Escrow/Waterworks Bonds 0f 2003/UtilESCROW AGREEMENT
APPROVED, A,~.3'O
FORM BY:~
BETWEEN
THE
CITY OF CARMEL, INDIANA
AND
NATIONAL CITY BANK OF INDIANA
As Escrow Trustee
WATERWORKS REFUNDING REVENUE BONDS OF 2003, SERIES A
Dated April 22, 2003
ESCROW AGREEMENT
This agreement (the "Escrow Agreement") made and entered into as of April 22, 2003,
by and between the City of Carmel (the "Issuer"), a municipal corporation existing under the
laws of the State of Indiana, by and through its Board of Public Works and Safety, and National
City Bank of Indiana (the "Escrow Trustee"), a nationa! banking association organized under the
laws of the United States of America, having its principal corporate trust office in Indianapolis,
Indiana, as Escrow Trustee under this Escrow Agreement with the Issuer.
WITNESSETH
WHEREAS, Indiana Code, Title 5, Article 1, Chapter 5 (the "Act"), has been enacted by
the legislature of Indiana; and
WHEREAS, the Act declares that the refunding of bonds to effect a savings for the Issuer
or to relieve the Issuer of restrictive covenants which impede additional financings and the
issuance of refunding bonds to accomplish the refunding constitute a public purpose; and
WHEREAS, the Act provides that the proceeds of the refunding bonds may be secured
by a trust agreement between the Issuer and a corporate trustee; and
WHEREAS, the execution and delivery of this Escrow Agreement has been in all
respects duly and validly authorized by Ordinance No. D1622-03 duly passed and approved by
the Common Council and signed by the Mayor of the Issuer on March 17, 2003, (collectively,
the "Ordinance"); and
WHEREAS, the Issuer has heretofore issued, pursuant to Ordinance A-67 adopted on
December 7, 1992 (the "1993 Ordinance"), its Waterworks Revenue Bonds of 1993, Series B
dated May 1, 1993, (the "1993 Bonds"), in the total amount of $5,010,000 of which $280,000
and $3,960,000 in principal amount (respectively, the "Current Bonds" and the "Refunded
Bonds") are now outstanding (collectively, the "Outstanding 1993 Bonds"); and
WHEREAS, the Issuer has concurrently with the execution and delivery of this Escrow
Agreement, executed, issued and delivered pursuant to the Ordinance, its Waterworks Refunding
Revenue Bonds of 2003, Series A (the "2003 Bonds") in the amount of $4,005,000.00, and the
Issuer has deposited with the Escrow Trustee cash from the proceeds of the Bonds in the amount
of $3,538,069.94 and funds on hand in the amount of $350,754.70 from the principal and interest
account and $543,281.00 from the debt service reserve account (collectively, the "Cash
Requirement") in a total amount of $4,432,105.64, which is sufficient to pay the accrued interest
on and principal of the outstanding 1993 Bonds from the date of delivery of the 2003 Bonds to
May 1, 2003, the maturity date of the Current Bonds and the earliest date on which the Refunded
Bonds may be redeemed, with redemption premiums thereon, thereby defeasing the Outstanding
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1993 Bonds so that they are no longer deemed outstanding or entitled to the pledge of the Net
Revenues (as defined in the Ordinance) of the Issuer's waterworks.
NOW THEREFORE, THIS AGREEMENT WITNESSETH: That in order to secure the
payment of the principal of and interest and redemption premium, if any, on the Outstanding
1993 Bonds according to their tenor, purport and effect, and in order to secure the performance
and observance of all the covenants and conditions herein and in the Current Bonds, the
Refunded Bonds and 2003 Bonds, and for and in consideration of the mutual covenants herein
contained, and of the acceptance by the Escrow Trustee of the trust hereby created, the Issuer has
executed and delivered this Escrow Agreement.
