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HomeMy WebLinkAboutD-1735-04 Utility $7.5m BANSponsor: Councilor Kevin Kirby ORDINANCE NO. D-1735-04 AN ORDINANCE OF THE COMMON COUNCIL OF THE CITY OF CARMEL, INDIANA CONCERNING THE CONSTRUCTION OF ADDITIONS AND IMPROVEMENTS TO THE WATERWORKS OF THE CITY OF CARMEL, INDIANA; AUTHORIZING THE ISSUANCE OF REVENUE BONDS FOR SUCH PURPOSE; ADDRESSING 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 said works pursuant to I.C. 8-1.5, as amended, and other applicable laws (together, the "Act"); and WHEREAS, the Common Council of the City (the "Council") now finds that certain improvements and extensions to said works are necessary; and that plans, specifications and estimates have been prepared for and on behalf of the City for the construction of said improvements and extensions (as more fully set forth in Exhibit A attached hereto) (the "Project"); and WHEREAS, the Council finds that there are not available sufficient funds of the works to expend on the Project, and that revenue bonds shall be issued to pay for costs of the Project, including incidental expenses; and WHEREAS, the Council finds that there are now outstanding bonds issued on account of the works and payable out of the revenues therefrom designated (a) "City of Cannel, Indiana Waterworks Revenue Bonds of 2002, Series A," dated April 19, 2002, now outstanding in the aggregate principal amount of $3,960,000 and maturing annually over a period ending May 1, 2020 (the "2002 Series A Bonds") which were authorized by and issued pursuant to Ordinance No. D-1550-01, adopted by the Council on December 17, 2001 (the "2002A Bond Ordinance"), (b) "City of Carmel, Indiana Waterworks Revenue Bonds of 2002, Series B," dated December 3, 2002, now outstanding in the aggregate principal amount of $5,310,000 and maturing annually over a period ending May 1, 2023 (the "2002 Series B Bonds") which were authorized by and issued pursuant to Ordinance No. D-1567-02, adopted by the Council on May 20, 2002 (the "2002B Bond Ordinance"), and (c) "City of Carmel, Indiana Waterworks Refunding Revenue Bonds of 2003, Series A," dated April 2, 2003, now outstanding in the aggregate principal amount of $3,665,000 and maturing annually over a period ending May I, 2013 (the "2003 Bonds"), which were authorized by and issued pursuant to Ordinance No. D-1622-03, adopted by the Council on March 17, 2003 (the "2003 Bond Ordinance")(where appropriate, (i) the 2002 Series A Bonds, the 2002 Series B Bonds and the 2003 Bonds collectively referred to as the "Parity Bonds" and (ii) the 2002A Bond Ordinance, the 2002B Bond Ordinance and the 2003 Bond Ordinance collectively referred to as the "Parity Ordinances"); and WHEREAS, the Parity Bonds constitute a first charge upon the Net Revenues (as hereinafter defined); and WHEREAS, the Parity Ordinances provide that the City may authorize and issue additional bonds payable out of the Net Revenues ranking on a parity with the Parity Bonds for the purpose of financing the cost of future additions, extensions and improvements to the works, or to refund obligations, subject to certain conditions in the Parity Ordinances; and WHEREAS, the conditions precedent to the issuance of additional parity bonds set forth in the Parity Ordinances, as described above, will be satisfied (such additional parity bonds being the hereafter defined 2004 Project Bonds); and WHEREAS, the Council now finds that it may be necessary to obtain interim financing by the issuance and sale of bond anticipation notes ("BANs") and it desires to authorize the issuance of such notes hereunder if necessary; and WHEREAS, Section 1.150-2 of the Treasury Regulations on Income Tax (the "Reimbursement Regulations") specifies conditions under which a reimbursement allocation may be treated as an expenditure of bond proceeds, and the City intends by this ordinance to qualify amounts advanced by the City to the Project for reimbursement from proceeds of the BANS or the 2004 Project Bonds in accordance with the requirements of the Reimbursement Regulations; WHEREAS, the Council now finds that all conditions precedent to the adoption of an ordinance authorizing the issuance of revenue bonds and bond anticipation notes have been complied with in accordance with the applicable provisions of the Act. NOW, THEREFORE, BE IT ORDAINED by the Common Council of the City of Carmel, Indiana, as follows: SECTION 1. Proiect. The City shall proceed with the Project for the construction and acquisitions of said improvements and extensions. The actions of the Board of Public Works of the City taken in connection with the Project are hereby approved, ratified, and confirmed. The Project shall be constructed pursuant to and in accordance with the Act. The Project shall not be affected by the refunding of any BANs which may be issued pursuant to this Ordinance and any other interim borrowing related to the Project, and the bonds herein authorized shall be issued pursuant to and in accordance with the provisions of the Act. The terms "works" and "utility" and other like terms where used in this Ordinance shall be construed to mean and include all structures and property of the City's waterworks utility. 907785 Page 2 SECTION 2. Authorization of Obligations. (a) The City shall issue its "City of Carmel, Indiana Waterworks Revenue Bonds of 2004" [with the year and any series or other references added, revised or removed as appropriate] (the "2004 Project Bonds"), in one or more series, in an original principal amount not to exceed Seven Million Five Hundred Thousand Dollars ($7,500,000), as negotiable, fully registered bonds, for the purpose of procuring funds to be applied to the costs of the Project, including without limitation reimbursement of preliminary expenses related thereto and all incidental expenses incurred in connection therewith (all of which are deemed to be a part of the Project), and the costs of selling and issuing the 2004 Project Bonds. The 2004 Project Bonds shall rank on a parity for all purposes with the Parity Bonds. (b) The 2004 Project Bonds shall be issued in denominations of Five Thousand Dollars ($5,000) or any integral multiple thereof, numbered consecutively from I upward, and dated as of the first day of the month in which they are sold or the date of delivery, as evidenced by the execution thereof. The 2004 Project Bonds shall bear interest at a rate or rates not exceeding seven percent (7%) per armum (the exact rate or rates to be determined by bidding or, if applicable, negotiations), and interest shall be payable semiannually on May 1 and November 1 in each year, beginning no later than the second May 1 following their issuance. Interest on the 2004 Project Bonds shall be calculated according to a 360-day calendar year containing twelve 30-day months. The 2004 Project Bonds shall mature annually on May 1 of each year thereafter over a period ending not later than May 1 of the twenty-fourth (24th) year following their issuance and in such amounts which will achieve as level debt service as practicable (either when determined solely based on the debt service of the 2004 Project Bonds or based on the combined debt service of the 2004 Project Bonds and the Parity Bonds) with authorized denominations, finally determined by the Mayor of the City (the "Executive") and the Clerk-Treasurer of the City (the "Fiscal Officer") as evidenced by delivery of the executed initial issue of the 2004 Project Bonds to the Registrar for authentication. (c) All or a portion of the 2004 Project 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 the 2004 Project Bonds, relative to the form of the 2004 Project Bonds contained in this Ordinance, to reflect any mandatory sinking fund redemption terms. 