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655 Bond Anticipation LID 1CITY OF YELM, WASHINGTON LOCAL IMPROVEMENT DISTRICT NO. 1 BOND ANTICIPATION NOTES, 1999 ORDINANCE NO. 655 AN ORDINANCE OF THE CITY OF YELM, WASHINGTON, PROVIDING FOR THE ISSUANCE AND SALE OF BOND ANTICIPATION NOTES FOR THE PURPOSE OF PROVIDING INTERIM FINANCING THE IMPROVEMENTS WITHIN LOCAL IMPROVEMENT DISTRICT NO. 1 IN THE AGGREGATE PRINCIPAL AMOUNT OF $1,500,000; PROVIDING THE FORM, TERMS AND MATURITY OF SAID NOTES; CREATING A SPECIAL FUND FOR THE PAYMENT OF SAID NOTES; AUTHORIZING A PRELIMINARY OFFICIAL STATEMENT; AND APPROVING THE SALE OF SUCH NOTES. APPROVED ON FEBRUARY 10, 1999 PREPARED BY: PRESTON GATES & ELLIS LLP Seattle, Washington CITY OF YELM ORDINANCE NO. 655 AN ORDINANCE of the City of Yelm, Washington, providing for the issuance and sale of bond anticipation notes for the purpose of providing interim financing the improvements within Local Improvement District No. 1 in the aggregate principal amount of $1,500,000; providing the form, terms and maturity of said notes; creating a special fund for the payment of said notes; authorizing a preliminary official statement; and approving the sale of such notes. WHEREAS, the City formed Local Improvement District No. 1 by Ordinance No. 654 on this February 10, 1999 (the "LID No. 1 "); and WHEREAS, pursuant to RCW Ch. 35.45, the City is authorized to issue local improvement district bonds to provide financing for improvements to be made in LID No. l; and WHEREAS, pursuant to RCW Ch. 39.50, the City is authorized to issue short term obligations in anticipation of the issuance of such local improvement district bonds; and WHEREAS, in order to provide interim financing for the costs of the improvements LID No. 1, it is found to be in the best interest of the City and its residents to issue and sell its bond anticipation notes in the principal amount of $1,500,000; and WHEREAS, this City Council has determined that it is in the best interest of the residents of the City that such obligations be issued under the terms and conditions set forth in this ordinance; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF YELM, WASHINGTON, DOES ORDAIN, as follows: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: "Act" means Chapter 39.50 RCW. "Beneficial Owner" means any person that has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Note (including persons holding Notes through nominees, depositories or other intermediaries). "Bonds" means the Local Improvement District bonds of the City to be issued for the purpose of providing permanent financing for the Improvements. "Code" means the federal Internal Revenue Code of 1986, as amended from time to time, and the applicable regulations thereunder. "City" means City of Yelm, Washington, a municipal corporation duly organized and existing under and by virtue of the laws of the State of Washington. "LID No. 1 Fund" means the City's Local Improvement District No. 1 Fund created pursuant to Section 8 of this ordinance. City. "Council" means the duly constituted City Council as the general legislative body of the TIC" means The Depository Company, New York, New York, a limited purpose trust company organized under the laws of the State of New York, as depository for the Notes pursuant to Section 4 hereof. "Government Obli ati�ons" means those obligations now or hereafter defined as such in chapter 39.53 RCW. "Guaranty Fund" means the City's Guaranty Fund maintained pursuant to RCW ch. 35.54. The Treasurer is hereby authorized and directed to establish and maintain a Guaranty Fund for the benefit of the holders of all obligations permitted to be secured thereby. "Improvements" means the improvements to be undertaken within LID No. 1. "Letter of Representations" means the blanket issuer letter of representations from the City to DTC. "MSRB" means the Municipal Securities Rulemaking Board or any successor to its functions. -2- CM W3TM. DOC 99/02/10 "Note Fund" means the 1999 LID No. 1 Note Redemption Fund, created in the office of the Treasurer by Section 5 of this ordinance. "Note Register" means the registration books showing the name, address and tax identification number of each registered owner of the Notes, maintained pursuant to Section 149(a) of the Code. "Note Registrar" means the fiscal agency of the State of Washington in either Seattle, Washington, or New York, New York, for the purposes of registering and authenticating the Notes, maintaining the Note Register, effecting transfer of ownership of the Notes and paying interest on and principal of the Notes. "Notes" means the City of Yelm, Washington, Local Improvement District No. 1 Bond Anticipation Notes, 1999, the sale and issuance of which are authorized herein. "NRMSIR" means a nationally recognized municipal securities information repository. "Registered Owner" means the person named as the registered owner of a Note in the Note Register. "SEC" means the Securities and Exchange Commission. "SID" means a state information depository for the State of Washington if one is hereafter created. "Treasurer" means the Finance Director of the City, or any successor to the functions of the Finance Director. Section 2. Authorization of