ORDINANCE NO

ORDINANCE NO. 2088

AN ORDINANCE AUTHORIZING THE ISSUANCE AND SALE

OF WATER AND SEWER REFUNDING 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 Eureka Springs, Arkansas (the

"City") owns water and sewer facilities, which are operated as a

single, integrated municipal undertaking (the "System"); and

WHEREAS, the City Council has determined that the City

will be able to receive a savings by refunding its Water and Sewer

Revenue Bonds, Series 2002 (the "Bonds Refunded") authorized by

Ordinance No. 1905 of the City, adopted November 12, 2002, as

supplemented by Ordinance No. 1909 of the City, adopted on December

20, 2002 (collectively, the "2002 Ordinance"); and

WHEREAS, the City can refund the Bonds Refunded by the

issuance of Water and Sewer Refunding Revenue Bonds, Series 2008,

in the aggregate principal amount of $1,635,000 (the "bonds"); and

WHEREAS, the City is making arrangements for the sale of

the bonds to Stephens Inc. (the "Purchaser"), at a purchase price

of 98.84% of par plus accrued interest (the "Purchase Price"),

pursuant to a Bond Purchase Agreement (the "Agreement") which has

been presented to and is before this meeting; and

WHEREAS, the Preliminary Official Statement, dated July

8, 2008, offering the bonds for sale (the "Preliminary Official

Statement") has been presented to and is before this meeting; and

WHEREAS, the Limited Continuing Disclosure Agreement

between the City and BancorpSouth Bank (the "Disclosure

Agreement"), providing for the ongoing disclosure obligations of

the City with respect to the bonds, has been presented to and is

before this meeting; and

WHEREAS, the City has outstanding its Water and Sewer

Refunding Revenue Bonds, Series 2005 (the "Senior Bonds")

authorized by Ordinance No. 2007, adopted on October 10, 2005 (the

"Senior Bond Ordinance");

NOW, THEREFORE, BE IT ORDAINED by the City Council of the

City of Eureka Springs, Arkansas:

Section 1. The refunding of the Bonds Refunded shall be

accomplished. The Mayor and City Clerk are hereby authorized to

take, or cause to be taken, all action necessary to accomplish the

same and to execute all required contracts. The Bonds Refunded

shall be called for redemption on August 19, 2008, or the first

available date thereafter, at a redemption price equal to the

principal amount being redeemed plus accrued interest.

Section 2. The Disclosure Agreement, in substantially

the form submitted to this meeting, is approved, and the Mayor is

hereby authorized and directed to execute and deliver the

Disclosure Agreement on behalf of the City. The Mayor is

authorized and directed to take all action required on the part of

the City to fulfill its obligations under the Disclosure Agreement.

Section 3. The City Council hereby finds and declares

that the period of usefulness of the System will be more than 25

years, which is longer than the term of the bonds.

Section 4. The Agreement, in substantially the form

submitted to this meeting, is approved and the bonds are hereby

sold to the Purchaser for the Purchase Price. 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.

Section 5. The Preliminary Official Statement is hereby

approved and the previous use of the Preliminary Official Statement

by the Purchaser in connection with the sale of the bonds is hereby

in all respects approved and confirmed, and the Mayor be, and is

hereby, authorized and directed, for and on behalf of the City, to

execute the Preliminary Official Statement and the final Official

Statement in the name of the City for use in connection with the

sale of the bonds as set forth in the Agreement.

Section 6. Under the authority of the Constitution and

laws of the State of Arkansas (the "State"), including particularly

Title 14, Chapter 234, Subchapter 2, Title 14, Chapter 164,

Subchapter 4, and Title 14, Chapter 235, Subchapter 2 of the

Arkansas Code of 1987 Annotated and applicable decisions of the

Supreme Court of the State, including particularly City of Harrison

v. Braswell, 209 Ark. 1094, 194 S.W. 2d 12 (1946), City of Eureka

Springs, Arkansas Water and Sewer Refunding Revenue Bonds, Series

2008 are hereby authorized and ordered issued in the aggregate

principal amount of $1,635,000 for the purpose of refunding the

Bonds Refunded, funding a debt service reserve and paying expenses

of issuing the bonds. The bonds shall mature on December 1, 2027

and shall bear interest at the rate of 4.20%.

The bonds shall be dated August 1, 2008 and shall be

issuable only as fully registered bonds without coupons in the

denomination of $5,000 or any integral multiple thereof. Unless

the City shall otherwise direct, the bonds shall be numbered from

1 upward in order of issuance. Each bond shall have a CUSIP

number.

The bonds shall be registered initially in the name of

Cede & Co., as nominee for The Depository Trust Company ("DTC"),

which shall be considered to be the registered owner of the bonds

for all purposes under this Ordinance, including, without

limitation, payment by the City of principal of, redemption price,

premium, if any, and interest on the bonds, and receipt of notices

and exercise of rights of registered owners. There shall be one

certificated, typewritten bond for each stated maturity date which

shall be immobilized in the custody of DTC with the beneficial

owners having no right to receive the bonds in the form of physical

securities or certificates. DTC and its participants shall be

responsible for maintenance of records of the ownership of

beneficial interests in the bonds by book-entry on the system

maintained and operated by DTC and its participants, and transfers

of ownership of beneficial interests shall be made only by DTC and

its participants, by book-entry, the City having no responsibility

therefor. DTC is expected to maintain records of the positions of

participants in the bonds, and the participants and persons acting

through participants are expected to maintain records of the

purchasers of beneficial interests in the bonds. The bonds as such

shall not be transferable or exchangeable, except for transfer to

another securities depository or to another nominee of a securities

depository, without further action by the City.

If any securities depository determines not to continue

to act as a securities depository for the bonds for use in a book-

entry system, the City may establish a securities depository/ book-

entry system relationship with another securities depository. If

the City does not or is unable to do so, or upon request of the

beneficial owners of all outstanding bonds, the City and the

Trustee (hereinafter identified), after the Trustee has made

provision for notification of the beneficial owners by the then

securities depository, shall permit withdrawal of the bonds from

the securities depository, and authenticate and deliver bond

certificates in fully registered form (in denominations of $5,000

or integral multiples thereof) to the assigns of the securities

depository or its nominee, all at the cost and expense (including

costs of printing definitive bonds) of the City, if the City fails

to maintain a securities depository/book-entry system, or of the

beneficial owners, if they request termination of the system.

