HomeMy WebLinkAbout3186CITY OF PORT ANGELES, WASHINGTON
ORDINANCE NO. 3186
AN ORDINANCE of the City of Port Angeles, Washington, authorizing the
issuance of electric revenue and refunding bonds in the principal amount of
$3,185,000 to refund certain outstanding electric revenue bonds of the City
and to finance the cost of certain improvements to the City's Electric System,
authorizing the appointment of an escrow agent and the execution of an
escrow agreement related to the refunding; authorizing the terms of the
bonds; establishing covenants to secure payment of the bonds; and approving
the sale of the bonds.
Passed February 1, 2005
Prepared by:
PRESTON GATES & ELLIS LLP
Seattle, Washington
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions 2
Section 1.2. Interpretation 10
ARTICLE II
FINDINGS AND DETERMINATIONS
Section 2.1. Projects 10
Section 2.2. Parity Conditions 11
Section 2.3. Due Regard 12
ARTICLE III
AUTHORIZATION AND ISSUANCE OF BONDS
Section 3.1. Authorization of 2005 Bonds 12
Section 3.2. Registration, Exchange and Payments 13
Section 3.3. Redemption of 2005 Bonds 15
Section 3.4. Partial Redemption 16
Section 3.5. Notice of Redemption 16
Section 3.6. Purchase of 2005 Bonds 17
ARTICLE IV
ISSUANCE OF ADDITIONAL BONDS
Section 4.1. Authorization of Series of Additional Bonds 17
Section 4.2. Additional Bonds 18
ARTICLE V
GENERAL TERMS AND PROVISIONS OF BONDS
Section 5.1. Execution of 2005 Bonds 21
Section 5.2. Lost, Stolen, Destroyed or Mutilated Bonds 22
ARTICLE VI
CREATION OF SPECIAL FUNDS AND ACCOUNTS AND PAYMENTS
THEREFROM
Section 6.1. Light Fund 22
Section 6.2. Bond Fund 24
Section 6.3. Investment of Funds 27
ARTICLE VII
USE OF BOND PROCEEDS; PLAN OF REFUNDING
Section 7.1. Refunding Account 28
Section 7.2. Call for Redemption of Refunded Bonds 29
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Section 7.3. Finding of Savings and Defeasance 30
Section 7.1. Construction Account 30
ARTICLE VII
FORM OF 2005 BONDS
Section 8.1. Form of 2005 Bonds 31
ARTICLE IX
COVENANTS TO SECURE BONDS
Section 9.1. Security for Bonds 34
Section 9.2. Rate Covenant - General 35
Section 9.3. Rate Covenant - Debt Service Coverage 35
Section 9.4. Restrictions on Contracting of Obligations Secured by Revenues 36
Section 9.5. Covenant to Maintain System in Good Condition 37
Section 9.6. Covenants Concerning Disposal of Properties of System 37
Section 9.7. Insurance. 38
Section 9.8. Books of Account 38
Section 9.9. Covenant Not to Render Service Free of Charge 39
Section 9.10. Covenant to Make Only Economically Sound Improvements 39
Section 9.11. Covenant to Pay Bond Principal and Interest Punctually 39
Section 9.12. Covenant to Pay Taxes, Assessments and Other Claims 40
Section 9.13. Covenant to Retain Competent Management 40
Section 9.14. Further Assurances 40
Section 9.15. Tax Covenants; Special Designation 40
ARTICLE X
SUPPLEMENTAL AND AMENDATORY ORDINANCES
Section 10.1. Amendments Without Consent of Bondowners 41
Section 10.2. Amendments With Consent of Bondowners 41
ARTICLE XI
DEFAULTS AND REMEDIES
Section 11.1. Events of Default 42
Section 11.2. Waivers of Default 43
Section 11.3. Bondowners' Trustee 43
Section 11.4. Suits at Law or in Equity 44
Section 11.5. Books of City Open to Inspection 44
Section 11.6. Payment of Funds to Bondowners' Trustee 44
Section 11.7. Application of Funds by Bondowners' Trustee 45
Section 11.8. Relinquishment of Funds Upon Remedy of Default 45
Section 11.9. Suits by Individual Bondowners 46
Section 11.10. Remedies Granted in Ordinance not Exclusive 46
ARTICLE XII
AMENDMENTS AND BONDOWNERS MEETINGS
Section 12.1. Call of Bondowners Meetings 46
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Section 12.2. Notice to Bondowners 47
Section 12.3. Proxies; Proof of Ownership of Bonds 47
Section 12.4. Execution of Instruments by Bondowners 47
Section 12.5. Appointment of Officers at Bondowners Meetings 48
Section 12.6. Quorum at Bondowners Meetings 48
Section 12.7. Vote Required to Amend Ordinance 48
Section 12.8. Obtaining Approval of Amendments at Bondowners Meeting 48
Section 12.9. Alternate Method of Obtaining Approval of Amendments 49
Section 12.10. Amendment of Ordinance In Any Respect by Approval of All Bondowners 50
Section 12.11. Bonds Owned by City 50
Section 12.12. Endorsement of Amendment on Bonds 50
ARTICLE XIII
MISCELLANEOUS, DEFEASANCE; SALE OF BONDS AND APPROVAL OF
OFFICIAL STATEMENT
Section 13.1. Ordinance and Laws a Contract With Bondowners 51
Section 13.2. Bonds Deemed No Longer to be Outstanding Hereunder 51
Section 13.3. Sale of 2005 Bonds 51
Section 13.4. Official Statement 52
Section 13.5. Undertaking to Provide Ongoing Disclosure 52
Section 13.6. Municipal Bond Insurance 54
Section 13.7. Benefits of Ordinance Limited to City, Bondowners, Insurer, and Bond
Registrar 57
Section 13.8. Term "City" Includes Successors 57
Section 13.9. Severability 57
Section 13.10. General Authorization 57
Section 13.11. Adjustment of Dollar Amounts 57
Section 13.12. Prior Acts 58
Section 13.13. Effective Date of Ordinance 58
Exhibit A: Form of Surety Agreement
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ORDINANCE NO. 3186
AN ORDINANCE of the City of Port Angeles, Washington, authorizing the
issuance of electric revenue and refunding bonds in the principal amount of
$3,185,000 to refund certain outstanding electric revenue bonds of the City
and to finance the cost of certain improvements to the City's Electric System;
authorizing the appointment of an escrow agent and the execution of an
escrow agreement related to the refunding; authorizing the terms of the
bonds; establishing covenants to secure payment of the bonds; and approving
the sale of the 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, there are currently outstanding $2,365,000 principal amount of the City `s
Electric Revenue Bonds, Series 1995 (the "1995 Bonds "), of which $2,305,000 principal amount
maturing on and after September 1, 2006, may be called for redemption on September 1, 2005;
and
WHEREAS, there are currently outstanding $2,355,000 principal amount of the City's
Electric Revenue Bonds, Series 2001 (the "2001 Bonds "); and
WHEREAS, it is in the best interest of the City and ratepayers of the Electric System that
certain improvements be made to the Electric System (as further described herein, the "Projects ")
and that electric revenue bonds in the principal amount of $950,000 (the "Project Bonds ") be
issued to finance costs of the Projects; and
WHEREAS, it is also in the best interest of the City and ratepayers of the Electric System
that the callable portions of the 1995 Bonds be refunded by the issuance and sale of electric
revenue refunding bonds (the "Refunding Bonds ") to achieve debt service savings; and
WHEREAS, the ordinances that authorized issuance of the 1995 Bonds and the 2001
Bonds provide for the issuance of additional electric revenue bonds on a parity with the 1995
Bonds and 2001 Bonds on certain conditions; 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 Project Bonds and the Refunding
Bonds may be combined and issued and sold as a single series (the "2005 Bonds ") as provided by
this ordinance; and
WHEREAS, the City has received an offer from Seattle- Northwest Securities Corporation
to purchase the 2005 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 1995 Bonds, the 2001
Bonds, and the 2005 Bonds pursuant to Article IV of this ordinance.
"Adjusted Net Revenues" means Net Revenues as calculated pursuant to Section 4.2.H.
"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
interest 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 1995 Bonds, the 2001 Bonds, the 2005 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 all 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 2005 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 2005 Bonds, maintenance of the Bond Register, effecting transfer of
ownership of the 2005 Bonds, and paying the principal of premium, if any, and interest on the
2005 Bonds. A Supplemental Ordinance may appoint a different person, firm or entity to serve
as Bond Registrar.
"Bond Register" means the books or records maintained by the Bond Registrar for the
purpose of registration of the 2005 Bonds.
"City" means the City of Port Angeles, Washington, a municipal corporation duly
organized and existing under the laws of the State of Washington.
"Code" means the federal Internal Revenue Code of 1986, as amended, and applicable
regulations.
"Contingency and Replacement Account" means the account of that name established in
the Light Fund for the purposes described in Section 6.1.0 of this ordinance.
"Construction Account" means the account of that name established in the Light Fund for
the purpose of providing funds to pay for improvements to the Electric System.
"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.
"Director of Public Works and Utilities" means the duly appointed and acting Director of
Public Works and Utilities, whose duties include management of the Electric System, or the
successor to such duties.
"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
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thereof hereafter constructed or acquired. Distribution and Transmission Facilities shall not
include Generating Facilities.