Notes. For the purpose of providing interim financing of the Improvements pending their completion and the issuance of the Bonds, the Council hereby authorizes the issuance and sale of its bond anticipation notes in the aggregate principal amount of $1,500,000 (the "Notes "). The Notes shall be designated as the "City of Yelm, Washington, Local Improvement District No. 1 Bond Anticipation Notes, 1999," shall be dated as of March 1, 1999, shall be issued in fully registered form in the denomination of $25,000 or any integral multiple of $5,000 in excess thereof, and shall bear interest at a per annum rate of -3- CMW3TM.DOC 99/02/10 4.00 %, payable at maturity on December 1, 1999. Interest on the Notes shall be calculated on the basis of a 360 -day year with 30 -day months. The Notes shall be an obligation only of the Note Fund and the Guaranty Fund and shall be payable and secured as provided herein. The Notes shall not be deemed to constitute a general obligation or a pledge of the faith and credit or taxing power of the City or the State of Washington. Section 3. Optional Redemption. The Notes are redeemable in whole on September 1, 1999, October 1, 1999 and November 1, 1999 at a price of par plus accrued interest to the date of redemption. For so long as the Notes are held in book -entry form, the manner of selection of the Notes to be redeemed shall be in accordance with the operational arrangements of DTC referred to in the Letter of Representations. In addition, the City may purchase the Notes offered to it at any time at any price deemed reasonable by the Treasurer. Section 4. Registration, Exchange and Payments. (a) Registrar /Note Register. The City hereby adopts the system of registration approved by the Washington State Finance Committee. The City shall cause a Note register to be maintained by the Note Registrar. So long as any Notes remain outstanding, the Note Registrar shall make all necessary provisions to permit the exchange or registration or transfer of Notes at its principal office. The Note Registrar shall keep, or cause to be kept, at its principal corporate trust office, sufficient records for the registration and transfer of the Notes which shall at all times be open to inspection by the City. The Note Registrar is authorized, on behalf of the City, to authenticate and deliver Notes transferred or exchanged in accordance with the provisions of such Notes and this ordinance and to carry out all of the Note Registrar's powers and duties under this ordinance. The Note Registrar shall be responsible for its representations contained in the Certificate of Authentication on the Notes. The Note Registrar may become the owner of Notes with the same rights it would have if it were not the Note Registrar, and to the extent permitted by law, may act as depositary for and permit any of its 4- CMW3TM.DOC 99/02/10 officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Note owners. (b) Registered Ownership. The City and the Note Registrar, each in its discretion, may deem and treat the Registered Owner of each Note as the absolute owner thereof for all purposes, and neither the City nor the Note Registrar shall be affected by any notice to the contrary. Payment of any such Note shall be made only as described in Section 4(h) hereof, but such registration may be transferred as herein provided. All such payments made as described in Section 4(h) shall be valid and shall satisfy and discharge the liability of the City upon such Note to the extent of the amount or amounts so paid. The City and the Note Registrar shall be entitled to treat the person in whose name any Note is registered as the absolute owner thereof for all purposes of this ordinance and any applicable laws, notwithstanding any notice to the contrary received by the Note Registrar or the City. (c) DTC Acceptance /Letters of Representations. To induce DTC to accept the Notes as eligible for deposit at DTC, the City shall execute and deliver to DTC a Blanket Issuer Letter of Representations. The Notes initially issued shall be held in fully immobilized form by DTC acting as depository pursuant to the terms and conditions set forth therein. Neither the City nor the Note Registrar will have any responsibility or obligation to DTC participants or the persons for whom they act as nominees with respect to the Notes in respect of the accuracy of any records maintained by DTC or any DTC participant, the payment by DTC or any DTC participant of any amount in respect of the principal of or interest on Notes, 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 Note Registrar or to DTC), or any consent given or other action taken by DTC as the Registered Owner. For so long as any Notes 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 its nominee and shall not mean the Beneficial Owners or the owners of any beneficial interest in such Notes. -5- CM W 3TM. DOC 99/02/10 If any Note 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 Note until it is paid. (d) Use of Depository. (i) The Notes shall be registered initially in the name of "Cede & Co. ", as nominee of DTC, with one Note maturing on each of the maturity dates for the Notes in a denomination corresponding to the total principal therein designated to mature on such date. Registered ownership of such immobilized Notes, 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 Treasurer pursuant to subsection (ii) below or such substitute depository's successor; or (C) to any person as provided in subsection (iv) below. 