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HomeMy WebLinkAbout2709CITY OF PORT ANGELES, WASHINGTON ORDINANCE NO. 2709 AN ORDINANCE OF THE CITY OF PORT ANGELES, WASHINGTON, ESTABLISHING A PLAN AND SYSTEM FOR CAPITAL IMPROVEMENTS; AUTHORIZING THE ISSUANCE OF ELECTRIC REVENUE BONDS IN THE PRINCIPAL AMOUNT OF $2,920,000 TO PROVIDE FUNDS TO PAY A PORTION OF THE CITY'S ELECTRIC UTILITY CAPITAL IMPROVEMENT PROGRAM; PROVIDING FOR THE ESTABLISHMENT OF CERTAIN FUNDS AND ACCOUNTS; MAILING OTHER COVENANTS AND AGREEMENTS IN CONNECTION WITH THE FOREGOING; AND AUTHORIZING THE SALE OF SUCH BONDS. Adopted September 1, 1992 Prepared by: PRESTON THORGRIMSON SHIDLER GATES & ELLIS Seattle, Wa®hington TABLE OF CONTENTS Page ARTICLE I DEFINITIONS SECTION 1.1. Definitions 1 SECTION 1.2. Interpretation 9 ARTICLE II FINDINGS AND DETERMINATIONS SECTION 2.1. Plan and System. 10 SECTION 2.2. Best Interest of the City 10 SECTION 2.3. Revenues Sufficient 10 SECTION 2.4. Due Regard 10 ARTICLE III AUTHORIZATION AND ISSUANCE OF BONDS SECTION 3.1. Authorization of 1992 Bonds 11 SECTION 3.2. Additional Provisions of 1992 Bonds 11 SECTION 3.3. Reservation of Right to Purchase 12 SECTION 3.4. Optional Redemption of 1992 Bonds 12 SECTION 3.6. Mandatory Redemption of 1992 Bonds 13 SECTION 4.1. SECTION 4.2. ARTICLE IV ISSUANCE OF ADDITIONAL BONDS Authorization of Series of Additional Bonds Additional Bonds ARTICLE V GENERAL TERMS AND PROVISIONS OF BONDS 14 15 SECTION 5.1. Execution and Payment of Bonds 19 SECTION 5.2. Ownership of Bonds 19 SECTION 5.3. Bond Registrar 20 SECTION 5.4. Transfers and Exchanges 20 SECTION 5.5. Payment of Bonds and Interest 21 SECTION 5.6. Lost, Stolen, Destroyed or Mutilated Bonds 21 -i- D0T529 92/08/27 SECTION 5.7. Limitations on Duty of City to Register, Exchange or Transfer Bonds 22 SECTION 5.8. Paid or Surrendered Bonds Not to be Reissued 22 SECTION 5.9. CUSIP Identification Numbers 22 SECTION 5.10. Issuance of Coupon or Bearer Bonds 22 SECTION 5.11. Temporary Bonds 23 ARTICLE VI REDEMPTION OF BONDS SECTION 6.1. Notice of Redemption 23 SECTION 6.2. Payment of Redeemed Bonds; When Interest on Bonds Called for Redemption Ceases to Accrue 25 SECTION 6.3. Optional Redemption or Purchase of Bonds 26 ARTICLE VII - CREATION OF SPECIAL FUNDS AND ACCOUNTS AND PAYMENTS THEREFROM SECTION 7.1. Light Fund 26 SECTION 7.2. Bond Fund 29 SECTION 7.3. Construction Account 34 SECTION 7.4. Arbitrage Rebate 34 SECTION 7.5. Investment of Funds 35 ARTICLE VIII DISPOSITION OF PROCEEDS SECTION 8.1. Disposition of the Proceeds from the Sale of the 1992 Bonds 36 ARTICLE IX COVENANTS TO SECURE BONDS SECTION 9.1. Security for Bonds 37 SECTION 9.2. Rate Covenant - General 38 SECTION 9.3. Rate Covenant - Debt Service Coverage 38 SECTION 9.4. Restrictions on Contracting of Obligations Secured by Revenues 39 SECTION 9.5. Covenant to Maintain System in Good Condition 40 SECTION 9.6. Covenants Concerning Disposal of Properties of System 40 SECTION 9.7. Insurance. 41 D0T529 92/08/27 SECTION 9.8. Books of Account 42 SECTION 9.9. Covenant Not to Render Service Free of Charge 42 SECTION 9.10. Covenant to Make Only Economically Sound Improvements 43 SECTION 9.11. Covenant to Pay Bond Principal and Interest Punctually 43 SECTION 9.12. Covenant to Pay Taxes, Assessments and Other Claims 43 SECTION 9.13. Covenant to Retain Competent Management 44 SECTION 9.14. Further Assurances 44 SECTION 9.15. Tax Covenants 44 ARTICLE X SUPPLEMENTAL AND AMENDATORY ORDINANCES SECTION 10.1. Amendments Without Consent of Bondowners 45 SECTION 10.2. Amendments With Consent of Bondowners 46 ARTICLE XI DEFAULTS AND REMEDIES SECTION 11.1. Events of Default 46 SECTION 11.2. Waivers of Default 48 SECTION 11.3 Bondowners' Trustee 48 SECTION 11.4. Suits at Law or in Equity 49 SECTION 11.5. Books of City Open to Inspection 49 SECTION 11.6. Payment of Funds to Bondowners' Trustee 50 SECTION 11.7. Application of Funds by Bondowners' Trustee 50 SECTION 11.8. Relinquishment of Funds Upon Remedy of Default 51 SECTION 11.9. Suits by Individual Bondowners 51 SECTION 11.10. Remedies Granted in Ordinance not Exclusive 52 ARTICLE XII AMENDMENTS AND BONDOWNERS MEETINGS SECTION 12.1. Call of Bondowners Meetings 52 SECTION 12.2. Notice to Bondowners 52 SECTION 12.3. Proxies; Proof of Ownership of Bonds 53 SECTION 12.4. Execution of Instruments by Bondowners 53 D0T529 92/08/27 SECTION 12.5. Appointment of Officers at Bondowners Meetings 54 SECTION 12.6. Quorum at Bondowners Meetings 54 SECTION 12.7. Vote Required to Amend Ordinance 54 SECTION 12.8. Obtaining Approval of Amendments at Bondowners Meeting 55 SECTION 12.9. Alternate Method of Obtaining Approval of Amendments 56 SECTION 12.10. Amendment of Ordinance In Any Respect by Approval of All Bondowners 57 SECTION 12.11. Bonds Owned by City 57 SECTION 12.12. Endorsement of Amendment on Bonds 57 ARTICLE XIII FORM OF BONDS SECTION 13.1. Form of Bonds SECTION 13.2. Form of 1992 Bonds ARTICLE XIV MISCELLANEOUS, DEFEASANCE; SALE OF BONDS AND APPROVAL OF OFFICIAL STATEMENT 58 58 SECTION 14.1. Ordinance and Laws a Contract With Bondowners 64 SECTION 14.2. Bonds Deemed No Longer to be Outstanding Hereunder 65 SECTION 14.3. Moneys Held by Paying Agents One Year After Due Date 66 SECTION 14.4. Sale of 1992 Bonds 66 SECTION 14.5. Approval of Official Statement 66 SECTION 14.6. Benefits of Ordinance Limited to City, Bondowners, and Paying Agents 67 SECTION 14.7. Term "City" Includes Successors 67 SECTION 14.8. Severability 67 SECTION 14.9. General Authorization 68 SECTION 14.10. Adjustment of Dollar Amounts 68 SECTION 14.11. Special Designation 68 SECTION 14.12. Prior Acts 68 SECTION 14.13. Effective Date of Ordinance 68 SECTION 14.14. Repealer 68 -iv- DOT529 92/08/27 ORDINANCE NO. 2709 AN ORDINANCE OF THE CITY OF PORT ANGELES, WASHINGTON, ESTABLISHING A PLAN AND SYSTEM FOR CAPITAL IMPROVEMENTS; AUTHORIZING THE ISSUANCE OF ELECTRIC REVENUE BONDS IN THE PRINCIPAL AMOUNT OF $2,920,000 TO PROVIDE FUNDS TO PAY A PORTION OF TH8 CITY ►S ELECTRIC UTILITY CAPITAL IMPROVEMENT PROGRAM; PROVIDING FOR THE ESTABLISHMENT OF CERTAIN FUNDS AND ACCOUNTS; MAILING OTHER COVENANTS AND AGREEMENTS IN CONNECTION WITH THE FOREGOING; AND AUTHORIZING THE SALE OF SUCH BONDS, WHEREAS, the City of Port Angeles, Washington (the "City "), a municipal corporation of the State of Washington, owns and operates an electric utility system (the "Electric System "); and WHEREAS, the City presently has no outstanding Electric System revenue bonds; and WHEREAS, the City Council of "Council ") haai determined that it City that it undertake a plan renewals of the Electric System capital improvement plan for the d the City of Port Angeles (the is in the beat interests of the of repairs, maintenance and as set forth in the City's, Electric System (the "Plan "); WHEREAS, the Council deems it necessary and advisable to Josue Electric System revenue bonds (the "1992 Bonds ") in order to pay part of the coots of the plan of improvements and to reimburse the City for a portion of the coot of 1991 Plan improvements to the Electric System; and WHEREAS, the City wishes to establish the terms and conditions for the issuance of additional bonds on a parity with the 1992 Bonds; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PORT ANGELES, WASHINGTON DO ORDAIN AS FOLLOWS: ARTICLE I DRFINITIONg SECTION 1.1. Definitions. As used in this Ordinance the following words and phrases shall have the meanings herein set forth unless the context shall clearly indicate that another meaning is intended. "Additional Bonds" means the Bonds pursuant to Article "Adjusted Net Revenues" pursuant to Section 4.2.I. of: any Bonds issued on a parity with IV of this Ordinance. means Net Revenues as calculated "Annual Debt Service" for any Fiscal Year shall mean the sum (a) standing Bonds of Bonds, (b) the interest due in such Fiscal Year on all out- , excluding interest to be paid from the proceeds the principal of all outstanding Serial Bonds due in such Fiscal Year, and (c) the Sinking Fund Requirement, if any, for such Fiscal Year (calculated as of the Sinking Fund Requirement Date for such Fiscal Year). If the interest rate on any such Bonds is other than a fixed rate, the rate applicable at the time of computation shall be used. "Average Annual Debt Service" means the amount determined by dividing (a) the sum of all interest and principal to be paid on outstanding Bonds from the date of determination to the last maturity date of such Bonds, by (b) the number of Fiscal Years from and including the Fiscal Year in which the determination is made to the last Fiscal Year in which the sum of (i) the principal amount of Serial Bonds maturing in such Fiscal Year plus (ii) the Sinking Fund Requirement for such Fiscal Year, exceeds 4% of the principal amount of Bonds outstanding as of the date of determination. If the interest rate on any such Bonds is other than a fixed rate, the rate applicable at the time of computation shall be used. "Bonds" means the 1992 Bonds and any Additional Bonds. "Bonds" may include bonds, notes, warrants, certificates of indebtedness or any other evidence of indebtedness. "Bond Fund" means the Electric System Revenue Bond Fund established pursuant to Section 7.2 of this Ordinance to secure payment of the Bonds. "Bond Fund Trustee" means any bank or trust company organized under the laws of any state of the United States or any - 2 - D0T529 92/08/27 national banking association hereafter appointed as trustee pursuant to Section 11.3 of this Ordinance. "Bond Registrar" or "Registrar" means the fiscal agency of the State of Washington in either Seattle, Washington, or New York, New York, whose duties include the registration and authen- tication of the 1992 Bonds, maintenance of the Bond Register, effecting transfer of ownership of the 1992 Bonds, and paying the principal of, premium, if any, and interest on the 1992 Bonds. A Supplemental Ordinance may appoint a different person, firm or entity to serve as Bond Registrar. "Bond Register" means the books or records maintained by the Bond Registrar for the purpose of registration of the 1992 Bonds. "Bond Year" means each one year period (or shorter period from the date of issue) that ends at the close of business on August 31. "City" means the City of Port Angeles, Washington, a municipal corporation of the State of Washington. "City Light Director" means the duly appointed and acting City Light Director of the Electric System, or the successor to such office. "Code" means the federal Internal Revenue Code of 1986, as amended, and applicable regulations. "Closing" means the delivery of any 1992 Bonds to, and payment of the purchase price therefor by, the initial purchasers of the 1992 Bonds. "Council" means the legislative body of the City as the same shall be duly and regularly constituted from time to time. "Computation Date" means the Installment Computation Date the Final Computation Date. "Computation Period" means the period from the date Closing through the date as of which the Rebate Amount determined pursuant to Section 7.4. "Construction Account" means the 1992 Electric System Revenue Bond Construction Account created pursuant to Section 7.3 of this Ordinance. or of is "Distribution and Transmission Facilities" means the electric utility properties and assets, real and personal, tan- gible and intangible, now owned and operated by the City and used -3- D0T529 92/08/27 or useful in the transmission, distribution or sale of electric current or electric service, and business incidental thereto, and any additions, improvements and betterments thereto and extensions thereof hereafter constructed or acquired. Distri- bution and Transmission Facilities shall not include Generating Facilities. "Electric System" means the Distribution and Transmission Facilities and any Generating Facilities hereafter acquired, but such Electric System shall not include any property and facilities as may hereafter be acquired or constructed and established as a separate utility system not financed from the Revenues except on a basis junior and inferior to the lien on Revenues pledged to pay and secure the Bonds, the revenue of which separate utility system may be pledged to the payment of revenue obligations issued to purchase, construct, condemn or otherwise acquire such separate utility system. "Final Computation Date" means the date that the last 1992 Bond is discharged. A 1992 Bond is discharged on the date that all amounts due under the terms of the 1992 Bond are actually and unconditionally due if cash is available at the place of payment and no interest accrues with respect to the 1992 Bond after such date. "Finance Director" means the duly appointed and acting Finance Director of the City or the successor to such office. "Fiscal Year" means the fiscal year used by the City at any time. At the time of the adoption of this Ordinance, the Fiscal Year is the twelve -month period beginning January 1 of each year. "Generating Facilities" means electric utility properties and assets, real and personal, tangible and intangible, and used or useful in the generation of electric energy, hereafter acquired or constructed by the City and declared to be part of the Electric System, including any common undivided interest therein, related transmission facilities, and additions, improve- ments and betterments to and extensions of such properties and assets. "Government Obligations" means direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States Government. "Installment Computation Date" means the last day of the fifth Bond Year and of each succeeding fifth Bond Year. "Net Revenues" means, for any period, the excess of Revenues over Operating Expenses for such period, excluding from the -4- D0T529 92/08/27 computation of Revenues (a) any profit or loss derived from the sale or other disposition, not in the ordinary course of business, of investments or fixed or capital assets, or resulting from the early extinguishment of debt, and (b) insurance proceeds. ' "1992 Bonds" means the 82,920,000 principal amount of the City's Electric Revenue Bonds, Series 1992, authorized to be issued by this Ordinance. "Nonpurpose Receipts" respect to an investment following types of receipts means, in general, any receipt with allocated to the 1992 Bonds. The are specifically included: (a) Actual Receipts. constructively received with Actual receipts may not commissions, administrative expenses. Any amount actually or respect to an investment. be reduced by selling expenses or similar (b) Disposition Receipts. An amount determined 41, treating an investment that ceases to be allocated to the Blonde (other than by reason of a sale or retirement) as if sold for fair market value on the date that the investment ceases to be allocated to the 1992 Bonds._ (c) Installment Date Receipts. The fair market value (or, for fixed rate investments, present value) of all investments allocated to the 1992 Bonds at the close of business on any Computation Date. (d) Imputed Receipts. Any receipts that are required to be imputed and taken into account pursuant to Section 1.148 -ST of the Temporary Income Tax Regulations or any successor Temporary or Final Income Tax Regulations. ^Nonpurpose Payments" means, in genera,, any payment respect to an investment allocated to the 1992 Bonds. following types of payments are specifically included: (a) Direct Payments. The amount of gross proceeds of the Bonds directly used to purchase the investment. Direct payments do not include brokerage commissions, administrative expenses or similar expenses. (b) Constructive Payments, The fair market value (as of the date of allocation to the 1992 Bonds) of any . 5 . DOT529 with The 92/08/27 investment that was not directly purchased with gross proceeds of the 1992 Bonds, but which is allocated to the 1992 Bonds. (c) Payments of Rebatable Arbitrage. Any payment of Rebatable Arbitrage if such payment is made no later than the due date for such payment. "Operating Expenses" means (i) the City's expenses for operation and maintenance of the Electric System, and ordinary repairs, renewals, replacements and reconstruction of the Electric System, including all costs of delivering electric power and energy and payments (other than payments out of Bond proceeds) into reasonable reserves in the Light Fund for items of Operating Expenses the payment of which is not immediately required, and shall include, without limiting the generality of the foregoing, all costs of purchased power, costs of transmission and distribution operation and maintenance expenses, rents, administrative and general expenses, engineering expenses, legal and financial advisory expenses, required payments to pension, retirement, health and hospitalization funds, insurance premiums and any taxes, assessments, or payments in lieu of taxes, all to the extent properly allocable to the Electric System; (ii) any current expenses required to be paid by the City under the provisions of this Ordinance or by law, all to the extent properly allocable to the Electric System; and (iii) the fees and expenses of any Paying Agent. Operating Expenses shall not include any costs or expenses for new construction or other capital outlays, interest, amortization of debt service on any evidence of indebtedness or any allowance for depreciation. "Ordinance" means this Ordinance, except when used in Articles XI and XII hereof, where the term "Ordinance" has the meaning prescribed in Section 11.1 hereof. "Paying Agent" means the designated fiscal agency of the State of Washington in either Seattle, Washington, or New York, New York, or a bank or banks designated as Paying Agent by the City. "Permitted Investments" means the following, to the extent that the same are legal for investment of funds of the City: (a) any Government Obligations, including obligations of any of the federal agencies set forth in clause (b) below to the extent unconditionally guaranteed by the United States; (b) obligations of the Export- Import Bank of the United States, the Government National Mortgage Association, the Federal National Mortgage Association to the extent guaranteed by the Government National Mortgage Association, the Federal Financing Bank, the Federal Intermediate Credit Banks, the Federal Banks for Cooperatives, -6- DOT529 92/08/27 the Federal Land Banks, the Farmers Home Administration and the Federal Home Loan Mortgage Association, or any agency or instrumentality of the Federal Government which shall be estab- lished for the purposes of acquiring the obligations of any of the foregoing or otherwise providing financing therefor; (c) new housing authority bonds issued by public agencies or municipali- ties and fully secured as to the payment of both principal and interest by a pledge of annual contribution under an annual contributions contract or contracts with the United States; or project notes issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a requisition or payment agreement with the. United States; (d) direct and general obligations of any State within the territorial United States, to the payment of the principal of and interest on which the full faith and credit of such State is pledged, provided, that at the time of their purchase, such obligations are rated in one of the two highest rating categories by either Moody's Investors Services, Inc. or Standard & Poor's Corporation; (e) certificates of deposit, whether negotiable or nonnegotiable, issued by any bank or trust company organized under the laws of any State of the United States of America or any national banking association (including the Bond Fund Trustee, if any), provided that such certificates of deposit shall be (i) continuously and fully insured by the Federal Deposit Insurance Corporation, or (ii) issued by any bank or trust company which is a recognized qualified public depository of the State of Washington under RCW Chapter 39.58, as amended, or (iii) continuously and fully secured by such securities as are described above in clauses (a) or (b) , which shall have a market value (exclusive of accrued interest) at all times at least equal to the principal amount of such certificates of deposit; (f) any written repurchase agreement with any bank, savings institution or trust company which is insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or with any brokerage dealer with retail customers which falls under Securities Investors Protection Corporation protection, provided that such repurchase agreements are fully secured by direct obligations of the United States of America, and provided further that (i) such collateral is held by the City or its agent or trustee during the term of such repurchase agreement, (ii) such collateral is not subject to liens or