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HomeMy WebLinkAboutO-1995 - Bond issuance (Special)d-~-~. d -I}m-frJJf~J. l-~~ CITY OF MARYSVILLE,WASHINGTON ORDINANCE No./99r-- AN ORDINANCE relating to the Waterworks utility of the city,including the system of sewerage as a part thereof; specifying,adopting and ordering the carrying out of a system or plan of additions and betterments to and extensions of the Waterworks Utility of the City; providing for the issuance of Water and Sewer Revenue Bonds,1994,in the principal amount of $5,800,000 for the purpose of providing a part of the funds to pay the cost of carrying out that system and plan,to capitalize a reserve for the bonds and to pay the cost of issuing the bonds;fixing the date,form,maturities,interest rates,terms,coyenants and uses of the proceeds of those bonds;creating a construction fund;providing for bond insurance;and approving the sale and providing for the delivery of these bonds to Pacific Crest securities of Seattle,Washington. 0129263.03 Prepared by:Foster Pepper &Shefelman 1111 Third Avenue,suite 3400 Seattle,Washington (206)447-4400 CITY OF MARYSVILLE,WASHINGTON ORDINANCE NO. TABLE OF CONTENTS Recitals section 1- section 2. section 3. section 4. section 5. section 6. section 7. section 8. section 9. section 10. section 11. section 12. section 13. section 14. section 15. Definitions Adoption of Plan and System satisfaction of Parity Conditions Authorization and Description of Bonds Registration and Transfer of Bonds payment of Bonds Redemption and Open Market Purchase of Bonds •••.. Notice of Redemption Failure to Redeem Bonds Form and Execution of Bonds Bond Registrar Bond Fund Finding as to SUfficiency of Revenue, Pledge of Revenue and Lien position Construction Fund;Application of Bond Proceeds Covenants Page 1 5 12 13 14 15 15 16 17 18 18 19 20 . . ..23 24 24 0129263.03 (a)Maintenance and operation 24 (b)Establishment and Collection of Rates and Charges 25 (c)Sale or Disposition of the Waterworks utility .•....••••.•25 (d)Liens Upon the Waterworks utility 26 (e)Books and Accounts ••. • . . .27 (f)No Free Service 27 (g)Collection of Delinquent Accounts 27 (h)Fire and Extended Coverage Insurance 27 (i)Public Liability and Property Damage Insurance • • • • . • • . • • 27 -i- Approval of Bond Purchase Contract and Preliminary Official Statement Deemed Final 33 Designation of Bonds as "Qualified Tax-Exempt obligations 30 Bonds Negotiable 31 Advance Refunding or Defeasance of Bonds 31. Amendatory and Supplemental Ordinances 28 29 29 42 42 39 34 34 .... . . Effective Date Bond Insurance Flow of Funds Temporary Bond Provision for Future Parity Bonds Preservation of Tax Exemption for Interest on Bonds •..•••. section 16. section 17. Section 18. section 19. section 20. Section 21. Section 22. section 23. section 24. section 25. Section 26. Signatures 0129263.03 -ii- CITY OF MARYSVILLE,WASHINGTON ORDINANCE NO. AN ORDINANCE relating to the Waterworks utility of the city,including the system of sewerage as a part thereof;specifying,adopting and ordering the carrying out of a system or plan of additions and betterments to and extensions of the Waterworks Utility of the city; providing for the issuance of Water and Sewer Revenue Bonds,1994,in the principal amount of $5,800,000 for the purpose of providing a part of the funds to pay the cost of carrying out that system and plan,to capitalize a reserve for the bonds and to pay the cost of issuing the bonds;fixing the date,form,maturities,interest rates,terms,covenants and uses of the proceeds of those bonds;creating a construction fund;providing for bond insurance;and approving the sale and providing for the delivery of these bonds to Pacific Crest Securities of Seattle,Washington. WHEREAS,pursuant to Ordinance No.385,the waterworks system of the City of Marysville,Washington (the "city"),and the sewerage system of the city were combined into a waterworks utility of the city,and such combined systems (the "Waterworks utility") are maintained and operated jointly;and WHEREAS,pursuant to ordinance No.1945,the City issued its $22,505,000 par value Water and Sewer Refunding Revenue Bonds,1993 (the "1993 Bonds"),for the purpose of refunding all of the city's then outstanding revenue obligations pledged against the Gross Revenue of the Waterworks utility and ULID Assessments (as hereinafter defined),except the City's $800,000 par value Water and Drought Relief Revenue Bond,1977 (the "Junior Lien Bond"), issued pursuant to Ordinance No. 972 and pledged against the Gross Revenue of the Waterworks Utility,which Junior Lien Bond is subordinate to the 1993 Bonds and any bonds sUbsequently issued on a parity therewith;and 0129263.03 -1- WHEREAS,pursuant to section 18 of Ordinance No.1945,the city reserved the right to issue water and sewer revenue bonds having a lien and charge on the Gross Revenue of the Waterworks utility and ULIO Assessments on a parity with the lien and charge upon such Gross Revenue and ULIO Assessments of the 1993 Bonds for the payment of the principal thereof and interest thereon if the following conditions are met and complied with at the time of issuance of those bonds: "ea)There shall be no deficiency in the Bond Fund. n (b)The ordinance providing for the issuance of the Future Parity Bonds shall provide that all assessments and interest thereon that may be levied in any ULIO created for the purpose of paying,in whole or in part, the principal of and interest on those Future Parity Bonds,shall be paid directly into the Bond Fund,except for any prepaid assessments permitted by law to be paid into a construction fund or account. n (c)The ordinance providing for the issuance of such Future Parity Bonds shall proY-ide for the payment of the principal thereof and interest thereon out of the Bond Fund. n (d)The ordinance providing for the issuance of such Future Parity Bonds shall provide for the deposit into the Reserve Account of (i)an amount equal to the Reserve Requirement for those Future Parity Bonds from the Future Parity Bond proceeds or other money legally available,or (ii)Reserve Insurance or Alternate Security or an amount plus Reserve Insurance or Alternate Security equal to the Reserve Requirement for those Future Parity Bonds,or (iii)to the extent that the Reserve Requirement is not funded from Future Parity Bond proceeds,other legally available money or Reserve Insurance or Alternate security at the time of issuance of those Future Parity Bonds,within five years from the date of issue of the Future Parity Bonds from ULIO Assessments,if any,levied and first collected for the payment of the principal of and interest on those Future Parity Bonds and,to the extent that ULIO Assessments are insufficient,then from the Net Revenue of the Waterworks utility in five approximately equal annual payments.No Reserve Insurance or Alternate Security may be used to satisfy the Reserve Requirement for Future Parity Bonds unless (i)the insurance policy or Alternate Security is 0129263.03 -2- 0129263.03 non-cancelable and (ii)the insurer or provider of the Alternate Security as of the time of issuance of such insurance or Alternate Security is rated in the highest rating categories by both Moody's Investors Service, Inc.,and Standard &Poor's Corporation. "(e)The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the payment of mandatory redemption or sinking fund requirements into the Bond Fund for any Term Bonds to be issued and for regular payments to be made for the payment of the principal of such Term Bonds on or before their maturity, or,as an altern~tive,the mandatory redemption of those Term Bonds prior to their maturity date from money in the Principal and Interest Account • ."