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 Treasurer to discontinue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor), the Treasurer may hereafter appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. (iii) In the case of any transfer pursuant to clause (A) or (B) of subsection (i) above, the Note Registrar shall, upon receipt of all outstanding Notes, together with a written request on behalf of the Treasurer, issue a single new Note for this issue 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 Treasurer. (iv) 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 Treasurer determines that it is in the best interest of the Beneficial Owners of the Notes that such Beneficial Owners be able to obtain such Notes in the form of Note -6- CMW3TM.DOC 99/02/10 certificates, the ownership of such Notes may then be transferred to any person or entity as herein provided, and shall no longer be held in fully immobilized form. The Treasurer shall deliver a written request to the Note Registrar, together with a supply of definitive Notes, to issue Notes as herein provided in any authorized denomination. Upon receipt by the Note Registrar of all then outstanding Notes together with a written request on behalf of the Treasurer to the Note Registrar, new Notes shall be issued in the appropriate denominations and registered in the names of such persons as are requested in such written request. (e) Transfer or Exchange of Registered Ownership; Change in Denominations. The registered ownership of any Note may be transferred or exchanged, but no transfer of any such Note shall be valid unless it is surrendered to the Note Registrar with the assignment form appearing on such Note duly executed by the Registered Owner or such Registered Owner's duly authorized agent in a manner satisfactory to the Note Registrar. Upon such surrender, the Note Registrar shall cancel the surrendered Note and shall authenticate and deliver, without charge to the Registered Owner or transferee therefor, a new Note (or Notes 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 Note, in exchange for such surrendered and cancelled Note. Any Note may be surrendered to the Note Registrar and exchanged, without charge, for an equal aggregate principal amount of Notes of the same date, maturity and interest rate, in any authorized denomination. The Note Registrar shall not be obligated to transfer or exchange any Note during the 15 days preceding any interest payment or principal payment date. (f) Note Registrar's Ownership of Notes. The Note Registrar may become the Registered Owner of any Note with the same rights it would have if it were not the Note 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 Notes. -7- - CMW3TM.DOC 99/02/10 (g) Registration Covenant. The City covenants that, until all Notes have been surrendered and cancelled, it will maintain a system for recording the ownership of each Note that complies with the provisions of Section 149 of the Code. (h) Place and Medium of Payment. Both principal of and interest on the Notes shall be payable in lawful money of the United States of America. For so long as all Notes are in fully immobilized form, payments of principal and interest thereon shall be made as provided in the operational arrangements of DTC as in effect at the time. In the event that the Notes are no longer in fully immobilized form, interest on the Notes shall be paid by check or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing on the Note Register on the 15th day of the month preceding the interest payment date. Principal of the Notes shall be payable upon presentation and surrender of such Notes by the Registered Owners at the principal office of the Note Registrar. Section 5. Note Fund -- Security and Sources of Payment of Notes. There is hereby authorized to be established and the Treasurer is authorized and requested to establish a special fund of the City to be known as the "1999 LID No. 1 Note Redemption Fund" (the "Note Fund "), which fund shall be a trust fund and shall be drawn upon only for the payment of the principal of and interest on the Notes. The City hereby covenants and agrees that on or before December 1, 1999, it will deposit into the Note Fund proceeds of the Bonds or refunding notes or, in the alternative, assessments levied within LID No. 1, in an amount sufficient to pay the principal of and interest on the Notes as the same become due. The Notes shall be obligations only of the Note Fund and the Guaranty Fund of the City. Section 6. Execution and Delivery of Notes. The Notes shall be executed on behalf of the City by the manual or facsimile signature of the Mayor and attested by the manual or facsimile signature of the City Clerk. The official seal of the City shall be impressed or a facsimile thereof imprinted on each Note. In case any officer whose signature shall appear on any Note shall cease to be an officer before the delivery of such