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Ordinance 3460CITY OF EDMONDS, WASHINGTON ORDINANCE NO. 3460 AN ORDINANCE of the City of Edmonds, Washington, relating to contracting indebtedness; providing for the issuance, specifying the maturities, interest rates, terms and covenants of $7,000,000 par value of Unlimited Tax General Obligation Refunding Bonds, 2003, to provide part of the funds with which to pay the cost of advance refunding a portion of the City's outstanding Unlimited Tax General Obligation Bonds, 1996, and paying the administrative costs of such refunding and the costs of issuance and sale of such bonds; establishing a bond redemption fund; providing for and authorizing the purchase of certain obligations out of the proceeds of the sale of the bonds herein authorized and for the use and application of the money derived from those investments; authorizing the execution of an agreement with U.S. Bank National Association of Seattle, Washington, as refunding trustee; providing for the call, payment and redemption of the outstanding bonds to be refunded; providing for bond insurance; and approving the sale and providing for the delivery of the bonds to Seattle - Northwest Securities Corporation. of Seattle, Washington. Passed June 24, 2003 This document prepared by: Foster Pepper & Shefelman PLLC 1111 Third Avenue, Suite 3400 Seattle, Washington 98101 (206) 447 -4400 50384285.03 Section 1 Section 2 Section 3. Section 4. Section 5. Section 6. Section 7. Section 8. TABLE OF CONTENTS Definitions............................................................................. ............................... Authorization and Description of Bonds ............................. :....................... Registration and Transfer of Bonds .............................. ............................... Paymentof Bonds ......................................................... ............................... Redemption Provisions and Open Market Purchase of Bonds ................... Noticeof Redemption ................................................... ............................... Failure to Redeem Bonds .............................................. ............................... Pled e of Taxes Page 2 4 ...................5 ...................7 ...................7 ...................8 g................................................................... ............................... ..............9 ..............9 Section 9. Form and Execution of Bonds ........................................................... ..............................9 Section10. Bond Registrar .................................................................................. .............................10 Section 11. Preservation of Tax Exemption for Interest on Bonds ..................... .............................11 Section 12. Designation of Bonds as "Qualified Tax- Exempt Obligations." ..... .............................11 Section 13. Refunding or Defeasance of the Bonds ............................................ .............................12 Section14. Bond Fund ......................................................................................... .............................13 Section 15. Refunding of Refunded Bonds ......................................................... .............................14 Section 16. Call for Redemption of the Refunded Bonds ................................... .............................17 Section 17. City Findings with Respect to Refunding ......................................... .............................17 Section 18. Approval of Bond Purchase Contract ................:.............................. .............................18 Section 19. Preliminary Official Statement Deemed Final ................................. .............................18 Section 20. Undertaking to Provide Continuing Disclosure ............................... .............................19 Section 21. Bond Insurance ................................................................................. .............................21 Section 22. Payment Procedures Under Financial Guaranty Policy ................... .............................22 Section 23. Parties Interested Herein ................................................................... .............................24 Section 24. Effective Date of Ordinance .............................................................. .............................26 50384285.03 CITY OF EDMONDS, WASHINGTON ORDINANCE NO. 3460 AN ORDINANCE of the City of Edmonds, Washington, relating to contracting indebtedness; providing for the issuance, specifying the maturities, interest rates, terms and covenants of $7,000,000 par value of Unlimited Tax General Obligation Refunding Bonds, 2003, to provide part of the funds with which to pay the cost of advance refunding a portion of the City's outstanding Unlimited Tax General Obligation Bonds, 1996, and paying the administrative costs of such refunding and the costs of issuance and sale of such bonds; establishing a bond redemption fund; providing for and authorizing the purchase of certain obligations out of the proceeds of the sale of the bonds herein authorized and for the use