Ordinance 7-14-98 Refunding Outstanding Sewage Works Revenue Bonds

AN ORDINANCE CONCERNING THE REFUNDING OF OUTSTANDING
SEWAGE WORKS REVENUE BONDS OF THE TOWN OF KENTLAND,
INDIANA; AUTHORIZING THlE ISSUANCE OF REVENUE BONDS FOR
SUCH PURPOSE; ADDRESSING OTHER MATTERS CONNECTED
THEREWITH; AND REPEALING ORDINANCES INCONSISTENT
HEREWITH

WHEREAS, the Town of Kentland, Indiana (the "Unit") has heretofore established, constructed and financed a municipal sewage works and now owns and operates said works pursuant to I.C. 36-9-23, as amended, and other applicable laws (together, tile "Act"); and

WHEREAS, the Town Council of the Unit (the "Council") now finds that there are outstanding bonds issued on account of the works and payable out of the revenues therefrom designated "Sewage Works Revenue Bonds of 1990" (the "1990 Bonds") authorized by an Ordinance adopted by the Council on June 12, 1989 (the "Prior Ordinance"), now outstanding in the amount of $845,000; and

WHEREAS, the 1990 Bonds constitute a first charge upon the Net Revenues (as hereinafter defined) ; and

WHEREAS, Indiana law authorizes the refunding of all or a portion of the 1990 Bonds; and

WHEREAS, the Council deems it advisable to issue the refunding bonds authorized by this Ordinance in original principal amount of not to exceed Nine Hundred Twenty-Five Thousand Dollars ($925,000) for the purpose of providing for the payment of (i) the principal amount of the 1990 Bonds then outstanding on January 1, 2000, the first date on which they may be redeemed prior to maturity, (ii) the interest and two percent (2%) premium then payable on the 1990 Bonds, (iii) the costs of refunding the 1990 Bonds, and (iv) the costs of issuing the bonds authorized hereby (the "Refunding"); and

WHEREAS, the Council deems it advisable to escrow certain proceeds of the bonds authorized hereby, and investment income thereon, pursuant to the terms of a refunding escrow agreement (the "Escrow Agreement") to be entered into with an escrow agent (the "Escrow Agent") to provide for the payment of principal of and interest and premium on the 1990 Bonds as such becomes due and payable at redemption prior to maturity; and

WHEREAS, the Council now finds that all conditions precedent to the adoption of an ordinance authorizing the issuance of revenue bonds have been complied with in accordance with the applicable provisions of the Act.

NOW THEREFORE, BE IT ORDAINED BY THE TOWN COUNCIL OF THE TOWN OF KENTLAND AS FOLLOWS:

SECTION 1. Definitions. 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 Unit's sewage works utility.

All payments of interest on the 1998 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 Unit 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 $100,000 or more in principal amount of 1998 Bonds, or the Indiana Bond Bank, if the registered owner of 1998 Bonds, shall be entitled to receive interest payments by wire transfer by providing written wire instructions to the Paying Agent before the Record Date for any payment. All principal payments and premium payments, if any, on the 1998 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 $100,000 or more in principal amount of 1998 Bonds or the Indiana Bond Bank, 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 1998 Bonds shall be payable from the interest payment date to which interest has been paid next preceding the authentication date thereof unless such 1998 Bonds are authenticated after the Record Date for an interest payment date and on or before such interest payment date in which case they shall bear interest from such interest payment date, or unless authenticated on or before the Record Date for the first interest payment date, in which case they shall bear interest from the original date, until the principal shall be fully paid.

SECTION 4. Transfer and Exchange of Bonds. Each 1998 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 1998 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 1998 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 Unit 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 Unit, the Registrar and the Paying Agent may treat and consider the persons in whose names such 1998 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 1998 Bond is mutilated, lost, stolen or destroyed, the Unit 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 Unit and the Registrar may, upon receiving indemnity satisfactory to them, pay the same without surrender thereof. The Unit and the Registrar may charge the owner of such 1998 Bond with their reasonable fees and expenses in this connection. Any 1998 Bond issued pursuant to this paragraph shall be deemed an original, substitute contractual obligation of the Unit, whether or not tile lost, stolen or destroyed 1998 Bond shall be found at any time, and shall be entifled to all the benefits of this Ordinance, equally and proportionately with any and all other 1998 Bonds issued hereunder.

