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1675
000NU ORDINANCE NO. 1675 (#25-2021) AN ORDINANCE PROVIDING FOR THE ISSUANCE AND SALE OF WASTEWATER REVENUE BONDS, SERIES 2021, IN ONE OR MORE SERIES, FOR THE PURPOSES OF FINANCING A PORTION OF THE COSTS OF THE IMPROVEMENTS, BETTERMENTS, AND EXTENSIONS TO THE JACKSONVILLE SEWER SYSTEM; 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 Jacksonville, Arkansas (the "City") owns a municipal wastewater system (the "System"), which is operated by the Jacksonville Wastewater Utility (the "Utility") and governed by the Jacksonville Sewer Commission of the City (the "Commission"); and WHEREAS, the City has determined the need for constructing betterments, improvements, and extensions to the System to benefit the citizens of the City including, engineering, construction, and equipment for treatment plant improvements, and such other betterments and improvements as the Utility shall from time to time deem necessary and appropriate (the "Improvements"); and WHEREAS, the Commission has caused to be prepared by Hawkins -Weir Engineers for the Utility a preliminary report, general plans, and Construction Manager at Risk process estimates '—" of costs for the Improvements that have been examined and approved by the Commission; WHEREAS, in order to finance a portion of the costs of the Improvements, the City intends to issue its Wastewater Revenue Bonds, Series 2021 (the "Bonds") in an aggregate principal amount of Eight Million One Hundred Fifty Thousand Dollars and No/100 ($8,150,000.00) pursuant to the provisions of the Act; and WHEREAS, the total cost of the Improvements is approximately $18,000,000. The Improvements are expected to be funded from proceeds of the Bonds together with a one-time contractual contribution from Little Rock Air Force Base, a one-time contractual contribution from Waste Management, and other funds of the Utility; and WHEREAS, the City and the Commission have made arrangements for the sale of the Bonds to Stephens Inc. (the "Purchaser"), at a price of $8,138,704.35 (principal amount plus net reoffering premium of $62,054.35 and less underwriter's discount of $73,350.00) (the "Purchase Price"), on a negotiated basis 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 November 8, 2021, offering the Bonds for sale (the "Preliminary Official Statement") has been presented to and is before this meeting; and WHEREAS, in order to comply with the applicable securities laws, it is necessary that the City and the Utility enter into a Continuing Disclosure Agreement among the City, the Utility, and Bank OZK, Little Rock, Arkansas, as Dissemination Agent (the "Disclosure Agreement"), 2413190-v1 000011'i l; providing for the ongoing disclosure obligations of the City and the Utility with respect to the Bonds, and a copy of the Disclosure Agreement has been presented to and is before this meeting. NOW, THEREFORE, BE IT ORDAINED by the City Council of the City of Jacksonville, Arkansas as follows: Section 1. The Improvements shall be accomplished and are expected to be funded from proceeds of the Bonds together with a one-time contractual contribution from Little Rock Air Force Base, a one-time contractual contribution from Waste Management, and other funds of the Utility. The Mayor and City Clerk/Treasurer are hereby authorized to take, or cause to be taken, all action necessary to accomplish the completion of the Improvements and to execute all required contracts in connection therewith. The accomplishment of the Improvements shall be under the control and supervision of, and all details in connection therewith shall be handled by, the Commission, and the Commission shall make all contracts and agreements necessary or incidental to the performance of its duties and the execution of its powers. The Commission shall enter into all construction contracts pursuant to and in accordance with existing laws and shall require such performance bonds and insurance from the contractors as, in the judgment of the Commission, will fully insure the completion of the Improvements in accordance with the plans and specifications therefor. Section 2. The City Council hereby finds and declares that the period of usefulness of the Improvements will be more than thirty (30) years, which is longer than the term of the bonds. — Section 3. The offer of the Purchaser for the purchase of the Bonds from the City at the Purchase Price for Bonds bearing interest at the rates per annum, maturing, and otherwise subject to the terms and provisions hereafter in this Ordinance set forth in detail be, and is hereby accepted, and the Agreement, in substantially the form submitted to this meeting, is approved and the Bonds are hereby sold to the Purchaser. The approval and execution of the Agreement on November 18, 2021, by the Mayor and the General Manager, is hereby ratified and the Mayor and General Manager are hereby authorized to deliver the Agreement on behalf of the City and the Utility, respectively, and to take all action required on the part of the City to fulfill its obligations under the Agreement. Section 4. 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 authorized and approved, and the Mayor is hereby authorized and directed, for and on behalf of the City, to execute the Preliminary Official Statement and the final Official Statement as set forth in the Agreement. Section 5. 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 and the General Manager are each authorized and directed to take all action required on the part of the City to fulfill the City's obligations under the Disclosure Agreement. Section 6. (a) Under the authority of the Constitution and laws of the State of Arkansas (the "State"), including particularly Amendment 65 to the Constitution of the State and Title 14, Chapter 164, Subchapter 4 and Title 14, Chapter 235, Subchapter 2 of the Arkansas Code of 1987 Annotated, the Bonds are hereby authorized and ordered issued in the principal amount of 2413190-v1 2 000 $8,150,000 for the purposes of financing a portion of the costs of the Improvements, funding a ^., debt service reserve, and paying costs incidental thereto and expenses of issuing the Bonds. The Bonds shall bear interest at the rates and shall mature on the dates and in the amounts as follows: Maturity Principal (December 1) Amount Interest Rate M) 2022 $ 360,000 4.000% 2023 355,000 4.000% 2024 190,000 4.000% 