claims of third parties, (iii) such collateral has a market value (determined at least once every 14 days) at least equal to 100% of the amount invested in the repurchase agreement, (iv) the City or its agent or trustee has a perfected first security interest in the collateral, (v) the agreement shall be for a term not longer than 270 days and (vi) the failure to maintain such collateral at the level required in (iii) above will require the City or its agent or trustee to liquidate the collateral; and (g) any investment or investment agreement permitted for funds of -7- D0T529 92/08/27 the City under the laws of the State of Washington, as amended from time to time, which are approved by [Bond Insurer], if such corporation is then the insurer of any Bonds, and by such other corporations, if any, which are then insurers of any Bonds. "Professional Utility Consultant" means the independent person(s) or firm(s) selected by the City having a favorable reputation for skill and experience with generation, transmission and distribution systems of comparable size and character to the Electric System in such areas as are relevant to the purposes for which they are retained. "Qualified Insurance" means any non - cancellable municipal bond insurance policy or surety bond issued by any insurance company licensed to conduct an insurance business in any state of the United States (or by a service corporation acting on behalf of one or more such insurance companies), which insurance company or companies, as of the time of issuance of such policy or surety bond, are currently rated in one of the two highest rating categories by Moody's Investors Service, Inc. or Standard & Poor's Corporation or both Moody's Investors' Service, Inc., and Standard & Poor's Corporation if such institution is rated by both or their comparably recognized business successors. "Qualified Letter of Credit" means any irrevocable letter of credit issued by a financial institution for the account of the City on behalf of the owners of one or more series of Bonds, which institution maintains an office, agency or branch in the United States and as of the time of issuance of such letter of credit is currently rated in one of the two highest rating categories by Moody's Investors Service, Inc. or Standard & Poor's Corporation or their comparably recognized business successors or both Moody's Investors Service, Inc. and Standard & Poor's Corporation if such institution is rated by both or their comparably recognized business successors. "Rebatable Arbitrage" means the amount required to be paid pursuant to Section 148(f) of the Code. "Rebate Computation Certificate" means the certificate executed by the City setting forth the methodology for computation of Rebatable Arbitrage. "Light Fund" means the fund of that name described in Section 7.1 of this Ordinance. "Revenues" means all income (including investment income), receipts and revenues derived by the City through the ownership and operation of the Electric System but shall not include: - 8 - D0T529 92/08/27 (a) any income derived by the City through the ownership and operation of any facilities that may hereafter be purchased, constructed or otherwise acquired by the City as a separate utility system; or (b) investment income restricted to a particular purpose inconsistent with its use for the payment of debt service, including investment income derived pursuant to a plan of debt retirement or refunding. "Serial Bonds" means Bonds other than Term Bonds. "Sinking Fund Requirement" for any Fiscal Year means the principal amount of Term Bonds required to be purchased, redeemed or paid in such Fiscal Year as established by the ordinance of the City authorizing the issuance of such Term Bonds. "Sinking Fund Requirement Date" means, for any Fiscal Year, the date by which the Sinking Fund Requirement for such Fiscal Year must be met, which with respect to the 1992 Bonds shall be September 1. "Supplemental Ordinance" means any ordinance amending, modifying or supplementing the provisions of this Ordinance, including any ordinance providing for the issuance of Additional Bonds. "Term Bonds" means Bonds of any principal maturity which are subject to mandatory redemption and for which mandatory sinking fund payments are required. The 1992 Bonds maturing on September 1, 2012, and September 1, 2022, shall be deemed "1992 Term Bonds." SECTION 1.2. Interpretation. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Words imparting the singular number shall include the plural numbers and vice versa unless the context shall otherwise indi- cate. Reference to Articles, Sections and other subdivisions of this Ordinance are to the Articles, Sections and other sub- divisions of this Ordinance as originally adopted unless express- ly stated to the contrary. The headings or titles of the Articles and Sections hereof, and the Table of Contents appended hereto, are for convenience of reference only and shall not define or limit the provisions hereof. -9- D0T529 92/08/27 ARTICLE II FINDINGS AND DETERMINATIONS SECTION 2.1. Plan and System. The Council hereby approves and authorizes the acquisition, development and construction by the City of the project facilities as more fully described in the City's capital outlay program for the System, as set forth and approved by the City in Ordinance No. 2664 of the City (the "Plan "). The City may modify details of the foregoing Plan where deemed necessary or advisable in the judgment of the Council. Should any part or provision of the Plan be held to be invalid, such holding shall not affect the validity of any other part thereof. The estimated cost of the Plan is hereby declared to be the sum of $2,890,000. Included in this estimated cost are funds for legal, engineering and financing costs. SECTION 2.2. Best Interest of the City. The Council hereby finds and determines that it is in the best interests of the City and the users of the Electric System that the City issue the 1992 Bonds for. the purpose of providing funds to finance a portion of the costs of the Plan. SECTION 2.3. Revenues Sufficient. The Council hereby further finds and determines that the Revenues to be derived by the City from the operation of the Electric System at the rates to be charged for the electricity furnished thereby will be sufficient in the judgment of the Council to meet all expenses of operation and maintenance, and to make all necessary repairs, replacements and renewals thereof, and to permit the setting aside out of such Revenues in the Bond Fund of such amounts as may be required to pay the principal of and interest on the 1992 Bonds as the same become due and payable. SECTION 2.4. Due Regard. The Council hereby finds and determines that due regard has been given to the cost of the operation and maintenance of the Electric System and that it has not obligated the City to set aside into the Bond Fund for the account of the Bonds a greater amount of the revenues and proceeds of the Electric System than in its judgment will be available over and above such cost of maintenance and operation. -10- D0T529 92/08/27 SECTION 3.1. ARTICLE III AUTHORIZATION AND ISSUANCE OF BONDS Authnri nation of 1992 Bonds,, For the purpose of paying a portion of the costs of the Plan, to fund the Reserve Account, and to pay for the costs of issuing the 1992 Bonds, there are hereby authorized to be issued $2,920,000 aggregate principal amount of Electric Revenue Bonds, Series 1992 (the "1992 Bonds "), which shall bear interest from their date at such rates per annum and shall mature on September 1 of such year and in such amounts as follows: XIII lit 1993 1994 1995 1996 1997 1998 1999 2000 2001 2005 2012 2022 8t interest Rate $ 40,000.00 40,000.00 45,000.00 45,000.00 50,000.00 50,000.00 55,000.00 55,000.00 60,000.00 270,000.00 650,000.00 1,560,000.00 3.2000 4.1000 4.5000 4.7500 5.0000 5.2000 5.3500 5.5500 5.7000 6.0500 6.2500 6.4000 SECTION 3.2. Adr9i ti nal Provilione of 1992 Bonds. The 1992 Bonds shall be dated September 1, 1992, shall be Cully registered as to both principal and interest, shall be in denominations of $5,000 or any integral multiple thereof, provided that no 1992 Bond shall represent more than one maturity, and shall be numbered separately in such manner and with any additional designation as the Bond .Registrar deems necessary for purposes of identification. Interest may be paid by check or draft drawn upon the Paying Agent. Principal of the 1992 Bonds, at maturity or when otherwise due, shall be payable upon due presentation and surrender of the Bonds at the office of the Paying Agent in such coin or currency of the United States of America which at the time of payment is legal tender for public and private debts. The principal of and interest on the Bonds shall be payable from the Bond Fund. D07529 9a /oe /27 Interest on the 1992 Bonds shall be payable semiannually on March 1 and September 1 of each year, beginning March 1, 1993. The Bond Register shall be maintained by the Bond Registrar, and shall contain the name and mailing address of the registered owner or owners of each 1992 Bond or nominee of such registered owner or owners and the principal amount and number of 1992 Bonds held by each registered owner or nominee. SECTION 3.3. The City reserves the right to use moneys in the Light Fund or any other funds legally available therefor at any time to purchase any of the Bonds in the open market for retirement only if such purchase shall be found by the City to be economically advantageous and in the best interest of the City. Any purchases of Bonds may be made with or without tenders of Bonds and at either public or private sale. All Bonds so purchased or redeemed shall be cancelled and not reissued. Any moneys which are to be applied to the purchase or redemption of Bonde,,.shall, prior to such purchase or redemption, be transferred to and deposited in the Bond Fund to the credit of the appropriate account therein. SECTION 3.4. Dntiona1 Red2n _i nr, cf 1992 „3pnd . The 1992 Bonds maturing after September 1, 2002 are subject to redemption prior to maturity, at the option of the City, on or after September 1, 2002, in whole or in part on any date, upon written notice mailed as provided in Article VI of this Ordinance, at a price of par plus interest accrued thereon to the date fixed for redemption. If less than all of the 1992 Bonds subject to optional redemption are so called for redemption, the City shall choose the maturities to be redeemed. Except as provided in the Letter of Representation, if less than the whole of a maturity is so called for redemption, the Bond Registrar shall choose by lot the Bonds to be redeemed. In the case of any redemption of 1992 Bonds at the election or direction of the City, the City shall give written notice to the Paying Agent, at least 45 days prior to the date of redemption, of the principal amounts of the 1992 Bonds of each maturity to be redeemed (all of which shall be determined by the City in its sole discretion, subject to the provisions of this Ordinance). -12- 001529 92/08/27 For the purpose of selection of 1992 Bonds for redemption, each $5,000 of principal amount of Bonds shall be treated as a separate Bond. SECTION 3.6. Mandatory ede ption of 1992 onds. The 1992 Bonds maturing on September 1, 2005, shall be redeemed prior to maturity by lot (or purchased or paid at maturity), not later than September 1 in the years 2002 through 2005, inclusive, from amounts credited to the Bond Retirement Account in the Bond Fund as sinking fund installments therefor (to the extent such amounts have not been used to redeem or purchase such Bonds as provided in this Ordinance) and in the principal amounts as set forth below, upon written notice as provided in Article VI of this Ordinance, by payment of the principal amount thereof, together with th eintarest accrued thereon to the date fixed for redemption. Year Amount 2002 $60,000 2003 65,000 2004 70,000 2005 75,000 The 1992 Bonds maturing on September 1, 2012, shall be redeemed prior to maturity by lot (or purchased or paid at maturity), not later than September 1 in the years 2003 through 2012, inclusive, from amounts credited to the Bond Retirement Account in the Bond Fund as sinking fund installments therefor (to the extent such amounts have not been used to redeem or purchase such Bonds as provided in this Ordinance) and in the principal amounts as set forth below, upon written notice as provided in Article VI of this Ordinance, by payment of the principal amount thereof, together with the interest accrued thereon to the date fixed for redemption. Year Am 2006 $ 80,000.00 2007 80,000.00 2008 85,000.00 2009 90,000.00 2010 100,000.00 2011 105,000.00 2012 110,000.00 The 1992 Bonds maturing on September 1, 2022, shall be redeemed prior to maturity by lot (or purchased or paid at maturity), not later than September 1 in the years 2013 through -13- DOTS24 42/08/27 2022, inclusive, from amounts credited to the Bond Retirement Account in the Bond Fund as sinking fund installmanto therefor (to the extent such amounts have not been used to redeem or purchase such Bonds as provided in this Ordinance) and in the principal amounts as set forth below, upon written notice as provided in Article VI of this Ordinance, by payment of the principal amount thereof, together with the interest accrued thereon to the data fixed for redemption. ,Yaax AMQUAt 2013 $115,000.00 2014 125,000.00 2015 130,000.00 2016 140,000.00 2017 150,000.00 -13a- DOTfl9 92/01/2? 201$ 2019 2020 2021 2022 160,000.00 170,000.00 180,000.00 190,000.00 200,000.00 The foregoing amounts snail be deemed Sinking Fund Require- ments for the 1992 Bonds maturing on September 1, 2005, September 1, 2012 and on September 1, 2022 (the "1992 Term Bonds ") . The City may purchase and redeem 1992 Term Bonds through the application of part or all of the respective Sinking Fund Requirements therefor on the first day of any month prior to any September 1. Any moneys not so used to purchase and redeem such 1992 Term Bonds shall be applied to the redemption of such bonds on such September 1. If, as of any September 1, the principal amount of 1992 Term Bonds retired by purchase (through appli- cation of Sinking Fund Requirements or any other legally avail- able funds) or redemption exceeds the cumulative Sinking Fund Requirement through such date, such excess may be credited against the Sinking Fund Requirement for the next Fiscal Year. For the purpose of selection of Bonds for redemption, each $5,000 of principal amount of Bonds shall be treated as a separate Bond. SECTION 4.1. ARTICLE IV ISSUANCE OF ADDITIONAL BONDS •+- Before any series of Additional Bonds shall be issued under the provisions of this Article, the City shall adopt an ordinance or ordinances authorizing the issuance of such bonds, fixing the amount and the details thereof, describing in brief and general terms the purpose or purposes for which such bonds are to be issued and specifying the amount, if any, of the proceeds of such bonds to be deposited to the credit of the construction or pro- ject fund created with respect to such bonds or to another fund for the payment of capitalized interest on such bonds and to the Reserve Account; provided, however, that deposits to the Reserve Account shall be made as required under Section 7.2.0 hereof. The bonds of each series issued under the provisions of this Section shall be designated "Electric Revenue Bonds, Series ", shall be in such denominations, shall be dated, shall bear interest at a rate or rates (including variable rates) not exceeding the maximum rate then permitted by law, shall be pay- able, both as to principal and interest, at such place or places, shall mature in such year or years, shall be made redeemable at such times and prices (subject to the provisions of this Ordina- -14- D0T929 92/08/27 nce), shall be numbered, shall have such Paying Agents, and any Term Bonds of such series shall have such amortization require- ments, all as may be provided by ordinance or ordinances adopted by the City prior to the issuance of such bonds. SECTION 4.2. Additional Bonds. A. Additional Bonds may be issued payable from the Bond Fund on a parity with the Bonds and secured by an equal charge and lien on the Revenues pledged to the Bond Fund for any lawful purpose of the City, including the refunding of outstanding Bonds; provided that, (i) except as to Bonds issued pursuant to Section 4.2.E hereof, at the time of the issuance of such Additional Bonds, there is no deficiency in the Bond Fund, and no Event of Default has occurred and is continuing, and (ii) the requirements of the applicable provisions of this Section 4.2 are complied with. B. Additional Bonds may be issued for any lawful purpose of the City if the following requirements are met. A certificate signed by the Treasurer shall set forth: (i) the amount of the Net Revenues for any 12 consecutive months of the 24 months prior to the date of the issuance of such Bonds; (ii) the amount of the Average Annual Debt Service in any Fiscal Year thereafter on account of all Bonds then outstanding under this Ordinance and the Additional Bonds then to be issued hereunder; and (iii) the percentage derived by dividing the amount shown in (i) above by the amount shown in (ii) above, and shall state that such percentage is not less than 125 %; C. Additional Bonds may also be issued for any lawful purpose of the City if the following requirements are met. A certificate signed by a Professional Utility Consultant and filed with the City Clerk shall set forth: (i) the amount of the Adjusted Net Revenues computed as provided in Section 4.2.I; (ii) the amount of the Average Annual Debt Service thereafter on account of all Bonds then outstanding under this Ordinance and the Additional Bonds then to be issued hereunder; and (iii) as to the applicable Fiscal Year under (ii) above, the percentage derived by dividing the amount shown in -15- D0T529 92/08/27 (i) above by the amount shown in (ii) above, and shall state that such percentage is not less than 125 %. Additional Bonds may be issued pursuant to Subsections E and F of this Section 4.2 without complying with the provisions of this Subsection C. D. Additional Bonds may also be issued for the purpose of paying part of the costs of Distribution and Transmission Facili- ties or Generating Facilities for which Bonds have theretofore been issued, if a certificate is signed by a Professional Utility Consultant and filed with the City Clerk, which shall comply with the requirements of paragraph C above or shall state that the issuance of such Additional Bonds is necessary to complete such facilities and that the completion is necessary for the efficient and economic operation of the Electric System. E. Additional Bonds may also be issued from time to time for the purpose of providing funds, together with any other available funds, for retiring at or prior to their maturity or maturities any or all of the outstanding Bonds of any series, including the payment of any redemption premium thereon, and, if deemed necessary by the City, for paying the interest to accrue thereon to the date fixed for their retirement and any expenses incident to the issuance of such Additional Bonds. F. Additional Bonds issued under subsections E above shall not be delivered unless the proceeds (excluding any accrued interest but including any premium) of such Additional Bonds, together with any other moneys that have been made available for such purposes, and the principal of and the interest on the investment of such proceeds or any such moneys, shall be suffi- cient to pay the principal of and the redemption premium, if any, on the Bonds to be refunded and the interest that will become due and payable on or prior to the date of their payment or redemp- tion, and the expenses incident to the issuance of such Additional Bonds. If such Additional Bonds are to be issued pursuant to Section 4.2.F above, (1) there shall be filed with the City a certificate signed by the Treasurer of the City showing that the Annual Debt Service for any Fiscal Year thereafter shall not be increased by more than $5,000 by reason of the issuance of the Additional Bonds, or (2) There shall be filed with the City a certificate signed by a Professional Utility Consultant setting forth: -16- D0T529 92/08/27 (a) the amount of the Adjusted Net Revenues computed as provided in Section 4.2.I; (b) the amount of the Average Annual Debt Service in any Fiscal Year thereafter on account of all Bonds to be outstanding in such Fiscal Year and the Additional Bonds then to be issued hereunder; and (c) stating that the amount shown in (a) above is not less than 125% of the amount shown in (b) above. G. In