HomeMy WebLinkAboutA014 - Letter from Ambac Assurance Corporation dated October 15, 2002 - opinionArnbac Assurance Corporation
October 15, 2002
City of Ames, Iowa
515 Clark Avenue
Ames, IA 50010
Hutchinson, Shockey, Efley & Co.
222 West Adams Street
Ambac Chicago, IL 60606
Ladies and Gentlemen:
Evensen Dodge, Inc.
650 Third Avenue South
Minneapolis, MN 55402
Dorsey & Whitney LLP
801 Grand Avenue
Des Moines, IA 50309
Otie State Street Plaza
NewY(,.)rk, NY 10004
211668,0340
A member ofAmbac Finawial Group, hic
This opinion has been requested Of the undersigned, Managing Director and General
Counsel, Public Finance of Ambac Assurance Corporation, a Wisconsin stock insurance
corporation ("Ambac Assurance"), in connection with the issuance by Ambac Assurance of
a certain Financial Guaranty Insurance Policy, effective as of the date hereof (the "Policy"),
insuring $7,525,000 in aggregate principal arnOUnt of the City of Ames, Iowa (the
"Obligor"), Electric Revenue Refunding Bonds, Series 2002D, dated October 15, 2002 (the
"Obligations").
In connection with my opinion herein, I have examined the Policy, such statutes,
documents and proceedings as I have considered necessary or appropriate under the
circurnstances to render the following opinion, including, without limiting the generality of
the foregoing, certain statements contained in the Official Statement of the Obligor dated
September 30, 2002 relating to the Obligations (the "Official Statement") under the
headings "DESCRIPTION OF THE BONDS -BOND INSURANCE" and "APPENDIX D
— SPECIMEN MUNICIPAL BOND INSURANCE POLICY".
Based upon the foregoing and having regard to legal considerations I deern relevant, I am
of the opinion that:
Ambac Assurance is a stock insurance corporation duly organized and validly
existing Under the laws of the State of Wisconsin and duly qualified to conduct an
insurance business in the State of Iowa.
2. Ambac Assurance has full corporate power and authority to execute and deliver the
Policy and the Policy has been duly authorized, executed and delivered by Ambac
Assurance and constitutes a legal, valid and binding obligation of Ambac
Assurance enforceable in accordance with its terms except to the extent that the
enforceability (but not the validity) of such obligation may be limited by any
applicable bankruptcy, insolvency, liquidation, rehabilitation or other similar law
or enactment now or hereafter enacted affecting the enforcement of creditors'
rights.
The execution and delivery by Ambac Assurance of the Policy will not, and the
consummation of the transactions contemplated thereby and the satisfaction of the
terms thereof will not, conflict with or result in a breach of any of the terms,
conditions or provisions of the Certificate of Authority, Articles of Incorporation or
By -Laws of Ambac Assurance, or any restriction contained in any contract,
agreement or instrument to which Ambac Assurance is a party or by which it is
bound or constitute a default under any of the foregoing.
4. Proceedings legally required for the issuance of the Policy have been taken by
Ambac Assurance and licenses, orders, consents or other authorizations or
approvals of any governmental boards or bodies legally required for the
enforceability of the Policy have been obtained; any proceedings not taken and any
licenses, authorizations or approvals not obtained are not material to the
enforceability of the Policy.
.00IMbaC 5. The statements contained in the Official Statement under the heading
"DESCRIPTION OF THE Bs ?�0S-BOIND INSUR,ANICE" , insofar as such
statements constitute summaries of' the matters referred to therein, accurately
reflect and fairly present the information purported to be shown and, insofar as
such statements describe Ambac Financial Group, Inc. and Ambac Assurance,
fairly and accurately describe Ambac Financial Group, Inc. and Ambac Assurance.
6. The form of Policy contained in the Official Statement under the heading
"APPENDIX D — SPECIMEN MUNICIPAL BOND INSURANCE POLICY" is a
true and complete copy of the form of Policy.
The opinions expressed herein are solely for your benefit, and may not be relied upon by
any other person.
)r and
Public Finance
/kd
20032be
OF BONI) INSURER
Inconnection with the issuance of$7,525800inaggregate principal amount ofthe
City ofAznoa. Iowa (tkc "Obligor"), l]cuLdo Revenue Refunding Bonds, Series 20020,
dated October 15, 2002 (the ^^Ob|iguii*nu^). /\ndruc &moun^nuc Corporation (^^Avibuo`^) is
issuing u 6naouiu| guaranty insurance policy (ibc '^bumuruncm Policy") guaranteeing the
puyouoni ofpriocipul and bn(crcmt when doe on the Obligations, all as more fully set out in
the Insurance Policy.
On behalf of Ambac, the undersigned hereby certifies that:
(i) the Insurance Policy in an unconditional and recourse obligation ofAnnbuu
(enforceable by or on behalf of' the holders of the Obligations) to pay the scheduled
payments of interest and principal on the Obligations in the event of Nonpayment as
defined inthe Insurance Policy;
(ii) the insurance prernium of $30,000.00 was dcteonmed in urna'* length
negotiations in accordance with our standard pzmcedurom, is required to be paid as a
condition to the iomouncc of the Insurance Policy and nepcouenio u reasonable charge for the
transfer ofcredit risk;
(iii) no portion of such prerniurn represents x payment for any direct or indirect
services other than the transfer of credit risk, including costs of underwriting or remarketing
the Obligations or the cost of insurance for casualty of Obligation financed property;
(iv)veare not on the Obligations and donot reasonably expect that
we will be called upon to make any payment under the Insurance Policy;
(v) the Obligor is not entitled to u refund of any portion of premiurn for the
Insurance Policy in the event that the Obligations are retired prior to their stated maturity;
and
(vi) vewould not have issued the Insurance Policy inthe absence nfareserve
fund of the size and type established by the documents pursuant to which the Obligations
are being issued, and iiianormal and oostonumry10 require ereserve fund of" such asize and
type iosimilar transactions.