Prior to issuance of the bonds, the City shall have

executed and delivered to DTC a written agreement (the

"Representation Letter") setting forth (or incorporating therein by

reference) certain undertakings and responsibilities of the City

with respect to the bonds so long as the bonds or a portion thereof

are registered in the name of Cede & Co. (or a substitute nominee)

and held by DTC. Notwithstanding such execution and delivery of

the Representation Letter, the terms thereof shall not in any way

limit the provisions of this Section or in any other way impose

upon the City any obligation whatsoever with respect to persons

having interests in the bonds other than the registered owners, as

shown on the registration books kept by the Trustee. The Trustee

shall take all action necessary for all representations of the City

in the Representation Letter with respect to the Trustee to at all

times be complied with.

The authorized officers of the Trustee and the City shall

do or perform such acts and execute all such certificates,

documents and other instruments as they or any of them deem

necessary or advisable to facilitate the efficient use of a

securities depository for all or any portion of the bonds; provided

that neither the Trustee nor the City may assume any obligations to

such securities depository or beneficial owners of bonds that are

inconsistent with their obligations to any registered owner under

this Ordinance.

Interest on the bonds shall be payable on December 1,

2008, and semiannually thereafter on June 1 and December 1 of each

year. Payment of each installment of interest shall be made to the

person in whose name the bond is registered on the registration

books of the City maintained by BancorpSouth Bank, Stuttgart,

Arkansas, as Trustee and Paying Agent (the "Trustee"), at the close

of business on the fifteenth day of the month (whether or not a

business day) next preceding each interest payment date (the

"Record Date"), irrespective of any transfer or exchange of any

such bond subsequent to such Record Date and prior to such interest

payment date.

Each bond shall bear interest from the payment date next

preceding the date on which it is authenticated unless it is

authenticated on an interest payment date, in which event it shall

bear interest from such date, or unless it is authenticated prior

to the first interest payment date, in which event it shall bear

interest from August 1, 2008, or unless it is authenticated during

the period from the Record Date to the next interest payment date,

in which case it shall bear interest from such interest payment

date, or unless at the time of authentication thereof interest is

in default thereon, in which event it shall bear interest from the

date to which interest has been paid.

Only such bonds as shall have endorsed thereon a

Certificate of Authentication substantially in the form set forth

in Section 8 hereof (the "Certificate") duly executed by the

Trustee shall be entitled to any right or benefit under this

Ordinance. No bond shall be valid and obligatory for any purpose

unless and until the Certificate shall have been duly executed by

the Trustee, and the Certificate upon any such bond shall be

conclusive evidence that such bond has been authenticated and

delivered under this Ordinance. The Certificate on any bond shall

be deemed to have been executed if signed by an authorized officer

of the Trustee, but it shall not be necessary that the same officer

sign the Certificate on all of the bonds.

In case any bond shall become mutilated or be destroyed

or lost, the City shall, if not then prohibited by law, cause to be

executed and the Trustee may authenticate and deliver a new bond of

like date, maturity and tenor in exchange and substitution for and

upon cancellation of such mutilated bond, or in lieu of and in

substitution for such bond destroyed or lost, upon the owner paying

the reasonable expenses and charges of the City and Trustee in

connection therewith, and, in the case of a bond destroyed or lost,

his filing with the Trustee evidence satisfactory to it that such

bond was destroyed or lost, and of his ownership thereof, and

furnishing the City and Trustee with indemnity satisfactory to

them. The Trustee is hereby authorized to authenticate any such

new bond. In the event any such bond shall have matured, instead

of issuing a new bond, the City may pay the same without the

surrender thereof. Upon the issuance of a new bond under this

Section, the City may require the payment of a sum sufficient to

cover any tax or other governmental charge that may be imposed in

relation thereto and any other expenses (including the fees and

expenses of the Trustee) connected therewith.

The City shall cause books to be maintained for the

registration and for the transfer of the bonds as provided herein

and in the bonds. The Trustee shall act as the bond registrar.

Each bond is transferable by the registered owner thereof or by his

attorney duly authorized in writing at the principal office of the

Trustee. Upon such transfer a new fully registered bond or bonds

of the same maturity, of authorized denomination or denominations,

for the same aggregate principal amount will be issued to the

transferee in exchange therefor.

No charge shall be made to any owner of any bond for the

privilege of transfer or exchange, but any owner of any bond

requesting any such transfer or exchange shall pay any tax or other

governmental charge required to be paid with respect thereto.

Except as otherwise provided in the immediately preceding sentence,

the cost of preparing each new bond upon each exchange or transfer

and any other expenses of the City or the Trustee incurred in

connection therewith shall be paid by the City. The City shall not

be required to transfer or exchange any bonds selected for

redemption in whole or in part.

The person in whose name any bond shall be registered

shall be deemed and regarded as the absolute owner thereof for all

purposes, and payment of or on account of the principal or premium,

if any, or interest on any bond shall be made only to or upon the

order of the registered owner thereof or his legal representative,

but such registration may be changed as hereinabove provided. All

such payments shall be valid and effectual to satisfy and discharge

the liability upon such bond to the extent of the sum or sums so

paid.

In any case where the date of maturity of interest on or

principal of the bonds or the date fixed for redemption of any

bonds shall be a Saturday or Sunday or shall be in the State a

legal holiday or a day on which banking institutions are authorized

by law to close, then payment of interest or principal (and

premium, if any) need not be made on such date but may be made on

the next succeeding business day with the same force and effect as

if made on the date of maturity or the date fixed for redemption,

and no interest shall accrue for the period after the date of

maturity or date fixed for redemption.

Section 7. The bonds shall be executed on behalf of the

City by the manual or facsimile signatures of the Mayor and City

Clerk and shall have impressed or imprinted thereon the seal of the

City. The bonds, together with interest thereon, are secured by

and are payable solely from revenues derived from the System

("Revenues") which are hereby pledged and mortgaged for the equal

and ratable payment of the bonds. The pledge of Revenues is

subordinate to the pledge in favor of the Senior Bonds. The bonds

shall not constitute an indebtedness of the City within any

constitutional or statutory limitation.