TO HAVE AND TO HOLD the same unto the Escrow Trustee, and its successor or
successors and its or their assigns forever;
IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth, to secure the
payment of the Outstanding 1993 Bonds upon redemption and premium, if any, payable upon
redemption and the interest payable thereon, and to secure also the observance and performance
of all the terms, provisions, covenants and conditions of this Escrow Agreement, and for the
equal and ratable benefit and security of all and singular the owners of all Outstanding 1993
Bonds without preference, priority or distinction as to lien or otherwise of any one Current Bond
or Refunded Bond or as between principal and interest; and it is hereby mutually covenanted and
agreed that the terms and conditions upon which the Outstanding 1993 Bonds are to be paid and
redeemed, and a portion of the proceeds of the 2003 Bonds invested, and the trusts and
conditions upon which the pledged Cash Requirement is to be held and disbursed, are as follows:
1. Upon closing on the 2003 Bonds, the Escrow Trustee shall acknowledge receipt
from the Issuer of the Cash Requirement, to be applied on the principal of, interest and
redemption premium, if any, on the Outstanding 1993 Bonds in accordance with the schedule set
forth in Exhibit A attached hereto. The Cash Requirement will be available and sufficient to pay
the principal of, interest on the Current Bonds through May 1, 2003, and to redeem all the then
outstanding Refunded Bonds on May 1, 2003 (the earliest date on which the Refunded Bonds
may be called for redemption prior to maturity) at a redemption price equal to 102% of the
principal amount with accrued interest to that date.
2. (a) A Trust Account is created hereby for the Refunded Bonds (the "Trust
Account"). For purposes of securing payment for the Outstanding 1993 Bonds, the Cash
Requirement will be held in trust by the Escrow Trustee in the Trust Account on deposit with the
Escrow Trustee, including interest to be earned thereon, if any, together with the Cash
Requirement, are pledged solely and irrevocably for the benefit of the owners of the Current
Bonds and the Refunded Bonds. Pursuant to this Section, the Issuer irrevocably instructs the
Escrow Trustee to duly call the Refunded Bonds for redemption on May 1, 2003, and the Escrow
Trustee hereby agrees to follow this instruction.
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(b) The Escrow Trustee and the Issuer agree to pay the interest on and the
principal of the Outstanding 1993 Bonds and to redeem on May 1, 2003, all the then outstanding
Refunded Bonds. The Escrow Trustee and the Issuer shall complete the notice attached as
Exhibit B and mail the notices at least thirty (30) days prior to May 1, 2003, substantially in the
form attached to this Escrow Agreement as Exhibit B. The Escrow Trustee shall, with the
cooperation of the Issuer, transfer funds to the paying agent for the 1993 Bonds to effectuate
timely payments under this Escrow Agreement.
(c) Any balance remaining in the Trust Account after redemption or payment
at maturity of all the Current Bonds and the Refunded Bonds, shall be deposited with the Issuer
and used by the Issuer to pay debt service on the 2003 Bonds.
(d) The mathematical calculations of the adequacy of the Trust Account to
fully provide for all payments enumerated in this Escrow Agreement will be computed at the
time of delivery of the 2003 Bonds by H.J. Umbaugh & Associates LLP (the "Verification
Report").
3. The Issuer covenants that the proceeds from the sale of 2003 Bonds, any moneys
attributable to the proceeds of the 2003 Bonds, amounts received from the investment of the
proceeds of the 2003 Bonds, any other amounts treated as proceeds of the 2003 Bonds under the
applicable provisions of the Internal Revenue Code of 1986 as existing on the date of the
issuance of the 2003 Bonds (the "Code"), to the extent applicable to the 2003 Bonds or held in
funds or accounts under the 1993 Ordinance or the Ordinance, shall not be invested or otherwise
used in a manner which would cause the 2003 Bonds, the Current Bonds or the Refunded Bonds
to be "arbitrage bonds" within the meaning of the Code and the regulations and rulings
promulgated thereunder.
