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SOUTH WHIDBEY PARKS AND RECREATION DISTRICT

ISLAND COUNTY, WASHINGTON

UNLIMITED TAX GENERAL OBLIGATION REFUNDING BOND, 2016

_____________________________________

RESOLUTION NO. ________

A RESOLUTION OF THE BOARD OF COMMISSIONERS OF SOUTH

WHIDBEY PARKS AND RECREATION DISTRICT, ISLAND

COUNTY, WASHINGTON, PROVIDING FOR THE ISSUANCE

AND SALE OF AN UNLIMITED TAX GENERAL OBLIGATION

REFUNDING BOND OF THE DISTRICT IN THE PRINCIPAL

AMOUNT OF NOT TO EXCEED $1,120,000 FOR THE PURPOSE

OF REFUNDING CERTAIN OUTSTANDING UNLIMITED TAX

GENERAL OBLIGATION BONDS OF THE DISTRICT;

PROVIDING THE FORM OF THE BOND; AND APPROVING THE

SALE OF THE BOND.

APPROVED ON SEPTEMBER 21, 2016

PREPARED BY:

PACIFICA LAW GROUP LLP

SEATTLE, WASHINGTON

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RESOLUTION NO. ____

TABLE OF CONTENTS*

Page

Section 1. Definitions and Interpretation of Terms ..................................................................2

Section 2. Authorization of the Bond .......................................................................................5

Section 3. Bond Details.............................................................................................................5

Section 4. Registration, Exchange and Payments .....................................................................5

Section 5. Form of Bond ...........................................................................................................6

Section 6. Execution of Bond ...................................................................................................8

Section 7. Application of Bond Proceeds; Plan of Refunding ..................................................9

Section 8. Tax Covenants .......................................................................................................10

Section 9. Pledge of Funds and Credit; General Obligation ...................................................11

Section 10. Right of Prepayment ..............................................................................................11

Section 11. Sale of the Bond .....................................................................................................11

Section 12. Ongoing Disclosure; Covenants ............................................................................12

Section 13. Lost, Stolen or Destroyed Bond .............................................................................12

Section 14. Assignment ............................................................................................................13

Section 15. General Authorization and Ratification .................................................................13

Section 16. Severability ............................................................................................................13

Section 17. Effective Date ........................................................................................................13

Exhibit A: Lender’s Proposal

* This Table of Contents is provided for convenience only and is not a part of this resolution.

10062 00006 fa073n21h1

RESOLUTION NO. _________

A RESOLUTION OF THE BOARD OF COMMISSIONERS OF SOUTH

WHIDBEY PARKS AND RECREATION DISTRICT, ISLAND

COUNTY, WASHINGTON, PROVIDING FOR THE ISSUANCE

AND SALE OF AN UNLIMITED TAX GENERAL OBLIGATION

REFUNDING BOND OF THE DISTRICT IN THE PRINCIPAL

AMOUNT OF NOT TO EXCEED $1,120,000 FOR THE PURPOSE

OF REFUNDING CERTAIN OUTSTANDING UNLIMITED TAX

GENERAL OBLIGATION BONDS OF THE DISTRICT;

PROVIDING THE FORM OF THE BOND; AND APPROVING THE

SALE OF THE BOND.

WHEREAS, South Whidbey Parks and Recreation District, Island County, Washington

(the “District”), issued its Unlimited Tax General Obligation Bonds, 2008 (the “2008 Bonds”)

pursuant to Resolution No. 2008-07, adopted by the District’s Board of Commissioners (the

“Board”) on May 21, 2008 (the “2008 Bond Resolution”); and

WHEREAS, the 2008 Bonds were issued under the authority of chapters 36.69 and 39.46

of the Revised Code of Washington (“RCW”) and were authorized by the qualified voters of the

District at an election held on February 19, 2008; and

WHEREAS, the 2008 Bonds remain outstanding as follows:

Maturity Dates

(December 1)

Principal Amounts

Interest Rates

2017* $ 150,000 3.50%

2021* 350,000 4.50

2027* 645,000 4.70

*Term Bonds.

