 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 October, 2007. My Commission expires: (SEAL) OFFICIAL SEA! BONNIE J. PRUETT NOTARY PUBLIC . ARKANSAS WASHINGTON COUNTY ' COMMISSION EXP. 05101/2013 [ACKNOWLEDGEMENT TO FIRST SUPPLEMENTAL TRUST INDENTURE] 4848-3917-7473.4 0 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 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 this ' ay of October, 2007. Notary Public My Commission expires: (SEAL) [ACKNOWLEDGEMENT TO FIRST SUPPLEMENTAL TRUST INDENTURE] 4848-3917-7473.4 EXHIBIT A TO FIRST SUPPLEMENTAL TRUST INDENTURE 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 No. R07- REGISTERED I UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2007 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 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 0111N 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. h 4848-3917-7473.4 A-2 STATEMENT OF INSURANCE 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 4948-3917-7473.4 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 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 RkA and consideration for the issuance of any of the Bonds. 4848-3917-7473.4 A-4 This Bond is issued with the intent that the laws of the State of Arkansas will govern its 44 construction. --1 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 (S E A L) CITY OF FAYETTEVILLE, ARKANSAS Mayor (Form of Trustee's Certificate) TRUSTEE'S CERTIFICATE OF AUTHENTICATION 01%N This bond is one of the Series 2007 Bonds of the issue described in and issued under the provisions of the within mentioned Indenture. N 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 WE Authorized Signature 4848-3917-7473.4 A-6 Q (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. 4848-3917-7473.4 A-7 TRUSTEE'S CERTIFICATE ORO 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 Sig —nature 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, SR MONS 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 SIMMONS 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 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 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 (0 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°d Street New York, New York 10019 Attn: Risk Management Department (Re: Policy No: D-2009-1478) Telecopy No. (212) 581-3268 Email: riskmanagementdgpt@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 generalcounsel(aassuredguaranty.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 (0 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; (Ili) 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: By: jAA City.Clerk �'a<<s�ranuraaveog ° FAYETTEVI LLE n 5° ° R S h ATTEST: Bv: Title: Vice President (SEAL) CITY OF FAYETTEVILLE, ARKANSAS By: 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. CITY OF FAYETTEVILLE, ARKANSAS Mayor ATTEST: By: City Clerk (SEAL) SIMMONS FIRST TRUST COMPANY, N.A., as Trustee By: d Title: Assistant Vice Pre` ident ATTEST: By: 4 0. Title: Vice lyresident (SEAL) [SIGNATURE PAGE TO SECOND SUPPLEMENTAL TRUST INDENTURE] 4823-2826-9828.4 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 -',day of November, 2009. Notary Public My Commission expires: DENISE S. BOUGAE WASHINGTON COUNTY OTAIiPPQBpC —AM A My Commission Expires June 19, 2019 (SEA Commission No. 123719W [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 _Lbd y of November, 2009. otary Public My Commission expires: JqW44�f �� �l AL)OURA SSTTEPHHEENS NOTALLRY PUBLIC, ARKANSAS DREW COUNTY COMMISSION #12372803 MY COMMISSION EXP. 08-07-2019 [ACKNOWLEDGEMENT TO SECOND SUPPLEMENTAL TRUST INDENTURE] 4823-2826-9828.4 EXHIBIT A TO SECOND SUPPLEMENTAL TRUST INDENTURE 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. REGISTERED No. R09- REGISTERED 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 CUSIP: Registered Owner: CEDE & CO. Principal Amount: 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, 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 Serios 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, A.RKANSAS Mayor (Form of Trustee's Certificate) TRUSTEE'S CERTIFICATE OF AUTHENTICATION 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 "AY' 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: IL, ►ice✓�� City Clerk ``,����tin►►rtrrr�' (SEAL)r��9s� �•`���; ° °G\i Y q,. FAYETTEVILLE: ir i O i s t e 0 '�, ATTEST: CITY OF FA , ARKANSAS SIMMONS FIRST TRUST COMPANY, N.A., as Trustee By: Title: Vice President and eorporate Trust Officer By: Title: Vice Presid nt and Corporate Trust Officer (SEAL) � us Cp' s oRAr COO: v [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 this day of November, 2013. Nolaiy ublic My Commission expires: as (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 I3t"day of November, 2013. s; _t-ram Notary Public My Commission expires: 'zq 12-0 ­' 2,- �- OFFICIAL SEAL DONNA HERRIN NOTARY PUBLIC, ARKANSAS JEFFERSON COUNTY COMMISSION #12390425 MY COMMISSION EXP. 10-24-2022 [ACKNOWLEDGEMENT TO THIRD SUPPLEMENTAL TRUST INDENTURE] 4845-03 58-9397.5 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 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: % Maturity Date: November 1, 20_ Date of Bond: November 1, 2013 CUSIP: 312673 _ Registered Owner: CEDE & CO. Principal Amount: 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, 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 4845-03 58-9397.5 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 LO-A 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 TAX REGULATORY AGREEMENT between CITY OF FAYETTEVILLE, ARKANSAS on SIMMONS FIRST TRUST COMPANY, N.A. as Trustee Dated as of November 12, 2013 Relating to: $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2013 Prepared by: Kutak Rock LLP 124 West Capitol Avenue Suite 2000 Little Rock, Arkansas 72201 4810-4829-1349.3 TAX REGULATORY AGREEMENT THIS TAX REGULATORY AGREEMENT (this "Tax Regulatory Agreement) is made and dated as of November 12, 2013, 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, and by that Third Supplemental Trust Indenture dated as of November 1, 2013 (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 $22,750,000 principal amount of its Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Bonds"), pursuant to the Indenture and Ordinance No. 5619, adopted and approved on September 17, 2013 (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: 4810-4829-1349.3 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 $22,750,000 original principal amount of Sales and Use Tax Capital Improvement Bonds, Series 2013. "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, 2014. "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 4810-4829-1349.3 (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 4810-4829-1349.3 "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.L 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 4810-4829-1349.3 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 2.5. 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 4810-4829-1349.3 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 2013 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 4810-4829-1349.3 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 2013 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 4810-4829-1349.3 Bond Fund, and an Interest Account and Principal Account therein; Redemption Fund; Debt Service Reserve Fund, and a Series 2013 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 $22,765,874.43 (representing the $22,750,000 par amount of the Bonds, less an original net offering discount of $4,700.00 and plus $20,574.43 of accrued interest thereon). The Underwriter will retain an underwriting discount of $295,750.00. Accordingly, the net amount of proceeds of the Bonds to be received by the Issuer shall be $22,470,124.43, which amount shall be deposited and expended as follows: (i) $20,574.43, representing the accrued interest on the Bonds, will be deposited into the Interest Account of the Bond Fund and will be utilized to make a portion of the first interest payment due on the Bonds on May 1, 2014; (ii) $56,875.00 will be paid to the 2013 Insurer for the premium on the 2013 Reserve Policy (as defined in the Indenture), which 2013 Reserve Policy shall be deposited in the Series 2013 Account of the Debt Service Reserve Fund; (iii) $22,311,675.00 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 (iv) the remaining $81,000.00 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 $81,000.00 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 8 4810-4829-1349.3 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 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 $56,875.00 of the proceeds of the Bond proceeds will be deposited for the payment of the premium on the 2013 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 $22,311,675.00 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, 2016. 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 2016, 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, 0 4810-4829-1349.3 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 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 3.0915166%. 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. 10 4810-4829-1349.3 (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. (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 11 4810-4829-1349.3 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. 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. 12 4810-4829-1349.3 (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: (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 13 4810-4829-1349.3 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 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 14 48104829-1349.3 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. (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 4810-4829-1349.3 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 4810-4829-1349.3 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 President an Corporate Trust Officer [SIGNATURE PAGE TO TAX REGULATORY AGREEMENT] 17 4810-4829-1349.3 EXHIBIT A TO TAX REGULATORY AGREEMENT UNDERWRITER'S CERTIFICATE The undersigned officer of Stephens Inc., the Underwriter (defined below) for the $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2013 (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) Based upon our records and other information available to us which we have no reason to believe is not correct: (a) All of the Bonds have been the subject of a bona fide initial offering to the public (excluding of bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at the public offering prices or yields indicated on the cover of the Issuer's Official Statement dated October 22, 2013 (the "Official Statement"); (b) At the time the Underwriter agreed to purchase the Bonds, based upon the prevailing market conditions, the Underwriter had no reason to believe that any of the Bonds would be initially sold to the public (excluding of bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at greater prices, or yields less, than those indicated on the cover of the Official Statement; and (c) As of the date of the Bond Purchase Agreement entered into by and between the Issuer and the Underwriter with respect to the Bonds, the first prices at which the Underwriter reasonably expected to sell 10% of each maturity of the Bonds to the public (excluding of bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) were the respective prices shown on the cover of the Official Statement, or in the case of obligations sold on a yield basis, at the respective yields shown on the cover of the Official Statement. A-1 4810-4829-1349.3 (3) The Yield on the Bonds is 3.0915166%. 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. IN WITNESS WHEREOF, the undersigned has set his hand as of the date set forth below. Dated: November 12, 2013 STEPHENS INC. By: _ Title: A-2 4810-4829-1349.3 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 $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Bonds"). The Bonds are being issued pursuant to the terms and provisions of Ordinance No. 5619 duly approved by the City Council of the City on September 17, 2013, 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, 2-007, 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 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. 4848-2329-6021.3 "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 4848-2329-6021.3 "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 EN2. The final Official Statement relating to the Bonds is dated October 22, 2013 (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 I) 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 4848-2329-6021.3 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 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 S. 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 4848-2329-6021.3 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 4848-2329-6021.3 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, 2013 CITY OF F ff TTEVILLE, ARKANSAS SIMMONS FIRST TRUST COMPANY, N.A., as Dissemination Agent By: Title: Vice President and orporate Trust Officer Con 4848-2329-6021.3 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. 4848-2329-6021.3 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. 4848-2329-6021.3 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. R13-1 REGISTERED $2,500,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2013 Interest Rate: 2.000% Date of Bond: November 1, 2013 Registered Owner: CEDE & CO. Maturity Date: November 1, 2014 CUSIP: 312673 EJ1 Principal Amount: TWO MILLION FIVE HUNDRED 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, 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. 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 4851-8665-2438.1 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. R13-2 REGISTERED $1,280,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2013 Interest Rate: 3.000% Date of Bond: November 1, 2013 Registered Owner: CEDE & CO. Maturity Date: November 1, 2021 CUSIP: 312673 EK8 Principal Amount: ONE MILLION TWO HUNDRED EIGHTY 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, 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. 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 4851-8665-2438.1 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. R13-3 REGISTERED $5,780,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2013 Interest Rate: 3.125% Date of Bond: November 1, 2013 Registered Owner: CEDE & CO. Maturity Date: November 1, 2022 CUSIP: 312673 EL6 Principal Amount: FIVE MILLION SEVEN HUNDRED EIGHTY 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, 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. 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 4851-8665-2438.1 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. R13-4 REGISTERED $7,000,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2013 Interest Rate: 3.300% Maturity Date: November 1, 2023 Date of Bond: November 1, 2013 CUSIP: 312673 EM4 Registered Owner: CEDE & CO. Principal Amount: SEVEN MILLION 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, 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. 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 4851-8665-2438.1 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. R13-5 REGISTERED $6,190,000 UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BOND SERIES 2013 Interest Rate: 2.800% Date of Bond: November 1, 2013 Registered Owner: CEDE & CO. Maturity Date: November 1, 2024 CUSIP: 312673 EN2 Principal Amount: SIX MILLION ONE HUNDRED NINETY 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, 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. 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 4851-8665-2438.1 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. 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. 0 i 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 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 3 4851-8665-2438.1 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 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. 4 4851-8665-2438.1 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 F YETTEVILLE, ARKANSAS B ayor ATTEST: By:e- City Clerk `.011111T111j', K•/ • Rom` (S E A Y : FAYETTEVILLE- z= y c� e orm of Trustee's Certificate) 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: 11- X,1) SIMMONS FIRST TRUST COMPANY, N.A., as Trustee By: ,x Authorized Signatu e 5 4851-8665-2438.1 t �u (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 4851-8665-2438.1 BOND PURCHASE AGREEMENT October 22, 2013 City of Fayetteville City Administration Building 113 West Mountain Fayetteville, Arkansas 72701 $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2013 Ladies and Gentlemen: EXECUTION COPY On the basis of the representations, warranties and agreements and upon the terms and conditions contained herein, the undersigned, Stephens Inc. (the "Underwriter"), hereby offers to enter into this Bond Purchase Agreement (this "Bond Purchase Agreement") with the City of Fayetteville, Arkansas (the "City") which, upon your acceptance of this offer, will be binding upon you and upon the Underwriter. Terms not otherwise defined herein shall have the same meanings as set forth in the Indenture defined and described below. This offer is made subject to your acceptance of this Bond Purchase Agreement on or before midnight on October 22, 2013. 1. General. Upon the terms and conditions and in reliance upon the respective representations, warranties and covenants herein, the Underwriter hereby agrees to purchase from the City, and the City hereby agrees to sell to the Underwriter, all (but not less than all) of $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Bonds"), at the purchase price (the "Purchase Price") of $22,449,550.00 (equal to the par amount of the Bonds less a net reoffering discount of $4,700.00 and less underwriter's discount of $295,750.00) plus accrued interest, if any, from November 1, 2013 to the Closing Date (hereinafter defined). 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. 2013) §§ 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 4814-9555-2789.3 levies were approved by the voters of the City at a special election held September 12, 2006, and (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, 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 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"), and (iii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"), pursuant to the Indenture. The Bonds shall be issued and secured pursuant to Ordinance No. 5619 of the City Council of the City which was adopted on September 17, 2013 (the "Authorizing Ordinance"), and pursuant to the Indenture. The Bonds shall have the maturities and interest rates as set forth in Exhibit A hereto. The Bonds shall be subject to redemption as set forth in the Indenture and in the Official Statement (hereinafter defined). The proceeds of the Bonds will be utilized (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 (ill) 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). The City is not in default with respect to any of its obligations under previous undertakings pursuant to the Rule. In order to ensure compliance with the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the City will enter into a Tax Regulatory Agreement dated as of the date of delivery of the Bonds (the "Tax Regulatory Agreement"). 2. Bona Fide Public Offering. The Underwriter agrees to make a bona fide public offering of all of the Bonds at the offering prices set forth on the cover of the final Official Statement described below. 