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HomeMy WebLinkAbout2005-01-03 ORDINANCE NO.�W����� AN ORDINANCE AUTHORIZING THE ISSUANCE OF WATER AND SEWER SYSTEM REVENUE BONDS; PROVIDING FOR THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE BONDS; PRESCRIBING OTHER MATTERS RELATING THERETO; AND DECLARING AN EMERGENCY. WHEREAS, the City of Batesville, Arkansas (the "City" ) , a city of the first class, owns and operates, by and through the Batesville Utilities Commission (the "Commission" ) a Waterworks and Sewer System ( "System" ) ; and WHEREAS, the Commission has found and determined that there is a need for certain improvements to the sewer facilities of the System (the "Improvements" ) , at an estimated cost of $490 , 000 (including costs of financing) ; and WHEREAS, it has been recommended by the Commission that the cost of the Improvements be financed by water and sewer revenue bonds to be issued by the City; and WHEREAS, the City has made arrangements for the sale of its $490, 000 in principal amount of Water and Sewer Revenue Bonds, Weries 2005 (the "Series 2005 Bonds" ) ; NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Batesville, Arkansas : Section 1 . The sale of the Series 2005 Bonds to The Citizens Bank, Batesville, Arkansas pursuant to the terms and conditions set out in the Bond Purchase Agreement relating thereto, which has been submitted to and is before the meeting at which this Ordinance is considered, at a price of $490, 000 (being the principal amount) plus accrued interest for Series 2005 Bonds bearing interest, maturing and otherwise subject to the terms and provisions hereafter in this Ordinance set forth in detail is approved and confirmed. The Bond Purchase Agreement is approved and the Mayor is authorized to execute and deliver it on behalf of the City. Section 2 . Under the authority of the Constitution and laws of the State of Arkansas, including particularly Arkansas Code of 1987 Annotated, Title 14 , Chapter 164 , Subchapter 4 , and decisions of the Supreme Court of Arkansas, including City of Harrison v. Braswell , 209 Ark. 1094 , 194 S .W. 2d 12 (1946) , City of Batesville, Arkansas Water and Sewer Revenue Bonds, Series 2005, are hereby authorized and ordered issued in the principal amount of $490, 000 for the purpose of financing the Improvements (including paying necessary expenses incidental to the issuance of the Series 2005 Bonds) . Principal and interest on the Series 2005 Bonds shall be payable in monthly installments . The Series 2005 Bonds shall bear interest at the rate of 5 . 05% per annum. The Series 2005 Bonds shall mature over a period of twenty years . The first payment of principal and interest shall be due April 1 , 2005, and shall be in the amount of $1, 185 . 25 plus accrued interest from the date of issuance of the Series 2005 Bonds . Commencing May 1, 2005 monthly payments of principal and interest shall be in the amount of $3 , 247 . 33 , except that the last payment , on March 1 , 2025, shall be in the amount of $3 , 248 .46 . The Series 2005 Bonds shall be registered as to principal and interest . Principal is payable at The Citizens Bank, in Batesville, Arkansas (the "Trustee" and the "Paying Agent" ) . Payment of interest shall be by check or draft mailed to the registered owner at the address shown on the registration book of the City maintained by the Trustee . Section 3 . The Series 2005 Bonds shall be executed on behalf of the City by the Mayor and City Clerk and shall have impressed thereon the seal of the City. The Series 2005 Bonds are secured on a parity of lien, pledge and security with the City' s Water and Sewer Revenue Refunding Bonds, Series 2001 (the "Series 2001 Bonds" ) , the City' s Water and Sewer Revenue Refunding Bonds, Series 2002 (the "Series 2002 Bonds" ) and with any Additional Bonds issued under Ordinance No. 2001-3-1, adopted March 13 , 2001 (the "Basic Ordinance" ) , and the term "Bonds" refers to and includes the Series 2005 Bonds, the Series 2002 Bonds, the Series 2001 Bonds and any Additional Bonds outstanding. The Bonds, together with interest thereon, shall be payable solely out of the Water and Sewer Revenue Bond Fund, hereinafter described, and shall be a valid claim of the holders thereof only against such fund and the amount of revenues pledged thereto or deposited therein, which revenues are hereby pledged and mortgaged for the equal and ratable payment of the Bonds and shall be used for no other purpose than to pay the principal , premium, if any, interest and Trustee ' s and Paying Agent ' s fees on and in connection with the Bonds . The Bonds shall not constitute an indebtedness of the City within any constitutional or statutory limitation. Section 4 . The Series 2005 Bonds shall be in substantially the following form and the Mayor and City Clerk are hereby expressly authorized and directed to make all recitals contained therein: 2 (Form of Bond) �+ REGISTERED REGISTERED No. $ UNITED STATES OF AMERICA STATE OF ARKANSAS CITY OF BATESVILLE, ARKANSAS WATER AND SEWER REVENUE BOND SERIES 2005 Dated Date : 1, 2005 Registered Owner: Principal Amount : KNOW ALL MEN BY THESE PRESENTS : That the City of Batesville, Arkansas (the "City" ) , for value received, hereby promises to pay, but solely from the source as hereinafter provided and not otherwise, to the Registered Owner shown above, the Principal Amount shown above, 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 public and private debts, and to pay by check or draft interest thereon, but solely from the source as hereinafter provided and not otherwise, in like coin or currency. Principal and interest evidenced hereby are payable in monthly installments until payment of such principal sum or, if this Series 2005 Bond or a portion thereof shall be duly called for redemption, until the date fixed for redemption, and to pay interest on overdue principal and interest (to the extent legally enforceable) at the rate borne by this Series 2005 Bond. This Series 2005 Bond bears interest at the rate of 5 . 05% per annum. Principal of this Series 2005 Bond shall mature over a period of twenty years . The first payment of principal and interest is due April 1, 2005, and shall be in the amount of $1, 185 . 25 plus accrued interest from the date of issuance of the Series 2005 Bonds . Commencing May 1, 2005 monthly payments of principal and interest shall be in the amount of $3 , 247 . 33 , except that the last payment, on March 1 , 2025, shall be in the amount of $3 , 248 . 46 . Payment of each installment shall be made to the person in whose name this Series 2005 Bond is registered on the registration books of the City maintained by the Trustee at the close of business on the 20th day of the month (whether or not a business day) next preceding each payment date (the "Record Date" ) , irrespective of any transfer or exchange of this Series 2005 Bond subsequent to such Record Date and prior to such payment date . Payment of the final installment due hereon shall be only upon surrender of this Series 2005 Bond at the corporate trust office of The Citizens Bank, in Batesville, Arkansas, or its successor or successors, as Trustee and Paying Agent (the "Trustee") . Interest hereon shall be payable from the payment date next preceding the 3 date on which this Series 2005 Bond is authenticated unless this �r Series 2005 Bond is authenticated on a payment date, in which case it shall bear interest from such date, or unless this Series 2005 Bond is authenticated prior to the first payment date, in which case it shall bear interest from the Dated Date, or unless this Series 2005 Bond is authenticated during the period from the Record Date to the then next payment date, in which case it shall bear interest from such payment date, or unless at the time of authentication of this Series 2005 Bond interest is in default hereon, in which case it shall bear interest from the date to which interest has been paid. This Series 2005 Bond is one of an issue of City of Batesville, Arkansas Water and Sewer Revenue Bonds, Series 2005 , aggregating Four Hundred Ninety Thousand Dollars ($490 , 000) , in principal amount (the "Series 2005 Bonds" ) , and is issued for the purpose of financing certain Improvements to the City' s municipal Water and Sewer System (the "System" ) . The Series 2005 Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas, including particularly Title 14 , Chapter 164 , Subchapter 4 , and decisions of the Supreme Court of Arkansas, including City of Harrison v. Braswell , 209 Ark. 1094 , 194 S .W. 2d 12 (1946) , and pursuant to Ordinance No. 2001-3-1, duly ad ted on March 13 , 2001 and Ordinance No.ag�/-3 duly adopted on 2 2005 (collectively, the "Authorizing Ordinance" ) 0 and do0not constitute an indebtedness of the City within any constitutional or statutory limitation. The Series 2005 Bonds are secured on a parity of lien, pledge and security with the City' s Water and Sewer Revenue Refunding Bonds, Series 2001 (the "Series 2001 Bonds" ) , the City' s Water and Sewer Revenue Refunding Bonds, Series 2002 (the "Series 2002 Bonds" ) and with any Additional Bonds, if any, issued under the Authorizing Ordinance, and the term "Bonds" herein includes the Series 2005 Bonds, the Series 2002 Bonds, the Series 2001 Bonds and any Additional Bonds outstanding. The Bonds are not general obligations of the City but are special obligations secured by a pledge of revenues derived from the operation of the System. An amount of revenues of the System sufficient to pay the principal of and interest on the Bonds has been duly pledged for the payment of principal of, premium, if any, on and interest on the Bonds . Reference is hereby made to the Authorizing Ordinance for a detailed statement of the terms and conditions upon which the Bonds are issued, of the nature and extent of the security for the Bonds, and the rights and obligations of the City, the