HomeMy WebLinkAbout3407CITY OF PORT ANGELES, WASHINGTON
WATER AND WASTEWATER UTILITY REVENUE BONDS, 2010
ORDINANCE NO. 3407
AN ORDINANCE of the City of Port Angeles, Washington, combining
the City's storm water utility with the City's water and wastewater
utility; authorizing the issuance of water and wastewater utility
revenue bonds of the City in the principal amount of $5,695,000 to
finance the cost of improvements to the City's storm water utility
and water and wastewater utility; establishing the date, form,
terms, maturities and covenants of the bonds; and approving the
sale of the bonds.
Passed August 3, 2010
Prepared By:
K&L GATES LLP
Seattle, Washington
TABLE OF CONTENTS
Page
Section 1. Definitions 2
Section 2. Combining the Storm Water Utility with the Water and Wastewater Utility 15
Section 3. The Projects 15
Section 4. Compliance with Parity Conditions 15
Section 5. Authorization and Description of Bonds 16
Section 6. Registration, Exchange and Payments 17
Section 7. Redemption; Purchase of Bonds 19
Section 8. Form of Bonds 21
Section 9. Execution of Bonds 25
Section 10. Application of Bond Proceeds 25
Section 11. Revenue Fund 25
Section 12. Rate Stabilization Fund 26
Section 13. Bond Account 26
Section 14. Adequacy of Revenues 28
Section 15. Covenants and Agreements 28
Section 16. Tax Exemption 30
Section 17. Defeasance 31
Section 18. Issuance of Future Parity Bonds 32
Section 19. Sale of Bonds 34
Section 20. Official Statement 34
Section 21. Undertaking to Provide Ongoing Disclosure 35
Section 22. Bond Insurance 37
Section 23. Supplements and Amendments 45
Section 24. Lost or Destroyed Bonds 46
Section 25. Severability 46
Section 26. Effective Date 46
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P 1.20391 DOT\20391 2A4 08/03/10
ORDINANCE NO. 3407
AN ORDINANCE of the City of Port Angeles, Washington, combining
the City's storm water utility with the City's water and wastewater
utility; authorizing the issuance of water and wastewater utility
revenue bonds of the City in the principal amount of $5,695,000 to
finance the cost of improvements to the City's storm water utility
and water and wastewater utility; establishing the date, form,
terms, maturities and covenants 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 a storm water utility and a combined water and
wastewater utility; and
WHEREAS, it is in the best interest of the City and ratepayers of the storm water utility
and the water and wastewater utility that certain improvements be made to facilities of each
utility (as further described herein, the "Projects ") and that revenue bonds in the principal amount
of $5,695,000 (the "Bonds ") be issued to finance costs of the Projects; and
WHEREAS, there are currently outstanding $3,525,000 principal amount of the City's
Water and Wastewater Utility Revenue Bonds, 2003 (the "2003 Bonds "), and $7,445,000
principal amount of the City's Water and Wastewater Utility Revenue Refunding Bonds, 2009
(the "2009 Bonds "); and
WHEREAS, the ordinances authorizing the 2003 Bonds and the 2009 Bonds permit the
City to combine the City's storm water utility with the water and wastewater utility for borrowing
purposes, and the City Council of the City (the "Council ") has determined that it is in the best
interest of the City and ratepayers of the utilities to combine the utilities; and
WHEREAS, the ordinances authorizing the 2003 Bonds and the 2009 Bonds permit the
City to issue additional water and wastewater utility revenue bonds on a parity with the
2003 Bonds and the 2009 Bonds if certain conditions are met; and
WHEREAS, after due consideration it appears to the Council that those parity conditions
can be met and that the City may issue the Bonds on a parity with the 2003 Bonds and
2009 Bonds; and
WHEREAS, the City has received the offer of Seattle- Northwest Securities Corporation
(the "Underwriter ") to purchase the Bonds, and it is in the best interests of the City and
ratepayers of the System that the City accept that offer and sell the Bonds to the Underwriter on
the terms set forth in its offer and in this ordinance;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PORT ANGELES,
WASHINGTON, DO ORDAIN, as follows:
Section 1. Definitions. As used in this ordinance the following words and phrases
have the following meanings:
"AGC" means Assured Guaranty Corp. or any successor thereto or assignee thereof, as
provider of a municipal bond insurance policy for the 2009 Bonds.
"AGM" means Assured Guaranty Municipal Corp. (formerly known as Financial Security
Assurance Inc.), or any successor thereto or assignee thereof, as provider of a municipal bond
insurance policy for the Bonds.
"Annual Debt Service," for so long as any 2003 Bonds remain outstanding, for any Fiscal
Year or calendar year means the sum of:
(a) the interest due in such year on all outstanding Parity Bonds excluding, however,
interest to be paid from the proceeds of Parity Bonds,
(b) the principal of all outstanding Serial Bonds due in such year, and
(c) the Sinking Fund Requirement, if any, for such year.
If the interest rate on any such bonds is other than a fixed rate, the rate applicable at the
time of the computation shall be used; provided, however, that so long as the 2009 Bonds are
outstanding the City may issue variable rate obligations payable from Gross Revenue only as
provided in Section 18(d) of this ordinance.
From and after the date when no 2003 Bonds remain outstanding, "Annual Debt Service,"
for any Fiscal Year or calendar year means the sum of:
(a) the interest due in such year on all outstanding Parity Bonds excluding, however,
interest to be paid from the proceeds of Parity Bonds,
(b) the principal of all outstanding Serial Bonds due in such year, and
(c) the Sinking Fund Requirement, if any, for such year.
For purposes of satisfying the rate covenant in Section 15(a) and the Future Parity Bond
test in Section 18(a), Annual Debt Service for any Fiscal Year or calendar year shall exclude any
Debt Service Offsets. If the interest rate on any such bonds is other than a fixed rate, the rate
applicable at the time of the computation shall be used; provided, however, that so long as the
2009 Bonds are outstanding the City may issue variable rate obligations payable from Gross
Revenue only as provided in Section 18(d) of this ordinance. From and after such time as no
2003 Bonds or 2009 Bonds remain outstanding, if the interest rate on any Parity Bonds is other
than a fixed rate, the rate applicable at the time of computation shall be used unless such rate is
less than an interest rate equal to the yield to maturity equal to the higher of (i) the average of the
SIFMA Municipal Swap Index over the 60 month period immediately preceding the date of
computation, or (ii) the average of the SIFMA Municipal Swap Index over the 12 month period
immediately preceding the date of computation, as determined within ten days prior to the date
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of computation or, if such computation is being made in connection with the certificate required
for the issuance of Future Parity Bonds, then within ten days prior to the date of such certificate.
"Assessments" means assessments (including interest and penalties) levied in any utility
local improvement district of the City for the acquisition or construction of additions and
improvements to and extension of the System, if such assessments are pledged to be paid into the
Bond Account.
"Average Annual Debt Service" means the amount determined by dividing (a) the sum of
all interest and principal to be paid on all Parity Bonds from the date of determination to the last
maturity date of such Parity Bonds, by (b) the number of Fiscal Years or calendar years from and
including the Fiscal Year or calendar year in which the determination is made to the last Fiscal
Year or calendar year in which any of such Parity Bonds will be outstanding.
"Bond Account" means the 1994 Water and Wastewater Utility Revenue Bond Fund
created by Section 15 of Ordinance No. 2843 and continued pursuant to Section 13 of this
ordinance.
"Bond Insurance Policy" means the financial guaranty insurance policy issued by AGM to
guaranty the payment when due of the principal of and interest on the Bonds as provided therein.
"Bond Register" means the books or records maintained by the Bond Registrar for the
purpose of registration of the Bonds.
"Bond Registrar" means the fiscal agency of the State of Washington in New York,
New York whose duties include registering and authenticating the Bonds, maintaining the Bond
Register, effecting transfer of ownership of the Bonds, and paying the principal of, premium, if
any, and interest on the Bonds.
"Bonds" mean the City's Water and Wastewater Utility Revenue Bonds, 2010, issued in
the aggregate principal amount of $5,695,000 pursuant to this ordinance.
"City" means the City of Port Angeles, 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.
"Commission" means the United States Securities and Exchange Commission.
"Costs of Maintenance and Operation" means all necessary operating expenses, current
maintenance expenses, expenses of reasonable upkeep and repairs, and insurance and
administrative expenses of the System, but excludes depreciation, payments for debt service or
into reserve accounts and costs of capital additions to or replacements of the System, taxation by
the City or payments in lieu of taxes.
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"Council" means the Port Angeles City Council, as the general legislative body of the
City as the same is duly and regularly constituted from time to time.
"Debt Service Account" means the account of that name created in the Bond Account by
Section 15 of Ordinance No. 2843 and continued pursuant to Section 13 of this ordinance.
"Debt Service Offset" means receipts of the City that are not included in Gross Revenue
and that are legally available to pay debt service on Parity Bonds, including without limitation
federal interest subsidy payments, designated as such by the City.
"DTC" means The Depository Trust Company, New York, New York, a limited purpose
trust company organized under the laws of the State of New York, as initial depository for the
Bonds or any successor substitute depository for the Bonds.
"Finance Director" means the duly appointed and acting Finance Director of the City or
the successor to the duties of that office.
"Fiscal Year" means the fiscal year used by the City at any time. At the time of the
passage of this ordinance, the Fiscal Year is the twelve -month period beginning January 1 of
each year and ending December 31 of each year.
"Future Parity Bonds" mean any revenue bonds, revenue warrants or other revenue
obligations that may be issued in the future with a lien on money in the Revenue Fund to pay and
secure the payment of the principal thereof and interest thereon equal to the lien created on the
money in such Fund to pay and secure the payment of the principal of and interest on the 2003
Bonds, the 2009 Bonds, and the Bonds.
"Government Obligations" means those obligations now or hereafter defined as such in
Chapter 39.53 RCW, as this chapter may be hereafter amended or restated.
"Gross Revenue" means all earnings, revenue and money, except Assessments, received
by the City from or on account of the operation of the System, including proceeds from the sale,
lease or other disposition of any of the properties or facilities of the System, and the income from
investments of money in the Revenue Fund and any bond fund or from any other investment
thereof except the income from investments irrevocably pledged to the payment of revenue bonds
pursuant to a plan of retirement or refunding. The term "Gross Revenue" does not include grants
or bond proceeds, but does include federal or state reimbursements of operating expenses to the
extent such expenses are included as "Costs of Maintenance and Operation."
"Letter of Representations" means the Blanket Issuer Letter of Representations from the
City to DTC dated September 23, 1998.
"MBIA" means the MBIA Insurance Corporation, a stock insurance company
incorporated under the laws of the State of New York, or any successor thereto, as provider of a
policy of municipal bond insurance for the 2003 Bonds (which policy is currently administered
and reinsured by National Public Finance Guarantee Corporation).
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"Moody's" means Moody's Investors Service, a corporation duly organized and existing
under and by virtue of the laws of the State of Delaware, or its successor.
"MSRB" means the Municipal Securities Rulemaking Board or any successor to its
functions.
Bonds.
"Net Revenue" means the Gross Revenue less the Costs of Maintenance and Operation.
"Parity Bonds" means the 2003 Bonds, the 2009 Bonds, the Bonds and any Future Parity
"Permitted Investments" means:
(i) any Washington State - administered investment pool in which the City is
statutorily permitted or required to invest City funds; and
(ii) any of the following investments, if permitted under the laws of the State of
Washington as amended from time to time and, so long as the Bonds remain outstanding, if also
permitted under section (ii) of this definition of "Permitted Investments ":
A. Direct obligations of the United States of America (including
obligations issued or held in book -entry form on the books of the Department of the Treasury,
and CATS and TGRS) or obligations the principal of and interest on which are unconditionally
guaranteed by the United States of America.
B. Bonds, debentures, notes or other evidence of indebtedness issued
or guaranteed by any of the following federal agencies and provided such obligations are backed
by the full faith and credit of the United States of America (stripped securities are only permitted
if they have been stripped by the agency itself):
1. U.S. Export-Import Bank: direct obligations or fully
guaranteed certificates of beneficial ownership;
ownership;
2. Farmers Home Administration: certificates of beneficial
3. Federal Financing Bank;
4. Federal Housing Administration Debentures;
5. General Services Administration: participation certificates;
6. Government National Mortgage Association (GNMA):
GNMA - guaranteed mortgage- backed bonds and GNMA - guaranteed pass - through obligations;
financing; and
7. U.S. Maritime Administration: guaranteed Title XI
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8. U.S. Department of Housing and Urban Development:
project notes; local authority bonds; U.S. government - guaranteed new communities debentures;
U.S. government- guaranteed public housing notes and bonds.
C. Bonds, debentures, notes or other evidence of indebtedness issued
or guaranteed by any of the following non -full faith and credit U.S. government agencies
(stripped securities are only permitted if they have been stripped by the agency itself):
1. Federal Home Loan Bank System: senior debt obligations;
2. Federal Home Loan Mortgage Corporation: participation
certificates and senior debt obligations;
3. Federal National Mortgage Association: mortgage- backed
securities and senior debt obligations;
4. Student Loan Marketing Association: senior debt
obligations;
5. Resolution Funding Corp. (REFCORP) obligations; and
6. Farm Credit Systems: consolidated systemwide bonds and
notes.