Section 8. The bonds and the Certificate 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:

REGISTERED(Form of Bond)

REGISTERED

No. ____

UNITED STATES OF AMERICA

STATE OF ARKANSAS

COUNTY OF CARROLL

CITY OF EUREKA SPRINGS

WATER AND SEWER REFUNDING REVENUE BOND,

SERIES 2008

Interest Rate: _____% Maturity Date: December 1, _______

Dated Date: August 1, 2008

Registered Owner: Cede & Co.

Principal Amount: ______________________________________ Dollars

CUSIP No.: __________________

KNOW ALL MEN BY THESE PRESENTS:

That the City of Eureka Springs, County of Carroll, State

of 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 upon the

presentation and surrender hereof at the principal corporate office

of BancorpSouth Bank, Stuttgart, Arkansas, or its successor or

successors, as Trustee and Paying Agent (the "Trustee"), on the

Maturity Date 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 from the interest commencement date

specified below at the Interest Rate per annum shown above, payable

December 1, 2008 and semiannually thereafter on the first days of

June and December of each year, until payment of such principal sum

or, if this bond or a portion hereof 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 bond. Payment of each

installment of interest shall be made to the person in whose name

this bond is registered on the registration books of the City

maintained by the Trustee at the close of business on the fifteenth

day of the month (whether or not a business day) next preceding

each interest payment date (the "Record Date"), irrespective of any

transfer or exchange of this bond subsequent to such Record Date

and prior to such interest payment date.

This bond shall bear interest from the payment date next

preceding the date on which it is authenticated unless it is

authenticated on an interest payment date, in which event it shall

bear interest from such date, or unless it is authenticated prior

to the first interest payment date, in which event it shall bear

interest from the Dated Date shown above, or unless it is

authenticated during the period from the Record Date to the next

interest payment date, in which case it shall bear interest from

such interest payment date, or unless at the time of authentication

hereof interest is in default hereon, in which event it shall bear

interest from the date to which interest has been paid.

Unless this certificate is presented by an authorized

representative of The Depository Trust Company, a New York

corporation ("DTC") to the Trustee for registration of transfer,

exchange, or payment and any certificate issued is registered in

the name of Cede & Co. or in such other name as is requested by an

authorized representative of DTC (and any payment is made to Cede

& Co. or to such other entity as is requested by an authorized

representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF

FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as

the registered owner hereof, Cede & Co., has an interest herein.

This bond is one of an issue of City of Eureka Springs,

Arkansas Water and Sewer Refunding Revenue Bonds, Series 2008,

aggregating One Million Six Hundred Thirty-Five Thousand Dollars

($1,635,000) in principal amount (the "bonds"), and is issued for

the purpose of refunding certain outstanding bonds payable from

revenues of the City's water and sewer (combined) system (the

"System"), paying necessary expenses incidental thereto and to the

authorization and issuance of the bonds and funding a debt service

reserve.

The bonds are issued pursuant to and in full compliance

with the Constitution and laws of the State of Arkansas (the

"State"), including particularly Title 14, Chapter 234, Subchapter

2, Title 14, Chapter 164, Subchapter 4, and Title 14, Chapter 235,

Subchapter 2 of the Arkansas Code of 1987 Annotated and applicable

decisions of the Supreme Court of Arkansas, including particularly

City of Harrison v. Braswell, 209 Ark. 1094, 194 S.W. 2d 12 (1946),

and pursuant to Ordinance No. 2008, duly adopted on July 14, 2008

(the "Authorizing Ordinance"), and do not constitute an

indebtedness of the City within any constitutional or statutory

limitation. The bonds are not general obligations of the City, but

are special obligations payable solely from the revenues derived

from the operation of the System. In this regard, the pledge in

favor of the bonds is subordinate to the pledge in favor of the

City's Water and Sewer Refunding Revenue Bonds, Series 2005. An

amount of System revenues sufficient to pay the principal of and

interest on the bonds has been duly pledged and set aside into the

2008 Water and Sewer Revenue Bond Fund identified in the

Authorizing Ordinance. 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 registered owners of the bonds. The City has

fixed and has covenanted and agreed to maintain rates for the

services of the System which shall be sufficient at all times to

provide for the proper and reasonable expenses of operation and

maintenance of the System and for the payment of the principal of

and interest on the bonds, including Trustee's fees, as the same

become due and payable, to establish and maintain a debt service

reserve and to make the required deposit for the depreciation of

the System.

The bonds shall be subject to optional and mandatory

sinking fund redemption as follows:

(1) The bonds are subject to redemption at the option of

the City, from funds from any source, on and after December 1, 2013

in whole at any time or in part on any interest payment date, at a

redemption price equal to the principal amount being redeemed plus

accrued interest to the redemption date. If fewer than all of the

bonds shall be called for redemption, the particular bonds or

portions thereof to be redeemed shall be selected by lot by the

Trustee.

(2) To the extent not previously redeemed, the bonds are

subject to mandatory sinking fund redemption by lot in such manner

as the Trustee shall determine, on December 1 in the years and in

the amounts set forth below, at a redemption price equal to the

principal amount being redeemed plus accrued interest to the date

of redemption:

Year

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

Principal Amount

$ 55,000

60,000

65,000

70,000

75,000

80,000

85,000

90,000

95,000

100,000

105,000

110,000

115,000

125,000

In case any outstanding bond is in a denomination greater than

$5,000, each $5,000 of face value of such bond shall be treated as

a separate bond of the denomination of $5,000.

Notice of redemption identifying the bonds or

portions thereof (which shall be $5,000 or a multiple thereof) to

be redeemed shall be given by the Trustee, not less than 30 nor

more than 60 days prior to the date fixed for redemption, by

mailing a copy of the redemption notice by first class mail,

postage prepaid, or by other standard means, including facsimile

and electronic communication, to all registered owners of bonds to

be redeemed. Failure to mail or send an appropriate notice or any

such notice to one or more registered owners of bonds to be

redeemed shall not affect the validity of the proceedings for

redemption of other bonds as to which notice of redemption is duly

given in proper and timely fashion. All such bonds or portions

thereof thus called for redemption and for the retirement of which

funds are duly provided in accordance with the Authorizing

Ordinance prior to the date fixed for redemption will cease to bear

interest on such redemption date.

