TO : BOARD OF DIRECTORS FROM : GARY PLATT SUBJECT : BOND REFUNDING DATE : AUGUST 5, 2008 TYPE : ACTION NEEDED/RESOLUTION NO.

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1 TO : BOARD OF DIRECTORS FROM : GARY PLATT SUBJECT : BOND REFUNDING DATE : AUGUST 5, 2008 TYPE : ACTION NEEDED/RESOLUTION NO. 2007/ From time to time, as bond interest rates vary, it makes economic sense to refinance school construction bonds. That time has come for bonds issued in 1996 and Bonds totaling approximately $11,010,000 are eligible for refinancing (aka refunding). The final amount of bonds to be refunded and the estimated savings in interest payments will be presented also. D.A. Davidson & Co. is putting together a pooled financing for several districts with similar issues like Stanwood-Camano. The pool significantly reduces the required effort and shares the cost over the other participants while providing equal or better savings when compared to a traditional refunding. Currently 14 school districts are participating in the pool. Estimated net savings to the Stanwood-Camano School District taxpayer given current interest rates is in excess of $290,000. This amount will be recovered in less than five years. In past refundings, the savings would take nearly 10 years to recover, which makes this refunding even more attractive. In order to call the existing bonds and pay the accrued interest, the new bonds will have a higher par value than the par value of the old bonds. In addition, the par value of the new bonds will need to cover the cost of issuing the new bonds, which will be around $72,000. That is why the refunding bond resolution amount is greater that the bond amount being refunded. Also, the actual par value of the new refunding bonds will not be determined until they are sold this fall. At today s meeting Jon Gores, representing D.A. Davidson & Co., will be present to discuss the details of the refunding. Cynthia Weed, Preston Gates Ellis LLP, our bond attorney, has prepared the attached resolution, which allows us to participate in the State Treasure s bond guarantee program and authorizes the bond refunding. Action needed: Adopt Resolution No. 2007/ authorizing participation in the State Treasurer s bond guarantee program

2 STANWOOD-CAMANO SCHOOL DISTRICT NO. 401, SNOHOMISH AND ISLAND COUNTIES, WASHINGTON UNLIMITED TAX GENERAL OBLIGATION REFUNDING BOND, 2008 RESOLUTION NO. 2007/ A RESOLUTION of the Board of Directors of Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington, providing for the issuance and sale of two series of unlimited tax general obligation bonds of the District in the aggregate principal amount not to exceed $12,350,000 for the purpose of providing the funds necessary to refund certain of the outstanding unlimited tax general obligation bonds of the District and to pay the costs of issuing the bonds; providing the date, form, and repayment terms of the bonds and for the pledge of funds to pay the principal thereof and interest thereon; authorizing the Superintendent and/or Executive Director, Business and Operations to submit a request for eligibility for the Washington State School District Credit Enhancement Program; approving the sale of such bonds to D.A. Davidson & Co.; and authorizing the Superintendent to negotiate the final terms of the bonds authorized herein and to execute any documentation in connection therewith. APPROVED ON AUGUST 5, 2008 PREPARED BY: K&L PRESTON GATES ELLIS LLP Seattle, Washington

3 STANWOOD-CAMANO SCHOOL DISTRICT NO. 401 RESOLUTION NO. 2007/ TABLE OF CONTENTS * Page Section 1. Definitions... 2 Section 2. Purpose, Authorization and Details of the Bond... 4 Section 3. Registration and Payments... 5 Section 4. Optional Prepayment... 6 Section 5. Form of Bond... 6 Section 6. Execution of Bond... 8 Section 7. Refunding Proceeds, Application of Bond Proceeds... 9 Section 8. Pledge of Taxes and Credit Section 9. Tax Covenants Section 10. Ongoing Disclosure Section 11. Sale of the Bond and Authority to the Superintendent Section 12. Credit Enhancement Program Section 13. General Authorization and Ratification Section 14. Severability Section 15. Effective Date Exhibit A Description of the Refunded Bonds Exhibit B Estimated Maturity Schedule * This Table of Contents and the cover page are not a part of this resolution; they are included for convenience of the reader only. -i- P:\20287_CMW\20287_858 07/30/08