WHEREAS, the 2008 Bond Resolution provides that the 2008 Bonds maturing on or after

December 1, 2021, may be refunded prior to their stated maturities at the option of the District on

any date on or after June 1, 2018, as a whole or in part, at the price of par plus accrued interest, if

any, to the date of redemption; and

WHEREAS, after due consideration it appears that the December 1, 2021 and 2027

maturities of the 2008 Bonds (the “Refunded Bonds”) may be defeased and advance refunded by

the proceeds of unlimited tax general obligation bonds at a savings to the District and its taxpayers;

and

WHEREAS, the Board deems it in the best interest of the District to issue an unlimited

tax general obligation refunding bond in the principal amount of not to exceed $1,120,000

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(the “Bond”) to advance refund and defease the Refunded Bonds and to pay costs of issuing the

Bond; and

WHEREAS, the District has received a proposal from Heritage Bank (the “Lender”) set

forth in Exhibit A attached hereto (the “Proposal”), to purchase the Bond; and

WHEREAS, it is deemed necessary and advisable that the District accept the Lender’s

offer and issue the Bond as set forth herein;

NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF

SOUTH WHIDBEY PARKS AND RECREATION DISTRICT, ISLAND COUNTY,

WASHINGTON as follows:

Section 1. Definitions and Interpretation of Terms.

(a) Definitions. As used in this resolution, the following words shall have the

following meanings:

Acquired Obligations mean the Government Obligations acquired by the District under the

terms of this resolution and the Escrow Agreement to effect the defeasance and refunding of the

Refunded Bonds, but only to the extent that the same are acquired at Fair Market Value.

Board means the duly constituted Board of Commissioners as the general legislative

authority of the District, as the same may be constituted from time to time.

Bond means the Unlimited Tax General Obligation Refunding Bond, 2016 authorized to

be issued by the District pursuant to this resolution.

Bond Counsel means Pacifica Law Group LLP, Seattle, Washington, or any other attorney

or firm of attorneys, which is admitted to practice law before the highest court of any state in the

United States of America or the District of Columbia and nationally recognized and experienced

in legal work relating to the issuance of tax-exempt bonds who is or are selected by the District.

Bond Fund means the fund or account authorized to be created pursuant to Section 9 of

this resolution for the purpose of paying debt service on the Bond.

Bond Register means the registration records for the Bond maintained by the Bond

Registrar.

Bond Registrar means the Treasurer, whose duties include registering and authenticating

the Bond, maintaining the Bond Register, transferring ownership of the Bond, and paying the

principal of and interest on the Bond.

Call Date means the date set forth in the Escrow Agreement for the refunding of the

Refunded Bonds.

Code means the Internal Revenue Code of 1986, as amended, together with corresponding

and applicable final, temporary or proposed regulations and revenue rulings issued or amended

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with respect thereto by the United States Treasury Department or the Internal Revenue Service, to

the extent applicable to the Bond.

Commission means the Securities and Exchange Commission.

Designated Representative means the Director of the District, or his or her designee.

Director means the Park Director of the District, or the successor to such officer.

District means South Whidbey Parks and Recreation District, Island County, Washington,

duly organized and existing under and by virtue of the laws of the State of Washington.

Escrow Agent means U.S. Bank National Association, and its successors and assigns.

Escrow Agreement means the Escrow Deposit Agreement between the District and the

Escrow Agent to be dated as of the date of closing and delivery of the Bond.

Event of Default means the declaration by the Lender of an event of default as a result of

a determination by the Lender that there has been: (i) a failure to pay principal or interest on the

Bond when due, (ii) a failure by the District to comply with any of its obligations, or to perform

any of its duties, under the this resolution, or the Bond, which failure continues, and is not cured,

for a period of more than 60 days after the Lender has made written demand on the District to cure

such failure, or (iii) a material misrepresentation to the Lender by the District in the purchase of

the Bond, as reasonably concluded by the Lender after investigation and discussion with the

District.