This bond is transferable by the registered owner hereof

in person or by his attorney-in-fact duly authorized in writing at

the principal corporate trust office of the Trustee, 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 bond. Upon such transfer a new fully

registered bond or bonds of the same maturity, of authorized

denomination or denominations, for the same aggregate principal

amount, will be issued to the transferee in exchange therefor.

This bond is issued with the intent that the laws of the State

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 shall be

affected by any notice to the contrary.

The 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, fully registered bonds may be

exchanged for a like aggregate principal amount of fully registered

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 bonds do exist,

have happened and have been performed in due time, form and manner

as required by law; that the indebtedness represented by the bonds,

together with all obligations of the City, does not exceed any

constitutional or statutory limitation; and that the above referred

to revenues pledged to the payment of the principal of and premium,

if any, and interest on the bonds as the same become due and

payable will be sufficient in amount for that purpose.

This bond shall not be valid or become obligatory for any

purpose or be entitled to any security or benefit under the

Authorizing Ordinance until the Certificate of Authentication

hereon shall have been signed by the Trustee.

THE CITY HAS DESIGNATED THIS BOND AS A "QUALIFIED

TAX-EXEMPT OBLIGATION" WITHIN THE MEANING OF SECTION 265(b) OF THE

INTERNAL REVENUE CODE OF 1986, AS AMENDED.

IN WITNESS WHEREOF, the City of Eureka Springs, Arkansas

has caused this bond to be executed by its Mayor and City Clerk,

thereunto duly authorized, and its corporate seal to be impressed

on this bond, all as of the Dated Date shown above.

CITY OF EUREKA SPRINGS, ARKANSAS

ATTEST:

Dani D. Joy, Mayor

Mary Jean Sell CMC

City Clerk

(SEAL)

(Form of Trustee's Certificate)

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This bond is one of the bonds designated Series 2008 in

and issued under the provisions of the within mentioned Authorizing

Ordinance.

Date of Authentication: _______________________________

BANCORPSOUTH BANK

TRUSTEE

By _______________________________

Authorized Signature

(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: Signature(s) must be guaranteed by a member of

or participant in the Securities Transfer Agents Medallion Program

(STAMP), or in another signature guaranty program recognized by the

Trustee.

Section 9. The rates charged for services of the System

heretofore fixed by ordinances of the City and the conditions,

rights and obligations pertaining thereto, as set out in those

ordinances, are ratified, confirmed and continued.

The City covenants that the rates shall never be reduced

while any of the bonds are outstanding unless there is obtained

from an independent certified public accountant ("Accountant") a

certificate that the Net Revenues of the System (Net Revenues being

defined as gross Revenues less the expenses of operation and

maintenance of the System, including all expense items properly

attributable to the operation and maintenance of the System under

generally accepted accounting principles applicable to municipal

water and sewer facilities other than depreciation, interest and

amortization of deferred bond discount expenses), with the reduced

rates, will always be equal to the amount required to be set aside

for the Depreciation Fund (hereinafter described) and leave a

balance equal to at least 120% of the aggregate average annual

principal and interest requirements on all outstanding bonds to

which Revenues are pledged ("System Bonds"). The City further

covenants that the rates shall, if and when necessary from time to

time, be increased in such manner as will produce Net Revenues

equal to at least 120% of the aggregate average annual principal

and interest requirements on all System Bonds. The City also

agrees that Net Revenues shall always be sufficient to make the

required deposits into the Depreciation Fund hereinafter identified

and to otherwise comply with the provisions of the Authorizing

Ordinance and all ordinances authorizing System Bonds.

Section 10. None of the facilities or services afforded

by the System shall be furnished without a charge being made

therefor. In the event that the City or any department, agency or

instrumentality thereof shall avail itself of the facilities and

services afforded by the System, the reasonable value of the

services or facilities so afforded shall be charged against the

City or such department, agency or instrumentality and shall be

paid for as the charges therefor accrue. The revenues so received

shall be deemed to be Revenues and shall be used and accounted for

in the same manner as any other Revenues. Nothing herein shall be

construed as requiring the City or any department, agency or

instrumentality thereof to avail itself of the facilities or

services afforded by the System.

Section 11. All of the provisions of the Senior Bond

Ordinance and the 2002 Ordinance, except those provisions clearly

inconsistent herewith or inapplicable hereto, including, without

limitation, the provisions pertaining to vacancies in office, the

collection, depositing, securing, disbursing and handling of

Revenues and funds and the operation, maintenance, insurance and

care of the System, are hereby made applicable hereto and are

incorporated herein by reference as though fully set forth at this

point. The effect of the above covenant shall be to continue the

applicable provisions of the Senior Bond Ordinance and the 2002

Ordinance in full force and effect even after the payment of the

Senior Bonds and the Bonds Refunded and until the bonds are paid,

or provision made therefor. In this regard, the following funds

incorporated into the Senior Bond Ordinance and the 2002 Ordinance

are hereby confirmed and continued: Water and Sewer Fund (the

"Revenue Fund"); Water and Sewer Operation and Maintenance Fund

(the "Operation and Maintenance Fund"); 2002 Water and Sewer

Revenue Bond Fund (the "Senior Bond Fund"); and Water and Sewer

Depreciation Fund (the "Depreciation Fund").

Section 12. (a) After making payments into the Operation

and Maintenance Fund and the payment into the Senior Bond Fund with

respect to the Senior Bonds, there shall be paid from the Revenue

Fund into a special fund in the name of the City hereby created and

designated the "2008 Water and Sewer Revenue Bond Fund" (the "Bond

Fund") the sums in the amounts and at the times described below for

the purpose of providing funds for the payment of the principal of

and interest on the bonds, as they mature, with Trustee's fees, and

as a debt service reserve.

(b) There shall be paid into the Bond Fund on the first

business day of each month, until all outstanding bonds, with

interest thereon, have been paid in full or provision made for such

payment, a sum equal to 1/6 of the next installment of interest due

on the bonds and 1/12 of the next installment of principal (whether

at maturity or upon mandatory sinking fund redemption) on the

bonds; provided, however, that monthly installments through

November 2008 shall be equal to 1/3 of interest on the bonds due

December 1, 2008.

