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CITY OF PORT ANGELES, WASHINGTON
ORDINANCE NO. 3100
AN ORDINANCE OF THE CITY OF PORT ANGELES, WASHINGTON,
AUTHORIZING THE ISSUANCE OF ELECTRIC REVENUE
REFUNDING BONDS IN THE PRINCIPAL AMOUNT OF $2,560,000 TO
REFUND CERTAIN OUTSTANDING ELECTRIC REVENUE BONDS OF
THE CITY; PROVIDING FOR THE ESTABLISHMENT OF CERTAIN
FUNDS AND ACCOUNTS; MAKING OTHER COVENANTS AND
AGREEMENTS IN CONNECTION WITH THE FOREGOING; AND
AUTHORIZING THE SALE OF SUCH BONDS.
Passed October 16, 2001
Prepared by:
PRESTON GATES & ELLIS LLP
Seattle, Washington
TABLE OF CONTENTS
a
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions 2
Section 1.2. Interpretation 9
ARTICLE II
FINDINGS AND DETERMINATIONS
Section 2.1. Parity Conditions 10
Section 2.2. Revenues Sufficient 10
Section 2.3. Due Regard 10
ARTICLE III
AUTHORIZATION AND ISSUANCE OF BONDS
Section 3.1. Authorization of 2001 Bonds 11
Section 3.2. Registration, Exchange and Payments 11
Section 3.3. Redemption of 2001 Bonds 14
Section 3.4. Selection of 2001 Bonds 15.
Section 3.5. Notice of Redemption 16
Section 3.6. Purchase of 2001 Bonds 17
ARTICLE IV
ISSUANCE OF ADDITIONAL BONDS
Section 4.1. Authorization of Series of Additional Bonds 18
Section 4.2. Additional Bonds 18
ARTICLE V
GENERAL TERMS AND PROVISIONS OF BONDS
Section 5.1. Execution of 2001 Bonds 21
Section 5.2. Lost, Stolen, Destroyed or Mutilated Bonds 22
Section 5.3. Temporary Bonds 22
ARTICLE VI
CREATION OF SPECIAL FUNDS AND ACCOUNTS AND PAYMENTS THEREFROM
Section 6.1. Light Fund 23
Section 6.2. Bond Fund 24
Section 6.3. Investment of Funds 28
ARTICLE VII
PLAN OF REFUNDING
Section 7.1. Refunding Account 29
Section 7.2. Call for Redemption of Refunded Bonds 30
Section 7.3. Finding of Savings and Defeasance 31
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ARTICLE VII
FORM OF 2001 BONDS
Section 8.1. Form of 2001 Bonds 31
ARTICLE D(
COVENANTS TO SECURE BONDS
Section 9.1. Security for Bonds 35
Section 9.2. Rate Covenant - General 36
Section 9.3. Rate Covenant - Debt Service Coverage 36
Section 9.4. Restrictions on Contracting of Obligations Secured by Revenues 37
Section 9.5. Covenant to Maintain System in Good Condition 38
Section 9.6. Covenants Concerning Disposal of Properties of System 38
Section 9.7. Insurance. 39
Section 9.8. Books of Account 39
Section 9.9. Covenant Not to Render Service Free of Charge 40
Section 9.10. Covenant to Make Only Economically Sound Improvements 40
Section 9.11. Covenant to Pay Bond Principal and Interest Punctually 40
Section 9.12. Covenant to Pay Taxes, Assessments and Other Claims 41
Section 9.13. Covenant to Retain Competent Management - 41
Section 9.14. Further Assurances -- 41
Section 9.15. Tax Covenants; Special Designation 41
ARTICLE X
SUPPLEMENTAL AND AMENDATORY ORDINANCES
Section 10.1. Amendments Without Consent of Bondowners 42
Section 10.2. Amendments With Consent of Bondowners 43
ARTICLE XI
DEFAULTS AND REMEDIES
Section 11.1. Events of Default 43
Section 11.2. Waivers of Default 44
Section 11.3. Bondowners' Trustee 45
Section 11.4. Suits at Law or in Equity 45
Section 11.5. Books of City Open to Inspection 46
Section 11.6. Payment of Funds to Bondowners' Trustee 46
Section 11.7. Application of Funds by Bondowners' Trustee 46
Section 11.8. Relinquishment of Funds Upon Remedy of Default 47
Section 11.9. Suits by Individual Bondowners 47
Section 11.10. Remedies Granted in Ordinance not Exclusive 48
ARTICLE XII
AMENDMENTS AND BONDOWNERS MEETINGS
Section 12.1. Call of Bondowners Meetings 48
Section 12.2. Notice to Bondowners 48
Section 12.3. Proxies; Proof of Ownership of Bonds 49
Section 12.4. Execution of Instruments by Bondowners 49
Section 12.5. Appointment of Officers at Bondowners Meetings 50
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Section 12.6.
Section 12.7.
Section 12.8.
Section 12.9.
Section 12.10.
Section 12.11.
Section 12.12.
MISCELLAN
Quorum at Bondowners Meetings 50
Vote Required to Amend Ordinance 50
Obtaining Approval of Amendments at Bondowners Meeting 50
Alternate Method of Obtaining Approval of Amendments 51
Amendment of Ordinance In Any Respect by Approval of All
Bondowners 52
Bonds Owned by City 52
Endorsement of Amendment on Bonds 52
ARTICLE XIII
EOUS, DEFEASANCE; SALE OF BONDS AND APPROVAL OF OFFICIAL
STATEMENT
Ordinance and Laws a Contract With Bondowners _
Bonds Deemed No Longer to be Outstanding Hereunder
Money Held by Paying Agents One Year After Due Date
Sale of 2001 Bonds
Undertaking to Provide Ongoing Disclosure
Municipal Bond Insurance
Benefits of Ordinance Limited to City, Bondowners, and Paying Agents
Term "City" Includes Successors
Severability
Section 13.1.
Section 13.2.
Section 13.3.
Section 13.4.
Section 13.5.
Section 13.6.
Section 13.7.
Section 13.8.
Section 13.9.
Section 13.10. General Authorization
Section 13.11. Adjustment of Dollar Amounts
Section 13.12. Prior Acts
Section 13.13. Effective Date of Ordinance
Section 13.14. Repealer
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ORDINANCE NO. 3100
AN ORDINANCE OF THE CITY OF PORT ANGELES, WASHINGTON,
AUTHORIZING THE ISSUANCE OF ELECTRIC REVENUE
REFUNDING BONDS IN THE PRINCIPAL AMOUNT OF $2,560,000 TO
REFUND CERTAIN OUTSTANDING ELECTRIC REVENUE BONDS OF
THE CITY; PROVIDING FOR THE ESTABLISHMENT OF CERTAIN
FUNDS AND ACCOUNTS; MAKING OTHER COVENANTS AND
AGREEMENTS IN CONNECTION WITH THE FOREGOING; AND
AUTHORIZING THE SALE OF SUCH BONDS.
WHEREAS, the City of Port Angeles, Washington, a municipal corporation of the State
of Washington (the "City "), owns and operates an electric utility system (the "Electric System ");
and
WHEREAS, pursuant to Ordinance No. 2709 of the City, passed on September 1, 1992,
the City issued its Electric Revenue Bonds, Series 1992 (the "1992 Bonds "), of which
$2,420,000 principal amount maturing on and after September 1, 2003, may be called for
redemption on September 1, 2002; and
WHEREAS, pursuant to Ordinance No. 2877 of the City, passed on August 1, 1995, the
City issued its Electric Revenue Bonds, Series 1995 (the "1995 Bonds "), of which $2,520,000
principal amount remains outstanding; and
WHEREAS, Ordinance Nos. 2709 and 2877 provide for the issuance of electric revenue
refunding bonds on a parity of lien with the 1992 Bonds and the 1995 Bonds on the condition
that the City achieve certain savings in connection with any such refunding; and
WHEREAS, after due consideration it appears to the City Council of the City (the
"Council ") that such parity conditions can be met and that the callable portions of the 1992
Bonds may be refunded by the issuance and sale of the electric revenue refunding bonds of the
City authorized herein (the "2001 Bonds ") so that a substantial savings to the Electric System
and its ratepayers will be effected by the issuance of such refunding bonds and the payment and
redemption of the callable portion of the 1992 Bonds on September 1, 2002; and
WHEREAS, to effect such refunding most advantageously to the City and its ratepayers,
it is hereby found necessary and advisable that an escrow agent be appointed and that certain
"Acquired Obligations" (hereinafter identified) be purchased out of the proceeds of sale of the
refunding bonds and certain money of the City; and
WHEREAS, the City has received an offer from Seattle - Northwest Securities
Corporation to purchase the 2001 Bonds and it is in the best interest of the City and ratepayers of
the Electric System to accept such offer on the terms set forth therein and in this ordinance;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PORT ANGELES,
WASHINGTON, DO ORDAIN AS FOLLOWS:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
As used in this ordinance the following words and phrases shall have the meanings set
forth below unless the context shall clearly indicate that another meaning is intended.