SECTION 5. Registrar and Paying Agent. The Fiscal Officer is hereby authorized to serve as, or to appoint a qualified fmancial institution to serve as, Registrar and Paying Agent for the 1998 Bonds (together with any successor, the "Registrar" or "Paying Agent"). The Registrar is hereby charged with the responsibility of authenticating the 1998 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 any such institution as will enable the institution to perform the services required of a Registrar and Paying Agent. The Fiscal Officer is further authorized to pay such fees and the institution may charge for the services its provides as Registrar and Paying Agent and such fees may be paid from the Sinking Fund established to pay the principal of and interest on the 1998 Bonds as fiscal agency charges.

The Registrar and Paying Agent may at any time resign as Registrar and Paying Agent by giving thirty (30) days written notice to the Unit and by first-class mail to each registered owner of the 1998 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 Unit. Such notice to the Unit 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 Unit, in which event the Unit may appoint a successor Registrar and Paying Agent. The Unit shall notify each registered owner of the 1998 Bonds then outstanding of the removal of the Registrar and Paying Agent. Notices to the registered owners of the 1998 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 1998 Bonds, cash and investments related thereto in its possession and tile Registration Record to the successor Registrar and Paying Agent.

If the 1998 Bonds are sold to the Indiana Bond Bank, 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 1998 Bonds may be made redeemable at the option of the Unit on thirty (30) days notice, in whole or in part, in any order of maturities selected by the Unit and by lot within a maturity, on dates and with premiums, if any, and other terms as determined by the Executive and Fiscal Officer with the advice of the Unit's financial advisor, as evidenced by delivery of the executed initial issue of the 1998 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 1998 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 1998 Bonds redeemed, provided, however, that failure to give such notice by mailing, or any defect therein, with respect to any 1998 Bond shall not affect the validity of any proceedings for the redemption of any other 1998 Bonds. The notice shall specify the date and place of redemption, the redemption price and the CUSIP numbers of the 1998 Bonds called for redemption. The place of redemption may be determined by the Unit. Interest on the 1998 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 1998 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 1998 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 1998 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 1998 Bonds or portions thereof called for redemption, including accrued interest thereon to the redemption date. No payment shall be made upon any 1998 Bond or portion thereof called for redemption until such 1998 Bond shall have been delivered for payment or cancellation or the Registrar shall have received the items required by this Ordinance with respect to any mutilated, lost, stolen or destroyed bond.

SECTION 7. Execution and Negotiability. The 1998 Bonds shall be signed in the name of the Unit by the manual or facsimile signature of the Executive, and attested by the manual or facsimile signature of the Fiscal Officer, who also shall affix the seal of the Unit 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 1998 Bonds, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery.

The 1998 Bonds shall also be authenticated by the manual signature of the Registrar, and no 1998 Bond shall be valid or become obligatory for any purpose until the certificate of authentication thereon has been so executed.

The 1998 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.

During any time that the 1998 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 1998 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 1998 Bond has been obtained, the Registrar shall be entitled to treat the beneficial owners of the 1998 Bonds as the bondholders and any consent, request, direction, approval, objection or other instrument of such beneficial owner may be obtained in the fashion described in this Ordinance.