907785 Page 3 (d) The City has the authority to elect to issue its bond anticipation note or notes ("BANs") to (i) the Indiana Bond Bank pursuant to a Purchase Agreement ("Purchase Agreement"); or (ii) a purchaser pursuant to Indiana Code 5-1-11 or as other permitted by law and approved by the Executive and Fiscal Officer. The Council hereby authorizes the issuance and execution of the BAN or BANs, if necessary, in lieu of initially issuing 2004 Project Bonds to provide interim construction financing for the Project until permanent financing becomes available. If so determined by the Executive and Fiscal Officer, the City shall issue its BANs for the purpose of procuring interim financing to apply to the cost of the Project. (e) The BAN or BANs shall be issued in an aggregate amount not exceeding Seven Million Dollars ($7,000,000) and shall be designated "City of Carmel, Indiana Bond Anticipation Note of 200 "[with the year and any series or other references added, revised or removed as appropriate]. Any-such BAN or BANS shall have a maturity not to exceeding one (1) year and shall be dated the first day of the month in which issued or sold or the date of delivery as determined by the Executive and Fiscal Officer with the advice of the City's financial adviser. Any such BAN or BANs shall pay interest semiannually on May 1 and November 1 in each year, beginning no later than either the next May 1 and November 1 following their issuance until maturity. BAN interest may be paid as capitalized interest and, after provision for payment of the Parity Bonds, from the Net Revenues of the utility on a subordinate basis. BAN interest shall be calculated according to a 360-day calendar year containing twelve 30-day months, or based on an actual days basis using a 365-day year, as determined by the Executive and Fiscal Officer with the advice of the City's financial adviser. Any such BAN or BANs shall bear interest at a rate or rates not exceeding seven percent (7%) per annum, or bear interest at a variable rate determined by reference to any available published index as selected by the Executive or Fiscal Officer prior to their issuance, and may be sold at a discount not to exceed one percent (1%). The BANs herein authorized are payable from the proceeds of the 2004 Project Bonds and other legally available funds of the utility. Any such BAN or BANs shall be subject to early redemption on or after any date selected by the Executive or Fiscal Officer prior to their issuance, upon seven (7) days notice to the owner of such BAN, without a premium. The BANs may be issued in one or more series of BANs, or the City may receive payment on the BANs in installments, as determined by the Executive and Fiscal Officer with the advice of the City's financial advisor prior to advertising or negotiating a sale of the BANs. The BANs shall be in a customary form as approved by the Executive and Fiscal Officer. (f) It shall not be necessary for the City to repeat the procedures for the issuance of its 2004 Project Bonds; the procedures followed before the issuance of the BAN or BANs are for all purposes sufficient to authorize the issuance of the 2004 Project Bonds and the use of the proceeds to repay the BAN or BANs. The City shall issue the 2004 Project Bonds described and authorized in this Ordinance to discharge its obligations under the BAN and BANs at or before the maturity date of the BAN or BANs. SECTION 3. Pledge of Net Revenuesl Payment of Principal and Interest. The 2004 Project Bonds, and any bonds ranking on a parity therewith, including the Parity 15onds, as to principal, premium, if any, and interest, shall be payable solely from and are hereby secured by an irrevocable pledge of and shall constitute a charge upon all the net revenues (defined as gross 907785 Page 4 revenues of the works after deduction only for the payment of the reasonable expenses of operation, repair and maintenance) of the works (the "Net Revenues"). The City shall not be obligated to pay the 2004 Project Bonds, any BANs or the interest thereon, except from the Net Revenues, and the 2004 Project Bonds and any BANs shall not constitute an indebtedness of the City within the meaning of the provisions and limitations of the constitution of the State of Indiana. All payments of interest on the 2004 Project Bonds shall be paid by check mailed one business day prior to the interest payment date to the registered owners thereof as of the fifteenth (15th) day of the month preceding the interest payment date (the "Record Date") at the addresses as they appear on the registration and transfer books of the City kept for that purpose by the Registrar (the "Registration Record") or at such other address as is provided to the Paying Agent in writing by such registered owner. Each registered owner of $1,000,000 or more in principal amount of the 2004 Project Bonds shall be entitled to receive interest payments by wire transfer by providing written wire instructions to the Paying Agent before the Record Date for any payment. All principal payments and premium payments, if any, on the 2004 Project Bonds shall be made upon surrender thereof at the principal office of the Paying Agent, in any U.S. coin or currency which on the date of such payment shall be legal tender for the payment of public and private debts, or in the case of a registered owner of $1,000,000 or more in principal amount of the 2004 Project Bonds, by wire transfer on the due date upon written direction of such owner provided at least fifteen (15) days prior to the maturity date or redemption date. Interest on 2004 Project Bonds shall be payable from the interest payment date to which interest has been paid next preceding the authentication date thereof unless such 2004 Project Bonds are authenticated after the Record Date for 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 authenticated on or before the Record Date for 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. Transfer and Exchange of Bonds and BANs. Each 2004 Project Bond or BAN shall be transferable or exchangeable only upon the Registration Record, by the registered owner thereof in writing, or by the registered owner's attorney duly authorized in writing, upon surrender of such 2004 Project Bond or BAN, together with a written instrument of transfer or exchange satisfactory to the Registrar duly executed by the registered owner or such attorney, and thereupon a new fully registered 2004 Project Bond or Bonds, or BAN or BANs, in the same aggregate principal amount, and of the same maturity, shall be executed and delivered in the names 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 and the Paying Agent may treat and consider the persons in whose names such 2004 Project Bonds or BANs are registered as the absolute owners thereof for all purposes including for the purpose of receiving payment of, or on account of, the principal thereof and interest and premium, if any, due thereon. 907785 Page 5 In the event any 2004 Project Bond or BAN is mutilated, lost, stolen or destroyed, the City may execute and the Registrar may authenticate a new bond of like date, maturity and denomination as that mutilated, lost, stolen or destroyed, which new bond shall be marked in a manner to distinguish it from the 2004 Project Bond or BAN for which it was issued, provided that, in the case of any mutilated 2004 Project Bond or BAN, such mutilated bond shall first be surrendered to the Registrar, and in the case of any lost, stolen or destroyed bond there shall be first famished to the Registrar evidence of such loss, theft or destruction satisfactory to the Fiscal Officer and the Registrar, together with indemnity satisfactory to them. In the event any such 2004 Project Bond or BAN shall have matured, instead of issuing a duplicate bond, the City and the Registrar may, upon receiving indemnity satisfactory to them, pay the same without surrender thereof. The City and the Registrar may charge the owner of such 2004 Project Bond or BAN with their reasonable fees and expenses in this connection. Any 2004 Project Bond or BAN issued pursuant to this paragraph shall be deemed an original, substitute contractual obligation of the City, whether or not the lost, stolen or destroyed 2004 Project Bond or BAN shall be found at any time, and shall be entitled to all the benefits of this Ordinance, equally and proportionately with any and all other 2004 Project Bond or BAN issued hereunder. SECTION 