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HomeMy WebLinkAboutD-1622-03 1993 Water Bond Refunding Sponsor(s): Councilor Kevin Kirby ORDINANCE NO. D-1622-03 AN ORDINANCE OF THE COMMON COUNCIL OF THE CITY OF CARMEL, INDIANA, CONCERNING THE REFUNDING BY THE CITY OF CARMEL, INDIANA, OF ITS WATERWORKS REVENUE BONDS OF 1993, SERIES B; AUTHORIZING THE ISSUANCE OF WATERWORKS REFUNDING REVENUE BONDS OF 2003, SERIES A FOR SUCH PURPOSE, PROVIDING FOR THE COLLECTION, SEGREGATION AND DISTRIBUTION OF THE REVENUES OF THE WATERWORKS AND THE SAFEGUARDING OF THE INTERESTS OF THE OWNERS OF THE WATERWORKS REFUNDING REVENUE BONDS OF 2003, SERIES A; OTHER MATTERS CONNECTED THEREWITH; AND REPEALING ORDINANCES INCONSISTENT HEREWITH 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 Indiana Code 8-1.5, and other applicable laws; and WHEREAS, the Common Council of the City (the "Council") finds that certain hereinafter described outstanding bonds of the waterworks should be refimded to obtain a reduction in interest payments to effect a savings to the City; that the refunding of those outstanding bonds, together with redemption premium and accrued interest thereon and including all costs related to the refunding to be paid from bond proceeds, will require funds in an amount not to exceed $5,430,000; that the total cost of the refunding cannot be provided for out of funds of the waterworks now on hand and the refunding should be accomplished by the use of certain funds on hand and the issuance of refunding revenue bonds of the waterworks; and WHEREAS, the Council finds that there are now outstanding bonds of the City's waterworks and payable out of the revenues therefrom designated "Waterworks Revenue Bonds of 1993, Series B" dated May 1, 1993 (the "1993 Bonds") issued pursuant to Ordinance No. A- 67, as amended, adopted December 7, 1992 (collectively, the "1993 Ordinance"), originally issued in the amount of $5,010,000, now outstanding in the amount of $4,240,000 and maturing annually over a period ending May 1, 2013, which 1993 Bonds constitute a charge upon the Net Revenues (as hereinafter defined) of the waterworks on a parity with the City's Waterworks Revenue Bonds of 2002, Series A (the "2002 A Bonds"), issued pursuant to Ordinance No. D- '1550-01, as amended, adopted December 17, 2001 (the "2002A Ordinance"), and Waterworks Revenue Bonds of 2002, Series B (the "2002B Bonds"), together with the 2002A Bonds (collectively, the "Parity Bonds"), issued pursuant to Ordinance No. D-1567-02, as amended, adopted May 20, 2002 (the "2002B Ordinance") together with the 2002A Ordinance (collectively, the "Parity Ordinance"); and WHEREAS, the Council finds that the 1993 Bonds should be refunded pursuant to the provisions of Ind. Code 5-1-5 to enable the City to obtain a reduction in interest payments to effect a savings to the City; and WHEREAS, the Council finds that it is advisable to issue its refunding revenue bonds in an amount not to exceed $4,600,000 and to use the proceeds, together with funds on hand, to D:\Files\OrdinancesX2003\D- 1622-03.doc 1 Sponsor(s): CounciLor Kevin Kirby refund the 1993 Bonds, and to pay for all costs related to the refunding and the issuance of the bonds hereunder; and WHEREAS, the Council now finds that all conditions precedent to the adoption of an ordinance authorizing the issuance of revenue bonds have been complied with in accordance with the provisions of I.C. 5-1-5 and I.C. 8-1.5 (collectively, the "Act"); NOW THEREFORE, BE IT ORDAINED by the Common Council of the City of Carmel, Indiana, as follows: Section 1. Authorization of Obligations. (a) The City being the owner of and engaged in operating an unencumbered waterworks supplying the City, its inhabitants, and the residents adjacent thereto, with water supply, treatment and distribution services, now finds it necessary to provide funds for refunding the 1993 Bonds thereby reducing its interest payments and effecting a savings, as reported by H. J. Umbaugh & Associates, Certified Public Accountants, LLP (the "City's Financial Advisor"). The terms "waterworks," "waterworks system," "works," "system," and words of like import where used in this Ordinance shall be construed to mean the City's 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. (b) The City shall issue its "City of Carmel, Indiana Waterworks Refunding Revenue Bonds of 2003, Series A" (the "Refunding Bonds"), in one or more series, in an original principal amount not to exceed Four Million Six Hundred Thousand Dollars ($4,600,000) (the "Authorized Amount"), as negotiable, fully registered bonds, for the purpose of procuring funds to be applied to the refunding of the 1993 Bonds, the costs of selling and issuing the Refunding Bonds, all other costs related to the refunding, and, in the event a Reserve Account Credit Facility (as defined in Section 14 of this Ordinance) is obtained pursuant to Section 14 of this Ordinance, the premium therefor. The City shall apply any other moneys currently held for the payment of debt service on the 1993 Bonds to the refunding as provided in Section 8 of this Ordinance. The Refunding Bonds shall rank on a parity for all purposes with the Parity Bonds. (c) The Refunding Bonds shall be issued in denominations of Five Thousand Dollars ($5,000) or any integral multiple thereof, numbered consecutively from 1 upward, and dated as of the date of delivery. The Refunding Bonds shall bear interest at a rate or rates not exceeding four and one-quarter percent (4.25%) per annum, and interest shall be payable semiannually on May 1 and November 1 in each year, beginning on November 1, 2003. Interest on the Refunding Bonds shall be calculated according to a 360-day calendar year containing twelve 30-day months. The Bonds shall mature beginning May 1, 2004, and on May 1 of each year thereafter over a period ending not later than May 1, 2013, and in such amounts which will achieve with the greatesf savings to the City with authorized denominations as finally determined by the Mayor of the City (the "Executive") and the Clerk-Treasurer of the City (the "Fiscal Officer") as evidenced by the delivery of the executed initial issue of the Refunding Bonds to the Registrar for authentication. D:\Files\OrdinancesX2003\D- 1622-03 .doc 2 Sponsor(s): Councilor Kevin Kirby (d) All or a portion of the Refunding Bonds may be aggregated into and issued as one or more term bonds. The term bonds will be subject to mandatory sinking fund redemption with sinking fund payments and final maturities corresponding to the serial maturities described above. Sinking fund payments shall be applied to retire a portion of the term bonds as though it were a redemption of serial bonds, and, if more than one term bond of any maturity is outstanding, redemption of such maturity shall be made by lot. Sinking fund redemption payments shall be made in a principal amount equal to such serial maturities, plus accrued interest to the redemption date, but without premium or penalty. For all purposes of this Ordinance, such mandatory sinking fund redemption payments shall be deemed to be required payments of principal which mature on the date of such sinking fund payments. Appropriate changes shall be made in the definitive form of Refunding Bonds, relative to the