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
65,000
70,000
70,000
75,000
80,000
80,000
85,000
90,000
95,000
95,000
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:

By

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.


(c) If for any reason there shall be a deficiency in the
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.


(c) The owners of not less than 75% in aggregate
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.


(c) The bonds are hereby designated as "qualified
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.
(c) Moneys held for the credit of any other fund shall
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.


(c) Any resignation by the Trustee shall not be
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)