Trustee and the bondholders . The Series 2005 Bonds or portions thereof may be redeemed at the option of the City, in whole or in part, from funds from any source, in inverse order of maturity (and by lot within a maturity in such manner as the Trustee shall determine) on any date on and after six months after the date of issuance of the Series 2005 L 4 ( Bonds, at a redemption price equal to the principal amount being �r redeemed plus accrued interest, if any, to the redemption date, plus a prepayment fee (the "Prepayment Fee" ) equal to an amount sufficient to reimburse the holder of the Series 2005 Bonds for all prepayment penalties incurred as a result of required prepayment to the Federal Home Loan Bank of Dallas, all as determined by the Trustee, which determination shall be conclusive . The Series 2005 Bonds shall be redeemed, on any date, at a redemption price equal to the principal amount being redeemed plus accrued interest to the redemption date plus the Prepayment Fee, in inverse order of maturity (and by lot within a maturity) to the extent that proceeds of the Series 2005 Bonds exceed the cost of the Improvements; provided that, should the Prepayment Fee cause interest on the Series 2005 Bonds to exceed the maximum rate permitted by law, no redemption shall be required. Notice of redemption identifying the Series 2005 Bonds or portions thereof to be redeemed shall be given by the Trustee, not less than thirty (30) nor more than sixty (60) days prior to the date fixed for redemption, by mailing a copy of the redemption notice by first class mail , postage prepaid, or sending such notice by electronic transmission with evidence of receipt, to all registered owners of Series 2005 Bonds to be redeemed. Failure to send an appropriate notice or any such notice to one or more (W registered owners of Series 2005 Bonds to be redeemed shall not affect the validity of the proceedings for redemption of other Series 2005 Bonds as to which notice of redemption is duly given in proper and timely fashion. All such Series 2005 Bonds or portions thereof thus called for redemption will cease to bear interest on such redemption date . With respect to notice of redemption of Series 2005 Bonds at the option of the City, unless moneys sufficient to pay the principal of, premium, if any, and interest on the Series 2005 Bonds to be redeemed shall have been received by the Trustee prior to the giving of such notice, the notice shall state that redemption shall be conditional upon the receipt of such moneys by the Trustee on or prior to the date fixed for such redemption. If such moneys shall not have been so received, such notice shall be of no force and effect, the City shall not redeem such Series 2005 Bonds and the Trustee shall give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. This Series 2005 Bond is transferable by the registered owner hereof in person or by his attorney-in-fact duly authorized in writing at the corporate trust office of the Trustee in Batesville, Arkansas, but only in the manner, subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, and upon surrender and cancellation of this Series 2005 Bond. Upon such transfer a new fully registered Series 5 2005 Bond or Bonds of the same series and maturity, of authorized denomination or denominations, for the same aggregate principal amount , will be issued to the transferee in exchange therefor. This Series 2005 Bond is issued with the intent that the laws of the State of Arkansas shall govern its construction. The City and the Trustee may deem and treat the registered owner hereof as the absolute owner hereof for the purpose of receiving payment of or on account of principal hereof and premium, if any, hereon and interest due hereon and for all other purposes, and neither the City nor the Trustee nor any paying agent shall be affected by any notice to the contrary. The Series 2005 Bonds are issuable only as fully registered bonds in the denomination of $5 , 000 , and any integral multiple thereof . Subject to the limitations and upon payment of the charges provided in the Authorizing Ordinance, Series 2005 Bonds may be exchanged for a like aggregate principal amount of Series 2005 Bonds of the same maturity of other authorized denominations . IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the Series 2005 Bonds do exist, have happened and have been performed in due time, form and manner as required by law; that the indebtedness represented by the Series 2005 Bonds, together with all obligations of the City, does not exceed any constitutional or statutory limitation; and that the above referred to revenues pledged to the payment of the principal of and premium, if any, and interest on the Series 2005 Bonds as the same become due and payable will be sufficient in amount for that purpose . This Series 2005 Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Authorizing Ordinance until the Certificate of Authentication hereon shall have been signed by the Trustee. THE CITY HAS DESIGNATED THIS SERIES 2005 BOND AS A "QUALIFIED TAX-EXEMPT OBLIGATION" WITHIN THE MEANING OF SECTION 265 (b) OF THE INTERNAL REVENUE CODE OF 1986 , AS AMENDED. 