4 RESOLUTION NO. 2007/ A RESOLUTION of the Board of Directors of Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington, providing for the issuance and sale of two series of unlimited tax general obligation bonds of the District in the aggregate principal amount not to exceed $12,350,000 for the purpose of providing the funds necessary to refund certain of the outstanding unlimited tax general obligation bonds of the District and to pay the costs of issuing the bonds; providing the date, form, and repayment terms of the bonds and for the pledge of funds to pay the principal thereof and interest thereon; authorizing the Superintendent and/or Executive Director, Business and Operations to submit a request for eligibility for the Washington State School District Credit Enhancement Program; approving the sale of such bonds to D.A. Davidson & Co.; and authorizing the Superintendent to negotiate the final terms of the bonds authorized herein and to execute any documentation in connection therewith. WHEREAS, Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington, (the District ) has outstanding its unlimited tax general obligation bonds described on Exhibit A attached hereto, portions of which are callable as described in Exhibit A (the Refunded Bonds ); and WHEREAS, the resolutions authorizing the issuance of the Refunded Bonds provides that the District may call the Refunded Bonds on the date identified on Exhibit A (the Call Date ), at a price of par plus accrued interest to the date of redemption; and WHEREAS, as a result of changed market conditions, it appears to the Board that a substantial debt service savings may be obtained by refunding the Refunded Bonds through the issuance of unlimited tax general obligation refunding bonds in the principal amount of not to exceed $12,350,000 herein authorized (hereinafter defined as the Bonds ); and WHEREAS, in order to effect such refunding in the most economical manner it is deemed necessary and advisable that the Superintendent be authorized to negotiate a bond

5 purchase contract with D.A. Davidson & Co. (the Purchaser ) designating the principal maturities, interest rates and redemption provisions for the Bonds within the limitations established by the Bond Act (chapter RCW) and this resolution; and WHEREAS, the Purchaser will assign the Bonds to U.S. Bank National Association (the Trustee ) under the terms of an Assignment and Trust Agreement (the Assignment ) pursuant to which the Trustee will issue certificates of participation in the Bonds, as well as other refunding bonds issued by other Washington school districts (the Certificates ); and WHEREAS, chapter RCW established a credit enhancement program (the Credit Enhancement Program ) for voter-approved school district general obligation bonds; and WHEREAS, RCW authorizes the state treasurer to make a determination that a school district is eligible for participation in the Credit Enhancement Program if the state treasurer determines that the district is eligible under rules adopted by the state finance committee; and WHEREAS, to the extent that the Credit Enhancement Program demonstrates substantial savings to the taxpayers of the District, the District wishes to participate in the Credit Enhancement Program; NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF STANWOOD-CAMANO SCHOOL DISTRICT NO. 401, SNOHOMISH AND ISLAND COUNTIES, WASHINGTON, as follows: Section 1. Definitions. As used in this resolution, the following words shall have the following meanings: Acquired Obligations means the Government Obligations acquired by the Trustee under the terms of the Assignment to effect the defeasance and refunding of the Refunded Bonds. -2- P:\20287_CMW\20287_858 07/30/08

6 Assignment means the Assignment and Trust Agreement between the Purchaser and the Trustee. Board of Directors means the duly constituted Board of Directors as the general legislative authority of the District. Bonds means the Series A Bond and the Series B Bond. to be issued in the principal amount of not to exceed $12,350,000 pursuant to this resolution. Bond Act means chapter RCW. Bond Register means the registration books maintained by the Bond Registrar for the purpose of identifying ownership of the Bonds. Bond Registrar means the Treasurer or any other paying agent designated by the Treasurer, including but not limited to the fiscal agent of the State of Washington, for the purposes of registering and authenticating the Bonds, maintaining the Bond Register, and paying installments of interest on and principal of the Bonds. Call Date means the date that the Refunded Bonds will be redeemed, identified on Exhibit A. Closing Date means the date of closing and delivery of the Bonds to the Purchaser. Code means the federal Internal Revenue Code of 1986 as amended, together with corresponding and applicable final, temporary or proposed regulations and revenue rulings issued or amended with respect thereto by the United States Treasury Department of the Internal Revenue Service, to the extent applicable to the Bonds. Credit Enhancement Program means the program for enhancing the credit of voter-approved school district general obligation bonds established by Senate Joint Resolution 8206 of the 1999 State Legislature, codified as chapter RCW. -3- P:\20287_CMW\20287_858 07/30/08