(f)There shall be on file from a licensed professional engineer exper.ienced in the design, construction and operation of municipal utilities,or from an independent certified pUblic accountant,a certificate showing that in his or her professional opinion the Net Revenue of the Waterworks utility for any 12 consecutive calendar months out of the immediately preceding 24 calendar months shall be equal to the Coverage Requirement for each year thereafter.The certificate,in estimating the Net Revenue of the Waterworks utility available for debt service,may adjust Net Revenue of the Waterworks utility to reflect: II (1)Any changes in rates in effect and being charged or expressly committed by ordinance to be made in the future; II (2)Income derived from customers of the Waterworks utility who have become customers during the 12 consecutive month period or thereafter adjusted to reflect one year's net revenue from those customers; "(3)Income from any customers to be connected to the Waterworks utility who have paid the required connection charges; II (4)The engineer's or accountant's estimate of the Net Revenue of the Waterworks utility to be derived from customers anticipated to connect for whom building permits have been issued; II (5)Income received or to be received which is derived from any person,firm, corporation or municipal corporation under any executed contract for water,sewage disposal or other utility service,which revenue was -3- and 0129263.03 not included in the historical Net Revenue of the Waterworks utility; "(6)The engineer's or accountant's estimate of the Net Revenue of the Waterworks utility to be derived from customers with existing homes or buildings which will be required to connect to any additions to and improvements and extensions of the Waterworks utility constructed and to be paid for out of the proceeds of the sale of the additional Future Parity Bonds or other additions to and improvements and extensions of the Waterworks utility then under construction and not fully connected to the facilities of the Waterworks utility when such additions,improvements and extensions are completed;and "(7)Any increases or decreases in Net Revenue as a result of any actual or reasonably anticipated changes in Maintenance and operation Expense sUbsequent to the 12-month period. "If Future Parity Bonds proposed to be so issued are for the sole purpose of refunding outstanding bonds payable from the Bond Fund,such certification of coverage shall not be required if the amount required for the payment of the principal and interest in each year for the refunding bonds is not increased more than $5,000 over the amount for that same year required for the bonds or the portion of that bond issue to be refunded thereby and if the maturities of such refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby. "For purposes of preparing the engineer's or accountant's certificate,Future Parity Bonds (including the Future Parity Bonds proposed to be issued)that are Variable Interest Rate Bonds shall be assumed to bear interest at a fixed rate equal to the higher of (1)the highest variable rate borne during the preceding 24 months by any outstanding variable rate water and sewer revenue bonds of the Waterworks utility of the city or, (2)if no such Variable Interest Rate Bonds are outstanding at the time of calculation,the rate borne by other variable rate debt the interest rate for which is determined by reference to an index comparable to the index to be used to determine the interest rate on the Future Parity Bonds proposed to be issued"; -4- WHEREAS,the city council has determined that it is necessary and in the best interest of the.city that certain improvements to the waterworks utility of the city be made and there be adopted a system or plan of additions to and betterments and extensions of the waterworks utility of the City;and WHEREAS,the City council has determined that it is necessary to issue and sell water and sewer revenue bonds (the "Bonds")in the principal amount of $5,800,000 to provide a .part of the funds necessary to carry out that system or plan of additions to and betterments and extensions of the Waterworks utility,to capitalize a reserve for the Bonds and to pay the cost of issuance and sale of the Bonds;and WHEREAS,Pacific Crest securities has offered to purchase the Bonds under the terms and conditions hereinafter set forth;and WHEREAS,the Municipal Bond Investors Assurance Corporation of Armonk,New York,has made a commitment to issue an insurance policy (the "Municipal Bond Insurance Policy")relative to the Bonds effective as of the date of issuance of the Bonds,and the City council deems that the purchase of the Municipal Bond Insurance policy is in the best interest of the city;NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MARYSVILLE,WASHINGTON,DO ORDAIN as follows: section 1.Definitions.As used in this ordinance the following words shall have the following meanings: "Alternate Security"means any bond insurance, collateral,security,letter of credit,guaranty,surety bond or 0129263.03 -5- similar credit enhancement device providing for or securing the payment of all or part of the principal of and interest on the outstanding parity Bonds,the Bonds or any Future Parity Bonds, issued by an in~titution which has been assigned a credit rating at the time of issuance of the outstanding Parity Bonds,Bonds or Future Parity Bonds,respectively,secured by such Alternate security equal to or better than the highest then-existing rating for any of the Outstanding Parity Bonds,Bonds or Future Parity Bonds. 0129263.03 -6- "Bond Insurer"means the Municipal Bond Investors Assurance Corporation of Armonk,New York. "Bond Register"means the books or records maintained by the Bond Registrar on which are recorded the names and addresses of the owners of each of the Bonds. "Bond Registrar"means the Fiscal Agency. "Bonds"means the $5,800,000 par value Water and SeWer Revenue Bonds,1994,authorized to be issued by this ordinance. "1993 Bonds"means the outstanding Water and Sewer Refunding Revenue Bonds,1993,issued for the purposes provided in and pursuant to 'Ordinance No.1945. "city"means the city of Marysville,Washington. "Code"means the Internal Revenue Code of 1986,as amended,and applicable rules and regulations promulgated thereunder. "Coverage Requirement"in any year means an amount of Net Revenue of the Waterworks utility equal to at least 1.20 times an amount equal to the Annual Debt Service that year on all bonds payable from the Bond Fund less the ULID Assessments due in that year and not delinquent. "Fiscal Agency"means either of the fiscal agencies of the State of Washington located in Seattle,Washington,and New York,New York,as the same may be designated from time to time. "Future Parity Bonds"means any and all water and sewer revenue bonds of the City issued after the date of the issuance of the Bonds,the payment of the principal of and interest on which constitutes a charge or lien on the Gross Revenue of the Waterworks 0129263.03 -7- utility and ULID Assessments equal in rank with the charge and lien upon such revenue and assessments required to be paid into the Bond Fund to pay and secure the payment of the principal of and interest on the Outstanding Parity Bonds and the Bonds. "Government Obligations"means those government obligations defined by RCW 39.53.010(9)as it now reads or hereafter may be amended and which are otherwise Legal Investments of the city at the time of such investment. "Gross Revenue of the waterworks utility"or "Gross Revenue"means all of the earnings and revenues received by the city from the maintenance and operation of the waterworks utility and all earnings from the investment of money in the Bond Fund which earnings are deposited in the Principal and Interest Account, and connection and capital improvement charges collected for the. purpose of defraying the cost of capital facilities of the waterworks utility,except ULID Assessments,government grants, proceeds from the sale of waterworks utility property,city taxes collected by or through the Waterworks utility,principal proceeds of bonds and earnings or proceeds from any investments in a trust, defeasance or escrow fund created to defease or refund Waterworks utility obligations (until commingled with other earnings and revenues of the Waterworks utility)or held in a special account for the purpose of paying a rebate to the united states Government under the Code. "Legal Investments"means any investments now or hereafter authorized for the City under the laws of the state of Washington. 