Note, such signature shall -8- CM W 3TM. DOC 99/02/10 nevertheless be valid and sufficient for all purposes, and such Note may be authenticated and delivered the same as if such officer had remained in office until such delivery. Only such Notes as shall bear thereon a Certificate of Authentication in the form hereinafter specified in Section 13, manually executed by the Note 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 Notes so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this ordinance. Section 7. Sale of the Notes. The City hereby accepts the offer of Martin Nelson & Co., Inc., Tacoma, Washington, delivered to the City Council on this date to purchase the Notes in accordance with the terms contained in this ordinance and said offer. The City officials are hereby authorized and directed to do everything necessary to complete such sale and delivery of the Notes to the purchaser thereof upon the payment of the purchase price thereof, all in accordance with this ordinance and the offer of Martin Nelson & Co., Inc. The Treasurer is hereby authorized to review and approve on behalf of the City the preliminary and final Official Statements and to execute a certificate evidencing compliance with Securities and Exchange Commission Rule 15c2 -12 relative to the Notes with such additions and changes as may be deemed necessary or advisable to her. The preliminary Official Statement for the Notes is hereby deemed final within the meaning of SEC Rule 15c2 -12. The proper City officials are hereby authorized and directed to do everything necessary for the prompt execution and delivery of the Notes to said purchaser and for the proper application and use of the proceeds of sale thereof. Section 8. Application of Note Proceeds. There is hereby authorized to be created a special fund of the City designated as the "Local Improvement District No. 1 Fund" (the "LID No. 1 Fund "). The proceeds of the Notes received on the closing and delivery of the Notes shall be deposited into the LID No. 1 Fund and used to pay costs of issuance for the Notes and the costs of the completion of the Improvements. -9- CMW3TM.DOC 99/02/10 On or prior to the date of issuance and delivery of the Notes, the City shall deposit the sum of $200,000 into the Guaranty Fund. Such deposit shall be made from any legally available funds of the City Money on hand in the LID No. 1 Fund shall be used, together with other moneys on deposit therein and available therefor, for the undertaking of the Improvements and for paying all expenses incidental thereto (including but not limited to costs of issuance of the Notes, engineering, financing, legal or any other incidental costs) and for repaying any advances heretofore or hereafter made on account of such costs or for redeeming the Notes. All moneys held in the LID No. I Fund may be invested in any legal investment for the City's funds, and all investments shall be scheduled to mature as costs of the Improvements are reasonably anticipated to be incurred. Interest earned and income or profits derived by virtue of investments of moneys in the LID No. 1 Fund may remain in the LID No. 1 Fund and may be used for the payment of Improvements costs. Upon the completion of the Improvements and the payment of all costs thereof, including the payment of all retainages for construction, the balance on hand in the LID No. 1 Fund shall be transferred to the Note Fund, and the LID No. 1 Fund shall be closed. Section 9. Defeasance. In the event that money and/or Government Obligations maturing at such time or times and bearing interest to be earned thereon in amounts sufficient to redeem and retire any or all of the Notes in accordance with their terms are set aside in a special account to effect such redemption or retirement and such money and the principal of and interest on such obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made into the Note Fund for the payment of the principal of and interest on the Notes so provided for and such Notes shall cease to be entitled to any lien, benefit or security of this ordinance except the right to receive the funds so set aside and pledged, and such Notes shall be deemed not to be outstanding hereunder. Section 10. Lost, Destroyed or Mutilated Notes. In the event any Note is lost, destroyed, or mutilated, the City will cause to be issued a new Note, substantially similar to the -10- CM W 3TM. DOC 99/02/10 original, to replace the same, in such manner and upon such reasonable terms and conditions as the Note Registrar may from time to time determine. Section 11. Representations and Warranties. The City hereby makes the following representations, warranties and agreements. (a) The City has full legal right, power and authority (i) to pass this ordinance, (ii) to sell, issue and deliver the Notes as provided herein and (iii) to carry out and consummate all other transactions contemplated by this ordinance. (b) By all necessary official action prior to or concurrently herewith, the City has duly authorized and approved the execution and delivery of, and the performance by the City of its obligations contained in the Notes and this ordinance and the consummation by it of all other transactions contemplated by this