3. Delivery of Official Statement. (a) The City has previously provided the Underwriter with copies of its Preliminary Official Statement, including the cover page and the appendices thereto, dated October 15, 2013, relating to the Bonds (the "Preliminary Official Statement"). As of its date, the Preliminary Official Statement is 2 4814-9555-2789.3 "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 22, 2013, 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 confirms 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 Third 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 complied with all provisions of applicable law, including the Act, in all matters relating to such transactions. 3 4814-9555-2789.3 (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 Third 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 Third 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 Third 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 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 4 4814-9555-2789.3 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 Third 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 Third Supplemental Trust Indenture, the Continuing Disclosure Agreement and the Tax Regulatory Agreement have been obtained. 0) 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. (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. 5 4814-9555-2789.3 (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, 2013, 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 Third Supplemental Trust Indenture, the Continuing Disclosure Agreement and the Tax Regulatory Agreement and the other documents related to the Bonds and the payment for the Bonds and the delivery of the certificates, opinions and other instruments as described in Section 8 of this Bond Purchase Agreement shall occur in the offices 6 4814-9555-2789.3 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 form as introduced or as amended, would have the purpose or effect of imposing federal income taxation upon revenues or other income of the general character to be derived by the City or by any similar body under the Authorizing Ordinance or the Indenture or similar documents or upon interest received on obligations of the general character of the Bonds or the Bonds, or of causing interest on obligations of the general character of the Bonds, or the Bonds, to be includable in gross income for purposes of federal income taxation, and such legislation, in the Underwriter's opinion, materially adversely affects the market price of the Bonds; or (ii) a tentative decision with respect to legislation shall be reached by a committee of the House of Representatives or the Senate of the Congress of the United States, or legislation shall be favorably reported or rereported by such a committee or be introduced, by amendment or otherwise, in or be passed by the House of Representatives or the Senate, or recommended to the Congress of the United States for passage by the President of the United States, or be enacted or a decision by a federal court of the United States or the United States Tax Court shall have been rendered, or a ruling, release, order, regulation or official statement by or on behalf of the United States Treasury Department, the Internal Revenue Service or other governmental agency shall have been made or proposed to be made having the purpose or effect, or any other action or event shall have occurred which has the purpose or effect, directly or indirectly, of adversely affecting the federal income tax consequences of owning the Bonds or of any of the transactions contemplated in connection herewith, including causing interest on the Bonds to be included in gross income for purposes of federal income taxation, or imposing federal income taxation upon revenues or other income of the general character to be derived by the City or by any similar body under the Authorizing Ordinance or the Indenture or similar documents or upon interest received on obligations of the general character of the Bonds, or the Bonds which, in the opinion of the Underwriter, materially adversely affects the market price of or market for the Bonds; or (iii) legislation shall have been enacted, or actively considered for enactment with an effective date prior to the Closing, or a decision by a court of the United States shall have been rendered, the effect of which is that the Bonds, including any underlying obligations, or the Indenture, as the case may be, is not exempt from the registration, qualification or other requirements of the Securities Exchange Act of 1933, as amended and 7 4814-9555-2789.3 as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or (iv) a stop order, ruling, regulation or official statement by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall have been issued or made or any other event occurs, the effect of which is that the issuance, offering or sale of the Bonds, including any underlying obligations, or the execution and delivery of the Indenture as contemplated hereby or by the Official Statement, is or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect; or (v) any event shall have occurred or any information shall have become known to the Underwriter which causes the Underwriter to reasonably believe that the Official Statement as then amended or supplemented includes an untrue statement of a material fact, or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or (vi) there shall have occurred any outbreak of hostilities or any national or international calamity or crisis, including a financial crisis, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds; or (vii) there shall be in force a general suspension of trading on the New York Stock Exchange, the effect of which on the financial markets of the United States is such as, in the reasonable judgment of the Underwriter, would materially adversely affect the market for or market price of the Bonds; or (viii) a general banking moratorium shall have been declared by federal, New York or State authorities; or (ix) any proceeding shall be pending or threatened by the Securities and Exchange Commission against the City; or (x) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange; or (xi) the New York Stock Exchange or other national securities exchange, or any governmental authority, shall impose, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by, or the charge to the net capital requirements of the Underwriter. 8. Conditions to Underwriter's Obligations. The obligation of the Underwriter to purchase the Bonds shall be subject (a) to the performance by the City of its obligations to be 8 4814-9555-2789.3 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 Third 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 Third 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 fully executed originals of the Third 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 form 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; (5) Certified copies of the Notice of Election and Mayor's Proclamation of Election Results, together with proofs of publication thereof; 9 4814-9555-2789.3 (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 "A+ (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 Third 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 Third 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, 2012, 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 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 10 4814-9555-2789.3 Agreement, the Authorizing Ordinance, the Election Ordinance, the Indenture, 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 Third 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 Third Supplemental Trust Indenture, the Continuing Disclosure Agreement, the Tax Regulatory Agreement and this Bond Purchase Agreement have been duly authorized, approved, executed and delivered by the City and, subject to the extent that the enforceability of the rights and remedies set forth therein may be limited by bankruptcy, insolvency or other laws affecting creditors' rights generally, constitute valid and binding agreements of the City enforceable in accordance with their terms; (v) the information in the Official Statement under the captions "THE 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 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 Third Supplemental 11 4814-9555-2789.3 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) 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 (13) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Underwriter and Bond Counsel may reasonably request to evidence compliance by the City with legal requirements, the truth and accuracy, as of the time of Closing, of the representations of the City herein contained and the due performance or satisfaction by the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied. If the City shall be unable to satisfy the conditions to the obligations of the Underwriter contained in this Bond Purchase Agreement, or if the obligation of the Underwriter to purchase and accept delivery of the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the Underwriter nor the City shall be under further obligation hereunder; except that the respective obligations to pay expenses, as provided in Section 12 hereof, shall continue in full force and effect. 9. Conditions to Obligations of the City. The obligations of the City hereunder are subject to the performance by the Underwriter of its obligations hereunder. 10. Survival. All representations, warranties and agreements of the City shall remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriter, and shall survive the Closing. The obligations of the City under Sections 11 or 12 hereof shall survive any termination of this Bond Purchase Agreement by the Underwriter pursuant to the terms hereof. 12 4814-9555-2789.3 11. Indemnification. The City, to the extent permitted by law, agrees to indemnify and hold harmless the Underwriter, each member, officer, director, partner or employee of the Underwriter and each person who controls the Underwriter within the meaning of Section 15 of the Securities Act of 1933, as amended, or Section 20 of the Securities Exchange Act of 1934, as amended (collectively called the "Indemnified Parties"), against any and all losses, claims, damages, liabilities or expenses (including any legal or other expenses incurred by an Indemnified Party in connection with investigating any claims against an Indemnified Party and defending any actions) whatsoever caused by any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact contained in the Official Statement or caused by any omission or alleged omission from the Official Statement of any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading insofar as such losses, claims, damages, liabilities or expenses are caused by any such untrue or misleading statement or omission or alleged untrue or misleading statement or omission in the information contained in the Official Statement; provided, however, that the City shall not be liable to an Indemnified Party in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any of such documents in reliance upon and in conformity with written information furnished to the City by the Underwriter specifically for use therein. No Indemnified Parties shall be indemnified hereunder for any losses, claims, damages or liabilities resulting from the negligence of such Indemnified Parties. In case any action shall be brought against one or more of the Indemnified Parties based upon the Official Statement and in respect of which indemnity may be sought against the City, the Indemnified Parties shall promptly notify the City in writing, and, to the extent permitted by law, the City shall promptly assume the defense thereof, including the employment of counsel, the payment of all expenses and the right to negotiate and consent to settlement. Any one or more of the Indemnified Parties shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless employment of such counsel has been specifically authorized by the City. The City shall not be liable for any settlement of any such action effected without its consent by any of the Indemnified Parties, but if settled with the consent of the City, the City agrees to indemnify and hold harmless the Indemnified Parties to the extent provided in this Bond Purchase Agreement and to the extent permitted 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 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 13 4814-9555-2789.3 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. Nonassignability. 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: _ ( ,,. A=� Authorize Representative Accepted and agreed to as of 3:00 p.m. on the date first above written: CITY OF FAYETTEVILLE, ARKANSAS 14 4814-9555-2789.3 EXHIBIT A MATURITY SCHEDULE (November 1) Principal Interest Maturity Amount Rate Yield Price 2014 $2,500,000 2.000% 0.400% 101.546% 2021 1,280,000 3.000% 3.000% 100.000% 2022 5,780,000 3.125% 3.222% 99.250% 2023 7,000,000 3.300% 3.300% 100.000% 2024 6,190,000 2.800% 2.800% 100.000% (with accrued interest on all Bonds from November 1, 2013) A-1 4814-9555-2789.3 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 , 2013 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 $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2013 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 $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (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. 2013) §§14-164-301 et seq. (as from time to time amended, the "Act"), pursuant to Ordinance No. 5619 of the City, duly adopted and approved on September 17, 2013 (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, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (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. B-1 4814-9555-2789.3 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, and (iii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2009. 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 will commence as of the first day of the first month B-2 4814-9555-2789.3 following cessation of the Existing Tax securing the Existing Indebtedness (each as defined in the Indenture). 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 4814-9555-2789.3 EXHIBIT C PROPOSED FORM OF BOND COUNSEL SUPPLEMENTAL OPINION November , 2013 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 $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2013 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 22, 2013 (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, 2013 (the "Disclosure Agreement"), by and between the City and Simmons First Trust Company, N.A., as trustee (the "Trustee"); C-1 4814-9555-2789.3 (c) An executed counterpart of the Tax Regulatory Agreement dated November 12, 2013 (the "Tax Regulatory Agreement"), by and between the City and the Trustee; (d) An executed counterpart of the Insurance Agreement dated November 12, 2013 (the "Insurance Agreement"), by and between the City and Assured Guaranty Municipal Corp. ("AGM"); (e) The Official Statement dated October 22, 2013, with respect to the Bonds (the "Official Statement"); and (f) 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 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. The Insurance 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 4814-9555-2789.3 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 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, C-3 4814-9555-2789.3 2�i PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 15, 2013 NEW ISSUE BOOK -ENTRY ONLY *RATING: S&P "A+" (stable outlook) In the opinion of Kutak Rock LLP, Bout Counsel, ureter existing laws, regulations, rulings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Series 2013 Bonds is excludable from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal altenaative mininurm tax. Under existing laws, regulations, rulings and judicial decisions, Bond Counsel is of the opinion that the Series 2013 Bondi and the interest thereon are exempt from all state, county and municipal taxes in the State ofArkansa.s. For a more complete description, .see the caption "TAX MATTERS" herein. Dated: November 1, 2013 $22,750,000** CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2013 Due: November 1, as shown on inside front cover The Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 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 2013 Bonds. See the captions "ESTIMATED SOURCES AND USES OF FUNDS" and "THE STREET PROJECT" herein. The Series 2013 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 2013 Bonds will be made so long as Cede & Co. is the registered owner of the Series 2013 Bonds. Individual purchases of the Series 2013 Bonds will be made only in book -entry form, in denominations of $5,000 or integral multiples thereof. Individual purchasers ("Beneficial Owners") of Series 2013 Bonds will not receive physical delivery of bond certificates. Seethe caption "BOOK -ENTRY ONLY SYSTEM" herein. The Series 2013 Bonds shall bear interest from their dated date, payable on May 1 and November 1 of each year, commencing May 1, 2014. All such interest payments shall be payable to the persons in whose name such Series 2013 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 2013 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 2013 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 IndirectParticipants, 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, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (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 2013 Bonds is secured by a pledge of the receipts from (i) a one -quarter of one percent (025%o) 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 (tile "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) $46,195,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) $12,050,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), and (iii) $10,360,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"). See the caption "SECURITY FOR THE BONDS" herein. The Series 2013 Bonds are subject to mandatory redemption prior to maturity as more fully described herein under the caption "THE SERIES 2013 BONDS - Redemption." The Series 2013 Bonds are special obligations of the City secured by and payable solely from receipts of the Sales and Use Taxes. The Series 2013 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 2013 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 2013 Bonds, except as described herein with respect to the Sales and Use Taxes. The Series 2013 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 2013 Bonds will be available for delivery in New York, New York, on or about November 8, 2013. See the caption "RATING" herein. Preliminary; subject to change. Stephens hic. 1111ialll�n O;m1:c^; The date of this Official Statement is October _, 2013. x Preliminary, subject to change. MATURITY SCHEDULE* Maturity Principal Interest (November 1) Amount Rate Yield 2014 $ 130,000 % % 2021 1,735,000 2022 6,720,000 2023 6,960,000 2024 7,205,000 (Plus accrued interest) CITY OF FAYETTEVILLE, ARKANSAS Issuer City Council Lioneld Jordan, Mayor Rhonda Adams Adella Gray Mark Kinion 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 2013 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 2013 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 2013 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 Page TheSeries 2013 Bonds............................................................................................................................................................ 2 Securityfor the Bonds............................................................................................................................................................. 