2025 195,000 4.000% 2026 200,000 4.000% 2027 210,000 2.000% 2028 215,000 2.000% 2029 215,000 2.000% 2030 220,000 1.500% 2031 225,000 2.000% 20320) 230,000 2.000% 20330) 235,000 2.000% 20340) 245,000 2.000% 20350) 245,000 2.000% 20360) (2) 245,000 2.000% 20370) 255,000 2.000% 20380) 260,000 2.000% 20390) 555,000 2.000% 2040')(2) 1,335,000 2.000% 2041(')(3) 1,360,000 2.212% 20420) (2) (3) 800,000 2.212% (1) Term Bond, subject to mandatory sinking fund redemption. (2) Final Maturity of Term Bond. (3) Combined sinking funds for 2042 bifurcated maturity. (b) The Bonds shall be dated December 28, 2021, with interest payable semiannually on June 1 and December 1 of each year, commencing June 1, 2022, shall be numbered consecutively from 1 upward, in order of issuance, and shall be issuable only as fully registered bonds without coupons in the denomination of $5,000 or any integral multiple thereof. Each Bond shall have a CUSIP number. The Bonds shall be registered as to principal and interest. Principal is payable at the principal office of the Trustee. Payment of interest shall be by check or draft mailed to the registered owner at the address shown on the registration book of the City maintained by Bank OZK, Little Rock, Arkansas, which is hereby appointed as Trustee and Paying Agent (the "Trustee"), at the close of business on the fifteenth (15th) 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. The Bonds will bear interest from the dates and shall be subject to redemption prior to maturity as hereinafter set forth in the bond forms. 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 of, premium on, 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 2413190-v1 0 i 0000 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, 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 book -entry 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, the City, and the Utility 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. 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 December 28, 2021, 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. 2413190-v1 4 M r(-=� r- L°:Ju J I D 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, number, 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 6, 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 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 2413190-v1 5 000 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/Treasurer 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 the Net Revenues (hereinafter defined) derived from the System ("Pledged Revenues") which are hereby pledged and mortgaged for the equal and ratable payment of the Bonds, subject only to the parity pledge in favor of the Parity Bonds (hereinafter defined). "Net Revenues" being defined as gross revenues of the System 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 wastewater facilities, excluding depreciation, interest, and amortization of deferred bond discount expenses. The Bonds are being issued on a parity of security with the City's Wastewater Refunding Revenue Bonds, Series 2020 (Federally Taxable) (the "Parity Bonds"). Section 8. The Bonds and the Certificate shall be in substantially the following form and the Mayor and City Clerk/Treasurer are hereby expressly authorized and directed to make all recitals contained therein: [Remainder of page intentionally left blank.] 2413190-v1 16 (Form of Series 2021 Bond) REGISTERED UNITED STATES OF AMERICA STATE OF ARKANSAS COUNTY OF PULASKI CITY OF JACKSONVILLE WASTEWATER REVENUE BOND, SERIES 2021 Maturity Date: Dated Date: , 2021 Registered Owner: Cede & Co. Principal Amount: KNOW ALL MEN BY THESE PRESENTS: 0000 REGISTERED Interest Rate: % CUSIP No.: That the City of Jacksonville, County of Pulaski, 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 Bank OZK, Little Rock, 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 June 1, 2022, and semiannually thereafter on June 1 and December 1 of each year, until payment of such Principal Amount or, if this Bond or a portion thereof shall be duly called for redemption, until the date fixed for redemption, and to pay interest on overdue principal and interest (to the extent legally enforceable) at the rate borne by this 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 (15th) 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. Unless this Bond 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 required 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 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 2413190-v1 7 0000 1$ 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, authenticated 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. This Bond is one of an issue of City of Jacksonville, Arkansas Wastewater Revenue Bonds, Series 2021, aggregating Eight Million One Hundred Fifty Thousand Dollars ($8,150,000) in principal amount (the `Bonds"), and is issued for the purposes of financing a portion of the costs of constructing betterments, improvements, and extensions to the City's existing wastewater system (the "System"); funding a debt service reserve; and paying expenses incidental thereto and to the authorization and issuance of the Bonds. The Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas (the "State"), including particularly Amendment 65 to the Constitution of the State and Title 14, Chapter 164, Subchapter 4 and Title 14, Chapter 235, Subchapter 2 of the Arkansas Code of 1987 Annotated, and pursuant to Ordinance No. 1675 (#25-2021) duly adopted on November 18, 2021 (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 on a parity of security with the City's Wastewater Refunding Revenue Bonds, Series 2020 (Federally Taxable) (the "Parity Bonds") solely from the Net Revenues derived from the operation of the System. "Net Revenues" being defined as gross revenues of the System 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 wastewater facilities, excluding depreciation, interest, and amortization of deferred bond discount expenses. An amount of Net Revenues sufficient to pay the principal of and interest on the Bonds has been duly pledged and set aside into the Bond Fund created by 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; to provide for the payment of the principal of and interest on the Bonds and the Parity 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 deposits for the depreciation of the System. The Bonds shall be subject to optional, extraordinary, and mandatory sinking fund redemption as follows: 1. Optional Redemption. The Bonds are subject to redemption at the option of the City from funds from any source, in whole or in part at any time on and after December 1, 2026, prior to maturity from any moneys available therefor 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 maturities of the Bonds to be redeemed shall be selected by the City in its discretion. If fewer than all of the Bonds of any one maturity shall be called for redemption, the particular Bonds or portion thereof to be redeemed from such maturity shall be selected by lot by the Trustee. Notwithstanding the foregoing, if the 2042 maturities are 2413190-v1 selected to be called for redemption the 2042 maturity with the highest interest rate shall be called for redemption first. 