Fair Market Value means the price at which a willing buyer would purchase the

investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date

the contract to purchase or sell the investment becomes binding) if the investment is traded on an

established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the

term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as

referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with

applicable regulations under the Code, (ii) the investment is an agreement with specifically

negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for

example, a guaranteed investment contract, a forward supply contract or other investment

agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the

investment is a United States Treasury Security--State and Local Government Series that is

acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or

(iv) any commingled investment fund in which the City and related parties do not own more than

a 10% beneficial interest therein if the return paid by the fund is without regard to the source of

the investment. To the extent required by the applicable regulations under the Code, the term

“investment” shall include a hedge.

Federal Tax Certificate means the certificate executed by the Designated Representative

setting forth the requirements of the Code for maintaining the tax exemption of interest on the

Bond to be dated as of the date of closing and delivery of the Bond, and attachments thereto.

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Fiscal Year means the period beginning January 1 of each year and ending on the next

succeeding December 31, or as otherwise established by the District.

Government Obligations mean those obligations now or hereafter defined as such in

chapter 39.53 RCW, as such chapter may be amended or restated.

Interest Rate means a fixed rate of interest of 1.84% per annum; provided such Interest

Rate may be adjusted upon the occurrence of an Event of Default as provided in Section 3 of this

resolution.

Lender means Heritage Bank, or its successors or assigns.

Placement Agent means D.A. Davidson & Co., and its successors.

Proposal means the proposal letter submitted by the Lender substantially in the form

attached hereto as Exhibit A.

Refunded Bonds mean those 2008 Bonds designated for refunding pursuant to Section 7

and Section 11.

Registered Owner means the person in whose name the Bond is registered on the Bond

Register.

Rule means the Commission’s Rule 15c2-12 under the Securities Exchange Act of 1934,

as the same may be amended from time to time.

State means the State of Washington.

Treasurer means the Island County Treasurer, as ex officio treasurer of the District, or any

successor to the functions of the Treasurer.

2008 Bond Resolution means Resolution No. 2008-07 passed by the Board on May 21,

2008, authorizing the issuance of the 2008 Bonds.

2008 Bonds mean the Unlimited Tax General Obligation Bonds, 2008 of the District,

issued pursuant to the 2008 Bond Resolution as described in the recitals of this resolution.

(b) Interpretation. In this resolution, unless the context otherwise requires:

(1) The terms “hereby,” “hereof,” “hereto,” “herein,” “hereunder” and any

similar terms, as used in this resolution, refer to this resolution as a whole and not to any particular

article, section, subdivision or clause hereof, and the term “hereafter” shall mean after, and the

term “heretofore” shall mean before, the date of this resolution;

(2) Words of the masculine gender shall mean and include correlative words of

the feminine and neutral genders and words importing the singular number shall mean and include

the plural number and vice versa;

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(3) Words importing persons shall include firms, associations, partnerships

(including limited partnerships), trusts, corporations and other legal entities, including public

bodies, as well as natural persons;

(4) Any headings preceding the text of the several articles and sections of this

resolution, and any table of contents or marginal notes appended to copies hereof, shall be solely

for convenience of reference and shall not constitute a part of this resolution, nor shall they affect

its meaning, construction or effect; and

(5) All references herein to “articles,” “sections” and other subdivisions or

clauses are to the corresponding articles, sections, subdivisions or clauses hereof.

Section 2. Authorization of the Bond. For the purpose of refunding the Refunded

Bonds and paying costs of issuance and the costs of the refunding, the District is hereby authorized

to issue and sell an unlimited tax general obligation refunding bond in the principal amount of not

to exceed $1,120,000 (the “Bond”).

Section 3. Bond Details. The Bond shall be designated the “South Whidbey Parks and

Recreation District, Island County, Washington, Unlimited Tax General Obligation Refunding

Bond, 2016,” or other such designation as set forth in the Bond and approved by the Designated

Representative.

The Bond shall be dated as of its date of delivery to the Lender, shall be fully registered as

to both principal and interest, shall be in one denomination, and shall mature on December 1, 2027,

as set forth in the Bond. The Bond shall bear interest from its dated date or the most recent date

to which interest has been paid at the Interest Rate, subject to adjustment as provided below.

Interest on the principal amount of the Bond shall be calculated per annum on a 30/360-day basis.

Principal and interest on the Bond shall be payable as set forth in the payment schedule attached

to the Bond.