6 IN WITNESS WHEREOF, the City of Batesville, Arkansas has caused this Series 2005 Bond to be executed by its Mayor and City Clerk, their manual or facsimile signatures thereunto duly authorized and its corporate seal to be impressed, lithographed or imprinted on this Series 2005 Bond. CITY OF BATESVILLE, ARKANSAS AT ST By C�21 /2) - AL� 6 Mayor City Clerk (SEAL) (Form of Trustee ' s Certificate) TRUSTEE ' S CERTIFICATE OF AUTHENTICATION This Series 2005 Bond is one of the Bonds designated Water and Sewer Revenue Bonds, Series 2005, in and issued under the provisions of the within mentioned Authorizing Ordinance . THE CITIZENS BANK Batesville, Arkansas TRUSTEE %C4 Q/ (�J,��f By Gl- kl Authorized Signature DATE OF AUTHENTICATION: (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, ( "Transferor" ) , hereby sells, assigns and transfers unto the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints as attorney to transfer the within bond on the books kept for registration thereof with full power of substitution in the premises . DATE : Transferor GUARANTEED BY: NOTICE: Signatures) must be guaranteed by a financial institution (W acceptable to the Trustee . 7 Section 5 . (a) The Series 2005 Bonds are issued pursuant to the terms of the Basic Ordinance, including Section 12 thereof, and the Basic Ordinance is incorporated herein by reference and shall serve to protect the Series 2005 Bonds and the holders thereof, on a parity of lien, pledge and security, without distinction or priority. The incorporation of the Basic Ordinance includes, without limitation, the provisions of Section 5 (maintenance of rates) , Sections 6, 7 and 8 (deposit of revenues) , Section 9 (deposits to the Bond Fund) , Section 17 (maintenance of the System) , and Section 20 (default and remedies) . (b) So long as any of the Series 2005 Bonds shall be outstanding, monthly deposits into the Bond Fund (established pursuant to Section 9 of the Basic Ordinance) shall be increased to include an amount equal to not less than the amortized monthly payment due for the then next month with respect to the Series 2005 Bonds . (c) The terms of the Basic Ordinance, as heretofore amended, are confirmed except as amended or modified by this Ordinance . Section 6 . When the Series 2005 Bonds have been executed and the seal of the City impressed as herein provided, they shall be delivered to the Trustee, and the Trustee shall authenticate them and deliver them upon payment in cash of the purchase price of $490, 000 plus accrued interest, if any, to the date of delivery ( "total sale proceeds" ) . The Trustee shall disburse the total sale proceeds as set forth in detail in a letter of delivery instructions delivered to the Trustee, as follows : (1) The Trustee shall deposit the amount of the accrued interest, if any, in the Bond Fund. (2) The Trustee shall pay such costs of issuance of the Series 2005 Bonds as shall be specified in the letter of delivery instructions . (3) The balance of the total sale proceeds shall be deposited in an account with the Trustee designated the 112005 Water and Sewer Improvement Fund" (the "Improvement Fund" ) and disbursed for the acquisition, construction and installation of the Improvements, on the basis of requisitions signed by the Manager of the System or such other person who may be designated by the Commission in a writing filed with the Trustee . When the Improvements shall be completed the Manager (or other designated officer) shall so state in a writing filed with the Trustee and any balance then remaining in the Improvement Fund shall be transferred to the Bond Fund. Moneys in the Improvement Fund may be invested in (a) [ Permitted Investments (within the meaning of the Basic Ordinance or �r 8 (b) certificates of deposit of banks insured by the FDIC or (W collateralized as required by law. Section 7 . (a) The City covenants that it shall not take any action or suffer or permit any action to be taken or condition to exist which causes or may cause the interest payable on the Bonds to be subject to federal income taxation. Without limiting the generality of the foregoing, the City represents and covenants that the proceeds of the Bonds and System Revenues will not be used directly or indirectly in such manner as to cause the Series 2005 Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code" ) . The City covenants to pay to the United States Treasury any arbitrage rebate due under Section 148 of the Code at the times required by Section 148 of the Code, if any be required. (b) The City shall assure that (1) not in excess of ten percent (10%) of the Net Proceeds of the Series 2005 Bonds is used for Private Business Use if, in addition, the payment of more than ten percent (10%) of the