974 Water Refunding Revenue Bond (2)for a specified period of time. If so provided in the ordinance authorizing their issuance, Parity
Bonds may be deemed to be Fixed Rate Bonds for only a portion of their term.
Future Parity Bonds means any water revenue bonds which the City may hereafter issue
having a lien upon the Revenue of the System for the payment of the principal thereof and
interest thereon equal to the lien upon the Revenue of the System of the 2010 Bonds and the
Bonds.
Government Obligations has the meaning given such term in RCW Ch. 39.53, as such
chapter may be hereafter amended or restated.
Letter of Representations means the Blanket Issuer Letter of Representations from the
City to DTC.
Maximum Annual Debt Service means highest dollar amount of Annual Debt Service in
any fiscal year or Base Period for all outstanding Parity Bonds and the Bonds and /or for all
subordinate lien evidences of indebtedness secured by Revenue of the System, as the context
requires.
Moody's means Moody's Investors Service, its successors and their assigns, and, if such
corporation shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, Moody's shall be deemed to refer to any other nationally recognized
securities rating agency (other than S &P and Fitch) designated by the City.
MSRB means the Municipal Securities Rulemaking Board or any successor to its
functions.
Net Proceeds when used with reference to the Bonds, means the principal amount of the
Bonds, plus accrued interest and original issue premium, if any, and less original issue discount
and proceeds, if any, deposited in the Reserve Fund.
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Net Revenue means Revenue of the System less Costs of Maintenance and Operation.
Original Issue Discount Bonds means Parity Bonds which are sold at an initial public
offering price of less than 95% of their face value and which are specifically designated as
Original Issue Discount Bonds in the ordinance authorizing their issuance.
Parity Bonds means the Bonds, the 2010 Bonds and any Future Parity Bonds.
Parity Requirement means Net Revenues equal to or greater than:
(a) 125% of Maximum Annual Debt Service for all Parity Bonds computed by
deducting from Annual Debt Service the Annual Debt Service for each series or issue of Parity
Bonds which is covered by ULID Assessments which is determined by multiplying such Annual
Debt Service by the percentage determined by dividing the ULID Assessments originally
pledged to such issue /series by the original principal amount of such issue /series, and
(b) 100% of Maximum Annual Debt Service for all subordinate lien evidences of
indebtedness secured by Revenue of the System.
Private Person means any natural person engaged in a trade or business or any trust,
estate, partnership, association, company or corporation.
Private Person Use means the use of property in a trade or business by a Private Person
if such use is other than as a member of the general public. Private Person Use includes
ownership of the property by the Private Person as well as other arrangements that transfer to the
Private Person the actual or beneficial use of the property (such as a lease, management or
incentive payment contract or other special arrangement) in such a manner as to set the Private
Person apart from the general public. Use of property as a member of the general public includes
attendance by the Private Person at municipal meetings or business rental of property to the
Private Person on a day -to -day basis if the rental paid by such Private Person is the same as the
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rental paid by any Private Person who desires to rent the property. Use of property by nonprofit
community groups or community recreational groups is not treated as Private Person Use if such
use is incidental to the governmental uses of property, the property is made available for such
use by all such community groups on an equal basis and such community groups are charged
only a de minimis fee to cover custodial expenses.
Purchase Contract means the Purchase Contract relating to the Bonds between the City
and the Underwriter as approved by a City Representative pursuant to Section 17 of this
ordinance.
Qualified Insurance means any non - cancelable municipal bond insurance policy or
surety bond issued by any insurance company licensed to conduct an insurance business in any
state of the United States (or by a service corporation acting on behalf of one or more such
insurance companies) which insurance company or companies, as of the time of issuance of such
policy or surety bond, are currently rated in one of the two highest Rating Categories by both
Moody's and S &P.
Qualified Letter of Credit means any irrevocable letter of credit issued by a financial
institution for the account of the City on behalf of registered owners of the Bonds, which
institution maintains an office, agency or branch in the United States and as of the time of
issuance of such letter of credit, is currently rated in one of the two highest Rating Categories by
either Moody's or S &P.
Rate Covenant means Net Revenues in each fiscal year at least equal to 125% of the
amounts required in such fiscal year to be paid as scheduled debt service (principal and interest)
on all Parity Bonds, computed by deducting from such debt service 110% of the debt service for
each series or issue of Parity Bonds which is covered by ULID Assessments which is determined
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by multiplying such debt service by the percentage determined by dividing the ULID
Assessments originally pledged to such issue /series by the original principal amount of such
issue /series. The maximum amount required to be paid as principal and interest shall be
calculated net of any federal subsidy legally available to pay such principal and interest.
Rating Agency means Moody's or S &P.
Rating Category means the generic rating categories of the Rating Agency, without
regard to any refinement or gradation of such rating category by a numerical modifier or
otherwise.
Registered Owner means the person named as the registered owner of a Bond in the
Bond Register. For so long as the Bonds are held in book -entry only form, DTC shall be deemed
to be the sole Registered Owner.
Reserve Fund means the Fund maintained by the City to secure the payment of debt
service on Parity Bonds.
Reserve Requirement means the lesser of (a) Maximum Annual Debt Service and
(b) 1.25 times Average Annual Debt Service; provided, however, that the Reserve Requirement
shall not exceed an amount equal to 10% of the aggregate of the initial par amounts of each
outstanding series of Parity Bonds. The dollar amount of the Reserve Requirement shall be re-
calculated annually.
Revenue Fund means the Water Department Fund No. 401 maintained by the Treasurer
of the City.
Revenue of the System or Revenue means all of the earnings and revenues received by
the City from the maintenance and operation of the System and all earnings from the investment
of money in the Bond Fund which earnings are deposited in the Bond Fund, and connection and
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capital improvement charges collected for the purpose of defraying the cost of capital facilities of
the System, but excluding government grants, proceeds from the sale of System property, City
taxes collected by or through the System, principal proceeds of bonds and earnings or proceeds
from any investments in a trust, defeasance or escrow fund created to defease or refund System
obligations (until commingled with other earnings and revenues of the System) or held in a
special account for the purpose of paying a rebate to the United States Government under the
Code. Revenue of the System shall also include any federal or state reimbursements of operating
expenses to the extent such expenses are included as Costs of Maintenance and Operation;
provided, however, that Revenue of the System shall not include ULID Assessments. The term
Revenue of the System shall not include any federal subsidy legally available to pay the
principal of or interest on Parity Bonds.
Rule means the Commission's Rule 15c2 -12 under the Securities Exchange Act of 1934,
as the same may be amended from time to time.
Savings Target means a dollar amount greater than three percent (3.00 %) of the
outstanding principal of the refunded 2003 Bonds.
S &P means Standard & Poor's Rating Services, a Standard & Poor's Financial Services
LLC business, a New York corporation, its successors and their assigns, and, if such corporation
shall be dissolved or liquidated or shall no longer perform the functions of a securities rating
agency, S &P shall be deemed to refer to any other nationally recognized securities rating agency
designated by the City.
System means the City's existing water supply and distribution system, as the same may
be added to, improved and extended for as long as any Parity Bonds are outstanding. The term
System also shall include any other utility that may in the future be combined with the System.
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2003.
2010.
2003 Bond Ordinance means Ordinance No. 776 approved by the Council on April 23,
2003 Bonds has the meaning given such term in the recitals to this ordinance.
2010 Bond Ordinance means Ordinance No. 922 approved by the Council on August 24,
2010 Bonds has the meaning given such term in the recitals to this ordinance.
ULID means a utility local improvement district of the City.
ULID Assessments means the assessments levied in all ULIDs, the assessments in which
are payable into the Bond Fund, and shall include installments thereof and interest and any
penalties thereon.
Underwriter means D.A. Davidson & Co., Inc., Seattle, Washington.
Variable Interest Rate means a variable interest rate or rates to be borne by a series of
Future Parity Bonds or any one 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 (a) the particular period or
periods of time or manner of determining such period or periods of time for which each value of
such variable interest rate shall remain in effect or (b) 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.
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(b) This ordinance provides that the Reserve Requirement shall be funded no later
than the date of delivery of the Future Parity Bonds; and
(c) The Bonds being issued are for the purpose of refunding outstanding Parity
Bonds.
The Parity Conditions having been complied with or assured, the payments required
herein to be made out of the Revenue Fund into the Bond Fund and the Reserve Fund to pay and
secure the payment of the principal of and interest on the Bonds shall constitute a lien and charge
upon the money in the Revenue Fund equal in rank with the lien and charge thereon for the
payments required to be made for the 2010 Bonds.
Section 3. Authorization of Bonds. For the purpose of refunding the 2003 Bonds and
paying the costs of issuance related thereto, and thereby effecting a substantial savings to the
City and its ratepayers, the City shall issue its water revenue refunding bonds (the "Bonds ").
Section 4. Description of the Bonds. The Bonds shall be designated as the "City of
Yelm, Washington Water Revenue Refunding Bonds, 2013" (the "Bonds "); shall be registered as
to both principal and interest, shall be issued in the aggregate principal amount set forth in the
Purchase Contract, and shall be numbered separately in the manner and with any additional
designation as the Bond Registrar deems necessary for purposes of identification, shall be dated
their date of delivery to the Underwriter, and shall be in the denomination of $5,000 each or any
integral multiple of $5,000 within a maturity. The Bonds shall bear interest from their date of
delivery to the Underwriter until the Bonds bearing such interest have been paid or their payment
duly provided for, at the rates, payable semiannually on the dates, set forth in the Purchase
Contact and shall mature on the dates and in the principal amounts set forth in the Purchase
Contract, all as approved by the City Representative pursuant to Section 17.
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The Bonds shall be obligations only of the Bond Fund and shall be payable and secured
as provided herein. The Bonds shall not be general obligations of the City.
Section 5. Place and Medium of Payment. The 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
calculated on the basis of a 360 -day year and twelve 30 -day months. For so long as all Bonds
are in fully- immobilized form, such payments of principal and interest thereon shall be made as
provided in the operational arrangements of DTC as referred to in the Letter of Representations.
In the event that the Bonds are no longer in fully - immobilized form, interest on the Bonds
shall be paid by check or draft mailed to the Registered Owners of the Bonds at the addresses for
such Registered Owners 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 such Bonds by the Registered Owners at the principal office of the Bond Registrar.
Section 6. Registration.
(a) Bond Registrar /Bond Register. The City hereby specifies and adopts the system
of registration approved by the Washington State Finance Committee from time to time through
the appointment of state fiscal agencies. The City shall cause a bond register to be maintained by
the Bond Registrar. So long as any Bonds remain outstanding, the Bond Registrar shall make all
necessary provisions to permit the exchange or registration or transfer of Bonds at its principal
corporate trust office. The Bond Registrar may be removed at any time at the option of the City
upon prior notice to the Bond Registrar and a successor Bond Registrar appointed by the City.
No resignation or removal of the Bond Registrar shall be effective until a successor shall have
been appointed and until the successor Bond Registrar shall have accepted the duties of the Bond
Registrar hereunder. The Bond Registrar is authorized, on behalf of the City, to authenticate and
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deliver Bonds transferred or exchanged in accordance with the provisions of such Bonds and this
ordinance and to carry out all of the Bond Registrar's powers and duties under this ordinance.
The Bond Registrar shall be responsible for its representations contained in the Certificate of
Authentication of the Bonds.
(b) Registered Ownership. The City and the Bond Registrar, each in its discretion,
may deem and treat the Registered Owner of each Bond as the absolute owner thereof for all
purposes (except as provided in Section 19 of this ordinance), and neither the City nor the Bond
Registrar shall be affected by any notice to the contrary. Payment of any such Bond shall be
made only as described in Section 5 hereof, but such Bond may be transferred as herein
provided. All such payments made as described in Section 5 shall be valid and shall satisfy and
discharge the liability of the City upon such Bond to the extent of the amount or amounts so
paid.
