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HomeMy WebLinkAboutOrd 1735 - Water and Sewer Revenue Bonds for Waterworks Utilityf i-o gefia L, 1 3 2 t City of Tukwila Washington Ordinance No. / 73S - AN ORDINANCE OF THE CITY OF TUKWILA, WASHINGTON, RELATING TO THE WATERWORKS UTILITY OF THE CITY, INCLUDING THE SYSTEM OF SEWERAGE AS A PART THEREOF; SPECIFYING, ADOPTING AND ORDERING TO BE CARRIED OUT A SYSTEM OR PLAN OF ADDITIONS TO AND BETTERMENTS AND EXTENSIONS OF THE WATERWORKS UTILITY; PROVIDING FOR THE ISSUANCE OF $4,500,000 PRINCIPAL AMOUNT OF WATER AND SEWER REVENUE BONDS, 1995, OF THE CITY FOR THE PURPOSE OF PROVIDING A PART OF THE COST OF THAT SYSTEM OR PLAN, AND TO PAY COSTS OF ISSUING THE BONDS; FIXING THE DATE, FORM, MATURITIES, INTEREST RATES, TERMS AND COVENANTS OF SUCH BONDS; PROVIDING FOR BOND INSURANCE; AND PROVIDING FOR THE SALE AND DELIVERY OF SUCH BONDS TO LEHMAN BROTHERS INC., SEATTLE, WASHINGTON; AND DECLARING AN EMERGENCY. WHEREAS, the City of Tukwila, Washington (then the Town of Tukwila), by Ordinance No. 320, passed by the Town Council and approved by the Mayor on May 1,1961, and subsequently amended, specified and adopted a system or plan for a system of sewerage for the Town and provided that system of sewerage become a part of the waterworks utility of the Town, and authorized the issuance and sale of Water and Sewer Revenue Bonds,1961, in the principal amount of not to exceed $170,000 to pay a portion of the cost thereof, such waterworks utility, as hereinafter referred to, being deemed to include the systems of water supply and distribution and sanitary sewage disposal, as combined by Ordinance No. 320 pursuant to RCW 35.67.320, and any additions thereto and extensions, renewals and betterments thereof hereafter made or constructed; and WHEREAS, $170,000 par value Water and Sewer Revenue Bonds,1961, of the City (the '1961 Bonds'), were issued pursuant to Ordinance No. 334 and are payable from the gross revenues of the waterworks utility, including as a part of such revenues a water and sanitary sewage disposal service surcharge payable under a contract between the City and Puget Western, Inc., a Washington corporation, all of which bonds have matured or have been redeemed and retired; and WHEREAS, pursuant to Section 7 of Ordinance No. 334, as amended and restated by Section 16 of Ordinance No.1575, and as further amended and restated by Section 19 of Ordinance No.1676, the City of Tukwila, Washington (the 'City'), reserved the right to issue water and sewer revenue bonds having a charge and lien upon the gross revenues of the waterworks utility on a parity with the lien and charge upon such gross revenues of the 1961 Bonds for the payment of the principal thereof and interest thereon if the following conditions are met and complied with at the time of issuance of those bonds: "(a) All payments then required by this Ordinance or any other ordinance hereafter enacted pertaining to Outstanding Parity Bonds, the Bonds and to any such additional or refunding water and sewer revenue bonds hereafter issued shall have been made into the Bond Fund and maintained intact therein; and "(b) The revenues of the Waterworks Utility, including any water and sanitary sewage disposal service surcharge payable under any Agreement between the City and any third party, for any twelve months out of the immediately preceding fifteen months' period adjusted to reflect a year's net income from each customer of the Waterworks Utility connected to such utility at the end of that twelve- month period who has not been a customer for the entire twelve -month period, plus the additional -1- revenue, from whatever source and of whatever nature, anticipated to be received from the proposed improvement in connection with which such additional water and sewer revenue bonds are to be issued, shall be deemed sufficient, after the payment of normal operation and maintenance costs and taxes, to equal at least 1.35 times the average annual principal and interest requirements of all then outstanding water and sewer revenue bonds, including the Bonds and of the additional or refunding bonds proposed to be so issued, but except the principal requirements of any term bond maturity year or years, as defined in Section 8 of this Ordinance, of any bonds payable out of the Bond Fund. Such determination of the sufficiency of the revenues shall be made and certified to by an independent professional registered engineer experienced in municipal utilities and licensed to practice in the State of Washington; except, that if such additional bonds proposed to be so issued are for the sole purpose of refunding water and sewer revenue bonds, such certification of coverage shall not be required if the amount required for payment of the principal and interest in each year for the refunding bonds is not increased over the amount required for the bonds to be refunded thereby and the maturities of said refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby; and "(c) The ordinance authorizing the issuance of such additional bonds shall provide that an amount equal to the average annual debt service of the additional bonds proposed to be issued shall be accumulated as a reserve in the Bond Fund, said amounts to be accumulated by monthly deposits commencing not later than one month after the date of issuance of the additional bonds and to be accumulated within five years after the date of issuance of such bonds, and said reserve to be maintained in such amounts so long as any of those additional bonds are outstanding to the last maturity thereof. In the case of parity refunding bonds the ordinance authorizing the issuance of such refunding bonds shall provide that the money in the 'Reserve Account' for the bonds to be refunded shall be transferred to the 'Reserve Account' in the Bond Fund, or that the moneys in the 'Reserve Account' for the bonds to be refunded shall be used to redeem such bonds, in which event an amount equal to the average annual debt service for the refunding bonds proposed to be issued shall be accumulated as a reserve in the same manner and within the same times as set forth herein for additional revenue bonds. "In lieu of the accumulation of a reserve in the manner provided in this subsection 7(c), the ordinance authorizing such additional bonds may provide for a cash deposit by a third party with an escrow agent acceptable to the City in an amount equal to the average annual debt service of the additional bonds proposed to be issued, which deposit shall be made on or before the delivery of the additional bonds and shall be conditioned on the payment into the 'Reserve Account of the Bond Fund of amounts necessary to make up any deficiency in the Principal and Interest Account in the Bond Fund to meet maturing installments of either principal or interest on such additional bonds. That third party shall also be bound by agreement with the City to make such additional cash deposits in escrow as are necessary to maintain that deposit at the required level in the event that the original or subsequent deposits are called upon to make up the deficiencies in the Principal and Interest Account of the Bond Fund. Such cash deposits shall remain in escrow at the required level until the moneys in the Reserve Account paid in for those additional bonds equal the average annual debt service of those additional bonds; and "Upon the redemption or defeasance of all of the 1961 Bonds, 1963 Bonds, 1965 Bonds and 1972 Bonds, the City may issue Future Parity Bonds if the following conditions shall be met and complied with at the time of issuance of such Future Parity Bonds: "(a) All payments then required by this Ordinance or any other ordinance hereafter enacted pertaining to Outstanding Parity Bonds, the Bonds and to any such additional or refunding water and sewer revenue bonds hereafter issued shall have been made into the Bond Fund and maintained intact therein; and '(b) The historical gross revenues of the Waterworks Utility, including any water and sanitary sewage disposal service surcharge payable under any Agreement between the City and any third party, for any twelve consecutive months out of the immediately preceding fifteen months' period adjusted to reflect (1)a year's net income from each customer of the Waterworks Utility connected to such utility at the end of that twelve -month period who has not been a customer for the entire twelve -month period, (2) the additional revenue, from whatever source and of whatever nature, anticipated to be received from the improvement in connection with which additional water and sewer revenue bonds are to be issued, (3) revenue to be derived from any customer under any executed contract for water and/or sewer service which revenue was not included in the historical gross revenues of the Waterworks Utility, and (4) the engineer's estimate of the gross revenues to be derived by the City from customers within improved property available to commit to any additions to and -2- improvements and extensions of the Waterworks Utility to be paid out of the proceeds of the sale of the Future Parity Bonds (as defined in Ordinance No. 1408) or other additions to and improvements and betterments of the Waterworks Utility then under construction and not fully connected to the Waterworks Utility when such additions, improvements and betterments are completed and connected, shall be deemed sufficient, after the payment of normal operation and maintenance costs (adjusted to reflect actual or reasonably anticipated changes in those operation and maintenance costs subsequent to that twelve -month period) and state and federal taxes, to equal at least 1.35 times the average annual principal and interest requirements of all then outstanding water and sewer revenue bonds, including the Bonds and of the additional or refunding bonds proposed to be so issued, but except the principal requirements of any term bond maturity year or years, as defined in Section 8 of this Ordinance No. 334 of any bonds payable out of the Bond Fund, such determination of the sufficiency of the revenues shall be made and certified to by an independent professional registered engineer experienced in municipal utilities and licensed to practice in the State of Washington; except, that if such additional bonds proposed to be so issued are for the sole purpose of refunding water and sewer revenue bonds, such certification of coverage shall not be required if the amount required for payment of the principal and interest in each year for the refunding bonds is not increased over the amount required for the bonds to be refunded thereby and the maturities of said refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby; and "(c) The ordinance authorizing the issuance of such additional bonds shall provide that such additional bonds shall provide that an amount equal to the average annual debt service of the additional bonds proposed to be issued shall be accumulated as a reserve in the Bond Fund, those amounts to be accumulated by monthly deposits commencing not later than one month after the date of issuance of the additional bonds and to be accumulated within five years after the date of issuance of such bonds, and that reserve to be maintained in such amounts so long as any of those additional bonds are outstanding to the last maturity thereof In the case of parity refunding bonds the ordinance authorizing the issuance of such refunding bonds shall provide that the money in the Reserve Account for the bonds to be refunded shall be transferred to the 'Reserve Account' in the Bond Fund, or that the money in the 'Reserve Account'for the bonds to be refunded shall be used to redeem such bonds, in which event an amount equal to the average annual debt service for the refunding bonds proposed to be issued shall be accumulated as a reserve in the same manner and within the same times as set forth herein for additional revenue bonds. '(d) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the creation of a sinking fund account in the Bond Fund for any Term Bonds to be issued and for regular payments to be made into such account for the payment of principal of such Term Bonds on or before their maturity, or, as an alternative, for the mandatory redemption of such Term Bonds prior to their maturity date from money on deposit in the Principal and Interest Account....; and "Upon the redemption or irrevocable defeasance of all of the outstanding 1963 Bonds, 1965 Bonds, 1972 Bonds, 1986 Bonds and 1990 Bonds, the City may issue additional or refunding water and sewer revenue bonds which shall constitute a charge or lien upon the gross revenues of the Waterworks Utility, including all additions thereto and betterments, replacements and extensions thereof at any time made, on a parity of lien with the Bonds, if the following conditions shall be made and complied with at the time of issuance of such additional or refunding water and sewer revenue bonds: '(a) All payments then required by this Ordinance or any other ordinance hereafter enacted pertaining to Outstanding Parity Bonds, the Bonds and to any such additional or refunding water and sewer revenue bonds hereafter issued shall have been made into the Bond Fund and maintained intact therein; and "(b) The historical gross revenues of the Waterworks Utility, including any water and sanitary sewage disposal service surcharge payable under any Agreement between the City and any third party, for any twelve consecutive months out of the immediately preceding fifteen months' period adjusted to reflect (1) a year's net income from each customer of the Waterworks Utility connected to such utility at the end of that twelve -month period who has not been a customer for the entire twelve -month period, (2) the additional revenue, from whatever source and of whatever nature, anticipated to be received from the improvement in connection with which additional water and sewer revenue bonds are to be issued, (3) revenue to -3- be derived from any customer under any executed contract for water and /or sewer service which revenue was not included in the historical gross revenues of the Waterworks Utility, and (4) the engineer's estimate of the gross revenues to be derived by the City from customers within improved property available to commit to any additions to and improvements an extensions of the Waterworks Utility to be paid out of the proceeds of the sale of the Future Parity Bonds or other additions to and improvements and betterments