4 Book -Entry Only System......................................................................................................................................................... 6 TheStreet Project..................................................................................................................................................................... 8 HistoricalSales and Use Tax Collections................................................................................................................................ 8 EstimatedSources and Uses of Funds..................................................................................................................................... 9 EstimatedDebt Service Requirements..................................................................................................................................... 9 EstimatedDebt Service Coverage............................................................................................................................................ 10 ProjectedMandatory Redemptions.......................................................................................................................................... 11 TheCity................................................................................................................................................................................... 12 TheSales and Use Taxes........................................................................................................................................................... 15 Summaryof the Indenture....................................................................................................................................................... 15 Summary of the Continuing Disclosure Agreement................................................................................................................ 20 Underwriting............................................................................................................................................................................ 23 TaxMatters.............................................................................................................................................................................. 23 Rating....................................................................................................................................................................................... 24 LegalMatters........................................................................................................................................................................... 25 Miscellaneous..........................................................................................................................................................................25 Accuracy and Completeness of Official Statement.................................................................................................................. 25 APPENDIXA Form of Bond Counsel Opinion......................................................... ........................................................... A-1 APPENDIX B - Definitions of Certain Terms.........................................................................................................................B-1 APPENDIXC - The Sales and Use Taxes............................................................................................................................... C-1 [THIS PAGE INTENTIONALLY BLANK] OFFICIAL STATEMENT $22,750,000* CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2013 INTRODUCTORY STATEMENT The following introductory statement is subject in all respects to the more complete information set forth in this Official Statement. All descriptions and summaries of documents hereinafter set forth are qualified in their entirety by reference to each such document. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms 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 2013, in the principal amount of $22,750,000* (the "Series 2013 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. & 2013 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 2013 Bonds are to be issued by the City pursuant to Amendment 62, the Act and Ordinance No. 5619, adopted and approved on September 17, 2013 (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 2013 Bonds. See the captions "ESTIMATED SOURCES AND USES OF FUNDS" and "THE STREET PROJECT" herein. The Series 2013 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) $46,195,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) $12,050,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), and (iii) $10,360,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 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 2013 Bonds, and the Series 2013 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 2013 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 2013 Bonds, except as described herein with respect to the Sales and Use Taxes. * Preliminary; subject to change. The Series 2013 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 2013 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 and any series of Additional Bonds hereafter issued as provided under the caption "THE SERIES 2013 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 and any other series of Additional Bonds. See the captions "THE SERIES 2013 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 2013 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 2013 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, 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 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 and the Series 2013 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 2013 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 2013 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. THE SERIES 2013 BONDS Description. The Series 2013 Bonds will be initially dated as of November 1, 2013, and will bear interest payable semiannually on May 1 and November 1 of each year, commencing May 1, 2014, at the rates set forth on the inside cover page hereof. The Series 2013 Bonds will mature on November 1 in the years and in the principal amounts set forth on the inside cover page hereof. The Series 2013 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 2013 Bonds will be made so long as Cede & Co. is the registered owner of the Series 2013 Bonds. Individual purchases of the Series 2013 Bonds will be made only in book -entry form, in denominations of $5,000 or integral multiples thereof. Individual purchasers ("Beneficial Owners") of Series 2013 Bonds will not receive physical delivery of bond certificates. See the caption "BOOK -ENTRY ONLY SYSTEM" herein. All interest payments on the Series 2013 Bonds shall be payable to the persons in whose name such Series 2013 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 2013 Bonds shall be payable at the principal corporate trust office of the Trustee. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2013 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 2013 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 2013 Bonds are subject to redemption prior to maturity as follows: (i) 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 Street Account of the Project Fund in excess of the amount needed to complete the Street Project. (ii) 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. "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 and any series of Additional Bonds hereafter issued as provided under the caption "THE SERIES 2013 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 and any other series of Additional Bonds. See the caption "PROJECTED MANDATORY REDEMPTIONS" herein. In the case of any defeasance of the Series 2013 Bonds, the dates of redemption, the principal amounts and the maturities of the Series 2013 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 2013 Bond. If less than all of the Series 2013 Bonds of a maturity are called for redemption, the particular Series 2013 Bonds or portions of Series 2013 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 2013 Bonds, the procedures established by DTC shall control with respect to the selection of the particular Series 2013 Bonds to be redeemed. Notice of Redemption. Notice of the call for any redemption, identifying the Series 2013 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 2013 Bonds, by any other means acceptable to DTC, including facsimile) to the registered owner of each such Series 2013 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 6f any proceeding for the redemption of any Series 2013 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. To the extent authority remains under the Election Ordinance, the City may issue from time to time one or more series of Additional Bonds for the purpose of (i) financing Project Costs in connection with the acquisition, construction, reconstruction, extension, improving or equipping of the Street Project, (ii) refunding the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds or any series of Additional Bonds, in whole or in part, or (iii) any combination thereof. Additional Bonds shall be secured equally and ratably with the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 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, (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, 2009 through November 1, 2014, on all the Outstanding Bonds theretofore incurred, plus the Additional Bonds to be issued, 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 the Outstanding Bonds, plus the Additional Bonds to be issued. For the purpose of making the aforementioned certification, 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. The aggregate principal amount of Additional Bonds that may be issued is limited to $9,000,000, except for refunding bonds issued under the Indenture. 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 2013 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 2013 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 2013 Bond or Bonds in the same aggregate principal amount and of any authorized denomination or denominations. Transfers of registration or exchanges of Series 2013 Bonds shall be without charge to the Holders of such Series 2013 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 2013 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 2013 Bond during the period from and including a Record Date to the next succeeding interest payment date of such Series 2013 Bond nor to transfer or exchange any Series 2013 Bond after the mailing of notice calling such Series 2013 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 2013 Bonds, transfers of beneficial interests in the Series 2013 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. SECURITY FOR THE BONDS General. The Series 2013 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 2013 Bonds pursuant to Ordinance No. 5619, duly adopted by the City Council of the City on September 17, 2013 (the "Authorizing Ordinance"). Such pledge is made on a parity basis with an existing pledge on such receipt securing (i) $46,195,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) $12,050,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), and (iii) $10,360,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"). 11 Pursuant to the terms of the Election Ordinance, the collection of the 0.25% Sales and Use Tax commenced on January 1, 2007. An existing three-quarters of one percent (0.75%) special city-wide sales and use tax (the "Existing Tax") is pledged to the payment of certain indebtedness of the City originally authorized in the aggregate principal amount of $92,000,000 (the "Existing Indebtedness"). Given redemptions of the Existing Indebtedness to date, the outstanding principal amount of the Existing Indebtedness is $10,743,056. Assuming no growth in collections of the Existing Tax, it is currently projected that the Trustee will have sufficient moneys on hand to pay the Existing Indebtedness in full by July 1, 2014. The levy of the Existing Tax will cease upon payment in full of the Existing Indebtedness or adequate provision therefor. Collection of the 0.75% Sales and Use Tax will commence on the first day of the first month following cessation of the Existing Tax. See the captions "THE SALES AND USE TAXES" and "HISTORICAL SALES AND USE TAX COLLECTIONS" herein. The Series 2013 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 2013 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 2013 Bonds, except as described herein with respect to the Sales and Use Taxes. Debt Service Reserve. From the proceeds of the Series 2013 Bonds, there shall be deposited into the Series 2013 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 2013 Bonds (the "Reserve Requirement"). Amounts on deposit in the Series 2013 Account of the Debt Service Reserve Fund shall be used solely to pay the principal of and interest on the Outstanding Series 2013 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. ("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 2013 Bonds (the "Reserve Fund Insurance Policy"), effective as of the date of issuance of such Series 2013 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 2013 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 2013 Bonds, on the later to occur of (i) the date such scheduled principal or interest becomes due for payment or (ii) the business day next following the day on which AGM receives a demand for payment therefor 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 $1,137,500` (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. Preliminary; subject to change. 5 The Reserve Fund Insurance Policy is not covered by the property/casualty insurance security fund specified in Article 76 of New York insurance law. BOOK -ENTRY ONLY SYSTEM The Series 2013 Bonds will be issued only as one fully registered Series 2013 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 2013 Bonds. The fully registered Series 2013 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 2013 Bonds for all purposes under the Indenture. Owners of any book entry interests in the Series 2013 Bonds (the "book entry interest owners") described below, will not receive or have the right to receive physical delivery of the Series 2013 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 2013 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"). DTC has a Standard & Poor's rating of AA+. 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 2013 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2013 Bonds on DTC's records. The ownership interest of each actual purchaser of each Series 2013 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 2013 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 2013 Bonds, except in the event that use of the Book -Entry System for the Series 2013 Bonds is discontinued. To facilitate subsequent transfers, all Series 2013 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 2013 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 2013 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2013 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 2013 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 2013 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 2013 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 2013 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 2013 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 2013 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 2013 Bonds made to DTC or its nominee as the registered owner of the Series 2013 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 2013 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 STREET PROJECT Approximately $22,254,000* of the proceeds of the Series 2013 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"). HISTORICAL SALES AND USE TAX COLLECTIONS An existing three-quarters of one percent (0.75%) special city-wide sales and use tax (the "Existing Tax") is pledged to the payment of certain indebtedness of the City originally authorized in the aggregate principal amount of $92,000,000 (the "Existing Indebtedness"). Given redemptions of the Existing Indebtedness to date, the outstanding principal amount of the Existing Indebtedness is $10,743,056, all of which is attributable to the Series 2006 RLF Loan. Assuming no growth in collections of the Existing Tax, it is currently projected that the Trustee will have sufficient moneys on hand to pay the Existing Indebtedness in full by July 1, 2014. The levy of the Existing Tax will cease upon payment in full of the Existing Indebtedness or adequate provision therefor. Collection of the 0.75% Sales and Use Tax will commence on the first day of the first month following cessation of the Existing Tax. Collection of the Existing Tax commenced April 1, 2002. Set forth below is a table showing receipts of the Existing Tax and receipts of a separate one percent (1.00%) city-wide sales and use tax (the "1.00% Tax") over the last six years. Collections of the 1.00% Tax received by the City for the most recent twelve-month period (October, 2012 to September, 2013) were $17,929,809, a 4.92% increase from the previous twelve-month period (October, 2011 to September, 2012). Historical Collections of Historical Collections of Year Existing Tax (0.75 %) 1.00 % Tax (') Growth Percentage 2007 $11,609,675 $15,479,567 n/a 2008 12,379,238 16,505,650 6.63 % 2009 11,800, 854 15,734,472 (4.67 %) 2010 11,761,837 15,682,449 (0.33%) 2011 12,294,359 16,392,478 4.53% 2012 13,095,428 17,460,507 6.52% (1) Reflects collections of a one percent (1.00%) city-wide sales and use tax. This tax is not pledged to the payment of any indebtedness. Source: Arkansas State Treasurer Preliminary; subject to change. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] ESTIMATED SOURCES AND USES OF FUNDS The proceeds of the Series 2013 Bonds are expected to be used as follows: Sources of Funds(]) Par Amount of Series 2013 Bonds Projected Net Original Issue Discount Total Sources: Uses of Funds(l) Deposit to Street Account of Project Fund Costs of Issuance, including Reserve Policy premium and Underwriter's Discount Rounding Amount Total Uses: (1) Preliminary, subject to change. ESTIMATED DEBT SERVICE REQUIREMENTS $22,750,000 (33,446) $22,716, 554 $22,254,000 461,875 679 $22,716 554 As of the date of closing, the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds and the Series 2013 Bonds will constitute the only debt obligations secured by receipts of the Sales and Use Taxes. The following table sets forth estimates of the amounts required to pay scheduled principal of and interest on the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds and the Series 2013 Bonds during each year: Series 2006A, Series 2006A, 2007 & 2009 2007 & 2009 Series 2013 Series 2013 Total Debt Year Principal Interest Principal Interest(l) Service 2014 $ -- $ 2,953,381 $ 130,000 $ 800,403 $ 3,883,784 2015 8,565,000 2,953,381 -- 797,802 12,316,183 2016 8,960,000 2,563,531 -- 797,803 12,321,334 2017 9,375,000 2,151,494 -- 797,802 12,324,296 2018 9,810,000 1,716,119 -- 797,803 12,323,922 2019 10,245,000 1,276,094 -- 797,802 12,318,896 2020 10,695,000 831,881 -- 797,803 12,324,684 2021 6,345,000 480,950 1,735,000 797,802 9,358,752 2022 1,255,000 215,200 6,720,000 741,415 8,931,615 2023 1,315,000 152,450 6,960,000 506,215 8,933,665 2024 1,385,000 86,700 7,205,000 252,175 8,928,875 2025 655,000 27,837 - -- 682,837 Totals: $68,605. 000 $15 409 018 $22,750 000 $ 7 884,825 $114,648,843 Preliminary; subject to change. Assuming for purposes of this Preliminary Official Statement, an average coupon rate on the Series 2013 Bonds of 3.530% per annum. 