7 Debt Service Fund means the special fund of the District of that name created in the office of the Treasurer pursuant to RCW 28A District means Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington, a municipal corporation duly organized and existing under and by virtue of the laws of the State of Washington. Purchaser means D.A. Davidson & Co. Refunded Bonds mean the unlimited tax general obligation bonds of the District identified on Exhibit A. Series A Bond means the Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington, Unlimited Tax General Obligation Refunding Bond, 2008A Series B Bond means the Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington, Unlimited Tax General Obligation Refunding Bond, 2008B State Treasurer means the Treasurer of the State of Washington, or any successor to the functions thereof. Structuring Agent means D.A. Davidson & Co. Treasurer means the Snohomish County Treasurer, as ex officio treasurer of the District, or any successor to the functions of the Treasurer. Trustee means U.S. Bank National Association. Section 2. Purpose, Authorization and Details of the Bonds. For the purpose of providing for the refunding of the Refunded Bonds and thereby effecting a substantial savings to the District and its taxpayers, the District shall issue its unlimited tax general obligation refunding bonds in the principal amount of not to exceed $12,350,000 (the Bond ). The Bonds shall be issued in two series. The Series A Bond shall be designated Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington, Unlimited Tax General -4- P:\20287_CMW\20287_858 07/30/08

8 Obligation Refunding Bond, 2008A, and the Series B Bond shall be designated Stanwood- Camano School District No. 401, Snohomish and Island Counties, Washington, Unlimited Tax General Obligation Refunding Bond, 2008B (together, the Bonds ). Each Bond shall be dated as of the date specified in the purchase contract for the Bonds described in Section 11 hereof, shall be fully registered as to both principal and interest, shall be numbered in such manner and with any additional designation as the Bond Registrar deems necessary for purposes of identification; and shall bear interest at a fixed rate from its date. Interest on the Series A Bond shall be payable on the first day of each June and December, commencing on December 1, Interest on the Series B Bond shall be payable on the fifteenth day of each June and December, commencing on December 15, Principal of the Bonds shall be payable on December 1 or December 15 of the years in the estimated principal amounts shown on Exhibit B attached hereto. The interest and principal payment dates and redemption schedules are subject to change, as provided in the following paragraph. The amounts of each principal payment are subject to change, to effect an overall debt service savings result for the District, but in no case will the aggregate principal amount of the Bonds increase or decrease by more than the amount permitted by the Bond Act. The Superintendent is hereby authorized and directed to negotiate final principal payment amounts and details of the Bonds with the Purchaser in the manner described in Section 11 hereof. Section 3. Registration and Payments. The District requests that the Treasurer act as authenticating agent, paying agent and registrar for the Bonds (collectively, the Bond Registrar ), or that the Treasurer designate the state fiscal agency as Bond Registrar. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Installments of the principal of and interest on the Bonds shall be paid by check or draft of the Bond Registrar mailed five calendar days prior to the date such interest is due or by -5- P:\20287_CMW\20287_858 07/30/08

9 electronic funds transfer made on the date such interest is due to the registered owner or nominee at the address appearing on the Bond Register. Upon final payment of all installments of principal and interest thereon, the Bonds shall be submitted to the Bond Registrar for cancellation and surrender. The Bonds are not transferable. Section 4. Optional Prepayment. The Bonds are not subject to optional prepayment prior to their scheduled maturity. Section 5. Form of Bonds. The Bonds shall be in substantially the following form: NO. R-1 UNITED STATES OF AMERICA [STATE GUARANTY LANGUAGE] $ STATE OF WASHINGTON STANWOOD-CAMANO SCHOOL DISTRICT NO. 401, SNOHOMISH AND ISLAND COUNTIES, WASHINGTON UNLIMITED TAX GENERAL OBLIGATION REFUNDING BOND, 2008[A][B] INTEREST RATE: REGISTERED OWNER: As shown on Schedule A attached hereto D.A. DAVIDSON & CO. PRINCIPAL AMOUNT: Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington, (the District ), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns, the principal payments of this bond will be made annually beginning December [1][15], 2008 as more particularly described on Exhibit A attached hereto. This bond shall bear interest on unpaid principal from its date or the most recent date to which interest has been paid at the Interest Rate set forth above, payable semiannually on the [first][fifteenth] day of June and December, beginning December [1][15], Interest shall be calculated on the basis of a year of 360 days and 12 months of 30 days. Both principal of and interest on this bond are payable in lawful money of the United States of America. Installments of the principal of and interest on this bond shall be paid by mailing a check or draft of [the Snohomish County Treasurer][fiscal agent of the State of -6- P:\20287_CMW\20287_858 07/30/08