0129263.03 -8- "Maintenance and Operation Expense"means all reasonable expenses incurred by the city in causing the waterworks utility of the city to be operated and maintained in good repair,working order and condition,including payments made to any other municipal corporation or.private entity for water service and for sewage treatment and disposal service or other utility service in the event the City combines such service into the Waterworks utility and enters into a contract for such service,but not including any depreciation or taxes levied or imposed by the city or payments to the city in lieu of taxes,or capital additions or capital replacements to the waterworks utility. "Maximum Annual Debt Service"means at the time of calculation,the maximum amount of Annual Debt Service that will mature or come due in the current year or any future year on the outstanding outstanding Parity Bonds and the Bonds and any outstanding Future Parity Bonds. "Maximum Interest Rate"means,with respect to any Variable Interest Rate Bond,a numerical rate of interest,set forth in the ordinance authorizing the Future Parity Bonds,that is the maximum rate of interest those Future Parity Bonds may bear at any time. "Municipal Bond Insurance Policy"means the policy issued by the Bond Insurer insuring the payment of the principal of and interest on the Bonds. "Net Revenue of the Waterworks utility"or "Net Revenue" means the Gross Revenue less Maintenance and Operation Expense. 0129263.03 -9- "outstanding Parity Bonda ":means the outstanding 1993 Bonds. "Plan and System"means the plan of additions to and betterments and extensions of the Waterworks utility specified, adopted and ordered to be carried out by section 2 of this ordinance. "Principal and Interest Account"means the account of that name created in the Bond Fund for the payment of the principal of and interest on the Outstanding Parity Bonds,Bonds and Future Parity Bonds. "Reserve Account"means the account of that name created in the Bond Fund for the purpose of securing the payment of the , principal of and interest on the outstanding parity Bonds,Bonds and Future Parity Bonds. "Reserve Insurance"means,in lieu of cash and investments,insurance obtained by the City equal to part or all of the Reserve Requirement for any outstanding Parity Bonds,Bonds or Future Parity Bonds then outstanding for which such insurance is obtained. "Reserve Requirement"means: (1)For the Outstanding Parity Bonds and the Bonds, the amount of $2,397,188.~ 2.,'15'1,'i,S (2)For any Future Parity Bonds,an amount equal to the difference between the Reserve Requirement for the Outstanding Parity Bonds,the Bonds and any Future Parity Bonds then outstanding and the least of (a)10%of the issue price of the Outstanding Parity Bonds,Bonds and any Future Parity Bonds then outstanding and the Future Parity Bonds proposed to be issued,(b)Maximum Annual Debt Service on the Outstanding Parity Bonds and Bonds then outstanding,any outstanding Future Parity Bonds and the Future Parity Bonds proposed to be issued and (c)1.25 times Average Annual Debt Service on the 0129263.03 -10- Outstanding Parity Bonds,Bonds,any outstanding Future Parity Bonds and the Future Parity.Bonds proposed to be issued,but in no event to exceed an amount equal to the least of 10%of the issue price of the proposed Future Parity Bonds,Maximum Annual Debt Service on those bonds and 1.25 times Average Annual Debt Service on the proposed bonds.For the purposes of determining Maximum Annual Debt Service and Average Annual Debt Service for calculating the Reserve Requirement,all bonds payable or proposed to be paid from the Bond Fund shall be treated as a single issue and the last scheduled maturity for any of those issues shall be used as the denominator. For purposes of calculating the Reserve Requirement for Future Parity Bonds.(including any Future Parity Bonds proposed to be issued),Variable Interest Rate Bonds shall be assumed to bear interest at a fixed rate equal to the higher of (1)the highest variable rate borne during the preceding 24 months by any outstanding variable rate water and sewer revenue bonds of the Waterworks utility of the city or,(2)if no such Variable Interest Rate Bonds are outstanding at the time of calculation,the rate borne by other variable rate debt the interest rate for which is determined by reference to an index comparable to the index to be used to determine the interest rate on the Future Parity Bonds proposed to be issued. "Term Bond Maturity Year"means any calendar year in which Term Bonds are scheduled to mature. "Term Bonds"means the Bonds maturing in 2012 and those bonds designated as such in the ordinance authorizing the issuance and sale of those bonds. "ULID"means utility Local Improvement District. "ULID Assessments"means all assessments levied and collected in ULIDs Nos.1 through 18,inclusive,and any ULID of the city created for the acquisition or construction of additions to and extensions and betterments of the Waterworks utility if such assessments are pledged to be paid into the Bond Fund (less any prepaid assessments permitted by law to be paid into a construction 0129263.03 -11- fund or account).ULIO Assessments shall include installments thereof and any interest or penalties that may be due thereon. "Variable Interest Rate"means a variable interest rate or rates to be borne by a series of Future Parity Bonds or anyone or more maturities within a series of Future Parity Bonds.The method of computing such a variable interest rate shall be specified in the ordinance authorizing such Future Parity Bonds, which ordinance also shall specify either (i)the particular period or periods of time or manner of determining such period or periods of time tor which each value of such variable interest rate shall remain in effect or (ii)the time or times upon which any change in such variable interest rate shall become effective. "Variable Interest Rate Bonds"means,for any period of time,Future Parity Bonds which bear a Variable Interest Rate during that period,except that Future Parity Bonds the interest rate or rates on which shall have been fixed for the remainder of the term thereof no longer "shall be deemed to be Variable Interest Rate Bonds. "Waterworks utility"means the waterworks utility of the city,including the sewerage system as apart thereof,and all "additions thereto and betterments and extensions thereof at any time made. Section 2.Adoption of Plan and System.The City specifies, adopts and orders the carrying out of the system or plan of additions to and betterments and extensions of the Waterworks utility consisting of the improvements,acquisitions and work described in Exhibit A,attached hereto and by this reference made 0129263.03 -12- a part hereof (the "Plan and System").There shall be included in the Plan and system the acquisition and installation of all necessary valves,pumps,fittings,couplings,connections, equipment and appurtenances,the acquisition of any assessments, rights-of-way and land that may be required and the performance of such work as may be incidental thereto and necessary. All of the foregoing shall be in accordance with the plans and specifications.therefor prepared by the City's engineers and consulting engineers. The city Council may modify the details of the Plan and System where,in its judgment,it appears advisable if such modifications do not sUbstantially alter the purposes of that Plan. The life of the improvements comprising the foregoing Plan and System is declared to be at least twenty years.The estimated cost of the acquisition,construction,installation and financing of the above-described improvements is declared to be approximately $5,000,000,which cost shall be paid from the proceeds of the Bonds authorized in this ordinance,proceeds of interfund loans and other money of or received by the city which is made available therefor. section 3.Satisfaction of Parity Conditions.The city Council finds and declares that the amounts required to have been paid into the Bond Fund for the outstanding Parity Bonds have been paid and maintained as required therein,and that all other conditions for the issuance of the Bonds as Future Parity Bonds under Section 18 of Ordinance No.1945 will have been met and satisfied before the Bonds are delivered to the original purchaser thereof. 