and application of the money derived from those investments; authorizing the execution of an agreement with U.S. Bank National Association of Seattle, Washington, as refunding trustee; providing for the call, payment and redemption of the outstanding bonds to be refunded; providing for bond insurance; and approving the sale and providing for the delivery of the bonds to Seattle- Northwest Securities Corporation of Seattle, Washington. WHEREAS, pursuant to Ordinance No. 3106, the City of Edmonds, Washington (the "City ") heretofore issued its $9,275,000 par value Unlimited Tax General Obligation Bonds, 1996 (the "1996 Bonds "), for the purpose of paying the cost of constructing public safety facilities, and by that ordinance reserved the right to redeem the 1996 Bonds maturing on or after December 1, 2007, prior to their maturity at any time on or after December 1, 2006, as a whole or in part (within one or more maturities selected by the City and by lot within a maturity in such manner as the Bond Registrar shall determine), at a price of par plus accrued interest to the date fixed for redemption; and WHEREAS, after due consideration, it appears to the City Council that a portion of the 1996 Bonds (hereinafter defined as the "Refunded Bonds ") may be refunded by the issuance and sale of the unlimited tax general obligation refunding bonds authorized herein (the "Bonds "), so that a substantial savings will be effected by the difference between the principal and interest 50384285.03 cost over the life of the Bonds and the principal and interest cost over the life of the Refunded Bonds but for such refunding, which refunding will be effected by the Refunding Plan (hereinafter defined); and WHEREAS, to effect that refunding in the manner that will be most advantageous to the City it is found necessary and advisable that certain Acquired Obligations (hereinafter defined) bearing interest and maturing at such time or times as necessary to accomplish the refunding as aforesaid be purchased out of a portion of the proceeds of the Bonds and other money of the City; and WHEREAS, the City Council deems it to be in the best interests of the City to issue and sell the Bonds to pay part of the cost of advance refunding the Refunded Bonds and to pay the administrative costs of such refunding and the costs of issuance and sale of the Bonds; and WHEREAS, Ambac Assurance Corporation, a Wisconsin - domiciled stock insurance company ( "Ambac Assurance" or the 'Bond Insurer "), has made a commitment to issue an insurance policy (the "Financial Guaranty Insurance Policy ") insuring the payment when due of the principal of and interest on the Bonds as provided therein, and the City Council deems that the purchase of such Financial Guaranty Insurance Policy is in the best interest of the City; and WHEREAS, Seattle- Northwest Securities Corporation of Seattle, Washington, has offered to purchase the Bonds under the terms and conditions hereinafter set forth in the form of a bond purchase agreement, and the City Council has determined it is in the best interest of the City to accept that offer; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF EDMONDS, WASHINGTON, DO ORDAIN AS FOLLOWS: Section 1. Definitions. As used in this ordinance the following words shall have the following meanings: -2- 50384285.03 "Acquired Obligations" means those United States Treasury Certificates of Indebtedness, Notes, and Bonds - -State and Local Government Series and other direct, noncallable obligations of the United States of America purchased to accomplish the refunding of the Refunded Bonds as authorized by this ordinance. "Bond Insurer" or " Ambac Assurance" means Ambac Assurance Corporation, a Wisconsin - domiciled stock insurance company. "Bond Fund" means the Unlimited Tax General Obligation Refunding Bond Fund, 2003, "Bond Register" means the registration books of the Bond Registrar on which are recorded the names of the owners of the Bonds. "Bond Registrar" means, collectively, the fiscal agent and co -fiscal agent of the State of Washington as the same may be designated from time to time. "Bonds" means the $7,000,000 par value Unlimited Tax General Obligation Refunding Bonds, 2003, of the City authorized to be issued by this ordinance. "City" means the City of Edmonds, Washington, a duly organized and existing noncharter code city under the laws of the State of Washington. "Code" means the Internal Revenue Code of 1986, as amended. "DTC" means The Depository Trust Company. "Letter of Representations" means the Blanket Issuer Letter of. Representations dated August 6, 1996, between DTC and the City. "Financial Guaranty Insurance Policy" means the financial guaranty insurance policy issued by the Bond Insurer insuring the payment when due of the principal of and interest on the Bonds as provided herein. -3- 50384285.03 "Refunded Bonds" means the following outstanding Unlimited Tax General Obligation Bonds, 1996, of the City, issued pursuant to Ordinance No. 3106, the refunding of which has been provided for by this ordinance: Maturity Year Refunded Interest (December 1) Principal Rate 2008 $ 170,000' 5.15% 20102 1,135,000 5.40 2011 645,000 5.50 2012 700,000 5.55 20162 3,465,000 5.60 'Represents a portion of 2008 