principal or ten percent (100-8) of the interest due on the Series 2005 Bonds during the term thereof is, under the terms of the Series 2005 Bonds 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 five percent (5%) of the Net Proceeds of the Series 2005 Bonds are used for a Private Business Use, and (B) an amount in excess of five percent (5%) of the principal or five percent (5%) of the interest due on the Series 2005 Bonds during the term thereof is, under the terms of the Series 2005 Bonds 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, the excess over such five percent (5%) of Net Proceeds of the Series 2005 Bonds used for a Private Business Use shall be used for a Private Business Use related to the governmental use of the System. The City shall assure that not in excess of five percent (5%) of the Net Proceeds of the Series 2005 Bonds is used, directly or indirectly, to make or finance a loan to persons other than state or local governmental units . As used in this subsection (b) , the following terms shall have the following meanings : 4 9 "Net Proceeds" means the face amount of the Series 2005 Bonds, plus accrued interest and premium, if any, less original issue discount, if any. "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 . The City agrees that, so long as the Series 2005 Bonds are outstanding, it will comply with the regulations of the United States Treasury pertaining to "output facilities" (presently §1 . 141-2 and following) . Without limiting the generality of the foregoing, the City has not, subsequent to September 19, 2002 , and the City will not, except upon receiving an opinion of counsel of national reputation with regard to the exemption from income tax of interest on state and local government obligations ( "Bond Counsel" ) to the effect that the exemption of interest on the Series 2005 Bonds will not be adversely affected thereby, (a) enter into any contract for the providing of water or (b) enter into any amendment of any contract (regardless of when originally entered into) for the providing of water. (c) The Series 2005 Bonds are hereby designated as "qualified tax-exempt obligations" within the meaning of Section 4W265 of the Code . The City represents and covenants that it does not expect that the aggregate principal amount of its qualified tax-exempt obligations (excluding "private activity bonds" within the meaning of Section 141 of the Code which are not "qualified 501 (c) (3) bonds" within the meaning of Section 145 of the Code) , including those of its subordinate entities, to be issued in the current calendar year will exceed $10 , 000, 000 . (d) The City covenants that the City will either (1) comply with the provisions of regulations issued under the Code with regard to the eighteen-month expenditure schedule for proceeds of the Series 2005 Bonds (together with any earnings thereon) (the "Proceeds" ) or (2) comply with the regulations with regard to computation of rebate owed to the United States and the making of rebate payments, as advised in writing by Bond Counsel . In order to comply with the eighteen-month expenditure schedule, the City shall expend proceeds within the following periods (commencing with the date of issuance of the Series 2005 Bonds) : (x) at least 15% of proceeds within six months; (y) at least 60% of proceeds within twelve months; (z) 100% of proceeds within eighteen months . (e) The City covenants that it will take no action which (w would cause the Series 2005 Bonds to be "federally guaranteed" within the meaning of Section 149 (b) of the Code; specifically, (A) 10 • the payment of any portion of principal or interest with respect to the Series 2005 Bonds will not be guaranteed (directly or indirectly) by the United States or any agency or instrumentality thereof and (B) not more than 5% of the proceeds of the Series 2005 Bonds (exclusive of proceeds invested for an initial temporary period until needed for the purpose for which the Series 2005 Bonds were issued and proceeds deposited into the Bond Fund) will be invested (directly or indirectly) in federally insured deposits or accounts . Nothing in this Section shall prohibit investments in obligations issued by the United States Treasury. (f) The City covenants that it will submit to the Secretary of the Treasury of the United States, not later than the 15th day of the second calendar month after the close of the calendar quarter in which the Series 2005 Bonds are issued, the statement required by Section 149 (e) of the Code . Section 8 . The Series 2005 Bonds shall be subject to redemption prior to maturity in accordance with the terms set out in the bond form, hereinabove . Section 9 . The provisions of this Ordinance are hereby declared to be severable and if any provision shall for any reason be held illegal or invalid, such holding shall not affect the validity of the remainder of the Ordinance . Section 10 . This Ordinance shall not create any right of any kind and no right of any kind shall arise hereunder pursuant to it until the Series 2005 Bonds shall be issued and delivered. Section 11 . All ordinances and resolutions or parts thereof, in conflict herewith are hereby repealed to the extent of such conflict . Section 12 . It is hereby ascertained and declared that the terms for the Series 2005 Bonds are in the interest of the City and are conditioned upon issuance of the Series 2005 Bonds as scheduled. It is, therefore, declared that an emergency exists and this Ordinance being necessary for the immediate preservation of the public peace, health and safety shall take effect and be in force from and after its passage . 