ordinance in connection with the issuance of the Notes, and such authorizations and approvals are in full force and effect and have not been amended, modified or supplemented in any material respect. (c) This ordinance constitutes the legal, valid and binding obligation of the City. (d) The Notes, when issued, authenticated and delivered, will constitute the legal, valid and binding obligations of the City, in accordance with their terms. (e) The City is not in breach of or default under any applicable judgment or decree or any loan agreement, ordinance, bond, note, ordinance, agreement or other instrument to which the City is a party or to which the City or any of its property or assets is otherwise subject where such breach or default would have a material adverse effect on the operations or financial condition of the City; and (i) the passage of this ordinance, and (ii) the sale, issuance and delivery of the Notes, and compliance with the provisions on the City's part contained therein, will not conflict with or constitute a breach of or default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, ordinance, agreement or other instrument to which the City is a party or to which the City or any of its property or assets is otherwise subject, nor will any such passage, execution, -11- CMW3TM.DOC 99/02/10 delivery, sale, issuance or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or under the terms of any such law, regulation or instrument, except as provided by the Notes and this ordinance. Section 12. Covenants of the Citv. The City hereby makes the following covenants with the owners of the Notes. (a) Punctual Payment of Notes. The City covenants that amounts on deposit in the Note Fund shall be drawn upon solely for the purpose of paying the principal of and interest on the Notes. The City further covenants that it will duly and punctually pay or cause to be paid the principal of and interest on every Note at the place or places, on the date or dates and in the manner provided in the Notes and herein. The City further covenants and agrees that it will deposit moneys from the sources herein provided or issue refunding notes in such amount and at such time as will enable it to make the deposits into the Note Fund required by Section 5 of this ordinance. (b) Notes to Remain Tax Exempt; Nonarbitrage Covenant. 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 taxation of the interest on the Notes 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 Notes. 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 investment of the proceeds of any Notes or other funds that would result in constituting the Notes "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 a bond issuer whose arbitrage certifications may not be relied upon. -12- CM W 3TM. DOC 99/02/10 Section 13. Form of Notes and Certificate of Authentication. The Notes shall be in substantially the following form: Ea INTEREST RATE: 4.00% REGISTERED OWNER: PRINCIPAL AMOUNT: UNITED STATES OF AMERICA STATE OF WASHINGTON CITY OF YELM LOCAL IMPROVEMENT DISTRICT NO. 1 BOND ANTICIPATION NOTE, 1999 MATURITY DATE: DECEMBER 1, 1999 Im CUSIP NO.: 985816AA5 The City of Yelm, Washington, (the "City "), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date the Principal Amount specified above and to pay interest thereon from March 1, 1999, or the most recent date to which interest has been paid or duly provided for until payment of this note, at the rate of 4.00% per annum, payable on the Maturity Date. Both principal of and interest on this note are payable in lawful money of the United States of America and shall be paid as provided in the Blanket Issuer Letter of Representations (the "Letter of Representations ") from the City to The Depository Trust Company ( "DTC "). Principal shall be paid as provided in the Letter of Representations to the Registered Owner or assigns upon presentation and surrender of this bond at the principal office of the fiscal agencies of the State of Washington in either Seattle, Washington or New York, New York (collectively the 'Bond Registrar "). Interest shall be calculated on the basis of a year of 360 days and twelve 30 -day months. Both principal of and interest on this note are payable out the special fund of the City known as the "1999 LID No. 1 Note Redemption Fund" (the "Note Fund ") as provided by Ordinance No. 655 (the "Note Ordinance "). The definitions contained in the Note Ordinance shall apply to capitalized terms contained herein. The City hereby irrevocably covenants and agrees with the Registered Owner of this note that it will keep and perform all the covenants of this note and of the Note Ordinance to be by it kept and performed. Reference is hereby made to the Note Ordinance for a complete statement of such covenants and for the definition of capitalized terms used herein. This note is one of an authorized issue of notes of like date, interest rate, maturity date and tenor, except as to number and amount, in the aggregate principal amount of $1,500,000. -13- CMW3TM.DOC 99/02/10 The notes of this issue are issued under and in accordance with the provisions of the Constitution and applicable statutes of the State of Washington and the Note Ordinance, approved by