maturity 2Tenn Bonds "Refunding Plan" means: (a) the placement of sufficient proceeds of the Bonds which, with other money of the City, if necessary, will acquire the Acquired Obligations to be deposited, with cash, if necessary, with the Refunding Trustee; (b) the payment of the interest on the Refunded Bonds when due up to and including December 1, 2006, and the call, payment, and redemption on December 1, 2006, of all of the outstanding Refunded Bonds at a price of par; and (c) the payment of the costs of issuing the Bonds and the costs of carrying out the foregoing elements of the Refunding Plan. "Refunding Trust Agreement" means a Refunding Trust Agreement between the City and the Refunding Trustee substantially in the form of that which is on file with the City Clerk and by this reference incorporated herein. "Refunding Trustee" means U.S. Bank National Association of Seattle, Washington, serving as trustee or escrow agent or any successor trustee or escrow agent. Section 2. Authorization and Description of Bonds. The City shall issue the Bonds for the purpose of carrying out the Refunding Plan. The Bonds shall be called Unlimited Tax General Obligation Refunding Bonds, 2003, of the City; shall be in the aggregate principal -4- 50384285.03 amount of $7,000,000; shall be dated July 1, 2003; shall be in the denomination of $5,000 or any integral multiple thereof within a single maturity; shall be numbered separately in the manner and with any additional designation as the Bond Registrar deems necessary for purposes of identification; shall bear interest (computed on the basis of a 360 -day year of twelve 30 -day months) payable semiannually on each June 1 and December 1, commencing December 1, 2003, to the maturity or earlier redemption of the Bonds; and shall mature on December in years and amounts and bear interest at the rates per annum as follows: Maturity Interest Years Amounts Rates 2003 $ 70,000 2.000% 2004 90,000 2.000 2005 90,000 2.000 2006 95,000 2.000 2007 90,000 2.250 2008 265,000 2.375 2009 640,000 2.500 2010 670,000 3.000 2011 715,000 3.125 2012 755,000 3.250 2013 800,000 3.100 2014 855,000 3.150 2015 905,000 3.400 2016 960,000 3.500 $885,000 of principal of the Bonds shall constitute nonvoted debt of the City. Section 3. Registration and Transfer of Bonds. The Bonds shall be issued only in registered form as to both principal and interest and shall be recorded on the Bond Register. The Bond Register shall contain the name and mailing address of the owner of each Bond and the principal amount and number of each of the Bonds held by each owner. Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized denomination of an equal aggregate principal amount and of the same interest rate and maturity. Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to -5- 50384285.03 the Bond Registrar. Any exchange or transfer shall be without cost to the owner or transferee. The Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days preceding any principal payment or, redemption date. The Bonds initially shall be registered in the name of Cede & Co., as the nominee of DTC. The Bonds so registered shall be held in fully immobilized form by DTC as depository in accordance with the provisions of a Letter of Representations. Neither the City nor the Bond Registrar shall have any responsibility or obligation to DTC participants or the persons for whom they act as nominees with respect to the Bonds regarding accuracy of any records maintained by DTC or DTC participants of any amount in respect of principal of or interest on the Bonds, or any notice that is permitted or required to be given to registered owners hereunder (except such notice as is required to be given by the Bond Registrar to DTC). For as long as any Bonds are held in fully immobilized form, DTC, its nominee or its successor depository shall be deemed to be the registered owner for all purposes hereunder and all references to registered owners, bondowners, bondholders or the like shall mean DTC or its nominee and shall not mean the owners of any beneficial interests in the Bonds. Registered ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i) to any successor of DTC or its nominee, if that successor shall be qualified under any applicable laws to provide the services proposed to be provided by it; (ii) to any substitute depository appointed by the City or such substitute depository's successor; or (iii) to any person if the Bonds are no longer held in immobilized form. Upon the resignation of DTC or its successor (or any substitute depository or its successor) from its functions as depository, or a determination by the City that it no longer wishes to continue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor), the City may appoint a substitute depository. Any such -6- 50384285.03 substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. If (i) DTC or its successor (or substitute depository or its successor) resigns from its functions as depository, and no substitute depository can be. obtained, or (ii) the City determines that the Bonds are to be in certificated form, the ownership of Bonds may be transferred to any person as provided herein and the Bonds no longer shall be held in fully immobilized form. Section 4. Payment of Bonds. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds shall be paid by checks or drafts of the Bond Registrar mailed on the interest payment date to the registered owners at the addresses appearing on the Bond Register on the 15th day of the month preceding the interest payment date. Principal of the Bonds shall be payable upon presentation and surrender of the Bonds by the registered owners at either of the principal offices of the Bond Registrar at the option of the owners. Notwithstanding the foregoing, as long as the Bonds are registered in the name of DTC or its nominee, payment of principal of and interest on the Bonds shall be made in the manner set forth in the Letter of Representations. Section 5. Redemption Provisions and Open Market Purchase of Bonds. Bonds maturing in the years 2003 through 2013, inclusive, shall be issued without the right or option of the City to redeem those Bonds prior to their stated maturity dates. The City reserves the right and option to redeem the Bonds maturing on or after December 1, 2014, prior to their stated maturity dates at any time on or after December 1, 2013, as a whole or in part (within one or more maturities selected by the City and randomly within a maturity in such manner as the Bond Registrar shall determine), at par plus accrued interest to the date fixed for redemption. Portions of the principal amount of any Bond, in installments of $5,000 or any integral multiple thereof, may be redeemed. If less than all of the principal amount of any Bond is -7- 50384285.03 redeemed, upon surrender of that Bond at either of the principal offices of the Bond Registrar, there shall be issued to the registered owner, without charge therefor, a new Bond (or Bonds, at the option of the registered owner) of the same maturity and interest rate in any of the denominations authorized by this ordinance in the aggregate principal amount remaining unredeemed. The City further reserves the right and option to purchase any or all of the Bonds in the open market at any time at any price plus accrued interest to the date of purchase. All Bonds purchased or redeemed under this section shall be cancelled. Notwithstanding the foregoing, for as long as the Bonds are registered in the name of DTC or its nominee, selection of Bonds for redemption shall be in accordance with the Letter of Representations. Section 6. Notice of Redem tp ion. The City shall cause notice of any intended redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed for redemption by first -class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares the notice, and the requirements of this sentence shall be deemed to have been fulfilled when notice has been mailed as so provided, whether or not it is actually received by the owner of any Bond. Interest on Bonds called for redemption shall cease to accrue on the date fixed for redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the call. In addition, the redemption notice shall be mailed within the same period, postage prepaid, to Moody's Investors Service, Inc., and Standard & Poor's at their offices in New York, New York, or their successors, to Seattle- Northwest Securities Corporation at its principal office in Seattle, Washington, or "its successor, to the Bond Insurer at its principal office in New York, New York, or its successor, to each NRMSIR or the MSRB and to such other persons and with -8- 50384285.03 such additional information as the Administrative Services Director of the City shall determine, but these additional mailings shall not be a condition precedent to the redemption of Bonds. Notwithstanding the foregoing, for as long as the Bonds are registered in the name of DTC or its nominee, notice of redemption shall be given in accordance with the Letter of Representations. Section 7. Failure to Redeem Bonds. If any Bond is not redeemed when properly presented at its maturity or call date, the City shall be obligated to pay interest on that Bond at the same rate provided in the Bond from and after its maturity or call date until that Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund hereinafter created and the Bond has been called for payment by giving notice of that call to the registered owner thereof. Section 8. Pledge of Taxes. For as long as any of the Bonds are outstanding, the City irrevocably pledges to levy taxes annually without limitation as to rate or amount on all of the taxable property within the City in an amount sufficient, together with other money legally available and to be used therefor, to pay when due the principal of and interest on the Bonds, and the full faith, credit and resources of the City are pledged irrevocably for the annual levy and collection of those taxes and the prompt payment of that principal and interest. Section 9. Form and Execution of Bonds. The Bonds shall be prepared in a form consistent with the provisions of this ordinance and state law, shall be signed by the Mayor and City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. Only Bonds bearing a Certificate of Authentication in the following form, manually signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance: -9- 50384285.03 CERTIFICATE OF AUTHENTICATION This Bond is one of the fully