During any time that the 1998 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 responsibillty of the Registrar, and (ii) comply with all requirements of tile Clearing Agency, including without limitation same day funds settlement payment procedures. Further, during any time that the 1998 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 1998 Bonds. The form and tenor of the 1998 Bonds shall be substantially as follows, all blanks to be filled in prpperly and all necessary additions and deletions to be made prior to delivery:

Interest Rate

Maturity Date

Original Date

Authentication Date

CUSIP

PRINCIPAL SUM:

Dollars ($_________)

The Town of Kentland, in Newton County, State of Indiana (the "Unit"), for value received, hereby promises to pay to the Registered Owner set forth above, solely out of the special revenue fund hereinafter refeffed to, the Principal Sum set forth above on the Maturity Date set forth above (unless this bond is subject to and is 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 alter 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 December 15,1998, in which case it shall bear interest from the Original Date, which interest is payable semi-annually on January 1 and July 1 of each year, beginning on January 1,1999. 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 to the Registered Owner as of the Record Date at the address as it appears on the registration books kept by the Registrar or at such other address as is provided to the Paying Agent in writing by the Registered Owner. Each Registered Owner of $100,000 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, and premium, if any, on this bond shall be made upon surrender thereof at the principal office of the Paying Agent, in any U.S. coin or currency which on the date of such payment shall be legal tender for the payment of public and private debts, or in the case of a Registered Owner of $100,000 or more in principal amount of 1998 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.

The Unit 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 Unit 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 by law.

This bond shall not be valid or become obligatory for any purpose until the certificate of authentication hereon shall have been executed by an authorized representative of the Registrar.

The terms and provisions of this bond are continued below and such terms and provisions shall for all purposes have the same effect as though fully set forth at this place.

IN WITNESS WHEREOF, the Town of Kentland, in Newton County, Indiana, has caused this bond to be executed in its corporate name by the manual or facsimile signature of the President of the Town Council of the Town, its corporate seal to be hereunto affixed, imprinted or impressed by any means and attested manually or by facsimile by its Clerk-Treasurer.

It is hereby certified that this bond is one of the bonds described in the within-mentioned Ordinance duly authenticated by the Registrar.

This bond is one of an authorized issue of bonds of the Town of Kentiand, Indiana, of like date, tenor and effect, except as to denomination, numbering, rates of interest, redemption times and dates of maturity, aggregating _______________ Thousand Dollars ($________), numbered consecutively from 1 upward (the "Bonds"), issued for the purpose of providing funds to be applied to the complete refinancing of the bonds of the Unit designated as Sewage Works Revenue Bonds of 1990 (the "Refunding"), and to pay incidental expenses and costs of issuance of the Bonds. This bond is issued pursuant to an ordinance adopted by the Town Council of said Unit on the 14th day of July, 1993, entitled "An Ordinance concerning the refunding of outstanding Sewage Works revenue bonds of the Town of Kentland, Indiana; authorizing the issuance of revenue bonds for such purpose; addressing other matters connected therewith; and repealing ordinances inconsistent herewith" (the "Ordinance"), and in accordance with the provisions of Indiana law, including without limitation Indiana Code 36-9-23, and other applicable laws, as amended (the "Act"), all as more particularly described in the Ordinance. The owner of this bond, by the acceptance hercof, 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 and any bonds hereafter issued on a parity therewith are payable solely from the Sinking Fund (the "Sinking Fund") maintained under the Ordinance to be provided from the Net Revenues (defined as the gross revenues of the works remaining after the payment of the reasonable expenses of operation, repair and maintenance) of the works, including all additions and improvements thereto and replacements thereof subsequently constructed or acquired.

The Unit 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, to the extent necessary for such purposes, and covenants that it will establish proper rates and charges for services rendered by the utility as are sufficient in each year for the payment of the proper and reasonable expenses of operation, repair and maintenance of the works and for the payment of the sums required to be paid into the Sinking Fund under the provisions of the Act and the Ordinance. If the Unit 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 Unit covenants that for so long as the Bonds and any bonds issued on a parity therewith 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 or accumulate 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 heraafter 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.

This bond has been designated as a qualified tax~xempt obligation for purposes of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended.