form of Refunding Bonds contained in this Ordinance, to reflect any mandatory sinking fund redemption terms. Section 2. Registrar and Pa¥in~ Affent. (a) The Fiscal Officer is hereby authorized to contract with a qualified financial institution to serve as Registrar and Paying Agent for the Refunding Bonds (the "Registrar" or "Paying Agent"). The Registrar is hereby charged with the responsibility of authenticating the Refunding Bonds. The Fiscal Officer is hereby authorized to enter into such agreements or understandings with the Registrar as will enable the institution to perform the services required of a registrar and paying agent. The Fiscal Officer is further authorized to pay such fees as the Registrar 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 Refunding Bonds as fiscal agency charges. (b) The principal of the Refunding Bonds shall be payable at the principal corporate trust office of the Paying Agent, or by wire transfer to holders of $1,000,000 or more in aggregate principal amount of the Refunding Bonds on written request, and to registered depositories. If the office location at which principal is payable changes, the Paying Agent must give notice of such change to each registered owner of the Refunding Bonds by first class mail at least fifteen (15) days prior to the first principal payment date following the date of such change in location. All payments of interest on the Refunding Bonds shall be paid by check, mailed one (1) business day prior to the interest payment date, or by wire transfer on such interest payment date to holders of $1,000,000 or more in aggregate principal amount of the Refunding Bonds, upon written request, and to registered depositories, 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 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. (c) Interest on the Refunding Bonds shall be payable from the interest payment date to which interest has been paid next preceding the authentication date of the Refunding Bonds unless the Refunding Bonds are authenticated after the fifteenth day of the month preceding 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 Refunding Bonds are authenticated on or before October 15, 2003, in which case they shall bear interest from the original date until the principal shall be fully paid. D:\Files\Ordinancesk2003\D- 1622-03 .doc 3 Sponsor(s): Councilor Kevin Kirby (d) Each 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 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 Refunding Bond or Refunding 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, Registrar and Paying Agent for the Refunding Bonds may treat and consider the person in whose name such 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. (e) The Registrar and Paying Agent may at any time resign as Registrar and Paying Agent upon giving 30 days' prior written notice to the City and by first class mail to each registered owner of the 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 Refunding Bonds then outstanding by first class mail of the removal of the Registrar and Paying Agent. Notices to the registered owners of the 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. (f) Upon the appointment of any successor registrar and paying agent by the City, the Fiscal Officer 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 bonds. The Fiscal Officer 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 waterworks Sinking Fund created by the 1993 Ordinance. Any predecessor registrar and paying agent shall deliver all of the 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. Section 3. Securities Depository Provisions. (a) All Refunding Bonds shall be Book Entry Bonds. Such Book Entry Bonds shall be registered in the name of Cede & Co., as nominee of the Depository Trust Company ("DTC"). If necessary, the Fiscal Officer is hereby authorized to execute and deliver a "Letter of Representations" to DTC. All payments of principal of, redemption premium, if any, and interest on the Book Entry Bonds and all notices with respect thereto, including notices of full or partial redemption, shall be made and given at the times and in the manner set out in the "Letter of Representations." The terms and provisions of the "Letter of Representations" shall govern in the event of any inconsistency between the D:\Files\Ordinances~2003\D- 1622-03 .doc 4 Sponsor(s): Councilor Kevin Kirby provisions of this Ordinance and the "Letter of Representations." Representations" may be amended without Bondholder consent. The "Letter of (b) The book-entry registration system for all of the Book Entry Bonds may be terminated, and certificates may be delivered to and registered in the name of the Beneficial Owners, under either of the following circumstances: (i) DTC notifies the City and the Registrar that it is no longer willing or able to act as Securities Depository for the Book Entry Bonds as of a date certain, and a successor Securities Depository for the Book Entry Bonds is not appointed by the City prior to such date; or (ii) The City determines that continuation of the book-entry system through DTC (or a successor securities depository) is not in the best interest of the City. In the event a successor Securities Depository is appointed by the City, the Book Entry Bonds will be registered in the name of such successor Securities Depository or its nominee. In the event certificates are required to be issued to Beneficial Owners, the Registrar, and the City shall be fully protected in relying upon the certificate of DTC or any DTC participant as to the identity of and the principal amount of Book Entry Bonds held by such Beneficial Owners. (c) The Beneficial Owners of Refunding Bonds will not receive physical delivery of certificates except as provided herein. For so long as there is a Securities Depository for the Refunding Bonds, all of such Refunding Bonds shall be registered in the name of the nominee of the Securities Depository, all transfers of beneficial ownership interests in such Refunding Bonds will be made in accordance with the rules of the Securities Depository, and no investor or other party purchasing, selling or otherwise transferring beneficial ownership of such Refunding Bonds will receive, hold or deliver any certificate. The City and the Registrar shall have no responsibility or liability for transfers of beneficial ownership interests in such Refunding Bonds. (d) Except as otherwise expressly provided in this Ordinance, the City and the Registrar will recognize the Securities Depository or its nominee as the Bondholder of Book Entry Bonds for all purposes, including receipt of payments, notices and votes, provided the Registrar may recognize votes by or on behalf of Beneficial Owners as if such votes were made by Bondholders of a related portion of the Refunding Bonds when such votes are received in compliance with an omnibus proxy of the Securities Depository or otherwise pursuant to the rules of the Securities Depository or the provisions of the Letter of Representations or other comparable evidence delivered to the Registrar by the Bondholders. (e) With respect to Book Entry Bonds, the Registrar shall be entitled to treat the Person in whose name such Refunding Bond is registered as the absolute owner of such