registered City of Edmonds, Washington, Unlimited Tax General Obligation Refunding Bonds, 2003, described in the Bond Ordinance. WASHINGTON STATE FISCAL AGENT Bond Registrar Authorized Signer The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bond so authenticated has been duly executed, authenticated and delivered and is entitled to the benefits of this ordinance. If any officer whose facsimile signature appears on the Bonds ceases to be an officer of the City authorized to sign bonds before the Bonds bearing his or her facsimile signature are authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless may be authenticated; issued and delivered and, when authenticated, issued and delivered, shall be as binding on the City as though that person had continued to be an officer of the City authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person who, on the actual .date of signing of the Bond, is an officer of the City authorized to sign bonds, although he or she did not hold the required office on the date of issuance of the Bonds. Section 10. Bond Registrar. The Bond Registrar shall keep, or cause to be kept, at its principal corporate trust office, sufficient books for the registration and transfer of the Bonds, which shall be open to inspection by the City at all times. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of the Bonds and this ordinance, to serve as the City's paying agent for the Bonds and to carry out all of the Bond Registrar's powers and duties under this ordinance and City Ordinance No. 2451 establishing a system of registration for the City's bonds and obligations. -10- 50384285.03 The Bond Registrar shall be responsible for its representations contained in the Bond Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the owner of Bonds with the same rights it would have if it were not the Bond Registrar and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as members of, or in any other capacity with respect to, any committee formed to protect the rights of Bond owners. Section 11. Preservation of Tax Exemption for Interest on Bonds. The City covenants that it will take all actions necessary to prevent interest on the Bonds from being included in gross income for federal income tax purposes, and it will neither take any action nor make or permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds at any time during the term of the Bonds, which will cause interest on the Bonds to be included in gross income for federal income tax purposes. The City also covenants that it will, to the extent the arbitrage rebate requirement of Section 148 of the Internal Revenue Code of 1986, as amended (the "Code "), is applicable to the Bonds, take all actions necessary to comply (or to be treated as having complied) with that requirement in connection with the Bonds, including the calculation and payment of any penalties that the City has elected to pay as an alternative to calculating rebatable arbitrage, and the payment of any other penalties if required under Section 148 of the Code to prevent interest on the Bonds from being included in gross income for federal income tax purposes. The City certifies that it has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. Section 12. Designation of Bonds as "Qualified Tax - Exempt Obligations." The City has determined and certifies that (a) the Bonds are not "private activity bonds" within the meaning of Section 141 of the Code; (b) the reasonably anticipated amount of tax - exempt obligations (other -11- 50384285.03 than private activity bonds and other obligations not required to be included in such calculation) which the City and any entity subordinate to the City (including any entity which the City controls, which derives its authority to issue tax - exempt obligations from the City or which issues tax - exempt obligations on behalf of the City) will issue during the calendar year in which the Bonds are issued will not exceed $10,000,000; and (c) the amount of tax - exempt obligations, including the Bonds, designated by the City as "qualified tax - exempt obligations" for the purposes of Section 265(b)(3) of the Code during the calendar year in which the Bonds are issued does not exceed $10,000,000. The City designates the Bonds as "qualified tax- exempt obligations" for the purposes of Section 265(b)(3) of the Code. Section 13. Refunding or Defeasance of the Bonds. The City may issue refunding bonds pursuant to the laws of the State of Washington or use money available from any other lawful source to pay when due the principal of and interest on the Bonds, or any portion thereof included in a refunding or defeasance plan, and to redeem and retire, refund or defease all such then - outstanding Bonds (hereinafter collectively called the "defeased Bonds ") and to pay the costs of the refunding or defeasance. If money and /or "government obligations" (as defined in chapter 39.53 RCW, as now or hereafter amended) maturing at a time or times and bearing interest in amounts (together with money, if necessary) sufficient to redeem and retire, refund or defease the defeased Bonds in accordance with their terms are set aside in a special trust fund or escrow account irrevocably pledged to that redemption, retirement or