rendering any certificate under this Section, the Professional Utility Consultant may rely upon, and such certificate shall have attached thereto, (1) financial statements of the Electric System, certified by the chief financial officer thereof, showing income and expenses for the period upon which the same are based and a balance sheet as of the end of such period, or (2) similar certified statements by the Division of Municipal Corporations of the Office of the State Auditor of the State of Washington (or any successor thereto), or (3) similar certified statement by an independent certified public accountant, if any, for as much of said period as any examination by them has been made and completed. If two or more of such statements are inconsistent with each other, the Professional Utility Consultant shall rely on the statement described under (1) above. In connection with the issuance of any Bonds pursuant to subsections 4.2.C, 4.2.D and 4.2.G of this Section, the certifi- cate of the Professional Utility Consultant hereinabove referred to shall be conclusive and the only evidence required to show compliance with the provisions and requirements of said subsection. H. For the purposes of the certificates required by Sec- tions 4.2.0 and 4.2.G of this Ordinance, Adjusted Net Revenues shall be computed by the Professional Utility Consultant as follows: (a) The Net Revenues for any 12 consecutive months (selected by the City) out of the 24 months prior to the date of issuance of the Additional Bonds (such 12 -month period being herein called the "Base Period ") may be adjusted: (i) to reflect any changes in Net Revenues for the Base Period which would have occurred if the schedule of rates and charges in effect at the time of the computation (or approved by the Council as of the time of such computation and to become effective within 12 months -17- D0T529 92/08/27 thereof) had been in effect during the portion of the Base Period in which such schedule was not in effect; (ii) to reflect a full 12 months of Net Revenues from any customers of the Electric System added prior to the computation date; and (iii) to reflect any changes in Net Revenues estimated as a result of, and upon completion of, any facilities under construction or to be acquired, constructed or installed as a part of the Electric System from the proceeds of any Bonds; provided, however, that if such facilities are Generating Facilities not then in existence and to be constructed and installed as part of the Electric System from the proceeds of any Bonds, only 80% of the estimated Net Revenues from such facilities shall be included. I. Nothing contained herein shall prevent the City from refunding at one time all of the Bonds then outstanding. Nothing contained herein shall prevent the City from issuing obligations payable from a lien on the Revenues that is junior and inferior to the Bonds. J. Additional Bonds may be issued from time to time without complying with the requirements set forth above if, in the opinion of the Professional Utility Consultant, as evidenced by a certificate filed with the City, it is necessary to repair any damage or loss to the Electric System or if the Electric System has been destroyed or damaged by disaster or unanticipated event to such an extent that it cannot be operated; provided, however, that the proceeds of any Additional Bonds issued for such purpose may only be used to return the Electric System to, or to maintain the Electric System at, substantially its former or then operating capacity; and provided further, that in the case of repair, such Additional Bonds may be issued only to the extent that insurance proceeds from such damage or loss are insufficient for the accomplishment of such purpose. K. In calculating Annual Debt Service for purposes of this Section, if the interest rate on any Bonds is other than a fixed rate, the rate applicable at the time of computation shall be used unless such rate is less than the most recently published Bond Buyer's Revenue Bond Index for municipal revenue bonds, in which case the rate stated by such index shall be used. If such index is no longer published, another nationally recognized index for municipal revenue bonds maturing in 20 to 30 years shall be used. -18- D0T529 92/08/27 ARTICLE V GENERAL TERMS AND PROVISIONS OF BONDS SECTION 5.1. Execution and Payment of Bonds. The 1992 Bonds and, except as otherwise provided in the Supplemental Ordinance providing for the issuance thereof, Additional Bonds shall be executed on behalf of the City with the manual or facsimile signature of the Mayor and attested with the manual or facsimile signature of the City Clerk; and the seal of the City shall be impressed or imprinted on each of the Bonds. In case any of the officers who shall have signed, attested or registered any of the Bonds shall cease to be such officer before such Bonds have been actually issued and delivered, such Bonds shall be valid nevertheless and may be issued by the City with the same effect as though the persons who had signed, attested or registered such Bonds had not ceased to be such officers. The Bonds of each series shall be payable as to principal, premium, if any, and interest in lawful money of the United States of America and, except as otherwise provided in Section 5.6 shall be payable at the principal office of the Paying Agent of the City for such series of Bonds. Only such Bonds as shall bear thereon a Certificate of Authentication in the form set forth in Section 13.2 of this Ordinance, manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this Ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Ordinance. SECTION 5.2. Ownership of Bonds. The City, the Paying Agent and any other person may treat the registered owner of any Bond as the absolute owner of such Bond for the purpose of paying the principal thereof, and premi- ums, if any, and interest thereon and for all other purposes, and neither the City nor the Paying Agent shall be bound by any notice or knowledge to the contrary, whether such Bond or the interest thereon shall be overdue or not. All payments of or on account of interest to any registered owner (or to his registered assigns), and all payments of or on account of principal to any registered owner of any Bond, shall be valid and effectual and shall be a discharge of the City and Paying Agent in respect of the liability upon the Bonds or claims for principal or interest, as the case may be, to the extent of the sum or sums paid. -19- D0T529 92/08/27 SECTION 5.3. Bond Registrar. The City hereby adopts for the 1992 Bonds the system of registration specified and approved by the Washington State Finance Committee. The Bond Registrar shall keep, or cause to be kept, at its principal corporate trust office, sufficient books for the registration and transfer of the 1992 Bonds which shall at all times be open to inspection by the City. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the 1992 Bonds transferred or exchanged in accordance with the provisions of such 1992 Bonds and this Ordinance and to carry out all of the Bond Registrar's powers and duties under this Ordinance. The Bond Registrar shall be responsible for its representations contained in the Certificate of Authentication on the 1992 Bonds. The Bond Registrar may become the owner of 1992 Bonds with the same rights it would have if it were not the Bond Registrar, and to the extent permitted by law may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of 1992 Bond owners. SECTION 5.4. Transfers and Exchanges. Upon surrender thereof to the Bond Registrar, the 1992 Bonds are interchangeable for 1992 Bonds in any authorized denomination of equal aggregate principal amount and of the same interest rate and maturity. 1992 Bonds may be transferred only if endorsed in the manner provided thereon and surrendered to the Bond Registrar. Such exchange or transfer shall be without cost to the owner or transferee. In every case of an exchange of Bonds and of a transfer of any Bond, the surrendered Bonds shall be held by the Bond Regis- trar and a certificate evidencing such exchange or transfer shall be promptly transmitted by the Bond Registrar to the City. All Bonds surrendered for exchange or transfer shall be cancelled and a certificate evidencing such cancellation shall be promptly transmitted to the City. All Bonds executed and delivered in exchange for or upon transfer of Bonds so surrendered shall be valid obligations of the City evidencing the same debt as the Bonds surrendered, and shall be entitled to all the benefits and protection of this Ordinance to the same extent as the Bonds in exchange for, or upon transfer for, which they were executed and delivered. -20- D0T529 92/08/27 SECTION 5.5. Payment of Bonds and Interest. The Bonds of each series may be presented for payment at the principal office of any of the Paying Agents for such series of Bonds. The principal of all Bonds of a series shall be payable at the principal office of any one of the Paying Agents for such series of Bonds. Payment of the interest on each Bond shall be made on each interest payment date by check or draft drawn upon one of the Paying Agents therefor and mailed by first class mail to the registered owner at his address as it appears on the Bond Register as of the fifteenth day of the month preceding the interest payment date. Upon request of a registered owner of at least $1,000,000 in principal amount of 1992 Bonds, payment shall be made by wire transfer to an account designated by such owner. All Bonds upon the payment thereof shall be cancelled and destroyed by the Paying Agents. A certificate evidencing such payment, cancellation and destruction shall be promptly trans- mitted by the Paying Agents to the City. SECTION 5.6. Lost. Stolen. Destroyed or Mutilated Bonds. In case any Bond shall at any time become mutilated or be lost, stolen or destroyed, the City in the case of such mutilated Bond shall, and in the case of such a lost, stolen or destroyed Bond, in its discretion may, execute and deliver a new Bond of the same series, interest rate and maturity and of like tenor and effect in exchange or substitution for and upon the surrender or cancellation of such mutilated Bond, or in lieu of or in substitution for such destroyed, stolen or lost Bond or if such stolen, destroyed or lost Bond shall be matured, instead of issuing a substitute therefor, the City may at its option pay the same without the surrender thereof. Any such exchange or substitution shall be accomplished in accordance with RCW Chapter 39.72, as the same shall be amended from time to time, or any successor statute thereto. Except in the case where a mutilated Bond is surrendered, the applicant for the issuance of a substi- tute Bond shall furnish to the City evidence satisfactory to it of the theft, destruction or loss of the original Bond, and of the ownership thereof, and also such security and indemnity as may be required by the City, and no such substitute Bond shall be issued unless the applicant for the issuance thereof shall reim- burse the City for the expenses incurred by the City in connection with the preparation (including printing), execution, issuance and delivery of the substitute Bond. Any such substitute Bond shall be equally and proportionately entitled to the security of this Ordinance with all other Bonds issued hereunder, whether or not the Bond alleged to have been lost, -21- D0T529 92/08/27 stolen or destroyed shall be found at any time or enforceable by anyone. The City shall advise the Paying Agents of the issuance of substitute Bonds. All mutilated Bonds so surrendered to the City shall be cancelled by it. SECTION 5.7. Limitations on Duty of City to Register. Exchange or Transfer Bonds. The City shall not be required (a) to issue, transfer or exchange Bonds for a period of 15 days next preceding any interest payment date therefor; (b) to issue, register, discharge from registration, transfer or exchange Bonds for a period of ten days thereafter; or (c) to register, discharge from registration, transfer or exchange any Bonds which have been designated for redemption within a period of 30 days next preceding the date fixed for redemption. SECTION 5.8. Paid or Surrendered Bonds Not to be Reissued. No Bonds shall be issued in lieu of Bonds surrendered upon exchange or transfer, except as expressly provided by this Ordinance; provided that the City reserves the right to account for any Bonds redeemed at the option of the registered owner thereof prior to maturity pursuant to the Supplemental Ordinance authorizing the issuance of such Bonds as having been purchased by the City and eligible for resale or reissuance (including the issuance of substitute Bonds). SECTION 5.9. CUSIP Identification Numbers. At the sole option of the City, CUSIP identification numbers may be printed on the Bonds of any series of Bonds, but no such number shall be deemed to be a part of any Bond or a part of the contract evidenced thereby, and no liability shall hereafter attach to the City or any officer or agent thereof (including the Paying Agents) because of or on account of said CUSIP identi- fication numbers or any use made thereof. SECTION 5.10. Issuance of Coupon or Bearer Bonds. The City reserves the right to amend and modify the provisions of this Ordinance and to include in any Supplemental Ordinance authorizing the issuance of Additional Bonds provisions relating to the issuance of Bonds in bearer or coupon form if state and federal law permit such issuance; provided always that no changes can be made that would, in the opinion of bond counsel, impair the obligation of the City to carry out its other promises, covenants, warranties and representations hereunder nor in any way impair its obligation to pay the principal of, premium, if any, or interest on any 1992 Bonds or any Additional -22- D0T529 92/08/27 Bonds or affect the tax - exempt status of any 1992 Bonds or any Additional Bonds. SECTION 5.11. Temporary Bonds. Any Bonds of any series may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the City, and may contain such reference to any of the provisions of this Ordinance as may be appropriate. Every temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds may be surrendered for cancellation at the corporate trust office of the Bond Registrar and the Bond Registrar shall deliver in exchange for such temporary Bonds so surrendered an equal aggre- gate principal amount of definitive Bonds of like principal amount and in authorized denominations of the same series, maturity or maturities, interest rate or rates. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Ordinance as definitive Bonds delivered under this Ordinance. ARTICLE VI REDEMPTION OF BONDS SECTION 6.1. Notice of Redemption. Written notice of any redemption of Bonds shall be given by the City, which notice shall specify the title, series, maturities, letters and numbers or other distinguishing marks of the Bonds to be redeemed, the redemption date and the place or places where the amount due upon such redemption will be payable and, in the case of registered Bonds to be redeemed in part only, such notice shall also specify the respective portions of the principal amount thereof to be redeemed. Such notice shall further state that upon the date fixed for redemption there shall become due and payable upon each Bond to be redeemed the principal amount thereof plus the premium, if any, due thereon upon the said redemption date, together with interest accrued to the redemption date, and that from and after the redemption date interest thereon, or on the portion of any Bond to be redeemed in part (unless the City shall default in the payment of the Bonds, or of the portion of any Bond so to be redeemed in part) shall cease to accrue and become payable. Such notice shall be mailed by first class mail, postage prepaid, not less than 30 days nor more than 60 days before the redemption date to the registered owners of Bonds which are to be redeemed in whole or in part at -23- D0T529 92/08/27 their last addresses, if any, appearing upon the Bond Register. Whenever notice of redemption has been duly given as herein provided, the City shall transfer to the Paying Agent or Paying Agents for the Bonds so to be redeemed amounts in cash which, in addition to other moneys, if any, held by such Paying Agent or Paying Agents for such purpose, will be sufficient to redeem, on the redemption date, all the Bonds so to be redeemed. In addition to the foregoing notice, further notice shall be given by the City as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. (i) Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus (i) the CUSIP numbers of all Bonds being redeemed; (ii) the date of issue of the Bonds as originally issued; (iii) the rate of interest borne by each Bond being redeemed; (iv) the maturity date of each Bond being redeemed; and (v) any other descriptive information needed to identify accurately the Bonds being redeemed. (ii) Each further notice of redemption may be sent at least 35 days before the redemption date by registered or certified mail or overnight delivery service to all registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds and shall be sent to one or more national information services that disseminate notices of redemption of obligations such as the Bonds. (iii) Each such further notice shall be published one time in the Bond Buyer of New York, New York or, if such publication is impractical or unlikely to reach a substantial number of the owners of the Bonds, in some other financial newspaper or journal which regularly carries notices of redemption of other obligations similar to the Bonds, such publication to be made at least 30 days prior to the date fixed for redemption. (iv) Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer. The foregoing notice provisions of this Section 6.1, including but not limited to the information to be included in -24- D0T529 92/08/27 redemption notices and the persons designated to receive notices, may be amended by additions, deletions and changes in order to maintain compliance with duly promulgated regulations and recommendations regarding notices of redemption of municipal securities. SECTION 6.2. Payment of Redeemed Bonds; When Interest on Bonds Called for Redemption Ceases to Accrue. Notice having been given by mailing in the manner provided in Section 6.1 hereof, the Bonds or portions thereof so called for redemption, together with accrued interest to the date fixed for redemption, shall become due and payable on the redemption date designated in said notice, and the Paying Agents shall make payments thereof upon presentation and surrender thereof at the offices of the Paying Agents specified in such notice together with, in the case of Bonds for which payment is requested by a person other than the registered owner, a written instrument of transfer in form satisfactory to the Paying Agent, duly executed by the registered owner or his duly authorized attorney. In the event there shall be selected for redemption less than all of the Bonds represented by a Bond, the City shall execute and the Paying Agents shall deliver upon the surrender of such Bond without charge to the owner thereof, for the unredeemed balance of the principal amount of the Bond so surrendered, a Bond or Bonds of the same series, interest rate and maturity, in either the denomination of such unredeemed balance or in any of the authorized denominations as shall be requested by the registered owner of the Bond so surrendered; provided, however, that the City may, upon written agreement with the owner of any Bond, make payment of the redemption price of a portion of such Bond directly to the registered owner thereof without presentation or surrender thereof upon such terms and conditions as the City may consent to in such agreement. The Paying Agents shall be advised by the City of each such agreement and shall be entitled to rely thereon, and to make payments in accordance therewith, until notified by the City of the termination of such agreement. If moneys for the redemption of all the Bonds, or portions thereof, to be redeemed on any redemption date, together with the interest to the redemption date, shall be held by the Paying Agents so as to be available therefor on the date fixed for the redemption thereof, and if notice of redemption of said Bonds shall have been mailed as provided in this Article, then from and after the redemption date, interest on the Bonds or portions thereof so called for redemption shall cease to accrue and become payable, and all Bonds or portions thereof so called for redemp- tion shall be payable solely from the moneys set aside for