2. Extraordinary Redemption. The Bonds are subject to extraordinary redemption from excess moneys in the Project Fund (hereinafter defined) 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 maturities of the Bonds to be redeemed shall be selected by the City in its discretion. If fewer than all of the Bonds of any one maturity shall be called for redemption, the particular Bonds or portion thereof to be redeemed from such maturity shall be selected by lot by the Trustee. Notwithstanding the foregoing, if the 2042 maturities are selected to be called for redemption the 2042 maturity with the highest interest rate shall be called for redemption first. 3. Mandatory Sinking Fund Redemption. To the extent not previously redeemed, the Bonds maturing on December 1 in the year 2036 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: Bonds Maturing December 1, 2036 Years Principal Amounts 2032 $230,000 "—' 2033 235,000 2034 245,000 2035 245,000 2036 (Final Maturity) 245,000 To the extent not previously redeemed, the Bonds maturing on December 1 in the year 2040 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: Bonds Maturing December 1, 2040 Years Principal Amounts 2037 $255,000 2038 260,000 2039 555,000 2040 (Final Maturity) 1,335,000 To the extent not previously redeemed, the Bonds maturing on December 1 in the year 2042, bearing interest at 2.250%, 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: 2413190-v1 9 0000 —� Bonds Maturing December 1, 2042 Years Principal Amounts 2041 $945,000 2042 (Final Maturity) $555,000 To the extent not previously redeemed, the Bonds maturing on December 1 in the year 2042, bearing interest at 2.125%, 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: Bonds Maturing December 1, 2042 Years Principal Amounts 2041 $415,000 2042 (Final Maturity) $245,000 The provisions for mandatory sinking fund redemption of the Bonds are subject to the provisions of the Authorizing Ordinance which permit the City to receive credit for Bonds previously redeemed or for Bonds acquired by the City and surrendered to the Trustee. Bonds of denominations greater than $5,000 may be redeemed partially in the amount of $5,000, or any integral multiple thereof. 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 thirty (30) nor more than sixty (60) days prior to the date fixed for redemption, by mailing a copy of the redemption notice by first class mail, postage prepaid, to all Registered Owners of Bonds to be redeemed. Failure to mail 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. No charge shall be made to the owner of any Bond for the privilege of registration, but any owner requesting any such registration shall pay any tax or governmental charge required to be 2413190-v 1 10 )50 090051 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. Neither the City nor the Trustee shall be required to transfer or exchange any Bond selected for redemption in whole or in part. 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 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. [Signature page follows.] 2413190-v1 11 09M .--� IN WITNESS WHEREOF, the City of Jacksonville, Arkansas has caused this Bond to be executed by its Mayor and City Clerk/Treasurer and its corporate seal to be impressed or imprinted on this Bond, all as of the Dated Date shown above. ATTEST: CITY OF JACKSONVILLE, ARKANSAS By: Bob Jo son, ayor 2413190-v1 12 S 0900, (Form of Trustee's Certificate) TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds designated Wastewater Revenue Bonds, Series 2021 in and issued under the provisions of the within mentioned Authorizing Ordinance. Date of Authentication: Bank OZK Little Rock, Arkansas, Trustee Authorized Signature 2413190-v1 13 E (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, 000n� ("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. 2413190-v1 14 ^ r) f?, 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 hereby ratified, confirmed, and continued. 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 service or facilities so afforded shall be charged against the City or such department, agency, or instrumentality and shall be paid for as the charges accrue. The revenues so received shall be deemed to be System Revenues derived from the operation of the System and shall be used and accounted for in the same manner as the other System Revenues derived from the operation of the System. "System Revenues" being defined as gross revenues of the System. The City covenants that the rates established will produce System Revenues at least sufficient to pay principal of and interest on all outstanding bonds and other debt obligations to which System Revenues are pledged ("System Bonds"), maintain a debt service reserve at the Required Level (as defined in Section 12 hereinafter), provide the amount required to be set aside for the Depreciation Fund (hereinafter identified), and pay the expenses of operation and maintenance of the System, including all expense items properly attributable to operation and maintenance under generally accepted accounting principles applicable to municipal wastewater facilities (other than depreciation, interest, and amortization of deferred bond discount expenses). The City further covenants that the rates shall, if and when necessary from time to time, be increased in such manner as will produce System Revenues at least sufficient to comply with the previous sentence. The City covenants and agrees that the rates shall never be reduced while any of the System Bonds are outstanding unless there is obtained from an