defeasance of defeased Bonds (hereinafter called the "trust account "), then all right and interest of the owners of the defeased Bonds in the covenants of this ordinance and in the funds and accounts obligated to the payment of the defeased Bonds shall cease and become void. The owners of defeased Bonds shall have the right to receive payment of the principal of and interest on the defeased Bonds from the trust account. The City shall include in the refunding or defeasance plan such -12- 50384285.03 provisions as the City deems necessary for the random selection of any defeased Bonds that constitute less than all of a particular maturity of the Bonds, for notice of the defeasance to be given to the owners of the defeased Bonds and to such other persons as the City shall determine, and for any required replacement of Bond certificates for defeased Bonds. The defeased Bonds shall be deemed no longer outstanding, and the City may apply any money in any other fund or account established for the payment or redemption of the defeased Bonds to any lawful purposes as it shall determine. Notwithstanding anything in this section to the contrary, if the principal of and/or interest due on the Bonds is paid by the Bond Insurer pursuant to the Financial Guaranty Insurance Policy, the Bonds shall be treated as remaining outstanding for all purposes and shall not be considered paid by the City, and the covenants, agreements and other obligations of the City to the registered owners of the Bonds shall continue to exist and run to the benefit of the Bond Insurer, and the Bond Insurer shall be subrogated to the rights of the registered owners. If the Bonds are registered in the name of DTC or its nominee, notice of any defeasance of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for notices of redemption of Bonds. Section 14. Bond Fund. There is created and established in -the office of the Administrative Services Director of the City a special fund designated as the Unlimited Tax General Obligation Refunding Bond Fund, 2003 (the "Bond Fund "). Accrued interest on the Bonds, if any, received from the sale and delivery of the Bonds shall be paid into the Bond Fund. All taxes collected for and allocated to the payment of the principal of and interest on the Bonds shall be deposited in the Bond Fund. -13- 50384285.03 "(a) At least one (1) day prior to all Interest Payment Dates the Trustee or Paying Agent [the Bond Registrar], if any, will determine whether there will be sufficient funds in the Funds and Accounts to pay the principal of or interest on the Obligations on such Interest Payment Date. If the Trustee or Paying Agent, if any, determines that there will be insufficient funds in such Funds or Accounts, the Trustee or Paying Agent, if any, shall so notify Ambac Assurance. Such notice shall specify the amount of the anticipated deficiency, the Obligations to which such deficiency is applicable and whether such Obligations will be deficient as to principal or interest, or both. If the Trustee or Paying Agent, if any, has not so notified Ambac Assurance at least one (1) day prior to an Interest Payment Date, Ambac Assurance will make payments of principal or interest due on the Obligations on or before the first (1st) day next following the date on which Ambac Assurance shall have received notice of nonpayment from the Trustee or Paying Agent, if any. "(b) the Trustee or Paying Agent, if any, shall, after giving notice to Ambac Assurance as provided in (a) above, make available to Ambac Assurance and, at Ambac Assurance's direction, to The Bank of New York in New York, New York, as insurance trustee for Ambac Assurance or any successor insurance trustee (the "Insurance Trustee "), the registration books of the Obligor maintained by the Trustee or Paying Agent, if any, and all records relating to the Funds and Accounts maintained under this ordinance. "(c) the Trustee or Paying Agent, if any, shall provide Ambac Assurance and the Insurance Trustee with a list of registered owners of Obligations entitled to receive principal or interest payments from Ambac Assurance under the terms of the Financial Guaranty Insurance Policy, and shall make arrangements with the Insurance Trustee (i) to mail checks or drafts to the registered owners of Obligations entitled to receive full or partial interest payments from Ambac Assurance and (ii) to pay principal upon Obligations surrendered to the Insurance Trustee by the registered owners of Obligations entitled to receive full or partial principal payments from Ambac Assurance. "(d) the Trustee or Paying Agent, if any, shall, at the time it provides notice to Ambac Assurance pursuant to (a) above, notify registered owners of Obligations entitled to receive the payment of principal or interest thereon from Ambac Assurance (i) as to the fact of such entitlement, (ii) that Ambac Assurance will remit to them all or a part of the interest payments next coming due upon proof of Holder entitlement to interest payments and delivery to the Insurance Trustee, in form satisfactory to the Insurance Trustee, of an appropriate assignment of the registered owner's right to payment, (iii) that should they be entitled to receive full payment of principal from Ambac Assurance, they