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HomeMy WebLinkAbout2011-06-03 ® ORDINANCE N0. J I -()(o -Q3 AN ORDINANCE AUTHORIZING THE ISSUANCE OF A SALES AND USE TAX BOND FOR THE PURPOSE OF FINANCING A PORTION OF THE COSTS OF ACQUIRING) CONSTRUCTING AND EQUIPPING EXTENSIONS, BETTERMENTS AND IMPROVEMENTS TO THE SEWER FACILITIES OF THE CITY OF BATESVILLE, ARKANSAS; PROVIDING FOR THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE BOND; AND PRESCRIBING OTHER MATTERS RELATING THERETO. WHEREAS, there was submitted to the qualified electors of the City of Batesville, Arkansas (the "City") at a special election held March 10, 2009, the question of issuing capital improvement bonds in the maximum principal amount of $50,000,000 for the purpose of financing all or a portion of the costs of acquiring, constructing and equipping extensions, betterments and improvements to the City's sewer system (the "Improvements"); and WHEREAS, at the special election, a majority of the electors voting on the question approved the issuance of the bonds and the levy of a new sales and use tax at the rate of 1% (the "Tax")to retire the bonds; and • WHEREAS, pursuant to Ordinance No. 2009-12-1 of the City duly adopted on December 22, 2009 ("Ordinance No. 2009-12-1"), the City has issued its $6,300,000 Sales and Use Tax Bond, Series 2010 (the "Series 2010 Bond") for the purpose of financing a portion of the costs of the Improvements; and WHEREAS, the City is making arrangements for the sale of a City of Batesville, Arkansas Sales and Use Tax Bond, Series 2011 (the "Series 2011 Bond") in the principal amount of $20,000,000 to the Arkansas Development Finance Authority, as purchaser (the "Bondholder"), at a price of par for a bond bearing interest at the rate of 1.50% per annum pursuant to a Bond Purchase Agreement (the "Agreement") among the City, the Bondholder and the Arkansas Natural Resources Commission (the "Commission"), which has been presented to and is before this meeting; and WHEREAS, the Series 2011 Bond is being issued pursuant to Ordinance No. 2009-12-1 as an "Additional Parity Bond" thereunder; and WHEREAS, the City is authorized, under the provisions of Amendment No. 62 to the Arkansas Constitution and the Arkansas Code of 1987 Annotated, Title 14, Chapter 164, Subchapter 3 (the "Authorizing Legislation"), to enter into the Agreement and to issue the Series 2011 Bond; and • WHEREAS, the Bondholder proposes to pledge the Series 2011 Bond as collateral for the payment of its wastewater system revolving loan fund revenue bonds pursuant to its general bond resolution, as amended or supplemented from time to time, to the bank or trust company named or to be named as trustee thereunder; and WHEREAS, the City is required to pay to the Arkansas Development Finance Authority, as servicer (the "Authority"), a financing fee equal to 1% per annum of the outstanding principal amount of the Series 2011 Bond (the "Financing Fee"); NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Batesville, Arkansas: Section 1. The sale to the Bondholder of up to $20,000,000 in principal amount of the Series 2011 Bond from the City at a price of par for a bond bearing interest at the rate of 1.50% per annum and otherwise subject to the terms and provisions hereafter in this Ordinance set forth in detail is hereby approved and the Series 2011 Bond is hereby sold to the Bondholder. The Mayor is hereby authorized and directed to execute and deliver the Agreement on behalf of the City and to take all action required on the part of the City to fulfill its obligations under the Agreement. The Agreement is hereby approved in substantially the form submitted to this meeting, with such changes as may be approved by the Mayor, his execution to constitute complete evidence of such approval. • Section 2. Under the authority of the Constitution and laws of the State of Arkansas (the "State"), including particularly the Authorizing Legislation, the Series 2011 Bond is hereby authorized and ordered issued in the principal amount of up to $20,000,000. The proceeds from the sale of the Series 2011 Bond are necessary to provide a portion of the funds to accomplish the Improvements, pay expenses incidental thereto and pay expenses of issuing the Series 2011 Bond. The Series 2011 Bond shall bear interest at the rate of 1.50% per annum based upon a 360-day year of twelve consecutive 30-day months. The Series 2011 Bond shall be dated the date of delivery to the Bondholder. Interest shall be payable on each April 15 and October 15 after the Series 2011 Bond is issued. Principal shall be payable in installments on October 15, 2014 and each April 15 and October 15 thereafter until the unpaid principal is paid in full as follows: • 2 • Date Amount Date Amount 10/15/14 $388,428 10/15/24 $497,979 04/15/15 393,283 04/15/25 504,204 10/15/15 398,200 10/15/25 510,506 04/15/16 403,177 04/15/26 516,888 10/15/16 408,216 10/15/26 523,349 04/15/17 413,320 04/15/27 529,891 10/15/17 418,486 10/15/27 536,515 04/15/18 423,717 04/15/28 543,221 10/15/18 429,013 10/15/28 550,011 04/15/19 434,376 04/15/29 556,886 10/15/19 439,806 10/15/29 563,848 04/15/20 445,303 04/15/30 570,895 10/15/20 450,870 10/15/30 578,031 04/15/21 456,505 04/15/31 585,257 10/15/21 462,211 10/15/31 592,573 04/15/22 467,990 04/15/32 599,980 10/15/22 473,840 10/15/32 607,480 04/15/23 479,763 04/15/33 615,073 10/15/23 485,760 10/15/33 622,761 • 04/15/24 491,831 04/15/34 630,557 The Series 2011 Bond will be registered as to both principal and interest, payable to the Bondholder, or registered assigns, as set forth hereinafter in the bond form, and shall be numbered R-1. Payment of principal and interest shall be by check or draft mailed to the Bondholder at its address shown on the bond registration books of the City which shall be maintained by the City Clerk as Bond Registrar, without presentation or surrender of the Series 2011 Bond (except upon final payment) and such payments shall discharge the obligation of the City to the extent thereof. The City Clerk shall keep a payment record and make proper notations thereon of all payments of principal and interest. Payment of principal and interest shall be in any coin or currency of the United States of America which, as at the time of payment, shall be legal tender for the payment of debts due the United States of America. When the principal of and interest on the Series 2011 Bond have been fully paid, it shall be canceled and delivered to the City Clerk. Section 3. The pledge of collections of the Tax (the "Pledged Revenues") in favor of the Series 2011 Bond is on a parity with the pledge in favor of the Series 2010 Bond. The Series 2011 Bond is being issued as an Additional Parity Bond under Ordinance No. 2009- 12-1 and shall be a part of"the bonds" within the meaning of such ordinance. In this regard, all • provisions of Ordinance No. 2009-12-1 pertaining to "the bonds" shall inure and appertain to the Series 2011 Bond to the same extent and with like force and effect as if herein set out in full. 3 • The effect of the above provisions shall be to continue the applicable provisions of Ordinance No. 2009-12-1 in full force and effect after the Series 2010 Bond is paid or provision made therefor. Section 4. The Series 2011 Bond shall be in substantially the following form, and the Mayor and City Clerk are hereby authorized and directed to make all the recitals contained therein: (form of Series 2011 Bond) UNITED STATES OF AMERICA STATE OF ARKANSAS COUNTY OF INDEPENDENCE CITY OF BATESVILLE 1.50% SALES AND USE TAX BOND, SERIES 2011 No. R-1 $20,000,000 KNOW ALL MEN BY THESE PRESENTS: That the City of Batesville, Independence County, Arkansas (the "City"), for • value received, hereby acknowledges itself to owe and promises to pay to the Arkansas Development Finance Authority, or registered assigns, solely from the special fund provided as hereinafter set forth,the principal sum of TWENTY MILLION DOLLARS (or the total principal amount outstanding as reflected by the Record of Payment of Advances attached hereto) with interest on the unpaid balance of the total principal amount at the rate of 1.50% per annum from the date of each advance. The principal and interest shall be payable in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of debts due the United States of America. Interest on the unpaid balance of the total principal amount shall be payable on October 15, 2011 and on each April 15 and October 15 thereafter. Principal shall be payable in installments on October 15, 2014, and on each April 15 and October 15 thereafter until the unpaid principal is paid as follows: Date Amount (There will be inserted the schedule set forth in Section 2 of this Ordinance.) • 4 • Payments of the principal and interest installments due hereon shall be made, except for final payment, without presentation and surrender of this bond, directly to the registered owner at his address shown on the bond registration book of the City maintained by the City Clerk as Bond Registrar, and such payments shall fully discharge the obligation of the City to the extent of the payments so made. This bond is issued for the purpose of providing financing of a portion of the costs of acquiring, constructing and equipping extensions, betterments and improvements to the City's sewer system, and costs of authorizing and issuing this bond, and is issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas (the "State"), including particularly Amendment No. 62 to the Arkansas Constitution and the Arkansas Code of 1987 Annotated, Title 14, Chapter 164, Subchapter 3 (the "Authorizing Legislation"), and pursuant to Ordinance No. 2009-12-1 of the City,.duly adopted and approved on the 22nd day of December, 2009 and Ordinance NoP011-0b-qf the City, duly adopted and approved on the 28th day of June, 2011 (collectively, the "Authorizing Ordinance") and an election duly held on March 10, 2009 at which the majority of the legal voters of the City voting on the question approved the issuance of this bond. Reference is hereby made to the Authorizing Ordinance for the details of the nature and extent of the security and of the rights and obligations of the City and the registered owner of this bond. This bond may be assigned with the written approval of the Arkansas Natural Resources Commission (the "Commission"), and in order to effect such assignment the assignor • shall promptly notify the City Clerk by registered mail, and the assignee shall surrender this bond along with a written approval of the Commission to the City Clerk for transfer on the registration records. Every assignee shall take this bond subject to all payments and prepayments of principal (as reflected by the Payment Record maintained by the City Clerk), prior to such surrender for transfer. This bond does not constitute an indebtedness of the City within any constitutional or statutory limitation or provision. This bond is a special obligation payable solely from a pledge of collections of the City's 1% sales and use tax, levied by Ordinance No. 2009-1-1 of the City duly adopted on January 13, 2009 under the authority of the Authorizing Legislation (the "Tax"), and the City hereby pledges its collections of the Tax for the payment of this bond. The pledge in favor of the bond is on a parity with the pledge in favor of the City's Sales and Use Tax Bond, Series 2010 (the "Series 2010 Bond"). The City has reserved the right in the Authorizing Ordinance to issue additional bonds, in the principal amount of$23,700,000, on a parity of security with this bond and the Series 2010 Bond ("Additional Parity Bonds"). This bond may be prepaid, at the option of the City, in whole or in part at any time from Tax collections in excess of the amount necessary to insure the prompt payment of the principal of and interest on this bond, the Series 2010 Bond and the Additional Parity Bonds ("Surplus Tax Collections") as the same becomes due at the prepayment price equal to the principal amount being prepaid plus accrued interest to the prepayment date. The City shall determine the bonds to be redeemed from Surplus Tax Collections. • 5 • This bond may also be prepaid at the option of the City from funds from any other source, in whole but not in part, at any time on and after October 15, 2021, at a prepayment price equal to the principal amount outstanding, plus accrued interest to the prepayment date, upon 90 days' notice. Notice shall be given of each prepayment in writing mailed to the address of the owner of this bond or registered assigns at the address as reflected on the bond registration books of the City Clerk. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by the Constitution and statutes of the State to exist, happen and be performed precedent to and in the issuance of this bond do exist, have happened and have been performed in regular and due time, form and manner as required by law; that this bond does not exceed any constitutional or statutory limitation of indebtedness; and that provision has been made for the payment of the principal of and interest on this bond, as provided in the Authorizing Ordinance. IN WITNESS WHEREOF, the City of Batesville, Arkansas has caused this bond to be executed in its name by its Mayor and City Clerk, thereunto duly authorized, and its corporate seal to be affixed, all as of the 6- day of , 2011. [The Bond shall contain signature spaces, a registration certificate and record of payment advances.] • Section 5. (a) The City Treasurer shall set aside and make provision as set forth in (b) below from moneys in the special fund of the City heretofore created and designated "Sales and Use Tax Revenue Fund" (the "Revenue Fund") for the payment of the principal of and interest on the Series 2011 Bond by making a deposit as set forth in (b) below into an account of the City in a special fund to be created by the Bondholder (the "2011 ADFA Bond Fund") for the purpose of paying the principal of and interest on the Series 2011 Bond in the amounts specified in(b) below. (b) In order to pay interest on the Series 2011 Bond, there shall be deposited from moneys in the Revenue Fund into the 2011 ADFA Bond Fund on each April 15 and October 15 after the Series 2011 Bond is issued and delivered until April 15, 2014, the interest due on the Series 2011 Bond on such dates. Commencing on the first business day of each month thereafter, there shall be deposited into the 2011 ADFA Bond Fund from moneys in the Revenue Fund an amount equal to 1/6 of the amount of interest on and principal of the Series 2011 Bond next due. The deposit required herein shall be made contemporaneously with the deposit from the Revenue Fund into the 2010 ADFA Bond Fund required by Ordinance No. 2009-12-1. The obligation to make deposits into the 2010 ADFA Bond Fund and the 2011 ADFA Bond Fund shall be on a parity of lien, pledge of security. If the available moneys in the Revenue Fund are insufficient to make the required deposits in full, the available moneys shall be distributed between the 2010 ADFA Bond Fund and the 2011 ADFA Bond Fund in proportion to the required deposits. • 6 • (c) If moneys in the Revenue Fund are insufficient to make the required payment on or before the first business day of the following month into the 2011 ADFA Bond Fund, the amount of any such deficiency in the payment made shall be added to the amount otherwise required to be paid into the 2011 ADFA Bond Fund on the first business day of the next month. (d) When the moneys held in the 2011 ADFA Bond Fund which represent payments by the City and interest earnings thereon or proceeds of investments therefrom (collectively, "City Funds") shall be and remain sufficient to pay in full the principal of and interest on the Series 2011 Bond, the City shall not be obligated to make any further payments into the 2011 ADFA Bond Fund. (e) All moneys in the 2011 ADFA Bond Fund representing City Funds shall be used solely for the purpose of paying the principal of and interest on the Series 2011 Bond and the City shall automatically receive a credit for the amount of such City Funds on hand in the 2011 ADFA Bond Fund and available for the payment of any principal and interest currently due on an interest or principal payment date irrespective of whether the Bondholder has applied or caused to be applied such funds on that date for such purpose. The City shall receive a credit for all earnings and income derived from the investment of the City Funds each April 15 and October 15 and such earnings and income shall be credited against the next six monthly payments. • Section 6. After making the payments into the 2011 ADFA Bond Fund required by Section 5 hereof, into the 2010 ADFA Bond Fund and into the bond funds for any Additional Parity Bonds, there shall be paid from the Revenue Fund the Financing Fee to the Authority. The Financing Fee shall be payable on each date interest on the Series 2011 Bond is due and shall be calculated on the same basis as interest on the Series 2011 Bond. The payment of the Financing Fee is expressly made subordinate to the payment of the principal of and interest on the Series 2011 Bond, the Series 2010 Bond and any Additional Parity Bonds. Section 7. The City shall assure that (i) not in excess of 10% of the proceeds of the Series 2011 Bond is used for Private Business Use if, in addition, the payment of more than 10% of the principal or 10% of the interest due on the Series 2011 Bond during the term thereof is, under the terms of the Series 2011 Bond or any underlying arrangement, directly or indirectly secured by any interest in property used or to be used for a Private Business Use or in payments in respect of property used or to be used for a Private Business Use or is to be derived from payments, whether or not to the City, in respect of property or borrowed moneys used or to be used for a Private Business Use; and (ii) that, in the event that both (A) in excess of 5% of the proceeds of the Series 2011 Bond are used for a Private Business Use, and (B) an amount in excess of 5% of the principal or 5% of the interest due on the Series 2011 Bond during the term thereof is, under the terms of the Series 2011 Bond or any underlying arrangement, directly or indirectly, secured by any interest in property used or to be used for a Private Business Use or in payments in respect of property used or to be used for a Private Business Use or is to be derived from payments, whether or not to the City, in respect of property or borrowed money used or to • be used for a Private Business Use, then the excess over said 5% of proceeds of the Series 2011 7 • Bond used for a Private Business Use shall be used for a Private Business Use related to the governmental use of the Improvements. The City shall assure that not in excess of 5% of the proceeds of the Series 2011 Bond are used, directly or indirectly, to make or finance a loan to persons other than state or local governmental units. As used in this Section, "Private Business Use" means use directly or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, excluding, however, use by a state or local governmental unit and use as a member of the general public. Section 8. The principal and interest installments shall be prepayable prior to maturity as provided in the bond form in Section 4 hereof. Section 9. It is covenanted by the City with the Bondholder and the Commission that it will faithfully and punctually perform all duties with reference to the Tax required by the Constitution and laws of the State and by this Ordinance, including, without limitation, the collection of the Tax and applying the Pledged Revenues to the respective funds maintained pursuant to this Ordinance. If there be any default in the payment of the principal of or interest on the Series • 2011 Bond, or if the City defaults in any 2011 ADFA Bond Fund requirement or in the performance of any of the other covenants contained in this Ordinance, the Bondholder may, by proper suit, compel the performance of the duties of the officials of the City under the laws of the State. No remedy herein conferred upon or reserved to the Bondholder is intended to be exclusive of any other remedy or remedies herein provided or provided by law, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or given by law. No delay or omission of the Bondholder to exercise any right or power accrued upon any default shall impair any such right or power or shall be construed to be a waiver of any default or an acquiescence