the payment thereof with the Paying Agents, and said Bonds or portions thereof shall no longer be secured by the lien on and -25- D0T529 92/08/27 pledge of the Revenues herein created for the security and payment thereof; provided, however, that such lien and pledge shall continue in full force and effect as to the portion of any Bond not called for redemption. If moneys shall not be available for the payment of such Bonds or portions thereof as shall have been called for redemption, such Bonds or portions thereof shall continue to bear interest until paid at the rate they would have borne had they not been called for redemption and shall continue to be secured by the lien on and pledge of the Revenues herein created for the security and payment thereof. SECTION 6.3. Optional Redemption or Purchase of Bonds. In the event that moneys available therefor are to be applied to the purchase or redemption of Bonds, and if more than one series of Bonds shall then be outstanding hereunder, the City shall determine from which series such purchases or redemptions shall be made and may elect that all such purchases or redemptions shall be made from only one series or from more than one series. Any such purchases of Bonds may be made with or without tenders of Bonds and at either public or private sale. All Bonds so purchased or redeemed shall be cancelled and not reissued. Any moneys which are to be applied to the purchase or redemption of Bonds shall, prior to such purchase or redemption, be transferred to and deposited in the Bond Fund to the credit of the appropriate account therein. In the case of any redemption of bonds at the election or direction of the City, the City shall give written notice to the Paying Agents, at least 45 days prior to the date of redemption, of the series and the principal amounts of the Bonds of each maturity of such series to be redeemed (all of which shall be determined by the City in its sole discretion, subject to this Ordinance). In the event notice of redemption shall have been given as provided above, the Paying Agents shall pay on the redemption date, out of moneys available therefore held by the Paying Agents, the redemption price thereof, plus interest accrued and unpaid to the redemption date on the Bonds to be redeemed. ARTICLE VII CREATION OF SPECIAL FUNDS AND ACCOUNTS AND PAYMENTS THEREFROM SECTION 7.1. Light Fund . A. A special fund of the City has heretofore been created pursuant to Ordinance No. 250 adopted by the City Council on August 26, 1897, and designated the "Light Fund." Said Light Fund shall be maintained and continued in existence, and shall -26- D0T529 92/08/27 be held and administered by the City. The City covenants and agrees that it will pay or cause to be paid all Revenues into the Light Fund as promptly as practicable after receipt thereof. There are hereby authorized to be created four accounts in the Light Fund known as (i) the General Account, (ii) the Contingency and Replacement Account, (iii) the Rate Stabilization Account, and (iv) the 1992 Construction Account, which accounts shall be held and used for the purposes hereinafter described. B. The Revenues of the City shall be deposited and credited to the following accounts in the Light Fund and used only for the following purposes and in the following order of priority: (1) All Revenues paid into the Light Fund shall first be credited to the General Account therein and applied as follows: (i) to pay Operating Expenses and to provide sufficient working capital for the operation of the Electric System; (ii) to make all payments required to be made into the Interest Account in the Bond Fund for the payment of accrued interest on the next interest payment date; (iii) to make all payments required to be made into the Principal Account in the Bond Fund for the payment of the principal amount of Serial Bonds next coming due, and into the Bond Retirement Account in the Bond Fund for the mandatory redemption of Term Bonds; (iv) to make all payments required to be made into the Reserve Account in the Bond Fund created to secure the payment of the Bonds; and (v) to make all payments required to be made into any special fund or account created to pay or secure the payment of the principal of and interest on any revenue bonds, warrants or other revenue obligations of the City having a lien upon Revenues and moneys in the Light Fund and Bond Fund and accounts therein junior and inferior to the lien thereon for the payment of the principal of and interest on the Bonds. (2) To the extent that surplus Revenues remain after the payments so required to be made out of the General Account, the City shall credit to the Contingency and Replacement Account -27- 007529 92/08/27 in each Fiscal Year an amount equal to at least 25% of the Annual Debt Service in such Fiscal Year. (3) To the extent that surplus Revenues remain after the payments so required to be made out of the General Account and the credit to the Contingency and Replacement Account, the City may credit up to the full amount of such surplus to the Rate Stabilization Fund. (4) After all of the above payments and credits have been made, amounts remaining in the General Account may be used for any other lawful purpose of the Light Fund. Any credits from the General Account pursuant to subsec- tions (2) and (3) above, and any credits to the General Account from the Rate Stabilization Account made pursuant to Section 9.3 hereof, shall be made prior to closing the books and accounts of the City for each Fiscal Year. C. Moneys in the Contingency and Replacement Account shall be used from time to time to make up any deficiencies in the Reserve Account, and such moneys in the Contingency and Replace- ment Account are hereby pledged as additional payments to the Bond Fund to the extent required for any such deficiencies. Moneys in the Contingency and Replacement Account may be used to make additions, betterments, extensions, renewals, replacements and other capital improvements to the Electric System, to retire Bonds, or may be used by the City for any other lawful purpose of the City, but may not be paid directly into the Rate Stabilization Account. The Rate Stabilization Account is created in anticipation of future increases in revenue requirements. Funds in the Rate Stabilization Account may be transferred to the General Account to accommodate part or all of those future revenue requirement increases. On or before the date of issuance of the 1992 Bonds, the City shall transfer at least $720,000 to the Rate Stabilization Account from funds legally available therefor. Moneys in the Rate Stabilization Account may be used for any lawful purpose. Moneys in the Rate Stabilization Account shall be used from time to time to make up any deficiencies in the Bond Fund, and such moneys in the Rate Stabilization Account are hereby pledged as additional payments to the Bond Fund to the extent required for any such deficiencies. Nothing contained in this Section 7.1 shall be construed to require the deposit into the Light Fund of any of the revenues, income, receipts or other moneys of the City derived by the City through the ownership or operation of any separate utility system -28- D0T529 92/08/27 hereafter created or established from funds other than the proceeds of Bonds. SECTION 7.2. Bond Fund. A special fund of the City is hereby authorized to be created and designated the "Electric System Revenue Bond Fund" (hereinafter referred to as the "Bond Fund "). The Bond Fund shall be held in trust and administered by the City and shall be used solely for the purposes of paying the principal of, premium, if any, and interest on the Bonds, and retiring the Bonds prior to maturity in the manner herein provided. The City hereby obligates and binds itself irrevocably to set aside and to pay (to the extent not otherwise provided) from moneys in the Light Fund into the Bond Fund, after paying or making provision for Operating Expenses and prior to the payment of any other charge or obligation against such Revenues, amounts sufficient to pay the principal of, premium, if any, and interest on all the Bonds from time to time outstanding as the same respectively become due and payable, either at the maturity thereof or in accordance with the terms of any Sinking Fund Requirement established for the retirement of Term Bonds. The fixed amounts to be paid into the Bond Fund, to the extent that such payments are not made from Bond proceeds or from other moneys which may legally be available therefor, shall be as follows and in the following order of priority, to wit: A. There is hereby authorized to be created in the Bond Fund, for the purpose of paying the interest on Bonds as the same becomes due and payable, a Bond Interest Account (the "Interest Account "). No later than the last day of the month in which any Bonds are delivered to the initial purchasers thereof and on or before the 25th day of each month thereafter, the City shall pay from the Light Fund into the Bond Fund to the credit of the Interest Account an amount such that, if the same amount were so paid and credited to the Interest Account on the 25th day of each of the months preceding the next date upon which an installment of interest falls due on the Bonds, the aggregate of the amounts so paid and credited to the Interest Account would on such date be equal to the installment of interest then falling due on all Bonds then outstanding. B. There is hereby authorized to be created in the Bond Fund, for the purpose of paying outstanding Serial Bonds as they mature and for the purpose of redeeming Term Bonds pursuant to the Sinking Fund Requirement pertaining to such Term Bonds, the following accounts each of which shall be equal in priority: (i) The Bond Principal Account, for the purpose of paying outstanding Serial Bonds as they mature (the "Principal -29- D0T529 92/08/27 Account "). No later than the 25th day of the 12th month prior to each Serial Bond maturity, or if there are less than 12 months preceding such maturity then no later than the last day of the month immediately succeeding the month in which the Bonds are delivered to the initial purchaser(s) thereof, and on or before the 25th day of each month thereafter, the City shall pay from the Light Fund into the Bond Fund to the credit of the Principal Account an amount such that, if the same amount were so paid and credited to the Principal Account on the 25th day of each succeeding month thereafter and prior to such Serial Bond maturity date, the aggregate of the amounts so paid and credited to the Principal Account would on such date be equal to the principal amount of Serial Bonds then falling due. (ii) The Bond Retirement Account, for the purpose of redeeming Term Bonds pursuant to the Sinking Fund Requirement pertaining to such Term Bonds and to otherwise retire Bonds prior to maturity (hereinafter referred to as the "Bond Retirement Account "). No later than the 25th day of the 12th month prior to the date of each Sinking Fund Requirement, or if there are less than 12 months preceding such Sinking Fund Requirement Date, then on the last day of the month immediately succeeding the month in which the Bonds are delivered to the initial purchaser(s) thereof, and on or before the 25th day of each succeeding month thereafter, the City shall pay from the Light Fund into the Bond Fund to the credit of the Bond Retirement Account an amount such that, if the same amount were so set aside in the Bond Fund and credited to the Bond Retirement Account on the 25th day of each succeeding month thereafter and prior to such Sinking Fund Requirement Date, the aggregate of the amounts so paid and credited to the Bond Retirement Account would be equal to the Sinking Fund Requirement for such date. The City shall apply all the moneys paid into the Bond Fund for credit to the Bond Retirement Account to the redemption of Term Bonds on the next ensuing Sinking Fund Requirement Date (or may so apply such moneys prior to such Sinking Fund Requirement Date), pursuant to the terms of this Ordinance or of the Supplemental Ordinance authorizing the issuance thereof. The City may also apply the moneys paid into the Bond Fund for credit to. the Bond Retirement Account for the purpose of retiring Term Bonds by the purchase of such Bonds at a purchase price (including accrued interest and any brokerage charge) not in excess of the principal amount thereof, in which event the prin- cipal amount of such Bonds so purchased shall be credited against the next ensuing Sinking Fund Requirement. If as of any September 1 the principal amount of the 1992 Term Bonds retired by purchase or redemption exceeds the cumulative amount required to have been redeemed by sinking fund installments on or before such September 1, then such excess may be credited against the -30- D0T529 92/08/27 Sinking Fund Requirement for the 1992 Term Bonds for the following Fiscal Year. Any such purchase of Bonds by the City may be made with or without tenders of Bonds in such manner as the City shall, in its discretion, deem to be in its best interest. C. There is hereby authorized to be created a "Bond Reserve Account" in the Bond Fund (the "Reserve Account "). Upon the issuance of the 1992 Bonds, the City shall deposit in the Reserve Account an amount equal to Average Annual Debt Service for the 1992 Bonds. In the event of the issuance of any Additional Bonds, the Supplemental Ordinance authorizing the issuance of such Additional Bonds shall provide for approximately equal monthly payments into the Bond Fund for credit to the Reserve Account from the moneys in the Light Fund, in such amounts and at such times so that by no later than three years from the date of issuance of such Additional Bonds there will be credited to the Reserve Account an amount equal to the Average Annual Debt Service at the date of issuance of such Additional Bonds; provided, however, that the proceedings authorizing the issuance of Additional Bonds may provide for payments into the Bond Fund for credit to the Reserve Account from the proceeds of such Additional Bonds or from any other moneys lawfully available therefor, in which event, in providing for deposits and credits required by the foregoing provisions of this paragraph, allowance shall be made for any such amounts so paid into such Account. Subject to the two preceding sentences, the moneys and value of Permitted Investments in the Reserve Account shall be deter- mined as of the last business day of each Fiscal Year and main- tained at an amount at least equal to the Average Annual Debt Service, except where it is necessary for the City to make a transfer therefrom to the Interest Account, Principal Account or Bond Retirement Account because of an insufficiency of money therein to make any required payment of principal of or interest on any Bonds when due. The City shall make up any deficiencies in such account arising because of such transfer, or because of an insufficient value of moneys and Permitted Investments in such account, in not more than 18 approximately equal consecutive monthly installments into the Reserve Account. If at any time the moneys and value of Permitted Investments in the Reserve Account shall exceed the amount of moneys and value of Permitted Investments then required to be maintained therein by 10 %, such excess may be transferred to the General Account in the Light Fund . For the purposes of valuation of Permitted Investments pursuant to this Section 7.2.C, the value of Permitted Investments shall be computed as follows: (a) the value of -31- D0T529 92/08/27 obligations which mature within six months from the date of purchase thereof shall be the purchase price of such obligations; and (b) the value of obligations which mature more than six months after the date of purchase thereof shall be the lesser of (i) the principal or face amount of such obligations, or (ii) the bid quotation price thereof as of the fifth business day next preceding the date of such determination as reported in The Wall Street Journal, or in the event such newspaper is not published or such price is not reported in said newspaper, in a newspaper of general circulation or a financial journal published in the Borough of Manhattan, City and State of New York, or (iii) the price at which such obligations are then redeemable by the owner at his option. The computations made under this paragraph shall not include accrued interest. In making the payments and credits to the Principal Account, Interest Account, Bond Retirement Account and Reserve Account required by this Section 7.2, to the extent that such payments are made from Bond proceeds, from moneys in any capitalized interest account, or from other moneys which may legally be available, such payments are not required to be made from the Light Fund . The City may elect to meet the requirements of this Section 7.2.0 with respect to the ReserVe Account through the use of a Qualified Letter of Credit, Qualified Insurance or other equivalent credit enhancement device currently rated in one of the two highest rating categories by Moody's Investors Service, Inc. or Standard & Poor's Corporation. The City may contract with the entity providing such Qualified Letter of Credit, Qualified Insurance or other equivalent credit enhancement device that the City's reimbursement obligation, if any, to such entity ranks on a parity of lien with the Bonds. In the event that the City elects additionally to secure any issue of Additional Bonds through the use of a Qualified Letter of Credit, Qualified Insurance or other equivalent credit enhancement device, the City may contract with the entity providing such Qualified Letter of Credit, Qualified Insurance or other equivalent credit enhancement device that the City's reimbursement obligation, if any, to such entity ranks on a parity of lien with outstanding Bonds; provided that the payments due under such reimbursement agreement are such that if such reimbursement obligation were a series of Additional Bonds, such Bonds could be issued in compliance with the provisions of Article IV hereof. In making the payments and credits to the Reserve Account required by this Section 7.2, t0 the extent that the City has obtained Qualified Insurance or a Qualified Letter of Credit for -32- D0T529 92/08/27 specific amounts required pursuant to this section to be paid out of the Reserve Account, such amounts so covered by Qualified Insurance or a Qualified Letter of Credit shall be credited against the amounts required to be maintained in the Bond Reserve Account by this Section 7.2.0 to the extent that such payments and credits to be made are insured by an insurance company, or guaranteed by a letter of credit from a financial institution. Upon the expiration of any Qualified Letter of Credit or the termination of any Qualified Insurance, the Reserve Account shall be funded in accordance with the third paragraph of this Section 7.2.0 as if the Bonds that remain outstanding had been issued on the date of such notice of expiration or termination. D. In the event that there shall be a deficiency in the Interest Account, Principal Account or Bond Retirement Account in the Bond Fund, the City shall promptly make up such deficiency from the Reserve Account by the withdrawal of cash therefrom for that purpose and by the sale or redemption of obligations held in the Reserve Account, if necessary, in such amounts as will provide cash in the Reserve Account sufficient to make up any such deficiency. The City covenants and agrees that any deficiency created in the Reserve Account by reason of any withdrawal therefrom for payment into the Interest Account, Principal Account or Bond Retirement Account shall be made up from moneys in the Light Fund first available after making provision first for payment of Operating Expenses and then for the required payments into such Interest, Principal and Bond Retirement Accounts. Moneys in the Bond Fund shall be transmitted to the Paying Agents in amounts sufficient to meet the maturing installments of principal of, premium, if any, and interest on the Bonds when due. Whenever the assets of the Bond Fund shall be sufficient to provide moneys to retire all Bonds then outstanding, including such interest thereon as thereafter may become due and payable and any premiums upon redemption thereof, no further payments need be made into the Bond Fund. All moneys remaining in the Bond Fund after provision for the payment in full of the prin- cipal of, premium, if any, and interest on the Bonds shall be returned to the Light Fund . The Bond Fund shall be drawn upon solely for the purpose of paying the principal of, premium, if any, and interest on the Bonds. Moneys set