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Home My WebLink About9937-09 Concerning the Construction of Improvements to the Municipal Waterworks of the CityORDINANCE No. Passed by the Common Council of the City of South Bend, Indiana June 8, 20 09 Attest: Attest: Presented by me to the Mayor of the Ciry of South Bend, Indiana June 9, 20 09 City Clerk President of Common Council Yl ,C.D~ S ~~ City Clerk Mary Beth Wisniewski, Chief Deputy Approved and signed by me June 10, 20 09 ~ /~~~ ~~ Mayor Mary~Be~h Wisniewski, Chief Deputy ORDINANCE NO. ~ 13 ~ ~ 0 1 An Ordinance of the Common Council of the City of South Bend, Indiana, Concerning the Construction of Improvements to the Municipal Waterworks of the City of South Bend, Indiana; Authorizing the Issuance of Revenue Bonds for such Purpose in the Principal Amount not to exceed Six Million Two Hundred Thousand ($6,200,000); Addressing Other Matters Connected Therewith, Including the Issuance of Notes in Anticipation of Bonds; and Repealing Ordinances Inconsistent Herewith STATEMENT OF PURPOSE AND INTENT The City of South Bend, 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"). The City's Municipal Waterworks Utility is subject to the authority and regulation of the Indiana Utility Regulatory Commission ("IURC") and has not withdrawn from the lURC's authority and regulation. The City will receive IURC approval prior to issuance of the 2009 Bonds (as hereinafter defined). The Common Council of the City (the "Council") now finds that certain improvements to said works are necessary; and that plans, specifications and estimates have been prepared and filed by the engineers employed by the City for the acquisition and construction of said improvements (as described more fully on Exhibit A) (the "Project"), which plans and specifications or other pertinent information have been or in a timely fashion will be submitted to all government authorities having jurisdiction, particularly the Indiana Department of Environmental Management ("IDEM"), if and to the extent IDEM approval is required under Indiana law, and have been or will be approved by the aforesaid government authorities and are hereby incorporated herein by reference and open for inspection at the office of the clerk of the City as required by law. The City has obtained engineer's estimates of the costs for the construction of the Project, and on the basis of said estimates, the estimated cost of the Project, including incidental expenses, will not exceed the amount of $6,200,000. The City's Department of Waterworks has prepared preliminary descriptions, specifications and estimates of the costs of the Project and, on or about May 26, 2009, the City's Board of Public Works (the "Board") adopted resolutions whereby they: (i) determined that the Project and the issuance of bonds to provide financing of the Project, together with expenses incidental thereto, are necessary and will be of general benefit to the City and its citizens; (ii) approved the Project and the issuance of the City of South Bend, Indiana Waterworks Revenue Bonds of 2009, in an aggregate principal amount not to exceed $6,200,000, subject to approval and proper action by this Common Council, (iii) recommended to the Council that such bonds be issued, and that the proceeds of such bonds (together with any investment earnings thereon) be applied to the payment of the costs of the Project, together with expenses incidental thereto, including expenses in connection with the issuance of such bonds; and (iv) approved the substantially final form of this ordinance and recommended to the Council the adoption of this ordinance, which sets forth the terms and conditions of the bonds to be issued hereunder. The Council finds that there are not available sufficient funds of the works to construct the Project, and that revenue bonds shall be issued to pay for costs of the Project, including incidental expenses. The Council finds that there are now outstanding bonds issued on account of the works and payable out of the revenues therefrom designated as the "Waterworks Revenue Bonds of 2006" dated June 1, 2006 (the "2006 Bonds") originally issued in the amount of $4,710,000 authorized by Ordinance No. 9603-OS adopted by the Council on July 25, 2005 (the "2005 Ordinance"), now outstanding in the amount of $4,400,000. The Council also finds that there are now outstanding bonds issued on account of the works and payable out of the revenues therefrom designated as the "Waterworks Revenue Bonds of 2002" dated June 1, 2002 (the "2002 Bonds") originally issued in the amount of $5,580,000 authorized by Ordinance No. 9247-01 adopted by the Council on August 27, 2001 (the "2002 Ordinance"), now outstanding in the amount of $4,705,000. The Council finds that there are now outstanding bonds issued on account of the works and payable out of the revenues therefrom designated as the "Waterworks Revenue Bonds of 2000" dated June 12, 2000 (the "2000 Bonds") originally issued in the amount of $2,600,000 authorized by Ordinance No. 9095-00 adopted by the Council on February 28, 2000 (the "2000 Ordinance"), now outstanding in the amount of $1,744,031. The Council finds that there are also now outstanding bonds issued on account of the works and payable out of the revenues therefrom designated as the "Waterworks Revenue Bonds of 1997" dated December 1, 1997 (the "1997 Bonds") (the 2006 Bonds, the 2002 Bonds, the 2000 Bonds and the 1997 Bonds together, the "Prior Bonds"), originally issued in the amount of $22,500,000 authorized by Ordinance No. 8801-97 adopted by the Council on June 23, 1997 (the "1997 Ordinance"), now outstanding in the amount of $6,120,000. The Council finds that on or about May 28, 2002, the Council adopted Ordinance No. 9328-02 (the "2002 Supplemental Ordinance"), which supplemented and amended the 2002 Ordinance, the 2000 Ordinance and the 1997 Ordinance to permit the City to substitute an insurance policy to provide funds for the Debt Service Reserve Account thereby freeing monies currently held in the Debt Service Reserve Account for use by and improvement of the waterworks. The 2002 Supplemental Ordinance, together with the 2005 Ordinance, the 2002 Ordinance, the 2000 Ordinance and the 1997 Ordinance are sometimes collectively referred to herein as the "Prior Ordinances". -2- The Council now finds that pursuant to the 2002 Supplemental Ordinance, the City entered into an Insurance Agreement with Financial Security Assurance Inc. ("FSA"), dated June 27, 2002 (the "FSA Insurance Agreement"), and pursuant to the FSA Insurance Agreement, FSA issued its Municipal Bond Debt Service Reserve Insurance Policy No. 29146-R, effective June 27, 2002 (the "2002 Reserve Insurance Policy"). The 2002 Reserve Insurance Policy covers principal and interest payments on the 1997 Bonds, 2000 Bonds and 2002 Bonds, up to the policy limit stated in the 2002 Reserve Insurance Policy. The initial policy limit of the 2002 Reserve Insurance Policy was set at $2,332,703. The Council now finds that pursuant to the 2005 Ordinance, the City entered into an Insurance Agreement with MBIA Insurance Corporation ("MBIA"), dated June 6, 2006 (the "MBIA Insurance Agreement"), and pursuant to the MBIA Insurance Agreement, MBIA issued its Debt Service Reserve Surety Bond No. 48026(2), effective June 6, 2006 (the "2006 Reserve Insurance Policy"). The 2006 Reserve Insurance Policy covers principal and interest payments on the 2006 Bonds, up to the policy limit stated in the 2006 Reserve Insurance Policy. The initial policy limit of the 2006 Reserve Insurance Policy was set at $365,826. The Prior Bonds constitute a first charge upon the Net Revenues (as hereinafter defined) The Prior Ordinances provide that the City may authorize and issue additional bonds payable out of the Net Revenues ranking on parity with the Parity Bonds (as hereinafter defined) for the purpose of financing the cost of future additions, extensions and improvements to the works subject to the provisions of the Prior Ordinances. The conditions precedent to the issuance of additional parity bonds set forth in the Prior Ordinances, as described above, have been satisfied, subject to approval by the State of Indiana (the "State"). The City desires to authorize the issuance of a bond anticipation note or notes hereunder, if necessary, payable from the proceeds of the revenue bonds authorized herein (the "BANS"), and to authorize the refunding of said BANS, if issued. The City desires to enter into a Financial Assistance Agreement, in substantially the form attached hereto as Exhibit B, with the Indiana Finance Authority together with any subsequent amendments thereto (the "Financial Assistance Agreement"), which would pertain to the Project and the financing thereof, if any of the 2009 Bonds are sold to the Indiana Finance Authority pursuant to its Drinking Water Revolving Loan Program (the "SRF Program"); and The Council now finds that all conditions precedent to the adoption of an ordinance authorizing the issuance of revenue bonds and BANS 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 SOUTH BEND, IIVDIA.NA, AS FOLLOWS: SECTION 1. Proiect. The City shall proceed with the Project in accordance with the cost estimates, and the plans and speci5cations heretofore prepared and filed by the c;ansulting -3- engineers employed by the City, which cost estimates, plans and specif cations are hereby approved and are hereby incorporated by reference as if set forth in full at this place, two copies of which are on file and available for public inspection in the office of the City Clerk pursuant to I.C. §36-1-5-4. The actions of the Board taken in connection with the Project are hereby approved, ratified, and confirmed. The Project shall be constructed and the bonds herein authorized shall be issued pursuant to and in accordance with 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 (and its Drinking Water System as defined in the Financial Assistance Agreement) and all real estate and equipment used in connection therewith and appurtenances thereto, and all extensions, additions and improvements thereto and replacements thereof now or at anytime hereafter constructed or acquired). SECTION 2. Authorization of Obligations. (a) The City shall issue its "Waterworks Revenue Bonds of 2009" (the "2009 Bonds"), in one or more series (as designated by the City, a "Series"), in an original principal amount not to exceed Six Million Two Hundred Thousand Dollars ($6,200,000) (the "Authorized Amount"), 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 2009 Bonds and funding a debt service reserve as described herein. The City reasonably expects to reimburse expenditures for the Project with the proceeds of the 2009 Bonds and this constitutes a declaration of official intent to reimburse expenditures under Treas. Reg. 1.150-2(e) and Indiana Code 5-1-14-6(c). The 2009 Bonds shall rank on parity for all purposes with the Prior Bonds. The 2009 Bonds shall be issued in denominations of One Thousand Dollars ($1,000) or any integral multiple thereof, or in authorized denominations of One Dollar ($1.00) consistent with the requirements of the SRF Program or the Indiana Bond Bank, numbered consecutively from 1 upward, and dated the date of delivery. The 2009 Bonds shall bear interest at a rate or rates not exceeding seven percent (7%) per annum, and interest shall be payable semiannually on January 1 and July 1 in each year, with the beginning date of interest payments being finally determined by the Mayor as the executive of the City (the "Executive") and the Controller as the fiscal officer of the City, or any acting, assistant or deputy controller of the City (the "Fiscal Officer"), as evidenced by delivery of the executed initial issue of the 2009 Bonds to the Registrar for authentication. The 2009 Bonds shall be sold pursuant to I.C. 5-1-11, as amended, unless sold to the Indiana Finance Authority through the SRF Program or the Indiana Bond Bank. Interest on the BANs and the 2009 Bonds shall be calculated according to a 360- day calendar year containing twelve 30-day months. The 2009 Bonds shall mature beginning not earlier than January 1, 2011 and on January 1 of each year thereafter over a period ending not later than 20 years after substantial completion cf the Project, in su:.h amounts as is deemed appropriate by the Executive, as evidenced by delivery or the executed initial issue of the 2009 Bonds to the Registrar for authentication, provided that if ar~y o` th:. 200:' Bon; s are sold to the Indiana Finance Authority through the rk~ Program, ±he;~ in ,:.•:~~~:I: ~~;ounts that will p:-oduce -4- .annual debt service that is as level as practicable, except as otherwise provided in the Financial Assistance Agreement. All or a portion of the 2009 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 2009 Bonds, relative to the form of 2009 Bonds contained in this Ordinance, to reflect any mandatory sinking fund redemption terms. (b) The City shall issue, if necessary, BANS for the purpose of procuring interim financing for the Project. Any such issuance shall be in accord with the provisions of Section 25 of this Ordinance. (c) Notwithstanding anything contained herein, the City may accept any other forms of financial assistance, as and if available, from the SRF Program (including without limitation any forgivable loans, grants or other assistance whether available as an alternative to any 2009 Bond or BAN related provision otherwise provided for herein or as a supplement or addition thereto). If required by the SRF Program to be eligible for such financial assistance, one or more of the Series of the 2009 Bonds issued hereunder maybe issued on a basis such that the payment of the principal of or interest on (or both) such Series of 2009 Bonds is junior and subordinate to the payment of the principal of and interest on other Series of 2009 Bonds issued hereunder (and/or any other revenue bonds secured by a pledge of Net Revenues, whether now outstanding or hereafter issued), all as provided by the terms of such Series of 2009 Bonds as modified pursuant to this authorization. Such financial assistance, if any, shall be as provided in the Financial Assistance Agreement and the 2009 Bonds of each Series of 2009 Bonds issued hereunder (including any modification made pursuant to the authorization in this paragraph to the form of the 2009 Bonds otherwise contained herein). SECTION 3. Pledge of Net Revenues; Payment of Principal and Interest. The 2009 Bonds, and any bonds ranking on a parity therewith, including the Prior Bonds, as to principal, premium, if any, and interest, shall be payable solely from and are secured by an irrevocable pledge of and shall constitute a charge upon all the Net Revenues {as defined in the following sentence) of the works. The term "Net Revenues," as used herein, shall be defined as the gross revenues of the works after deduction only for the payment of the reasonable expenses of operation, repair and maintcnanc.. of the works, and which reasonable expenses of operation, repair and maintenance specifrcally do not i.~clude any rates or charges in lieu :,f taxes made and collected by the works and tTMa~~sf~rred t~T t:~e City in accordance with. the :pct (the "PTI~OT Payment"). The City specifc~.'.y ~ubor:ii~'_at~s its rigrit to receive any P?~1=,C{I Payment '~~ *.Iz~ ,rights of the holders of the ?0~~5' Bond~~., Esnn any Parity Bonds, inclu~i~zg:~f: Pr=.~~r 1?ond,~:, .Fc recerE~e p~:yrrient of the rrir.,cdlo~.~. p,: eY'~at~rn.. a.f ary, and interest, pcya'~te %.r ~ :°'.;"i b~z~ds. P'LI,,~: ~, c Payments shall be made not more frequently ±han.semiannually on January 2 and July 2 and may be made only if all monthly deposits required by this Ordinance are current and held as of such dates in the Operation and Maintenance Fund and the Sinking Fund (each as defined herein). Other than PILOT Payments and normal and regular pro rata payments to the City for shared expenses charged by the City to its various departments, no moneys derived from the revenues of the works shall be transferred to the General Fund of the City or be used for any purpose not connected with the works. The provisions of this Section 3 amend and supersede the corresponding provisions of Section 3 of the 1997 Ordinance, Section 3 of the 2000 Ordinance, Section 3 of the 2002 Ordinance and Section 3 of the 2005 Ordinance as to the definition of "Net Revenues" and the subordination by the City of its right to receive any PILOT Payments to the rights of the bondholders of the 2009 Bonds and any Parity Bonds to receive debt service payments on such 2009 Bonds and Parity Bonds. Such amendments cure ambiguities or formal defects or omissions, and furthermore, the Council hereby determines that such amendments do not aversely affect the interest of the owners of the Parity Bonds. Therefore, such amendments are made in compliance with Section -23 of the 1997 Ordinance, Section 23 of the 2000 Ordinance, Section 23 of the 2002 Ordinance and Section 23 of the 2005 Ordinance. All payments of interest on the 2009 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 2009 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. If any of the 2009 Bonds or BANs are registered in the name of the Indiana Finance Authority or the Indiana Bond Bank, the principal thereof and interest thereon shall be paid by wire transfer to such financial institution if and. as directed by the Indiana Finance Authority or Indiana Bond Bank, as the case may be, on the due date of such payment or, if such due date is a day when financial institutions are not open for business, on the business day immediately after such due date. So long as the Indiana Finance Authority or Indiana Bond Bank is the owner of any of the 2009 Bonds or BANs, such 2009 Bonds or BANS shall be presented for payment as directed by the Indiana Finance Authority or Indiana Bond Bank, as the case may be. All principal payments and premium payments, if any, on the 2009 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 2009 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 any 2009• Bonds sold to the India:~a Finance Authority or free Indiana Bond Bank shall be paid from the date of delivery of the 2009 Bonds. Interest on 2009 Bonds not sold - to- trYe Indiana Finance Authority or the Indiana Bond Bank s:.ali be paya,le from the interest ;~uyment• date to which interest has beet: paid next prece~ing -~'~e aatirent:icaion .date thereof • .- ~. -,less su:;i7 2009 Bonds are autl'ienti:;ate~ alter the RccordJ L'att: ict;- ~ interest ~tuyment gate acid Ei er~iefore S~aCI? lnteiest.p?.y:?1"•,lt ~,ciE; ~ tii't ,•~ c ~ ci-a`i Fy,.=•.-_ t,-,'. - ,,, . - _~i:.•.. ca, e ~__~~~ .,_~ ~:.:~:...z,:~ ~~r~:st ~~:`:3I2"i ~.~u~t~ ~r.~erest . ~ F' ~.`'IGAlr;• ~.~~~: - ~s Llr'cleSS autheritr;wted Er:~i u3" t~.. Jr6`- t~~c^^. ~d:r.'t,()?.:_ ~1 ~,~,o; ~ .;i t _2°• ....:,~ . iii;,.°~;;:~ ~. RS"i:.';xt . ~" j .. ~p - -. date, in which case they shall beat interest from the original date, until the principal shall be fully paid. SECTION 4. Transfer and Exchange of Bonds. Each 2009 Bond 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 2009 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 2009 Bond or Bonds 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 2009 Bonds 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. In the event any 2009 Bond 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 bond for which it was issued, provided that, in the case of any mutilated bond, 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 furnished 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 bond 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 2009 Bond with their reasonable fees and expenses in this connection. Any 2009 Bond issued pursuant to this paragraph shall be deemed an original, substitute contractual obligation of the City, whether or not the lost, stolen or destroyed 2009 Bond 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 2009 Bonds issued hereunder. SECTION 5. Registrar and Paying Agent. The Fiscal Officer is hereby authorized to appoint a qualified financial institution to serve as Registrar and Paying Agent for the 2009 Bonds (together with any successor, the "Registrar" or "Paying Agent"). The Registrar is hereby charged with the responsibility of authenticating the 2009 Bonds, 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 such institution as will enable the institution to perform the _ .services required of a Registrar and Paying Agerit. 