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HomeMy WebLinkAbout4321 CITY OF BREMERTON, WASHINGTON ORDINANCE NO. 9 3 AN ORDINANCE of the City of Bremerton, Washington, relating to contracting indebtedness; providing for the issuance, specifying the maturities, interest rates, terms and covenants of $1,850,000 par value of Unlimited Tax General Obligation and Refunding Bonds, 1991; providing for and authorizing the purchase of certain obligations out of a portion of the proceeds of the sale of the bonds herein authorized and for the use and application of the money derived from those investments; authorizing the execution of an agreement with Seattle-First National Bank, as refunding trustee; establishing certain funds; approving the sale and providing for the delivery of the bonds to Seattle-First National Bank of Seattle, Washington. WHEREAS, pursuant to Ordinance No. 3765 of the City of Bremerton, Washington (the "City"), the City issued $550,000 par value of its Unlimited Tax General Obligation Bonds, 1983 (the "1983 Bonds") which were authorized by the qualified electors of the City at a special election; and WHEREAS, by Ordinance No. 3765, the City reserved the right to redeem the 1983 Bonds on February 1, 1993, or on any interest payment date thereafter at par plus accrued interest to the date fixed for redemption; and WHEREAS, there are presently outstanding $465,000 principal amount of the 1983 Bonds maturing on February 1 of each of the years 1992 through 2003, inclusive and bearing interest at various interest rates from 9% to 11%; and -1- WHEREAS, after due consideration, it appears to the City Council that the outstanding 1983 Bonds may be refunded by the issuance and sale of the unlimited tax general obligation and refunding bonds authorized herein (the "Bonds") so that a substantial saving will be effected by the difference between the principal and interest costs of the portion of the Bonds allocated to the refunding and the principal and interest costs over the life of the outstanding 1983 Bonds but for such refunding, which refunding will be effected by: (a) The issuance of the Bonds; and (b) The payment of the principal of and interest on the 1983 Bonds when due, up to and including February 1, 1993, and the call, payment and redemption on February 1, 1993, of all of the outstanding 1983 Bonds at a price of par; and WHEREAS, in order to effect that refunding in the manner that will be most advantageous to the City and its taxpayers, the City Council finds it necessary and advisable that certain acquired obligations (hereinafter defined) bearing interest and maturing at the time or times necessary to accomplish the refunding as aforesaid be purchased out of a portion of the proceeds of the sale of the bonds authorized herein; and WHEREAS, pursuant to Ordinance No. 4287, a proposition was submitted to the qualified electors of the City for their ratification or rejection at a special election held therein on November 6, 1990, to issue unlimited tax general obligation bonds for the purpose of acquiring three fire engines, a fire/rescue boat and fire-fighting equipment, constructing a 2 fire training facility and for other capital purposes, and that proposition was approved by the requisite number of electors; and WHEREAS, under the laws governing the limitation of indebtedness, the City may issue and it has need for the proceeds from the total authorized issue of not to exceed $1,500,000 par value unlimited tax general obligation bonds; and WHEREAS, Seattle-First National Bank has offered to purchase the Bonds under the terms and conditions hereinafter set forth in the form of a purchase contract; NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BREMERTON, WASHINGTON, as follows: Section 1. Authorization and Description of Bonds. The City shall issue and sell $1,850,000 par value negotiable general obligation bonds, $1,500,000 of which were authorized by the qualified voters of the City at a special election held on November 6, 1990, in conjunction with the State general election held on the same date pursuant to Ordinance No. 4286, passed September 5, 1990, for the purpose of paying the cost of acquiring three fire engines, a fire/rescue boat and fire-fighting equipment, constructing a fire training facility and for other capital purposes (the "Project"), and $350,000 of which shall be used to provide part of the money required to pay the principal of and interest on th~ 1983 Bonds up to and including February 1, 1993, and to call, pay and redeem on February 1, 1993, all of the outstanding 1983 Bonds at a price -3- of par (the "Refunding Plan"), and to pay the costs of issuance and sale of the Bonds (the "costs of issuance"). The Bonds shall be called Unlimited Tax General Obligation and Refunding Bonds, 1991, of the City (the "Bonds"); shall be in the aggregate principal amount of $1,850,000; shall be dated May 1, 1991; 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 located in Seattle, Washington, and New York, New York) deems necessary for purposes of identification; shall bear interest at the rates set forth below computed on the basis of a 360-day year of twelve 30-day months), payable on February 1, 1992, and semiannually thereafter on each succeeding August 1 and February 1; and shall bear interest at the rates and mature on February 1 in years and amounts as follows: Maturity Interest Years Amounts Rates 1993 $ 70,000 5.25% 1994 75,000 5 50 1995 80,000 5 70 1996 85,000 5 85 1997 110,000 6 00 1998 140,000 6 15 1999 145,000 6 25 2000 155,000 6 35 2001 175,000 6 45 2002 180,000 6 55 2003 200,000 6 65 2004 135,000 6 75 2005 145,000 6 85 2006 155,000 6 95 -4- Bonds maturing in the following years and in the following amounts are allocated to the refunding portion of the Bonds: Maturity Years Amounts 1997 $ 20,000 1998 45,000 1999 45,000 2000 50,000 2001 60,000 2002 60,000 2003 70,000 The life of the capital facilities to be acquired or constructed with the proceeds of the Bonds exceeds the term of the Bonds. Section 2. Registration and Transfer of Bonds. The Bonds shall be issued only in registered form as to both principal and interest and 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. 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 -5- any Bond during the fifteen days preceding any principal payment or redemption date. Section 3. 