9 ESTIMATED DEBT SERVICE COVERAGE Set forth below are tables showing estimated debt service coverage with respect to the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds and the Series 2013 Bonds during the year 2014 and during the years 2015-2025. Collections of the Existing Tax during the twelve-month period ended September, 2013 were utilized for the purpose of making the coverage calculations. See the caption "HISTORICAL SALES AND USE TAX COLLECTIONS" herein. The City will initially receive collections only from the 0.25% Sales and Use Tax which was levied and commenced being collected as of January 1, 2007. The Existing Tax is pledged to the payment of the Existing Indebtedness, originally authorized in the aggregate principal amount of $92,000,000. Given redemptions of the Existing Indebtedness to date, the outstanding principal amount of the Existing Indebtedness is $10,743,056. Assuming no growth in collections of the Existing Tax, it is currently projected that the Trustee will have sufficient moneys on hand to pay the Existing Indebtedness in full by July 1, 2014. The levy of the Existing Tax will cease upon payment in full of the Existing Indebtedness or adequate provision therefor. Collection of the 0.75% Sales and Use Tax will commence on the first day of the first month following cessation of the Existing Tax. Historical Existing Tax Receipts at 0.25% "1 $4,482,452 Maximum Annual Debt Service (2014) (2) $3,883,784 Maximum Annual Debt Service Coverage 1.15X Actual collections of the Existing Tax during the last twelve-month period ending September, 2013, and assuming a tax rate of 0.25%. 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 and the Series 2013 Bonds in 2014. See the caption "ESTIMATED DEBT SERVICE REQUIREMENTS" herein. Historical Existing Tax Receipts at 1.00% (" $17,929,809 Maximum Annual Debt Service (2015-2025) (21 $12,324,684 Maximum Annual Debt Service Coverage 1 45X tt1 Actual collections of the Existing Tax during the last twelve-month period ending September, 2013, and assuming a tax rate of 1.00%. 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 and the Series 2013 Bonds in 2015-2025. See the caption "ESTIMATED DEBT SERVICE REQUIREMENTS" herein. THE COVERAGE NUMBERS SET FORTH ABOVE ARE BASED ON HISTORICAL RECEIPTS OF THE EXISTING 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 AND THE SERIES 2013 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 PROJECTED MANDATORY REDEMPTIONS 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 and the Series 2013 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 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 and any series of Additional Bonds hereafter issued as provided under the caption "THE SERIES 2013 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 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 ABOVE. See the caption "THE SALES AND USE TAXES — Future Sales and Use Tax Receipts" herein. Series 2013 Bonds Series 2013 Redeemed Prior to Total Series 2013 Date(l) Principal Due Mal rity(2)t3) (4) Principal Retired 11-1-14 $ 130,000 $ 345,000 $ 475,000 5-1-15 -- 565,000 565,000 11-1-15 -- 605,000 605,000 5-1-16 -- 610,000 610,000 11-1-16 -- 655,000 655,000 5-1-17 -- 670,000 670,000 11-1-17 -- 720,000 720,000 5-1-18 -- 730,000 730,000 11-1-18 -- 805,000 805,000 5-1-19 -- 820,000 820,000 11-1-19 -- 2,415,000 2,415,000 5-1-20 -- 4,470,000 4,470,000 11-1-20 -- 5,250,000 5,250,000 5-1-21 - 3,960,000 3,960,000 Totals: $ 130,000 $22.620.000 $22,750 000 " Series 2013 Bonds are subject to mandatory redemption from Surplus Tax Receipts on each May 1 and November 1. See the caption "THE SERIES 2013 BONDS — Redemption" herein. (2) Assuming annual receipts of the Sales and Use Taxes of $18,000,000. (3) Projected mandatory redemptions related to Series 2013 Bonds maturing November 1, 2021 through November 1, 2024. (4) Assuming the issuance of Additional Bonds in the principal amount of $9,000,000 during the next six months. [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 540, U.S. Highways 62 and 71, and State Highways 16, 45, 112, 156, 180 and 265. The Burlington Northern Railroad has several lines running through the City, and a general aviation airport with a 6,006-foot runway is available for limited commuter travel. The Northwest Arkansas Regional Airport is located approximately 40 minutes from downtown Fayetteville and provides daily flights to numerous venues. Government. The City currently operates under the Mayor -Council form of government pursuant to which a mayor, city attorney, city clerk and eight aldermen are elected, two from each of the City's four wards. The mayor, city attorney and city clerk are full-time positions elected to four year terms. Aldermen also serve four year terms. The City's elected officials and the dates on which their respective terms expire are as follows: Name Office Term Expires Lioneld Jordan Mayor 12/31/16 Kit Williams City Attorney 12/31/14 Sondra Smith City Clerk 12/31/16 Rhonda Adams Alderman 12/31/14 Adella Gray Alderman 12/31/14 Mark Kinion Alderman 12/31/14 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 12/31/14 Population. The following is a table of population changes for the City, the MSA and the State of Arkansas, according to the United States Census Bureau: City of State of Year Fayetteville MSA Arkansas 1960 20,274 92,069 1,786,272 1970 30,729 127,846 1,923,322 1980 36,608 178,609 2,286,435 1990 42,099 210,908 2,350,624 2000 58,047 311,121 2,673,400 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 2000 $22,828 $22,577 2001 24,061 23,870 2002 24,658 24,273 2003 25,387 25,434 2004 27,420 26,846 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 n/a 34,723 Source: Discover Arkansas, Data Analysis. Retail sales figures for the MSA and the State are as follows: 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 (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 2000 $ 432,951,171 $ 145,147,891 $ 578,099,062 2001 486,853,822 155,794,579 642,648,401 2002 530,235,135 158,778,031 689,013,166 2003 565,846,525 167,638,657 733,485,182 2004 649,361,820 183,102,702 832,464,522 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 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: 2008 2009 2010 2011 2012 Residential Building 414 281 256 273 394 Permits Commercial Building 57 14 16 29 18 Permits Value of All Building Permits $127,477,937 $70,365,173 $79,103,682 $81,146,187 $251,041,427 (1) Does not include building activity of the University of Arkansas, school permits and additions/alterations to existing structures. Source: City of Fayetteville. Unemployment figures for the MSA and the State of Arkansas, according to the U.S. Bureau of Labor Statistics, are as follows: Year MSA State of Arkansas 2000 2.9% 4.2% 2001 3.0 4.7 2002 3.3 5.3 2003 3.7 5.8 2004 3.8 5.6 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* 5.9 7.6 July, 2013 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 Spring semester of 2013 of approximately 23,286. On the Fayetteville campus, the University employs approximately 4,216 faculty, administrative, secretarial, clerical and maintenance personnel in both full-time and part-time positions, making the University the largest employer in the City. Other major employers in the City, their products or services and approximate number of employees are set forth below: Employer Product or Service Employee Range Washington Regional Med. Ctr. Medical 1,521 Washington County Gov't Government 1,344 Fayetteville School District Education 1,315 Veterans Admin. Med. Ctr. Medical 1,124 Superior Industries Cast aluminum wheels 1,120 City of Fayetteville Government 704 Wal-Mart #9149 (optical lab) Optical products 678 Tyson Mexican Original Food 572 Wal-Mart #144 Retail 507 Source: 2012 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 2013 Bonds. Collection of the 0.25% Sales and Use Tax commenced on January 1, 2007. An existing three-quarters of one percent (0.75%) special city-wide sales and use tax (the "Existing Tax") is pledged to the payment of certain indebtedness of the City originally authorized in the aggregate principal amount of $92,000,000 (the "Existing Indebtedness"). Given redemptions of the Existing Indebtedness to date, the outstanding principal amount of the Existing Indebtedness is $10,743,056. Assuming no growth in collections of the Existing Tax, it is currently projected that the Trustee will have sufficient moneys on hand to pay the Existing Indebtedness in full by July 1, 2014. The levy of the Existing Tax will cease upon payment in full of the Existing Indebtedness or adequate provision therefor. Collection of the 0.75% Sales and Use Tax will commence on the first day of the first month following cessation of the Existing Tax. 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 2013 Bonds. SUMMARY OF THE INDENTURE The following statements are brief summaries of certain provisions of the Indenture. The statements do not purport to be complete, and reference is made to the Indenture, copies of which are available for examination at the offices of the 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 and Series 2013 Accounts therein Redemption Fund 15 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 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. See the captions "THE SERIES 2013 BONDS —Redemption" and "PROJECTED MANDATORY REDEMPTIONS" herein. 16 (f) Project Fund. A portion of the proceeds of the Series 2013 Bonds shall be deposited in the Street Account of the Project Fund. See the captions "ESTIMATED 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 2013 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 2013 BONDS — Redemption" herein. (g) Cost of Issuance Fund. A portion of the proceeds of the Series 2013 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 2013 Bonds (and in any event not later than December 1, 2013), 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 2013 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 2013 Bond from gross income for federal income tax purposes. No part of the proceeds of the Series 2013 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 2013 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 2013 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 17 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 2013 Bonds, the dates of redemption of such Series 2013 Bonds and the principal amounts and maturities of Series 2013 Bonds to be redeemed on such dates will be determined by taking into consideration the applicable redemption requirements with respect to the Series 2013 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. 18 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 (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. 19 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. SUMMARY OF THE CONTINUING DISCLOSURE AGREEMENT The City has entered into an undertaking in the form of the Continuing Disclosure Agreement as required by the Indenture for the benefit of the Beneficial Owners of the Series 2013 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"). In connection with certain of the City's prior undertakings pursuant to the Rule, certain filings of the City's Audited Financial Statements and Annual Financial Information were not made on or before the due dates provided in said undertakings. All required filings have now been made with the MSRB through the EMMA system, and the City is in the process of implementing procedures to assure verifiable 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. 20 (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 2013 Bonds or defeasance of any Series 2013 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 2013 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 2013 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 2013 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 2013 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 2013 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 2013 Bonds holding a majority of the aggregate principal amount of the Series 2013 Bonds (excluding Series 2013 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 2013 Bonds (including persons holding Series 2013 Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Series 2013 Bonds for federal income tax purposes. "Commission" means the U.S. Securities and Exchange Commission. 21 "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 2013 0) 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. "MSRB" shall mean the Municipal Securities Rulemaking Board established in accordance with the provisions of Section 15B(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 2012 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. 22 UNDERWRITING Under a bond purchase agreement entered into by and among the City and Stephens Inc. (the "Underwriter"), the Series 2013 Bonds are being purchased at a purchase price of $ (representing the stated principal amount of the Series 2013 Bonds [less][plus] a net reoffering [discount][premium] of $ and less an underwriting discount of $ ) plus accrued interest from November 1, 2013 to the date of delivery of the Series 2013 Bonds. The bond purchase agreement provides that the Underwriter will purchase all of the Series 2013 Bonds if any are purchased. The obligation of the Underwriter to accept delivery of the Series 2013 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 2013 Bonds or any proceedings in connection with the issuance thereof, and the absence of material adverse changes in the financial condition of the City. The Underwriter intends to offer the Series 2013 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 2013 Bonds to the public, and may offer the Series 2013 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 2013 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 2013 Bonds is excludable 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 opinions described in the preceding sentences assume the accuracy of certain representations and compliance by the City with certain covenants designed to satisfy the requirements of the Code that must be satisfied subsequent to the issuance of the Series 2013 Bonds. Failure to comply with certain of such requirements may cause interest on the Series 2013 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2013 Bonds. The City has covenanted to comply with such requirements. Original Issue Discount. The Series 2013 Bonds maturing November 1, 20_, 20_, 20_ and 20_ (collectively, 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. 23 Original Issue Premium.. The Series 2013 Bonds maturing November 1, 20_, 20_, 20_ and 20_ (collectively, 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 2013 Bonds. The accrual or receipt of interest on the Series 2013 Bonds may otherwise affect the federal income tax liability of the owners of the Series 2013 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 2013 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 2013 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 2013 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 2013 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 2013 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 2013 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 2013 Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular lawsuit will be resolved, or whether the Series 2013 Bonds or the market value thereof would be impacted thereby. Purchasers of the Series 2013 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 2013 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. RATING Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"), has assigned a rating of "A+" (stable outlook) to the Series 2013 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 24 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 2013 Bonds. Neither the City nor the Underwriter has undertaken any responsibility subsequent to the issuance of the Series 2013 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 2013 Bonds. LEGAL MATTERS Legal Opinions. Legal matters incident to the authorization and issuance of the Series 2013 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 2013 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 2013 Bonds or questioning or affecting the legality of the Series 2013 Bonds or the proceedings and authority under which the Series 2013 Bonds are to be issued, or questioning the right of the City to issue the Series 2013 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 2013 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 2013 Bonds. ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT The information contained in this Official Statement has been taken from sources considered to be reliable, but is not guaranteed. To the best of the knowledge of the City, this Official Statement does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated herein, or necessary to make the statements herein, in light of the circumstances under which they were made, not misleading. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] 25 The execution and delivery of this Official Statement has been duly authorized by the City of Fayetteville, Arkansas. CITY OF FAYETTEVILLE, ARKANSAS Mayor 26 APPENDIX A Proposed Form of Bond Counsel Opinion Upon delivery of the Series 2013 Bonds in definitive form, Kutak Rock LLP, Little Rock, Arkansas, proposes to deliver its approving opinion in substantially the following form: November _, 2013 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 $22,750,000* City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2013 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 $22,750,000* Sales and Use Tax Capital Improvement Bonds, Series 2013 (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. 2013) §§14- 164-301 et seq. (as from time to time amended, the "Act"), pursuant to Ordinance No. 5619 of the City, duly adopted and approved on September 17, 2013 (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, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (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, and (iii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2009. 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 will commence as of the first day of the first month following cessation of the Existing Tax securing the Existing Indebtedness (each as defined in the Indenture). 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. 