Notwithstanding anything to the contrary in this resolution, at the election of the Lender

and with prior written notice to the District, the Interest Rate on the Bond will increase while an

Event of Default is continuing and uncured by three percent (3.0%).

Section 4. Registration, Exchange and Payments.

(a) Registrar/Bond Registrar. The Treasurer of the District shall act as Bond Registrar.

The Bond Registrar is authorized, on behalf of the District, to authenticate and deliver the Bond if

transferred or exchanged in accordance with the provisions of the Bond and this resolution and to

carry out all of the Bond Registrar’s powers and duties under this resolution.

(b) Registered Ownership. The District and the Bond Registrar may deem and treat

the Registered Owner of the Bond as the absolute owner for all purposes, and neither the District

nor the Bond Registrar shall be affected by any notice to the contrary. Payment of the Bond shall

be made only as described in subsection (d) below. All such payments made as described in

subsection (d) below shall be valid and shall satisfy the liability of the District upon the Bond to

the extent of the amount so paid.

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(c) No Transfer or Exchange of Registered Ownership. The Bond shall not be

transferrable without the written consent of the District unless (i) the Lender’s corporate name is

changed and the transfer is necessary to reflect such change, or (ii) the transferee is a successor in

interest of the Lender by means of a corporate merger, an exchange of stock, or a sale of assets.

Notwithstanding the foregoing, the Bond may be transferred upon satisfaction of the requirements,

if any, set forth in this resolution and in the Bond.

(d) Place and Medium of Payment. Both principal of and interest on the Bond shall be

payable in lawful money of the United States of America. Principal and interest on the Bond shall

be payable by check, warrant, Automated Clearing House/electronic funds transfer or by other

means mutually acceptable to the Registered Owner and the District. Payment of principal of and

interest on the Bond will be made by the District directly to the Registered Owner and not through

a third party paying agent. Upon final payment of principal and interest of the Bond, the Registered

Owner shall surrender the Bond for cancellation at the office of the Bond Registrar in accordance

with this Section 4 and Section 13, if applicable. Any payment by the District to the Lender shall

be applied first to pay accrued interest, and second to pay Bond principal.

Section 5. Form of Bond. The Bond shall be in substantially the following form:

THIS BOND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS

AMENDED (THE “SECURITIES ACT”), AS AMENDED, OR UNDER THE SECURITIES

LAWS OF ANY STATE OR JURISDICTION, THIS BOND IS SUBJECT TO CERTAIN

TRANSFER RESTRICTIONS AS PROVIDED IN THE BOND RESOLUTION DESCRIBED

BELOW AND MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED

EXCEPT PURSUANT TO THE TERMS THEREOF.

UNITED STATES OF AMERICA

NO. R-1 $____________

STATE OF WASHINGTON

SOUTH WHIDBEY PARKS AND RECREATION DISTRICT

ISLAND COUNTY, WASHINGTON

UNLIMITED TAX GENERAL OBLIGATION REFUNDING BOND, 2016

INTEREST RATE: 1.84%, SUBJECT TO ADJUSTMENT AS PROVIDED BELOW

MATURITY DATE: DECEMBER 1, 2027

REGISTERED OWNER: HERITAGE BANK

PRINCIPAL AMOUNT: _______________ AND NO/100 DOLLARS

SOUTH WHIDBEY PARKS AND RECREATION DISTRICT, ISLAND COUNTY,

WASHINGTON (the “District”), hereby acknowledges itself to owe and for value received

promises to pay to the Registered Owner identified above, on or before the Maturity Date identified

above, the Principal Amount identified above. This bond shall bear interest at the fixed rate stated

above (the “Interest Rate”), subject to adjustment as provided herein. Interest on this bond shall

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accrue from its dated date until paid and shall be computed per annum on the principal amount

outstanding on a 30/360-day basis. Principal of and accrued interest on this bond shall be payable

on the dates set forth in the payment schedule attached hereto. Notwithstanding the foregoing, at

the election of the Registered Owner and with prior written notice to the District, the interest rate

on this bond will increase while an Event of Default is continuing and uncured by three percent

(3.0%).