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 afi the 2009 Bons as hscal agency charges.- ,. ~~ ~ The R.G;gi~trar anc~ P.ay~ng ~,gen;t.may a.t any time resign. as .Registrar. and Paying Agent by . ._,giving. tk~.~rty (30~ days wri.tt~TM noti.,:e t~ the Ca_t~, and by first-class mai' to eacl: registered owner -~7- of the 2009 Bonds 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 2009 Bonds then outstanding by first-class mail of the removal of the Registrar and Paying Agent. Notices to the registered owners of the 2009 Bonds shall be deemed to be given when mailed by first-class mail to the addresses of such registered owners as they appear on the Registration Record. Any predecessor Registrar and Paying Agent shall deliver all the 2009 Bonds, cash or investments related thereto in its possession and the Registration Record to the successor Registrar and Paying Agent. As to the BANS, the Fiscal Officer shall serve as Registrar and Paying Agent and is hereby charged with the duties of Registrar and Paying Agent. SECTION 6. Terms of Redemption. The 2009 Bonds may be made redeemable at the option of the City on thirty (30) days' notice, in whole or in part, in any order of maturities selected by the City (or in the case of any 2009 Bonds sold to the Indiana Finance Authority or Indiana Bond Bank, in inverse order of maturity) and by lot within a maturity, on dates and with premiums and other terms, as finally determined by the Executive with the advice of the City's financial advisor, as evidenced by delivery of the executed initial issue of the 2009 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 2009 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 2009 Bonds redeemed, provided, however, that failure to give such notice by mailing, or any defect therein, with respect to any 2009 Bond shall not affect the validity of any proceedings for the redemption of any other 2009 Bonds. The notice shall specify the date and place of redemption, the redemption price and the CUS1P numbers of the 2009 Bonds called for redemption. The place of redemption maybe determined by the City. Interest on the 2009 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 2009 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 2009 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 2009 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 2009 Bonds or portions thereof called for redemption, including accrued interest thereon to the redemption date. No payment shall be made upon any 2009. Bond or portion thereof called. for redemption until such, 2009. Bond shall haws been -8- 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. The BANs are prepayable by the City, in whole or in part, at any time upon seven (7) days' notice to the owner of the BANs, without any premium. SECTION 7. Execution and Negotiability. The 2009 Bonds shall be signed in the name of the City by the manual or facsimile signature of the Executive and attested by the manual or facsimile signature of the City Clerk, 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 2009 Bonds, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery. The 2009 Bonds shall also be authenticated by the manual signature of the Registrar, and no 2009 Bond shall be valid or become obligatory for any purpose until the certificate of authentication thereon has been so executed. The 2009 Bonds shall have all of the qualities and incidents of negotiable instruments under the laws of the State of Indiana, subject to the provisions for registration herein. SECTION 8. Authorization for Book-Entry System. The 2009 Bonds 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 2009 Bond 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 2009 Bonds as are necessary or appropriate to accomplish or recognize such book-entry form 2009 Bonds. During any time that the 2009 Bonds are held in book-entry form on the books of a Clearing Agency, (1) any such 2009 Bond 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 2009 Bond is so registered shall be, and the City and the Registrar' and Paying Agent may deem and treat such Clearing Agency as, the absolute owner and holder of such 2009 Bond 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 2009 Bond, 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 2009 Bond, including, without limitation, any responsibility or obligation hereunder to maintain accurate records of any interest in any 2009 Bond or any -9- responsibility or obligation hereunder with respect to the receiving of payment of principal of or interest or premium, if any, on any 2009 Bond, the receiving of notice or the giving of consent; and (4) the Clearing Agency is not required to present any 2009 Bond 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 2009 Bonds to the effect that such Clearing Agency is unable or unwilling to discharge its responsibility as a Clearing Agency for the 2009 Bonds, or the City elects to discontinue its use of such Clearing Agency as a Clearing Agency for the 2009 Bonds, 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 the holders of the 2009 Bonds, as are necessary or appropriate to discontinue use of such Clearing Agency as a Clearing Agency for the 2009 Bonds and to transfer the ownership of each of the 2009 Bonds to such person or persons, including any other Clearing Agency, as the holder of the 2009 Bonds may direct in accordance with this Ordinance. Any expenses of such discontinuance and transfer, including expenses of printing new certificates to evidence the 2009 Bonds, shall be paid by the City. During any time that the 2009 Bonds are held in book-entry form on the books of a Clearing Agency, the Registrar shall be entitled to request and rely upon a certificate or other written representation from the Clearing Agency or any participant or indirect participant with respect to the identity of any beneficial owner of the 2009 Bonds as of a record date selected by the Registrar. For purposes of determining whether the consent, advice, direction or demand of a registered -owner of a 2009 Bond has been obtained, the Registrar shall be entitled to treat the beneficial owners of the 2009 Bonds as the bondholders and any consent, request, direction, approval, objection or other instrument of such beneficial owner maybe obtained in the fashion described in this Ordinance. During any time that the 2009 Bonds 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 issuer shall be the responsibility of the Registrar, and (ii) comply with all requirements of the Clearing Agency, including without limitation same day funds settlement payment procedures. Further, during any time that the 2009 Bonds 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 2009 Bonds. The form and tenor of the 2009 Bonds shall be substantially as follows, all blanks to be filled in properly and all necessary additions and deletions to be made prior to delivery: -10- R- UNITED STATES OF AMERICA STATE OF INDIANA COUNTY OF ST. JOSEPH CITY OF SOUTH BEND, INDIANA WATERWORKS REVENUE BOND OF 20[ ] Interest Maturity Original Rate Date Date [See Exhibit A] , 2009 REGISTERED OWNER: PRINCII'AL SUM: Dollars ($, CUSIP No. The City of South Bend, in St. Joseph, County, State of Indiana (the "City"), for value received, hereby promises to pay to the Registered Owner set forth above, solely out of the special revenue fund hereinafter referred to, the Principal Sum set forth above [, or so much thereof as may be advanced from time to time and be outstanding as evidenced by records of the Registered Owner making payment for this bond, or its assigns,] on [the Maturity Date set forth above] or [ in the years and in the amounts set forth on Exhibit A attached hereto] [(unless this bond be subject to and be called for redemption prior to maturity as hereafter provided)], and to pay interest thereon until the Principal Sum shall be fully paid at the Interest Rate per annum specified 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 , 20 , in which case it shall bear interest from the Original Date, which interest is payable semiannually on January 1 and July 1 of each year, beginning on 1, 20 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 "Registrar" or "Paying Agent"), in Indiana.] All payments of interest on this bond shall be paid by [check mailed one business day prior to the interest payment date] [wire transfer for deposit to a financial institution as directed by the Indiana Finance Authority (the "Authority") on the due date or, if such due date is a day when financial institutions are not open for business, on the business day immediately after such due date] to the Registered Owner as of the Authentication Date 2009 -11- 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 [Bonds (as hereinafter defined) held by the Authority, by wire transfer or deposit to a financial institution as directed by the Authority on the due date or, if such due date is a day when financial institutions are not open for business, on the business day immediately after such due date] [a Registered Owner of $1,000,000 or more in principal amount of the Bonds (as hereinafter defined), by wire transfer on the due date upon written direction of such owner provided at least fifteen (15) days prior to the maturity date or redemption date). THE CITY SHALL NOT BE OBLIGATED TO PAY THIS BOND OR THE INTEREST HEREON EXCEPT FROM THE HEREINAFTER DESCRIBED SPECIAL FUND, AND NEITHER THIS BOND NOR THE ISSUE OF WHICH IT IS A PART SHALL IN ANY RESPECT CONSTITUTE A CORPORATE INDEBTEDNESS OF THE CITY WITHIN THE PROVISIONS AND LIMITATIONS OF THE CONSTITUTION OF THE STATE OF INDIANA. It is hereby certified and recited that all acts, conditions and things required to be done precedent to and in the execution, issuance and delivery of this bond have been done and performed in regular and due form as provided bylaw. This bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been executed by an authorized representative of the Registrar. This bond is one of an authorized issue of bonds of the City of South Bend, Indiana, of like date, tenor and effect, except as to denomination, numbering, rates of interest, redemption terms and dates of maturity, aggregating Dollars ($ ), numbered consecutively from 1 upward (the "Bonds"), issued for the purpose of providing funds to be applied on the cost of improvements to the City's waterworks (the "Project"), to refund interim notes issued in anticipation of the Bonds, if any, to fund a debt service reserve, 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 , 2009, entitled "An Ordinance of the Common Council of the City of South Bend, Indiana, Concerning the Construction of Improvements to the Municipal Waterworks of the City of South Bend, Indiana; Authorizing the Issuance of Revenue Bonds for such Purpose in the Principal Amount not to exceed Dollars ($ ); Addressing Other Matters Connected Therewith, Including the Issuance of Notes in Anticipation of Bonds; and Repealing Ordinances Inconsistent Herewith" (the "Ordinance"), and in accordance -12- 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 Prior 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 after deduction only for the payment of the reasonable expenses of operation, repair and maintenance of the works, and which reasonable expenses of operation, repair and maintenance specifically do not include any rates or charges in lieu of taxes made and collected by the works and transferred to the City in accordance with the Act. 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 "Waterworks Revenue Bonds of 2006" dated June 1, 2006 (the "2006 Bonds"), "Waterworks Revenue Bonds of 2002" dated June 1, 2002 (the "2002 Bonds"),"Waterworks Revenue Bonds of 2000" dated June 12, 2000 (the "2000 Bonds") and the "Waterworks Revenue Bonds of 1997" dated December 1, 1997 (the "1997 Bonds"), (the 2006 Bonds, 2002 Bonds, the 2000 Bonds and the 1997 Bonds together, the "Prior Bonds"), each authorized by ordinance of the City, 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] [Operation and Maintenance (as defined in the Financial Assistance Agreement)] 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. The City covenants that for so long as the Bonds and any bonds issued on a parity therewith, including the Prior 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 to 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. -13- The bonds of this issue maturing on and after January 1, 2021 are redeemable at the option of the City on January 1, 2020, or any date thereafter, on thirty (30) days' notice, in whole or in part, [in any order of maturities selected by the City] [in inverse order of maturity] and by lot within a maturity, at 100% of face value, together with the following premiums: _% if redeemed on January 1, 20_ or thereafter before January 1, 20_; _% if redeemed on January 1, 20_ or thereafter before January 1, 20_; and 0% if redeemed on January 1, 20_, 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 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 -14- maybe, in exchange therefor. This bond maybe 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 [$1.00) [$1,000) or any integral multiple thereof.) [Reference is hereby made to the Financial Assistance Agreement, as amended from time to time, between the City and the Indiana Finance Authority as to certain terms and covenants pertaining to the Project and this bond (the "Financial Assistance Agreement").] [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.] -15- IN WITNESS WHEREOF, the City of South Bend, in St. Joseph County, Indiana, has caused this bond to be executed in its corporate name by the manual or facsimile signature of the Mayor, and its corporate seal to be hereunto affixed, imprinted or impressed by any means and attested manually or by facsimile by its Clerk. CITY OF SOUTH BEND, INDIANA By: Mayor (SEAL) ATTEST Clerk REGISTRAR'S CERTIFICATE OF AUTHENTICATION It is hereby certified that this bond is one of the bonds described in the within-mentioned Ordinance duly authenticated by the Registrar. as Registrar By Authorized Representative The following abbreviations, when used in the inscription of the face of this bond, shall be construed as through they were written out in full according to applicable laws or regulations: TEN. COM. as tenants in common TEN. ENT. as tenants by the entireties JT. TEN. as joint tenants with right of survivorship and not as tenants in common UNIF. TRAN. MIN. ACT Custodian (Gust.) (Minor) under Uniform Transfer to Minors Act of (State) Additional abbreviations may also be used although not in the above list. -16- 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 $1,000) of the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints ,attorney to transfer the within bond on the books kept for the registration thereof with full power of substitution in the premises. Dated: Signature Guaranteed: 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. 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)(i) Except as provided in section 10(a)(ii), the 2009 Bonds shall be sold in a competitive sale. 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 2009 Bonds are being issued, the total amount 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. The Fiscal Officer is designated as the officer responsible for the sale of the 2009 Bonds, and shall provide or cause to be provided all notices required by law. -17- All bids for the 2009 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 2009 Bonds shall be required to name the rate or rates of interest which the 2009 Bonds are to bear, which shall be the same for all 2009 Bonds maturing on the same date and the interest rate bid on any maturity of 2009 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 2009 Bonds to the bidder who offers the lowest interest cost, to be determined by computing the total interest on all the 2009 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-seven and one-half percent (97.5%) of the par value of the 2009 Bonds for any such 2009 Bonds to be sold to the Indiana Finance Authority or the Indiana Bond Bank or ninety-nine percent (99%) of the par value of the 2009 Bonds for any such 2009 Bonds to be sold by competitive sale, 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 2009 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 2009 Bonds have been properly sold and executed, the Fiscal Officer shall receive from the purchasers payment for the 2009 Bonds and shall provide for delivery of the 2009 Bonds to the purchasers. The City may receive payment for the 2009 Bonds in installments. (ii) As an alternative to public sale, the Fiscal Officer may negotiate the sale of the 2009 Bonds to the Indiana Finance Authority or the Indiana Bond Bank at an interest rate or rates not exceeding seven percent (7%) per annum. The Mayor and the Fiscal Officer are hereby authorized to (A) submit an application to the SRF Program and the Indiana Bond Bank, (B) execute the Financial Assistance Agreement (including any amendment thereof) with the Indiana Finance Authority or purchase agreement with the Indiana Bond Bank, and (C) sell such bonds, in one or more Series, upon such terms as are acceptable to the Mayor and the Fiscal Officer consistent with the terms of this Ordinance. The Financial Assistance Agreement for the 2009 Bonds and the Project shall be executed by the City and the Indiana Finance Authority. The substantially final form of Financial Assistance Agreement attached hereto as Exhibit B and incorporated herein by reference is hereby approved by the Council, and the Mayor and Fiscal Officer are hereby authorized to execute and deliver the same, and to approve any changes in form or substance to the Financial Assistance Agreement, such approval to be conclusively evidenced by its execution. The Mayor and Fiscal Officer are hereby authorized to execute and deliver an amended and restated Financial Assistance Agreement or subsequent Financial Assistance Agreement if an earlier Series of 2009 Bonds has been purchased by the Indiana Finance -18- Authority and may approve any changes in form or substance to the attached Financial Assistance Agreement as they determine to be necessary or desirable in connection therewith, and such approval shall be conclusively evidenced by its execution. (b) The 2009 Bonds, as and to the extent 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 2009 Bonds to the purchaser, to draw all proper and necessary warrants, and to do whatever acts and things which maybe 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 2009 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. In order to assist any underwriter of the 2009 Bonds in complying with paragraph (b)(5) of the SEC Rule by undertaking to make available appropriate disclosure about the City and the 2009 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 2009 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 performance by the City of its obligations thereunder by or through any employee or agent of the City, are hereby approved, and the City shall comply with and carry out the terms thereof. (d) The Fiscal Officer is hereby authorized and directed to obtain a legal opinion as to the validity of the 2009 Bonds from Barnes & Thornburg LLP, and to furnish such opinion to the purchasers of the 2009 Bonds or to cause a copy of said legal opinion to be printed on each 2009 Bond. The cost of such opinion shall be paid out of the proceeds of the 2009 Bonds. (e) In connection with the sale of the 2009 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 2009 Bonds, and the taking of such actions and the execution and delivery of such agreements and instruments are hereby approved. SECTION 11. Use of Proceeds. The accrued interest received at the time of delivery of the 2009 Bonds, if any, and premium, if any, shall be deposited in the Bond and Interest Account of the Sinking Fund (as hereafter defined) and applied to payments on the 2009 Bonds on the first interest payment date. An amount of proceeds from the sale of the 2009 Bonds of any -19- Series