The bonds of this issue maturing on and after July 1, 2005 are redeemable at the option of the Unit on January 1, 2005, or any date thereafter, on thirty (30) days' notice, in whole or in part, in any order of maturities selected by the Unit and by lot within a maturity, at 100% of face value, together with the following premiums:

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 Unit 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 Unit. Interest on the bonds so called for redemption shall cease on the redemption date fixed in such notice if sufficient fluids are avallable at the place of redemption topay 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 Unit 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 Unit shall have no furtlier 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 flllly registered bond or bonds in the same aggregate principal amount, and of the same maturity, shall be executed and delivered in the name of the transferee or transferees or the Registered Owner, as the case may be, in exchange therefor. This bond may be transferred or exchanged without cost to the Registered Owner except for any tax or governmental charge required to be paid with respect to the transfer or exchange. The Unit, the Registrar, the Paying Agent and any other registrar or paying agent for this bond may treat and consider the person in whose name this bond is registered as the absolute owner hereof for all purposes including for the purpose of receiving payment of, or on account of, the principal hereof and interest and premium, if any, due hereon.

The bonds maturing on any maturity date are issuable only in the denomination of $5,000 or any integral multiple thereof.

The following abbreviations, when used in the inscription of the face of this bond, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN. COM    as tenants in common
TEN. ENT.    as tenants by the entireties
JT. TEN.        as joint tenants with right of survivorship and not as tenants in common

UNIF. TRAN.
MIN. ACT        _______ Custodian _______
                        (Cust.)                          (Minor)
                        under Uniform Transfer to Minors Act of
                        _________________
                        (State)

FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto___________________ (Please Print or Typewrite Name and Address and Social Security or Other Identifying Number) $_________ principal amount (must be a multiple of $5,000) of the within bond and all rights thereunder, and hereby irrevocably constitutes and appoints _______________________ attorney to transfer the within bond on the books kept for the registration thereof with full power of substitution in the premises.

Dated:	_____________	____________________________________
		NOTICE: The Signature to this assignment must correspond with the name as it appears on the face of the within bond in every particular, without alteration or enlargement or any change whatsoever.

Signature Guaranteed:

_________________________
NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution participating in a Securities Transfer Association recognized signature guarantee program.

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.

(a) The Executive and the Fiscal Officer may negotiate the sale of the 1998 Bonds to an underwriter or other purchaser selected by the Executive (the "Underwriter") at a price not less than ninety-eight and one-half percent (98.5%) of the par value thereof and at an interest rate or rates not exceeding six percent (6.0%) per annum. The Executive and the Fiscal Officer each are authorized to execute a purchase agreement with said Underwriter with terms consistent with the terms of this Ordinance.

(b) As an alternative to the negotiated sale to an underwriter, the Executive and the Fiscal Officer may negotiate the sale of the 1998 Bonds to the Indiana Bond Bank at a price not less than ninety-eight and one-half percent (98.5%) of the par value thereof and at an interest rate or rates not exceeding six percent (6.0%) per annum. The Executive and the Fiscal Officer each are authorized to (i) submit an application to the Indiana Bond Bank, (ii) execute a purchase agreement with the Indiana Bond Bank; and (iii) sell such 1998 Bonds upon such ternis as are acceptable to the Executive and the Fiscal Officer consistent with the terms of this Ordinance.

(c) After the 1998 Bonds have been properly sold and executed, the Fiscal Officer shall receive from the purchasers payment for the 1998 Bonds and shall provide for delivery of the 1998 Bonds to the purchasers.

(d) The 1998 Bonds, when fully paid for and delivered to the purchaser shall be the binding special revenue obligations of the Unit, payable out of the Net Revenues. The proper officers of the Unit are hereby directed to sell the 1998 Bonds to the purchaser, to draw all proper and necessary warrants, and to do whatever acts and things which may be necessary to carry out the provisions of this Ordinance.

(e) The Executive and the Fiscal Officer each are hereby authorized to deem final an official statement, offering circular or other offering document with respect to the 1998 Bonds, as of its date, subject to completion, and the Unit further authorizes the distribution of the deemed final offering document, 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 offering document.

(f) The Fiscal Officer is hereby authorized and directed to obtain a legal opinion as to the validity of the 1998 Bonds from Barnes & Thornburg, and to furnish such opinion to the purchasers of the 1998 Bonds or to cause a copy of said legal opinion to be printed on each 1998 Bond. The cost of such opinion shall be paid out of the proceeds of the 1998 Bonds.