must surrender their Obligations (along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee to permit ownership of such Obligations to be registered in the name of Ambac Assurance) for payment to the Insurance Trustee, and not the Trustee or Paying Agent, if any, and (iv) that should they be entitled to receive partial payment of principal from Ambac -23- 50384285.03 Assurance, they must first surrender their Obligations for payment thereon first to the Trustee or Paying Agent, if any, who shall note on such Obligations the portion of the principal paid by the Trustee or Paying Agent, if any, and then, along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to the Insurance Trustee, which will then pay the unpaid portion of principal. "(e) in the event that the Trustee or Paying Agent, if any, has notice that any payment of principal of or interest on a Bond which has become Due for Payment and which is made to a Holder by or on behalf of the Obligor has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee or Paying Agent, if any, shall, at the time Ambac Assurance is notified pursuant to (a) above, notify all registered owners that in the event that any registered owner's payment is so recovered, such registered owner will be entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available, and the Trustee or Paying Agent, if any, shall furnish to Ambac Assurance its records evidencing the payments of principal of and interest on the Obligations which have been made by the Trustee or Paying Agent, if any, and subsequently recovered from registered owners and the dates on which such payments were made. "(f) in addition to those rights granted Ambac Assurance under this ordinance, Ambac Assurance shall, to the extent it makes payment of principal of or interest on Obligations, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Financial Guaranty Insurance Policy, and to evidence such subrogation (i) in the case of subrogation as to claims for past due interest, the Trustee or Paying Agent, if any, shall note Ambac Assurance's rights as subrogee on the registration books of the Obligor maintained by the Trustee or Paying Agent, if any, upon receipt from Ambac Assurance of proof of the payment of interest thereon to the registered owners of the Obligations, and (ii) in the case of subrogation as to claims for past due principal, the Trustee or Paying Agent, if any, shall note Ambac Assurance's rights as subrogee on the registration books of the Obligor maintained by the Trustee or Paying Agent, if any, upon surrender of the Obligations by the registered owners thereof together with the proof of the payment of principal thereof." Section 23. Parties Interested Herein. To the extent that this ordinance confers upon or gives or grants to the Bond Insurer any right, remedy or claim under or by reason of this ordinance, the Bond Insurer is explicitly recognized as being a third -party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder. Nothing expressed or implied in this ordinance is intended or shall be construed to confer upon, -24- 50384285.03 or to give or grant to, any person or entity, other than the City, the Bond Insurer and the registered owners of the Bonds, any right, remedy or claim under or by reason of this ordinance or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this ordinance contained by and on behalf of the City shall be for the sole and exclusive benefit of the City, the Bond Insurer and the registered owners of the Bonds. Notwithstanding any other provision of this ordinance, the City shall notify the Bond Insurer immediately if at any time there are insufficient funds to make any payments of principal and/or interest as required and immediately upon the occurrence of any event of default hereunder. Anything in this ordinance to the contrary notwithstanding, upon the occurrence and continuance of an event of default, the Bond Insurer shall be entitled to control and direct the enforcement of all rights and remedies granted to the Bond owners for the benefit of the Bond owners pursuant to state law. Any provision of this ordinance expressly recognizing or granting rights in or to the Bond Insurer may not be amended in any manner which affects the rights of the Bond Insurer hereunder without the prior written consent of the Bond Insurer. Unless otherwise provided in this section, the Bond Insurer's consent shall be required, in addition to Bond owner consent, when required, for the following purposes: (i) execution and delivery of any supplemental ordinance, and (ii) initiation or approval of any other action which requires Bond owner consent. Any reorganization or liquidation plan with respect to the City must be acceptable to the Bond Insurer. In the event of any reorganization or liquidation, the Bond Insurer shall have the right to vote on behalf of all Bond owners who hold Ambac Assurance - insured bonds absent a default by the Bond Insurer under the applicable Financial Guaranty Insurance Policy insuring such bonds. -25- 50384285.03 Section 24. Effective Date of Ordinance. This ordinance shall take effect and be in force from and after its passage and five days following its publication as required by law. PASSED by the City Council and