equal to the amount described in Section 14(b) will be deposited to the Subaccount of the Debt Service Reserve Account for the 2009 Bonds of such Series and applied as described below. The remaining proceeds from the sale of the 2009 Bonds, to the extent not used to refund BANS issued pursuant to this Ordinance, shall be deposited in a fund of the utility hereby created and designated as "City of South Bend, Indiana Waterworks 2009 Bond Construction Fund" (the "Construction Fund"). The proceeds deposited in the Construction Fund, together with all investment earnings thereon, shall be expended only for the purpose of paying the costs of the Project and the costs of selling and issuing the 2009 Bonds, including the premium for any bond insurance obtained for the 2009 Bonds. Any balance remaining in the Construction 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 2009 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 2009 Bonds were originally issued, all in accordance with I.C. 5-1-13, as amended or as otherwise permitted by law. With respect to any 2009 Bonds sold to the Indiana Finance Authority, to the extent that (a) the total principal amount of the 2009 Bonds is not paid by the purchaser or drawn down by the City, or (b) proceeds remain in the Construction Fund and are not applied to the Project (or any modifications or additions thereto) approved by IDEM and the Indiana Finance Authority, the City shall reduce the principal amount of the 2009 Bond maturities to effect such reduction in a manner that will still achieve as level annual debt service as practicable as described in Section 2(a). SECTION 12. Revenue Fund. There is hereby continued a fund of the utility created and designated in the Prior Ordinances as the Revenue Fund (the "Revenue Fund"). All income and revenues of the works shall be paid into the Revenue Fund for application as described below. SECTION 13. Operation and Maintenance Fund. There is hereby continued a fund of the utility created and designated in the Prior Ordinances as the Operation and Maintenance Fund (the "Operation and Maintenance Fund") (also shown on the books of the utility as the Operating 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 so that the balance in this Fund shall be sufficient to pay the expenses of operation, repair and maintenance for the then next succeeding two calendar months. .The moneys credited to this Fund shall be used for the payment of the reasonable and proper operation, repair and maintenance expenses of the 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 two calendar months 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. -20- SECTION 14. Sinking Fund. There is hereby continued a fund of the utility created and designated in the Prior Ordinances as the Sinking Fund (the "Sinking Fund"), 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 for the payment of any fiscal agency charges in connection with such payment. The Sinking Fund is divided into two accounts designated as the Bond and Interest Account and the Debt Service Reserve Account, which are pledged for the purposes set forth below. There shall be set aside and deposited in the Sinking Fund, as available, and as hereinafter provided, a sufficient amount of the Net Revenues to meet the requirements of the Bond and Interest Account (also shown on the books of the utility as the Bond Sinking Fund) and of the Debt Service Reserve Account. Such payments shall continue until the balance in the Bond and Interest Account, plus the balance in the Debt Service Reserve Account, equals the amount needed to redeem all of the then outstanding bonds. (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 Bond and Interest Account an amount equal to the sum of one-twelfth (1/12) of the principal and one-sixth (1/6) of the interest on all then outstanding bonds payable from Net Revenues on the next succeeding principal and interest payment dates, until the amount so credited shall equal the principal payable during the next succeeding twelve (12) calendar months and the interest payable during the next succeeding six (6) calendar months. There shall similarly be credited to the account any amount necessary to pay when due the bank fiscal agency charges for paying principal of and interest on the bonds as the same become payable. The City shall, from the sums deposited in the Sinking Fund and credited to the Bond and Interest Account, remit promptly 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. The City may, upon the issuance of the 2009 Bonds of any Series, establish within the Debt Service Reserve Account a subaccount for the 2009 Bonds of such Series (each, a "Subaccount"). The Debt Service Reserve Account (excluding any Subaccounts) shall constitute the margin for safety and as protection against default in the payment of principal of and interest on the Bonds (as hereinafter defined) (excluding any 2009 Bonds of any Series for which a Subaccount was established), and the moneys in the Debt Service Reserve Account (excluding any Subaccounts) shall be used to pay current principal and interest on the Bonds (excluding any 2009 Bonds of any Series for which a Subaccount was established) to the extent that moneys in the Bond and Interest Account are insufficient for that purpose. The Subaccount of the Debt Service Reserve Account for the 2009 Bonds of any Series shall constitute the margin for safety and as protection against default in the payment of principal of and interest on the 2009 Bonds of such Series, and the moneys in such Subaccount shall be used to pay current principal and interest on the 2009 Bonds of such Series to the extent that moneys in the Bond and Interest Account are insufficient for that purpose. (c) No amounts in the Subaccount of the Debt Service Reserve Account for the 2009 Bonds of any Series shall be available to pay any principal of or interest or redemption premium, if arty, on any Bonds, except the 2009 Bonds of such Series. (d) No amounts in the Debt Service Reserve Account shall be available to pay any principal of or interest or redemption premium, if any, on any 2009 Bonds of any Series for -21- which a Subaccount was established, except that any amounts in the Subaccount of the Debt Service Reserve Account for the 2009 Bonds of any Series shall be available to pay the principal of or interest or redemption premium, if any, on the 2009 Bonds of such Series. (e) In this Ordinance the term "Parity Bonds" means any and all bonds ranking on a parity with the 2009 Bonds issued hereunder (including the Prior Bonds) which are (i) now outstanding or issued in the future by the City and (ii) which are payable from the net revenues of the City's waterworks. (f) In this Section 14, the term "Bonds" means the 2009 Bonds issued hereunder and all Parity Bonds. (g) In this Ordinance, the term "Reserve Requirement" for the Bonds (excluding the 2009 Bonds of any Series for which a Subaccount was established) means the least o£ (i) the maximum annual debt service on the Bonds (excluding the 2009 Bonds of any Series for which a Subaccount was established), (ii) 125% of the average annual debt service on the Bonds (excluding the 2009 Bonds of any Series for which a Subaccount was established), or (iii) 10% of the proceeds of the Bonds (excluding the 2009 Bonds of any Series for which a Subaccount was established); provided, however, that the "Reserve Requirement" for the Bonds (excluding the 2009 Bonds of any Series for which a Subaccount was established) which are sold to the Indiana Finance Authority through the SRF Program means the maximum annual debt service on the Bonds (excluding the 2009 Bonds of any Series for which a Subaccount was established). In this Ordinance, the term "Reserve Requirement" for the 2009 Bonds of each Series for which a Subaccount was established means the least of: (i) the maximum annual debt service on the 2009 Bonds of such series, (ii) 125% of the average annual debt service on the 2009 Bonds of such Series, or (iii) 10% of the proceeds of the 2009 Bonds of such Series; provided, however, that the "Reserve Requirement" for the 2009 Bonds of any Series for which a Subaccount was established which are sold to the Indiana Finance Authority through the SRF Program means the maximum annual debt service on the 2009 Bonds of such Series. (h) Subject to Section 14(i) and Section 14(j) below, the City shall maintain in the Debt Service Reserve Account (excluding any Subaccounts) an amount equal to the Reserve Requirement for the Bonds (excluding the 2009 Bonds of any Series for which a Subaccount was established). Subject to Section 14(i) and Section 14(j) below, the City shall maintain in the Subaccount of the Debt Service Reserve Account for the 2009 Bonds of each Series for which a Subaccount was established an amount equal to the Reserve Requirement for the 2009 Bonds of such Series. (i) To the extent that the amount in the Debt Service Reserve Account (excluding any Subaccounts) on the date of the issuance of the 2009 Bonds of any Series is less than the Reserve Requirement for the Bonds (excluding the 2009 Bonds of any Series for which a Subaccount was established), that portion of the shortfall which exists as of the date of issuance of the 2009 Bonds of such Series shall, at the election of the Executive and Fiscal Officer with the advice of the City's financial advisor, be deposited into the Debt Service Reserve Account (excluding any Subaccounts) either (i) in a single payment, to be paid on the date of the issuance of the 2009 Bonds of such Series, or (ii) in equal monthly installments, over a period not to exceed sixty (60) months after the date of issuance of the 2009 Bonds of such Series, with the -22- first installment due and payable on the date of the issuance of the 2009 Bonds of such Series, and the remaining installments payable on the last day of each calendar month, commencing on the last day of the month in which the 2009 Bonds of such Series are issued. To the extent that the amount in the Subaccount of the Debt Service Reserve Account for the 2009 Bonds of any Series on the date of the issuance of the 2009 Bonds of such Series is less than the Reserve Requirement for the 2009 Bonds of such Series, that portion of the shortfall which exists as of the date of issuance of the 2009 Bonds of such Series shall, at the election of the Executive and Fiscal Officer with the advice of the City's financial advisor, be deposited into such Subaccount either (i) in a single payment, to be paid on the date of the issuance of the 2009 Bonds of such Series, or (ii) in equal monthly installments, over a period not to exceed sixty (60) months after the date of issuance of the 2009 Bonds of such Series, with the first installment due and payable on the date of the issuance of the 2009 Bonds of such Series, and the remaining installments payable on the last day of each calendar month, commencing on the last day of the month in which the 2009 Bonds of such Series are issued. (j) To the extent that additional Parity Bonds are issued subsequent to the issuance of the 2009 Bonds of any Series, the additional amounts, if any, which are required to be paid into the Debt Service Reserve Account to satisfy the Reserve Requirement as a result of the issuance of such additional Parity Bonds shall, at the election of the Executive and Fiscal Officer with the advice of the City's financial advisor, be deposited into the Debt Service Reserve Account either (i) in a single payment, to be paid on the date of the issuance of such additional Parity Bonds, or (ii) in equal monthly installments, over a period not to exceed sixty (60) months after the date of issuance of such additional Parity Bonds, with the first installment due and payable on the date of the issuance of such additional Parity Bonds, and the remaining installments payable on the last day of each calendar month, commencing on the last day of the month in which such additional Parity Bonds are issued. (k) Subject to Section 14(i) and Section 14(j) above, any deficiency in the balance maintained in the Debt Service Reserve Account (excluding any Subaccounts) or any Subaccounts shall be promptly made up from the next available Net Revenues after credits into the Bond and Interest Account, on a pro rata basis, calculated by reference to the amount of the deficiency in the Debt Service Revenue Account (excluding any Subaccounts) and each Subaccount. Any moneys in the Debt Service Reserve Account (excluding any Subaccount) in excess of the Reserve Requirement for the Bonds (excluding the 2009 Bonds of any Series for which a Subaccount was established), and any moneys in the Subaccount for the 2009 Bonds of any Series for which a Subaccount was established in excess of the Reserve Requirement for the 2009 Bonds of such Series, maybe used for the prepayment of installments of principal, together with interest due thereon, on the then outstanding Bonds which are then callable or prepayable, or for the purchase of outstanding Bonds or installments of principal of and interest on the Bonds at a price not exceeding par and accrued interest, or may be transferred to the Improvement Fund. (1) As an alternative to holding cash funds in the Debt Service Reserve Account or any Subaccount, the City, with the advice of the Financial Advisor and Bond Counsel, may satisfy all or any part of its obligation to maintain any amount in the Debt Service Reserve Account or such Subaccount by depositing a Credit Facility (as defined in the next sentence) therein (which, for any 2009 Bonds of any Series for which a Subaccount was -23- established which are sold to the Indiana Finance Authority through the SRF Program, will require the written consent of the Indiana Finance Authority to the deposit of any such Credit Facility), provided that such deposit does not adversely affect any then existing rating on the Bonds. A "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. To the extent that any Bonds are insured, and the Credit Facility is not being provided by the insurer of such Bonds, such insurance policy shall be subject to the insurer's prior written consent. (m) In the event a draw is made against the Credit Facility in the Debt Service Reserve Account or any Subaccount, the City shall repay the amount of the draw and related expenses incurred by the issuer(s) of the Credit Facility (the "Credit Facility Issuer") together with interest thereon at the rate specified in the Credit Facility and/or the related Credit Facility Agreement (as defined below). The repayment of the draw amount, related expenses and accrued interest (the "Credit Facility Costs") shall be paid from the funds that would have been set aside above to replenish the Debt Service Reserve Account or such Subaccount, respectively. Repayment of the Credit Facility Costs shall commence in the first month following each draw, in an amount equal to no less than one twelfth (1/12) of the aggregate Credit Facility Costs related to such draw ("Monthly Installments"). Each Monthly Installment shall be deposited by the City into the Debt Service Reserve Account or such Subaccount, respectively, and then payments shall be made from the Debt Service Reserve Account or such Subaccount, respectively, to pay Credit Facility Costs. (n) If and to the extent cash has been deposited to the Debt Service Reserve Account or any Subaccount (other than Monthly Installments to pay Credit Facility Costs), all such cash (or permitted investments) shall be used prior to any drawing under the Credit Facility therein, and repayment of any Credit Facility Costs shall be made prior to replenishment of any such cash amounts. (o) If, in addition to the Credit Facility in the Debt Service Reserve Account or any Subaccount, any other reserve account substitute instrument ("Additional Credit Facility") is provided, drawings under the Credit Facility and any such Additional Credit Facility, and repayment of Credit Facility Costs and reimbursement of amounts due under the Additional Credit Facility, shall be made on a pro-rata basis (calculated by reference to the maximum amounts available thereunder) after applying all available cash therein and prior to replenishment of any such cash draws, respectively. (p) Inasmuch as the Reserve Requirement pertaining to the 1997 Bonds, the 2000 Bonds and the 2006 Bonds is currently being satisfied by the 2002 Reserve Insurance Policy and 2006 Reserve Insurance Policy, the City with the advice of the Financial Advisor and Bond Counsel, may satisfy the Reserve Requirement pertaining to the 2009 Bonds of any Series as follows: (i) by amending the terms of either the 2002 Reserve Insurance Policy or the 2006 Reserve Insurance Policy to expand the scope of either the 2002 Reserve Insurance Policy or the 2006 Reserve Insurance Policy to include -24- the 2009 Bonds of such Series, and by adjusting the Policy Limit of the 2002 Reserve Insurance Policy or the 2006 Reserve Insurance Policy accordingly; or (ii) by obtaining a separate Additional Credit Facility covering the Reserve Requirement attributable to the 2009 Bonds of such Series; or (iii) by funding the Reserve Requirement attributable to the 2009 Bonds of such Series in cash funds, either (i) in a single payment, to be paid on the date of the issuance of the 2009 Bonds of such Series, or (ii) in equal monthly installments, over a period not to exceed sixty (60) months after the date of issuance of the 2009 Bonds of such Series, with the first installment due and payable on the date of the issuance of the 2009 Bonds of such Series, and the remaining installments payable on the last day of each calendar month, commencing on the last day of the month in which the 2009 Bonds of such Series are issued. 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 hereby continued which was created and designated in the Prior Ordinances as the "Waterworks Improvement Fund" (the "Improvement Fund") (also shown on the books of the utility as the Depreciation Fund), and said Fund shall be used for improvements, replacements, additions and extensions of 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 or, if necessary, to eliminate any deficiencies in credits to or minimum balance in the Debt Service Reserve Account of the Sinking Fund, or may be transferred to the Operation and Maintenance Fund to meet unforeseen contingencies in the operation and maintenance of the works. SECTION 16. Investment of Funds. The Revenue Fund and the Sinking Fund each shall be deposited in and maintained as a separate bank account or accounts from all other bank accounts of the City. The Operation and Maintenance Fund and the Improvement Fund may be maintained in a single bank account or accounts, but such bank account or accounts shall likewise be maintained separate and apart from the Revenue Fund and all other bank accounts of the City and apart from the Revenue Fund and the Sinking Fund bank accounts. All moneys deposited in the bank 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, Chapter 9 as amended or supplemented, and in the event of such investment the income therefrom shall become a part of the funds invested and shall be used only as provided in this Ordinance. SECTION 17. 