10 Washington] (the Bond Registrar ) mailed on the date such interest is due or sent by electronic funds transfer made on the date such interest is due to the registered owner or nominee at the address appearing on the Bond Register. Upon final payment of all installments of principal and interest thereon, this bond shall be submitted to the Bond Registrar for cancellation and surrender. This bond is issued pursuant to Resolution No. 2007/ adopted by the Board of Directors of the District on August 5, 2008 (the Bond Resolution ) for the purpose of refunding certain outstanding bonds of the District. Reference is made to the Bond Resolution as more fully describing the covenants with and rights of the Registered Owner of the bond or registered assigns and the meanings of capitalized terms appearing on this bond that are defined in such resolution. This bond is not subject to redemption prior to its scheduled maturity. This bond is not transferable, except to U.S. Bank National Association under the terms of the Assignment and Trust Agreement, dated as of, This bond is not a private activity bond as such term is defined in the Internal Revenue Code of 1986, as amended (the Code ). This bond is not a qualified tax-exempt obligation under Section 265(b) of the Code. The District hereby irrevocably covenants that it will levy taxes annually upon all the taxable property in the District without limitation as to rate or amount and in amounts sufficient, with other monies legally available therefor, to pay the principal of and interest on the bond of this issue as the same shall become due. The full faith, credit and resources of the District are hereby irrevocably pledged for the annual levy and collection of such taxes and the prompt payment of such principal and interest. The pledge of tax levies may be discharged prior to maturity of the bond by making provision for the payment thereof on the terms and conditions set forth in the resolution authorizing their issuance. 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. 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 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. IN WITNESS WHEREOF, Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington, has caused this bond to be executed by the manual or facsimile signatures of the President and Secretary of its Board of Directors and the seal of the District to be impressed, imprinted or otherwise reproduced hereon as of this day of, P:\20287_CMW\20287_858 07/30/08

11 STANWOOD-CAMANO SCHOOL DISTRICT NO. 401, SNOHOMISH AND ISLAND COUNTIES, WASHINGTON By /s/ facsimile President, Board of Directors ATTEST: /s/ facsimile Secretary, Board of Directors CERTIFICATE OF AUTHENTICATION Date of Authentication: This bond is the Unlimited Tax General Obligation Refunding Bond, 2008[A][B], of Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington, described in the within mentioned Bond Resolution. [SNOHOMISH COUNTY TREASURER] [WASHINGTON STATE FISCAL AGENCY], as Bond Registrar By Authorized Signatory Exhibit A to Bond Section 6. Execution of Bonds. The Bonds shall be executed on behalf of the District with the manual or facsimile signatures of the President and Secretary of its Board of Directors, and the seal, if any, of the District shall be impressed or imprinted on the Bonds. The Bonds shall be valid or obligatory for any purpose or entitled to the benefits of this resolution only if the Certificate of Authentication in the form hereinbefore recited, has been manually executed by or on behalf of the Bond Registrar or its duly designated agent. In case either of the officers who shall have executed the Bonds shall cease to be an officer or officers of the District before the Bonds so signed shall have been authenticated or delivered by the Bond Registrar, or issued by the District, such Bonds may nevertheless be -8- P:\20287_CMW\20287_858 07/30/08