"DTC" means The Depository Trust Company of New York, as depository for the 2005
Bonds, or any successor or substitute depository for the 2005 Bonds.
"Electric System" means the Distribution and Transmission Facilities and any Generating
Facilities hereafter acquired, but such Electric System shall not include any property and facilities
as may hereafter be acquired or constructed and established as a separate utility system not
financed from the Revenues except on a basis junior and inferior to the lien on Revenues pledged
to pay and secure the Bonds, the revenue of which separate utility system may be pledged to the
payment of revenue obligations issued to purchase, construct, condemn or otherwise acquire such
separate utility system.
"Escrow Agent" means U.S. Bank National Association.
"Finance Director" means the duly qualified, appointed and acting Finance Director of the
City or any other officer who succeeds to the duties now delegated to that 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 those obligations now or hereafter defined as such in
Chapter 39.53 RCW, as such chapter may be hereafter amended or restated.
"Insurer" means XL Capital Assurance, Inc., a stock insurance company incorporated
under the laws of the State of New York, or any successor thereto or assignee thereof, as issuer of
the Bond Insurance Policy.
"Letter of Representations" means the blanket issuer letter of representations from the
City to DTC dated September 23, 1998.
"MSRB" means the Municipal Securities Rulemaking Board or any successor to its
functions.
"Light Fund" means the fund of that name described in Section 6.1 of this ordinance.
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"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.
"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 the 1995 Bond Ordinance.
"2001 Bond Ordinance" means Ordinance No. 3100 passed on October 16, 2001.
"2001 Bonds" means the City's Electric Revenue Refunding Bonds, Series 2001, issued
in the original principal amount of $2,560,000 pursuant to the 2001 Bond Ordinance.
"2005 Bonds" means the City's Electric Revenue and Refunding Bonds, Series 2005,
authorized to be issued in the aggregate principal amount of $3,185,000 pursuant to this
ordinance.
"NRMSIR" means a nationally recognized municipal securities information repository.
"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,
any allowance for depreciation, or any payments for City taxes or payments in lieu of City taxes.
"Ordinance," as used in Articles XI and XII hereof, means Ordinance Nos. 2877, 2879,
3100, this ordinance, and any Supplemental Ordinance.
"Paying Agent" or "Paying Agents" means the Bond Registrar, with respect to the 2005
Bonds, and the paying agent for each other series of outstanding Bonds.
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"Permitted Investments" means the following, to the extent that the same are legal for
investment of funds of the City:
A. The following obligations may be used as Permitted Investments for all purposes,
including defeasance investments in the refunding escrow accounts.
(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)
• State and Local Government Series (SLGS)
(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
• Resolution Funding Corp. (REFCORP) Debt obligations
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 following Obligations shall be 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
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• U.S. Maritime 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)
• Senior debt obligations of the Federal Home Loan Bank System
• Senior debt obligations of other Government Sponsored Agencies
approved by Ambac and the Insurer
(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
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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 "Aaa/AAA" or general obligations of States
with a rating of "Aa2 /AA" or higher or both Moody's and S &P;
(8) Investment agreements approved in writing by the Insurer and the insurer
of the 2001 Bonds and supported by appropriate opinions of counsel; and
(9) Other forms of investments (including repurchase agreements) approved in
writing by the Insurer and the insurer of the 2001 Bonds.
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 the insurer of the 2001 Bonds;
(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 and the insurer of the 2001 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.
"Project Bonds" means the $950,000 principal amount of electric revenue bonds
authorized to be issued pursuant to this ordinance to pay costs of the Projects.
"Projects" means those improvements to the Electric System authorized by Section 2.1 of
this ordinance.
"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
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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 1995 Bonds maturing on and after September 1, 2006.
"Refunding Account" means the City of Port Angeles 2005 Electric Revenue Refunding
Account authorized to be created and held by the Escrow Agent pursuant to Section 7.1 of this
ordinance.
"Refunding Bonds" means $2,235,000 principal amount of electric revenue bonds,
authorized to be issued pursuant to this ordinance to refund the Refunded Bonds.
"Registered Owner" means the person named as the registered owner of a Bond in the
Bond Register. For so long as the 2005 Bonds are held in book -entry only form, DTC shall be
deemed to be the sole Registered Owner.
"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.
"Rule" means the Commission's Rule 15c2 -12 under the Securities Exchange Act of
1934, as the same may be amended from time to time.
"Serial Bonds" means Bonds other than Term Bonds.
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"SID" means a state information depository for the State of Washington.
"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 2005
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.
"Surety Bond" means the surety bond, satisfying the definition of "Qualified Insurance,"
issued by the Insurer guaranteeing certain payments into the Reserve Account for the Bonds as
provided therein and subject to the limitations therein.
"Surety Agreement" means the Financial Guaranty Agreement with respect to the Surety
Bond dated as of the date of delivery of the Bonds, between the District and the Insurer,
authorized to be executed in substantially the form attached as Exhibit A to this ordinance.
"Term Bonds" means Bonds of any principal maturity that are subject to mandatory
redemption and for which mandatory sinking fund payments are required. The 2005 Bonds
maturing on September 1, 2020 shall be deemed "2005 Term Bonds."
"Underwriter" means Seattle- Northwest Securities Corporation.
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.
ARTICLE II
FINDINGS AND DETERMINATIONS
Section 2.1. Projects. The Council hereby approves the acquisition, development and
construction of the improvements to the Electric System included or to be included for 2005 in
the City's Capital Facilities Plan. The estimated cost of the Projects is $925,000. In undertaking
the Projects, the City shall acquire and install all equipment and appurtenances necessary for
their proper operation and shall acquire by purchase, lease or condemnation all property, both
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real and personal, or any interest therein, and all rights -of -way, franchises, and easements
necessary to complete the Projects. The Projects shall be subject to such changes as to size or
location or any other details as may be authorized by the City either prior to or during the course
of construction. The City may also elect to substitute for one or more of the Projects any other
Electric System improvements, approved by the Council, that are now or may hereafter be
included in the City's Capital Facilities Plan.
Section 2.2. Parity Conditions. The 1995 Bond Ordinance and 2001 Bond Ordinance
provide that the City may issue Additional Bonds payable from the Bond Fund on a parity with
the 1995 Bonds and 2001 Bonds upon compliance with certain conditions. The Council hereby
finds, as required by such provisions of the 1995 Bond Ordinance and 2001 Bond Ordinance, as
follows:
(i) There is no deficiency in the Bond Fund and no Event of Default has occurred and
is continuing.
(ii) The Refunding Bonds are being issued to refund the Refunded Bonds, and the
proceeds of the Refunding 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 Refunding Bonds.
(iii) Prior to delivery of the Refunding Bonds, there shall be filed with the City a
certificate signed by the 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
Refunding Bonds.
(iv) Prior to delivery of the Project Bonds, there shall be filed with the City a
certificate signed by the Finance Director showing:
(A) the amount of the Net Revenues for any 12 consecutive months of the 24
months prior to the date of the issuance of the Project Bonds;
(B) the amount of the Average Annual Debt Service in any Fiscal Year
thereafter on account of the unrefunded 1995 Bonds, the 2001 Bonds, the Refunding Bonds and
the Project Bonds; and
(C) the percentage derived by dividing the amount shown in (A) above by the
amount shown in (B) above, which percentage shall be not less than 125 %.
The Additional Bonds tests of the 1995 Bond Ordinance and 2001 Bond Ordinance
having been complied with or assured, the lien and charge on Revenues for the payment of the
principal of and interest on the Refunding Bonds and Project Bonds shall be equal to the lien and
charge thereon for the payment of principal of and interest on the 1995 Bonds and 2001 Bonds.
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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 2005 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 and the cost of paying and securing the
payment of the unrefunded 1995 Bonds and the 2001 Bonds.
ARTICLE III
AUTHORIZATION AND ISSUANCE OF BONDS
Section 3.1. Authorization of 2005 Bonds. The Refunding Bonds are hereby
authorized to be issued in the aggregate principal amount of $2,235,000 to refund the Refunded
Bonds and pay the costs of issuing the Refunding Bonds. The Project Bonds are hereby
authorized to be issued in the aggregate principal amount of $950,000 to finance costs of the
Projects and pay costs of issuing the Project Bonds.
The Refunding Bonds and the Project Bonds shall be issued as a combined series
designated as the City's Electric Revenue and Refunding Bonds, Series 2005 (the "2005
Bonds "), which shall be dated as of the date of their initial delivery to the Underwriter, 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
* Term Bond
Amount Interest Rate
2005 $ 90,000 3.00%
2006 110,000 3.00
2007 110,000 3.00
2008 115,000 3.00
2009 125,000 3.00
2010 125,000 4.00
2011 130,000 4.00
2012 135,000 4.00
2013 140,000 4.00
2014 145,000 4.00
2015 155,000 3.75
2016 155,000 3.75
2017 165,000 3.80
2020* 530,000 4.00
2021 190,000 4.05
2022 195,000 4.10
2023 205,000 4.20
2024 215,000 4.25
2025 150,000 4.30
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The 2005 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 2005 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 2005 Bonds shall be payable semiannually on March 1 and September 1 of each
year, beginning September 1, 2005.