0129263.03 -13- section 4.Authorization and Description of Bonds.For the purpose of providing all or part of the money required to carry out the Plan and System,to capitalize a reserve for the Bonds and to pay the costs of issuance and sale of the Bonds,the City shall issue the Bonds in the principal amount of $5,800,000.The Bonds shall be designated Water and Sewer Revenue Bonds,1994;shall be dated July 1,1994;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 the purpose 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 1,1994;and shall mature on December 1 in years and amounts and bear interest at the rates per annum as follows: Maturity Interest Dates Amounts Rates 1994 $125,000 3.60% 1995 135,000 4.10 1996 130 ;'000 4.60 1997 130,000 4.80 1998 135,000 5.00 1999 135,000 5.10 2000 120,000 5.15 2001 105,000 5.20 2002 115,000 5.30 2003 120,000 5.50 2004 130,000 5.65 2005 140,000 5.80 2006 160,000 5.90 2007 390,000 6.00 2008 440,000 6.10 2009 505,000 6.20 ******2012 2,785,000 6.10 0129263.03 -14- section 5.Registration and Transfer of Bonds.The Bonds shall be issued only in registered form as to both principal and interest and 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 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. section 6.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 mailed by the Bond Registrar 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.The Bonds shall be payable solely out of the Bond Fund and shall not be general obligations of the city. 0129263.03 -15- section 7.Redemption and Open Market Purchase of Bonds. Bonds maturing in the years 1994 through 2004,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 Bonds maturing on or after December 1, 2005,prior to their stated maturity dates,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),on December 1,2004,or on any interest payment date thereafter,at par plus accrued interest to the date fixed for redemption. Bonds maturing in 2012 are Term Bonds and,if not redeemed under the optional redemption provisions set forth above or purchased in the open market under the provisions set forth below, shall be called for redemption by lot (in such manner as the Bond Registrar shall determine)at par plus accrued interest on December I in years and amounts as follows: Mandatory Redemption Years 201.0 2011 2012 (maturity) Mandatory Redemption Amounts $585,000 695,000 1,505,000 If the city redeems Term Bonds under the optional redemption provisions set forth above or purchases Term Bonds in the open market as set forth below,the Term Bonds so redeemed or purchased (irrespective of their redemption or purchase price)shall be credited at the par amount thereof against last scheduled mandatory redemption amount. 0129263,03 -16- 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 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 total 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 acceptable to the City·plus accrued interest to the date of purchase. All Bonds purchased or redeemed under this section shall be cancelled. section 8.Notice of Redemption.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 0129263.03 -17- notice shall be mailed within the same period,postage prepaid,to Moody's Investors Service,Inc.,and Standard &poor's Ratings Group at their offices in New York,New York,or their successors, to Pacific Crest Securities at its principal office in Seattle, Washington,or its successor,to the Bond Insurer at its principal office in Armonk,New York,or its successor,and to such other person and with such additional information as the city Finance Director shall determine,.but these additional mailings shall not be a condition precedent to the redemption of Bonds. section 9.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 and the Bond has been called for payment by giving notice of that call to the registered owner of each of those unpaid Bonds. section 10.Form and Execution of Bonds.The Bonds shall be printed or lithographed on good bond paper 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 0129263.03 -18- valid or obligatory for any purpose or entitled to the benefits of this ordinance: CERTIFICATE OF AUTHENTICATION This Bond is one of the fully registered city of Marysville,Washington,Water and Sewer Revenue Bonds, 1994,described in the Bond Ordinance. WASHINGTON STATE FISCAL AGENCY Bond Registrar Authorized Signer The authorized signing of a certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed,authenticated and delivered and are entitled to the benefits of this ordinance. If any officer whose facsimile appears on the Bonds ceases to be an officer of the City authorized to sign bonds before the Bonds bearing his or her signature are authenticated or delivered by the Bond Registrar or issued by the City,those Bonds nevertheless may be authenticated,delivered and issued 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 11.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 0129263.03 -19- which shall at all times be open to inspection by the City.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.1405 establishing a system of registration for the City's bonds and obligations. 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 12.Bond Fund.The Bond Fund previously has been created in the office of the City Finance Director and is divided into two accounts:the Principal and Interest Account and the Reserve Account.So long as any Outstanding Parity Bonds,Bonds or Future Parity Bonds are outstanding against the Bond Fund,the City shall set aside and pay into the Bond Fund all ULID Assessments on their collection and,out of the Net Revenue of the Waterworks utility (in addition to those amounts required by Ordinance No. 1945),certain fixed amounts without regard to any fixed proportion,namely: (a)Into the Principal and Interest Account on the 20th day of July,1994,and thereafter on the 20th day of 0129263.03 -20- each succeeding month,an amount,together with other money on deposit therein,sufficient to pay 1/5 of the principal and interest requirement on the Bonds on December 1,1994,and thereafter an amount,together with other money on deposit therein,sufficient to pay 1/6 of the next ensuing interest requirement on the Bonds and 1/12 of the next ensuing principal requirement on the Bonds;and (b)Into the Reserve Account,on the date of issue, from Bond proceeds,an amount,together with other money on deposit therein,sufficient to fUlly fund the Reserve Requirement. (cl Notwithstanding clauses (al and (bl above,the deposit to be made into the Reserve Account,and Reserve Requirement,each may be decreased for any issue.of Future Parity Bonds when and to the extent that the city has provided for Reserve Insurance or Alternate Security. Except for withdrawals therefrom as authorized herein,the Reserve Account shall be maintained at the Reserve Requirement amount for all bonds payable from the Bond Fund at all times so long as any of such bonds are outstanding.When the total amount in the Bond Fund shall equal the total amount of principal and interest for all outstanding bonds payable out of the Bond Fund to the last maturity thereof,no further payment need be made into the Bond Fund.Notwithstanding the first sentence of this paragraph, the Reserve Requirement may be decreased for the outstanding Parity Bonds,the Bonds or.any issue of Future Parity Bonds when and to the extent the City has provided for an Alternate security or Reserve Insurance. If there is a deficiency in the Principal and Interest Account in the Bond Fund to meet maturing installments of either principal or interest,as the case may be,that deficiency shall be made up from the Reserve Account by the withdrawal of cash therefrom for that purpose. 