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 on the interest payment date to the registered owners at the addresses appearing on the Bond Register on the fifteenth day of the month preceding the interest payment date. Principal of the Bonds shall be payable upon presentation and surrender of the Bonds by the registered owners at either of the principal offices of the Bond Registrar at the option of the owners. Section 4. Optional Redemption and Open Market Purchase of Bonds. Bonds maturing in the years 1993 through 1999, inclusive, shall be issued without the right or option of the City to redeem those Bonds prior to their stated maturity dates. The City reserves the right and option to redeem the Bonds maturing on or after February 1, 2000, prior to their stated maturity dates, as a whole, or in part in inverse order of maturity (and by lot within a maturity in such manner as the Bond Registrar shall determine), on February 1, 1999, or on any interest payment date thereafter, at par plus accrued interest to the date fixed for redemption. 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 6 is redeemed, upon surrender of that Bond at either of the principal offices of the Bond Registrar, there shall be issued to the registered owner, without charge therefor, a new Bond (or Bonds at the option of the registered owner) of the same maturity and interest rate in any of the denominations authorized by this ordinance in the aggregate total principal amount remaining unredeemed. The City further reserves the right and option to purchase any or all of the Bonds in the open market at any time at a price not in excess of par plus accrued interest to the date of purchase. All Bonds purchased or redeemed under this section shall be cancelled. Section 5. 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 -7- 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 Seattle-First National Bank, at its principal office in Seattle, Washington, or its successor and to such other person and with such additional information as the City Treasurer shall determine, but these additional mailings shall not be a condition precedent to the redemption of Bonds. Section 6. 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 redemption fund hereinafter created 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 7. Pledqe of Taxes. For as long as any of the Bonds are outstanding, the City irrevocably pledges to levy taxes annually without limitation as to rate or amount on all of the taxable property within the City 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 City are pledged irrevocably for the annual levy and collection of those taxes and the prompt payment of that principal and interest. 8 Section 8. Form and Execution of Bonds. The Bonds shall be printed or lithographed on good bond paper in a form consistent with the provisions of this ordinance and state law, shall be signed by the Mayor and City Clerk, either or both of whose signatures may be manual or in facsimile, and the seal of the City or a facsimile reproduction thereof shall be impressed or printed thereon. Only Bonds bearing a Certificate of Authentication in the following form, manually signed by the Bond Registrar, shall be 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 Bremerton, Washington, Unlimited Tax General Obligation and Refunding Bonds, 1991, described in the Bond Ordinance. WASHINGTON STATE FISCAL AGENCY Bond Registrar By Authorized Officer The authorized signing of a Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered and are entitled to the benefits of this ordinance. If any officer whose facsimile 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 -9- 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 9. Bond Reqistrar. 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. 3862 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 -10- act as members of, or in any other capacity with respect to, any committee formed to protect the rights of Bond owners. Section 10. Refundinq of the 1983 Bonds. (a) The City Treasurer is authorized and directed to transfer the amount of $13,264.33 from the City's Unlimited Tax General Obligation Fire Station Bond Fund, 1983, to Seattle-First National Bank, which is appointed the Refunding Trustee, to provide part of the funds to carry out the Refunding Plan. (b) Acquisition and Substitution of Acquired Obligations. From the proceeds of the sale of the Bonds, $350,000, together with $163,264.33 of other funds of the City (which amount may be increased or decreased), shall be deposited immediately upon the receipt thereof with the Refunding Trustee to discharge the obligations of the City relating to the outstanding 1983 Bonds under Ordinance No. 3765 by providing for the payment of the amounts required to be paid by the Refunding Plan. To the extent practicable, such obligations shall be discharged fully by the Refunding Trustee's simultaneous purchase of United States Treasury Certificates of Indebtedness and/or Notes - State and Local Government Series or other direct, noncallable obligations of the United States of America (the "Acquired Obligations"), bearing such interest and maturing as to principal and interest in such amounts and at such times so as to provide for the payment of the amounts required to be paid by the Refunding Plan. The Acquired Obligations are listed and -11- more particularly described in Schedule A attached to the Refunding Trust Agreement between the City and the Refunding Trustee, but are subject to substitution as set forth below. Prior to the purchase of any such Acquired Obligations, the City reserves the right to substitute other direct, noncallable obligations of the United States of America ("Government Obligations") for any of the Acquired Obligations and to use any savings created thereby for any lawful City purpose if, (a) in the opinion of Foster Pepper & Shefelman, the City's bond counsel, the interest on the Bonds will remain excluded from gross income for federal income tax purposes under Sections 103, 148 and 149(d) of the Code, and (b) such substitution shall not impair the timely payment of the amounts required to be paid by the Refunding Plan, as verified by an independent nationally recognized firm of certified public accountants. After the purchase of the Acquired Obligations by the Refunding Trustee, the City reserves the right to substitute therefor cash or Government Obligations subject to the conditions that such money or securities held by the Refunding Trustee shall be sufficient to carry out the Refunding Plan, that such substitution will not cause the Bonds to be arbitrage bonds within the meaning of Section 148 of the Code and regulations thereunder in effect on the date of such substitution and applicable to obligations issued on the issue date of the Bonds and obtains, at its expense: (1) verification by an independent nationally recognized certified public -12- accounting firm acceptable to the Refunding Trustee confirming that the payments of principal of and