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 - 25 - of Accounts. There shall be furnished, upon written request, to any owner of the 2009 Bonds, 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. If any of the 2009 Bonds are sold to the Indiana Finance Authority through the SRF Program or the Indiana Bond Bank, the City shall establish and maintain the books and other financial records of the Project (including the establishment of a separate account or subaccount for the Project) and the waterworks in accordance with (i) generally accepted governmental accounting standards for utilities, on an accrual basis, as promulgated by the Government Accounting Standards Board and (ii) the rules, regulations and guidance of the State Board of Accounts. SECTION 18. Rate Covenant. The City, by and through the Board and to the fullest extent permitted by law, shall establish, fix, maintain and collect reasonable and just rates and charges for the use of and the services rendered by the works so that such rates and charges shall produce revenues at least sufficient in each year to (a) pay all the legal and other necessary expenses incident to the operation of the works (including Operation and Maintenance as defined in the Financial Assistance Agreement and other costs and expenses required thereunder), including maintenance costs, operating charges, upkeep, repairs, and interest charges on bonds or other obligations, including leases; (b) provide a sinking fund for the liquidation of bonds or other obligations, including leases; (c) provide a debt service reserve on bonds or other obligations, including leases, as required by the terms of such obligations; (d) prove adequate money for working capital; (e) provide adequate money for making extensions and replacements; and (f) provide money for the payment of any taxes that may be assessed against the works. So long as any of the 2009 Bonds are outstanding, none of the facilities and services afforded by the works shall be furnished without a reasonable and just charge being made therefor. SECTION 19. Defeasance. If, when the 2009 Bonds or a portion thereof shall have become due and payable in accordance with their terms or shall have been duly called for redemption or irrevocable instructions to call the 2009 Bonds 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 2009 Bonds or any portion thereof then outstanding shall be paid, or (i) cash, (ii) direct non-callable obligations of (including obligations issued or held in book- entry form on the books of) the U.S. Department of the Treasury, the principal of and the interest on which when due without reinvestment will provide sufficient money, or (iii) any combination of the foregoing, shall be held irrevocably in trust for such purpose, and provision shall also be made for paying all fees and expenses for the payment, then and in that case the 2009 Bonds or such designated portion thereof shall no longer be deemed outstanding or secured by this Ordinance or entitled to the pledge of the Net Revenues. SECTION 20. Additional Bonds. The City reserves the right to issue additional bonds payable out of the Net Revenues ranking on a parity with the 2009 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: -26- (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, and all required payments into the Sinking Fund required by this Ordinance shall have been made. The Reserve Requirement shall be satisfied for the additional Parity Bonds either at the time of delivery of the additional Parity Bonds or over afive-year or shorter period, in a manner which is commensurate with the requirements established in Section 14 of this Ordinance. (b) The Net Revenues in the fiscal year immediately preceding the issuance of any such bonds ranking on a parity with the 2009 Bonds shall be not less than one hundred twenty-five percent (125%) of the maximum annual principal and interest requirements of the then outstanding bonds (including the 2009 Bonds and the Prior Bonds) and the additional Parity Bonds proposed to be issued; or, prior to the issuance of the additional Parity Bonds, the water rates and charges shall be increased sufficiently so that the increased rates and charges applied to the previous fiscal year's operations would have produced Net Revenues for the year equal to not less than one hundred twenty-five percent (125%) of the maximum annual principal and interest requirements of the then outstanding bonds and the additional Parity Bonds proposed to be issued. For purposes of this subsection, the records of the works shall be analyzed and all showings shall be prepared by an independent certified public accountant employed by the City for that purpose. (c) To the extent required by law, the issuance of the proposed additional Parity Bonds and any necessary increase in water rates and charges shall have been approved by the Indiana Utility Regulatory Commission, or any successor body vested by law with authority to approve bonds and water rates and charges of municipal waterworks. (d) The principal of said additional Parity Bonds shall be payable on January 1 and the interest shall be payable on January 1 and July 1 during the periods such principal and interest are payable. (e) If any of the 2009 Bonds are sold to the Indiana Finance Authority through the SRF Program, which bonds remain outstanding, (i) the City obtains the consent of the Authority, (ii) the City has faithfully performed and is in compliance with each of its obligations, agreements and covenants contained in the Financial Assistance Agreement and this Ordinance, and (iii) the City is in compliance with its waterworks permits, except for non- compliance for which purpose the additional Parity Bonds are issued, including refunding bonds issued prior to, but part of the overall plan to eliminate such non-compliance. SECTION 21. Further Covenants of the City. For the purpose of further safeguarding the interests of the owners of the 2009 Bonds, it is hereby specifically provided as follows: (a) The City, through the Board, 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 2009 Bonds are outstanding, the City, through the Board, 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 -27- the laws of the State of Indiana. As an alternative to maintaining such insurance, the City may maintain aself-insurance program with catastrophic or similar coverage so long as such program meets the requirements of any applicable laws or regulations and is maintained in a manner consistent with programs maintained by similarly situated municipalities. If the 2009 Bonds or BANs are sold to the Indiana Finance Authority, such insurance coverage shall be acceptable to the Authority. Insurance proceeds or self-insurance proceeds shall be used in replacing or repairing the property destroyed or damaged, or if not used for that purpose, shall be treated and applied as Net Revenues, but only with the written consent of the Indiana Finance Authority, if the 2009 Bonds or BANs are sold to the Indiana Finance Authority. (c) So long as any of the 2009 Bonds 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 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, and if the 2009 Bonds or BANs are sold to the Indiana Finance Authority, the City shall not do so without the prior written consent of the Indiana Finance Authority; provided, the foregoing restrictions shall not apply to the extent approved otherwise in writing by the owners of a112009 Bonds then outstanding, including the Indiana Finance Authority to the extent that the 2009 Bonds or BANs are sold to the Indiana Finance Authority, and the City receives an opinion of nationally recognized bond counsel to the effect that the transaction will not cause the interest on the 2009 Bonds to be included in gross income for federal income tax purposes. (d) If any of the 2009 Bonds are sold to the Indiana Finance Authority through the SRF Program and remain outstanding, the City shall not borrow any money, enter into any contract or agreement or incur any other liabilities in connection with the waterworks, other than for normal operating expenditures, without the prior written consent of the Indiana Finance Authority, as the case may be, if such undertaking would involve, commit or use the revenues of the waterworks. (e) Except as otherwise specifically provided in Section 20 of this Ordinance and in the Prior Ordinances, so long as any of the 2009 Bonds 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 2009 Bonds, unless all of the 2009 Bonds are defeased, redeemed or retired coincidentally with the delivery of such additional bonds or other obligations. Such subordinate obligations shall be subject to the provisions of Section 20(d). (f) The provisions of this Ordinance shall constitute a contract by and between the City and the owners of the 2009 Bonds, 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 2009 Bonds and so long as any of the principal thereof or interest or premium, if any, thereon remains unpaid, except as expressly provided herein, this Ordinance shall not be repealed or amended in any respect which, in the determination of the Council in its sole discretion, will materially and 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 the determination of the Council in its sole discretion, in any way materially and adversely affects the rights of such owners; provided, however, that if any of the 2009 Bonds are sold to the Indiana Finance -28- Authority through the SRF Program and remain outstanding, the City shall obtain the prior written consent of the Indiana Finance Authority prior to any amendment of this Ordinance. (g) The provisions of this Ordinance shall be construed to create a trust in the proceeds of the sale of the 2009 Bonds for the uses and purposes herein set forth, and the owners of the 2009 Bonds 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 2009 Bonds shall have all the rights, remedies and privileges set forth in the Act. (h) All contracts let by the City in connection with the construction of the Project shall be let after due advertisement as required by the laws of the State of Indiana, and all contractors shall be required to furnish surety bonds in an amount equal to 100% of the amount of such contracts, to insure the completion of said contracts in accordance with their terms, and such contractors shall also be required to carry such employers' liability and public liability insurance as are required under the laws of the State of Indiana in the case of public contracts, and shall be governed in all respects by the laws of the State of Indiana relating to public contracts. (j) The Project shall be constructed under plans and specifications approved by a competent engineer designated by the City. All estimates for work done or material furnished shall first be checked by the engineer and approved by the City. 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 a majority in aggregate principal amount of the 2009 Bonds 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 if any portion of the 2009 Bonds are sold to the Indiana Finance Authority through the SRF Program or to the Indiana Bond Bank, the City shall obtain the prior written consent of the Indiana Finance Authority or the Indiana Bond Bank, as the case may be; provided, further, 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 any 2009 Bond or an advancement of the earliest redemption date on any 2009 Bond, without the consent of the holder of each 2009 Bond so affected; or (b) A reduction in the principal amount of any 2009 Bond, the redemption premium, the Reserve Requirement therefor 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 2009 Bond 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 2009 Bonds then outstanding; or -29- (d) A preference or priority of any 2009 Bond over any other 2009 Bond, without the consent of the holders of a112009 Bonds then outstanding; or (e) A reduction in the aggregate principal amount of the 2009 Bonds required for consent to such supplemental ordinance, without the consent of the holders of a112009 Bonds then outstanding. 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 2009 Bonds. The Registrar shall not, however, be subject to any liability to any owners of the 2009 Bonds by reason of its failure to mail such notice, and any such failure shall not affect the validity of such supplemental ordinance when consented to and approved as herein provided. 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 2009 Bonds of not less than a majority in aggregate principal amount of the 2009 Bonds then outstanding, which instrument or instruments shall refer to the proposed supplemental ordinance described in such notice, and shall specifically consent to and approve the adoption thereof in substantially the form of the copy thereof referred to in such notice as on file with the Registrar, thereupon, but not otherwise, the City may adopt such supplemental ordinance in substantially such form, without liability or responsibility to any owners of the 2009 Bonds, whether or not such owners shall have consented thereto. No owner of any 2009 Bond shall have any right to object to the adoption of such supplemental ordinance or to object to any of the terms and provisions contained therein or the operation thereof, or in any manner to question the propriety of the adoption thereof, or to enjoin or restrain the Council from adopting the same, or from taking any action pursuant to the provisions thereof. Upon the adoption of any supplemental ordinance pursuant to the provisions of his section, this Ordinance shall be, and shall be deemed, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Ordinance of the City and all owners of 2009 Bonds then outstanding shall thereafter be determined, exercised and enforced in accordance with this Ordinance, subject in all respects to such modifications and amendments. Notwithstanding anything contained in the foregoing provisions of this Ordinance, the rights and obligations of the City and of the owners of the 2009 Bonds, and the terms and provisions of the 2009 Bonds and this Ordinance, or any supplemental ordinance, may be modified or amended in any respect with the consent of the City and the consent of the owners of all the 2009 Bonds 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 2009 Bonds, except with regard to the 2009 Bonds owned by the Indiana Finance Authority, and in such case only with the consent of the Indiana Finance Authority, adopt such ordinances supplemental hereto (which supplemental ordinances shall thereafter form a part hereof): -30- (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 2009 Bonds any additional rights, remedies, powers, authority or security that may lawfully be granted to or conferred upon the owners of the 2009 Bonds; (c) To procure a rating on the 2009 Bonds from a nationally recognized securities rating agency designated in such supplemental ordinance, if such supplemental ordinance, in the determination of the Council in its sole discretion, will not materially and adversely affect the owners of the 2009 Bonds; (d) To obtain or maintain bond insurance with respect to the 2009 Bonds; (e) To provide for the refunding or advance refunding of the 2009 Bonds; (f) To provide for the issuance of additional bonds as provided in Section 20 hereof; or (g) To make any other change which, in the determination of the Council in its sole discretion, is not to the material prejudice of the owners of the 2009 Bonds. SECTION 24. Tax Matters. In order to preserve the exclusion of interest on the 2009 Bonds from gross income for federal income tax purposes and as an inducement to purchasers of the 2009 Bonds, the City represents, covenants and agrees that: (a) No person or entity, other than the City or another state or local governmental unit, will use proceeds of the 2009 Bonds or property financed by the 2009 Bond proceeds other than as a member of the general public. No person or entity other than the City or another state or local governmental unit will own property financed by 2009 Bond 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 2009 Bond proceeds will be loaned to any entity or person other than a state or local governmental unit. No 2009 Bond proceeds will be transferred, directly or indirectly, or deemed transferred to anon-governmental person in any manner that would in substance constitute a loan of the 2009 Bond proceeds. (c) The City will not take any action or fail to take any action with respect to the 2009 Bonds that would result in the loss of the exclusion from gross income for federal income tax purposes of interest on the 2009 Bonds pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder as applicable to the 2009 Bonds, including, without limitation, the taking of such action as is necessary to rebate or cause to be rebated arbitrage profits on 2009 Bond proceeds or other monies treated as 2009 Bond proceeds to the federal government as provided in Section 148 of the Code, and will set -31- 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. (d) The City will file an information report on Form 8038-G with the Internal Revenue Service as required by Section 149 of the Code. (e) The City will not make any investment or do any other act or thing during the period that any 2009 Bond is outstanding hereunder which would cause any 2009 Bond to be an "arbitrage bond" within the meaning of Section 148 of the Code and the regulations thereunder as applicable to the 2009 Bonds. 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 2009 Bonds from gross income under federal law (the "Tax Exemption") need not be complied with to the extent the City receives an opinion of nationally recognized bond counsel that compliance with such Tax Section is unnecessary to preserve the Tax Exemption. SECTION 25. Issuance of BANS; Other Actions. (a) The City, having satisfied all the statutory requirements for the issuance of the 2009 Bonds, has the authority to elect to issue a bond anticipation note or notes, repayable from the proceeds received from the sale of the 2009 Bonds (defined herein as the "BANs"). This Council hereby authorizes the issuance and sale of the BANs pursuant to I.C. §5-1-14-5 in one or more series, ranking on a parity with each other, in original aggregate principal amount not to exceed Six Million Two Hundred Thousand Dollars ($6,200,000) to provide interim financing until permanent financing becomes available and to pay for costs of issuing the BANS, and the BANS also may fund capitalized interest thereon. The designation of the BANs shall be "City of South Bend, Indiana Waterworks Bond Anticipation Note of 20_". The BANs shall be issued in fully registered form in denominations of One Thousand Dollars ($1,000) or in denominations of One Dollar ($1.00) if the BANs are sold to the Indiana Finance Authority, or integral multiples thereof, shall be originally dated the date of delivery, shall be numbered consecutively from 1 upward, shall mature not more than five (5) years from the date of issuance, may be renewed or extended from time to time, over a period not exceeding five (5) years from the date of the original issuance of the BANS, in accord with I.C. §5-1.1-5, shall be prepayable on seven (7) days' notice in whole or in part in any authorized denomination without premium or penalty, shall bear interest at a rate not exceeding seven percent (7%) per annum, and shall be sold at a discount not exceeding ninety-nine percent (99%) of the principal amount thereof. The BANs shall be issued pursuant to IC 4-4-11 and IC 13-18-21 if sold to the Indiana Finance Authority. Interest on the BANs shall be payable at maturity. The BANs shall be issued pursuant to IC 13-18-21 if sold to the Indiana Finance Authority, pursuant to IC 5-1.5-8-6.1 if sold to the Indiana Bond Bank or pursuant IC 5-1-14-5 if sold to a financial institution or any other purchaser. If the BANs are sold to the Indiana Finance Authority through the SRF Program, the Financial Assistance Agreement shall serve as the Bond Anticipation Note Agreement. The Executive and the Fiscal Officer are hereby authorized and directed to execute a Bond Anticipation Note Agreement or Financial Assistance Agreement (and any amendments made from time to time) in such form as they shall approve acting upon the advice of counsel. It shall not be necessary for the City to repeat the procedures for the issuance of the 2009 Bonds as -32- the procedures followed before the issuance of the BANS are for all purposes sufficient to authorize the issuance of the 2009 Bonds and to use proceeds thereof to repay the BANS. The principal of the BANS herein authorized is payable solely from proceeds received from the sale of the 2009 Bonds, and the interest thereon may be paid from such proceeds or from the Net Revenues or a combination thereof, and the proceeds received by the City from the sale of the 2009 Bonds and such Net Revenues are hereby irrevocably pledged to the payment of the principal of and interest on the BANS. The Executive is hereby authorized to determine the form of the BANS and to execute the BANS, the Fiscal Officer is hereby authorized to have the BANs prepared, and to attest to the BANS and affix the seal the City or cause a facsimile of the seal of the City to be imprinted or impressed on the BANS. The Fiscal Officer is hereby authorized and directed to obtain the legal opinion as to the validity of the BANS from Barnes & Thornburg LLP. After the BANS shall have been properly executed, the Fiscal Officer shall be authorized to receive from the purchaser thereof payment for the BANS and to provide for delivery of the BANs to the purchaser. The City may receive payment for the BANS in installments. Proceeds received from the sale of the BANs shall be deposited in the Construction Fund referred to in Sec. 11 of this Ordinance. The Fiscal Officer is authorized to sell the BANS to any investor, and to work with the investor to facilitate the sale of the BANs. In any case any officer whose signature or a facsimile signature appears on the BANs shall cease to be such officer before delivery of the BANs, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until delivery of the BANS. Upon execution of the BANS by the Executive and attestation thereof by the City Clerk, the BANs shall constitute the legal, valid and binding obligations of the City. No action shall betaken that would impair the exclusion from gross income of interest on the BANS provided by the Code (as defined in Section 24). In furtherance of the foregoing, the provisions of Section 24 of this Ordinance shall apply to the BANS in the same manner as they apply to the 2009 Bonds. The BANs shall be subject to transfer or exchange in the same manner as the 2009 Bonds, as described in Section 4, and to amendment in the same manner as the 2009 Bonds, as described in Sections 22 and 23. The Executive and the Fiscal Officer each are authorized and directed to execute a purchase agreement with respect to the BANs in such form or substance as they shall approve. As an alternative to any terms of the BANs set forth above and to the method of sale referred to above, the Fiscal Officer may negotiate the sale to the Indiana Finance Authority or the Indiana Bond Bank upon such terms as are acceptable to the Executive and the Fiscal Officer and as are authorized by law for such sale, and the Executive and the Fiscal Officer each are authorized to execute a purchase agreement with the Indiana Finance Authority or the Indiana Bond Bank reflecting such terms. (b) The Executive and the Fiscal Officer may take such other actions or deliver such other certificates and documents needed for the Project or the financing as they deem necessary or desirable in connection therewith. -33- SECTION 26. Rate Ordinance. The rates and charges of the works are set forth or described in Ordinance No. 9561-OS adopted by the Council on January 10, 2005. Such ordinance is hereby incorporated by reference as if set forth in full at this place, two copies of which are on file and available for public inspection in the office of the City Clerk pursuant to I.C. §36-1-5-4. SECTION 27. 