5. Registrar and Pavin~, A~ent. The Fiscal Officer is hereby authorized to serve as, or to appoint a qualified financial institution to serve as, Registrar and Paying Agent for the 2004 Project Bonds and any BANs (together with any successor, the "Registrar" or "Paying Agent"). The Registrar is hereby charged with the responsibility of authenticating the 2004 Project Bonds and any BANs, and shall keep and maintain the Registration Record at its office. The Fiscal Officer is hereby authorized to enter into such agreements or understandings with any such institution 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 and the institution may charge for the services its 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 2004 Project Bonds and any BANs as fiscal agency charges. The Registrar and Paying Agent may at any time resign as Registrar and Paying Agent by giving thirty (30) days written notice to the City and by first-class mail to each registered owner of the 2004 Project Bonds and any BANs then outstanding, and such resignation will take effect at the end of such thirty (30) days or upon the earlier appointment of a successor Registrar and Paying Agent by the City. Such notice to the City may be served personally or sent by first-class or 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 2004 Project Bonds and any BANs then outstanding of the removal of the Registrar and Paying Agent. Notices to the registered owners of the 2004 Project Bonds and any BANs 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 Record. Any predecessor Registrar and Paying Agent shall deliver all the 2004 Project Bonds and any BANs, cash and investments related thereto in its possession and the Registration Record to the successor Registrar and Paying Agent. SECTION 6. Terms of Redemption. The 2004 Project Bonds may be made redeemable 9077ss Page 6 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 Executive and Fiscal Officer with the advice of the City's financial advisor, as evidenced by delivery of the executed initial issue of the 2004 Project Bonds to the Registrar for authentication. Notice of redemption shall be mailed by first-class mail to the address of each registered owner of a 2004 Project Bond to be redeemed as shown on the Registration Record not more than sixty (60) days and not less than thirty (30) days prior to the date fixed for redemption except to the extent such redemption notice is waived by owners of the 2004 Project Bonds redeemed, provided, however, that failure to give such notice by mailing, or any defect therein, with respect to any 2004 Project Bond shall not affect the validity of any proceedings for the redemption of any other 2004 Project Bonds. The notice shall specify the date and place of redemption, the redemption price and the CUSIP numbers of the 2004 Project Bonds called for redemption. The place of redemption may be determined by the City. Interest on the 2004 Project 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, and thereafter, such 2004 Project Bonds shall no longer be protected by this Ordinance and shall not be deemed to be outstanding hereunder, and the holders thereof shall have the right only to receive the redemption price. All 2004 Project Bonds which have been redeemed shall be canceled and shall not be reissued; provided, however, that one or more new registered bonds shall be issued for the unredeemed portion of any 2004 Project Bond without charge to the holder thereof. No later than the date fixed for redemption, funds shall be deposited with the Paying Agent or another paying agent to pay, and such agent is hereby authorized and directed to apply such funds to the payment of, the 2004 Project Bonds or portions thereof called for redemption, including accrued interest thereon to the redemption date. No payment shall be made upon any 2004 Project Bond or portion thereof called for redemption until such 2004 Project Bond shall have been delivered for payment or cancellation or the Registrar shall have received the items required by this Ordinance with respect to any mutilated, lost, stolen or destroyed bond. SECTION 7. Execution and Negotiability. The 2004 Project Bonds and any BANs 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. In case any officer whose signature or facsimile signature appears thereon shall cease to be such officer before the delivery of the 2004 Project Bonds and any BANs, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery. The 2004 Project Bonds and any BANs shall also be authenticated by the manual signature of the Registrar, and no 2004 Project Bond or BAN shall be valid or become obligatory for any purpose until the certificate of authentication thereon has been so executed. 907785 Page 7 The 2004 Project Bonds and any BANs 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 8. Authorization for Book-Entry System. The 2004 Project Bonds and any BANs may, in compliance with all applicable laws, initially 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"), without physical distribution of bonds to the purchasers. The following provisions of this Section apply in such event. One definitive 2004 Project Bond or BAN of each maturity shall be delivered to the Clearing Agency (or its agent) and held in its custody. 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 2004 Project Bonds and any BANs as are necessary or appropriate to accomplish or recognize such book-entry form 2004 Project Bonds and any BANs. During any time that the 2004 Project Bonds and any BANs are held in book-entry form on the books of a Clearing Agency, (1) any such 2004 Project Bond or BAN may be registered upon Registration Record in the name of such Clearing Agency, or any nominee thereof, including Cede & Co.; (2) the Clearing Agency in whose name such 2004 Project Bond or BAN 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 2004 Project Bond or BAN for all purposes of this Ordinance, including, without limitation, the receiving of payment of the principal of and interest and premium, if any, on such 2004 Project Bond or BAN, the receiving of notice and the 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 2004 Project Bond or BAN, including, without limitation, any responsibility or obligation hereunder to maintain accurate records of any interest in any 2004 Project Bond or BAN or any responsibility or obligation hereunder with respect to the receiving of payment of principal of or interest or premium, if any, on any 2004 Project Bond or BAN, the receiving of notice or the giving of consent; and (4) the Clearing Agency is not required to present any 2004 Project Bond or BAN called for partial redemption, if any, 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 the City receives notice from the Clearing Agency which is currently the registered owner of the 2004 Project Bonds and any BANs to the effect that such Clearing Agency is unable or unwilling to discharge its responsibility as a Clearing Agency for the 2004 Project Bonds and any BANs, or the City elects to discontinue its use of such Clearing Agency as a Clearing Agency for the 2004 Project Bonds and any BANs, then the City and the 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 907785 Page 8 adverse to the rights of the holders of the 2004 Project Bonds and any BANs, as are necessary or appropriate to discontinue use of such Clearing Agency as a Clearing Agency for the 2004 Project Bonds and any BANs and to transfer the ownership of each of the 2004 Project Bonds and any BANs to such person or persons, including any other Clearing Agency, as the holder of the 2004 Project Bonds and any BANs may direct in accordance with this Ordinance. Any expenses of such discontinuance and transfer, including expenses of printing new certificates to evidence the 2004 Project Bonds and any BANs, shall be paid by the City. During any time that the 2004 Project Bonds and any BANs 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 owner of the 2004 Project Bonds and any BANs 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 a 2004 Project Bond or BAN has