0129263.03 Any deficiency created in the Reserve Account by -21- reason of any such withdrawal shall then be made up from ULID Assessment payments and the Net Revenue of the Waterworks utility first available after making necessary provisions for the required payments into the Principal and Interest Account.The money in the Reserve Account otherwise shall be held intact and may be applied against the last outstanding bonds payable out of the Bond Fund, except that if the Reserve Account is fUlly funded,any money in excess of the Reserve.Requirement maybe withdrawn and deposited in the Principal and Interest Account and spent for the purpose of retiring bonds payable from the Bond Fund or may be deposited in any other fund and spent for any other lawful Waterworks utility purpose. The city may provide for the purchase,redemption or defeasance of bonds payable from the Bond Fund by the use of money on deposit in any account in the Bond Fund as long as the money remaining in those accounts is sufficient to satisfy the required deposits in those accounts for the remaining bonds outstanding payable from the Bond Fund. All money in the Bond Fund may be kept in cash or invested in Legal Investments maturing not later than the date when the funds are required for the payment of principal of or interest on the outstanding bonds payable from the Bond Fund (for investments in the Principal and Interest Account)or having a guaranteed redemption price prior to maturity and,in no event,maturing later than the last maturity of any remaining outstanding bonds payable from the Bond Fund (for investments in the Reserve Account). Earnings from investments in the Principal and Interest Account 0129263.03 -22- shall be deposited in that account.Income from investments in the Reserve Account shall be deposited in that account until the amount. therein is equal to the Reserve Requirement of all bonds payable from the Bond Fund and thereafter shall be deposited in the Principal and Interest Account. The city may create sinking fund accounts or other accounts in the Bond Fund for the payment or securing the payment of bonds payable from the Bond Fund as long as the maintenance of such accounts does not conflict with the.rights of the owners of bonds payable from the Bond Fund. If the city fails to set aside and pay into the Bond Fund the amounts set forth above,the owner of any of the outstanding bonds payable out of the Bond Fund may bring action against the City and compel such setting aside and payment. section 13.Finding as to Sufficiency of Revenue.Pledge of Revenue and Lien position.The City Council finds and determines that the Gross Revenue and benefits to be derived from the operation and maintenance of the waterworks utility of the city at the rates to be charged for water and sewer services from the Waterworks Utility will be more than sUfficient to meet all Maintenance and Operation Expense and to permit the setting aside into the Bond Fund out of the Gross Revenue of amounts sufficient to pay the principal of and interest on the Outstanding Parity Bonds and the Bonds when due.The Net Revenue of the Waterworks utility and ULID Assessments are pledged to the payment of the Outstanding Parity Bonds,the Bonds and any Future Parity Bonds, and the Outstanding Parity Bonds,the Bonds and those Future Parity 0129263.03 -23- Bonds,if any,shall constitute a lien and charge upon such Net Revenue and ULID Assessments prior and superior to any other charges whatsoever. section 14.Construction Fundi Application of Bond Proceeds. There is created in the office of the Finance Director of the city a special fund to be known and designed as the water and Sewer Construction Fund,1994 (the "Construction Fund"),which fund is to be drawn upon to.pay.all.or a.part of the costs of carrying out the Plan and System and the costs of issuance and sale of the Bonds. The accrued interest received from the purchaser of the Bonds shall be deposited in the Principal and Interest Account of the Bond Fund and used to pay interest on the Bond on their first interest payment date.Principal proceeds of the Bonds shall be deposited in the Reserve Account in an amount,together with other money on deposit therein,sufficient to fully fund the Reserve Requirement.The remaining principal proceeds of the Bonds shall be deposited in the Construction Fund and used to pay ,the costs of carrying out the Plan and System and the costs of issuance and sale of the Bonds.Money on deposit in the Construction Fund may be invested and the investment earnings retained in the Construction Fund and use for the purposes of that fund. section 15.Covenants.The City covenants and agrees with the owner of each Bond at any time outstanding,as follows: (a)Maintenance and Operation.It will at all times maintain,preserve and keep the properties of the Waterworks utility in good repair,working order and condition,will make all necessary and proper additions, betterments,renewals and repairs thereto,and improvements,replacements and extensions thereof,and will at all times operate or cause to be operated the properties of the Waterworks utility and the business in 0129263.03 -24- 0129263.03 connection therewith in an efficient manner and at a reasonable cost. (b)Establishment and Collection of Rates and Charges.It will establish,maintain and collect rates and charges for all services and facilities provided by the waterworks utility which will be fair and nondiscriminatory,and will adjust those rates and charges from time to time so that: (X)The Gross Revenue of the waterworks utility will at all times be sufficient to (i)pay all Maintenance and Operation Expense on a current basis,(ii)pay when due all amounts that the City is obligated to pay into the Bond Fund and the accounts therein,and (iii)pay all taxes, assessments or other governmental charges lawfully imposed on the Waterworks utility or the revenue therefrom or payments in lieu thereof and any and all other amounts which the city may now or hereafter become obligated to pay from the Gross Revenue of the Waterworks utility by law or contract. (2)The Net Revenue of the Waterworks utility in each calendar year will be at least equal to the Coverage Requirement. To the extent allowable by law,those to which service of the Waterworks utility is available will be charged for that service at the prevailing rate within 30 days of the availability of that service. (c)Sale or Disposition of the waterworks utility. It will not sell or otherwise dispose of the Waterworks utility in its entirety unless,simultaneously with such sale or other disposition,all outstanding Parity Bonds, Bonds and any Future Parity Bonds are defeased under section 20 of this ordinance. It will not sell,lease,mortgage or in any manner encumber or otherwise dispose of any part of the Waterworks utility,including all additions and improvements thereto and extensions thereof at any time made,that are used,useful or material in the operation of the Waterworks utility,unless provision is made for the replacement thereof or for payment into the Bond Fund of the greatest of the following: (1)An amount which will be in the same proportion to the net amount of Outstanding Parity Bonds,Bonds and Future parity Bonds then outstanding (defined as the total amount of the Parity Bonds less the amount of cash and -25- 0129263.03 investments in the Bond Fund and accounts therein) that the Gross Revenue of the Waterworks utility from the portion of the Waterworks utility sold or disposed of for the preceding year bears to the total Gross Revenue of the Waterworks utility for that period;or (2)An amount which will be in the same proportion to the net amount of Outstanding Parity Bonds,Bonds and Future Parity Bonds then outstanding (as defined above)that the Net Revenue from the portion of the Waterworks utility sold or disposed of for the preceding year bears to the total Net Revenue of the Waterworks utility for such period;or (3)An amount which will be in the same proportion to the net amount of Outstanding Parity Bonds,Bonds and Future Parity Bonds then outstanding (as defined above)that the depreciated cost value of the facilities sold or disposed of bears to the depreciated cost value of the entire Waterworks utility immediately prior to such sale or disposition. Notwithstanding a,ny other provision of this sUbsection,the City a.n its discretion may sell or otherwise dispose of any of the works,plant,properties or facilities of the Waterworks utility or any real or personal property comprising a part of the same which shall have become unserviceable,inadequate,obsolete or unfit to be used in the operation of the Waterworks utility,or no longer necessary,material to or useful to the operation of the Waterworks utility,without making any deposit into the Bond Fund.In no event shall such proceeds be treated as Gross Revenue of the Waterworks utility for purposes of this ordinance. (d)Liens Upon the Waterworks utility.It