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 28. No Conflict. The Council hereby finds and determines that the adoption of this Ordinance and the issuance of the 2009 Bonds is in compliance with the Prior Ordinances. The Prior Ordinances shall remain in full force and effect (except as otherwise provided in Section 3 of this Ordinance). All ordinances and resolutions and parts thereof in conflict herewith, except the Prior Ordinances (except as provided in Section 3 hereof), are to the extent of such conflict hereby repealed. None of the provisions of this Ordinance shall be construed to adversely affect the rights of the owners of the Parity Bonds. -SECTION 29. 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 30. Interpretation. Unless the context or laws clearly require otherwise, references herein to statutes or other laws include the same as modified, supplemented or superseded from time to time. SECTION 31. Effectiveness. This Ordinance shall be in full force and effect from and after its passage and compliance with the procedures required by law. SECTION 32. Credit Facility. The Executive and the Fiscal Officer, on behalf of the City, are hereby authorized to obtain a Credit Facility or Additional Credit Facility as set forth in Section 14 herein. The Executive and the Fiscal Officer, on behalf of .the City, are also authorized to enter into an agreement with the Credit Facility Issuer for either the Credit Facility or Additional Credit Facility (the "Credit Facility Agreement") and negotiate the terms of the Credit Facility Agreement, with the advice of the City's financial advisor and Bond Counsel. The Executive and the Fiscal Officer, on behalf of the City, are also authorized to execute any and all other documents required to obtain the Credit Facility. The City hereby agrees that: (a) If the waterworks fails to pay any Credit Facility Costs in accordance with the requirements set forth above, the Credit Facility Issuer shall be entitled to exercise any and all remedies available at law or under the authorized documents other than (i) acceleration of the -34- maturity of the 2009 Bonds or (ii) remedies which would adversely affect the owners of the 2009 Bonds. (b) This Ordinance shall not be discharged and the 2009 Bonds defeased until all Credit Facility Costs owing to the Credit Facility Issuer shall have been paid in full. (c) The Credit Facility Issuer is granted a security interest (subordinate to that of the owners of the 2009 Bonds) in all revenues and collateral pledged as security for the 2009 Bonds, for the repayment of the Credit Facility Costs. (d) No additional bonds payable from the Net Revenues will be issued without the Credit Facility Issuer's prior written consent as long as Credit Facility Costs are past due and still owing to the Credit Facility Issuer. (e) This Ordinance shall not be modified or amended, except as provided in Section 23 herein, without the prior written consent of the Credit Facility Issuer. The Credit Facility Issuer shall be provided with written notice of the resignation or removal of the Registrar and Paying Agent and the appointment of a successor thereto and of the issuance of additional indebtedness of the City's waterworks at such address as may be specified, from time to time, by the Credit Facility Issuer. SECTION 33. Payment on Bonds in the Event of Default. In the event available moneys are insufficient to pay debt service on the 2009 Bonds and any Parity Bonds when due, available moneys shall be applied, after payment of all costs and expenses associated therewith, to the 2009 Bonds and any Parity Bonds as follows: to the payment to the persons entitled thereto of all unpaid installments of interest then due on, and the unpaid principal of, the 2009 Bonds and any Parity Bonds, including interest on any past due principal of any 2009 Bond or Parity Bond at the rate borne by such 2009 Bond or Parity Bond, in the order of the maturity of the installments of such interest and the due dates of such principal and, if the amount available shall not be sufficient to pay in full any particular installment of interest or maturity of principal, then to such payment ratably, according to the amounts so due, to the persons entitled thereto, without any discrimination or privilege or any preference of or priority of interest over principal or principal over interest. During the continuance of any default in the payment of either principal of or interest or premium on any 2009 Bonds or Parity Bonds, no payment shall be made with respect to any subordinate obligations issued pursuant to Section 21(e). Moneys available for payment to holders of such subordinate obligations shall, in the event of an insufficient amount being available to pay all debt service with respect to the subordinate obligations when due, be applied to the subordinate obligations in accordance with the sequence and other terms set forth above with respect to payments regarding 2009 Bonds and Parity Bonds unless otherwise provided in the ordinance authorizing the subordinate obligations. SECTION 34. Actions and Agreements. Each of the Executive, the Fiscal Officer and any other officer or employee of the City is hereby authorized and directed to execute any instruments or agreements or take any other actions necessary or desirable to effect the -35- transaction contemplated by this Ordinance, such necessity or desirability to be conclusively evidenced by the execution of such instruments or agreements or the taking of such action. PASSED AND ADOPTED by the Common Council of the City of South Bend, Indiana, this day of , 2009. Member of the Common Council Attest: s/' ~ SC~w City ler Presented by me to the Mayor of the City of South Bend, Indiana on the ~_day of ;\ , 2 p~ , at 1 : `l~ o'clock ~. m. ~ City Clerk Approved and signed by me on the •~f~- o'clock Q . m. ~'~ day of c.~-n..- , 2 Qm at Mayor, City of S Bend, Indiana 1st kEADING S- Z ~° " ~ 4 ?UBLtC NEAP.lt~1C,~ b-~-~~ 0.S Su.~S~~'~-~ 3 rd READING (o ~ ,~ c~ a, S $ v..`n S ~•~ 'L-tt~~ s--c~ NOT APPROVED REFERRED RA~l~i b.~-c`~~ 0.S .3 v~.,~s~~-~~ Filed in Clerk's Office JUN -- 4 2009 JOHN VOORDE CITY CLERK, S0. BEND, IN, TO THE COMMON COUNCIL OF THE CITY OF SOUTH BEND: Your Committee of the Whole, to whom was referred: BILL NO. 36-09 A BILL OF THE COMMON COUNCIL OF THE CITY OF SOUTH BEND, INDIANA, CONCERNING THE CONSTRUCTION OF IMPROVEMENTS TO THE MUNICIPAL WATERWORKS OF THE CITY OF SOUTH BEND, INDIANA; AUTHORIZING THE ISSUANCE OF REVENUE BONDS FOR SUCH PURPOSE IN THE PRINCIPAL AMOUNT NOT TO EXCEED SIX MILLION TWO HUNDRED THOUSAND ($6,200,000); ADDRESSING OTHER MATTERS CONNECTED THEREWITH, INCLUDING THE ISSUANCE OF NOTES IN ANTICIPATION OF BONDS; AND REPEALING ORDINANCES INCONSISTENT HEREWITH Respectfully report that they have examined the matter and that in their opinion, this bill is being recommended to the full Council with a favorable recommendation as substituted by modifications that reflect changes requested by the SRF program and primarily involve the establishment of a separate debt service reserve for bonds sold to the SRF. Ann Puzzello Chairperson, Committee of the Whole Exhibit A PROJECT DESCRIPTION The Project consists of upgrades, expansions, additions, replacements, extensions and improvements to the Waterworks, including: 1. The repair and replacement of a roof on a 5.5 million gallon reservoir. 2. The repair of an under drain and replacement of the filter media at a filtration plant. 3. The replacement of 4 main line valves. 4. The installation of a water main extension south of the intersection of Ireland Road and Ironwood Drive; and the design and installation of a pumping station at the Ireland Road Tank site. 5. The installation of a water main extension from Carroll Street and Johnson Road to Lucinda Street and to U.S. 31, and from Lilac Road to Armstrong Drive along Kern Road. 6. The purchase of 2 tandem axle dump trucks and 1 backhoe. 7. The purchase of residential water meters. 8. Making any and all additional improvements related to the foregoing. Exhibit B FINANCIAL ASSISTANCE AGREEMENT (Attached) SBDS02 PFACCENDA 388474v5 STATE OF INDIANA DRINKING WATER REVOLVING LOAN PROGRAM FINANCIAL ASSISTANCE AGREEMENT made as of this day of 2009 by and between the Indiana Finance Authority (the "Finance Authority"), a body politic and corporate, not a state agency but an independent instrumentality ofthe State of Indiana (the "State") and the City of South Bend, Indiana (the "Participant"),apolitical subdivision as defined in I.C. 13-11-2-164, operating its water utility under I.C. 8-1.5, witnesseth: WHEREAS, the State's Drinking Water Revolving Loan Program (the "Drinking Water SRF Progam") has been established in accordance with the federal Safe Drinking Water Act and any regulations promulgated thereunder, and pursuant to I.C. 13-18-21 (the "Drinking Water SRF Act"), which Drinking Water SRF Act also establishes the drinking water revolving loan fund (the "Drinking Water SRF Fund"); and WHEREAS, pursuant to the Drinking Water SRF Act, the State was authorized to fund the Drinking Water SRF Program with federal capitalization grants, together with required state matching funds therefor, and to operate the Drinking Water SRF Program, and prior to May 15, 2005 so funded and operated the Drinking Water SRF Program; and WHEREAS, the Indiana Bond Bank (the "Bond Bank") has had a longstanding commitment to finance water quality and drinking water projects for qualified entities by issuing its bonds, pursuant to I.C. 5-1.5, for the purpose of buying securities of such qualified entities and financed by the Drinking Water SRF Program, including the required state matching funds, and prior to May 15, 2005 so financed the Drinking Water SRF Program; and WHEREAS, pursuant to Public Law 235-2005, by operation of law and effective May 15, 2005, the Finance Authority has become the successor to the State in all matters related to the Drinking Water SRF Program (including use and acceptance of federal capitalization grants and required state matching funds and operation of the Drinking Water SRF Program) and to the Bond Bank in all matters related to the financing of the Drinking Water SRF Program (including the Bond Bank's outstanding State Revolving Fund Program Bonds and securities of all qualified entities purchased with the proceeds of such bonds); and WHEREAS, the Participant is a duly existing political subdivision of the State, lawfully empowered to undertake all transactions and execute all documents mentioned or contemplated herein; and WHEREAS, the Participant has previously entered into two Financial Assistance Agreements with the State in its capacity as predecessor to the Finance Authority in matters related to the Drinking Water and Wastewater SRF Programs, dated as of June 12, 2000 and December 30, 1998 (the "Prior Agreements"), to borrow money from the Drinking Water and Wastewater SRF Programs, respectively, to construct and acquire a separate project (as described and defined in the Prior Agreements); and WHEREAS, the Participant has determined to undertake a drinking water system project (as more fully described herein, the "Project") and to borrow money from the Drinking Water SRF Program to construct and acquire the Project; and WHEREAS, the Finance Authority and the Participant desire to set forth the terms of such financial assistance as hereinafter provided. NOW THEREFORE, in consideration of the mutual covenants herein set forth, the Finance Authority and the Participant agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. The following terms shall, for all purposes of this Agreement, have the following meaning: "A enc "shall mean the United States Environmental Protection Agency or its successor. "American Recovery and Reinvestment Act" shall mean the American Recovery and Reinvestment Act of 2009, and other laws, regulations and guidance supplemental thereto (including the Safe Drinking Water Act), as amended and supplemented from time to time. "AuthorizinE Instrument(s)" shall mean the separate trust indenture(s) of the Participant entered into with a corporate trustee or the detailed resolution(s) or ordinance(s) of the governing body of the Participant pursuant to which the Bonds are issued in accordance with State law. "Authorized Representative" shall mean the Clerk-Treasurer of the Participant or such other officer, official, or representative of the Participant duly authorized to act for and on behalf of the Participant as provided for herein. "Bond" or "Bonds" shall mean the instrument(s) (including the 2009 Bonds and the 2009 BAN) which evidence(s) the Loan, as authorized by the Authorizing Instrument and containing the terms set forth in Section 2.02 of this Agreement. "Bond Fund" shall mean the separate and segregated fund or account established and created by the Participant pursuant to the Authorizing Instrument from which payment of the principal of and interest on the Bonds is required to be made by the Participant. "Business Day" shall mean any day other than a Saturday, Sunday or State legal holiday or any other day on which financial institutions in the State are authorized bylaw to close and to remain closed. 2 "Code" shall mean the Internal Revenue Code of 1986, as amended and supplemented from time to time, together with the regulations related thereto. "Commission" shall mean the Indiana Utility Regulatory Commission created under I.C. 8-1-1-2 or its successor. "Construction Fund" shall mean the separate and segregated fund or account established and created by the Participant pursuant to the Authorizing Instrument to receive proceeds of the Bonds and from which Eligible Costs of the Project maybe paid by the Participant. "Credit Instrument" means a letter of credit, surety bond, liquidity facility, insurance policy or comparable instrument furnished by a Credit Provider that is used by the Participant to meet all or a portion of any debt service reserve requirement securing the Bonds or any other bonds payable from the revenues of the Drinking Water System, which bonds are on a parity with the Bonds. "Credit Provider" means a bank, insurance company, financial institution or other entity providing a Credit Instrument. "Department" shall mean the Indiana Department of Environmental Management created under I.C. 13-13-1-1 or its successor. "Deposit Agreement" shall mean an agreement between the Participant and the Deposit Agreement Counterparts in such form as from time to time determined by the Finance Authority pursuant to which (a) the Participant's Bond Fund (including any reserve account established and created by the Participant pursuant to the Authorizing Instrument related thereto) shall beheld by such Deposit Agreement Counterparts and available for payment of the Bonds and any other similar obligations of the Participant that are payable from the Bond Fund regardless whether they are on a parity basis, (b) such Deposit Agreement Counterparts serves as the paying agent for the Bonds and any other such similar obligations of the Participant that are payable from the Bond Fund, and (c) the Participant's Construction Fund may be held by such Deposit Agreement Counterparts upon any Loan disbursement by the Finance Authority to it from time to time. "Deposit Agreement Counterparts" shall mean the financial institution that enters into a Deposit Agreement with the Participant, which financial institution shall be approved by the Finance Authority and may be replaced by the Finance Authority from time to time. "Director of Environmental Programs" shall mean the person designated by the Finance Authority as authorized to act as the Director of Environmental Programs (which designation includes such Director's assumption of the duties previously assigned to the Drinking Water SRF Program Representative and the Drinking Water SRF Program Director) and where not limited, such person's designee. 3 "Disbursement Agent" shall mean the party disbursing the Loan to or for the benefit of the Participant, which shall be the Trustee unless amounts are held in the Construction Fund, in which case the Disbursement Agent shall thereafter be the Deposit Agreement Counterparty as the party disbursing amounts are held in the Construction Fund unless otherwise agreed by the Finance Authority. "Disbursement Request" shall mean a request for a disbursement of the Loan made by an Authorized Representative in such form as the Finance Authority may from time to time prescribe. "Drinlcin~ Water SRF Fund" shall mean the drinking water revolving loan fund as established by I.C. 13-18-21-2. ~~Drinlang Water SRF Indenture" shall mean the Third Amended and Restated Drinking Water SRF Trust Indenture, dated as of April 1, 2007 between the Finance Authority (as successor by operation of law to the State in all matters related to the Drinking Water SRF Program) and the Trustee, as amended and supplemented from time to time. `~Drinlcin~ Water System" shall mean all, or any part of, the system for the provision to the public of water for human consumption through pipes and other constructed conveyances that: (1) has at least fifteen (15) service connections; or (2) regularly serves at least twenty-five (25) individuals; and as further defined and described in I.C. 13-11-2-177.3 and SRF Policy Guidelines, as amended and supplemented from time to time. "Eligible Cost(s)" shall mean and include, whether incurred before or after the date of this Agreement, all costs which have been incurred and qualify for Financial Assistance, including engineering, financing and legal costs related thereto. "Equity Account" shall mean the Equity Grant Account, the Equity Earnings Account and any other Equity account, each as created and existing from time to time under the Drinking Water SRF Indenture and held as part of the Drinking Water SRF Fund. "Finance Authority" shall mean the Indiana Finance Authority, a body politic and corporate, not a state agency but an independent instrumentality ofthe State. "Finance Authority Bonds" shall mean (A) any Indiana Bond Bank State Revolving Fund Program Bonds issued as a part of the Drinking Water SRF Program within the meaning of the Drinking Water SRF Indenture and (B) any Finance Authority State Revolving Fund Program Bonds or other similar obligations of the Finance Authority issued as a part of the Drinking Water SRF Program within the meaning of the Drinking Water SRF Indenture. 