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 B DEFINITIONS OF CERTAIN TERMS The following are definitions of certain terms used in this Official Statement: "Account" means an Account established by Article V of the Indenture. "Act" means the 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. "Additional Bonds" means 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 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, and (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. "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 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. IM "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 2013 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. "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 Bond, 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 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, 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 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 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 "AY 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; B-3 0) Pre -refunded municipal obligations rated "AAA" by S&P and "Aaa" by Moody's meeting the following requirements: 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: payment, (i) the name of the Person or party to whom payment is to be made and the purpose of the (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. "RLF Loan" means the City's $20,000,000 original principal amount of Sales and Use Tax Capital Improvement Bond, Series 2006 RLF Loan, constituting a portion of the Existing Indebtedness and structured as a loan to the City under the Arkansas Natural Resources Commission Revolving Loan Fund Program. "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 commence on the first day following the date of expiration of the Existing Tax securing the 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 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`. "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 2013 Bonds from gross income for federal income tax purposes, delivered in connection with the issuance of the Series 2013 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. APPENDIX C THE SALES AND USE TAX Sales Tax. The sales tax portion of the Sales and Use Tax 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, 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 C - I 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 front 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 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 C-2 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; (j) 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; (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; 6j) 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; (it) 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 apart 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 which become part of commercial jet 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; (ttt) Kegs used to sell beer wholesale; C-5 (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 Tax 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; (j) 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 (v) 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 OFFICIAL STATEMENT NEW ISSUE BOOK -ENTRY ONLY *RATING: S&P "A+" (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 2013 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. Under existing laws, regulations, rulings and judicial decisions, Bond Counsel is of the opinion that the Series 2013 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. $22,750,000 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2013 Dated: November 1, 2013 Due: November 1, as shown on inside front cover The Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 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 2013 Bonds. See the captions "SOURCES AND USES OF FUNDS" and"THE STREET PROJECT" herein. The Series 2013 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 2013 Bonds will be made so long as Cede & Co. is the registered owner of the Series 2013 Bonds. Individual purchases of the Series 2013 Bonds will be made only in book -entry form, in denominations of $5,000 or integral multiples thereof. Individual purchasers ("Beneficial Owners") of Series 2013 Bonds will not receive physical delivery of bond certificates. See the caption "BOOK -ENTRY ONLY SYSTEM" herein. The Series 2013 Bonds shall bear interest from their dated date, payable on May I and November I of each year, commencing May 1, 2014. All such interest payments shall be payable to the persons in whose name such Series 2013 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 2013 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 2013 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, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (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 2013 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) $46,195,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) $12,050,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), and (iii) $10,360,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"). See the caption "SECURITY FOR THE BONDS" herein. The Series 2013 Bonds are subject to mandatory redemption prior to maturity as more fully described herein under the caption "THE SERIES 2013 BONDS - Redemption." The Series 2013 Bonds are special obligations of the City secured by and payable solely from receipts of the Sales and Use Taxes. The Series 2013 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 2013 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 2013 Bonds, except as described herein with respect to the Sales and Use Taxes. The Series 2013 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 2013 Bonds will be available for delivery in New York, New York, on or about November 12, 2013. The date of this Official Statement is October 22, 2013. * See the caption "RATING" herein. MATURITY SCHEDULE Maturity Principal Interest (November 1) Amount Rate Yield 2014 $2,500,000 2.000% 0.400% 2021 1,280,000 3.000% 3.000% 2022 5,780,000 3.125% 3.222% 2023 7,000,000 3.300% 3.300% 2024 6,190,000 2.800% 2.800% (Plus accrued interest) CITY OF FAYETTEVILLE, ARKANSAS Issuer City Council Lioneld Jordan, Mayor Rhonda Adams Adella Gray Mark Kinion 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 2013 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 2013 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 2013 BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. TABLE OF CONTENTS Page IntroductoryStatement............................................................................................................................................................. 1 TheSeries 2013 Bonds............................................................................................................................................................ 2 Securityfor the Bonds............................................................................................................................................................. 4 Book -Entry Only System......................................................................................................................................................... 6 TheStreet Project..................................................................................................................................................................... 8 Historical Sales and Use Tax Collections................................................................................................................................ 8 Sourcesand Uses of Funds...................................................................................................................................................... 9 DebtService Requirements...................................................................................................................................................... 9 EstimatedDebt Service Coverage............................................................................................................................................ 10 Projected Mandatory Redemptions.......................................................................................................................................... 11 TheCity................................................................................................................................................................................... 12 TheSales and Use Taxes........................................................................................................................................................... 15 Summaryof the Indenture....................................................................................................................................................... 15 Summary of the Continuing Disclosure Agreement................................................................................................................ 20 Underwriting............................................................................................................................................................................ 23 TaxMatters.............................................................................................................................................................................. 23 Rating....................................................................................................................................................................................... 24 LegalMatters............................................................:.............................................................................................................. 25 Miscellaneous..........................................................................................................................................................................25 Accuracy and Completeness of Official Statement.................................................................................................................. 25 APPENDIX A - Form of Bond Counsel Opinion....................................................................................................................A-1 APPENDIX B - Definitions of Certain Terms.........................................................................................................................B-1 APPENDIXC - The Sales and Use Taxes...............................................................................................................................C-1 [THIS PAGE INTENTIONALLY BLANK] OFFICIAL STATEMENT $22,750,000 CITY OF FAYETTEVILLE, ARKANSAS SALES AND USE TAX CAPITAL IMPROVEMENT BONDS SERIES 2013 INTRODUCTORY STATEMENT The following introductory statement is subject in all respects to the more complete information set forth in this Official Statement. All descriptions and summaries of documents hereinafter set forth are qualified in their entirety by reference to each such document. Capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms 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 2013, in the principal amount of $22,750,000 (the "Series 2013 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. & 2013 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 2013 Bonds are to be issued by the City pursuant to Amendment 62, the Act and Ordinance No. 5619, adopted and approved on September 17, 2013 (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 2013 Bonds. See the captions "SOURCES AND USES OF FUNDS" and "THE STREET PROJECT" herein. The Series 2013 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) $46,195,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) $12,050,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), and (iii) $10,360,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 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 2013 Bonds, and the Series 2013 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 2013 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 2013 Bonds, except as described herein with respect to the Sales and Use Taxes. The Series 2013 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 2013 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 and any series of Additional Bonds hereafter issued as provided under the caption "THE SERIES 2013 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 and any other series of Additional Bonds. See the captions "THE SERIES 2013 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 2013 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 2013 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, 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 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 and the Series 2013 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 2013 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 2013 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. THE SERIES 2013 BONDS Description. The Series 2013 Bonds will be initially dated as of November 1, 2013, and will bear interest payable semiannually on May 1 and November 1 of each year, commencing May 1, 2014, at the rates set forth on the inside cover page hereof. The Series 2013 Bonds will mature on November 1 in the years and in the principal amounts set forth on the inside cover page hereof. The Series 2013 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 2013 Bonds will be made so long as Cede & Co. is the registered owner of the Series 2013 Bonds. Individual purchases of the Series 2013 Bonds will be made only in book -entry form, in denominations of $5,000 or integral multiples thereof. Individual purchasers ("Beneficial Owners") of Series 2013 Bonds will not receive physical delivery of bond certificates. See the caption "BOOK -ENTRY ONLY SYSTEM" herein. All interest payments on the Series 2013 Bonds shall be payable to the persons in whose name such Series 2013 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 2013 Bonds shall be payable at the principal corporate trust office of the Trustee. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Series 2013 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 2013 Bonds, 2 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 2013 Bonds are subject to redemption prior to maturity as follows: (i) 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 Street Account of the Project Fund in excess of the amount needed to complete the Street Project. (ii) 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. "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 and any series of Additional Bonds hereafter issued as provided under the caption "THE SERIES 2013 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 and any other series of Additional Bonds. See the caption "PROJECTED MANDATORY REDEMPTIONS" herein. In the case of any defeasance of the Series 2013 Bonds, the dates of redemption, the principal amounts and the maturities of the Series 2013 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 2013 Bond. If less than all of the Series 2013 Bonds of a maturity are called for redemption, the particular Series 2013 Bonds or portions of Series 2013 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 2013 Bonds, the procedures established by DTC shall control with respect to the selection of the particular Series 2013 Bonds to be redeemed. Notice of Redemption. Notice of the call for any redemption, identifying the Series 2013 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 2013 Bonds, by any other means acceptable to DTC, including facsimile) to the registered owner of each such Series 2013 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 2013 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. To the extent authority remains under the Election Ordinance, the City may issue from time to time one or more series of Additional Bonds for the purpose of (i) financing Project Costs in connection with the acquisition, construction, reconstruction, extension, improving or equipping of the Street Project, (ii) refunding the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 Bonds or any series of Additional Bonds, in whole or in part, or (iii) any combination thereof. Additional Bonds shall be secured equally and ratably with the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds, the Series 2013 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, (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, 2009 through November 1, 2014, on all the Outstanding Bonds theretofore incurred, plus the Additional Bonds to be issued, 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 the Outstanding Bonds, plus the Additional Bonds to be issued. For the purpose of making the aforementioned certification, 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. The aggregate principal amount of Additional Bonds that may be issued is limited to $9,000,000, except for refunding bonds issued under the Indenture. 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 2013 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 2013 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 2013 Bond or Bonds in the same aggregate principal amount and of any authorized denomination or denominations. Transfers of registration or exchanges of Series 2013 Bonds shall be without charge to the Holders of such Series 2013 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 2013 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 2013 Bond during the period from and including a Record Date to the next succeeding interest payment date of such Series 2013 Bond nor to transfer or exchange any Series 2013 Bond after the mailing of notice calling such Series 2013 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 2013 Bonds, transfers of beneficial interests in the Series 2013 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. SECURITY FOR THE BONDS General. The Series 2013 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 2013 Bonds pursuant to Ordinance No. 5619, duly adopted by the City Council of the City on September 17, 2013 (the "Authorizing Ordinance"). Such pledge is made on a parity basis with an existing pledge on such receipt securing (i) $46,195,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2006A (the "Series 2006A Bonds"), (ii) $12,050,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2007 (the "Series 2007 Bonds"), and (iii) $10,360,000 outstanding principal amount of the City's Sales and Use Tax Capital Improvement Bonds, Series 2009 (the "Series 2009 Bonds"). Pursuant to the terms of the Election Ordinance, the collection of the 0.25% Sales and Use Tax commenced on January 1, 2007. An existing three-quarters of one percent (0.75%) special city-wide sales and use tax (the "Existing Tax") is pledged to the payment of certain indebtedness of the City originally authorized in the aggregate principal amount of $92,000,000 (the "Existing Indebtedness"). Given redemptions of the Existing Indebtedness to date, the outstanding principal amount of the Existing Indebtedness is $10,743,056. Assuming no growth in collections of the Existing Tax, it is currently projected that the Trustee will have sufficient moneys on hand to pay the Existing Indebtedness in full by July 1, 2014. The levy of the Existing Tax will cease upon payment in full of the Existing Indebtedness or adequate provision therefor. Collection of the 0.75% Sales and Use Tax will commence on the first day of the first month following cessation of the Existing Tax. See the captions "THE SALES AND USE TAXES" and "HISTORICAL SALES AND USE TAX COLLECTIONS" herein. The Series 2013 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 2013 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 2013 Bonds, except as described herein with respect to the Sales and Use Taxes. Debt Service Reserve. From the proceeds of the Series 2013 Bonds, there shall be deposited into the Series 2013 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 2013 Bonds (the "Reserve Requirement"). Amounts on deposit in the Series 2013 Account of the Debt Service Reserve Fund shall be used solely to pay the principal of and interest on the Outstanding Series 2013 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. ("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 2013 Bonds (the "Reserve Fund Insurance Policy"), effective as of the date of issuance of such Series 2013 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 2013 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 2013 Bonds, on the later to occur of (i) the date such scheduled principal or interest becomes due for payment or (ii) the business day next following the day on which AGM receives a demand for payment therefor 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 $1,137,500 (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. BOOK -ENTRY ONLY SYSTEM The Series 2013 Bonds will be issued only as one fully registered Series 2013 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 2013 Bonds. The fully registered Series 2013 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 2013 Bonds for all purposes under the Indenture. Owners of any book entry interests in the Series 2013 Bonds (the "book entry interest owners") described below, will not receive or have the right to receive physical delivery of the Series 2013 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 2013 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"). DTC has a Standard & Poor's rating of AA+. 