will not at any time create or permit to accrue or to exist any lien or other encumbrance or indebtedness upon the Gross Revenue of the Waterworks utility,or any part thereof, prior or superior to the lien thereon for the payment of the Outstanding Parity Bonds,the Bonds and any Future Parity Bonds,and will pay and discharge,or cause to be paid and discharged,any and all lawful claims for labor, materials or supplies which,if unpaid,might become a lien or charge upon the Gross Revenue of the Waterworks utility,or any part thereof,prior to or superior to the lien of the Outstanding Parity Bonds,the Bonds and any Future Parity Bonds,or which might impair the security of the Outstanding Parity Bonds,the Bonds and any Future Parity Bonds. -26- 0129263.03 (e)Books and Accounts.It will keep proper books, records and accounts with respect to the operations, income and expenditures of the waterworks utility in accordance with proper accounting procedures and any applicable rules and regulations prescribed by the state of Washington.It will prepare annual financial and operating statements within 90 days of the close of each fiscal year showing in reasonable detail the financial condition of the Waterworks utility as of the close of the previous year,and the income and expenses for such year,including the amounts paid into the Bond Fund and into any and all special funds or accounts created pursuant to the provisions of this ordinance,the status of all funds and accounts as of the end of such year,and the amounts expended for,maintenance,renewals, replacements and capital additions to the Waterworks utility.such statements shall be sent to the owner of any outstanding Parity Bonds,Bonds and Future Parity Bonds upon written request therefor being made to the city. (f)No Free Service.Except to aid the poor or infirm,to provide for resource conservation or to provide for the proper handling of hazardous materials, it will not furnish or supply or permit the furnishing or supplying of any service or facility in connection with the operation of the Waterworks utility free of charge to any person,firm or corporation,pUblic or private,other than the city,so long as any outstanding Parity Bonds, Bonds and Future Parity Bonds are outstanding. (g)Collection of Delinguent Accounts.On at least an annual basis,it will determine all accounts that are delinquent and will take all necessary action to enforce payment of such accounts against those property owners whose accounts are delinquent. (h)Fire and Extended Coverage Insurance.It at all times will carry fire and extended coverage and such other forms of insurance with responsible insurers and with pOlicies payable to the City on such of the buildings,equipment,works,plants,facilities and properties of the Waterworks utility as are ordinarily carried by municipal or privately owned utilities engaged in the operation of like systems,or will implement and maintain a self-insurance or an insurance pool program with reserves adequate,in the reasonable jUdgment of the city,to protect the Waterworks utility and the owners of the Outstanding Parity Bonds,the Bonds and any Future Parity Bonds against loss. (L)Public Liability and Property Damage Insurance. It at all times will keep or arrange to keep in full force and effect such policies of pUblic liability and -27- property damage insurance with responsible insurers and with policies payable to the city against such claims for damages as are ordinarily carried by municipal or privately owned utilities engaged in the operation of like systems,or will implement and maintain a self-insurance or an insurance pool program with reserves adequate,in the reasonable judgment of the city Council, to protect the waterworks utility and the owners of the Outstanding Parity Bonds,the Bonds and any Future Parity Bonds against loss. section 16.Flow of Funds.All ULID Assessments shall be paid into the Bond Fund as provided by section 12.The Gross Revenue of the Waterworks utility shall be used for the following purposes only and shall be applied in the following order of priority: (a)To pay the Maintenance and Operation Expense; (b)To pay the principal of and interest on the Outstanding Parity Bonds,the Bonds and any Future Parity Bonds as they come due or as the principal is required to be paid and to make all payments required to be made into any mandatory redemption or sinking fund account created to provide for the payment of the principal of Term Bonds; (c)To make all payments required to be made into the Reserve Account; (d)To make all payments required to be made into any revenue bond,note,warrant or other .revenue obligation redemption fund,debt service account or reserve account created to payor secure the payment of the principal of and interest on any revenue bonds, notes,warrants or other obligations of the city having a lien upon the revenue of the Waterworks utility junior and inferior to the lien thereon for the payment of the principal of and interest on the outstanding Parity Bonds,the Bonds and any Future Parity Bonds;and (e)To retire by redemption or purchase in the open market any outstanding revenue bonds or other revenue obligations of the Waterworks utility,to make necessary additional betterments,improvements and repairs to or extensions and replacements of the Waterworks utility,or for any other lawful Waterworks utility purposes. 0129263.03 -28- The city may transfer any money from any funds or accounts of the waterworks utility legally available therefor,except bond redemption funds,refunding escrow funds or defeasance funds,to meet the required payments to be made into the Bond Fund. section 17.Provisions for Future Parity Bonds.The city reserves the right to issue Future Parity Bonds if the conditions set forth in section 18 of Ordinance No.1945,which section by this reference is incorporated herein and made a part hereof,are met and complied with at the time of the issuance of those Future Parity Bonds. Nothing contained herein shall prevent the City from issuing revenue bonds that are a charge upon the Gross Revenue of the waterworks utility of the city subordinate to the payments required to be made therefrom into the Bond Fund for the payment of the Outstanding Parity Bonds,the Bonds and any Future Parity Bonds or from pledging the payment of utility local improvement district assessments into a bond redemption fund created for the payment of the principal of and interest on those junior lien bonds as long as such utility local improvement district assessments are levied for improvements constructed from the proceeds of those junior lien bonds. section 18.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 0129263.03 -29- 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 arbitrage rebate requirements of section 148 of the Code are applicable to the Bonds,take all actions necessary to comply (or to be treated as having complied)with those requirements 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 19.Designation of Bonds as "Oualified 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 than private activity bonds)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- 0129263.03 -30- 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 20.Bonds Negotiable.The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-102 and 62A.8-105. section 21.Advance Refunding or Defeasance of Bonds.The City may issue advance refunding bonds pursuant to the laws of the State of Washington or use money available from any other lawful source to pay the principal of and interest on the Bonds,or such portion thereof included in a refunding or defeasance plan,as the same become due and payable and to redeem and retire,release, refund or defease all such then-outstanding Bonds (hereinafter collectively called the "defeased Bonds")and to pay the costs of such refunding or defeasance.If money and/or Government Obligations sUfficient in amount,together with known earned income ·from the investments thereof,to redeem and retire,release,refund or defease the defeased Bonds in accordance with their terms,are set aside irrevocably in a special fund for and pledged irrevocably to such redemption,retirement or defeasance (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 Gross