There is hereby created as a part of the Bond Fund, a

Debt Service Reserve which shall be maintained by the City in an

amount equal to one-half of the maximum annual debt service

requirements on the bonds (the "Required Level"). There shall be

deposited into the Debt Service Reserve proceeds of the bonds

sufficient for such purpose. Should the Debt Service Reserve

become impaired or be reduced below the Required Level, the City

shall make additional monthly payments from the Revenue Fund until

the impairment or reduction is corrected over a twenty-four month

period.

The City shall also pay into the Bond Fund such

additional sums as necessary to provide for Trustee's fees for and

expenses (including reasonable legal fees) plus any arbitrage

rebate due the United States Treasury under Section 148 of the

Internal Revenue Code of 1986, as amended (the "Code"). The City

shall receive a credit against monthly deposits into the Bond Fund

from bond proceeds deposited therein, all interest earnings on

moneys in the Bond Fund, for transfers into the Bond Fund derived

from earnings in the Debt Service Reserve during the preceding

month as hereinafter provided, and transfers therein directed by

Section 25 hereof.

If Revenues are insufficient to make the required payment

on the first business day of the following month into the Bond

Fund, the amount of any such deficiency in the payment made shall

be added to the amount otherwise required to be paid into the Bond

Fund on the first business day of the next month.

payments made into the Bond Fund so that there are unavailable

sufficient moneys therein to pay the principal of and interest on

the bonds as the same become due, any sums then held in the Debt

Service Reserve shall be used to the extent necessary to pay such

principal and interest, but the Debt Service Reserve shall be

reimbursed as described above. The Debt Service Reserve shall be

used solely as herein described, but the moneys therein may be

invested as set forth below. Any earnings on moneys in the Debt

Service Reserve which increase the amount therein above the

Required Level shall be transferred from the Debt Service Reserve

and used as a credit against the next monthly deposit into the Bond

Fund.

(d) It shall be the duty of the City Treasurer to cause

to be withdrawn from the Bond Fund and deposited with the Trustee

at least one business day before the due date of any principal

and/or interest on any bond, at maturity or redemption prior to

maturity, an amount equal to the amount of such bond and interest

due thereon for the sole purpose of paying the same, together with

the fees of the Trustee. When the moneys held in the Bond Fund

shall be and remain sufficient to pay the principal of and interest

on all bonds then outstanding, plus Trustee’s fees, the City

Treasurer shall not be obligated to make any further payments into

the Bond Fund. No withdrawal of funds from the Bond Fund shall be

made for any other purpose except as otherwise authorized in this

Ordinance.

(e) All moneys in the Bond Fund shall be used solely for

the purpose of paying the principal of, premium, if any, and

interest on the bonds when due and any arbitrage rebate due under

Section 148 of the Code, except as herein specifically provided.

If a surplus shall exist in the Bond Fund over and above the amount

required for making all principal and interest payments due during

the next 12 months and over and above the Required Level for the

Debt Service Reserve, such surplus shall be used to redeem the

bonds to the extent callable, shall be transferred into the Revenue

Fund.

(f) The bonds shall be specifically secured by a pledge

of all Revenues subordinate to the pledge in favor of the Senior

Bonds. This pledge in favor of the bonds is hereby irrevocably

made according to the terms of this Ordinance, and the City and its

officers and employees shall execute, perform and carry out the

terms thereof in strict conformity with the provisions of this

Ordinance.

Section 13. After making the required monthly deposits

into the Operation and Maintenance Fund, the Senior Bond Fund and

the Bond Fund, there shall be paid from the Revenue Fund into the

Deprecation Fund being maintained pursuant to the 2002 Ordinance

and the Senior Bond Ordinance the amounts as set forth in the 2002

Ordinance and the Senior Bond Ordinance.

Section 14. The City reserves the right to issue

additional bonds ranking senior to or on a parity with the bonds to

finance or pay the cost of making any future extensions,

betterments or improvements to the System, or to refund bonds

issued for such purpose, but the City shall not authorize or issue

any such additional bonds ranking senior to or on a parity with the

bonds, unless and until there have been procured and filed with the

Trustee a statement by an Accountant reciting that, based upon

necessary investigation, the Net Revenues for the fiscal year

immediately preceding the fiscal year in which it is proposed to

issue such additional bonds shall equal not less than 125% of the

average annual principal and interest requirements on all the then

outstanding System Bonds and the additional bonds then proposed to

be issued. For this purpose, Net Revenues means gross Revenues

less the amounts required to pay Operation and Maintenance Expenses

under generally accepted accounting principles attributable to

municipal water and sewer facilities other than depreciation,

interest and amortization of deferred bond discount expenses. In

making the computation set forth above, additional amounts may be

added to the Net Revenues of the completed fiscal year immediately

preceding the issuance of additional bonds, as follows: if, prior

to the issuance of the additional bonds and subsequent to the first

day of such preceding fiscal year, the City shall have increased

its rates or charges imposed for services of the System there may

be added to the Net Revenues of such fiscal year the additional Net

Revenues which would have been received from the operation of the

System during such fiscal year had such increase been in effect

throughout such fiscal year, as reflected by a certificate of a

duly qualified consulting engineer not in the regular employ of the

City.

The additional bonds, the issuance of which is restricted

and conditioned by this Section, shall be understood to mean System

Bonds ranking senior to or on a parity of security with the bonds

and not System Bonds subordinate in security to the bonds. The

City reserves the right to issue System Bonds that rank subordinate

to the bonds.

Section 15. The bonds shall be subject to redemption

prior to maturity in accordance with the terms set out in the bond

form in Section 8 hereof.

Section 16. The City shall cause proper books of

accounts and records to be kept (separate from all other records

and accounts) in which complete and correct entries shall be made

of all transactions relating to the operation of the System, and

such books shall be available for inspection by the owner of any of

the bonds at reasonable times and under reasonable circumstances.

The City agrees to have these records audited by an independent

certified public accountant at least once each year, and a copy of

the audit shall be delivered to the Trustee and made available to

the registered owners of the bonds requesting the same in writing.