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 2005 Bonds approved by the Washington State Finance
Committee from time to time through the appointment of state fiscal agencies, currently
including The Bank of New York in New York, New York (the "Bond Registrar "). The City
shall cause the Bond Register to be maintained by the Bond Registrar. So long as any 2005
Bonds remain outstanding, the Bond Registrar shall make all necessary provisions to permit the
exchange or registration of transfer of 2005 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
have accepted the duties of the Bond Registrar hereunder. The Bond Registrar is authorized, on
behalf of the City, to authenticate and deliver 2005 Bonds transferred or exchanged in accordance
with the provisions of such 2005 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 2005 Bonds.
B. Registered Ownership. The City and the Bond Registrar may deem and treat the
Registered Owner of each 2005 Bond as the absolute owner for all purposes, and neither the City
nor the Bond Registrar shall be affected by any notice to the contrary. Payment of any such 2005
Bond shall be made only as described in Section 3.2.H hereof, but such 2005 Bond may be
transferred as herein provided. All such payments made as described in Section 3.2.H shall be
valid and shall satisfy the liability of the City upon such 2005 Bond to the extent of the amount
or amounts so paid.
C. DTC Acceptance /Letter of Representations. The 2005 Bonds shall initially be
held in fully immobilized form by DTC acting as depository. To induce DTC to accept the 2005
Bonds as eligible for deposit at DTC, the City has heretofore executed and delivered to DTC the
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 with respect to the 2005 Bonds for the
accuracy of any records maintained by DTC or any DTC participant, the payment by DTC or any
DTC participant of any amount in respect of the principal of or interest on 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), the
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selection by DTC or any DTC participant of any person to receive payment in the event of a
partial redemption of the 2005 Bonds, or any consent given or other action taken by DTC as the
Registered Owner. For so long as any Bonds are held in fully- immobilized form hereunder, DTC
or its successor depository shall be deemed to be the Registered Owner for all purposes, and all
references in this ordinance to the Registered Owners shall mean DTC or its nominee and shall
not mean the owners of any beneficial interest in any Bonds.
D. Use of Depositoty. (i) The 2005 Bonds shall be registered initially in the name of
"CEDE & Co. ", as nominee of DTC, with a single 2005 Bond for each maturity in a
denomination equal to the total principal amount of such maturity. Registered ownership of such
immobilized 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 City 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 City to discontinue the
system of book entry transfers through DTC or its successor (or any substitute depository or its
successor), the City may 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 Bonds, together with a written
request on behalf of the City, issue a single new Bond for each maturity then outstanding,
registered in the name of such successor or such substitute depository, or its nominee, all as
specified in such written request of the City.
(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 City determines that it is in the best interest of the beneficial owners of the 2005 Bonds
that the 2005 Bonds be provided in certificated form, the ownership of such Bonds may then be
transferred to any person or entity as herein provided, and shall no longer be held in
fully - immobilized form. The City shall deliver a written request to the Bond Registrar, together
with a supply of definitive Bonds in certificated form, to issue Bonds in any authorized
denomination. Upon receipt by the Bond Registrar of all then outstanding Bonds together with a
written request on behalf of the City to the Bond Registrar, new Bonds shall be issued in the
appropriate denominations and registered in the names of such persons as are provided in such
written request.
E. Transfer or Exchange of Registered Ownership; Change in Denominations. The
registered ownership of any Bond may be transferred or exchanged, but no transfer of any Bond
shall be valid unless it is surrendered to the Bond Registrar with the assignment form appearing
on such 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
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Registrar shall cancel the surrendered Bond and shall authenticate and deliver, without charge to
the Registered Owner or transferee, a new Bond (or 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 Bond, in exchange for such
surrendered and cancelled Bond. Any Bond may be surrendered to the Bond Registrar and
exchanged, without charge, for an equal aggregate principal amount of Bonds of the same date,
maturity and interest rate, in any authorized denomination. The Bond Registrar shall not be
obligated to transfer or exchange any Bond during the period beginning at the opening of
business on the 15th day of the month next preceding any interest payment date and ending at the
close of business on such interest payment date, or, in the case of any proposed redemption of the
2005 Bonds, after the mailing of the notice of such redemption.
F. Bond Registrar's Ownership of 2005 Bonds. The Bond Registrar may become the
Registered Owner of any 2005 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 2005 Bonds.
G. Registration Covenant. The City covenants that, until all 2005 Bonds have been
surrendered and cancelled, it will maintain a system for recording the ownership of each 2005
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 2005 Bonds
shall be payable in lawful money of the United States of America. Interest on the 2005 Bonds
shall be calculated on the basis of a 360 -day year and twelve 30 -day months. For so long as all
2005 Bonds are in fully- immobilized form, such payments of principal and interest thereon shall
be made in accordance with the operational arrangements of DTC referred to in the Letter of
Representations.
In the event that the 2005 Bonds are no longer in fully- immobilized form, interest on the
2005 Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for
such Registered Owners appearing on the Bond Register on the 15th day of the month preceding
the interest payment date; provided, however, that if so requested in writing by the Registered
Owner of at least $1,000,000 principal amount of 2005 Bonds, interest will be paid by wire
transfer on the interest payment date to an account with a bank located within the United States.
Principal of the 2005 Bonds shall be payable upon presentation and surrender of such 2005
Bonds by the Registered Owners at the principal office of the Bond Registrar.
Section 3.3. Redemption of 2005 Bonds.
A. Optional Redemption. The 2005 Bonds maturing in years 2005 through 2014 are
not subject to redemption prior to maturity. The 2005 Bonds maturing on and after September 1,
2015 are subject to redemption prior to maturity, at the option of the City, on or after
September 1, 2014, in whole or in part on any date (maturities to be selected by the City), at a
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price of par plus interest accrued thereon to the date fixed for redemption. For so long as the
2005 Bonds are in book -entry form, the selection of 2005 Bonds within a maturity to be
redeemed and the manner of providing notice of redemption to beneficial owners shall be
governed by the operational arrangements of DTC, as then in effect.
B. Mandatory Redemption. The 2005 Bonds maturing on September 1, 2020, shall
be redeemed prior to maturity by lot (or purchased or paid at maturity), not later than
September 1 in the years 2018 through 2020, 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 2005 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
2018 $ 170,000
2019 175,000
2020 185,000
The foregoing amounts shall be deemed Sinking Fund Requirements for the 2005 Bonds
maturing on September 1, 2020 (the "2005 Term Bonds ").
The City may purchase and redeem 2005 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 2005 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 2005 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. Partial Redemption. If less than all of the principal amount of any 2005
Bond is redeemed, upon surrender of such 2005 Bond at the principal office of the Bond
Registrar, there shall be issued to the Registered Owner, without charge, for the then unredeemed
balance of the principal amount, a new 2005 Bond or 2005 Bonds, at the option of the Registered
Owner, of like maturity and interest rate in any authorized denomination.
Section 3.5. Notice of Redemption.
A. Official Notice. Written notice of any redemption of 2005 Bonds shall be given
by the Bond Registrar on behalf of the City by first class mail, postage prepaid, not less than
30 days nor more than 60 days before the redemption date to the Registered Owners of 2005
Bonds that are to be redeemed at their last addresses shown on the Bond Register. So long as the
2005 Bonds are in book -entry form, notice of redemption shall be given as provided in the Letter
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of Representations. The Bond Registrar shall provide additional notice of redemption (at least
30 days) to each NRMSIR and SID, if any, in accordance with Section 13.5.
The requirements of this section shall be deemed complied with when notice is mailed,
whether or not it is actually received by the owner.
Each notice of redemption shall contain the following information: (1) the redemption
date, (2) the redemption price, (3) if less than all outstanding 2005 Bonds are to be redeemed, the
identification (and, in the case of partial redemption, the principal amounts) of the 2005 Bonds to
be redeemed, (4) that on the redemption date the redemption price will become due and payable
upon each 2005 Bond or portion called for redemption, and that interest shall cease to accrue
from the redemption date, (5) that the 2005 Bonds are to be surrendered for payment at the
principal office of the Bond Registrar, (6) the CUSIP numbers of all 2005 Bonds being
redeemed, (7) the dated date of the 2005 Bonds, (8) the rate of interest for each 2005 Bond being
redeemed, (9) the date of the notice, and (10) any other information needed to identify the 2005
Bonds being redeemed.
Upon the payment of the redemption price of Bonds being redeemed, each check or other
transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and
maturity, the 2005 Bonds being redeemed with the proceeds of such check or other transfer.
B. Effect of Notice. Unless the City has revoked a notice of redemption, the City
shall transfer to the Bond Registrar amounts that, in addition to other money, if any, held by the
Bond Registrar, will be sufficient to redeem, on the redemption date, all the 2005 Bonds to be
redeemed. From the redemption date interest on each 2005 Bond to be redeemed shall cease to
accrue.
C. Amendment of Notice Provisions. The foregoing notice provisions of this section,
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 2005 Bonds. The City also reserves the right to purchase any
of the 2005 Bonds offered to the City at any time at a price deemed reasonable by the City.
