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JEFFERSON COUNTY, WASHINGTON
RESOLUTION NO. 10-03
A RESOLUTION of the Board of County Commissioners of Jefferson
County, Washington, relating to contracting indebtedness; providing for the
issuance, specifying the maturities, interest rates, terms, and covenants and fixing the
form of $4,580,000 par value Limited Tax General Obligation Bonds, 2003, to
provide funds with which to pay costs of making certain multi-purpose County
improvements and certain Courthouse improvements; providing for bond insurance;
and approving the sale and providing for the delivery of the bonds to Martin Nelson
& Co., Inc. of Seattle, Washington.
ADOPTED FEBRUARY 10, 2003
This document prepared by:
Foster Pepper & Shefelman PLLC
1111 Third Avenue, Suite 3400
Seattle, Washington 98101
(206) 447-4400
50355325.04
TABLE OF CONTENTS
Page
Recitals.............................................................................................................................................1
Section 1. Authorization of Bonds and Projects...................................................................................... 1
Section2. Description of Bonds.............................................................................................................. 2
Section 3. Registration and Transfer of Bonds........................................................................................ 2
Section4. Payment of Bonds................................................................................................................... 3
Section 5. Optional Redemption, Mandatory Redemption and Open Market Purchase of Bonds.......... 4
Section6. Notice of Redemption............................................................................................................. 5
Section 7. Failure to Redeem Bonds........................................................................................................ 5
Section8.
Pledge of Taxes...................................................................................................................... 5
Section9.
Bond Registrar........................................................................................................................
6
Section 10.
Preservation of Tax Exemption for Interest on Bonds...........................................................
7
Section 11.
Refunding or Defeasance of the Bonds..................................................................................
7
Section 12 Designation of Bonds as "Qualified Tax -Exempt Obligations." ................................................
8
Section 13.
Approval of Bond Purchase Contract.....................................................................................
8
Section 14.
Disposition of Bond Proceeds................................................................................................
8
Section 15.
Preliminary Official Statement Deemed Final........................................................................
9
Section 16.
Undertaking to Provide Continuing Disclosure......................................................................
9
Section 17.
Bond Insurance.....................................................................................................................
11
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50355325.04
JEFFERSON COUNTY, WASHINGTON
RESOLUTION NO. 10-03
A RESOLUTION of the Board of County Commissioners of Jefferson
County, Washington, relating to contracting indebtedness; providing for the
issuance, specifying the maturities, interest rates, terms, and covenants and fixing the
form of $4,580,000 par value Limited Tax General Obligation Bonds, 2002, to
provide funds with which to pay costs of making certain multi-purpose County
improvements and certain Courthouse improvements; providing for bond insurance;
and approving the sale and providing for the delivery of the bonds to Martin Nelson
& Co., Inc. of Seattle, Washington.
WHEREAS, Jefferson County, Washington (the "County"), is in need of making certain
multi-purpose County improvements and certain Courthouse improvements (collectively, the
"Projects"), consisting respectively of Sheriff's Department renovations, a new E911 Dispatch
Center and the modernization of Castle Hill facilities for Health Department, planning and
permitting activities (the "Multi -Purpose County Improvements"), the estimated cost of the multi-
purpose County improvements being $3,500,000, and Courthouse improvements, consisting of
renovation and modernization work to be hereafter specified by the Board of County
Commissioners (the "Courthouse Improvements"), the estimated cost of the Courthouse
Improvements being $1,000,000, and the County does not have available sufficient funds to pay
that costs; and
WHEREAS, under the laws governing the limitation of indebtedness, the County
currently may issue and it has need for the proceeds of $4,580,000 par value of limited tax
general obligation bonds (the "Bonds"); and
WHEREAS, MBIA Insurance Corporation of Armonk, New York (the `Bond Insurer"),
has made a commitment to issue an insurance policy (the "Financial Guaranty Insurance Policy")
insuring the payment when due of the principal of and interest on the Bonds as provided therein,
and the Board of County Commissioners of the County deems that the purchase of the Financial
Guaranty Insurance Policy is in the best interest of the County; and
WHEREAS, the Board of County Commissioners deems it to be in the best interests of
the County to issue and sell the Bonds to pay costs of carrying out the Projects and to pay the
costs of issuance and sale of the Bonds; NOW, THEREFORE,
BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF
JEFFERSON COUNTY, WASHINGTON, as follows:
Section 1. Authorization of Bonds and Projects. The County shall borrow money on
the credit of the County and issue its negotiable limited tax general obligation bonds evidencing
that indebtedness in the amount of $4,580,000 for general County purposes for the purpose of
carrying out the Projects, and to pay costs of the issuance of the Bonds (the "Costs of Issuance.")