of the Waterworks Utility then under construction and not fully connected to the Waterworks Utility when such additions, improvements and betterments are completed and connected, shall be deemed sufficient, after the payment of normal operation and maintenance costs (adjusted to reflect actual or reasonably anticipated changes in those operation and maintenance costs subsequent to that twelve -month period) and state and federal taxes, to equal at least 1.25 times the average annual principal and interest requirements of all then outstanding water and sewer revenue bonds, including the Bonds and of the additional or refunding bonds proposed to be so issued, but except the principal requirements of any Term Bond Maturity Year or Years of any bonds payable out of the Bond Fund, such termination of the sufficiency of the revenues shall be made and certified to by an independent professional registered engineer experienced in municipal utilities and licensed to practice in the State of Washington; except, that if such additional bonds proposed to be so issued are for the sole purpose of refunding water and sewer revenue bonds, such certification of coverage shall not be required if the amount required for payment of the principal and interest in each year for the refunding bonds is not increased over the amount required for the bonds to be refunded thereby and the maturities of said refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby. TO The ordinance authorizing the issuance of such additional bonds shall provide that such additional bonds shall provide that an amount equal to the average annual debt service of the additional bonds proposed to be issued shall be accumulated as a reserve in the Bond Fund, those amounts to be accumulated by monthly deposits commencing not later than one month after the date of issuance of the additional bonds and to be accumulated within five years after the date of issuance of such bonds, and that reserve to be maintained in such amounts so long as any of those additional bonds are outstanding to the last maturity thereof. In the case of parity refunding bonds the ordinance authorizing the issuance of such refunding bonds shall provide that the money in the Reserve Account for the bonds to be refunded shall be transferred to the Reserve Account in the Bond Fund, or that the money in the Reserve Account for the bonds to be refunded shall be used to redeem such bonds, in which event an amount equal to the average annual debt service for the refunding bonds proposed to be issued shall be accumulated as a reserve in the same manner and within the same times as set forth herein for additional revenue bonds. The City may at any time substitute an Alternate Security in lieu of all or any part of the cash deposit in the amount of the required reserve in the Reserve Account; and "(d) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the creation of a sinking fund account in the Bond Fund for any Term Bonds to be issued and for regular payments to be made into such account for the payment of principal of such Term Bonds on or before their maturity, or, as an alternative, for the mandatory redemption of such Term Bonds prior to their maturity date from money on deposit in the Principal and Interest Account;" and WHEREAS, pursuant to Ordinance No. 387, the City heretofore issued its $190,000 par value Water and Sewer Revenue Bonds, 1963 (the "1963 Bonds dated October 1,1963, which bonds were issued on a parity of lien with the 1961 Bonds; and WHEREAS, pursuant to Ordinance No. 422, the City heretofore issued its $85,000 par value Water and Sewer Revenue Bonds, 1965 (the "1965 Bonds"), dated March 1,1965, which bonds were issued in a parity of lien with the 1961 Bonds and 1963 Bonds; and -4- WHEREAS, pursuant to Ordinance No. 748, the City heretofore issued its $675,000 par value Water and Sewer Refunding and Construction Revenue Bonds,1972 (the "1972 Bonds"), dated December 1, 1972, which bonds were issued on a parity of lien with the 1961 Bonds, 1963 Bonds and 1965 Bonds; and WHEREAS, pursuant to Ordinance No.1408, as amended by Ordinances Nos.1413 and 1575, the City heretofore issued its $3,600,000 par value Water and Sewer Revenue Bonds,1986 (the "1986 Bonds"), dated December 1,1986, which bonds were issued on a parity of lien with the 1961 Bonds, 1963 Bonds,1965 Bonds and 1972 Bonds; and WHEREAS, pursuant to Ordinance No.1575, the City issued its $1,030,000 par value Water and Sewer Revenue Bonds,1990 (the "1990 Bonds dated July 1,1990, which bonds were issued on a parity of lien with the 1961 Bonds,1963 Bonds, 1965 Bonds,1972 Bonds and 1986 Bonds; and WHEREAS, pursuant to Ordinance No.1676, the City issued its $2,925,000 par value Water and Sewer Refunding Revenue Bonds,1993 (the "1993 Bonds"), dated November 1,1993, which bonds were issued on a parity of lien with the 1961 Bonds,1963 Bonds,1965 Bonds,1972 Bonds, 1986 Bonds and 1990 Bonds; and WHEREAS, pursuant to the Agreement for Transfer of Water System Facilities and Customers from The City of Seattle to the City of Tukwila, dated March 29,1995 (the "Water System Agreement The City of Seattle has agreed to transfer to the City on or after January 1,1996, all rights and responsibilities to provide water to the areas generally known as Ryan Hill, East Marginal Way South and Oxbow and more particularly described in the agreement; and WHEREAS, pursuant to the Agreement for Transfer of Wastewater Responsibilities, Facilities and Customers from The City of Seattle to the City of Tukwila, dated March 29,1995 (the "Wastewater Agreement The City of Seattle has agreed to transfer to the City on or after January 1,1996, all rights and responsibilities to provide wastewater service for the areas generally known as Ryan Hill and East Marginal Way and more particularly described in the agreement; and WHEREAS, the City Council has determined that certain capital improvements to the Waterworks Utility are necessary to enable the City to provide water and sewer services to the areas of the City described in the Water System Agreement and the Wastewater Agreement; and WHEREAS, the City Council has determined to issue the Bonds to provide the funds to pay part of the cost of the Plan of Additions and paying the cost of issuance and sale of the Bonds; and WHEREAS, the [Municipal Bond Investors Assurance Corporation of Armonk, New York] (the "Bond Insurer has made a commitment to issue an insurance policy the "Municipal Bond Insurance Policy" relative to the Bonds effective as of the date of issuance of the Bonds, and the City Council deems that the purchase of the Municipal Bond Insurance Policy is in the best interest of the City; and WHEREAS, Lehman Brothers Inc. of Seattle, Washington, has offered to purchase the Bonds on the terms and conditions hereinafter set forth in its written offer (the "Offer which offer is subject to withdrawal if not accepted on June 5,1995; and WHEREAS, the Finance Director has advised the City Council that the Offer is advantageous to the City, that the City should accept the Offer, and that any delay in accepting the Offer risks having interest costs increased to the detriment of the City and its utility ratepayers; and WHEREAS, to authorize the acceptance of the Offer, under its terms, this ordinance must become effective as soon as permitted under RCW 35A.12.130; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: "Alternate Security" shall mean a surety bond or insurance policy issued to a bond trustee or other independent party as agent of the owners by a company licensed to issue an insurance policy guaranteeing the payment of debt service of, and which may be deposited in the Reserve Account to meet -5- the required reserve for, the Bonds or any Future Parity Bonds if the claims paying ability of the issuer thereof shall be rated "AAA" or "Aaa" by Standard Poor' s Ratings Group or Moody' s Investors Service, respectively. "Bond Fund" shall mean that special fund of the City known as the Water and Sewer Revenue Bond Fund,1961, created by Ordinance No. 334 for the payment of the principal of and interest on the 1961 Bonds and any bonds issued on a parity therewith, including the Outstanding Parity Bonds and the Bonds. "Bond Insurer" shall mean the Municipal Bond Investors Assurance Corporation of Armonk, New York. "Bond Registrar" shall mean the fiscal agencies of the State of Washington in Seattle, Washington, and New York, New York, as the same may be designated from time to time. "Bonds" shall mean the $4,500,000 par value of Water and Sewer Revenue Bonds, 1995, of the City issued pursuant to and for the purposes provided in this ordinance. "1961 Bonds" shall mean the Water and Sewer Revenue Bonds, 1961, issued for the purposes provided in and pursuant to Ordinance No. 334, as amended, all of which 1961 Bonds have matured and have been redeemed. "1963 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 1963, issued for the purposes provided in and pursuant to Ordinance No. 387. "1965 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 1965, issued for the purposes provided in and pursuant to Ordinance No. 422. "1972 Bonds" shall mean the outstanding Water and Sewer Refunding and Construction Revenue Bonds, 1972, issued for the purposes provided in and pursuant to Ordinance No. 748. "1986 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds, 1986, of the City issued pursuant to and for the purposes provided in Ordinance No.1408, as amended by Ordinance No.1413 and Ordinance No.1575. "1990 Bonds" shall mean the outstanding Water and Sewer Revenue Bonds,1990, of the City issued pursuant to and for the purposes provided in Ordinance No.1575. "1993 Bonds" shall mean the outstanding Water and Sewer Refunding Revenue Bonds, 1993, of the City issued pursuant to and for the purposes described in Ordinance No.1676. "City" shall mean the City of Tukwila, Washington, formerly the Town of Tukwila. "Code" shall mean the Internal Revenue Code of 1986, as amended, and applicable rules and regulations promulgated thereunder. "Future Parity Bonds" shall mean any and all water and sewer revenue bonds of the City issued after the date of the issuance of the Bonds and in accordance with Section 7 of Ordinance No. 334, as amended by Ordinances Nos. 1408,1413, 1575 and 1676, the payment of the principal of and interest on which constitutes a charge and lien upon the revenue of the Waterworks Utility equal in rank with the charge and lien upon such revenue required to be paid into the Bond Fund to pay and secure the payment of the principal of and interest on the Outstanding Parity Bonds and the Bonds. "Government Obligations" shall mean United States Treasury Certificates, Notes and Bonds (including State and Local Government Series "SLGS") and direct obligations of the U.S. Treasury which have been stripped by the Treasury itself (excludes CATS, TRGS and similar securities). "Municipal Bond Insurance Policy" shall mean the policy issued by the Bond Insurer insuring the payment of the principal of and interest on the Bonds. "Outstanding Parity Bonds" shall mean the outstanding 1963 Bonds, 1965 Bonds, 1972 Bonds,1986 Bonds, 1990 Bonds and 1993 Bonds. -6- 'Permitted Investments" shall mean legal investments for the City which are (1) direct obligations of the United States of America (in the form of obligations issued or held in book -entry form on the books of the Department of the Treasury) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America; (2) unless otherwise specified, bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies (full faith and credit agencies): U. S. Export- Import Bank (direct obligations or fully guaranteed certificates of beneficial ownership), Farmers Home Administration (certificates of beneficial ownership), Federal Financing Bank, Federal Housing Administration (debentures), General Services Administration (participation certificates), Government National Mortgage Association (GNMA- guaranteed mortgage- backed bonds and GNMA guaranteed -pass- through obligations), U. S. Maritime Administration (guaranteed Title XI financing), New Communities Debentures (U. S. Government guaranteed debentures), and U. S. Public Housing Notes and Bonds (U. S. government guaranteed public housing notes and bonds); (3) unless otherwise specified, bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following U. S. government agencies (non full -faith and credit agencies): Federal Home Loan Bank System (senior debt obligations), Federal Home Loan Mortgage Association (participation certificates), Federal National Mortgage Association (mortgage backed securities and senior debt obligations), and Student Loan Marketing Association (senior debt obligations); and (4) certificates of deposit, savings accounts or deposit accounts which are fully secured by the FDIC. "Principal and Interest Account" shall mean the account of that name created in the Bond Fund for the payment of the principal of and interest on the Outstanding Parity Bonds, the Bonds and Future Parity Bonds. "Reserve Account" shall mean the account of that name created in the Bond Fund for the purpose of securing the payment of the principal of and interest on the Outstanding Parity Bonds, the Bonds and Future Parity Bonds. "Term Bond Maturity Year or Years" shall mean any last maturity year in which the outstanding amount of bonds of any one issue or series which are scheduled to mature (regardless of any reservation of parity redemption rights) is more than two times the average annual principal maturity of the bonds of that issue or series and of all bonds issued on a parity therewith for three years immediately proceeding such term bond maturity year. "Term Bonds" shall mean any bonds maturing in a Term Bond Maturity Year. "Transfer Agreements" shall mean, collectively, the Agreement for Transfer of Water System Facilities and Customers from The City of Seattle to the City of Tukwila, dated March 29,1995, and the Agreement for Transfer of Wastewater Responsibilities, Facilities and Customers from The City of Seattle to the City of Tukwila, dated March 29,1995. "Waterworks Utility" shall mean the waterworks utility of the City, including the system of sewerage. Section 2. Findings. The City Council finds: (1) All payments required by any ordinance of the City pertaining to Outstanding Parity Bonds of the City have been made into the Bond Fund for the payment of such Outstanding Parity Bonds and no deficiency exists therein; (2) As determined and certified by an