been obtained, the Registrar shall be entitled to treat the beneficial owners of the 2004 Project Bonds and any BANs 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 2004 Project Bonds and any BANs are held in book-entry form on the books of a Clearing Agency, the Executive, the Fiscal Officer and/or the Registrar are authorized to execute and deliver a Letter of Representations agreement with the Clearing Agency, or a Blanket Issuer Letter of Representations, and the provisions of any such Letter of Representations or any successor agreement shall control on the matters set forth therein. The Registrar, by accepting the duties of Registrar under this Ordinance, agrees that it will (i) undertake the duties of agent required thereby and that those duties to be undertaken by either the agent or the City 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, during any time that the 2004 Project Bonds and any BANs are held in book- entry form, the provisions of Section 8 of this Ordinance shall control over conflicting provisions in any other section of this Ordinance. SECTION 9. Form of the 2004 Proiect Bonds. The form and tenor of the 2004 Project Bonds shall be substantially as follows (with such additions, deletions and modification as the Executive and Fiscal Officer may authorize, as conclusively evidenced by their signatures thereon), with all blanks to be filled in properly prior to delivery thereof: 907785 Page 9 UNITED STATES OF AMERICA STATE OF INDIANA COUNTY OF HAMILTON CITY OF CARMEL, iNDIANA WATERWORKS REVENUE BOND OF 2004 Interest Maturity Original Authentication Rate Date Date Date CUSIP REGISTERED OWNER: PRINCIPAL SUM: The City of Carmel, in Hamilton, County, State of Indiana (the "City"), for value received, hereby promises to pay to the Registered Owner set forth 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 hereafter provided), and to pay interest hereon until the Principal Sum shall be fully paid at the Interest Rate per annum set forth 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 the interest payment date (the "Record 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 15, 200~, in which case it shall bear interest from the Original Date, which interest is payable semiannually on May 1 and November 1 of each year, begirming on 1,200__. Interest shall be calculated on the basis of a 360-day year comprised of twelve 30-day months. The principal of and premium, if any, on this bond are payable at the principal office of the Clerk-Treasurer of the City of Carmel [or the principal office of the financial institution so appointed] (the "Registrar" or "Paying Agent"), in Carmel, Indiana. 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 as of the Record 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. Each Registered Owner of $1,000,000 or more in principal amount of bonds shall be entitled to receive interest payments by wire transfer by providing written wire instructions to the Paying Agent before the Record Date for any payment. All payments of principal of, and premium, if any, on this bond shall be made upon surrender thereof at the principal office of the Paying Agent, in any U.S. coin or currency which on the date of such payment shall be legal tender for the payment of public and private debts, or in the case of a Registered Owner of $1,000,000 or more in principal amount of the 2004 Project Bonds, by wire transfer on the due date upon written direction of such owner provided at least fifteen (15) days prior to the maturity date or redemption date. 907785 Page 10 The City shall not be obligated to pay this Bond or the interest hereon except from the hereinafter described special fund, and neither this Bond nor the issue of which it is a part shall in any respect constitute a corporate indebtedness of the City within the provisions and limitations of the constitution of the State of Indiana. This bond is one of an authorized issue of bonds of the City of Carmel, of Hamilton County, Indiana, of like date, tenor and effect, except as to denomination, numbering, rates of interest, redemption terms and dates of maturity, aggregating Dollars ($. ), numbered consecutively from 1 upward (the "Bonds"), issued for the purpose of providing funds to be applied for construction and acquisition of certain improvements to the waterworks (the "Project"), and to pay incidental expenses and 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 December, 2004, entitled "An Ordinance of the Common Council of the City of Carmel, Indiana Concerning the Construction of Additions and Improvements to the Waterworks of the City of Carmel, Indiana; Authorizing the Issuance of Revenue Bonds for Such Purpose; Addressing other Matters Connected Therewith, and Repealing Ordinances Inconsistent Herewith" (the "Ordinance"), and in accordance with the provisions of Indiana law, including without limitation Indiana Code 8-1.5, and other applicable laws, as amended (the "Act"), all as more particularly described in the Ordinance. The owner of this bond, by the acceptance hereof, agrees to all the terms and provisions contained in the Ordinance and 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 Parity Bonds (as hereinafter defined), and any bonds hereafter issued on a parity therewith are payable solely from the Sinking Fund (the "Sinking Fund") maintained under the Ordinance to be provided from the Net Revenues (defined as the gross revenues of the works remaining after the payment of the reasonable expenses of operation, repair and maintenance) of the works, including all additions and improvements thereto and replacements thereof subsequently constructed or acquired. The City irrevocably pledges the entire Net Revenues of the works to the prompt payment of the principal of and interest on the Bonds and any bonds ranking on a parity therewith, including the City of Carmel, Indiana Waterworks Revenue Bonds of 2002, Series A, the City of Carmel, Indiana Waterworks Revenue Bonds of 2002, Series B, and the City of Carmel, Indiana Waterworks Refunding Revenue Bonds of 2003, Series A (collectively, the "Parity Bonds"), each authorized by an Ordinance referred to collectively herein as the Parity Ordinances, to the extent necessary for such purposes, and covenants that it will establish proper 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 works 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 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. 907785 Page 1 1 The City covenants that for so long as the Bonds and any bonds issued on a parity therewith, including the Parity Bonds, remain outstanding it will set aside and pay into the Sinking Fund a sufficient amount of the Net Revenues for the payment of (a) the principal of and interest on all bonds which by their terms are payable from the Net Revenues, as such principal and interest shall fall due, (b) the necessary fiscal agency charges for paying bonds and (c) an additional amount as a margin of safety to accumulate and maintain the reserve required by the Ordinance. Such required payments shall constitute a first charge upon all the Net Revenues. 