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HomeMy WebLinkAboutD-2364-17 Bond Ordinance for Purchase of Water/Cityizens Energy GroupSponsor: Councilor Finkam ORDINANCE NO. D-2364-17 A BOND ORDINANCE OF THE CITY OF CARMEL, INDIANA, FOR THE PURPOSE OF AUTHORIZING THE EXECUTION AND DELIVERY OF ITS JUNIOR WATERWORKS REVENUE REFUNDING BONDS OF 2017, AND APPROVING CERTAIN RELATED MATTERS IN CONNECTION THEREWITH Synopsis: Bond Ordinance permitting the refinancing of a prior obligation of the Water Utility originally utilized for the purchase of water lines from Citizens Energy Group, effecting a savings to the Water Utility. _WHEREAS, the City of Carmel, Indiana (the "City") has heretofore established, constructed and financed a municipal Waterworks and now owns and operates the Waterworks pursuant to IC 8-1.5, and other applicable laws (the "Waterworks"); and WHEREAS, the Waterworks previously entered into an agreement with Citizens Energy Group ("Citizens") to purchase certain waterlines, with payments of $1,800,003.35 each year through the year 2025, with $16,200,030.15 of payments remaining (the "Obligation"); and WHEREAS, Citizens has agreed to permit the Waterworks to make a one-time payment of approximately $12,985,107 to complete the purchase the waterlines (the "Purchase Price"); and WHEREAS, Indiana Code Section 5-1-5 provides that the common council of a City may by ordinance provide for the issuance of bonds to refund outstanding obligations at any time by such City, and to pay redemption premiums and costs of refunding, to effect a savings to such City; and WHEREAS, the Common Council for the City (the "Common Council") desires to authorize the issuance of refunding bonds for the purpose of providing funds for the refunding of the Obligation (the "Refunded Obligation"), including the payment of any redemption premiums, and costs of refunding, the funding of a reasonably required debt service reserve to secure the payment of such refunding bonds, and the payment of costs of issuance of such refunding bonds and any other fees and charges associated with the issuance of such refunding bonds, including the payment of any fees and charges associated with obtaining credit enhancement for such refunding bonds; and WHEREAS, the Common Council, after consideration of the estimated or known interest payable to the fixed maturities of such refunding bonds, the interest payable on the Refunded Obligation, the costs of issuance of such refunding bonds, including any sale discount, the redemption premiums to be paid, and the probable earned income from the investment of the proceeds of such refunding bonds pending redemption of the Refunded Obligation, has determined that a savings to the City will be effected by such a refunding; and WHEREAS, the Common Council finds that there are now outstanding bonds issued on account of the construction of the City's Waterworks and payable out of the revenues therefrom designated "Waterworks Revenue Bonds of 2008" dated September 22, 2008, originally issued in the amount of $84,664,479.30, authorized by Ordinance No. D-1887-08, as Amended (the "2008 Bond Ordinance"), adopted by the Common Council on July 7, 2008 (the "2008 Senior Bonds"); and WHEREAS, the Common Council finds that there are now outstanding bonds issued on account of the construction of the City's Waterworks and payable out of the revenues therefrom designated "Junior Waterworks Revenue Bonds of 2012," dated February 9, 2012, originally issued in the amount of $21,625,000, authorized by Ordinance No. D-2070-11 adopted by the Common Council of the Issuer on December 19, 2011, as amended by Ordinance No. D-2080-12 (collectively, the "2012 Ordinance"), adopted by the Common Council of the Issuer on January 23, 2012 (the "2012 Junior Bonds"); and WHEREAS, the 2008 Senior Bonds constitute a first charge upon the Net Revenues (as hereinafter defined) of the Waterworks; and WHEREAS, the 2017 Refunding Bonds (as hereinafter defined) will be issued on a junior basis to the 2008 Senior Bonds and on a parity basis with the 2012 Junior Bonds; and WHEREAS, the 2012 Ordinance provides that the City may authorize and issue additional bonds payable out of the Net Revenues of its Waterworks ranking on a parity with the 2012 Junior Bonds for the purpose of financing the cost of future additions, extensions and improvements to its Waterworks, or to refund obligations, subject to the provisions of Section 20 of the 2012 Ordinance; and WHEREAS, the conditions precedent to the issuance of additional parity bonds with the 2012 Junior Bonds set forth in each of the 2012 Ordinance, as described above, have been satisfied; and WHEREAS, the Common Council now finds that all conditions precedent to the adoption of an ordinance authorizing the issuance of refunding bonds have been complied with in accordance with the provisions of Indiana Code 5-1-5 and 8-1.5 (collectively, the "Act"); and WHEREAS, the Common Council consequently seeks to authorize the issuance of refunding bonds pursuant to the Act and the sale of such refunding bonds pursuant to the provisions of the Act. NOW THEREFORE, BE IT ORDAINED BY THE COMMON COUNCIL OF THE CITY OF CARMEL THAT: Section 1. Refunding; Redemption of Certain Refunded Obli ag tion. The Common Council, after consideration of the Purchase Price, the costs of issuance of the 2017 Refunding Bonds (as hereinafter defined), including any sale discount, the redemption premiums to be paid, and the probable earned income from the investment of the proceeds of the 2017 Refunding Bonds pending redemption of the Refunded Obligation, hereby determines that a saving to the City will be effected by the Refunding (as hereinafter defined). Section 2. Issuance of 2017 Refunding Bonds. The City shall issue and sell its Waterworks refunding revenue bonds, designated "City of Carmel, Indiana, Junior Waterworks Refunding Revenue Bonds of 2017," in an aggregate principal amount not to exceed Thirteen Million Two Hundred Fifty Thousand Dollars ($13,250,000) (the "2017 Refunding Bonds") for the purpose of providing funds for the refunding of the Refunded Obligation, and costs of the refunding, the funding of a reasonably required debt service reserve to secure the payment of the 2017 Refunding Bonds, if any, and the payment of costs of issuance of the 2017 Refunding Bonds and any other fees and charges associated with the issuance of the 2017 Refunding Bonds, including the payment of any fees and charges associated with obtaining credit enhancement for the 2017 Refunding Bonds (collectively, the "Refunding"). The 2017 Refunding Bonds shall be payable solely out of and constitute a charge against the Net Revenues (herein defined as gross revenues of the Waterworks of the City remaining after the payment of the reasonable expenses of operation, repair and maintenance) of the Waterworks of the City, junior to the 2008 Senior Bonds and on parity with the 2012 Junior Bonds. The 2017 Refunding Bonds shall be issued in the denomination of One Hundred Thousand Dollars ($100,000) each, and $1,000 integral multiples above $100,000, numbered consecutively from R-1 upward, dated as of the date of issuance or the first day of the month in which they are sold, as determined on the date of issuance of the 2017 Refunding Bonds by the Clerk -Treasurer of the City (the "Clerk -Treasurer") and the Mayor of the City (the "Mayor") as evidenced by their execution of the 2017 Refunding Bonds. The 2017 Refunding Bonds shall bear interest at a rate or rates not exceeding 4.75% per annum (the exact rate or rates to be determined by bidding or as negotiated with the purchaser of the 2017 Refunding Bonds), calculated on the basis of a 360 -day year comprised of twelve thirty -day months. Interest shall be payable semiannually on May 1 and November 1 in each year, beginning on November 1, 2017, as determined on the date of issuance of the 2017 Refunding Bonds by the Clerk -Treasurer and the Mayor as evidenced by their execution of the 2017 Refunding Bonds. The 2017 Refunding Bonds shall be sold at a price of not less than 99.0% of the par value thereof (the "Sale Price"). Principal on the 2017 Refunding Bonds shall be payable in lawful money of the United States of America, at the principal office of the Paying Agent (as hereinafter defined) and such 2017 Refunding Bonds shall mature annually, or shall be subject to mandatory sinking fund redemption in such amounts as are approved by the Clerk -Treasurer and the Mayor as evidenced by their execution of the 2017 Refunding Bonds. All or a portion of the bonds may be issued as one or more term bonds, upon election of the successful bidder. Such term bonds shall have a stated maturity or maturities of May 1 and November 1, in the years as determined by the successful bidder, but in no event later than the last serial maturity date of the bonds as determined in the above paragraph. The term bonds shall be subject to mandatory sinking fund redemption and final payment(s) at maturity at 100% of the principal amount thereof, plus accrued interest to the redemption date, on principal payment dates which are hereinafter determined in accordance with the above paragraph. 3 The term "Waterworks," "works", "utility", "Waterworks" and other like terms where used in this Ordinance shall be construed to mean the existing Waterworks system and all real estate and equipment used in connection therewith and appurtenances thereto, and all extensions, additions and improvements thereto and replacements thereof now or at any time hereafter constructed or acquired, and all other items as defined in IC 8-1.5, as amended. Section 3. Registrar and Paving Agent. The Clerk -Treasurer is hereby authorized to appoint herself or select and appoint a qualified financial institution to serve as Registrar and Paying Agent for the 2017 Refunding Bonds (the "Registrar," or "Paying Agent"). The Registrar is hereby charged with the responsibility of authenticating the 2017 Refunding Bonds. The Clerk -Treasurer is hereby authorized to enter into such agreements or understandings with such institution as will enable the institution to perform the services required of a Registrar and Paying Agent. The Clerk -Treasurer is further authorized to pay such fees as the institution may charge for the services it provides as Registrar and Paying Agent and such fees may be paid from the Sinking Fund established to pay the principal of and interest on the 2017 Refunding Bonds as fiscal agency charges. The principal of the 2017 Refunding Bonds shall be payable at the principal office of the Paying Agent. All payments of interest on the 2017 Refunding Bonds shall be paid by check, mailed one business day prior to the interest payment date to the registered owners thereof as the names appear as of the fifteenth day of the month preceding the interest payment date and at the addresses as they appear on the registration books kept by the Registrar or at such other address