12 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 Bonds may also be signed and attested on behalf of the District by such persons who are at the actual date of delivery of the Bonds, the proper officers of the District although at the original date of the Bonds any such person shall not have been such officer of the District. Section 7. Refunding Proceeds; Application of Bond Proceeds. (a) Refunding Plan. For the purpose of realizing a debt service savings and benefiting the taxpayers of the District, the Board of Directors of the District proposes to issue the Bonds for the purpose of providing for the payment of the principal of and interest on and the redemption price (or principal due at maturity) of the Refunded Bonds. The Refunded Bonds shall be called for redemption at 100% of par on the Call Date. (b) Refunding Proceeds. The net proceeds of sale of the Bonds shall be delivered and held in the custody of the Trustee for the purpose of defeasing the Refunded Bonds and paying related costs of issuance. Money received by the Trustee from the Bond proceeds and other money provided by the District, if any, shall be used immediately upon receipt to defease the Refunded Bonds as provided in the Assignment and to pay costs of issuance. The District shall defease the Refunded Bonds and discharge such obligations by the use of money deposited with the Trustee to purchase certain Government Obligations (which shall be referred to as Acquired Obligations ), bearing such interest and maturing as to principal and interest in such amounts and at such times which, together with any necessary beginning cash balance, will provide for the payment of: -9- P:\20287_CMW\20287_858 07/30/08

13 (1) interest on the Refunded Bonds due and payable through and including the Call Date; and (2) the redemption price of the Refunded Bonds (100% of the principal amount thereof) on the Call Date. (c) Implementation of Refunding Plan. The District hereby irrevocably sets aside sufficient funds out of the purchase of Acquired Obligations from proceeds of the Bonds to make the payments described in Subsections (a) and (b) of this Section. The District hereby irrevocably calls the Refunded Bonds for redemption on the Call Date in accordance with the provisions of the resolution authorizing the issuance and redemption of the Refunded Bonds. Said defeasance and call for redemption of the Refunded Bonds shall be irrevocable after the delivery of the Acquired Obligations to the Trustee. Section 8. Pledge of Taxes and Credit. The District hereby irrevocably covenants that, unless the principal of and interest on the Bonds 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. 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 such principal and interest. Section 9. Tax Covenants. The District hereby covenants that it will not make any use of the proceeds of sale of the Bonds or any other funds of the District that may be deemed to be proceeds of such Bonds pursuant to Section 148 of the Code that will cause the Bonds to be arbitrage bonds within the meaning of said section and said regulations. The District will comply with the requirements of Section 148 of the Code (or any successor provision thereof -10- P:\20287_CMW\20287_858 07/30/08

14 applicable to the Bonds) and the applicable Regulations thereunder throughout the term of the Bonds. The District further covenants that it will not take any action or permit any action to be taken that would cause the Bonds to constitute private activity bonds under Section 141 of the Code. The Bonds shall not be qualified tax-exempt obligations under Section 265(b) of the Code for investment by financial institutions. Section 10. Ongoing Disclosure. (a) Contract/Undertaking. This section constitutes the District s written undertaking for the benefit of the owners (including Beneficial Owners) of the Bonds as required by Section (b)(5) of the Rule. (b) Financial Statements/Operating Data. The District agrees to provide or cause to be provided to each NRMSIR and to the SID, if any, in each case as designated by the Commission in accordance with the Rule, the following annual financial information and operating data for the prior fiscal year (commencing in 2009 for the fiscal year ended August 31, 2008): 1. Annual financial statements showing ending fund balances prepared in accordance with regulations prescribed by the Superintendent of Public Instruction and the State Auditor pursuant to RCW 28A , RCW 28A , RCW 28A and RCW (or any successor statutes) from time to time and generally of the type included in the official statement for certificates of participation with respect to the Bonds under the headings Statement of Revenues, Expenditures and Changes in General Fund Balance ; 2. The assessed valuation of taxable property in the District; 3. Property taxes due and property taxes collected; -11- P:\20287_CMW\20287_858 07/30/08

15 4. Property tax levy rates per $1,000 of assessed valuation; and 5. Outstanding general obligation debt of the District. Such annual information and operating data described above shall be so provided on or before the expiration of nine months after the end of the District s fiscal year. The District may adjust such date if the District changes its fiscal year by providing written notice of the change of fiscal year and the new reporting date to each then existing NRMSIR and the SID, if any. In lieu of providing such annual financial information and operating data, the District may cross-reference to other documents provided to the NRMSIR s, the SID or to the Commission and, if such document is a final official statement within the meaning of the Rule, available from the MSRB. If not provided as part of the annual financial information discussed above, the District shall provide the District s audited annual financial statement prepared in accordance with regulations prescribed by the Superintendent of Public Instruction and the State Auditor pursuant to RCW 28A , RCW 28A , RCW 28A and RCW (or any successor statutes), when and if available, to each then existing NRMSIR and the SID, if any. (c) Material Events. The District agrees to provide or cause to be provided, in a timely manner, to the SID, if any, and to each NRMSIR or to the MSRB notice of the occurrence of any of the following events with respect to the Bonds, if material: Principal and interest payment delinquencies; Non-payment related defaults; Unscheduled draws on debt service reserves reflecting financial difficulties; Unscheduled draws on credit enhancements reflecting financial difficulties; Substitution of credit or liquidity providers, or their failure to perform; Adverse tax opinions or events affecting the tax-exempt status of the Bond; -12- P:\20287_CMW\20287_858 07/30/08