Both principal of and interest on this bond shall be payable in lawful money of the United

States of America. Principal and interest on this bond shall be payable by check or warrant or by

other means mutually acceptable to the Registered Owner and the District. Upon final payment of

principal and interest of this bond, the Registered Owner shall surrender this bond for cancellation

at the office of the Bond Registrar in accordance with Resolution No. ______ of the District (the

“Bond Resolution”).

This bond is issued pursuant to the Bond Resolution to refund certain outstanding unlimited

tax general obligation bonds of the District and to pay costs of issuance and costs associated with

the refunding. Capitalized terms used in this bond have the meanings given such terms in the Bond

Resolution.

The District may prepay this bond as provided in the Bond Resolution.

This bond has been designated by the District as a “qualified tax-exempt obligation” within

the meaning of Section 265(b) of the Internal Revenue Code of 1986, as amended.

The District has in the Bond Resolution authorized the creation of a fund or account to be

used for the payment of debt service on this bond (the “Bond Fund”). The Bond Fund shall be

drawn upon for the sole purpose of paying the principal of and interest on this bond.

The District hereby irrevocably covenants with the Registered Owner that the District will

levy taxes annually upon all the taxable property in the District without limitation as to rate or

amount and in amounts sufficient, together with other money legally available therefor, to pay the

principal of and interest on this bond when due. The full faith, credit and resources of the District

are irrevocably pledged for the annual levy and collection of such taxes and the prompt payment

of such principal and interest, and any applicable prepayment fees.

This bond shall not be valid or become obligatory for any purpose or be entitled to any

security or benefit under the Bond Resolution until the Certificate of Authentication hereon shall

have been manually signed by or on behalf of the Bond Registrar or its duly designated agent.

This bond is issued pursuant to the Constitution and laws of the State of Washington, and

duly adopted resolutions of the District. This bond is transferable upon compliance with the

conditions set forth in the Bond Resolution.

It is hereby certified that all acts, conditions and things required by the Constitution and

statutes of the State of Washington to exist, to have happened, been done and performed precedent

to and in the issuance of this bond exist, have happened, been done and performed and that the

issuance of this bond does not violate any constitutional, statutory or other limitation upon the

amount of bonded indebtedness that the District may incur.

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IN WITNESS WHEREOF, South Whidbey Parks and Recreation District, Island County,

Washington, has caused this bond to be executed by the manual or facsimile signatures of the

President and Secretary of its Board and as of this [__] day of _________, 2016.

SOUTH WHIDBEY PARKS AND

RECREATION DISTRICT, ISLAND

COUNTY, WASHINGTON

By /s/ facsimile

Chair, Board of Commissioners

ATTEST:

/s/ facsimile

Secretary, Board of Commissioners

REGISTRATION CERTIFICATE

This bond is registered in the name of the Registered Owner on the books of the District,

in the office of the Bond Registrar, as to both principal and interest, as noted in the registration

blank below. All payments of principal of and interest on this bond shall be made by the District

from the Bond Fund.

Date of

Registration

Name and Address of

Registered Owner

Signature of

Bond Registrar

__________ __, 2016 Heritage Bank ______________________

Address

Attn:

Island County Treasurer, as

ex officio treasurer of the

District and Bond Registrar

PAYMENT SCHEDULE

Principal and interest on this bond shall be payable as set forth in the following schedule:

Date Principal Interest Total Payment

Section 6. Execution of Bond. The Bond shall be executed on behalf of the District

with the manual or facsimile signature of the Chair and Secretary of its Board.

Only such Bond as shall bear thereon a Certificate of Authentication in the form earlier

recited, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or

entitled to the benefits of this resolution. Such Certificate of Authentication shall be conclusive

evidence that the Bond so authenticated has been duly executed, authenticated and delivered

hereunder and is entitled to the benefits of this resolution.

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In case either of the officers who shall have executed the Bond shall cease to be an officer

or officers of the District before the Bond so signed shall have been authenticated or delivered by

the Bond Registrar, or issued by the District, such Bond may nevertheless be authenticated,

delivered and issued and upon such authentication, delivery and issuance, shall be as binding upon

the District as though those who signed the same had continued to be such officers of the District.

The Bond may also be signed and attested on behalf of the District by such persons who at the date

of the actual execution of the Bond, are the proper officers of the District, although at the original

date of such Bond any such person shall not have been such officer of the District.