IN WITNESS WBDBRB0P, }\nzbuo Assurance Corporation has caused this
certificate to be executed in its name on this 15ib day of October, 2002, by one of its
officers duly authorized aeu[Such date.
AM8&C ASSURANC RP, RATION
Ambac
Financial Guaranty Insurance Policy
Obligor: CITYOF AMES, IOWA
Ambac Assurance Corporation
One State Screer Plaza, 15th Floor
New York, New York 10004
Telephone: (212) 668-0340
Policy Number: 20032BE
Obligations: $7,525,000 Electric Revenue Refunding Bonds, Series 2002D, -Premium: $30,000.00
dated October 15, 2002, and maturing on January I in the years
2003 through 2008, both inclusive. The Paying Agent is the City
Treasurer of the City of Ames, Iowa.
Ambac Assurance Corporation (Ambac), a Wisconsin stock insurance corporation, in consideration of the payment of the
premium and subject to the terms of this Policy, hereby agrees to pay to The Bank of New York, as trustee, or its successor (the
"Insurance Trustee"), for the benefit of the Holders, that portion of the principal of and interest on the above -described obligations
(the "Obligations") which shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Obligor.
Ambac will make such payments to the Insurance Trustee within one (1) business day following written notification to Ambac of
Nonpayment. Upon a Holder's presentation and surrender to the Insurance Trustee of such unpaid Obligations or related coupons,
uncanceled and in bearer form and free of any adverse claim, the Insurance Trustee will disburse to the Holder the amount of
principal and interest which is then Due for Payment but is unpaid. Upon such disbursement, Ambac shall become the owner of
the surrendered Obligations and/or coupons and shall be fully subrogated to all of the Holder's rights to payment thereon.
In cases where the Obligations are issued in registered form, the Insurance Trustee shall disburse principal to a Holder only upon
presentation and surrender to the Insurance Trustee of the unpaid Obligation, uncanceled and free of any adverse claim, together
with an instrument of assignmenc, in form satisfactory to Ambac and the Insurance Trustee duly executed by the Holder or such
Holder's duly authorized representative, so as to permit ownership of such Obligation to be registered in the name of Ambac or its
nominee. The Insurance Trustee shall disburse interest to a Holder of a registered Obligation only upon presentation to the
Insurance Tnistee of proof that the claimant is the person entitled to the payment of interest on the Obligation and delivery to the
Insurance Trustee of an instrument of assignment, in form satisfactory co Ambac and the Insurance Trustee, duly executed by the
Holder or such Holder's duly authorized representative, transferring to Ambac all rights under such Obligation to receive the
interest in respect of which the insurance disbursement was made. Ambac shall be subrogated to all of the Holders' rights to
payment on registered Obligations to the extent of any insurance disbursements so made.
In the event that a trustee or paying agent for the Obligations has notice that any payment of principal of or interest on an
Obligation which has become Due for Payment and which is made to a Holder by or on behalf of the Obligor has been deemed a
preferential transfer and theretofore recovered from the Holder pursuant to the United States Bankruptcy Code in accordance with
a final, nonappealable order of a court of competent jurisdiction, such Holder will be entitled to payment from Ambac co the extent
of such recovery if sufficient funds are not otherwise available.
As used herein, the term "Holder" means any person other than (i) the Obligor or (ii) any person whose obligations constitute the
underlying security or source of payment for the Obligations who, at the time of Nonpayment, is the owner of an Obligation or of
a coupon relating to an Obligation. As used herein, "Due for Payment", when referring to the principal of Obligations, is when
the scheduled maturity date or mandatory redemption date for the application of a required sinking fund installment has been
reached and does not refer to any earlier dace on which payment is due by reason of call for redemption (other than by application
of required sinking fund installments), acceleration or other advancement of maturity; and, when referring to interest on the
Obligations, is when the scheduled date for payment of interest has been reached. As used herein, "Nonpayment" means the failure
of the Obligor to have provided sufficient funds to the trustee or paying agent for payment in full of all principal of and interest
on the Obligations which are Due for Payment.
This Policy is noncancelable. The premium on this Policy is not refundable for any reason, including payment of the Obligations
prior to maturity. This Policy does nor insure against loss of any prepayment or other acceleration payment which at any rime
may become due in respect of any Obligation, other than at the sole option of Ambac, nor against any risk ocher than Nonpayment.
In witness whereof, Ambac has caused this Policy to be affixed with a facsimile of its corporate seal and to be signed by its duly
authorized officers in facsimile to become effective as its original seal and signatures and binding upon Ambac by virtue of the
countersignature of its duly authorized representative.
President
%'s
Secretary
crerary
4
Effective Date: October 15, 2002
V
AV
V4
or z
uthorized Representative
THE BANK OF NEW YORK acknowledges
that it has agreed
to perform the duties of Insurance Trustee under this Policy.
Form No.: 213-0012 (1/01)
31,75
Authorized Trustee
A-