16 Modifications to rights of owners; Optional, contingent or unscheduled Bond calls other than scheduled sinking fund redemptions for which notice is given pursuant to Exchange Act Release ; Defeasances; Release, substitution or sale of property securing the repayment of the Bonds; and Rating changes. Solely for purposes of disclosure, and not intending to modify this undertaking, the District advises that there is no property securing repayment of the Bonds, and there is no debt service reserve fund or account for the Bonds, as the District lacks legal authority for either measure. If further changes in the law permit such measures, and if the District subsequently chooses to establish such reserves or provide such property as security for the Bonds, the District will provide notice of such establishment or provision and undertake to provide notices of material events relating thereto, should such events occur. (d) Notification Upon Failure to Provide Financial Data. The District agrees to provide or cause to be provided, in a timely manner, to each NRMSIR or to the MSRB and to the SID, if any, notice of its failure to provide the annual financial information described in subsection (b) above on or prior to the date set forth in subsection (b) above. (e) Termination/Modification. The District s obligations to provide annual financial information and notices of material events shall terminate upon the defeasance, prior redemption or payment in full of the Bonds. This section, or any provision hereof, shall be null and void if the District (1) obtains an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require this section, or any such provision, are invalid, have been -13- P:\20287_CMW\20287_858 07/30/08

17 repealed retroactively or otherwise do not apply to the Bonds; and (2) notifies each then existing NRMSIR and the SID, if any, of such opinion and the cancellation of this section. Notwithstanding any other provision of this resolution, the District may amend this Section 10 and any provision of this Section 10 may be waived with an approving opinion of nationally recognized bond counsel. In the event of any amendment of or waiver of a provision of this Section 10, the District shall describe such amendment in the next annual report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the District. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (I) notice of such change shall be given in the same manner as for a material event under Subsection (c), and (II) the annual report for the year in which the change is made should present a comparison (in narrative form and also, if practical, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. (f) Bond Owner s Remedies Under This Section. A Bond owner s right to enforce the provisions of this section shall be limited to a right to obtain specific enforcement of the District s obligations hereunder, and any failure by the District to comply with the provisions of this undertaking shall not be an event of default with respect to the Bonds under this resolution. (g) DisclosureUSA. The District may elect to submit the information required by this Section 10 to be filed with the NRMSIRs and the SID, if any, directly to DisclosureUSA.org unless or until the SEC withdraws its approval of this submission process P:\20287_CMW\20287_858 07/30/08

18 Section 11. Sale of the Bonds and Authority to the Superintendent. The Bonds shall be sold by private placement to the Purchaser. D.A. Davidson & Co. will act as structuring agent for the transaction (the Structuring Agent ). The Superintendent is hereby authorized to negotiate the final terms and details of the Bonds with the Purchaser. The District has been advised that market conditions continue to fluctuate and, as a result, the most favorable market conditions may occur on a day other than a regularly scheduled meeting of the Board. The Board has determined that it would be inconvenient to hold a special meeting on short notice and, accordingly, has determined that it would be in the best interest of the District to delegate to the Superintendent or his or her designee for a limited time the authority to approve certain details of the Bonds including the dated date and the delivery date, the interest rate(s), the aggregate principal amount and the amount of each principal maturity payment. The Superintendent, or his or her designee, shall take into account those factors which, in his or her judgment, will result in the lowest net effective interest cost on the Bonds to its maturity; provided there is a present value savings in debt service of the Refunded Bonds. The Superintendent is hereby authorized to execute a purchase offer of the Purchaser for the Bonds upon his or her approval of the final details of the Bonds including the dated date and the delivery date, the interest rate(s), the aggregate principal amount, the amount of each principal maturity payment dates, if different than those indicated in Section 2 of this resolution, and Structuring Agent fee, if any. The Superintendent is hereby authorized and directed to execute any additional documentation in connection with the issuance of the Bonds, including, but not limited to the Bonds and any related certificates and an official statement for certificates of participation with respect to the Bonds. The authority given to the Superintendent by this section shall expire on October 31, 2008 if the Bonds have not been issued and delivered by October 31, P:\20287_CMW\20287_858 07/30/08