4. The Escrow Trustee hereby accepts the trusts imposed upon it by this Escrow
Agreement and agrees to perform these trusts as a corporate trustee ordinarily would perform
such trusts under a corporate indenture. The Escrow Trustee may execute any of the trusts or
powers hereof and perform any of its duties by or through attorneys, agents, receivers or
employees but shall not be answerable for the conduct of the same if appointed in accordance
with the standard specified above, and shall be entitled to advice of counsel concerning all
compensation to all such attorneys, certified public accountants, agents, receivers and employees
as may reasonably be employed in connection with the trusts hereof. The Escrow Trustee may
act upon the opinion or advice of any attorney (who may be the attorney or attorneys for the
Issuer). The Escrow Trustee shall not be responsible for any loss or damage resulting from any
action or non-action in good faith in reliance upon such opinion or advice.
The Escrow Trustee shall be entitled to payment and/or reimbursement in accordance
with the schedule attached hereto as Exhibit C in connection with services under this Escrow
Agreement including costs incurred under the preceding paragraph. Such fees shall not
constitute a lien against the Trust Account. If, after the Outstanding 1993 Bonds are paid, there
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are insufficient funds to pay such fees, the Issuer is responsible for the payment of such Escrow
Trustee fees and paying agent fees.
5. The Escrow Trustee shall have the power to sell, transfer, request the redemption
or otherwise dispose of some or all of the securities, if any, in the Trust Account and to substitute
other securities, if any, of equal or greater security identified in the Verification Report therefor
provided that the Escrow Trustee shall receive the unqualified opinion of nationally recognized
municipal bond attorneys prior to any such actions to the effect that such disposition and
substitution would not cause any of the Refunded Bonds or the 2003 Bonds to be an "arbitrage
bond" within the meaning of Section 148 of the Code, or any other regulations and rulings to the
extent applicable to the Refunded Bonds of the 2003 Bonds; and furthermore, provided that the
Escrow Trustee shall received the unqualified opinion of a certified public accountant or a firm
of certified public accountants to the effect that such disposition and substitution shall not reduce
the sufficiency and adequacy of the Trust Account to fully provide for all payments enumerated
in this Escrow Agreement.
6. This Escrow Agreement is made for the benefit of the Issuer and the holders from
time to time of the Outstanding 1993 Bonds, and it shall not be repealed, revoked, altered or
amended without the written consent of all such holders, the Escrow Trustee and the Issuer,
provided, however, that the Issuer and the Escrow Trustee may, without the consent of, or notice
to, such holders, amend this Escrow Agreement or enter into such agreements supplemental to
this Escrow Agreement, in their sole judgment and discretion, as shall not materially adversely
affect the rights of such holders, for any one or more of the following purposes: (i) to cure any
ambiguity or formal defect or omission in this Escrow Agreement; (ii) to grant to, or confer
upon, the Escrow Trustee for the benefit of the holders of the Current Bonds and the Refunded
Bonds, any additional rights, remedies, powers, security or authority that may lawfully be
granted to, or conferred upon, such holders or the Escrow Trustee; and (iii) to include under this
Escrow Agreement additional funds, securities or properties.
7. If any one or more of the covenants or agreements provided in this Escrow
Agreement on the part of the Issuer or the Escrow Trustee to be performed should be determined
by a court of competent jurisdiction to be contrary to law, such covenants or agreements shall be
null and void and shall be deemed separate from the remaining covenants and agreements herein
contained and shall in no way affect the validity of the remaining provisions of this Escrow
Agreement.
8. This Escrow Agreement may be executed in several counterparts, all or any of
which shall be regarded for all purposes as one original and shall constitute and be but one and
the same instrument.
9. This Escrow Agreement shall be construed and enforced under the laws of the
State of Indiana, without regard to conflict of law principles.
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10. If the date for making any payment or the last date for performance of any act or
the exercising of any right, as provided in this Escrow Agreement, shall be a legal holiday or a
day on which banking institutions in the city in which is located the principal office of the
Escrow Trustee are authorized by law to remain 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 authorized to remain closed, with the same force and effect as if
done on the nominal date provided in this Escrow Agreement, and no interest shall accrue for the
period after such nominal date.