SECTION 11. Use of Proceeds The accrued interest received at the time of delivery of the 1998 Bonds, if any, and premium, if any, shall be deposited in the Principal and Interest Account of the Sinking Fund (as hereafter defined) and applied to payments on the 1998 Bonds on the first interest payment date. The remaining proceeds from the sale of tile 1998 Bonds, together with other funds of the works to be applied to the Refunding as approved by the Executive and bond counsel, shall be and are hereby set aside for application on the cost of the Refunding.

The proceeds of the 1998 Bonds, and any such other funds, to be applied to the payment of principal of and interest and premium on the 1990 Bonds shall be deposited in escrow pursuant to the Escrow Agreement. The balance of the proceeds of the 1998 Bonds shall be used to pay costs of issuance of the 1998 Bonds and other incidental expenses.

The Escrow Agreement shall be in customary form, as approved by the Executive or the Fiscal Officer as evidenced by such official's signature thereon. The moneys deposited pursuant to the Escrow Agreement to carry out the Refunding shall be held as cash or invested in direct non-callable obligations of or unconditionally guaranteed by the U.S. Department of the Treasury, and shall be irrevocably set aside and pledged for such purpose. The Executive shall select the Escrow Agent, and the Executive and the Fiscal Officer each are authorized to execute the Escrow Agreement and the Fiscal Officer is authorized to pay the charges for the services of the Escrow Agent.

SECTION 12. Revenue Fund. There is hereby continued a fund known as the Sewage Works Revenue Fund (the "Revenue Fund"), into which there shall be deposited upon receipt all revenues of the works. This fund shall be maintained separate and apart from all other bank accounts of the Unit. All moneys deposited in the Revenue Fund may be invested in accordance with I.C. 5-13-9 and other applicable laws.

SECTION 13. Operation and Maintenance Fund. There is hereby continued a fund known as the "Operation and Maintenance Fund" (the "0 & M Fund"). There shall be credited on the last day of each calendar month a sufficient amount of revenues of the works so that the balance of the 0 & M 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 the 0 & M 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 0 & M Fund shall be used for depreciation, replacements, improvements, extensions or additions. Any moneys in said Fund in excees of the expected expenses of operation, repair and maintenance for the next succeeding month may be transferred to the Sewage Works Sinking Fund if necessary to prevent a default in the payment of principal of or interest on the outstanding bonds of the sewage works.

SECTION 14. Sewage Works Sinking Fund. There is hereby continued a flind of the utility designated as the "Sewage Works 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 the payment of any fiscal agency charges in connection with such payment. The Sinking Fund is divided into two accounts designated as the Principal and Interest Account (formerly, the "Bond and Interest Account") and the Debt Service Reserve Account, which are pledged for the purposes set forth below.

(a) Principal and Interest Account. There shall be transferred, on the last day of each calendar month, from the Revenue Fund and credited to the Principal and Interest Account an amount equal to the sum of at least one-sixth (1/6) of the principal and at least one-sixth (1/6) of the interest on all then outstanding bonds payable from Net Revenues on the next succeeding principal and interest payment dates, until the amount available therein, shall equal the principal payable during the next succeeding six (6) 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 Unit shall, from the sums deposited in the Sinking Fund and credited to the Principal and Interest Account, remit promptly to the registered owner or to the bank fiscal agency sufficient moneys to pay the principal and interest on tile due dates thereof together with tile amount of bank fiscal agency charges.