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
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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 Finance Director shall set forth:
(i) the amount of the Net Revenues for any 12 consecutive months of the 24
months prior to the date of the issuance of such Bonds;
(ii) the amount of the Average Annual Debt Service in any Fiscal Year
thereafter on account of all Bonds then outstanding under this ordinance and the
Additional Bonds then to be issued hereunder; and
(iii) the percentage derived by dividing the amount shown in (i) above by the
amount shown in (ii) above, and shall state that such percentage is not less than 125 %;
C. Additional Bonds may also be issued for any lawful purpose of the City if the
following requirements are met. A certificate signed by a Professional Utility Consultant and
filed with the City Clerk shall set forth:
(i) the amount of the Adjusted Net Revenues computed as provided in
Section 4.2.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
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(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,
(1) there shall be filed with the City a certificate signed by the 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 Additional Bonds; or
(2) There shall be filed with the City a certificate signed by a Professional
Utility Consultant setting forth:
Section 4.2.I;
(a) the amount of the Adjusted Net Revenues computed as provided in
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(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
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.
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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 retum 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. So long as the 2005 Bonds remain outstanding, the consent of
the Insurer must be obtained prior to the issuance of Additional Bonds pursuant to this
Section 4.2.J.
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 2005 Bonds. The 2005 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
2005 Bonds cease to be such officer before such 2005 Bonds have been actually issued and
delivered, such 2005 Bonds shall be valid nevertheless and may be issued by the City with the
same effect as though the persons who had signed or attested such 2005 Bonds had not ceased to
be such officers, and any 2005 Bond may be signed or attested on behalf of the City by officers
who at the date of actual execution of such 2005 Bond are the proper officers, although at the
nominal date of execution of such 2005 Bond such officer was not an officer of the City.
Only 2005 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 2005 Bonds so authenticated have been duly executed, authenticated
and delivered and are entitled to the benefits of this ordinance.
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Section 5.2. Lost or Destroyed Bonds. If any 2005 Bonds are lost, stolen or destroyed,
the Bond Registrar may authenticate and deliver a new 2005 Bond or 2005 Bonds of like amount,
maturity and tenor to the Registered Owner upon such Registered Owner's paying the expenses
and charges of the Bond Registrar and the City in connection with preparation and authentication
of the replacement 2005 Bond or 2005 Bonds and upon his or her filing with the Bond Registrar
and the City evidence satisfactory to both that such 2005 Bond or 2005 Bonds were actually lost,
stolen or destroyed and of his or her ownership, and upon furnishing the City and the Bond
Registrar with indemnity satisfactory to both.
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. 374 passed by the City Council on May 5, 1910, 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 have heretofore been created the following accounts in the Light Fund: (i) the
General Account, (ii) the Contingency and Replacement Account, and (iii) the Rate Stabilization
Account. Such 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;
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(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.
(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
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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 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 such date 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 Tenn 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.
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(ii) The Bond Retirement Account, for the purpose of redeeming Term Bonds
pursuant to the Sinking Fund Requirement pertaining to such Term Bonds and to otherwise retire
Bonds prior to maturity (hereinafter referred to as the "Bond Retirement Account "). No later
than the 25th day of the 12th month prior to the date of each Sinking Fund Requirement, or if
there are less than 12 months preceding such Sinking Fund Requirement Date, then on the last
day of the month immediately succeeding the month in which the Bonds are delivered to the
initial purchaser(s) thereof, and on or before the 25th day of each succeeding month thereafter,
the City shall pay from the Light Fund into the Bond Fund to the credit of the Bond Retirement
Account an amount such that, if the same amount were so set aside in the Bond Fund and
credited to the Bond Retirement Account on the 25th day of each succeeding month thereafter
and prior to such Sinking Fund Requirement Date, the aggregate of the amounts so paid and
credited to the Bond Retirement Account would be equal to the Sinking Fund Requirement for
such date.
The City shall apply all the 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 2005 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 2005 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 2005 Bonds, the City shall obtain Qualified
Insurance in an amount that, together with other funds, if any, on deposit in the Reserve Account,
shall equal at least Average Annual Debt Service for the then outstanding 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.
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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
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
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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 N 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
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(1),
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A(2), A(3), B(1), B(2) and B(3) 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 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(1), A(2), A(3), B(1), B(2) and B(3) of 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, however, that so long as the 1995 Bonds remain outstanding, investments in any
capitalized interest account hereafter created shall be those described in clauses A(1), A(2), A(3),
B(1), B(2) and B(3) 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 Bonds are insured, City funds may be invested in any manner permitted by
Washington law.
ARTICLE VII
USE OF BOND PROCEEDS; 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 2005 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 Refunding Bonds 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 1995 Bond Ordinance and pay costs
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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 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 1995 Bonds as it becomes due and payable
through and including September 1, 2005; and
(ii) the redemption price (100% of the principal amount thereof) of the
Refunded 1995 Bonds on September 1, 2005.
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 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 2005
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, 2005 in accordance with
the applicable provisions of the 1995 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 the 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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1995 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 2005 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 2005 Bonds and the Refunded Bonds, the costs of
issuance of the 2005 Bonds and the known earned income from the investment of the proceeds of
sale of the 2005 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 1995 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 1995 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.
Section 7.4. Construction Account. There is hereby authorized to be created in the
office of the Finance Director a special subaccount within the Construction Account to be
designated as the "City of Port Angeles 2005 Electric System Construction Subaccount" (the
"2005 Construction Subaccount"). Proceeds of the Project Bonds shall be deposited into the
2005 Construction Subaccount and applied to pay costs of the Projects and costs of issuance of
the Project Bonds. Money in the 2005 Construction Subaccount shall be invested in Permitted
Investments; provided, however, that any investments of funds in any capitalized interest account
hereafter created shall be those described in clauses A(1), A(2), A(3), B(1), B(2) and B(3) of the
definition of Permitted Investments. Funds remaining in the 2005 Construction Subaccount after
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the Projects have been completed shall be deposited into the Contingency and Replacement
Account.
ARTICLE VIII
FORM OF 2005 BONDS
Section 8.1. Form of 2005 Bonds.
The 2005 Bonds shall be in substantially the following form:
[Bond Insurance Legend]
UNITED STATES OF AMERICA
STATE OF WASHINGTON
CITY OF PORT ANGELES, WASHINGTON
ELECTRIC REVENUE AND REFUNDING BOND, SERIES 2005
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 , 2005, 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 September 1, 2005. Both
principal of and interest on this bond are payable in lawful money of the United States of
America. For so long as the this bond is 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 $3,185,000 in principal amount and designated
as "Electric System Revenue and Refunding Bonds, Series 2005" (the "Bonds "). The Bonds are
issued under and pursuant to Ordinance No. , passed on February 1, 2005 (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 financing certain improvements to facilities of
the Electric System and refunding certain outstanding electric revenue bonds of the City. The
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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 and the rights and
remedies of the owners of the Bonds with respect thereto, the terms and conditions upon which
the Bonds have been issued, and the terms and conditions upon which this Bond shall no longer
be secured by the Bond Ordinance or deemed to be outstanding hereunder if money or certain
specified securities sufficient for the payment of this Bond shall have been set aside in a special
account and held in trust solely for the payment thereof.
Under the Bond Ordinance, the City is obligated to set aside and pay into the Bond Fund
out of the Revenues of 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.
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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.
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 , 2005.
(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 and Refunding Bonds, Series 2005, of the City of Port
Angeles, Washington, dated , 2005, as described in the Bond Ordinance.
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WASHINGTON STATE FISCAL
AGENCY
Bond Registrar
By
Authorized Officer
P:IDOTIDOTIFR 07/01/05
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER OF TRANSFEREE
(Please print or typewrite name and address, including zip code, of Transferee)
the within bond and does hereby irrevocably constitute and appoint of
, or its successor, as Bond Registrar to transfer said bond on the books
kept for registration thereof with full power of substitution in the premises.
DATED:
SIGNATURE GUARANTEED:
NOTE: The signature on this 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
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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.
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. For the purpose of meeting the requirement of this
paragraph, (i) there may be added to Net Revenues for any Fiscal Year such amount, withdrawn
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from the Rate Stabilization Account and deposited in the General Account, and (ii) there must be
subtracted from Net Revenues for any Fiscal Year such amounts as are withdrawn from the
General Account and deposited into the Rate Stabilization Account for such Fiscal Year.
The City also covenants and agrees to maintain Net Revenues for the then current Fiscal
Year in an amount that will be equal to the Annual Debt Service on the then outstanding Bonds
in such Fiscal Year.
The failure to collect Revenues in any Fiscal Year sufficient to comply with the covenants
contained in this Section 9.3 shall not constitute an Event of Default if the City, before the 60th
day of the following Fiscal Year:
A. Employs a Professional Utility Consultant to recommend changes in the City's
rates 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.
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D. Unless such agreement specifically states that the obligation of the City
thereunder is junior to the obligation of the City to make payments from the Light Fund into the
Bond Fund, the City shall not hereafter enter into any agreement obligating the City to pay, from
Revenues, for (a) generating or transmission capacity or the use or lease of generating or
transmission facilities, which agreement is not conditional on the availability of such capacity or
facility, or (b) the installment purchase or lease of property which, whether or not subject to
annual appropriations, otherwise transfers to the City the burdens and benefits of ownership of
such property.
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.
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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.
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 the City, whether or not the City is at that
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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, 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.
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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 2005 Bonds
from federal income taxation.
The City hereby covenants that it will not make any use of the proceeds of sale of the
2005 Bonds or any other funds of the City that may be deemed to be proceeds of such 2005
Bonds pursuant to Section 148 of the federal Internal Revenue Code of 1986 and the applicable
regulations thereunder that will cause the 2005 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 2005 Bonds), and the applicable regulations thereunder throughout the term of the 2005
Bonds.