Revenue of the Waterworks utility,ULID Assessments,funds and accounts obligated to the payment of such defeased Bonds,other than the right to receive the funds so set aside and pledged, thereafter shall cease and become void.Such owners thereafter 0129263.03 -31- shall have the right to receive payment of the principal of and interest on the defeased Bonds from the trust account. After the establishing and full funding of such a trust account,the city then 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,sUbject only to the rights of the owners of any other Bonds or bonds then out.s't.andLnq , If the refunding plan provides that the defeased Bonds or the refunding bonds to be issued be secured by money and/or Government Obligations pending the prior redemption of the defeased Bonds and if such refunding plan also provides that certain money and/or Government Obligations are pledged irrevocably for the prior redemption of the defeased Bonds included in that refunding plan, then only the debt service on the Bonds which are not defeased Bonds and the refunding bonds,the payment of which is not so secured by the refunding plan,shall be included in the computation of the coverage requirement for the issuance of Future Parity Bonds and the annual computation of coverage for determining compliance with the rate covenants. If the principal of and/or interest due on the Bonds is paid by the Bond Insurer pursuant to the Municipal Bond Insurance Policy,the Bonds shall not be considered paid by the city,and the covenants,agreements and other obligations of the city to the registered owners shall continue to exist and the Bond Insurer shall be sUbrogated to the rights of the registered owners. 0129263.03 -32- section 22.Approval of Bond Purchase Contract and Preliminary Official statement Deemed Final.Pacific Crest securities of Seattle,Washington (the "purchaser"),has presented a bond purchase agreement (the "Bond Purchase ccnta-act;v)to the city offering to purchase the Bonds under the terms and conditions provided in the Bond Purchase contract,which written Bond Purchase Contract is on file with the city Clerk and is incorporated herein by this reference.The City Council finds that entering into the Bond Purchase Contract is in the city's best interest and, therefore,accepts the offer contained therein and authorizes its execution by City officials. The Bonds will be printed at City expense and will be delivered to the Purchaser in accordance with the terms of the Bond Purchase Contract with the approving legal opinion of Foster Pepper &Shefelman,municipal bond counsel of Seattle,Washington, relative to the issuance of the Bonds,printed on each Bond.Bond counsel has not been retained to and shall not be required to review or express any opinion concerning the completeness or accuracy of any official statement,offering circular or other sales material issued or used in connection with the Bonds,and bond counsel's opinion shall so state. The city Council has been provided with copies of a preliminary official statement dated June 13,1994 (the "Preliminary Official statement"),prepared in connection with the sale of the Bonds.For the sole purpose of the Purchaser's compliance with securities and Exchange Commission Rule 15c2-12 (b)(1),the City "deems final"that Preliminary Official 0129263.03 -33- statement as of its date,except for the omission of information as to offering prices,interest rates,selling compensation,aggregate principal amount,principal amount per maturity,maturity dates, options of redemption,delivery date,ratings and other terms of the Bonds dependent on such matters. The proper city officials are authorized and directed to do everything necessary for the prompt delivery of the Bonds to the Purchaser and for the proper application and use of the proceeds of the sale thereof. section 23.Temporary Bond.Pending the printing,execution and delivery to the Purchaser of the definitive Bonds,the City may cause to be executed and delivered to the Purchaser a single temporary Bond in the total principal amount of the Bonds.The temporary Bond shall bear the same date of issuance,interest rates,principal payment dates and terms and covenants as the definitive Bonds,shall be issued as a fully registered Bond in the name of the Purchaser,and shall be in such form as acceptable to the Purchaser.Such temporary Bond shall be exchanged for the definitive Bonds as soon as the same are printed,executed and available for delivery. section 24.Amendatory and Supplemental Ordinances. Ca)This ordinance shall not be modified or amended in any respect subsequent to the initial issuance of the Bonds,except as provided in and in accordance with and sUbject to the provisions of this section. 0129263.03 -34- (b)The City,from time to time,and at any time, without the consent of or notice to the registered owners of the Bonds,may pass supplemental or amendatory ordinances as follows: (1)To cure any formal defect,omission, inconsistency or ambiguity in this ordinance in a manner not adverse to the owner of any outstanding Parity Bonds,Bonds or Future Parity Bonds; (2).To impose upon.the Bond Registrar (with its consent)for the benefit of the registered owners of the Bonds any additional rights,remedies,powers,authority,security, liabilities or duties which may lawfully be granted,conferred or imposed and which are not contrary to or inconsistent with this ordinance as theretofore in effect; (3)To add to the covenants and agreements of,and limitations and restrictions upon,the City in this ordinance, other covenants,agreements,limitations and restrictions to be observed by the city which are not contrary or inconsistent with this ordinance as theretofore in effect; (4)To confirm,as further assurance,any pledge under,and the sUbjection to any claim,lien or pledge created or to be created by this ordinance of any other money,securities or funds; (5)To authorize different denominations of the Bonds and to make correlative amendments and modifications to this ordinance regarding exchangeability of Bonds of different authorized denominations,redemptions of portions of Bonds of 0129263.03 -35- particular authorized denominations and similar amendments and modifications of a technical nature; (6)To modify,alter ,amend or supplement this ordinance in any other respect which is not materially adverse to the registered owners of the Bonds and which does not involve a change described in subsection (c)of this section;and (7)Because of change in federal law or rulings,to maintain the exclusion from gross income of the interest on the Bonds from federal income taxation. Before the city shall adopt any such supplemental ordinance pursuant to this sUbsection,there shall have been delivered to the city and the Bond Registrar an opinion of Foster Pepper & Shefelman,bond counsel,or other nationally recognized bond counsel,stating that such supplemental ordinance is authorized or permitted by this ordinance and,upon the execution and delivery thereof,will be valid and binding upon the city in accordance with its terms and will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. (c)(1)Except for any supplemental ordinance entered into pursuant to subsection (b)of this section,sUbject to the terms and provisions contained in this Subsection (c)and not otherwise,registered owners of not less than 60%in aggregate principal amount of the Bonds then outstanding shall have the right from time to time to consent to and approve the passage by the City Council of any supplemental ordinance deemed necessary or desirable by the city for the purpose of modifying,altering,amending, supplementing or rescinding,in any particular,any of the terms or 0129263.03 -36- provisions contained in this ordinance;except that,unless approved in writing by the registered owners of all the Bonds then outstanding,nothing contained in this section shall permit,or be construed as permitting: (i)A change in the times,amounts or currency of payment of the principal of or interest on any outstanding Bond,or a reduction in the principal amount of redemption price of any outstanding Bond or a change in the redemption price of any outstanding Bond or a change in the method .of.determining the rate of interest thereon, or (ii)A preference of priority of any Bond or Bonds or any other bond or bonds,or (iii)A reduction in the aggregate principal amount of Bonds,the consent of the registered owners of Bonds of which is required for any such supplemental ordinance. (2)If at any time the City shall pass any supplemental ordinance for any of the purposes of this Subsection (c),the Bond Registrar shall cause notice of the proposed supplemental ordinance to be given by first-class United states mail to all registered owners of the then outstanding Bonds,to the Bond Insurer,and to Moody's Investors Service,Inc.,and Standard &Poor's Ratings Group,if the Bonds are rated by those agencies.