11 • PASSED: a 2005 . APPROVED: ATTEST: r Mayor , City Clerk (SEAL) • • 12 • CERTIFICATE The undersigned, City Clerk of the City of Batesville, Arkansas, hereby certifies that the foregoing pages are a true and correct copy of Ordinance NobUS- -3 adopted at a 6%� session of the Council of the City of Batesville, Arkansas, held at the regular eeting p1 of the Council in the City at S?o p.m. , on the day of , 2005, and that said Ordinance is of record in Ordinance ecord Book No. (�f Page S now in my possession. r GIVEN under my hand and seal this C � day of 2005 . City Clerk (SEAL) • O 13 • BOND PURCHASE AGREEMENT $490, 000 City of Batesville, Arkansas Water and Sewer Revenue Bonds, Series 2005 City of Batesville, Arkansas January 25, 2005 Ladies and Gentlemen: The City of Batesville, Arkansas (the "Issuer" ) and The Citizens Bank, Batesville, Arkansas (the "Bank" ) are entering into this Bond Purchase Agreement (the "Agreement" ) for the purchase by the Bank and the sale by the Issuer of the Bonds of the Issuer more particularly described below. The terms of this Agreement are : 1 . Upon the terms and conditions and upon the basis of the representations herein set forth, the Bank hereby agrees to purchase from the Issuer and the Issuer hereby agrees to sell to the Bank the entire principal amount of an issue of bonds designated "City of Batesville, Arkansas Water and Sewer Revenue Bonds, Series 2005" (the "Bonds" ) to be issued under and secured by Ordinance No. of the Issuer (the "Authorizing Ordinance" ) in the form heretofore delivered by the Issuer, with only such changes therein as shall be mutually agreed upon between the Issuer and the Bank. 2 . The Bonds are being issued for the purpose of financing the cost of various improvements to the sewer facilities of the Issuer ' s waterworks and sewer system (the "System" ) and paying expenses of issuing the Bonds . The Bonds shall be secured by a pledge of revenues derived from the System, as set forth in the Authorizing Ordinance . 3 . The Bonds shall be dated, shall be payable and shall bear interest as set forth in the Authorizing Ordinance . The Citizens Bank, Batesville, Arkansas shall be trustee for the bondholders and paying agent (the "Trustee" ) . 4 . The Bonds or portions thereof shall be subject to redemption prior to maturity as set forth in the Authorizing Ordinance . 5 . The Bank hereby agrees to purchase all of the Bonds from the Issuer and the Issuer hereby agrees to sell all of the Bonds to the Bank at a price of 100% of the principal amount of the Bonds, plus interest accrued thereon, if any, from the date of the Bonds to the date of Closing as hereinafter defined. The sale and purchase of the Bonds shall take place at a closing (the "Closing" ) at 10 : 00 a .m. , prevailing local time, on 2005, or at such other time or on such earlier or later date as is mutually agreed upon, and at the offices of Friday, Eldredge & Clark, LLP, Little Rock, Arkansas or at such other place as is mutually agreed upon. At the Closing, the Issuer will deliver, or cause to be delivered, to the Bank a typewritten Bond or Bonds, duly executed and authenticated, together with the other documents herein required. The Bonds shall be prepared and delivered in authorized denominations and registered in the name of the Bank. At the Closing, and subject to satisfaction (or proper waiver by the Bank) of the conditions to its obligations to purchase the Bonds, the Bank will accept delivery and pay the purchase price of the Bonds by immediately available funds payable to the order of the Trustee for the account of the Issuer. If at the Closing the Issuer fails to deliver the Bonds as provided herein, or if at the Closing any of the conditions specified in paragraph 8 hereof shall not have been fulfilled to the satisfaction of the Bank, the Bank may elect to be relieved of any further obligations under this Agreement without thereby waiving any other rights the Bank may have by reason of such failure or nonfulfillment . The Bank and the Issuer understand that in any of such events the actual respective expenses, costs or damages of such parties may be unequal , and any such amounts incurred by any party may be greater or may be less than those amounts incurred by any other. Accordingly, and subject to paragraphs 11 and 12 hereof, each party hereby waives any right to claim that its actual expenses, costs or damages are or will be greater than the actual expenses, costs or damages incurred or suffered by any such party, and no such party shall be entitled to claim any damages from the other. 