(c) DTC Acceptance /Letters of Representations. The Bonds initially shall be held in
fully immobilized form by DTC acting as depository. To induce DTC to accept the Bonds as
eligible for deposit at DTC, the City has executed and delivered to DTC a Blanket Issuer Letter
of Representations. Neither the City nor the Bond Registrar will have any responsibility or
obligation to DTC participants or the persons for whom they act as nominees (or the participants
of any successor depository or those for who any such successor acts as nominee) with respect to
the Bonds in respect of the accuracy of any records maintained by DTC (or any successor
depository) or any DTC participant, the payment by DTC (or any successor depository) or any
DTC participant of any amount in respect of the principal of or interest on Bonds, any notice
which is permitted or required to be given to Registered Owners under this ordinance (except
such notices as shall be required to be given by the City to the Bond Registrar or to DTC (or any
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successor depository)), or any consent given or other action taken by DTC (or any successor
depository) as the Registered Owner. For so long as any Bonds are held in fully- immobilized
form hereunder, DTC or its successor depository shall be deemed to be the Registered Owner for
all purposes hereunder, and all references herein to the Registered Owners shall mean DTC (or
any successor depository) or its nominee and shall not mean the owners of any beneficial interest
in such Bonds.
If any Bond shall be duly presented for payment and funds have not been duly provided
by the City on such applicable date, then interest shall continue to accrue thereafter on the unpaid
principal thereof at the rate stated on such Bond until it is paid.
(d) Use of Depository.
(1) The Bonds shall be registered initially in the name of "Cede & Co. ", as
nominee of DTC, with one Bond maturing on each of the maturity dates for the Bonds in a
denomination corresponding to the total principal therein designated to mature on such date.
Registered ownership of such immobilized Bonds, or any portions thereof, may not thereafter be
transferred except (A) to any successor of DTC or its nominee, provided that any such successor
shall be qualified under any applicable laws to provide the service proposed to be provided by it;
(B) to any substitute depository appointed by the City Representative pursuant to subsection (2)
below or such substitute depository's successor; or (C) to any person as provided in
subsection (4) below.
(2) 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 Representative to
discontinue the system of book entry transfers through DTC or its successor (or any substitute
depository or its successor), the City Representative may hereafter appoint a substitute
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depository. Any such substitute depository shall be qualified under any applicable laws to
provide the services proposed to be provided by it.
(3) In the case of any transfer pursuant to clause (A) or (B) of subsection (1)
above, the Bond Registrar shall, upon receipt of all outstanding Bonds, together with a written
request of the City Representative, issue a single new Bond for each maturity then outstanding,
registered in the name of such successor or such substitute depository, or their nominees, as the
case may be, all as specified in such written request of the City Representative.
(4) In the event that (A) DTC or its successor (or substitute depository or its
successor) resigns from its functions as depository, and no substitute depository can be obtained,
or (B) the City Representative determines that it is in the best interest of the Beneficial Owners
of the Bonds that such owners be able to obtain such bonds in the form of Bond certificates, the
ownership of such Bonds may then be transferred to any person or entity as herein provided, and
shall no longer be held in fully- immobilized form. The City Representative shall deliver a
written request to the Bond Registrar, together with a supply of definitive Bonds, to issue Bonds
as herein provided in any authorized denomination. Upon receipt by the Bond Registrar of all
then outstanding Bonds together with a written request of the City Representative to the Bond
Registrar, new Bonds shall be issued in the appropriate denominations and registered in the
names of such persons as are requested in such written request.
(e) Registration of Transfer of Ownership or Exchange; Change in Denominations.
The transfer of any Bond may be registered and Bonds may be exchanged, but no transfer of any
such Bond shall be valid unless it is surrendered to the Bond Registrar with the assignment form
appearing on such Bond duly executed by the Registered Owner or such Registered Owner's
duly authorized agent in a manner satisfactory to the Bond Registrar. Upon such surrender, the
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Bond Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without
charge to the Registered Owner or transferee therefor, a new Bond (or Bonds at the option of the
new Registered Owner) of the same date, maturity and interest rate and for the same aggregate
principal amount in any authorized denomination, naming as Registered Owner the person or
persons listed as the assignee on the assignment form appearing on the surrendered Bond, in
exchange for such surrendered and cancelled Bond. Any Bond may be surrendered to the Bond
Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of
the same date, maturity and interest rate, in any authorized denomination. The Bond Registrar
shall not be obligated to register the transfer or to exchange any Bond during the 15 days
preceding any interest payment or principal payment date any such Bond is to be redeemed.
(f) Bond Registrar's Ownership of Bonds. The Bond Registrar may become the
Registered Owner of any Bond 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 member of, or in any other capacity with respect to, any committee
formed to protect the right of the Registered Owners of Bonds.
(g) Registration Covenant. The City covenants that, until all Bonds have been
surrendered and canceled, it will maintain a system for recording the ownership of each Bond
that complies with the provisions of Section 149 of the Code.
Section 7. Redemption and Purchase.
(a) Optional Redemption. The Bonds shall not be subject to optional redemption
prior to their scheduled maturity.
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(b) Mandatory Redemption. The Bonds may be subject to mandatory redemption at
any time prior to scheduled maturity under terms approved by the City Representative in the
Purchase Contract pursuant to Section 17 of this ordinance.
(c) Purchase of Bonds for Retirement. The City reserves the right to use at any time
any surplus Revenue of the System available after providing for the payments required by
paragraphs First, through Fifth of Section 8 of this ordinance, or other available funds, to
purchase any of the Bonds offered to the City at any price deemed reasonable by the City to
purchase any of the Bonds offered to the City at any price deemed reasonable to the City.
(d) Selection of Bonds for Redemption. For as long as the Bonds are held in
book -entry only form, the selection of particular Bonds within a maturity to be redeemed shall be
made in accordance with the operational arrangements then in effect at DTC. If the Bonds are no
longer held in uncertificated form, the selection of such Bonds to be redeemed and the surrender
and reissuance thereof, as applicable, shall be made as provided in the following provisions of
this subsection (d). If the City redeems at any one time fewer than all of the Bonds having the
same maturity date, the particular Bonds or portions of Bonds of such maturity to be redeemed
shall be selected by lot (or in such manner determined by the Bond Registrar) in increments of
$5,000. In the case of a Bond of a denomination greater than $5,000, the City and the Bond
Registrar shall treat each Bond as representing such number of separate Bonds each of the
denomination of $5,000 as is obtained by dividing the actual principal amount of such Bond by
$5,000. In the event that only a portion of the principal sum of a Bond is redeemed, upon
surrender of such Bond at the principal office of the Bond Registrar there shall be issued to the
Registered Owner, without charge therefor, for the then unredeemed balance of the principal sum
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thereof, at the option of the Registered Owner, a Bond or Bonds of like maturity and interest rate
in any of the denominations herein authorized.
(e) Notice of Redemption.
(1) Official Notice. For so long as the Bonds are held in uncertificated form,
notice of redemption (which notice may be conditional) shall be given in accordance with the
operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar
will provide any notice of redemption to any Beneficial Owners. Thereafter (if the Bonds are no
longer held in uncertificated form), notice of redemption shall be given in the manner hereinafter
provided. Unless waived by any owner of Bonds to be redeemed, official notice of any such
redemption (which redemption shall be conditioned by the Bond Registrar on the receipt of
sufficient funds for redemption) shall be given by the Bond Registrar on behalf of the City by
mailing a copy of an official redemption notice by first class mail at least 20 days and not more
than 60 days prior to the date fixed for redemption to the Registered Owner of the Bond or
Bonds to be redeemed at the address shown on the Bond Register or at such other address as is
furnished in writing by such Registered Owner to the Bond Registrar. Mailed notices will also
be sent within the same period to the Underwriter or its business successor, if any.
All official notices of redemption shall be dated and shall state:
(A) the redemption date,
(B) the redemption price,
(C) if fewer than all outstanding Bonds are to be redeemed, the identification
by maturity (and, in the case of partial redemption, the respective principal amounts) of the
Bonds to be redeemed,
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(D) that on the redemption date the redemption price will become due and
payable upon each such Bond or portion thereof called for redemption, and that interest thereon
shall cease to accrue from and after said date, and
(E) the place where such Bonds are to be surrendered for payment of the
redemption price, which place of payment shall be the principal office of the Bond Registrar.
On or prior to any redemption date, unless the redemption notice was conditional and the
City shall thereafter have determined not to proceed with the redemption, the City shall deposit
with the Bond Registrar an amount of money sufficient to pay the redemption price of all the
Bonds or portions of Bonds which are to be redeemed on that date.
(2) Effect of Notice; Bonds Due. If an unconditional official notice of
redemption having been given as aforesaid, the Bonds or portions of Bonds so to be redeemed
shall, on the redemption date, become due and payable at the redemption price therein specified,
and from and after such date (unless the City shall default in the payment of the redemption
price) such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such
Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond
Registrar at the redemption price. Installments of interest due on or prior to the redemption date
shall be payable as herein provided for payment of interest. All Bonds which have been
redeemed shall be canceled and destroyed by the Bond Registrar and shall not be reissued.
(3) Additional Notice. In addition to the foregoing notice, further notice shall
be given by the City as set out below, but no defect in said further notice nor any failure to give
all or any portion of such further notice shall in any manner defeat the effectiveness of a call for
redemption if notice thereof is given as above prescribed. Each further notice of redemption
given hereunder shall contain the information required above for an official notice of redemption
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plus (A) the CUSIP numbers of all Bonds being redeemed; (B) the date of issue of the Bonds as
originally issued; (C) the rate of interest borne by each Bond being redeemed; (D) the maturity
date of each Bond being redeemed; and (E) any other descriptive information needed to identify
accurately the Bonds being redeemed. Each further notice of redemption may be sent at least
35 days before the redemption date to each party entitled to receive notice pursuant to
Section 19, and to the Underwriter or to its business successor, if any, and to such persons and
with such additional information as the City Representative shall deem appropriate, but such
mailings shall not be a condition precedent to the redemption of such Bonds.
(4) CUSIP Number. Upon the payment of the redemption price of Bonds
being redeemed, each check or other transfer of funds issued for such purpose shall bear the
CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds
of such check or other transfer.
(5) Amendment of Notice Provisions. The foregoing notice provisions of this
Section 7, including but not limited to the information to be included in redemption notices and
the persons designated to receive notices, may be amended by additions, deletions and changes
in order to maintain compliance with duly promulgated regulations and recommendations
regarding notices of redemption of municipal securities.
Section 8. Revenue Fund and Priority of Application of Revenue. There has
heretofore been created by the City a special fund of the City known as the "Water Department
Fund No. 401" (the "Revenue Fund ") into which shall be deposited the Revenue of the System
as collected. The Revenue Fund shall be held separate and apart from all other funds and
accounts of the City and the Revenue of the System deposited in such Fund shall be used only
for the following purposes and in the following order of priority:
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First, to pay the Costs of Maintenance and Operation of the System;
Second, to pay the interest on any Parity Bonds, including reimbursements to the issuer
of a Qualified Letter of Credit or Qualified Insurance if the Qualified Letter of Credit or
Qualified Insurance secures the payment of interest on Parity Bonds and the ordinance
authorizing such Parity Bonds provides for such reimbursement;
Third, to pay the principal of any Parity Bonds, including reimbursements to the issuer of
a Qualified Letter of Credit or Qualified Insurance if the Qualified Letter of Credit or Qualified
Insurance secures the payment of principal of Parity Bonds and the ordinance authorizing such
Parity Bonds provides for such reimbursement;
Fourth, to make all payments required to be made into the Reserve Fund, including
reimbursements to the issuer of a Qualified Letter of Credit or Qualified Insurance if the
Qualified Letter of Credit or Qualified Insurance has been issued to fund a Reserve Requirement
and the ordinance authorizing such Parity Bonds provides for such reimbursement;
Fifth, to make all payments required to be made into any revenue bond redemption fund
or revenue warrant redemption fund and debt service fund or reserve fund created to pay and
secure the payment of the principal of and interest on any other revenue bonds or revenue
warrants of the City having a lien upon the Revenue of the System junior and inferior to the lien
thereon for the payment of the principal of and interest on Parity Bonds; and
Sixth, to retire by redemption or purchase any outstanding revenue bonds or revenue
warrants of the City, to make necessary additions, betterments, improvements and repairs to or
extensions and replacements of the System, or for any other lawful City purposes.