Refunding Bond for all purposes of this Ordinance, except as otherwise expressly provided herein, and neither the City nor the Registrar shall have any responsibility or obligation to any Beneficial Owner of such Book Entry Bond, except as otherwise expressly provided in this Ordinance. Without limiting the immediately preceding sentence, neither the City nor the Registrar shall have any responsibility or obligation with respect to (i) the accuracy of the records of any Securities Depository or any other Person with respect to any ownership interest D:hCilesSOrdin ances~2003\D- 1622-03 .doc 5 Sponsor(s): Councilor Kevin Kirby in Book Entry Bonds, (ii) the delivery to any Person, other than a Bondholder, of any notice with respect to Book Entry Bonds, including any notice of redemption or refunding, (iii) the selection of the particular Refunding Bonds or portions thereof to be redeemed or refunded in the event of a partial redemption or refunding of part of the Refunding Bonds outstanding or (iv) the payment of any Person, other than a Bondholder, of any amount with respect to the principal of, redemption premium, if any, or interest on Book Entry Bonds. Section 4. Redemption of Refunding Bonds. (a) The Refunding Bonds may be made redeemable at the option of the City on at least thirty (30) days' notice, in whole or in part, in such order of maturity as the City shall determine and by lot within a maturity, on dates and with premiums not exceeding two percent (2%), if any, and other terms as determined by the Executive and the Fiscal Officer with the advice of the City's Financial Advisor, as evidenced by delivery of the executed initial issue of the Refunding Bonds to the Registrar for authentication. (b) If any Refunding Bond is issued as a term bond, the Paying Agent shall credit against the mandatory sinking fund requirement for the Refunding Bonds maturing as term bonds, and corresponding mandatory redemption obligation, in the order determined by the City, any Refunding Bonds maturing as term bonds which have previously been redeemed (otherwise than as a result of a previous mandatory redemption requirement) or delivered to the Registrar for cancellation or purchased for cancellation by the Paying Agent and not theretofore applied as a credit against any redemption obligation. Each Refunding Bond maturing as a term bond so delivered or canceled shall be credited by the Paying Agent at 100% of the principal amount thereof against the mandatory sinking fund obligation on such mandatory sinking fund date, and any excess of such amount shall be credited on future redemption obligations, and the principal amount of the Refunding Bonds to be redeemed by operation of the mandatory sinking fund requirement shall be accordingly reduced; provided, however, the Paying Agent shall credit only such Refunding Bonds maturing as term bonds to the extent received on or before forty-five (45) days preceding the applicable mandatory redemption date. (c) If fewer than all of the Refunding Bonds are called for redemption at one time, the Refunding Bonds shall be redeemed in such order of maturity as the City shall determine, and by lot within a maturity. Each Five Thousand Dollars ($5,000) principal amount shall be considered a separate bond for purposes of optional and mandatory redemption. If some Refunding Bonds are to be redeemed by optional redemption and mandatory sinking fund redemption on the same date, the Registrar shall select by lot the Refunding Bonds for optional redemption before selecting the Refunding Bonds by lot for the mandatory sinking fund redemption. (d) In either case, notice of such redemption shall be given at least thirty (30) days prior to the date fixed for redemption by mail unless the notice is waived by the registered owner of a Refunding Bond. Such notice shall be mailed to the address of the registered owners as shown on the registration records of the City as of the date which is forty-five (45) days prior to such redemption date. The notice shall specify the date and place of redemption and sufficient identification of the Refunding Bonds called for redemption. The place of redemption shall be determined by the City. Interest on the 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 D:\Files\Ordinances~2003\D- 1622-03 ,doc 6 Sponsor(s): Councilor Kevin Kirby payment of the redemption price, the Refunding Bonds so called for redemption shall be surrendered for cancellation. Section 5. Execution and Neeotiabilit~. (a) The Refunding Bonds shall be signed in the name of the City by the manual or facsimile signature of the Executive, and attested by the manual or facsimile signature of the Fiscal Officer, who also shall affix the seal of the City manually or shall have the seal imprinted or impressed thereon by facsimile or 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 Refunding Bonds. In case any officer whose signature or facsimile signature appears thereon shall cease to be such officer before the delivery of the Refunding Bonds, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery. (b) The Refunding Bonds shall also be authenticated by the manual signature of the Registrar, and no Refunding Bond shall be valid or become obligatory for any purpose until the certificate of authentication thereon has been so executed. (c) The 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. Section 6. Form of Bonds. The form and tenor of the Refunding Bonds shall be substantially as follows, all blanks to be filled in properly prior to delivery; UNITED STATES OF AMERICA STATE OF INDIANA COUNTY OF HAMILTON CITY OF CARMEL, INDIANA WATERWORKS REFUNDING REVENUE BOND OF 2003, SERIES A Interest Rate Maturity Date Original Date Authentication Date CUSIP REGISTERED OWNER: PRINCIPAL SUM: CEDE & Co. Dollars ($ ) The City of Carmel, in Hamilton County, State of Indiana (the "City"), 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 D:\Files\Ordinances~2003\D- 1622-03 .doc 7 Sponsor(s): Councilor Kevin Kirby 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, 2003, 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, 2003. Interest shall be calculated on the basis of a 360-day year comprised of twelve 30-day months. The principal of and premium of this bond is payable at the principal office of (the "Registrar" or "Paying Agent"), in the of , Indiana. All payments of interest on this bond shall be paid by check, mailed one business day prior to the interest payment date, or by wire transfer on such interest payment date to registered owners of $1,000,000 or more in aggregate principal amount of the bonds, upon written request, and to registered depositories, to the registered owner hereof as of the fifteenth day of the month preceding such interest payment date at the address as it appears on the registration books kept by the Registrar or at such other address as is provided to the Paying Agent in writing by the registered owner. All payments on the bond shall be made in any coin or currency of the United States of America, which on the dates of such payment, shall be legal tender for the payment of public and private debts. THE CITY SHALL NOT BE OBLIGATED TO PAY THIS BOND OR THE INTEREST HEREON EXCEPT FROM THE HEREINAFTER DESCRIBED SPECIAL FUND, AND NEITHER THIS