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 1, __ are redeemable at the option of the City on .... or any date thereafter, 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, at 100% of face value, together with the following premiums: % if redeemed on 1, or thereafter before 1, __.; % if redeemed on 1, or thereafter before 1, __5 % if redeemed on 1, or thereafter prior to maturity; plus accrued interest to the date fixed for redemption. Each minimum authorized denomination in principal amount shall be considered a separate bond for purposes of partial redemption. Notice of such redemption shall be mailed by first-class mail not more than sixty (60) days and not less than thirty (30) days prior to the date fixed for redemption to the address of the registered owner of each bond to be redeemed as shown on the registration record of the City except to the extent such redemption notice is waived by owners of the bond or bonds redeemed, provided, however, that failure to give such notice by mailing, or any defect therein, with respect to any bond shall not affect the validity of any proceedings for the redemption of any other bonds. The notice shall specify the date and place of redemption, the redemption price and the CUSIP numbers 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, and thereafter, such bonds shall no longer be protected by the Ordinance and shall not be deemed to be outstanding thereunder. This bond is subject to defeasance prior to payment or redemption as provided in the Ordinance. If this bond shall not be presented for payment or redemption on the date fixed therefor, the 907785 Page 12 the City may deposit in trust with the Paying Agent or another paying agent, 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 for payment and the City shall have no further obligation or liability in respect thereto. This bond is transferable or exchangeable only upon the registration record kept for that purpose at the office of the Registrar by the Registered Owner 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 such attorney, and thereupon a new fully registered bond or bonds in the same 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. This bond may be transferred or exchanged without cost to the Registered Owner except for any tax or governmental charge required to be paid with respect to the transfer or exchange. 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 and premium, if any, due hereon. The bonds maturing on any maturity date are issuable only in the denomination of $5,000 or any integral multiple thereof. A Continuing Disclosure Contract 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 herein 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. 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. 907785 Page 13 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 [LEGAL OPINION] 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. TEN. ENT. JT. TEN. UNIF. TRAN. MiN. ACT as tenants in common as tenants by the entireties as joint tenants with right of survivorship and not as tenants in common Custodian (Cust.) (Minor) 907785 Page 14 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 Number) $ 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. SECTION 10. Sale of Bonds. (a) The 2004 Project Bonds shall be sold in a competitive sale or pursuant to I.C. 5-1.5 as determined by the Executive and Fiscal Officer. Unless sold pursuant to I.C. 5-1.5, the Fiscal Officer shall cause to be published either (i) a notice of sale once each week for two consecutive weeks in accordance with I.C. §5-3-1-2, in which case the date fixed for the sale shall not be earlier than fifteen (15) days after the first of such publications and not earlier than three (3) days after the second of such publications, or (ii) a notice of intent to sell bonds once each week for two weeks in accordance with I.C. §5-1-11-2 and I.C. §5-3-1-4 and in a newspaper of general circulation published in the State capital, in which case bids may not be received more than ninety (90) days after the first of such publications. Said sale notice shall state the time and place of sale, the purpose for which the 2004 Project Bonds are being issued, the total amount thereof, the 90778s Page 15 thereof, the amount and date of each maturity, the maximum rate or rates of interest thereon, their denominations, the time and place of payment, the terms and conditions upon which bids will be received and the sale made and such other information as is required by law or as the Fiscal Officer shall deem necessary. All bids for the 2004 Project Bonds shall be sealed and shall be presented to the Fiscal Officer in accord with the terms set forth in the sale notice. Bidders for the 2004 Project Bonds shall be required to name the rate or rates of interest which the 2004 Project Bonds are to bear, which shall be the same for all 2004 Project Bonds maturing on the same date and the interest rate bid on any maturity of the 2004 Project Bonds must be no less than the interest rate bid on any and all prior maturities, not exceeding seven percent (7%) per annum, and such interest rate or rates shall be in multiples of one hundredth of one percent. The Fiscal Officer shall award the 2004 Project Bonds to the bidder who offers the lowest interest cost, to be determined by computing the total interest on all the 2004 Project Bonds to their maturities and deducting therefrom the premium bid, if any, or adding thereto the amount of the discount, if any. No bid for less than ninety-eight and one-half percent (98.5%) of the par value of the 2004 Project Bonds, plus accrued interest, shall be considered. The Fiscal Officer may require that all bids be accompanied by certified or cashier's checks payable to the order of the City, or a surety bond, in an amount not to exceed one percent of the aggregate principal amount of the 2004 Project Bonds as a guaranty of the performance of said bid, should it be accepted. In the event no satisfactory bids are received on the day named in the sale notice, the sale may be continued from day to day thereafter for a period of thirty (30) days without readvertisement; provided, however, that if said sale is continued, no bid shall be accepted which offers an interest cost which is equal to or higher than the best bid received at the time fixed for sale in the bond sale notice. The Fiscal Officer shall have full right to reject any and all bids. After the 2004 Project Bonds have been properly sold and executed, the Fiscal Officer shall receive from the purchasers payment for the 2004 Project Bonds and shall provide for delivery of the 2004 Project Bonds to the purchasers. (b) The 2004 Project Bonds, when fully paid for and delivered to the purchaser shall be the binding special revenue obligations of the City, payable out of the Net Revenues. The proper officers of the City are hereby directed to sell the 2004 Project Bonds to the purchaser, 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. (c) The Executive and the Fiscal Officer each are hereby authorized to deem final an official statement with respect to the 2004 Project Bonds, as of its date, in accordance with the provisions of Rule 15c2-12 of the U.S. 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 Executive or the Fiscal Officer in the form of a final official statement. 90778s Page 16 In order to assist any underwriter of the 2004 Project Bonds in complying with paragraph (b)(5) of the SEC Rule by undertaking to make available appropriate disclosure about the City and the 2004 Project Bonds to participants in the municipal securities market, the City hereby covenants, agrees and undertakes, in accordance with the SEC Rule, unless excluded 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 contract. "Continuing disclosure contract" shall mean that certain continuing disclosure contract executed by the City and dated the date of issuance of the 2004 Project 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 contract, and the perfom~ance 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. (d) The Fiscal Officer is hereby authorized and directed to obtain a legal opinion as to the validity of the 2004 Project Bonds from Bingham McHale LLP, and to furnish such opinion to the purchasers of the 2004 Project Bonds or to cause a copy of said legal opinion to be printed on each 2004 Project Bond. The cost of such opinion shall be paid out of the proceeds of the 2004 Project Bonds. (e) In connection with the sale of the 2004 Project Bonds, the Executive and the Fiscal Officer each are authorized to take such actions and to execute and deliver such agreements and instruments as they deem advisable to obtain a rating and/or to obtain bond insurance for the 2004 Project Bonds, and the taking of such actions and the execution and delivery of such agreements and instruments are hereby approved. (f) In connection with the sale of the BANs, the Executive and the Fiscal Officer each are authorized to take all or a part of the same authorized actions, and to execute and deliver the agreements