therein; and every power and remedy given by this Ordinance to the Bondholder may be exercised from time to time and as often as may be deemed expedient. No waiver of any default shall extend to or affect any other existing or any subsequent default or defaults or impair any rights or remedies consequent thereon. Any costs of enforcement of the bonds or of any provision of this Ordinance, including reasonable attorney's fees, shall be paid by the City. The Authority may enforce all rights and exercise all remedies available to the Bondholder in the event the Financing Fee is not paid when due. Section 10. When the Series 2011 Bond has been executed and sealed as herein provided, it shall be delivered to the Bondholder upon payment of all or a portion of the purchase price in accordance with the Agreement. • 8 • The sale proceeds shall be deposited, as and when received, into a special fund of the City in a bank selected by the City that is a member of FDIC which is hereby created and designated "2011 Sales and Use Tax Bond Sewer Construction Fund" (the "Construction Fund"). The moneys in the Construction Fund shall be used for paying the costs, or reimbursing the City for the costs paid, in accomplishing the Improvements, expenses incidental thereto and the expenses of issuing the Series 2011 Bond approved in accordance with the Agreement. Payments from the Construction Fund shall be by check or voucher signed by the two persons designated by the City Council, and drawn on the depository. Each such check or voucher shall briefly specify the purpose of the expenditure. Section 11. (a) Moneys held for the credit of all funds created by this Ordinance shall, as nearly as may be practicable, be continuously invested and reinvested in direct obligations of, or obligations the principal of and interest on which are fully guaranteed by, the United States Government ("Government Obligations"), or other investments as may be from time to time authorized by law, which mature or which shall be subject to redemption by the holder, at the option of such holder, not later than the date or dates when the moneys will be needed for the purposes intended. (b) Obligations so purchased as an investment of moneys in any such fund shall be deemed at all times to be a part of such fund, and the interest accruing thereon and any profit realized from such investment shall be credited to such fund, and any loss resulting from such investment shall be charged to such fund. • (c) Moneys so invested in Government Obligations need not be secured by the depository bank. Section 12. The terms of this Ordinance shall constitute a contract between the City, the Bondholder and the Commission and no variation or change in the undertaking herein set forth shall be made while the Series 2011 Bond is outstanding unless consented to in writing by the Bondholder and the Commission. Section 13. The provisions of this Ordinance are hereby declared to be severable, and if any provision shall for any reason be held illegal or invalid, it shall not affect the validity of the remainder of this Ordinance. Section 14. Reference in this Ordinance to 'Bondholder" shall include the original Bondholder or any registered assign thereof. Section 15. All ordinances and resolutions and parts thereof in conflict herewith are hereby repealed to the extent of such conflict. • 9 C PASSED: June 28, 2011 APPROVED: ATTEST: City Clerk (SEAL) �r 10 • CERTIFICATE The undersigned, City Clerk of Batesville, Arkansas, hereby certifies that the foregoing pages are a true and perfect copy of Ordinance Noo�Q/ , passed at a regular session of the City Council, held at the regular meeting place of the City Council at 5:30 o'clock p.m., on the 28th day of June, 2011, and that the Ordinance is of record in Ordinance Record Book No. F ,Page '� 9 , now in my possession. GIVEN under my hand and seal this 28th day of June, 2011. City Clerk (SEAL) 11 BOND PURCHASE AGREEMENT City of Batesville, Arkansas June 28, 2011 Attention: Mayor Ladies and Gentlemen: Certain terms used in this Bond Purchase Agreement are defined as follows: Issuer: City of Batesville, Arkansas Principal Amount: $20,000,000 Interest Rate: 1.50% Financing Fee: 1% per annum of the outstanding principal amount of the Bond (see Exhibit A) Bond: City of Batesville, Arkansas Sales and Use Tax Bond, Series 2011 Bond Counsel: Friday, Eldredge & Clark, LLP Bond Ordinance: Ordinance No. 2009-12-1 of the Issuer, adopted December 22, 2009 and Ordinance No11-0�b'?Ahe Issuer, adopted June 28, 2011, under which the Bond is to be issued and secured. Tax Ordinance: Ordinance No. 2009-1-1 of the Issuer, adopted January 13, 2009 levying the Tax. Tax: The sales and use tax levied by the Issuer at the rate of 1% for the payment of the Bond. Issuer's Notice City of Batesville, Arkansas Address: 500 E. Main Street Batesville, Arkansas 72501 Attn: Mayor Closing: 10:00 a.m., prevailing local time, on August 9, 2011, or at such other time or on such earlier or later date as is mutually agreed upon, at the offices of Bond Counsel in Little Rock, Arkansas. Authorizing Title 14, Chapter 164, Subchapter 3 of the Arkansas Code of 1987 Legislation: Annotated Disbursement April 15, 2014 Cut-Off Date: • The Arkansas Natural Resources Commission (the "Commission") and the Arkansas Development Finance Authority (the "Authority") hereby offer to enter into this Bond Purchase Agreement (the "Agreement") with you, the Issuer, for the purchase by the Authority from moneys in the Construction Assistance Revolving Loan Fund, created by Arkansas Code of 1987 Annotated § 15-5-901, as the same may be amended from time to time (the "Revolving Loan Fund"), and the sale by you of the Bond of the Issuer more particularly described below. Upon approval by you and by the execution of the acceptance hereof by the Mayor of the Issuer, this Agreement shall be in full force and effect in accordance with its terms and shall be valid, binding, and enforceable upon the Issuer,the Commission, and the Authority. Further terms of this Agreement are: 1. Upon the terms and conditions and upon the basis of the representations herein set forth, the Authority hereby agrees to purchase from the Issuer and the Issuer hereby agrees to sell to the Authority the entire Principal Amount of the Bond to be issued under and secured by the Bond Ordinance. 