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 2013 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2013 Bonds on DTC's .records. The ownership interest of each actual purchaser of each Series 2013 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 2013 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 2013 Bonds, except in the event that use of the Book -Entry System for the Series 2013 Bonds is discontinued. To facilitate subsequent transfers, all Series 2013 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 2013 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 2013 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Series 2013 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 2013 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 2013 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 2013 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 2013 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 2013 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 2013 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 2013 Bonds made to DTC or its nominee as the registered owner of the Series 2013 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 2013 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 STREET PROJECT Approximately $22,311,675 of the proceeds of the Series 2013 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'). HISTORICAL SALES AND USE TAX COLLECTIONS An existing three-quarters of one percent (0.75%) special city-wide sales and use tax (the "Existing Tax") . is pledged to the payment of certain indebtedness of the City originally authorized in the aggregate principal amount of $92,000,000 (the "Existing Indebtedness"). Given redemptions of the Existing Indebtedness to date, the outstanding principal amount of the Existing Indebtedness is $10,743,056, all of which is attributable to the Series 2006 RLF Loan. Assuming no growth in collections of the Existing Tax, it is currently projected that the Trustee will have sufficient moneys on hand to pay the Existing Indebtedness in full by July 1, 2014. The levy of the Existing Tax will cease upon payment in full of the Existing Indebtedness or adequate provision therefor. Collection of the 0.75% Sales and Use Tax will commence on the first day of the first month following cessation of the Existing Tax. Collection of the Existing Tax commenced April 1, 2002. Set forth below is a table showing receipts of the Existing Tax and receipts of a separate one percent (1.00%) city-wide sales and use tax (the "1.00% Tax") over the last six years. Collections of the 1.00% Tax received by the City for the most recent twelve-month period (October, 2012 to September, 2013) were $17,929,809, a 4.92% increase from the previous twelve-month period (October, 2011 to September, 2012). Historical Collections of Historical Collections of Year Existing Tax (0.75%) 1.00% Tax (1) Growth Percentage 2007 $11,609,675- $15,479,567 n/a 2008 12,379,238 16,505,650 6.63% 2009 11, 800, 854 15,734,472 (4.67 %) 2010 11,761,837 15,682,449 (0.33 %) 2011 12,294,359 16,392,478 4.53 % 2012 13,095,428 17,460,507 6.52% Reflects collections of a one percent (1.00%) city-wide sales and use tax. This tax is not pledged to the payment of any indebtedness. Source: Arkansas State Treasurer [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] SOURCES AND USES OF FUNDS The proceeds of the Series 2013 Bonds will be used as follows: Sources of Funds Par Amount of Series 2013 Bonds Net Original Issue Discount Total Sources: Uses of Funds Deposit to Street Account of Project Fund Costs of Issuance, including Underwriter's Discount Reserve Policy Premium Total Uses: DEBT SERVICE REQUIREMENTS $22,750,000 (4,700) $22.745.300 $22,311,675 376,750 56,875 $22.745. 000 As of the date of closing, the Series 2006A Bonds, the Series 2007 Bonds, the Series 2009 Bonds and the Series 2013 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 and the Series 2013 Bonds during each year: Series 2006A, Series 2006A, 2007 & 2009 2007 & 2009 Series 2013 Series 2013 Total Debt Year Principal Interest Principal Interest Service 2014 $ -- $ 2,953,381 $ 2,500,000 $ 673,345 $ 6,126,726 2015 8,565,000 2,953,381 -- 623,345 12,141,726 2016 8,960,000 2,563,531 -- 623,345 12,146,876 2017 9,375,000 2,151,494 -- 623,345 12,149,839 2018 9,810,000 1,716,119 -- 623,345 12,149,464 2019 10,245,000 1,276,094 -- 623,345 12,144,439 2020 10,695,000 831,881 -- 623,345 12,150,226 2021 6,345,000 480,950 1,280,000 623,345 8,729,295 2022 1,255,000 215,200 5,780,000 584,945 7,835,145 2023 1,315,000 152,450 7,000,000 404,320 8,871,770 2024 1,385,000 86,700 6,190,000 173,320 7,835,020 2025 655,000 27,837 -- -- 682,837 Totals: $68.605. 000 $15 409 018 $22 750 000 $ 6 199.345 $112 963.363 7 ESTIMATED DEBT SERVICE COVERAGE 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 and the Series 2013 Bonds. Collections of the Existing Tax during the twelve-month period ended September, 2013 were utilized for the purpose of making the coverage calculations. See the caption "HISTORICAL SALES AND USE TAX COLLECTIONS" herein. The City will initially receive collections only from the 0.25% Sales and Use Tax which was levied and commenced being collected as of January 1, 2007. The Existing Tax is pledged to the payment of the Existing Indebtedness, originally authorized in the aggregate principal amount of $92,000,000. Given redemptions of the Existing Indebtedness to date, the outstanding principal amount of the Existing Indebtedness is $10,743,056. Assuming no growth in collections of the Existing Tax, it is currently projected that the Trustee will have sufficient moneys on hand to pay the Existing Indebtedness in full by July 1, 2014. The levy of the Existing Tax will cease upon payment in full of the Existing Indebtedness or adequate provision therefor. Collection of the 0.75% Sales and Use Tax will commence on the first day of the first month following cessation of the Existing Tax. Historical Existing Tax Receipts at 1.00%.t. $17,929,809 Maximum Annual Debt Service (2) $12,150,226 Maximum Annual Debt Service Coverage 1.48X tt� Actual collections of the Existing Tax during the last twelve-month period ending September, 2013, and assuming a tax rate of 1.00%. 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 and the Series 2013 Bonds in 2020. See the caption "DEBT SERVICE REQUIREMENTS" herein. THE COVERAGE NUMBERS SET FORTH ABOVE ARE BASED ON HISTORICAL RECEIPTS OF THE EXISTING 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 AND THE SERIES 2013 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 PROJECTED MANDATORY REDEMPTIONS 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 and the Series 2013 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 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 and any series of Additional Bonds hereafter issued as provided under the caption "THE SERIES 2013 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 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 ABOVE. See the caption "THE SALES AND USE TAXES — Future Sales and Use Tax Receipts" herein. Series 2013 Bonds Series 2013 Redeemed Prior to Total Series 2013 Date(l) Principal Due M4ur4yt21(3) (4) Principal Retired 5-1-14 $ -- $ 110,000 $ 110,000 11-1-14 2,500,000 520,000 3,020,000 5-1-15 -- 550,000 550,000 11-1-15 -- 585,000 585,000 5-1-16 -- 600,000 600,000 11-1-16 -- 645,000 645,000 5-1-17 -- 655,000 655,000 11-1-17 -- 715,000 715,000 5-1-18 -- 725,000 725,000 11-1-18 -- 805,000 805,000 5-1-19 -- 1,005,000 1,005,000 11-1-19 -- 3,410,000 3,410,000 5-1-20 -- 4,555,000 4,555,000 11-1-20 -- 5,370,000 5,370,000 Totals: $ 2,500,000 $20 250, 000 $22,750. 000 Series 2013 Bonds are subject to mandatory redemption from Surplus Tax Receipts on each May 1 and November 1. See the caption "THE SERIES 2013 BONDS — Redemption" herein. (2) Assuming annual receipts of the Sales and Use Taxes of $18,000,000. (3) Projected mandatory redemptions related to Series 2013 Bonds maturing November 1, 2021 through November 1, 2024. (4) Assuming the issuance of Additional Bonds in the principal amount of $9,000,000 during the next six months. [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 540, U.S. Highways 62 and 71, and State Highways 16, 45, 112, 156, 180 and 265. The Burlington Northern Railroad has several lines running through the City, and a general aviation airport with a 6,006-foot runway is available for limited commuter travel. The Northwest Arkansas Regional Airport is located approximately 40 minutes from downtown Fayetteville and provides daily flights to numerous venues. Government. The City currently operates under the Mayor -Council form of government pursuant to which a mayor, city attorney, city clerk and eight aldermen are elected, two from each of the City's four wards. The mayor, city attorney and city clerk are full-time positions elected to four year terms. Aldermen also serve four year terms. The City's elected officials and the dates on which their respective terms expire are as follows: Name Office Term Expires Lioneld Jordan Mayor 12/31/16 Kit Williams City Attorney 12/31/14 Sondra Smith City Clerk 12/31/16 Rhonda Adams Alderman 12/31/14 Adella Gray Alderman 12/31/14 Mark Kinion Alderman 12/31/14 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 12/31/14 Population. The following is a table of population changes for the City, the MSA and the State of Arkansas, according to the United States Census Bureau: City of State of Year Fayetteville MSA Arkansas 1960 20,274 92,069 1,786,272 1970 30,729 127,846 1,923, 322 1980 36,608 178,609 2,286,435 1990 42,099 210,908 2,350,624 2000 58,047 311,121 2,673,400 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 2000 $22,828 $22,577 2001 24,061 23,870 2002 24,658 24,273 2003 25,387 25,434 2004 27,420 26,846 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 n/a 34,723 Source: Discover Arkansas, Data Analysis. Retail sales figures for the MSA and the State are as follows: 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 M 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 2000 $ 432,951,171 $ 145,147,891 $ 578,099,062 2001 486,853,822 155,794,579 642,648,401 2002 530,235,135 158,778,031 689,013,166 2003 565,846,525 167,638,657 733,485,182 2004 649,361,820 183,102,702 832,464,522 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 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(t) are shown below for the years indicated: 2008 2009 2010 2011 2012 Residential Building 414 281 256 273 394 Permits Commercial Building 57 14 16 29 18 Permits Value of All Building Permits $127,477,937 $70,365,173 $79,103,682 $81,146,187 $251,041,427 (1) Does not include building activity of the University of Arkansas, school permits and additions/alterations to existing structures. Source: City of Fayetteville. Unemployment figures for the MSA and the State of Arkansas, according to the U.S. Bureau of Labor Statistics, are as follows: Year MSA State of Arkansas 2000 2.9% 4.2% 2001 3.0 4.7 2002 3.3 5.3 2003 3.7 5.8 2004 3.8 5.6 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* 5.9 7.6 * July, 2013 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 Spring semester of 2013 of approximately 23,286. On the Fayetteville campus, the University employs approximately 4,216 faculty, administrative, secretarial, clerical and maintenance personnel in both full-time and part-time positions, making the University the largest employer in the City. Other major employers in the City, their products or services and approximate number of employees are set forth below: Employer Product or Service Employee Range Washington Regional Med. Ctr. Medical 1,521 Washington County Gov't Government 1,344 Fayetteville School District Education 1,315 Veterans Admin. Med. Ctr. Medical 1,124 Superior Industries Cast aluminum wheels 1,120 City of Fayetteville Government 704 Wal-Mart #9149 (optical lab) Optical products 678 Tyson Mexican Original Food 572 Wal-Mart #144 Retail 507 Source: 2012 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 2013 Bonds. Collection of the 0.25% Sales and Use Tax commenced on January 1, 2007. An existing three-quarters of one percent (0.75%) special city-wide sales and use tax (the "Existing Tax") is pledged to the payment of certain indebtedness of the City originally authorized in the aggregate principal amount of $92,000,000 (the "Existing Indebtedness"). Given redemptions of the Existing Indebtedness to date, the outstanding principal amount of the Existing Indebtedness is $10,743,056. Assuming no growth in collections of the Existing Tax, it is currently projected that the Trustee will have sufficient moneys on hand to pay the Existing Indebtedness in full by July 1, 2014. The levy of the Existing Tax will cease upon payment in full of the Existing Indebtedness or adequate provision therefor. Collection of the 0.75% Sales and Use Tax will commence on the first day of the first month following cessation of the Existing Tax. 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 2013 Bonds. SUMMARY OF THE INDENTURE The following statements are brief summaries of certain provisions of the Indenture. The statements do not purport to be complete, and reference is made to the Indenture, copies of which are available for examination at the offices of the 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 and Series 2013 Accounts therein Redemption Fund 15 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 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. See the captions "THE SERIES 2013 BONDS — Redemption" and "PROJECTED MANDATORY REDEMPTIONS" herein. 16 (f) Project Fund. A portion of the proceeds of the Series 2013 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 2013 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 2013 BONDS — Redemption" herein. (g) Cost of Issuance Fund. A portion of the proceeds of the Series 2013 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 2013 Bonds (and in any event not later than December 1, 2013), 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 2013 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 2013 Bond from gross income for federal income tax purposes. No part of the proceeds of the Series 2013 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 2013 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 2013 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 17 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 2013 Bonds, the dates of redemption of such Series 2013 Bonds and the principal amounts and maturities of Series 2013 Bonds to be redeemed on such dates will be determined by taking into consideration the applicable redemption requirements with respect to the Series 2013 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 5 1 % 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. 18 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 (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. 19 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. SUMMARY OF THE CONTINUING DISCLOSURE AGREEMENT The City has entered into an undertaking in the form of the Continuing Disclosure Agreement as required by the Indenture for the benefit of the Beneficial Owners of the Series 2013 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"). In connection with certain of the City's prior undertakings pursuant to the Rule, certain filings of the City's Audited Financial Statements and Annual Financial Information were not made on or before the due dates provided in said undertakings. All required filings have now been made with the MSRB through the EMMA system, and the City is in the process of implementing procedures to assure verifiable 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. 20 (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 2013 Bonds or defeasance of any Series 2013 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 2013 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 2013 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 2013 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 2013 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 2013 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 2013 Bonds holding a majority of the aggregate principal amount of the Series 2013 Bonds (excluding Series 2013 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 2013 Bonds (including persons holding Series 2013 Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Series 2013 Bonds for federal income tax purposes. "Commission" means the U.S. Securities and Exchange Commission. 21 "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 2013 (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. "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 2012 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. 22 UNDERWRITING Under a bond purchase agreement entered into by and among the City and Stephens Inc. (the "Underwriter"), the Series 2013 Bonds are being purchased at a purchase price of $22,449,550.00 (representing the stated principal amount of the Series 2013 Bonds less a net reoffering discount of $4,700.00 and less an underwriting discount of $295,750.00) plus accrued interest from November 1, 2013 to the date of delivery of the Series 2013 Bonds. The bond purchase agreement provides that the Underwriter will purchase all of the Series 2013 Bonds if any are purchased. The obligation of the Underwriter to accept delivery of the Series 2013 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 2013 Bonds or any proceedings in connection with the issuance thereof, and the absence of material adverse changes in the financial condition of the City. The Underwriter intends to offer the Series 2013 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 2013 Bonds to the public, and may offer the Series 2013 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 2013 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 2013 Bonds is excludable 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 opinions described in the preceding sentences assume the accuracy of certain representations and compliance by the City with certain covenants designed to satisfy the requirements of the Code that must be satisfied subsequent to the issuance of the Series 2013 Bonds. Failure to comply with certain of such requirements may cause interest on the Series 2013 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2013 Bonds. The City has covenanted to comply with such requirements. Original Issue Discount. The Series 2013 Bonds maturing November 1, 2022 (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. 