interest on the substitute Acquired Obligations, if paid when due, and any other money held by the Refunding Trustee will be sufficient to carry out the Refunding Plan; and (2) an opinion from Foster Pepper & Shefelman, bond counsel to the City, its successor, or other nationally recognized bond counsel to the City, to the effect that the disposition and substitution or purchase of such securities, under the statutes, rules and regulations then in force and applicable to the Bonds, will not cause the interest on the Bonds or the 1983 Bonds to be included in gross income for federal income tax purposes and that such disposition and substitution or purchase is in compliance with the statutes and regulations applicable to the Bonds. Any surplus money resulting from the sale, transfer, other disposition or redemption of the Acquired Obligations and the substitutions therefor shall be released from the trust estate and transferred to the City to be used for any lawful City purpose. (c) Administration of Refundinq Plan. The Refunding Trustee is authorized and directed to purchase the Acquired Obligations (or substitute obligations) and to make the payments required to be made by the Refunding Plan from the Acquired Obligations (or substitute obligations) and money deposited with the Refunding Trustee pursuant to this ordinance. All Acquired Obligations (or substitute obligations) and the money deposited with the Refunding Trustee and any income therefrom shall be -13- held irrevocably, invested and applied in accordance with the provisions of Ordinance No. 3765, this ordinance, Chapter 39.53 RCW and other applicable statutes of the State of Washington and the Refunding Trust Agreement. All necessary and proper fees, compensation and expenses of the Refunding Trustee for the Bonds and all other costs incidental to the setting up of the escrow to accomplish the refunding of the outstanding 1983 Bonds and costs related to the issuance and delivery of the Bonds, including bond printing, rating service fees, verification fees, bond counsel's fees and other related expenses, shall be paid out of the proceeds of the Bonds. (d) Authorization for Refundinq Trust Aqreement. In order to carry out the Refunding Plan provided for by this ordinance, the Mayor is authorized and directed to execute and deliver to the Refunding Trustee a Refunding Trust Agreement substantially in the form on file with the City Clerk and by this reference made a part hereof setting forth the duties, obligations and responsibilities of the Refunding Trustee in connection with the payment, redemption and retirement of the outstanding 1983 Bonds as provided herein and stating that the provisions for payment of the fees, compensation and expenses of such Refunding Trustee set forth therein are satisfactory to it. Prior to executing the Refunding Trust Agreement, the Mayor is authorized to make such changes therein which do not change the substance and purpose thereof or which assure that the escrow provided therein and the Bonds are in compliance with the requirements of federal -14- law governing the exclusion of interest on the Bonds from gross income for federal income tax purposes. Section 11. Call for RedemDtion of the Outstandinq 1983 Bonds. The City calls for redemption on February 1, 1993, of all of the outstanding 1983 Bonds at par plus accrued interest. Such call for redemption shall be irrevocable after the delivery of the Bonds to the initial purchaser thereof. The date on which the 1983 Bonds are herein called for redemption is the next date on which those bonds may be called at a premium of 3% or less. The proper City officials are authorized and directed to give or cause to be given such notices as required, at the times and in the manner required, pursuant to Ordinance No. 3765 in order to effect the redemption prior to their maturity of the 1983 Bonds. Section 12. Findinqs with Respect to Refundinq. The City Council finds and determines that the issuance and sale of the Bonds at this time will effect a saving to the City and its taxpayers and is in the best interest of the City and in the public interest. In making such finding and determination, the City Council has given consideration to the fixed maturities of the Bonds and the 1983 Bonds, the costs of issuance of the Bonds and the known earned income from the investment of the proceeds of the issuance and sale of the Bonds and other money of the City used in the Refunding Plan pending payment and redemption of the 1983 Bonds. -15- The City Council further finds and determines that the money to be deposited with the Refunding Trustee for the 1983 Bonds in accordance with Section 10 of this ordinance will discharge and satisfy the obligations of the City under Ordinance No. 3765 with respect to the 1983 Bonds, and the pledges, charges, trusts, covenants and agreements of the City therein made or provided for as to the 1983 Bonds and that the 1983 Bonds shall no longer be deemed to be outstanding under such ordinance immediately upon the deposit of such money with the Refunding Trustee. Section 13. Preservation of Tax Exemption for Interest on Bonds. The City covenants that it will take all actions necessary to prevent interest on the Bonds from being included in gross income for federal income tax purposes, and it will neither take any action nor make or permit any use of proceeds of the Bonds or other funds of the City treated as proceeds of the Bonds at any time during the term of the Bonds which will cause interest on the Bonds to be included in gross income for federal income tax purposes. The City 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 14. Small Governmental Issuer Arbitraqe Rebate Exemption and Designation of Bonds as "Qualified Tax-ExemDt Obligations." The City finds and declares that (a) it is a duly organized and existing governmental unit of the State of -16- 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) 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, 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 exemption 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 15. Bonds Neqotiable. The Bonds shall be negotiable instruments to the extent provided by RCW 62A.8-102 and 62A.8-105. -17- Section 16. Advance Refundinq or Defeasance of the Bonds. The City may issue advance refunding bonds pursuant to the laws of the State of Washington or use money available from any other lawful source to pay 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 "government obligations" (as defined in Chapter 39.53 RCW, as now or hereafter amended) 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 and retirement 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 