2. The Bond is being issued for the purpose of financing a portion of the costs of the planning, design, construction and/or rehabilitation of the wastewater treatment and/or wastewater collection facilities of the Issuer's water and sewer system described in the facilities plan furnished by the Issuer to and concurred with by the Commission (the "Project"), paying costs incidental thereto and paying approved expenses incurred in connection with the issuance of the • Bond as set forth in Exhibit B. 3. The Bond and the Financing Fee shall be secured by a pledge of and payable from Tax collections, subject to the terms of the Bond Ordinance. The pledge in favor of the Bond is on a parity with the pledge in favor of the City's Sales and Use Tax Bond, Series 2010 (the "Series 2010 Bond"). The Issuer may issue up to $23,700,000 of additional bonds secured by collections of the Tax, which bonds will rank on a parity of security with the Bond and the Series 2010 Bond("Additional Parity Bonds"). 4. The Bond shall be dated the date of the Closing. The Bond shall be authorized in an amount up to the Principal Amount identified above, and shall bear interest at the Interest Rate identified above. Principal and interest shall be amortized in accordance with the schedule set forth on Exhibit A attached hereto (which is based upon semiannual repayment of principal and interest commencing six months following the Disbursement Cut-Off Date and a twenty-year amortization), and the Issuer shall pay to the Authority on the first business day of each month, commencing six months prior to the first principal payment date set forth on Exhibit A, an amount equal to 1/6 of the next installment of interest and principal due on the Bond, and the Issuer shall pay to the Authority interest on the Bond on each April 15 and October 15 to and including the Disbursement Cut-Off Date. In addition to the payment of the principal and interest on the Bond,the Issuer shall be obligated to pay the Financing Fee to the Authority. The Financing Fee shall be payable in the same manner and on the same dates as interest on the Bond is due. The payment of the Financing Fee is expressly made subordinate to the payment of the principal of and . interest on the Bond, the Series 2010 Bond and any Additional Parity Bonds. The Issuer agrees that any delay in completion of the Project beyond the Disbursement Cut-Off Date shall not result 2 Lin any extension of the date on which principal and interest payments are to be made on the Bond. The Bond shall be subject to redemption prior to maturity, shall be payable, and shall be as otherwise described in the Bond Ordinance. Interest on the Bond shall not be excludable from gross income for federal income tax purposes. 5. The Issuer recognizes that in the event the costs of the Project exceed the amount of the Bond, the Series 2010 Bond, the Additional Parity Bonds and the City's Water and Sewer Revenue Bond, Series 2010, the Authority and the Commission shall be under no obligation to provide any additional funds to the Issuer. If, for any reason, the Issuer does not utilize the entire Bond proceeds, then in such event the Principal Amount of the Bond will be reduced to the amount actually withdrawn. Any reduction of the Bond pursuant to this provision shall result in pro rata reductions of the remaining installments of principal so that the weighted average life of the Bond immediately following any such reduction shall be substantially equal to the weighted average life of the Bond immediately prior to such reduction. The Authority agrees to accept, or cause the registered owner of the Bond to accept, a new Bond from the Issuer reflecting the revised payment schedule. 6. Subject to the terms and conditions and upon the basis of the representations herein set forth, the Authority hereby agrees to purchase the Bond from the Issuer in installments from time to time from moneys in the Revolving Loan Fund in an amount up to the Principal Amount, and the Issuer hereby agrees to sell the Bond to the Authority at a price of 100 percent of the Principal Amount of the Bond purchased from time to time. The purchase price for the Bond shall be paid in a series of advances in accordance with the provisions of paragraph 7. The initial Ladvance of the purchase price shall take place at the Closing. At the Closing, the Issuer will deliver, or cause to be delivered, to the Authority a single typewritten bond, duly executed and authenticated, together with the other documents herein required, and the Authority will accept delivery and make the initial advance of the purchase price of the Bond by wire transfer of immediately available funds or by certified or official bank cashier's check as directed by the Issuer. If the Closing and the initial advance do not occur within 180 days from the date hereof, then the Authority's obligation to purchase the Bond is terminated. 7. So long as the Issuer is in compliance with the terms and provisions of this Agreement and the Bond Ordinance and the representations and warranties of the Issuer made herein remain true and correct, the Authority agrees to make, and the Commission agrees to approve advances of the purchase price of the Bond ("Disbursements") from moneys in the Revolving Loan Fund as follows: (a) Disbursements shall only be made based upon actual work completed; (b) The Issuer may request reimbursement for costs not more often than monthly, provided, however, during the Project performance period requests for reimbursement shall be limited to quarterly; 3 (c) Disbursements shall be for costs incurred prior to the Disbursement Cut-Off Date, and no Disbursements shall be made following the Disbursement Cut-Off Date; (d) Disbursements shall be made for eligible work called for in the engineering services contract and in the plans and specifications approved by the Commission and Bond issuance costs eligible under Title XVI of the Rules of the Commission, as now or hereafter amended ("Title XVI"); and (e) All requests for Disbursements must be made in accordance with Title XVI and shall be made by forwarding a completed copy of a Disbursement Request, in the form attached as Exhibit C hereto, to the Commission's Water Resources Development Division, along with the documentation for eligible Project Costs incurred since the last Disbursement Request and not previously submitted. 8. The parties hereto acknowledge that the Authority intends to pledge the Bond to secure payment of the Authority's wastewater system revolving loan fund revenue bonds (the "ADFA Bonds"). The Authority agrees not to make any other transfer or attempt to transfer the Bond without the prior written consent of the Commission and without written disclosure to the transferee that the interest on the Bond is includable in gross income for federal income tax purposes. Upon transfer of the Bond, the Authority and the Commission may assign their rights hereunder to the new owner of the Bond without consent of the Issuer. 