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The City may transfer any money from any funds or accounts of the System 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 9. Bond Fund and Reserve Fund. The Treasurer is hereby authorized to
maintain two special funds of the City known as the "Water Revenue Debt Redemption Fund"
(the "Bond Fund ") and the "Water Revenue Debt Reserve Fund" (the "Reserve Fund ") for the
purpose of paying and securing the payment of all Parity Bonds.
(a) Payments into Bond Fund. The Bond Fund shall be maintained for the purpose of
paying the principal of and interest on all Parity Bonds.
As long as any Parity Bond remains outstanding, the City hereby irrevocably obligates
and binds itself to set aside and pay from the Revenue Fund into the Bond Fund those amounts
necessary, together with such other funds as are on hand and available in the Bond Fund, to pay
the interest or principal and interest next coming due on outstanding Parity Bonds. Such
payments from the Revenue Fund to the Bond Fund shall be made in a fixed amount without
regard to any fixed proportion following the closing and delivery of the Bonds on or before each
date on which an installment of interest or principal and interest falls due on Parity Bonds equal
to the installment of interest or principal and interest.
The City Treasurer is hereby authorized and directed and the City hereby obligates and
binds itself to set aside and pay into the Bond Fund all ULID Assessments as the same are
collected.
(b) Payments into Reserve Fund. The Reserve Fund shall be maintained for the
purpose of securing the payment of the principal of and interest on Parity Bonds. The City
covenants and agrees that from and after the closing and delivery of the Bonds, it will at all times
'26' PA20287_CM1M20287_A7G 9/10/13
maintain an amount in the Reserve Fund at least equal to the Reserve Requirement except for
withdrawals therefrom authorized hereinafter, at all times for so long as any Parity Bonds remain
outstanding. The Reserve Requirement may be maintained by deposits of cash, a Qualified
Letter of Credit or Qualified Insurance, or a combination of the foregoing. In computing the
amount on hand in the Reserve Fund, Qualified Insurance and /or a Qualified Letter of Credit
shall be valued at the face amount thereof, and all other obligations purchased as an investment
of moneys therein shall be valued at cost. As used herein, the term "cash" shall include
U.S. currency, cash equivalents and evidences thereof, including demand deposits, certified or
cashier's check; and the deposit to the Reserve Fund may be satisfied initially by the transfer of
qualified investments to such account.
If the balances on hand in the Reserve Fund are sufficient to satisfy the Reserve
Requirement, interest earnings shall be applied as provided in the following sentences.
Whenever there is a sufficient amount in the Bond Fund, including the Reserve Fund and the
Bond Fund to pay the principal of and interest on all outstanding Bonds, the money in the
Reserve Fund may be used to pay such principal and interest. As long as the money left
remaining on deposit in the Reserve Fund is equal to the Reserve Requirement, money in the
Reserve Fund may be transferred to the Bond Fund and used to pay the principal of and interest
on the Bonds as the same becomes due and payable. The City also may transfer out of the
Reserve Fund any money required in order to prevent any Parity Bonds from becoming
"arbitrage bonds" under the Code.
If a deficiency in the Bond Fund shall occur, such deficiency shall be made up from the
Reserve Fund by the withdrawal of cash therefrom for that purpose and by the sale or redemption
of obligations held in the Reserve Fund, in such amounts as will provide cash in the Reserve
-27- PA20287 CMWM20287 A7G 9/10/13
Fund sufficient to make up any such deficiency with respect to Parity Bonds, and if a deficiency
still exists immediately prior to an interest payment date and after the withdrawal of cash, the
City shall then draw from any Qualified Letter of Credit or Qualified Insurance for the Bonds in
sufficient amount to make up the deficiency. Such draw shall be made at such times and under
such conditions as the agreement for such Qualified Letter of Credit or such Qualified Insurance
shall provide.
In making the payments and credits to the Reserve Fund required by this Section 9(b), to
the extent that the City has obtained Qualified Insurance or a Qualified Letter of Credit for
specific amounts required pursuant to this section to be paid out of the Reserve Fund such
amounts so covered by Qualified Insurance or a Qualified Letter of Credit shall be credited
against the amounts required to be maintained in the Reserve Fund by this Section 9(b) to the
extent that such payments and credits to be made are insured by an insurance company, or
guaranteed by a letter of credit from a financial institution.
All money not required to be deposited in the Reserve Fund either may be transferred to
the Bond Fund as needed or may be used for any lawful purpose of the City.
Any Qualified Letter of Credit or Qualified Insurance shall not be cancelable on less than
30 days' notice to the City. In the event of any cancellation, the Reserve Fund shall be funded as
if the Parity Bonds that remain outstanding had been issued on the date of such notice of
cancellation.
In the event that the City elects to meet the Reserve Requirement through the use of a
Qualified Letter of Credit, Qualified Insurance or other equivalent credit enhancement device,
the City may contract with the entity providing such Qualified Letter of Credit, Qualified
Insurance or other equivalent credit enhancement device that the City's reimbursement
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obligation, if any, to such entity shall be made from payments of principal and interest on Parity
Bonds from the City subject only to the prior lien thereon for the payments required hereunder to
be made to registered owners of Parity Bonds.
In the event a deficiency in the Bond Fund shall occur such deficiency shall be made up
from the Reserve Fund by the withdrawal of cash therefrom for that purpose and by the sale or
redemption of obligations held in the Reserve Fund, if necessary, in such amounts as will
provide cash in the Reserve Fund sufficient to make up any such deficiency, and if a deficiency
still exists immediately prior to an interest payment date and after the withdrawal of cash, the
City shall then draw from any Qualified Letter of Credit, Qualified Insurance, or other equivalent
credit facility in sufficient amount to make up the deficiency. Such draw shall be made at such
times and under such conditions as the agreement for such Qualified Letter of Credit or such
Qualified Insurance shall provide. Any deficiency created in the Reserve Fund by reason of any
such withdrawal shall then be made up within one year of the date of withdrawal from Net
Revenues or from ULID Assessments (or out of any other moneys on hand legally available for
such purpose) after making necessary provision for the payments required to be made into the
Bond Fund within such year.
(c) Priority of Lien of Payments into Bond Fund and Reserve Fund. The amounts so
pledged to be paid into the Bond Fund and the Reserve Fund from the Revenue Fund and from
ULID Assessments are hereby declared to be a prior lien and charge upon the Revenue of the
System and ULID Assessments superior to all other charges of any kind or nature whatsoever
except the Costs of Maintenance and Operation of the System, and except that the amounts so
pledged are of equal lien to the charges upon such Revenue and ULID Assessments for the
payment of the principal of and interest on the 2003 Bonds and any Future Parity Bonds.
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(d) Application and Investment of Moneys in the Bond Fund and Reserve Fund.
Money in the Bond Fund and Reserve Fund may be kept in cash or invested as permitted by law.
Investments in the Bond Fund shall mature prior to the date on which such money shall be
needed for required interest or principal payments (for investments in the Bond Fund) or having
a guaranteed redemption price prior to maturity. Investments in the Reserve Fund shall mature
not later than the last maturity of any then outstanding Parity Bonds. All interest earned and
income derived by virtue of such investments shall remain in the Bond Fund or the Reserve
Fund, as specified by the City Treasurer, and be used to meet the required deposits therein.
(e) Sufficiency of Revenues. The City Council hereby finds that in fixing the amounts
to be paid into the Bond Fund and the Reserve Fund out of the Revenue of the System, it has
exercised due regard for the Costs of Maintenance and Operation and has not obligated the City
to set aside and pay into the Bond Fund and the Reserve Fund a greater amount of such Revenue
than in its judgment will be available over and above the Costs of Maintenance and Operation.
Section 10. Specific Covenants.
(a) Rate Covenant. The City will establish, maintain and collect such rates and
charges for service of its System for so long as any Bonds are outstanding as will maintain the
Rate Covenant.
(b) System Maintenance. The City will at all times maintain and keep the System in
good repair, working order and condition, and also will at all times operate such utility and the
business in connection therewith in an efficient manner and at a reasonable cost.
(c) Disposal of Properties. The City will not mortgage, sell, lease, or in any manner
encumber or dispose of all or substantially all the property of the System (voluntarily or
involuntarily), unless provision is made for payment into the Bond Fund of a sum sufficient to
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pay the principal of, premium, if any, and interest on all outstanding bonds payable therefrom,
nor will it mortgage, sell, lease, or in any manner encumber or dispose of (including but not
limited to a disposition by transfer to another public or private organization) voluntarily or
involuntarily any part of the System that is used, useful and material to the operation of the
System unless
(1) the City certifies, based upon reasonable expectations, that the remaining
assets of the System shall be sufficient to continue regular operations of the City on a financially
sound basis for a period of at least five years and
(2) provision is made for replacement thereof or for payment into the Bond
Fund of the total amount of revenue received which shall not be less than an amount which shall
bear the same ratio to the amount of outstanding Parity Bonds as the greater of
(A) the Net Revenue available for Debt Service for such outstanding
Parity Bonds for the 12 months preceding such sale, lease, encumbrance or disposal from the
portion of the System sold, leased, encumbered or disposed of bears to the Net Revenue
available for Debt Service for such Parity Bonds from the entire System for the same period;
(B) the Revenue of the System for the 12 months preceding such sale,
lease, encumbrance or disposal from the portion of the System sold, leased, encumbered or
disposed of bears to the Revenue of the System for the same period;
(C) the proportion of assets (on a depreciated basis) allocable to the
assets being sold, leased, encumbered or disposed of bears to the total assets of the System; or
(D) the proportion of customers of the City allocable to the assets
being sold, leased, encumbered or disposed of bears to the total number of customers of the
System, provided, however, that the City may dispose of any portion of the facilities of the
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System up to an aggregate of five percent of the book value of the total assets of the System
without the requirement for any deposit to the Bond Fund as hereinabove provided.
Any such moneys so paid into the Bond Fund shall be used to retire such outstanding
Parity Bonds at the earliest possible date. Any money received by the City as condemnation
awards, insurance proceeds or the proceeds of sale, if not deposited to the Bond Fund, shall be
used for the replacement of facilities of the System.
(d) Books and Records. The City -will, while any of the Bonds remains outstanding,
keep proper and separate accounts and records in which complete and separate entries shall be
made of all transactions relating to the System, and it will furnish the original purchaser or
purchasers of the Bonds or any subsequent owner or owners thereof, at the written request of
such owner or owners, complete operating and income statements of the System in reasonable
detail covering any fiscal year, showing the financial condition of the water departments and
compliance with the terms and conditions of this ordinance, not more than 120 days after the
close of such fiscal year, and it will grant any owner or owners of at least 25% of the outstanding
Bonds the right at all reasonable times to inspect the entire System and all records, accounts and
data of the City relating thereto. Upon request of any owner of any of said Bonds, it will also
furnish to such owner a copy of the most recently completed audit of the City's accounts by the
State Auditor of Washington or independent certified public accountant.