as is provided to the Paying Agent in writing by such registered owner. All payments on the 2017 Refunding Bonds shall be made in any coin or currency of the United States of America, which on the date of such payment, shall be legal tender for the payment of public and private debts. If the 2017 Refunding Bonds are registered in the name of the Carmel Local Public Improvement Bond Bank (the "Bond Bank") or a registered owner in whose name is held $100,000 or more of principal amount of the 2017 Refunding Bonds, by providing written instructions to the Registrar before the fifteenth day of the month immediately preceding the month in which such interest is payable, the principal of and interest thereon may be paid by wire transfer to such financial institution as designated by the Bond Bank or such registered owner, or as otherwise agreed, on the due date of such payment or, if such due date is a day when financial institutions are not open for business, on the business day immediately after such due date. Each 2017 Refunding Bond shall be transferable or exchangeable only upon the books of the City kept for that purpose at the principal corporate trust office of the Registrar by the registered owner in person, or by its attorney duly authorized in writing, upon surrender of such 2017 Refunding Bond together with a written instrument of transfer or exchange satisfactory to the Registrar duly executed by the registered owner, or its attorney duly authorized in writing, and thereupon a new fully registered 2017 Refunding Bond or Bonds in an authorized aggregate principal amount and of the same maturity, shall be executed and delivered in the name of the transferee or transferees or the registered owner, as the case may be, in exchange therefor. The costs of such transfer or exchange shall be borne by the City except for any tax or governmental charge required to be paid with respect to the transfer or exchange, which taxes or governmental charges are payable by the person requesting such transfer or exchange. The City, the Registrar M and the Paying Agent for the 2017 Refunding Bonds may treat and consider the person in whose name such 2017 Refunding Bonds are registered as the absolute owner thereof for all purposes including for the purpose of receiving payment of, or on account of, the principal thereof and interest due thereon. The Registrar shall not be obligated to make any transfer or exchange of any Bond called for redemption within forty-five (45) days of the redemption date. The Registrar and Paying Agent may at any time resign as Registrar and Paying Agent upon giving 30 days' notice in writing to the City and by first class mail to each registered owner of the 2017 Refunding Bonds then outstanding, and such resignation will take effect at the end of such 30 day period or upon the earlier appointment of a successor registrar and paying agent by the City. Any such notice to the City may be served personally or sent by registered mail. The Registrar and Paying Agent may be removed at any time as Registrar and Paying Agent by the City, in which event the City may appoint a successor registrar and paying agent. The City shall notify each registered owner of the 2017 Refunding Bonds then outstanding by first class mail of the removal of the Registrar and Paying Agent. Notices to the registered owners of the 2017 Refunding Bonds shall be deemed to be given when mailed by first class mail to the addresses of such registered owners as they appear on the registration books kept by the Registrar. Upon the appointment of any successor registrar and paying agent by the City, the Clerk - Treasurer is authorized and directed to enter into such agreements and understandings with such successor registrar and paying agent as will enable the institution to perform the services required of a registrar and paying agent for the 2017 Refunding Bonds. The Clerk -Treasurer is further authorized to pay such fees as the successor registrar and paying agent may charge for the services it provides as registrar and paying agent and such fees may be paid from the Sinking Fund established to pay the principal of and interest on the 2017 Refunding Bonds as fiscal agency charges. Any predecessor registrar and paying agent shall . deliver all of the 2017 Refunding Bonds and any cash or investments in its possession with respect thereto, together with the registration books, to the, successor registrar and paying agent. Interest on the 2017 Refunding Bonds shall be payable from the interest payment date to which interest has been paid next preceding the authentication date of the 2017 Refunding Bonds unless the 2017 Refunding Bonds are authenticated after the fifteenth day of the month immediately preceding the month of an interest payment date and on or before such interest payment date in which case they shall bear interest from such interest payment date, or unless the 2017 Refunding Bonds are authenticated on or before the fifteenth day of the month immediately preceding the month of the first interest payment date, in which case they shall bear interest from the original date until the principal shall be fully paid. Section 4. Redemption of 2017 Refunding Bonds. The 2017 Refunding Bonds may be made redeemable at the option of the City on thirty (30) days' notice, in whole or in part, in any order of maturities selected by the City and by lot within a maturity, on dates and with premiums, if any, and other terms as determined by the Mayor with the advice of the City's financial advisor, as evidenced by delivery of the form of 2017 Refunding Bonds to the Registrar for authentication. Each One Thousand Dollars ($1,000) principal amount shall be considered a separate bond for purposes of optional redemption. 5 Notice of such redemption shall be given not less than thirty (30) days prior to the date fixed for redemption by mail unless the notice is waived by the registered owner of a 2012 Bond. Such notice shall be mailed to the address of the registered owners of the 2017 Refunding Bonds to be redeemed as shown on the registration records of the City. The notice shall specify the date and place of redemption and sufficient identification of the 2017 Refunding Bonds called for redemption. The failure to give such notice by mailing or a defect in the notice or the mailing as to any 2017 Refunding Bond shall not affect the validity of any proceedings for redemption as to any other 2017 Refunding Bonds for which notice is adequately given. The place of redemption shall be determined by the City. Interest on the 2017 Refunding Bonds so called for redemption shall cease on the redemption date fixed in such notice if sufficient funds are available at the principal office of the Paying Agent to pay the redemption price on the date so named. Coincidentally with the payment of the redemption price, the 2017 Refunding Bonds so called for redemption shall be surrendered for cancellation. Section 5. Execution and Negotiability. Each of the 2017 Refunding Bonds shall be executed in the name of the City by the manual or facsimile signature of the Mayor, and attested by the manual or facsimile signature of the Clerk -Treasurer, and the seal of the City shall be affixed, imprinted or impressed to or on each of the 2017 Refunding Bonds, by facsimile or any other means; and these officials, by the execution of a Signature and No Litigation Certificate, shall adopt as and for their own proper signatures the facsimile signatures appearing on the 2017 Refunding Bonds. In case any officer whose signature or facsimile signature appears on the 2017 Refunding Bonds shall cease to be such officer before the delivery of the 2017 Refunding Bonds, the signature of such officer shall nevertheless be valid and sufficient for all purposes the same as if such officer had remained in office until such delivery. The 2017 Refunding Bonds shall have all of the qualities and incidents of negotiable instruments under the laws of the State of Indiana, subject to the provisions for registration herein. The 2017 Refunding Bonds shall also be authenticated by the manual signature of the Registrar, and no 2017 Refunding Bond shall be valid or become obligatory for any purpose until the certificate of authentication thereon has been so executed. The 2017 Refunding Bonds may, in compliance with all applicable laws, be issued and held in book -entry form on the books of the central depository system, The Depository Trust Company, its successors, or any successor central depository system appointed by the City from time to time (the "Clearing Agency"). The City and Registrar may, in connection herewith, do or perform or cause to be done or performed any acts or things not adverse to the rights of the holders of the 2017 Refunding Bonds, as are necessary or appropriate to accomplish or recognize such book -entry form 2017 Refunding Bonds. During any time that the 2017 Refunding Bonds are held in book -entry form on the books of a Clearing Agency (1) any such 2017 Refunding Bond may be registered upon the books kept by the Registrar in the name of such Clearing Agency, or any nominee thereof, including CEDE & Co., as nominee of The Depository Trust Company; (2) the Clearing Agency in whose name such 2017 Refunding Bond is so registered shall be, and the City and the Registrar and Paying Agent may deem and treat such Clearing Agency as, the absolute owner and holder of such 2017 0 Refunding Bond for all purposes of this Ordinance, including, without limitation, the receiving of payment of the principal of, premium, if any, on and interest on such 2017 Refunding Bond, the receiving of notice and giving of consent; (3) neither the City nor the Registrar or Paying Agent shall have any responsibility or obligation hereunder to any direct or indirect participant, within the meaning of Section 17A of the Securities Exchange Act of 1934, as amended, of such Clearing Agency, or any person on behalf of which, or otherwise in respect of which, any such participant holds any interest in any 2017 Refunding Bond, including, without limitation, any responsibility or obligation hereunder to maintain accurate records of any interest in any 2017 Refunding Bond or any responsibility or obligation hereunder with respect to the receiving of payment of principal, premium, if any, or interest on any 2017 Refunding Bonds, the receiving of notice or the giving of consent; and (4) the Clearing Agency is not required to present any 2017 Refunding Bond called for partial redemption prior to receiving payment so long as the Registrar and Paying Agent and the Clearing Agency have agreed to the method for noting such partial redemption. If either (i) the City receives notice from the Clearing Agency which is currently the registered owner of the 2017 Refunding Bonds to the effect that such Clearing Agency is unable or unwilling to discharge its responsibility as a Clearing Agency for the 2017 Refunding Bonds or (ii) the City elects