4 "Financial Assistance" shall mean the financial assistance authorized by the Safe Drinking Water Act, including the Loan. "Loan" shall mean the purchase of the Bonds by the Finance Authority to finance the planning, designing, constructing, renovating, improving and expanding of the Participant's Drinking Water System or refinance an existing debt obligation where such debt was incurred and building of such systems began after July 1, 1993, but does not mean the provision of other Financial Assistance. "Loan Forgiveness" shall mean the forgiveness and discharge of the 2009 BAN as provided by Section 2.02(e) herein to the extent permitted by the American Recovery and Reinvestment Act. "Loan Reduction Payment" shall mean in any circumstances where there is a balance (inclusive of Loan proceeds and any earnings) in the Construction Fund, any action causing such balance to be applied to a reduction in the maximum aggregate amount of the Loan outstanding other than pursuant to regularly scheduled principal payments or optional redemptions applicable to the Bonds. A Loan Reduction Payment shall not be applicable unless Loan amounts are held in the Construction Fund. "Non-Use Close-out Date" shall mean that date which is the earlier of (a) the first date as of which the full amount of the Loan has been disbursed on a cumulative basis (which shall also be deemed to have occurred when and if such amounts have been deposited in the Participant's Construction Fund) or (b) the date as of which the Participant binds itself that no further Loan disbursements will be made under this Agreement. "Non-Use Fee" shall mean a fee in an amount determined by the Finance Authority charged to compensate it for costs and expenses within the Drinking Water SRF Program. Such amount shall be the greater of (A) the product of the undrawn balance of the Loan on each applicable Non-Use Assessment Date multiplied by one percent (1 %) or (B) One Thousand Dollars ($1,000). Such fee shall apply and be payable under Section 5.09 herein with respect to each Non-Use Assessment Date until the Non-Use Close-out Date shall occur. ANon-Use Fee shall not be applicable if the full amount of the Loan has been disbursed and deposited in the Participant's Construction Fund by the Non-Use Assessment Date. "Non-Use Assessment Date" shall mean 1, 2011 and the first day of each sixth (6`h) calendar month thereafter unless and until the Non-Use Close-out Date occurs in advance of any such Non-Use Assessment Date. "Operation and Maintenance" shall mean the activities required to assure the continuing dependable and economic function of the Drinking Water System, including maintaining compliance with primary and secondary drinking water standards, as follows: (1) Operation shall mean the control and management of the united processes and equipment which make up the Drinking Water System, including financial and 5 personnel management, records, reporting, laboratory control, process control, safety and emergency operation planning and operating activities. (2) Maintenance shall mean the preservation of the functional integrity and efficiency of equipment and structures by implementing and maintaining systems of preventive and corrective maintenance, including replacements. "Plans and Specifications" shall mean the detailed written descriptions of the work to be done in undertaking and completing the Project, including the written descriptions of the work to be performed and the drawings, cross-sections, profiles and the like which show the location, dimensions and details of the work to be performed. "Preliminary En~ineerin~ Report" shall mean the information submitted by the Participant that is necessary for the Finance Authority (or if submitted to the Department prior to May 15, 2005, then the Department in its role as predecessor to the Finance Authority in certain matters related to the Drinking Water SRF Program) to determine the technical, economic and environmental adequacy of the proposed Project. "Project" shall mean the activities or tasks identified and described in Exhibit A to this Agreement, and incorporated herein, as amended or supplemented by the Participant and consented to by the Finance Authority, for which the Participant may expend the Loan. "Purchase Account" shall mean the account by that name created by the Drinking Water SRF Indenture and held as part of the Drinking Water SRF Fund. "Reamortization Methodology" shall mean a change in principal maturities of the Bonds by use of the following methodology caused by the Project being Substantially Complete with a portion of the Loan (including any amounts held in the Construction Fund) not being subject to disbursement to pay further Project costs, whether such is effected by means of a Loan Reduction Payment or a reduction in the maximum Loan amount available under this Agreement as determined by the Finance Authority: (1) as between the 2009 Bonds and the 2009 BAN, shall be reduced in the same proportion as would have had been applied to such Loan, had the Loan been first allocated under the SRF Policy Guidelines on the date of this Agreement in the aggregate amount finally drawn; and (2) the principal maturities of the 2009 Bonds shall be modified in such amounts and with such maturities as achieves as level annual debt service for such 2009 Bonds as practicable during each annual period (commencing in the first full bond year after application of this methodology and ending no later than the date of the final maturity of the 2009 Bonds as originally scheduled); provided that (a) this methodology is agreed to be consistent with the methodology prescribed in the Authorizing Instrument and as originally applied to the Bonds and (b) any principal payment on the 2009 Bonds due and payable prior to application of this methodology shall not be affected 6 by this methodology. "Safe Drinking Water Act" shall mean the Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq. and other laws, regulations and guidance supplemental thereto (including the American Recovery and Reinvestment Act), as amended and supplemented from time to time. "Settlement Costs" shall mean any and all fees, costs, losses or expenses incurred (or estimated to be incurred) by the Finance Authority resulting or arising from a Loan Reduction Payment (including without limitation interest and earnings differentials when the Finance Authority seeks to lend such Loan Reduction Payment to another Drinking Water SRF Program borrower). In connection with the Loan made pursuant to this Agreement, there are agreed to be no Settlement Costs. "Settlement Fee" shall mean a fee payable by the Participant to the Finance Authority to compensate the Finance Authority for its Settlement Costs in circumstances where there has been a Loan Reduction Payment. "SRF Policy Guidelines" shall mean guidance of general applicability (as from time to time published, amended and supplemented by the Finance Authority) pertaining to participants utilizing financial assistance in connection with their projects funded in whole or in part through the Drinking Water SRF Program. "State" shall mean the State of Indiana. "2009 Recovery Grant" shall mean the federal capitalization grant, if any, made available to the Finance Authority pursuant to the American Recovery and Reinvestment Act by the Agency for use as part of the Drinking Water SRF Program, provided that such grant is available and designated by the Finance Authority as a source of funding for all or a portion of the Loan, whether such designation by the Finance Authority occurs when this Agreement is entered into or later. "Substantial Completion of Construction" shall mean the day on which the Finance Authority (or if designated by the Finance Authority, the Department) determines that all but minor components of the Project have been built, all equipment is operational and the Project is capable of functioning as designed. "Trustee" shall mean The Bank of New York Mellon Trust Company, N.A., Indianapolis, Indiana, in its capacity as trustee or its successor under the Drinking Water SRF Indenture. (End of Article I) 7 ARTICLE II PURPOSE OF BORROWING AND LOAN TERMS Section 2.01, Amount; Purpose. The Finance Authority agrees to Loan an amount not to exceed Million Thousand Dollars ($ ,000) in aggregate principal amount to the Participant as Financial Assistance to pay for the Eligible Costs, as hereinafter described, of the Project on, and subject to, the terms and conditions contained herein. The Loan shall be used only to pay the following Eligible Costs: (a) eligible planning services for the production of a Preliminary Engineering Report ("Planning"), (b) eligible design services for the production of Plans and Specifications ("Design") and (c) eligible construction costs, including financing and legal costs ("Construction"). The Loan shall be funded solely from unallocated and available proceeds of the 2009 Recovery Grant or from other sources (including its Purchase Account and Equity Accounts) that the Finance Authority may, in its sole discretion, designate. The Loan is evidenced by the Bonds executed and delivered by the Participant contemporaneously herewith. The Bonds shall be in fully registered form, with the Finance Authority registered as the registered owner. So long as the Finance Authority is the registered owner, the principal of and redemption premium, if any, and interest on the Bonds shall be paid to the Trustee by a wire transfer referenced as follows: The Bank of New York, ABA 021 000 018, For Credit to GLA: 111-565, For Final Credit: TAS #610026, Account Name: IN SRF QE Deposit, Attn: Amy L Oram. The Participant agrees to undertake and complete the Project and to receive and expend the Loan proceeds in accordance with this Agreement. Section 2.02. The Bonds. (a) Until paid, the Waterworks Revenue Bonds of 2009 ("2009 Bonds") will bear interest at the per annum rate of and One-Hundredths percent ~%). Such interest shall be calculated on the basis of a 360-day year comprised of twelve 30-day months, and be as provided in I.C. 13-18-21-10 and -15. Interest, if any, on the 2009 Bonds will be payable on January 1 and July 1 of each year, commencing January 1, 2010. The 2009 Bonds will be in the aggregate principal amount of Million Thousand Dollars ($ ,000). Subject to Section 2.05 and 2.06 herein, the 2009 Bonds will mature on January 1 of each of the years set forth in, and at the principal amount set opposite each such month and year set forth in the schedule contained in the attached Exhibit B to this Agreement (which is hereby incorporated by reference); provided, however, notwithstanding the foregoing or the terms of the 2009 Bonds to the contrary, no maturity of 2009 Bonds shall extend beyond the date which is twenty (20) years after Substantial Completion of Construction. If the maturity date for any 2009 Bonds is beyond such date, unless otherwise agreed to, such 2009 Bonds, together with accrued and unpaid interest thereon, will be due and payable on such date. (b) Until paid, the Waterworks Bond Anticipation Note of 2009 ("2009 BAN") will bear interest at the per annum rate of zero percent (0%). Such interest shall be calculated on the basis of a 360-day year comprised of twelve 30-day months, and be as provided in I.C. 13-18-21-10 and -15. Interest, if any, on the 2009 BAN will be payable on January 1 and July 1 of each year, 8 commencing January 1, 2010. The 2009 BAN will be in the aggregate principal amount of Million Thousand Dollars ($ ,000). Subject to Section 2.05 and 2.06 herein, the 2009 BAN will mature on April 15, 2013. (c) The Bonds will be subject to redemption by the Participant as provided in the Authorizing Instrument. The Loan, and the Bonds evidencing it, will be subject to payment by the Participant as provided in this Agreement. (d) The form and other terms of the Bonds will be in conformity with the Authorizing Instrument. (e) The principal maturity of the 2009 BAN is subject to Loan Forgiveness (which evidences a portion of the Loan made hereunder) and shall be deemed forgiven and discharged on April 15, 2013 to the extent permitted by the American Recovery and Reinvestment Act, provided however that there is not then existing any default under this Agreement and the Participant has otherwise complied with the terms and conditions of this Agreement (including having timely made principal and interest payments on the remainder of the maturities of the 2009 Bonds). Section 2.03. Disbursement Conditions. Each of the following shall be a condition precedent to the disbursement of the Loan or any portion thereof (including from the Construction Fund): (a) (1) With respect to procurement of professional services related to the Project to be paid from Loan proceeds, the Participant shall have complied with applicable State law and SRF Policy Guidelines. (2) With respect to procurement of all other goods and services related to the Project to be paid from Loan proceeds, the Participant shall have complied with I.C. 36-1-12 and SRF Policy Guidelines. (b) No representation, warranty or covenant of the Participant contained in this Agreement or in any paper executed and delivered in connection with the transactions contemplated by this Agreement shall be false or inaccurate in any material respect. (c) The Participant shall undertake and faithfully perform each of its obligations, agreements and covenants contained in this Agreement, the Authorizing Instrument and the Bonds. (d) There shall be available to the Finance Authority uncommitted funds in an amount sufficient to satisfy the Finance Authority's obligations hereunder from the proceeds of the 2009 Recovery Grant or from other sources (including its Purchase Account and Equity Accounts) that the Finance Authority may, in its sole discretion, designate; provided however, once Loan proceeds have been deposited in the Construction Fund, such condition shall be deemed satisf ed. (e) The Participant shall have undertaken all actions necessary to comply with and satisfy the conditions and requirements for a Loan secured with money made 9 available from the Drinking Water SRF Fund as set forth in federal and State statutes, rules and regulations, including I.C. 13-18-21, SRF Policy Guidelines, the Safe Drinking Water Act and 40 C.F.R. Part 35. (f) Prior to making any Loan disbursement to pay any Construction costs, the Project shall have been approved by the State's Historical Preservation Officer in a manner consistent with the policies and practices of the Drinking Water SRF Program (the "Historical Preservation Approval"). Notwithstanding any provision of this Agreement to the contrary, in the event a Historical Preservation Approval has not been given within four (4) months after the date of this Agreement, the Finance Authority may, in its sole discretion, (i) reduce the aggregate amount of the Loan to the amount then disbursed and outstanding under this Agreement and (ii) if any amounts are held in the Construction Fund, require a Loan Reduction Payment pursuant to Section 2.06 as if it were a date that was three (3) years after the dated date of the Bonds. Upon giving notice to the Participant of such action, no further Loan disbursement (including from the Construction Fund) maybe made under this Agreement unless consented to by the Finance Authority. (g) In the event the Bonds are payable from rates and charges of the Drinking Water System if requested by the Finance Authority, the Participant shall provide evidence satisfactory to the Finance Authority demonstrating that such rates and charges are at a level adequate to produce and maintain sufficient net revenue after providing for the proper Operation and Maintenance of the Drinking Water System, on a proforma basis consistent with SRF Policy Guidelines, to provide 1.25x coverage on al] obligations of the Drinking Water System (including the Bonds). Section 2.04. Disbursement Procedures. Loan proceeds (including any held from time to time in the Construction Fund) shall be disbursed to the Participant by the Disbursement Agent for actual Eligible Costs incurred with respect to the Project. The Finance Authority may, in its discretion, cause Loan disbursements to be made (a) directly to the person or entity identified in the Disbursement Request to whom payment is due, or (b) if advised in writing by the Participant that I.C. 36-1-12-14 or a similar law applies to the Project, to the Participant for purposes of collecting retainage, or some combination thereof. Any Loan proceeds in excess of the amount subject to retainage controlled by the Participant will be immediately remitted to the person or entity to whom payment is due, no later than three (3) Business Days after receipt or the date such Loan proceeds are no longer subject to retainage. The Finance Authority may, in its discretion, cause Loan disbursements to be made from time to time, in whole or in part, to the Participant's Construction Fund for disbursement consistent with this Agreement. Loan disbursements shall not be made more frequently than monthly and shall only be made following the submission of a Disbursement Request to the Finance Authority. Disbursement Requests shall be approved by the Director of Environmental Programs prior to submission to the Disbursement Agent for a Loan disbursement. Disbursement Requests shall be numbered sequentially, beginning with the number 1. Section 2.05. Effect of Disbursements. Loan disbursements made to or for the benefit of the Participant shall be deemed to be a purchase, first, of the 2009 Bonds for any Loan 10 Disbursements made on the date hereof, second, of the 2009 BAN unless cost related to a disbursement has been designated as not eligible for funding from the 2009 Recovery Grant and, third, of the remainder of the 2009 Bonds in order of their maturities, provided that if the original maximum aggregate amount of the Loan is not disbursed (or not required to be disbursed pursuant to Section 2.06(a) or (b) herein), then the maturities of the Bonds (including as set forth in Exhibit B) shall be modified consistent with the Reamortization Methodology. The deposit of Loan proceeds in the Construction Fund shall be deemed to be a purchase of the Bonds. Interest on the Loan commences on disbursement of the Loan to or for the benefit of the Participant (including any amounts disbursed to the Construction Fund) by the Finance Authority and the Bonds shall be deemed to be purchased in the full amount thereof. Each disbursement (including any amounts disbursed from the Construction Fund) shall be made pursuant to a Disbursement Request. In the event any Loan disbursement (including any amounts disbursed from the Construction Fund) shall be made in excess of Eligible Costs, such excess disbursements shall be immediately paid by the Participant to the Disbursement Agent (and if made from any amounts held in the Construction Fund, shall be immediately deposited by the Participant into such Construction Fund) and thereafter may, subject to the terms and conditions set forth in this Agreement, be applied thereafter to pay Eligible Costs of the Project by the Participant. Section 2.06. Acknowledgment of Amount of Loan; Interim Contractual Commitment Requirements; Final Disbursement. (a) Within 30 days after any request by the Finance Authority from time to time, the Participant shall execute and deliver to the Finance Authority an acknowledgment in the form prescribed by the Finance Authority which acknowledges the outstanding principal of and interest on the Bonds. Unless the Finance Authority consents in writing, no Loan disbursement shall be made more than one year after Substantial Completion of Construction. After Substantial Completion of Construction, upon the request of the Finance Authority, the Participant shall replace, at its expense, the Bonds with substitutes issued pursuant to the Authorizing Instrument to evidence the outstanding principal under the Loan. (b) In the event that (i) Construction has not commenced by December 1, 2009 or (ii) the Participant has not entered into contracts related to Eligible Costs as of December 1, 2009 which obligate the Participant to make payments that aggregate an amount at least equal to the maximum Loan amount hereunder ("Contractual Commitments"), then the Loan balance available pursuant to this Agreement shall be reduced as of December 1, 2009 to an aggregate amount equal to Contractual Commitments as of December 1, 2009 (the "Reduced Loan Amount"). The Participant agrees to certify to the Finance Authority by no later than December 5, 2009 (i) the aggregate amount of the Contractual Commitments by December 1, 2009, (ii) that true and accurate copies of the contracts constituting such Contractual Commitments have been provided to the Finance Authority, (iii) whether Construction has commenced by December 1, 2009 and (iv) such additional information as required by SRF Policy Guidelines. The Finance Authority may in its discretion determine one or more later dates to apply to the foregoing provisions of this Section 2.06(b) provided that such actions by such dates permits compliance with the American Recovery and Reinvestment Act without any deobligation of the 2009 Recovery Grant funds. 