9. The Issuer represents and warrants to, and agrees with, the Authority and the Commission that: (a) The Issuer is a city of the first class, duly organized and existing under the laws of the State of Arkansas, and has, and at the date of Closing will have, full legal right, power, and authority (i) to enter into this Agreement, (ii) to adopt the Bond Ordinance and the Tax Ordinance, (iii) to issue, sell and deliver the Bond to the Authority as provided herein, (iv) to levy the Tax and pledge the Tax collections, and (v) to carry out and consummate the transactions contemplated by this Agreement and the Bond Ordinance; (b) The Issuer has complied, and will at the date of Closing be in compliance, in all respects, with the Authorizing Legislation; (c) By adoption of the Bond Ordinance pursuant to the Authorizing Legislation, the Issuer has duly authorized and approved the execution and delivery of, and the performance by the Issuer of the obligations contained in, the Bond and this Agreement and, when delivered to and paid for by the Authority at the Closing in accordance with the provisions of this Agreement, the Bond will have been duly authorized, executed, issued, and delivered and will constitute a valid and binding obligation of the Issuer in accordance with its terms, in 4 conformity with the Authorizing Legislation, entitled to the benefit and security of the Bond Ordinance; (d) The execution and delivery of this Agreement and the Bond, the adoption of the Bond Ordinance and the Tax Ordinance, the levy of the Tax, the pledge of the Tax collections to the Bond (and to the Financing Fee), and the carrying out and consummation of the transactions contemplated by this Agreement and the Bond Ordinance will not conflict with or constitute a breach of or default under any applicable law or administrative regulation of the State of Arkansas or the United States or any judgment or decree or any agreement or other instrument to which the Issuer is a party or is otherwise subject; (e) There is no action, suit, proceeding or investigation involving the Issuer before or by any court, public board or body pending or, to the knowledge of the Issuer, threatened wherein an unfavorable decision, ruling or finding would: (i) affect the creation, organization, existence or powers of the Issuer or the titles of its officials to their offices, (ii) enjoin or restrain the issuance, sale and delivery of the Bond, the levy of the Tax, or the pledge of Tax collections, (iii) in any way question or affect any of the rights, powers, duties or obligations of the Issuer with respect to the Tax collections, (iv) in any way question or affect any authority for the issuance of the Bond or the validity or enforceability of the Bond, the Bond Ordinance or the Tax Ordinance, or (v) in any way question or affect this Agreement or the transactions contemplated by this Agreement, or any other agreement or instrument relating thereto to which the Issuer is a party; (f) The Tax has been duly levied under the Authorizing Legislation, and the Tax collections have been duly pledged to the payment of the Bond (and the Financing Fee) under the Bond Ordinance pursuant to the authority granted by the Authorizing Legislation; and (g) The Issuer will promptly remit each Disbursement to the person or persons to whom payment is then due and owing. 10. The Issuer covenants and agrees with the Commission and the Authority: (a) To comply with all applicable Arkansas and federal statutes and regulations, including particularly, without limitation, Title XVI; (b) To utilize and expend the proceeds of the Bond in a timely and expeditious manner by: (1) utilizing Bond proceeds for eligible Project Costs and approved issuance costs, (2) proceeding expeditiously with and completing the Project, and (3) completing all facilities recommended in the approved facilities plan; (c) To establish and maintain adequate financial records for the Project in accordance with "generally accepted governmental accounting 5 standards" defined as, but not limited to, those contained in the U.S. General Accounting Office (GAO) publication "Standards for Audit of Governmental Organizations, Programs, Activities and Functions" (February 27, 1981), and make these records available to the Commission, the EPA Inspector General, or their authorized representatives; (d) To undertake the Project on its own responsibility and release and hold harmless the Commission and the Authority, and their officers, members, directors and employees, from any claim arising in connection with the design, construction or operation of the Project or any other aspect of the wastewater facilities of the Issuer, including any matter due solely to their own negligence; (e) To comply with all terms and conditions of any construction contracts, architectural or engineering agreements, and other agreements affecting the Project, the premises of the wastewater facilities of the Issuer, and its operations and to require its construction contractor to furnish both a performance bond and payment bond in the full amount of the construction contract for the Project; (f) To become familiar with and comply with all federal and state laws pertaining to equal employment opportunities ensuring that all engineers and contractors for the Project do not discriminate against any person on the basis of race, color, religion, sex, age, national origin or handicap; and (g) To maintain and operate the wastewater facilities of the Issuer in a sound and economical manner and in accordance with standards as may be required or prescribed by federal, state, or local regulatory agencies. 11. The Issuer covenants and agrees with the Authority as follows: (a) For purposes of this paragraph 11, the following terms shall have the meanings set forth below. "Rule 15c2-12" shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time (17 C.F.R., Part 240 §240.15c2-12). "Obligated Person" shall mean any person who is committed by contract or other arrangement to support payments in a sum equal to ten percent (10%) or more of the aggregate payments of the loans, including the Bond, which comprise the Revolving Loan Fund administered by the Authority, and which are pledged as security for ADFA Bonds, the proceeds of which fund a portion of the Bond. (b) If, during any fiscal year of the Authority, the outstanding obligations of the Issuer under the terms of the Bond shall cause the Issuer to be deemed an Obligated Person, and unless in the opinion of bond counsel for the 6 ADFA Bonds an exemption from Rule 15c2-12 is then available, the Issuer shall, upon notice from the Authority, within 120 days after the close of each fiscal year of the Authority, furnish to the Authority (i) a copy of the latest financial statements of the Issuer prepared in accordance with generally accepted government accounting standards and audited by its independent auditors (or, if not available as of such date, the latest unaudited financial statements of the Issuer and, as soon thereafter as available, the audited financial statements) and (ii) such financial information and operating data relating to the Issuer as agreed to by the Issuer