The City further covenants that it will not take any action or permit any action to be taken
that would cause the 2005 Bonds to constitute "private activity bonds" under Section 141 of the
federal Internal Revenue Code of 1986, as amended.
The City hereby designates the 2005 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 2005.
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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 clarifying matters or questions
arising under this ordinance or any Supplemental Ordinance as are necessary or desirable in the
event any such modifications are not contrary to or inconsistent with this ordinance or any
Supplemental Ordinance as theretofore in effect; or
(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
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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, 2879, 3100, 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, 3100, 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;
(4) If the City shall fail, by any Sinking Fund Requirement Date, to have
purchased or redeemed Term Bonds in a cumulative principal amount at least equal to the
cumulative Sinking Fund Requirements at such Sinking Fund Requirement Date;
(5) If the City shall default in the observance and performance of any other of
the covenants, conditions and agreements on the part of the City contained in the Ordinance and
such default or defaults shall have continued for a period of 60 days after the City shall have
received from a Bondowners' Trustee or from the owners of not less than 20% in principal
amount of the Bonds outstanding, a written notice specifying and demanding the cure of such
default;
(6) If the City shall (except as herein permitted) sell, transfer, assign or convey
any properties constituting the Electric System or interests therein, or any part or parts thereof, or
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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.
The Bondowners' Trustee or the owners of not less than 50% in principal amount of the
Bonds at the time outstanding, or their attomeys -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,
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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
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,
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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
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
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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 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.
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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.
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
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sufficient. Any request or consent of the owner of any Bond shall bind every future owner of the
same Bond in respect of anything done by the City in pursuance of such request, direction or
consent.
The right of a proxy for a bondowner to act may be proved (subject to the City's right to
require additional proof) by a written proxy executed by such bondowner as aforesaid.
Section 12.5. Appointment of Officers at Bondowners Meetings. Persons named by the
City or elected by the owners of a majority in principal amount of the Bonds represented at the
meeting in person or by proxy in the event the City is not represented at such meeting, shall act
as temporary Chairman and temporary Secretary of any meeting of bondowners. A permanent
Chairman and a permanent Secretary of such meeting shall be elected by the owners of a majority
in principal amount of the Bonds represented at such meeting in person or by proxy. The
permanent Chairman of the meeting shall appoint two Inspectors of Votes who shall count all
votes cast at such meeting, except votes on the election of Chairman and Secretary as aforesaid,
and who shall make and file with the Secretary of the meeting and with the City their verified
report of all such votes cast at the meeting.
Section 12.6. 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 1V 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
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such amendment is permitted by the provisions of Section 12.7 hereof, to take effect when and as
provided in this Section. At any time thereafter such ordinance may be submitted by the City for
approval to a meeting of the bondowners duly convened and held in accordance with the
provisions of the Ordinance. A record in duplicate of the proceedings of each meeting of the
bondowners shall be prepared by the permanent Secretary of the meeting and shall have attached
thereto the original reports of the Inspectors of Votes and affidavits by a person or persons
having knowledge of the facts, showing a copy of the notice of the meeting and setting forth the
facts with respect to the mailing and publication thereof under the provisions of the Ordinance.
Such a record shall be signed and verified by the affidavits of the permanent Chairman and the
permanent Secretary of the meeting, and one duplicate thereof shall be delivered to the City. Any
record so signed and verified shall be proof of the matters therein stated. If the ordinance of the
City making such amendment shall be approved by a ordinance duly adopted at such meeting of
bondowners by the affirmative vote of the owners of the required percentages of Bonds, a notice
stating that a ordinance approving such amendment has been so adopted shall be mailed by the
City to each bondowner who has requested such notice (but failure so to mail copies of such
notice shall not 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
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been given by the owners of the Bonds described in such certificate or certificates. Any such
consent shall be binding upon the owner of the Bonds giving such consent and on every
subsequent owner of such Bonds (whether or not such subsequent owner has notice thereof). A
notice stating that the ordinance 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. Sale of 2005 Bonds. The 2005 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. The proper City officials are
hereby authorized and directed to do everything necessary for the prompt execution and delivery
of the 2005 Bonds to the Underwriter and for the proper application and use of the proceeds of
sale thereof.
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Section 13.4. Official Statement. The City approves the preliminary Official Statement
presented to this Council and ratifies the Underwriter's distribution of the preliminary Official
Statement in connection with the offering of the 2005 Bonds. To permit the Underwriter to
comply with the Rule, the Preliminary Official Statement dated January _, 2005, is hereby
deemed final as of its date except for the omission of information dependent upon the pricing of
the 2005 Bonds and the completion of the purchase contract. The City agrees to cooperate with
the Underwriter to deliver or cause to be delivered, within seven business days from the date of
the sale of the 2005 Bonds and in sufficient time to accompany any confirmation that requests
payment from any customer of the Underwriter, copies of a final Official Statement in sufficient
quantity to comply with paragraph (b)(4) of the Rule and the rules of the MSRB. The City
Manager and Finance Director are hereby authorized to review and approve on behalf of the City
the final Official Statement relative to the 2005 Bonds with such additions and changes as they
may deem necessary or advisable
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 2005 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 2005 for the fiscal year ended December 31, 2004):
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 shall 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;
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 2005 Bonds;
4. Electric System operating results and debt service coverage on all
outstanding Bonds substantially in the form of the table "Historical Operating Results" in the
Official Statement for the 2005 Bonds; and
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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 2005 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 2005
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 2005
Bonds; and
• Rating changes.
Solely for purposes of disclosure, and not intending to modify this undertaking, the City
advises that no property secures payment of the 2005 Bonds.
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 2005 Bonds. Any provision of that section shall be null and void
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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 2005 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 accordance with the Rule.
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. DisclosureUSA. Any filing required to be made with any NRMSIR or SID under
this Section 13.5 may be made by transmitting such filing solely to the Texas Municipal
Advisory Council (the "MAC ") as provided at http: / /www.disclosureusa.org unless the United
States Securities and Exchange Commission has withdrawn the interpretive advice in its letter to
the MAC dated September 7, 2004.
G. Bond Owner's Remedies Under This Section. The right of any bondowner or
beneficial owner of 2005 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 2005 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 2005 Bonds, including persons holding 2005 Bonds through nominees or
depositories.
H. 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 and Surety Bond.
A. Acceptance of Insurance. In accordance with the Underwriter's offer to purchase
the 2005 Bonds, the Council hereby approves the commitment of XL Capital Assurance, Inc. (the
"Insurer ") to provide a bond insurance policy guaranteeing the payment when due of principal of
and interest on the 2005 Bonds (the `Bond Insurance Policy ") and the Surety Bond to satisfy the
Reserve Account requirement with respect to the 2005 Bonds. The City agrees to the conditions
for obtaining the Surety Bond, including the payment of the premium therefor and the other
requirements set forth in the Surety Agreement. The Surety Agreement is hereby approved in
substantially the form set forth on Exhibit A to this ordinance, and the City Manager or his
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designee is hereby authorized to sign the Surety Agreement on behalf of the City, subject to such
changes as may be approved by counsel to the City, which approval shall be evidenced by the
City Manager's signing and delivery of the Surety Agreement. The Council further authorizes
and directs all proper officers, agents, attorneys and employees of the City to cooperate with the
Insurer in preparing 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 and the
Surety Bond.
B. Payments Under the Bond Insurance Policy. As long as the Bond Insurance
Policy is in full force and effect, the City and the Bond Registrar shall comply with the following
provisions:
(i) If, on the Business Day immediately preceding a scheduled interest
payment date or principal payment date ( "Payment Date "), there is not on deposit with the Bond
Registrar money sufficient to pay the principal of and interest on the 2005 Bonds due on such
Payment Date, the City or the Bond Registrar shall give notice to the Insurer and to its designated
agent (if any) (the "Insurer's Fiscal Agent "), by telephone or telecopy, of the amount of such
deficiency by 12:00 noon, New York City time, on such Business Day. If, on such Payment
Date, there is not on deposit with the Bond Registrar money sufficient to pay the principal of, and
interest on, the 2005 Bonds due on such Payment Date, the Bond Registrar shall make a claim
under the Insurance Policy and give notice to the Insurer and the Insurer's Fiscal Agent (if any)
by telephone of the amount of any deficiency in the amount available to pay principal and
interest, and the allocation of such deficiency between the amount required to pay interest on the
2005 Bonds and the amount required to pay principal of the 2005 Bonds, confirmed in writing to
the Insurer and the Insurer's Fiscal Agent by 12:00 noon, New York City time, on such Payment
Date, by delivering the Notice of Nonpayment and Certificate.
For the purposes of the preceding paragraph, "Notice" means telephonic or telecopied
notice, subsequently confirmed in a signed writing, or written notice by registered or certified
mail, from the City or Bond Registrar to the Insurer, which notice shall specify (a) the name of
the entity making the claim, (b) the policy number, (c) the claimed amount and (d) the date such
claimed amount will become Due for Payment. "Nonpayment" means the failure of the City to
have provided sufficient funds to the Bond Registrar for payment in full of all principal of, and
interest on, the 2005 Bonds that are Due for Payment. "Due for Payment," when referring to the
principal of insured bonds, means when the stated maturity date or mandatory redemption date
for the application of a required sinking fund installment has been reached and does not refer to
any earlier date on which payment is due by reason of call for redemption (other than by
application of required sinking fund installments or other advancement of maturity, unless the
Insurer shall elect, in its sole discretion, to pay such principal); and when referring to interest on
2005 Bonds, means when the stated date for payment of interest has been reached. "Certificate"
means a certificate in form and substance satisfactory to the Insurer as to the Bond Registrar's
right to receive payment under the Insurance Policy.