19 Section 12. Credit Enhancement Program. This Board of Directors hereby requests that the State Treasurer issue a certificate of eligibility in favor of the District for participation by the District in the Credit Enhancement Program with respect to the Bonds. The Superintendent and/or Executive Director, Business and Operations are hereby authorized and directed to submit such applications, resolutions and certifications as shall be required by the State Treasurer in reviewing the District s request for participation. Section 13. General Authorization and Ratification. The Superintendent or his or her designee are authorized to take any actions and to execute documents as in their 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 14. Severability. If any one or more of the covenants or agreements provided in this resolution to be performed on the part of the District shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable from the remaining covenants and agreements of this resolution and shall in no way affect the validity of the other provisions of this resolution or of the Bonds P:\20287_CMW\20287_858 07/30/08

20 Section 15. Effective Date. This resolution shall become effective immediately upon its approval. APPROVED by the Board of Directors of Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington, at a regular meeting thereof held this 5th day of August, STANWOOD-CAMANO SCHOOL DISTRICT NO. 401, SNOHOMISH AND ISLAND COUNTIES, WASHINGTON ATTEST: Directors Secretary, Board of Directors -17- P:\20287_CMW\20287_858 07/30/08

21 EXHIBIT A Description of the Refunded Bonds Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington Unlimited Tax General Obligation Refunding Bonds, 1996 The District issued its Unlimited Tax General Obligation Refunding Bonds, 1996 pursuant to Resolution No. 95/ (the 1996 Refunded Bond Resolution ) under date of February 1, 1996, in the original aggregate principal amount of $9,705,000 (the 1996 Bonds ) which remain outstanding as follows: Maturity Years (December 1) Principal Amounts Interest Rates 2008 $835, % , , , The 1996 Refunded Bond Resolution authorizes the defeasance and redemption of the 1996 Bonds maturing on and after December 1, 2007 in advance of their scheduled maturity on and after December 1, 2006, in whole or in part on any date, at a price of par plus accrued interest to the date of redemption. The 2009 through 2011 maturities of the 1996 Bonds (the 1996 Refunded Bonds ) will be refunded pursuant to this resolution. The 1996 Refunded Bonds will be called on the earliest redemption date permitted under the 1996 Refunded Bond Resolution, as reasonably determined at the time of sale, but in no event later than December 1, 2008 (the Call Date ). Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington Unlimited Tax General Obligation Refunding Bonds, 1998 The District issued its Unlimited Tax General Obligation Refunding Bonds, 1998 pursuant to Resolution No. 98\ (the 1998 Refunded Bond Resolution ) under date of December 15, 1998, in the original aggregate principal amount of $9,825,000 (the 1998 Bonds ) which remain outstanding as follows: Maturity Years (December 15) Principal Amounts Interest Rates 2008 $ 100, % ,030, ,115, ,810, The 1998 Refunded Bond Resolution authorizes the defeasance and redemption of the 1998 Bonds maturing on and after December 15, 2009 in advance of their scheduled maturity on and after December 15, 2008, in whole or in part on any date, at a price of par plus accrued A-1 P:\20287_CMW\20287_858 07/30/08

22 interest to the date of redemption. The 2009 through 2011 maturities of the 1998 Bonds (the 1998 Refunded Bonds, and together with the 1996 Refunded Bonds, the Refunded Bonds ) will be refunded pursuant to this resolution. The 1998 Refunded Bonds will be called on the earliest redemption date permitted under the 1998 Refunded Bond Resolution, as reasonably determined at the time of sale, but in no event later than December 15, 2008 (the Call Date ). -2- P:\CMW\CMW5VI 07/30/08