D. Money market funds registered under the Federal Investment
Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and
having a rating by S &P of AAAm -G. AAAm or AAm.
E. Certificates of deposit secured at all times by collateral described
in (A) and /or (B) above. Such certificates must be issued by commercial banks, savings and loan
associations or mutual savings banks. The collateral must be held by a third party and the
bondholders must have a perfected first security interest in the collateral.
F. Certificates of deposit, savings accounts, deposit accounts or
money market deposits that are fully insured by FDIC, including BIF and SAIF.
G. Investment Agreements, including GIC's, acceptable to MBIA.
H. Commercial paper rated, at the time of purchaser, "Prime -1" by
Moody's and "A -1" or better by S &P.
I. Bonds or notes issued by any state or municipality rated by
Moody's and S &P in one of the two highest rating categories assigned by such agencies.
J. Federal funds or bankers acceptances with a maximum term of one
year of any bank that has an unsecured, uninsured and unguaranteed obligation rating of
"Prime -1" or "A3" or better by Moody's and "A" or better by S &P.
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K. Repurchase agreements providing for the transfer of securities
from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer /lender), and
the transfer of cash from a municipal entity to the dealer bank or securities firm with an
agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal
entity in exchange for the securities at a specified date. Repurchase Agreements must satisfy the
following criteria or be approved by AGM, by AGC (so long as the 2009 Bonds remain
outstanding), and by MBIA (so long as the 2003 Bonds remain outstanding):
1. Repos must be between the municipal entity and a dealer
bank or securities firm.
a. Primary dealers on the Federal Reserve reporting
dealer list that are rated A or better by S &P and Moody's, or
b. Banks rated "A" or above by S &P and Moody's.
2. The written repo contract must include the following:
a. Securities that are acceptable for transfer are:
(1) Direct U.S. governments, or
(2) Federal agencies backed by the full faith and
credit of the U.S. government (and FNMA & FHLMC).
b. The term of the repo may be up to thirty (30) days.
c. The collateral must be delivered to the municipal
entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the
trustee (if the trustee is supplying the collateral) before or simultaneously with payment
(perfection by possession of certificated securities).
d. The securities must be valued weekly,
marked -to- market at current market price plus accrued interest. The value of collateral must be
equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or
securities firm under the repo plus accrued interest. If the value of securities held as collateral
slips below 104% of the value of the cash transferred by municipality, then additional cash and /or
acceptable securities must be transferred. If, however, the securities used as collateral are FNMA
or FHLMC, then the value of collateral must equal 105 %.
3. A legal opinion must be delivered to the municipal entity to
the effect that the repo meets guidelines under state law for legal investment of public funds.
(iii) So long as the Bonds remain outstanding, any of the following investments, if
permitted under the laws of the State of Washington as amended from time to time:
A. (a) Cash (fully insured by the Federal Deposit Insurance
Corporation), (b) direct obligations (other than an obligation subject to variation in principal
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repayment) of the United States of America ( "U.S. Treasury Obligations "), (c) obligations fully
and unconditionally guaranteed as to timely payment of principal and interest by the United
States of America, (d) obligations fully and unconditionally guaranteed as to timely payment of
principal and interest by any agency or instrumentality of the United States of America when
such obligations are backed by the full faith and credit of the United States of America, or
(e) evidences of ownership of proportionate interests in future interest and principal payments on
obligations described above held by a bank or trust company as custodian, under which the
owner of the investment is the real party in interest and has the right to proceed directly and
individually against the obligor and the underlying government obligations are not available to
any person claiming through the custodian or to whom the custodian may be obligated. The
above referenced obligations may constitute defeasance 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).
B. Federal Housing Administration debentures.
C. The following obligations of government- sponsored agencies that
are not backed by the full faith and credit of the United States of America:
1. Federal Home Loan Mortgage Corporation (FHLMC)
senior debt obligations and Participation certificates (excluded are stripped mortgage securities
that are purchased at prices exceeding their principal amounts)
2. Farm Credit System (formerly Federal Land Banks, Federal
Intermediate Credit Banks and Banks for Cooperatives) consolidated system -wide bonds and
notes
3. Federal Home Loan Banks (FHL Banks) consolidated debt
obligations
4. Federal National Mortgage Association (FNMA) senior
debt obligations and mortgage- backed securities (excluded are stripped mortgage securities
which are purchased at prices exceeding their principal amounts)
D. Unsecured certificates of deposit, time deposits, and bankers'
acceptances (having maturities of not more than three hundred sixty -five (365) days) of any bank
the short-term obligations of which are rated "A -1 +" or better by S &P and "Prime -1" by
Moody's.
E. Deposits the aggregate amount of which are fully insured by the
Federal Deposit Insurance Corporation, in banks that have capital and surplus of at least $15
million.
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F. Commercial paper (having original maturities of not more than two
hundred seventy (270) days) rated "A -1 +" by S &P and "Prime -1" by Moody's.
G. Money market funds rated "Aam" or "AAm -G" by S &P, or better
and if rated by Moody's rated "Aa2" or better.
H. "State Obligations," which means:
1. Direct general obligations of any state of the United States
of America or any subdivision or agency thereof to which is pledged the full faith and credit of
a state the unsecured general obligation debt of which is rated at least "A3" by Moody's and at
least "A -" by S &P, or any obligation fully and unconditionally guaranteed by any state,
subdivision or agency whose unsecured general obligation debt is so rated.
2. Direct general short-term obligations of any state agency
or subdivision or agency thereof described in (a) above and rated "A -1 +" by S &P and "MIG -1"
by Moody's.
3. Special Revenue Bonds (as defined in the United States
Bankruptcy Code) of any state or state agency described in (b) above and rated "AA -" or better
by S &P and "Aa3" or better by Moody's.
I. Pre - refunded municipal obligations rated "AAA" by S &P and
"Aaa" by Moody's meeting the following requirements:
1. the municipal obligations are (1) not subject to redemption
prior to maturity or (2) the trustee for the municipal obligations has been given irrevocable
instructions concerning their call and redemption and the City of the municipal obligations has
covenanted not to redeem such municipal obligations other than as set forth in such
instructions;
2. the municipal obligations are secured by cash or
U.S. Treasury Obligations which may be applied only to payment of the principal of, interest
and premium on such municipal obligations;
3. the principal of and interest on the U.S. Treasury
Obligations (plus any cash in the escrow) has been verified by the report of independent
certified public accountants to be sufficient to pay in full all principal of, interest, and premium,
if any, due and to become due on the municipal obligations ( "Verification Report");
4. the cash or U.S. Treasury Obligations serving as security
for the municipal obligations are held by an escrow agent or trustee in trust for owners of the
municipal obligations;
5. no substitution of a U.S. Treasury Obligation shall be
permitted except with another U.S. Treasury Obligation and upon delivery of a new Verification
Report; and
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6. the cash or U.S. Treasury Obligations are not available to
satisfy any other claims, including those by or against the trustee or escrow agent.
J. Repurchase agreements: with (1) any domestic bank, or domestic
branch of a foreign bank, the long term debt of which is rated at least "A -" by S &P and "A3"
Moody's; or (2) any broker - dealer with "retail customers" or a related affiliate thereof which
broker - dealer has, or the parent company (which guarantees the provider) of which has, long-
term debt rated at least "A -" by S &P and "A3" by Moody's, which broker - dealer falls under the
jurisdiction of the Securities Investors Protection Corporation; or (3) any other entity rated at
least "A -" by S &P and "A3" Moody's and acceptable to AGM, to AGC (so long as the 2009
Bonds remain outstanding), and to MBIA (so long as the 2003 Bonds remain outstanding) (each
an "Eligible Provider "), provided that:
1. (i) permitted collateral shall include U.S. Treasury
Obligations, or senior debt obligations of GNMA, FNMA or FHLMC (no collateralized
mortgage obligations shall be permitted for these providers), and (ii) collateral levels must be at
least 102% of the total principal when the collateral type is U.S. Treasury Obligations, 103% of
the total principal when the collateral type is GNMA's and 104% of the total principal when the
collateral type is FNMA and FHLMC ( "Eligible Collateral ");
2. the trustee or a third party acting solely as agent therefore
or for the City (the "Custodian ") has possession of the collateral or the collateral has been
transferred to the Custodian in accordance with applicable state and federal laws (other than by
means of entries on the transferor's books) and such collateral shall be marked to market;
3. the collateral shall be marked to market on a daily basis
and the provider or Custodian shall send monthly reports to the trustee, the City, AGM, AGC
(so long as the 2009 Bonds remain outstanding), and MBIA (so long as the 2003 Bonds remain
outstanding), setting forth the type of collateral, the collateral percentage required for that
collateral type, the market value of the collateral on the valuation date and the name of the
Custodian holding the collateral;
4. the repurchase agreement (or guaranty, if applicable) may
not be assigned or amended without the prior written consent of AGM, AGC (so long as the
2009 Bonds remain outstanding), and MBIA (so long as the 2003 Bonds remain outstanding);
5. the repurchase agreement shall state and an opinion of
counsel shall be rendered at the time such collateral is delivered that the Custodian has a
perfected first priority security interest in the collateral, any substituted collateral and all
proceeds thereof;
6. the repurchase agreement shall provide that if during its
term the provider's rating by either Moody's or S &P is withdrawn or suspended or falls below
"A -" by S &P or "A3" by Moody's, as appropriate, the provider must, notify the City, the
trustee, AGM, AGC (so long as the 2009 Bonds remain outstanding), and MBIA (so long as the
2003 Bonds remain outstanding) within five (5) days of receipt of such notice. Within ten (10)
days of receipt of such notice, the provider shall either: (i) provide a written guarantee
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acceptable to AGM, to AGC (so long as the 2009 Bonds remain outstanding), and to MBIA (so
long as the 2003 Bonds remain outstanding), (ii) post Eligible Collateral, or (iii) assign the
agreement to an Eligible Provider. If the provider does not perform a remedy within ten (10)
business days, the provider shall, at the direction of the trustee (who shall give such direction if
so directed by AGM, by AGC (so long as the 2009 Bonds remain outstanding), and by MBIA
(so long as the 2003 Bonds remain outstanding) repurchase all collateral and terminate the
repurchase agreement, with no penalty or premium to the City or the trustee.
K. Investment agreements: with a domestic or foreign bank or
corporation the long -term debt of which, or, in the case of a guaranteed corporation the long-
term debt, or, in the case of a monoline financial guaranty insurance company, claims paying
ability, of the guarantor is rated at least "AA -" by S &P and "Aa3" by Moody's, and acceptable
to AGM, to AGC (so long as the 2009 Bonds remain outstanding), and to MBIA (so long as the
2003 Bonds remain outstanding) (each an "Eligible Provider "); provided that:
1. interest payments are to be made to the trustee at times and
in amounts as necessary to pay debt service (or, if the investment agreement is for the
construction fund, construction draws) on the Bonds;
2. the invested funds are available for withdrawal without
penalty or premium, at any time upon not more than seven (7) days' prior notice; the City and the
trustee hereby agree to give or cause to be given notice in accordance with the terms of the
investment agreement so as to receive funds thereunder with no penalty or premium paid;
3. the provider shall send monthly reports to the trustee, the
City, AGM, AGC (so long as the 2009 Bonds remain outstanding), and MBIA (so long as the
2003 Bonds remain outstanding) setting forth the balance the City or trustee has invested with the
provider and the amounts and dates of interest accrued and paid by the provider;
4. the investment agreement shall state that is an
unconditional and general obligation of the provider, and is not subordinated to any other
obligation of, the provider thereof or, if the provider is a bank, the agreement or the opinion of
counsel shall state that the obligation of the provider to make payments thereunder ranks pari
passu with the obligations of the provider to its other depositors and its other unsecured and
unsubordinated creditors;
5. the investment agreement (or guaranty, if applicable) may
not be assigned or amended without the prior written consent of AGM, AGC (so long as the 2009
Bonds remain outstanding), and MBIA (so long as the 2003 Bonds remain outstanding);
6. the City, the trustee, AGM, AGC (so long as the 2009
Bonds remain outstanding), and by MBIA (so long as the 2003 Bonds remain outstanding) shall
receive an opinion of domestic counsel to the provider that such investment agreement is legal,
valid, binding and enforceable against the provider in accordance with its terms;
7. the City, the trustee, AGM, by AGC (so long as the 2009
Bonds remain outstanding), and by MBIA (so long as the 2003 Bonds remain outstanding) shall
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receive an opinion of foreign counsel to the provider (if applicable) that (i) the investment
agreement has been duly authorized, executed and delivered by the provider and constitutes the
legal, valid and binding obligation of the provider, enforceable against the provider in accordance
with its terms, (b) the choice of law of the state set forth in the investment agreement is valid
under that country's laws and a court in such country would uphold such choice of law, and
(c) any judgment rendered by a court in the United States would be recognized and enforceable in
such country;
8. the investment agreement shall provide that if during its
term:
1. the provider's rating by either S &P or Moody's
falls below "AA -" or "Aa3," the provider shall, at its option, within ten (10) days of receipt of
publication of such downgrade, either (i) provide a written guarantee acceptable to AGM, to
AGC (so long as the 2009 Bonds remain outstanding), and to MBIA (so long as the 2003 Bonds
remain outstanding), (ii) post Eligible Collateral with the City, the trustee or a third party acting
solely as agent therefore (the "Custodian ") free and clear of any third party liens or claims, or
(iii) assign the agreement to an Eligible Provider, or (iv) repay the principal of and accrued but
unpaid interest on the investment;
2. the provider's rating by either S &P or Moody's is
withdrawn or suspended or falls below "A -" or "A3," the provider must, at the direction of the
City or the trustee (who shall give such direction if so directed by AGM, by AGC (so long as
the 2009 Bonds remain outstanding), and by MBIA (so long as the 2003 Bonds remain
outstanding) within ten (10) days of receipt of such direction, repay the principal of and accrued
but unpaid interest on the investment, in either case with no penalty or premium to the City or
trustee.