BOND NOR THE ISSUE OF WHICH IT IS A PART SHALL IN ANY RESPECT CONSTITUTE A CORPORATE INDEBTEDNESS OF THE CITY WITHIN THE PROVISIONS AND LIMITATIONS OF THE CONSTITUTION OF THE STATE OF INDIANA. This bond is one of an authorized issue of bonds of the City of Carmel, of like date, tenor and effect, except as to rates of interest and dates of maturity; aggregating Million __ Hundred Thousand Dollars ($ ); numbered consecutively from 1 upward; issued for the purpose of refunding the 1993 Bonds, the costs of selling and issuing the bonds[,] [and] all other costs related to the refunding [and to pay the cost of the premium for the reserve account credit facility (the "Reserve Account Credit Facility" issued by ] (as defined in the hereinafter defined Ordinance). This bond is issued pursuant to an Ordinance adopted by the Common Council of said City (the "Council") on the __ day of entitled "AN ORDINANCE OF THE COMMON COUNCIL OF THE CITY OF CARMEL, INDIANA, CONCERNING THE REFUNDING BY THE CITY OF CARMEL, INDIANA, OF ITS WATERWORKS REVENUE BONDS OF 1993, SERIES B; AUTHORIZING THE ISSUANCE OF WATERWORKS REFUNDING REVENUE BONDS OF 2003, SERIES A FOR SUCH PURPOSE, PROVIDING FOR THE COLLECTION, SEGREGATION AND DISTRIBUTION OF THE REVENUES OF THE WATERWORKS AND THE SAFEGUARDING OF THE INTERESTS OF THE OWNERS OF THE WATERWORKS REFUNDING REVENUE BONDS OF 2003, SERIES A; OTHER MATTERS CONNECTED D:\Files\Ordinances~2003\D- 1622-03 .doc 8 Sponsor(s): Councilor Kevin Kirby THEREWITH; AND REPEALING ORDINANCES INCONSISTENT HEREWITH" (the "Ordinance"), and in accordance with the provisions of Indiana law, including without limitation I.C. 5-1-5, and I.C. 8-1.5 and other applicable law, (hereinafter collectively, the "Act"), the proceeds of which bonds are to be applied solely to the refunding and economic defeasance or legal defeasance, as the case may be, of the 1993 Bonds, including the incidental expenses incurred in connection therewith. 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 2002A Bonds and the 2002B Bonds (each as defined in the Ordinance), and any bonds hereafter issued on a parity therewith are payable solely from the waterworks Sinking Fund created by the 1993 Ordinance and continued by the Ordinance and the Parity Ordinance (as defined in the Ordinance)(the "Sinking Fund") 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 now owned or hereafter acquired by the City, except to the extent payable from the proceeds of the Bonds [and the Reserve Account Credit Facility]. Pursuant to the Ordinance and the Escrow Agreement defined therein, the City has set aside certain cash from proceeds of the bonds of this issue and funds on hand of the waterworks, in a Trust Account to provide payment of the principal of and interest and redemption premium, if any, on the 1993 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 2002A Bonds and the 2002B Bonds, to the extent necessary for that purpose, and covenants that it will cause to be fixed, maintained and collected such rates and charges for services rendered by the waterworks 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 further covenants that it will set aside and pay into the Sinking Fund monthly, as available, or more often if necessary, a sufficient amount of the Net Revenues of the works for 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 bonds and interest, (c) the principal of all bonds which by their terms are payable from the revenues of the waterworks, as such principal shall fall due, and (d) an additional amount as a margin of safety to create and maintain the debt service reserve required by the Ordinance. 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 D:\Files\OrdinancesX2003~D- 1622 -03.doc 9 Sponsor(s): Councilor Kevin Kirby obligations may hereafter be issued on parity with this bond, the maimer 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 May 1, 20__ are redeemable at the option of the City on May 1, 20__, and on any date thereafter, on thirty (30) days' notice, in whole or in part, in such order of maturity as the City shall determine and by lot within a maturity, at face value, together with the following premiums: _% if redeemed on May 1, 20_, or thereafter on or before April 30, 20~; _% if redeemed on May 1, 20__, or thereafter prior to maturity; plus in each case accrued interest to the date fixed for redemption. [The bonds maturing on May 1, are subject to mandatory sinking fund redemption prior to maturity, at a redemption price equal to the principal amount thereof plus accrued interest, on May 1 in the years and amounts set forth below: Year Amount *Final Maturity] If fewer than all of the bonds are called for redemption at one time, the bonds shall be redeemed in such order of maturity as the City shall determine and by lot within a maturity. Each Five Thousand Dollars ($5,000) principal mount shall be considered a separate bond for purposes of optional [and mandatory] redemption. Jif some bonds are to be redeemed by optional redemption and mandatory sinking fund redemption on the same date, the Registrar shall select by lot the bonds for optional redemption before selecting the bonds by lot for the mandatory sinking fund redemption.] Notice of such redemption shall be mailed to the address of the registered owner, as shown on the registration records of the City as of the date which is forty-five (45) days prior to such redemption date, 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 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. D:\Files\Ordinancesk2003\D- 1622 -03.doc 10 Sponsor(s): Councilor Kevin Kirby 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 its 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 its 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 transferees 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 proposes including, but not limited to, the purpose of receiving payment of, or on account of, the principal hereof, premium, if any, and interest due hereon. 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 1N THE ORDINANCE. The Ordinance may be amended without the consent of the owners of the bonds as provided in the Ordinance if the 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 on any maturity date are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof. 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 "Contract"), has been executed by the City, a copy of which is available from the City and the terms of which are incorporated therein by this reference. The Contract 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 Contract 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. D :\Files\Ordinanees~2003~D- 1622-03 .doc 11 Sponsor(s): Councilor Kevin Kirby 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. 1N 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 its 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 By: Mayor (SEAL) ATTEST: Clerk-Treasurer REGISTRAR'S CERTIFICATE OF AUTHENTICATION It is hereby certified that this bond is one of the bonds described in the within-mentioned Ordinance duly authenticated by the Registrar. as Registrar By: Authorized Representative The following abbreviations, when used in the inscription of the face of this bond, shall be construed as though 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. TRAN. D:~Files\Ordinances~2003\D- 1622-03 .doc 12 M1N. ACT Custodian (Cust.) Sponsor(s): Councilor Kevin Kirby (Minor) under Uniform Transfer to Minors Act of (State) Additional abbreviations may also be used although not in the above list. ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto (Please Print or Typewrite Name and Address and Social Security or Other Identifying Numbers) $ principal amount (must be a multiple of $5,000) 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 the registration thereof with full power of substitution in the premises. Dated: NOTICE: The Signature to this assignment must correspond with the name as it appears on the face of the within bond in every particular, without alteration or enlargement or any change whatsoever. Signature Guaranteed: NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution participating in a Securities Transfer Association recognized signature guarantee program. [LEGAL OPINION] [End of Refunding Bond Form] Section 7. Authorization for Preparation and Sale of the Refunding Bonds. (a) The Fiscal Officer is hereby authorized and directed to have the Refunding Bonds prepared, and the Executive and Fiscal Officer are hereby authorized and directed to execute and attest the Refunding Bonds in the form and manner provided herein. The Fiscal Officer is hereby authorized and directed to deliver the Refunding Bonds to City Securities Corporation (the "Underwriter") in accordance with the Purchase Contract (the "Purchase Contract") between the City and the Underwriter. The Fiscal Officer is hereby authorized to approve the form of any such Purchase Contract, and the Executive and the Fiscal Officer are hereby authorized to D:\Files\OrdinancesX2003~D- 1622-03 .doc 13 Sponsor(s): Councilor Kevin Kirby execute such Purchase Contract with terms consistent with this Ordinance, including a final principal amount, interest rate, maturity schedule, optional redemption features, and term bond mandatory redemptions, if any. (b) The Fiscal Officer is hereby authorized, upon consultation with the City's Financial Advisor, to contract for and obtain a policy of municipal bond insurance securing the Refunding Bonds, provided that such municipal and insurance policy generates a present value savings on the repayment of the Refunding Bonds which is greater than the premium required to obtain such municipal bond insurance policy. (c) The Fiscal Officer is hereby authorized to appoint a financial institution to serve as escrow trustee (the "Escrow Trustee") for the 1993 Bonds in accordance with the terms of the Escrow Agreement, to be executed between the City and the Escrow Trustee (the "Escrow Agreement"). The substantially final form of Escrow Agreement attached hereto is hereby approved by the Council, and the Executive and the Financial Officer are hereby authorized and directed to complete, execute and attest the same on behalf of the City so long as its provisions are consistent with this Ordinance and the Pumhase Contract. (d) The Refunding Bonds, when fully paid for and delivered to the Underwriter, shall be a binding special revenue obligation of the City, payable out of 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, to be set aside into the waterworks Sinking Fund created by the 1993 Ordinance. The proper officers of the City are hereby directed to sell the Refunding Bonds to the Underwriter, to draw all proper and necessary warrants, and to do whatever acts and things which may be necessary to carry out the provisions of this Ordinance. (e) Distribution of an Official Statement (preliminary and final) prepared by the City's Financial Advisor, on behalf of the City, is hereby approved and the Executive or the Fiscal Officer is authorized and directed to execute the final Official Statement on behalf of the City in a form consistent with this Ordinance and the Purchase Contract, if any. The Executive or Fiscal Officer is hereby authorized to designate the Official Statement as "nearly final" for purposes of Rule 15c2-12 promulgated by the Securities and Exchange Commission. Section 8. Refunding of the 1993 Bonds and Costs of Issuance. (a) Concurrently with the delivery of the Refunding Bonds, the Fiscal Officer shall deposit certain cash from the proceeds of the Refunding Bonds and cash on hand as set forth in the Escrow Agreement, to refund and legally defease the 1993 Bonds all as set forth in the Escrow Agreement (b) The Fiscal Officer shall obtain a verification of an independent certified public accountant as to the sufficiency of the funds deposited in the Trust Account under the Escrow Agreement to accomplish said refunding of the Refunded Bonds. (c) Costs of issuance of the Refunding Bonds not otherwise paid shall be paid from the remaining proceeds by the Fiscal Officer. When all the costs of issuance of the Refunding Bonds have been paid, the Fiscal Officer shall then transfer any amount then remaining from the proceeds of the Refunding Bonds to the Sinking Fund herein created. D:\Files\Ordinances~2003\D- 1622-03.doc 14 Sponsor(s): Councilor Kevin Kirby Section 9. Accrued Interest. The accrued interest received at the time of delivery of the Refunding Bonds, if any, shall be deposited in the waterworks Sinking Fund created by the 1993 Ordinance, to be credited to the Principal and Interest Account of the Sinking Fund. Section 10. 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. There shall be prepared and furnished, upon written request, to the Underwriter and to any owner of at least $25,000 in principal amount of the Refunding Bonds, an annual report setting out complete operating, income and financial statements of the utility, in reasonable detail, covering the preceding fiscal year. Such report shall be prepared by the Fiscal Officer and furnished within one hundred twenty (120) days after the close of each calendar year. There shall also be furnished, upon written request, to the Underwriter or Purchaser and to any owner of at least $25,000 in principal amount of the Refunding Bonds, within thirty (30) days of their receipt by the City, the audited financial statements of the waterworks prepared by the Indiana State Board of Accounts. Copies of all such statements and reports shall be kept on file in the office of the Fiscal Officer. Any owner of at least $25,000 in principal amount of the Refunding Bonds shall have the right at all reasonable times to inspect the waterworks system and the records, accounts and data of the City. Section 11. Pledge of ]Net Revenues. The interest on and the principal of the Refunding Bonds issued pursuant to the provisions of this Ordinance, the Parity Bonds, and any bonds hereafter issued on a parity therewith, shall constitute a first charge on all the Net Revenues, and such Net Revenues are hereby irrevocably pledged to the payment of the interest on and principal of such Refunding Bonds, to the extent necessary for that purpose. Section 12. Revenue Fund. There is hereby continued a fund of the waterworks designated as the Revenue Fund (the "Revenue Fund"), into which there shall be deposited upon receipt all revenue of the works for application as set forth below. Section 13. Operation and Maintenance Fund. There is hereby continued an operating fund of the waterworks designated as the Operation and Maintenance Fund (the "Operation and Maintenance Fund"). 