(e) No Free Service. The City will not furnish water service to any customer
whatsoever free of charge (except to aid the poor or infirm, to provide for resource conservation
or to provide for the proper handling of hazardous materials) and will promptly take legal action
to enforce collection of all delinquent accounts.
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(f) Property Insurance. The City will at all times carry fire and extended coverage
and such other forms of insurance on the buildings, equipment, facilities and properties of the
System, if such insurance is obtainable at reasonable rates and upon reasonable conditions,
against such risks, in such amounts, and with such deductibles as the Council shall deem
necessary for the protection of the System and the owners of all outstanding Parity Bonds.
(g) Liability Insurance. The City will at all times keep and arrange to keep in full
force and effect policies of public liability and property damage insurance which will protect the
City against anyone claiming damages of any kind or nature arising out of the operation of the
System, if such insurance is obtainable at reasonable rates and upon reasonable conditions, in
such amounts and with such deductibles as the Council shall deem necessary for the protection
of the City and the owners of the outstanding Parity Bonds.
(h) Delinquencies of Accounts. The City will, on or before April 1 of each calendar
year, determine all accounts that are delinquent and will take all necessary action to enforce
payment of any such delinquencies.
(i) ULID Assessments. All ULID Assessments shall be paid into the Bond Fund and
shall be used to pay and secure the payment of the principal of and interest on the Bonds and
Future Parity Bonds. Nothing in this ordinance or this section shall be construed to prohibit the
City from issuing water revenue bonds junior in lien to the Bonds and pledging as security for
their payment assessments levied in any ULID which may have been specifically created to pay
part of the cost of improvements to the System for which those junior lien bonds were
specifically issued.
Section 11. Tax Covenants. The City covenants that it will not take or permit to be
taken on its behalf any action that would adversely affect the exemption from federal income
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taxation of the interest on the Bonds and will take or require to be taken such acts as may
reasonably be within its ability and as may from time to time be required under applicable law to
continue the exemption from federal income taxation of the interest on the Bonds.
(a) Arbitrage Covenant. Without limiting the generality of the foregoing, the City
covenants that it will not take any action or fail to take any action with respect to the proceeds of
sale of the Bonds or any other funds of the City which may be deemed to be proceeds of the
Bonds pursuant to Section 148 of the Code and the regulations promulgated thereunder which, if
such use had been reasonably expected on the dates of delivery of the Bonds to the initial
purchasers thereof, would have caused the Bonds to be treated as "arbitrage bonds" within the
meaning of such term as used in Section 148 of the Code.
The City represents that it has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that it is an issuer whose arbitrage certifications may not
be relied upon. The City will comply with the requirements of Section 148 of the Code and the
applicable regulations thereunder throughout the term of the Bonds.
(b) Private Person Use Limitation for Bonds. The City covenants that for as long as
the Bonds are outstanding, it will not permit:
(1) More than 10% of the Net Proceeds of the Bonds to be allocated to any
Private Person Use; and
(2) More than 10% of the principal or interest payments on the Bonds in a
Bond Year to be directly or indirectly: (A) secured by any interest in property used or to be used
for any Private Person Use or secured by payments in respect of property used or to be used for
any Private Person Use, or (B) derived from payments (whether or not made to the City) in
respect of property, or borrowed money, used or to be used for any Private Person Use.
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The City further covenants that, if:
(3) More than five percent of the Net Proceeds of the Bonds are allocable to
any Private Person Use; and
(4) More than five percent of the principal or interest payments on the Bonds
in a Bond Year are (under the terms of this ordinance or any underlying arrangement) directly or
indirectly:
(A) secured by any interest in property used or to be used for any
Private Person Use or secured by payments in respect of property used or to be used for any
Private Person Use, or
(B) derived from payments (whether or not made to the City) in
respect of property, or borrowed money, used or to be used for any Private Person Use, then,
(i) any Private Person Use of the Projects financed or refinanced with the proceeds of the Bonds
or Private Person Use payments described in subsection (4) hereof that is in excess of the five
percent limitations described in such subsections (3) or (4) will be for a Private Person Use that
is related to the state or local governmental use of the Projects financed or refinanced with the
proceeds of the Bonds, and (ii) any Private Person Use will not exceed the amount of Net
Proceeds of the Bonds used for the state or local governmental use portion of the Projects
financed or refinanced with the proceeds of the Bonds to which the Private Person Use of such
portion of the Projects financed or refinanced with the proceeds of the Bonds relates. The City
further covenants that it will comply with any limitations on the use of the Projects by other than
state and local governmental users that are necessary, in the opinion of its bond counsel, to
preserve the tax exemption of the interest on the Bonds. The covenants of this section are
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specified solely to assure the continued exemption from regular income taxation of the interest
on the Bonds.
(c) Modification of Tax Covenants. The covenants of this section are specified solely
to assure the continued exemption from regular income taxation of the interest on the Bonds. To
that end, the provisions of this section may be modified or eliminated without any requirement
for formal amendment thereof upon receipt of an opinion of the City's bond counsel that such
modification or elimination will not adversely affect the tax exemption of interest on any Bonds.
(d) Designation under Section 265(b). The City hereby designates the Bonds as
"qualified tax - exempt obligations" for investment by financial institutions under Section 265(b)
of the Code. The City does not anticipate that it will issue more than $10,000,000 in qualified
tax - exempt obligations during 2013 (excluding obligations permitted by the Code to be excluded
for purposes of the City's qualification as a qualified small issuer).
Section 12. Issuance of Future Parity Bonds. The City hereby further covenants and
agrees with the owners of each of the Bonds for as long as any of the same remain outstanding as
follows:
(a) Conditions upon the Issuance of Future Parity Bonds. As long as any Bonds
remain outstanding, the City hereby further covenants and agrees that it will not issue any Future
Parity Bonds except that the City hereby reserves the right to issue additional revenue bonds,
which shall constitute a charge and lien upon the Revenue of the System equal to the lien thereon
of the Bonds. Except as provided in subsection (b) below, the City shall not issue any series of
Future Parity Bonds or incur any additional indebtedness with a parity lien or charge on Net
Revenues (i.e., on a parity of lien with Parity Bonds at the time outstanding) unless:
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(1) the City shall not have been in default of its Rate Covenant for the
immediately preceding fiscal year, and
(2) the ordinance authorizing the issuance of such Future Parity Bonds shall
provide that the Reserve Requirement shall be funded no later than the date of delivery of the
Future Parity Bonds.
(3) there shall have been filed a certificate (prepared as described in
subsection (c) or (d) below) demonstrating fulfillment of the Parity Requirement, commencing
with the first full fiscal year following the date on which any portion of interest on the series of
Future Parity Bonds then being issued no longer will be paid from the proceeds of such series of
Future Parity Bonds.
(b) No Certificate Required. The certificate described in the foregoing
subsection (a)(3) shall not be required as a condition to the issuance of Future Parity Bonds:
(1) if the Future Parity Bonds being issued are for the purpose of refunding
outstanding Parity Bonds; or
(2) if the Future Parity Bonds are being issued to pay costs of construction of
facilities of the System for which Future Parity Bonds have been issued previously and the
principal amount of such Future Parity Bonds being issued for completion purposes does not
exceed an amount equal to an aggregate of 15% of the principal amount of Future Parity Bonds
theretofore issued for such facilities and reasonably allocable to the facilities to be completed as
shown in a written certificate of the City Representative, and there is delivered a Consultant's
certificate stating that the nature and purpose of such facilities has not materially changed.
(c) Certificate of the City Without A Consultant. If required pursuant to the foregoing
subsection (a)(3), a certificate may be delivered by the City (executed by the City
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Representative) without a Consultant if Net Revenues for the Base Period (confirmed by an
independent auditor) conclusively demonstrate that the Parity Requirement will be fulfilled
commencing with the first full fiscal year following the date on which any portion of interest on
the series of Future Parity Bonds then being issued will not be paid from the proceeds of such
series of Future Parity Bonds.
(d) Certificate of a Consultant. Unless compliance with the requirements of
subsection (a)(3) have been otherwise satisfied (as provided in (b) or (c) above), compliance with
the Parity Requirement shall be demonstrated conclusively by a certificate of a Consultant.
In making the computations of Net Revenues for the purpose of certifying compliance
with the Parity Requirement, the Consultant shall use as a basis the Net Revenues for the Base
Period. Such Net Revenues shall be determined by adding the following:
(1) The historical net revenue of the City for any 12 consecutive months out
of the 30 months immediately preceding the month of delivery of the Future Parity Bonds being
issued as determined by a Consultant.
(2) The net revenue derived from those customers of the City that have
become customers during such 12 -month period or thereafter and prior to the date of such
certificate, adjusted to reflect a full year's net revenue from each such customer to the extent
such net revenue was not included in (1) above.
(3) The estimated annual net revenue to be derived from any person, firm,
association, private or municipal corporation under any executed contract for service, which net
revenue was not included in any of the sources of net revenue described in this subsection (d).
(4) The estimated annual net revenue to be derived from the operation of any
additions or improvements to or extensions of the City under construction but not completed at
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the time of such certificate and not being paid for out of the proceeds of sale of such Future
Parity Bonds being issued, and which net revenue is not otherwise included in any of the sources
of net revenue described in this subsection (d).
(5) The estimated annual net revenue to be derived from the operation of any
additions and improvements to or extensions of the City being paid for out of the proceeds of
sale of such Bonds being issued.
In the event the City will not derive any revenue as a result of the construction of the
additions, improvements or extensions being made or to be made to the System within the
provisions of subparagraphs (4) and (5) immediately above, the estimated normal Costs of
Maintenance and Operation (excluding any transfer of money to other funds of the City and
license fees, taxes and payments in lieu of taxes payable to the City) of such additions,
improvements and extensions shall be deducted from estimated annual net revenue.
The words "historical net revenue" or "net revenue" as used in this subsection (d) shall
mean the Revenue of the System or any part or parts thereof less the Costs of Maintenance and
Operation, but before depreciation.
Such "historical net revenue" or "net revenue" shall be adjusted to reflect the rates and
charges effective on the date of such certificate if there has been any change in such rates and
charges during or after such 12- consecutive -month period.
(e) Subordinate Lien Obligations. Nothing herein contained shall prevent the City
from issuing revenue bonds or other obligations which are a charge upon the Revenue of the
System junior or inferior to the payments required by this ordinance to be made out of such
Revenue to pay and secure the payment of any outstanding Parity Bonds.
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(f) Refunding Obligations. Nothing herein contained shall prevent the City from
issuing revenue bonds to refund maturing Parity Bonds for the payment of which moneys are not
otherwise available.
No.
Section 13. Form of Bonds. The Bonds shall be in substantially the following form:
UNITED STATES OF AMERICA
STATE OF WASHINGTON
CITY OF YELM
WATER REVENUE REFUNDING BOND, 2013
911
INTEREST RATE: MATURITY DATE: CUSIP NO.:
REGISTERED OWNER: CEDE & Co.
PRINCIPAL AMOUNT:
The City of Yelm, Washington, a municipal corporation organized and existing under and
by virtue of the laws of the State of Washington (the "City "), promises to pay to the Registered
Owner identified above, or registered assigns, on the Maturity Date identified above, solely from
the special fund of the City known as the "Water Revenue Debt Redemption Fund" (the "Bond
Fund "), the Principal Amount indicated above and to pay interest thereon from the Bond Fund
from September _, 2013, or the most recent date to which interest has been paid or duly
provided for or until payment of this bond at the Interest Rate set forth above, payable on
December 1, 2013, and semiannually thereafter on the first days of each June and December.