to discontinue its use of such Clearing Agency as a Clearing Agency for the 2017 Refunding Bonds, then the City and Registrar and Paying Agent each shall do or perform or cause to be done or performed all acts or things, not adverse to the rights of the holders of the 2017 Refunding Bonds, as are necessary or appropriate to discontinue use of such Clearing Agency as a Clearing Agency for the 2017 Refunding Bonds and to transfer the ownership of each of the 2017 Refunding Bonds to such person or persons, including any other Clearing Agency, as the holder of the 2017 Refunding Bonds may direct in accordance with this Ordinance. Any expenses of such discontinuance and transfer, including expenses of printing new certificates to evidence the 2017 Refunding Bonds, shall be paid by the City. During any time that the 2017 Refunding Bonds are held in book -entry form on the books of a Clearing Agency, the Registrar shall be entitled to request and rely upon a certificate or other written representation from the Clearing Agency or any participant or indirect participant with respect to the identity of any beneficial owners of the 2017 Refunding Bonds as of a record date selected by the Registrar. For purposes of determining whether the consent, advice, direction or demand of a registered owner of the 2017 Refunding Bond has been obtained, the Registrar shall be entitled to treat the beneficial owners of the 2017 Refunding Bonds as the bondholders and any consent, request, direction, approval, objection or other instrument of such beneficial owner may be obtained in the fashion described in this Ordinance. During any time that the 2017 Refunding Bonds are held in book -entry form on the books of a Clearing Agency, the Mayor, the Clerk -Treasurer and/or the Registrar are authorized to enter into a Letter of Representations agreement with the Clearing Agency, and the provisions of any such Letter of Representations or any successor agreement shall control on the matters set forth herein. The Registrar, by accepting the duties of Registrar under this resolution, agrees that it will (i) undertake the duties of agent set forth therein and that those duties to be undertaken by either the agent or the issuer shall be the responsibility of the Registrar, and (ii) comply with all requirements of the Clearing Agency, including without limitation same day funds settlement payment procedures. Further, so long as the 2017 Refunding Bonds remain and are held in 7 book -entry form, the provisions of Section 5 of this Ordinance shall control over conflicting provisions in any other section of this Ordinance. Section 6. Form of 2017 Refunding Bonds. The form and tenor of the 2017 Refunding Bonds shall be substantially as follows, all blanks to be filled in properly and all necessary additions and deletions to be made prior to delivery: R-_ UNITED STATES OF AMERICA STATE OF INDIANA COUNTY OF HAMILTON CITY OF CARMEL, INDIANA JUNIOR WATERWORKS REFUNDING REVENUE BONDS OF 2017 Interest Maturity Original Authentication Rate Date Date Date CUSIP REGISTERED OWNER: PRINCIPAL SUM: Dollars ($) The City of Carmel, in Hamilton County, State of Indiana, for value received, hereby promises to pay to the Registered Owner named above or registered assigns, solely out of the special revenue fund hereinafter referred to, the Principal Sum set forth above on the Maturity Date set forth above (unless this bond be subject to and be called for redemption prior to maturity as hereinafter provided), and to pay interest hereon at the Interest Rate per annum stated above, from the interest payment date to which interest has been paid next preceding the Authentication Date of this bond unless this bond is authenticated after the fifteenth day of the month preceding an interest payment date and on or before such interest payment date in which case it shall bear interest from such interest payment date, or unless this bond is authenticated on or before October 15, 2017, in which case it shall bear interest from the Original Date, until the principal is paid, which interest is payable semiannually on the first days of May and November in each year, beginning on November 1, 2017. Interest shall be calculated on the basis of a 360 -day year comprised of twelve 30 -day months. The principal of this bond is payable at the principal office of (the "Registrar", or "Paying Agent'), in the , . All payments of interest on this bond shall be paid by check, mailed one business day prior to the interest payment date to the registered owner hereof as of the fifteenth day of the month preceding such interest payment date at the address as it appears on the registration books kept by the Registrar or at such other address as is provided to the Paying Agent in writing by the registered owner. In the event of purchase by the Bond Bank or such owner in whose name is registered $100,000 or more principal amount of the Bonds, upon written instructions to the Registrar before the fifteenth day of the month immediately preceding the month in which principal or interest is payable, payments of principal or interest on this bond shall be made by wire transfer for deposit to a financial institution as designated by the Bond Bank or such registered owner on the due date or, if such due date is a day when financial institutions are not open for business, on the business day immediately after such due date. All payments on the bond shall be made in any coin or currency of the United States of America, which on the dates of such payment, shall be legal tender for the payment of public and private debts. THE CITY SHALL NOT BE OBLIGATED TO PAY THIS BOND OR THE INTEREST HEREON EXCEPT FROM THE HEREINAFTER DESCRIBED SPECIAL FUND, AND NEITHER THIS BOND NOR THE ISSUE OF WHICH IT IS A PART SHALL IN ANY RESPECT CONSTITUTE A CORPORATE INDEBTEDNESS OF THE CITY WITHIN THE PROVISIONS AND LIMITATIONS OF THE CONSTITUTION OF THE STATE OF INDIANA. This bond is one of an authorized issue of bonds of the City of Carmel, Indiana, issued in series, of like date, tenor and effect, except as to rates of interest and dates of maturity; aggregating Dollars ($ ), numbered consecutively from R-1 upward (the "2017 Refunding Bonds"), issued for the purpose of providing funds for the refinancing of a certain obligation to Citizens Energy Group, originally utilized to purchase water lines by the City, and to pay costs of issuance of the Bonds. This bond is issued pursuant to an ordinance adopted by the Common Council of said City on the day of , 2017, entitled "A Bond Ordinance of the City of Carmel, Indiana, for the Purpose of Authorizing the Execution and Delivery of Its Junior Waterworks Revenue Refunding Bonds of 2017, and Approving Certain Related Matters in Connection Therewith (the "Ordinance"), and in accordance with the provisions of Indiana law, including without limitation Indiana Code 8-1.5 and 5-1-5 and the laws amendatory thereof and supplemental thereto (collectively, the "Act"). Pursuant to the provisions of the Act and the Ordinance, the principal of and interest on this bond and all other bonds of said issue, the 2017 Refunding Bonds (as defined in the Ordinance and any bonds hereafter issued on a parity therewith are payable solely from the Waterworks Sinking Fund (the "Sinking Fund") and maintained under the Ordinance to be provided from the Net Revenues (herein defined as the gross revenues of the Waterworks of the City remaining after the payment of the reasonable expenses of operation, repair and maintenance) of the Waterworks of the City, including all additions and improvements thereto and replacements thereof subsequently constructed or acquired, provided that, the 2017 Refunding Bonds are junior and subordinate to the previously issued 2008 Senior Bonds (as defined in the Ordinance) and on a parity with the 2012 Junior Bonds (as defined in the Ordinance). The City irrevocably pledges the entire Net Revenues of the Waterworks to the prompt payment of the principal of and interest on the bonds authorized by the Ordinance, of which this is one, and any bonds ranking on a parity therewith, including the 2012 Junior Bonds, but junior and subordinate to the 2008 Senior Bonds for all purposes, to the extent necessary for such purposes, and covenants that it will cause to be fixed, maintained and collected such rates and charges for services rendered by the utility as are sufficient in each year for the payment of the proper and reasonable expenses of operation, repair and maintenance of the Waterworks and for the payment of the sums required to be paid into the Sinking Fund under the provisions of the Act and the Ordinance. If the City or the proper officers thereof shall fail or refuse to so fix, maintain and collect such rates or charges, or if there be a default in the payment of the interest on or principal of this bond, the owner of this bond shall have all of the rights and remedies provided for in the Act, including the right to have a receiver appointed to administer the works and to charge and collect rates sufficient to provide for the payment of this bond and the interest hereon. The City covenants that for so long as the bonds of this issue and any bonds senior therewith, including the 2008 Senior Bonds, and any bonds issued on a parity therewith, including the 2012 Junior Bonds, remain outstanding it will set aside and pay into the Sinking Fund a sufficient amount of the Net Revenues of the works for the payment of (a) the principal and interest on all bonds which by their terms are payable from the revenues of the Waterworks of the City, as such principal and interest shall fall due, (b) the necessary fiscal agency charges for paying bonds and (c) an additional amount to accumulate and maintain a reserve for the payment of bonds equal to Reserve Requirement, which is equal to the least of (i) the maximum amount debt service on the bonds, (ii) 125% of average amount debt service on the bonds, and (iii) 10% of the stated principal amount of the bonds. Such required payments shall constitute a first charge upon all the Net Revenues of the Waterworks. Reference is made to the Ordinance for a more complete statement of the revenues from which and conditions under which this bond is payable, a statement of the conditions on which obligations may hereafter be issued on parity with this bond, the manner in which the Ordinance may be amended and the general covenants and provisions pursuant to which this bond has been issued. The bonds of this issue maturing on and after November 1, 2022 are redeemable at the option of the City on May 1, 2022, or any date thereafter, on thirty (30) days' notice, in whole or in part, in any order of maturity selected by the City and by lot within a maturity, at face value, plus accrued interest to the date fixed for redemption. Each One Hundred Thousand Dollars ($100,000) principal amount shall be considered a separate bond for purposes of redemption. 