and the Authority. (c) The Issuer shall provide to the Authority, within ten (10) business days after the occurrence thereof, notice of any of the following events with respect to the Bond: (1) any principal or interest payment delinquency with respect to the Bond; (2) any non-payment related default under the Bond Ordinance, the Bond or this Agreement, if material; (3) any event that would cause the Bond to be a "private activity bond" under the Internal Revenue Code of 1986, as amended; (4) any defeasance of the Bond, in whole or in part; and (5) any release, substitution or sale of property securing repayment of the Bond, if material. (d) The Issuer's obligations under this paragraph 11 shall terminate upon the defeasance, prior redemption or payment in full of the Bond. (e) Nothing in this paragraph 11 shall be deemed to prevent the Issuer from disseminating any other information, or including any other information in any notice or report made hereunder, in addition to that which is specifically required by this paragraph 11. If the Issuer chooses to include any information in any report or notice made hereunder in addition to that which is specifically required by this paragraph 11, the Issuer shall have no obligation hereunder to update such information or include it in any future report or notice. (f) The reporting requirements set forth in this Agreement are in addition to any financial reporting requirements set forth in the Bond Ordinance. 7 12. The Authority and the Commission have entered into this Agreement in reliance upon the representations and agreements of the Issuer herein and the performance by the Issuer of its obligations hereunder, both as of the date hereof and as of the date of the Closing. The obligation of the Authority and the Commission under this Agreement are and shall be subject to the following further conditions: (a) At the Closing, the Bond Ordinance and the Tax Ordinance shall be in full force and effect and shall not have been amended, modified or supplemented after the date hereof except as may have been agreed to by the Authority and the Commission, and the Issuer shall have duly adopted and there shall be in full force and effect such other ordinances and resolutions as, in the opinion of Bond Counsel and the Commission, shall be necessary in connection with the transactions contemplated hereby. (b) The representations and warranties of the Issuer contained herein shall be true, complete and correct on the date hereof and on and as of the date of the Closing, as if made on and as of the date of the Closing. (c) At or prior to the Closing, the Commission and the Authority shall have received the following: (1) The Bond Ordinance and the Tax Ordinance, certified by the Issuer under its seal as having been duly adopted and as being in full force and effect, with only such amendments as may have been agreed to by the Commission and the Authority; (2) An unqualified approving opinion, dated the date of the Closing, of Bond Counsel, in form and substance satisfactory to the Commission and the Authority, to the effect that: (i) the Issuer is duly created and validly existing as a city of the first class of the State of Arkansas, with the power to adopt the Bond Ordinance and the Tax Ordinance, perform the agreements on its part contained in the Bond Ordinance, and issue the Bond; (ii) the Bond has been duly authorized and issued by the Issuer and is a valid and binding special obligation of the Issuer enforceable in accordance with its terms; (iii) the Bond is secured by an irrevocable pledge of and lien on the Tax collections as provided in the Bond Ordinance, which pledge is valid and enforceable; and (iv) the interest on the Bond is exempt from all Arkansas state, county, and municipal taxes; 8 (3) A supplemental opinion, dated the date of Closing, of Bond Counsel, in form and substance satisfactory to the Commission and the Authority, to the effect that (i) the Bond and the Bond Ordinance conform in both form and tenor to the provisions relating thereto summarized in the Term Sheet for the Project and (ii) if the Bond were being purchased on a tax-exempt basis, the Bond would not constitute a "private activity bond" within the meaning of Section 141 of the Internal Revenue Code of 1986, as amended, and covering such other matters as may be reasonably requested by the Authority and the Commission; (4) A certificate dated the date of the Closing and signed by the Mayor and the City Clerk of the Issuer to the effect that: (i) the representations and warranties of the Issuer contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing, (ii) the Issuer has complied with all agreements and covenants and satisfied all conditions on its part to be complied with or satisfied at or prior to the Closing, and (iii) the collections of the Tax have not been pledged to any other interest-bearing obligation of the Issuer, other than the Series 2010 Bond; (5) Two counterpart originals of a transcript of all proceedings relating to the authorization and issuance of the Bond; and (6) Such additional legal opinions, certificates, proceedings, instruments and other documents as the Commission, the Authority and Bond Counsel may reasonably request to evidence compliance by the Issuer with legal requirements, the truth and accuracy, as of the time of Closing, of the representations of the Issuer herein contained, and the due performance or satisfaction by the Issuer at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Issuer. All of the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to the Commission and the Authority. The performance of any and all obligations of the Issuer under this Agreement and the performance of any and all conditions contained herein for the benefit of the Authority and the Commission may be waived by the Authority and the Commission in their sole discretion. 13. All notices, demands and formal actions hereunder will be in writing mailed, telegraphed, or delivered to the parties at the following addresses: The Issuer: Issuer's Notice Address The Commission: Arkansas National Resources Commission 101 East Capitol, Suite 350 Little Rock, Arkansas 72201 Attention: Pris Houchens 9 The Authority: Arkansas Development Finance Authority Technology Center 900 West Capitol Little Rock, Arkansas 72201 Attention: Vice President for Finance and Administration 14. All representations, warranties and covenants of the Issuer contained herein shall remain operative and in full force and shall survive (a) the execution and delivery of this Agreement, (b) any investigation made by or on behalf of the Commission or the Authority, (c) the purchase of the Bond hereunder, and (d) any disposition of or payment for the Bond. 15. Any audit or review of plans and specifications and any inspection of the work shall be for the Commission's convenience only in order to determine that they are within the approved scope of the Project. No such review and inspection, approvals, and disapprovals shall be an undertaking by the Commission of responsibility for design or construction. 