Both principal of and interest on this bond are payable in lawful money of the United
States of America. For so long as the bonds of this issue are held in fully immobilized form,
payments of principal and interest thereon shall be made as provided in accordance with the
operational arrangements of The Depository Trust Company ( "DTC ") referred to in the Blanket
Issuer Letter of Representations (the "Letter of Representations ") from the City to DTC. The
fiscal agency of the State of Washington has been appointed by the City as the authenticating
agent, paying agent and registrar for the bonds of this issue (the "Bond Registrar "). Capitalized
terms used in this bond that are not specifically defined have the meanings given such terms in
Ordinance No. 974 of the City (the "Bond Ordinance "). Reference is made to the Bond
Ordinance and any and all modifications and amendments thereto for a description of the nature
and extent of the security for the bonds of this issue, the funds or revenues pledged, and the
terms and conditions upon which such bonds are issued.
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This bond is one of an issue of $1,600,000 of bonds of the City of like date, tenor and
effect, except as to number, amount, rate of interest and date of maturity and is issued pursuant to
the Bond Ordinance to refund certain outstanding water revenue bonds.
The bonds of this issue are not subject to optional redemption prior to their stated
maturities. [The bonds of this issue are subject to mandatory redemption prior to their scheduled
maturity as provided in the Bond Ordinance and the Purchase Contract.]
The bonds of this issue are not general obligations of the City. The City hereby
covenants and agrees with the owner and holder of this bond that it will keep and perform all the
covenants of this bond and the Bond Ordinance.
The bonds of this issue are not "private activity bonds" as such term is defined in the
Internal Revenue Code of 1986, as amended (the "Code "). The City has designated bonds of this
issue as "qualified tax - exempt obligations" under Section 265(b) of the Code.
This bond is payable solely out of the Revenue of the System, and does not constitute a
general obligation of the City. Both principal of and interest on this bond are payable solely out
of the special fund of the City known as the Bond Fund. The City does hereby pledge and bind
itself to set aside and pay into the Bond Fund the amounts required by the Bond Ordinance to be
paid therein on or prior to the maturity of the Bond as the same shall become due from the
proceeds of the Bonds (as authorized in the Bond Ordinance) or from the sources and in the
priority specified in the Bond Ordinance. To the extent more particularly provided by the Bond
Ordinance, the amounts so pledged to be paid from the Revenue Fund out of the Revenue of the
System into the Bond Fund and the account therein shall be a lien and charge thereon equal in
rank to the lien and charge upon said revenue of the Outstanding Parity Bonds and the amounts
required to pay and secure the payment of any revenue bonds of the City hereafter issued on a
parity with Outstanding Parity Bonds and the bonds of this issue and superior to all other liens
and charges of any kind or nature except the Costs of Maintenance and Operation of the System.
This bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall
have been manually signed by the Bond Registrar.
It is hereby certified that all acts, conditions, and things required by the Constitution and
statutes of the State of Washington to exist, to have happened, been done, and performed
precedent to and in the issuance of this bond have happened, been done, and performed.
-41- PA20287 CMM20287 A7G 9/10/13
IN WITNESS WHEREOF, the City of Yelm, Washington has caused this bond to be
signed with the facsimile signature of the Mayor, to be attested by the facsimile signature of the
City Clerk, and the corporate seal of the City to be reproduced hereon, all as of this day of
September, 2013.
CITY OF YELM, WASHINGTON
By /s/ facsimile or manual
Mayor
(SEAL)
ATTEST:
/s/ facsimile or manual
City Clerk
CERTIFICATE OF AUTHENTICATION
Date of Authentication:
This bond is one of the bonds described in the within - mentioned Bond Ordinance and is
one of the Water Revenue Refunding Bonds, 2013 of the City of Yelm, Washington, dated
September , 2013.
WASHINGTON STATE FISCAL
AGENCY, Bond Registrar
C
Authorized Signer
Section 14. Execution of Bonds. The Bonds shall be executed on behalf of the City
with the facsimile signature of the Mayor, shall be attested by the facsimile signature of the City
Clerk and shall have the seal of the City impressed, imprinted or otherwise reproduced thereon.
Only such Bonds as shall bear thereon a Certificate of Authentication in the form
hereinbefore recited, manually executed by the Bond Registrar, shall be valid or obligatory for
any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall
be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated,
and delivered hereunder and are entitled to the benefits of this ordinance.
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In case either of the officers who shall have executed the Bonds shall cease to be an
officer or officers of the City before the Bonds so signed shall have been authenticated or
delivered by the Bond Registrar, or issued by the City, such Bonds shall be valid nevertheless
and may be issued by the City with the same effect as though the persons who had executed such
Bonds had not ceased to be such officers.
Section 15. Defeasance. In the event that the City, in order to effect the payment,
retirement or redemption of any Bond, sets aside in the Bond Fund or in another special account,
cash or noncallable Government Obligations, or any combination of cash and /or noncallable
Government Obligations, in amounts and maturities which, together with the known earned
income therefrom, are sufficient to redeem or pay and retire such Bond in accordance with its
terms and to pay when due the interest and redemption premium, if any, thereon, and such cash
and/or noncallable Government Obligations are irrevocably set aside and pledged for such
purpose, then no further payments need be made into the Bond Fund for the payment of the
principal of and interest on such Bond. The owner of a Bond so provided for shall cease to be
entitled to any lien, benefit or security of this ordinance except the right to receive payment of
principal, premium, if any, and interest from such special account, and such Bond shall be
deemed to be not outstanding under this ordinance.
The Registrar shall provide notice of defeasance of Bonds to Registered Owners and to
each party entitled to receive notice in accordance with Section 19 of this ordinance.
Section 16. Lost or Destroyed Bonds. In case any Bonds shall be lost, stolen or
destroyed, the Bond Registrar may authenticate and deliver a new Bond or Bonds of like amount,
date and tenor to the owner thereof upon the owner's paying the expenses and charges of the
Bond Registrar and the City in connection therewith and upon his filing with the Bond Registrar
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and the City evidence satisfactory to both that such Bond or Bonds were actually lost, stolen or
destroyed and of his ownership thereof, and upon furnishing the City and the Bond Registrar
with indemnity satisfactory to both.
Section 17. Sale of Bonds: Official Statement.
(a) Bond Sale. The Bonds shall be sold at negotiated sale to the Underwriter pursuant
to the terms of the Purchase Contract. The City Representative is hereby authorized to negotiate
terms for the purchase of the Bonds and to execute the Purchase Contract, with such terms as are
approved by the City Representative pursuant to this section and consistent with this ordinance.
The Council has been advised that market conditions are fluctuating and, as a result, the most
favorable market conditions may occur on a day other than a regular meeting date of the Council.
The Council has determined that it would be in the best interest of the City to delegate to the City
Representative for a limited time the authority to approve the final interest rates, maturity dates,
aggregate principal amount, principal amounts and prices of each maturity, and other terms and
conditions of the Bonds. The City Representative is hereby authorized to approve the final
interest rates, maturity dates (not later than the final maturity of the 2003 Bonds), aggregate
principal amount, principal amounts and prices of each maturity for the Bonds in the manner
provided hereafter so long as (i) the aggregate principal amount of the Bonds does not exceed the
maximum principal amount set forth in Section 3, (ii) the true interest cost of the Bonds is not
greater than 4.50 %, and (iii) the net present value aggregate savings to be realized as a result of
refunding the 2003 Bonds after payment of all allocable costs of issuance is at least equal to the
Savings Target.
In determining the final interest rates, maturity dates, aggregate principal amount,
principal amounts and prices of each maturity (within the parameters required to achieve the
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Savings Target), the City Representative, in consultation with City staff, shall take into account
those factors that, in his or her judgment, will result in the lowest true interest cost on the Bonds
to their maturity, including, but not limited to current financial market conditions and current
interest rates for obligations comparable in tenor and quality to the Bonds. Subject to the terms
and conditions set forth in this section, the City Representative is hereby authorized to execute
the final form of the Purchase Contract. Following the execution of the Purchase Contract, the
City Representative shall provide a report to the Council, describing the final terms of the Bonds
approved pursuant to the authority delegated in this section. The authority granted to the City
Representative by this section shall expire on December 31, 2013. If a Purchase Contract for the
Bonds has not been executed by December 31, 2013, the authorization for the issuance of such
Bonds shall be rescinded, and such Bonds shall not be issued nor their sale approved unless such
Bonds shall have been re- authorized by ordinance of the Council. The ordinance reauthorizing
the issuance and sale of the Bonds may be in the form of a new ordinance repealing this
ordinance in whole or in part or may be in the form of an amendatory ordinance approving a
Purchase Contract or establishing terms and conditions for the authority delegated under this
section.
(b) Delivery; Documentation. Upon the adoption of this ordinance, the proper
officials of the City including the City Representative, are authorized and directed to undertake
all other actions necessary for the prompt execution and delivery of the Bonds to the Underwriter
and further to execute all closing certificates and documents required to effect the closing and
delivery of the Bonds in accordance with the terms of the Purchase Contract.
The City Representative and other City officials, agents and representatives are hereby
authorized and directed to do everything necessary for the prompt issuance, execution and
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delivery of the Bonds to the Underwriter and for the proper application and use of the proceeds
of sale of the Bonds. In furtherance of the foregoing, the City Representative is authorized to
approve and enter into agreements for the payment of costs of issuance, including Underwriter's
discount, the fees and expenses specified in the Purchase Contract, including fees and expenses
of Underwriter and other retained services, including Bond Counsel, rating agencies, fiscal
agency, escrow agent, escrow verification services and other expenses customarily incurred in
connection with issuance and sale of bonds. The disbursement of Bond proceeds to pay certain
costs of issuance shall be made by the Escrow Agent under the terms set forth in the Cost of
Issuance Agreement.
(c) Preliminary and Final Official Statements. The City hereby approves the
Preliminary Official Statement presented herewith to the Council and authorizes the
Underwriter's distribution of the Preliminary Official Statement in connection with the offering
of the Bonds. Pursuant to Securities and Exchange Commission Rule 15c2 -12 (the "Rule "), the
City hereby deems the Preliminary Official Statement as final as of its date except for the
omission of information dependent upon the pricing of the issue and the completion of the
Purchase Contract, such as offering prices, interest rates, selling compensation, aggregate
principal amount, principal amount per maturity, delivery dates, and other terms of the Bonds
dependent on the foregoing matters.
The City Representative is hereby authorized to review and approve on behalf of the City
the final official statement relative to the Bonds with such additions and changes as may be
deemed necessary or advisable to him/her to be appropriate.
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Section 18. Refunding Plan and Procedures.
(a) Refunding Plan. The proceeds of sale of the Bonds, together with other funds, if
any, provided by the City shall be delivered to the Escrow Agent for the purpose of defeasing the
2003 Bonds and paying related costs of issuance. Money received by the Escrow Agent from
Bond proceeds and other money provided by the City shall be used immediately by the Escrow
Agent upon receipt thereof in accordance with the terms of the Escrow Agreement to defease the
2003 Bonds as authorized by the 2003 Bond Ordinance, and pay costs of issuance of the Bonds.
The City shall defease the 2003 Bonds and discharge such obligations to purchase certain
Government Obligations (which obligations so purchased, are herein called "Acquired
Obligations "), bearing such interest and maturing as to principal and interest in such amounts
and at such times which, together with any necessary beginning cash balance, will provide for
the payment of:
Date; and
(1) Interest on the 2003 Bonds as such becomes due on and prior to the Call
(2) The redemption price (100% of the principal amount) of the 2003 Bonds
payable on the Call Date.