0 Notice of such redemption shall be mailed to the address of the registered owners of the bonds to be redeemed as shown on the registration records of the City, not less than thirty (30) days prior to the date fixed for redemption unless the notice is waived by the registered owner of this bond. The notice shall specify the date and place of redemption and sufficient identification of the bonds called for redemption. The failure to give such notice by mailing or a defect in the notice or the mailing as to any bond shall not affect the validity of any proceeding for redemptions to any other bond for which notice is adequately given. The place of redemption may be determined by the City. Interest on the bonds so called for redemption shall cease on the redemption date fixed in such notice if sufficient funds are available at the place of redemption to pay the redemption price on the date so named. If this bond shall not be presented for payment or redemption on the date fixed therefor, the City may deposit in trust with its depository bank, an amount sufficient to pay such bond or the redemption price, as the case may be, and thereafter the registered owner shall look only to the funds so deposited in trust with said bank for payment and the City shall have no further obligation or liability in respect thereto. This bond is transferable or exchangeable only upon the books of the City kept for that purpose at the principal corporate trust office of the Registrar by the registered owner hereof in person, or by his attorney duly authorized in writing, upon surrender of this bond together with a written instrument of transfer or exchange satisfactory to the Registrar duly executed by the registered owner, or his attorney duly authorized in writing, and thereupon a new fully registered bond or bonds in an authorized aggregate principal amount and of the same maturity, shall be executed and delivered in the name of the transferee or to the registered owner, as the case may be, in exchange therefor. This bond may be transferred without cost to the registered owner except for any tax or governmental charge required to be paid with respect to the transfer. The City, the Registrar, the Paying Agent and any other registrar or paying agent for this bond may treat and consider the person in whose name this bond is registered as the absolute owner hereof for all purposes including for the purpose of receiving payment of, or on account of, the principal hereof and interest due thereon. This bond is subject to defeasance prior to redemption or payment as provided in the Ordinance referred to herein. THE OWNER OF THIS BOND, BY THE ACCEPTANCE HEREOF, HEREBY AGREES TO ALL THE TERMS AND PROVISIONS CONTAINED IN THE ORDINANCE. The Ordinance may be amended without the consent of the owners of the bonds as provided in the Ordinance if the Common Council determines, in its sole discretion, that the amendment shall not adversely affect the rights of any of the owners of the bonds. The bonds maturing in any one year are issuable only in fully registered form in the denomination of $100,000 or any $1,000 integral multiple above such amount. A Continuing Disclosure Agreement from the City to each registered owner or holder of any bond, dated as of the date of initial issuance of the bonds (the "Agreement'), has been executed by the City, a copy of which is available from the City and the terms of which are incorporated herein by this reference. The Agreement contains certain promises of the City to each registered owner or holder of any bond, including a promise to provide certain continuing disclosure. By its payment for and acceptance of this bond, the registered owner or holder of this bond assents to the Agreement and to the exchange of such payment and acceptance for such promises. It is hereby certified and recited that all acts, conditions and things required to be done precedent to and in the execution, issuance and delivery of this bond have been done and performed in regular and due form as provided by law. This bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been executed by an authorized representative of the Registrar. IN WITNESS WHEREOF, the City of Carmel, in Hamilton County, Indiana, has caused this bond to be executed in its corporate name by the manual or facsimile signature of the Mayor, its corporate seal to be hereunto affixed, imprinted or impressed by any means and attested manually or by facsimile by its Clerk -Treasurer. CITY OF CARMEL, INDIANA 10 [SEAL] Attest: Clerk -Treasurer M Mayor REGISTRAR'S CERTIFICATE OF AUTHENTICATION This bond is one of the bonds described in the within -mentioned Ordinance. as Registrar 51 Authorized Representative The following abbreviations, when used in the inscription of the face of this bond, shall be construed as through they were written out in full according to applicable laws or regulations: TEN. COM. as tenants in common TEN. ENT. as tenants by the entireties JT. TEN. as joint tenants with right of survivorship and not as tenants in common UNIF. TRANS. MIN. ACT Custodian (Cust.) (Minor) under Uniform Transfers to Minors Act of (State) Additional abbreviations may also be used, although not contained in the above list. ASSIGNMENT 11 FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto (please print or typewrite name and address of transferee) (please insert social security or other identifying number of assignee) $ in principal amount (must be a multiple of $1,000) of the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints , attorney, to transfer the within bond on the books kept for registration thereof, with full power of substitution in the premises. Dated: Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution participating in a Securities Transfer Association recognized signature guarantee program. NOTICE: The signature of this assignment must correspond with the name as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatever. [END OF BOND FORM] Section 7. Authorization for Preparation and Sale of the 2017 Refunding. (a) If the 2017 Refunding Bonds are to be sold at a competitive sale, the Clerk -Treasurer shall cause to be published either (i) a notice of bond sale in the authorized newspaper(s) for the City of Carmel, Indiana, two (2) times, at least one week apart, with the first publication being made at least fifteen (15) days before the date of the sale and the second publication being made at least three days before the date of the sale or (ii) a notice of intent to sell bonds in the authorized newspaper(s) and the Court & Commercial Record, all in accordance with IC 5-1-11, as amended, and IC 5-3-1, as amended. The notice shall state the character, the amount and the authorized denominations of the 2017 Refunding Bonds, the maximum rate or rates of interest thereon, the terms and conditions upon which bids will be received and the sale made, and such other information as the Clerk -Treasurer and the attorneys employed by the City shall deem advisable. Any summary notice may contain any information deemed so advisable. The notice may provide, among other things, that each bid shall be accompanied by a certified or cashier's check or a financial surety bond in an amount equal to one percent (1%) of the principal amount of the 2017 Refunding Bonds described in the notice. If a financial surety bond is used, it must be from an insurance company licensed to issue such bond in the State, and such bond must be submitted to the City prior to the opening of the bids. The financial surety bond must identify each bidder whose good faith deposit is guaranteed by such financial surety bond. If the 2017 Refunding Bonds are awarded to a bidder utilizing a financial surety bond, then the purchaser is required to submit to the City a certified or cashier's check (or wire transfer such amount as instructed by the City) not later than a time designated by the Financial Advisor on the next business day following the award. In the event the successful bidder shall fail or refuse to accept 12 delivery of the 2017 Refunding Bonds and pay for the same as soon as the 2017 Refunding Bonds are ready for delivery, or at the time fixed in the notice of sale, then such good faith deposit and the proceeds thereof shall be the property of the City and shall be considered as its liquidated damages on account of such default. Bidders for the 2017 Refunding Bonds will be required to name the rate or rates of interest which the 2017 Refunding Bonds are to bear, not exceeding the maximum rate hereinbefore fixed, and that such interest rate or rates shall be in multiples of one -one hundredth (1/100) of one percent (1%). The rate bid on a maturity shall be equal to or greater than the rate bid on the immediately preceding maturity. No conditional bid or bid for less than the applicable minimum percentage of the par value of the 2017 Refunding Bonds will be considered. The opinion of Bond Counsel approving the legality of the 2017 Refunding Bonds will be furnished to the purchaser at the expense of the City. The 2017 Refunding Bonds shall be awarded by the Clerk -Treasurer to the best bidder who has submitted its bid in accordance with the terms of this Ordinance, IC 5-1-11, as amended, and the notice. The best bidder will be the one who offers the lowest interest cost to the City, to be determined by computing the total interest on all of the 2017 Refunding Bonds to their maturities and deducting the premium bid, if any, or adding thereto the discount bid, if any. The right to reject any and all bids shall be reserved. If an acceptable bid is not received on the date of sale, the sale may be continued from day to day thereafter without further advertisement for a period of thirty (30) days, during which time, no bid which provides a higher net interest cost to the City than the best bid received at the time of the advertised sale will be considered. (b) As an alternative to a public sale, the Mayor and the Clerk -Treasurer may deem that it is in the best interests of the City that the 2017 Refunding Bonds be sold in the manner and upon the terms and conditions set forth in a purchase agreement between the City and an underwriter selected by the Mayor and the Clerk -Treasurer (the "Underwriter") (such purchase agreement, the "Purchase Agreement"). In such event, the Common Council hereby approves the sale of the 2017 Refunding Bonds to the Underwriter, and authorizes the Mayor and the Clerk -Treasurer, for and on behalf of the City, to execute and deliver, and to perform the obligations of the City under, the Purchase Agreement, in the form the Mayor and the Clerk - Treasurer, with the advice of counsel, determine to be necessary or appropriate, such determination to be conclusively evidenced by such Mayor's and such Clerk -Treasurer's execution thereof. (c) As a further alternative to a public sale, the Mayor and the Clerk -Treasurer may deem that it is in the best interests of the City that the 2017 Refunding Bonds be sold in