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 Bond Registrar for inspection by all registered owners of the outstanding Bonds. (3)Within two years after the date of the mailing of such notice,the City may adopt such supplemental ordinance in SUbstantially the form described in such notice,but only if there shall have first been delivered to the Bond Registrar (i)the 0129263.03 -37- required consents,in writing,of the registered owners of the Bonds,and (ii)an opinion of bond counsel stating that such supplemental ordinance is authorized or permitted by this ordinance and,upon the execution and delivery thereof,will be valid and binding upon the city in accordance with its terms and will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds. (4)If registered.owners of not less than the percentage of Bonds required by this Subsection (c)shall have consented to and approved the execution and delivery thereof as herein provided,no owner of the Bonds shall have any right to object to the passage 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 passage thereof,or to enjoin or restrain the City or the Bond Registrar from passing the same or from taking any action pursuant to the provisions thereof. (d)Upon the execution and delivery of any supplemental ordinance pursuant to the provisions of this section,this ordinance shall be,and be deemed to be,modified and amended in accordance therewith,and the respective rights,duties and obligations under this ordinance of the City,the Bond Registrar and all registered owners of Bonds then outstanding,shall thereafter be determined,exercised and enforced under this ordinance sUbject in all respects to such modifications and amendments. 0129263.03 -38- section 25.Bond Insurance.The city council finds that it is in the City's best interest to purchase,and that a savings will result from purchasing,the Municipal Bond Insurance Policy for the Bonds.The city shall purchase from the Bond Insurer the Municipal Bond Insurance pOlicy insuring the prompt payment of the principal of and interest on the Bonds and agrees to the conditions for obtaining that policy,including the payment of the premium therefor,..and the .following.provisions entitled "Payments under the Policy"required by the Bond Insurer to be included in this ordinance: "A.In the event that,on the second Business Day,and again on the Business Day,prior to the payment date on the Obligations,the Paying Agent has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following,as the case may be, Business Day,the Paying Agent shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph,confirmed in writing by registered or certified mail,of the amount of the deficiency. "B.If the deficiency is made up in whole or in part prior to or on the payment date,the Paying Agent shall so notify the Insurer or its designee. "c.In addition,if the Paying Agent has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligation to a trustee in Bankruptcy or creditors or others pursuant to a final jUdgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Bondholder within the meaning of any applicable bankruptcy laws,then the Paying Agent shall notify the Insurer or its designee of such fact by telephone or telegraphic notice,confirmed in writing by registered or certified mail. "D.The Paying Agent is hereby irrevocably designated, appointed,directed and authorized to act as attorney-in-fact for Holders of the Obligations as follows: "1.If and to the extent there is a deficiency in amounts required to pay interest on the Obligations,the Paying Agent shall (a)execute and deliver to Citibank,N.A.,or its successors under the Policy (the "Insurance Paying Agent"),in 0129263.03 -39- 0129263.03 form satisfactory to the Insurance Paying Agent,an instrument .appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer,(b)receive as designee of the respective Holders (and not as Paying Agent)in accordance with the tenor of the Policy payment from the Insurance Paying Agent with respect to the claims for interest so assigned,and (c)disburse the same to such respective Holders;and "2.If and to the extent of a deficiency in amounts required to pay.principal of the Obligations,the paying Agent shall (a)execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating to the payment of such principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received),(b)receive as designee of the respective Holders (and not as Paying Agent)in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent,and (c)disburse the same to such Holders. "E.Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations, and the Insurer shall become the owner of such unpaid Obligationsand<claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. "F.Irrespective of whether any such assignment is executed and delivered,the Issuer and the Paying Agent hereby agree for the benefit of the Insurer that, "1.They recognize that to the extent the Insurer makes payments,directly or indirectly (as by paying through the Paying Agent),on account of principal of or interest on the Obligations,the Insurer will be sUbrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer,with interest thereon as -40- 0129263.03 provided and solely from the sources stated in this Indenture and the Obligations;and "2.They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under sUbparagraph (ii)of the first paragraph of the Policy,which principal and interest shall be deemed past due and not to have been paid),with interest thereon as provided in this Indenture and the obligations,but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders,and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. "G.In connection with the issuance of additional Obligations,the Issuer shall deliver to the Insurer a copy of the disclosure document,if any,circulated with respect to such additional Obligations. "H.Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard &Poor's Corporation. "I.The Insurer shall receive notice of the resignation or removal of the Paying Agent and the appointment of a successor thereto. "J.The Insurer shall receive copies of all notices required to be delivered to Bondholders and,on an annual basis,copies of the Issuer's audited financial statements and Annual BUdget. "Notices"Any notice that is required to be given to a holder of the Obligation or to the Paying Agent pursuant to the Indenture shall also be provided to the Insurer.All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to Municipal Bond Investors Assurance Corporation,113 King street,Armonk,New York 10504 Attention:Surveillance." -41- section 26.Effective Date.This ordinance shall take effect and be in force five days after its passage,approval and legal publication. PASSED by the City Council at a regular open public meeting and APPROVED by the Mayor this 27th day of June,1994. CITY OF MARYSVILLE,WASHINGTON By Mayor FORM APPROVED: ~city Attorney 0129263.03 -42- '.,'I EXHIBIT A CITY OF MARYSVILLE,WASHINGTON PLAN OF ADDITIONS AND BETTERMENTS TO WATERWORKS UTILITY The following improvements shall be acomplished in accordance with plans and specifications to be prepared by the City's engineers and consultants: •Completion of the Waste Water Treatment Plant Phase III Upgrade. •Construction and engineering of the 1994 Water System Improvements consisting of 8200 LF of 24"diameter pipeline and 1800 LF of 12"diameter pipeline. •Construction and engineering of a 6 MG water reservoir. • 0129263.03 Construction Improvements and purchase and engineering of the 1995 Water System consisting of 5600 LF of 20"diameter pipeline of a future reservoir site.