independent professional registered engineer in accordance with Section 7 or Ordinance No. 334, the revenues of the Waterworks Utility for the twelve -month period commencing April 1,1994, and ending March 31,1995, is sufficient, after the payment of normal operation and maintenance costs and taxes, to equal at least 1.35 times the average annual principal and interest requirements of the Outstanding Parity Bonds and the Bonds authorized herein; and (3) Provision is made in Section 10 herein for the payment into the Reserve Account of the amounts required by Section 7 of Ordinance No. 334, as amended. It is declared that in creating the Bond Fund and in fixing the amounts to be paid into the Bond Fund, as aforesaid, the City Council and corporate authorities of the City have due regard to the cost of operation and maintenance expenses of the Waterworks Utility and to any proportion or part of the gross revenue previously pledged as a fund for the payment of bonds, warrants or other indebtedness or -7- obligations and declare that the City has not set aside into the Bond Fund a greater amount or proportion of that gross revenue and proceeds than in its judgment will be available over and above such cost of operation and maintenance and the debt service and reserve requirements for the presently outstanding Outstanding Parity Bonds and other obligations of that gross revenue. Section 3. Adoption of Plan of Additions. The City specifies, adopts and orders to be carried out a system or plan of additions to and betterments and extensions of the Waterworks Utility (the "Plan of Additions" and each element thereof an "Addition') described as follows: (1) Enter into and assume the rights and obligations to provide water and wastewater services to the Ryan Hill, East Marginal Way and Oxbow areas of the City, as more particularly described in the Transfer Agreements; and (2) Construct a new water pipeline along East Marginal Way, commencing at South 112th Street and terminating at 16th Avenue South, to replace an existing 50- year -old pipeline; and (3) Construct infrastructure improvements to the Waterworks Utility, including a water pipeline to connect the East Marginal Way area to the City's existing storage reservoir and related minor improvements in the Ryan Hill area. The estimated cost of the Plan of Additions, as nearly as may be determined, is declared to be $4,500,000, all of which is expected to be financed from the proceeds of water and sewer revenue bonds and other obligations of the City. The Plan of Additions may be modified to include other improvements if the City determines by ordinance that those amendments or other improvements constitute a system or plan of additions to and betterments and extensions of the Waterworks Utility. Section 4. Authorization and Description of Bonds. For the purpose of providing part of the money required to carry out the Plan of Additions and pay the costs of issuance and sale of the Bonds, the City shall issue the Bonds in the aggregate principal amount of $4,500,000. The Bonds shall be designated Water and Sewer Revenue Bonds, 1995; shall be dated June 1,1995; shall be in the denomination of $5,000 or any integral multiple thereof within a single maturity; shall be numbered separately, in the manner and with any additional designation as the Bond Registrar deems necessary for purpose of identification; shall bear interest (computed on the basis of a 360 -day year of twelve 30 -day months), payable semiannually on each February 1 and August 1, commencing February 1,1996, to the maturity or earlier redemption of the Bonds; and shall mature on February 1 in years and amounts and bear interest at the rates per annum as follows: Maturity Interest Years Amounts Rates 1997 145,000 4.150% 1998 155,000 4.250% 1999 160,000 4.350% 2000 170,000 4.450% 2001 175,000 4.550% 2002 185,000 4.650% 2003 195,000 4.750% 2004 200,000 4.850% 2005 210,000 5.000% 2006 225,000 5.000% 2007 235,000 5.200% 2011 1,075,000 5.400% 2015 1,370,000 6.625% Section 5. Registration and Transfer of Bonds. The Bonds shall be issued only in registered form as to both principal and interest and recorded on books or records maintained by the Bond Registrar (the "Bond Register The Bond Register shall contain the name and mailing address of the owner of each Bond and the principal amount and number of each of the Bonds held by each owner. -8- Bonds surrendered to the Bond Registrar may be exchanged for Bonds in any authorized denomination of an equal aggregate principal amount and of the same interest rate and maturity. Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to the Bond Registrar. Any exchange or transfer shall be without cost to the owner or transferee. The Bond Registrar shall not be obligated to exchange or transfer any Bond during the 15 days preceding any principal payment or redemption date. Section 6. Payment of Bonds. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds shall be paid by checks or drafts mailed by the Bond Registrar on the interest payment date to the registered owners at the addresses appearing on the Bond Register on the 15th day of the month preceding the interest payment date, or, if requested by a registered owner of $1,000,000 or more in principal amount of Bonds at least 10 days before an interest payment date, by wire transfer to that owner on the interest payment date. Principal of the Bonds shall be payable upon presentation and surrender of the Bonds by the registered owners at either of the principal offices of the Bond Registrar at the option of the owners. The Bonds shall be payable solely out of the Bond Fund and shall not be general obligations of the City. Section 7. Optional Redemption; Mandatory Redemption; and Open Market Purchase of Bonds. Bonds maturing in the years 1997 through 2005, inclusive, and in 2015, shall be issued without the right or option of the City to redeem those Bonds prior to their stated maturity dates. The City reserves the right and option to redeem Bonds maturing in 2006, 2007, and 2011, prior to their stated maturity dates as a whole or in part at any time within one or more maturities selected by the City (and randomly within a maturity in such manner as the Bond Registrar shall determine) on or after February 1, 2005, at the redemption prices shown below (expressed as a percentage of the principal amount of the Bonds to be redeemed) plus accrued interest to the date fixed for redemption: Redemption Redemption Period Price February 1, 2005, through January 31, 2006 102% February 1, 2006, through January 31, 2007 101 February 1, 2007, and thereafter 100 Bonds maturing in 2011 are Term Bonds and, if not redeemed under the optional redemption provisions set forth above or purchased in the open market under the provisions set forth below, shall be called for redemption by lot (in such manner as the Bond registrar shall determine) at par plus accrued interest on February 1 in years and amounts as follows: Mandatory Mandatory Redemption Redemption Years Amounts 2008 $250,000 2009 260,000 2010 275,000 2011 (maturity) 290,000 Bonds maturing in 2015 are Term Bonds and, if not purchased in the open market under the provisions set forth below, shall be called for redemption by lot (in such manner as the Bond Registrar shall determine) at par plus accrued interest on February 1 in years and amounts as follows: Mandatory Mandatory Redemption Redemption Years Amounts 2012 310,000 2013 330,000 2014 355,000 2015 (maturity) 375,000 -9- If the City redeems Term Bonds under the optional redemption provisions set forth above or purchase Term Bonds in the open market as set forth below, the par amount of the Term Bonds so redeemed or purchased (irrespective of their actual redemption or purchase prices) shall be credited against one or more scheduled mandatory redemption amounts for those Term Bonds (as allocated by the City) beginning not earlier than 60 days after the date of the optional redemption or purchase, and the City shall promptly notify the Bond Registrar in writing of the manner in which the credit for the Term Bonds so redeemed or purchased has been allocated. Portions of the principal amount of any Bond, in installments of $5,000 or any integral multiple thereof, may be redeemed. If less than all of the principal amount of any Bond is redeemed, upon surrender of that Bond at either of the principal offices of the Bond Registrar, there shall be issued to the registered owner, without charge therefor, a new Bond (or Bonds, at the option of the registered owner) of the same maturity and interest rate in any of the denominations authorized by this ordinance in the aggregate principal amount remaining unredeemed. The City further reserves the right and option to purchase any or all of the Bonds at any time at any price plus accrued interest to the date of purchase. All Bonds purchased or redeemed under this section shall be cancelled. Section 8. Notice of Redemption. The City shall cause notice of any intended redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed for redemption by first class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares the notice, and the requirements of this sentence shall be deemed to have been fulfilled when notice has been mailed as so provided, whether or not it is actually received by the owner of any Bond. Interest on Bonds called for redemption shall cease to accrue on the date fixed for redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the call. In addition, the redemption notice shall be mailed within the same period, postage prepaid, to Moody s Investors Service, Inc., and Standard Poor' s Corporation at their offices in New York, New York, or their successors, to Lehman Brothers Inc. at its principal office in Seattle, Washington, or its successor, to the Bond Insurer at its principal office in Armonk, New York, or its successor, and to such other persons and with such additional information as the City Finance Director shall determine, but these additional mailings shall not be a condition precedent to the redemption of Bonds. Section 9. Failure to Redeem Bonds. If any Bond is not redeemed when properly presented at its maturity or call date, the City shall be obligated to pay interest on that Bond at the same rate provided in the Bond from and after its maturity or call date until that Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the Bond Fund and the Bond has been called for payment by giving notice of that call to the registered owner of each of those unpaid Bonds. Section 10. Payments into Bond Fund. The Bond Fund was created by Ordinance No. 334 and has been divided into two accounts, the Principal and Interest Account and the Reserve Account. So long as any Bonds are outstanding against the Bond Fund, the City covenants to set aside and to pay into the Principal and Interest Account and the Reserve Account, out of the gross revenue of the Waterworks Utility, in addition to the amounts required to be paid and retained therein for the Outstanding Parity Bonds certain fixed amounts, without regard to any fixed proportion, and such other money as provided, namely: (a) Into the Principal and Interest Account. there shall be deposited the accrued interest received by the City as partial payment for the Bonds on their delivery; and monthly, beginning with the month of August,1995, an amount that, together with the accrued interest and other money on deposit therein, will equal at least 1/6 of the next ensuing requirement for interest on the Bonds due and payable on the next interest payment date; and, beginning with the month of February, 1996, an amount that, together with other money on deposit therein, will at least 1/12 of the next ensuing requirement for principal on the Bonds due and payable on the next principal payment date; and (b) Into the Reserve Account, on the date or issue, an amount equal to the average annual debt service of the Bonds (hereinafter referred to as the "Reserve Requirement") from non -Bond proceeds of the City. The City covenants and agrees that it will at all times maintain in the Reserve Account the required reserves as set forth, except for withdrawals as authorized in this section, until there is a -10- sufficient amount in the Principal and Interest Account and the Reserve Account to pay the principal of and interest on the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds to the final maturity thereof, at which time no further payments need be made into the Bond Fund. Upon the redemption or irrevocable defeasance of all of the outstanding 1963 Bonds, 1965 Bonds, 1972 Bonds, 1986 Bonds and 1990 Bonds, the City may at any time substitute an Alternate Security in lieu of all or any part of the cash deposit in the amount of the required reserve in the Reserve Account. If there shall be a deficiency in the Principal and Interest Account to meet maturing installments of either principal of or interest on bonds payable from the Bond Fund, such deficiency shall be made up from the Reserve Account by the withdrawal of cash therefrom for that purpose. Any deficiency created in the Reserve Account by reason of any such withdrawal then shall be made up from the gross revenue of the Waterworks Utility which shall be first available after required payments into the Principal and Interest Account. The Reserve Account may be accumulated from any other money of the City available therefor in addition to the gross revenue of the Waterworks Utility. All money in the Reserve Account may be kept on deposit in the official bank depository of the City or may be invested and reinvested in Permitted Investments at a fixed price and maturing no later than one month prior to the final maturity date of the last outstanding bonds payable out of the Bond Fund. In no event shall any money in the Bond Fund or any other money reasonably expected to be used to pay principal of and /or interest on the Bonds be invested in other than Permitted Investments or at a yield which would cause the Bonds to be arbitrage bonds within the meaning of Section 148 of the Code. If the required reserve is deposited in the Reserve Account, interest earned on any such investment or on such bank deposit in the Reserve Account attributable to the Bonds or Future Parity Bonds shall be deposited into the Principal and Interest Account and used to pay the next interest or principal coming due on bonds payable from the Bond Fund. If the City fails to set aside and pay into the Bond Fund the amounts above set forth, the owner