23 EXHIBIT B Stanwood-Camano School District No. 401 Snohomish and Island Counties, Washington Unlimited Tax General Obligation Refunding Bond, 2008A Estimated Maturity Schedule Maturity Years December 1 Principal Amounts 2011 $ 450,000 Unlimited Tax General Obligation Refunding Bond, 2008B Estimated Maturity Schedule Maturity Years (December 15) Principal Amounts 2008 $ 148, ,880, ,970, ,725,000 B-1 P:\20287_CMW\20287_858 07/30/08

24 CERTIFICATE I, the undersigned, Secretary of the Board of Directors of Stanwood-Camano School District No. 401, Snohomish and Island Counties, Washington, (the District ) and keeper of the records of the Board of Directors (the Board ), DO HEREBY CERTIFY: 1. That the attached resolution is a true and correct copy of Resolution No. 2007/ of the Board (the Resolution ), duly passed at a regular meeting thereof held on the 5th day of August, 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 5th day of August, Secretary, Board of Directors P:\20287_CMW\20287_858 07/30/08

25 Current Refunding Overview & Schedule Stanwood-Camano School District No. 401 August 5, 2008 Jon Gores Senior Vice President (206) Direct (206) Mobile Chad Cowan Vice President (206) Direct (206) Mobile

26 1 Refunding Bonds Current refundings Under Federal tax law, a current refunding is one in which the new refunding bond transaction is completed within 90 days of the call date of the old bonds. Not all bonds can be called Call feature is set prior to the sale of bonds Which bonds can be called Why they can be called What price is paid to call the bonds Example of typical call language: Bonds maturing on and after December 1, 2009 are subject to redemption on or after December 1, 2008 at the price of par.

27 2 Refunding Overview OWES Debt Service on Outstanding Bonds 1996 & 1998 Bonds Stanwood -Camano School District ISSUES New Refunding Bonds TO PAY New Bonds Debt Service on Outstanding Bonds 1996 & 1998 Bonds

28 3 Summary of Refunding Analysis The Pooled Borrowing maximizes the savings realized by the District s taxpayers while minimizing costs of issuance and workload. Without 2008 Pool With 2008 Pool 2009 Individual Refunded Bonds: Bond Series: Series 1996 & 1998 Series 1996 & 1998 Series 1996 & 1998 Maturities Refunded: Call Date & Price: 1996: : : : : : 100 Savings Statistics: PV Savings: $ 216,322 $ 230,470 $ 118,659

29 4 The Pool Concept School District A County Treas. Owners of COPs School District B County Treas. School District C County Treas. Paying Agent for COPs Owners of COPs School District D County Treas. School District E County Treas. Pays Shared Cost of Issuance Owners of COPs

30 5 The Pool Refunding vs. Conventional Refunding Along with maximizing savings, the Pooled Financing has multiple other benefits. Decision Points: No Individual Official Statement & Associated Costs No Individual Rating & Fee No Individual Bond Counsel Fee Minimizes total Costs of Issuance Minimizes Workload on District Staff Minimizes Number of Board Resolutions Lowest Interest Rates Best Savings Results for District s Taxpayers Without Pool With Pool

31 6 Points to Consider By law, current refundings are only allowed once 90 days before the call date. Must provide debt service savings annually Savings benefit only taxpayers Cannot extend term of the bonds Impact on non-voted debt capacity the over issuance of new bonds to pay cost of issuance and fund escrow is counted against non-voted debt capacity Future debt issuance and the impact on Federal Tax Law related to: Arbitrage rebate Bank Qualification

32 Next Steps 7 Board adopts State Bond Guarantee Resolution and Authorization Resolution Prepare for bond sale Bond Sale September 2008 Preliminary Schedule of Events Staff: District Staff Board: District Board DAD: D.A. Davidson BC: Bond Counsel (K&L Preston Gates Ellis LLP) County: Snohomish and Island County Treasurers Date Event Participants August 5 Board adopts State Guarantee and Authorizing Resolution Staff, Board August Complete State Guarantee Application DAD September Complete draft Preliminary Official Statement ( POS ) and bond purchase contract DAD September Mail information to insurers DAD September Mail POS to potential investors DAD Week of September 8 Review market conditions DAD, Staff September Pricing DAD, Staff September Bond Closing BC, DAD, County