In the event that the City fails or refuses to make the audit, the

Trustee or any registered owner of the bonds, may have the audit

made, and the cost thereof shall be charged against the Operation

and Maintenance Fund.

Section 17. Any bond shall be deemed to be paid within

the meaning of this Ordinance when payment of the principal of and

interest on such bond (whether at maturity or upon redemption as

provided herein, or otherwise), either (i) shall have been made or

caused to be made in accordance with the terms thereof, or (ii)

shall have been provided for by irrevocably depositing with the

Trustee, in trust and irrevocably set aside exclusively for such

payment, (1) cash fully insured by the Federal Deposit Insurance

Corporation ("FDIC") and/or fully collateralized with Government

Obligations (as defined in Section 23 hereof) sufficient to make

such payment and/or (2) direct obligations of (including

obligations issued or held in book entry form on the books of) the

Department of the Treasury of the United States of America

("Investment Securities") (provided that such deposit will not

affect the tax exempt status of the interest on any of the bonds or

cause any of the bonds to be classified as "arbitrage bonds" within

the meaning of Section 148 of the Code, maturing as to principal

and interest in such amounts and at such times as will provide

sufficient moneys to make such payment, and all necessary and

proper fees, compensation and expenses of the Trustee pertaining to

the bonds with respect to which such deposit is made shall have

been paid or the payment thereof provided for to the satisfaction

of the Trustee.

On the payment of any bonds within the meaning of this

Ordinance, the Trustee shall hold in trust, for the benefit of the

owners of such bonds, all such moneys and/or Investment Securities.

When all the bonds shall have been paid within the

meaning of this Ordinance, if the Trustee has been paid its fees

and expenses and if any arbitrage rebate is paid or provided for to

the satisfaction of the Trustee, the Trustee shall take all

appropriate action to cause (i) the pledge and lien of this

Ordinance to be discharged and cancelled, and (ii) all moneys held

by it pursuant to this Ordinance and which are not required for the

payment of such bonds to be paid over or delivered to or at the

direction of the City. In determining the sufficiency of the

deposit of Investment Securities there shall be considered the

principal amount of such Investment Securities and interest to be

earned thereon until the maturity of such Investment Securities.

Section 18. If there be any default in the payment of

the principal of or interest on any of the bonds, or if the City

defaults in any Bond Fund requirement or in the performance of any

of the other covenants contained in this Ordinance, the Trustee

may, and upon the written request of the registered owners of not

less than 10% in principal amount of the then outstanding bonds,

shall, by proper suit, compel the performance of the duties of the

officials of the City under the laws of Arkansas. And in the case

of a default in the payment of the principal of and interest on any

of the bonds, the Trustee may and upon written request of the

registered owners of not less than 10% in principal amount of the

then outstanding bonds, shall apply in a proper action to a court

of competent jurisdiction for the appointment of a receiver to

administer the System on behalf of the City and the registered

owners of the bonds with power to charge and collect (or by

mandatory injunction or otherwise to cause to be charged and

collected) rates sufficient to provide for the payment of the

expenses of operation, maintenance and repair and to pay any bonds

and interest outstanding and to apply the Revenues in conformity

with the laws of Arkansas and with this Ordinance. When all

defaults in principal and interest payments have been cured, the

custody and operation of the System shall revert to the City.

No registered owner of any of the outstanding bonds shall

have any right to institute any suit, action, mandamus or other

proceeding in equity or at law for the protection or enforcement of

any power or right unless such owner previously shall have given to

the Trustee written notice of the default on account of which such

suit, action or proceeding is to be taken, and unless the

registered owners of not less than 10% in principal amount of the

bonds then outstanding shall have made written request of the

Trustee after the right to exercise such power or right of action,

as the case may be, shall have accrued, and shall have afforded the

Trustee a reasonable opportunity either to proceed to exercise the

powers granted to the Trustee, or to institute such action, suit or

proceeding in its name, and unless, also, there shall have been

offered to the Trustee reasonable security and indemnity against

the costs, expenses and liabilities to be incurred therein or

thereby and the Trustee shall have refused or neglected to comply

with such request within a reasonable time. Such notification,

request and offer of indemnity are, at the option of the Trustee,

conditions precedent to the execution of any remedy. No one or

more registered owners of the bonds shall have any right in any

manner whatever by his or their action to affect, disturb or

prejudice the security of this Ordinance, or to enforce any right

thereunder except the manner herein described. All proceedings at

law or in equity shall be instituted, had and maintained in the

manner herein described and for the benefit of all registered

owners of the outstanding bonds.

No remedy conferred upon or reserved to the Trustee or to

the registered owners of the bonds is intended to be exclusive of

any other remedy or remedies, and every such remedy shall be

cumulative and shall be in addition to every other remedy given

under this Ordinance or by law.

The Trustee may, and upon the written request of the

registered owners of not less than 50% in principal amount of the

bonds then outstanding shall, waive any default which shall have

been remedied before the entry of final judgment or decree in any

suit, action or proceeding instituted under the provisions of this

Ordinance or before the completion of the enforcement of any other

remedy, but no such waiver shall extend to or affect any other

existing or any subsequent default or defaults or impair any rights

or remedies consequent thereon.

All rights of action under this Ordinance or under any of

the bonds, enforceable by the Trustee, may be enforced by it

without the possession of any of the bonds, and any such suit,

action or proceeding instituted by the Trustee shall be brought in

its name for the benefit of all the registered owners of such

bonds, subject to the provisions of this Ordinance.

No delay or omission of the Trustee or of any registered

owners of the bonds 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 such default or an acquiescence therein; and

every power and remedy given by this Ordinance to the Trustee and

to the registered owners of the bonds, respectively, may be

exercised from time to time and as often as may be deemed

expedient.

In any proceeding to enforce the provisions of this

Ordinance any plaintiff bondholder and the Trustee shall be

entitled to recover from the City all costs of such proceeding,

including reasonable attorneys' fees.

Section 19. (a) The terms of this Ordinance shall

constitute a contract between the City and the registered owners of

the bonds and no variation or change in the undertaking herein set

forth shall be made while any of these bonds are outstanding,

except as hereinafter set forth in subsections (b) and (c).