"Additional Bonds" means any Bonds issued on a parity with the 1992 Bonds, the 1995
Bonds and the 2001 Bonds pursuant to Article IV of this ordinance.
"Adjusted Net Revenues" means Net Revenues as calculated pursuant to Section 4.2.I.
"Annual Debt Service" for any Fiscal Year shall mean the sum of:
(a) the interest due in such Fiscal Year on all outstanding. Bonds,. excluding
to be paid from the proceeds of Bonds,
(b) 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, the 1995 Bonds, the 2001 Bonds and any Additional
Bonds. "Bonds" may include bonds, notes, warrants, certificates of indebtedness or any other
evidence of indebtedness.
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"Bond Fund" means the Electric System Revenue Bond Fund established pursuant to
Section 7.2 of Ordinance No. 2709 to secure payment of the Bonds.
"Bond Insurance Policy" means the municipal bond insurance policy issued by the
Insurer insuring the payment when due of the principal of and interest on the 2001 Bonds as
provided therein.
"Bondowners' Trustee" means any bank or trust company organized under the laws of
any state of the United States or any national banking association hereafter appointed as trustee
for Bondowners 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
authentication of the 2001 Bonds, maintenance of the Bond Register, effecting transfer of
ownership of the 2001 Bonds, and paying the principal of, premium, if any, and interest on the
2001 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 Registranfor the
purpose of registration of the 2001 Bonds. <.
"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.
"Council" means the City Council, as the legislative body of the City, as the same shall
be duly and regularly constituted from time to time.
"Distribution and Transmission Facilities" means the electric utility properties and assets,
real and personal, tangible and intangible, now owned and operated by the City and used 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. Distribution 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
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pledged to the payment of revenue obligations issued to purchase, construct, condemn or
otherwise acquire such separate utility system.
"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 and ending December 31 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, improvements 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.
"Insurer" means Ambac Assurance Corporation, a Wisconsin domiciled stock insurance
company.
"Light Fund" means the fund of that name described in Section 7.1 of the Ordinance.
"Net Revenues" means, for any period, the excess of Revenues over Operating Expenses
for such period, excluding from the 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 Bond Ordinance" means Ordinance No. 2709 passed on September 1, 1992, as
amended by Ordinance No. 2879 passed on August 15, 1995.
"1992 Bonds" means the City's Electric Revenue Bonds, Series 1992, issued in the
original principal amount of $2,920,000 pursuant to Ordinance No. 2709 passed on September 1,
1992.
"1995 Bond Ordinance" means Ordinance No. 2877 passed on August 1, 1995, as
amended by Ordinance No. 2879 passed on August 15, 1995.
"1995 Bonds" means the City's Electric Revenue Bonds, Series 1995, issued in the
original principal amount of $2,760,000 pursuant to Ordinance No. 2877 passed on August 1,
1995, as amended by Ordinance No. 2879 passed on August 15, 1995.
"2001 Bonds" means the $2,560,000 principal amount of the City's Electric Revenue
Refunding Bonds, Series 2001, authorized to be issued by this ordinance.
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"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," as used in Articles XI and XII hereof, means Ordinance Nos. 2709, 2877,
2879, this ordinance, and any Supplemental Ordinance.
"Paying Agent" or "Paying Agents" means the Bond Registrar, with respect to the
2001 Bonds, and the paying agent for each other series of outstanding Bonds.
"Permitted Investments" means the following, to the extent that the same are legal for
investment of funds of the City:
A. The Insurer will allow the following obligations to be used as Permitted
Investments for all purposes, including defeasance investments in the refunding escrow accounts.
(The Insurer does not give a premium credit for the investment of accrued and/or
capitalized interest).
(1)
Cash (insured at all times by the Federal Deposit Insurance Corporation.
(2) Obligations of, or obligations guaranteed as to principal and interest by,
the U.S. or any agency or instrumentality thereof, when such obligations are backed by the full
faith and credit of the U.S. including:
• U.S. Treasury obligations
• All direct or fully guaranteed obligations
• Farmers Home Administration
• General Services Administration
• Guaranteed Title XI financing
• Government National Mortgage Association (GNMA)
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• State and Local Government Series
(3) Obligations of Government- Sponsored Agencies that are not backed by
the full faith and credit of the U.S. Government:
• Federal Home Loan Mortgage Corp. (FHLMC) Debt obligations
• Farm Credit System (formerly: Federal Land Banks, Federal Intermediate
Credit Banks, and Banks for Cooperatives)
• Federal Home Loan Banks (FHL Banks)
• Federal National Mortgage Association (FNMA) Debt obligations
• Financing Corp. (FICO) Debt obligations
• Resolution Funding Corp. (REFCORP) Debt obligations
• U.S. Agency for International Development (U.S.A.I.D.) Guaranteed notes
Any security used for defeasance must provide for the timely payment of principal and
interest and cannot be callable or prepayable prior to maturity or earlier redemption of the rated
debt (excluding securities that do not have a fixed par value and/or whose terms do not promise a
fixed dollar amount at maturity or call date).
U.S.A.I.D. securities must mature at least four business days before the appropriate
payment date.
B. The Insurer will allow the following Obligations to be used as Permitted
Investments for all purposes other than defeasance investments in refunding escrow accounts.
(1) Obligations of any of the following federal agencies which obligations
represent the full faith and credit of the United States of America, including:
• Export-Import Bank
• Rural Economic Community Development Administration
• U.S. Maritime Administration
• Small Business Administration
• U.S. Department of Housing & Urban Development (PHAs)
• Federal Housing Administration
• Federal Financing Bank;
(2). Direct obligations of any of the following federal agencies which
obligations are not fully guaranteed by the full faith and credit of the United States of America:
• Senior debt obligations issued by the Federal National Mortgage
Association (FNMA) or Federal Home Loan Mortgage Corporation
(FHLMC).
• . Obligations of the Resolution Funding Corporation (REFCORP)
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• Senior debt obligations of the Federal Home Loan Bank System
• Senior debt . obligations of other Government Sponsored Agencies
approved by Ambac
(3) U.S. dollar denominated deposit accounts, federal funds and bankers'
acceptances with domestic commercial banks which have a rating on their short term certificates
of deposit on the date of purchase of "P -1" by Moody's and "A -1" or "A -1 +" by S &P and
maturing no more than 360 calendar days after the date of purchase. (Ratings on holding
companies are not considered as the rating of the bank);
(4) Commercial paper which is rated at the time of purchase in the single
highest classification, "P -1" by Moody's and "A -1 +" by S &P and which matures not more than
270 days after the date of purchase;
(5)
better by S &P;
Investments in a money market fund rated "AAAm" or "AAAm -G" or
(6) Pre - refunded Municipal Obligations defined as follows: any bonds or
other obligations of any state of the United States of America or of any agency, instrumentality
or local governmental unit of any such state which are not callable at the option of the obligor
prior to maturity or as to which irrevocable instructions have been given by the obligor to -call on
the date specified in the notice; and
(A) which are rated, based on an irrevocable escrow account or fund
(the "escrow "), in the highest rating category of Moody's and S &P or any successors thereto; or
(B) (i) which are fully secured as to principal and interest and
redemption premium, if any, by an escrow consisting only of cash or obligations described in
paragraph A(2) above, which escrow may be applied only to the payment of such principal of
and interest and redemption premium, if any, on such bonds or other obligations on the maturity
date or dates thereof or the specified redemption date or dates pursuant to such irrevocable
instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally
recognized independent certified public accountant, to pay principal of and interest and
redemption premium, if any, on the bonds or other obligations described in this paragraph on the
maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;
(7) Municipal obligations rated "Aaa1AAA" or general obligations of States
with a rating of "A2 /A" or higher or both Moody's and S &P;
(8) Investment agreements approved in writing by the Insurer supported by
appropriate opinions of counsel; and
(9) Other forms of investments (including repurchase agreements) approved in
writing by the Insurer.
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C. The value of the above investments shall be determined as follows:
a) For the purpose of determining the amount in any fund, all Permitted
Investments credited to such fund shall be valued at fair market value. The City shall determine
the fair market value based on accepted industry standards and from accepted industry providers.