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. -18- Section 17. Bond Fund. There is created and established in the office of the City Treasurer a special fund designated as the Unlimited Tax General Obligation and Refunding Bond Fund, 1991 (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. There also is created and established in the office of the City Treasurer a special fund designated as the Fire Equipment Acquisition and Building Construction Fund, 1991 ("the Acquisition and Construction Fund"). The balance of the principal proceeds received from the sale and delivery of the Bonds after the payment provided for in Section 10 shall be paid into the Acquisition and Construction Fund and used for the purposes specified in Section 1 of this ordinance. Until needed to pay the costs of the Project and costs of issuance of the Bonds, the City may invest principal proceeds temporarily in any legal investment, and the investment earnings may be retained in the Acquisition and Construction Fund and spent for the purposes of that fund. All taxes collected for and allocated to the payment of the principal of and interest on the Bonds shall be deposited in the Bond Fund. Section 18. Approval of Bond Purchase Contract. Seattle-First National Bank of Seattle, Washington, has presented a purchase contract (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 -19- 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 Bond Purchase Contract, with the approving legal opinion of Foster Pepper & Shefelman, 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 material issued or used in connection with the Bonds, and bond counsel's opinion shall so state. The City Council has been provided with copies of a preliminary official statement dated April 11, 1991 (the "Preliminary Official Statement"), prepared in connection with the sale of the Bonds. For the sole purpose of the purchaser's compliance with Securities and Exchange Commission Rule 15c2-12(b)(1), the City "deems final" that Preliminary Official 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. -20- The proper City officials are authorized and directed to do everything necessary for the prompt delivery of the Bonds to the purchaser and for the proper application and use of the proceeds of the sale thereof. Section 19. Temporary Bond. Pending the printing, execution and delivery to the purchaser of definitive Bonds, the City may cause to be executed and delivered to the purchaser a single temporary Bond in the total principal amount of the Bonds. The temporary Bond shall bear the same date of issuance, interest rates, principal payment dates and terms and covenants as the definitive Bonds, shall be issued as a fully registered Bond in the name of the purchaser, and otherwise shall be in a form acceptable to the purchaser. The temporary Bond shall be exchanged for definitive Bonds as soon as they are printed, executed and available for delivery. Section 20. Effective Date. The City is in urgent need of constructing and acquiring the improvements comprising the Project and has been advised that a favorable market exists at this time for the sale of the Bonds resulting in lower interest rates on the Bonds and a savings to the City and its taxpayers. Therefore, the City council finds that sufficient urgency exists to require that this ordinance take effect immediately upon its passage and publication. -21- PASSED by the City Council of the City of Bremerton, Washington, at a regular open public meeting thereof, this 24th day of April, 1991. · President Bremerton City Council APPROVED this ~q~-day of April, 1991. LOUIS MENTOR, Mayor ATTEST: KATHLEEN L. McCLUSKEY, City C~erk APPROVED AS TO FORM: ~lty Attorney DRAFT 4/23/91 REFUNDING TRUST AGREEMENT THIS AGREEMENT is made and entered into as of the day of May, 1991, by and between the CITY OF BREMERTON, WASHINGTON (the "City"), a municipal corporation, and SEATTLE-FIRST NATIONAL BANK, of Seattle, Washington (the "Refunding Trustee"). WHEREAS, the City now has outstanding $465,000 principal amount of its Unlimited Tax General Obligation Bonds, 1983, maturing on February 1 in each of the years 1992 through 2003, inclusive, and bearing interest at various rates from 9.00% to 11.00% (the "1983 Bonds"); and WHEREAS, pursuant to Ordinance No. of the City (the "Refunding Bond Ordinance"), the City has determined to pay the principal of and interest on the 1983 Bonds up to and including February 1, 1993, and, on February 1, 1993, to call, pay and redeem all of the outstanding 1983 Bonds at a price of par out of a portion of the proceeds of the sale of its Unlimited Tax General Obligation and Refunding Bonds, 1991 (the "Bonds"), for the purpose of effecting a savings in debt service on the 1983 Bonds; and WHEREAS, the payment, through advance refunding, of the 1983 Bonds will be accomplished pursuant to this Refunding Trust Agreement (including Schedule A attached hereto) and the Refunding Bond Ordinance, which documents provide for and, for the purpose of Sections 103, 148 and 149(d) of the Internal Revenue Code of 1986, as amended (the "Code"), are to be considered as the Refunding Plan, by: (a) The delivery by the City to the Refunding Trustee of all $330,000 proceeds of the Bonds and other funds of the City in the amount of $ ; (b) The purchase by the Refunding Trustee of the noncallable Acquired Obligations listed on Schedule A attached hereto and made a part hereof by this reference or substituted obligations purchased pursuant to Section 2 of this Agreement (the "Acquired Obligations") at or prior to the date the Bonds are delivered to the original purchasers thereof and the City receives full payment therefor (the "Date of Closing"), which Acquired Obligations satisfy the requirements of the Verification described in paragraph (c); (c) The delivery to the City and the Refunding Trustee of a verification (the "Verification") by an independent nationally recognized public accounting firm verifying the mathematical accuracy of the computations (which computations shall be attached to that report) showing that the Acquired Obligations to be purchased by the Refunding Trustee pursuant to the -2- Refunding Bond Ordinance and this Refunding Trust Agreement, together with the maturing principal of and interest on such Acquired Obligations and the beginning cash balance, if any, will provide sufficient money (assuming that all principal of and interest on the Acquired Obligations are paid on the due dates thereof) to pay when due the principal and interest on the 1983 Bonds up to and including February 1, 1993, and to pay and redeem all of the outstanding 1983 Bonds on February 1, 1993; (d) The receipt by the Refunding