APPROVED by the Mayor of the City of Edmonds, Washington, at a regular open public meeting thereof this 24h day of June, 2003. CITY OF EDMONDS, WASHINGTON By May •0U :"►• X 6 �`,I (e Bond Couns6f o -26- 50384285.03 SUMMARY OF ORDINANCE NO. 3460 of the City of Edmonds, Washington On the 24th day of June, 2003, the City Council of the City of Edmonds, passed Ordinance No. 3460. A summary of the content of said ordinance, consisting of the title, provides as follows: AN ORDINANCE of the City of Edmonds, Washington, relating to contracting indebtedness; providing for the issuance, specifying the maturities, interest rates, terms and covenants of $7,000,000 par value of Unlimited Tax General Obligation Refunding Bonds, 2003, to provide part of the funds with which to pay the cost of advance refunding a portion of the City's outstanding Unlimited Tax General Obligation Bonds, 1996, and paying the administrative costs of such refunding and the costs of issuance and sale of such bonds; establishing a bond redemption fund; providing for and authorizing the purchase of certain obligations out of the proceeds of the sale of the bonds herein authorized and for the use and application of the money derived from those investments; authorizing the execution of an agreement with U.S. Bank National Association of Seattle, Washington, as refunding trustee; providing for the call, payment and redemption of the outstanding bonds to be refunded; providing for bond insurance; and approving the sale and providing for the delivery of the bonds to Seattle - Northwest Securities Corporation of Seattle, Washington. The full text of this Ordinance will be mailed upon request. DATED this 25th day of June, 2003. ,Qw«- �c�,- -mil • C� CITY CLERK, SANDRA S. CHASE CERTIFICATION Deputy I, the undersigned, City Clerk of the City of Edmonds, Washington (the "City "), hereby certify as follows: 1. The attached copy of Ordinance No. 3460 (the "Ordinance ") is a full, true and.correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on June 24, 2003, as that ordinance appears on the minute book of the City; and the Ordinance will be in full force and effect five days after the publication of its summary in the City's official newspaper; and 2. A quorum of the members of the City Council was present throughout the meeting and a majority of those members present voted in the proper manner .for the passage of the Ordinance. .IN WITNESS WHEREOF, I have hereunto set my hand this 3�,i...day of 2003. ' CITY OF EDMONDS, WASHINGTON r LINDA C. HYND., Deputy City Clerk 50384285.03 Affidavit of Publication STATE OF WASHINGTON, COUNTY OF SNOHOMISH S.S. SUMMARY nE0Rr)INANCE- NO_3460 of the City of Edmonds, Washington On the 24th day of June, 2003, the Cillyy Council of the City of Edmonds, passed Ordinance No. 346b. A summary of the content of said ordinance, consisting of the title, provides as follows: AN ORDINANCE of the City of Edmonds, Washington, relating to contracting indebtedness; providing for the is- suance, specifying the maturities, interest rates, terms and covenants of $7,000,000 par value of Unlimited Tax General Obligation Refunding Bonds, 2003, to provide Fart of the funds with which to pay the cost of advance re- funding a portion of the City's outstanding Unlimited Tax General Obligation Bonds, 1996, and paying the adminis- trative costs of such refunding and the costs of issuance and sale of such bonds; establishing a bond redemption fund; providing for and authorizing the purchase of cer- tain obligations out of the proceeds of the sale of the bonds herein authorized and for the use and application of the money derived from those Investments; authoriz- ing the execution of an agreement with U.S. Bank Nation- al Association of Seattle, Washington, as refunding trust- ee; providing for the call, payment and redemption of the outstanding bonds to be refunded; providing for bond in- surance; and approving the sale and providing for the de- livery of the bonds to Seattle- Northwest Securities Corpo- ration of Seattle, Washington. The full text of this Ordinance will be mailed upon request. DATED this 25th day of June, 2003. Published: June 29, 2003. CITY CLERK, SANDRA S. CHASE T RECEIVED J u L 0 7 2003 EDMONDS CITY CLERK The undersigned, being first duly sworn on oath deposes and says that she is Principal Clerk of THE HERALD, a daily newspaper printed and published in the City of Everett, County of Snohomish, and State of Washington; that said newspaper is a newspaper of general circulation in said County and State; that said newspaper has been approved as a legal newspaper by order of the Superior Court of Snohomish County and that the notice City of Edmonds Summary of Ordinance No. 3460 a printed copy of which is hereunto attached, was published in said newspaper proper and not in supplement form, in the regular and entire edition of said paper on the following days and times, namely: ,Tune 29, 2003 and that said Subscribed day of was regularly distributed to its subscribers during all of said period. to before me this Notary Public in and for the State of County. 30th ncr r 910 a e t, Tftrlmstish A : 'PUBLIC •�? I, ,VVWA�c�,�= Account Name: City Of Edmonds Edmonds, City Of Account Number: 101416 Order Number: 0001054275