(ii) The Bond Registrar shall designate any portion of payment of principal on
2005 Bonds paid by the Insurer at maturity on its books as a reduction in the principal amount of
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2005 Bonds registered to the then current Registered Owner, whether DTC or its nominee or
otherwise, and shall issue a replacement 2005 Bond to the Insurer, registered in the name of the
Insurer, as the case may be, in a principal amount equal to the amount of principal so paid
(without regard to authorized denominations); provided, however, that the Bond Registrar's
failure to so designate any payment or issue any replacement 2005 Bond shall have no effect on
the amount of principal or interest payable by the City on any 2005 Bond or the subrogation
rights of the Insurer.
(iii) The Bond Registrar shall keep a complete and accurate record of all funds
deposited by the Insurer into the Policy Payments Account (as hereinafter defined) and the
allocation of such funds to payment of interest on and principal paid with respect to any 2005
Bond. The Insurer shall have the right to inspect such records at reasonable times upon
reasonable notice to the Bond Registrar.
(iv) Upon payment of a claim under the Bond Insurance Policy, the Bond
Registrar shall establish a separate special purpose trust account for the benefit of owners of 2005
Bonds referred to herein as the "Policy Payments Account" and over which the Bond Registrar
shall have exclusive control and sole right of withdrawal. The Bond Registrar shall receive any
amount paid under the Bond Insurance Policy in trust on behalf of owners of 2005 Bonds and
shall deposit any such amount in the Policy Payments Account and distribute such amount only
for purposes of making the payments for which a claim was made. Such amounts shall be
disbursed by the Bond Registrar to owners of 2005 Bonds in the same manner as principal and
interest payments are to be made with respect to the 2005 Bonds under Section 3.2 hereof. It
shall not be necessary for such payments to be made by checks or wire transfers separate from the
check or wire transfer used to pay debt service with other funds available to make such payments.
Funds held in the Policy Payments Account shall not be invested by the Bond Registrar and may
not be applied to satisfy any costs, expenses or liabilities of the Bond Registrar. Any funds
remaining in the Policy Payments Account following an insured 2005 Bond payment date shall
promptly be remitted to the Insurer.
C. Provisions Relating to Bond Insurance Policy. As long as the Bond Insurance
Policy is in full force and effect, the City shall comply with the following provisions:
(i) Notice to the Insurer. Any notices required to be given by the City shall
also be given to the Insurer, Attn: Surveillance.
(ii) Amendments. Prior written consent of the Insurer is required for any
amendment to this ordinance. The City shall give the Insurer notice of any such proposed
amendment. A copy of any amendment to this ordinance that is consented to by the Insurer shall
be sent to Standard & Poor's Rating Services, a Division of The McGraw -Hill Companies, Inc.
(iii) Remedies. The Insurer shall be entitled to control and direct the
enforcement of all rights and remedies granted to owners of the 2005 Bonds. The Insurer shall
be recognized as the owner of each 2005 Bond for the purposes of exercising all rights and
privileges available to owners of the 2005 Bonds. The Insurer shall have the right to institute any
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suit, action, or proceeding at law or in equity under the same terms as an owner of the 2005
Bonds.
(iv) The Insurer as Third Party Beneficiary. The Insurer shall be a third -party
beneficiary under this ordinance.
(v) Subrogation. If principal and/or interest due on the 2005 Bonds is paid by
the Insurer, such 2005 Bonds shall remain outstanding under this ordinance for all purposes, and
shall not be deemed defeased or otherwise satisfied, or paid by the City, and the pledge of
revenues and all covenants, agreements and other obligations of the City to the owners of the
2005 Bonds shall continue to exist and shall run to the benefit of the Insurer, and the Insurer shall
be subrogated to the rights of such owners.
Section 13.7. Benefits of Ordinance Limited to City, Bondowners, Insurer, and Bond
Registrar. 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 2005 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
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 2005 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 2005 Bonds.
Section 13.10. General Authorization. The Mayor, Director of Public Works and
Utilities, 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
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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.
PASSED by the City Council of the City of Port Angeles, Washington, at a regular
meeting thereof, held this 1st day of February, 2005.
Attest:
City Clerk
Published by Summary: February 6, 2005
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Mayor
0 faliackz)s
P0D011DOT1 FR 02/01/05
EXHIBIT A
FINANCIAL GUARANTY AGREEMENT
FINANCIAL GUARANTY AGREEMENT made as of , 2004, by and
between (the "Issuer ") and XL Capital Assurance Inc. (the "Insurer "), a New York stock
insurance company.
WITNESSETH:
WHEREAS, the Issuer has or will issue the Obligations; and
WHEREAS, pursuant to the terms of the Bond Document the Issuer agrees to make
certain payments on the Obligations; and
WHEREAS, the Insurer will issue its Debt Service Reserve Policy, substantially in the
form set forth in Annex A to this Agreement, guaranteeing certain payments by the Issuer subject
to the terms and limitations of the Debt Service Reserve Policy; and
WHEREAS, to induce the Insurer to issue the Debt Service Reserve Policy, the Issuer has
agreed to pay the premium for the Debt Service Reserve Policy and to reimburse the Insurer for
all payments made by the Insurer under the Debt Service Reserve Policy, all as more fully set
forth in this Agreement, and
WHEREAS, the Issuer understands that the Insurer expressly requires the delivery of this
Agreement as part of the consideration for the execution by the Insurer of the Debt Service
Reserve Policy; and
NOW, THEREFORE, in consideration of the premises and of the agreements herein
contained and of the execution of the Debt Service Reserve Policy, the Issuer and the Insurer
agree as follows:
ARTICLE I.
DEFINITIONS; DEBT SERVICE RESERVE POLICY
Section 1.01 Definitions. The terms which are capitalized herein shall have the
meanings specified in Annex B hereto.
Section 1.02 Debt Service Reserve Policy.
(a) The Insurer will issue the Debt Service Reserve Policy in accordance with
and subject to the terms and conditions of the Commitment.
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(b) The maximum liability of the Insurer under the Debt Service Reserve
Policy and the coverage and term thereof shall be subject to and limited by the terms and
conditions of the Debt Service Reserve Policy.
Section 1.03 Premium. In consideration of the Insurer agreeing to issue the Debt
Service Reserve Policy hereunder, the Issuer hereby agrees to pay or cause to be paid the
Premium set forth in Annex B hereto. The Premium on the Debt Service Reserve Policy is not
refundable for any reason.
Section 1.04 Certain Other Expenses. The Issuer will pay all reasonable fees and
expenses of the Insurer's outside counsel related to any amendment or modification of this
Agreement or the Debt Service Reserve Policy.
ARTICLE II.
REIMBURSEMENT AND INDEMNIFICATION
OBLIGATIONS OF ISSUER AND SECURITY THEREFOR
Section 2.01 Reimbursement for Payments under the Debt Service Reserve Policy and
Expenses; Indemnification.
(a) The Issuer will reimburse the Insurer, within the Reimbursement Period,
without demand or notice by the Insurer to the Issuer or any other person, to the extent of each
Debt Service Reserve Policy Payment with interest on each Debt Service Reserve Policy
Payment from and including the date made to the date of the reimbursement at the lesser of the
Reimbursement Rate or the maximum rate of interest permitted by then applicable law.
(b) The Issuer also agrees to reimburse the Insurer immediately and
unconditionally upon demand for all reasonable expenses (including, without limitation, the fees
and expenses of the Insurer's outside counsel) incurred by the Insurer in connection with the
Debt Service Reserve Policy and the enforcement by the Insurer of the Issuer's obligations under
this Agreement, the Bond Document, and any other document executed in connection with the
issuance of the Obligations, together with interest on all such expenses from and including the
date incurred to the date of payment at the rate set forth in subsection (a) of this Section 2.01.
(c) The Issuer agrees to indemnify the Insurer, to the extent permitted by state
law, against any and all liability, claims, loss, costs, damages, fees of attorneys and other
expenses which the Insurer may sustain or incur by reason of or in consequence of (i) the failure
of the Issuer to perform or comply with the covenants or conditions of this Agreement or
(ii) reliance by the Insurer upon representations made by the Issuer or (iii) a default by the Issuer
under the terms of the Bond Document or any other documents executed in connection with the
issuance of the Obligations.
(d) The Issuer agrees that all amounts owing to the Insurer pursuant to
Section 1.03 hereof and this Section 2.01 must be paid in full prior to any optional redemption or
refunding of the Obligations.
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(e) Unless Insurer appoints a fiscal agent pursuant to the terms of the Debt
Service Reserve Policy, all payments made to the Insurer under this Agreement shall be paid in
lawful currency of the United States in immediately available funds at the Insurer's office at
1221 Avenue of the Americas, New York, New York 10020, Attention: Surveillance, or at such
other place as shall be designated by the Insurer.