of any of the outstanding bonds payable out of the Bond Fund may bring action against the City to compel such setting aside and payment. Section 11. Pledge of Gross Revenue and Lien Position. The gross revenue of the Waterworks Utility is pledged to the payments required by this ordinance, and the Bonds constitute a charge and lien upon the gross revenue of the Waterworks Utility prior and superior to all other charges of any kind or nature, excluding charges for operation and maintenance, except that the charge and lien on the gross revenue of the Waterworks Utility for the Bonds shall be on a parity with the charge and lien thereon for the Outstanding Parity Bonds and any Future Parity Bonds. Section 12. Form and Execution of Bonds. The Bonds shall be printed, typed or multicopied, or lithographed on good bond paper in a form consistent with the provisions of this ordinance and state law, shall be signed by the Mayor and City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. Only Bonds bearing a Certificate of Authentication in the following form, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance: CERTIFICATE OF AUTHENTICATION This bond is one of the fully registered City of Tukwila, Washington, Water and Sewer Revenue Bonds,1995, described in the Bond Ordinance. WASHINGTON STATE FISCAL AGENCY Bond Registrar By Authorized Signer -11- The authorized signing of a 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. If any officer whose facsimile signature appears on the Bonds ceases to be an officer of the City authorized to sign bonds before the Bonds bearing his or her facsimile signature are authenticated or delivered by the Bond Registrar or issued by the City, those Bonds nevertheless may be authenticated, delivered and issued and, when authenticated, issued and delivered, shall be as binding on the City as though that person had continued to be an officer of the City authorized to sign bonds. Any Bond also may be signed on behalf of the City by any person who, on the actual date of signing of the Bond, is an officer of the City authorized to sign bonds, although he or she did not hold the required office on the date of issuance of the Bonds. Section 13. Bond Registrar. The Bond Registrar shall keep, or cause to be kept, at its principal corporate trust office, sufficient books for the registration and transfer of the Bonds which shall at all times be open to inspection by the City. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of the Bonds and this ordinance, to serve as the City's paying agent for the Bonds and to carry out all of the Bond Registrar' s powers and duties under this ordinance and City Ordinance No.1338 establishing a system of registration for the City's bonds and obligations. The Bond Registrar shall be responsible for its representations contained in the Bond Registrar's Certificate of Authentication on the Bonds. The Bond Registrar may become the owner of Bonds with the same rights it would have if it were not the Bond Registrar and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as members of, or in any other capacity with respect to, any committee formed to protect the rights of Bond owners. Section 14. Bonds Negotiable Instruments. The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8102 and 62A.8105. Section 15. Covenants. The City covenants and agrees with the owner of each of the Bonds at any time outstanding, as follows: (a) It will establish, maintain and collect such rates and charges for water and for sanitary sewage disposal service so long as Outstanding Parity Bonds, Bonds or Future Parity Bonds are outstanding, as will make available, together with interest accruing from investment of money in the Reserve Account and any water and sanitary sewage disposal service surcharge payable under any agreement between the City and any third party, for the payment of the principal of and interest on such bonds as the same shall become due an amount equal to at least 1.35 times the average annual debt service, both principal and interest, of such bonds, after deducting the costs of operation and maintenance of the Waterworks Utility, but before depreciation. Upon the redemption or irrevocable defeasance of all of the outstanding 1963 Bonds, 1965 Bonds, 1972 Bonds, 1986 Bonds and 1990 Bonds, the foregoing subsection 15(a) shall be amended and replaced to read as follows: (a) It will establish, maintain and collect such rates and charges for water and for sanitary sewage disposal service so long as Outstanding Parity Bonds, Bonds or Future Parity Bonds are outstanding, as will make available, together with interest accruing from investment of money in the Reserve Account and any water and sanitary sewage disposal service surcharge payable under any agreement between the City and any third party, for the payment of the principal of and interest on such bonds as the same shall become due an amount equal to at least 1.25 times the average annual debt service, both principal and interest, of such bonds, after deducting the costs of operation and maintenance of the Waterworks Utility, but before depreciation. (b) It will at all times maintain and keep the Waterworks Utility in good repair, working order and condition, and will at all times operate such Waterworks Utility and the business in connection therewith in an efficient manner and at a reasonable cost. -12- (c) It will not sell, lease, mortgage or in any manner encumber or dispose of all the property of the Waterworks Utility unless provision is made for payment into the Bond Fund of a sum sufficient to pay the principal of and interest on all bonds payable out of the Bond Fund at any time outstanding, and it will not sell, lease, mortgage or in any manner encumber or dispose of any part of the property of the Waterworks Utility that is used, useful and material to the operation thereof, unless provision is made for the replacement thereof, or for payment into the Bond Fund of the total amount of gross revenues received which shall not be less than an amount which shall bear the same ratio to the amount of outstanding bonds payable out of the Bond Fund as the revenue of the Waterworks Utility available for debt service for such outstanding bonds for the twelve months preceding such sale, lease, encumbrance or disposal from the portion of the Waterworks Utility sold, leased, encumbered or disposed of bears to the revenues available for debt service for such bonds from the entire Waterworks Utility for the same period. Any such money so paid into the Bond Fund shall be used to retire such outstanding bonds at the earliest possible date. (d) While any of the Bonds remain outstanding, it will keep proper and separate accounts and records in which complete and separate entries shall be made of all transactions relating to the Waterworks Utility, and it will furnish the original purchaser of the bonds or any subsequent owner or owners of the bonds, at the written request of such owner or owners, complete operating and income statements of such waterworks utility in reasonable detail covering any calendar year not more than 90 days after the close of such calendar 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 waterworks utility and all records, accounts and data of the City relating thereto. Upon request of any owner of any such Bonds, it also will furnish to such owner a copy of the most recently completed audit of the City's accounts by the State Auditor of Washington or such other audit as is authorized by law in lieu thereof. (e) It will not furnish water or sanitary sewage disposal service to any customer whatsoever free of charge and will promptly take legal action to enforce collection of all delinquent accounts. (f) It will carry the types of insurance on the properties of the Waterworks Utility in the amounts normally carried by private water and sewer companies engaged in the operation of waterworks utilities, and the cost of such insurance shall be considered a part of operating and maintaining such utility. If, as and when the United States of America or some agency thereof shall provide for war risk insurance, the City further agrees to take out and maintain such insurance on all or such portions of such utility on which such war risk insurance may be written in an amount or amounts to cover adequately the value thereof. (g) It will pay all costs of operation and maintenance of the Waterworks Utility and the debt service requirements for the Outstanding Parity Bonds and otherwise meet the obligations of the City as herein set forth. (h) It will take all actions necessary to prevent the interest on the Bonds from being included in gross income for federal income tax purposes, and it will neither take any actions nor make or permit any use of proceeds of the Bonds or other funds of the Waterworks Utility treated as proceeds of the Bonds at any time during the term of the Bonds which will cause the interest on the Bonds to be included in gross income for federal income tax purposes. The City further covenants that it has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certifications may not be relied upon. Section 16. Small Governmental Issuer Arbitrage Rebate Exception and Designation of Bonds as Qualified Tax Exempt Obligations. The City finds and declares that (a) it is a duly organized and existing governmental unit of the State of Washington and has general taxing power, (b) no Bond which is part of this issue of Bonds is a "private activity bond" within the meaning of Section 141 of the United States Internal Revenue Code of 1986, as amended (the "Code"); (c) at least 95% of the net proceeds of the Bonds will be used for local governmental activities of the City (or of a governmental unit the jurisdiction of which is entirely within the jurisdiction of the City); (d) the aggregate face amount of all tax exempt obligations (other than private activity bonds and other obligations not required to be included in such calculation) issued by the City and all entities subordinate to, the City (including any entity which the City controls, which derives its authority to issue tax exempt obligations from the City or which issues tax exempt obligations on behalf of the City) during the calendar year in which the Bonds are issued is not reasonably expected to exceed $5,000,000; and (e) the amount of tax exempt obligations, -13- including the Bonds, designated by the City as "qualified tax exempt obligations" for the purposes of Section 265(b)(3) of the Code during the calendar year in which the Bonds are issued does not exceed $10,000,000. The City therefore certifies that the Bonds are eligible for the arbitrage rebate exception under Section 148(f)(4)(D) of the Code and designates the Bonds as "qualified tax exempt obligations" for the purposes of Section 265(b)(3) of the Code. Section 17. Parity Provisions. The City covenants and agrees with the owner of each Bond payable from the Bond Fund at that time outstanding that (i) prior to the redemption or irrevocable defeasance of all of the outstanding 1963 Bonds,1965 Bonds,1972 Bonds,1986 Bonds and 1990 Bonds, it will not issue any Future Parity Bonds unless it first shall satisfy the conditions set forth in Section 7 of Ordinance No. 334, as amended and restated by Section 16 of Ordinance No.1575, which sections are by reference incorporated herein and made a part hereof and shall be applicable to the Bonds so long as any of the same are outstanding; and (ii) upon the redemption or irrevocable defeasance of all of the outstanding 1963 Bonds, 1965 Bonds, 1972 Bonds, 1986 Bonds and 1990 Bonds, it will not issue any Future Parity Bonds, unless it shall first satisfy the conditions set forth in Section 19 of Ordinance No. 1676, which section is by reference incorporated herein and made a part hereof and shall be applicable to the Bonds so long as any of the same are outstanding. Nothing herein contained shall prevent the City from issuing water and sewer revenue bonds or other obligations which are a charge upon the gross revenue of the Waterworks Utility junior or inferior to the payments required to be made therefrom into the Bond Fund for the payment of the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds. Section 18. Refunding of Defeasance of Bonds. The City may issue refunding bonds pursuant to the laws of the State of Washington or use money available from any other lawful source to pay when due or callable the principal of and interest on the Bonds, or any portion thereof included in a refunding or defeasance plan, and to redeem and retire, refund or defease all such then outstanding Bonds (hereinafter collectively called the "defeased Bonds") and to pay the costs of the refunding or defeasance. If money and /or direct obligations of the United States of America maturing at a time or times and bearing interest in amounts (together with money, if necessary) sufficient to redeem and retire, refund or defease the defeased Bonds in accordance with their terms are set aside in a special trust fund or escrow account irrevocably pledged to that redemption, retirement or defeasance of defeased Bonds (hereinafter called the "trust account then all right and interest of the owners of the defeased Bonds in the covenants of this ordinance and in the funds and accounts obligated to the payment of the defeased Bonds shall cease and become void. The owners of defeased Bonds shall have the right to receive payment of the principal of and interest on the defeased Bonds from the trust account. The City shall include in the refunding or defeasance plan such provisions as the City deems necessary for the random selection of any defeased Bonds that constitute less than all of a particular maturity of the Bonds, for notice of the defeasance to be given to the owners of the defeased Bonds and to such other persons as the City shall determine, and for any required replacement of Bond certificates for defeased Bonds. The defeased Bonds shall be deemed no longer outstanding, and the City may apply any money in any other fund or account established for the payment or redemption of the defeased Bonds to any lawful purposes as it shall determine. The City must obtain the consent of the Bond Insurer prior to utilizing a forward supply contract in a refunding plan with respect to the Bonds. If the refunding plan provides that the defeased Bonds or the refunding bonds to be issued be secured by cash and /or Government Obligations pending the prior redemption of the defeased Bonds and if