Accepted industry providers shall include but are not limited to pricing services provided by
Financial Times Interactive Data Corporation, Merrill Lynch, Salomon Smith Barney, Bear
Stearns, or Lehman Brothers;
b) As to certificates of deposit and bankers' acceptances: the face amount
thereof, plus accrued interest thereon;
c) As to any investment not specified above: the value thereof established by
prior agreement between the City and the Insurer; and
d) Any investment or investment agreement permitted for funds of the City
under the laws of the State of Washington, as amended from time to time, which are approved by
Insurer, if such corporation is then the insurer of the 2001 Bonds, and by such other entities, 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.
"Refunded Bonds" means the 1992 Bonds maturing on and after September 1, 2003.
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"Refunding Account" means the City of Port Angeles 2001 Electric Revenue Refunding
Account authorized to be created and held by the Escrow Agent pursuant to 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:
(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 2001
Bonds shall be October 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 2001 Bonds
maturing on September 1, 2016, and September 1, 2022, shall be deemed "2001 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 indicate. Reference to
Articles, Sections and other subdivisions of this ordinance are to the Articles, Sections and other
subdivisions of this ordinance as originally adopted unless expressly 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.
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ARTICLE II
FINDINGS AND DETERMINATIONS
Section 2.1. Parity Conditions.
The 1992 and 1995 Bond Ordinances provide that the City may issue a series of
Additional Bonds payable from the Bond Fund on a parity with the 1992 Bonds and the 1995
Bonds upon compliance with certain conditions. The Council hereby finds, as required by the
1992 and 1995 Bond Ordinances, as follows:
(i) The 2001 Bonds are being issued to refund the Refunded Bonds, and the proceeds
of the 2001 Bonds, together with other funds of the City, if necessary, and the principal of and
the interest on the investment of such proceeds or any such funds, shall be sufficient to pay the
principal of and the redemption premium, if any, on the Refunded Bonds to be refunded and the
interest that will become due and payable on or prior to the date of their payment or redemption,
and the expenses incident to the issuance of the 2001 Bonds.
(ii) Prior to delivery of the 2001 Bonds, there shall be filed with the City a certificate
signed by the City's Finance Director 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 2001
Bonds.
The Additional Bonds tests of the. 1992 and 1995 Bond Ordinances having been complied
with or assured, the lien and charge on Revenues for the payment of the principal of and interest
on the 2001 Bonds shall be equal to the lien and charge thereon for the payment of principal of
and interest on the 1992 Bonds and the 1995 Bonds.
Section 2.2. 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 unrefunded 1992 Bonds, the 1995
Bonds and the 2001 Bonds as the same become due and payable.
Section 2.3. 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 2001 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.
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ARTICLE III
AUTHORIZATION AND ISSUANCE OF BONDS
Section 3.L Authorization of 2001 Bonds.
For the purpose of refunding the Refunded Bonds and paying the costs of issuing the
2001 Bonds, there are hereby authorized to be issued $2,560,000 aggregate principal amount of
Electric Revenue Refunding Bonds, Series 2001 (the "2001 Bonds "), which shall be dated
November 1, 2001, shall bear interest from their date at such rates per annum and shall mature on
September 1 of such years and in such amounts as follows:
Year Amount Interest Rate
2002 $ 30,000 2.40%
2003 85,000 2.50
2004 90,000 2.85
2005 95,000 3.15
2006 95,000 3.40
2007 100,000 3.60
2008 100,000 3.85
2009 100,000 3.95
2010 110,000 4.05
2016* 750,000 4.70
2022* 1,005,000 4.90
* Term Bonds
The 2001 Bonds shall be fully registered as to both principal and interest, shall be in
denominations of $5,000 or any integral multiple thereof, provided that no 2001 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 on the 2001 Bonds shall be payable semiannually on March 1 and September 1 of each
year, beginning March 1, 2002.
Section 3.2. Registration, Exchange and Payments.
A. Bond Registrar /Bond Register. The City hereby specifies and adopts the system
of registration and transfer for the 2001 Bonds approved by the Washington State Finance
Committee from time to time through the appointment of state fiscal agencies. The City shall
cause a bond register to be maintained by the Bond Registrar. So long as any 2001 Bonds
remain outstanding, the Bond Registrar shall make all necessary provisions to permit the
exchange or registration of transfer of 2001 Bonds at its principal corporate trust office. The
Bond Registrar may be removed at any time at the option of the City upon prior notice to the
Bond Registrar, DTC, the Insurer, each NRMSIR and SID, if any, and a successor Bond
Registrar appointed by the City. No resignation or removal of the Bond Registrar shall be
effective until a successor shall have been appointed and until the successor Bond Registrar shall
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have accepted the duties of the Bond Registrar hereunder. The Bond Registrar is authorized, on
behalf of the City, to authenticate and deliver 2001 Bonds transferred or exchanged in
accordance with the provisions of such 2001 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 2001
Bonds.
B. Registered Ownership. The City and the Bond Registrar, each in its discretion,
may deem and treat the Registered Owner of each 2001 Bond as the absolute owner thereof for
all purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the
contrary. Payment of any such 2001 Bond shall be made only as described in Section 3.2.H
hereof, but such 2001 Bond may be transferred as herein provided. All such payments made as
described in Section 3.2.H shall be valid and shall satisfy and discharge the liability of the City
upon such 2001 Bond to the extent of the amount or amounts so paid.
C. DTC Acceptance /Letter of Representations. To induce DTC to accept the 2001
Bonds as eligible for deposit at DTC, the City will execute and deliver to DTC a Letter of
Representations.
Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC
participants or the persons for whom they act as nominees (or any successor depository) with
respect to the 2001 Bonds in respect of the accuracy of any records maintained by DTC (or any
successor depository) or any DTC participant, the payment by DTC (or any successor
depository) or any DTC participant of any amount in respect of the principal of or interest on
2001 Bonds, any notice that is permitted or required to be given to Registered Owners under this
ordinance (except such notices as shall be required to be given by the City to the Bond Registrar
or to DTC (or any successor depository)), or any consent given or other action taken by DTC (or
any successor depository) as the Registered Owner. For so long as any 2001 Bonds are held in
fully- immobilized form hereunder, DTC or its successor depository shall be deemed to be the
Registered Owner for all purposes hereunder, and all references herein to the Registered Owners
shall mean DTC (or any successor depository) or its nominee and shall not mean the owners of
any beneficial interest in such 2001 Bonds.
If any 2001 Bond shall be duly presented for payment and funds have not been duly
provided by the City on such applicable date, then interest shall continue to accrue thereafter on
the unpaid principal thereof at the rate stated on such 2001 Bond until such 2001 Bond is paid.
D. Use of Depository. (i) The 2001 Bonds shall be registered initially in the name of
"CEDE & Co. ", as nominee of DTC, with one 2001 Bond maturing on each of the maturity dates
for the 2001 Bonds in a denomination corresponding to the total principal therein designated to
mature on such date. Registered ownership of such immobilized 2001 Bonds, or any portions
thereof, may not thereafter be transferred except (A) to any successor of DTC or its nominee,
provided that any such successor shall be qualified under any applicable laws to provide the
service proposed to be provided by it; (B) to any substitute depository appointed by the Council
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pursuant to subsection (ii) below or such substitute depository's successor; or (C) to any person
as provided in subsection (iv) below.
(ii) Upon the resignation of DTC or its successor (or any substitute depository
or its successor) from its functions as depository or a determination by the Council to discontinue
the system of book entry transfers through DTC or its successor (or any substitute depository or
its successor), the Council may hereafter appoint a substitute depository. Any such substitute
depository shall be qualified under any applicable laws to provide the services proposed to be
provided by it.
(iii) In the case of any transfer pursuant to clause (A) or (B) of subsection (i)
above, the Bond Registrar shall, upon receipt of all outstanding 2001 Bonds, together with a
written request on behalf of the Council, issue a single new 2001 Bond for each maturity then
outstanding, registered in the name of such successor or such substitute depository, or their
nominees, as the case may be, all as specified in such written request of the Council.
(iv) In the event that (A) DTC or its successor (or substitute depository or its
successor) resigns from its functions as depository, and no substitute depository can be obtained,
or (B) the Council determines that it is in the best interest of the beneficial owners of the' 2001
Bonds that such owners be able to obtain such bonds in the form of bond certificates,' the
ownership of such 2001 Bonds may then be transferred to any person or entity as ,herein
provided, and shall no longer be held in fully- immobilized form. The Council shall deliver a
written request to the Bond Registrar, together with a supply of definitive 2001 Bonds, to issue
2001 Bonds as herein provided in any authorized denomination. Upon receipt by the Bond
Registrar of all then outstanding 2001 Bonds together with a written request on behalf of the
Council to the Bond Registrar, new 2001 Bonds shall be issued in the appropriate denominations
and registered in the names of such persons as are requested in such written request.