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 to meet 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 works on a day-to-day basis, but none of the moneys in the Operation and Maintenance Fund shall be used for depreciation, replacements, improvements, extensions or additions. Any balance in Operation and Maintenance 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 works. Section 14. Sinking Fund. There is hereby continued a fund of the waterworks designated as the Sinking Fund (the "Sinking Fund"), to be used for the payment of the principal D:\Files\OrdinancesX2003~D- 1622-03 ,doc 15 Sponsor(s): Councilor Kevin Kirby of and interest on bonds which by their terms are payable from the Net Revenues, and the payment of any fiscal agency charges in connection with such payment. The Sinking Fund is divided into two accounts designated as the Principal and Interest Account and the Debt Service Reserve Account, which are hereby continued and pledged for the purposes set forth below. (a) Principal and Interest Account. Any moneys heretofore accumulated to pay principal and interest for the 1993 Bonds shall be credited to and become a part of the Trust Account under the Escrow Agreement and shall be applied on the first payments made from the Trust Account. There shall be transferred, on the last day of each calendar month, from the Revenue Fund and credited to the 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 bonds 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 bonds as the same become payable. The City shall, from the sums deposited in the Sinking Fund and credited to the 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 the due dates thereof together with the amount of bank fiscal agency charges. (b) Debt Service Reserve Account. (1) There shall be transferred, on the last day of each calendar month, after making any required transfer to the Principal and Interest Account, from the Revenue Fund and credited to the Debt Service Reserve Account an amount to constitute an appropriate reserve to facilitate the marketing of the Refunding Bonds, which monthly deposits shall be in an amount sufficient to build the balance in the Debt Service Reserve Account to an amount equal to such required reserve within no more than five (5) years on level monthly basis (after accounting for earnings thereon), which reserve amount shall not exceed the lesser of ten percent (10%) of the proceeds of the Refunding Bonds, the maximum annual debt service on the Refunding Bonds, or 125% of the average annual debt service on the Refunding Bonds. (2) After the issuance of the Refunding Bonds, the City shall maintain the balance in the Debt Service Reserve Account in an amount equal to the Reserve Requirement, subject to the provisions of this Ordinance or any ordinance authorizing parity bonds which allows the Reserve Requirement to be accumulated over time. For these purposes, "Reserve Requirement" means the lesser often percent (10%) of the proceeds of the Refunding Bonds and any bonds ranking on a parity therewith (including the Parity Bonds), the maximum annual debt service on the Refunding Bonds and such parity bonds, or 125% of the average annual debt service on the Refunding Bonds and such parity bonds. All money in the Debt Service Reserve Account shall be used and withdrawn solely for the purpose of making deposits into the Principal and Interest Account, in the event of and to the extent of any deficiency in the Principal and Interest Account with respect to the payments then due on the Refunding Bonds and any such parity bonds, or to make the final payments on such bonds when the 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 Debt Service Reserve Account in excess of the Reserve Requirement shall be withdrawn from time to time, and at least as frequently as D:\Files\Ordinances~2003\D- 1622-03 .doc 16 Sponsor(s): Councilor Kevin Kirby annually, and deposited in the Principal and Interest Account. Any deficiency in the balance required to be held in the Debt Service Reserve Account shall be promptly made up from the next available Net Revenues after credits to the Principal and Interest Account. (3) Notwithstanding the foregoing, after obtaining the necessary approval, if any, of the municipal bond insurers of the Parity Bonds, the Fiscal Officer, 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 Debt Service Reserve Account equal to the Reserve Requirement by depositing a Reserve Fund Credit Facility in the Debt Service Reserve Account, provided that such deposit does not adversely affect any then existing rating on the Refunding Bonds or the Parity Bonds. 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 15. Improvement Fund. After meeting the requirements of the Operation and Maintenance Fund and the Sinking Fund, any excess revenues may be transferred from the Revenue Fund and credited to the special waterworks fund, to be expended in making good depreciation in the waterworks and new construction, hereby continued and designated as the "Improvement Fund" (the "Improvement Fund"). Said Fund shall be used for replacements, improvements, extensions and additions to the waterworks. Moneys in the Improvement Fund shall be transferred to the Sinking Fund if necessary to prevent a default in the payment of principal of and interest on the then outstanding bonds of the waterworks, or may be transferred to the Operation and Maintenance Fund to meet unforeseen contingencies in the operation, repair and maintenance of the waterworks. Section 16. 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 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. Section 17. Defeasance of the Refunding Bonds. If, when the 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 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 Refunding Bonds or a portion thereof then outstanding shall be paid; or (i) sufficient moneys, or (ii) 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, 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 D:\Files\OrdinancesX2003~D- 1622-03 ,doc 17 Sponsor(s): Councilor Kevin Kirby 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 18. Rate Covenant. The City covenants and agrees that it will establish and maintain just and equitable rates or 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 said waterworks by or through any part of the waterworks of the City, or that in any way uses or is served by such waterworks; that such rates or charges shall be 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 by the Act and this Ordinance. Such rates or 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, repair and maintenance of the waterworks and the requirements of the Sinking Fund. The rates or charges so established shall apply to any and all use of such waterworks by and service rendered to the City and all departments thereof, and shall be paid by the City or the various departments thereof as the charges accrue. Section 19. Additional Bonds. The City reserves the right to authorize and issue additional bonds payable out of the Net Revenues ranking on a parity with the Refunding Bonds for