Section 7. Application of Bond Proceeds; Plan of Refunding. For the purpose of debt

service savings, the District proposes to defease and/or refund the Refunded Bonds as set forth

herein. The Designated Representative shall designate all or a portion of the 2008 Bonds as

Refunded Bonds and shall establish the Call Date. Such designation and Call Date shall be set

forth in the Escrow Agreement.

A portion of the proceeds of the Bond shall be deposited with the Escrow Agent pursuant

to the Escrow Agreement to be used immediately upon receipt thereof to defease the Refunded

Bonds as authorized by the 2008 Bond Resolution and to pay costs of issuance of the Bond. The

net proceeds deposited with the Escrow Agent and any interest earnings on any Acquired

Obligations will provide for the payment of:

(a) interest on the Refunded Bonds as such becomes due on and prior to the Call Date;

and

(b) the redemption price (100 percent of the principal amount) of the Refunded Bonds

on the Call Date.

Such Acquired Obligations shall be purchased at a yield not greater than the yield permitted

by the Code and regulations relating to acquired obligations in connection with refunding bond

issues.

A beginning cash balance, if any, and the Acquired Obligations, if any, shall be deposited

irrevocably with the Escrow Agent in an amount sufficient to defease and refund the Refunded

Bonds. In order to carry out the purposes of this Section 7, the Designated Representative is

authorized and directed to execute and deliver to the Escrow Agent an Escrow Agreement.

The District hereby calls the Refunded Bonds for redemption on their Call Date in

accordance with the provisions of the 2008 Bond Resolution authorizing the redemption and

retirement of the 2008 Bonds prior to their fixed maturities. Said defeasance and call for

redemption of the Refunded Bonds shall be irrevocable after the issuance of the Bond and delivery

of the proceeds of the Bond and/or Acquired Obligations to the Escrow Agent.

The Escrow Agent is hereby authorized and directed to provide for the giving of notices of

the defeasance and/or redemption of the Refunded Bonds in accordance with the provisions of the

2008 Bond Resolution. The costs of publication of such notices shall be an expense of the District.

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The District will take such actions as are found necessary to see that all necessary and

proper fees, compensation and expenses of the Escrow Agent for the Refunded Bonds shall be

paid when due.

Section 8. Tax Covenants. The District will take all actions necessary to assure the

exclusion of interest on the Bond from the gross income of the owners of the Bond to the same

extent as such interest is permitted to be excluded from gross income under the Code as in effect

on the date of issuance of the Bond, including but not limited to the following:

(a) Private Activity Bond Limitation. The District will assure that the proceeds of the

Bond are not so used as to cause the Bond to satisfy the private business tests of Section 141(b) of

the Code or the private loan financing test of Section 141(c) of the Code.

(b) Limitations on Disposition of Project. The District will not sell or otherwise

transfer or dispose of (i) any personal property components of the projects financed with proceeds

of the Refunded Bonds (the “Projects”) other than in the ordinary course of an established

government program under Treasury Regulation 1.141-2(d)(4) or (ii) any real property

components of the Projects, unless it has received an opinion of Bond Counsel to the effect that

such disposition will not adversely affect the treatment of interest on the Bond as excludable from

gross income for federal income tax purposes.

(c) Federal Guarantee Prohibition. The District will not take any action or permit or

suffer any action to be taken if the result of such action would be to cause the Bond to be “federally

guaranteed” within the meaning of Section 149(b) of the Code.

(d) Rebate Requirement. The District will take any and all actions necessary to assure

compliance with Section 148(f) of the Code, relating to the rebate of excess investment earnings,

if any, to the federal government, to the extent that such section is applicable to the Bond.

(e) No Arbitrage. The District will not take, or permit or suffer to be taken by the

Escrow Agent or otherwise, any action with respect to the proceeds of the Bond which, if such

action had been reasonably expected to have been taken, or had been deliberately and intentionally

taken, on the date of issuance of the Bond would have caused the Bond to be an “arbitrage bond”

within the meaning of Section 148 of the Code.