(b) Debt Service Reserve Account. On the date of issuance of the 1998 Bonds, there shall be maintained in the Debt Service Reserve Account an amount to constitute an appropriate reserve to facilitate the marketing of the 1998 Bonds, which reserve amount shall not exceed the lesser of ten percent (10%) of the proceeds of the 1998 Bonds, the maximum annual debt service on the 1998 Bonds, and 125% of the average annual debt service on the 1998 Bonds. After the issuance of the 1998 Bonds, the Unit shall maintain the balance in the Debt Service Reserve Account in an amount equal to the Reserve Requirement, subject to the provisions of any ordinance authorizing parity bonds which allows the Reserve Requirement to be accumulated over time. For these purposes, "Reserve Requirement" means the lesser of ten percent (10%) of the proceeds of the 1998 Bonds and any bonds ranking on a parity therewith, the maximum annual debt service on tIle 1998 Bonds and such parity bonds, and 125% of the average annual debt service on the 1998 Bonds and such parity bonds. All money in the Debt Service Reserve Account shall be used and withdrawn solely for the purpose of making deposits into the Principal and Interest Account, in the event of and to the extent of any deficiency in the Principal and Interest Account with respect to the payments then due on the 1998 Bonds and any such parity bonds, or to make the final payments on such bonds when the Debt Service Reserve Account, together with other funds available for such purpose, is sufficient to make all remaining payments thereon to final maturity. Any amount in the Debt Service Reserve Account in excess of the Reserve Requirement shall be withdrawn from time to time, and at least as frequently as annually, and deposited in the Principal and Interest Account. Any deficiency in the balance required to be held in the Debt Service Reserve Account shall be promptly made up from the next available Net Revenues after credits to the Principal and Interest Account.

SECTION 15. Sewage Works Improvement Fund. There is hereby continued a special fund designated the "Sewage Works Improvement Fund" (the "Improvement Fund"). In the event all required payments into the 0 & M Fund and the Sinking Fund have been met to date, then any excess Net Revenues may be transferred to the Improvement Fund for improvements, replacements, additions and extensions to the works. All or any portion of the funds accumulated and reserved in the Improvement Fund shall be transferred to the Sinking Fund, if neeessaay, to prevent a default in the payment of principal of or interest on the bonds payable from said Sinking Fund or to eliminate any deficiencies in credits to or minimum balance in the Debt Service Reserve Account. Moneys m the Improvement Fund also may be transferred to the 0 & M Fund to meet unforeseen contingencies in the operation, repair and maintenance of the works.

SECTION 16. Investment of Funds. The funds and accounts described herein shall be accounted for separate and apart from each other and from all other funds and accounts of the Unit. All moneys deposited in the funds and accounts shall be deposited, held and secured as public funds in accordance with the public depository laws of the State of Indiana; provided that moneys therein may be invested in obligations in accordance with the applicable laws, including particularly Indiana Code, Title 5, Article 13, as amended or supplemented, and in the event of such investment the income therefrom shall become a part of the funds invested and shall be used only as provided in this Ordinance.

SECTlON 17. Financial Records and Accounts The Unit 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 Unit shall maintain on file the audited fmancial statements of the utility prepared by the State Board of Accounts. There shall be furnished, upon written request, to any owner of the 1998 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.

SECTION 18. Rate Covenant. The Unit covenants and agrees that, by ordinance of the Council, it will establish just and equitable rates and charges for the use of the service rendered by the works, to be paid by the owner of each and every lot, parcel of real estate or building that is connected with and uses said works by or through any part of the utility, or that in any way uses or is served by such works; that such rates or charges shall be sufficient in each year for the payment of the proper and reasonable expenses of operation, repair and maintenance of the works, and for the payment of the sums required to be paid into the Sinking Fund by the Act and this Ordinance. Such rates or charges shall, if necessary, be changed and readjusted from time to time so that the revenues therefrom shall always be sufficient to meet the expenses of operation, repair and maintenance of the works and the requirements of the Sinking Fund. The rates or charges so established shall apply to any and all use of such works by and service rendered to the Unit and all departments thereof, and shall be paid by the Unit or the various departments thereof as the charges accrue.