the manner and upon the terms and conditions set forth in a qualified entity purchase agreement between the City and the Bond Bank (the "Qualified Entity Purchase Agreement"). In such event, the Common Council hereby approves the sale of the 2017 Refunding Bonds to the Bond Bank, and authorizes the Mayor and the Clerk -Treasurer, for and on behalf of the City, to execute and deliver, and to perform the obligations of the City under, the Qualified Entity Purchase Agreement, in the form the Mayor and the Clerk -Treasurer, with the advice of counsel, determine to be necessary or appropriate, such determination to be conclusively evidenced by such Mayor's and such Clerk -Treasurer's execution thereof. In addition, if the Refunding Bonds are sold to the Bond Bank, the Common Council hereby recognizes its authority under Indiana Code 5-1.4-5-4 to annually appropriate a sum to the Bond Bank for deposit in one or more debt service reserve funds. The Common Council hereby expresses its intent to consider such "moral 13 obligation" by an annual appropriation if the Chairman of the Board of the Carmel Bond Bank should find it necessary to make a certification according to Indiana Code 5-1.4-5-4(a), that such appropriation is necessary to restore funds in an amount equal to the debt service reserve requirement of the bonds issued by the Bond Bank pursuant to the Qualified Entity Purchase Agreement. The Common Council further recognizes that nothing contained in Indiana Code 5- 1.4-5-4 creates a debt or liability of the Issuer to make any appropriations for such purpose and nothing contained in this Ordinance shall be construed as a covenant to make any such appropriation or to create a debt or liability of the Issuer. (d) The Clerk -Treasurer is hereby authorized to have the 2017 Refunding Bonds prepared, and the Mayor and the Clerk -Treasurer are hereby authorized to execute or to cause the execution of the 2017 Refunding Bonds in the form and manner herein provided. The Clerk - Treasurer is hereby authorized to deliver the 2017 Refunding Bonds to the purchaser or purchasers thereof upon compliance with the requirements established hereunder and under the Act for the sale thereof, and to collect the full amount which the purchaser or respective purchasers_ have agreed to pay therefor. The 2017 Refunding Bonds, when fully paid for and delivered to the purchaser or purchasers, shall be the binding special revenue obligations of the City, payable out of the revenues of the Waterworks to be set aside and paid into the Waterworks Sinking Fund as herein provided, and the proceeds derived from the sale of the 2017 Refunding Bonds shall be and are hereby set aside for the application to the costs of the Refunding. The authorized officers of the City are hereby authorized to draw all proper and necessary warrants and to do whatever other acts and things that may be necessary or appropriate to carry out the provisions of this Ordinance. (e) Prior to the delivery of the 2017 Refunding Bonds, the Clerk -Treasurer (i) is authorized to investigate and to obtain insurance and/or credit ratings on the 2017 Refunding Bonds, if deemed necessary, and (ii) will obtain a legal opinion as to the validity of the 2017 Refunding Bonds from Barnes & Thornburg LLP, Indianapolis, Indiana, bond counsel for the City, and such opinion shall be furnished to the purchasers of the 2017 Refunding Bonds at the expense of the City. The costs of obtaining any such insurance and/or credit ratings, together with bond counsel's fee in preparing and delivering such opinion and in the performance of related services in connection with the issuance, sale and delivery of the 2017 Refunding Bonds, shall be considered as a part of the costs of issuance of the 2017 Refunding Bonds and shall be paid out of the proceeds of the sale of the 2017 Refunding Bonds. (f) The Mayor or the Clerk -Treasurer is hereby authorized to deem final an official statement with respect to the 2017 Refunding Bonds, as of its date, in accordance with the provisions of Rule 15c2-12 of the United States Securities and Exchange Commission, as amended (the "SEC Rule"), subject to completion as permitted by the SEC Rule, and the City further authorizes the distribution of the deemed final official statement, and the execution, delivery and distribution of such document as further modified and amended with the approval of the Mayor or the Clerk -Treasurer in the form of a final official statement. In order to assist the underwriter of the 2017 Refunding Bonds in complying with paragraph (b)(5) of the SEC Rule by undertaking to make available appropriate disclosure about the City and the 2017 Refunding Bonds to participants in the municipal securities market, the City hereby covenants, agrees and undertakes, in accordance with the SEC Rule, unless excluded 14 from the applicability of the SEC Rule or otherwise exempted from the provisions of paragraph (b)(5) of the SEC Rule, that it will comply with and carry out all of the provisions of the continuing disclosure agreement. "Continuing disclosure agreement" shall mean that certain continuing disclosure contract executed by the City and dated the date of issuance of the 2017 Refunding Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. The execution and delivery by the City of the continuing disclosure agreement, and the performance by the City of its obligations thereunder by or through any employee or agent of the City, are hereby approved, and the City shall comply with and carry out the terms thereof. Section 8. Disposition of Proceeds of 2017 Refunding Bonds. The net proceeds received by the City from the sale of the 2017 Refunding Bonds shall be applied by the City, in accordance with instructions delivered by the Clerk -Treasurer to the Registrar and Paying Agent, as follows: (a) An amount equal to the any amount necessary, if any, to fully fund the Reserve Requirement (as hereinafter defined) of the Waterworks Sinking Fund, shall be deposited into the Waterworks Sinking Fund; (b) An amount equal to the estimated costs of issuance of the 2017 Refunding Bonds and other fees and charges associated with the issuance of the 2017 Refunding Bonds, including any fees and charges associated with obtaining credit enhancement for the 2017 Refunding Bonds, shall be deposited into the Waterworks Costs of Issuance Fund; and (c) An amount equal to the remaining net proceeds from the sale of the 2017 Refunding Bonds may be deposited into the Waterworks Refunded Obligation Account in order to immediately make payment in full of the Refunded Obligation. All funds deposited to the credit of the Waterworks Sinking Fund, the Waterworks Costs of Issuance Fund or Waterworks Refunded Obligation Account shall be deposited, held, secured, invested and expended in accordance with the laws of the State of Indiana relating to the depositing, holding, securing, investing and expending of public funds, including, particularly, applicable provisions of Indiana Code 5-13. Any interest or income derived from any such investments shall become a part of the moneys in the fund or account so invested. Pursuant to the Act, the owners of the 2017 Refunding Bonds shall be entitled to a lien on the proceeds of the 2017 Refunding Bonds until such proceeds are applied as required by this Ordinance and by Indiana law. Section 9. Waterworks 2017 Refunding Fund. A special fund, designated as the "Waterworks 2017 Refunding Fund" and an account within such fund designated "Refunded Obligation Account," are hereby created. All amounts deposited into the Refunded Obligation Account of. the Waterworks 2017 Refunding Fund shall be immediately expended for the payment in full of the Refunded Obligation. Section 10. Waterworks Costs of Issuance Fund. A special fund, designated as the "Waterworks Costs of Issuance Fund," is hereby created. All amounts in the Waterworks Costs 15 of Issuance Fund shall be expended only for the purpose of paying the costs of issuance of the 2017 Refunding Bonds and any other fees and charges associated with the issuance of the 2017 Refunding Bonds, including any fees and charges associated with obtaining credit enhancement for the 2017 Refunding Bonds. Any balance remaining unexpended in the Waterworks Costs of Issue Fund after payment of all such costs, fees and charges shall, not later than thirteen (13) months after the date of issuance of the 2017 Refunding Bonds, be transferred into the Waterworks Sinking Fund and shall be used solely for the purposes of such fund or as otherwise permitted by Indiana Code 5-1-13. Section 11. Revenue Fund. There is hereby continued a fund known as the Waterworks Revenue Fund (the "Revenue Fund"), into which there shall be deposited upon receipt, all income and revenues of the Waterworks. This fund shall be maintained separate and apart from all other accounts of the City. All moneys deposited in the Revenue Fund may be invested in accordance with IC 5-13. Section 12. Operation and Maintenance Fund. The Operation and Maintenance Fund (the "Operation and Maintenance Fund") is hereby continued. There shall be transferred from the Revenue Fund and credited to the Operation and Maintenance Fund on the last day of each calendar month, a sufficient amount of the revenues of the Waterworks so that the balance in this Fund shall be sufficient to pay the expenses of operation, repair and maintenance for the then next succeeding two calendar months. The moneys credited to this Fund shall be used for the payment of the reasonable and proper operation, repair and maintenance expenses of the Waterworks on a day-to-day basis, but none of the moneys in such Fund shall be used for transfers for depreciation, replacements, improvements, extensions or additions. Any balance in said Fund in excess of the expected expenses of operation, repair and maintenance for the next succeeding month may be transferred to the Sinking Fund if necessary to prevent a default in the payment of principal of or interest on the outstanding bonds of the Waterworks. Section 13. Sinking Fund. A special fund is hereby continued and known as the Waterworks Sinking Fund (the "Sinking Fund"), and designated and constituted the sinking fund, for the payment of the principal of and premium, if any, and interest on the 2008 Senior Bonds, the 2012 Junior Bonds, the 2017 Refunding Bonds and any bonds hereafter issued senior to or on a parity therewith or subordinate thereto, and for the payment of any fiscal agency charges in connection with the payment of bonds. There shall be set aside and paid into the Sinking Fund monthly, as available, a sufficient amount of the Net Revenues, as defined in this Ordinance, for the payment of (a) the interest on all bonds which by their terms are payable from the revenues of the Waterworks, as such interest shall fall due, (b) the necessary fiscal agency charges for paying the principal of and interest on all bonds and (c) the principal of all bonds which