Section 2.02 Allocation of Payments. The Insurer and the Issuer hereby agree that each
payment received by the Insurer from or on behalf of the Issuer as a reimbursement to the Insurer
as required by Section 2.01 hereof shall be applied by the Insurer first, toward payment of any
unpaid premium; second, toward repayment of the aggregate Debt Service Reserve Policy
Payments made by the Insurer and not yet repaid, payment of which will reinstate all or a portion
of the Debt Service Reserve Policy Coverage as set forth therein; and third, upon full
reinstatement of the Debt Service Reserve Policy Coverage to the Policy Limit, toward other
amounts, including, without limitation, any interest payable with respect to any Debt Service
Reserve Policy Payments then due to the Insurer.
Section 2.03 Security for Payments; Instruments of Further Assurance. To the extent,
but only to the extent, that the Bond Document, or any related indenture, trust agreement,
ordinance, resolution, mortgage, security agreement or similar instrument, if any, pledges to the
Owners or any trustee therefor, or grants a security interest or lien in or on any collateral,
property, revenue or other payments ( "Collateral and Revenues ") in order to secure the
Obligations or provide a source of payment for the Obligations, the Issuer hereby grants to the
Insurer a security interest in or lien on, as the case may be, and pledges to the Insurer all such
Collateral and Revenues as security for payment of all amounts due hereunder and under the
Bond Document or any other document executed in connection with the issuance of the
Obligations, which security interest, lien and/or pledge created or granted under this Section 2.03
shall be secured on a parity with the interests of the Owners and any trustee therefor in such
Collateral and Revenues, except as otherwise provided. The Issuer agrees that it will, from time
to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered,
any and all financing statements, if applicable, and all other further instruments as may be
required by law or as shall reasonably be requested by the Insurer for the perfection of the
security interest, if any, granted under this Section 2.03 and for the preservation and protection of
all rights of the Insurer under this Section 2.03.
Section 2.04 Unconditional Obligation. The obligations hereunder are absolute and
unconditional and will be paid or performed strictly in accordance with this Agreement, subject
to the limitations of the Bond Document, irrespective of:
(a) any lack of validity or enforceability of, or any amendment or other
modification of, or waiver with respect to the Obligations, the Bond Document or any other
document executed in connection with the issuance of the Obligations; or
(b) any exchange, release or nonperfection of any security interest in property
securing the Obligations or this Agreement or any obligations hereunder; or
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(c) any circumstances that might otherwise constitute a defense available to,
or discharge of, the Issuer with respect to the Obligations, the Bond Document or any other
document executed in connection with the issuance of the Obligations; or
(d) whether or not such obligations are contingent or matured, disputed or
undisputed, liquidated or unliquidated.
Section 2.05 Insurer's Rights. The Issuer shall repay the Insurer to the extent of
payments made and expenses incurred by the Insurer in connection with the Obligations and this
Agreement.
Section 2.06 Ongoing Information Obligations of Issuer.
(a) Quarterly Reports. The Issuer will provide to the Insurer within 45 days of
the close of each quarter interim financial statements covering all fund balances under the Bond
Document, a statement of operations (income statement), balance sheet and changes in fund
balances. These statements need not be audited by an independent certified public accountant,
but if any audited statements are produced, they must be provided to the Insurer;
(b) Annual Reports. The Issuer will provide to the Insurer annual financial
statements audited by an independent certified public accountant within 90 days of the end of
each fiscal year;
(c) Access to Facilities Books and Records. The Issuer will grant the Insurer
reasonable access to the properties financed by the Obligations and will make available to the
Insurer, at reasonable times and upon reasonable notice all books and records relative to the
project financed by the Obligations; and
(d) Compliance Certificate. On an annual basis the Issuer will provide to the
Insurer a certificate confirming compliance with. all covenants and obligations hereunder and
under the Bond Document or any other document executed in connection with the issuance of the
obligations.
ARTICLE III.
AMENDMENTS TO DOCUMENT
So long as this Agreement is in effect, the Issuer agrees that it will not agree to amend the
Bond Document or any other document executed in connection with the issuance of the
Obligations, without the prior written consent of the Insurer.
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P1DOT\DOT1 FR 02/01/05
ARTICLE IV.
EVENTS OF DEFAULT; REMEDIES
Section 4.01 Events of Default. The following events shall constitute Events of Default
hereunder:
(a) The Issuer shall fail to pay to the Insurer when due any amount payable
under Section 1.03; or
(b) The Issuer shall fail to pay to the Insurer any amount payable under
Sections 1.04 and 2.01 hereof and such failure shall have continued for a period in excess of the
Reimbursement Period; or
(c) Any material representation or warranty made by the Issuer under the
Bond Document or hereunder or any statement in the application for the Debt Service Reserve
Policy or any report, certificate, financial statement, document or other instrument provided in
connection with the Commitment, the Debt Service Reserve Policy, the Obligations, or herewith
shall have been materially false at the time when made; or
(d) Except as otherwise provided in this Section 4.01, the Issuer shall fail to
perform any of its other obligations under the Bond Document, or any other document executed
in connection with the issuance of the Obligations, or hereunder, provided that such failure
continues for more than 30 days after receipt by the Issuer or written notice of such failure to
perform; or
(e) The Issuer shall (i) voluntarily commence any proceeding or file any
petition seeking relief under the United States Bankruptcy Code or any other Federal, state or
foreign bankruptcy, insolvency or similar law, (ii) consent to the institution of, or fail to
controvert in a timely and appropriate manner, any such proceeding or the filing of any such
petition, (iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator or similar official for such party or for a substantial part of its property, (iv) file an
answer admitting the material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors, (vi) become unable, admit in writing
its inability or fail generally to pay its debts as they become due or (vii) take action for the
purpose of effecting any of the foregoing; or
(1) An involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the Issuer, or of a
substantial part of its property, under the United States Bankruptcy Code or any other Federal,
state or foreign bankruptcy, insolvency or similar law or (ii) the appointment of a receiver,
trustee, custodian, sequestrator or similar official for the Issuer or for a substantial part of its
property; and such proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall continue unstayed and in effect for
30 days.
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Section 4.02 Remedies. If an Event of Default shall occur and be continuing, then the
Insurer may [(a) declare the Remaining Premium Amount and all other amounts owing hereunder
to be due and payable forthwith, whereupon the same shall immediately become due and payable
by the Borrower and (b)] take whatever action at law or in equity may appear necessary or
desirable to collect the amounts then due and thereafter to become due under this Agreement or
to enforce performance of any obligation of the Issuer to the Insurer under the Bond Document or
any related instrument, and any obligation, agreement or covenant of the Issuer under this
Agreement. All rights and remedies of the Insurer under this Section 4.02 are cumulative and the
exercise of any one remedy does not preclude the exercise of one or more of the other available
remedies.
ARTICLE V.
SETTLEMENT
The Insurer shall have the exclusive right to decide and determine whether any claim,
liability, suit or judgment made or brought against the Insurer, the Issuer or any other party on the
Debt Service Reserve Policy shall or shall not be paid, compromised, resisted, defended, tried or
appealed, and the Insurer's decision thereon, if made in good faith, shall be final and binding
upon the Insurer, the Issuer and any other party on the Debt Service Reserve Policy. An itemized
statement of payments made by the Insurer, certified by an officer of the Insurer, or the voucher
or vouchers for such payments, shall be prima facie evidence of the liability of the Issuer, and if
the Issuer fails to immediately reimburse the Insurer upon the receipt of such statement of
payments, interest shall be computed on such amount from the date of any payment made by the
Insurer at the rate set forth in subsection (a) of Section 2.01 hereof.
ARTICLE VI.
MISCELLANEOUS
Section 6.01 Interest Computations. All computations of interest due hereunder shall
be made on the basis of the actual number of days elapsed over a year of 360 days.
Section 6.02 Exercise of Rights. No failure or delay on the part of the Insurer to
exercise any right, power or privilege under this Agreement and no course of dealing between the
Insurer and the Issuer or any other party shall operate as a waiver of any such right, power or
privilege, nor shall any single or partial exercise of any such right, power or privilege preclude
any other or further exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein expressly provided are cumulative and not exclusive of any rights or
remedies which the Insurer would otherwise have pursuant to law or equity. No notice to or
demand on any party in any case shall entitle such party to any other or further notice or demand
in similar or other circumstances, or constitute a waiver of the right of the other party to any other
or further action in any circumstances without notice or demand.
Section 6.03 Amendment and Waiver. Any provision of this Agreement may be
amended, waived, supplemented, discharged or terminated only with the prior written consent of
the Issuer and the Insurer. The Issuer hereby agrees that upon the written request of the Trustee,
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the Insurer may make a modification to or issue a substitute for the Debt Service Reserve Policy
to cure any ambiguity or formal defect or omission in the Debt Service Reserve Policy which
does not materially change the terms of the Debt Service Reserve Policy nor adversely affect the
rights of the Owners, and this Agreement shall apply to such substituted Debt Service Reserve
Policy. The Insurer agrees to deliver to the Issuer and to the company or companies, if any,
rating the Obligations, a copy of such substituted Debt Service Reserve Policy.
Section 6.04 Successors and Assigns; Descriptive Headings.