9. if the provider is required to collateralize, permitted
collateral shall include U.S. Treasury Obligations, or senior debt obligations of GNMA, FNMA
or FHLMC (no collateralized mortgage obligations shall be permitted for these providers) and
collateral levels must be 102% of the total principal when the collateral type is U.S. Treasury
Obligations, 103% of the total principal when the collateral type is GNMA's and 104% of the
total principal when the collateral type is FNMA and FHLMC ( "Eligible Collateral "). In
addition, the collateral shall be marked to market on a daily basis and the provider or Custodian
shall send monthly reports to the trustee, the City, AGM, AGC (so long as the 2009 Bonds
remain outstanding), and MBIA (so long as the 2003 Bonds remain outstanding), setting forth
the type of collateral, the collateral percentage required for that collateral type, the market value
of the collateral on the valuation date and the name of the Custodian holding the collateral;
10. the investment agreement shall state and an opinion of
counsel shall be rendered, if collateral is required to be pledged by the provider under the terms
of the investment agreement, at the time such collateral is delivered, that the Custodian has a
perfected first priority security interest in the collateral, any substituted collateral and all
proceeds thereof;
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11. the investment agreement must provide that if during its
term: (i) the provider shall default in its payment obligations, the provider's obligations under
the investment agreement shall, at the direction of the City or the trustee (who shall give such
direction if so directed by AGM, by AGC (so long as the 2009 Bonds remain outstanding), and
by MBIA (so long as the 2003 Bonds remain outstanding), be accelerated and amounts invested
and accrued but unpaid interest thereon shall be repaid to the City or trustee, as appropriate, and
(ii) the provider shall become insolvent, not pay its debts as they become due, be declared or
petition to be declared bankrupt, etc. ( "event of insolvency "), the provider's obligations shall
automatically be accelerated and amounts invested and accrued but unpaid interest thereon shall
be repaid to the City or trustee, as appropriate.
"Professional Utility Consultant" means the independent person(s) or firm(s) selected by
the City having a favorable reputation for skill and experience with water, wastewater and storm
water systems of comparable size and character to the System in such areas as are relevant to the
purposes for which they are retained.
"Projects" means those improvements to the System authorized by Section 3 of this
ordinance.
"Projects Account" means the special account authorized to be created in the office of the
Finance Director pursuant to Section 10 of this ordinance.
"Qualified Insurance" means (i) so long as any 2003 Bonds remain outstanding, any
unconditional municipal bond insurance policy or surety bond issued by any insurance company
licensed to conduct an insurance business in any state of the United States or by a service
corporation acting on behalf of one or more such insurance companies, which insurance company
or service corporation is rated in one of the two highest rating categories by Moody's Investors
Service, Inc. or any other rating agency then maintaining a rating on the Bonds, provided, that, as
of the time of issuance of such policy or surety bond, such insurance company or companies
maintain a policy owner's surplus in excess of $500,000,000; and (ii) from and after such time as
no 2003 Bonds remain outstanding, any unconditional municipal bond insurance policy or surety
bond issued by any insurance company licensed to conduct an insurance business in any state of
the United States or by a service corporation acting on behalf of one or more such insurance
companies, which insurance company or service corporation, as of the time of issuance of such
policy or surety bond, is then rated in one of the two highest rating categories by Moody's
Investors Service, Inc. or any other rating agency then maintaining a rating on the Bonds.
"Qualified Letter of Credit" means any irrevocable letter of credit issued by a bank for the
account of the City and for the benefit of the owners of Parity Bonds, provided that such bank
maintains an office, agency or branch in the United States, and provided further, that, as of the
time of issuance of such letter of credit, such bank is currently rated in one of the two highest
rating categories by either Moody's Investors Service, Inc. or any other rating agency then
maintaining a rating on the Bonds.
"Rate Stabilization Fund" means the fund of that name created pursuant to Section 13 of
Ordinance No. 2843 and continued pursuant to Section 12 of this ordinance.
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"Registered Owner" means the person named as the registered owner of a Bond in the
Bond Register. For so long as the Bonds are held in book -entry only form, DTC will be deemed
to be the sole Registered Owner.
"Reserve Account" means the account of that name in the Bond Account created pursuant
to Ordinance No. 2843 and continued pursuant to Section 13 of this ordinance.
"Reserve Account Requirement" means, with respect to the Bonds or Future Parity
Bonds, an amount equal to the least of (a) 125% of Average Annual Debt Service on all
outstanding Parity Bonds, (b) 10% of the stated principal amount of all outstanding Parity Bonds,
or (c) maximum Annual Debt Service on all outstanding Parity Bonds.
"Revenue Fund" means the special fund of the City known as the "City of Port Angeles
Water and Wastewater Utility Revenue Fund" created in the office of the Finance Director
pursuant to Section 2 of Ordinance No. 2843 and continued pursuant to Section 11 of this
ordinance.
"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.
"S &P" means Standard & Poor's Ratings Services, or its successor.
"Serial Bonds" means Parity Bonds other than Term Bonds.
"Sinking Fund Requirement" means, for any Fiscal Year or calendar year, the principal
amount of Term Bonds required to be purchased, redeemed or paid at maturity in such year as
established by the ordinance of the City authorizing the issuance of such Term Bonds.
"State Loans" means Public Works Trust Fund loans, Drinking Water Revolving Fund
loans, and similar loans to the City for purposes related to the System that are administered by
the Public Works Board, Department of Commerce, or other successor or similar state agencies,
and are secured by a pledge of Gross Revenue.
"System" means the City's combined water supply and distribution utility, sanitary
sewage collection and wastewater treatment utility, and storm water utility as the same now
exists and as it may hereafter be added to, improved and extended for as long as any of the Bonds
are outstanding.
"Tax Certificate" means the certificate with respect to federal tax matters relating to the
Bonds authorized to be executed by the Finance Director pursuant to the provisions of Section 16
of this ordinance.
"Term Bonds" means Parity Bonds of any principal maturity that are subject to
mandatory redemption and for which mandatory sinking fund payments are required, including
the Bonds identified as such in Section 7(b) of this ordinance.
"Underwriter" means Seattle- Northwest Securities Corporation.
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"2003 Bonds" means the City's Water and Wastewater Utility Revenue Refunding
Bonds, 2003, issued in the original principal amount of $4,220,000 under date of November 18,
2003, pursuant to Ordinance No. 3148 of the City and currently outstanding in the principal
amount of $3,525,000.
"2009 Bonds" means the City's Water and Wastewater Utility Revenue Refunding
Bonds, 2009, issued in the original principal amount of $7,590,000 under date of September 29,
2009, pursuant to Ordinance No. 3375 of the City and currently outstanding in the principal
amount of $7,445,000.
Words of the masculine gender are deemed and construed to include correlative words of
the feminine and neuter genders. Words imparting the singular number include the plural
numbers and vice versa unless the context indicates otherwise. 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 do not define or limit the provisions hereof.
Section 2. Combining the Storm Water Utility with the Water and Wastewater
Utility. The City's storm water utility and water and wastewater utility are hereby combined for
borrowing purposes, as permitted by Ordinance Nos. 3148 and 3375 authorizing the issuance of
the 2003 Bonds and the 2009 Bonds. The "System" as defined in such ordinances and in this
ordinance shall be deemed to include the storm water utility and the water and wastewater utility
as they now exist and as they may hereafter be added to, improved or extended.
Section 3. The Projects. The Council hereby approves the acquisition, development
and construction of the improvements to the System included or to be included in the City's
Capital Facilities Plan, including but not limited to advanced metering infrastructure, water
pipeline improvements, sewer pipeline improvements wastewater Supervisory Control and Data
Acquisition improvements, a septage receiving station, wastewater treatment plant
improvements, and stormwater system improvements (the "Projects "). The estimated cost of the
Projects is $5,396,000. In undertaking the Projects, the City will acquire and install all
equipment and appurtenances necessary for their proper operation and will acquire by purchase,
lease or condemnation all property, both real and personal, or any interest therein, and all
rights -of -way, franchises, and easements necessary to complete the Projects. The Projects are
subject to those 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 System improvements, approved by the Council, that are
now or may hereafter be included in the City's Capital Facilities Plan.
Section 4. Compliance with Parity Conditions. Ordinance Nos. 3148 and 3375
that authorized the issuance of the 2003 Bonds and the 2009 Bonds provide that the City may
issue Future Parity Bonds upon compliance with certain conditions. The Council hereby finds, as
required by those provisions of Ordinance Nos. 3148 and 3375, as follows:
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First, that the Bonds are being issued for the purpose of acquiring, constructing and
installing additions and improvements to and extensions of, acquiring necessary equipment for,
or making necessary replacements or repairs and capital improvements to the System;
Second, that at the time of the adoption of this ordinance and at the time of the issuance
of the Bonds there is not nor will there be any deficiency in the Bond Account or the Reserve
Account;
Third, this ordinance provides that (i) the principal of and interest on the Bonds are
payable out of the Bond Account, (ii) payments will be made into the Bond Account to satisfy
the Sinking Fund Requirements on the Term Bonds, and (iii) proceeds of the Bonds or other
funds of the City legally available therefor will be deposited into the Reserve Account in an
amount sufficient to satisfy the Reserve Account Requirement for the Bonds, all as required by
Ordinance Nos. 3148 and 3375; and
Fourth, prior to the issuance of the Bonds, the City will have on file a certificate of a
Professional Utility Consultant satisfying the requirements of Section 17(a)(5) of Ordinance
No. 3148 and Section 16(a)(5) of Ordinance No. 3375.
The parity conditions contained in Ordinance Nos. 3148 and 3375 having been complied
with or assured, the payments required in this ordinance to be made out of the Revenue Fund into
the Bond Account and Reserve Account to pay and secure the payment of the principal of and
interest on the Bonds shall constitute a lien and charge upon the money in such Revenue Fund
equal in rank with the lien and charge thereon for the payments required to be made into the
Bond Account to pay and secure the payment of the principal of and interest on the 2003 Bonds
and 2009 Bonds.
Section 5. Authorization and Description of Bonds. To finance costs of the
Projects and pay costs of issuing the Bonds, the City will issue its water and wastewater utility
revenue bonds in the aggregate principal amount of $5,695,000 (the "Bonds "). The Bonds will
be designated as the "City of Port Angeles, Washington, Water and Wastewater Utility Revenue
Bonds, 2010," will be dated as of the date of their initial delivery to the Underwriter, will be in
the denomination of $5,000 each, or integral multiples thereof (provided that no Bond may
represent more than one maturity), will be fully registered as to principal and interest, and will be
numbered separately in such manner and with any additional identification as the Bond Registrar
deems necessary for identification. The Bonds will bear interest from their date (calculated on
the basis of a year of three hundred sixty (360) days and twelve 30 -day months) payable on
May 1 and November 1 of each year, beginning on November 1, 2010, at the rates per annum and
mature on November 1 of the years and in the principal amounts, as follow:
Maturity Year Principal Interest
(November 1) Amount Rate
* Term Bonds
2030* $3,140,000 4.00%
2034* 2,555,000 4.25
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Principal of and interest on the Bonds are payable solely from the Bond Account. The
Bonds are not general obligations of the City or of the State of Washington or any political
subdivision thereof.
Section 6. Registration, Exchange and Payments.
(a) Bond Registrar /Bond Register. The City hereby adopts the system of
registration and transfer for the Bonds approved by the Washington State Finance Committee,
which utilizes the fiscal agency of the State of Washington in New York, New York, as registrar,
authenticating agent, paying agent and transfer agent (collectively, the "Bond Registrar "). The
Bond Registrar shall keep, or cause to be kept, at its principal corporate trust office, sufficient
records for the registration and transfer of the Bonds, which shall be open to inspection by the
City. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the
Bonds transferred or exchanged in accordance with the provisions of such 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 Bonds.
(b) Registered Ownership. The City and the Bond Registrar may deem and
treat the Registered Owner of each 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
Bond shall be made only as described in Section 6(g) hereof, but such registration may be
transferred as herein provided. All such payments made as described in Section 6(g) shall be
valid and shall satisfy the liability of the City upon such Bond to the extent of the amount or
amounts so paid.
