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