11. This Escrow Agreement shall not be assigned by the Escrow Trustee or any
successor thereto without the prior written consent of the Issuer.
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IN W1TNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
executed for and on their behalf the day and year first hereinabove written.
CITY OF CARMEL, by and through its
Board of Public Works and Safety
Date: ~me s B r~n_ar~ ~re s kt~g.~ f fi c~r
B y: M~art~ B~'~7-,'{-/A~
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By:
Date:
Attest:
/ Diana L. Cordray, leAMC, Clerk-Treasurer
Date: ~'~/0' O~
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
executed for and on their behalf the day and year first hereinabove written.
NATIONAL CITY BANK OF INDIANA
By:
Patti. G. Wade,
Trust Officer
(SEAL)
Attest:
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EXHIBIT A
Date
05/01/03
Principal
$4,240,000.00
Interest
$112,905.64
Redemption
Premium
$79,200.00
Total
Payment
$4,432,105.64
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EXHIBIT B
CONDITIONAL NOTICE OF REDEMPTION TO THE HOLDER OF THE
CITY OF CARMEL
WATERWORKS REVENUE BONDS OF 1993, SERIES B
Dated: May 1, 1993
NOTICE IS HEREBY GIVEN to the registered owners of the Waterworks Revenue
Bonds of 1993, Series B, maturing on and after May 1, 2004 (the "1993 Bonds"), issued by the
City of Carmel (the "Issuer"), that the 1993 Bonds shall be redeemed on May 1, 2003, at the
price of one hundred two percent (102%) of the par amount thereof (the "Redemption Price"),
plus accrued and unpaid interest to May 1, 2003.
The 1993 Bonds to be redeemed are as follows:
Principal Interest
Maturity Date Amount Rate
May 1, 2004 $ 300,000 5.30%
May 1, 2005 315,000 5.30%
May 1, 2006 335,000 5.30%
May 1, 2007 355,000 5.30%
May 1, 2008 375,000 5.30%
May 1, 2009 400,000 5.30%
May 1, 2010 425,000 5.30%
May 1, 2011 455,000 5.375%
May 1, 2012 485,000 5.375%
May 1, 2013 515,000 5.375%
Payment of the Redemption Price of and accrued interest on the 1993 Bonds will be
made upon presentation and surrender of the 1993 Bonds at the corporate trust operations office
of the National City Bank of Indiana, Indianapolis, Indiana 46255, Attention: Corporate Trust
Department.
The 1993 Bonds will cease to bear interest on May 1, 2003, whether or not presented for
payment on that date.
Notwithstanding anything above, this Notice is conditional upon the Issuer closing on its
proposed Waterworks Refunding Bonds of 2003, Series A ("Refunding Bonds") anticipated to
occur on or before April 22, 2003. In the event the Issuer does not issue its Refunding Bonds,
this Notice will be revoked on or before May 1, 2003.
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Dated: On or before
IMPORTANT: The provisions of the Interest and Dividend Tax Compliance Act of 1983 (the
"Act") require each holder of the 1993 Bonds to submit its taxpayer identification number (either
such holder's social security number, 1RS individual taxpayer identification number or employer
identification number, as appropriate) or payee exemption certificate with each note presented
for payment. Failure to comply with the Act may subject the payment of the Redemption Price
to the withholding of 31% thereof. To avoid being subject to such withholding, each holder of
the 1993 Bonds should submit an IRS Form W-9 or payee exemption certificate at the time the
notes are presented for payment.
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EXHIBIT C
ESCROW TRUSTEE FEES
National City Bank of Indiana as Escrow Trustee for:
City of Carmel, Indiana
Waterworks Revenue Bonds of 1993, Series B
The Escrow Trustee fees and expenses in paying the 1993 Bonds are $375.00.
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