aside from time to time with the Paying Agents for such payment shall be held in trust for the owners of the Bonds in respect of which the same shall have been so set aside. Until so set aside, all moneys in the Bond Fund shall be held in trust for the benefit of the owners of all Bonds at the time outstanding equally and ratably. -33- D0T529 92/08/27 SECTION 7.3. Construction Account. There is hereby authorized to be created in the office of the Treasurer a special fund of the City to be known as the "1992 Electric System Revenue Bond Construction Account" (the "Construction Account "). The Construction Account shall be maintained in existence and shall be used to pay those costs of the Plan to be financed by the 1992 Bonds and the costs of issuing the 1992 Bonds. If, after the payment in full of all costs of any such additions, improvements and betterments or after adequate provision has been made for such payment, any moneys remain in the Construction Account, the balance so remaining shall be paid into the Bond Fund for credit to the Reserve Account therein, unless and until there shall then be credited to such Account moneys and Permitted Investments equal to the Average Annual Debt Service, and any further remainder shall be paid into the Contingency and Replacement Account. SECTION 7.4. Arbitrage Rebate. (a) General Rule. The City will pay to the United States of America in accordance with the provisions of this section (i) at least 90% of the Rebatable Arbitrage with respect to the 1992 Bonds as of each Installment Computation Date, (ii) 100% of the Rebatable Arbitrage with respect to the 1992 Bonds as of the Final Computation Date and (iii) any income attributable to such Rebatable Arbitrage. (b) Computation of Rebatable Arbitrage. The Rebatable Arbitrage with respect to the 1992 Bonds computed in accordance with the Rebate Computation Certificate and, as of each Computation Date, will be the excess of: (i) The future value of all Nonpurpose Receipts with respect to the 1992 Bonds; over (ii) The future value of all Nonpurpose Payments with respect to the 1992 Bonds. The future value will be computed as of each Computation Date. (c) Payment Procedure. (i) The payment of Rebatable Arbitrage due as of each Installment Computation Date will be paid no later than the date that is 60 days after the Installment Computation Date. (ii) The payment of Rebatable Arbitrage due as of the Final Computation Date will be paid no later than the latest of (a) the date that is 60 days after the Final Computation Date, -34- D0T529 92/08/27 (b) the date that is 8 months after the date of issuance of the 1992 Bonds, or (c) the date 60 days after the earlier of the date that the City no longer expects to spend gross proceeds of the 1992 Bonds within 6 months of the date of issuance of the 1992 Bonds or 12 months after the date of issuance of the 1992 Bonds. (iii) Each payment of Rebatable Arbitrage will be made to the Internal Revenue Service Center, Philadelphia, Pennsylvania 19225, and will be accompanied by IRS Form 8038 -T. (d) Other Methodology. Notwithstanding this Section 7.4, payments of Rebatable Arbitrage will be made in accordance with instructions provided by Preston Thorgrimson Shidler Gates & Ellis if necessary to maintain the federal income tax exemption for interest payments made on the 1992 Bonds. SECTION 7.5. Investment of Funds. Moneys held for the credit of the Interest Account, Prin- cipal Account and Bond Retirement Account in the Bond Fund shall, to the fullest extent practicable and reasonable, be invested and reinvested at the direction of the City solely in, and obliga- tions deposited in such accounts shall consist of, investments described in clauses (a), (b), (c), (e) and (f) inclusive of the definition of Permitted Investments which shall mature prior to the respective dates when the moneys held for the credit of such Accounts will be required for the purposes intended. Moneys in the Reserve Account in the Bond Fund not required for immediate disbursement for the purposes for which such Account is created shall, to the fullest extent practicable and reasonable, be invested and reinvested at the direction of the City solely in, and obligations deposited in the Reserve Account shall consist of investments described in clauses (a), (b), (c), (e) and (f) in the definition of Permitted Investments, maturing or subject to redemption at the option of the owner thereof within 20 years from the date of such investment (but maturing prior to the final maturity date of the Bonds then outstanding). Moneys in the Light Fund and Construction Account and any arbitrage rebate fund not required for immediate disbursement for the purposes for which such Funds were created shall, to the fullest extent practicable and reasonable, be invested and reinvested by the City in Permitted Investments; provided that investments in any capitalized interest account hereafter created shall be those described in clauses (a) , (b) , (c) , (e) and (f) of the definition of Permitted Investments. Except to the extent there are deficiencies in any account in the Bond Fund, all income received from the investment of -35- D0T529 92/08/27 moneys in the Bond Fund and the Light Fund shall be from time to time deposited in the Light Fund. All moneys held or set aside by the City in the Light Fund Revenue Fund and Bond Fund shall, until otherwise invested or applied as provided in this Ordinance, be deposited by the City in its name, for the account of the Light Fund (and the appropriate account therein) or the Bond Fund (and the appropriate account therein), as the case may be, in such depositary or depositaries as the City shall at any time or from time to time appoint for such purpose. All moneys so deposited shall be secured in the manner prescribed by the laws of the State of Washington for the securing of funds of the City. When no 1992 Bonds are outstanding and no Bonds are insured, City funds may be invested in any manner permitted by Washington law. ARTICLE VIII DISPOSITION OF PROCEEDS SECTION 8.1. Disposition of the Proceeds from the Sale of the 1992 Bonds. The proceeds of the 1992 Bonds shall be deposited as follows: A. The amount equal to the interest accruing on the 1992 Bonds from September 1, 1992, to the date of their delivery shall be deposited in the Interest Account in the Bond Fund. B. The amount, together with other moneys legally available therefor, equal to the Average Annual Debt Service on the 1992 Bonds shall be deposited in the Reserve Account in the Bond Fund. C. The balance of the proceeds shall be deposited in the Construction Account and shall be used to pay the costs of the Plan and to pay the costs of issuance of the 1992 Bonds. ARTICLE IX COVENANTS TO SECURE BONDS The City covenants and agrees with the purchasers and owners of all Bonds issued pursuant to this Ordinance, so long as any such Bonds are outstanding, as follows: -36- D0T529 92/08/27 SECTION 9.1. Security for Bonds. All Bonds are special limited obligations of the City payable from and secured solely by Revenues, and by other moneys and assets specifically pledged hereunder for the payment thereof. There are hereby pledged as security for the payment of the principal of, premium, if any, and interest on all Bonds in accordance with the provisions of this Ordinance, subject only to the provisions of this Ordinance restricting or permitting the application thereof for the purposes and on the terms and condi- tions set forth in this Ordinance: (i) the Revenues, and (ii) the moneys and investments, if any, credited to the Light Fund , the Construction Account and the Bond Fund, and the income therefrom. The Revenues and other moneys and securities hereby pledged shall immediately be subject to the lien of this pledge without any physical delivery thereof or further act, and the lien of this pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the City regardless of whether such parties have notice thereof. All Bonds now or hereafter outstanding shall be equally and ratably payable and secured hereunder without priority by reason of date of adoption of the ordinance providing for their issuance or by reason of their series, number or date of sale, issuance, execution or delivery, or by the liens, pledges, charges, trusts, assignments and covenants made herein, except as otherwise expressly provided or permitted in this Ordinance and except as to insurance which may be obtained by the City to insure the repayment of one or more series or maturities within a series. The pledge of the Revenue and of the amounts to be paid into and maintained in the funds and accounts described above in this Section to pay and secure the payment of Bonds is hereby declared to be a prior lien and charge on the Revenues and the moneys and investments in such funds and accounts, subject to provision for operating capital and to the payment of Operating Expenses as provided in Section 7.1.B hereof, and superior to all other liens and charges of any kind or nature. Bonds shall not in any manner or to any extent constitute general obligations of the City or of the State of Washington, or any political subdivision of the State of Washington, or a charge upon any general fund or upon any moneys or other property of the City or of the State of Washington, or of any political subdivision of the State of Washington, not specifically pledged thereto by this Ordinance. -37- D0T529 92/08/27 SECTION 9.2. Rate Covenant - General. The City will establish, maintain and collect rates and charges for electric power and energy and other services, facili- ties and commodities sold, furnished or supplied through the facilities of the Electric System that shall be fair and non- discriminatory and adequate to provide Revenues sufficient, together with other funds legally available therefor, for the punctual payment of the principal of, premium, if any, and inter- est on the Bonds for which the payment has not otherwise been provided, for all payments which the City is obligated to make into the Bond Fund, and for the proper operation and maintenance of the Electric System, and all necessary repairs, replacements and renewals thereof, including the payment of all taxes, assess- ments or other governmental charges lawfully imposed on the Electric System or the Revenues therefrom, or payments in lieu thereof, and the payment of all other amounts which the City may now or hereafter become obligated to pay from the Revenues by law or contract. SECTION 9.3. Rate Covenant - Debt Service Coverage. The City will also establish, maintain and collect rates and charges which shall be adequate to provide in each Fiscal Year Net Revenues in an amount equal to at least 1.25 times the Annual Debt Service on the then outstanding Bonds in such Fiscal Year. For the purpose of meeting the requirement of this paragraph, (i) there may be added to Net Revenues for any Fiscal Year such amount, withdrawn from the Rate Stabilization Account and deposited in the General Account, and (ii) there must be subtracted from Net Revenues for any Fiscal Year such amounts as are withdrawn from the General Account and deposited into the Rate Stabilization Account for such Fiscal Year. The City also covenants and agrees to maintain Net Revenues for the then current Fiscal Year in an amount that will be equal to the Annual Debt Service on the then outstanding Bonds in such Fiscal Year. The failure to collect Revenues in any Fiscal Year sufficient to comply with the covenants contained in this Section 9.3 shall not constitute an Event of Default if the City, before the 60th day of the following Fiscal Year: A. Employs a Professional Utility Consultant to recommend changes in the City's rates which are estimated to produce Revenues sufficient (once the rates recommended by the Professional Utility Consultant have been imposed by the City) to meet the requirements of this Section; and -38- D0T529 92/08/27 B. Promptly imposes rates at least as high as those recommended by such Professional Utility Consultant. The calculation of the coverage requirements set forth above, and in Section 4.2 hereof, and the City's compliance therewith, may be made solely with reference to this Ordinance without regard to future changes in generally accepted accounting principles. If the City has changed one or more of the accounting principles used in the preparation of its financial statements, because of a change in generally accepted accounting principles or otherwise, then an event of default relating to these coverage requirements shall not be considered an Event of Default if the coverage requirement ratios would have been complied with had the City continued to use those accounting principles employed at the date of the most recent audited financial statements prior to the date of this Ordinance. SECTION 9.4. Restrictions on Contracting of Obligations Secured by Revenues. A. The City will not hereafter create any other special fund or funds for the payment of revenue bonds, warrants or other revenue obligations, or issue any bonds, warrants or other obligations or create any additional indebtedness which will rank on a parity with or prior to the charge and lien on the Revenues or properties of the Electric System for the payments into the Bond Fund, except as provided under Article IV hereof. B. Additional Bonds may be issued as provided in Article IV. C. The City may issue bonds, notes, warrants or other obligations payable from and secured by a lien on the Revenues of the Electric System that is subordinate or inferior to the lien on such Revenues securing the Bonds and may create a special fund or funds for payment of such subordinate obligations. D. Unless such agreement specifically states that the obligation of the City thereunder is junior to the obligation of the City to make payments from the Light Fund into the Bond Fund, the City shall not hereafter enter into any agreement obligating the City to pay, from Revenues, for (a) generating or transmission capacity or the use or lease of generating or transmission facilities, which agreement is not conditional on the availability of such capacity or facility, or (b) the installment purchase or lease of property which, whether or not subject to annual appropriations, otherwise transfers to the City the burdens and benefits of ownership of such property. -39- D0T529 92/08/27 SECTION 9.5. Covenant to Maintain System in Good Condition. The City shall at all times maintain, preserve and keep, or cause to be maintained, preserved and kept, the properties of the Electric System and all additions and betterments thereto and extensions thereof and every part and parcel thereof, in good repair, working order and condition, and will from time to time make, or cause to be made, all necessary and proper repairs, renewals, replacements, extensions and betterments thereto so that at all times the business carried on in connection therewith shall be properly and advantageously conducted. The City will at all times operate such properties and the business in connection therewith or cause such properties and business to be operated in an efficient manner and at a reasonable cost. SECTION 9.6. Covenants Concerning Disposal of Properties of System. The City shall not sell, mortgage, lease or otherwise dispose of the properties of the Electric System except as provided in this Section. A. The City will not sell or otherwise dispose of the Electric System in its entirety unless simultaneously with such sale or other disposition, provision is made for the payment, redemption or other retirement of all Bonds then outstanding. B. Except as provided in C below, the City will not sell or otherwise dispose of any part of the Electric System unless provision is made for the payment, redemption or other retirement of a principal amount of Bonds equal to the greater of the following amounts, provided, such amount is in excess of $100,000: (1) An amount that will be in the same proportion to the net principal amount of Bonds then outstanding (defined as the total principal amount of Bonds outstanding less the amount of cash and investments in the Bond Fund) that the Revenues attributable to the part of the Electric System sold or disposed of for the twelve preceding months bears to the total Revenues for such period; or (2) An amount that will be in the same proportion to the net principal amount of Bonds then outstanding that the book value of the part of the Electric System sold or disposed of bears to the book value of the entire Electric System immediately prior to such sale or disposition. The City shall only be required to comply with the requirements of subsections (1) and (2) above if the proceeds of -40- D0T529 92/08/27 such sale, lease or other disposition shall exceed 2% of the value of the net utility plant of the Electric System. C. The City may sell or otherwise dispose of any part of the Electric System that shall have become unserviceable, inadequate, obsolete or unfit to be used in the operation of the Electric System, or no longer necessary, material to or useful in such operation, and may also sell or otherwise dispose of street lighting systems now or hereafter owned by the City at a price permitted by law. The proceeds of any such sale or disposition pursuant to this subsection C shall be paid into the Bond Fund for credit to the Reserve Account to the extent of any deficiency in such Reserve Account, and the balance of such proceeds, if any, shall be deposited in the Light Fund . D. Notwithstanding any other provision of this Section 9.6 to the contrary, the City may sell or otherwise dispose of any part of the Electric System if the City obtains a certificate satisfying the requirements of Section 4.2.B or Section 4.2.0 hereof. SECTION 9.7. Insurance. The City shall either self- insure or, as needed, and to the extent insurance coverage is available at reasonable cost with responsible insurers, keep, or cause to be kept, the Electric System and the operation thereof insured, with policies payable to the City, against the risks of direct physical loss, damage to or destruction of the Electric System, or any part thereof, and against accidents, casualties or negligence, including liability insurance and employer's liability, at least to the extent that similar insurance is usually carried by electric utilities operating like properties. In the event of any loss or damage to the properties of the Electric System covered by insurance, the City will (i) with respect to each such loss, promptly repair and reconstruct to the extent necessary to the proper conduct of the operations of the Electric System the lost or damaged portion thereof and shall apply the proceeds of any insurance policy or policies covering such loss or damage for that purpose to the extent required therefor, unless in the case of loss or damage involving $300,000 or more, such repair and reconstruction shall not be recommended by the Professional Utility Consultant, and (ii) if the City shall not use the entire proceeds of such insurance to repair or reconstruct such lost or damaged property, such insurance proceeds thereof not so used shall be paid into the Light Fund , and if in excess of $300,000 for any one loss or damage, shall be used to purchase or redeem Bonds or to acquire or construct extensions, betterments and improvements to the Electric System. -41- D0T529 92/08/27 SECTION 9.8. Books of Account. The City shall keep proper books of account as required by this Ordinance in accordance with the rules and regulations prescribed by the Division of Municipal Corporations of the Office of the State Auditor of the State of Washington, or other State department or agency succeeding to such duties of the State Auditor's office, and if no such rules or regulations are pre- scribed, then in substantial accordance with the uniform system of accounts prescribed by the Federal Energy Regulatory Council or other federal agencies having jurisdiction over electric public utility companies owning and operating properties similar to the electric properties operated by the City, whether or not the City is at that time required by law to use such system of accounts. The City shall cause its books of account to be audited by the Office of the State Auditor or other state agency as may be authorized and directed by law to make such audit, or if the audit shall not be made within twelve months after the close of any Fiscal Year of the City, then the City shall cause such audit to be made by independent certified public accountants licensed, registered or entitled to practice, and practicing as such, under the laws of the State of Washington who, or each of whom, is in fact independent and does not