by their terms are payable from the revenues of the Waterworks, as such principal shall fall due. Said payments shall continue until the balance in the Bond and Interest Account, plus the balance in the reserve accounts equal the principal of and interest on all the outstanding bonds to the final maturity thereof. The Sinking Fund is further and additionally divided into two additional accounts designated as the Junior Principal and Interest Account and the Junior Debt Service Reserve Account, which are pledged for the purposes set forth below. (a) Junior Principal and Interest Account. After meeting monthly deposits to the Sinking Fund required by the 2008 Bond Ordinance, there shall be transferred, on the last day of 16 each calendar month, from the Revenue Fund and credited to the Junior Principal and Interest Account an amount equal to the sum of at least one -twelfth (1/12) of the principal and at least one-sixth (1/6) of the interest on all then outstanding 2012 Junior Bonds, 2017 Refunding Bonds, and any hereafter issued bonds ranking on a parity therewith payable from Net Revenues on the next succeeding principal and interest payment dates, until the amount available therein shall equal the principal payable during the next succeeding twelve (12) calendar months and the interest payable during the next succeeding six (6) calendar months. There shall similarly be credited to the account any amount necessary to pay when due the bank fiscal agency charges for paying principal of and interest on the 2012 Junior Bonds, 2017 Refunding Bonds and any hereafter issued bonds ranking on a parity therewith as the same become payable. The City shall, from the sums deposited in the Sinking Fund and credited to the Junior Principal and Interest Account, remit promptly to the registered owner or to the bank fiscal agency sufficient moneys to pay the principal and interest on 2012 Junior Bonds, 2017 Refunding Bonds and any hereafter issued bonds ranking on a parity therewith the due dates thereof together with the amount of bank fiscal agency charges. Amounts held in the Junior Principal and Interest Account are neither pledged to, nor available for, payments of the principal of and interest on the 2008 Senior Bonds. (b) Junior Debt Service Reserve Account. If required, after meeting monthly deposits to the Sinking Fund required by the 2008 Bond Ordinance, there shall be transferred, on the last day of each calendar month following the issuance of the 2017 Refunding Bonds, after making any required transfer to the Junior Principal and Interest Account, from the Revenue Fund and credited to the Junior Debt Service Reserve Account an amount to constitute an appropriate reserve to facilitate the marketing of the 2017 Refunding Bonds, which monthly deposits shall be in an amount sufficient to build the balance in the Junior Debt Service Reserve Account (after consideration of any transfers made pursuant to the next following sentence) to an amount equal to such required reserve within no more than five (5) years on a level monthly basis (after accounting for earnings thereon), which reserve amount shall not exceed the least of ten percent (10%) of the proceeds of the 2017 Refunding Bonds, the maximum annual debt service on the 2017 Refunding Bonds, or 125% of the average annual debt service on the 2017 Refunding Bonds. The Clerk -Treasurer, with the advice of the City's financial advisor, may transfer an amount of the funds of the utility now on hand, or apply proceeds of the 2017 Refunding Bonds, in full or partial satisfaction of the Reserve Requirement at or after the issuance of the 2017 Refunding Bonds. After the issuance of the 2017 Refunding Bonds, the City shall maintain the balance in the Junior Debt Service Reserve Account in an amount equal to the Reserve Requirement, subject to the provisions of this Ordinance or any ordinance authorizing and any hereafter issued bonds ranking on a parity therewith, which allows the Reserve Requirement to be accumulated over time, and first subject to meeting the requirement of the Sinking Fund pursuant to the 2008 Bond Ordinance. For these purposes, "Reserve Requirement" means the least of ten percent (10%) of the proceeds of the 2012 Junior Bonds, 2017 Refunding Bonds and any hereafter issued bonds ranking on a parity therewith, the maximum annual debt service on the 2017 Refunding Bonds and any hereafter issued bonds ranking on a parity therewith, or 125% of the average annual debt service on the 2012 Junior Bonds, 2017 Refunding Bonds and any hereafter issued bonds ranking on a parity therewith. All money in the Junior Debt Service Reserve Account shall be used and withdrawn solely for the purpose of making deposits into the Junior Principal and Interest Account, in the 17 event of and to the extent of any deficiency in the Junior Principal and Interest Account with respect to the payments then due on the 2012 Junior Bonds, 2017 Refunding Bonds and any hereafter issued bonds ranking on a parity therewith, or to make the final payments on such bonds when the Junior Debt Service Reserve Account, together with other funds available for such purpose, is sufficient to make all remaining payments thereon to final maturity. Any amount in the Junior Debt Service Reserve Account in excess of the Reserve Requirement shall be withdrawn from time to time, and at least as frequently as annually, and deposited in the Junior Principal and Interest Account. Any deficiency in the balance required to be held in the Junior Debt Service Reserve Account shall be promptly made up from the next available Net Revenues after credits to the Junior Principal and Interest Account and subject to first meeting the requirement of the Sinking Fund pursuant to the 2008 Bond Ordinance. Amounts held in the Junior Debt Service Reserve Account are neither pledged to, nor available for, payments of the principal of and interest on the 2008 Bonds. Notwithstanding the foregoing, after obtaining the necessary approval, if any, of the municipal bond insurers of the 2008 Bonds, the Clerk -Treasurer, with the advice of the City's Financial Advisor and bond counsel, may enable .the City to satisfy all or any part of its obligation to maintain an amount in the Junior Debt Service Reserve Account equal to the Reserve Requirement by depositing a Reserve Fund Credit Facility in the Junior Debt Service Reserve Account at or after the issuance of the 2017 Refunding Bonds, provided that such deposit does not adversely affect any then existing rating on the 2012 Junior Bonds and any hereafter issued bonds ranking on a parity therewith. A "Reserve Fund Credit Facility" is hereby defined as a letter of credit, liquidity facility, insurance policy or comparable instrument furnished by a bank, insurance company, financial institution or other entity pursuant to a reimbursement agreement or similar instrument between such entity and the City, for the purpose of satisfying in whole or in part the City's obligation to maintain the Reserve Requirement. Section 14. Improvement Fund. After meeting the requirements of the Operation and Maintenance Fund and the Sinking Fund, then any available excess revenues of the Waterworks may be placed into an improvement fund for the Waterworks (the "Improvement Fund"). Amounts so deposited may be used to pay the cost of improvements, betterments, extensions, enlargements and additions to the Waterworks. No revenues of the Waterworks shall be deposited in or credited to the Improvement Fund which will interfere with the required monthly payments into or accumulated in the Sinking Fund, or with the requirements as to paying the expenses of or reserving funds for the operation, maintenance and repair of the Waterworks and for depreciation. All or any portion of the funds accumulated and reserved for operation, repair and maintenance for the next -succeeding twelve (12) calendar months shall be transferred to the Sinking Fund if necessary to prevent a default in the payment of principal of or interest on the outstanding bonds payable from such Sinking Fund, or may be transferred to the Operation and Maintenance Fund to meet unforeseen contingencies in the operation, repair and maintenance of the Waterworks. Section 15. Investment of Funds. The funds and accounts described herein shall be accounted for separate and apart from each other and from all other funds and accounts of the City. All moneys deposited in the funds and accounts shall be deposited, held and secured as public funds in accordance with the public depository laws of the State of Indiana; provided that moneys therein may be invested in obligations in accordance with the applicable laws, including 18 particularly Indiana Code, Title 5, Article 13, as amended or supplemented, and in the event of such investment the income therefrom shall become a part of the funds invested and shall be used only as provided in this Ordinance. The Clerk -Treasurer is hereby authorized pursuant to Indiana Code 5-1-14-3 to invest moneys pursuant to the provisions of this Ordinance (subject to applicable requirements of federal law to ensure such yield is then current market rate) to the extent necessary or advisable to preserve the exclusion from gross income of interest on the 2017 Refunding Bonds under federal law. The Clerk -Treasurer shall keep full and accurate records of investment earnings and income from moneys held in the funds and accounts created or referenced herein. In order to comply with the provisions of this Ordinance, the Clerk -Treasurer is hereby authorized and directed to employ consultants or attorneys from time to time to advise the City as to requirements of federal law to preserve the tax exclusion. The Clerk -Treasurer may pay any fees as operation expenses of the utility. Section 16. Financial Records and Accounts. The City shall keep proper records and books of account, separate from all of its other records and accounts, in which complete and correct entries shall be made showing all revenues received on account of the operation of the Waterworks and all disbursements made therefrom and all transactions relating to the utility. The City shall maintain on file the audited financial statements of the utility prepared by the State Board of Accounts. There shall be furnished, upon written request, to any owner of the 2017 Refunding Bonds, the most recent copy of the audited financial statements of the Waterworks prepared by the State Board of Accounts. Copies of all such statements and reports shall be kept on file in the office of the Clerk -Treasurer. Section 17. Pledge of Net Revenues. The 2008 Senior Bonds, and any bonds ranking on a parity therewith, as to both principal and interest, shall be payable from and secured by an irrevocable pledge of and shall constitute a first charge upon all the Net Revenues (herein defined as gross revenues after deduction only for the payment of the reasonable expenses of operation, repair and maintenance) of the