the purpose of financing the cost of future additions, extensions and improvements to the waterworks, or to provide for a complete or partial refunding of obligations, subject to the following conditions precedent: (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 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 Refunding Bonds shall be not less than one hundred t~venty-five percent (125%) of the armual principal and interest requirements of the then outstanding parity bonds (including the Refunding Bonds and the Parity Bonds) and the additional parity bonds proposed to be issued for each respective year during the term of such outstanding parity bonds and the proposed additional bonds; or, prior to the issuance of the additional 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 such annual principal and interest requirements for each respective year during the term of such outstanding parity bonds and the proposed additional bonds. For purposes of this subsection, the records of the waterworks shall be analyzed and all showings shall be prepared by a certified public accountant employed by the City for that purpose. D;\Files\Ordinances~2003\D- 1622-03 .doc 18 Sponsor(s): Councilor Kevin Kirby (d) The principal of said additional 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 20. 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 Refunding Bonds, it is hereby specifically provided as follows: (a) So long as any of the Refunding Bonds are outstanding, 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 Refunding Bonds are outstanding, the City shall maintain insurance on the insurable parts of the waterworks system, of a kind and in an amount such as is usually carried by private entities 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. All insurance proceeds shall (i) be used either in replacing or restoring the property destroyed or damaged, or (ii) shall be deposited in the Sinking Fund. (c) So long as any of the Refunding Bonds are outstanding, the City shall not mortgage, pledge or otherwise encumber the property or plant of its waterworks system, or any part thereof, and shall not sell, lease or otherwise dispose of any part of the same, excepting only, such machinery, equipment or other property as may be replaced, or shall no longer be necessary for use in connection with said waterworks. (d) Except as otherwise specifically provided in Section 19 of this Ordinance, so long as any of the Refunding Bonds are outstanding, no additional bonds or other obligations pledging any portion of the revenues of the waterworks system shall be authorized, issued or executed by the City, except such as shall be made junior and subordinate in all respects to the Refunding Bonds, unless all of the Refunding Bonds are redeemed or defeased 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 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 Refunding Bonds and so long as any of the principal thereof or interest or premium, if any, thereon remains unpaid, except as expressly provided herein, 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 Refunding Bonds, nor shall the Council or any other body of the City adopt any law, ordinance or resolution in any way adversely affecting the rights of the bondholders. Except in the case of changes described in Section 20(a) through (d) hereof, this Ordinance may be amended, however, without the consent of bond owners, if the Council determines, in its sole discretion, that such amendment would not adversely affect the owners of the Refunding Bonds. D:\Files\OrdinancesX2003\D- 1622-03 .doc 19 Sponsor(s): Councilor Kevin Kirby (f) The provisions of this Ordinance shall be construed to create a trust in the proceeds of the sale of the Refunding Bonds herein authorized for the uses and purposes herein set forth, and the owners of the Refunding Bonds shall retain a lien on such proceeds until the same are applied in accordance with the provisions of this Ordinance and of 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 set forth in this Ordinance. The owners of the Refunding Bonds shall have all the fights, 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 waterworks 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 Refunding Bonds. (g) None of the provisions of this Ordinance shall be construed as requiting the expenditure of any funds of the City derived from any soumes other than the proceeds of the Refunding Bonds and the operation of the waterworks system. Section. 21. Amendments with Consent of Bondholders. (a) Subject to the terms and provisions contained in this section, and Sections 20 and 22 hereof, the owners of not less than sixty-six and two-thirds percent (66 2/3 %) in aggregate principal amount of the Refunding Bonds issued pursuant to this Ordinance and 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 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 the terms or provisions contained in this Ordinance, or in any supplemental ordinance; provided, however, that nothing herein contained shall, without the consent of the holder of each Refunding Bond so affected, permit or be construed as permitting: (i) An extension of the maturity of the principal of or interest or premium, if any, on, or any mandatory sinking fund redemption date for, any Refunding Bond issued pursuant to this Ordinance, or on advancement of the earliest redemption date on any Refunding Bond~ or (ii) A reduction in the principal amount of any Refunding Bond or the redemption premium or the rate of interest thereon; or (iii) 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 (iv) A preference or priority of any Refunding Bond or Refunding Bonds issued pursuant to this Ordinance over any other Refunding Bond or Refunding Bonds issued pursuant to the provisions of this Ordinance; or (v) A reduction in the aggregate principal amount of the Refunding Bonds required for consent to such supplemental ordinance; or D:\Files\Ordinances~2003\D- 1622 -03.doc 20 Sponsor(s): Councilor Kevin Kirby (vi) A reduction in the Reserve Requirement. (b) If the City shall desire to obtain any such consent, it shall cause the Registrar to mail a notice, postage prepaid, to the addresses appearing on the Registration Record. Such notice shall briefly set forth the nature of the proposed supplemental ordinance and shall state that a copy thereof is on file at the office of the Registrar for inspection by all owners of the Refunding Bonds. The Registrar shall not, however, be subject to any liability to any owners of the Refunding Bonds by reason of its failure to mail such notice, and any such failure shall not affect the validity of such supplemental ordinance when consented to and approved as herein provided. (c) Whenever at any time within one year after the date of the mailing of such notice, the City shall receive any instrument or instruments purporting to be executed by the owners of the Refunding Bonds of not less than sixty-six and two-thirds per cent (66-2/3%) in aggregate principal amount of the Refunding Bonds then outstanding, which instrument or instruments shall refer to the proposed supplemental ordinance described in such notice, and shall specifically consent to and approve the adoption thereof in substantially the form