(f) Registration Covenant. The District will maintain a system for recording the

ownership of the Bond that complies with the provisions of Section 149 of the Code until the Bond

has been surrendered and canceled.

(g) Record Retention. The District will retain its records of all accounting and

monitoring it carries out with respect to the Bond for at least three years after the Bond matures or

is redeemed (whichever is earlier); however, if the Bond is redeemed and refunded, the District

will retain its records of accounting and monitoring at least three years after the earlier of the

maturity or redemption of the obligations that refunded the Bond.

(h) Compliance with Federal Tax Certificate. The District will comply with the

provisions of the Federal Tax Certificate with respect to the Bond, which are incorporated herein

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as if fully set forth herein. The covenants of this Section will survive payment in full or defeasance

of the Bond.

(i) Bank Qualification. The District hereby designates the Bond for purposes of

paragraph (3) of Section 265(b) of the Code and represents that not more than $10,000,000

aggregate principal amount of obligations the interest on which is excludable (under Section 103(a)

of the Code) from gross income for federal income tax purposes (excluding (i) private activity

bonds, as defined in Section 141 of the Code, except qualified 501(c)(3) bonds as defined in

Section 145 of the Code and (ii) current refunding obligations to the extent the amount of the

refunding obligation does not exceed the outstanding amount of the refunded obligation), has been

or will be issued by the District, including all subordinate entities of the District, during the

calendar year 2016.

Section 9. Pledge of Funds and Credit; General Obligation. The District hereby

authorizes the creation of a fund or account to be used for the payment of debt service on the Bond

(the “Bond Fund”). No later than the date each payment of principal of or interest on the Bond

becomes due, the District shall transmit sufficient funds, from the Bond Fund or from other legally

available sources, to the Bond Registrar for the payment of such principal or interest, and any

applicable prepayment fees. Money in the Bond Fund may be invested in legal investments for

District funds, but only to the extent that the same are acquired, valued and disposed of at Fair

Market Value.

The District hereby irrevocably covenants that, unless the principal of and interest on the

Bond are paid from other sources, it will make annual levies of taxes without limitation as to rate

or amount upon all of the property in the District subject to taxation in amounts sufficient to pay

such principal and interest as the same shall become due. All of such taxes and any of such other

money so collected shall be paid into the Bond Fund. None of the money in the Bond Fund shall

be used for any other purpose than the payment of the principal of and interest on the Bond.

The full faith, credit and resources of the District are hereby irrevocably pledged for the

annual levy and collection of such taxes and for the prompt payment of the principal of and interest

on the Bond when due.

Section 10. Right of Prepayment. The Bond may be prepaid in whole or in part, at any

time after December 1, 2021, without prepayment penalty or fee.

Section 11. Sale of the Bond. The District hereby accepts the Proposal in accordance

with the terms contained in this resolution and the Proposal, which is attached as Exhibit A. The

Designated Representative is hereby authorized to approve the principal amount of the Bond and

to agree to any other terms, conditions and covenants that are in the best interest of the District and

in accordance with the Proposal so long as the principal amount of the Bond does not exceed

$1,120,000.

The appropriate District officials, including but not limited to the Designated

Representative, are hereby authorized and directed to do everything necessary for the prompt

issuance, execution and delivery of the Bond and for the proper application and use of the proceeds

thereof. Upon delivery of the Bond, the District shall pay the reasonable fees and expenses of

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Lender counsel in the amount of not to exceed $3,500.00. As provided in Section 7 of this

resolution, the District shall pay or cause to be paid the other costs of issuance for the Bond,

including any fees and costs of Bond Counsel, fees and costs of the Placement Agent, and any

other expenses and costs which the District incurs in connection with the issuance of the Bond.

The District acknowledges that the Lender will make a loan by purchasing the Bond under

the following additional conditions: (a) the Bond is not being registered under the Securities Act

of 1933 and is not being registered or otherwise qualified for sale under the “Blue Sky” laws and

regulations of any state; (b) the Lender will hold the Bond as one single debt instrument; (c) no

CUSIP numbers will be obtained for the Bond; (d) no official statement has been or will be

prepared in connection with the private placement of the Bond with the Lender; (e) the Bond will

not close through The Depository Trust Company or any similar repository and will not be in book

entry form; and (f) the Bond is not listed on any stock or other securities exchange.