E. Registration of Transfer of Ownership or Exchange; Change in Denominations.
The transfer of any 2001 Bond may be registered and 2001 Bonds may be exchanged, but no
transfer of any such 2001 Bond shall be valid unless such 2001 Bond is surrendered to the Bond
Registrar with the assignment form appearing on such 2001 Bond duly executed by the
Registered Owner or such Registered Owner's duly authorized agent in a manner satisfactory to
the Bond Registrar. Upon such surrender, the Bond Registrar shall cancel the surrendered 2001
Bond and shall authenticate and deliver, without charge to the' Registered Owner or transferee
therefor, a new 2001 Bond (or 2001 Bonds at the option of the new Registered Owner) of the
same date, maturity and interest rate and for the same aggregate principal amount in any
authorized denomination, naming as Registered Owner the person or persons listed as the
assignee on the assignment form appearing on the surrendered 2001 Bond, in exchange for such
surrendered and cancelled 2001 Bond. Any 2001 Bond may be surrendered to the Bond
Registrar and exchanged, without charge, for an equal aggregate principal amount of 2001 Bonds
of the same date, maturity and interest rate, in any authorized denomination. The Bond Registrar
shall not be obligated to register the transfer or to exchange any 2001 Bond during the 15 days
preceding the date any such 2001 Bond is to be redeemed.
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F. Bond Registrar's Ownership of 2001 Bonds. The Bond Registrar may become the
Registered Owner of any 2001 Bond 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 member of, or in any other capacity with respect to, any committee
formed to protect the right of the Registered Owners of 2001 Bonds.
G. Registration Covenant. The City covenants that, until all 2001 Bonds have been
surrendered and cancelled, it will maintain a system for recording the ownership of each 2001
Bond that complies with the provisions of Section 149 of the Code.
H. Place and Medium of Payment. The principal of and interest on the 2001 Bonds
shall be payable in lawful money of the United States of America. Interest on the 2001 Bonds
shall be calculated on the basis of a 360 -day year and twelve 30 -day months. For so long as all
2001 Bonds are in fully- immobilized form, such payments of principal and interest thereon shall
be made as provided in the operational arrangements of DTC as referred to in the Letter of
Representations.
In the event that the 2001 Bonds are no longer in fully- immobilized form, interest on the
2001 Bonds shall be paid by check or draft mailed to the Registered Owners of the 2001 Bonds
at the addresses for such Registered Owners appearing on the Bond Register on the 15th day of
the month preceding the interest payment date. Principal of the 2001 Bonds shall be payable
upon presentation and surrender of such 2001 Bonds by the Registered Owners at the principal
office of the Bond Registrar.
Section 3.3. Redemption of 2001 Bonds.
A. Optional Redemption. The 2001 Bonds maturing in years 2002 through 2011 are
not subject to redemption prior to maturity. The 2001 Bonds maturing on and after September 1,
2012 are subject to redemption prior to maturity, at the option of the City, on or after
September 1, 2011, in whole or in part on any date (maturities to be selected by the City), at a
price of par plus interest accrued thereon to the date fixed for redemption.
B. Mandatory Redemption. The 2001 Bonds maturing on September 1, 2016, shall
be redeemed prior to maturity by lot (or purchased or paid at maturity), not later than
September 1 in the years 2011 through 2016, 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 2001 Bonds as provided in this
ordinance) and in the principal amounts as set forth below, upon written notice as provided in
Section 3.5 of this ordinance, by payment of the principal amount thereof, together with the
interest accrued thereon to the date fixed for redemption.
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Year Amount
2011 $ 115,000
2012 115,000
2013 120,000
2014 130,000
2015 130,000
2016 140,000
The 2001 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 2017 through 2022,
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 2001 Bonds as provided in this ordinance) and in the principal amounts as set forth below,
upon written notice as provided in Section 3.5 of this ordinance, by payment of the principal
amount thereof, together with the interest accrued thereon to the date fixed for redemption.
Year Amount
2017 $ 150,000
2018 155,000
2019 165,000
2020 170,000
2021 175,000
2022 190,000
The foregoing amounts shall be deemed Sinking Fund Requirements for the 2001 Bonds
maturing on September 1, 2016 and September 1, 2022 (the "2001 Term Bonds ").
The City may purchase and redeem 2001 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 money not so used to purchase and redeem such 2001 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 2001 Term Bonds retired by purchase (through application of Sinking Fund
Requirements or any other legally available 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.
Section 3.4. Selection of 2001 Bonds for Redemption.
As long as the 2001 Bonds are held in book -entry only form, the selection of 2001 Bonds
to be redeemed shall be made in accordance with the operational arrangements in effect at DTC.
If the 2001 Bonds are no longer held in uncertificated form, the selection of such 2001 Bonds to
be redeemed shall be made as provided in this Section 3.4. If the City redeems at any one time
fewer than all of the 2001 Bonds having the same maturity date, the particular 2001 Bonds or
portions of 2001 Bonds of such maturity to be redeemed shall be selected by lot (in such other
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manner determined by the Bond Registrar) in increments of $5,000. In the case of a 2001 Bond
of a denomination greater than $5,000, the City and Bond Registrar shall treat each 2001 Bond as
representing such number of separate 2001 Bonds each of the denomination of $5,000 as is
obtained by dividing the actual principal amount of such 2001 Bond by $5,000. In the event that
only a portion of the principal sum of a 2001 Bond is redeemed, upon surrender of the such 2001
Bond at the principal office of the Bond Registrar there shall be issued to the Registered Owner,
without charge therefor, for the then unredeemed balance of the principal sum thereof, at the
option of the Registered Owner, a 2001 Bond or 2001 Bonds of like maturity and interest rate in
any of the denominations herein authorized. If 2001 Bonds are called for redemption, portions of
the principal amount of such 2001 Bonds, in installments of $5,000 or any integral multiple of
$5,000, may be redeemed. If less than all of the principal amount of any 2001 Bond is redeemed,
upon surrender of such 2001 Bond at the principal office of the Bond Registrar there shall be
issued to the registered owner, without charge therefor, for the then unredeemed balance of the
principal amount thereof, a new 2001 Bond or 2001 Bonds, at the option of the Registered
Owner, of like maturity and interest rate in any denomination authorized by this ordinance.
Section 3.5. Notice of Redemption.
A. Official Notice. Unless waived by any owner of 2001 Bonds to be redeemed, . .
official notice of any such redemption shall be given by the Bond Registrar on behalf of the City
by mailing a copy of an official redemption notice by first class mail at least 30 days and not
more than 60 days prior to the date fixed for redemption to the Registered Owner of the 2001
Bond or 2001 Bonds to be redeemed at the address shown on the Bond Register or at such other
address as is furnished in writing by such registered owner to the Bond Registrar.
All official notices of redemption shall be dated and shall state:
(A) the redemption date,
(B) the redemption price,
(C) if fewer than all outstanding 2001 Bonds are to be redeemed, the
identification by series and maturity (and, in the case of partial redemption, the respective
principal amounts) of the 2001 Bonds to be redeemed,
(D) that on the redemption date the redemption price will become due and
payable upon each such 2001 Bond or portion thereof called for redemption, and that interest
thereon shall cease to accrue from and after said date, and
(E) the place where such 2001 Bonds are to be surrendered for payment of the
redemption price, which place of payment shall be the principal office of the Bond Registrar.
On or prior to any redemption date, the City shall deposit with the Bond Registrar an
amount of money sufficient to pay the redemption price of all the 2001 Bonds or portions of
2001 Bonds that are to be redeemed on that date.
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B. Effect of Notice; 2001 Bonds Due. Official notice of redemption having been
given as aforesaid, the 2001 Bonds or portions of 2001 Bonds so to be redeemed shall, on the
redemption date, become due and payable at the redemption price therein specified, and from and
after such date (unless the City shall default in the payment of the redemption price) such 2001
Bonds or portions of 2001 Bonds shall cease to bear interest. Upon surrender of such 2001
Bonds for redemption in accordance with said notice, such 2001 Bonds shall be paid by the Bond
Registrar at the redemption price. Installments of interest due on or prior to the redemption date
shall be payable as herein provided for payment of interest: Upon surrender for any partial
redemption of any 2001 Bond, there shall be prepared for the Registered Owner a new 2001
Bond or 2001 Bonds of the same maturity in the amount of the unpaid principal. All 2001 Bonds
which have been redeemed shall be canceled and destroyed by the Bond Registrar and shall not
be reissued.