23 Original Issue Premium. The Series 2013 Bonds maturing November 1, 2014 (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 2013 Bonds. The accrual or receipt of interest on the Series 2013 Bonds may otherwise affect the federal income tax liability of the owners of the Series 2013 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 2013 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 2013 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 2013 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 2013 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 2013 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 2013 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 2013 Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular lawsuit will be resolved, or whether the Series 2013 Bonds or the market value thereof would be impacted thereby. Purchasers of the Series 2013 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 2013 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. RATING Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P"), has assigned a rating of "A+" (stable outlook) to the Series 2013 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 24 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 2013 Bonds. Neither the City nor the Underwriter has undertaken any responsibility subsequent to the issuance of the Series 2013 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 2013 Bonds. LEGAL MATTERS Legal Opinions. Legal matters incident to the authorization and issuance of the Series 2013 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 2013 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 2013 Bonds or questioning or affecting the legality of the Series 2013 Bonds or the proceedings and authority under which the Series 2013 Bonds are to be issued, or questioning the right of the City to issue the Series 2013 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 2013 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 2013 Bonds. ACCURACY AND COMPLETENESS OF OFFICIAL STATEMENT The information contained in this Official Statement has been taken from sources considered to be reliable, but is not guaranteed. To the best of the knowledge of the City, this Official Statement does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated herein, or necessary to make the statements herein, in light of the circumstances under which they were made, not misleading. [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK] 25 The execution and delivery of this Official Statement has been duly authorized by the City of Fayetteville, Arkansas. CIAOFYETT E, AJRKANSAS B - ord ayor 26 APPENDIX A Proposed Form of Bond Counsel Opinion Upon delivery of the Series 2013 Bonds in definitive form, Kutak Rock LLP, Little Rock, Arkansas, proposes to deliver its approving opinion in substantially the following form: November _, 2013 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 $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2013 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 $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (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. 2013) §§14- 164-301 et seq. (as from time to time amended, the "Act"), pursuant to Ordinance No.5619 of the City, duly adopted and approved on September 17, 2013 (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, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (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, and (iii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2009. 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 will commence as of the first day of the first month following cessation of the Existing Tax securing the Existing Indebtedness (each as defined in the Indenture). 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. 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 B DEFINITIONS OF CERTAIN TERMS The following are definitions of certain terms used in this Official Statement: "Account" means an Account established by Article V of the Indenture. "Act" means the 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. "Additional Bonds" means 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 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, and (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. "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 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 2013 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. "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 Bond, 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 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. IM "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, 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 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 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-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 "AY 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; B-3 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. MIE "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. "RLF Loan" means the City's $20,000,000 original principal amount of Sales and Use Tax Capital Improvement Bond, Series 2006 RLF Loan, constituting a portion of the Existing Indebtedness and structured as a loan to the City under the Arkansas Natural Resources Commission Revolving Loan Fund Program. "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 commence on the first day following the date of expiration of the Existing Tax securing the 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 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. "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 2013 Bonds from gross income for federal income tax purposes, delivered in connection with the issuance of the Series 2013 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. • APPENDIX C THE SALES AND USE TAX Sales Tar. The sales tax portion of the Sales and Use Tax 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, 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 C-1 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 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 C-2 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; (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; (it) 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 apart 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 which become part of commercial jet 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; (ttt) Kegs used to sell beer wholesale; C-5 (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 Tax 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 (v) 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.vVilbourn@kutakrock.com (501) 975-3101 City of Fayetteville, Arkansas Fayetteville, Arkansas K U TA K ROCK L L P ATLANTA CHICAGO SUITE 2000 DENVER 124 WEST CAPITOL AVENUE FAYETTEVILLE 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, 2013 Simmons First Trust Company, N.A., as Trustee Pine Bluff, Arkansas Stephens Inc. Fayetteville, Arkansas Assured Guaranty Municipal Corp. New York, New York $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2013 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 $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (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. 2013) §§14-164-301 et seq. (as from time to time amended, the "Act"), pursuant to Ordinance No. 5619 of the City, duly adopted and approved on September 17, 2013 (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, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (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 4841-7438-3638.1 KUTAK ROCK LLP November 12, 2013 Page 2 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, and (iii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2009. 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. 4841-7438-3638.1 KUTAK ROCK LLP November 12, 2013 Page 3 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 will commence as of the first day of the first month following cessation of the Existing Tax securing the Existing Indebtedness (each as defined in the Indenture). 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, 4841-7438-3638.1 NORTHWEST ARKANSAS OFFICE SUITE 400 234 EAST MILLSAP ROAD FAYETTEVILLE, ARKANSAS 72703-4099 479-973-4200 GORDON M. WILBOURN gordon.wilbourn@kutakrock.com (501)975-3101 City of Fayetteville, Arkansas Fayetteville, Arkansas K U TA K ROCK L L P ATLANTA CHICAGO SUITE 2000 DENVER 124 WEST CAPITOL AVENUE FAYETTEVILLE IRVINE LITTLE ROCK, AR 72201-3706 KANSAS CITY LITTLE ROCK 501-975-3000 LOSANGELES FACSIMILE 501-975-3001 MINNEAPOLIS OKLAHOMA CITY www.kutakrock.com OMAHA PHILADELPHIA RICHMOND SCOTTSDALE WASHINGTON WICHITA November 12, 2013 Simmons First Trust Company, N.A., as Trustee Pine Bluff, Arkansas Stephens Inc. Fayetteville, Arkansas Assured Guaranty Municipal Corp. New York, New York $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2013 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 22, 2013 (the "Bond Purchase Agreement"), by and between the City and Stephens Inc., as underwriter (the "Underwriter"); 4848-7928-8854.1 KUTAK ROCK LLP November 12, 2013 Page 2 (b) An executed counterpart of the Continuing Disclosure Agreement dated November 12, 2013 (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, 2013 (the "Tax Regulatory Agreement"), by and between the City and the Trustee; (d) The Official Statement dated October 22, 2013, 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. 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. 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 4848-7928-8854.1 KUTAK ROCK LLP November 12, 2013 Page 3 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 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, 4848-7928-8854.1 IASON B. KELLEY Assistant City Attorney Judy Housley Office Manager Phone (479) 575-8313 FAX (479) 575-8315 TDD (479) 521-1316 KIT WILLIAMS FAYETTEVILLE CITY ATTORNEY November 12, 2013 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 aye .,,y'.le 113 W. Mountain, Suite 302 Fayetteville, AR 72701-6083 Re: $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2013 Ladies and Gentlemen: I am City Attorney for the City of Fayetteville, Arkansas (the "City") and have acted in that capacity in connection with the issuance and sale by the City of its $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Bonds"), which Bonds are being sold pursuant to the terms of a Bond Purchase Agreement dated October 22, 2013 (the "Bond Purchase Agreement"), 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. 5619 adopted by the City Council on September 17, 2013 (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, and by a Third Supplemental Trust Indenture dated as -of November 1, 2013 (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, 2013 (the "Tax Regulatory Agreement"), by and between the City and the Trustee, the Continuing Disclosure Agreement dated November 12, 2013 (the "Disclosure Agreement"), by and between the City and the Trustee, the Preliminary Official Statement dated October 15, 2013. (the "Preliminary Official Statement"), and the Official Statement dated October 22, 2013 (the "Official Statement") relating to the offering of the Bonds, and closing certificates of the City. 4827-3010-2550.1 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. Levy and collection of the 0.75% Sales and Use Tax will commence as of the first day of the first month following cessation of the Existing Tax securing the Existing Indebtedness (each as defined in the Indenture). 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. 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 2 4827-3010-2550.1 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. Sincerely,\ KIT WILLIAMS _ Fayetteville City Attorney 4827-3010-2550.1 ASSURED MUNICIPAL BOND GUARANTY DEBT SERVICE RESERVE MUNICIPAL INSURANCE POLICY ISSUER: City of Fayetteville, Arkansas Policy No.: 215825-S BONDS: Sales and Use Tax Capital Improvement Bonds, Effective Date: November 12, 2013 Series 2013 Premium: $56,875.00 Termination Date: The earlier of November 1, 2024 or the date the Bonds are no longer outstanding 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 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 2013 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. 215825-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 $1,137,500. 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 "2013 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 2013 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 2013 Insurer's Fiscal Agent on behalf of AGM. The 2013 Insurer's Fiscal Agent is the agent of AGM only and the 2013 Insurer's Fiscal Agent shall in no event be liable to any Owner for any act of the 2013 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. A subsidiar�r of Assured Guaranty Municipal Holdings Inc. 31 West 52 ° Street, New York, N.Y. 10019 Form 501 NY (6/90) ASSURED GUARANTY MUNICIPAL CORP. By Authorized Officer (212, 8 0100 Na DEFAULT AND TAX CERTIFICATE OF ASSURED GUARANTY MUNICIPAL. CORP. The undersigned hereby certifies on behalf of Assured Guaranty Municipal Corp. ("AGW), in connection with the issuance by AGM of its Policy No. M825-8 (the 'Policy') in respect of the City of Fayetteville, Arkansas Sales and Use - Tax Capital Improvement Bonds, Series 2013 (the "Bonds) that: (i) 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, (fi) the insurance premium of $56,875.00 (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, (iii) no portion of such Premium represents an indirect payment of, costs of issuance, including rating agency toes, other thamfees paid by AGM to maintain its ratings, which, together With all other overhead expenses of AGM, are taken into acc.oUnt 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 ot 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 claims 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 refired before the final Maturity date, and (00 AGM would not have issued the Policy untess the..auth.orizing 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, bated. No'vern'ber-1:2,2013 ASSURED GUARANTY MUNICIPAL CORP. By:rt Authorized Off 'r �11 U A`,,S'SURE' . D G UMZANTY' MUNICIPAL November 12,2013 City of Fayetteville _Arkansas Sales and Use Tax Capita,_,,,,, Improvement Bonds. Series 2013 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: 1. AGM is a stock insurance company duty 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 duty authorized, executed and delivered by AGM. 1 The Policy constitutes the valid and binding obligation of AGM, enforceable in accordance with its terms, subject, as to the enforcern ent 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 I am a member of the Bar of the State of Now York, and do not express any opinion as to any law other than the laws of the State of New York. Very truly City of Fayetteville, Arkansas, 113 W. Mountain, Fayetteville, Arkansas 72701. Stephens Inc., 3425 North Futrall, Suite 201, Fayetteville, Arkansas 72703. A,,surcd Gwaranly Municipal Corp. 52", sllfllMll TT` in 1 2,1Z en 0100 www, assvredguammy,coal N�4yor� NY � ODI tax 121-2 688 3 1 -a I 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 $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (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. 5619 of the City, adopted September 17, 2013, 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, and the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009. 4. The collection of the 0.25% Tax commenced as of January 1, 2007. The collection of the 0.75% Tax shall commence as of the day following the date of termination of the City's existing three-quarters of one percent (0.75%) city-wide sales and use tax presently levied under the Act pursuant to the Ordinance No. 4327 adopted August 7, 2001, and pledged to the payment of certain outstanding indebtedness of the City. Certified this _Vday of November, 2013. DEPARTMENT OF FINANCE AND ADMINISTRATION By: k4hv Title: 401yr -q- NOV 1 3 20i. 8, 429,9;1 u 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 $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Bonds"), by the City of Fayetteville, Arkansas (the "City"). 3. There has been fled 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. 5619 of the City, adopted September 17, 2013, 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, and the City's $11,250,000 Sales and Use Tax Capital Improvement Bonds, Series 2009. Certified this (. - day of November, 2013. TREASURER OF THE STATE OF ARKANSAS By: Title: U-4 1 w� 4848-0071-4006.1 TRUSTEE'S CERTIFICATE Simmons First Trust Company, N.A., Pine Bluff, Arkansas, as trustee for $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2013 (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, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (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 $22,750,000, being in the form of five (5) typewritten registered bonds, numbered R13-1 through R13-5, inclusive. 3. Each person who, on behalf of the Trustee, authenticated the initial Bonds or executed the Third Supplemental Trust Indenture, the Tax Regulatory Agreement dated as of November 12, 2013, or the Continuing Disclosure Agreement dated as of November 12, 2013, 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 ature Glenda L. Dean Vice President Roy Ferrell 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, 2013 SIMMONS FIRST TRUST COMPANY, N.A. Pine Bluff, Arkansas By: oe Clement, President 4814-3013-1990.1 UNDERWRITER'S CERTIFICATE The undersigned officer of Stephens Inc., the Underwriter (defined below) for the $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2013 (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) Based upon our records and other information available to us which we have no reason to believe is not correct: (a) All of the Bonds have been the subject of a bona fide initial offering to the public (excluding of bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at the public offering prices or yields indicated on the cover of the Issuer's Official Statement dated October 22, 2013 (the "Official Statement"); (b) At the time the Underwriter agreed to purchase the Bonds, based upon the prevailing market conditions, the Underwriter had no reason to believe that any of the Bonds would be initially sold to the public (excluding of bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at greater prices, or yields less, than those indicated on the cover of the Official Statement; and (c) As of the date of the Bond Purchase Agreement entered into by and between the Issuer and the Underwriter with respect to the Bonds, the first prices at which the Underwriter reasonably expected to sell 10% of each maturity of the Bonds to the public (excluding of bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) were the respective prices shown on the cover of the Official Statement, or in the case of obligations sold on a yield basis, at the respective yields shown on the cover of the Official Statement. (3) The Yield on the Bonds is 3.0915166%. 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, 4814-5699-8934.1 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. IN WITNESS WHEREOF, the undersigned has set his hand as of the date set forth below. Dated: November 12, 2013 STEPHENS INC. By:'Z. Title: 5- V+cc t�'�� s• 4814-5699-8934.1 UNDERWRITER'S RECEIPT The undersigned, on behalf of Stephens Inc., as purchaser (the "Purchaser") of $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Bonds"), hereby acknowledges receipt of each and all of the Bonds, said Bonds being in the form of five (5) 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, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (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 22, 2013, 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, 2013 STEPHENS INC. By: Title: 5 4830-2488-5014.1 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, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (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 $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Bonds"), hereby certifies that: 1. The Trustee has received this date, on behalf of the City, from Stephens Inc. (the "Underwriter"), $22,413,249.43, that being the agreed purchase price of the Bonds, pursuant to the Bond Purchase Agreement dated October 22, 2013, between the City and the Underwriter (less $56,875.00 paid by the Underwriter on behalf of the City for the premium on a debt service reserve policy). 