the City Council on February 10, 1999 for the purpose of paying part of the costs of improvements in Local Improvement District No. 1 of the City. The notes of this issue are issued in anticipation of the issuance of Local Improvement District bonds authorized by the City to be issued. This note is a special obligation of the City and is payable solely from the Note Fund of the City into which the City has covenanted and agreed to deposit the proceeds of notes. The City has further covenanted to deposit money in the Note Fund from the proceeds of bonds or assessments, including the guaranty fund of the City. The notes of this issue are redeemable in whole at the option of the City on September 1, 1999, October 1, 1999 and November 1, 1999 at a price of par plus accrued interest. This note is not a "private activity bond." The City has designated the notes of this issue as qualified tax exempt obligations for investment by financial institutions pursuant to Section 265(b) of the Internal Revenue Code of 1986, as amended. This note shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Note Ordinance until the Certificate of Authentication hereon shall have been manually signed by or on behalf of the Note 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 note have happened, been done and performed and that the issuance of this note and the notes of this issue does not violate any constitutional, statutory or other limitation upon the amount of indebtedness that the City may incur. IN WITNESS WHEREOF, the City of Yelm, Washington, has caused this note to be signed with the manual or facsimile signature of the Mayor and attested by the manual or facsimile signature of the City Clerk, and the seal of the City to be impressed or a facsimile thereof to be imprinted hereon, as of this 1 st day of March, 1999. ATTEEST: /s/ Agne . Bennick, City Clerk CITY OF YELM, WASHINGTON By /s/ k/z� w,��� Martha M. Parsons, Mayor Pro -Tem -14- CMW3TM.DOC 99/02110 The Note Registrar's Certificate of Authentication on the Notes shall be in substantially the following form: CERTIFICATE OF AUTHENTICATION This note is one of the notes described in the within- mentioned Note Ordinance and is one of the Local Improvement District No. 1 Bond Anticipation Notes, 1999 of the City of Yelm, Washington, dated March 1, 1999. WASHINGTON STATE FISCAL AGENCY, Note Registrar Authorized Signer Section 14. Tax Designation. The City hereby designates the Notes as "qualified tax exempt obligations" for purchase by financial institutions pursuant to 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 the year 1999. Section 15. General Authorization. The officials of the City are hereby authorized to do and perform from time to time any and all acts and things consistent with this ordinance necessary or appropriate to carry the same into effect. Section 16. Effect of Partial Invalidity. In case any one or more of the provisions of this ordinance or of the Notes shall for any reason be held to be illegal or invalid, such illegality or invalidity shall not affect any other provision of this ordinance or of said Notes, but this ordinance and said Notes shall be construed and enforced as if such illegal or invalid provision had not been contained therein. In case any covenant, obligation or agreement contained in the Notes or in this ordinance shall for any reason be held to be in violation of law, then such covenant, obligation or agreement shall be deemed to be the covenant, obligation or agreement of the City to the full extent permitted by law. Section 17. Effect of Covenants, Etc. All covenants, obligations and agreements of the City contained in this ordinance shall be deemed to be covenants, obligations and agreements -15- CMW3TM.DOC 99/02/10 of the City to the full extent authorized by the Act and permitted by the Constitution of the State of Washington. No covenant, obligation or agreement contained herein shall be deemed to be a covenant, obligation or agreement of any present or future official, member, agent or employee of the City in his or her individual capacity, and neither the members of the City Council nor any officer thereof executing the Notes shall be liable personally on the Notes or be subject to any personal liability or accountability by reason of the issuance thereof. No member, officer, agent or employee of the City shall incur any liability in acting or proceeding or in not acting or proceeding, in good faith in accordance with the terms of this ordinance. Section 18. Undertaking to Provide Ongoing Disclosure. (a) Contract /Undertaking. This section constitutes the City's written undertaking for the benefit of the owners and beneficial owners of the Notes as required by Section (b)(5) of the Rule. The Notes have a maturity of 18 months or less. (b) Material Events. The City agrees to provide or cause to be provided, in a timely manner, to the SID, if any, and to each NRMSIR or to the MSRB notice of the occurrence of any of the following events with respect to the Notes, if material: 1. Principal and interest payment delinquencies; 2. Nonpayment- related defaults; 3. Unscheduled draws on debt service reserves reflecting financial difficulties; 4. Unscheduled draws on credit