Waterworks of the City. The 2012 Junior Bonds and the 2017 Refunding Bonds, and any bonds ranking on a parity therewith, as to both principal and interest, shall be payable from and secured by an irrevocable pledge of and shall constitute a second charge upon all the Net Revenues of the Waterworks of the City. The City shall not be obligated to pay the 2008 Senior Bonds, the 2012 Junior Bonds, or the 2017 Refunding Bonds or the interest thereon except from the Net Revenues of the Waterworks, and the 2008 Senior Bonds, the 2012 Junior Bonds, or the 2017 Refunding Bonds shall not constitute an indebtedness of the City or any municipal corporation or political subdivision of the State of Indiana within the meaning of the provisions and limitations of the constitution of the State of Indiana. Section 18. Defeasance of the 2017 Refunding. If, when the 2017 Refunding Bonds or a portion thereof shall have become due and payable in accordance with their terms or shall have been duly called for redemption or irrevocable instructions to call the 2017 Refunding Bonds or a portion thereof for redemption shall have been given, and the whole amount of the principal and the interest and the premium, if any, so due and payable upon all of the 2017 Refunding Bonds or a portion thereof then outstanding shall be paid; or (i) sufficient moneys, (ii) 19 direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America, the principal of and the interest on which when due will provide sufficient moneys for such purpose, or (iii) time certificates of deposit of a bank or banks fully secured as to both principal and interest by obligations of the kind described in (ii) above, the principal and interest on which when due will provide sufficient moneys for such purpose; shall be held in trust for such purpose, and provision shall also be made for paying all fees and expenses for the redemption, then and in that case the 2017 Refunding Bonds or any designated portion thereof issued hereunder shall no longer be deemed outstanding or entitled to the pledge of the Net Revenues of the City's Waterworks. Section 19. Rate Covenant. The City covenants and agrees that it will establish and maintain reasonable and just rates and charges for the use of and the service rendered by the Waterworks, to be paid by the owner of each and every lot, parcel of real estate or building that is connected with and uses the Waterworks, or that in any way uses or is served by the Waterworks, at a level adequate to produce and maintain sufficient revenue (including user and other charges, fees, income or revenues available to the City) to provide for operation and maintenance of the Waterworks, to comply with and satisfy all covenants contained in this Ordinance and to all obligations of the Waterworks and of the City with respect to the Waterworks. Such rates and charges shall, if necessary, be changed and readjusted from time to time so that the revenues therefrom shall always be sufficient to meet the expenses of operation and maintenance of the Waterworks and the requirements of the Sinking Fund. The rates and charges so established shall apply to any and all use of the Waterworks by and service rendered to the City and shall be paid by the City as the charges accrue. Section 20. Additional Bond Provisions. The City reserves the right to authorize and issue additional bonds payable out of the Net Revenues of its Waterworks ranking on a parity with the 2017 Refunding Bonds for the purpose of financing the cost of future additions, extensions and improvements of its Waterworks, or to refund obligations, subject to the following conditions: (a) The interest on and principal of all bonds payable from the Net Revenues shall have been paid to date in accordance with the terms thereof, provided, this condition shall be satisfied if any required amount is to be provided from the proceeds of such additional bonds or other funds. (b) The balance in the Junior Debt Service Reserve Account shall be equal to the amount required herein, provided, this condition shall be satisfied if any required amount is to be provided from the proceeds of such additional bonds or other funds. (c) The Net Revenues in the fiscal year immediately preceding the issuance of any such bonds ranking on a parity with the 2017 Refunding Bonds shall be not less than one hundred twenty five percent (125%) of the average annual principal and interest requirements of the then outstanding 2017 Refunding Bonds and any hereafter issued bonds ranking on a parity with the 2017 Refunding Bonds including the proposed additional bonds to be issued and to rank on a parity with the 2017 Refunding Bonds ("Proposed Parity Bonds") for each respective year during the period commencing as of the issuance of the Proposed' Parity Bonds and ending as the final maturity of the then outstanding 2017 Refunding Bonds; or, prior to the issuance of the additional Proposed Parity Bonds, the rates and charges shall be increased sufficiently so that said increased rates and charges applied to the previous fiscal year's operations would have produced Net Revenues for said year equal to not less than one hundred twenty five percent (125%) of the average annual principal and interest requirements for each respective year during the period commencing as of the issuance of the Proposed Parity Bonds and ending as the final maturity of the then outstanding 2017 Refunding Bonds. For purposes of this subsection, the records of the works shall be analyzed and all showings shall be prepared by a certified public accountant employed by the City for that purpose. (d) The principal. of the Proposed Parity Bonds shall be payable on May 1 and the interest shall be payable on May 1 and November 1 during the periods such principal and interest are payable. Section 21. Further Covenants of the City; Maintenance, Insurance Pledge Not To Encumber, Subordinate Indebtedness, and Contract With Bondholders. For the purpose of further safeguarding the interests of the owners of the 2017 Refunding Bonds, it is hereby specifically provided as follows: (a) The City shall at all times maintain the Waterworks system in good condition, and operate the same in an efficient manner and at a reasonable cost. (b) So long as any of the 2017 Refunding Bonds are outstanding, the City shall maintain insurance on the insurable parts of said work, of a kind and in an amount such as would normally be carried by private corporations engaged in a similar type of business. All insurance shall be placed with responsible insurance companies qualified to do business under the laws of the State of Indiana. As an alternative to maintaining such insurance, the City may maintain a self-insurance program with catastrophic or similar coverage so long as such program meets the requirements of any applicable laws or regulations and is maintained in a manner consistent with programs maintained by similarly situated municipalities. Insurance proceeds or self-insurance proceeds shall be used in replacing or repairing the property destroyed or damaged, or if not used for that purpose, shall be treated and applied as net revenues of the works. (c) So long as any of the 2017 Refunding Bonds are outstanding, the City shall not mortgage, pledge or otherwise encumber the property and plant of its Waterworks system, or any part thereof, and shall not sell, lease or otherwise dispose of any part of the same, except such machinery, equipment or other property as may be replaced, or shall no longer be necessary for use in connection with said utility, and except as approved by the owners of all the bonds issued pursuant to this ordinance, then outstanding, if the Common Council receives an opinion of nationally recognized bond counsel to the effect that the transaction will not cause interest on the bonds to be included in gross income for federal tax purposes. (d) Except as otherwise specifically provided in Section 20 of this Ordinance, so long as any of the 2017 Refunding Bonds are outstanding, no additional bonds or other obligations pledging any portion of the revenues of the system shall be authorized, issued or executed by the 21 City, except such as shall be made junior and subordinate in all respects to the 2017 Refunding Bonds, unless all of the 2017 Refunding Bonds are redeemed and retired coincidentally with the delivery of such additional bonds or other obligations. (e) The provisions of this ordinance shall constitute a contract by and between the City and the owners of the 2017 Refunding Bonds herein authorized, all the terms of which shall be enforceable by any bondholder by any and all appropriate proceedings in law or in equity. After the issuance of the 2017 Refunding Bonds, this ordinance shall not be repealed, amended or modified in any respect which will adversely affect the rights or interests of the owners of the 2017 Refunding Bonds nor shall the Common Council or any other body of the City adopt any law, ordinance or resolution in any way adversely affecting the rights of such owners so long as any of the 2017 Refunding Bonds or the interest thereon, remain outstanding or unpaid. Except in the case of changes described in Section 22, this Ordinance may be amended, however, without the consent of the owners of the 2017 Refunding Bonds, if the Common Council determines, in its sole discretion, that such amendment would not adversely affect the owners of the 2017 Refunding Bonds. (f) The provisions of this ordinance shall be construed to create a trust in the proceeds of the sale of the 2017 Refunding Bonds herein authorized for the uses and purposes herein set forth, and the owners of the 2017 Refunding Bonds shall retain a lien on such proceeds until the same are applied in accordance with the provisions of this ordinance and said governing Act. The provisions of this ordinance shall also be construed to create a trust in the Net Revenues herein directed to be set apart and paid into the Sinking Fund for the uses and purposes of that Fund as in this ordinance set forth. The owners of the 2017 Refunding Bonds shall have all the rights, remedies and privileges set forth in the provisions of the governing Act, including the right to have a receiver appointed to administer the Waterworks in the event the City shall fail or refuse to fix and collect sufficient rates and charges for those purposes, or shall fail or refuse to operate and maintain said system and to apply properly the revenues derived from the operation thereof, or if there be a default in the payment of the interest on or principal of the 2017 Refunding Bonds. (g) None of the provisions of this ordinance shall be construed as requiring the expenditure of any funds of the City derived from any sources other than the proceeds of the 2017 Refunding Bonds and the operation of the Waterworks system. (h) So long as the 2017 Refunding Bonds are outstanding, the City shall not mortgage, pledge or otherwise encumber the Waterworks, or