such refunding plan also provides that certain cash and /or Government Obligations are pledged irrevocably for the prior redemption of the defeased Bonds included in that refunding plan, then only the debt service on the Bonds which are not defeased Bonds and the refunding bonds, the payment of which is not so secured by the refunding plan, shall be included in the computation of coverage for the issuance of Future Parity Bonds and for determining compliance with the rate covenants. If the principal of and /or interest due on the Bonds is paid by the Bond Insurer pursuant to the Municipal Bond Insurance Policy, the Bonds shall not be considered paid by the City, and the covenants, agreements and other obligations of the City to the owners of the Bonds shall continue to exist and the Bond Insurer shall be subrogated to the rights of the registered owners. Section 19. Deposit of Bonds Proceeds. The principal proceeds received from the sale and delivery of the Bonds shall be paid into the City's Water /Sewer Construction Fund (Fund No. 403) (the "Construction Fund") and used for the purposes specified in Section 3 of this ordinance. Until needed to pay the costs of the Plan of Additions and costs of issuance of the Bonds, the City may invest principal proceeds -14- temporarily in any legal investment, and the investment earnings may be retained in the Construction Fund and be spent for the purposes of that fund except that earnings subject to a federal tax or rebate requirement may be withdrawn from the Construction Fund and used for those tax or rebate purposes. Section 20. Ordinance a Contract. The covenants of the City contained in this ordinance constitute a contract between the City and the owners of the Bonds. In the event of default of any covenant by the City, any such bondowner may enforce performance and obtain other appropriate relief in the proper forum as permitted by law. Section 21. Approval of Bond Purchase Contract and Delivery of Bonds. Lehman Brothers Inc. of Seattle, Washington (the "Purchaser"), has presented a bond purchase contract dated June 5,1995 (the 'Bond Purchase Contract") to the City offering to purchase the Bonds under the terms and conditions provided in the Bond Purchase Contract, which written Bond Purchase Contract is on file with the City Clerk and is incorporated herein by this reference. The City Council finds that entering into the Bond Purchase Contract is in the City's best interest and, therefore, accepts the offer contained therein and authorizes its execution by City officials. The Bonds will be printed at City expense and will be delivered to the Purchaser in accordance with the terms of the Bond Purchase Contract with the approving legal opinion of Foster Pepper Shefelman, municipal bond counsel of Seattle, Washington, relative to the issuance of the Bonds, printed on each Bond. Bond counsel has not been retained to and shall not be required to review or express any opinion concerning the completeness or accuracy of any official statement, offering circular or other sales material issued or used in connection with the Bonds, and bond counsel' s opinion shall so state. The proper City officials are authorized and directed to do everything necessary for the prompt delivery of the Bonds to the Purchaser and for the proper application and use of the proceeds of the sale thereof. The City Council further approves and authorizes the Mayor or the Finance Director, as his designee, to execute the Official Statement and any amendments thereto under the terms of the Purchase Contract. Section 22. Bond Insurance. The City Council finds that it is in the City's best interest to purchase, and that a savings will result from purchasing, the Municipal Bond Insurance Policy for the Bonds. The City shall purchase from the Bond Insurer the Municipal Bond Insurance Policy insuring the prompt payment of the principal of and interest on the Bonds and agrees to the conditions for obtaining that policy, including the payment of the premium therefor and the following provisions entitled "Payments under the Policy" required by the Bond Insurer to be included in this ordinance: "A. In the event that, on the second Business Day, and again on the Business Day, prior to the payment date on the Obligations, the Paying Agent has not received sufficient moneys to pay all principal of and interest on the Obligations due on the second following or following, as the case may be, Business Day, the Paying Agent shall immediately notify the Insurer or its designee on the same Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency. "B. If the deficiency is made up in whole or in part prior to or on the payment date, the Paying Agent shall so notify the Insurer or its designee. "C. In addition, if the Paying Agent has notice that any Bondholder has been required to disgorge payments of principal or interest on the Obligation to a trustee in Bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes a voidable preference to such Bondholder within the meaning of any applicable bankruptcy laws, then the Paying Agent shall notify the Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail. "D. The Paying Agent is hereby irrevocably designated, appointed, directed and authorized to act as attorney -in -fact for Holders of the Obligations as follows: "1. If and to the extent there is a deficiency in amounts required to pay interest on the Obligations, the Paying Agent shall (a) execute and deliver to Citibank, N.A., or its successors under the Policy (the "Insurance Paying Agent"), in form satisfactory to the Insurance Paying Agent, an -15- instrument appointing the Insurer as agent for such Holders in any legal proceeding related to the payment of such interest and an assignment to the Insurer of the claims for interest to which such deficiency relates and which are paid by the Insurer, (b) receive as designee of the respective Holders (and not as Paying Agent) in accordance with the tenor of the Policy payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (c) disburse the same to such respective Holders; and "2. If and to the extent of a deficiency in amounts required to pay principal of the Obligations, the Paying Agent shall (a) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the Insurer as agent for such Holder in any legal proceeding relating to the payment of such principal and an assignment to the Insurer of any of the Obligation surrendered to the Insurance Paying agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Paying Agent and available for such payment (but such assignment shall be delivered only if payment from the Insurance Paying Agent is received), (b) receive as designee of the respective Holders (and not as Paying Agent) in accordance with the tenor of the Policy payment therefor from the Insurance Paying Agent, and (c) disburse the same to such Holders. "E. Payments with respect to claims for interest on and principal of Obligations disbursed by the Paying Agent from proceeds of the Policy shall not be considered to discharge the obligation of the Issuer with respect to such Obligations, and the Insurer shall become the owner of such unpaid Obligations and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of this subsection or otherwise. "F. Irrespective of whether any such assignment is executed and delivered, the Issuer and the Paying Agent hereby agree for the benefit of the Insurer that, "l. They recognize that to the extent the Insurer makes payments, directly or indirectly (as by paying through the Paying Agent), on account of principal of or interest on the Obligations, the Insurer will be subrogated to the rights of such Holders to receive the amount of such principal and interest from the Issuer, with interest thereon as provided and solely from the sources stated in this Indenture and the Obligations; and "2. They will accordingly pay to the Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Policy, which principal and interest shall be deemed past due and not to have been paid), with interest thereon as provided in this Indenture and the Obligations, but only from the sources and in the manner provided herein for the payment of principal of and interest on the Obligations to Holders, and will otherwise treat the Insurer as the owner of such rights to the amount of such principal and interest. "G. In connection with the issuance of additional Obligations, the Issuer shall deliver to the Insurer a copy of the disclosure document, if any, circulated with respect to such additional Obligations. "H. Copies of any amendments made to the documents executed in connection with the issuance of the Obligations which are consented to by the Insurer shall be sent to Standard Poor's Corporation. "I. The Insurer shall receive notice of the resignation or removal of the Paying Agent and the appointment of a successor thereto. "J. The Insurer shall receive copies of all notices required to be delivered to Bondholders and, on an annual basis, copies of the Issuer' s audited financial statements and Annual Budget. "Notices" Any notice that is required to be given to a holder of the Obligation or to the Paying Agent pursuant to the Indenture shall also be provided to the Insurer. All notices required to be given to the Insurer under the Indenture shall be in writing and shall be sent by registered or certified mail addressed to Municipal Bond Investors Assurance Corporation, 113 King Street, Armonk, New York 10504 Attention: Surveillance. "Investments" shall mean "Permitted Investments" set forth on Exhibit A, attached hereto." -16- Section 23. Ratifaction and Confirmation. All actions of the City or its officers prior to the date hereof and consistent with the terms of this ordinance, including but not limited to the execution of the Transfer Agreements, are ratified and confirmed. Section 24. Declaration of Emergency; Effective Date. For the reason that it is necessary that the City obtain the proceeds of sale of the Bonds as soon as possible in order to carry out the improvements to the Waterworks Utility and to take advantage of the favorable bond interest cost contained in the Bond Purchase Contract, which is subject to withdrawal if not accepted immediately, an emergency is declared to exist, and it is found necessary for the support of City government and its existing public institutions and for the preservation of public health and safety that this ordinance be effective pursuant to RCW 35A.12.130. PASSED BY THE CITY COUNCIL OF THE CI�UKWILA, WASHINGTON, at a Regular Meeting thereof this day of c ,1995. (A eefoded 0 John Rants, Mayor ATTEST /AUTHENTICATED: Jame Cantu, City Clerk APPROVED AS TO FORM: By /4 Office of the City Attorney FILED WITH THE CITY CLERK: 6 1- 95 PASSED BY THE CITY COUNCIL: 6 PUBLISHED: tP 9 S� EFFECTIVE DATE: 5 ORDINANCE NO.: 7 S -17- CITY OF TUKWILA SUMMARY OF ORDINANCE NO. 7 S AN ORDINANCE OF THE CITY OF TUKWILA, WASHINGTON, RELATING TO THE WATERWORKS UTILITY OF THE CITY, INCLUDING THE SYSTEM OF SEWERAGE AS A PART THEREOF; SPECIFYING, ADOPTING AND ORDERING TO BE CARRIED OUT A SYSTEM OR PLAN OF ADDITIONS TO AND BETTERMENTS AND EXTENSIONS OF THE WATERWORKS UTILITY; PROVIDING FOR THE ISSUANCE OF $4,500,000 PRINCIPAL AMOUNT OF WATER AND SEWER REVENUE BONDS, 1995, OF THE CITY FOR THE PURPOSE OF PROVIDING A PART OF THE COST OF THAT SYSTEM OR PLAN, AND TO PAY COSTS OF ISSUING THE BONDS; FIXING THE DATE, FORM, MATURITIES, INTEREST RATES, TERMS AND COVENANTS OF SUCH BONDS; PROVIDING FOR BOND INSURANCE; AND PROVIDING FOR THE SALE AND DELIVERY OF SUCH BONDS TO LEHMAN BROTHERS INC., SEATTLE, WASHINGTON; AND DECLARING AN EMERGENCY. The full text of this ordinance will be mailed without charge to anyone who submits a written request to the City Clerk of the City of Tukwila for a copy of the text. APPROVED by the City Council at its meeting of Qd..9( -e- S 1? r ap E. Cantu, City Clerk Published Seattle Times: 4 //c2-/9 AIBIA EXHIBIT A PERMISSIBLE INVESTMENTS FOR INDENTURED FUNDS A. Direct obligations of the United States of America (including obligations issued or held in book -entry form on the books of the Department of the Treasury, and CATS and TGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. B. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): 1. U.S. Exhort-Imnort Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership 2. Farmers Home Administration (FmHA) Certificates of beneficial ownership 3. Federal Financing Bank 4. Federal Housing Administration Debentures (FHA) 5. General Services Administration Participation certificates 6. Government National Mortgage Association (GNMA or "Ginnie Mae GNMA guaranteed mortgage- backed bonds GNMA guaranteed pass through obligations (not acceptable for certain cash -flow sensitive issues.) 7. U.S. Maritime Administration Guaranteed Title XI financing 8. U.S. Denartment of Housing and Urban Development (HUD) Proj ect Notes Local Authority Bonds New Communities Debentures U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds U.S. government guaranteed public housing notes and bonds C. Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non -full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself): 1. Federal Home Loan Bank System Senior debt obligations 2. Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac MBA Participation Certificates Senior debt obligations 3. Federal National Mortgage Association (FNMA or "Fannie Mae Mortgage- backed securities and senior debt obligations 4. Student Loan Marketing Association (SLMA or "Sallie Mae Senior debt obligations 5. Resolution Funding_ Corn. (REFCORP) obligations 6. Farm Credit System Consolidated systemwide bonds and notes D. Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S &P of AAAm -G; AAAm; or AAm. E. Certificates of deposit secured at all times by collateral described in (A) and/or (B) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral. F. Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF. G. Investment Agreements, including GIC's, acceptable to the Insurer. H. Commercial paper rated, at the time of purchase, "Prime 1" by Moody's and "A-1" or better by S &P. I. Bonds or notes issued by any state or municipality which are rated by Moody's and S &P in one of the two highest rating categories assigned by such agencies. J. Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime 1" or "A3" or better by Moody's and "A -1" or "A" or better by S &P. K. Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer /lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specified date. Repurchase Agreements must satisfy the following criteria or be approved by the Insurer. 