Such Acquired Obligations shall be purchased at a yield not greater than the yield
permitted by the Code and regulations relating to acquired obligations in connection with
refunding bond issues.
(b) Escrow Agent /Escrow Agreement. The City hereby appoints U.S. Bank National
Association, Seattle, Washington, to perform the duties described herein (the "Escrow Agent ")
A beginning cash balance, if any, and Acquired Obligations shall be deposited irrevocably with
the Escrow Agent in an amount sufficient to defease the 2003 Bonds. The proceeds of the Bonds
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after acquisition of the Acquired Obligations and provision for the necessary beginning cash
balance shall be utilized to pay expenses of the acquisition and safekeeping of the Acquired
Obligations and expenses of the issuance of the Bonds.
In order to carry out the purposes of this section, the City Representative is authorized
and directed to execute and deliver to the Escrow Agent, an Escrow Deposit Agreement
substantially in the form attached hereto as Exhibit A.
(c) Implementation of Refunding Plan. The City hereby irrevocably calls the
2003 Bonds for redemption on the Call Date in accordance with the provisions of the 2003 Bond
Ordinance. Said defeasance and call for redemption of the 2003 Bonds shall be irrevocable after
the final establishment of the escrow account and delivery of the Acquired Obligations to the
Escrow Agent.
The Escrow Agent is hereby authorized and directed to provide for the giving of notices
of the redemption of the 2003 Bonds in accordance with the applicable provisions of the
2003 Bond Ordinance. The City Representative is authorized and requested to provide whatever
assistance is necessary to accomplish such redemption and the giving of notices therefor. The
costs of publication of such notices shall be an expense of the City.
The Escrow Agent is hereby authorized and directed to pay to the paying agent for the
2003 Bonds, sums sufficient to pay, when due, the payments specified in of subsection (a) above.
All such sums shall be paid from the money and Acquired Obligations deposited with said
Escrow Agent pursuant to this section, and the income therefrom and proceeds thereof.
The City will take such actions as are found necessary to ensure that all necessary and
proper fees, compensation and expenses of the Escrow Agent shall be paid when due.
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Section 19. Undertaking to Provide Ongoing Disclosure.
(a) Contract /Undertaking. This section constitutes the City's written undertaking for
the benefit of the owners of the Bonds as required by Section (b)(5) of the Rule.
(b) Financial Statements /Operating Data. The City agrees to provide or cause to be
provided to the Municipal Securities Rulemaking Board ( "MSRB "), the following annual
financial information and operating data for the prior fiscal year (commencing in 2014 for the
fiscal year ended December 31, 2013):
1. Annual financial statements, which statements may or may not be audited,
showing ending fund balances for the System prepared in accordance with the Budget
Accounting and Reporting System prescribed by the Washington State Auditor pursuant to
RCW 43.09.200 (or any successor statute) and generally of the type included in the official
statement for the Bonds under the heading "Historical Operating Results ";
2. Principal amount of Parity Bonds;
3. Debt service coverage ratios for Parity Bonds;
4. Rates for the System; and
5. Number of customers of the System.
Items 2 -5 shall be required only to the extent that such information is not included in the annual
financial statements.
The information and operating data described above shall be so provided on or before the
expiration of nine months after the end of the City's fiscal year. The City's current fiscal year
ends December 31. The City may adjust such date if the City changes its fiscal year by
providing written notice of the change of fiscal year and the new reporting date to the MSRB. In
lieu of providing such annual financial information and operating data, the City may cross-
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reference to other documents available to the public on the MSRB's internet website or filed
with the Commission and, if such document is a final official statement within the meaning of
the Rule, available from the MSRB or Commission.
If not provided as part of the annual financial information discussed above, the City shall
provide the City's audited annual financial statement prepared in accordance with regulations
prescribed by the State Auditor pursuant to RCW 43.09.200 (or any successor statutes), when
and if available, to the MSRB.
(c) Material Events. The City agrees to provide notice of the following material
events not in excess of ten business days after the occurrence of the event:
Principal and interest payment delinquencies;
Non- payment related defaults, if material;
• Unscheduled draws on debt service reserves reflecting financial difficulties;
• Unscheduled draws on credit enhancements reflecting financial difficulties;
Substitution of credit or liquidity providers, or their failure to perform;
Adverse tax opinions, the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-
TEB) or other material notices or determinations with respect to the tax status of
the Bonds, or other material events affecting the tax status of the Bonds;
Modifications to the rights of Bondholders, if material;
Bond calls, if material, and tender offers;
Defeasances;
Release, substitution, or sale of property securing repayment of the Bonds, if
material;
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Rating changes;
Bankruptcy, insolvency, receivership or similar event of the City;
The consummation of a merger, consolidation, or acquisition involving the City
or the sale of all or substantially all of the assets of the City, other than in the
ordinary course of business, the entry into a definitive agreement to undertake
such an action or the termination cf a definitive agreement relating to any such
actions, other than pursuant to its terms, if material; and
• Appointment of a successor or additional trustee or the change of name of a
trustee, if material.
Solely for purposes of information, and not intending to modify this undertaking, the City
advises that there is no property securing repayment of the Bonds.
(d) Notification Upon Failure to Provide Financial Data. The City agrees to provide
or cause to be provided, in a timely manner to the MSRB, notice of its failure to provide the
annual financial information described in subsection (b) above on or prior to the date set forth in
subsection (b) above.
(e) Emma; Format for Filings with the MSRB. Until otherwise designated by the
MSRB or the SEC, any information or notices submitted to the MSRB in compliance with the
Rule are to be submitted through the MSRB's Electronic Municipal Market Access system
( "EMMA "), currently located at www.emma.msrb.org (which is not incorporated into this
Official Statement by reference). All notices, financial information and operating data required
by this undertaking to be provided to the MSRB must be in an electronic format as prescribed by
the MSRB. All documents provided to the MSRB pursuant to this undertaking must be
accompanied by identifying information as prescribed by the MSRB.
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(f) Term ination/Modification. The City's obligations to provide annual financial
information and notices of material events shall terminate upon the defeasance, prior redemption
or payment in full of all of the Bonds. This section, or any provision hereof, shall be null and
void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that
those portions of the Rule which require this section, or any such provision, are invalid, have
been repealed retroactively or otherwise do not apply to the Bonds; and (2) notifies the MSRB,
of such opinion and the cancellation of this section. Notwithstanding any other provision of this
ordinance, the City may amend this section and any provision of this section may be waived with
an approving opinion of nationally recognized bond counsel.
In the event of any amendment of or waiver of a provision of this section, the City shall
describe such amendment in the next annual report, and shall include, as applicable, a narrative
explanation of the reason for the amendment or waiver and its impact on the type (or in the case
of a change of accounting principles, on the presentation) of financial information or operating
data being presented by the City. In addition, if the amendment relates to the accounting
principles to be followed in preparing financial statements, (I) notice of such change shall be
given in the same manner as for a material event under Subsection (c), and (II) the annual report
for the year in which the change is made should present a comparison (in narrative form and
also, if practical, in quantitative form) between the financial statements as prepared on the basis
of the new accounting principles and those prepared on the basis of the former accounting
principles.
(g) Bond Owner's Remedies Under This Section. A Bond owner's right to enforce
the provisions of this section shall be limited to a right to obtain specific enforcement of the
City's obligations hereunder, and any failure by the City to comply with the provisions of this
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undertaking shall not be an event of default with respect to the Bonds under this ordinance. For
purposes of this section, "beneficial owner" means any person who has the power, directly or
indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds, including
persons holding the Bonds through nominees or depositories.
Section 20. Effective Date. This ordinance shall be effective five days from its
passage and publication as required by law.
ADOPTED by the City Council of the City of Yelm, Washington, and approved by its
Mayor at a regular meeting of said Council held this 10th day of September, 2013.
ATTEST:
City Clerk
CITY OF YELM, WAWINGTON
-53- PA20287_CMVN20287_A7G 9110/13
EXHIBIT A
ESCROW DEPOSIT AGREEMENT
CITY OF YELM, WASHINGTON
WATER REVENUE REFUNDING BONDS, 2013
THIS ESCROW AGREEMENT, dated as of September 25, 2013 (herein, together with
any amendments or supplements hereto, called the "Agreement ") is entered into by and between
the CITY OF YELM, WASHINGTON (herein called the "City ") and U.S. Bank National
Association, Seattle, Washington, as escrow agent (herein, together with any successor in such
capacity, called the "Escrow Agent "). The notice addresses of the City and the Escrow Agent
are shown on Exhibit A attached hereto and made a part hereof.
WITNESSETH:
WHEREAS, the City heretofore has issued and there presently remain outstanding the
obligations described in Exhibit B (the "Refunded Bonds "); and
WHEREAS, pursuant to Ordinance No. 974 adopted on September 10, 2013 (the "Bond
Ordinance "), the City has determined to issue its Water Revenue Refunding Bonds, 2013 (the
"Bonds "), the proceeds of which are being used to refund the Refunded Bonds as described in
Exhibit B; and
WHEREAS, the Escrow Agent has reviewed this Agreement, and is willing to serve as
Escrow Agent hereunder; and
WHEREAS, simultaneously herewith, the City is entering into a Cost of Issuance
Agreement with the Escrow Agent to provide for the payment of costs of issuance relating to the
Bonds;
NOW, THEREFORE, in consideration of the mutual undertakings, promises and
agreements herein contained, the sufficiency of which hereby are acknowledged, and to secure
the full and timely payment of principal of and the interest on the Refunded Bonds, the City and
the Escrow Agent mutually undertake, promise and agree for themselves and their respective
representatives and successors, as follows:
Article 1. Definitions
Section 1.1. Definitions.
Unless the context clearly indicates otherwise, the following terms shall have the
meanings assigned to them below when they are used in this Agreement:
Call Date means November 1, 2013
Paying Agent means the fiscal agency of the state of Washington, as the paying agent for
the Refunded Bonds.
Redemption Price means $ , the dollar amount required to pay and redeem
the Refunded Bonds on the Call Date.
Refunding Account means the fund created by this Agreement to be established, held
and administered by the Escrow Agent pursuant to the provisions of this Agreement.
Section 1.2. Other Definitions.
The terms "Agreement," "Bonds," "City," "Escrow Agent," "Bond Ordinance," and
"Refunded Bonds" when they are used in this Agreement, shall have the meanings assigned to
them in the preamble to this Agreement.
Section 1.3. Interpretations.
The titles and headings of the articles and sections of this Agreement have been inserted
for convenience and reference only and are not to be considered a part hereof and shall not in any
way modify or restrict the terms hereof. This Agreement and all of the terms and provisions
hereof shall be liberally construed to effectuate the purposes set forth herein and to achieve the
intended purpose of providing for the refunding of the Refunded Bonds in accordance with
applicable law.
Article 2. Deposit of Funds
Section 2.1. Deposits in the Refunding Account.
Concurrently with the sale and delivery of the Bonds the City shall deposit, or cause to be
deposited, with the Escrow Agent, for deposit in the Refunding Account, the net proceeds to
redeem the Refunded Bonds and pay costs of issuance described in Exhibit D, and the Escrow
Agent shall, upon the receipt thereof, acknowledge such receipt to the City in writing.
Article 3. Creation and Operation of Refunding Account
Section 3.1. Refunding Account.