11 (c) In addition to Section 2.06(b), in the event there remains a balance (inclusive of Loan proceeds and any earnings) in the Construction Fund on the date that is the earlier of (i) one year after Substantial Completion of Construction or (ii) three (3) years after the dated date of the Bonds (or in either such circumstance, such later date as the Finance Authority may approve in its discretion), the Participant agrees to make a Loan Reduction Payment, and to pay a Settlement Fee, to the Finance Authority within 10 days after any Finance Authority written demand. Any Loan Reduction Payment shall be applied and Bond maturities modified consistent with the Reamortization Methodology. If the Authorizing Instrument permits the Participant to apply Bond proceeds to pay interest accruing on or before Substantial Completion of Construction, the Participant may seek to reimburse itself for such interest costs it has paid pursuant to a Disbursement Request provided, unless otherwise approved by the Finance Authority, any such reimbursement shall be limited to the amount thereof that the Participant causes to be used to pay the Settlement Fee. If the Participant fails to make such Loan Reduction Payment or to pay a Settlement Fee by such date, the Finance Authority and Deposit Agreement Counterparty are authorized to cause any balance held in the Construction Fund to be so applied without further direction and authorization from the Participant. Notwithstanding the foregoing, if requested by the Finance Authority, in lieu of the Participant making a Loan Reduction Payment together with any Settlement Fee payment, the Finance Authority may in its discretion require the Participant to hold any remaining balance (inclusive of Loan proceeds and any earnings) in the Construction Fund until such amounts maybe applied on the first optional redemption date applicable to the Bonds, and upon any such request, the Participant agrees to cause such amounts to be so held and applied on such date. (End of Article II) 12 ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PARTICIPANT Section 3.01. Planning, Design and Construction Covenants. The Participant hereby covenants and agrees with the Finance Authority that the Participant will: (a) Provide information as requested by the Finance Authority to determine the need for, or to complete any necessary, environmental review or analysis. (b) Comply with the procurement procedures and affirmative action requirements contained in SRF Policy Guidelines in the Planning, Design and Construction of the Project to the extent that such are to be paid from Loan proceeds. (c) With respect to prime and first tier contract awards, report minority and women business enterprise utilization in the Planning, Design and Construction of the Project, to the extent that such are to be paid from Loan proceeds, by executing and delivering Agency Form SF 5700-52 to the Finance Authority whenever any agreements or subagreements are awarded. (These reports must be submitted on regular reporting cycles consistent with SRF Policy Guidelines commencing after such agreement or subagreement is awarded.) (d) Comply with all applicable federal, State and local statutes, rules and regulations relating to the acquisition and construction of the Drinking Water System. (e) In the event Construction is to be paid from Loan proceeds, prior to an award of any contract for Construction of the Project, obtain a construction permit from the Department and receive the written approval of the Finance Authority (or if approved by the Department prior to May 15, 2005, then the Department in its role as predecessor to the Finance Authority in certain matters related to the Drinking Water SRF Program) of the Preliminary Engineering Report. (f) Obtain the property rights necessary to construct the Drinking Water System and, in procuring any such rights comply with federal and State law. (g) In the event Construction is to be paid from Loan proceeds, comply with the federal Davis-Bacon Act, codified at 40 U.S.C. 276a-276a-5 unless separately waived by the Finance Authority. (h) In the event Construction is to be paid from Loan proceeds, execute and deliver to the Finance Authority Agency Form 4700-4 ("Pre-award Compliance Review Report for Wastewater Treatment Construction Grants") and Agency Form 5700-49 ("Certification Regarding the Debarment, Suspension, and Other Responsibility Matters"). 13 (i) In the event Construction is to be paid from Loan proceeds, follow guidance issued by the Finance Authority in procuring contracts for Construction, including (1) submission to the Finance Authority (or if submitted to the Department prior to May 15, 2005, then the Department in its role as predecessor to the Finance Authority in certain matters related to the Drinking Water SRF Program) of Project change orders, (2) obtaining approval from the Director of Environmental Programs of any Project change order which significantly changes the scope or Design of the Project or, when taking into account other change orders and contracts, are reasonably expected to result in expenditures in an amount greater than the Loan, (3) receiving approval from the Director of Environmental Programs prior to the award of any contract for Construction and (4) receiving authorization from the Director of Environmental Programs prior to initiating procurement of Construction of the Project. (j) In the event Construction is to be paid from Loan proceeds, before awarding Construction contracts, receive approval of the Director of Environmental Programs for the user charge system (including any use ordinance and interlocal agreement) associated with the Project. (k) In the event Construction is to be paid from Loan proceeds, cause the Project to be constructed in accordance with the Preliminary Engineering Report and the Plans and Specifications, using approved contract papers. (1) Permit the Finance Authority and its agents to inspect from time to time (1) the Project, (2) the Drinking Water System and (3) the books and other financial records of the Drinking Water System, including the inspections described in SRF Policy Guidelines. Construction contracts shall provide that the Finance Authority or its agents will have access to the Project and the work related thereto and that the Participant's contractor will provide proper facilities for such access and inspection. All files and records pertaining to the Project shall be retained by the Participant for at least six years after Substantial Completion of Construction. (m) Upon Substantial Completion of Construction and when requested by the Finance Authority, provide audited reports to the Finance Authority to permit the Finance Authority to determine that the Loan proceeds have been used in compliance with this Agreement. (n) In the event Construction is to be paid from Loan proceeds, within one year of Substantial Completion of Construction, consistent with SRF Policy Guidelines, certify to the Finance Authority that the Project meets performance standards, or if not met, (1) submit to the Finance Authority (or if directed by the Finance Authority, to the Department) a corrective action plan and (2) promptly and diligently undertake any corrective action necessary to bring the Project into compliance with such standards. (o) In the event Construction is to be paid from Loan proceeds, within one year of Substantial Completion of Construction, provide as-built plans for the Project to the Finance Authority (or if directed by the Finance Authority, to the Department). 14 Section 3.02. General Covenants. The Participant hereby covenants and agrees with the Finance Authority that the Participant will: (a) Comply with all applicable federal, State and local statutes, rules and regulations relating to Operation and Maintenance. (b) (1) Own, operate and maintain the Project and the Drinking Water System for their useful life, or cause them to be operated and maintained for their useful life; (2) at all times maintain the Drinking Water System in good condition and operate it in an efficient manner and at a reasonable cost; and (3) not sell, transfer, lease or otherwise encumber the Drinking Water System or any portion thereof or any interest therein without the prior written consent of the Finance Authority. (c) Obtain and maintain the property rights necessary to operate and maintain the Drinking Water System, and in procuring any such rights, comply with federal and State law. (d) Acquire and maintain insurance coverage acceptable to the Finance Authority, including fidelity bonds, to protect the Drinking Water System and its operations. All insurance shall be placed with responsible insurance companies qualified to do business under State law. Insurance proceeds and condemnation awards shall be used to replace or repair the Drinking Water System unless the Finance Authority consents to a different use of such proceeds or awards. (e) Establish and maintain the books and other financial records of the Project (including the establishment of a separate account or subaccount for the Project) and the Drinking Water System in accordance with (1) generally accepted governmental accounting principles, as promulgated by the Government Accounting Standards Board and (2) the rules, regulations and guidance of the State Board of Accounts. (f) Provide to the Finance Authority such periodic financial and environmental reports as it may request from time to time, including (1) annual operating and capital budgets and (2) such other information requested or required of the Finance Authority or the Participant by the Agency. (g) Provide notice to the Finance Authority under the circumstances contemplated, and undertake inspections as required, by SRF Policy Guidelines. (h) (1) Establish and maintain just and equitable rates and charges for the use of and the service rendered by the Drinking Water System, to be paid by the owner of each and every lot, parcel of real estate or building that is connected with and uses the Drinking Water System, or that in any way uses or is served by the Drinking Water System, (2) establish, adjust and maintain rates and charges at a level adequate to produce and maintain sufficient revenue (including user and other charges, fees, income or revenues available to the Participant) to provide for the proper Operation and 15 Maintenance of the Drinking Water System, to comply with and satisfy all covenants contained herein and to pay all obligations of the Drinking Water System and of the Participant with respect thereto, and (3) if and to the extent Bonds are payable from property taxes, levy each year a special ad valorem tax upon all property located in the boundaries of the Participant, to pay all obligations of the Participant with respect thereto. (i) If the Bonds are payable from the revenues of the Drinking Water System, not borrow any money, enter into any contract or agreement or incur any other liabilities in connection with the Drinking Water System without the prior written consent of the Finance Authority if such undertaking would involve, commit or use the revenues of the Drinking Water System; provided that the Participant may authorize and issue additional obligations, payable out of the revenues of its Drinking Water System, ranking on a parity with the Bonds for the purpose of financing the cost of future additions, extensions and improvements to the Drinking Water System, or to refund obligations of the Drinking Water System, subject to the conditions, if any, in the Authorizing Instrument. (j) Comply with the Civil Rights Act of 1964, as amended, 42 U.S.C. Section 2000d et sec ., the Age Discrimination Act, as amended, Public Law 94-135, Section 504 of the Rehabilitation Act of 1973, as amended (including Executive Orders 11914 and 11250), 29 U.S.C. Section 794, Section 13 of the Federal Water Pollution Control Act Amendments of 1972, Public Law 92-500, Executive Order 11246 regarding equal employment opportunity, and Executive Orders 11625 and 12138. (k) Undertake all actions necessary to investigate all potential, material claims which the Participant may have against other persons with respect to the Drinking Water System and the Project and take whatever action is necessary or appropriate to (1) recover on any actionable, material claims related to the Project or the Planning, Design or Construction thereof, (2) meet applicable Project performance standards and (3) otherwise operate the Drinking Water System in accordance with applicable federal, State and local law. (1) Not modify, alter, amend, add to or rescind any provision of the Authorizing Instrument without the prior written consent of the Finance Authority. (m) In the event the Participant adopts an ordinance or resolution to refund the Bonds, within 5 days of the adoption of the ordinance or resolution, provide written notice to the Finance Authority of the refunding. Any refunding of the Bonds shall only be undertaken by the Participant with the prior written consent of the Finance Authority. (n) In any year in which disbursements exceed $500,000 the Participant shall comply with the Single Audit Act (SAA) of 1984, as amended by the Single Audit Act Amendments of 1996 (see Circular A-133) and have an audit of their use of Federal financial assistance. The Participant agrees to provide the Finance Authority with a copy of the SAA audit within 9 months of the audit period. 16 (o) Inform the Finance Authority of any findings and recommendations pertaining to the SRF program contained in an A-133 audit in which SRF Federal financial assistance was less than $500,000. (p) Initiate within 6 months of the audit period corrective actions for those audit reports with findings and recommendations that impact the SRF financial assistance. (q) Notwithstanding anything in the Authorizing Instrument related to the Bonds (or in any authorizing instrument related to any other outstanding bonds payable from the revenues of the Drinking Water System which are on a parity with the Bonds) to the contrary, in the event any Credit Provider that has provided a Credit Instrument fails to be rated on a long term basis at least "A-/A3" by Standard & Poor's Ratings Services, a Division of the McGraw-Hill Companies, and Moody's Investors Service, Inc., and their successors (such Credit Instrument, a "Disqualified Instrument"), within 12 months of such failure, the Participant shall cause cash (or a replacement Credit Instrument from a Credit Provider that is rated on a long term basis at least "AA-/Aa3" by Standard & Poor's Ratings Services, a Division of the McGraw-Hill Companies, and Moody's Investors Service, Inc., and their successors)(or some combination thereof) in an aggregate amount equal to the stated credit available under the Disqualified Instrument(s) to be deposited in the related reserve account(s) in lieu of such Disqualified Instrument(s). No Disqualified Instrument shall be included as part of the reserve balance which satisfies any such reserve requirement under any such authorizing instrument. Nothing in this subsection shall waive or modify additional requirements contained in any such authorizing instrument (including the Authorizing Instrument related to the Bonds); the provisions of this subsection and any such authorizing instrument (including the Authorizing Instrument related to the Bonds) shall both be required to be met. (r) Comply with all federal requirements applicable to the Loan when funded with the 2009 Recovery Grant (including those imposed by the American Recovery and Reinvestment Act and related SRF Policy Guidelines) which the Participant understands includes, among other, requirements that all of the iron, steel, and manufactured goods used in the Project be produced in the United States unless the Participant has requested, and the Finance Authority has obtained, a waiver from the Agency pertaining to the Project. Section 3.03. Representations and Warranties of the Participant. After due investigation and inquiry, the Participant hereby represents and warrants to the Finance Authority that: (a) The Participant is duly organized and existing under state law, and constitutes a "political subdivision" within the meaning of I.C. 13-11-2-164 and a "participant" within the meaning of I.C. 13-11-2-151.1. The Project and the Drinking Water System are subject to I.C. 8-1.5. 