and instruments, as they deem advisable with respect to the BANs to the same extent as if the foregoing provisions of this Section applicable to the 2004 Project Bonds were applied to the sale of the BANs, provided they shall not be required to take each and every such act as would relate to the 2004 Project Bonds unless by law it is required with respect to the BANs. SECTION 11. Use of Proceeds. Any accrued interest received at the time of delivery of the 2004 Project Bonds or BANs (and, if deemed by the Executive or the Fiscal Officer to be in excess of Project needs, any premium), shall be deposited in the Principal and Interest Account of the Sinking Fund (as hereafter defined) and applied to payments on the 2004 Project Bonds and any BANs on the first interest payment date. The remaining proceeds from the sale of the 2004 Project Bonds and any BANs, shall be deposited in a fund of the utility hereby created and designated as "City of Carmel, Indiana 2004 Bond Project Fund" (the "Project Fund"). The proceeds deposited in the Project Fund, together with all investment earnings thereon, shall be expended only for the purpose of paying the costs of the Project, refunding the BANs if issued and the costs of selling and issuing the 2004 Project Bonds and any BANs, including the premium for any bond insurance obtained for the 2004 Project Bonds. 907785 Page 1 7 The City hereby declares that it reasonably expects to reimburse the City's advances to the Project from proceeds of any BANs or the 2004 Project Bonds, as anticipated by this Ordinance, and such declaration shall be deemed one within the meaning of the Reimbursement Regulations. Any balance remaining in the Project Fund after the completion of the Project which is not required to meet unpaid obligations incurred in connection therewith and on account of the sale and issuance of the 2004 Project Bonds shall be paid into the Principal and Interest Account of the Sinking Fund and used solely for the purposes of such Account or used for the same purpose or type of project for which the 2004 Project Bonds were originally issued, all in accordance with I.C. 5-1-13, as amended or as otherwise permitted by law. SECTION 12. Revenue Fund. There is hereby continued a fund of the utility designated as the Revenue Fund (the "Revenue Funo?'), into which there shall be deposited upon receipt all revenues of the works for application as set forth below. SECTION 13. Operation and Maintenance Fund. There is hereby continued an operating fund of the utility 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 utility designated as the Sinking Fund (the "Sinking Func?'), to be used for the payment of the principal 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 pledged for the purposes set forth below. (a) Principal and Interest 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 (except in the instance of the first principal and interest payment dates next succeeding the issuance of the 2004 Project Bonds, an appropriately greater percentage as would result in such equal monthly transfers equaling the required payments), until the amount available therein shall equal the principal payable during the next succeeding twelve 907785 Page 18 (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. There shall be transferred, on the last day of each calendar month following the issuance of the 2004 Project Bonds, 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 2004 Project Bonds, which monthly deposits shall be in an amount sufficient to build the balance in the 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 2004 Project Bonds, the maximum annual debt service on the 2004 Project Bonds, or 125% of the average annual debt service on the 2004 Project Bonds. The Fiscal Officer, with the advice of the City's financial advisor, may transfer an amount of the funds of the utility now on hand in full or partial satisfaction of the Reserve Requirement. After the issuance of the 2004 Project 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 least often percent (10%) of the proceeds of the 2004 Project Bonds and any bonds ranking on a parity therewith (including the Parity Bonds), the maximum annual debt service on the 2004 Project Bonds and such parity bonds, or 125% of the average annual debt service on the 2004 Project Bonds or 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 2004 Project 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 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. 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 90778s Page 19 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 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 utility fund, to be expended in making good depreciation in the works 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 works. 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 works, or may be transferred to the Operation and Maintenance Fund to meet unforeseen contingencies in the operation, repair and maintenance of the works. 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. The Fiscal Officer 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 2004 Bonds under federal law. The Fiscal Officer 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 Fiscal Officer 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 Fiscal Officer may pay any fees as operation expenses of the utility. SECTION 17. 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 utility 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 90778s Page 20 Accounts. There shall be furnished, upon written request, to any owner of the 2004 Project Bonds and any BANs, the most recent copy of the audited financial statements of the utility prepared by the State Board of Accounts. Copies of all such statements and reports shall be kept on file in the office of the Fiscal Officer. SECTION 18. Rate Covenant. The City covenants and agrees that, by ordinance of the Council, it will establish and maintain just and equitable rates and charges for the use of and the service rendered by the works, to be paid by the owner of each and every lot, parcel of real estate or building that is connected with and uses said works by or through any part of the utility, or that in any way uses or is served by such works; 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 works, 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 works and the requirements of the Sinking Fund. The rates or charges so established shall apply to any and all use of such works 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. Defeasance. If, when the 2004 Project Bonds and any BANs 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 2004 Project Bonds and any BANs or a portion thereof for redemption shall have been given, and the whole amount of the principal, premium, if any, and the interest so due and payable upon such 2004 Project Bonds and any BANs or any 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 2004 Project Bonds and any BANs issued hereunder or any designated portion thereof shall no longer be deemed outstanding or entitled to the pledge of the Net Revenues of the works. SECTION 20. Additional Obligations. The City reserves the right to authorize and issue additional BANs at any time ranking on a parity with the BANs. The City reserves the right to authorize and issue additional bonds payable out of the Net Revenues ranking on a parity with the 2004 Project Bonds for the purpose of financing the cost of future additions, extensions and improvements to the works, 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. 907785 Page 21 (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 2004 Project Bonds shall be not less than one hundred twenty-five percent (125%) of the annual principal and interest requirements of the then outstanding parity bonds (including the 2004 Project 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 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 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 21. Further Covenants of the CiR. For the purpose of further safeguarding the interests of the owners of the 2004 Project Bonds and any BANs, it is hereby specifically provided as follows: (a) The City shall at all times maintain the works in good condition, and operate the same in an efficient manner and at a reasonable cost. (b) So long as any of the 2004 Project Bonds or BANs are outstanding, the City shall maintain insurance on the insurable parts of the works, of a kind and in an amount such as would normally be 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. 