The Escrow Agent has created on its books a special trust fund and irrevocable escrow to
be known as the Refunding Account. The Escrow Agent agrees that upon receipt it will deposit
to the credit of the Refunding Account the funds described in Exhibit D. Such deposit, all
proceeds therefrom, and all cash balances on deposit therein (a) shall be the property of the
Refunding Account, (b) shall be applied only in strict conformity with the terms and conditions
of this Agreement, and (c) are hereby irrevocably pledged to the payment of the Redemption
Price of the Refunded Bonds on the Call Date. When the final transfer has been made for the
payment of the Redemption Price of the Refunded Bonds, any balance then remaining in the
Exhibit A-2 PA20287_CMM20287_A7G 09/10/13
Refunding Account shall be transferred to the City, and the Escrow Agent shall thereupon be
discharged from any further duties hereunder.
Section 3.2. Payment of Principal and Interest.
The Escrow Agent is hereby irrevocably instructed to transfer to the Paying Agent from
the cash balance on deposit in the Refunding Account, the amount required to pay the
Redemption Price of the Refunded Bonds on the Call Date shown in Exhibit C.
Section 3.3. Sufficiency of Refunding Account.
The City represents that, based upon the information provided by D.A. Davidson & Co.,
the cash balance on deposit from in the Refunding Account will be at all times sufficient to
provide money for transfer to the Paying Agent of the Redemption Price on the Call Date, all as
more fully set forth in Exhibit E. If, for any reason, at any time, the cash balance on deposit or
scheduled to be on deposit in the Refunding Account shall be insufficient to transfer the amounts
required by the Paying Agent to make the payments set forth in Section 3.2, the City shall timely
deposit in the Refunding Account, from any funds that are lawfully available therefor, additional
funds in the amounts required to make such payments. Notice of any such insufficiency shall be
given promptly as hereinafter provided, but the Escrow Agent shall not in any manner be
responsible for any insufficiency of funds in the Refunding Account or the City's failure to make
additional deposits.
Section 3.4. Trust Fund.
The Escrow Agent shall hold at all times the Refunding Account, wholly segregated from
all other funds and securities on deposit with the Escrow Agent; it shall never allow the
Refunding Account to be commingled with any other funds or securities of the Escrow Agent;
and it shall hold and dispose of the assets of the Refunding Account only as set forth herein. The
Refunding Account shall always be maintained by the Escrow Agent as a trust fund for the
benefit of the owners of the Refunded Bonds; and a special account shall at all times be
maintained on the books of the Escrow Agent. The amounts received by the Escrow Agent
under this Agreement shall not be considered as a banking deposit by the City, and the Escrow
Agent shall have no right to title with respect thereto except as an agent and Escrow Agent under
the terms of this Agreement.
Article 4. Application of Cash Balances
Section 4.1. In General.
Except as provided in Section 2.1 and 3.2 hereof, no withdrawals, transfers or
reinvestment shall be made of cash balances in the Refunding Account. Cash balances shall be
held by the Escrow Agent as cash balances as shown on the books and records of the Escrow
Agent.
Exhibit A -3 P:%20287_CMVVX20287_A7G 09/10/13
Article 5. Redemption of Refunded Bonds
Section 5.1. Call for Redemption.
The City hereby irrevocably calls the Refunded Bonds for redemption on the Call Date,
as shown in Appendix A attached hereto.
Section 5.2. Notice of Redemption/Notice of Defeasance.
The Escrow Agent agrees to give a notice of defeasance and a notice of the redemption of
the Refunded Bonds to the Paying Agent for dissemination in accordance with the terms of
Ordinance No. 776 of the City and in substantially the forms attached hereto as Appendices A
and B to the Paying Agent for distribution as described therein. The notice of defeasance shall
be given immediately following the execution of this Agreement, and the notice of redemption
shall be given in accordance with the ordinance or resolution authorizing the Refunded Bonds.
The Escrow Agent hereby certifies that provision satisfactory and acceptable to the Escrow
Agent has been made for the giving of notice of redemption of the Refunded Bonds.
Article 6. Records and Reports
Section 6.1. Records.
The Escrow Agent will keep books of record and account in which complete and accurate
entries shall be made of all transactions relating to the receipts, disbursements, allocations and
application of the money deposited to the Refunding Account and all proceeds thereof, and such
books shall be available for inspection during business hours and after reasonable notice.
Section 6.2. Reports.
While this Agreement remains in effect, the Escrow Agent promptly following the Call
Date shall prepare and send to the City a written report summarizing all transactions relating to
the Refunding Account during the preceding year, including, without limitation, credits to the
Refunding Account as a result of transfer from the Refunding Account for payment on the
Refunded Bonds on the Call Date, the cash balance on deposit in the Refunding Account as of
the Call Date.
Article 7. Concerning the Paying Agent and Escrow Agent
Section 7.1. Representations.
The Escrow Agent hereby represents that it has all necessary power and authority to enter
into this Agreement and undertake the obligations and responsibilities imposed upon it herein,
and that it will carry out all of its obligations hereunder.
Exhibit A -4 PA20287_CMW120287_A7G 09/10113
Section 7.2. Limitation on Liability.
The liability of the Escrow Agent to transfer funds for the payment of the principal of and
interest on the Refunded Bonds shall be limited to the proceeds of the Escrowed Securities and
the cash balances from time to time on deposit in the Refunding Account. Notwithstanding any
provision contained herein to the contrary, the Escrow Agent shall have no liability whatsoever
for the insufficiency of funds from time to time in the Refunding Account or any failure of the
obligors of the Escrowed Securities to make timely payment thereon, except for the obligation to
notify the City promptly of any such occurrence.
The recitals herein and in the proceedings authorizing the Bonds shall be taken as the
statements of the City and shall not be considered as made by, or imposing any obligation or
liability upon, the Escrow Agent.
It is the intention of the parties that the Escrow Agent shall never be required to use or
advance its own funds or otherwise incur personal financial liability in the performance of any of
its duties or the exercise of any of its rights and powers hereunder.
The Escrow Agent shall not be liable for any action taken or neglected to be taken by it in
good faith in any exercise of reasonable care and believed by it to be within the discretion or
power conferred upon it by this Agreement, nor shall the Escrow Agent be responsible for the
consequences of any error of judgment; and the Escrow Agent shall not be answerable except for
its own action, neglect or default, nor for any loss unless the same shall have been through its
negligence or want of good faith.
Unless it is specifically otherwise provided herein, the Escrow Agent has no duty to
determine or inquire into the happening or occurrence of any event or contingency or the
performance or failure of performance of the City with respect to arrangements or contracts with
others, with the Escrow Agent's sole duty hereunder being to safeguard the Refunding Account,
to dispose of and deliver the same in accordance with this Agreement. If, however, the Escrow
Agent is called upon by the terms of this Agreement to determine the occurrence of any event or
contingency, the Escrow Agent shall be obligated, in making such determination, only to
exercise reasonable care and diligence, and in event of error in making such determination the
Escrow Agent shall be liable only for its own misconduct or its negligence. In determining the
occurrence of any such event or contingency the Escrow Agent may request from the City or any
other person such reasonable additional evidence as the Escrow Agent in its discretion may deem
necessary to determine any fact relating to the occurrence of such event or contingency, and in
this connection may make inquiries of, and consult with, among others, the City at any time.
Section 7.3. Successor Escrow Agents.
If at any time the Escrow Agent or its legal successor or successors should become
unable, through operation or law or otherwise, to act as Escrow Agent hereunder, or if its
property and affairs shall be taken under the control of any state or federal court or
administrative body because of insolvency or bankruptcy or for any other reason, a vacancy shall
forthwith exist in the office of Escrow Agent hereunder. In such event the City, by appropriate
Exhibit A-5 PA20287 CMWA20287_A7G 09/10/13
action, promptly shall appoint an Escrow Agent to fill such vacancy. If no successor Escrow
Agent shall have been appointed by the City within 60 days, a successor may be appointed by the
owners of a majority in principal amount of the Refunded Bonds then outstanding by an
instrument or instruments in writing filed with the City, signed by such owners or by their duly
authorized attorneys -in -fact. If, in a proper case, no appointment of a successor Escrow Agent
shall be made pursuant to the foregoing provisions of this Section within three months after a
vacancy shall have occurred, the owner of any Refunded Bond may apply to any court of
competent jurisdiction to appoint a successor Escrow Agent. Such court may thereupon, after
such notice, if any, as it may deem proper, prescribe and appoint a successor Escrow Agent.
Any successor Escrow Agent shall be a corporation organized and doing business under
the laws of the United States or any state, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $100,000,000 and subject to the
supervision or examination by federal or state authority.
Any successor Escrow Agent shall execute, acknowledge and deliver to the City and the
Escrow Agent an instrument accepting such appointment hereunder, and the Escrow Agent shall
execute and deliver an instrument transferring to such successor Escrow Agent, subject to the
terms of this Agreement, all the rights, powers and trusts of the Escrow Agent hereunder. Upon
the request of any such successor Escrow Agent, the City shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor Escrow Agent
all such rights, powers and duties.
The obligations assumed by the Escrow Agent pursuant to this Agreement may be
transferred by the Escrow Agent to a successor Escrow Agent if (a) the requirements of this
Section 7.3 are satisfied; (b) the successor Escrow Agent has assumed all the obligations of the
Escrow Agent under this Agreement; and (c) all money held by the Escrow Agent pursuant to
this Agreement has been duly transferred to such successor Escrow Agent.
Article 8. Miscellaneous
Section 8.1. Notice.
Any notice, authorization, request, or demand required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given when mailed by
registered or certified mail, postage prepaid addressed to the City or the Escrow Agent at the
address shown on Exhibit A attached hereto. The United States Post Office registered or
certified mail receipt showing delivery of the aforesaid shall be conclusive evidence of the date
and fact of delivery. Any party hereto may change the address to which notices are to be
delivered by giving to the other parties not less than ten days prior notice thereof.
Section 8.2. Termination of Responsibilities.
Upon the taking of all the actions as described herein by the Escrow Agent, the Escrow
Agent shall have no further obligations or responsibilities hereunder to the City, the owners of
the Refunded Bonds or to any other person or persons in connection with this Agreement.
Exhibit A -6 PA20287_CMVN20287_A7G 09/10/13
Section 8.3. Binding Agreement.
This Agreement shall be binding upon the City and the Escrow Agent and their respective
successors and legal representatives, and shall inure solely to the benefit of the owners of the
Refunded Bonds, the City, the Escrow Agent and their respective successors and legal
representatives.
Section 8.4. Severability.
In case any one or more of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall
be construed as if such invalid or illegal or unenforceable provision had never been contained
herein.
Section 8.5. Washington Law Governs.
This Agreement shall be governed exclusively by the provisions hereof and by the
applicable laws of the state of Washington.
Section 8.6. Time of the Essence.
Time shall be of the essence in the performance of obligations from time to time imposed
upon the Escrow Agent by this Agreement.
Section 8.7. Notice to S &P.
In the event that this agreement or any provision thereof is severed, amended or revoked,
the City shall provide written notice of such severance, amendment or revocation to Standard &
Poor's Ratings Services, 55 Water Street, New York, New York 10041, Attention: Refunded
Bonds Municipal Bond Department..
Section 8.8. Amendments.
This Agreement shall not be amended except to cure any ambiguity or formal defect or
omission in this Agreement. No amendment shall be effective unless the same shall be in
writing and signed by the parties thereto. No such amendment shall adversely affect the rights of
the holders of the Refunded Bonds. No such amendment shall be made without first receiving
written confirmation from the rating agencies, (if any) which have rated the Refunded Bonds that
such administrative changes will not result in a withdrawal or reduction of its rating then
assigned to the Refunded Bonds. If this Agreement is amended, prior written notice and copies
of the proposed changes shall be given to the rating agencies which have rated the Refunded
Bonds.
Exhibit A -7 P A20287_CMMO287_A7G 09/10/13
EXECUTED as of the date first written above.