(b) The Trustee may consent to any variation or change

in this Ordinance to cure any ambiguity, defect or omission in this

Ordinance or any amendment hereto, or to make any change that the

Trustee determines is not to the material prejudice of the

bondholders, without the consent of the owners of the outstanding

bonds.

principal amount of the bonds then outstanding shall have the

right, from time to time, anything contained in this Ordinance to

the contrary notwithstanding, to consent to and approve the

adoption by the City of such ordinance supplemental hereto as shall

be necessary or desirable for the purpose of modifying, altering,

amending, adding to or rescinding, in any particular, any of the

terms or provisions contained in this Ordinance or in any

supplemental ordinance; provided, however, that nothing contained

in this Section shall permit or be construed as permitting (a) an

extension of the maturity of the principal of or the interest on

any bond, or (b) a reduction in the principal amount of any bond or

the rate of interest thereon, or (c) a privilege or priority of any

bond or bonds over any other bond or bonds, or (d) a reduction in

the aggregate principal amount of the bonds required for consent to

such supplemental ordinance.

Section 20. When the bonds have been executed, they

shall be authenticated by the Trustee and the Trustee shall deliver

the bonds to the Purchaser upon payment of the Purchase Price. The

accrued interest shall be deposited into the Bond Fund. The

expenses of issuing the bonds as set forth in the delivery

instructions to the Trustee signed by the Mayor and City Clerk (the

"Delivery Instructions") shall also be paid from the Purchase

Price. The amount necessary from the Purchase Price to refund the

Bonds Refunded as set forth in the Delivery Instructions shall be

deposited with the trustee for the Bonds Refunded and used to

redeem the Bonds Refunded. The sum from the Purchase Price as set

forth in the Delivery Instructions as the amount required to fund

the Debt Service Reserve to the Required Level shall be deposited

into the Bond Fund. The remainder of the Purchase Price, if any,

shall be deposited into a special account in the name of the City

designated "Cost of Issuance Fund, Series 2008" (the "Cost of

Issuance Fund") in the Trustee. The moneys in the Cost of Issuance

Fund shall be disbursed solely in payment of the costs of

accomplishing the refunding, paying necessary expenses incidental

thereto, and paying expenses of issuing the bonds. Disbursements

shall be on the basis of requisitions which shall contain at least

the following information: the person to whom payment is being

made; the amount of the payment; and the purpose by general

classification of the payment. Each requisition must be signed by

the Mayor and the City Clerk. The Trustee shall issue its check

upon the Cost of Issuance Fund payable to the person, firm or

corporation designated in the requisition. The Trustee shall be

required to keep accurate records as to all payments made on the

basis of requisitions.

When all required expenses have been paid and

expenditures made from the Cost of Issuance Fund for and in

connection with the accomplishment of the refunding and the

issuance of the bonds, this fact shall, if there are moneys on hand

in the Cost of Issuance Fund, be evidenced by a certificate signed

by the Mayor and the City Clerk, which certificate shall state,

among other things, that all obligations payable from the Cost of

Issuance Fund have been discharged. A copy of the certificate

shall be filed with the Trustee, and upon receipt thereof the

Trustee shall transfer any remaining balance to the Bond Fund.

Section 21. There shall be a statutory mortgage lien

upon the water facilities which are part of the System (including

all extensions, improvements and betterments now or hereafter

existing) which shall exist in favor of the owners of the bonds,

and each of them and such water facilities shall remain subject to

such statutory mortgage lien until payment in full of the interest

on and principal of the bonds, provided, however, that such

statutory mortgage lien shall be interpreted according to the

decision of the Supreme Court of the State in City of Harrison v.

Braswell, supra.

Section 22. (a) The City covenants that it shall not take

any action or suffer or permit any action to be taken or conditions

to exist which causes or may cause the interest payable on the

bonds to be included in gross income for federal income tax

purposes. Without limiting the generality of the foregoing, the

City covenants that the proceeds of the sale of the bonds and

Revenues will not be used directly or indirectly in such manner as

to cause the bonds to be treated as "arbitrage bonds" within the

meaning of Section 148 of the Code.

(b) The City shall assure that (i) not in excess of 10%

of the Net Proceeds of the bonds 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 bonds during the term thereof is,

under the terms of the 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 5% of the Net Proceeds of the bonds 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 bonds during the term thereof is,

under the terms of the bonds or any underlying arrangement,

directly or indirectly, secured by any interest in property used or

to be used for said Private Business Use or in payments in respect

of property used or to be used for said 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 said Private

Business Use, then said excess over said 5% of Net Proceeds of the

bonds used for a Private Business Use shall be used for a Private

Business Use related to the governmental use of the improvements

financed by the Bonds Refunded.

The City shall assure that not in excess of 5% of the Net

Proceeds of the bonds are 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:

"Net Proceeds" means the face amount of the bonds, plus

accrued interest and less the deposit into the Debt Service Reserve

from proceeds of the bonds.

"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.

tax-exempt obligations" within the meaning of the Code. The City

represents 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, issued in calendar

year 2008 will not exceed $10,000,000.

(d) The City covenants that it will take no action which

would cause the bonds to be "federally guaranteed" within the

meaning of Section 149(b) of the Code. Nothing in this Section

shall prohibit investments in bonds issued by the United States

Treasury.

(e) 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 bonds are issued, a statement

required by Section 149(e) of the Code.

(f) The City covenants that it will, in compliance with

the requirements of Section 148(f) of the Code, pay with moneys in

the Bond Fund to the United States Government in accordance with

the requirements of Section 148(f) of the Code, from time to time,

an amount equal to the sum of (1) the excess of (A) the amount

earned on all Non-purpose Investments (as therein defined)

attributable to the bonds, other than investments attributable to

such excess over (B) the amount which would have been earned if

such Non-purpose Investments attributable to the bonds were

invested at a rate equal to the Yield (as defined in the Code) on

the bonds, plus (2) any income attributable to the excess described

in (1), subject to the exceptions set forth in Section 148 of the

Code. The City further covenants that in order to assure

compliance with its covenants herein, it will employ a qualified

consultant to advise the City in making the determination required

to comply with this subsection. Anything herein to the contrary

notwithstanding, the City need not comply with this provision if in

the opinion of Bond Counsel filed with the Trustee, the failure to

comply would not affect the tax-exempt status of interest on the

bonds for federal income tax purposes.