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 Revenues of the Sinking Fund. (c) So long as any of the 2004 Project Bonds and any BANs are outstanding, the City shall not mortgage, pledge or otherwise encumber the works, or any part thereof, and shall not sell, lease or otherwise dispose of any part of the 907785 Page 22 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 utility. (d) Except as otherwise specifically provided in Section 20 of this Ordinance and in the companion provisions of the Parity Ordinances, so long as any of the 2004 Project Bonds and any BANs are outstanding, no additional bonds or other obligations pledging any portion of the revenues of the works shall be issued by the City, except such as shall be made junior and subordinate in all respects to the 2004 Project Bonds and the Parity Bonds, unless all of the 2004 Project Bonds and Parity Bonds are defeased, redeemed or 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 2004 Project Bonds and any BANs, all the terms of which shall be enforceable by any such owner by any and all appropriate proceedings in law or in equity. After the issuance of the 2004 Project Bonds and any BANs 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 or amended in any respect which will adversely affect the rights of such owners, nor shall the Council or any other body of the City adopt any law, ordinance or resolution which in any way adversely affects the rights of such owners. Except in the case of changes described in Section 22(a) through (f) 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 2004 Project Bonds. (f) The provisions of this Ordinance shall be construed to create a trust in the proceeds of the sale of the 2004 Project Bonds and any BANs for the uses and purposes herein set forth, and the owners of the 2004 Project Bonds and any BANs shall retain a lien on such proceeds until the same are applied in accordance with the provisions of this Ordinance and the 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 2004 Project Bonds and any BANs shall have all the rights, remedies and privileges set forth in the Act, including the right to have a receiver appointed to administer the utility 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 utility 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 2004 Project Bonds or any BANs. (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 2004 Project Bonds and any BANs and the operation of the 907785 Page 23 the utility. SECTION 22. Amendments With Consent of Bondholders. Subject to the terms and provisions contained in this section and Sections 21 and 23, the owners of not less than sixty-six and two-thirds percent (66 2/3%) in aggregate principal amount of the 2004 Project Bonds and any BANs and then outstanding shall have the right, from time to time, to consent to and approve the adoption by the Council of such ordinance or ordinances supplemental hereto, as shall be deemed necessary or desirable by the City for the purpose of amending 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 permit or be construed as permitting: (a) An extension of the maturity of the principal of or interest or premium, if any, on, or any mandatory sinking fund redemption date for, or an advancement of the earliest redemption date on, any 2004 Project Bond or BAN, without the consent of the holder of each 2004 Project Bond or BAN so affected; or (b) A reduction in the principal amount of any 2004 Project Bond or BAN or the redemption premium or the rate of interest thereon, or a change in the monetary medium in which such amounts are payable, without the consent of the holder of each 2004 Project Bond or BAN so affected; or (c) The creation of a lien upon or a pledge of the Net Revenues ranking prior to the pledge thereof created by this Ordinance, without the consent of the holders of all 2004 Project Bonds then outstanding; or (d) A preference or priority of any 2004 Project Bond or BAN over any other 2004 Project Bond or BAN, without the consent of the holders of all 2004 Project Bonds and any BANs then outstanding; or (e) A reduction in the aggregate principal amount of the 2004 Project Bonds and any BANs required for consent to such supplemental ordinance, without the consent of the holders of all 2004 Project Bonds and any BANs then outstanding; or (f) A reduction in the Reserve Requirement. 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 2004 Project Bonds and any BANs. The Registrar shall not, however, be subject to any liability to any owners of the 2004 Project Bonds and any BANs 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. 907785 Page 24 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 2004 Project Bonds and any BANs of not less than sixty-six and two-thirds per cent (66-2/3%) in aggregate principal amount of the 2004 Project Bonds and any BANs 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 2004 Project Bonds and any BANs, whether or not such owners shall have consented thereto. No owner of any 2004 Project Bond or BAN 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 the 2004 Project Bonds and any BANs then outstanding shall thereafter be determined, exercised and enfomed 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 2004 Project Bonds and any BANs, and the terms and provisions of the 2004 Project Bonds and any BANs 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 2004 Project Bonds and any BANs then outstanding. SECTION 23. 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 2004 Project Bonds and any BANs, 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; (b) To grant to or confer upon the owners of the 2004 Project Bonds and any BANs any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the owners of the 2004 Project Bonds and any BANs; (c) To procure a rating on the 2004 Project Bonds and any BANs from a nationally recognized securities rating agency designated in such supplemental 907785 Page 25 ordinance, if such supplemental ordinance will not adversely affect the owners of the 2004 Project Bonds and any BANs; (d) To obtain or maintain bond insurance with respect to the 2004 Project Bonds; (e) To provide for the refunding or advance refunding of the 2004 Project Bonds; (f) To provide for the issuance of additional bonds or BANs as provided in Section 20 hereof; or (g) To make any other change which, in the determination of the Council in its sole discretion, does not in any way adversely affect the rights of such owners of the 2004 Project Bonds and any BANs. SECTION 24. Tax Matters. In order to preserve the exclusion of interest on the 2004 Project Bonds and any BANs from gross income for federal income tax purposes and as an inducement to purchasers of the 2004 Project Bonds and any BANs, 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 2004 Project Bonds and any BANs or property financed by the 2004 Project Bond or BAN 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 2004 Project Bond or BAN proceeds or will have actual or beneficial use of such property pursuant to a lease, a management or incentive payment contract, an arrangement such as take- or-pay or output contract, or any other type of arrangement that differentiates that person's or entity's use of such property from the use by the public at large. (b) No portion of the principal of or interest on the 2004 Project Bonds and any BANs is (under the terms of the 2004 Project Bonds and any BANs, 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 2004 Project Bond or BAN proceeds will be loaned to any entity or person other than a state or local governmental unit. No 2004 Project Bond or BAN proceeds will be transferred, directly or indirectly, or deemed transferred to a non-governmental person in any manner that would in substance constitute a loan of the 2004 Project Bond or BAN proceeds. 