enhancements reflecting financial difficulties; 5. Substitution of credit or liquidity providers or their failure to perform; 6. Adverse tax opinions or events affecting the tax- exempt status of the Notes; 7. Modifications to the rights of Noteholders; 8. Note calls (optional, contingent or unscheduled Note calls other than scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act Release 34- 23856); -16- CMW3TM.DOC 99/02/10 9. Defeasances; 10. Release, substitution or sale of property securing repayment of the Notes; and 11. Rating changes. Solely for purposes of disclosure, and not intending to modify this undertaking, the City advises that no credit enhancements or property secure payment of the Notes. (c) Termination /Modification. The City's obligations to provide notices of material events shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Notes. Any provision of this section shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does not apply to the Notes and (2) notifies each NRMSIR and the SID, if any, of such opinion and the cancellation of this section. (d) Note Owner's Remedies Under This Section. The right of any Note owner or beneficial owner of Notes to enforce the provisions of this section shall be limited to a right to obtain specific enforcement of the City's obligations under this section, and any failure by the City to comply with the provisions of this undertaking shall not be an event of default with respect to the Notes. 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 Notes, including persons holding Notes through nominees or depositories. Section 19. Ordinance to Constitute Contract. In consideration of the purchase and acceptance of any of the Notes authorized to be issued hereunder by those who shall hold the same from time to time, this ordinance shall be deemed to be and shall constitute a contract between the City and such owners, and the covenants and agreements set forth in this ordinance to be performed on behalf of the City shall be for the equal benefit, protection and security of the owners of any and all of the Notes, all of which shall be of equal rank without preference, priority or distinction of any of the Notes over any other thereof. -17- CMW3TM.DOC 99/02/10 APPROVED by the City Council of City of Yelm, Washington, at a regular meeting thereof held this 10th day of February, 1999. ATTEST: AglWes P. Bennick, City Clerk CITY OF YELM, WASHINGTON Martha M. Parsons, Mayor Pro Tem -18- CMW3TM.DOC 99/02110 CERTIFICATE I, the undersigned, City Clerk of 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. 655 of the Council (the "Ordinance "), duly approved at a regular meeting thereof held on the 10th day of February, 1999. 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. IN WITNESS WHEREOF, I have hereunto set my hand this 10th day of February, 1999. [SEAL] dG Agrles P. Bennick, Clerk CMW3TM.DOC 99/02/10 Table of Contents P,e Section1. Definitions .......................................................................... ............................... 1 Section 2. Authorization of Notes ........................................................ ............................... 3 Section 3. No Prior Redemption .......................................................... ............................... 4 Section 4. Registration, Exchange and Payments ................................. ............................... 4 Section 5. Note Fund -- Security and Sources of Payment of Notes ....... ............................... 8 Section 6. Execution and Delivery of Notes ........................................ ............................... 8 Section 7. Sale of the Notes ................................................................. ............................... 9 Section 8. Application of Note Proceeds ............................................. ............................... 9 Section9. Defeasance ........................................................................ ............................... 10 Section 10. Lost, Destroyed or Mutilated Notes .................................. ............................... 10 Section 11. Representations and Warranties ........................................ ............................... 11 Section 12. Covenants of the City ....................................................... ............................... 12 Section 13. Form of Notes and Certificate of Authentication ............... ............................... 13 Section14. Tax Designation ................................................................ ............................... 15 Section 15. General Authorization ....................................................... ............................... 15 Section 16. Effect of Partial Invalidity ................................................ ............................... 15 Section 17. Effect of Covenants, Etc ................................................... ............................... 15 Section 18. Undertaking to Provide Ongoing Disclosure ..................... ............................... 16 Section 19. Ordinance to Constitute Contract ...................................... ............................... 17 -1- CM W 3TM. DOC 99102/10