C. Additional Notice. 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. Each further notice of redemption
given hereunder shall contain the information required above for an official notice of redemption
plus (A) the CUSIP numbers of all 2001 Bonds being redeemed; (B) the date of issue of the'2001
Bonds as originally issued; (C) the rate of interest borne by each 2001 Bond being redeemed;
(D) the maturity date of each 2001 Bond being redeemed; and (E) any other descriptive
information needed to identify accurately the 2001 Bonds being redeemed. Each further notice
of redemption may be sent at least 30 days before the redemption date to the Insurer, each
NRMSIR, the SID, if any, and to the Underwriter or to its business successor, if any, and to such
persons and with such additional information as the Bond Registrar shall deem appropriate, but
such mailings shall not be a condition precedent to the redemption of such 2001 Bonds.
D. Redemption Payments. Upon the payment of the redemption price of 2001 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 2001 Bonds being redeemed with the
proceeds of such check or other transfer.
E. Amendment of Notice Provisions. The foregoing notice provisions of this
Section 4, including but not limited to the information to be included in 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 3.6. Purchase of 2001 Bonds.
The City also reserves the right to purchase any of the 2001 Bonds offered to the City at
any time at a price deemed reasonable by the City.
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ARTICLE IV
ISSUANCE OF ADDITIONAL BONDS
Section 4.1. Authorization of Series 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 project 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 6.2.0 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 payable, 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 ordinance), shall be numbered, shall have such Paying
Agents, and any Term Bonds of such series shall have such amortization requirements, 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 %;
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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.H;
(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 (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 Facilities 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 (i) shall comply with the requirements of paragraph C above or (ii)
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;
provided, however, that the principal amount of such Additional Bonds may not exceed 15% of
the principal amount of the Bonds theretofore issued for such facilities.
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 subsection 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 money that has been made available for such purposes, and the
principal of and the interest on the investment of such proceeds or any such money, shall be
sufficient 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 redemption, 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,
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(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:
(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 certificate 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 Sections 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
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within 12 months 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 to be received from
residences and businesses that are in existence as of the date of issuance of such
Additional Bonds and that are expected to connect to the Electric System 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.
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.
ARTICLE V
GENERAL TERMS AND PROVISIONS OF BONDS
Section 5.1. Execution of 2001 Bonds.
The 2001 Bonds shall be executed on behalf of the City with the manual or facsimile
signature of the Mayor, attested by the manual or facsimile signature of the City Clerk, and shall
have the seal of the City impressed, imprinted or otherwise reproduced thereon. In case either or
both of the officers who have signed or attested any of the 2001 Bonds cease to be such officer
before such 2001 Bonds have been actually issued and delivered, such 2001 Bonds shall be valid
nevertheless and may be issued by the City with the same effect as though the persons who had
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signed or attested such 2001 Bonds had not ceased to be such officers, and any 2001 Bond may
be signed or attested on behalf of the City by officers who at the date of actual execution of such
2001 Bond are the proper officers, although at the nominal date of execution of such 2001 Bond
such officer was not an officer of the City.
Only 2001 Bonds that bear a Certificate of Authentication in the form set forth in
Section 8, 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 2001 Bonds so authenticated have been duly executed, authenticated
and delivered and are entitled to the benefits of this ordinance.
Section 5.2. Lost, Stolen, Destroyed or Mutilated Bonds.
In case any 2001 Bond shall be lost, stolen or destroyed, the Bond Registrar may
authenticate and deliver a new 2001 Bond or 2001 Bonds of like amount, date, and tenor to the
Registered Owner thereof upon such Registered Owner paying the expenses and charges of the
City and the Bond Registrar in connection therewith and upon his or her filing with the Bond
Registrar evidence satisfactory to the Bond Registrar that such 2001 Bond or 2001 Bonds were
actually lost, stolen or destroyed and of his or her ownership thereof, and upon furnishing the
City and the Bond Registrar with indemnity satisfactory to the Finance Director or his designee
and the Bond Registrar.
Section 5.3. Temporary Bonds.
The 2001 Bonds may be initially issued in temporary form exchangeable for definitive
2001 Bonds when ready for delivery. The temporary 2001 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 2001 Bond shall be executed by the City upon the same conditions and in
substantially the same manner as the definitive 2001 Bonds. If the City issues temporary 2001
Bonds, it will execute and furnish definitive 2001 Bonds without delay, and thereupon the
temporary 2001 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 2001 Bonds
so surrendered an equal aggregate principal amount of definitive 2001 Bonds of like principal
amount and in authorized denominations of the same maturity or maturities and interest rate or
rates. Until so exchanged, the temporary 2001 Bonds shall be entitled to the same benefits under
this ordinance as definitive 2001 Bonds.
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ARTICLE VI
CREATION OF SPECIAL FUNDS AND ACCOUNTS
AND PAYMENTS THEREFROM
Section 6.1. Light Fund .
A. A special fund of the City has heretofore been created pursuant to Ordinance
No. 250 passed 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 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 2001 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 money 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.
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(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 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 subsections (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. Money in the Contingency and Replacement Account shall be used from time to
time to make up any deficiencies in the Reserve Account, and such money in the Contingency
and Replacement Account is hereby pledged as additional payment to the Bond Fund to the
extent required for any such deficiencies. Money 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.
Money in the Rate Stabilization Account may be used for any lawful purpose. Money in
the Rate Stabilization Account shall be used from time to time to make up any deficiencies in the
Bond Fund, and such money in the Rate Stabilization Account is hereby pledged as additional
payments to the Bond Fund to the extent required for any such deficiencies.
Nothing contained in this Section 6.1 shall be construed to require the deposit into the
Light Fund of any of the revenues, income, receipts or other money of the City derived by the
City through the ownership or operation of any separate utility system hereafter created or
established from funds other than the proceeds of Bonds.
Section 6.2. Bond Fund.
Pursuant to Ordinance No. 2709, a special fund of the City has heretofore been created
and designated the "Electric System Revenue Bond Fund" (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
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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 money 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 money which may legally be available therefor, shall be as follows
and in the following order of priority, to wit:
A. There has been 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 suchdate be
equal to the installment of interest then falling due on all Bonds then outstanding.
B. There has been 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
are equal in priority:
(i) The Bond Principal Account, for the purpose of paying outstanding Serial
Bonds as they mature (the "Principal 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
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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 money 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 money 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 money 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 principal 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 2001' 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 Sinking Fund Requirement for
the 2001 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 has been created a "Bond Reserve Account" in the Bond Fund (the
"Reserve Account "). Upon the issuance of the 2001 Bonds, the City shall deposit in the Reserve
Account an amount equal to Average Annual Debt Service for the 2001 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 money 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 money 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 money and value of Permitted Investments in
the Reserve Account shall be determined as of the last business day of each Fiscal Year and
maintained 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
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of money 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 money and value of Permitted Investments in the Reserve Account shall
exceed the amount of money 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 6.2.C, the
value of Permitted Investments shall be computed as follows: (a) the value of 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 6.2, to the extent that such
payments are made from Bond proceeds, from money in any capitalized interest account, or from
other money that 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 6.2.0 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 Rating Services. 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 6.2,
to the extent that the City has obtained Qualified Insurance or a Qualified Letter of Credit for
specific amounts required pursuant to this section to be paid out of the Reserve Account, such
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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 6.2.0 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 6.2.0 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 money in the Light Fund available after making
provision first for payment of Operating Expenses and then for the required payments into such
Interest, Principal and Bond Retirement Accounts.
Money 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 money 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 money remaining in the Bond Fund after provision for the payment in full of the
principal 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. Money 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 money 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.
Section 6.3. Investment of Funds.
Money held for the credit of the Interest Account, Principal 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 obligations 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
money held for the credit of such Accounts will be required for the purposes intended. Money 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
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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).
Money in the Light Fund 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 money in the Bond Fund and the Light Fund shall be from time
to time deposited in the Light Fund.
All money 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 money 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 VII
PLAN OF REFUNDING
Section 7.1. Refunding Account.
There is hereby authorized to be created in the Bond Fund an account known as the "City
of Port Angeles 2001 Electric Revenue Refunding Account" (the "Refunding Account "), which
Account is to be held by the Escrow Agent and drawn upon for the sole purpose of paying the
principal of and interest on the Refunded Bonds until their date of redemption and of paying
costs related to the refunding of the Refunded Bonds.
The proceeds of sale of the 2001 Bonds (exclusive of accrued interest thereon, which
shall be paid into the Bond Fund and used to pay interest on the Bonds on March 1, 2002) shall
be credited to the Refunding Account and, together with other funds of the City, if necessary,
shall be used immediately upon receipt thereof to defease the Refunded Bonds as authorized by
the 1992 Bond Ordinance and pay costs of issuance. The City shall defease the Refunded Bonds
and discharge such obligations by the use of money in the Refunding Account to purchase
certain Government Obligations (which obligations so purchased, are herein called "Acquired
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Obligations "), bearing such interest and maturing as to principal and interest in such amounts and
at such times that, together with any necessary beginning cash balance, will provide for the
payment of:
(i) interest on the Refunded 1992 Bonds as it becomes due and payable
through and including September 1, 2002; and
(ii) the redemption price (100% of the principal amount thereof) of the
Refunded 1992 Bonds on September 1, 2002.