have any interest, direct or indirect, in any contract with the City other than his contract of employment pursuant to this Section and who is not connected with the City as an officer or employee of the City. In keeping the books of account, the City shall accrue depreciation monthly on depreciable properties operated by the City in accordance with the accounting practice prescribed by the uniform system of accounts of the Federal Energy Regulatory Council above mentioned. The City will furnish a copy of the most recent audit report to any owner of Bonds upon written request therefor. Any owner of Bonds may also obtain at the office of the City copies of the balance sheet and income and expense statements showing in reasonable detail the financial condition of the Electric System as of the close of each Fiscal Year, including the transactions relating to the Light Fund , the Bond Fund, and all other funds and accounts created or maintained pursuant to the provisions of this Ordinance. SECTION 9.9. Covenant Not to Render Service Free of Charge. So long as any Bonds are outstanding, the City shall not furnish or supply or permit the furnishing or supplying of elec- tric energy or any other commodity, service or facility furnished by or in connection with the operation of the Electric System free of charge to any person, firm or corporation, public or private, and the City will promptly enforce the payment of any and all accounts owing to the City and delinquent, by -42- 'D0T529 92/08/27 discontinuing service or by filing suits, actions or proceedings, or by both discontinuance of service and filing suit; provided, that to the extent permitted by law, the City may loan money and may provide commodities, services or facilities free of charge or at a reduced charge in connection with a plan of conservation of electric energy or senior citizen or indigent ratepayer discounts adopted by the Council. SECTION 9.10. Covenant to Make Only Economically Sound Improvements. The City shall not expend any moneys in the Light Fund or the proceeds of Additional Bonds or other obligations for any renewals, replacements, extensions, betterments and improvements to the Electric System which are not economically sound, and which will not properly and advantageously contribute to the conduct of the business of the City in an efficient and economical manner; provided that the foregoing shall not preclude the City from paying any legal or contractual obligations. SECTION 9.11. Covenant to Pay Bond Principal and Interest Punctually. The City shall duly and punctually pay or cause to be paid, but only from the Bond Fund, the principal of, premium, if any, and interest on each and every Bond on the dates and at the places and in the manner provided in the Bonds, according to the true intent and meaning thereof, and will faithfully do and perform and fully observe and keep any and all covenants, under- takings, stipulations and provisions contained in the Bonds and in this Ordinance and each Supplemental Ordinance authorizing Additional Bonds. SECTION 9.12. Covenant to Pay Taxes. Assessments and Other Claims. The City shall from time to time duly pay and discharge, or cause to be paid and discharged, when the same shall become due, all taxes, assessments and other governmental charges, or payments in lieu thereof, lawfully imposed upon the Electric System or the Revenues, and all claims for labor and materials and supplies which, if not paid, might become a lien or charge upon the Electric System, or any part thereof, or upon the Revenues, or which might in any way impair the security of the Bonds, except taxes, assessments, charges or claims which the City shall in good faith contest by proper legal proceedings. -43- D0T529 92/08/27 SECTION 9.13. Covenant to Retain Competent Management. The City shall at all times retain and employ a competent manager for the Electric System who shall be an experienced executive of administrative ability. All employees or agents of the City who collect or handle money of the City shall be bonded by a responsible surety company or companies in amounts sufficient to protect the City adequately from loss. SECTION 9.14. Further Assurances. The City shall, at any and all times, insofar as it may be authorized so to do, pass, make, do, execute, acknowledge and deliver all and every such further ordinances, acts, deeds, conveyances, assignments, transfers and assurances as may be necessary or desirable for the better assuring, conveying, granting, assigning and confirming any and all of the rights, Revenues and other funds hereby pledged or assigned to the payment of the Bonds, or intended so to be, or which the City may hereafter become bound to pledge or assign. SECTION 9.15. Tax Covenants. The City shall comply with the provisions of this Section unless, in the written opinion of bond counsel to the City, such compliance is not required in order to maintain the exemption of the interest on the 1992 Bonds from federal income taxation. The City hereby covenants that it will not make any use of the proceeds of sale of the 1992 Bonds or any other funds of the City which may be deemed to be proceeds of such 1992 Bonds pursuant to Section 148 of the federal Internal Revenue Code of 1986 and the applicable regulations thereunder that will cause the 1992 Bonds to be "arbitrage bonds" within the meaning of said section and said regulations. The City will comply with the requirements of Section 148 of the Internal Revenue Code of 1986, as amended (or any successor provision thereof applicable to the 1992 Bonds), and the applicable regulations thereunder throughout the term of the 1992 Bonds. The City further covenants that it will not take any action or permit any action to be taken that would cause the 1992 Bonds to constitute "private activity bonds" under Section 141 of the federal Internal Revenue Code of 1986, as amended. -44- 00T529 92/08/27 ARTICLE X SUPPLEMENTAL AND AMENDATORY ORDINANCES SECTION 10.1. Amendments Without Consent of Bondowners. The City may adopt at any time and from time to time without the consent of the owners of any Bonds an ordinance or ordinances supplemental to or amendatory of Ordinance Nos. 1130 or 1218, this Ordinance and any Supplemental Ordinance theretofore adopted for any one or more of the following purposes: (1) To provide for the issuance of Additional Bonds pursuant to Article IV hereof, and to prescribe the terms and conditions pursuant to which such Bonds may be issued, paid or redeemed; (2) To add additional covenants and agreements of the City for the purpose of further securing the payment of the Bonds, provided such additional covenants and agreements are not contrary to or inconsistent with the covenants and agreements of the City contained in this Ordinance or any Supplemental Ordinance; (3) To prescribe further limitations and restrictions upon the issuance of Bonds and the incurring of indebtedness by the City payable from the Revenues which are not contrary to or inconsistent with the limitations and restrictions thereon theretofore in effect; (4) To surrender any right, power or privilege re- served to or conferred upon the City by the terms of this Ordinance; (5) To confirm as further assurance any pledge under, and the subjection to any lien, claim or pledge created or to be created by, the provisions of this Ordinance of the Revenues or of any other moneys, securities or funds; (6) To cure any ambiguity or defect or inconsistent provision of this Ordinance or any Supplemental Ordinance or to insert such provisions clarifying matters or questions arising under this Ordinance or any Supplemental Ordinance as are necessary or desirable in the event any such modifications are not contrary to or inconsistent with this Ordinance or any Supplemental Ordinance as theretofore in effect; (7) To appoint a Bond Fund Trustee and specify the qualifications, duties, rights and immunities of such Trustee; or -45- D0T529 92/08/27 (8) To modify any of the provisions of this Ordinance or any Supplemental Ordinance in any other respect; provided that such modification shall not be effective until after the Bonds outstanding as of the date of adoption of such ordinance shall cease to be outstanding, and any Bonds issued under such ordinance shall contain a specific reference to the modifications contained in such subsequent ordinance. SECTION 10.2. Amendments With Consent of Bondowners. The provisions of this Ordinance and of any Supplemental Ordinance may be modified at any time or from time to time by a Supplemental Ordinance, with the consent of bondowners in accord- ance with and subject to the provisions of Article XII hereof. Written notice of any amendment to this Ordinance or any Supplemental Ordinance shall be given to Moody's Investors Service, 99 Church Street, New York, NY 10007, Attention: Public Finance. ARTICLE XI DEFAULTS AND REMEDIES SECTION 11.1. Events of Default. The Council of the City hereby finds and determines that the continuous operation of the Electric System and the collection, deposit and disbursement of the Revenues in the manner provided in this Ordinance and in any Supplemental Ordinance are essential to the payment and security of the Bonds, and the failure or refusal of the City to perform the covenants and obligations contained in this Ordinance or any such Supplemental Ordinance will endanger the necessary continuous operation of the Electric System and the application of the Revenues to the purposes set forth in this Ordinance. This Ordinance and each Supplemental Ordinance adopted pursuant to Article X are hereinafter in this Article XI and in Article XII referred to collectively as "the Ordinance ". The City hereby covenants and agrees with the purchasers and owners from time to time of the Bonds, in order to protect and safeguard the covenants and obligations undertaken by the City securing the Bonds, that the following shall constitute "Events of Default": (1) If the City shall default in the performance of any obligations with respect to payments into the Light Fund; (2) If default shall be made in the due and punctual payment of the principal of and premium, if any, on any of the -46- D0T529 92/08/27 Bonds when the same shall become due and payable, either at maturity or by proceedings for redemption or otherwise; (3) If default shall be made in the due and punctual payment of any installment of interest on any Bond; (4) If the City shall fail, by any Sinking Fund Requirement Date, to have purchased or redeemed Term Bonds in a cumulative principal amount at least equal to the cumulative Sinking Fund Requirements at such Sinking Fund Requirement Date; (5) If the City shall default in the observance and performance of any other of the covenants, conditions and agreements on the part of the City contained in the Ordinance and such default or defaults shall have continued for a period of 60 days after the City shall have received from a Bondowners' Trustee or from the owners of not less than 20% in principal amount of the Bonds outstanding, a written notice specifying and demanding the cure of such default; (6) If the City shall (except as herein permitted) sell, transfer, assign or convey any properties constituting the Electric System or interests therein, or any part or parts thereof, or shall make any agreement for such sale or transfer (except as expressly authorized by Section 9.6 hereof); (7) If an order, judgment or decree shall be entered by any court of competent jurisdiction: (a) appointing a receiver, trustee or liquidator for the City or the whole or any substantial part of the Electric System; (b) approving a petition filed against the City seeking the bankruptcy, arrangement or reorganization of the City under any applicable law of the United States or the State of Washington; or (c) assuming custody or control of the City or of the whole or any substantial part of the Electric System under the provisions of any other law for the relief or aid of debtors and such order, judgment or decree shall not be vacated or set aside or stayed (or, in case custody or control is assumed by said order, such custody or control shall not be otherwise terminated) within 60 days from the date of the entry of such order, judgment or decree; or (8) If the City shall: (a) admit in writing its inability to pay its debts generally as they become due; (b) file a petition in bankruptcy or seeking a composition of indebtedness under any state or federal bankruptcy or insolvency law; (c) make an assignment for the benefit of its creditors; (d) consent to the appointment of a receiver of the whole or any substantial part of the Electric System; or (e) consent to the assumption by any court of competent jurisdiction under the provisions of any other law for the relief or aid of debtors of custody or control -47- 00T529 92/08/27 of the City or of the whole or any substantial part of the Electric System. SECTION 11.2. Waivers of Default. No delay or omission of the Bondowners' Trustee or of any owner of Bonds to exercise any right or power arising upon the happening of an Event of Default shall impair any right or power or shall be construed to be a waiver of any such Event of Default or to be an acquiescence therein; and every power and remedy given by this Article to the Bondowners' Trustee or to the owners of Bonds may be exercised from time to time and as often as may be deemed expedient by the Bondowners Trustee or by such owners. The Bondowners' Trustee or the owners of not less than 50% in principal amount of the Bonds at the time outstanding, or their attorneys -in -fact duly authorized, may on behalf of the owners of all of the Bonds waive any past default under the Ordinance and its consequences, except a default in the payment of the principal of, premium, if any, or interest on any of the Bonds. No such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 11.3 Bondowners' Trustee. So long as an Event of Default shall not have been remedied, a Bondowners' Trustee may be appointed by the owners of 20% in principal amount of the Bonds then outstanding, by an instrument or concurrent instruments in writing signed and acknowledged by such bondowners or by their attorneys -in -fact duly authorized and delivered to such Trustee, notification thereof being given to the City. Any Bondowners' Trustee appointed under the provisions of this Section 11.3 shall be a bank or trust company organized under the laws of the State of Washington or the State of New York or a national banking association. The fees and expenses of the Bondowners' Trustee shall be borne by the bondowners and not by the City. The bank or trust company acting as Bondowners' Trustee may be removed at any time, and a successor Bondowners' Trustee may be appointed, by the owners of a majority in prin- cipal amount of the Bonds and any Additional Bonds issued pursuant to this Ordinance, by an instrument or concurrent instruments in writing signed and acknowledged by such bondowners or by their attorneys -in -fact duly authorized. The Bondowners' Trustee appointed in the manner herein provided, and each successor thereto, is hereby declared to be a trustee for the owners of all the Bonds and is empowered to exercise all the rights and powers herein conferred on the Bondowners' Trustee. -48- D0T529 92/08/27 SECTION 11.4. Sui s at Law or in Equity. The Bondowners' Trustee may upon the happening of an Event of Default, and during the continuance thereof, take such steps and institute such suits, actions or other proceedings in its own name, or as trustee, all as it may deem appropriate for the protection and enforcement of the rights of bondowners to collect any amounts due and owing the City, or to obtain other appropriate relief, and may enforce the specific performance of any covenant, agreement or condition contained in this Ordinance, or in any of the Bonds. Any action, suit or other proceedings instituted by the Bondowners' Trustee hereunder shall be brought in its name as trustee for the bondowners and all such rights of action upon or under any of the Bonds or the provisions of this Ordinance may be enforced by the Bondowners' Trustee without the possession of any of said Bonds, and without the production of the same at any trial or proceedings relative thereto except where otherwise required by law, and the respective owners of said Bonds, by taking and holding the same, shall be conclusively deemed irrev- ocably to appoint the Bondowners' Trustee the true and lawful trustee of the respective owners of said Bonds, with authority to institute any such action, suit or proceeding; to receive as trustee and deposit in trust any sums becoming distributable on account of said Bonds; to execute any paper or documents for the receipt of such money, and to do all acts with respect thereto that the bondowner himself might have done in person. Nothing herein contained shall be deemed to authorize or empower the Bondowners' Trustee to consent to accept or adopt, on behalf of any owner of any Bond, any plan or reorganization or adjustment affecting the said Bonds of the City or any right of any owner thereof, or to authorize or empower the Bondowners' Trustee to vote the claims of the owners thereof in any receivership, insolvency, liquidation, bankruptcy, reorganization or other proceeding to which the City shall be a party. SECTION 11.5. Books of City Open to Inspection. The City covenants that if an Event of Default shall have happened and shall not have been remedied, the books of record and account of the City shall at all times be subject to the inspection and use of the Bondowners' Trustee. The City covenants that if an Event of Default shall happen and shall not have been remedied, the City will continue to account, as a trustee of an express trust, for all Revenues and other moneys, securities and funds pledged under this Ordinance. -49- D0T529 92/08/27 SECTION 11.6. Payment of Funds to Bondowners' Trustee. The City covenants that if an Event of Default shall happen and shall not have been remedied, the City, upon demand of the Trustee, shall pay over to the Bondowners' Trustee (i) forthwith, all moneys, securities and funds then held by the City and pledged under this Ordinance, and (ii) as promptly as practicable after receipt thereof, all Revenues. SECTION 11.7. Application of Funds by Bondowners' Trustee. During the continuance of an Event of Default the Revenues received by the Bondowners' Trustee pursuant to the provisions of the preceding paragraph shall be applied by the Bondowners' Trustee, first, to the payment of the reasonable and proper charges, expenses and liabilities paid or incurred by the Trustee (including the cost of securing the services of any engineer or firm of engineers selected for the purpose of rendering advice with respect to the sufficiency of the rates and charges for power and energy sold, furnished or supplied by the Electric System), and second, in accordance with the provisions of Section 7.1 of this Ordinance. In the event that at any time the funds held by the Bondowners' Trustee and the Paying Agent for the Bonds shall be insufficient for the payment of the principal of, premium, if any, and interest then due on the Bonds, such funds (other than funds held for the payment or redemption of particular Bonds which have theretofore become due at maturity or by call for redemption) and all Revenues and other moneys received or collected for the benefit or for the account of owners of the Bonds by the Bondowners' Trustee shall be applied as follows: First, to the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, earliest maturities first, and, if the amount available shall not be sufficient to pay in full any installment or installments or interest maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and Second, to the payment to the persons entitled thereto of the unpaid principal and premium, if any, of any Bonds which shall have become due, whether at maturity or by call for redemption, in the order of their due datee, earliest maturities first, and, if the amount available shall not be sufficient to pay in full all the Bonds due on any date, then to the payment thereof ratably, according to the -50- D0T529 92/08/27 amounts of principal and premium, if any, due on such date, to the persons entitled thereto, without any discrimination or preference. SECTION 11.8. Relinquishment of Funds Upon Remedy of Default. If and whenever all overdue installments of interest on all Bonds, together with the reasonable and proper charges, expenses and liabilities of the Bondowners' Trustee and the owners of Bonds, their respective agents and attorneys, and all other sums payable by the City under this Ordinance, including