Upon the adoption of this resolution, the proper officials of the District, including the

Designated Representative, members of the Board, and the Treasurer, are authorized and directed

to undertake all action necessary for the prompt execution and delivery of the Bond to the Lender

and further to execute all closing certificates, agreements, loan agreement, bond purchase

agreement, and documents required to effect the closing and delivery of the Bond in accordance

with the terms of the Proposal.

Section 12. Ongoing Disclosure; Covenants .

(a) Ongoing Disclosure. The Bond is exempt from ongoing disclosure requirements

of the Rule.

(b) Covenants. So long as the Bond is outstanding, the District hereby covenants and

agrees as follows:

(1) If not otherwise publicly available, to provide the Lender within 270 days

of the end of each Fiscal Year with a copy of its annual financial report submitted to the office of

the Washington State Auditor commencing with the report for the 2016 fiscal year, and

(2) To provide the Lender with such other information as the Lender may from

time to time reasonably request.

Section 13. Lost, Stolen or Destroyed Bond. In case the Bond shall be lost, stolen or

destroyed while in the Registered Owner’s possession, the Bond Registrar may at the request of

the Registered Owner execute and deliver a new Bond of like date, number and tenor to the

Registered Owner upon the Registered Owner’s paying the expenses and charges of the District

and the Bond Registrar in connection therewith and upon its filing with the District written

certification that such Bond was actually lost, stolen or destroyed and of its ownership thereof. If

the Bond shall be lost, stolen, or destroyed while in the Registered Owner’s possession, the

Registered Owner may elect upon final payment of principal and interest of the Bond to surrender

a photocopy of the Bond for cancellation at the office of the Bond Registrar together with written

certification that such Bond was actually lost, stolen or destroyed and of its ownership thereof.

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Section 14. Assignment. This resolution and the Bond shall be binding upon and shall

inure to the benefit of the District and the Lender and their respective successors and assigns.

Section 15. General Authorization and Ratification. The appropriate District officials,

including but not limited to the Designated Representative, the members of the Board, and the

Treasurer, are hereby authorized to take any actions and to execute documents as in his or her

judgment may be necessary or desirable in order to carry out the terms of, and complete the

transactions contemplated by, this resolution. All acts taken pursuant to the authority of this

resolution but prior to its effective date are hereby ratified.

Section 16 Severability. If any provision in this resolution is declared by any court of

competent jurisdiction to be contrary to law, then such provision shall be null and void and shall

be deemed separable from the remaining provision of this resolution and shall in no way affect the

validity of the other provisions of this resolution or of the Bond.

Section 17. Effective Date. This resolution shall become effective immediately upon

its adoption.

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ADOPTED by the Board of Commissioners of South Whidbey Parks and Recreation

District, Island County, Washington, at a regular open public meeting thereof, held this 21st day

of September, 2016.

SOUTH WHIDBEY PARKS AND

RECREATION DISTRICT, ISLAND

COUNTY, WASHINGTON

Chair

Vice-Chair

Secretary

Treasurer

At-Large

ATTEST:

Its:

10062 00006 fa073n21h1

Exhibit A

Lender Proposal

(attached)

10127 00002 fh30ge15yk

CERTIFICATE

I, the undersigned, Secretary of the Board of Commissioners of South Whidbey Parks and

Recreation District, Island County, Washington (the “District”), and keeper of the records of the

Board of Commissioners (the “Board”), DO HEREBY CERTIFY:

1. That the attached resolution is a true and correct copy of Resolution No. ______ of

the Board (the “Resolution”), duly adopted at a regular meeting thereof held on the 21st day of

September, 2016.

2. That said meeting was duly convened and held in all respects in accordance with

law, and to the extent required by law, due and proper notice of such meeting was given; that a

legal quorum was present throughout the meeting and a legally sufficient number of members of

the Board voted in the proper manner for the adoption of the Resolution; that all other requirements

and proceedings incident to the proper adoption of the Resolution have been duly fulfilled, carried

out and otherwise observed; and that I am authorized to execute this certificate.

IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of September, 2016.

Secretary, Board of Commissioners