(c) DTC Acceptance /Letter of Representations. The Bonds will be held
initially in fully immobilized form by DTC acting as depository. To induce DTC to accept the
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 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 the Bonds, any notice
that is permitted or required to be given to Registered Owners under this ordinance (except such
notices as are required to be given by the City to the Bond Registrar or to DTC), the selection by
DTC or any DTC participant of any person to receive payment in the event of a partial
redemption of the 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 hereunder, and
all references herein to the Registered Owners shall mean DTC or its nominee and shall not mean
the owners of any beneficial interest in the Bonds.
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(d) Use of Depository.
(1) The Bonds shall be registered initially in the name of "Cede &
Co.," as nominee of DTC, with a single Bond for each maturity in a denomination equal to the
total principal amount of that maturity. Registered ownership of such immobilized Bonds, or any
portions thereof, may not thereafter be transferred except (i) 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; (ii) to any substitute depository appointed by
the City pursuant to subsection (2) below or such substitute depository's successor; or (iii) to any
person as provided in subsection (4) below.
(2) 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 Council may hereafter appoint a substitute depository. Any such
substitute depository shall be qualified under any applicable laws to provided the services
proposed to be provided by it.
(3) In the case of any transfer pursuant to clause (i) or (ii) of
subsection (1) 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 of such
Bonds then outstanding, registered in the name of such successor or such substitute depository,
or their nominees, as the case may be, all as specified in such written request of the City.
(4) If (i) DTC or its successor (or substitute depository or its
successor) resigns from its functions as depository, and no substitute depository can be obtained,
or (ii) the Council determines that it is in the best interest of the beneficial owners of any of the
Bonds that they be able to obtain such Bonds in the form of bond certificates, the ownership of
Bonds may then be transferred to any person or entity as herein provided, and the Bonds 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, to issue Bonds as herein provided in any
authorized denomination. Upon receipt of all then outstanding Bonds by the Bond Registrar
together with a written request on behalf of the City to the Bond Registrar, new Bonds shall be
issued in such denominations and registered in the names of such persons as are requested 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 Registrar shall cancel the surrendered Bond and shall authenticate and
deliver, without charge to the Registered Owner or transferee therefor, 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
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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 a 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 bonds, after the mailing of notice of the call of such bonds for redemption.
(f) Registration Covenant. The City covenants that, until all Bonds have been
surrendered and canceled, it will maintain a system for recording the ownership of each Bond
that complies with the provisions of Section 149 of the Code.
(g) Place and Medium of Payment. Both principal of and interest on the
Bonds are payable in lawful money of the United States of America. For so long as all Bonds are
in fully immobilized form, payments of principal and interest thereon will be made in accordance
with the operational arrangements of DTC referred to in the Letter of Representations. If the
Bonds are no longer in fully immobilized form, interest on the Bonds will 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 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 Bonds will be payable upon
presentation and surrender of the Bonds by the Registered Owners at the principal office of the
Bond Registrar.
(h) Bond Registrar's Ownership of Bonds. The Bond Registrar may become
the Registered Owner of any 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 Bonds.
Section 7. Redemption; Purchase of Bonds.
(a) Optional Redemption. The Bonds maturing on or after November 1, 2030
are subject to redemption prior to maturity, at the option of the City, on or after November 1,
2020, in whole or in part on any date (and if in part with maturities to be selected by the City), at
a price of par, plus interest accrued thereon to the date fixed for redemption. For so long as the
Bonds are in book -entry form, the selection of Bonds within a maturity to be redeemed and the
manner of providing notice of redemption to beneficial owners are governed by the operational
arrangements of DTC, as then in effect.
(b) Mandatory Redemption. The Bonds maturing on November 1, 2030 and
November 1, 2034 (the "Term Bonds "), shall be redeemed prior to maturity by lot (or paid or
purchased at maturity), not later than November 1 in the years as shown below (to the extent such
2010 Term Bonds have not been previously redeemed or purchased) and in the principal amounts
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set forth below, without premium, together with the interest accrued to the date fixed for
redemption.
2030 Term Bonds
Year Amount
2025 $475,000
2026 490,000
2027 510,000
2028 535,000
2029 555,000
2030* 575,000
* Maturity
2034 Term Bonds
Year Amount
2031 $600,000
2032 625,000
2033 650,000
2034** 680,000
* * Final Maturity
(c) Partial Redemption. If less than all of the principal amount of any Bond is
redeemed, upon surrender of such Bond at the principal office of the Bond Registrar, there will
be issued to the Registered Owner, without charge, for the then unredeemed balance of the
principal amount, a new Bond or Bonds, at the option of the Registered Owner, of like maturity
and interest rate in any authorized denomination.
(d) Notice of Redemption. Written notice of any redemption of Bonds (which
may be conditional) will be given by the Bond Registrar on behalf of the City by first class mail,
postage prepaid, no fewer than twenty (20) days nor more than sixty (60) days before the
redemption date to the Registered Owners of Bonds that are to be redeemed at their last
addresses shown on the Bond Register. So long as the Bonds are in book -entry form, notice of
redemption will be given as provided in the Letter of Representations. The Bond Registrar will
provide additional notice of redemption (at least twenty (20) days) to the MSRB, in accordance
with Section 21.
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 will contain the following information: (1) the redemption
date, (2) the redemption price, (3) any condition to the redemption (including, but not limited to,
the receipt of proceeds of refunding bonds), (4) if less than all outstanding Bonds are to be
redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the
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Bonds to be redeemed, (5) that on the redemption date, upon the satisfaction of any conditions,
the redemption price will become due and payable upon each Bond or portion called for
redemption, and that interest shall cease to accrue from the redemption date, (6) that the Bonds
are to be surrendered for payment at the principal office of the Bond Registrar, (7) the CUSIP
numbers of all Bonds being redeemed, (8) the dated date of the Bonds, (9) the rate of interest for
each Bond being redeemed, (10) the date of the notice, and (11) any other information needed to
identify the 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 will bear the CUSIP number identifying, by issue and
maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
(e) Effect of Redemption. Unless a condition to the redemption has not been
satisfied, the City will 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
Bonds to be redeemed. From the redemption date interest on each Bond to be redeemed shall
cease to accrue.
(f) 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 to
maintain compliance with duly promulgated regulations and recommendations regarding notices
of redemption of municipal securities.
(g) Purchase of Bonds in Open Market. The City also reserves the right to
purchase any of the Bonds in the open market at any time at prices deemed reasonable by the
City.
Section 8. Form of Bonds. The Bonds shall be in substantially the following form:
UNITED STATES OF AMERICA
NO. $
Assured Guaranty Municipal Corp. (formerly known as Financial Security Assurance
Inc.) ( "AGM "), New York, New York, has delivered its municipal bond insurance policy
(the "Policy ") with respect to the scheduled payments due of principal of and interest on
this Bond to The Bank of New York Mellon, New York, New York, or its successor, as
paying agent for the Bonds (the "Paying Agent "). Said Policy is on file and available for
inspection at the principal office of the Paying Agent and a copy thereof may be obtained
from AGM or the Paying Agent. All payments required to be made under the Policy shall
be made in accordance with the provisions thereof. The owner of this Bond
acknowledges and consents to the subrogation rights of AGM as more fully set forth in
the Policy.
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STATE OF WASHINGTON
CITY OF PORT ANGELES
WATER AND WASTEWATER UTILITY REVENUE BOND, 2010
INTEREST RATE:
MATURITY DATE:
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
Dollars
CUSIP NO:
The City of Port Angeles, Washington (the "City"), a municipal corporation of the State
of Washington, for value received hereby promises to pay to the Registered Owner identified
above, or registered assigns, on the Maturity Date set forth above the Principal Amount set forth
above, and to pay interest thereon from the date hereof, or the most recent date to which interest
has been paid or duly provided for, at the Interest Rate set forth above payable on the first days of
each May and November, commencing on November 1, 2010.
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. If the bonds of this issue are no longer in fully immobilized form, interest on this bond
will be paid by check or draft mailed to the Registered Owner at the address appearing on the
Bond Register on the 15th day of the month preceding the interest payment date, and principal of
this bond will be payable upon presentation and surrender of this bond by the Registered Owner
at the principal office of the fiscal agency of the State of Washington in either Seattle,
Washington, or New York, New York (collectively the "Bond Registrar ").
This bond is one of a series of bonds in the aggregate principal amount of $5,695,000 (the
"Bonds "), issued pursuant to Ordinance No. 3407 passed by the City Council on August 3, 2010
(the "Bond Ordinance "), to finance the cost of improvements to the City's water, wastewater and
storm water utility. Unless otherwise defined on this bond, capitalized terms used herein have
the meanings given them in the Bond Ordinance.
The principal of and interest on the Bonds are payable solely out of the special fund of the
City known as the "1994 Water and Wastewater Utility Revenue Bond Fund" ( "Bond Account ")
established by Ordinance No. 2843 of the City. The Bonds are special limited obligations of the
City and are not obligations of the State of Washington or any political subdivision thereof other
than the City, and neither the full faith and credit nor the taxing power of the City or the State of
Washington is pledged to the payment of the Bonds.
Under the Bond Ordinance, the City is obligated to set aside and pay into the Bond
Account out of Gross Revenue of the System certain fixed amounts sufficient to pay when due
the principal of and interest and premium, if any, on the Bonds and all other Parity Bonds. To
the extent provided by the Bond Ordinance, the amounts pledged to be paid from Gross Revenue
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into the Bond Account and accounts therein are a lien and charge thereon equal in rank to the lien
and charge upon Gross Revenue of the amounts required to pay and secure the payment of certain
outstanding Parity Bonds and any Future Parity Bonds that the City may issue hereafter, and
superior to all other liens and charges of any kind or nature, except the Costs of Maintenance and
Operation of the System.
The Bond Ordinance sets forth covenants of the City to secure the payment of Parity
Bonds, including but not limited to covenants relating to rates and charges of the System,
operations of the System, and the issuance of Future Parity Bonds.
The Bonds are subject to redemption prior to maturity as provided in the Bond Ordinance.
The Bonds may be transferred and exchanged upon surrender to the Bond Registrar as provided
in the Bond Ordinance.
The Bonds are not "private activity bonds" as such term is defined in the Internal
Revenue Code of 1986, as amended (the "Code "). The City has designated the Bonds as
"qualified tax - exempt obligations" within the meaning of Section 265(b)(3)(B) of the Code.
This bond will 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 has
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 signed by the manual or facsimile signature of its Mayor, attested by the manual or facsimile
signature of the City Clerk, and seal of the City to be impressed or reproduced hereon, all as of
, 2010.
(SEAL)
CITY OF PORT ANGELES, WASHINGTON
By [Manual or Facsimile Signature]
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Mayor
P \20391 DO1120391_2A4 08/03/10
Attest:
[Manual or Facsimile Signature]
City Clerk
Date of Authentication:
CERTIFICATE OF AUTHENTICATION
This is one of the Water and Wastewater Utility Revenue Bonds, 2010, of the City of Port
Angeles, Washington, dated , 2010, as described in the within mentioned Bond
Ordinance.
WASHINGTON STATE FISCAL AGENCY,
Bond Registrar
By
Authorized Officer
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR TAXPAYER IDENTIFICATION NUMBER OF TRANSFEREE
(Please print or typewrite name and address, including zip code, of Transferee)
the within bond and does hereby irrevocably constitute and appoint
as attorney -in -fact to transfer said bond on the books kept for registration thereof with full power
of substitution in the premises.
DATED:
SIGNATURE GUARANTEED:
NOTICE: Signature(s) must be guaranteed
pursuant to law.
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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.
P \20391 DOT\20391_2A4 08/03/10
Section 9. Execution of Bonds. The 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 on each of the Bonds. In case either of the officers who have signed or attested any
of the Bonds cease to be such officer before such Bonds have been actually issued and delivered,
such Bonds shall be valid nevertheless and may be issued by the City with the same effect as
though the persons who had signed or attested such Bonds had not ceased to be such officers.
Only Bonds that bear a Certificate of Authentication in the form set forth in Section 8
hereof, manually executed by the Bond Registrar, will be valid or obligatory for any purpose or
entitled to the benefits of this ordinance. Such Certificate of Authentication is conclusive
evidence that the Bonds so authenticated have been duly executed, authenticated and delivered
and are entitled to the benefits of this ordinance.
Section 10. Application of Bond Proceeds. There is hereby authorized to be created
in the office of the Finance Director a special account to be designated as the "City of Port
Angeles 2010 Water and Wastewater System Projects Account" (the "Projects Account ").
Proceeds of the Bonds will be deposited into the Projects Account and applied to pay costs of the
Projects and costs of issuance of the Bonds. Money in the Projects Account may be invested in
Permitted Investments. Funds remaining in the Projects Account after the Projects have been
completed shall be deposited in the Bond Account.