independent certified public accountant ("Accountant") a certificate that the Pledged Revenues of the System, with the reduced rates, will always be equal to the amount required to be set aside for the Depreciation Fund (hereinafter identified), and leave a balance equal to at least one hundred twenty-five percent (125%) of the average annual principal and interest requirements on the System Bonds. The City further covenants and agrees that the rates shall, if and when necessary, from time to time, be increased in such manner as will produce System Revenues at least sufficient to pay the principal and interest on all System Bonds when due, to pay the operation, repair, and maintenance expenses of the System, and to deposit the amounts required to be paid into the Depreciation Fund (hereinafter identified) and the Debt Service Reserve Fund in accordance with this Ordinance. Section 10. The System shall be continuously operated as a revenue producing undertaking and all revenues shall be paid into a special fund heretofore created and designated "Wastewater Revenue Fund" (the "Revenue Fund"). The revenues so deposited in the Revenue Fund shall be applied to the payment of the reasonable and necessary expenses of operation, repair, and maintenance of the System; to the payment of the principal of and premium, if any, and interest on System Bonds; to the establishment and maintenance of a Debt Service Reserve Fund; to the providing of a Depreciation Fund, as hereafter set forth; and otherwise as described in this Ordinance. The Revenue Fund, and the other special funds hereafter in this Ordinance provided for or referred to, shall be maintained in such depositories of the City as shall from time to time be designated by the Commission, with all such depositories to hold membership in the Federal Deposit Insurance Corporation (the "FDIC"), to be located in Pulaski County, Arkansas, and to have a capital and surplus of not less than $15,000,000, and with all deposits in any depository in 2413190-v 1 15 �. e excess of the amount insured by the FDIC to be secured by bonds or other direct or fully guaranteed obligations of the United States of America unless invested in accordance with Section 28 hereof. Section 11. There shall first be paid from the Revenue Fund into a fund heretofore created and designated "Wastewater Operation and Maintenance Fund" (the "Operation and Maintenance Fund") on or before the tenth (10th) day of each month while any Bonds are outstanding, an amount sufficient to pay the reasonable and necessary monthly expenses of operation, repair, and maintenance of the System for such month and from which disbursements shall be made only for those purposes. Fixed annual charges such as insurance premiums and the cost of major repair and maintenance expenses may be computed and set up on an annual basis, and one -twelfth (1/12) of the amount thereof may be paid into the Operation and Maintenance Fund each month. If in any month for any reason there shall be a failure to transfer and pay the required amount into the Operation and Maintenance Fund, the amount of any deficiency shall be added to the amount otherwise required to be transferred and paid into such fund in the next succeeding month. If in any fiscal year a surplus shall be accumulated in the Operation and Maintenance Fund over and above the amount which shall be necessary to defray the reasonable and necessary cost of operation, repair, and maintenance of the System during the remainder of the then current fiscal year and the next ensuing fiscal year, such surplus may be transferred to and deposited in the Revenue Fund. Section 12. (a) After making the required monthly deposits into the Operation and Maintenance Fund, there shall be paid from the Revenue Fund, pro rata, the required monthly deposits into the Series 2020 Wastewater Refunding Revenue Bond Fund, being maintained in connection with the Parity Bonds (the "Parity Bond Fund"), and a special fund in the name of the City which is hereby created and designated the "Series 2021 Wastewater Revenue Bond Fund" (the "Bond Fund") on or before the fifteenth (15th) day of each month, commencing on January 15, 2022, until all outstanding Bonds, with interest thereon, have been paid in full or provision made for such payment a sum equal to one-sixth (1/6) of the next installment of interest due on the Bonds and one -twelfth (1/12) of the next installment of principal due on the Bonds, except for the payments to be made from the date of delivery of the Bonds to the fifteenth (15th) day of the month preceding the first payment date which such monthly payments shall be made in an amount equal to the pro rata portion of the next installment of interest and principal, if any, due on the Bonds, which deposits are hereby pledged to secure the repayment of the Bonds. The City shall also pay into the Bond Fund such additional sums as necessary to provide for the Trustee's fees and expenses, and any arbitrage rebate due at the times and in the amounts required by Section 148(f) of the Internal Revenue Code of 1986, or amended (the "Code"). The City shall realize a credit against monthly deposits into the Bond Fund from Bond proceeds deposited therein, all interest earnings on moneys in the Bond Fund and all transfers made into the Bond Fund from the Debt Service Reserve Fund during the preceding month. There is hereby created, as a part of the Bond Fund, a Debt Service Reserve Fund (the "Debt Service Reserve Fund"), which shall be maintained by the City in an amount equal to the ^ least of (a) fifty percent (50%) of the maximum annual principal and interest requirement on the Bonds; (b) ten percent (10%) of the proceeds of the Bonds (excluding accrued interest but including Underwriter's discount); or (c) one hundred twenty-five percent (125%) of the average annual principal and interest requirements on the Bonds (the "Required Level"). Should the Debt Service Reserve Fund become impaired or be reduced below the Required Level, the City shall 2413190-v1 16 000 make additional monthly payments from the Revenue Fund until the impairment or reduction is corrected within a twelve (12) month period. If for any reason the City should fail at any time to make any of the required payments into the Bond Fund, any sums then held in the Debt Service Reserve Fund shall be used to the extent necessary for the payment of principal of or interest