1. Renos must be between the municipal entity and a dealer bank or securities firm a. Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by Standard Poor's Ratings Group and Moody's Investor Services, or AIBIA b. Banks rated "A" or above by Standard Poor's Ratings Group and Moody's Investor Services. 2. The written reno contract must include the following: a. Securities which are acceptable for transfer are: (1) Direct U.S. governments, or (2) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA FHLMC) b. The term of the reno may be un to 30 days c. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying the collateral) before /simultaneous with payment (perfection by possession of certificated securities). d. Valuation of Collateral (1) The securities must be valued weekly. marked -to- market at current market price plus accrued interest (2) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by municipality, then additional cash and /or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105 3. Legal opinion which must be delivered to the municipal entity: Repo meets guidelines under state law for legal investment of public funds. Additional Notes 1. Any state administered pool investment fund in which the issuer is statutorily permitted or required to invest will be deemed a permitted investment. 2. Debt Service Reserve Fund (DSRF) investments should be valued at fair market value and marked to market at least once per year. DSRF investments may not have maturities extending beyond 5 years. 2/24/92 9 �7 $4,500,000 1 CITY OF TUKWILA, WASHINGTON Ord, 755 WATER AND SEWER REVENUE BONDS, 1995 2 BOND PURCHASE CONTRACT June 5, 1995 City of Tukwila, Washington 6200 Southcenter Boulevard Tukwila, Washington 98188 Ladies and Gentlemen: The undersigned (the "Underwriter hereby offers to enter into this bond purchase contract (the "Purchase Contract with the City of Tukwila, Washington (the "City"), which upon the City's acceptance hereof will be binding upon the City and the Underwriter. This offer is made subject to the City's acceptance by execution of this Purchase Contract and its delivery to the Underwriter on or before 11:59 P.M., Pacific Daylight Time, June 5, 1995, and, if not so accepted, shall be subject to withdrawal by the Underwriter upon notice delivered by the Underwriter to the City at any time before the acceptance hereof by the City. All capitalized terms not otherwise defined herein shall be as defined in Ordinance No. 1735, passed by the City Council on the date hereof (the "Bond Ordinance 1. Purchase and Sale. Subject to the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the Underwriter hereby agrees to purchase from the City for offering to the public, and the City hereby agrees to sell to the Underwriter for such purpose, all (but not less than all) of $4,500,000 aggregate principal amount of the City's Water and Sewer Revenue Bonds, 1995 (the "Bonds The purchase price for all of the Bonds shall be $4,591,281.00 (the "Purchase Price calculated as the aggregate principal amount of the Bonds, plus a premium of $161,386.00, less an original issue discount of $21,550.00, and less an underwriting discount of $48,555.00. The Underwriter will also pay the City accrued interest on the Bonds from June 1, 1995, to the Closing Date (as hereinafter defined) computed on the basis of a 360 day year of twelve 30 -day months. The Bonds shall be issued and secured pursuant to the terms of the Bond Ordinance. The Bonds shall be dated June 1, 1995, and shall have the maturities, bear interest at the rates and be subject to redemption as set forth in Exhibit A attached hereto and incorporated herein by this reference. Interest on the Bonds is payable semiannually on each February 1 and August 1, commencing February 1, 1996. 2. The Official Statement and Authorizing Instruments. The Bonds shall be otherwise as described in the Official Statement of the City, dated the date hereof, relating SB951560.206 to the Bonds, which, together with the appendices attached thereto, and with such changes therein and supplements thereto that are consented to in writing by the Underwriter, is herein called the "Official Statement The City authorizes the use of the Official Statement in connection with the public offering and sale of the Bonds. The City also consents to the use by the Underwriter, before the date hereof, of the Preliminary Official Statement, dated May 23, 1995, relating to the Bonds, which together with the appendices attached thereto, is herein referred to as the "Preliminary Official Statement in connection with the public offering of the Bonds. Promptly after the acceptance hereof by the City, the City shall cause to be delivered to the Underwriter copies of the final Official Statement (together with appendices attached thereto) dated the date hereof. The City covenants and agrees to cause sufficient quantities of the Official Statement to be delivered to the Underwriter to enable the Underwriter to comply with the requirements of Rule 15c2 -12 of the Securities Exchange Commission promulgated under the Securities Exchange Act of 1934, as amended "Rule 15c2 -12 and with the requirements of Rule G -32 of the Municipal Securities Rulemaking Board "MSRB without charge, within seven business days of the date hereof and, if the Closing Date is less than seven business days after the date hereof, upon request of the Underwriter, in sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter. The City further covenants and agrees that if, after the date of this Purchase Contract and until 25 days after the end of the underwriting period (as described below), any event shall occur as a result of which it is necessary to amend or supplement the Official Statement to make the statements therein, in the light of the circumstances under which they were made when the Official Statement is delivered to a purchaser, not misleading, or if it is necessary to amend or supplement the Official Statement to comply with law, the City shall notify the Underwriter and provide the Underwriter with such information as it may from time to time request, and to forthwith prepare and furnish, at its own expense (in a form and manner approved by the Underwriter), a reasonable number of copies of either amendments or supplements to the Official Statement so that the statements in the Official Statement as so amended and supplemented will not, in light of the circumstances under which they were made when the Official Statement is delivered to a purchaser, be misleading or so that the Official Statement will comply with applicable law. Unless otherwise notified in writing by the Underwriter, the City can assume that the "end of the underwriting period" for purposes of Rule 15c2 -12 shall be 25 days from the Closing Date. If such notice is so given in writing by the Underwriter, the Underwriter agrees to notify the City in writing following the occurrence of the "end of the underwriting period" as defined in Rule 15c2 -12. The City hereby authorizes the Underwriter, and the Underwriter agrees at its own expense, to file one copy of the Official Statement, together with any supplement or amendment thereto, with at least one of the nationally recognized municipal securities information repositories designated by the Securities and Exchange Commission and two copies of the Official Statement (with any required forms) to the MSRB or its designee pursuant to Rule G -36 no later than seven business days following the date hereof. -2- 3. Public Offering. The Underwriter agrees to make a bona fide public offering of all the Bonds initially at the public offering prices (or yields) no higher than those shown on the cover page of the Official Statement, provided that the initial public offering prices (or yields) may be changed, from time to time, by the Underwriter as it deems necessary in connection with the marketing of the Bonds. The Underwriter also reserves the right to offer and sell the Bonds to certain dealers (including the Underwriter and other dealers depositing such Bonds into investment trusts) at prices lower than such initial public offering prices. On the Closing Date, the Underwriter shall provide to the City a certificate stating the initial offering prices (or yields) at which a substantial amount of the Bonds of each maturity were sold or are reasonably expected to be sold to the general public. 4. Delivery of Documents. The City shall deliver to the Underwriter three copies of the final Official Statement manually executed on behalf of the City by an authorized officer of the City no later than the Closing Date, and, as promptly as practicable thereafter, such reasonable number of certified or conformed copies of the foregoing as the undersigned may request. 5. Representations, Covenants and Warranties. The City represents, covenants and warrants to the Underwriter that as of the date hereof: (a) The City is a non charter code city duly created and validly existing under the Constitution and laws of the State, with full legal right, power and authority (i) to pass the Bond Ordinance and to perform the agreements on its part contained therein, (ii) to enter into this Purchase Contract, and (iii) to issue, sell and deliver the Bonds to the Underwriter as provided herein and in the Official Statement. (b) The Bond Ordinance has been duly passed by the City and no other authorization or approval is required for the execution and delivery of this Purchase Contract. (c) The Bond Ordinance and this Purchase Contract (assuming due authorization and execution by the Underwriter) are legal, valid and binding obligations of the City enforceable against the City in accordance with their terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights or contractual obligations generally to the extent constitutionally applicable and by the exercise of judicial discretion in appropriate cases and no authorization or approval is required for the execution and delivery of the Bond Ordinance and this Purchase Contract by the City, except such authorizations or approvals as shall have been obtained on or before the Closing Date, copies of which shall be delivered to the Underwriter on the Closing Date. (d) The City is in compliance with the provisions of the Bond Ordinance and with the provision of the ordinances authorizing the issuance of the Outstanding Parity Bonds (collectively, the "Outstanding Bond Ordinances no default exists -3- thereunder and no event has occurred which, with the passing of time or the delivery of notice, would or could constitute a default thereunder. (e) The Preliminary Official Statement was, as of its date, and is, as of the date hereof, true and correct in all respects material to the Bonds and did not and does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements and information therein contained, in light of the circumstances under which they were made, not misleading. (f) The City has duly authorized and approved the execution of the Official Statement by its Mayor or the City's Finance Director, as the Mayor's designee, including any amendments thereto under the terms of this Purchase Contract. (g) The City shall advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and shall not effect any such amendment or supplement without the written consent of the Underwriter, which consent shall not be unreasonably withheld. The City shall advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (h) Except as otherwise disclosed in the Official Statement, there has been no material adverse change since December 31, 1994, in the financial position, results of operations or condition, financial or otherwise, of the Waterworks Utility, other than changes in the ordinary course of business or in the normal operation of the Waterworks Utility or as otherwise disclosed in the Official Statement. (i) As of the time of acceptance hereof, except as otherwise disclosed in the Preliminary Official Statement and to the best of the City's knowledge, the City is not in breach of or in default under any applicable law or administrative regulation of the State or the United States relating to the Waterworks Utility, or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the City is a party or is otherwise subject, the consequence of which or the correction of which materially and adversely affects the operations of the Waterworks Utility as of the date hereof; and the execution and delivery of the Preliminary Official Statement, the Official Statement, this Purchase Contract and the Bonds, the passage of the Bond Ordinance and compliance with and fulfillment of the provisions of each of such agreements or instruments do not materially conflict with or constitute a material breach of or default under any applicable law or administrative regulation of the State or the United States or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the City is a party or is otherwise subject. -4- (j) The financial information with respect to the Waterworks Utility contained in the Preliminary Official Statement fairly presents the financial position and results of operations of the Waterworks Utility as of the dates and for the periods therein set forth, in accordance with generally accepted accounting principles consistently applied. (k) When delivered to The Depository Trust Company for the account of the Underwriter and paid for in full in accordance with the terms of this Purchase Contract, the Bonds (i) will have been duly authorized, executed, issued and delivered by the City, (ii) will constitute valid, legally binding obligations of the City enforceable in accordance with their terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights or contractual obligations generally to the extent constitutionally applicable and by the exercise of judicial discretion in appropriate cases, and (iii) will conform to the descriptions thereof contained in the Official Statement; (1) The proceeds of the sale of the Bonds shall be applied as described in the Official Statement under the caption "APPLICATION OF THE BOND PROCEEDS." (m) Between the time of acceptance hereof and the Closing Date, the City will not, without the prior written consent of the Underwriter, issue any bonds or securities on a parity with the Bonds. (n) No litigation is pending against the City in any court that (i) in any way challenges the titles of any principal officer of the City or any member of the