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The general indebtedness to be incurred shall be within the limit of up to 1'/z% of the
value of the taxable property within the County permitted for general municipal purposes
without a vote of the qualified voters therein.
The Board of County Commissioners shall determine the exact order, extent and
specifications of elements of the Projects. The cost of all necessary architectural, engineering,
legal and other consulting services, inspection and testing, administrative and relocation
expenses, site acquisition or improvement, demolition, on and off-site utilities, related
improvements and other costs incurred in connection with the making of the capital
improvements constituting the Projects shall be deemed a part of the costs of such
improvements. The Projects shall include all necessary furniture, equipment and appurtenances.
Section 2. Description of Bonds. The bonds shall be called Limited Tax General
Obligation Bonds, 2003, of the County (the "Bonds"); shall be in the aggregate principal amount
of $4,580,000; shall be dated March 3, 2003; shall be in the denomination of $5,000 or any
integral multiple thereof within a single maturity; shall be numbered separately in the manner
and with any additional designation as the Bond Registrar (collectively, the fiscal agencies of the
State of Washington) deems necessary for purposes of identification; shall bear interest
(computed on the basis of a 360 -day year of twelve 30 -day months) payable semiannually on
each June 1 and December 1, commencing December 1, 2003, to the maturity or earlier
redemption of the Bonds; and shall mature on December 1 in years and amounts and bear interest
at the rates per annum as follows:
Maturity
Interest
Years
Amounts
Rates
2003
$270,000
1.25%
2004
230,000
1.40
2005
235,000
1.70
2006
240,000
2.15
2007
245,000
2.60
2008
250,000
3.00
2009
260,000
3.25
2010
270,000
3.45
2011
280,000
3.65
2012
290,000
3.85
2013
300,000
4.05
2014
315,000
4.15
2015
325,000
4.25
2018
1,070,000
4.40
Section 3. Registration and Transfer of Bonds. The Bonds shall be issued only in
registered form as to both principal and interest and shall be recorded on 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.
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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.
The Bonds initially shall be registered in the name of CEDE & CO., as the nominee of
The Depository Trust Company, New York, New York ("DTC"). The Bonds so registered shall
be held in fully immobilized form by DTC as depository in accordance with the provisions of a
Blanket Issuer Letter of Representations with DTC dated November 2, 1998, between the
County and DTC (as it may be amended from time to time, the "Letter of Representations").
Neither the County nor the Bond Registrar shall have any responsibility or obligation to DTC
participants or the persons for whom they act as nominees with respect to the Bonds regarding
accuracy of any records maintained by DTC or DTC participants of any amount in respect of
principal of or interest on the Bonds, or any notice which is permitted or required to be given to
registered owners hereunder (except such notice as is required to be given by the Bond Registrar
to DTC).
For so long as any Bonds are held in fully immobilized form, DTC or its successor
depository shall be deemed to be the registered owner for all purposes hereunder and all
references to registered owners, bondowners, bondholders, or the like shall mean DTC or its
nominees and shall not mean the owners of any beneficial interests in the Bonds. Registered
ownership of such Bonds, or any portions thereof, may not thereafter be transferred except: (i) to
any successor of DTC or its nominee, if that successor shall be qualified under any applicable
laws to provide the services proposed to be provided by it; (ii) to any substitute depository
appointed by the County or such substitute depository's successor; or (iii) to any person if the
Bonds are no longer held in immobilized form.
Upon the resignation of DTC or its successor (or any substitute depository or its
successor) from its functions as depository, or a determination by the County that it no longer
wishes to continue the system of book entry transfers through DTC or its successor (or any
substitute depository or its successor), the County may appoint a substitute depository. Any such
substitute depository shall be qualified under any applicable laws to provide the services
proposed to be provided by it.