Such Acquired Obligations shall be purchased at a yield not greater than the yield
permitted by the Code and regulations relating to acquired obligations in connection with
refunding bond issues.
The City hereby appoints the corporate trust department of U.S. Bank Trust National
Association, Seattle, Washington as the Escrow Agent for the Refunded Bonds (the "Escrow
Agent "). A beginning cash balance, if any, and Acquired Obligations shall be deposited
irrevocably with the Escrow Agent in an amount sufficient to defease the Refunded Bonds. The
proceeds of the Bonds remaining in the Refunding Account after acquisition of the Acquired
Obligations and provision for the necessary beginning cash balance shall be utilized to pay
expenses of the acquisition and safekeeping of the Acquired Obligations and expenses of the
issuance of the Bonds. The City may, from time to time, transfer, or cause to be transferred,
from the Refunding Account any money not thereafter required for the purposes set forth in
subparagraphs (i) — (ii) above, subject to verification in writing by an independent certified
public accountant that such transfer will not result in inadequate funds being available to make
the required payments therefrom. The City reserves the right to substitute other securities for the
Acquired Obligations in the event it may do so pursuant to Section 148 of the Code and
applicable regulations thereunder, upon compliance with the conditions set forth in the Escrow
Agreement.
Section 7.2. Call for Redemption of Refunded Bonds.
The City hereby irrevocably sets aside sufficient funds out of the purchase of Acquired
Obligations from proceeds of the Bonds to make the payments described in
Subsection (a)(i) - (ii) of Section 7.1. The City hereby irrevocably calls the Refunded Bonds for
redemption on September 1, 2002 in accordance with the applicable provisions of the 1992 Bond
Ordinance.
The defeasance and call for redemption of the Refunded Bonds shall be irrevocable after
the final establishment of the Refunding Account and delivery of *_he Acquired Obligations and
the requisite cash deposit, if any, to the Escrow Agent, except as provided herein relating to the
substitution of securities.
The Escrow Agent is hereby authorized and directed to provide for the giving of notices
of the redemption of the Refunded Bonds in accordance with the applicable provisions of the
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1992 Bond Ordinance. The City is authorized and requested to provide whatever assistance is
necessary to accomplish such redemption and the giving of notices therefor. The costs of
publication of such notices shall be an expense of the City.
The Escrow Agent is hereby authorized and directed to pay to the fiscal agency or
agencies of the State of Washington, sums sufficient to pay, when due, the payments specified in
of subsections (i) - (ii) of Section 7.1 of this ordinance. All such sums shall be paid from the
money and Acquired Obligations deposited with said Escrow Agent pursuant to the previous
section of this ordinance, and the income therefrom and proceeds thereof.
The City will take such actions as are found necessary to see that all necessary and proper
fees and expenses of the Escrow Agent shall be paid when due. The proper officers and agents
of the City are directed to obtain from the Escrow Agent an agreement setting forth the duties,
obligations and responsibilities of the Escrow Agent in connection with the redemption and
retirement of the Refunded Bonds as provided herein and setting forth such provisions for the
payment of the Escrow Agent as are satisfactory to it. The Finance Director is authorized and
directed to execute and deliver to the Escrow Agent an escrow agreement in form satisfactory to
the Escrow Agent and approved by counsel to the City.
Section 7.3. Finding of Savings and Defeasance.
The Council hereby finds that the issuance and sale of the 2001 Bonds at this time will
effect a savings to the City and its taxpayers. In making such finding and determination, the
Council has given consideration to the interest on and the fixed maturities of the 2001 Bonds and
the Refunded Bonds, the costs of issuance of the 2001 Bonds and the known earned income from
the investment of the proceeds of sale of the 2001 Bonds pending redemption and payment of the
Refunded Bonds.
The Council also finds that the Acquired Obligations to be deposited with the Escrow
Agent and the income therefrom, together with any necessary beginning cash balance, are
sufficient to redeem the Refunded Bonds and will discharge and satisfy the obligations of the
City under the 1992 Bond Ordinance. Immediately upon the delivery of such Acquired
Obligations to the Escrow Agent and the deposit of any necessary beginning cash balance, the
Refunded Bonds shall be deemed not to be outstanding under the 1992 Bond Ordinance and shall
cease to be entitled to any lien, benefit or security under such ordinance except the right to
receive payment from the Acquired Obligations and beginning cash balance so set aside and
pledged.
ARTICLE VIII
FORM OF 2001 BONDS
Section 8.1. Form of 2001 Bonds.
The 2001 Bonds shall be in substantially the following form:
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UNITED STATES OF AMERICA
STATE OF WASHINGTON
CITY OF PORT ANGELES, WASHINGTON
ELECTRIC REVENUE REFUNDING BOND, SERIES 2001
INTEREST RATE: MATURITY DATE: CUSIP NO.:
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The City of Port Angeles, Washington (the "City "), hereby acknowledges itself to owe
and for value received promises to pay to the Registered Owner identified above, or registered
assigns, on the Maturity Date identified above, the Principal Amount indicated above and to pay
interest thereon from November 1, 2001, or the most recent date to which interest has been paid
or duly provided for until payment of this bond at the Interest Rate set forth above, payable on
the first days of each March and September, commencing on March 1, 2002. Both principal of
and interest on this bond are payable in lawful money of the United States of America. For so
long as the bonds of this issue are held in fully immobilized form, payments of principal and
interest thereon shall be made as provided in accordance with the operational arrangements of
DTC referred to in the Blanket Issuer Letter of Representations from the City to DTC.
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. 2709, passed on September 1, 1992.
This bond is one of a duly authorized series of bonds aggregating $2,650,000 in principal
amount and designated as "Electric System Revenue Refunding Bonds, Series 2001" (the
"Bonds "). The Bonds are issued under and pursuant to Ordinance No. 3100, passed on
October 16, 2001 (the "Bond Ordinance "), and under the authority of and in full compliance with
the Constitution and laws of the State of Washington. Unless otherwise defined on this Bond,
capitalized terms used herein shall have the meanings given them in the Bond Ordinance.
The Bonds are issued for the purpose of refunding certain outstanding electric revenue
bonds of the City. 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 the Bond Registrar, 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 arid 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 money or certain
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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 the 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.
The City has covenanted 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 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 necessary repairs thereto
and replacements and renewals thereof.
The Bonds are subject to optional and mandatory redemption in accordance with 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.
This bond shall not be valid or become obligatory for any purpose or be entitled to any
security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall
have been manually signed by the Bond Registrar.
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.
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IN WITNESS WHEREOF, the City of Port Angeles, Washington, has caused this bond
to be executed by the manual or facsimile signature of its Mayor and attested by the manual or
facsimile signature of the City Clerk, and the seal of the City to be imprinted or reproduced
hereon, all as of the 1st day of November, 2001.
(SEAL)
Attest:
• /s/
City Clerk
Date of Authentication:
CITY OF PORT ANGELES,
WASHINGTON
CERTIFICATE OF AUTHENTICATION
/s/
Mayor
This is one of the Electric Revenue Refunding Bonds, Series 2001, of the City of Port
Angeles, Washington, dated November 1, 2001, as described in the Bond Ordinance.
WASHINGTON STATE FISCAL
AGENCY
Bond Registrar
By
Authorized Officer
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)
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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 Assignment
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 IX
COVENANTS TO SECURE BONDS
The City covenants and agrees with the purchasers and owners of all Bonds, so long as
any such Bonds are outstanding, as follows:
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 money 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 conditions set forth in this ordinance: (i) the Revenues, and (ii) the money and
investments, if any, credited to the Light Fund , the Construction Account and the Bond Fund,
and the income therefrom. The Revenues and other money 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.
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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 money and investments in such
funds and accounts, subject to provision for operating capital and to the payment of Operating
Expenses as provided in Section 6.1.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 money 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.
Section 9.2. Rate Covenant - General.
The City will establish, maintain and collect rates and charges for electric power and
energy and other services, facilities and commodities sold, furnished or supplied through the
facilities of the Electric System that shall be fair and nondiscriminatory 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 interest on the Bonds for which the payment
has not otherwise been provided, for all payments that 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,
assessments 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 that 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. F or 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.
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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 that 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
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 that 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
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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.