17 (b) The Participant and its Drinking Water System are subject to the jurisdiction of the Commission under I.C. 8-1-2 or any other applicable law and the Project and the Bonds are subject to the Commission's review and approval requirements. If the Participant or its Drinking Water System is subject to the jurisdiction of the Commission under I.C. 8-1-2 or any other applicable law, the Commission has reviewed and approved the Project and the issuance of the Bonds and no additional approvals or consents are required to be obtained from the Commission related thereto. (c) The Participant has full power and authority to adopt the Authorizing Instrument, enter into this Agreement and issue the Bonds and perform its obligations hereunder and thereunder. (d) By all required action, the Participant has duly adopted the Authorizing Instrument and authorized the execution and delivery of this Agreement, the Bonds and all other papers delivered in connection herewith. (e) Neither the execution of, nor the consummation of the transaction contemplated by, this Agreement nor the compliance with the terms and conditions of any other paper referred to herein, shall conflict with, result in a breach of or constitute a default under, any indenture, mortgage, lease, agreement or instrument to which the Participant is a party or by which the Participant or its property, including the Drinking Water System, is bound or any law, regulation, order, writ, injunction or decree of any court or governmental agency or instrumentality having jurisdiction. (f) There is no litigation pending or, to the knowledge of the Participant, upon investigation, threatened that (1) challenges or questions the validity or binding effect of this Agreement, the Authorizing Instrument or the Bonds or the authority or ability of the Participant to execute and deliver this Agreement or the Bonds and perform its obligations hereunder or thereunder or (2) would, if adversely determined, have a significant adverse effect on the ability of the Participant to meet its obligations under this Agreement, the Authorizing Instrument or the Bonds. (g) The Participant has not at any time failed to pay when due interest or principal on, and it is not now in default under, any warrant or other evidence of obligation or indebtedness of the Participant. (h) All information furnished by the Participant to the Finance Authority or any of the persons representing the Finance Authority in connection with the Loan or the Project is accurate and complete in all material respects including compliance with the obligations, requirements and undertakings imposed upon the Participant pursuant to this Agreement. (i) The Participant has taken or will take all proceedings required bylaw to enable it to issue and sell the Bonds as contemplated by this Agreement. (j) For any outstanding bonds payable from the revenues of the Drinking Water 18 which are on a parity with the Bonds, each Credit Provider, if any, that has provided a Credit Instrument is at least rated on a long term basis "A-/A3" long term by Standard & Poor's Ratings Services, a Division of the McGraw-Hill Companies and Moody's Investors Service, Inc., and their successors. Each of the foregoing representations and warranties will be deemed to have been made by the Participant as of the date of this Agreement and as of the date of any disbursement of Loan proceeds (including from the Construction Fund). Each of the foregoing representations and warranties shall survive the Loan disbursements regardless of any investigation or investigations the Finance Authority may have undertaken. Section 3.04. Covenants Regarding Assignment. The Participant acknowledges that the Finance Authority may pledge, sell or assign the Bonds or cause the Bonds to be pledged, sold or assigned, and certain of its rights related thereto, as permitted pursuant to Section 5.02 herein. The Participant covenants and agrees to cooperate with and assist in, at its expense, any such assignment. Within 30 days following a request by the Finance Authority, the Participant covenants and agrees with the Finance Authority that the Participant will, at its expense, furnish any information, financial or otherwise, with respect to the Participant, this Agreement, the Authorizing Instrument and the Bonds and the Drinking Water System as the Finance Authority reasonably requests in writing to facilitate the sale or assignment of the Bonds. Section 3.05. Nature of Information. All information furnished by the Participant to the Finance Authority or any person representing the Finance Authority in connection with the Loan or the Project maybe furnished to any other person the Finance Authority, in its judgment, deems necessary or desirable in its operation and administration of the Drinking Water SRF Program. Section 3.06. Tax Covenants. The Participant hereby covenants that it will not take, or cause or permit to be taken by it or by any party under its control, or fail to take or cause to permit to be taken by it or by any party under its control, any action that would result in the loss of the exclusion from gross income for federal income tax purposes of interest on the 2009 Bonds pursuant to Section 103 of the Code. The Participant further covenants that it will not do any act or thing that would cause the 2009 Bonds to be "private activity bonds" within the meaning of Section 141 of the Code or "arbitrage bonds" within the meaning of Section 148 of the Code. In furtherance and not in limitation of the foregoing, the Participant shall take all action necessary and appropriate to comply with the arbitrage rebate requirements under Section 148 of the Code to the extent applicable to the Participant or the 2009 Bonds, including accounting for and making provision for the payment of any and all amounts that maybe required to be paid to the United States of America from time to time pursuant to Section 148 of the Code. Section 3.07. Non-Discrimination Covenant. Pursuant to and with the force and effect set forth in I.C. 22-9-1-10, the Participant hereby covenants that the Participant, and its contractor and subcontractor for the Project, shall not discriminate against any employee or applicant for employment, to be employed in the performance of this Agreement, with respect to the hire, tenure, terms, conditions or privileges of employment, or any matter directly or 19 indirectly related to employment, because of race, color, religion, sex, disability, national origin or ancestry. (End of Article III) 20 ARTICLE IV DEFAULTS Section 4.01. Remedies. The Finance Authority's obligation to make a disbursement under the Loan to the Participant hereunder may be terminated at the option of the Finance Authority, without giving any prior notice to the Participant, in the event: (a) the Participant fails to undertake or perform in a timely manner any of its agreements, covenants, terms or conditions set forth herein or in any paper entered into or delivered in connection herewith (including the Authorizing Instrument); or (b) any representation or warranty made by the Participant as set forth herein or in any paper entered into or delivered in connection herewith is materially false or misleading. Any such event shall constitute an event of default and in addition to any other remedies at law or in equity, the Finance Authority may (x) require a Loan Reduction Payment pursuant to Section 2.06 as if it were a date that was three (3) years after the dated date of the Bonds, (y) in the event a Deposit Agreement has not previously been entered into related to the Participant's Bond Fund (including any related reserve), require the Participant to enter into a Deposit Agreement (or to modify any such previously entered Deposit Agreement) and the Participant shall enter into (or modify) such an agreement within 5 days after any such demand and (z) without giving any prior notice, declare the entire outstanding principal amount of the Loan, together with accrued interest thereon, immediately due and payable. Section 4.02. Effect of Default. Failure on the part of the Finance Authority in any instance or under any circumstance to observe or perform fully any obligation assumed by or imposed upon the Finance Authority by this Agreement or by law shall not make the Finance Authority liable in damages to the Participant or relieve the Participant from paying any Bond or fully performing any other obligation required of it under this Agreement or the Authorizing Instrument; provided, however, that the Participant may have and pursue any and all other remedies provided by law for compelling performance by the Finance Authority of such obligation assumed by or imposed upon the Finance Authority. The obligations of the Finance Authority hereunder do not create a debt or a liability of the Finance Authority or the State under the constitution of the State or a pledge of the faith or credit of the Finance Authority or the State and do not directly, indirectly or contingently, obligate the Finance Authority or the State to levy any form of taxation for the payment thereof or to make any appropriation for their payment. Neither the Finance Authority or the State, nor any agent, attorney, member or employee of the Finance Authority or the State shall in any event be liable for damages, if any, for the nonperformance of any obligation or agreement of any kind whatsoever set forth in this Agreement. Section 4.03. Defaults under other Financial Assistance Agreements. The Participant and the Finance Authority agree that any event of default occurring under the Prior Agreements shall constitute an event of default under this Agreement. Similarly, the Participant and the Finance Authority agree that any event of default under this Agreement, or under any subsequent financial assistance agreement enter into between the Participant and the Finance Authority, shall constitute an event of default under the Prior Agreements and the subsequent financial assistance agreement, if any, as the case maybe. (End of Article IV) 21 ARTICLE V MISCELLANEOUS Section 5.01. Citations. Any reference to a part, provision, section or other reference description of a federal or State statute, rule or regulation contained herein shall include any amendments, replacements or supplements to such statutes, rules or regulation as may be made effective from time to time. Any reference to a Loan disbursement shall include any disbursement from the Construction Fund. Any use of the term "including" herein shall not be a limitation as to any provision herein contained but shall mean and include, without limitation, the specific matters so referenced. Section 5.02. Assignment. Neither this Agreement, nor the Loan or the proceeds thereof maybe assigned by the Participant without the prior written consent of the Finance Authority and any attempt at such an assignment without such consent shall be void. The Finance Authority may at its option sell or assign all or a portion of its rights and obligations under this Agreement, the Authorizing Instrument, and the Bonds to an agency of the State or to a separate body corporate and politic of the State or to a trustee under trust instrument to which the Finance Authority, the State or any assignee is a beneficiary or party. The Finance Authority may at its option pledge or assign all or a portion of its rights under this Agreement, the Authorizing Instrument, and the Bonds to any person. The Participant hereby consents to any such pledge or assignment by the Finance Authority. This Agreement shall be binding upon and inure to the benefit of any permitted secured party, successor and assign. Section 5.03. No Waiver. Neither the failure of the Finance Authority nor the delay of the Finance Authority to exercise any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other further exercise of any other right, power or privilege. Section 5.04. Modifications. No change or modification of this Agreement shall be valid unless the same is in writing and signed by the parties hereto. The Participant understands that the Finance Authority, pursuant to Public Law 235-2005, by operation of law and effective May 15, 2005, has become the successor to the State and the Bond Bank, and agrees to such as if the Prior Agreements (and the Authorizing Instrument and the Bonds referenced in such Prior Agreements and all other collateral agreements and understandings thereto), were amended and restated contemporaneously herewith to such force and effect. Section 5.05. Entire Agreement. This Agreement contains the entire agreement between the parties hereto and there are no promises, agreements, conditions, undertakings, warranties and representations, either written or oral, expressed or implied between the parties hereto other than as herein set forth or as may be made in the Authorizing Instrument and the other papers delivered in connection herewith. In the event there is a conflict between the terms of this Agreement and the Authorizing Instrument, the terms of this Agreement shall control. It is expressly understood and agreed that except as otherwise provided herein this Agreement represents an integration of any and all prior and contemporaneous promises, agreements, conditions, undertakings, warranties and representations between the parties hereto. This 22 Agreement shall not be deemed to be a merger or integration of the existing terms under the Prior Agreements except as expressly set forth in Section 4.03 herein. Section 5.06. Execution of Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be executed by the Finance Authority and the Participant, and all of which shall be regarded for all purposes as one original and shall constitute one and the same instrument. Section 5.07. Severability of Invalid Provisions, if any one or more of the covenants or agreements provided in this Agreement on the part of the Finance Authority or the Participant to be performed shall be deemed by a court of competent jurisdiction to be contrary to law or cause the Bonds to be invalid as determined by a court of competent jurisdiction, then such covenant or covenants or agreement or agreements shall be deemed severable from the remaining covenants and agreements and waived and shall in no way affect the validity of the other provisions of this Agreement. Section 5.08. Notices. All notices hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered personally or sent or transmitted to the appropriate destination as set forth below in the manner provided for herein. Notice to the Finance Authority shall be addressed to: Indiana Finance Authority SRF Programs 100 North Senate, Room 1275 Indianapolis, Indiana 46204 Attention: Director of Environmental Programs or at such other address(es) or number(s) and to the attention of such other person(s) as the Finance Authority may designate by notice to the Participant. Notices to the Participant shall be addressed to: City of South Bend City Hall City-County Building 227 W. Jefferson Boulevard South Bend, IN 46601-1830 Attention: Controller or at such other address(es) or number(s) and to the attention of such other person(s) as the Participant may designate by notice to the Finance Authority. Any notice hereunder shall be deemed to have been served or given as of (a) the date such notice is personally delivered, (b) three (3) Business Days after it is mailed U.S. mail, First Class postage prepaid, (c) one (1) Business Day after it is sent on such terms by Federal Express or similar next-day courier, or (d) the same day as it is sent by facsimile transmission with telephonic confirmation of receipt by the person to whom it is sent. 23 Section 5.09. Expenses. The Participant covenants and agrees to pay (a) the fees, costs and expenses in connection with making the Loan, including issuing the Bonds and providing the necessary certificates, documents and opinions required to be delivered therewith; (b) the fees, costs and expenses in connection with making and administering the Loan; (c) the costs and expenses of complying with its covenants made herein; and (d) any and all costs and expenses, including attorneys' fees, incurred by the Finance Authority in connection with the enforcement of this Agreement, the Authorizing Instrument and the Bonds in the event of the breach by the Participant of or a default under this Agreement, the Authorizing Instrument or the Bonds. Notwithstanding clause (b) above, the Participant shall not be obligated to pay any of the fees, costs and expenses in connection with administering the Loan except as follows: (1) the Finance Authority may request and the Participant shall promptly pay (no later than the date first above written), a closing fee in connection with the Loan in an amount determined by the Finance Authority, but not exceeding $1,000, which may not be paid from a Loan disbursement; (2) the Finance Authority may request and the Participant shall promptly pay (no later than thirty (30) days after any request), an annual administrative fee in connection with the Loan in an amount determined by the Finance Authority, but not exceeding $1,000, which may not be paid from a Loan disbursement; (3) the Finance Authority may request and the Participant shall promptly pay (no later than ten (10) days after any request), any Settlement Fee; (4) the Finance Authority may request and the Participant shall promptly pay (no later than thirty (30) days after any request), aNon-Use Fee in connection with the Loan, which may not be paid from a Loan disbursement; (5) for so long as the Finance Authority is the registered owner of the Bonds, at the direction of the Finance Authority, the interest rate on the Bonds maybe adjusted to lower the interest rate on the Bonds, and the difference between the amount payable as the original rate on the Bonds and the lower rate shall be deemed an additional administrative fee in connection with the Drinking Water SRF Program; and (6) the Participant shall only be obligated to pay fees, costs and expenses of the Finance Authority's counsel and financial advisers in connection with making the Loan up to $10,000, which may be paid from a Loan disbursement. Section 5.10. Applicable Law. This Agreement shall be construed in accordance with and governed by the laws of the State of Indiana. Section 5.11. Term. This Agreement shall terminate at such time as the Participant has fully met and discharged all of its obligations hereunder, which term may extend beyond the final payment of the Bonds or provision for the payment of the Bonds pursuant to the Authorizing Instrument. Section 5.12. Non-Collusion. The undersigned attests, subject to the penalties of perjury, that he/she is an authorized officer or representative of the Participant, that he/she has not, nor has any other officer or representative of the Participant, directly or indirectly, to the best of the undersigned's knowledge, entered into or offered to enter into any combination, collusion or agreement to receive pay, and that the undersigned has not received or paid any sum of money or other consideration for the execution of this Agreement other than that which appears upon the face of the agreement or is a payment to lawyers, accountants and engineers by the Participant related to customary services rendered in connection with the Loan. 24 Section 5.13. Federal Award Information. The Catalogue of Federal Domestic Assistance ("CFDA") Number for the Authority's Drinking Water SRF Program is 66.468 and the Federal Agency & Program Name is "US Environmental Protection Agency Capitalization Grant for Drinking Water State Revolving Funds." (End of Article V) [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 25 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized officers or officials, all as of the date first above written. CITY OF SOUTH BEND, INDIANA "Participant" INDIANA FINANCE AUTHORITY "Finance Authority" By: By: James P. McGoff Printed: Director of Environmental Programs Title: Attested by Finance Authority Staff: Attest: By: 26 EXHIBIT A The Project involves the following improvements: • [To be inserted directly from the description in the approved PER] The Project is more fully described in, and shall be in accordance with, the Preliminary Engineering Report and the Plans and Specifications approved by the Finance Authority (or if designated by the Finance Authority, the Department). A-1 EXHIBIT B Principal Payment Schedule for the 2009 Bonds Maturity Date Total Loan Principal Amount 1 / 1 /2009 1/1/2010 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 1/1/2019 1 / 1 /2020 1/1/2021 1/1/2022 1 / 1 /2023 1 / 1 /2024 1/1/2025 1/1/2026 1/1/2027 1 / 1 /2028 Total 1399738 I' BARNES&THORNBURG I.1.P Philip ]. Faccenda, Jr. (574)237-1148 phi]ip.faccendaQbtlaw.com 600 1st Source Bank Center 100 North Michigan South Bend, IN 46601 U.S.A. (574)233-1171 Fax (574) 237-1125 www.btlaw.com June 4, 2009 HAND DELIVERY John Voorde Clerk of the City of South Bend 227 West Jefferson Boulevard, Suite 455 South Bend, Indiana 46601 Derek D. Dieter, President South Bend Common Council 227 West Jefferson Boulevard, Suite 400 South Bend, Indiana 46601 Re: City of South Bend, Indiana Waterworks Revenue Bonds of 2009 Dear Mr. Voorde and Mr. Dieter: Enclosed for filing are multiple copies of a substitute Bill No. 36-09, which is the Ordinance for the above-referenced City of South Bend, Indiana Waterworks Revenue Bonds of 2009 for consideration of the Common Council on June 8, 2009. The Ordinance contemplates that a portion of the Project will be financed through the State Revolving Fund ("SRF"), through a grant and aloes-interest loan. The modifications in the substitute Bill reflect changes requested by the SRF Program and primarily involve the establishment of a separate debt service reserve for bonds sold to the SRF, consent rights of the SRF to the taking of certain actions for bonds sold to the SRF, and other minor modifications in connection with the SRF Program. The form of the Financial Assistance Agreement between the City and SRF is also attached as Exhibit B to the Ordinance. Please call me with any questions you may have. Sincerely, Philip J. Fac enda, Jr. PJF:mdm Enclosures ~it~~ in Cjt/r'~'~ 4fif~~e cc: Aladean M. DeRose, Esq. JUN - 4 2009 SBDS02 PFACCENDA 390550v1 J^`~I~'IO~fZ3F. G~ CLti .ivy u~. u~~s~, 1~~...~,~,,, Chicago Indiana Michigan Washington, D.C.