Section 23. (a) Moneys held for the credit of the Bond

Fund shall be continuously invested and reinvested by the City in

Permitted Investments (as hereinafter defined), all of which shall

mature, or which shall be subject to redemption by the holder

thereof, at the option of such holder, not later than the payment

date for interest or principal and interest.

(b) Moneys held for the credit of the Debt Service

Reserve shall be invested and reinvested by the City in Permitted

Investments, all of which shall mature, or which shall be subject

to redemption by the holder thereof, at the option of such holder,

not later than five (5) years after the date of investment or the

maturity date of the bonds, whichever is earlier.

be continuously invested and reinvested by the City in Permitted

Investments or other investments as may, from time to time, be

permitted by law, which shall mature, or which shall be subject to

redemption by the holder thereof, at the option of such holder, not

later than the date or dates when the moneys held for the credit of

the particular fund will be required for purposes intended.

(d) Obligations so purchased as an investment of moneys

in any 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

investments shall be credited to such fund, and any loss resulting

from such investment shall be charged to such fund, except that

interest earnings and profits on investments of moneys in the Debt

Service Reserve which increase the amount thereof above the

Required Level shall to the extent of any such excess be

transferred from time to time into the Bond Fund and used as a

credit against the monthly Bond Fund payment due.

(e) "Permitted Investments" are defined as (i) direct or

fully guaranteed obligations of the United States of America

(including any such securities issued or held in book-entry form on

the books of the Department of the Treasury of the United States of

America) ("Government Obligations"), or (ii) time deposits or

certificates of deposit of banks, including the Trustee, which are

insured by FDIC, or, if in excess of insurance coverage,

collateralized by Government Obligations or other securities

authorized by State law to secure public funds.

(f) Moneys so invested in Government Obligations or in

certificates of deposit of banks to the extent insured by FDIC,

need not be secured by the depository bank or banks.

(g) All investments and deposits shall have a par value

(or market value when less than par), exclusive of accrued interest

at all times at least equal to the amount of money credited to such

funds and shall be made in such a manner that the money required to

be expended from any fund will be available at the proper time or

times.

(h) Investments of moneys in all funds shall be valued

in terms of current market value as of the last day of each year,

except that direct obligations of the United States (State and

Local Government Series) in book-entry form shall be continuously

valued at par or face principal amount.

Section 24. (a) The Trustee shall only be responsible

for the exercise of good faith and reasonable prudence in the

execution of its trust. The recitals in this Ordinance and in the

face of the bonds are the recitals of the City and not of the

Trustee. The Trustee shall not be required to take any action as

Trustee unless it shall have been requested to do so in writing by

the registered owners of not less than 10% in principal amount of

the bonds then outstanding and shall have been offered reasonable

security and indemnity against the costs, expenses and liabilities

to be incurred therein or thereby. The Trustee may resign at any

time by giving 60 days' notice in writing to the City Clerk and to

the registered owners of the bonds, and the majority in value of

the registered owners of the outstanding bonds or the City, so long

as it is not in default under this Ordinance, at any time, with or

without cause, may remove the Trustee. In the event of a vacancy

in the office of Trustee, either by resignation or by removal, the

City shall forthwith designate a new Trustee by a written

instrument filed in the office of the City Clerk. The original

Trustee and any successor Trustee shall file a written acceptance

and agreement to execute the trust imposed upon it or them by this

Ordinance, but only upon the terms and conditions set forth in this

Ordinance and subject to the provisions of this Ordinance, to all

of which the respective registered owners of the bonds agree. Such

written acceptance shall be filed with the City Clerk and a copy

thereof shall be placed in the bond transcript. Any successor

Trustee shall have all the powers herein granted to the original

Trustee.

(b) Every successor Trustee appointed pursuant to this

Section shall be a trust company or bank, duly authorized to

exercise trust powers and subject to examination by federal or

state authority, having a reported capital and surplus of not less

than $5,000,000.

effective until the appointment of a successor Trustee under this

Section.

Section 25. All moneys held in the 2002 Subaccounts of

the Senior Bond Fund are hereby appropriated and shall be used as

necessary to refund the Bonds Refunded, with any balance to be

transferred to the Bond Fund.

Section 26. The insurance policies required by Section

19 of the 2002 Ordinance are to carry a clause making them payable

to the Trustee as its interest may appear, and satisfactory

evidence of said insurance shall be filed with the Trustee.

Section 27. Following adoption, this Ordinance shall be

posted in the following public places in the City: City Hall,

Auditorium, Eureka Springs Public Library, Hart's Family Center and

Bunch's Quik-Chek. The City’s Ordinance No. 2080, Ordinance No.

2081 and Ordinance No. 2085, relating to the City’s water and sewer

rates, shall also be posted as set forth in the preceding sentence.

Section 28. The provisions of this Ordinance are hereby

declared to be separable and if any provision shall for any reason

be held illegal or invalid, such holding shall not affect the

validity of the remainder of this Ordinance.

Section 29. All ordinances and resolutions or parts

thereof, in conflict herewith are hereby repealed to the extent of

such conflict.

Section 30. It is hereby ascertained and declared that

the refunding of the Bonds Refunded must be accomplished as soon as

possible in order to lower the interest cost on obligations of the

System. The refunding of the Bonds Refunded cannot be accomplished

without the issuance of the bonds, and therefore, it is declared

that an emergency exists and this Ordinance being necessary for the

preservation of the public peace, health and safety shall be in

force and take effect immediately upon and after its passage.

PASSED: July 14, 2008.

APPROVED: Dani D. Joy, Mayor

ATTEST:

Mary Jean Sell CMC

City Clerk

(SEAL)

CERTIFICATE

The undersigned, City Clerk of the City of Eureka

Springs, Arkansas, hereby certifies that the foregoing pages are a

true and correct copy of Ordinance No. 2088, adopted at a regular

session of the City Council of the City of Eureka Springs,

Arkansas, held at the regular meeting place of the City Council in

the City at 6 p.m., on the 14th day of July, 2008, and

that said Ordinance is of record in Ordinance Record Book No. 6, now in my possession.

GIVEN under my hand and seal this 14th day of July,

2008.

Mary Jean Sell CMC

City Clerk

(SEAL)