City Council to such member's position, (ii) seeks to restrain or enjoin the issuance, sale or delivery of any of the Bonds or the collection of the gross revenues of the Waterworks Utility pledged or to be pledged to pay the principal of, premium, if any, and interest on the Bonds, (iii) in any way contests or affects the validity of the Bonds, the Bond Ordinance, this Purchase Contract or the collection of said gross revenue of the Waterworks Utility or the pledge thereof, (iv) contests in any way the powers of the City or any authority for the issuance of the Bonds or the passage of the Bond Ordinance, (v) contests or affects in any way the ability of the City to establish rates and charges for the use of the Waterworks Utility as contemplated herein or in the Official Statement, (vi) contests in any way the completeness, accuracy or fairness of the Official Statement, (vii) would, in the event of a final adverse decision, materially adversely affect the financial condition or operations of the Waterworks Utility, or (viii) in any material respect might affect adversely the transactions contemplated herein; except for any such litigation, even if determined adversely to the City, that will not materially affect the collection of the gross revenues of the Waterworks Utility pledged or to be pledged to pay the principal of, premium, if any, and interest on the Bonds and will not materially affect the ability of the City to establish rates and charges for the use of the Waterworks Utility as -5- contemplated herein, in the Bond Ordinance or in the Official Statement. The City has described to the Underwriter all matters known to the City that create a probability that litigation of the type described in clauses (i) through (viii) of the previous sentence will be commenced against the City. (o) Except as may be set forth in the Preliminary Official Statement, all approvals, consents, authorizations, certifications and other orders of any governmental authority, board, agency, instrumentality or commission having jurisdiction, or filings with any such entities, which are necessary for the performance by the City of its obligations under the Bonds have been obtained or will be obtained on a timely basis; provided, that no representation or warranty is made with regard to any approvals that may be required for qualification of the Bonds under Blue Sky or other similar laws of any jurisdiction. (p) The City holds title to the properties constituting the Waterworks Utility free and clear of all liens and encumbrances which would unduly interfere with the use of the Waterworks Utility and the collection of gross revenues of the Waterworks Utility, except as otherwise disclosed in the Official Statement. (q) Any certificate or copy of any certificate signed by any official of the City and delivered to the Underwriter pursuant hereto or in connection herewith shall be deemed a representation by the City to the Underwriter as to the truth of the statements therein made. (r) The Agreement for Transfer of Water System Facilities and Customers from The City of Seattle to the City of Tukwila and the Agreement for Transfer of Wastewater System Responsibilities, Facilities and Customers from The City of Seattle to the City of Tukwila, both of which are dated March 29, 1995 (collectively, the "Interlocal Agreements assuming due authorization and execution by The City of Seattle, are in full force and effect and constitute valid legally binding agreements between the parties thereto enforceable in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights or contractual obligations generally to the extent constitutionally applicable and by the exercise of judicial discretion in appropriate cases. 6. The Closing. At 8:30 A.M., Pacific Daylight Time, on June 21, 1995, or at such other time or on such earlier or later business day as will have been agreed upon by the City and the Underwriter (the "Closing Date the City will deliver to the Underwriter the Bonds, duly executed and authenticated, through the facilities of The Depository Trust Company in New York, New York or such other place to be mutually agreed upon by the City and the Underwriter, and will deliver to the Underwriter the documents mentioned in Section 7 hereof, at such place in Seattle, Washington as may be agreed upon by the City and the Underwriter. The Underwriter will accept such delivery and pay the Purchase Price of the Bonds as set forth in Section 1 hereof, by wire transfer to the City in immediately -6- available federal funds. The documents mentioned in Section 7 shall be made available for inspection in Seattle, Washington, or at such other location as is mutually agreeable, by the Underwriter on the business day immediately before the Closing Date. 7. Closing Conditions. The Underwriter has entered into this Purchase Contract in reliance upon the representations and warranties herein and the performance by the City of its obligations hereunder, both as of the date hereof and as of the Closing Date. The Underwriter's obligations under this Purchase Contract are and shall be subject to the performance by the City of its obligations to be performed hereunder and under the documents mentioned in this Section 7, on or before the Closing Date, and also shall be subject to the following conditions: (a) the representations and warranties of the City contained herein, shall be true, complete and correct in all material respects at the date hereof and on the Closing Date, as if made on and as of the Closing Date, and where such representations and warranties referred to the Preliminary Official Statement, those representations and warranties are deemed to refer to the Official Statement; (b) on the Closing Date (i) the Bond Ordinance shall be in full force and effect, and shall not have been amended, modified or supplemented, except as shall have been agreed by the Underwriter in writing, (ii) the Official Statement shall not have been amended, modified or supplemented, except in such manner as may have been agreed to in writing by the Underwriter, and (iii) the City shall perform or shall have performed all of its obligations required under or specified in this Purchase Contract, the Official Statement, the Bond Ordinance, the Outstanding Bond Ordinances and the Interlocal Agreements to be performed on or before the Closing Date; (c) on the Closing Date, no default shall have occurred or be existing under the Bond Ordinance, the Outstanding Bond Ordinances or the Interlocal Agreements, nor shall any event have occurred which, with the passage of time or the giving of notice, shall constitute a default under the Bond Ordinance, the Outstanding Bond Ordinances or the Interlocal Agreements, nor shall the City be in default in the payment of principal or interest on any of its obligations for borrowed money; and (d) on or before the Closing Date, the Underwriter shall receive the following documents relating to the issuance of the Bonds: (1) copies of the Bond Ordinance and the Interlocal Agreements certified by the City Clerk as having been duly passed or authorized by the City and as being in full force and effect, together with all changes or amendments so certified; -7- (2) an approving opinion of Foster Pepper Shefelman, Bond Counsel to the City, as to the Bonds, dated the Closing Date and substantially in the form included in the Official Statement as Appendix A; (3) a supplemental opinion of Bond Counsel, addressed to the Underwriter and the City, substantially in the form of Exhibit B attached hereto; (4) a certificate, dated the Closing Date, signed by the City Finance Director, to the effect that (i) the representations and warranties of the City contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date, and where such representations and warranties referred to the Preliminary Official Statement, those representations and warranties are deemed to refer to the Official Statement; and (ii) to the best of such person's knowledge, no event materially adversely affecting the Waterworks Utility or the City has occurred since the date of the Official Statement which has not been disclosed therein or by supplement or amendment and which should be disclosed in the Official Statement for the purpose for which it is to be used or for which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; (5) a certificate of the City Finance Director, dated the Closing Date, to the effect that the information contained in the Official Statement under the headings "INTRODUCTION The City "INTRODUCTION Waterworks Utility "APPLICATION OF THE BOND PROCEEDS "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS Revenues", "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS Description of Certain Funds and Accounts "THE CITY "THE WATERWORKS UTILITY" and "GENERAL AND ECONOMIC INFORMATION to the best of such officer's knowledge, fairly and accurately summarizes the information presented therein and does not omit any material information required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, and that subsequent to the date of the Official Statement there has not been any change which would make any of such statements and information inaccurate or incomplete in any material respect on and as of the Closing Date and which has not been set forth accurately and completely in an amendment or supplement to the Official Statement; (6) an opinion, dated the Closing Date and addressed to the Underwriter, of Perkins Coie, counsel to the Underwriter, to the effect that it is not necessary, in connection with the public offering and sale of the Bonds, to register any securities under the Securities Act of 1933, as amended, or to qualify the Bond Ordinance under the Trust Indenture Act of 1939, as -8- amended. In addition, Perkins Coie shall state in such opinion, or in a separate letter dated the Closing Date, that based upon its participation in the preparation of the Official Statement as counsel to the Underwriter, no information came to the attention of the attorneys rendering legal services in connection with the issuance of the Bonds that caused such counsel to believe that, as of the date of the Official Statement or the Closing Date, the statements and information contained in the Official Statement (except for financial statements, financial, statistical and numerical information, verifications, forecasts, estimates, assumptions and expressions of opinion, as to which it need not express an opinion) do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (7) a certificate of a professional registered engineer experienced in municipal utilities and licensed to practice in the State of Washington as required by the Bond Ordinance showing that the coverage requirements set forth in the Bond Ordinance upon the issuance of additional parity bonds, such as the Bonds, have been met; (8) evidence, satisfactory to the Underwriter, that the Bonds are rated "Aaa" by Moody's Investors Service and are rated "AAA" by Standard Poor's Rating Group; (9) a policy of municipal bond insurance insuring the payment of principal and interest on the Bonds by MBIA Insurance Company along with an opinion of counsel to MBIA Insurance Company that such policy is enforceable; and (10) such additional certificates, instruments and other documents as the Underwriter may reasonably deem necessary to evidence the truth and accuracy as of the Closing Date of the representations of the City and the due performance or satisfaction by the City at or before such time of all agreements then to be performed and all conditions then to be satisfied by the City. 8. Termination of Contract. In recognition of the desire of the City and the Underwriter to effect a successful public offering of the Bonds, and in view of the potential adverse impact of any of the following events on such public offering, the Underwriter shall have the absolute right to terminate this Purchase Contract by notification to the City if at any time on or before the Closing Date: (a) An amendment to the Constitution of the United States or the State shall have been adopted which materially adversely affects the marketability of the Bonds. -9- (b) Legislation is introduced or adopted by the House of Representatives or the Senate of the United States Congress or the State Legislature, or a decision by a Court of the United States, the United States Tax Court or a State Court shall be rendered, or a ruling, regulation or official statement by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be made, with respect to federal or State taxation upon revenues or other income of the general character of the revenues pledged to the payment of the Bonds or upon interest received on bonds of the general character of the Bonds or which would, in the reasonable judgment of the Underwriter, have the effect of changing, directly or indirectly, the federal or State income tax consequences of interest on bonds of the general character of the Bonds in the hands of the holders thereof, which in the reasonable judgment of the Underwriter materially and adversely affects (i) the market price or marketability of the Bonds or (ii) the ability of the Underwriter to enforce contracts for sale of the Bonds. (c) Legislation shall be introduced, by amendment or otherwise, in, or be enacted by, the House of Representatives or the Senate of the United States Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, as contemplated hereby or by the Official Statement, is or would be in violation of any provision of the Securities Act of 1933, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect, or with the purpose or effect of otherwise prohibiting the issuance, offering or sale of obligations of the general character of the Bonds, or the Bonds, as contemplated hereby or by the Official Statement. (d) Any legislation, ordinance, rule or regulation shall be introduced in, or be enacted or promulgated by, any governmental body, department or agency of the United States or in the State, or a decision by any court of competent jurisdiction within the United States or within the State shall be rendered which, in the reasonable judgment of the Underwriter, materially and adversely affects (i) the market price or marketability of the Bonds or (ii) the ability of the Underwriter to enforce contracts for sale of the Bonds. (e) There shall have occurred any outbreak of hostilities or any national or international calamity or crisis, the effect of such outbreak, calamity or crisis, in the reasonable judgment