Section 11. Revenue Fund. Pursuant to Section 2 of Ordinance No. 2843, there has
heretofore been created in the office of the Finance Director a fund of the City known as the
"City of Port Angeles Water and Wastewater Utility Revenue Fund," which fund is hereby
confirmed and continued. The City hereby obligates and binds itself to pay all Gross Revenue as
collected into the Revenue Fund. The money in the Revenue Fund shall be held separate and
apart from all other funds and accounts of the City. The Gross Revenue deposited in the
Revenue Fund shall be used only for the following purposes and in the following order of
priority:
FIRST, to pay the Costs of Maintenance and Operation and to maintain a balance in the
Revenue Fund sufficient in amount to enable the City to continuously meet Costs of Maintenance
and Operation on a current basis;
SECOND, to make all payments required to be made into the Bond Account to pay the
interest on any Parity Bonds;
THIRD, to make all payments required to be made into the Bond Account to pay the
maturing principal of any Serial Bonds and to make all payments required to be made into the
Bond Account to satisfy the Sinking Fund Requirement;
FOURTH, to make all payments required to be made pursuant to a reimbursement
agreement or agreements (or other equivalent documents, including the payment obligations to
AGM hereunder) in connection with Qualified Insurance or a Qualified Letter of Credit;
provided that if there is not sufficient money to make all payments under reimbursement
agreements the payments will be made on a pro rata basis;
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FIFTH, to make all payments required to be made into the Reserve Account to secure the
payment of the principal of and interest on outstanding Parity Bonds;
SIXTH, to make all payments required to be made into any revenue bond redemption
fund, revenue warrant redemption fund, debt service account, reserve account or bond retirement
account created to pay and secure the payment of the principal of and interest on any revenue
bonds, or revenue warrants or other revenue obligations of the City, including the State Loans,
having a lien upon Gross Revenue junior and inferior to the lien thereon for the payment of the
principal of and interest on the Parity Bonds; and
SEVENTH, to retire by redemption or purchase in the open market any outstanding water
and wastewater utility revenue bonds, warrants or obligations of the System, to make necessary
additions, betterments, improvements and repairs to or extensions and replacements of the
System, to make deposits into the Rate Stabilization Fund, or for any other lawful City purposes.
Section 12. Rate Stabilization Fund. Pursuant to Section 13 of Ordinance No. 2843,
a special fund of the City designated the "Water and Wastewater Rate Stabilization Fund" (the
"Rate Stabilization Fund ") has heretofore been established in anticipation of future increases in
revenue requirements of the System, which fund is hereby confirmed and continued. In
accordance with the provisions of Section 9 of Ordinance No. 2843 and Section 11 of this
ordinance, the City may from time to time appropriate or budget amounts in the Revenue Fund
for deposit in the Rate Stabilization Fund and may from time to time withdraw amounts
therefrom for deposit in the Revenue Fund to prevent or mitigate water and wastewater rate
increases or for other lawful purposes of the City related to the System. Such deposits or
withdrawals may be made up to and including the date ninety (90) days after the end of the fiscal
year for which the deposit or withdrawal will be effective.
Section 13. Bond Account. Pursuant to Section 15 of Ordinance No. 2843, there has
heretofore been created in the office of the Finance Director a fund of the City known as the
"1994 Water and Wastewater Utility Revenue Bond Fund" (the "Bond Account "), which fund
and the accounts therein are hereby confirmed and continued. The Bond Account is to be drawn
upon for the sole purpose of paying the principal of, premium if any, and interest on any Parity
Bonds. The money in the Bond Account shall be kept separate and apart from all other funds and
accounts of the City. All funds in the Bond Account are held in trust for the benefit of the
owners of all Parity Bonds at the time outstanding equally and ratably and without preference or
distinction as between Parity Bonds of different series and maturities.
(a) Debt Service Account. A special account known as the Debt Service
Account has been created in the Bond Account for the purpose of paying the principal of,
premium, if any, and interest on the Parity Bonds.
As long as any of the Bonds remain outstanding, the City hereby irrevocably obligates
and binds itself to set aside and pay from the Revenue Fund into the Debt Service Account, on or
before the date due, those amounts necessary, together with Gross Revenue collected and
deposited and such other money as is on hand and available therefor in the Debt Service
Account, to pay the interest or principal and interest next coming due on the outstanding Bonds.
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The City covenants and agrees that if it issues any Future Parity Bonds that are Term
Bonds, it will provide in each ordinance authorizing the issuance of the same for annual
payments to be made from the Revenue Fund into the Debt Service Account sufficient, together
with Gross Revenue collected and deposited and such other money as is on hand and available
therefor in such account, to amortize the principal of future Parity Bonds that are Term Bonds on
or before the maturity date thereof.
(b) Reserve Account. A Reserve Account has been created in the Bond
Account for the purpose of securing the payment of the principal of and interest on the Bonds
and any Future Parity Bonds. The City hereby covenants and agrees that it will satisfy the
Reserve Account Requirement for the Bonds by depositing into the Reserve Account, from
proceeds of the Bonds or other available funds, an amount that will be sufficient to satisfy the
Reserve Account Requirement with respect to the Bonds.
The City further covenants and agrees that if it issues any Future Parity Bonds it will
provide in each ordinance authorizing the issuance of those Future Parity Bonds that on or prior
to the date of issuance of the Future Parity Bonds money will be deposited into the Reserve
Account, from proceeds of such bonds or other funds available therefor, so that the total amount
of money in the Reserve Account will at least equal the Reserve Account Requirement. The City
may substitute Qualified Insurance or a Qualified Letter of Credit for amounts required to be
deposited into the Reserve Account. Such Qualified Letter of Credit or Qualified Insurance shall
not be cancellable on less than 5 years notice. In the event of any cancellation, the Reserve
Account shall be funded in accordance with the provisions of this section providing for payment
in the event of a deficiency therein, as if the Parity Bonds that remain outstanding had been
issued on the date of such notice of cancellation.
The City further covenants and agrees that when the required deposits have been made
into the Reserve Account, it will at all times maintain therein an amount at least equal to the
Reserve Account Requirement, as redetermined in each calendar year with respect to the bonds
secured by such Reserve Account. Whenever there is a sufficient amount in the Bond Account,
including all accounts therein, to pay the principal of, premium, if any, and interest on all
outstanding Parity Bonds, the money in the Reserve Account may be used to pay the principal of,
premium, if any, and interest on the Parity Bonds secured thereby. Money in the Reserve
Account may also be withdrawn to redeem and retire, and to pay the premium, if any, and interest
due to such date of redemption, on the outstanding Parity Bonds secured by such Reserve
Account, as long as the money remaining on deposit in such Reserve Account is at least equal to
the Reserve Account Requirement determined with respect to the Parity Bonds then outstanding.
If the Bonds outstanding are ever refunded, the money set aside in the Reserve Account to
secure the payment thereof may be used to retire Bonds or may be transferred to any other
reserve account that may be created to secure the payment of any bonds issued to refund the
Bonds.
If there is a deficiency in the Debt Service Account to meet maturing installments of
either interest on or principal of and interest on the outstanding Parity Bonds payable out of such
Account, such deficiency shall be made up from the Reserve Account by the withdrawal of
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money therefrom 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, and if a deficiency still exists immediately prior to an interest payment date
and after the withdrawal of cash, the City shall then draw from any Qualified Letter of Credit,
Qualified Insurance, or other equivalent credit facility in sufficient amount to make up the
deficiency. Such draw shall be made at such times and under such conditions as the agreement
for such Qualified Letter of Credit or such Qualified Insurance shall provide. If more than one
Qualified Letter of Credit or Qualified Insurance is available, draws shall be made ratably
thereon to make up the deficiency. Any deficiency created in the Reserve Account by reason of
any such withdrawal shall then be made up from money in the Revenue Fund first available after
making the payments required to be made under paragraphs "FIRST" through "FOURTH" of
Section 11 of this ordinance.
(c) Lien of Bond Account. The Bonds, together with the interest thereon, shall
be payable from Gross Revenue, and such Gross Revenue is hereby pledged and set aside out of
the Revenue Fund into the Bond Account. Said amounts so pledged are hereby declared to be a
lien and charge upon Gross Revenue and the money in the Revenue Fund equal to the lien and
charge thereon to secure and pay the principal of and interest on the 2003 Bonds, the 2009
Bonds, the Bonds and any Future Parity Bonds and superior to all other charges of any kind or
nature, except the Costs of Maintenance and Operation.
(d) Investment of Money in Bond Account. All money in the Debt Service
Account or Reserve Account may be kept in cash or invested in Permitted Investments maturing
not later than the last maturity of the Bonds outstanding at the time of such purchase. Interest
earned on or profits made from the sale of such investments shall be deposited in and become a
part of the Revenue Fund.
Section 14. Adequacy of Revenues. The Council hereby declares that in fixing the
amounts to be paid into the Bond Account as hereinbefore provided it has exercised due regard
for the Costs of Maintenance and Operation and has not obligated the City to set aside and pay
into the Bond Account a greater amount of money in the Revenue Fund than in its judgment will
be available over and above such Costs of Maintenance and Operation.
Section 15. Covenants and Agreements. The City hereby covenants with the owner
of each of the Bonds for as long as any of the same remain outstanding as follows:
(a) Rates and Charges. The City will establish, maintain and collect lawful
rates and charges for the use of the services and facilities of the System, and will adjust such
rates and charges from time to time so that:
(1) Gross Revenue will at all times be sufficient (a) to pay all Costs of
Maintenance and Operations and to pay all taxes, assessments or other governmental charges
lawfully imposed on the System or the revenue therefrom or payments in lieu thereof and any and
all other amounts that the City may now be and hereafter become obligated to pay from Gross
Revenue by law or contract, and (b) together with Assessments actually collected, to pay the
principal of and interest on all outstanding Parity Bonds as and when the same become due and
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payable, to make all payments required to be made into the Bond Account to satisfy the Sinking
Fund Requirement, and to make when due all payments required to be made into the Reserve
Account.
(2) The Net Revenue in each Fiscal Year will equal at least 1.25 times
Annual Debt Service for such year (after deducting Assessments actually collected for such year).
For the purpose of meeting the requirement of this paragraph there may be added to Net Revenue
for any Fiscal Year any amount withdrawn from the Rate Stabilization Fund and deposited in the
Revenue Fund. There shall be subtracted from Net Revenue for any Fiscal Year any amounts in
such year withdrawn from the Revenue Fund and deposited into the Rate Stabilization Fund in
such Fiscal Year. From and after such time as no 2003 Bonds remain outstanding, Annual Debt
Service for purposes of this rate covenant shall be adjusted to reflect any Debt Service Offset.
(b) Maintenance of System. The City will at all times keep and maintain the
System in good repair, working order and condition, and will at all times operate the same and
the business in connection therewith in an efficient manner and at a reasonable cost.
(c) Sale or Disposition of the System. The City will not sell or otherwise
dispose of the System in its entirety unless simultaneously with such sale or other disposition, the
City provides for payment into the Bond Account of cash or Government Obligations sufficient
together with interest to be earned thereon to pay the principal of and interest on the then
outstanding Parity Bonds, nor will the City sell or otherwise dispose of any part of the useful
operating properties of the System unless the City receives the prior written consent of AGC (so
long as the 2009 Bonds are outstanding) and AGM and replaces such facilities or provides for
payment into the Bond Account of the greater of:
(1) An amount that will be in the same proportion to the net amount of
Parity Bonds then outstanding (defined as the total amount of the Parity Bonds less the amount of
cash and investments in the Bond Account and accounts therein) that the Net Revenue from the
portion of the System sold or disposed of for the preceding year bears to the total Net Revenue
for such period; or
(2) An amount that will be in the same proportion to the net principal
amount of Parity Bonds then outstanding that the book value of the part of the System sold or
disposed of bears to the book value of the entire System immediately prior to such sale or
disposition.
The proceeds of any such sale or disposition of a portion of the properties of the System
(to the extent required above) shall be paid into the Bond Account.
Notwithstanding any other provision of this subsection, the City may sell or otherwise
dispose of any of the works, plant, properties and facilities of the System or any real or personal
property comprising a part of the same with a value less than 2% of the net utility plant of the
System or that has become unserviceable, inadequate, obsolete or unfit to be used in the
operation of the System, or no longer necessary, material to or useful in such operation, without
making any deposit into the Bond Account.
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(d) Collection of Assessments. The City will promptly collect all Assessments
levied in any utility local improvement district now or hereafter created to secure the payment of
the principal of and interest on any Parity Bonds and shall pay the same into the Bond Account
without allocation of such Assessments to any particular series of Parity Bonds. It is hereby
provided further, however, that nothing in this ordinance or in this subsection shall be construed
to prohibit the City from issuing revenue bonds having a lien on Gross Revenue junior to the lien
on such revenue for the payment of the principal of and interest on Parity Bonds and pledging as
security for the payments of such junior lien bonds assessments levied in any utility local
improvement district that may have been created to pay part or all the cost of improvements to
the System for which such junior lien revenue bonds were specifically issued; provided,
however, that the City may not agree to acceleration as a remedy with respect to any bonds or
other obligations having a lien on Gross Revenue junior to the lien thereon of any Parity Bonds.
(e) Books and Accounts. The City will maintain complete books and records
relating to the operation of the System and its financial affairs, and will cause such books and
records to be audited annually, and cause to be prepared an annual financial and operating
statement, which statement will be mailed to any owner of Parity Bonds upon request.
(f) Insurance. The City will carry fire and extended coverage insurance on
the System as is ordinarily carried on the property of similar public utilities by other municipal
corporations engaged in the operation of the same, to the full insurable value thereof, and will
also carry adequate public liability insurance and other kinds of insurance as under good
practices are ordinarily carried on the properties of similar public utilities by private companies
engaged in the operation of the same; provided, however, that the City may, if the Council deems
necessary and advisable, institute or continue a self - insurance program with respect to any or all
of the aforementioned risks. The premiums paid for all such insurance shall be regarded and paid
as a Cost of Maintenance and Operation.
(g) Delinquencies. The City will promptly collect all service charges and
Assessments, determine in a timely manner all delinquencies, and take all necessary legal action
to enforce collection of such delinquencies.
(h) No Free Service. Except as permitted by law, the City will not furnish any
service of the System to any customer whatsoever free of charge.
Section 16. Tax Exemption.
(a) General. The City intends for interest on the Bonds to be excludable from
gross income for federal income tax purposes under sections 103 and 141 through 150 of the
Code, and the applicable regulations. The City covenants not to take any action, or knowingly
omit to take any action within its control, that if taken or omitted would cause the interest on the
Bonds to be includable in gross income, as defined in section 61 of the Code, for federal income
tax purposes.
(b) Tax Certificate. Upon the issuance of the Bonds, the Finance Director is
authorized to execute a federal tax certificate (the "Tax Certificate "), which will certify to
various facts and representations concerning the Bonds, based on the facts and estimates known
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or reasonably expected on the date of issuance of the Bonds, and make certain covenants with
respect to the Bonds, including but not limited to the following:
(i) No Private Activity Bonds. The proceeds of the Bonds will not be
used in a manner that would cause the Bonds to be "private activity bonds" within the meaning
of the Code, as further described in the Tax Certificate. Moreover, the City covenants that it will
use the proceeds of the Bonds (including interest or other investment income derived from Bond
proceeds), regulate the use of property financed, directly or indirectly, with such proceeds, and
take such other and further action as may be required so that the Bonds will not be "private
activity bonds."
(ii) No Federal Guarantee. The City has not and will not take any
action, and has not knowingly omitted and will not knowingly omit to take any action within its
control, that, if taken or omitted would cause the Bonds to be "federally guaranteed" within the
meaning of the Code, as further described in the Tax Certificate.
(iii) No Arbitrage Bonds. The City reasonably expects that the
proceeds of the Bonds will not be used in a manner that would cause the Bonds to be "arbitrage
bonds" within the meaning of the Code, as further described in the Tax Certificate.
(iv) No Hedge Bonds. The City reasonably expects that at least 85%
percent of the proceeds of the Bonds will be spent within three years of the date the Bonds are
issued to carry out the governmental purposes of the Bonds.
The City covenants that it will comply with the Tax Certificate unless it receives advice
from nationally recognized bond counsel or the Internal Revenue Service that certain provisions
have been amended or no longer apply to the Bonds.
(c) Arbitrage Rebate. If the City does not qualify for an exception to the
requirements of Section 148(0 of the Code relating to the payment of arbitrage rebate to the
United States, the City will take all necessary steps to comply with the requirement that certain
amounts earned by the City on the investment of the "gross proceeds" of the Bonds (within the
meaning of the Code) be rebated.
(d) Special Designation. The City hereby designates the Bonds as "qualified
tax - exempt obligations" within the meaning of Section 265(b)(3)(B) of the Code. The City does
not expect to issue more than $30,000,000 in qualified tax - exempt obligations during the year
2010.
Section 17. Defeasance. If money or Government Obligations maturing at such time
or times and bearing interest to be earned thereon in amounts (together with such money, if
necessary) sufficient to redeem and retire the Bonds or any of them in accordance with their
terms are set aside in a special account to effect such redemption and retirement and such money
and the principal of and interest on such Government Obligations are irrevocably set aside and
pledged for such purpose, then no further payments need be made into the Bond Account for the
payment of the principal of and interest on the Bonds so provided for, and the owners of those
Bonds will cease to be entitled to any lien, benefit or security of this ordinance except for the
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right to receive the money so set aside and pledged, and those Bonds will be deemed not to be
outstanding hereunder. Within thirty (30) days of any defeasance of Bonds, the City will provide
notice of defeasance of Bonds to AGM and the Registered Owners and to the MSRB in
accordance with Section 21 hereof. The City will 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 18. Issuance of Future Parity Bonds. The City hereby further covenants and
agrees with the owners of the Bonds for as long as any of the same remain outstanding as
follows:
(a) Parity Conditions. That it will not issue any bonds with a lien on Gross
Revenue superior to the lien of the Bonds on such revenue. The City may issue Future Parity
Bonds for:
First, the purpose of acquiring, constructing and installing additions and improvements to
and extensions of, acquiring necessary equipment for, or making necessary replacements or
repairs and capital improvements to the System; or
Second, the purpose of refunding or purchasing and retiring at or prior to their maturity
any outstanding revenue bonds or other obligations payable out of Gross Revenue;
and to pledge that payments be made into the Bond Account for the payment of the principal
thereof and interest thereon out of the Revenue Fund sufficient to pay the principal of and interest
on such Future Parity Bonds and to maintain the reserves required therefor, which such payments
may rank equally with the payments out of such Revenue Fund into the Bond Account and the
Reserve Account to pay and secure the payment of the principal of and interest on any Parity
Bonds then outstanding, upon compliance with the following conditions:
(1) That at the time of the issuance of such Future Parity Bonds there
is no deficiency in the Bond Account and the Reserve Account.
(2) If there are special assessments levied in any utility local
improvement district in which additions and improvements to and extensions of the System will
be constructed from the proceeds of such Future Parity Bonds, the ordinance authorizing such
Future Parity Bonds must require that such special assessments be paid into the Bond Account.
(3) If there are special assessments pledged to be paid into a warrant or
bond redemption fund for revenue bonds or warrants being refunded by Future Parity Bonds, the
ordinance authorizing such Future Parity Bonds must require such special assessments to be used
for the refunding or paid into the Bond Account.
(4) The principal of and interest on the Future Parity Bonds will be
payable out of the Bond Account, and the ordinance authorizing their issuance must further
provide for payments into the Bond Account to satisfy the Sinking Fund Requirement and
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payments into the Reserve Account to satisfy the Reserve Account Requirement, all as required
by Section 13 of this ordinance.
(5) Prior to the delivery of any Future Parity Bonds, the City must have
on file in the office of the City Clerk either:
(a) from and after such time as no 2003 Bonds or 2009 Bonds
remain outstanding, a certificate of the Finance Director showing that the Net Revenue (without
the adjustments described in subsection (5)(b) below) for each calendar or Fiscal Year after the
issuance of such Future Parity Bonds will equal at least 1.25 times the Annual Debt Service (after
deducting Assessments, allocated to the years in which they would be received if the unpaid
balance of each assessment roll were paid in the remaining number of installments with interest
on the declining balance at the times and at the rate provided in the ordinance confirming the
assessment roll) for each such calendar or Fiscal Year for all Parity Bonds plus the Future Parity
Bonds proposed to be issued. From and after such time as no 2003 Bonds remain outstanding,
Annual Debt Service for purposes of this rate covenant shall be adjusted to reflect any Debt
Service Offset; or
(b) a certificate of a Professional Utility Consultant showing:
that the Net Revenue determined and adjusted as hereafter provided for each calendar or Fiscal
Year after the issuance of such Future Parity Bonds (the "Adjusted Net Revenue ") will equal at
least 1.25 times the Annual Debt Service (after deducting Assessments, allocated to the years in
which they would be received if the unpaid balance of each assessment, roll were paid in the
remaining number of installments with interest on the declining balance at the times and at the
rate provided in the ordinance confirming the assessment roll) for each such calendar or Fiscal
Year for all Parity Bonds plus the Future Parity Bonds proposed to be issued. From and after
such time as no 2003 Bonds remain outstanding, Annual Debt Service for purposes of this rate
covenant shall be adjusted to reflect any Debt Service Offset.
The Adjusted Net Revenue shall be the Net Revenue for a period of any twelve (12)
consecutive months out of the twenty -four (24) months immediately preceding the date of
delivery of such proposed Future Parity Bonds as adjusted by such Professional Utility
Consultant to take into consideration changes in Net Revenue estimated to occur under the
following conditions for each year after such delivery for so long as any Parity Bonds, including
the Future Parity Bonds proposed to be issued, shall be outstanding:
(i) The additional Net Revenue that would have been received
if any change in rates and charges adopted prior to the date of such certificate and subsequent to
the beginning of such twelve (12) -month period, had been in force during the full twelve
(12) -month period;
(ii) The additional Net Revenue that would have been received
if any facility of the System that became fully operational after the beginning of such twelve
(12) -month period had been so operating for the entire period; and
(iii) The additional Net Revenue estimated by such Professional
Utility Consultant to be received as a result of any additions, betterments and improvements to
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and extensions of any facilities of the System that are (a) under construction at the time of such
certificate or (b) will be constructed from the proceeds of the Future Parity Bonds to be issued.
Such Professional Utility Consultant may rely upon, and his or her certificate shall have
attached thereto, financial statements of the System certified by the Finance Director showing
income and expenses for the period upon which the same is based.
The certificate of such Professional Utility Consultant shall be conclusive and the only
evidence required to show compliance with the provisions and requirements of this
subsection (5)(b).
(b) Refunding. Notwithstanding the foregoing requirement, if Future Parity
Bonds are to be issued for the purpose of refunding at or prior to their maturity any part or all of
the then outstanding Parity Bonds, the certificate described in subsection (a)(5) of this section is
not required if the Finance Director provides a certificate stating that upon the issuance of such
Future Parity Bonds (i) total debt service on all Parity Bonds (including the refunding bonds but
not including the bonds to be refunded thereby) will decrease, and (ii) the Annual Debt Service
for each year that any Parity Bonds (including the refunding bonds proposed to be issued) will be
outstanding will not increase by more than $5,000 by reason of the issuance of such Future Parity
Bonds.
(c) Junior Lien Obligations. Nothing herein contained shall prevent the City
from issuing any revenue bonds, warrants or other obligations that are a charge upon the money
in the Revenue Fund junior or inferior to the payments required by this ordinance to be made into
the Bond Account and the Reserve Account; provided, however, that the City may not agree to
acceleration as a remedy with respect to any bonds or other obligations having a lien on Gross
Revenue junior to the lien thereon of any Parity Bonds.
(d) Variable Rate Obligations. The City may not issue variable rate
obligations payable from Gross Revenue without the prior written consent of AGC (so long as
the 2009 Bonds are outstanding) and AGM.
Section 19. Sale of Bonds. The City hereby approves the offer of Seattle- Northwest
Securities Corporation (the "Underwriter ") to purchase the Bonds on the terms and conditions set
forth in its purchase contract received on the date of this ordinance (the "Purchase Contract ").
The Mayor or City Manager is hereby authorized to sign the Purchase Contract on behalf of the
City and deliver it to the Underwriter. The proper City officials are authorized and directed to do
everything necessary for the prompt execution and delivery of the Bonds to the Underwriter, in
accordance with this ordinance and the Purchase Contract, and to apply the Bond proceeds in
accordance with this ordinance.
Section 20. Official Statement. The Council approves the Preliminary Official
Statement for the Bonds dated July 22, 2010, and ratifies the Underwriter's distribution of the
Preliminary Official Statement in connection with the offering of the Bonds. To permit the
Underwriter to comply with the Rule, the City deems the Preliminary Official Statement final as
of its date except for the omission of information dependent upon the pricing of the Bonds and
the completion of a purchase contract. The City agrees to cooperate with the Underwriter to
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deliver or cause to be delivered, within seven (7) business days from the date of the sale of the
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 for the Bonds with such additions and changes as they may deem necessary or
advisable.
Section 21. Undertaking to Provide Ongoing Disclosure. This Section 21
constitutes the City's written undertaking for the benefit of the owners and Beneficial Owners of
the Bonds as required by Section (b)(5) of the Rule.
(a) Financial Statements /Operating Data. The City agrees to provide or
cause to be provided to the MSRB, in accordance with the Rule, the following annual financial
information and operating data for the prior Fiscal Year (commencing in 2011 for the Fiscal Year
ended December 31, 2010):
(1) Annual financial statements of the System, which statements may
or may not be audited, prepared in accordance with the Budget Accounting and Reporting
System prescribed by the Washington State Auditor pursuant to RCW 43.09.200 (or any
successor statute) and generally of the type included in the official statement for the Bonds under
the headings "Water, Wastewater and Stormwater Fund - Statement of Revenues, Expenses and
other Changes in Fund Equity" and "Water, Wastewater and Stormwater Utility - Historical
Coverage from Operations ";
(2) The principal amount of Parity Bonds and debt service coverage
for Parity Bonds;
(3) Water, wastewater and storm water rates; and
(4) Number of water, wastewater and storm water customers of the
System.
Items (2) — (4) shall be required only to the extent that such information is not included in
the annual financial statements provided pursuant to (1).
The financial information and operating data described above shall be provided on or
before nine (9) months after the end of the City's fiscal year. The City's fiscal year currently
ends on December 31. The City may adjust such fiscal year by providing written notice of the
change of fiscal year to the MSRB. In lieu of providing such annual financial information and
operating data, the City may cross -refer to other documents available to the public on the
MSRB's interne website or filed with the Commission.