Trustee of the maturing installments of principal of and interest on the Acquired Obligations; and (e) The Refunding Trustee's payment from time to time to the fiscal agencies of the State of Washington (collectively, the "Fiscal Agency"), duly appointed from time to time by the State Finance Committee, of money sufficient to make the payments on the 1983 Bonds set forth herein; and WHEREAS, upon the issuance of the Bonds for the purposes set forth herein, under the authority of Chapter 39.53 RCW, the principal amount of the 1983 Bonds no longer shall be considered outstanding; and -3- WHEREAS, the City Council has found that the advance refunding of the 1983 Bonds, through the issuance of the Bonds, is beneficial and will realize a debt service savings to the City and its taxpayers; and WHEREAS, the City Council, pursuant to the Refunding Bond Ordinance, has duly and validly authorized the execution and delivery of this Refunding Trust Agreement, the delivery of a portion of the proceeds of the Bonds to the Refunding Trustee, the purchase by the Refunding Trustee of the Acquired Obligations and the carrying out of the Refunding Plan; NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained and for the benefit of the City, the parties hereto agree as follows: Section 1. Delivery of Money to Escrow Aqent. On the Date of Closing, the City shall cause to be delivered to the Refunding Trustee $330,000 of the proceeds of the Bonds and other funds of the City in the amount of $ . Section 2. Investment and Expenditure of Money. On the Date of Closing, the Refunding Trustee shall apply $ to pay, on behalf of the City, the subscription or purchase prices for the purchase of the Acquired Obligations, from the sources, in the principal amounts, with the dates of maturity and at the interest rates or yields set forth in Schedule A, and shall hold $ as a beginning cash balance. Upon receipt thereof, the Refunding Trustee shall deliver to the City -4- copies of the documents evidencing the purchase of and payment for the Acquired Obligations. The City reserves the right at or prior to the Date of Closing to substitute other noncallable direct obligations of the United States of America authorized to be acquired with the proceeds of refunding bonds under the Refunding Bond Act of the State of Washington, Chapter 39.53 RCW ("Government Obligations"), or cash for any of the Acquired Obligations and to use any savings created thereby for any lawful City purpose if (a) in the opinion of Foster Pepper & Shefelman, bond counsel to the City, the interest on the Bonds will remain excluded from gross income for federal income tax purposes under Sections 103, 148 and 149(d) of the Code, and (b) a verification by an independent nationally recognized public accounting firm acceptable to the Refunding Trustee is obtained by the City verifying that such substitution shall not impair the timely payment of the amounts required to be paid under the Refunding Plan. On the Date of Closing, the Refunding Trustee shall pay the costs of issuance and sale of the Bonds from the remaining Bond proceeds deposited with the Refunding Trustee and, if not all of such remaining proceeds are required to pay these costs, shall return any unspent proceeds to the City for deposit in the Unlimited Tax General Obligation and Refunding Bond Fund, 1991, of the City. -5- Section 3. Sufficiency of Acquired Obliqations. The City represents that the Acquired Obligations and the maturing principal thereof and the interest thereon, if paid when due, together with the beginning cash balance, shall be sufficient to make the payments required by the Refunding Plan when due. Such amounts coming due are sometimes referred to hereinafter as the "payments described in Section 3." The schedules of the sources, amounts, maturities and interest rates or yields of the Acquired Obligations and of the 1983 Bonds which will fulfill the foregoing requirements are set forth in the Verification. Section 4. Collection of Proceeds of Acquired Obliqations and ADplication of Such Proceeds and Money. The Refunding Trustee shall present for payment and shall collect and receive on the due dates thereof the maturing installments of the principal of and the interest on the Acquired Obligations and any Substitute Obligations (defined hereinafter). The Refunding Trustee shall make payments in a timely manner to the Fiscal Agency of the amounts to be paid on the 1983 Bonds as shown in the Verification. Those payments shall be made by check, wire transfer or such other method of transfer of funds as shall be agreed upon by the Refunding Trustee and the Fiscal Agency. The Refunding Trustee shall notify the City not more than 70 nor less than 60 days prior to the call date to give notice of the call for redemption of the 1983 Bonds, and the City shall cause -6- timely notice of call for redemption of the 1983 Bonds to be given to the owners of those bonds. Section 5. All Obliqations and Money and Proceeds Thereof Held in Trust. The Refunding Trustee irrevocably agrees to hold the Acquired Obligations, the Substitute Obligations, if any, the principal thereof and interest thereon and any other money which it may receive pursuant to this Refunding Trust Agreement, and any reinvestments thereof made pursuant to Sections 7 and 8 hereof, in trust and separate at all times from all other funds and investments held by the Refunding Trustee, solely for the purpose of making the payments described in Section 3. The City irrevocably conveys, transfers and assigns to the Refunding Trustee the Acquired Obligations, any Substitute Obligations, the principal thereof and the interest thereon and any other money deposited with the Refunding Trustee pursuant to this Refunding Trust Agreement, for the purpose of making such payments. The Refunding Trustee shall not sell, transfer, assign or hypothecate any Acquired Obligations or Substitute Obligations except pursuant to Sections 7, 8, 9 and 13 hereof. Section 6. Reports and Notice of Insufficiency. The Refunding Trustee shall submit a report to the City at least semiannually, which report shall set forth the Acquired Obligations and any Substitute Obligations held hereunder by the Refunding Trustee, the obligations which have matured and amounts received by the Refunding Trustee by reason of such -7- maturity, the interest earned on such obligations, a list of any investments or reinvestments made by the Refunding Trustee in other obligations and the interest and/or principal derived therefrom, the amounts paid to the Fiscal Agency and any other transaction of the Refunding Trustee pertaining to its duties and obligations as set forth herein. In the event the maturing