the principal of, premium, if any, and accrued unpaid interest on all Bonds which shall then be payable (with interest upon such principal and premium, if any, and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest specified in the Bonds, to the date of such payment or deposit), shall either be paid by or for the account of the City, or provision satisfactory to the Trustee shall be made for such payment, and all defaults under this Ordinance or the Bonds shall be made good or secured to the satisfaction of the Bondowners' Trustee or provision deemed by the Bondowners' Trustee to be adequate shall be made therefor, the Bondowners' Trustee shall pay over to the City all moneys, securities, funds and Revenues then remaining unexpended in the hands of the Bondowners' Trustee and thereupon all Revenues shall thereafter be applied as pro- vided in this Ordinance. No such payment over to the City by the Bondowners' Trustee or resumption of the application of Revenues as provided in this Ordinance shall extend to or affect any sub- sequent default under this Ordinance or impair any right consequent thereon. SECTION 11.9. Suits by Individual Bondowners. No owner of any one or more of said Bonds shall have any right to institute any action, suit or proceeding at law or in equity, unless an Event of Default shall have happened and be continuing, and unless no Bondowners' Trustee has been created as herein provided, but any remedy herein authorized to be exercised by the Bondowners' Trustee may be exercised individually by any bondowner, in his own name and on his own behalf or for the benefit of all bondowners, in the event no Bondowners' Trustee has been appointed, or with the consent of the Bondowners' Trustee if such Bondowners' Trustee has been appointed; provided, however, that nothing in this Ordinance or in the Bonds shall affect or impair the obligation of the City, which is absolute and unconditional, to pay from Net Revenues the principal of and interest on the Bonds to the respective owners thereof at the respective due dates therein specified, or affect or impair the -51- D0T529 92/08/27 right of action, which is absolute and unconditional, of such owners to enforce such payment. SECTION 11.10. Remedies Granted in Ordinance not Exclusive. No remedy by the terms of the Ordinance conferred upon or reserved to the Bondowners' Trustee or the owners of the Bonds is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under the Ordinance or existing at law or in equity or by statute on or after the date of .adoption of the Ordinance. ARTICLE XII AMENDMENTS AND BONDOWNERS MEETINGS SECTION 12.1. Call of Bondowners Meetings. The City, the Bondowners' Trustee or the owners of not less than 20% in principal amount of the Bonds then outstanding may at any time call a meeting of the owners of the Bonds. Every such meeting shall be held at such place in the City of New York, State of New York, or in the City of Seattle, State of Washington, as may be specified in the notice calling such meeting. Written notice of such meeting, stating the place and time of the meeting and in general terms the business to be transacted, shall be mailed to the bondowners by the City, the Bondowners' Trustee or the bondowners calling such meeting not less than 30 nor more than 60 days before such meeting, and shall be published at least once a week for four successive calendar weeks on any day of the week, the date of first publication to be not less than 30 nor more than 60 days preceding the meeting; provided, however, that the mailing of such notice shall in no case be a condition precedent to the validity of any action taken at any such meeting. The expenses of publication of such notice shall be paid or reimbursed by the City. Any meeting of bondowners shall, however, be valid without notice if the owners of all Bonds then outstanding are present in person or by proxy or if notice is waived before or within 30 days after the meeting by those not so present. SECTION 12.2. Notice to Bondowners. Except as otherwise provided in this Ordinance, any pro- vision in this Ordinance for the mailing of a notice or other paper to bondowners shall be fully complied with if it is mailed by first class mail, postage prepaid, to each registered owner of any of the Bonds then outstanding at his address, if any, appearing upon the Bond Register; and any provision in this Ordinance contained for publication of a notice or other matter -52- D0T529 92/08/27 shall require the publication thereof in The Daily Bond Buyer in the City of New York, State of New York (or in lieu of publication in The Daily Bond Buyer, in a daily newspaper printed in the English language and customarily published on each business day of general circulation in the Borough of Manhattan, the City of New York, State of New York), and also in a daily newspaper printed in the English language and customarily published on each business day and of general circulation in the City of Seattle, State of Washington. SECTION 12.3. Proxies; Proof of Ownership of Bonds. Attendance and voting by bondowners at such meetings may be in person or by proxy. Owners of Bonds may, by an instrument in writing under their hands, appoint any person or persons, with full power and substitution, as their proxy to vote at any meeting for them. Officers or nominees of the City may be present or represented at such meeting and take part therein but shall not be entitled to vote thereat, except as such officers or nominees are bondowners or proxies for bondowners. Any registered owner of Bonds shall be entitled in person or by proxy to attend and vote at such meeting as owner of the Bonds registered in his name without producing such Bonds, and such persons and their proxies shall, if required, produce such proof of personal identity as shall be satisfactory to the Secretary of the meeting. All proxies presented at such meeting shall be delivered to the Inspectors of Votes and filed with the Secretary of the meeting. The vote at any such meeting of the owner of any Bond enti- tled to vote thereat shall be binding upon such owner and upon every such subsequent owner of such Bond (whether or not such subsequent owner has notice thereof). SECTION 12.4. Execution of Instruments by Bondowners. Any request, direction, consent or other instrument in writing required or permitted by this Ordinance to be• signed or executed by bondowners may be in any number of concurrent instru- ments of similar tenor, and may be signed or executed by such bondowners in person or by agent appointed by an instrument in writing. Proof of the execution of any such instrument shall be sufficient for any purpose of this Ordinance if made by either (a) an acknowledgment executed by a notary public or other officer empowered to take acknowledgments of deeds to be recorded in the particular jurisdiction, or (b) an affidavit of a witness to such execution sworn to before such a notary public or other officer. Where such execution is by an officer of a corporation or association or a member of a partnership on behalf of such -53- D0T529 92/08/27 corporation, association or partnership, such acknowledgment or affidavit shall also constitute sufficient proof of his authority. The foregoing shall not be construed as limiting the City to such proof, it being intended that the City may accept any other evidence of the matters herein stated which it may deem sufficient. Any request or consent of the owner of any Bond shall bind every future owner of the same Bond in respect of anything done by the City in pursuance of such request, direction or consent. The right of a proxy for a bondowner to act may be proved (subject to the City's right to require additional proof) by a written proxy executed by such bondowner as aforesaid. SECTION 12.5. Appointment of Officers at Bondowners Meetings. Persons named by the City or elected by the owners of a majority in principal amount of the Bonds represented at the meeting in person or by proxy in the event the City is not represented at such meeting, shall act as temporary Chairman and temporary Secretary of any meeting of bondowners. A permanent Chairman and a permanent Secretary of such meeting shall be elected by the owners of a majority in principal amount of the Bonds represented at such meeting in person or by proxy. The permanent Chairman of the meeting shall appoint two Inspectors of Votes who shall count all votes cast at such meeting, except votes on the election of Chairman and Secretary as aforesaid, and who shall make and file with the Secretary of the meeting and with the City their verified report of all such votes cast at the meeting. SECTION 12.6. Ouorum at Bondowners Meetings. The owners of not less than the principal amount of the Bonds required for any action to be taken at such meeting must be present at such meeting in person or by proxy in order to con- stitute a quorum for the transaction of business, less than a quorum, however, having power to adjourn from time to time without any other notice than the announcement thereof at the meeting; provided, however, that, if such meeting is adjourned by less than a quorum for more than ten days, notice thereof shall be published by the City at least five days prior to the adjourned date of the meeting. SECTION 12.7. Vote Required to Amend Ordinance. Any amendment to the provisions of the Ordinance, in any particular except the percentage of bondowners the approval of -54- D0T529 92/08/27 which is required to approve such amendment, may be made by a Supplemental Ordinance of the City and an ordinance duly adopted by the affirmative vote at a meeting of bondowners duly convened and held, or with written consent as hereinafter provided in Section 12.9, of the owners of not less than 66 2/3% in principal amount of the Bonds outstanding when such meeting is held or such consent is given; provided, however, that no such amendment shall (a) extend the date of payment of the principal of any Bond or of any installment of interest thereon or reduce the principal or redemption price thereof or the rate of interest thereon or advance the date upon which any Bond may first be called for redemption prior to its fixed maturity date; (b) give to any Bond or Bonds any preference over any other Bond or Bonds secured equally and ratably therewith; (c) reduce the aforesaid percentage of Bonds the owners of which are required to consent to any such ordinance amending the provisions of this Ordinance; or (d) authorize the creation of any pledge prior to or, except as provided in Article IV hereof for the issuance of Additional Bonds, on a parity with the pledge afforded by this Ordinance, without the consent of the owner of each such Bond affected thereby. SECTION 12.8. Obtaining Approval of Amendments at Bondowners Meeting. The City may at any time adopt an ordinance amending the provisions of the Ordinance to the extent that such amendment is permitted by the provisions of Section 12.7 hereof, to take effect when and as provided in this Section. At any time thereafter such ordinance may be submitted by the City for approval to a meeting of the bondowners duly convened and held in accordance with the provisions of the Ordinance. A record in duplicate of the proceedings of each meeting of the bondowners shall be prepared by the permanent Secretary of the meeting and shall have attached thereto the original reports of the Inspectors of Votes and affidavits by a person or persons having knowledge of the facts, showing a copy of the notice of the meeting and setting forth the facts with respect to the mailing and publication thereof under the provisions of the Ordinance. Such a record shall be signed and verified by the affidavits of the permanent Chairman and the permanent Secretary of the meeting, and one duplicate thereof shall be delivered to the City. Any record so signed and verified shall be proof of the matters therein stated. If the ordinance of the City making such amendment shall be approved by a ordinance duly adopted at such meeting of bondowners by the affirmative vote of the owners of the required percentages of Bonds, a notice stating that a ordinance approving such amendment has been so adopted shall be mailed by the City to each bondowner who has requested such notice (but failure so to mail copies of such notice shall not -55- D0T529 92/08/27 affect the validity of such ordinance) and shall be published at least once in the manner provided in Section 12.2 hereof. Proof of such mailing and publication by the affidavit or affidavits of a person or persons having knowledge of the facts shall be filed with the City. Such ordinance of the City making such amendment shall be deemed conclusively to be binding upon the City, the Paying Agents, and the owners of all Bonds at the expiration of 30 days after the publication of the notice provided for in this Section, except in the event of a final decree of a court of com- petent jurisdiction setting aside such ordinance or annulling the action taken thereby in a legal action or equitable proceeding for such purpose commenced within such period; provided that the City and any Paying Agents during such 30 day period and any such further period during which such action or proceeding may be pending shall be entitled in their absolute discretion to take such action, or to refrain from taking such action, with respect to such ordinance as they may deem expedient. Nothing in the Ordinance contained shall be deemed or construed to authorize or permit, by reason of any call of a meeting of bondowners or of any right conferred hereunder to make such a call, any hindrance or delay in the exercise of any rights conferred upon or reserved to the Paying Agents or the bondowners under any of the provisions of the Ordinance. SECTION 12.9. Alternate Method of Obtaining Approval of Amendments. The City may at any time adopt an ordinance amending the provisions of the Ordinance, or of any Bonds, to the extent that such amendment is permitted by the provisions of this Article, to take effect when and as provided in this Section. Upon adoption of such ordinance, a request that bondowners consent thereto shall be mailed by the City to the bondowners and notice that the City is requesting bondowners to consent to such amendment shall be published at least once in the manner provided in Section 12.2 hereof. Such ordinance shall not be effective unless and until there shall have been filed with the City the written consents of the percentages of owners of outstanding Bonds specified in Section 12.7 hereof and a notice shall have been published as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 12.3 hereof. A certificate or certificates of the City Clerk that he has examined such proof and that such proof is sufficient shall be conclusive that the consents have been given by the owners of the Bonds described in such certificate or certificates. Any such consent shall be binding upon the owner of the Bonds giving such consent and on every subsequent owner of such Bonds (whether or not such subsequent owner has notice thereof). A notice stating that the ordinance -56- DDT529 92/08/27 has been consented to by the owners of the required percentages of bonds and will be effective as provided in this Section, may be given to the bondowners by mailing such notice to the bondowners, and shall be given by publishing the same at least once in the manner provided in Section 12.2 hereof. A record, consisting of the papers required by this Section to be filed with the City shall be proof of the matters therein stated, and the ordinance shall be deemed conclusively to be binding upon the City and the owners of all Bonds at the expiration of 30 days after the notice last provided for in this Section, except in the event of a final decree of a court of competent jurisdiction setting aside such consent or annulling the action taken thereby in a legal action or equitable proceeding for such purpose commenced within such period. SECTION 12.10. Amendment of Ordinance In Any Respect by Approval of All Bondowners. Notwithstanding anything contained in the foregoing pro- visions of this Article, the rights and obligations of the City and of the owners of the Bonds and the terms and provisions of the Bonds and of the Ordinance may be amended in any respect with the consent of the City, by the affirmative vote of the owners of all said Bonds then outstanding at a meeting of bondowners called and held as hereinabove provided, or upon the adoption of an ordinance by the City and the consent of the owners of all the Bonds then outstanding, such consent to be given as provided in Section 12.9 except that no notice to bondowners either by mailing or publication shall be required, and the amendment shall be effective immediately upon such unanimous vote or written consent of all of the bondowners. SECTION 12.11. Bonds Owned by City. Bonds owned or held by or for the account of the City shall not be deemed outstanding for the purpose of any vote or consent or other action or any calculation of outstanding Bonds in this Ordinance provided for, and shall not be entitled to vote or consent or take any other action in this Ordinance provided for. SECTION 12.12. Endorsement of Amendment on Bonds. Bonds delivered after the effective date of any action amending this Ordinance taken as hereinabove provided may bear a notation by endorsement or otherwise as to such action, and in that case, upon demand of the owner of any Bond outstanding at such effective date and presentation of his Bond for the purpose at the principal office of the Paying Agents, suitable notation shall be made on such Bond by the Paying Agent as to any such -57- O0T529 92/08/27 action. If the City shall so determine, new Bonds so modified as in the opinion of the City and its counsel to conform to such action shall be prepared, delivered and upon demand of the owner of any Bond then outstanding shall be exchanged without cost to such bondowner for Bonds then outstanding hereunder, upon surrender of such Bonds. ARTICLE XIII FORM OF BONDS SECTION 13.1. Form of Bonds. The bonds of each series of Additional Bonds shall, unless or except as is otherwise provided in the Supplemental Ordinance or Ordinances authorizing their issuance, be in substantially the form provided in Section 13.2 of this Ordinance, with such modifications, additions or deletions as may be necessary or advisable to reflect the details and provisions of the issuance of such Bonds and the provisions of this Ordinance authorizing the same or as otherwise required or permitted by the provisions of such ordinance. SECTION 13.2. Form of 1992 Bonds. The 1992 Bonds shall be in substantially the following form: -58- 00T529 92/08/27 UNITED STATES OF AMERICA STATE OF WASHINGTON CITY OF PORT ANGELES, WASHINGTON ELECTRIC REVENUE BOND SERIES 1992 No. $ The City of Port Angeles, Washington, a municipal corporation of the State of Washington (hereinafter called the "City "), for value received, hereby promises to pay to , or registered assigns, on the first day of , the sum of Dollars ($ ) and to pay interest on such principal sum from the date hereof or the most recent date to which interest has been paid or duly provided for, at the rate of % per annum, payable semi - annually on the first day of and the first day of in each year (commencing 1, 1992) until the payment in full of such principal sum. Principal of and interest and premium, if any, on this bond are payable solely out of the special fund of the City known as the "Electric System Revenue Bond Fund" (the "Bond Fund ") created and established by Ordinance No. , passed by the Council of the City on , 1992. Both principal of and interest on this bond are payable in lawful money of the United States of America. Interest shall be paid by mailing a check or draft to the registered owner or assigns at the address shown on the Bond Register as of the 15th day of the month prior to the interest payment date. Principal shall be paid to the registered owner or assigns upon presentation and surrender of this bond at the principal office of the fiscal agency of the State of Washington in either Seattle, Washington, or New York, New York (hereinafter referred to collectively as the "Bond Registrar "). Reference is hereby made to additional provisions of this bond set forth below and such additional provisions shall for all purposes have the same effect as if set forth on this space. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance (as hereinafter defined) until the Certificate of Authentication hereon shall have been manually signed by the Bond Registrar. -59- D0T529 92/08/27 It is hereby certified, recited and declared that all acts, conditions and things required by the Constitution and statutes of the State of Washington to exist, to have happened and to have been performed precedent to and in the issuance of this bond do exist, have happened and have been performed in due time, form and manner as prescribed by law, and that the amount of this bond, together with all other obligations or indebtedness of the City, does not exceed any constitutional or statutory limitations of indebtedness. IN WITNESS WHEREOF, the City of Port Angeles, Washington, has caused this Bond to be executed in its name with the manual or facsimile signature of its Mayor and attested by the manual or facsimile signature of the City Clerk, and the manual or facsimile seal of said City to be imprinted hereon, all as of the 1st day of , 1992. (SEAL) Attest: City Clerk CITY OF PORT ANGELES, WASHINGTON Mayor CERTIFICATE OF AUTHENTICATION Date of Authentication: This bond is one of the bonds described in the within - mentioned Bond Ordinance and is one of the Electric System Revenue Bonds, Series 1992 of the City of Port Angeles, Washington, dated , 1992. -60- WASHINGTON STATE FISCAL AGENCY Bond Registrar By Authorized Officer D0T529 92/08/27 ADDITIONAL BOND PROVISIONS This bond is one of a duly authorized series of bonds aggre- gating $ in principal amount and designated as "Electric System Revenue Bonds, Series 1992." This bond and the bonds of the series of which it is a part (the "Bonds ") are issued under and pursuant to Ordinance No. (the "Bond Ordinance "), and under the authority of and in full compliance with the Constitution and laws of the State of Washington. The Bonds are issued for the purpose of paying a portion of the costs of improvements to the Electric System. The Bond Ordinance permits the issuance of Additional Bonds payable from the Bond Fund ranking on a parity with the Bonds and secured by an equal charge and lien on the Revenues of the Electric System (as such terms are defined in the Bond Ordinance). Copies of the Bond Ordinance are on file at the principal office of the City and at the principal office of each paying agent for this Bond, and reference thereto, and to any and all modifications and amendments thereof, is hereby made for a more complete description of the Revenues available for the payment of the principal of, premium, if any, and interest on the Bonds and the rights and remedies of the owners of the Bonds with respect thereto, the terms and conditions upon which the Bonds have been issued, and the terms and conditions upon which this Bond shall no longer be secured by the Bond Ordinance or deemed to be outstanding hereunder if moneys or certain specified securities sufficient for the payment of this Bond shall have been set aside in a special account and held in trust solely for the payment thereof. Under the Bond Ordinance, the City is obligated to set aside and pay into the Bond Fund out of the Revenues of said Electric System, certain fixed amounts sufficient to pay the principal of and interest and premium, if any, on all Bonds and any bonds at any time outstanding issued on a parity therewith payable from such Fund as the same become due and payable, all as is more fully provided in the Bond Ordinance. The Bonds and any bonds issued on a parity therewith payable from the Bond Fund and the interest thereon constitute the only charge against the Bond Fund and the amount of the Revenues pledged to said Bond Fund. In and by the Bond Ordinance, the City covenants to establish, maintain and collect rates or charges for electric energy and other services, facilities and commodities sold, furnished or supplied by the Electric System of the City that shall be fair and nondiscriminatory and adequate to provide Revenues sufficient for the fixed amounts that the City is obligated to set aside in the Bond Fund to pay the principal of and interest and premium, if any, on this Bond and the series of -61- D0T529 92/08/27 Bonds of which this Bond is a part, and any other bonds payable from said Fund on a parity with the Bonds and for the proper operation and maintenance of the Electric System, and all neces- sary repairs thereto and replacements and renewals thereof. The Bonds maturing on 1, 20 are subject to redemption prior to maturity, at the option of the City, on or after 1, 20 , in whole or in part on any date, upon written notice as provided hereinafter, at a price of par together with the interest accrued thereon to the date fixed for redemption. The Bonds maturing on 1, 20_ are subject to redemption prior to maturity, at the option of the City, on or after 1, 20 , in whole or in part on any date, upon written notice as provided hereinafter, at the redemption prices set forth below (expressed as a percentage of the principal amount) plus accrued interest to the date of redemption: Redemption Period (Inclusive) Redemption Price If less than all of the Bonds subject to optional redemption are to be called for redemption, the City shall choose the maturities to be redeemed. In the event that less than all of the Bonds of any maturity are called for redemption, the particular Bonds of such maturity to be redeemed shall be selected by lot by the Bond Registrar. The Bonds maturing on 1, 20_ (hereinafter referred to as the "Term Bonds ") , shall be redeemed prior to maturity by lot (or purchased or paid at maturity), not later than 1 in the years 20 through 20_, inclusive, from amounts credited to the Bond Retirement Account in the Bond Fund as sinking fund installments therefor (to the extent such amounts have not been used to redeem or purchase such Bonds as provided below) and in the principal amounts as set forth below, upon written notice as provided hereinafter by payment of the principal amount thereof, together with the interest accrued thereon to the date fixed for redemption. Year Amount The City may purchase and redeem the Term Bonds through the application of part or all of the respective sinking fund -62- 00T529 92/08/27 installments therefor on the first day of any month prior to any 1. Any moneys not so used to purchase and redeem such Term Bonds shall be applied to the redemption of such bonds on such 1. If, as of any 1, the principal amount of Term Bonds retired by purchase or redemption exceeds the cumulative requirement for sinking fund installments through such date, such excess may be credited against the sinking fund installment for the next fiscal year. Written notice of redemption shall be given by first class mail, postage prepaid, not less than 30 days nor more than 60 days before the redemption date to the registered owners of the Bonds to be redeemed in whole or in part at their last addresses, if any, appearing on the Bond Register, but failure to mail or to receive any such notice shall not affect the validity of the proceedings for redemption of Bonds. Notice of redemption having been given by mailing, as aforesaid, the Bonds so called for redemption shall on the date specified in such notice become due and payable at the applicable redemption price herein provided, and from and after the date so fixed for redemption (unless the City shall default in the payment of the Bonds so called for redemption) interest on said Bonds so called for redemption shall cease to accrue. Portions of the principal sum of this Bond in installments of $5,000 or any integral multiple thereof may be redeemed, and if less than all of the principal sum hereof is to be redeemed, in such case upon the surrender of this Bond at the principal office of one of the Paying Agents, there shall be issued to the registered owner, without charge therefor, for the then unredeemed balance of the principal sum hereof, fully registered Bonds of like series, maturity and interest rate in any of the denominations authorized by the Bond Ordinance. This Bond shall be transferable by the registered owner at the principal offices of the Bond Registrar upon surrender and cancellation of this Bond, and thereupon a new registered Bond of the same principal amount and interest rate and maturity will be issued to the transferee as provided in the Bond Ordinance. The City, the paying agents and any other person may treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment hereof and for all purposes and shall not be affected by any notice to the contrary, whether this Bond be overdue or not. The City has designated the Bonds as qualified tax - exempt obligations for investment by certain financial institutions. -63- D0T529 92/08/27 ASSIGNMENT FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto.. PLEASE INSERT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER OF TRANSFEREE (Please print or typewrite name and address, including zip code, of Transferee) the within bond and does hereby irrevocably constitute and appoint of , or its successor, as Bond Registrar to transfer said bond on the books kept for registration thereof with full power of substitution in the premises. DATED: SIGNATURE GUARANTEED: NOTE: The signature on this Assign- ment must correspond with the name of the registered owner as it appears upon the face of the within bond in every particular, without alteration or enlargement or any change whatever. ARTICLE XIV MISCELLANEOUS, DEFEASANCE; SALE OF BONDS AND APPROVAL OF OFFICIAL STATEMENT SECTION 14.1. Ordinance and Laws a Contract With Bondowners. This Ordinance is adopted under the authority of and in full compliance with the Constitution and laws of the State of Wash- ington, as amended and supplemented. In consideration of the -64- D0T529 92/08/27 purchase and acceptance of the Bonds by those who shall hold the same from time to time, the provisions of this Ordinance and of any Supplemental Ordinance authorizing the issuance of Additional Bonds and of said laws shall constitute a contract with the owner or owners of each Bond and the obligations of the City and its Council under said acts and under this Ordinance shall be enforceable by any court of competent jurisdiction; and the covenants and agreements herein set forth to be performed on behalf of the City shall be for the equal benefit, protection and security of the owners of any and all of said Bonds all of which, regardless of the time or times of their issue or maturity, shall be of equal rank without preference, priority or distinction of any of said Bonds over any others thereof except as expressly provided herein. SECTION 14.2. Bonds Deemed No Longer to be Outstanding Hereunder. In the event that the City, in order to effect the payment, retirement or redemption of any Bond, sets aside in the Bond Fund or in another special account, held in trust by the City or by a qualified trustee, advance refunding bond proceeds or other money lawfully available or direct obligations of or obligations the principal of and the interest on which are unconditionally guaranteed by the United States Government ( "Government Obligations "), or any combination of such proceeds, money and /or Government Obligations, in amounts which, together with known earned income from the investment thereof are sufficient to redeem, retire or pay such Bond in accordance with its terms and to pay when due the interest and redemption premium, if any, thereon, and such proceeds, money and /or Government Obligations are irrevocably set aside and pledged for such purpose, then no further payments need be made into the Bond Fund for the payment of the principal of and interest on such. Bond, and the owner of such Bond shall cease to be entitled to any lien, benefit or security of this Ordinance, or any other ordinance of the City, except the right to receive payment of principal, premium, if any, and interest from such special account, and such Bonds shall be deemed not to be outstanding hereunder. The City shall obtain an opinion of nationally recognized bond counsel to the effect set forth in the preceding sentence and that the tax- exempt status of such Bonds is not adversely affected, and a verification from a certified public accountant that the money when due or Government Obligations so set aside will be sufficient to pay the principal,, premium, if any, and interest on the Bonds to be refunded. -65- D0T529 92/08/27 SECTION 14.3. Moneys Held by Paying Agents One Year After Due Date. Moneys or Permitted Investments held by the Paying Agents in trust for the payment and discharge of any of the Bonds which remain unclaimed for one year after the date when such Bonds shall have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by such Payment Agents at such date or for one year after the date of deposit of such moneys if deposited with the Paying Agents after the date when such Bonds become due and payable, shall at the written request of the City be repaid by the Paying Agents to the City as the City's property and free from the trust created by this Ordinance, or any other ordinance of the City, and the Paying Agents shall thereupon be released and discharged with respect thereto, and the owners of the Bonds payable from such moneys shall look only to the City for the payment of such Bonds. SECTION 14.4. Sale of 1992 Bonds. Piper Jaffray, Inc. has presented a bond purchase contract dated September 1, 1992 (the "Purchase Contract ") to the City by which it has offered to purchase the 1992 Bonds under the terms and conditions provided in the Purchase Contract, which written Purchase Contract is on file with the Clerk of the Council and is incorporated herein by this reference. The Council finds that entering into the Purchase Contract is in the City's best interest and, therefore, accepts the offer contained in the Purchase Contract and authorizes its execution by City officials. The proper City officials are authorized and directed to do everything necessary for the prompt authentication and delivery of the 1992 Bonds to the purchaser and for the proper application and use of the proceeds of the sale thereof. SECTION 14.5. Approval of Official Statement. The City Light Director of the Electric System (the "City Light Director ") and the Finance Director are authorized and directed to execute and deliver to the purchaser copies of an Official Statement in the form presented at this meeting, and with such changes thereto as have been noted thereon; provided, however, that the City Light Director is authorized to supplement or amend the Official Statement as the City Light Director, with the approval of bond counsel to the City, deems necessary or appropriate. The City represents and warrants to the purchaser that such Official Statement is deemed final by the City as of the date thereof, and that the Preliminary Official Statement dated August 25, 1992, was deemed final by the City as of the date thereof for purposes of Rule 15c2 -12 of the Securities and -66- D0T529 92/08/27 Exchange Council, except for the omission of the offering prices, interest rates, maturities, principal amounts, redemption provisions, ratings and related information. The Council approves and authorizes the distribution and use of such Official Statement (including any such supplements and amendments thereto) in connection with the public offering and sale of the 1992 Bonds by the purchaser. The Council hereby ratifies, approves and confirms the distribution and use of the Preliminary Official Statement in connection with the public offering and sale of the 1992 Bonds. SECTION 14.6. Benefits of Ordinance Limited to City, Bondowners, and Paying Agents. Nothing in this Ordinance, expressed or implied, is intended or shall be construed to confer upon or give to any person or corporation other than the City, the Paying Agents, and the owners from time to time of the Bonds any rights, remedies or claims under or by reason of this Ordinance or any covenant, condition or stipulation thereof; and all the covenants, stipula- tions, promises and agreements in this Ordinance contained by or on behalf of the City shall be for the sole and exclusive benefit of the City, the Paying Agents and the owners from time to time of the Bonds. SECTION 14.7. Term "City" Includes Successors. Whenever in this Ordinance the City is named or referred to, it shall be deemed to include its successors and assigns, including any successor by merger or consolidation, and all the covenants and agreements in this Ordinance contained by or on behalf of the City shall bind and inure to the benefit of its successors and assigns whether so expressed or not. SECTION 14.8. Severability. If any one or more of the covenants or agreements provided in this Ordinance on the part of the City to be performed 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, and shall in no way affect the validity of the other provisions of this Ordinance or of the Bonds issued hereunder. -67- D0T529 92/08/27 SECTION 14.9. General Authorization. The Mayor, City Light Director, Finance Director and City Clerk and each of the other appropriate officers of the City are each hereby authorized and directed to take such steps, to do such other acts and things, and to execute such letters, certificates, agreements, papers, financing statements, assignments or instruments as in their judgment may be necessary, appropriate or desirable in order to carry out the terms and provisions of, and complete the transactions contemplated by, this Ordinance. SECTION 14.10. Adjustment of Dollar Amounts. The dollar amounts stated in Sections 9.6.B and 9.7 hereof may, at the option of the City, be adjusted according to the Federal Consumer Price Index applicable to the City, or, if such consumer price index is no longer published, such other similar governmentally published index of prices computed from January 1, 1986. SECTION 14.11. Special Designation. The City hereby designates the 1992 Bonds as qualified tax - exempt obligations for banks, thrift institutions and other financial institutions. SECTION 14.12. Prior Acts. All acts taken pursuant to the authority of this Ordinance but prior to its effective date are hereby ratified and confirmed. SECTION 14.13. Effective Date of Ordinance. This Ordinance shall be in effect from and after its adoption in accordance with law. SECTION 14.14. Repealer. All, ordinances and parts of ordinances in conflict herewith are hereby repealed to the extent of such conflict. -68- D0T529 92/08/27 PASSED BY THE CITY COUNCIL OF THE CITY OF PORT ANGELES, WASHINGTON, AT A REGULAR MEETING THEREOF f #• THIS 1st DAY OF SEPTEMBER, 1992. Attest: Ln4J City Cie Published: September 6, 1992 (By Summary) -69- D0T529 92/08/27 CERTIFICATE I, the undersigned, City Clerk of the City of Port Angeles, Washington, DO HEREBY CERTIFY: 1. That the attached is a true and correct copy of Ordina- nce No. 2709 (the "Ordinance ") of the City, duly passed at a regular meeting of the City Council (the "Council ") of the City held on the 1st day of September, 1992. 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 Council voted in the proper manner for the passage of said Ordinance; that all other requirements and proceedings incident to the proper passage of said Ordinance have been fully 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 1st day of September, 1992. City Cle] Summaries of Ordinances Adopted by the Port Angeles City Council on September 1, 1992 Ordinance No. 2708 This Ordinance of the City of Port Angeles establishes a ninety -day SEPA (State Environmental Policy Act) threshold determination deadline and amends Ordinance 1886, as most recently amended by Ordinance 2594, and Chapter 15.04 of the Port Angeles Municipal Code. Ordinance No. 2709 This Ordinance of the City of Port Angeles establishes a plan and system for capital improvements; authorizes the issuance of electric revenue bonds in the principal amount of $2,890,000 to provide funds to pay a portion of the City's Electric Utility Capital Improvement Program; provides for the establishment of certain funds and accounts; makes other covenants and agreements in connection with the foregoing; and authorizes the sale of such bonds. Ordinance No. 2710 This Ordinance of the City of Port Angeles establishes an annual budget which shall be in effect for the period of January 1, 1993, through December 31, 1993, and for succeeding annual budgets as designated in Chapter 3.04.010 of the Port Angeles Municipal Code; adopts Chapter 35A.33 RCW by reference; amends Ordinance 2400 and Chapter 3.04 of the Port Angeles Municipal Code; and repeals Ordinance 2450. The full texts of the Ordinances are available at City Hall in the City Clerk's office or will be mailed upon request. Office hours are Monday through Friday from 8:00 a.m. to 5:00 p.m. These Ordinances shall take effect five days after the date of publication of these summaries. Publish: September 6. 1992 Becky J. Upton City Clerk