If (i) DTC or its successor (or substitute depository or its successor) resigns from its
functions as depository, and no substitute depository can be obtained, or (ii) the County
determines that the Bonds are to be in certificated form, the ownership of Bonds may be
transferred to any person as provided herein and the Bonds no longer shall be held in fully
immobilized form.
Section 4. Payment of Bonds. Both principal of and interest on the Bonds shall be
payable in lawful money of the United States of America. Interest on the Bonds shall be paid by
checks or drafts of the Bond Registrar mailed or by wire transfer only if so requested in writing
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 in
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writing by a registered owner of $100,000 or more in principal amount of Bonds prior to the
applicable record date, by wire transfer on the interest payment date. Principal of the Bonds
shall be payable on presentation and surrender of the Bonds by the registered owners at either of
the principal offices of the Bond Registrar at the option of the owners. Notwithstanding the
foregoing, as long as the Bonds are registered in the name of DTC or its nominee, payment of
principal of and interest on the Bonds shall be made in the manner set forth in the Letter of
Representations.
Section 5. Optional Redemption, Mandatory Redemption and Open Market Purchase
of Bonds. Bonds maturing in the years 2003 through 2012, inclusive, shall be issued without the
right or option of the County to redeem those Bonds prior to their stated maturity dates. The
County reserves the right and option to redeem Bonds maturing on or after December 1, 2013,
prior to their stated maturity dates at any time on or after December 1, 2012, as a whole or in
part, within one or more maturities selected by the County (and randomly within a maturity in
such manner as the Bond Registrar shall determine), at par plus accrued interest to the date fixed
for redemption.
Bonds maturing in 2018 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 randomly (in such manner as the Bond Registrar shall
determine) at par plus accrued interest on December 1 in years and amounts as follows:
Mandatory Mandatory
Redemption Redemption
Years Amounts
2016
$340,000
2017
355,000
2018
375,000
If the County shall redeem 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 County) beginning not earlier than 60 days after the date of the optional
redemption or purchase, and the County 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, on 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 interest rate and maturity in any of the denominations
authorized by this resolution in the aggregate principal amount remaining unredeemed.
The County further reserves the right and option to purchase any or all of the Bonds in
the open market at any time at any price acceptable to the County plus accrued interest to the
date of purchase.
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All Bonds purchased or redeemed under this section shall be cancelled.
Notwithstanding the foregoing, for so long as the Bonds are registered in the name of
Cede & Co., as nominee of DTC, selection of Bonds for redemption shall be in accordance with
the Letter of Representations (as it may be changed).
Section 6. Notice of Redemption. The County shall cause notice of any intended
redemption of Bonds to be given not less than 30 nor more than 60 days prior to the date fixed
for redemption by first-class mail, postage prepaid, to the registered owner of any Bond to be
redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares
the notice, and the requirements of this sentence shall be deemed to have been fulfilled when
notice has been mailed as so provided, whether or not it is actually received by the owner of any
Bond. Interest on Bonds called for redemption shall cease to accrue on the date fixed for
redemption unless the Bond or Bonds called are not redeemed when presented pursuant to the
call. In addition, the redemption notice shall be mailed within the same period, postage prepaid,
to Moody's Investors Service, Inc., and Standard & Poor's at their offices in New York, New
York, or their successors, to Martin Nelson & Co., 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 County shall
determine, but these additional mailings shall not be a condition precedent to the redemption of
Bonds. Notwithstanding the foregoing, for so long as the Bonds are registered in the name of
Cede & Co., as nominee of DTC, notice of redemption shall be given in accordance with the
Letter of Representations (as it may be changed).
Section 7. Failure to Redeem Bonds. If any Bond is not redeemed when properly
presented at its maturity or call date, the County 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 redemption fund of the County 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 8. Pledge of Taxes. For as long as any of the Bonds are outstanding, the
County irrevocably pledges to include in its budget and levy taxes annually within the
constitutional and statutory tax limitations provided by law without a vote of the electors of the
County on all of the taxable property within the County in an amount sufficient, together with
other money legally available and to be used therefor, to pay when due the principal of and
interest on the Bonds, and the full faith, credit and resources of the County are pledged
irrevocably for the annual levy and collection of those taxes and the prompt payment of that
principal and interest. In addition, the County pledges to the payment of the principal and
interest on the Bonds, the proceeds of the Real Estate Excise Taxes imposed by the County
pursuant to RCW 82.46.010(2).