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 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 such sale, lease or other disposition shall exceed 2% of the value of
the net utility plant of the Electric System.
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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.
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 prescribed,
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
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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 electric 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 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 money 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 that are not economically sound and 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,
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and will faithfully do and perform and fully observe and keep any and all covenants,
undertakings, 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.
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; Special Designation.
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 2001 Bonds from federal income taxation.
The City hereby covenants that it will not make any use of the proceeds of sale of the
2001 Bonds or any other funds of the City that may be deemed to be proceeds of such 2001
Bonds pursuant to Section 148 of the federal Internal Revenue Code of 1986 and the applicable
regulations thereunder that will cause the 2001 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 2001 Bonds), and the applicable regulations thereunder throughout the term of the 2001
Bonds.
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The City further covenants that it will not take any action or permit any action to be taken
that would cause the 2001 Bonds to constitute "private activity bonds" under Section 141 of the
federal Internal Revenue Code of 1986, as amended.
The City hereby designates the 2001 Bonds as "qualified tax - exempt obligations" for
purchase by financial institutions pursuant to Section 265(b) of the Code. The City does not
anticipate that it will issue more than $10,000,000 in qualified tax- exempt obligations during the
year 2001.
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 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 Additional 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 that are not
contrary to or inconsistent with the limitations and restrictions thereon theretofore in effect;
(4) To surrender any right, power or privilege reserved 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 money, 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 ch rifying 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; or
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(7) 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
accordance 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 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
Ordinance Nos. 2709, 2877 and 2879, this ordinance, and any Supplemental Ordinances thereto
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 such ordinances will endanger the necessary
continuous operation of the Electric System and the application of the Revenues to the purposes
set forth in such ordinances. Ordinance Nos. 2709, 2877, 2879, 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 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;
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(4) If the City shall fail, by any Sinking Fund Requirement Date, to have
purchased or redeemed Tenn 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 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.
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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 principal amount ,of the
Bonds, 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.
Section 11.4. Suits 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 the 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 the 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
irrevocably 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
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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 trustee of an express trust, for all Revenues and
other money, securities and funds pledged under the Ordinance.
•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 Bondowners' Trustee, shall pay over to the Bondowners'
Trustee (i) forthwith, all money, securities and funds then held by the City and pledged under the
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 Bondowners' 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
the Ordinance.
In the event that at any time the funds held by the Bondowners' Trustee and the Paying
Agents 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 money 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
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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 dates, 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 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 the Ordinance, including the principal of, premium, if any, and accrued unpaid interest on
all Bonds then 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
Bondowners' Trustee shall be made for such payment, and all defaults under the 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 money, securities, funds and Revenues then
remaining unexpended in the hands of the Bondowners' Trustee and thereupon all Revenues
shall thereafter be applied as provided in the Ordinance. No such payment over to the City by
the Bondowners' Trustee or resumption of the application of Revenues as provided in the
Ordinance shall extend to or affect any subsequent default under the Ordinance or impair any
right consequent thereon.
Section 11.9. Suits by Individual Bondowners.
No owner of any one or more of the 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 appointed 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 that 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 the 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
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affect or impair the 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, New York, or in
the City of Seattle, 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 the Ordinance, any provision in the 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 the Ordinance
contained for publication of a notice or other matter shall require the publication thereof in The
Daily Bond Buyer in the City of New York, 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,
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, Washington.
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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 entitled 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 the
Ordinance to be signed or executed by Bondowners may be in any number of concurrent
instruments 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 the 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 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.
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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. Quorum 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
constitute 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 which is required to approve such amendment, may be
made by a Supplemental Ordinance of the City and a resolution 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 the 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 the 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
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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 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 competent 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
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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 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 provisions 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
the Ordinance provided for, and shall not be entitled to vote or consent or take any other action in
the Ordinance provided for.
Section 12.12. Endorsement of Amendment on Bonds.
Bonds delivered after the effective date of any action amending the 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 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.
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ARTICLE XIII
MISCELLANEOUS, DEFEASANCE; SALE OF BONDS
AND APPROVAL OF OFFICIAL STATEMENT
Section 13.1. 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 Washington, as amended and supplemented. In
consideration of the 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 13.2. 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.
Section 13.3. Money Held by Paying Agents One Year After Due Date.
Money 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
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earlier redemption, if such money were held by such Payment Agents at such date or for one year
after the date of deposit of such money 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 money shall
look only to the City for the payment of such Bonds.
Section 13.4. Sale of 2001 Bonds.
The Bonds shall be sold by negotiated sale to Seattle - Northwest Securities Corporation,
Seattle, Washington, under the terms and conditions thereof as provided in its purchase contract
and in this ordinance. The City Manager is hereby authorized to sign the purchase contract on
behalf of the City.
For purposes of the Rule, the preliminary Official Statement dated October 5, 2001 is
hereby deemed final as of its date except for the omission of information dependent upon the
pricing of the Bonds and the completion of the purchase contract. The City Manager and
Finance Director are hereby authorized to review and approve on behalf of the City the final
Official Statements relative to the Bonds with such additions and changes as may be deemed
necessary or advisable to them. The proper City officials are hereby authorized and directed to
do everything necessary for the prompt execution and delivery of the Bonds to said purchaser
and for the proper application and use of the proceeds of sale thereof.
Section 13.5. Undertaking to Provide Ongoing Disclosure.
A. Contract /Undertaking. This section constitutes the City's written undertaking for
the benefit of the owners of the Bonds as required by Section (b)(5) of the Rule.
B. Financial Statements /Operating Data. The City agrees to provide or cause to be
provided to each NRMSIR and to the SID, if any, in each case as designated by the Commission
in accordance with the Rule, the following annual financial information and operating data for
the prior fiscal year (commencing in 2002 for the fiscal year ended December 31, 2001):
1. The audited financial statements of the Electric System prepared in
accordance with generally accepted accounting principles applicable to government entities, and
in accordance with regulations prescribed by the Washington State Auditor pursuant to
RCW 43.09.200 (or any successor statute) and substantially in accordance with the system
prescribed by the Federal Energy Regulatory Commission; provided, that if the Electric System's
audited financial statements are not yet available, the City shali provide unaudited financial
statements in substantially the same format, and audited financial statements when they become
available;
2. The outstanding long -term indebtedness of the Electric System, and any
system of the City which provides power or capacity to the Electric System;
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3. Electric System retail customers, energy sales, peak loads and revenues
substantially in the form of the table "Historical Customers and Energy Revenues" in the Official
Statement for the 2001 Bonds;
4. Electric System operating results and debt service coverage on the
outstanding Bonds substantially in the form of the table "Historical Operating Results" in the
Official Statement for the 2001 Bonds; and
5. The aggregate amount and percentage of total energy sold and of retail
revenues provided by the Electric System's ten largest customers.
Items 2 -5 shall be required only to the extent that such information is not included in the
annual financial statements.
The information and data described above shall be provided on or before nine months
after the end of the City's fiscal year. The City's current fiscal year ends December 31. The City
may adjust such fiscal year by providing written notice of the change of fiscal year to each then
existing NRMSIR and the SID, if any. In lieu of providing such annual financial information
and operating data, the City may cross - reference to other documents provided to the NRMSIR's,
the SID or to the Commission and, if such document is a final official statement within the
meaning of the Rule, available from the MSRB.
C. Material Events. The City agrees to provide or cause to be provided, in a timely
manner, to the SID, if any, and to each NRMSIR or to the MSRB notice of the occurrence of any
of the following events with respect to the Bonds, if material:
• Principal and interest payment delinquencies;
• Non - payment related defaults;
• Unscheduled draws on debt service reserves reflecting financial difficulties;
• Unscheduled draws on credit enhancements reflecting financial difficulties;
• Substitution of credit or liquidity providers, or their failure to perform;
• Adverse tax opinions or events affecting the tax - exempt status of the Bonds;
• Modifications to rights of owners;
• Optional, contingent or unscheduled Bond calls other than scheduled sinking
fund redemptions for which notice is given pursuant to Exchange Act Release
34- 23856;
• Defeasances;
• Release, substitution or sale of property securing the repayment of the Bonds;
and
• Rating changes.
Solely for purposes of disclosure, and not intending to modify this undertaking, the City
advises that no debt service reserves or property secure payment of the Bonds.
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D. Notification Upon Failure to Provide Financial Data. The City agrees to provide
or cause to be provided, in a timely manner, to each NRMSIR or to the MSRB and to the SID, if
any, notice of its failure to provide the annual financial information described in subsection (b)
above on or prior to the date set forth in subsection (b) above.