6 . The Bank represents that it is purchasing the Bonds for its own account and agrees that it will execute and deliver an investment letter documenting its investment intent, in accordance with the provisions of SEC Rule 15c2-12 . 7 . In order to induce the Bank to enter into this Agreement, the Issuer represents to and agrees with the Bank that : A. The Issuer is and will be at the Closing a duly organized and existing municipality under the Constitution and 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 Authorizing Ordinance, (iii) to issue, sell and deliver the Bonds to the Bank as provided herein, and (iv) to carry out and consummate the transactions contemplated by this Agreement and the Authorizing Ordinance; 2 B. The Bonds will be issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas ; C. The execution and delivery of this Agreement and the compliance with the provisions hereof under the circumstances contemplated hereby, will not in any respect conflict with, or constitute on the part of the Issuer a breach or default under any agreement or other instrument to which the Issuer is a party, or any existing law, administrative regulation, court order or consent decree to which the Issuer is subject ; D. The Issuer will not take or omit to take any action, which action or omission will in any way cause the proceeds from the sale of the Bonds to be applied in a manner other than as provided in the Authorizing Ordinance; E . When delivered to and paid for by the Bank, the Bonds will have been duly authorized, executed, authenticated, issued and delivered, and will constitute valid and legally binding special obligations of the character referred to in the statutes under which issued; F. The Issuer will immediately notify the Bank of any adverse change of a material nature in the financial condition of the System which occurs prior to the Closing; G. Between the date of this Agreement and the Closing, the Issuer will not, without the prior written consent of the Bank, issue any bonds, notes or other obligations for borrowed money and secured by or payable from revenues derived from the operations of the System; H. 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 existence or powers of the Issuer or the titles of its officers to their respective offices, (ii) enjoin or restrain the issuance, sale and delivery of the Bonds or the collection of any moneys or property pledged or to be pledged under the Authorizing Ordinance or the pledge thereof, (iii) in any way question or affect any of the rights, powers, duties or obligations of the Issuer with respect to the moneys and assets pledged or to be pledged to pay the principal of and premium, if any, and interest on the Bonds, (iv) in any way question or affect any authority for the issuance of the Bonds or the validity or enforceability of the Bonds, the Authorizing Ordinance or any ordinance of the Issuer establishing rates to be charged for the services of the System (collectively, 3 the "Rate Ordinances" ) , or (v) in any way question or affect this Agreement or the transactions contemplated hereby, or any other agreement or instrument to which the Issuer is a party and relating to the Bonds or the System; and 8 . The Bank has 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 Closing. The Bank' s obligations under this Agreement are and shall be subject to the following further conditions : A. At the Closing, the Authorizing Ordinance and the Rate Ordinances shall be in full force and effect and the Authorizing Ordinance shall not have been amended, modified or supplemented after the date hereof except as may have been agreed to by the Bank, 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 Friday, Eldredge & Clark, LLP, Little Rock, Arkansas (the "Bond Counsel" ) shall be necessary in connection with the transactions contemplated hereby; B. At the Closing the Bank shall receive the approving opinion, dated as of the Closing, of Bond Counsel, in customary form and content satisfactory to the Bank, plus all other documents, opinions and certificates reasonably required by Bond Counsel or the Bank to evidence (i) compliance by the Issuer with legal requirements, (ii) the truth and accuracy, as of the date of Closing, of the representations of the Issuer contained herein, and (iii) the due performance or satisfaction by the Issuer at or prior to the Closing of all agreements to be performed and all conditions to be satisfied by the Issuer; C. At the Closing, the Issuer will deliver a certificate, dated the date of the Closing, signed by the Chairman of the Batesville Utilities Commission and the Manager of the System and