on the Bonds, but the Debt Service Reserve Fund shall be reimbursed from the Revenue Fund before any moneys in the Revenue Fund shall be used for any other purpose other than the making of payments required to be made into the Operation and Maintenance Fund and the Bond Fund. The Debt Service Reserve Fund shall be used solely as provided herein. If System Revenues are insufficient to make the required payment on the first (Ist) business day of the following month into the Bond Fund, then 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 (1st) business day of the next month. When the moneys held in the Bond Fund shall be and remain sufficient to pay the principal of and interest on all of the Bonds then outstanding plus Trustee's fees and any arbitrage rebate due as provided above, the City shall not be obligated to make any further payments into the Bond Fund. It shall be the duty of the City to cause to be withdrawn from the Bond Fund, or the Debt Service Reserve Fund to be paid into the Bond Fund, and deposited with the Trustee at least one (1) 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 Trustee's fee. There shall also be withdrawn and paid to the United States any arbitrage rebate due at the times and in the amounts required by Section 148(f) of the Code. No withdrawal of funds from the Bond Fund shall be made for any other purpose except as otherwise authorized in this Ordinance. The Bonds shall be specifically secured by a pledge of all Pledged Revenues remaining after the deposits have been made to the Operation and Maintenance Fund, as defined in Section 11 of this Ordinance. The Bonds are being issued on a parity of security with the Parity 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. There is created, as a part of the Bond Fund, the "Costs of Issuance Account" from which the various costs of issuance shall be paid by the Trustee at closing. Section 13. After making the required payments into the Operation and Maintenance Fund, the Bond Fund, and the Parity Bond Fund, there shall be paid from the Revenue Fund into a fund heretofore created and designated the "Wastewater Depreciation Fund" (the "Depreciation Fund") on or before the fifteenth (15th) day of each month while any bonds are outstanding, three percent (3%) of the System Revenues for the preceding month which remain after the required payments into the Operation and Maintenance Fund, the Bond Fund, and the Parity Bond Fund have been made. The moneys in the Depreciation Fund shall be used solely for the purpose of paying the cost of replacements made necessary by the depreciation of the System. If in any fiscal year a surplus shall be accumulated in the Depreciation Fund over and above the amount necessary to 2413190-v1 17 57 000 defray the cost of the probable replacements during the then current fiscal year and the next ensuing fiscal year, such surplus may be transferred and paid into the Revenue Fund. Section 14. The Trustee shall establish and maintain, separate and apart from any other funds and account established and maintained herein, the Series 2021 Wastewater Rebate Fund (the "Rebate Fund"), which fund is not pledged to the payment of any Bonds. Subject to transfer to the United States in payment of any arbitrage rebate due under Section 148(f) of the Code, all moneys at any time deposited in the Rebate Fund shall be held by the Trustee in trust, and neither the City nor the owner of any Bond shall have any rights in or claim to such money. Any amounts remaining in the Rebate Fund after payment in full of the rebate amount owing to the United States, within sixty (60) days after the date on which the last Bond is redeemed, shall be transferred to the Revenue Fund. Section 15. The Trustee shall establish and maintain, separate and apart from any other funds and account established and maintained herein, the Series 2021 Wastewater Project Fund (the "Project Fund"). A portion of the Bond proceeds shall be deposited in the Project Fund. Amounts in the Project Fund, including earnings thereon, shall be expended only for the payment of costs of the Improvements and paying necessary expenses incidental thereto upon submission of requisitions by the Utility to the Trustee. The Trustee shall only make payments from the Proj ect Fund pursuant to and in accordance with requisitions. 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 General Manager of the Utility. The Commission shall be required to keep accurate records of all payments made on the basis of requisitions. Within ninety (90) days following completion of the Improvements, the City or the Utility shall deliver to the Trustee its Certificate stating that the Improvements are complete and the Trustee shall transfer the remaining moneys in the Project Fund (save and except moneys needed to satisfy unpaid costs of the Improvements) to the Bond Fund for the application to the retirement of the Bonds by redemption or purchase. Section 16. Any surplus in the Revenue Fund, after making the required monthly deposits into the other funds as set forth above, may be used, at the option of the City, for any lawful purpose related to the System, as approved by the Commission. Section 17. So long as any of the Bonds are outstanding, the City shall not issue or attempt to issue any bonds claimed to be entitled to a priority of lien on System Revenues over the lien securing the Bonds and the Parity Bonds. The City reserves the right to issue additional 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 purposes, but the City shall not authorize or issue any such additional bonds ranking on a parity with the Bonds and the Parity Bonds unless and until there has been procured and filed with the City Clerk/Treasurer and the Trustee a statement by an independent certified public accountant not in the regular employ of the City (the "Accountant") reciting the opinion, based upon necessary investigation, that either (i) Pledged Revenues of the System for the fiscal year immediately preceding the fiscal year in which it is proposed to issue such additional parity bonds were not less than one hundred twenty-five percent (125%) of the average annual principal and interest requirements on all the then outstanding System Bonds and the additional parity bonds then proposed to be issued, or (ii) Pledged Revenues of the System for the ensuing fiscal year, including any increase in revenues attributable