SECTION 19. Defeasance. If, when the 1998 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 1998 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 1998 Bonds or any portion thereof then outstanding shall be paid, or (i) cash, (ii) direct non-callable obligations of or unconditionally guaranteed by (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 1998 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. AdditionalBonds. The Unit reserves the right to issue additional bonds payable out of the Net Revenues ranking on a parity with the 1998 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 refbnding of obligations, subject to the following conditions precedent:

(a) The interest on and principal of all bonds payable from the Net Revenues shall have been pald to date in accordance with the terms thereof, provided, this condition shall be satisfied if any required amount is to be provided from the proceeds of such additional bonds or other funds.

(b) The balance in the Debt Service Reserve Account shall be equal to the amount required herein, provided, this condition shall be satisfied if any required amount is to be provided from the proceeds of such additional bonds or other flinds.

(c) The Net Revenues in the fiscal year immediately preceding the issuance of any such bonds ranking on a parity with the 1998 Bonds shall be not less than one hundred twenty percent (120%) of the annual principal and interest requirements of the then outstanding parity bonds (including the 1998 Bonds) and the additional parity bonds proposed to be issued for each respective year during the term of such outstanding parity bonds and the proposed additional bonds; or, prior to the issuance of the additional bonds, the rates and charges shall be increased sufficiently so that said increased rates and charges applied to the previous fiscal year's operations would have produced Net Revenues for said year equal to not less than one hundred twenty percent (120%) of such annual principal and interest requirements for each respective year during the term of such outstanding parity bonds and the proposed additional bonds. For purposes of this subsection, the records of the works shall be analyzed and all showings shall be prepared by a certified public accountant or other financial consultant (the "Certifier") employed by the Unit for that purpose. For purposes of this subsection, the Certifier shall, in a reasonable manner, reduce the principal and interest requirements for any issue of bonds (i) as to interest, by any accrued interest and capitalized interest funded from the proceeds of the sale of such issue to the extent such amounts have been or will be at the time of issuance thereof set aside for such purpose, which shall be applied to offset the earliest installments of interest on the bonds of such issue, and (ii) as to principal and interest, by any debt service reserves to the extent such amounts have been or will be at the time of issuance of bonds set aside for such purpose which shall be applied to offset the latest maturities of principal and interest on the bonds secured by such reserves.

(d) The principal of said additional parity bonds shall be payable on January 1 and July 1 and the interest shall be payable on January 1 and July 1 during the periods such principal and interest are payable.

The Council shall approve and confirm the findings and estimates of a Certifier in any ordinance authorizing the issuance of the additional bonds, and such data shall be updated by the Certifier as of the date of issuance of the additional bonds.

In the event available moneys arc insufficient to pay debt service on the 1998 Bonds and any parity bonds when due, available moneys shall be applied, after payment of all costs and expenses associated therewith, to the 1998 Bonds and any parity bonds as follows:

FIRST - To the payment to the persons entitled thereto of all unpaid installments of interest then due on the 1998 Bonds and any parity bonds, including interest on any past due principal of any 1998 Bond or parity bond at the rate borne by such 1998 Bond or parity bond, in the order of the maturity of the installments of such interest and, if the amount available shlhl not be sufficient to pay in full any particular installment, then to such payment ratably, according to the amounts due on such installments, to the persons entitled thereto, without any discrimination or privilege; and

SECOND - To the payment to the persons entitled thereto of the unpaid principal of any of the 1998 Bonds and any parity bonds which shall have become due either at maturity or pursuant to a call for redemption (other than 1998 Bonds or parity bonds called for redemption for the payment of which other moneys are held), in the order of their due dates, and, if the amount available shall not be sufficient to pay in full the principal of 1998 Bonds or parity bonds due on any particular date, then to such payment ratably, according to the amount of principal due on such date, to the persons entitled thereto without any discrimination or privilege.

During the continuance of any default in the payment of either principal of or interest or premium on any 1998 Bonds or parity bonds, no payment shall be made with respect to any subordinate obligations issued pursuant to Section 21(d). 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 1998 Bonds and parity bonds unless otherwise provided in the ordinance authorizing the subordinate obligations.