907785 Page 26 (d) The City will not take any action or fail to take any action with respect to the 2004 Project Bonds and any BANs that would result in the loss of the exclusion from gross income for federal income tax purposes of interest on the 2004 Project Bonds and any BANs pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder as applicable to the 2004 Project Bonds and any BANs, including, without limitation, the taking of such action as is necessary to rebate or cause to be rebated arbitrage profits on 2004 Project Bond or BAN proceeds or other monies treated as 2004 Project Bond or BAN proceeds to the federal government as provided in Section 148 of the Code, and will set aside such monies, which may be paid from investment income on funds and accounts notwithstanding anything else to the contrary herein, in trust for such purposes. (e) The City will file an information report on Form 8038-G with the Internal Revenue Service as required by Section 149 of the Code. (f) The City will not make any investment or do any other act or thing during the period that any 2004 Project Bond or BAN is outstanding hereunder which would cause any 2004 Project Bond or BAN to be an "arbitrage bonc?' within the meaning of Section 148 of the Code and the regulations thereunder as applicable to the 2004 Project Bonds and any BANs. (g) It shall not be an event of default under this Ordinance if the interest on any 2004 Project Bonds or BANs 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 2004 Project Bonds and any BANs, respectively. These covenants are based solely on current law in effect and in existence on the date of delivery of the 2004 Project Bonds and any BANs, respectively. Notwithstanding any other provisions of this Ordinance, the foregoing covenants and authorizations (the "Tax Sections") which are designed to preserve the exclusion of interest on the 2004 Project Bonds and any BANs 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. 907785 Page 27 Section 25. Additional Authority. (a) The Executive and Fiscal Officer, and either of them, is hereby authorized and directed to do and perform all acts and execute in thc name of the City all such instruments, documents, papers or certificates which are necessary, desirable or appropriate to carry out the transactions contemplated by this Ordinance in such forms as the Executive or Fiscal Officer executing the same shall deem proper, to be conclusively evidenced by the execution thereof. Any provision of this Ordinance authorizing the Executive or Fiscal Officer to act shall mean either of them, individually rather than collectively, is so authorized and any action taken and agreement or undertaking executed in the name of the City by them in further of the same shall be deemed a proper use of such authority and will be conclusively evidenced by their execution of any agreement or undertaking, or by their taking of any such authorized action. (b) In the event the Executive and Fiscal Officer with the advice of the financial advisor to the City certifies to the City that it would be economically advantageous for the City to obtain a municipal bond insurance policy for any of the 2004 Project Bonds issued hereunder, the City hereby authorizes the purchase of such an insurance policy. The acquisition of a municipal bond insurance policy is hereby deemed economically advantageous in the event the difference between the present value cost of (a) the total debt service on the 2004 Project Bonds if issued without municipal bond insurance and (b) the total debt service on the 2004 Project Bonds if issued with municipal bond insurance, is greater than the cost of the premium on the municipal bond insurance policy. The City also authorizes the purchase of a debt service reserve surety bond based upon the advice of the City's financial advisor. If such an insurance policy or surety bond is purchased, the Executive or Fiscal Officer are hereby authorized to execute and deliver all agreements with the provider of the policy or surety bond, as the case may be, to the extent necessary to comply with the terms of such insurance policy, surety bond and the commitments to issue such policy or surety bond, as the case may be. 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. No Conflict. The Council hereby finds and determines that the adoption of this Ordinance and the issuance of the 2004 Project Bonds and any BANs is in compliance with the Parity Ordinances. 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 the Parity Ordinances, there is no adverse effect 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. 907785 Page 28 SECTION 28. 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 29. 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. 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. Effectiveness. This Ordinance shall be in full fome and effect from and after its passage and signing by the Executive. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 907785 Page 29 PASSED by the Common Council of the City of Carmel, Indiana this ~O~day of December 2004, by a vote of ~ ayes and ~ nays. COMMON COUNCIL FOR THE CITY OF CARMEL (~si~ficer' -- t K~rby '~l~onald E. Carter, President Pro Tempore Brian D. Mayo  Mark ~ann f~/seph~/~iffiths ft]/ Rick Sharp/ Presented by me to the Mayor of the City of Carmel, Indiana this~:) ff day of December 2004 at ci. IO., Diana~reasurer 907785 Page 30 Approved by me, Mayor of the City of Carmel, Indiana, this.3~l day of December 2004, at r~.M. J~es Brainard, Mayor ATTEST: Dian~surer Prepared by: Bryan J. Collins, Attorney At Law, BINGHAM. McHALE LLP, 2700 Market Tower, 10 West Market Street, Indianapolis, IN 46204 907785 Page 31 EXHIBIT A Project Description The Project consists of construction and acquisition of the following project components and improvements: Water Treatment Plant No. 5 Expansion Project: This project component is a four (4) Million Gallon per Day (MGD) expansion of the City's existing Water Plant No. 5. The City's existing water plant is an iron removal plant with a treatment capacity of 10.7 MGD. This project component will expand the capacity of the plant to 14.7 MGD. The project includes the installation of three DualatorsTM by Tonka Industries to provide oxidation of the iron and removal by sand filtration. The DualatorsTM will be housed in an approximately 6,500 square foot masonry building. The building includes the construction of two below ground concrete tanks that will serve as a backwash holding basin and a transfer well. This project component includes the necessary piping to connect into the existing water plant piping and the necessary controls to interface with the City's existing control system. Raw Water Supply Project: This project component includes the construction of approximately 13,000 feet of predominately 24-in. diameter raw water main to supply ground water to the Water Treatment Plant No. 5 Expansion Project. Groundwater Supply Project: This project component includes the construction of one 36- in. diameter groundwater supply well. The groundwater supply well will be connected to Water Treatment Plant No. 5 by the Raw Water Supply Project. Shelbome Road Water Main: This project component includes the construction of approximately 5,000 feet of predominately 20-in. diameter ductile iron water main along Shelbome Road. The purpose of this project component is to improve the transmission of water in western Clay Township. 2 MG Elevated Water Tank: This project component includes the construction of a two Million Gallon elevated composite water storage tank in western Clay Township. This tank will be used to provide more uniform water distribution system pressures to the customers in western Clay Township and to allow the City to better meet the anticipated fire fighting demands in western Clay Township. 907785 Page 32