to the proposed extensions, 2413190-v1 18 W 000001 betterments, and improvements as reflected by the written opinion of a duly qualified consulting engineer not in the regular employ of the City and including any additional revenues expected to be received as a result of a rate increase effective during such year or the prior fiscal year, shall be equal to not less than one hundred twenty-five percent (125%) of the average annual principal and interest requirements on all the then outstanding System Bonds and the additional parity bonds then proposed to be issued. For the purposes of the computation required by (i) above, additional amounts may be added to the Pledged Revenues of the completed fiscal year immediately preceding the issuance of the additional bonds, as follows: if, prior to the issuance of the additional bonds, and subsequent to the first (1St) 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 Pledged Revenues of such fiscal year the additional Pledged Revenues which would have been received from the operations of the System during such fiscal year had such increase been in effect throughout such fiscal year. Notwithstanding satisfaction of the other conditions to the issuance of additional bonds as set forth in this Section, no issuance may occur if a default or breach (or any event which, once all notice or grace periods have passed, would constitute a breach) exists unless such breach shall be cured upon such issuance. Section 18. The City covenants and agrees that it will or will cause the Utility to maintain the System in good condition and operate the same in an efficient manner and at reasonable cost. While any of the Bonds are outstanding, the City agrees that it will insure and at all times keep insured, in the amount of the full insurable value thereof, in a responsible insurance company or companies selected by the Commission and authorized and qualified under the laws of the State to assume the risk thereof, all aboveground structures of the System, to the extent that such structures would be covered by insurance by private companies engaged in similar types of businesses, against loss or damage thereto from fire, lightning, tornados, winds, riot, strike, civil commotion, malicious damage, explosion, and against any other loss or damage from any other causes customarily insured against by private companies engaged in similar types of business. The insurance policies are to carry a clause making them payable to the Commission and the Trustee, as their interests may appear, and satisfactory evidence of said insurance shall be filed with the Trustee. In the event of loss, the proceeds of such insurance shall be applied solely toward the reconstruction, replacement, or repair of the System, and in such event the City will, with reasonable promptness, cause to be commenced and completed the reconstruction, replacement, and repair work. If such proceeds are more than sufficient for such purposes, the balance remaining shall be deposited to the credit of the Revenue Fund, and if such proceeds shall be insufficient for such purposes the deficiency shall be supplied first from moneys in the Depreciation Fund and second from moneys in the Operation and Maintenance Fund and third from surplus moneys in the Revenue Fund. Nothing shall be construed as requiring the City to expend any moneys for operation and maintenance of the System or for premiums on its insurance which are derived from sources other than the operation of the System, but nothing shall be construed as preventing the City from doing so. Section 19. The Bonds shall be subject to redemption prior to maturity in accordance with the terms set out in the bond form as set forth in Section 8 of this Ordinance. The City may acquire Bonds by purchase at a price not in excess of par plus accrued interest, inclusive of brokerage fees, and surrender to the Trustee any Bonds so acquired, in exchange for which the City shall receive a credit under this Ordinance in an amount equal to the principal amount of the Bonds so acquired 2413190-v1 19 9 000( and surrendered, for and of the then next date for mandatory sinking fund redemption of Bonds of the same maturity. Section 20. The City shall or shall cause the Commission to keep proper books of accounts and records (separate from all other records and accounts of the City) 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 Trustee and registered owner of any of the Bonds at reasonable times and under reasonable circumstances. The City shall or shall cause the Commission to have these records audited by an Accountant at least once each year, and a copy of the audit shall be delivered to the Trustee and made available to interested registered owners 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 21. 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 FDIC and/or collateralized 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 ("Government 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 shall have been paid or the payment thereof provided for to the satisfaction of the Trustee. On the payment of any such 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 Government 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 due the United States has been 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 Government Securities there shall be considered the principal amount of such Government Securities and interest to be earned thereon until the maturity of such Government Securities. Section 22. (a) 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 and such failure continues unremedied for thirty (30) days, or if the City declares bankruptcy or seeks relief from its creditors under the provisions of any other similar state or federal law, the Trustee may, and upon the written request of the registered owners of not less than ten percent (10%) in principal amount of the then outstanding 2413190-v1 20 )GO J 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 ten percent (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 System 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. (b) 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 ten percent (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. (c) 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 given by any law or by the Constitution of the State of Arkansas. (d) The Trustee may, and upon the written request of the registered owners of not less than a majority 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. (e) 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. 