of the copy thereof referred to in such notice as on file with the Registrar, thereupon, but not otherwise, the City may adopt such supplemental ordinance in substantially such form, without liability or responsibility to any owners of the Refunding Bonds, whether or not such owners shall have consented thereto. (d) No owner of any Refunding Bond 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 Council 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 this 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 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. (e) Notwithstanding anything contained in the foregoing provisions of this Ordinance, the rights and obligations of the City and of the owners of the Refunding Bonds, and the terms and provisions of the Refunding Bonds and this Ordinance, or any supplemental ordinance, may be modified or amended in any respect with the consent of the City and the consent of the owners of all the Refunding Bonds then outstanding. Section 22. Amendments Without Consent of Bondholders. The Council may, from time to time and at any time, and without notice to or consent of the owners of the Refunding Bonds, adopt such ordinances supplemental hereto as shall not be inconsistent with the terms and provisions hereof (which supplemental ordinances shall thereafter form a part hereof): (a) To cure any ambiguity or formal defect or omission in this Ordinance or in any supplemental ordinance; D:\Files\Ordinances~2003~D- 1622-03.doc 21 Sponsor(s): Councilor Kevin Kirby (b) To grant to or confer upon the owners of the Refunding Bonds any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the owners of the Refunding Bonds; (c) To procure a rating on the Refunding Bonds from a nationally recognized securities rating agency designated in such supplemental ordinance, if such supplemental ordinance will not adversely affect the owners of the Refunding Bonds; (d) To obtain or maintain bond insurance with respect to the Refunding Bonds; (e) To provide for the refunding or advance refunding of the Refunding Bonds; (f) To provide for the issuance of additional bonds as provided in Section 19 hereof; or (g) To make any other change which, in the determination of the Council, in its sole discretion, is not to the prejudice of the owners of the Refunding Bonds. Section. 23. Tax Covenants. In order to preserve the exclusion of interest on the 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 Refunding Bonds (the "Code") and as an inducement to purchasers of the 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 Refunding Bonds or property financed by the Refunding Bond proceeds other than as a member of the general public. No person or entity other than the City or another state or local governmental unit will own property financed by 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 Refunding Bonds is (under the terms of the 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 Refunding Bond proceeds will be loaned to any person or entity other than another state or local governmental unit. No 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 Refunding Bond proceeds. (d) The City will not take any action nor fail to take any action with respect to the Refunding Bonds that would result in the loss of the exclusion from gross income for federal tax D:\Files\Ordinances~2003~D- 1622-03 .doc 22 Sponsor(s): Councilor Kevin Kirby purposes on the 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 not be an event of default under this Ordinance if the interest on any 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 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 Refunding Bonds. Section 24. 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 Refunding 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 25. Continuing Disclosure. If necessary in order for the purchaser of the Refunding Bonds to comply with Rule 15c2-12 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Rule"), the Executive is hereby authorized to execute and deliver, in the name and on behalf of the City, (i) an agreement by the City to comply with the requirements for a continuing disclosure undertaking of the City pursuant to subsection (b)(5) or (d)(2) of the Rule, and (ii) amendments to such agreement from time to time in accordance with the terms of such agreement (the agreement and any amendments thereto are collectively referred to herein as the "Continuing Disclosure Agreement"). The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. The remedies for any failure of the City to comply with and carry out the provisions of the Continuing Disclosure Agreement shall be as set forth therein. Section 26. Non-Business Days. If the date of making any payment or the last date for performance of any act or the exercising of any right, as provided in this Ordinance, shall be a legal holiday or a day on which banking institutions in the City or the jurisdiction in which the Registrar or Paying Agent is located are typically closed, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are typically closed, with the same force and effect as if done on the nominal date provided in this Ordinance, and no interest shall accrue for the period after such nominal date. Section 27. Conflicting Ordinances. The Council hereby finds and determines that the adoption of this Ordinance and the issuance of the Refunding Bonds is in compliance with the Parity Ordinance. The Parity Ordinance shall remain in full force and effect, except as modified herein. The Council determines that to the extent this Ordinance modifies or amends D :\Files\Ordinances~2003\D- 1622-03 .doc 23 Sponsor(s): Councilor Kevin Kirby the Parity Ordinance, there is no adverse affect to the holders of the Parity Bonds. All ordinances and resolutions and parts thereof in conflict are to the extent of such conflict hereby repealed. None of the provisions of this Ordinance shall be construed to adversely affect the rights of the owners of the Parity Bonds. Section 28. Severabilitw. 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 29. 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 30. Interpretation. Unless the context or laws clearly require otherwise, references herein to statutes or other laws include the same as modified, supplemented or superseded from time to time. Section 31. Effective Date. This Ordinance shall be in full force and effect from and after its passage and signing by the Mayor. [REMAINDER OF PAGE LEFT BLANK INTENTIONALLY] D:\Files\Ordinances~2003~D-1622-03 .doc 24 Sponsor(s): Councilor Kevin Kirby PASSED by the Common Council of the City of Carmel, Indiana this /'Tq/~ay of )r'yLO.~C-~q ,2003, by a vote of ~ ayes and (J nays. COMMON COUNCIL FOR THE CITY OF CARMEL r IN. 1~. Rundle . ' AT~,~) /~ ~ Wayne Wilson Diana L. Cordray,~asurer ereg,ent~d by me to the Mayor of the City of Carmel, Indiana, this~ day of~ ~ 2003, at ~9~ p.m. ~I~AM~asurer 2003, atAplg;~e~d bpY.mm~, May°r °f the City °f Carm~iTid~a~ this ~- day °f ~ ',~ Jan~13rmnard, Mayor Diana L. Cordray, IAMC, Cle~5~asurer Prepared by: Robert D. Swhier//Ty H. Conner; Bose McKinney & Evans LLP; 2700 First Indiana Plaza; 135 North Pennsylvania Street; Indianapolis, 1N 46204; 317-684-5000 D:\Files\Ordinances~2003~D- 1622-03.doc 25