principal of and interest on the Acquired Obligations, any Substitute Obligations and other money held by the Refunding Trustee pursuant to this Refunding Trust Agreement shall be insufficient or shall be projected to become insufficient at any time in the future to make the payments described in Section 3, the Refunding Trustee shall give the City prompt notice of such insufficiency or projected insufficiency. Section 7. Substitution of Different Government Obliqations or Other Investments. The City reserves the right to substitute from time to time for the Acquired Obligations initially purchased in accordance with Section 2 hereof, or for obligations purchased under this section, other Government Obligations (the "Substitute Obligations"). Prior to effecting any such substitution, the City shall have obtained at its expense and delivered to the Refunding Trustee: (a) A verification by an independent nationally recognized public accounting firm acceptable to the Refunding Trustee confirming that payments of principal -8- of and interest on the Substitute Obligations, if paid when due, and any other money held by the Refunding Trustee, will be sufficient to carry out the Refunding Plan; and (b) An opinion from Foster Pepper & Shefelman, bond counsel to the City, its successor or other nationally recognized bond counsel to the City, that the disposition and substitution or purchase of such securities, under the statutes, rules and regulations then in force and applicable to the Bonds, will not cause the interest on the Bonds or the 1983 Bonds to be included in gross income for federal income tax purposes and that such disposition and substitution or purchase is in compliance with the statutes and regulations applicable to the Bonds. Any surplus money resulting from the sale, transfer, other disposition or redemption of the Acquired Obligations and the substitutions therefor shall be released from the trust estate and shall be transferred to the City to be used for any lawful City purpose. Section 8. Reinvestment of Proceeds of Acquired and/or Substitute Obliqations. The proceeds (principal and interest) and reinvestment proceeds of any Acquired Obligations and/or Substitute Obligations held by the Refunding Trustee in accordance with this Refunding Trust Agreement which are not -9- needed within five business days of the receipt thereof to make the payments described in Section 3 shall be reinvested by the Refunding Trustee on such date of receipt, subject to the following conditions: (a) Except as provided in subsection (c) below, the proceeds of such Acquired Obligations and/or Substitute Obligations shall be reinvested in Government Obligations at a yield not to exceed % for those Acquired Obligations or Substitute Obligations purchased with Bond proceeds, or a yield not greater than % for those obligations purchased with other money of the City, or such higher yield as may be directed by letter of instructions from the City to the Refunding Trustee, but if the composite yield on the directed investments made pursuant to this Refunding Trust Agreement would exceed % for those Acquired Obligations or Substitute Obligations purchased with Bond proceeds, or a yield not greater than % for those obligations purchased with other money of the City, such letter of instructions shall contain a verification of such composite yield and shall be based upon and accompanied by the opinion of Foster Pepper & Shefelman, bond counsel to the City, its successor, or other nationally recognized bond -10- counsel to the City, approving reinvestment of such proceeds at such higher yield. (b) The obligations in which such proceeds are reinvested shall mature on the date or dates directed by the City, but not later than the dates (as shown by the then most recent certified public accountant verification) the principal thereof is needed to make the payments described in Section 3; (c) If such proceeds, together with other funds remaining in trust, are insufficient to reinvest in the smallest denomination of such obligations or are required sooner than the shortest maturity available for such obligations, then those proceeds and funds either shall be converted to United States currency and retained or carried on the books of the Refunding Trustee until required to make the payments described in Section 3, or until sufficient money is accumulated to permit the investment thereof; and (d) "Yield," as used in paragraph (a) of this section with respect to the Acquired Obligations or Substitute Obligations means that yield computed in accordance with and permitted by the Code applicable to the Bonds and the 1983 Bonds and the trust under this Refunding Trust Agreement so as to preserve the -11- exclusion from gross income for federal income tax purposes of the interest on the Bonds. Section 9. Surplus Money in Escrow. If at any time during the term of the escrow created pursuant to this Refunding Trust Agreement there are Acquired Obligations, Substitute Obligations and/or money held by the Refunding Trustee in excess of that required to make the payments described in Section 3 when due, considering the earnings to be realized on the investment of such obligations, and the City requests that such surplus obligations or the proceeds thereof or such surplus money be returned by the Refunding Trustee to the City or requests that such surplus be applied to any fees of the Refunding Trustee, then the Refunding Trustee shall do so at the times requested by the City. Before the return of any surplus to the City or application thereof to the Refunding Trustee's fees, the City shall furnish the Refunding Trustee a verification of an independent public accounting firm satisfactory to the Refunding Trustee showing the amount of such surplus. Section 10. Amendments to Refundinq Trust Aqreement. The Refunding Trustee and the City recognize that the owners of the 1983 Bonds and the Bonds from time to time have a beneficial interest in the Acquired Obligations, the Substitute Obligations and money to be held by the Refunding Trustee as herein provided. Therefore, this Refunding Trust Agreement is irrevocable and shall not be subject to amendment except for the -12- purpose of clarifying any ambiguity herein, increasing the protection of the rights of the owners of the Bonds or the 1983 Bonds, or preserving the exclusion of the interest on the 1983 Bonds and the Bonds from gross income for federal income tax purposes unless such amendment is accompanied by an opinion addressed to the City and the Refunding Trustee from Foster Pepper & Shefelman, its successor, or other nationally recognized bond counsel to the City, to the effect that such change is so necessary