of the Underwriter, being such as would materially and adversely affect (i) the market price or marketability of the Bonds or (ii) the ability of the Underwriter to enforce contracts for sale of the Bonds. (f) There shall be in full force a general suspension of trading on the New York Stock Exchange or minimum or maximum prices for trading shall have -10- been fixed and be in force or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange, whether by virtue of a determination by the New York Stock Exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction. (g) A general banking moratorium shall have been declared by federal, New York or State authorities having jurisdiction over banking matters and shall be in force. (h) The Official Statement shall have been amended, modified or supplemented other than as may be agreed to by the Underwriter. (i) Any event shall occur which shall affect the market price or marketability of the Bonds and in the reasonable judgment of the Underwriter, results in the Official Statement containing any untrue statement of a material fact or omitting to state a material fact necessary to make the statements and information therein contained, in light of the circumstances under which they were made, not misleading. (j) There shall have occurred, after the signing hereof, a default with respect to the debt obligations of the City or proceedings under the federal or State bankruptcy laws shall have been instituted by or against the City, the effect of which, in the reasonable judgment of the Underwriter, is such as to materially and adversely affect (i) the market price or marketability of the Bonds or (ii) the ability of the Underwriter to enforce contracts for sale of the Bonds. (k) The ratings of the City or of the Waterworks Utility by Standard Poor's Rating Group or Moody's Investors Service in effect as of the date hereof shall be withdrawn or lowered. If the City shall be unable to satisfy the conditions contained in this Purchase Contract or if the obligations of the Underwriter shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter nor the City shall be under a further obligation hereunder, except as set forth in Sections 1 and 9 hereof. 9. Expenses. The City shall pay or cause to be paid from the proceeds of the Bonds or other funds of the Waterworks Utility available to it, the expenses incident to the performance of its obligations hereunder, including, but not limited to: (i) the fees and disbursements of the Bond Registrar in connection with the issuance of the Bonds; (ii) the fees and disbursements of Bond Counsel, special counsel to the City, if any, and any other experts or consultants retained by the City in connection with the transactions contemplated hereby; (iii) the cost of obtaining ratings and municipal bond insurance on the Bonds; and (iv) the cost of printing and mailing the Preliminary Official Statement and the final Official Statement. -11- The Underwriter shall pay the cost of (i) delivering the Purchase Price of the Bonds in immediately available federal funds; (ii) the cost of preparing and printing any Blue Sky or legal investment memoranda; (iii) the cost of the CUSIP registration and the cost of preparing the Preliminary Official Statement and the Official Statement; and (iv) all other expenses incurred by them in connection with their public offering and distribution of the Bonds, including the fees and disbursements of counsel retained by them. 10. Transcripts. When available, the City shall cause to be delivered to the Underwriter (for the Underwriter and its counsel) three soft bound transcripts of all proceedings relating to the issuance of the Bonds. 11. Notice. Any notice or other communication to be given to the City under this Purchase Contract may be given by delivering the same in writing to the City, City Hall 6200 Southcenter Boulevard, Tukwila, Washington, Attention; Alan Doerschel, and any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to Sean B. Keatts, Lehman Brothers Inc., 701 Fifth Avenue, Suite 7101, Seattle, Washington 98104. 12. Entire Agreement. This Purchase Contract shall constitute the entire agreement between the City and the Underwriter and is made solely for the benefit of the City and the Underwriter (including the successors or assigns of the Underwriter). This Purchase Contract shall become effective when accepted by the City in writing as heretofore specified, shall constitute the entire agreement between the City and the Underwriter and may not be amended or modified except in writing. No other person shall acquire or have any right hereunder by virtue hereof. All the City's representations, warranties and agreements in this Purchase Contract shall remain operative and in full force and effect, regardless of (a) any investigation made by or on behalf of the Underwriter, (b) delivery of and payment for the Bonds hereunder, and (c) any termination of this Purchase Contract. 13. Governing Law and Venue. The validity, interpretation and performance of this Purchase Contract shall be governed by the laws of the State. Any action concerning the enforcement of this contract shall be commenced in the Superior Court of the State of Washington for King County or in the United States District Court for Western Washington in Seattle, Washington. -12- 14. Counterparts. This Purchase Contract may be executed in several counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. LEHMAN BROTHERS INC. By: 3. Richard B. King 6 Senior Vice President Accepted and agreed to as of the date first above written: CITY OF TUKWILA, WASHINGTON By: --Li i J l n W. Rants yor -13- EXHIBIT A Maturity Dates, Principal Amounts, Interest Rates, Yields and Prices Interest Due February 1 Principal Amount Rate Yield Price 1997 145,000 4.150% 4.150% 100.000 1998 155,000 4.250 4.250 100.000 1999 160,000 4.350 4.350 100.000 2000 170,000 4.450 4.450 100.000 2001 175,000 4.550 4.550 100.000 2002 185,000 4.650 4.650 100.000 2003 195,000 4.750 4.750 100.000 2004 200,000 4.850 4.850 100.000 2005 210,000 5.000 5.000 100.000 2006 225,000 5.000 5.150 98.779 2007 235,000 5.200 5.300 99.135 2011 1,075,000 5.400 5.550 98.440 2015 1,370,000 6.625 5.625 111.780 Redemption Provisions Optional Redemption. The Bonds maturing in the years 1997 through 2005, inclusive, and in the year 2015, are not subject to optional redemption prior to their stated dates of maturity. The City has reserved the right to redeem and call the Bonds maturing in the years 2006, 2007 and 2011 prior to their stated maturity, on or after February 1, 2005, in whole or in part (maturities to be selected by the City and by lot within a maturity in such manner as the Bond Registrar shall determine) at any time, at the following prices (expressed as a percentage of the principal amount of the Bonds to be redeemed), plus accrued interest, if any, to the date of redemption: Redemption Dates Redemption Prices February 1, 2005, through January 31, 2006 102% February 1, 2006, through January 31, 2007 101 February 1, 2007 and thereafter 100 SB951560.206 Mandatory Sinking Fund Redemption. The Bonds maturing on February 1, 2011, are Term Bonds and are subject to mandatory sinking fund redemption prior to maturity, in part, by lot in such manner as the Bond Registrar shall determine, at 100 percent of the principal amount thereof plus accrued interest to the date of redemption, from mandatory sinking fund deposits into the Principal and Interest Account in the years and principal amounts set forth below: Mandatory Sinking Fund Mandatory Sinking Fund Redemption Dates Redemption Amounts February 1, 2008 $250,000 February 1, 2009 260,000 February 1, 2010 275,000 February 1, 2011 (Maturity) 290,000 The Bonds maturing on February 1, 2015, are Term Bonds and are subject to mandatory sinking fund redemption prior to maturity, in part, by lot in such manner as the Bond Registrar shall determine, at 100 percent of the principal amount thereof plus accrued interest to the date of redemption, from mandatory sinking fund deposits into the Principal and Interest Account in the years and principal amounts set forth below: Mandatory Sinking Fund Mandatory Sinking Fund Redemption Dates Redemption Amounts February 1, 2012 $310,000 February 1, 2013 330,000 February 1, 2014 355,000 February 1, 2015 (Maturity) 375,000 EXHIBIT B [Letterhead of Foster Pepper Shefelman] June 1995 City of Tukwila, Washington 6200 Southcenter Boulevard Tukwila, Washington 98188 Lehman Brothers Inc. 701 Fifth Avenue, Suite 7101 Seattle, Washington 98104 Re: $4,500,000 City Of Tukwila, Washington Water And Sewer Revenue Bonds, 1995 Dear Ladies and Gentlemen: At the request of the City of Tukwila, Washington (the "City we have served as bond counsel to the City in connection with the issuance of $4,500,000 aggregate principal amount of its Water and Sewer Revenue Bonds, 1995 (the "Bonds In such connection we have examined a certified transcript of proceedings relating to the issuance of the Bonds and such letters, documents and materials relating to the Bonds as we have deemed relevant and necessary in order to enable us to express the opinions set forth below. All capitalized terms used but not defined herein shall have the respective meanings ascribed thereto in Ordinance No. 1735 of the City (the "Bond Ordinance passed by the City Council on June 5, 1995, or in the Bonds Purchase Contract, dated June 5, 1995 (the "Purchase Contract between the City and Lehman Brothers Inc., as Underwriter for the Bonds. This opinion is being delivered to you pursuant to Section 7(d)(3) of the Purchase Contract. Based on such examination, it is our opinion that: 1. The City has full legal right, power and authority to acquire, construct, operate, maintain, improve and finance the City's Waterworks Utility and to carry on its business as a municipal water and sewer utility. 2. The City has the requisite right and power under the Constitution and the laws of the State of Washington to pass the Bond Ordinance and the Bond Ordinance has been duly and lawfully passed by the City, is in full force and effect, is valid and binding on the City and is enforceable in accordance with its terms except to the extent that the enforceability thereof may be limited by bankruptcy, insolvency, or other similar laws affecting the rights and remedies of creditors and principles of equity if equitable principles are sought. SB951560.206 City of Tukwila, Washington June 3. The City has all requisite right, power and authority to execute and deliver the Purchase Contract, to perform its obligations thereunder and to carry out the transactions contemplated thereby; the Purchase Contract has been duly and lawfully authorized, executed and delivered by the City, is in full force and effect, and, assuming due authorization, execution and delivery by the Underwriter, is the legal, valid and binding obligation of the City enforceable against it in accordance with its terms except to the extent that the enforceability thereof may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors or as to the availability of any particular equitable remedy. 4. The City has all requisite right, power and authority to execute and deliver the Interlocal Agreements, to perform its obligations thereunder and to carry out the transactions contemplated thereby; the Interlocal Agreements have been duly and lawfully authorized, executed and delivered by the City, is in full force and effect, and, assuming due authorization, execution and delivery by the other parties thereto, are the legal, valid and binding obligations of the City enforceable against it in accordance with their terms except to the extent that the enforceability thereof may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors or as to the availability of any particular equitable remedy. 5. The execution and delivery by the City of the Purchase Contract and the Bonds, the passage by the City of the Bond Ordinance and compliance with the provisions on the City's part contained therein will not conflict with, nor constitute a material breach of or default under, any constitutional provisions, laws or administrative regulations of the State or the United States; nor will any such execution, delivery, passage or compliance conflict with the Bond Ordinance or with the Outstanding Bond Ordinances. To the best of our knowledge, such execution, delivery, passage or compliance will not 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, except as provided by the Bonds or the Bond Ordinance. 6. The statements contained in the Official Statement under the captions "THE BONDS," "APPLICATION OF BOND PROCEEDS," "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS" and "TAX EXEMPTION insofar as the statements under such captions purport to describe certain provisions of the Bonds, the Bond Ordinance and federal tax laws, present a fair and accurate description of such provisions. Although we have not verified or investigated and are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of the information contained in the Official Statement (except to the extent expressly set forth in paragraph (6) above), we have participated in the preparation of the Official Statement with officials of the City, the Underwriter and their counsel, and in the course of such participation, but without having undertaken to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement, no facts have come to our City of Tukwila, Washington June 1995 attention that caused us to believe that the Official Statement (except for financial, engineering and statistical data and information concerning MBIA contained therein as to which we express no view) as of its date, or as of the date hereof, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Where we render an opinion "to our knowledge" our opinion is based solely upon (i) the conscious awareness of facts or other information by the attorneys within the firm who have had active involvement in negotiating or preparing the Agreement or preparing this opinion letter, without undertaking a canvass of all lawyers in the firm or a search of all the firm's and (ii) written certifications of officers and representatives of the City. The foregoing opinion is being delivered solely to you in connection with the execution and delivery of the Bonds and may not be relied on by you for any other purpose or by any other person for any purpose without our written consent. We consent to the references to us contained in the Official Statement. FOSTER PEPPER SHEFELMAN