CITY OF YELM, WASHINGTON
City Representative
U.S. BANK NATIONAL ASSOCIATION
Authorized Signatory
Exhibit A -
Addresses of the City and the Escrow Agent
Exhibit B -
Description of the Refunded Bonds
Exhibit C -
Schedule of Debt Service on Refunded Bonds
Exhibit D -
Description of Beginning Cash Deposit
Exhibit E -
Escrow Fund Cash Flow
Appendix A -
Notice of Redemption for the Refunded Bonds
Appendix B -
Notice of Defeasance for the Refunded Bonds
Exhibit A -8 PA20287 CMVVV0287 A7G 09/10/13
EXHIBIT A
Addresses of the City and Escrow Agent
City: City of Yelm
105 Yelm Avenue West
Yelm, WA 98597
Attention: City Treasurer
Escrow Agent: U.S. Bank National Association
Corporate Trust Services PD- WA -T7CT
1420 Fifth Avenue, 7th Floor
Seattle, WA 98101
Attention: Greg E. Skutnik, Assistant Vice President
Exhibit A -A -1 P120287 CMM20287 A7G 09110/13
Maturity Years
(December 1)
EXHIBIT B
Description of the Refunded Bonds
City of Yelm, Washington
Water Revenue Bonds, 2003
(the "Refunded Bonds ")
Principal Amounts Interest Rates
2013
$120,000
4.25%
2014
130,000
4.40
2015
135,000
4.50
2016
140,000
4.60
2017
145,000
4.75
2022
855,000
5.25
Exhibit A -13-1 PA20287 CMVN20287 A7G 09/10/13
EXHIBIT C
Schedule of Debt Service on Refunded Bonds
Principal/
Date Interest Redemption Price Total
11/01/2013 $ $ 1,525,000 $
TOTAL $ $ $
Exhibit F, -C -1 PA20287 CMVN20287 A7G 09/10/13
I. Cash: $
EXHIBIT D
Escrow Deposit
Exhibit A -D -1 P120287 CMMO287 A7G 09/10/13
Date
9/ —/2013
11/01/2013
EXHIBIT E
Refunding Account Cash Flow
Escrow Net Escrow Excess
Requirement Receipts Receipts
Exhibit A -E -1
Cash Balance
P:120287_CMVN20287_A7G 09/10/13
APPENDIX A -1
Notice of Redemption*
City of Yelm, Washington
Water Revenue Refunding Bonds, 2003
NOTICE IS HEREBY GIVEN that the City of Yelm, Washington, has called for
redemption on November 1, 2013, its outstanding Water Revenue Bonds, 2003 (the "Bonds ").
The Bonds will be redeemed at a price of one hundred percent (100 %) of their principal
amount, plus interest accrued to November 1, 2013. The redemption price of the Bonds is
payable on presentation and surrender of the Bonds at the office of:
The Bank of New York Mellon
Global Corporate Trust
2001 Bryan Street, 9th Floor
Dallas, Texas 75201
Wells Fargo Bank, National
Association
-or- Corporate Trust Department
14th Floor - M/S 257
999 Third Avenue
Seattle, WA 98104
Interest on all Bonds or portions thereof which are redeemed shall cease to accrue on
November 1, 2013.
The following Bonds are being redeemed:
Maturity Year
Principal
Interest
CUSIP
(December 1)
Amount
Rate
Nos.
_
2013
$120,000
4.25%
98581 RAM3
2014
130,000
4.40
98581RANI
2015
135,000
4.50
98581RAP6
2016
140,000
4.60
98581 RAQ4
2017
145,000
4.75
98581 RAR2
2022
855,000
5.25
98581RASO
By Order of the City of Yelm, Washington
The Bank of New York Mellon, as Paying Agent
Dated:
* This notice shall be given not more than 60 nor less than 30 days prior to November 1, 2013, by first -class
mail to each registered owner of the 2003 Bonds. In addition notice shall be mailed to The Depository Trust
Company of New York, New York; Martin Nelson & Co., Inc., and to the Municipal Securities Rulemaking Board.
Exhibit A, Page 1 - Appendix A -1 P A20287_CMVN20287_A7G 09/10/13
Withholding of 28% of gross redemption proceeds of any payment made within the
United States may be required by the Jobs and Growth Tax Relief Reconciliation Act of 2003
(the "Act ") unless the Paying Agent has the correct taxpayer identification number (social
security or employer identification number) or exemption certificate of the payee. Please furnish
a properly completed Form W -9 or exemption certificate or equivalent when presenting your
Bonds.
Exhibit A, Page 2 - Appendix A -1 P:\20287_CMVV\20287_A7G 09/10/13
APPENDIX B*
Notice of Defeasance*
City of Yelm, Washington
Water Revenue Bonds, 2003
NOTICE IS HEREBY GIVEN to the owners of that portion of the above - captioned
bonds with respect to which, pursuant to an Escrow Agreement dated September 25, 2013, and
between the City of Yelm, Washington (the "City ") and U.S. Bank National Association, Seattle,
Washington (the "Escrow Agent "), the City has deposited into an escrow account, held by the
Escrow Agent, cash sufficient to provide money sufficient to pay each year, to and including the
respective maturity or redemption dates of such bonds so provided for, the principal thereof and
interest thereon (the "Defeased Bonds "). Such Defeased Bonds are therefore deemed to be no
longer outstanding pursuant to the provisions of Ordinance No. 776 of the City, authorizing the
issuance of the Defeased Bonds but will be paid by application of the assets of such escrow
account.
The Defeased Bonds are described as follows:
Water Revenue Bonds, 2003 (dated May 5, 2003)
Maturity Year
Principal
Interest
CUSIP
(December 1)
Amount
Rate
Nos.
2013
$120,000
4.25%
98581 RAM3
2014
130,000
4.40
98581RANI
2015
135,000
4.50
98581RAP6
2016
140,000
4.60
98581RAQ4
2017
145,000
4.75
98581RAR2
2022
855,000
5.25
98581RASO
Information for Individual Registered Owner
The addressee of this notice is the registered owner of Bond Certificate No. of the
Defeased Bonds described above, which certificate is in the principal amount of $
.2013
* This notice shall be given immediately by first class mail to each registered owner of the Defeased Bonds.
In addition notice shall be mailed to The Depository Trust Company of New York, New York; The Bank of New
York Mellon, as Fiscal Agent; Martin Nelson & Co., Inc., and to the Municipal Securities Rulemaking Board.
Exhibit A, Page 1 - Appendix B -1 PA20287_CMV\A20287_A7G 09/10/13
EXHIBIT B
COSTS OF ISSUANCE AGREEMENT
CITY OF YELM, WASHINGTON
WATER REVENUE REFUNDING BONDS, 2013
THIS COSTS OF ISSUANCE AGREEMENT, dated as of September _, 2013 (herein,
together with any amendments or supplements hereto, called the "Agreement "), is entered into
by and between the City of Yelm, Washington, (herein called the "City ") and U.S. Bank
National Association, Seattle, Washington, as Escrow Agent (herein, together with any successor
in such capacity, called the "Escrow Agent ").
WITNESSETH:
WHEREAS, pursuant to Ordinance No. 974 passed on September 10, 2013 (the "Bond
Ordinance "), the City has determined to issue its Water Revenue Refunding Bonds, 2013 (the
"Bonds "); and
WHEREAS, simultaneously herewith, the City is entering into an Escrow Deposit
Agreement, dated , 2013 under which the Escrow Agent will hold invested
proceeds of the Bonds in order to pay and redeem the 2003 Bonds under the terms set forth
therein; and
WHEREAS, certain proceeds of the Bonds will be delivered to the Escrow Agent on the
date of issuance of the Bonds that are required to be disbursed to pay costs of issuance of the
Bonds; and
WHEREAS, the Escrow Agent has agreed, without additional compensation to disburse
the Bond proceeds received to pay costs of issuance under the terms of this Agreement;
Section 1. Deposit in the Costs of Issuance Fund.
The Escrow Agent has created on its books a special trust fund and escrow fund to be
known as the Costs of Issuance Fund. The Escrow Agent agrees that upon receipt it will deposit
to the credit of the Costs of Issuance Fund Account the sum of $ to pay those costs of
issuance set forth on Attachment A. Such deposit, all proceeds therefrom, and all cash balances
on deposit therein shall be the property of the Costs of Issuance Fund to pay those costs of
issuance set forth on Attachment A upon receipt of invoices. If any of the $ deposit
allocated for costs of issuance for the Bonds remains unspent on , 2013, the Escrow
Agent shall transfer such unspent amount to the City, and this Agreement shall be deemed fully
performed and terminated.
Section 2. Investments.
The Escrow Agent shall not have any power or duty to invest or reinvest any money held
hereunder.
Exhibit B -1 P \20287_CMVV120287_A7G 09110/13
Section 3. Limitation on Liability.
The liability of the Escrow Agent to transfer funds for the payment of the costs of
issuance identified herein shall be limited to the proceeds of the Bonds delivered to the Escrow
Agent.
Section 4. Compensation.
The City shall pay to the Escrow Agent fees for performing the services hereunder and
under the Escrow Agreement for the expenses incurred or to be incurred by the Escrow Agent in
the administration of this Agreement and the Escrow Agreement pursuant to the terms of the Fee
Schedule attached as Attachment B. The Escrow Agent hereby agrees that in no event shall it
ever assert any claim or lien against funds held under the Escrow Agreement for any fees for its
services, whether regular or extraordinary, as Escrow Agent, or in any other capacity, or for
reimbursement for any of its expenses as Escrow Agent or in any other capacity.
Section 5. Notice.
Any notice, authorization, request, or demand required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given when mailed by
registered or certified mail, postage prepaid addressed to the City or the Escrow Agent at the
address shown on Exhibit A to the Escrow Agreement.
Section 6. Washington Law Governs.
This Agreement shall be governed exclusively by the provisions hereof and by the
applicable laws of the state of Washington.
EXECUTED as of the date first written above.
CITY OF YELM, WASHINGTON
City Representative
U.S. BANK NATIONAL ASSOCIATION
Authorized Signer
Attachment A — Costs of Issuance Schedule
Attachment B — Escrow Agent Fee Schedule
Exhibit B -2 P \20287 CMVN20287 A7G 09/10/13
ATTACHMENT A
COSTS OF ISSUANCE SCHEDULE
Escrow Agent Fee (U.S. Bank National
Association) .................... ............................... $
POS /OS Preparation (D.A. Davidson & Co.)
Bond Counsel Fee (K &L Gates LLP) ................
Rating Agency Fee (S &P) ... ...............................
Contingency $.
Total: .............................................................. $
Attachment A to Exhibit B, page 1 P \20287 CMW120287_A7G 09/10/13
ATTACHMENT B
ESCROW AGENT FEE SCHEDULE
[See Attached]
Attachment B to Exhibit B, page 1 PA20287_CMW120287_A7G 09/10/13
CERTIFICATE
I, the undersigned, City Clerk of the City of Yelm, Washington (the "City ") and keeper of
the records of the City Council (the "Council "), DO HEREBY CERTIFY:
1. That the attached ordinance is a true and correct copy of Ordinance No. 974 of the
Council (the "Ordinance "), duly passed at a regular meeting thereof held on the 10th day of
September, 2013.
2. That said meeting was duly convened and held in all respects in accordance with
law, and to the extent required by law, due and proper notice of such meeting was given; that a
legal quorum was present throughout the meeting and a legally sufficient number of members of
the Council voted in the proper manner for the passage of the Ordinance; that all other
requirements and proceedings incident to the proper passage of the Ordinance have been duly
fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate.
2013.
IN WITNESS WHEREOF, I have hereunto set my hand this day of September,
' City Clerk
PA20287 CMVN20287 A7G 09/10113