16. Neither the Commission nor the Authority is a partner, joint venturer, or in any other way a party to the Project or the operation of the wastewater facilities of the Issuer. Neither the Commission nor the Authority shall in any way be liable or responsible by reason of the provisions hereof to the Issuer or any third party for the payment of any claims in connection therewith. 17. The Authority agrees that it will invest the monthly payments made by the Issuer until applied to the semiannual interest and principal payments due on the Bond, and semiannually to credit interest accruing on such monthly payments against the next six monthly principal and interest payments due from the Issuer and to notify the Issuer in writing of such credit. 18. This Agreement may be executed in any number of counterparts with each executed counterpart constituting an original but all of which together shall constitute one and the same instrument. 19. This Agreement will inure to the benefit of and be binding upon the parties hereto and their successors and will not confer any rights upon any other person. This Agreement shall be governed by and construed in accordance with the laws of the State of Arkansas. 10 • ARKANSAS NATURAL RESOURCES COMMISSION By Title: ARKANSAS DEVELOPMENT FINANCE AUTHORITY By Title: Vice President for Finance and Administration ACCEPTED this 28th day of June, 2011. CITY OF BATESVILLE, ARKANSAS By 11 Batesville, Arkansas EXHIBIT A ANRC Loan#: 00647-CWRLF-L ANRC Project#: WRD-003-620 Amortization Schedule - 20 Years - Semi-Annual Payments as of date: Jun 22, 2011 Disbursement First Repayment Annual Cut-off Payment Length Lending Total Semi-Annual Date Date Years Rate Principal Payment Apr 15, 2014 Oct 15, 2014 20 2.500% $20,000,000.00 $ 638,428.00 Semi-Annual Payment Outstanding Payment 1.000% 1.500% Principal Period Date Amount Servicing Fee Interest Principal Balance $20,000,000.00 1 Oct 15, 2014 $ 638,428.00 $ 100,000.00 $ 150,000.00 $ 388,428.00 19,611,572.00 2 Apr 15, 2015 638,428.00 98,058.00 147,087.00 393,283.00 19,218,289.00 3 Oct 15, 2015 638,428.00 96,091.00 144,137.00 398,200.00 18,820,089.00 4 Apr 15, 2016 638,428.00 94,100.00 141,151.00 403,177.00 18,416,912.00 5 Oct 15, 2016 638,428.00 92,085.00 138,127.00 408,216.00 18,008,696.00 6 Apr 15, 2017 638,428.00 90,043.00 135,065.00 413,320.00 17,595,376.00 7 Oct 15, 2017 638,428.00 87,977.00 131,965.00 418,486.00 17,176,890.00 8 Apr 15, 2018 638,428.00 85,884.00 128,827.00 423,717.00 16,753,173.00 9 Oct 15, 2018 638,428.00 83,766.00 125,649.00 429,013.00 16,324,160.00 10 Apr 15, 2019 638,428.00 81,621.00 122,431.00 434,376.00 15,889,784.00 11 Oct 15, 2019 638,428.00 79,449.00 119,173.00 439,806.00 15,449,978.00 12 Apr 15, 2020 638,428.00 77,250.00 115,875.00 445,303.00 15,004,675.00 13 Oct 15, 2020 638,428.00 75,023.00 112,535.00 450,870.00 14,553,805.00 14 Apr 15, 2021 638,428.00 72,769.00 109,154.00 456,505.00 14,097,300.00 15 Oct 15, 2021 638,428.00 70,487.00 105,730.00 462,211.00 13,635,089.00 16 Apr 15, 2022 638,428.00 68,175.00 102,263.00 467,990.00 13,167,099.00 17 Oct 15, 2022 638,428.00 65,835.00 98,753.00 473,840.00 12,693,259.00 18 Apr 15, 2023 638,428.00 63,466.00 95,199.00 479,763.00 12,213,496.00 19 Oct 15, 2023 638,428.00 61,067.00 91,601.00 485,760.00 11,727,736.00 20 Apr 15, 2024 638,428.00 58,639.00 87,958.00 491,831.00 11,235,905.00 21 Oct 15, 2024 638,428.00 56,180.00 84,269.00 497,979.00 10,737,926.00 22 Apr 15, 2025 638,428.00 53,690.00 80,534.00 504,204.00 10,233,722.00 23 Oct 15, 2025 638,428.00 51,169.00 76,753.00 510,506.00 9,723,216.00 24 Apr 15, 2026 638,428.00 48,616.00 72,924.00 516,888.00 9,206,328.00 25 Oct 15, 2026 638,428.00 46,032.00 69,047.00 523,349.00 8,682,979.00 26 Apr 15, 2027 638,428.00 43,415.00 65,122.00 529,891.00 8,153,088.00 27 Oct 15, 2027 638,428.00 40,765.00 61,148.00 536,515.00 7,616,573.00 28 Apr 15, 2028 638,428.00 38,083.00 57,124.00 543,221.00 7,073,352.00 29 Oct 15, 2028 638,428.00 35,367.00 53,050.00 550,011.00 6,523,341.00 30 Apr 15, 2029 638,428.00 32,617.00 48,925.00 556,886.00 5,966,455.00 31 Oct 15, 2029 638,428.00 29,832.00 44,748.00 563,848.00 5,402,607.00 32 Apr 15, 2030 638,428.00 27,013.00 40,520.00 570,895.00 4,831,712.00 33 Oct 15, 2030 638,428.00 24,159.00 36,238.00 578,031.00 4,253,681.00 34 Apr 15, 2031 638,428.00 21,268.00 31,903.00 585,257.00 3,668,424.00 35 Oct 15, 2031 638,428.00 18,342.00 27,513.00 592,573.00 3,075,851.00 36 Apr 15, 2032 638,428.00 15,379.00 23,069.00 599,980.00 2,475,871.00 37 Oct 15, 2032 638,428.00 12,379.00 18,569.00 607,480.00 1,868,391.00 38 Apr 15, 2033 638,428.00 1 9,342.00 14,013.00 615,073.00 1,253,318.00 39 Oct 15, 2033 638,428.00 1 6,267.00 1 9,400.00 622,761.00 630,557.00 40 Apr 15, 2034 638,439.00 1 3,153.00 4,729.00 630,557.00 TOTALS $25,537,131.00 $ 2,214,853.00 $ 3,322,278.00 $20,000,000.00 • EXHIBIT B USES OF FUNDS Item Costs Local Loan Expenses $ 20,000 Planning and Design 773,000 Construction and Contingency 17,314,000 PRINCIPAL AMOUNT $20,000,000 EXHIBIT C RLF-76 DISBURSEMENT REQUEST (R-12i09) Arkansas Natural Resources Commission Revolving Loan Fund Project Name: Request Number: F. ,.ct Number: Loan Number: Percent Complete: Employer Identification No.: Cost Classification Costs Incurred RLF Eligible Previous RLF RLF Payment Due to Date Amount Disbursements this Request a. Land Acquisition Administration b. Costs(Land) Construction- c. Tank Construction- d. Pump Station(s) Construction- e. Rehabilitation Work A/E Basic Fees f. Bid Phase ('see below) A/E Basic Fees g. Const.Phase h. Inspection Phase i. Start-Up Services Project Performance j. Fees k. 08M Manual I. Material Testing Project Performance m. Testing n. Equipment Allowance o. (Planning/Design) p. ADFA Fee q. Legal Fees r. Issuance Costs S. `reimbursement to City TOTAL Signature of Authorized Certifying Official Date Report Submitted I certify that to the best of my Requested& knowledge,that this Approved Typed or Printed Name and Title Telephone Number disbursement request accurately Bv reflects the total RLF amount due Signature of Engineering Consultant Date Signed to date and that all costs Prepared& requested are in accordance with Approved Typed or Printed Name and Title Telephone Number the terms of the bond purchase By agreement and RLF regulations. Signature of RLF Official Date Signed I further certify that all work has Approved for been inspected and performed in Payment Typed or Printed Name and Title Telephone Number acri-irdance with RLF program gv r iments. Signature of Project Engineer Date Signed Typed of Printed Name and Title Telephone Number Page 1 of 1