2. The total proceeds of the sale of the Bonds (i.e., $22,413,249.43) have been deposited or will be applied, in accordance with the written directions of the City, as follows: (i) $20,574.43, representing the accrued interest on the Bonds, will be deposited into the Interest Account of the Bond Fund; (ii) $22,311,675.00 shall be deposited in the Street Account of the Project Fund; and (iii) The balance of said proceeds, in the amount of $81,000.00, shall be deposited in the Costs of Issuance Fund for payment of Costs of Issuance as directed by a Certificate of the City. Dated: November 12, 2013. SIMMONS FIRST TRUST COMPANY, N.A., as Trustee By: Glenda L. bean, Vice President 4831-6388-6870.1 jj—jz—yd UZ:11511 FR49 DIC UNDERWRITUG j POL 0� I t.1 V Blanket Issuer Letter of Representations cro t* CWT "I by i3"4 City of Fayetteville, AR tN®a c(Emw] mg�= W7 ;MkrPlki' - K; At=ti= Uuderwyifmg Department — Mlgahty The Dcpom;ib=y TrmA Compamy 55 Water Shvek 506 Flow New York .VT IOU1.0mg 7M. Vow Noft Scba&do A =Lww mtemianu that D= bQ&vw =4 &0 we"d Cf C&Cftg book. ,dm&y Of id, &=ftmd &wco 4=0da THE DEPOMORYTAUSTCOMPANT AM a �Slgmuww-- Fayetteville, AR-72701-- mp) 501-575-8330 (Pbo" Nmnbt:i SCB=ULE A SANGTEE OFFERUNG DOCUMENT LLNGUAGE DESCBIBLYG BOO$ ENMY-ONLY ISSLU.NCR (Prepared by DTC_--b«ckated awte,:ial may be Applicable only to certain i3sues) 1. The Depodwr/ Tr= Company (-DTC). tic— York NX will ad w secusitiea dcpcsixry �br the x=uities (the "Se mritbm'). The Seim hties w@ be luued u fiA-mgftsred wouitses registered in the narue of Cc& & Co. (DTC's pw=crshlp romincc). Ode fixity-mmiscssed Seeority certificate win be issued for (etch fine aft the Sacuftes, (earhj in the aggegtta prindpal amount of such issue_ tad wM be depoedtad witb DTC. (If, hoomvex the aglpvVe pd 1pal amount of (any) isme cwo& s S2W Y a. czaa oottScate will be issued with egwc, to cul = milli= of prlmpd amount and in sdditicxul cerbsortc wilI be issued with rMpe d to Sairemaiaiag Pzl.'xiga! arrrovmt of such b".j 2. DTC is a 1hz�tedixupose must oaenpany ospmimd unier the New York Bankiag Ira, a -$&nkzg orpnftzdon' r. hIa the meaning of tb* New York Banidng Law, a me xnbetr of the Ferrieral iia>,esm Systerss, n -fig aotp orudon' wtclSta tics mendng of the New York Uniform Commercial t ,odr7 sad a 'cleaaag agency' m%tst'emd parsez= to the provWas of Socdon,17A of the Sacti ties Eubrsrge Act of IOU DTC holds seciaftes that in put gxats (its") deposit with DTC_ DTC &Ices facflftatas the settleaaemt &Mang Thr6ct uts of secudtkt rocs, such as trams= and pled s, hs dapos toed secw ties through electrotac o=pute ezed, bwk-eatry changes is Partimpsncs' accounts, thereby e Umfrszorg the need far phy*%1 movement of securities certificates. Direct Part 4ewts iwlade securtbat brokrrs and dealer, 'banllm. gust compWes, cleswing co. rations, and certain odw orb aL=.tians. DTC to owned by a number of Its Dh,=t Partkiptats and by the New Ywk "stock Exchange, lrrc, the Awed= Stock EnimAge. Lw, and tbz Ns"MA dasodat>oa of Sex UlKes DeaLesy, rain. Acom to the DTC s/Awn Le afro e{n ikWe to other& such as w=risie x bzoloess and de ala n, houia, sad hv5c oampeases that clear titrouglt. or m2hm do a custodial re Ldoax% air a Dave Rudequiet. ri+,vr dkectly or mdb ec&, ('Iac3lrect PalticigcmW). The Ruks app8easb3e to DTC &M its Puddpattt;s ate on Me with the Socmdem Bead E mbange Couzmstiow 3. Puxhaaa of Sean ties under the Urc ryatt= must be made by or thmugh Direct Pairticipaents which wX raceme a cxe& for the Sec rtttt s au DM , m - rd. The cwncrahip iz3tJesest of each &dual porch== of cods 5ecsuity (' enacisl Owner'') is in tam to be reooQded = tba Dked mod W&rcd Pardcip�' rocea&. Bengfida1 O wnen will not receive w"MM c6n rmstlo t firma DTC of their guschaw but: Benaciel owaera are expected to race" written eomSrmadicus FrWA&g avws of the tt,mUCdon, as wdi as Periodic: strttemeobc of their bokhp. fsvm the Direct or Indf:ect PuwPont thz000 w bieb tbs Benesficw owner awmed into the winsactloa. Tnnsfess of omnc:mhip iatrrests is the Secu itla an to be aeoompliahed by errtrieo made an the: booka of PxrucVdnts scumg on behalf of BeneBdal Owoom BencRe t Ownwm will not; l=xw certiflcates Mpsesmtfag duk owaoersbdp k6neista In Sec zddes, =eprt in the -event tit use of the book-eatry rystttu for the Smattiea is discmemuni t. To figd subsexluerut t=aasfasu, all Se =rules 3epoi ted by Parsic3 W= with DTC are re tell m the name of in paivaershtp racrntnoe, Code & Co. The deposit of Somnidw with 17PC azsd that regUtradm is the name: of Cede & Co. effect no t6nge in beneficial ownership. IM her no k wledge of the actual Benese o ness of the Sects ibex, D=s records reflect only the identity of the Direet Rulit=ts ro whose acmtrV 1,r surh Sectrrida am e:reefited, which M2Y or MY not be the Beneficial Owpe x The Partsdpanrs w1I1 remain rmpoasihle far keeping aaaruat of t sd holes on behalf Of their CtSbomers. 5. Conveyance of notices sad other commuWcati= by DTC to Direct Par cipau:s, by Di-= Partcipsnts to Indirect Pw-dcipwam and by Diced ?anticipants and Indi:=t Partic_,ants -0 Benacw Owners will be governed by urangemws among them, subtect to any statutcry Qr re;uiatory reTaEn=eats se. ray be in effect from d=e W time. I& f aa=ptku :.,odces sbaD be sera to Cxte & Co. Tz less !Iota all of the Securities u-;tLn an ism see being redeemed. DTC's prstcscr is to determine by lot the amount of the interest of each Direct Particip wt in sorb issue to be redee.-neg T. Neltrer DTC aor Cade & Ca will consent or vc to wstb respect to Securities. Coder its usual proceclrsrw. DTC =dh as Omnibus Parry to the Iasurr as saw w po=bL- after the teeord dste. The Omn&u ?nny aasigm Cede & CoA caasentb2g or woting riots to Brost Dtrea Putcbmt: tov&we, areouno the Securities are credited on the reaoad date (kl=dfied in a hst mg attacted to the omnibus Prosy). B. Psindpol and lacrest payrflesta as the Serraitiea %ill be made bo DTC. DIM practice is to erndlt Dhz Parti�' aeoamts on payable date in ac=dance wtth their resoectir+e Iso &V &IMma ou DTC's , rcis unless! DTC has reason to behave tbtt it will not receive pWmert on Mvbla date. Paysneats by ParedfsnOs to Smeacisl Owner: will be gvaesnad by srsnding ions sad cusumary pnectiona, as is the case with securities held for the aceowmb of custamen in lmww form or registemd to 'street atone,' red *111 be t6 reTaastfty d such raddpont wed hot of DTC, the As=t. or the Irmo . subject to any statutory or regulatory regau'ements as may be in effect from time to time. Paxmeat of pdnci* end kmaxest to DTC is the seapca Aiti1tty of the Issuer or the Ag= disbtit:=ext4ut ` of sash payum tY to Dha t Pastfdpms %62 be the respon=Wlty of DTC, and disbwvwxst of such pvym=tt to the Beceddsl owns shalt be the seapaoA9ltty a[ Direct and Indiseet Pta'dcipents. (9. A BeorBeial Owner shall gt" notice to elect to bsve iM Swttmr. pwtb=d ar . thtotsgb its PfttcVwt to the (Tmta�asivs Sl sad shall effect dnl3vwy of such S,D.vnbn by =dzg tAe Dbvxt Pacticips-t to tlarafer the Paaticipurt's lntazw in the Samittes, an DTC! rem, to d w QT=dwA easatiostang] ASTmt The rara>lme t for Phymcal &Ivacy of Secwt!U s in O=Wctlaat vA& a dens d for punc&sse or a mud" parchase w1H be deemed satis,Bed when 69 owucssbtp xiots in the Seccattis are tzwa` and by Direct Partidpant:s on DTCs reooa&] 14L = mq dLuxxvizsue P it's 9eM= as ssaonddwi depostcary with impect != the SeowitW at; =y tans by vftg rww=bk notice to the Truer or the A&wt Qader saris ===uunco* in the e ,*= that a spoor securities depodLtory is toot obtadaed, Soc=ity oett orates are raq=ed to be printed and delfftx� 1L The Tx= may deeidto ascariaaue use of the system of book entry traasfe:s 6=mgh DTC (or I CUAXZM= SOCULftl= &To*=y). In ea m=t. Sceru'.ty enrol kd= will be printed and delivered„ M the takmad= in this section a0000miag DTC smd DTCs bookrcratay sy aw. bus boa abbhmd from .sources that the Issuer believes to be xehobls, but the Issuer tikes no regwcsibility for the ACMnrY thereof 00 RATINGS SERVICES 5incolnhazaruite3t Lincoln Plaza, Suite 3200 MCGRAW HILL FINANCIAL Dallas, TX 75201 tel (214) 871-1400 reference no.: 1277538 September 27, 2013 City of Fayetteville 113 W. Mountain Fayetteville, AR 72701 Attention: Mr. Paul Becker, Finance & Internal Services Director Re: US$22, 750, 000 City of Fayetteville, Arkansas, Sales and Use Tax Capital Improvement Bonds, Series 2013, dated: November 01,2013, due: November 01,2023 Dear Mr. Becker: Pursuant to your request for a Standard & Poor's Ratings Services ("Ratings Services") rating on the above -referenced obligations, Ratings Services has assigned a rating of "A+". Standard & Poor's views the outlook for this rating as stable. 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No person is intended as a third party beneficiary of any credit rating engagement or of a credit rating when issued. PF Ratings U.S. (02/16/13) STANDARD ii 0 R'S RATINGS SERVICES Primary Credit Analyst: Jennifer K Garza (Mann), Dallas (1) 214-871-1422; jennifergarza@standardandpoors.com Secondary Contact: Omar M Tabani, Dallas (1) 214-871-1472; omar.tabani@standardandpoors.com Table Of Contents .................. ........................... ...... Rationale Outlook Related Criteria And Research WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 30, 2013 1 1198198 1301664051 US$22.75 mil sales and use tax cap imp bnds ser 2013 dtd 11/01/2013 due 11/01/2023 Long Term Rating A+/Stable New Rationale Standard & Poor's Ratings Services assigned its 'A+' rating to Fayetteville, Ark.'s series 2013 sales and use tax capital improvement bonds. At the same time, Standard & Poor's affirmed its 'A+' underlying rating (SPUR) on Fayetteville's series 2006, 2007, and 2009 bonds and the 'AA-' SPUR on the city's existing series 2005 sales and use tax refunding and capital improvement debt. The outlook is stable. 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; a Very strong bond provisions, including a closed lien after the authorized amount has been issued and a mandatory use of surplus revenues for principal prepayment to shorten the maturity; and ® Rapid retirement of the series 2005 bonds. An offsetting rating factor includes the city's weak coverage of the subordinate -lien bonds. 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. Officials pledged the proceeds of the 0.75% sales and use tax toward the payment of $16.71 million of existing sales and uses tax bonds; revenues will not be available for debt service payments on the series 2006, 2007, and 2009 bonds until the existing lien bonds are defeased, which management estimates will be mid-2014. Fayetteville, with a population of roughly 73,000, is located in the rapidly growing Northwest Arkansas metropolitan statistical area, which includes Rogers and Springdale. The University of Arkansas and the poultry industry anchor Fayetteville's expanding economy. University of Arkansas, with about 4,216 employees, is the largest employer and anchors the economy. Officials have stated that the city continues to attract new business and residential construction. In our opinion, the city's median household income is adequate, at 80% of the national level. The significant student population dampens income levels. Per capita retail sales are very strong at 135% of the national level. Fayetteville's unemployment rate for June 2013 was 5.9%, lower than both the state and national averages. The 1% sales tax revenues have contracted by 0.3% in 2010 but started their rebound in 2011 with a 4.5% increase in sales for the year, followed by a 6.1% increase realized in 2012. The year-to-date collections for fiscal 2012 are up by 6.6% compared with the same period in prior year. Management reports the city ended fiscal 2012 with $17.4 million in total pledged revenues (the full 1% sales levy). For fiscal 2013, officials are expecting the sales tax revenues to increase by about 3.8% and conservatively assumed a 2% growth rate for the 2014 budget. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 30, 2013 2 1198198 1 301664051 Summary: Fayetteville, Arkansas; Sales Tax In fiscal 2012, the 0.75% revenue pledged for the series 2005 bonds, which is senior to the revolving loan fund issued through the Arkansas National Resources Commission, is good at 1AX maximum annual debt service (MADS). Combined coverage for the 2005 bonds and the RLF loan provided adequate, lAx coverage of MADS of $11.9 million, which is scheduled to occur in 2013. However, due to the early redemption feature on the bonds, the city's final payment on the series 2005B bonds has been made to the trustee for the final December 2013 payment, which has allowed them to pay the debt off earlier than the original 2015 maturity date. The final balance of the RLF loan, about $10.7 million, will be made July 2014, at which time the 0.75% revenues will become available to service the 2006, 2007, 2009, and 2013 bonds and improve coverage. The current, 0.25% pledged revenues available for debt service generates only 0.4x coverage of MADS of $11.6 million, scheduled to occur in 2020, which we consider insufficient. However the 0.25% pledged revenues for fiscal 2012 provided good 1.4 x coverage of annual debt service. After the retirement of the series 2005 debt in fiscal 2014, the debt service coverage will increase to about 1.4x MADS. 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. A debt service reserve funded at 5% of the par amount provides additional bondholder liquidity. The city may issue the additional authorized parity bonds if the prior year's pledged sales and use tax revenues provide a minimum, 1.25x coverage of MADS. Management plans to issue approximately $9 million to refund the existing hotel motel tax revenue bonds in the next 24 months and have projected that, based on 0% growth, they will have the remaining bonds outstanding paid off in 2021 due to the early redemption provision. The stable outlook reflects the stable regional economic base anchored by the University of Arkansas, and sustained steady economic growth. In addition, the stable outlook reflects our expectation that the 'A+' lien coverage levels will improve once the 0.75% lien becomes available for coverage but that the city plans to issue additional debt against it within the next two years, which will likely dilute coverage. A significant decline in pledged revenues leading to lower debt service coverage could lead to downward pressure on the rating. INN USPF Criteria Special Tax Bonds, June 13, 2007 Fayetteville sales tax (ASSURED GTY) Unenhanced Rating A+(SPUR)/Stable Affirmed Fayetteville sales tax Unenhanced Rating A+(SPUR)/Stable Affirmed Many issues are enhanced by bond insurance. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 30, 2013 3 1198198 1 301664051 Summary: Fayetteville, Arkansas; Sales Tax Complete ratings information is available to subscribers of RatingsDirect at wwwglobalcreditportal.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. WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 30, 2013 4 1198198 (30 i664051 Copyright © 2013 by Standard & Poor's Financial Services LLC. All rights reserved. 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WWW.STANDARDANDPOORS.COM/RATINGSDIRECT SEPTEMBER 30, 2013 5 1.198198 1301664051 CERTIFICATE RE CASH FLOWS Date: October 9, 2013 To: Financial Security Assurance Inc. and Assured Guaranty Corp., as insurers of (i) City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2006A, (ii) City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2007, and (iii) City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds, Series 2009 In connection with the issuance by the City of Fayetteville, Arkansas (the "City") of its $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (the "Series 2013 Bonds"), this certificate is provided to you pursuant to the provisions of (i) Section 1105 of the Trust Indenture dated as of November 1, 2006, (i.i) Section 1305 of the First Supplemental Trust Indenture dated as of October 1, 2007, and (iii) Section 1405 of the Second Supplemental Trust Indenture dated as of November 1, 2009, each by and between the City and Simmons First Trust Company, N.A., as trustee. As required by said Sections 1105, 1305 and 1405, the City hereby certifies the authenticity of the attached cash flows showing that the Existing Indebtedness (as defined in the Indenture and Supplemental Indenture) will be repaid in full no later than November 1, 2014. In constructing the attached cash flows, it is assumed that monthly collections of the Existing Tax (as defined in the Indenture and Supplemental Indenture) will be equal to the corresponding monthly collections of the Existing Tax during the last twelve months for which data is available. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture. Title: Finance Director 4833-2074-8054.1 City of Fayetteville, Arkansas Sales and Use Tax Bonds Series 2005 & RLF Redemption Analysis Fund Date Revenue Series 2005 RLF Balance 10/1/2013 - - - 9,035,515.00 11/1/2013 1,120,613.00 - 1,164,914.72 8,991,213.28 12/1/2013 1,120,613.00 6,252,600.00 3,859,226.28 - 1/1/2014 1,120,613.00 - 1,120,613.00 - 2/1/2014 1,120,613.00 - 1,120,613.00 3/1/2014 1,120,613.00 - 1,120,613.00 - 4/1/2014 1,120,613.00 - 1,120,613.00 - 5/1/2014 1,120,613.00 - 1,120,613.00 - 6/1/2014 1,120,613.00 - 1,120,613.00 - 7/1/2014 1,120,613.00 - 264,355.91 856,257.09 REQUISITION City of Fayetteville, Arkansas Series 2013 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, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (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 4835-6214-9142.1 NORTHWEST ARKANSAS OFFICE SUITE 400 034 EAST MMLSAP ROAD IAVSTTEWLLE. ARKANSAO 751703-4000 479-073-4900 GORDON M. WILBOURN g o rd o n, w l l h o u m (Mk ut a kroc k. c o m (501) 9753101 City of Fayetteville, Arkansas Fayetteville, Arkansas SUITE 2000 124 WEST CAPITOL AVENUE 501-975-3000. FACSIMILE 501-975-3001 November 12, 2013 Simmons First Trust Company, N.A., as Trustee Pine Bluff, Arkansas Fayetteville, Arkansas Assured Guaranty Municipal Corp. New York, New York $22,750,000 City of Fayetteville, Arkansas Sales and Use Tax Capital Improvement Bonds Series 2013 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 $22,750,000 Sales and Use Tax Capital Improvement Bonds, Series 2013 (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. 2013) §§14-164-301 el seq. (as from time to time amended, the "Act"), pursuant to Ordinance No. 5619 of the City, duly adopted and approved on September 17, 2013 (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, and by a Third Supplemental Trust Indenture dated as of November 1, 2013 (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 KUTAK ROCK LLP • November 12, 2013 Page 2 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, and (iii) the City's Sales and Use Tax Capital Improvement Bonds, Series 2009. 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. 4841-7438-3638.1 KUTAK ROCK LLP isNovember 12, 2013 Page 3 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 will commence as of the first day of the first month following cessation of the Existing Tax securing the Existing Indebtedness (each as defined in the Indenture). 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, *Jz-Ac'4c K LLP 484 l-7438-3638.1