in form and substance satisfactory to the Bank, to the effect that (1) Each of the representations and warranties of the Issuer set forth herein, including without limitation those set forth in paragraph 7 .H, is true and correct in all material respects as of the Closing and the Issuer has complied with each of its covenants and agreements required in this Agreement to be complied with at or prior to the Closing; and (2) There has been no material adverse change in the business, property or financial condition of the 4 System since the date hereof, the System has not since the date hereof incurred any material liabilities other than in the normal course of business; D. At the Closing, the Issuer will deliver a letter from the auditors for the System, in form and content satisfactory to the Bank, satisfying the requirements for the issuance of first lien, parity obligations, as provided in the Authorizing Ordinance; E. At the Closing, the Issuer will deliver such certificates and writings as may be reasonably requested by Bond Counsel . 9 . The Bank shall have the right to cancel and terminate its obligations under this Agreement at any time before Closing if any of the following occurs : (a) Legislation shall have been enacted by the Congress of the United States, or adopted by or introduced in either House or any committee thereof, or a decision shall have been rendered by a court of the United States or the Tax Court of the United States, or a ruling shall have been made or regulations shall have been proposed or made by the Treasury Department of the United States, the Internal Revenue Service or any other governmental agency with respect to federal taxation upon revenues or other income of the ( general character to be derived by the Issuer or by any similar fir► body, or upon interest received on obligations of the general character of the Bonds which, in the opinion of the Bank, materially adversely affects the value of the Bonds or the value generally of obligations of the general character of the Bonds; or (b) Any legislation, ordinance, rule or regulation shall be enacted or be actively considered for enactment by any governmental body, department or agency of the State of Arkansas, or a decision by any court of competent jurisdiction within the State of Arkansas shall be rendered which, in the opinion of the Bank, materially adversely affects the value of the Bonds; or (c) A stop order, ruling, regulation or official statement by or on behalf of the Securities and Exchange Commission shall be issued or made to the effect that the issuance, offering or sale of the Bonds, or of obligations of the general character of the Bonds, as contemplated hereby, is in violation of any provisions of the Securities Act of 1933 , or the Trust Indenture Act of 1939; or (d) (i) Any restriction on, or general suspension of, trading in securities on the New York Stock Exchange or any banking moratorium, or the establishment by the New York Stock Exchange, by the Securities and Exchange Commission, by any federal or state 5 agency, or by the decision of any court, of any limitation on prices for such trading or (ii) any new outbreak of hostilities or other national or international calamity or crisis, the effect of which on the financial markets of the United States shall be such as, in the reasonable judgment of the Bank, to have a material adverse affect on the value of the Bonds . 10 . All notices, demands and formal actions hereunder will be in writing mailed, telegraphed or delivered to : The Issuer: City of Batesville, Arkansas City Hall Batesville, Arkansas 72503 Attention: Mayor The Bank: The Citizens Bank P. 0. Box 2156 Batesville, Arkansas 72503 Attention: Robin Brock 11 . 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 Bank, (c) the l(W purchase of the Bonds hereunder, and (d) any disposition of or payment for the Bonds . 12 . The Bank shall be under no obligation to pay and the Issuer shall pay any expenses incident to the performance of its obligations hereunder including, but not limited to: (i) the cost of the preparation and distribution of this Agreement and the Authorizing Ordinance and the cost of the preparation, printing and delivery of the Bonds; (ii) the fees and disbursements of Bond Counsel and any counsel to the Issuer; (iii) the fees and disbursements of any experts or consultants retained by the Issuer; (iv) the charges for obtaining CUSIP numbers, if any, for the Bonds; (v) legal publication costs; and (vi) the Trustee ' s authentication fee and expenses . 13 . 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 . 14 . This Agreement will inure to the benefit of and be binding upon the parties thereto and their successors and will not confer any rights upon any other person. This Agreement shall be 6 governed by and construed in accordance with the laws of the State of Arkansas . THE CITIZENS BANK Batesville, Arkansas (Title) CITY OF BATESVILLE, ARKANSAS By Mayor 4D 7