2413190-v1 21 1 f - (f) 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. (g) After payment of reasonable expenses of the Trustee, the application of funds realized upon default shall be applied to the payment of expenses of the City or arbitrage rebate only after payment of past due and current debt service on the Bonds and amounts required to restore the Debt Service Reserve Fund to the Required Level. Section 23. (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 without the consent of the owners of the outstanding Bonds (i) in connection with the issuance of additional parity bonds under this Ordinance; (ii) in order to cure any ambiguity, defect, or omission herein or to correct or supplement any defective or inconsistent provisions contained herein as the City may deem necessary or desirable and not inconsistent herewith; or (iii) in order to make any other variation or change which the Trustee determines shall not adversely affect the interests of the owners of the Bonds. (c) The owners of not less than seventy-five percent (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 (i) an extension of the maturity of the principal of or the interest on any Bond, or (ii) a reduction in the principal amount of any Bond or the rate of interest thereon, or (iii) the creation of a lien or pledge superior to the lien and pledge created by this Ordinance, or (iv) a privilege or priority of any bond or bonds over any other bond or bonds, or (v) a reduction in the aggregate principal amount of the Bonds required for consent to such supplemental ordinance. Section 24. When the Bonds have been executed and sealed as herein provided, they shall be authenticated by the Trustee, and the Trustee shall deliver the Bonds to the Purchaser upon payment in cash of the Purchase Price. The accrued interest shall be remitted to the City for deposit into the Bond Funds. The expenses of issuing the Bonds and accomplishing the refunding as set forth in the delivery instructions to the Trustee signed by the Mayor and City Clerk/Treasurer shall also be paid from the Purchase Price (the "Delivery Instructions"). The amount necessary from the Purchase Price to pay the Costs of Issuance of the Bonds shall be distributed as set forth in the Delivery Instructions. The remainder of the Purchase Price shall be remitted to the Trustee for deposit into the Project Fund as set forth in Section 15. Section 25. In the event the office of Mayor, City Clerk/Treasurer, Commission, or City Council shall be abolished, or any two (2) or more of such offices shall be merged or consolidated, 2413190-v1 22 0.Da00 or in the event the duties of a particular office shall be transferred to another office or officer, or in the event of a vacancy in any such office by reason of death, resignation, removal from office, or otherwise, or in the event any such officer shall become incapable of performing the duties of his office by reason of sickness, absence from the City, or otherwise, all powers conferred and all obligations and duties imposed upon such office or officer shall be performed by the office or officer succeeding to the principal functions thereof, or by the office or officer upon whom such powers, obligations, and duties shall be imposed by law. So long as the System is under the control of the Commission, performance by the Commission of any obligation of the City hereunder shall be deemed performance by the City. The Commission presently consists of Fred Belote, John Ferrell, Edward Porter, Jeff Elmore, and Jerry Sanders. Section 26. (a) The City covenants that it shall not take any action or suffer or permit any action to be taken or condition to exist which causes or may cause the interest payable on the Bonds to be 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 System 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. The City covenants to pay to the United States any arbitrage rebate due under Section 148 of the Code at the times required by Section 148 of the Code. (b) The City shall assure that: (i) not in excess of ten percent (10%) of the Net Proceeds of the Bonds is used for Private Business Use if, in addition, the payment of more than ten percent (10%) of the principal or ten percent (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) in the event that both (A) in excess of five percent (5%) of the Net Proceeds of the Bonds are used for a Private Business Use; and, (B) an amount in excess of five percent (5%) of the principal or five percent (5%) of the interest due on the 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 five percent (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 or the improvements financed by the Bonds. The City shall assure that not in excess of five percent (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 premium, if any, less original issue discount, if any, less any amounts deposited into the 2413190-v1 23 WAM Debt Service Reserve Fund. "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 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. (d) The City covenants that it will submit to the Secretary of the Treasury of the United States, not later than the fifteenth (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. (e) The City covenants that it will not reimburse itself from proceeds of the Bonds for costs paid more than sixty (60) days prior to October 21, 2021, the date the City approved Resolution No. 811 (#10-2021) except in compliance with United States Treasury Regulation No.1.150-2 (the "Regulation"). Resolution No. 811 (#10-2021) shall constitute an "official intent" for the purpose of the Regulation. (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 (i) 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 (ii) any income attributable to the excess described in (i), 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 (f). Anything herein to the contrary notwithstanding this provision may be modified or rescinded if in the opinion of Bond Counsel such modification or rescission will not affect the tax-exempt status of the Bonds for federal income tax purposes. (g) The City hereby designates the Bonds 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), including those of its subordinate entities, issued in calendar year 2021 will not exceed $10,000,000. Section 27. 