(a) This Agreement shall bind, and the benefits thereof shall inure to, the
Issuer and the Insurer and their respective successors and assigns; provided, that the Issuer may
not transfer or assign any or all of its rights and obligations hereunder without the prior written
consent of the Insurer.
(b) The descriptive headings of the various provisions of this Agreement are
inserted for convenience of reference only and shall not be deemed to affect the meaning or
construction of any of the provisions hereof.
Section 6.05 Other Sureties. If the Insurer shall procure any other surety to reinsure the
Debt Service Reserve Policy, this Agreement shall inure to the benefit of such other surety, its
successors and assigns, so as to give to it a direct right of action against the Issuer to enforce this
Agreement, and "the Insurer," wherever used herein, shall be deemed to include such reinsuring
surety, as its respective interests may appear.
Section 6.06 Signature on Bond. The Issuer's liability shall not be affected by its
failure to sign the Debt Service Reserve Policy nor by any claim that other indemnity or security
was to have been obtained nor by the release of any indemnity, nor the return or exchange of any
collateral that may have been obtained.
Section 6.07 Waiver. The Issuer waives any defense that this Agreement was executed
subsequent to the date of the Debt Service Reserve Policy, admitting and covenanting that such
Debt Service Reserve Policy was executed pursuant to the Issuer's request and in reliance on the
Issuer's promise to execute this Agreement.
Section 6.08 Notices, Requests, Demands. Except as otherwise expressly provided
herein, all written notices, requests, demands or other communications to or upon the respective
parties hereto shall be deemed to have been given or made when actually received, or in the case
of telex or telecopier notice sent over a telex or a telecopier machine owned or operated by a
party hereto, when sent, addressed as specified below or at such other address as any of the
parties may hereafter specify in writing to the others:
If to the Issuer:
If to the Trustee:
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[Address]
[Address]
P: \DOT\DOTIFR 02/01/05
If to the Insurer:
XL Capital Assurance Inc.
1221 Avenue of the Americas
New York, New York 10020
Attention: Surveillance
Fax:: (212) 478 -3587
Section 6.09 Survival of Representations and Warranties. All representations,
warranties and obligations contained herein shall survive the execution and delivery of this
Agreement and the Debt Service Reserve Policy.
Section 6.10 Governing Law. This Agreement and the rights and obligations of the
parties under this Agreement shall be governed by and construed and interpreted in accordance
with the laws of the State.
Section 6.11 Counterparts. This Agreement may be executed in any number of copies
and by the different parties hereto on the same or separate counterparts, each of which shall be
deemed to be an original instrument, and all of which shall constitute but one and the same
instrument. Complete counterparts of this Agreement shall be lodged with the Issuer and the
Insurer.
Section 6.12 Severability. In the event any provision of this Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate
or render unenforceable any other provision hereof.
Section 6.13 Survival of Obligations. Notwithstanding anything to the contrary
contained in this Agreement, the obligation of the Issuer to pay all amounts due hereunder and
the rights of the Insurer to pursue all remedies shall survive the expiration, termination or
substitution of the Debt Service Reserve Policy and this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this
Agreement to be duly executed and delivered as of the date first above written.
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[ISSUER NAME]
By:
Name:
Title:
XL CAPITAL ASSURANCE INC.
By:
Name:
Title:
P:IDOT\DOTIFR 02/01/05
ANNEX A
[Form of Debt Service Reserve Policy]
Annex A - 1
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ANNEX B
DEFINITIONS
For all purposes of this Agreement and the Debt Service Reserve Policy, except as
otherwise expressly provided herein or unless the context otherwise requires, all capitalized
terms shall have the meaning as set out below, which shall be equally applicable to both the
singular and plural forms of such terms.
"Agreement" means this Financial Guaranty Agreement.
"Bond Document" means the [Indenture].
"Closing Date" means , 20 .
"Debt Service Payments" means those payments required to be made by or on behalf of
the Issuer which will be applied to payment of principal of and interest on the Obligations.
"Debt Service Reserve Policy" means that policy attached hereto as Annex A and issued
by the Insurer guaranteeing, subject to the terms and limitations thereof, including the Policy
Limit, Debt Service Payments required to be made by the Issuer under the Bond Document.
"Debt Service Reserve Policy Coverage" means the amount available at any particular
time to be paid under the terms of the Debt Service Reserve Policy, which amount shall never
exceed the Policy Limit.
"Debt Service Reserve Policy Payment" means the amount of any payment by the Insurer
under the Debt Service Reserve Policy.
"Event of Default" shall mean those events of default set forth in Section 4.01 of the
Agreement.
"[Indenture]" means
"Insurer" has the same meaning as set forth in the first paragraph of this Agreement.
"Issuer" means
"Notice of Nonpayment" means the certificate submitted to the Insurer for payment under
the Debt Service Reserve Policy substantially in the form attached to the Debt Service Reserve
Policy as Attachment I.
"Obligations" means [the Bonds]
Annex B - 1
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"Owners" means the registered owner of any Obligation as indicated in the books
maintained by the Trustee, the Issuer or any designee of the Issuer for such purpose.
"Policy Limit" means $
"Premium" means $ payable to the Insurer [on or prior to the Closing Date]
[on [specify dates]].
"Reimbursement Period" means, with respect to a particular Debt Service Reserve Policy
Payment, the period commencing on the date of such payment and ending on the expiration of
12 months following such Debt Service Reserve Policy Payment.
"Reimbursement Rate" means Citibank's prime rate plus three (3) percent per annum, as
of the date of such Debt Service Reserve Policy Payment, said "prime rate" being the rate of
interest announced from time to time by Citibank, N.A., New York, New York, as its prime rate.
The rate of interest shall be calculated on the basis of the actual number of days elapsed over a
360 -day year.
[ "Remaining Premium Amount" means, as of any date of determination, the present
value, using a discount rate of %, of each of the [Monthly] Premiums scheduled to be paid
from such date until the scheduled maturity date of the Obligations pursuant to Section 1.03
hereof, using the aggregate outstanding principal amount of the Obligations as of such date of
determination in order to calculate such [Monthly] Premiums.]
"State" means
"Trustee" means
AnnexB -2
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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. 3186 (the
"Ordinance ") of the City, duly passed at a regular meeting of the City Council (the "Council ") of
the City held on February 1, 2005.
2. That said meeting was duly convened and held in all respects in accordance with
law, and to the extent required by law, due and proper notice of such meeting was given; that a
legal quorum was present throughout the meeting and a legally sufficient number of members of
the Council voted in the proper manner for the passage of said Ordinance; that all other
requirements and proceedings incident to the proper passage of said Ordinance have been fully
fulfilled, carried out and otherwise observed; and that I am authorized to execute this certificate.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day of
February ,2005.
P:DOT\DOT1FR 02/01/05
Summaries of Ordinances Adopted by the
Port Angeles City Council
on February 1, 2005
Ordinance No. 3185
This Ordinance of the City of Port Angeles, Washington, authorizes the issuance and sale of
unlimited tax general obligation refunding bonds of the City in the aggregate principal amount of
$2,345,000 to refund certain outstanding unlimited tax general obligation bonds of the City;
authorizes the appointment of an escrow agent and the execution of an escrow agreement related to
such refunding; provides the date and form of said bonds; provides for the disposition of the bond
proceeds; provides for the annual levy of taxes to pay the principal of and interest on the bonds; and
approves the sale of the bonds.
Ordinance No. 3186
This Ordinance of the City of Port Angeles, Washington, authorizes the issuance of electric revenue and
refunding bonds in the principal amount of $3,185,000 to refund certain outstanding electric revenue
bonds of the City and to finance the cost of certain improvements to the City's Electric System;
authorizes the appointment of an escrow agent and the execution of an escrow agreement related to the
refunding; authorizes the terms of the bonds; establishes covenants to secure payment of the bonds; and
approves the sale of the bonds.
Ordinance No. 3187
This Ordinance of the City of Port Angeles, Washington, adjusts the corporate boundary of the City of
Port Angeles to include a portion of Mt. Angeles Road, legally described as all of Mount Angeles Road
right -of -way, County Road No. 34310, lying within the northeast quarter of the southwest quarter of
Section 14, Township 30 North, Range 6 West of the Willamette Meridian, Clallam County, Washington;
and a portion of US 101 between Doyle Road and the Pine Street Cutoff, legally described as a portion
of the south half of Section 9, Township 30 North, Range 6 West of the Willamette Meridian, Clallam
County, Washington, beginning at the intersection of the west margin of Pine Street Cutoff and the south
margin of U.S. Highway 101; thence west along said south margin to the east margin of Doyle Road;
thence northerly along said east margin, and a prolongation thereof, to the north margin of U.S. Highway
101 and the limits of the City of Port Angeles; thence east along said north margin and said limits to the
west margin of Pine Street cutoff; thence southerly to the Point of Beginning.
This Ordinance shall be effective when a similar ordinance or resolution is approved by the legislative
body of Clallam County, unless such ordinance or resolution has already been adopted by Clallam
County, in which case the ordinance shall be effective upon the adoption of this Ordinance.
The full texts of the Ordinances are available at City Hall in the City Clerk's office or will be mailed upon
request. Office hours are Monday through Friday from 8:00 a.m. to 5:00 p.m. Unless otherwise stated above,
these Ordinances shall take effect five days following the date of publication by summary.
Becky J. Upton, CMC
City Clerk
Publish: February 6, 2005