If not provided as part of the annual financial information discussed above, the City shall
provide to the MSRB the City's audited annual financial statement prepared in accordance with
the Budget Accounting and Reporting System prescribed by the Washington State Auditor
pursuant to RCW 43.09.200 (or any successor statute) when and if available.
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(b) Material Events. The City agrees to provide or cause to be provided, in a
timely manner, to the MSRB notice of the occurrence of any of the following events with respect
to the Bonds, if material:
• Principal and interest payment delinquencies;
• Non - payment related defaults;
• Unscheduled draws on debt service reserves reflecting financial difficulties;
• Unscheduled draws on credit enhancements reflecting financial difficulties;
• Substitution of credit or liquidity providers, or their failure to perform;
• Adverse tax opinions or events affecting the tax - exempt status of the Bonds;
• Modifications to rights of owners;
• Optional, contingent or unscheduled Bond calls other than scheduled sinking
fund redemptions for which notice is given pursuant to Exchange Act Release
34- 23856;
• Defeasances;
• Release, substitution or sale of property securing the repayment of the Bonds;
and
• Rating changes.
Solely for purposes of disclosure, and not intending to modify this undertaking, the City
advises that no property secures payment of the Bonds. The Reserve Account is the applicable
debt service reserve.
(c) Notification Upon Failure to Provide Financial Data. The City agrees to
provide or cause to be provided to the MSRB, in a timely manner, notice of the City's failure to
provide the annual financial information described in subsection (a) above on or prior to the date
set forth in subsection (a) above.
(d) EMMA, Format for Filings with the MSRB. Until otherwise designated by
the MSRB or the Commission, any information or notices submitted to the MSRB in compliance
with the Rule are to be submitted through the MSRB's Electronic Municipal Market Access
system ( "EMMA "), currently located at www.emma.msrb.org. All notices, financial information
and operating data required by this undertaking to be provided to the MSRB must be in an
electronic format as prescribed by the MSRB. All documents provided to the MSRB pursuant to
this undertaking must be accompanied by identifying information as prescribed by the MSRB.
(e) Termination /Modification. The City's obligations to provide annual
financial information and notices of material events shall terminate upon the defeasance, prior
redemption or payment in full of all of the Bonds. Any provision of this section shall be null and
void if the City (i) obtains an opinion of nationally recognized bond counsel to the effect that the
portion of the Rule requiring that provision is invalid, has been repealed retroactively or
otherwise does not apply to the Bonds; and (ii) notifies the MSRB of such opinion and the
cancellation of the provision.
Notwithstanding any other provision of this ordinance, the City may amend this
Section 21 with an approving opinion of nationally recognized bond counsel and in accordance
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with the Rule. In the event of any amendment of a provision of this Section 21, the City will
describe the amendment in the next annual report, and will 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 will be given in the same manner as for
a material event under subsection (b), and (ii) the annual report for the year in which the change
is made will present a comparison (in narrative form and also, if feasible, in quantitative form)
between the financial statements as prepared on the basis of the new accounting principles and
those prepared on the basis of the former accounting principles.
(f) Bond Owner 's Remedies Under This Section. The right of any Bond
Owner or Beneficial Owner of Bonds to enforce the provisions of this section are limited to a
right to obtain specific enforcement of the City's obligations hereunder, and any failure by the
City to comply with the provisions of this undertaking shall not be an event of default with
respect to the Bonds. For purposes of this Section 21, "Beneficial Owner" means any person
who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of
ownership of, any Bonds, including persons holding Bonds through nominees or depositories.
Section 22. Bond Insurance.
(a) Acceptance of Insurance. In accordance with the offer of the Underwriter
to purchase the Bonds, the Council hereby approves the commitment of Assured Guaranty
Municipal Corp. ( "AGM ") to provide a bond insurance policy guaranteeing the payment when
due of principal of and interest on the Bonds (the "Bond Insurance Policy "). The Council further
authorizes and directs all proper officers, agents, attorneys and employees of the City to
cooperate with AGM 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. The following provisions of this Section 22 shall apply so long as the Bond
Insurance Policy is in effect.
(b) Notices and Other Information. Any notice that is required to be given to
holders of the Bonds (the "Bondholders "), the MSRB, pursuant to the Rule or to the Bond
Registrar pursuant to this ordinance shall also be provided to AGM , simultaneously with the
sending of such notices. In addition, all information furnished pursuant to Section 21 of this
ordinance shall also be provided to AGM, simultaneously with the furnishing of such
information. All notices required to be given to AGM shall be in writing and shall be sent by
registered or certified mail addressed to: Assured Guaranty Municipal Corp., 31 West 52nd
Street, New York, New York 10019, (Re: Policy No. ), Attention: General Counsel, with a
copy to Assured Guaranty Corp., Attention: Risk Management Department- Public Finance
Surveillance.
(1) AGM shall have the right to receive such additional information as it may
reasonably request.
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(2) The City will permit AGM to discuss the affairs, finances and accounts of the
City or any information AGM may reasonably request regarding the security
for the Bonds with appropriate officers of the City, and will use best efforts to
enable AGM to have access to the facilities, books and records of the City on
any business day upon reasonable prior notice.
(3) The Bond Registrar shall notify AGM of any failure of the City to provide
notices, certificates and other information under this ordinance.
(4) The City shall provide to AGM:
(i)
the fiscal year budget of the City, with respect to the System, within 30
days after the adoption of such budget;
(ii) not later than 180 days after the end of the fiscal year of the City the
unaudited financial statements of the City, with respect to the System, and
the audited financial statements of the City, with respect to the System,
once available, together with a certificate of the City stating that no event
of default has occurred or is continuing under this ordinance;
(iii) notice of any withdrawal of from the Reserve Account within two business
days after knowledge thereof other than (a) withdrawals of amounts in
excess of the Reserve Account Requirement and (b) withdrawals in
connection with a refunding of any Parity Bonds;
(iv) notice of any default known to the Bond Registrar within five business
days after actual knowledge thereof;
(v) prior notice of the advance refunding or redemption of any of the Bonds,
including the principal amount, maturities and CUSIP numbers thereof;
(vi) notice of the commencement of any proceeding by or against the City
commence under the United States Bankruptcy Code or any other
applicable bankruptcy, insolvency, receivership, rehabilitation or similar
law;
(vii) notice of making of any claim in connection with any insolvency
proceeding seeking the avoidance as a preferential transfer of any payment
of principal of, or interest on, the Bonds;
(viii) a full original transcript of all proceedings relating to the execution of any
amendment or supplement to this ordinance;
(ix) prior to issuing Future Parity Bonds, any official statement or disclosure
document or financing agreement pertaining to such Future Parity Bonds,
which shall include, without limitation, the applicable maturity schedule,
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interest rates, redemption and security provisions pertaining to such Future
Parity Bonds; and
(x) within 30 days following any litigation or investigation that may have a
material adverse affect on the Gross Revenue or the System, notice of such
litigation or investigation.
(c) Defeasance. Notwithstanding anything herein to the contrary, in the event
that the principal and/or interest due on the Bonds shall be paid by AGM pursuant to the Bond
Insurance Policy, the Bonds shall remain outstanding for all purposes, not be defeased or
otherwise satisfied and not be considered paid by the City, and all covenants, agreements and
other obligations of the City to the Registered Owners shall continue to exist and shall run to the
benefit of AGM, and AGM shall be subrogated to the rights of such Registered Owners
including, without limitation, any rights that such Registered Owners may have in respect of
securities law violations arising from the offer and sale of the Bonds.
In the event that the Bonds are defeased pursuant to Section 17 of this ordinance, AGM
shall receive:
(1) An opinion of bond counsel stating that (i) such defeasance will not adversely
impact the exclusion from gross income for federal income tax purposes of
interest on the Bonds and (ii) the Bonds are no longer outstanding under this
ordinance.
(2) An escrow agreement and an opinion of bond counsel regarding the validity
and enforceability of the escrow agreement. The escrow agreement shall
provide that:
(xi) Any substitution of securities shall require verification by an independent
certified public accountant and the prior written consent of AGM.
(xii) The City will not exercise any optional redemption of the bonds secured
by the escrow agreement or any other redemption other than mandatory
sinking fund redemptions unless (i) the right to make any such redemption
has been expressly reserved in the escrow agreement and such reservation
has been disclosed in detail in the official statement for the refunding
bonds, and (ii) as a condition of any such redemption there shall be
provided to AGM a verification of an independent certified public
accountant as to the sufficiency of escrow receipts without reinvestment to
meet the escrow requirements remaining following such redemption.
(xiii) The City shall not amend the escrow agreement or enter into a forward
purchase agreement or other agreement with respect to rights in the escrow
without the prior written consent of AGM.
The documents listed in (c) above shall be delivered to AGM no later than five (5) days
prior to the funding of the escrow.
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(d) Bond Registrar. AGM shall receive prior written notice of any name
change of the Bond Registrar or the removal, resignation or termination and replacement of the
Bond Registrar.
(e) Amendments and Supplements. With respect to amendments or
supplements to this ordinance that do not require the consent of the Bondholders, Assured
Guaranty must be given prior written notice of any such amendments or supplements. With
respect to amendments or supplements to this ordinance that do require the consent of the
Bondholders, AGM's prior written consent is required. Any amendments or supplements to this
ordinance that are consented to by AGM shall be sent to the rating agencies that have assigned a
rating to the Bonds. Notwithstanding any other provision of this ordinance, in determining
whether the rights of Bondholders will be adversely affected by any action taken pursuant to the
terms and provisions thereof, the City shall consider the effect on the Bondholders as if there
were no Bond Insurance Policy.
(f) Insurer as Third Party Beneficiary. To the extent that this ordinance
confer upon or gives or grants to AGM any right, remedy or claim under or by reason of this
ordinance, AGM is explicitly recognized as being a third party beneficiary hereunder and may
enforce any such right, remedy or claim conferred, given or granted hereunder.
(g) Control Rights. AGM shall be deemed to be the holder of all of the Bonds
for purposes of (1) exercising all remedies and directing the Bond Registrar to take actions or for
any other purposes following an event of default, and (2) granting any consent, waiver, direction
or approval or taking any action permitted by or required under this ordinance, to be granted or
taken by the Bondholders.
Anything in this ordinance to the contrary notwithstanding, upon the occurrence and
continuance of an event of default as defined herein, AGM shall be entitled to control and direct
the enforcement of all rights and remedies granted to the Bondholders or the Bond Registrar for
the benefit of the Bondholders under this ordinance subject to the rights of other Parity Bond
owners.
(h) Consent of AGM. Any provision of this ordinance expressly recognizing
or granting rights in or to AGM may not be amended in any manner that affects the rights of
AGM hereunder without the prior written consent of AGM.
(i) Consent of AGM in Addition to Bondholder Consent. Wherever this
ordinance require the consent of Bondholders, AGM's prior written consent shall also be
required.
(j) Consent of AGM in the Event of Insolvency. To the extent permitted by
law, any reorganization or liquidation plan with respect to the City must be acceptable to AGM.
In the event of any such reorganization or liquidation, AGM shall have the right to vote on behalf
of all Bondholders who hold Bonds guaranteed by AGM, absent a payment default by AGM
under the Bond Insurance Policy.
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(k) Payment Procedure Under the Bond Insurance Policy. At least two (2)
business days prior to each payment date on the Bonds, the Bond Registrar will determine
whether there will be sufficient funds to pay all principal of and interest on the Bonds due on the
related payment date and shall immediately notify AGM or its designee on the same business day
by telephone or electronic mail, confirmed in writing by registered or certified mail, of the
amount of any deficiency. Such notice shall specify the amount of the anticipated deficiency, the
Bonds to which such deficiency is applicable and whether such Bonds will be deficient as to
principal or interest or both. If the deficiency is made up in whole or in part prior to or on the
payment date, the Bond Registrar shall so notify AGM or its designee.
(1) The Bond Registrar shall, after giving notice to AGM as provided above,
make available to AGM and, at AGM's direction, to any fiscal agent, the
registration books of the City maintained by the Bond Registrar and all records
relating to the funds maintained under this ordinance.
(2) For so long as all Bonds are in fully- immobilized form, payments of principal
and interest shall be made as provided in accordance with the operational
arrangements of DTC referred to in the Letter of Representations. In the event
that the Bonds are no longer in fully- immobilized form, the Bond Registrar
shall provide AGM and any fiscal agent with a list of Registered Owners of
Bonds entitled to receive principal or interest payments from AGM under the
terms of the Bond Insurance Policy, and shall make arrangements with AGM,
the fiscal agent or another designee of AGM to (i) mail checks or drafts to the
Registered Owners of Bonds entitled to receive full or partial interest
payments from AGM and (ii) pay principal upon Bonds surrendered to AGM,
the fiscal agent or another designee of AGM by the Registered Owners of
Bonds entitled to receive full or partial principal payments from AGM.