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 owners of not less than ten percent (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 sixty (60) days' notice in 2413190-v1 24 0000 writing to the City Clerk/Treasurer, the registered owners of the Bonds (and DTC as agent therefor), and the City or the majority in value of the registered owners of the outstanding Bonds 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 appoint a new Trustee, such appointment to be evidenced by a written instrument or instruments filed with the City Clerk/Treasurer. Every successor Trustee appointed pursuant to this Section shall be a trust company or bank in good standing, duly authorized to exercise trust powers, subject to examination by federal or state authority, and having a reported capitalized surplus of not less than $15,000,000. 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/Treasurer 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. The Trustee's resignation shall become effective upon the acceptance of the trusts by the successor Trustee. Section 28. (a) Moneys held for the credit of all funds created by this Ordinance may be invested and reinvested in Permitted Investments. (b) Obligations purchased as an investment of any fund or account shall be deemed at all times a part of such fund. Any profit or loss realized on investments of moneys in any fund shall be charged to said fund. (c) The Trustee shall so invest and reinvest pursuant to the direction of the City and in the Trustee's discretion in the absence of any direct instructions from the City. (d) "Permitted Investments" are defined to mean: (1) Direct or fully guaranteed obligations of the United States of America ("Government Securities"); (2) Obligations guaranteed as a payment of principal and interest by the United States of America ("Government Guaranteed Securities"); (3) Cash (insured at all times by the FDIC or otherwise collateralized with obligations described in clauses (1) or (2) above; (4) Time deposits or certificates of deposit of banks, including the Trustee, which are insured by the FDIC, or if in excess of insurance coverage, collateralized by Government Securities, Government Guaranteed Securities, or other securities authorized by State law to secure public funds. Permitted Investments shall mature, or shall be subject to redemption by the holder thereof, at the option of such holder, not later than (A) the payment date for interest or principal and interest in the case of the Bond Fund, (B) the date or dates when the moneys will be needed for the purpose intended in the case of the Project Fund, and (C) five (5) years for the Debt Service Reserve Fund. The Trustee shall follow any investment instructions of the City which are not inconsistent with the foregoing provisions of this paragraph. 2413190-v1 25 I 000 (e) Moneys held for the credit of any other fund shall be continuously invested and reinvested 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. Section 29. The appointments of Stephens Inc., as Underwriter, and Wright, Lindsey & Jennings LLP, as Bond Counsel, are hereby ratified and approved. Section 30. It is covenanted and agreed by the City with the registered owners of the Bonds, or any of them, that the City will and will cause the Commission to faithfully and punctually perform all duties with reference to the System required by the Constitution and laws of the State, including the charging and collecting of reasonable and sufficient rates lawfully established for services rendered by the System, the segregating of revenues as herein required, and the applying of System Revenues to the respective funds herein created or referred to. Section 31. The City covenants that it will not sell or lease the System, or any substantial portion thereof, provided, however, that nothing herein shall be construed to prohibit the City from making such dispositions of properties of the System and such replacements and substitutions for properties of the System as shall be necessary or incidental to the efficient operation of the System as a revenue-producing undertaking. All revenues derived from such dispositions shall be deposited into the Revenue Fund. Proceeds of any sale, lease, or other disposition of the System pursuant to this Section that are deposited into the Revenue Fund shall not be offset from amounts for which the City is obligated to establish rates under Section 9 of this Ordinance. Section 32. 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 33. All ordinances and resolutions or parts thereof, in conflict herewith are hereby repealed to the extent of such conflict. Section 34. It is hereby ascertained and declared that the Improvements must be accomplished as soon as possible in order to make the System adequate for the needs of the City and its inhabitants, without which the life, health, safety, and welfare thereof are jeopardized, and that the issuance of the Bonds and the taking of the other action authorized by this Ordinance is necessary for the accomplishment thereof. It is, therefore, declared that an emergency exists and this Ordinance being necessary for the immediate preservation of the public peace, health, and safety shall take effect and be in force from and after its passage. 2413190-v1 26 PASSED: November 18, 2021. e Bob Johnson, ayor Susan Daa tt, City Clerk/Treasurer D rode as to form: Step anie Freidman, City Attorney 2413190-v1 27 ©00 67 CERTIFICATE STATE OF ARKANSAS COUNTY OF PULASKI 000( I, Susan Davitt, City Clerk/Treasurer, within and for the City of Jacksonville, Arkansas do hereby certify that the foregoing is a true and correct copy of Ordinance No. 1675 (#25-2021) of the Ordinances of the City of Jacksonville, Arkansas entitled: "AN ORDINANCE PROVIDING FOR THE ISSUANCE AND SALE OF WASTEWATER REVENUE BONDS, SERIES 2021, IN ONE OR MORE SERIES, FOR THE PURPOSES OF FINANCING A PORTION OF THE COSTS OF THE IMPROVEMENTS, BETTERMENTS, AND EXTENSIONS TO THE JACKSONVILLE SEWER SYSTEM; PROVIDING FOR THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON THE BONDS; PRESCRIBING OTHER MATTERS RELATING THERETO; AND DECLARING AN EMERGENCY;" passed by the City Council of the City on November 18, 2021. IN WITNESS WHEREOF, I have hereunto set my hand and seal office this ZZ^) day of '2021. Susan Davi , City Clerk/Treasurer 2413190-v1 28 sa