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Notwithstanding anything in this section to the contrary, if the principal of and/or interest
due on the Bonds is paid by the Bond Insurer pursuant to the Financial Guaranty Insurance Policy,
the Bonds shall be treated as remaining outstanding for all purposes and shall not be considered paid
the County, and the covenants, agreements and other obligations of the County to the registered
owners of the Bonds shall continue to exist and run to the benefit of the Bond Insurer, and the Bond
Insurer shall be subrogated to the rights of the registered owners.
If the Bonds are registered in the name of DTC or its nominee, notice of any defeasance
of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for
notices of redemption of Bonds..The Bonds shall be printed or lithographed on good bond paper
in a form consistent with the provisions of this resolution and state law, shall be signed in the
corporate name of the County by the Chairman and Clerk of the Board of County
Commissioners of the County, either or both of whose signatures may be manual or in facsimile,
and the seal of the County or a facsimile reproduction thereof shall be impressed or printed
thereon.
Only Bonds bearing a Certificate of Authentication in the following form, manually
signed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the
benefits of this resolution:
CERTIFICATE OF AUTHENTICATION
This Bond is one of the fully registered Jefferson County, Washington,
Limited Tax General Obligation Bonds, 2002, described in the Bond Resolution.
WASHINGTON STATE FISCAL AGENCY
Bond Registrar
Authorized Signer
The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bond
so authenticated has been duly executed, authenticated, and delivered and is entitled to the benefits
of this resolution.
If any officer whose facsimile signature appears on the Bonds ceases to be an officer of
the County 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 County, those Bonds
nevertheless may be authenticated, issued, and delivered and, when authenticated, issued, and
delivered, shall be as binding on the County as though that person had continued to be an officer
of the County authorized to sign bonds. Any Bond also may be signed on behalf of the County
by any person who, on the actual date of signing of the Bond, is an officer of the County
authorized to sign bonds, although he or she did not hold the required office on the date of
issuance of the Bonds.
Section 9. 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
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which shall be open to inspection by the County at all times. The Bond Registrar is authorized,
on behalf of the County, to authenticate and deliver Bonds transferred or exchanged in
accordance with the provisions of the Bonds and this resolution, to serve as the County's paying
agent for the Bonds and to carry out all of the Bond Registrar's powers and duties under this
resolution and County Resolution No. 47-91 establishing a system of registration for the
County'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 10. Preservation of Tax Exemption for Interest on Bonds. The County
covenants that it will take all actions necessary to prevent interest on the Bonds from being
included in gross income for federal income tax purposes, and it will neither take any action nor
make or permit any use of proceeds of the Bonds or other funds of the County treated as
proceeds of the Bonds at any time during the term of the Bonds which will cause interest on the
Bonds to be included in gross income for federal income tax purposes. The County certifies that
it has not been notified of any listing or proposed listing by the Internal Revenue Service to the
effect that it is a bond issuer whose arbitrage certifications may not be relied upon.
Section 11. Refunding or Defeasance of the Bonds. The County may issue refunding
bonds pursuant to the laws of the State of Washington or use money available from any other
lawful source to pay when due the principal of and interest on the Bonds, or any portion thereof
included in a refunding or defeasance plan, and to redeem and retire, refund or defease all such
then -outstanding Bonds (hereinafter collectively called the "defeased Bonds") and to pay the
costs of the refunding or defeasance. If money and/or 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 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 resolution 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 County shall include in the refunding
or defeasance plan such provisions as the County 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 County shall determine, and for any required replacement of Bond certificates for defeased
Bonds. The defeased Bonds shall be deemed no longer outstanding, and the County 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.
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Notwithstanding anything in this section to the contrary, if the principal of and/or interest
due on the Bonds is paid by the Bond Insurer pursuant to the Financial Guaranty Insurance Policy,
the Bonds shall be treated as remaining outstanding for all purposes and shall not be considered paid
the County, and the covenants, agreements and other obligations of the County to the registered
owners of the Bonds shall continue to exist and run to the benefit of the Bond Insurer, and the Bond
Insurer shall be subrogated to the rights of the registered owners.
If the Bonds are registered in the name of DTC or its nominee, notice of any defeasance
of Bonds shall be given to DTC in the manner prescribed in the Letter of Representations for
notices of redemption of Bonds.
Section 12 Designation of Bonds as "Qualified Tax -Exempt Obligations." The
County has determnined and certifies that (a) the Bonds are not "private activity bonds" within
the meaning of Section 141 of the Code; (b) the reasonably anticipated amount of tax-exempt
obligations (other than private activity bonds and other obligations County (including any entity
that the County controls, that derives its authority to issue tax-exempt obligations from the
County, or that issues tax-exempt obligations on behalf of the County) will issue during the
calendar year in which the Bonds are issued will not exceed $10,000,000; and (c) the amount of
tax-exempt obligations, including the Bonds, designated by the County 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 County designates the Bonds as
"qualified tax-exempt obligations" for the purposes of Section 265(b)(3) of the Code.
Section 13. Approval of Bond Purchase Contract. Martin Nelson & Co., Inc. of
Seattle, Washington, has presented a purchase contract (the "Bond Purchase Contract") to the
County 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 Secretary to the
Board of County Commissioners and is incorporated herein by this reference. The Board of
County Commissioners finds that entering into the Bond Purchase Contract is in the County's
best interest and therefore accepts the offer contained therein and authorizes its execution by
County officials.
The Bonds will be printed at County expense and will be delivered to the purchaser in
accordance with the Bond Purchase Contract, with the approving legal opinion of Foster
Pepper & Shefelman PLLC, municipal bond counsel of Seattle, Washington, regarding the
Bonds printed on each Bond. Bond counsel shall not be required to review and shall express no
opinion concerning the completeness or accuracy of any official statement, offering circular or
other sales or disclosure material issued or used in connection with the Bonds, and bond
counsel's opinion shall so state.
The proper County officials are authorized and directed to do everything necessary for
the prompt delivery of the Bonds to the purchaser and for the proper application and use of the
proceeds of the sale thereof.
Section 14. Disposition of Bond Proceeds. There is created and established in the
office of the County Treasurer a special fund designated as the Limited Tax General Obligation
Bond Fund, 2003 (the "Bond Fund"). Accrued interest on the Bonds, if any, received from the
sale and delivery of the Bonds shall be paid into the Bond Fund. All taxes collected for and
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allocated to the payment of the principal of and interest on the Bonds shall be deposited in the
Bond Fund.
There also is created and established in the office of the County Treasurer a special fund
designated as the Courthouse Improvements Fund, 2003. The sum of $1,000,000 of principal
proceeds received from the sale and delivery of the Bonds shall be paid into such fund and used
for the purposes referred to as Courthouse Improvements in the first recital of this resolution.
Until needed to pay the costs of the Courthouse Improvements and costs of issuance of the
Bonds, the County may invest principal proceeds temporarily in any legal investment, and the
investment earnings may be retained in the Courthouse Improvements 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 such fund and used for those tax or rebate purposes.
There also is created and established in the office of the County Treasurer a special fund
designated as the Multi -Purpose County Improvements Fund, 2003. The remaining principal
proceeds received from the sale and delivery of the Bonds shall be paid into the Multi -Purpose
County Improvements Fund and used for the purposes referred to as Multi -Purpose County
Improvements in the first recital of this resolution. Until needed to pay the costs of the Multi -
Purpose County Improvements and costs of issuance of the Bonds, the County may invest
principal proceeds temporarily in any legal investment, and the investment earnings may be
retained in the Multi -Purpose County Improvements 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
such fund and used for those tax or rebate purposes.
Section 15. Preliminary Official Statement Deemed Final. The Board of County
Commissioners has been provided with copies of a preliminary official statement dated
January 10, 2003 (the "Preliminary Official Statement'), prepared in connection with the sale of
the Bonds. For the sole purpose of the Bond purchaser's compliance with Securities and
Exchange Commission Rule 15c2 -12(b)(1), the County "deems final" that Preliminary Official
Statement as of its date, except for the omission of information as to offering prices, interest
rates, selling compensation, aggregate principal amount, principal amount per maturity, maturity
dates, options of redemption, delivery dates, ratings, and other terms of the Bonds dependent on
such matters.
Section 16. Undertaking to Provide Continuing Disclosure. To meet the conditions of
paragraph (d)(2) of United States Securities and Exchange Commission ("SEC") Rule 15c2-12
(the "Rule") as required to qualify for the limited exemption from paragraph (b)(5) of the Rule,
as applicable to a participating underwriter for the Bonds, the County makes the following
undertaking (the "Undertaking") for the benefit of holders of the Bonds:
(a) Undertaking to Provide Annual Financial Information and Notice
of Material Events. The County undertakes to provide or cause to be provided,
either directly or through a designated agent:
(i) To any person upon request, or annually to a state
information depository, if any, established in the state of Washington (the
"SID"), annual financial information and operating data of the type
included in the final official statement for the Bonds that is customarily
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prepared by the County and is otherwise publicly available ("annual
financial information"); and
(ii) To each nationally recognized municipal securities
information repository designated by the SEC in accordance with the Rule
("NRMSIR") or the Municipal Securities Rulemaking Board ("MSRB')
and to the SID, timely notice of the occurrence of any of the following
events with respect to the Bonds, if material: (1) principal and interest
payment delinquencies; (2) non-payment related defaults; (3) unscheduled
draws on debt service reserves reflecting financial difficulties; (4)
unscheduled draws on credit enhancements reflecting financial
difficulties; (5) substitution of credit or liquidity providers, or their failure
to perform; (6) adverse tax opinions or events affecting the tax-exempt
status of the Bonds; (7) modifications to rights of holders of the Bonds; (8)
Bond calls (other than scheduled mandatory redemptions of Term Bonds);
(9) defeasances; (10) release, substitution, or sale of property securing
repayment of the Bonds; and (11) rating changes.
The annual financial information that the County undertakes to provide shall be
available from the Treasurer of the County, whose current address and telephone
number are identified in the final official statement for the Bonds.
(b) Amendment of Undertaking. The Undertaking is subject to
amendment after the primary offering of the Bonds without the consent of any
holder of any Bond, or of any broker, dealer, municipal securities dealer,
participating underwriter, rating agency, NRMSIR, the SID or the MSRB, under
the circumstances and in the manner permitted by the Rule.
The County will give notice to each NRMSIR or the MSRB, and the SID,
of the substance (or provide a copy) of any amendment to the Undertaking and a
brief statement of the reasons for the amendment. If the amendment changes the
type of annual financial information to be provided, the annual financial
information containing the amended financial information will include a narrative
explanation of the effect of that change on the type of information to be provided.
(c) Beneficiaries. The Undertaking evidenced by this section shall
inure to the benefit of the County and any holder of Bonds, and shall not inure to
the benefit of or create any rights in any other person.
(d) Termination of Undertaking. The County's obligations under this
Undertaking shall terminate upon the legal defeasance of all of the Bonds. In
addition, the County's obligations under this Undertaking shall terminate if those
provisions of the Rule which require the County to comply with this Undertaking
become legally inapplicable in respect of the Bonds for any reason, as confirmed
by an opinion of nationally recognized bond counsel or other counsel familiar
with federal securities laws delivered to the County, and the County provides
timely notice of such termination to each NRMSIR or the MSRB and the SID.
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(e) Remedy for Failure to Comply with Undertaking. As soon as
practicable after the County learns of any failure to comply with the Undertaking,
the County will proceed with due diligence to cause such noncompliance to be
corrected. No failure by the County or other obligated person to comply with the
Undertaking shall constitute a default in respect of the Bonds. The sole remedy of
any holder of a Bond shall be to take such actions as that holder deems necessary,
including seeking an order of specific performance from an appropriate court, to
compel the County or other obligated person to comply with the Undertaking.
(f) Designation of Official Responsible to Administer Undertaking.
The Treasurer of the County (or such other officer of the County who may in the
future perform the duties of that office) or his or her designee is authorized and
directed in his or her discretion to take such further actions as may be necessary,
appropriate or convenient to carry out the Undertaking of the County in respect of
the Bonds set forth in this section and in accordance with the Rule.
Section 17. Bond Insurance. The Board of County Commissioners finds that it is in the
County's best interest to purchase, and that a savings will result from purchasing, the Financial
Guaranty Insurance Policy for the Bonds. The County shall purchase from the Bond Insurer the
Financial Guaranty 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 resolution:
"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 [the
Bond Registrar] 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 an avoidable 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.
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"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:
44
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 State Street Bank and Trust Company, N.A., or its successors
under the Policy (the "Insurance Paying Agent"), in form satisfactory to the
Insurance Paying Agent, an instrument appointing the Insurer as agent for
such Holders in any legal proceeding related to the payment of such interest
and an assignment to the Insurer of the claims for interest to which such
deficiency relates and which are paid by the Insurer, (b) receive as designee
of the respective Holders (and not as Paying Agent) in accordance with the
tenor of the Policy payment from the Insurance Paying Agent with respect to
the claims for interest so assigned, and (c) disburse the same to such
respective Holders; and
"2. If and to the extent of a deficiency in amounts required to pay
principal of the Obligations, the Paying Agent shall (a) execute and deliver
to the Insurance Paying Agent in form satisfactory to the Insurance Paying
Agent an instrument appointing the Insurer as agent for such Holder in any
legal proceeding relating to the payment of such principal and an assignment
to the Insurer of any of the Obligation surrendered to the Insurance Paying
agent of so much of the principal amount thereof as has not previously been
paid or for which moneys are not held by the Paying Agent and available for
such payment (but such assignment shall be delivered only if payment from
the Insurance Paying Agent is received), (b) receive as designee of the
respective Holders (and not as Paying Agent) in accordance with the tenor of
the Policy payment therefor from the Insurance Paying Agent, and (c)
disburse the same to such Holders.
"E. Payments with respect to claims for interest on and principal of
Obligations disbursed by the Paying Agent from proceeds of the Policy shall not be
considered to discharge the obligation of the Issuer with respect to such Obligations,
and the Insurer shall become the owner of such unpaid 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:
46
1. They recognize that to the extent the Insurer makes
payments, directly or indirectly (as by paying through the Paying Agent), on
account of principal of or interest on the Obligations, the Insurer will be
subrogated to the rights of such Holders to receive the amount of such
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principal and interest from the Issuer, with interest thereon as provided and
solely from the sources stated in this Indenture and the Obligations; and
442. 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 MBIA
Insurance Corporation, 113 King Street, Armonk, New York 10504 Attention:
Surveillance."
"The Issuer/Obligator agrees to reimburse the Insurer immediately and
unconditionally upon demand, to the extent permitted by law, for all reasonable
expenses, including attorneys' fees and expenses, incurred by the Insurer in
connection with (i) the enforcement by the Insurer of the Issuer's/Obligator's
obligations, or the preservation or defense of any rights of the Insurer, under this
Resolution/Indenture and any other document executed in connection with the
issuance of the Obligations, and (ii) any consent, amendment, waiver or other
action with respect to the Resolution/Indenture or any related document, whether
or not granted or approved, together with interest on all such expenses from and
including the date incurred to the date of payment at Citibank's Prime Rate plus
3% or the maximum interest rate permitted by law, whichever is less. In addition,
the Insurer reserves the right to charge a fee in connection with its review of any
such consent, amendment or waiver, whether or not granted or approved."
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Any notices required to be given under the terms of this resolution shall also be given to the
Bond Insurer, Attn.: Insured Portfolio Management.
ADOPTED by the Board of County Commissioners of Jefferson County, Washington, at
a regular open public meeting thereof this 10th day of February, 2003.
ATTEST:
'n
�1
Clerk of the Board of County Commissions
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50355325.04
BOARD OF COUNTY COMMISSIONERS
JEFFERSON COUNTY13YASHINGTON
Chairman and Commissioner
Commissioner /"
Commissioner
CERTIFICATION
I, the undersigned, Clerk of the Board of County Commissioners of Jefferson County,
Washington (the "County"), hereby certify as follows:
1. The attached copy of Resolution No. /L�U (the "Resolution") is a full, true and
correct copy of a resolution duly adopted at a regular meeting of the Board of County
Commissioners (the "Board") of the County held at the regular meeting place thereof on
February 10, 2003, as that resolution appears on the minute book of the County; and the
Resolution is now in full force and effect.
2. A quorum of the members of the Board was present throughout the meeting and a
majority of those members present voted in the proper manner for the adoption of the Resolution.
W_
IN WITNESS WHEREOF, I have hereunto set my hand this //6- —day of February,
2003.
JEFFERSON COUNTY, WASHINGTON
-),/I f- a- " , b J2(" 0�,v�_L t'l
LORNA DELANEY, Clerk of the Brd of
County Commissioners the Board
50355325.04