(3)
The Bond Registrar shall, at the time it provides notice to AGM of any
deficiency pursuant to clause (1) above, notify Registered Owners of Bonds
entitled to receive the payment of principal or interest thereon from AGM (i)
as to such deficiency and its entitlement to receive principal or interest, as
applicable, (ii) that AGM will remit to them all or a part of the interest
payments due on the related payment date upon proof of its entitlement thereto
and delivery to AGM or any fiscal agent, in form satisfactory to AGM, of an
appropriate assignment of the Registered Owner's right to payment, (iii) that,
if they are entitled to receive partial payment of principal from AGM, they
must surrender the related Bonds for payment first to the Bond Registrar,
which will note on such Bonds the portion of the principal paid by the Bond
Registrar and second to AGM or its designee, together with an appropriate
assignment, in form satisfactory to AGM, to permit ownership of such Bonds
to be registered in the name of AGM, which will then pay the unpaid portion
of principal, and (iv) that, if they are entitled to receive full payment of
principal from AGM, they must surrender the related Bonds for payment to
AGM or its designee, rather than the Bond Registrar, together with the an
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appropriate assignment, in form satisfactory to AGM, to permit ownership of
such Bonds to be registered in the name of AGM.
(4) In addition, if the Bond Registrar has notice that any holder of the Bonds has
been required to disgorge payments of principal of or interest on the Bonds
previously due for payment pursuant to a final non - appealable order by a court
of competent jurisdiction that such payment constitutes an avoidable
preference to such holder within the meaning of any applicable bankruptcy
laws, then the Bond Registrar shall notify AGM or its designee of such fact by
telephone or electronic notice, confirmed in writing by registered or certified
mail.
(5) The Bond Registrar will be hereby irrevocably designated, appointed, directed
and authorized to act as attorney -in -fact for Bondholders as follows:
(i)
If and to the extent there is a deficiency in amounts required to pay interest
on the Bonds, the Bond Registrar shall (a) execute and deliver to AGM, in
form satisfactory to AGM, an instrument appointing AGM as agent for
such holders in any legal proceeding related to the payment of such
interest and an assignment to AGM of the claims for interest to which such
deficiency relates and which are paid by AGM, (b) receive as designee of
the respective holders (and not as Bond Registrar) in accordance with the
tenor of the Bond Insurance Policy payment from AGM with respect to the
claims for interest so assigned, and (c) disburse the same to such
respective holders; and
(ii) If and to the extent of a deficiency in amounts required to pay principal of
the Bonds, the Bond Registrar shall (a) execute and deliver to AGM, in
form satisfactory to AGM, an instrument appointing AGM as agent for
such holder in any legal proceeding related to the payment of such
principal and an assignment to AGM of the Bonds surrendered to AGM in
an amount equal to the principal amount thereof as has not previously been
paid or for which moneys are not held by the Bond Registrar and available
for such payment (but such assignment shall be delivered only if payment
from AGM is received), (b) receive as designee of the respective holders
(and not as Bond Registrar) in accordance with the tenor of the Bond
Insurance Policy payment therefore from AGM, and (c) disburse the same
to such holders.
(6) Payments with respect to claims for interest on and principal of Bonds
disbursed by the Bond Registrar from proceeds of the Bond Insurance Policy
shall not be considered to discharge the obligation of the City with respect to
such Bonds, and AGM shall become the owner of such unpaid Bond and
claims for the interest in accordance with the tenor of the assignment made to
it under the provisions of this subsection or otherwise.
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(7) Irrespective of whether any such assignment is executed and delivered, the
City hereby agrees for the benefit of AGM that:
(i)
it recognizes that to the extent AGM makes payments directly or indirectly
(e.g., by paying through the Bond Registrar), on account of principal of or
interest on the Bonds, AGM will be subrogated to the rights of such
holders to receive the amount of such principal and interest from the City,
with interest thereon as provided and solely from the sources stated in this
ordinance and the Bonds; and
(ii) it will accordingly pay to AGM the amount of such principal and interest,
with interest thereon as provided in this ordinance and the Bonds, but only
from the sources and in the manner provided herein for the payment of
principal of and interest on the Bonds to holders, and will otherwise treat
AGM as the owner of such rights to the amount of such principal and
interest.
(iii) The City hereby agrees to pay or reimburse AGM all amounts paid by
AGM under the Bond Insurance Policy and to the extent permitted by law
any and all charges, fees, costs and expenses that AGM may reasonably
pay or incur, including, but not limited to, fees and expenses of attorneys,
accountants, consultants and auditors and reasonable costs of
investigations, in connection with (i) any accounts established to facilitate
payments under the Bond Insurance Policy, (ii) the administration,
enforcement, defense or preservation of any rights in respect of the trust
agreement or any other financing document, including defending,
monitoring or participating in any litigation or proceeding (including any
bankruptcy proceeding in respect of the City or any affiliate thereof)
relating to this ordinance, any party to this ordinance or any other
financing document or the transaction contemplated by this ordinance; (iii)
the pursuit of any remedies under this ordinance, to the extent such costs
and expenses are not recovered from other sources, or (iv) any
amendment, waiver or other action with respect to, or related to, this
ordinance whether or not executed or completed; costs and expenses shall
include a reasonable allocation of compensation and overhead attributable
to time of employees of AGM spent in connection with the actions
described in clauses (ii) - (iv) above. In addition, AGM reserves the right
to charge a reasonable fee as a condition to executing any amendment,
waiver or consent proposed in respect of this ordinance. The City will pay
interest on the amounts owed in this paragraph from the date of any
payment due or paid, at the per annum rate of interest publicly announced
from time to time by JP Morgan Chase Bank, National Association, or its
successor, at its principal office in New York, New York as its prime
lending rate (any change in such prime rate of interest to be effective on
the date such change is announced by JPMorgan Chase Bank, National
Association) plus three percent (3 %) per annum (the "Reimbursement
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Rate "). The Reimbursement Rate shall be calculated on the basis of the
actual number of days elapsed over a 360 -day year. In the event JPMorgan
Chase Bank ceases to announce its prime rate publicly, the prime rate shall
be the publicly announced prime rate or base lending rate of such national
bank, as AGM shall specify.
(8) In addition to any and all rights of reimbursement, subrogation and any other
rights pursuant hereto or under law or in equity, to the extent permitted by law
the City agrees to pay or reimburse AGM any and all charges, fees, costs,
claims, losses, liabilities (including penalties), judgments, demands, damages,
and expenses that AGM or its officers, directors, shareholders, employees,
agents and each person, if any, who controls AGM within the meaning of
either Section 15 of the Securities Act of 1933, as amended, or Section 20 of
the Securities Exchange Act of 1934, as amended, may reasonably pay or
incur, including, but not limited to, fees and expenses of attorneys,
accountants, consultants and auditors and reasonable costs of investigations,
of any nature in connection with, in respect of or relating to the transactions
contemplated by this ordinance by reason of:
(i) any omission or action (other than of or by AGM) in connection with the
offering, issuance, sale, remarketing or delivery of the Bonds;
(ii) the negligence, bad faith, willful misconduct, misfeasance, malfeasance or
theft committed by any director, officer, employee or agent of the City or
the City in connection with any transaction arising from or relating to this
ordinance;
(iii) the violation by the City of any law, rule or regulation, or any judgment,
order or decree applicable to it;
(iv) the breach by the City of any representation, warranty or covenant under
this ordinance or the occurrence, in respect of the City, under this
ordinance of any event of default or any event which, with the giving of
notice or lapse of time or both, would constitute any "event of default "; or
(v) any untrue statement or alleged untrue statement of a material fact
contained in any official statement, if any, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
such claims arise out of or are based upon any untrue statement or
omission in information included in an official statement, if any, and
furnished by AGM in writing expressly for use therein.
(9) AGM shall be entitled to pay principal of or interest on the Bonds that shall
become Due for Payment but shall be unpaid by reason of Nonpayment by the
City (as such terms are defined in the Bond Insurance Policy), whether or not
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AGM has received a Notice (as defined in the Bond Insurance Policy) of
Nonpayment or a claim upon the Bond Insurance Policy.
(10) In addition, AGM shall, to the extent it makes any payment of principal of
or interest on the Bonds become subrogated to the rights of the recipients of
such payments in accordance with the terms of the Bond Insurance Policy, and
to evidence such subrogation (i) in the case of claims for interest, the Bond
Registrar shall note AGM's rights as subrogee on the registration books of the
City maintained by the Bond Registrar, upon receipt of proof of payment of
interest thereon to the registered holders of the Bonds, and (ii) in the case of
claims for principal, the Bond Registrar, if any, shall note AGM's rights as
subrogee on the registration books of the City maintained by the Bond
Registrar, upon surrender of the Bonds together with receipt of proof of
payment of principal thereof.
(1) No Purchase by City. Without the prior written consent of AGM, no
Bonds insured by AGM shall be purchased by the City, or any of its affiliates, in lieu of
redemption, unless such Bonds are redeemed, defeased or cancelled.
(m) Interest Rate Exchange Agreements. The City may not enter into an
interest rate exchange agreement without the prior written consent of AGM.
Section 23. Supplements and Amendments.
(a) The Council from time to time and at any time may adopt an ordinance or
ordinances supplemental hereof, which ordinance or ordinances thereafter shall become a part of
this ordinance, for any one or more or all of the following purposes:
(1) To add to the covenants and agreements of the City in this
ordinance other covenants and agreements thereafter to be observed, which shall not adversely
affect the interests of the owners of any Bonds or any Parity Bonds in any material respect, or to
surrender any right or power herein reserved to or conferred upon the City.
(2) To make such provisions for the purpose of curing any ambiguities
or of curing, correcting or supplementing any defective provision contained in this ordinance in
regard to such matters or questions as the Council may deem necessary or desirable and not
inconsistent with this ordinance and which shall not adversely affect the interests of the owners
of any Bonds or any Parity Bonds in any material respect.
(3) To amend or supplement any provision contained in this ordinance
for the purpose of obtaining or maintaining a rating on the Bonds so long as such amendment or
supplement is not inconsistent with this ordinance and will not adversely affect the interests of
the owners of any Bonds or any Parity Bonds in any material respect.
Any such supplemental ordinance of the Council may be adopted without the consent of
the owners of any Bonds at any time outstanding, notwithstanding any of the provisions of
subsection (b) of this section; provided, however, that the City shall obtain an opinion of
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nationally recognized bond counsel to the effect that such supplemental ordinance complies with
this subsection (a) and will not adversely affect the interests of the owners of any Bonds or any
Parity Bonds in any material respect.
(b) With the consent of the owners of not less than 65% in aggregate principal
amount of the Parity Bonds at the time outstanding, the Council may adopt an ordinance or
ordinances supplemental hereto for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this ordinance or of any supplemental ordinance;
provided, however, that no such supplemental ordinance shall:
(1) Extend the fixed maturity of any Parity Bonds, or reduce the rate of
interest thereon, or extend the time of payments of interest from their due date, or reduce the
amount of the principal thereof, or reduce any premium payable on the redemption thereof,
without the consent of the owner of each bond so affected; or
(2) Reduce the aforesaid percentage of bond owners required to
approve any such supplemental ordinance, without the consent of the owners of all of the Parity
Bonds then outstanding.
It shall not be necessary for the consent of bond owners under this subsection (b) to
approve the particular form of any proposed supplemental ordinance, but it shall be sufficient if
such consent shall approve the substance thereof.
(c) Upon the adoption of any supplemental ordinance pursuant to the
provisions of this section, this ordinance shall be deemed to be modified and amended in
accordance therewith, and the respective rights, duties and obligations of the City under this
ordinance and all owners of Bonds outstanding hereunder shall thereafter be determined,
exercised and enforced thereunder, subject in all respects to such modification and amendments,
and all the terms and conditions of any such supplemental ordinance shall be deemed to be part
of the terms and conditions of this ordinance for any and all purposes.
Section 24. Lost or Destroyed Bonds. In case any Bonds are lost, stolen or
destroyed, the Bond Registrar may authenticate and deliver a new Bond or Bonds of like amount,
date and tenor to the Registered Owner thereof if the owner pays the expenses and charges of the
Bond Registrar and the City in connection therewith and files with the Bond Registrar and the
City evidence satisfactory to both that such Bond or Bonds were actually lost, stolen or destroyed
and of his or her ownership thereof, and furnishes the City and the Bond Registrar with
indemnity satisfactory to both.
Section 25. Severability. If a court of competent jurisdiction declares that any one or
more of the covenants and agreements in this ordinance to be performed by the City are contrary
to law, then such covenant or covenants, agreement or agreements, will be null and void and will
be deemed separable from the remaining covenants and agreements in this ordinance and will in
no way affect the validity of other provisions of this ordinance or of the Bonds.
Section 26. Effective Date. This ordinance will become effective five (5) days from
and after its passage and publication.
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PASSED by the City Council of the City of Port Angeles, Washington, at a regular
meeting of the Council held on August 3, 2010.
Attest:
CITT F PORT ANGELES, WASH GTON
/ I( / S
M. or
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CERTIFICATE OF CITY CLERK
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. 3407 (the
"Ordinance ") of the City, duly passed at a regular meeting of the City Council (the "Council ") of
the City held on August 3, 2010.
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 3?' day of August,
2010.
City Clerk
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