any portion thereof, and shall not sell, lease or otherwise dispose of any part of the same, except to replace equipment which may become worn out or obsolete. Section 22. Amendments with Consent of Bondholders. Subject to the terms and provisions contained in this section and Sections 21 and 30, the owners of not less than sixty-six and two-thirds percent (66 2/3%) in aggregate principal amount of the 2017 Refunding Bonds issued pursuant to this ordinance and then outstanding shall have the right from time to time, to consent to and approve the adoption by the Common Council of such ordinance or ordinances supplemental hereto or amendatory hereof, as shall be deemed necessary or desirable by the City for the purpose of modifying, altering, amending, adding to or rescinding in any particular any of 22 the terms or provisions contained in this ordinance, or in any supplemental ordinance; provided, however, that nothing herein contained shall permit or be construed as permitting: (a) An extension of the maturity of the principal of or interest on any 2017 Refunding Bonds issued pursuant to this ordinance; or (b) A reduction in the principal amount of any 2017 Refunding Bonds or the redemption premium or the rate of interest thereon; or (c) The creation of a lien upon or a pledge of the revenues or Net Revenues of the Waterworks ranking prior to the pledge thereof created by this ordinance; or (d) A preference or priority of any 2017 Refunding Bond issued pursuant to this ordinance over any other 2017 Refunding Bond issued pursuant to the provisions of this ordinance; or (e) A reduction in the aggregate principal amount of the 2017 Refunding Bonds required for consent to such supplemental ordinance. If the owners of not less than sixty-six and two-thirds percent (66 2/3%) in aggregate principal amount of the 2017 Refunding Bonds outstanding at the time of adoption of such supplemental ordinance shall have consented to and approved the adoption thereof by written instrument to be maintained on file in the office of the Clerk -Treasurer, no owner of any 2017 Refunding Bond issued pursuant to this ordinance shall have any right to object to the adoption of such supplemental ordinance or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the adoption thereof, or to enjoin or restrain the Common Council of the City from adopting the same, or from taking any action pursuant to the provisions thereof. Upon the adoption of any supplemental ordinance pursuant to the provisions of his section, this ordinance shall be, and shall be deemed, modified and amended in accordance therewith, and the respective rights, duties and obligations under this ordinance of the City and all owners of 2017 Refunding Bonds then outstanding, shall thereafter be determined, exercised and enforced in accordance with this ordinance, subject in all respects to such modifications and amendments. Notwithstanding anything contained in the foregoing provisions of this ordinance, the rights and obligations of the City and of the owners of the 2017 Refunding Bonds authorized by this ordinance, and the terms and provisions of the 2017 Refunding Bonds and this ordinance, or any supplemental or amendatory ordinance, may be modified or altered in any respect with the consent of the City and the consent of the owners of all the 2017 Refunding Bonds then outstanding. Section 23. Tax Covenants. In order to preserve the exclusion of interest on the 2017 Refunding Bonds from gross income for federal tax purposes under Section 103 of the Internal Revenue Code of 1986 as existing on the date of issuance of the 2017 Refunding Bonds (the "Code") and as an inducement to purchasers of the 2017 Refunding Bonds, the City represents, covenants and agrees that: (a) No person or entity other than the City or another state or local governmental unit will use proceeds of the 2017 Refunding Bonds or property financed by the 2017 Refunding Bond proceeds other than as a member of the general public. No person or entity other than the 23 City or another state or local governmental unit will own property financed by 2017 Refunding Bond proceeds or will have any actual or beneficial use of such property pursuant to a lease, a management or incentive payment contract, arrangements such as take -or -pay or output contracts or any other type of arrangement that differentiates that person's or entity's use of such property from use by the general public. (b) No portion of the principal of or interest on the 2017 Refunding Bonds is (under the terms of the 2017 Refunding Bonds, this ordinance or any underlying arrangement), directly or indirectly, secured by an interest in property, used or to be used for any private business use or payments in respect of any private business use or payments in respect of such property or to be derived from payments (whether or not to the City) in respect of such property or borrowed money used or to be used for a private business use. (c) No 2017 Refunding Bond proceeds will be loaned to any person or entity other than another state or local governmental unit. No 2017 Refunding Bond proceeds will be transferred, directly or indirectly, or deemed transferred to a nongovernmental person in any manner that would in substance constitute a loan of the 2017 Refunding Bond proceeds. (d) The City will not take any action nor fail to take any action with respect to the 2017 Refunding Bonds that would result in the loss of the exclusion from gross income for federal tax purposes on the 2017 Refunding Bonds pursuant to Section 103 of the Code, nor will the City act in any other manner which would adversely affect such exclusion. (e) It shall be not an event of default under this ordinance if the interest on any 2017 Refunding Bond is not excludable from gross income for federal tax purposes or otherwise pursuant to any provision of the Code which is not currently in effect and in existence on the date of issuance of the 2017 Refunding Bonds. (f) The City hereby covenants that it will rebate any arbitrage profits to the United States to the extent required by the Code and the regulations promulgated thereunder. (g) These covenants are based solely on current law in effect and in existence on the date of delivery of such 2017 Refunding Bonds. Notwithstanding any other provisions of the Ordinance, the foregoing covenants and authorizations (the "Tax Sections") which are designed to preserve the exclusion of interest on the 2017 Refunding Bonds from gross income under federal law (the "Tax Exemption") need not be complied with to the extent the City receives an opinion of nationally recognized bond counsel that compliance with such Tax Section is unnecessary to preserve the Tax Exemption. Section 24. Execution of Documents. The Mayor and the Clerk -Treasurer may also take such other actions or deliver such other certificates as are necessary or desirable in connection with the issuance of the 2017 Refunding Bonds and the other documents needed for the financing as they deem necessary or desirable in connection therewith. Section 25. Noncompliance with Tax Covenants. Notwithstanding any other provisions of this ordinance, the covenants and authorizations contained in this ordinance (the "Tax Sections") which are designed to preserve the exclusion of interest on the 2017 Refunding A Bonds from gross income under federal law (the "Tax Exemption") need not be complied with if the City receives an opinion of nationally recognized bond counsel that any Tax Section is unnecessary to preserve the Tax Exemption. Section 26. Severability. If any section, paragraph or provision of this ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this ordinance. Section 27. Other Action. The appropriate officers are hereby authorized to take all actions to obtain a rating, bond insurance or any other form of credit enhancement for the 2017 Refunding Bonds if economically feasible and desirable and with the favorable recommendation of the financial advisors to the City. In addition, the appropriate officers of the City are hereby authorized and directed to take any other action deemed necessary or advisable in order to effectuate the issuance of the 2017 Refunding Bonds, or any other purposes of this ordinance. Section 28. Amendment of Ordinance without Consent of Bondholders. The Common Council may, from time to time, and without the consent of bondholders, adopt ordinances supplemental hereto (which supplemental ordinances shall thereafter form a part hereof) for any one or more of the following purposes: (a) To cure any ambiguity or formal defect or omission in this ordinance or in any supplemental ordinance; (b) To grant to or confer upon the owners of the 2017 Refunding Bonds any additional benefits, rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the owners of the 2017 Refunding Bonds, or to make any change which, in the judgment of the Common Council, is not to the prejudice of the owners of the 2017 Refunding Bonds; (c) To modify, amend or supplement this ordinance to permit the qualification of the 2017 Refunding Bonds for sale under the securities laws of the United States of America or of any of the states of the United States of America or to obtain or maintain bond insurance with respect to payments of principal of and interest on the 2017 Refunding Bonds; (d) To provide for the refunding or advance refunding of the 2017 Refunding Bonds; (e) To procure a rating on the 2017 Refunding Bonds from a nationally recognized securities rating agency designated in such supplemental resolution, if such supplemental resolution will not adversely affect the owners of the 2017 Refunding Bonds; or (f) Any other purpose which in the judgment of the Common Council does not adversely impact the interests of the owners of the 2017 Refunding Bonds. Section 29. Conflicting Ordinances. All ordinances and parts of ordinances in conflict herewith, except the 2012 Ordinance, are hereby repealed. None of the provisions of this Ordinance shall be construed to adversely affect the rights of the owners of the 2008 Senior Bonds or the 2012 Junior Bonds. 25 Section 30. Headings. The headings or titles of the several sections shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this ordinance. Section 31. Effective Date. This ordinance shall be in full force and effect from and after its passage. 26 N COUNCIL OF THE CITY OF CARMEL, Sue Kevin D. Rider, Vice President Bru imbal Laura CampbellJeff o 1 "076; E. Carter M Christine Pauley, Clerk-Treasu&of the City of Carmel, Indiana Presented by me to the Mayor of the Oj�2017, at ?50/0.M. Approved by me, Mayor of the City t74 r , 2017, at /V/;' _a.M. AT liristine Pau ey, Clerk-Treas er of the City of Carmel, Indiana City Af Carmel, Indiana, this V%day of CPiristine Pauley�/Clerk-Treasu e& of Carmel, Indiana, this /6 day of Jul es Brainard, Mayor 27 Prepared by: Richard C. Starkey Barnes & Thornburg LLP 11 South Meridian Street Indianapolis, IN 46204 DMS RCS 9887541vl Im