E. Termination /Modification. The City's obligations to provide annual financial
information and notices of material events shall terminate upon the defeasance, prior redemption
or payment in full of all of the Bonds. Any provision of that section shall be null and void if the
City (1) obtains an opinion of nationally recognized bond counsel to the effect that the portion of
the Rule that requires that provision is invalid, has been repealed retroactively or otherwise does
not apply to the Bonds; and (2) notifies each NRMSIR and the SID, if any, of such opinion and
the cancellation of this section. The City may amend this section with an approving opinion of
nationally recognized bond counsel.
In the event of any amendment of this section, the City shall describe such amendment in
the next annual report, and shall include, a narrative explanation of the reason for the amendment
and its impact on the type (or in the case of a change of accounting principles, on the
presentation) of financial information or operating data being presented by the City. In addition,
if the amendment relates to the accounting principles to be followed in preparing financial
statements, (I) notice of such change shall be given in the same manner as for a material event
under Subsection (c), and (II) the annual report for the year in which the change is made shall
present a comparison (in narrative form and also, if practical, in quantitative form) between the
financial statements as prepared on the basis of the new accounting principles and those prepared
on the basis of the former accounting principles.
F. Bond Owner's Remedies Under This Section. The right of any bondowner or
beneficial owner of Bonds to enforce the provisions of this section shall be limited to a right to
obtain specific enforcement of the City's obligations under this section, and any failure by the
City to comply with the provisions of this undertaking shall not be an event of default with
respect to the Bonds. For purposes of this section, "beneficial owner" means any person who has
the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of,
any Bonds, including persons holding Bonds through nominees or depositories.
G. No Default. The City is not and has not been in default in the performance of
its obligations of any prior undertaking for ongoing disclosure with respect to its bond
obligations.
Section 13.6. Municipal Bond Insurance.
A. Acceptance of Insurance. In accordance with the Underwriter's offer to purchase
the 2001 Bonds, the Council hereby approves the commitment of the Insurer to provide a bond
insurance policy guaranteeing the payment when due of principal of and interest on the 2001
Bonds (the "Bond Insurance Policy "). The Commission further authorizes and directs all proper
officers, agents, attorneys and employees of the City to cooperate with the Insurer in preparing
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such additional agreements, certificates, and other documentation on behalf of the City as shall
be necessary or advisable in providing for the Bond Insurance Policy.
B. Payments Under the Policy.
(1) At least one day prior to all interest payment dates for the 2001 Bonds, the
City will determine whether there will be sufficient funds in the Bond Fund to pay the principal
of or interest on the 2001 Bonds on such interest payment date. If the City determines that there
will be insufficient funds in such account, it shall so notify the Insurer. Such notice shall specify
the amount of the anticipated deficiency, the 2001 Bonds to which such deficiency is applicable
and whether such 2001 Bonds will be deficient as to principal or interest, or both. If the City has
not so notified the Insurer at least one day prior to an interest payment date, the Insurer will make
payments of principal or interest due on the 2001 Bonds on or before the first day next following
the date on which the Insurer shall have received notice of nonpayment from the City.
(2) The City shall, after giving notice to the Insurer as provided in
subsection 1 above, make available to the Insurer and, at the Insurer's direction, to The Bank of
New York, as insurance trustee for the Insurer or any successor insurance trustee (the "Insurance
Trustee "), the registration books of the City maintained by the Bond Registrar, if any, and all
records relating to the funds and accounts maintained under this ordinance.
(3) The City shall provide the Insurer and the Insurance Trustee with a list of
registered owners of 2001 Bonds entitled to receive principal or interest payments from the
Insurer under the terms of the Bond Insurance Policy, and shall make arrangements with the
Insurance Trustee (i) to mail checks or drafts to the registered owners of 2001 Bonds entitled to
receive full or partial interest payments from the Insurer and (ii) to pay principal upon 2001
Bonds surrendered to the Insurance Trustee by the registered owners of 2001 Bonds entitled to
receive full or partial principal payments from the Insurer.
(4) The City shall, at the time it provides notice to the Insurer pursuant to
subsection 1 above, notify registered owners of 2001 Bonds entitled to receive the payment of
principal or interest thereon from the Insurer (i) as to the fact of such entitlement, (ii) that the
Insurer will remit to them all or a part of the interest payments next coming due upon proof of
bond owner entitlement to interest payments and delivery to the Insurance Trustee, in form
satisfactory to the Insurance Trustee, of an appropriate assignment of the registered owner's right
to payment, (iii) that should they be entitled to receive full payment of principal from the Insurer,
they must surrender their 2001 Bonds (along with an appropriate instrument of assignment in
form satisfactory to the Insurance Trustee to permit ownership of such 2001 Bonds to be
registered in the name of the Insurer) for payment to the Insurance Trustee and not the Bond
Registrar, and (iv) that should they be entitled to receive partial payment of principal from the
Insurer, they must surrender their 2001 Bonds for payment thereon first to the Bond Registrar
who shall note on such 2001 Bonds the portion of the principal paid by the Bond Registrar, and
then, along with an appropriate instrument of assignment in form satisfactory to the Insurance
Trustee, to the Insurance Trustee, which will then pay the unpaid portion of principal.
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(5) In the event that the Bond Registrar has notice that any payment of
principal of or interest on a Bond which has become due for payment and which is made to a
bondholder by or on behalf of the City has been deemed a preferential transfer and theretofore
recovered from its registered owner pursuant to the United States Bankruptcy Code by a trustee
in bankruptcy in accordance with the final, nonappealable order of a court having competent
jurisdiction, the Bond Registrar shall, at the time the Insurer is notified pursuant to subsection 1
above, notify all registered owners that in the event that any registered owner's payment is so
recovered, such owner will be entitled to payment from the Insurer to the extent of such recovery
if sufficient funds are not otherwise available, and the Bond Registrar shall furnish to the Insurer
its records evidencing the payments of principal of and interest on the 2001 Bonds which have
been made by the Bond Registrar, and subsequently recovered from registered owners and the
dates on which such payments were made.
(6) In addition to those rights granted the Insurer under this ordinance, the
Insurer shall, to the extent it makes payment of principal of or interest on the 2001 Bonds,
become subrogated to the rights of the recipients of such payments in accordance with the terms
of the Bond Insurance Policy, and to evidence such subrogation (i) in the case of subrogation as
to claims for past due interest, the Bond Registrar shall note the Insurer's rights as subrogee on
the registration books of the City maintained by the Bond Registrar upon receipt from the Insurer
of proof of the payment of interest thereon to the owners of the 2001 Bonds, and (ii) in the case
of subrogation as to claims for past due principal, the Bond Registrar shall note the Insurer's
rights as subrogee on the registration books of the City maintained by the Bond Registrar upon
surrender of the 2001 Bonds by the registered owners thereof together with proof of the payment
of principal thereof.
C. Consent of the Insurer. Any provision of this ordinance expressly recognizing or
granting rights in or to the Insurer may not be amended in any manner which affects the rights of
the Insurer hereunder without the prior written consent of the Insurer.
D. Consent of the Insurer in Addition to Bondholder Consent. Unless otherwise
provided in this section, the Insurer's consent shall be required in addition to bond owner
consent, when required, for the following purposes: (i) execution and delivery of any
amendment, supplement or change to or modification of this ordinance; (ii) removal of the Bond
Registrar and selection and appointment of any successor Registrar (other than the designated
State fiscal agent); and (iii) any initiation or approval of any action not described in (i) or
(ii) above which requires bond owner consent.
Section 13.7. 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 Bond Registrar, the
Insurer and the owners from time to time of the 2001 Bonds any rights, remedies or claims under
or by reason of this ordinance or any covenant, condition or stipulation thereof; and all the
covenants, stipulations, promises and agreements in this ordinance contained by or on behalf of
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the City shall be for the sole and exclusive benefit of the City, the Bond Registrar, the Insurer
and the owners from time to time of the 2001 Bonds.
Section 13.8. 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 13.9. 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.
Section 13.10. 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 13.11. 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.
Section 13.12. Prior Acts.
All acts taken pursuant to the authority of this ordinance but prior to its effective date are
hereby ratified and confirmed.
Section 13.13. Effective Date of Ordinance.
This ordinance shall become effective from and after its passage and publication as
required by law.
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Section 13.14. Repealer.
All ordinances and parts of ordinances in conflict herewith are hereby repealed to the
extent of such conflict.
PASSED by the City Council of the City of Port Angeles, Washington, at a regular
meeting thereof, held this 16`h day of October, 2001.
Published: October 21, 2001
(By Summary)
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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 Ordinance No. 3100 (the
"Ordinance ") of the City, duly passed at a regular meeting of the City Council (the "Council ") of
the City held on the 16th day of October, 2001.
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 f [Dt day of October,
2001.
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