SECTION 21. Further Covenants of the Unit. For the purpose of further safeguarding the interests of the owners of the 1998 Bonds, it is hereby specifically provided as follows:

SECTION 22. Amendments With Consent of Bondholders Subject to the terms and provisions contained in this section and Sections 21 and 23, the owners of not less than sixty-six and two-thirds percent (66 2/3%) in aggregate principal amount of the 1998 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 Unit for the purpose of amending in any particular any of the terms or provisions contained in this Ordinance, or in any supplemental Ordinance; provided, however, that nothing herein contained shall permit or be construed as permitting:

If the Unit 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 1998 Bonds. The Registrar shall not, however, be subject to any liability to any owners of the 1998 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 Unit shall receive any instrument or instruments purporting to be executed by the owners of the 1998 Bonds of not less than sixty-six and two-thirds percent (66-2/3 %) in aggregate principal amount of the 1998 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 Unit may adopt such supplemental ordinance in substantially such form, without liability or responsibility to any owners of the 1998 Bonds, whether or not such owners shall have consented thereto.

No owner of any 1998 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 Unit and all owners of 1998 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 contalned in the foregoing provisions of this Ordinance, the rights and obligations of the Unit and of the owners of the 1998 Bonds, and the terms and provisions of the 1998 Bonds and this Ordinance, or any supplemental ordinance, may be modified or amended in any respect with the consent of the Unit and the consent of the owners of all the 1998 Bonds then outstanding.

SECTION 23. Amedments 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 1998 Bonds, adopt such ordinances supplemental hereto as shall not be inconsistent with the terms and provisions hereof (which supplemental ordinances shall thereafter form a part hereof):

Not withstanding 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 1998 Bonds from gross income under federal law (the "Tax Exemption") need not be complied with to the extent the Unit receives an opinion of nationally recognized bond counsel that compliance with such Tax Section is unnecessary to preserve the Tax Exemption.

The 1998 Bonds qualily for the exception in Section 265 of the Code from the disallowance of 100% of the deduction by financial institutions of interest expense allocable to tax-exempt obligations, because the 1998 Bonds are not private activity bonds within the meaning of Section 141 of the Code; the 1998 Bonds are hereby designated as "qualified tax-exempt obligations" for purposes of Section 265(b)(3) of the Code; the reasonably anticipated amount of qualified tax-exempt obligations (including qualified 501(c)(3) bonds but excluding other private activity bonds) which will be issued by or on behalf of the Unit, all entities which issue obligations on behalf of the Unit, and all subordinate entities during the calendar year of issuance of the 1998 Bonds will not exceed $10,000,000; and the Unit, all entities which issue obligations on behalf of the Unit, and all subordinate entities have not designated more than $10,000,000 of qualified tax-exempt obligations issued or to be issued during such year of issuance.

SECTlON 25. Other Actions. The Executive and the Fiscal Officer may take such other actions or deliver such other certificates and documents needed for the Refunding as they deem necessary or desirable in connection therewith.

SECTION 26. Non-Business Days. If the date of making any payment or the last date for performance of any act or the exercising of any right, as provided in this Ordinance, shall be a legal holiday or a day on which banking institutions in the Unit 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.

SECTlON 27. No Conflict. The Council hereby finds and determines that the adoption Ordinance and the issuance of the 1998 Bonds is in compliance with the Prior Ordinance.

The Prior Ordinance shall remain in full force and effect until the 1990 Bonds are defeased. All ordinances and resolutions and parts thereof in conflict herewith, except the Prior Ordinance, are to the extent of such conflict hereby repeeled.

SECTION 28. Severability. If any section, paragrnph or provision of this Ordinance shall be held to be invalid or unenforceable for any reason, the invalidity or unenforceability of such section, paragraph or provision shall not affect any of the remaining provisions of this Ordinance.

SECTION 29. Interpretation. Unless the context or laws clearly require otherwise, references herein to statutes or other laws include the same as modified, supplemented or superseded from time to time.

SECTION 30. Effectiveness. This Ordinance shall be in full force and effect from and after its passage and compliance with the procedures required by law.

Passed and adopted by the Town Council of e Town of Kentland, Indiana, on the 14th day of July, 1998.