and does not detrimentally affect the holders and owners of the outstanding 1983 Bonds and the Bonds or that it strengthens the protection of the holders of the 1983 Bonds and the Bonds and does not detrimentally affect the holders and owners of the 1983 Bonds and the Bonds. If such amendment affects the amount of money and investments in the trust account or the application thereof, prior to the amendments taking effect there also shall be a verification by an independent nationally recognized public accounting firm satisfactory to the Refunding Trustee to the effect that after such amendment the Acquired Obligations, Substitute Obligations and other money in the trust account will be sufficient to make the payments described in Section 3. A prior notice of the amendment shall be mailed to any national rating agency maintaining a rating on the 1983 Bonds. Section 11. Limitation of Liability of Refundinq Trustee. None of the provisions contained in this Refunding Trust -13- Agreement shall require the Refunding Trustee to use or advance its own funds in the performance of any of its duties or the exercise of any of its rights or powers hereunder. The Refunding Trustee shall be under no liability for the payment of interest on any funds or other property received by it hereunder except to the extent the Refunding Trustee is required by the express terms of this Refunding Trust Agreement to invest such funds. The Refunding Trustee's liabilities and obligations in connection with this Refunding Trust Agreement are confined to those specifically described herein. The Refunding Trustee is authorized and directed to comply with the provisions of this Refunding Trust Agreement and is relieved from all liability for so doing notwithstanding any demand or notice to the contrary by any party hereto. The Refunding Trustee shall not be responsible or liable for the sufficiency, correctness, genuineness or validity of the Acquired Obligations or the Substitute Obligations deposited with it; the performance or compliance by any party other than the Refunding Trustee with the terms or conditions of any such instruments; or any loss which may occur by reason of forgeries, false representations or the exercise of the Refunding Trustee's discretion in any particular manner unless such exercise is negligent or constitutes willful misconduct. -14- If any controversy arises between the City and any third person, the Refunding Trustee shall not be required to determine the same or to take any action in the premises, but it may institute, in its discretion, an interpleader or other proceedings in connection therewith as it may deem proper, and in following either course, it shall not be liable. Section 12. City Deposit of Additional Money. The City agrees that it will deposit promptly with the Refunding Trustee the additional money specified in the Refunding Trustee's notice of insufficiency given pursuant to Section 6 hereof. Section 13. Remittance of Funds When 1983 Bonds Paid in Full. At such time as the Refunding Trustee has received the representation of the City that the payments described in Section 3 have been made and the confirmation of such representation by the Fiscal Agency, together with such other evidence of such payment as shall be satisfactory to the City and the Refunding Trustee, the Refunding Trustee shall deliver forthwith or remit to the City any remaining Acquired Obligations, any Substitute Obligations and money held pursuant to this Refunding Trust Agreement. Section 14. Compensation of Refundinq Trustee. The payment arrangement heretofore made between the Refunding Trustee and the City on compensation and expenses of the Refunding Trustee for services rendered by it pursuant to the provisions of this Refunding Trust Agreement is satisfactory to it and to the City, -15- and no further payment to the Refunding Trustee shall be required for such purpose. Such arrangement for compensation and expenses is intended as compensation for the ordinary services as contemplated by this Refunding Trust Agreement, and in the event that the Refunding Trustee renders any service hereunder not provided for in this Refunding Trust Agreement, or the Refunding Trustee is made a party to or intervenes in any litigation pertaining to this Refunding Trust Agreement or institutes interpleader proceedings relative hereto, the Refunding Trustee shall be compensated reasonably by the City for such extraordinary services and reimbursed for all fees, costs, liability and expenses (including reasonable attorneys' fees) occasioned thereby. Section 15. Successor Refundinq Trustee. The obligations assumed by the Refunding Trustee pursuant to this Refunding Trust Agreement may be transferred by the Refunding Trustee to a successor if (a) the Refunding Trustee has presented evidence satisfactory to the City and to Foster Pepper & Shefelman, its successor or other nationally recognized bond counsel to the City, that the successor meets the requirements of RCW 39.53.070, as now in effect or hereafter amended; (b) the City approves the appointment of the successor trustee; (c) the successor has assumed all of the obligations of the Refunding Trustee under this Refunding Trust Agreement and has been compensated; and (d) all of the Acquired Obligations, Substitute -16- Obligations and money then held by the Refunding Trustee pursuant to this Refunding Trust Agreement have been duly transferred to such successor. Section 16. Indemnification of Refundinq Trustee. To the extent permitted by law, the City assumes liability for, and agrees (whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect, save and keep harmless the Refunding Trustee and its respective successors, assigns, agents, employees and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursements) of whatsoever kind and nature which may be imposed on, incurred by, or asserted against, the Refunding Trustee at any time (whether or not also indemnified against the same by the City or any other person under any other agreement or instrument, but without double indemnity) in any way relating to or arising out of the performance of this Agreement, the establishment hereunder of the Refunding Trust, the purchase of any securities to be purchased pursuant thereto, the retention of such securities or the proceeds thereof and any payment, transfer or other application of money or securities by the Refunding Trustee in accordance with the provisions of this Agreement; except the City shall not be required to indemnify the Refunding Trustee against the Refunding Trustee's own negligence or -17- willful misconduct or the negligence or willful misconduct of the Refunding Trustee's respective successors, assigns, agents and employees or the material breach by the Refunding Trustee of the terms of this Agreement. In no event shall the City or the Refunding Trustee be liable to any person by reason of the transactions contemplated hereby other than to each other as set forth in this section. The indemnities contained in this section shall survive the termination of this Agreement. Section 17. Miscellaneous. This Refunding Trust Agreement is governed by Washington law and may not be modified except by a writing signed by the parties and subject to the limitations of Section 10. In the event any one or more of the provisions contained in this Refunding Trust Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Refunding Trust Agreement, but this Refunding Trust Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. IN WITNESS WHEREOF, the parties have executed and delivered this Refunding Trust Agreement pursuant to due and proper authorization, all as of the date and year first above written. CITY OF BREMERTON, WASHINGTON SEATTLE-FIRST NATIONAL BANK, as Refunding Trustee By By Mayor Title: MLC-1631* -18- SCHEDULE A ACQUIRED OBLIGATIONS PAR INTEREST MATURITY TYPE* AMOUNT RATE DATE *LC = State and Local Government Series-Certificate of Indebtedness LN = State and Local Government Series-Note MLC-1631* I, KATHLEEN L. McCLUSKEY, City Clerk of the City of Bremerton, Washington, certify that the attached copy of Ordinance No.~l is a true and correct copy of the original ordinance passed on the 24th day of April, 1991, as such ordinance appears on the Minute book of the City. DATED this day of April, 1991. KATHLEEN L. McCLUSKEY, City Clerk MLC-1629' Nari S. Manhas Vice President and Manager Municipal Finance April 24, 1991 Honorable Mayor and City Council City of Bremerton 239 - 4th Street Bremerton, WA 98310 Ladies and Gentlemen: ,S,.eaf'trst Bank (the "Bank") is pleased to present an offer to purchase from the City of Bremerton (the City"), all of its $1,850,000 principal amount of Unlimited Tax General Obligation and Refunding Bonds, 1991 (the "Bonds"), which will be dated May 1, 1991. Principal of the Bonds shall be paid on February 1 of each year, commencing February 1, 1993 and annually thereafter. The Bonds shall bear interest at the rates shown immediately below: Due Amounl Rate Dll~ Amount Rate 1993 $ 70,000 5.25% 2000 $155,000 6.35% 1994 75,000 5.50 2001 175,000 6.45 1995 80,000 5.70 2002 180,000 6.55 1996 85,000 5.85 2003 200,000 6.65 1997 110,000 6.00 2004 135,000 6.75 1998 140,000 6.15 2005 145,000 6.85 1999 145,000 6.25 2006 155,000 6.95 We will pay you $98.72 for each $100.00 par value of Bonds. Our offer is subject to the following conditions: 1. The City has the full legal right, power and authority to enter into and perform its obligations under this Bond Purchase Contract and under the ordinance authorizing the issuance of the Bonds, to pass the Bond Ordinance and to sell and deliver the Bonds to the Bank. 2. Neither any government consent, approval nor authorization other than the Bond Ordinance is required in connection with the sale of the Bonds to the Bank 3. The approving legal opinion of Foster Pepper & Shefelman will be delivered with and printed on the Bonds. 4. The Bonds will be delivered to the Bank in Seattle, Washington, on May 15, 1991 or any other date agreed upon by the City, the Bank and bond counsel. The City may, as required, close the purchase of the Bonds with temporary bonds. 5. The City will be responsible for all of the bond issuance expenses including, but not limited to, bond counsel fees, bond printing and bond registration fees, bond rating fees, etc. 6. Interest on outstanding principal of the Bonds will be paid semiannually, commencing February 1, 1992 and on each August 1 and February 1 thereafter, until maturity. 7. The City shall reserve the right to redeem the Bonds maturing on or after February 1, 2000, in whole or in part, beginning February 1, 1999, or on any interest payment date thereafter, at par plus accrued interest to the date fixed for redemption. Seafirst Bank/800 Fifth Avenue, Floor 34/Post Office Box 34662/Seattle, Washington 98124 Telephone (206) 358-8939 / Telefax (206) 358-8877 City of Bremerton April 24, 1991 Page 2 8. The Bonds will be issued in fully registered form as to both principal and interest in the denomination of $5,000 each or any integral multiple thereof within a single maturity year. The Fiscal Agent of the State of Washington shall act as Registrar, Paying Agent and Transfer Agent for the Bonds. 9. Interest shall accrue on the basis of a 360-day year comprised of twelve 30-day months. 10. The Bank will prepare, on behalf of the City, the preliminary and final Official Statements describing the bond issue. The City shall cooperate with the Bank in the preparation of same and make available same in final form within 7 business days from the date of this Bond Purchase Contract. 11. As of its date, the Preliminary Official Statement has been "deemed final" by the City for purposes of S.E.C. Rule 15c2-12(b)(1). 12. The City shall deliver to the Bank, at the time of delivery of the Bonds, a statement substantially to the effect that: (a) from the date of the City's acceptance of this Bond Purchase Contract to the dated date of the Bonds, the Official Statement contains no untrue statement of a material fact nor omits any material fact necessary to make the statements therein, in light of the circumstances under which the statements were made, not misleading in any material respect; (b) the City has not incurred any material liabilities, either direct or contingent, nor has there been any material adverse change in the operations or financial condition of the City, nor, to the best of the City's knowledge, in the general economy of the City, except as described in the Official Statement. 13. If, prior to the sale of the Bonds by the Bank, the interest receivable on the Bonds becomes taxable, either directly or indirectly by the terms of any federal income tax law, the Bank may, at its option, be relieved of the obligation to purchase the Bonds. 14. This offer is submitted for acceptance by the City on April 24, 1991, at a meeting of the City Council duly held. Acceptance after that time is subject to confirmation and possible adjustment of the terms to reflect changing market conditions. 15. Details of this offer may be altered by mutual consent of the Bank and the City to accommodate the needs of the City. ~/~~, ~ubmitted, N'ari S: Ma~h~as~~ For your information only: Gross interest cost $1,115,639.38 Plus: Discount 23,680.00 Net interest cost $1,139,319.38 NIC (%) 6.6695% City of Bremerton, Washington Accepted this 24th day of April, 1991 By: