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HomeMy WebLinkAbout2877CITY OF PORT ANGELES, WASHINGTON ORDINANCE NO. 2 8 7 7 AN ORDINANCE OF THE CITY OF PORT ANGELES, WASHINGTON, ESTABLISHING A PLAN AND SYSTEM FOR CAPITAL IMPROVEMENTS; AUTHORIZING THE ISSUANCE OF A SERIES OF ELECTRIC REVENUE BONDS IN THE PRINCIPAL AMOUNT OF $2,760,000 TO FINANCE A PORTION OF THE CITY'S ELECTRIC UTILITY CAPITAL IMPROVEMENT PROGRAM; AND AUTHORIZING THE SALE OF SUCH BONDS BY COMPETITIVE BID. Passed August 1, 1995 Prepared by: PRESTON GATES & ELLIS Seattle, Washington SECTION 1. SECTION 2. SECTION 3. SECTION 4. SECTION 5. SECTION 6. SECTION 7. SECTION 8. SECTION 9. SECTION 10. SECTION 11. SECTION 12. SECTION 13. SECTION 14. SECTION 15. SECTION 16. SECTION 17. SECTION 18. SECTION 19. SECTION 20. SECTION 21. Exhibit A Exhibit B TABLE OF CONTENTS Page Definitions 1 Plan and System; Issuance of 1995 Bonds 4 Due Regard 5 Satisfaction of Parity Conditions 5 Authorization of 1995 Bonds 5 Bond Registrar 7 Redemption of 1995 Bonds 7 Construction Account 8 Arbitrage Rebate 8 Investment of Funds 8 Disposition of the Proceeds from the Sale of the 1995 Bonds 8 Tax Covenants; Special Designation 9 Sale of 1995 Bonds 9 Approval of Official Statement 10 Bond Insurance 10 Undertaking to Provide Ongoing Disclosure 11 General Authorization 13 Amending Flow of Funds in the Ordinance 13 Prior Acts 14 Severability 14 Effective Date 14 Form of Notice of Bond Sale Form of 1995 Bond -i- DOTOC8.DOC 95/07!31 ORDINANCE NO. AN ORDINANCE OF THE CITY OF PORT ANGELES, WASHINGTON, ESTABLISHING A PLAN AND SYSTEM FOR CAPITAL IMPROVEMENTS; AUTHORIZING THE ISSUANCE OF A SERIES OF ELECTRIC REVENUE BONDS IN THE PRINCIPAL AMOUNT OF $2,760,000 TO FINANCE A PORTION OF THE CITY'S ELECTRIC UTILITY CAPITAL IMPROVEMENT PROGRAM; AND AUTHORIZING THE SALE OF SUCH BONDS BY COMPETITIVE BID. WHEREAS, the City of Port Angeles, Washington (the "City "), a municipal corporation of the State of Washington, owns and operates an electric utility system (the "Electric System "); and WHEREAS, there are currently outstanding $2,840,000 of the City's Electric System Revenue Bonds, Series 1992, issued under date of September 1, 1992, as authorized by Ordinance No. 2709 of the City passed on September 1, 1992 (the "Ordinance "); and WHEREAS, the City Council of the City (the "Council ") has determined that it is in the best interests of the City that it continue the plan of repairs, maintenance and renewals of the Electric System as set forth in the City's capital improvement plan for the Electric System (the "Plan "); and WHEREAS, the Council deems it necessary and advisable to issue Electric System revenue bonds (the "1995 Bonds ") in order to pay part of the costs of the plan of improvements to the Electric System; and WHEREAS, the Ordinance provides that additional series of Electric System revenue bonds may be issued on a parity of lien with the 1992 Bonds, on the terms and conditions set forth in the Ordinance; and WHEREAS, the City wishes to authorize the sale of the 1995 Bonds by competitive bid, as herein provided; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PORT ANGELES, WASHINGTON, DO ORDAIN AS FOLLOWS: SECTION 1. Definitions. Capitalized terms used in this Supplemental Ordinance shall have the meanings given such terms in the Ordinance, unless otherwise defined herein. As used in this Supplemental Ordinance the following words and phrases shall have the meanings herein set forth unless the context shall clearly indicate that another meaning is intended. "Arbitrage and Tax Certification" means the certificate executed by the City pertaining to the calculation and payment of any Rebate Amount with respect to the 1995 Bonds. "Bond Insurance Policy" means the policy of Qualified Insurance, if any, obtained by the City pursuant to Section 15 hereof and the Sale Resolution, provided by the Bond Insurer and guaranteeing the payment when due of principal of and interest on the 1995 Bonds. "Bond Insurer" means the municipal bond insurance company, if any, to be named in the Sale Resolution if the City obtains a policy of Qualified Insurance from such company pursuant to Section 15 hereof. "Bond Registrar" or "Registrar" means the fiscal agency of the State of Washington in either Seattle, Washington, or New York, New York, whose duties include the registration and authentication of the 1995 Bonds, maintenance of the Bond Register, effecting transfer of ownership of the 1995 Bonds, and paying the principal of, premium, if any, and interest on the 1995 Bonds. "Closing" means the delivery of any 1995 Bonds to, and payment of the purchase price therefor by, the initial purchasers of the 1995 Bonds. "Commission" means the Securities and Exchange Commission. "Construction Account" means the 1995 Electric System Revenue Bond Construction Account created pursuant to Section 4.1 of this Supplemental Ordinance. "Disclosure Default" with respect to the 1995 Bonds means: (a) The failure to pay principal of or interest on any of the 1995 Bonds when the same shall become due and payable; or (b) Default by the City in the performance of any covenants of the City in this ordinance and such default continues for six months after the City receives written notice specifying and demanding the cure of such default from the registered owners of not less than 25% in principal amount of 1995 Bonds. If the default in the performance of the covenant cannot be completely remedied within six months after written notice is given, it shall not be a Default with respect to the 1995 Bonds as long as the City has taken active steps within the six months after written notice has been given to remedy the default and is diligently pursing such remedy; or (c) If the City files a petition in bankruptcy or is placed in receivership under any state or federal bankruptcy or insolvency law. "MSRB" means the Municipal Securities Rulemaking Board or any successor to its functions. "NRMSIR" means a nationally recognized municipal securities information repository. -2- DOTOC8.DOC 95/07/31 1 "1992 Bonds" means the City's Electric Revenue Bonds, Series 1992, issued under date of September 1, 1992, as authorized by the Ordinance. "1995 Bonds" means the $2,760,000 principal amount of the City's Electric Revenue Bonds, Series 1995, authorized to be issued by this Supplemental Ordinance. "Permitted Investments" means the following, to the extent that the same are legal for investment of funds of the City: (a) any Government Obligations, including obligations of any of the federal agencies set forth in clause (b) below to the extent unconditionally guaranteed by the United States; (b) obligations of the Export-Import Bank of the United States, the Government National Mortgage Association, the Federal National Mortgage Association to the extent guaranteed by the Government National Mortgage Association, the Federal Financing Bank, the Federal Intermediate Credit Banks, the Federal Banks for Cooperatives, the Federal Land Banks, the Farmers Home Administration and the Federal Home Loan Mortgage Association, or any agency or instrumentality of the Federal Government which shall be established for the purposes of acquiring the obligations of any of the foregoing or otherwise providing financing therefor; (c) new housing authority bonds issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a pledge of annual contribution under an annual contributions contract or contracts with the United States; or project notes issued by public agencies or municipalities and fully secured as to the payment of both principal and interest by a requisition or payment agreement with the United States; (d) direct and general obligations of any State within the territorial United States, to the payment of the principal of and interest on which the full faith and credit of such State is pledged, provided, that at the time of their purchase, such obligations are rated in one of the two highest rating categories by either Moody's Investors Services, Inc. or Standard & Poor's Ratings Group; (e) certificates of deposit, whether negotiable or nonnegotiable, issued by any bank or trust company organized under the laws of any State of the United States of America or any national banking association (including the Bond Fund Trustee, if any), provided that such certificates of deposit shall be (i) continuously and fully insured by the Federal Deposit Insurance Corporation, or (ii) issued by any bank or trust company which is a recognized qualified public depository of the State of Washington under RCW Chapter 39.58, as amended, or (iii) continuously and fully secured by such securities as are described above in clauses (a) or (b), which shall have a market value (exclusive of accrued interest) at all times at least equal to the principal amount of such certificates of deposit; (f) any written repurchase agreement with any bank, savings institution or trust company which is insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or with any brokerage dealer with retail customers which falls under Securities Investors Protection Corporation protection, provided that such repurchase agreements are fully secured by direct obligations of the United States of America, and provided further that (ii) such collateral is held by the City or its agent or trustee during the term of such repurchase agreement, (ii) such collateral is not subject to liens or claims of third parties, (iii) such collateral has a market value (determined at least once every 14 days) at least equal to 100% of the amount invested in the repurchase agreement, (iv) the City or its agent or trustee has a perfected first security interest in the collateral, (v) the agreement shall be for a term not longer than 270 days and (vi) the failure to maintain such collateral at the level required in (iii) above will require the City or its agent or -3- DOTOC8.O0C 95!07131 trustee to liquidate the collateral; and (h) any investment or investment agreement permitted for funds of the City under the laws of the State of Washington, as amended from time to time, which are approved by the Bond Insurer, if any, providing Qualified Insurance with respect to any 1995 Bonds. "Rebate Amount" means the amount, if any, determined to be payable with respect to the 1995 Bonds by the City to the United States of America in accordance with Section 148(f) of the Code. "Rule" means the Commission's Rule 15c2 -12 under the Securities and Exchange Act of 1934, as the same may be amended from time to time. "SID" means a state information depository for the State of Washington (if one is created). "Sale Resolution" means the resolution of the Council by which the Council may approve the sale of the 1995 Bonds in accordance with provisions of this Supplemental Ordinance. SECTION 2. Plan and System; Issuance of 1995 Bonds. The Council hereby approves and authorizes the acquisition, development and construction of the following improvements and betterments to the Electric System: 1. Upgrading insulators and transformers in areas of the City currently served at 4 KV to permit 12 KV service. Estimated cost: $510,000. 2. Upgrading transformer and circuit switcher at "I" Street Substation to permit 12 KV service. Estimated cost: $505,000. 3. Replacing transformer and switchgear at College Substation. Estimated cost: $646,750. 4. Transmission line and overhead powerlines. Estimated cost: $271,000. 5. New Golf Course Road Substation. Estimated cost: $362,000. 6. Acquisition from Clallam County Public Utility District No. 1 of its distribution systems and lines within city limits (third installment payment under three -year purchase contract). Cost: $340,000. The foregoing improvements and betterments to the Electric System, together with the further descriptions thereof set forth in the City's heretofore approved Capital Improvement Plan, are collectively defined herein as the "Plan." The City may modify details of the foregoing Plan where deemed necessary or advisable in the judgment of the Council. Should any part or provision of the Plan be held to be invalid, such holding shall not affect the validity of any other part thereof. -4- DOTOC8.DOC 95/07/31 The estimated cost of the Plan is hereby declared to be the sum of $2,861,420, a portion of which will be paid from proceeds of the 1995 Bonds. Included in this estimated cost are funds for legal, engineering and financing costs. The Council hereby finds and determines that it is in the best interests of the City and the users of the Electric System that the City issue the 1995 Bonds for the purpose of providing funds to finance a portion of the costs of the Plan. SECTION 3. Due Regard. The Council hereby finds and determines that due regard has been given to the cost of the operation and maintenance of the Electric System and that it has not obligated the City to set aside into the Bond Fund for the account of the 1995 Bonds a greater amount of the revenues and proceeds of the Electric System than in its judgment will be available over and above such cost of maintenance and operation. SECTION 4. Satisfaction of Parity Conditions. The Ordinance provides that the City may issue a series of Additional Bonds payable from the Bond Fund on a parity with the 1992 Bonds upon compliance with certain conditions set forth in Article IV thereof. The Council hereby finds and determines, as required by the Ordinance, as follows: A. There is now and, at the time of the issuance of the 1995 Bonds there will be, no deficiency in the Bond Fund, and no Event of Default has occurred and is continuing. B. On or before the Closing, the City shall have received a certificate signed by the Treasurer that sets forth: (i) the amount of the Net Revenues for any 12 consecutive months of the 24 months prior to the date of the issuance of the 1995 Bonds; (ii) the amount of the Average Annual Debt Service in any Fiscal Year thereafter on account of all Bonds then outstanding under the Ordinance and the 1995 Bonds; and (iii) the percentage derived by dividing the amount shown in (i) above by the amount shown in (ii) above, and shall state that such percentage is not less than 125 %. The Additional Bonds tests of the Ordinance having been complied with or assured, the lien and charge on Revenues for the payment of principal of and interest on the 1995 Bonds shall be equal to the lien and charge thereon for the payment of principal of and interest on the 1992 Bonds. SECTION 5. Authorization of 1995 Bonds. For the purpose of paying a portion of the costs of the Plan and to pay the costs of issuing the 1995 Bonds, there are hereby authorized to be issued $2,760,000 aggregate principal amount of City of Port Angeles, Washington, Electric -5- DOTOC8.DOC 95/07/31 Revenue Bonds, Series 1995 (the "1995 Bonds "), which shall mature on September 1 of such years and in such amounts as follows: Year (September 1) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Principal Year Principal Amount (September 1) Amount $ 40,000 45,000 45,000 50,000 55,000 55,000 60,000 65,000 65,000 70,000 75,000 80,000 85,000 90,000 95,000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 $ 100,000 105,000 110,000 120,000 125,000 135,000 140,000 150,000 160,000 170,000 180,000 190,000 200,000 215,000 225,000 The 1995 Bonds will be sold by public sale as provided in this Supplemental Ordinance. The rate or rates of interest to be borne by the 1995 Bonds shall be established by the Sale Resolution as provided herein. Bidders have the option of designating maturities of the Bonds as mandatory redemptions (payable in such years in such amounts) of Term Bonds maturing in a year or years to be specified in their bids, as provided in the Notice of Sale. Such provisions, if elected, shall also be established by the Sale Resolution. The 1995 Bonds shall be dated August 15, 1995, or such other date as may be established in the Sale Resolution, shall be fully registered as to both principal and interest, shall be in denominations of $5,000 or any integral multiple thereof, provided that no 1995 Bond shall represent more than one maturity, and shall be numbered separately in such manner and with any additional designation as the Bond Registrar deems necessary for purposes of identification. Interest may be paid by check or draft drawn upon the Paying Agent. Principal of the 1995 Bonds, at maturity or when otherwise due, shall be payable upon due presentation and surrender of the 1995 Bonds at the office of the Paying Agent in such coin or currency of the United States of America which at the time of payment is legal tender for public and private debts. The principal of and interest on the 1995 Bonds shall be payable from the Bond Fund. Interest on the 1995 Bonds shall be payable semiannually on March 1 and September 1 of each year, beginning March 1, 1996. The Bond Register shall be maintained by the Bond Registrar, and shall contain the name and mailing address of the registered owner or owners of each 1995 Bond or nominee of such -6- DOTOC8.DOC 95/07/31 registered owner or owners and the principal amount and number of 1995 Bonds held by each registered owner or nominee. SECTION 6. Bond Registrar. The City hereby adopts for the 1995 Bonds the system of registration specified and approved by the Washington State Finance Committee. The Bond Registrar shall keep, or cause to be kept, at its principal corporate trust office, sufficient books for the registration and transfer of the 1995 Bonds which shall at all times be open to inspection by the City. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver the 1995 Bonds transferred or exchanged in accordance with the provisions of such 1995 Bonds, the Ordinance and this Supplemental Ordinance and to carry out all of the Bond Registrar's powers and duties under the Ordinance and this Supplemental Ordinance. The Bond Registrar shall be responsible for its representations contained in the Certificate of Authentication on the 1995 Bonds. The Bond Registrar may become the owner of 1995 Bonds with the same rights it would have if it were not the Bond Registrar, and to the extent permitted by law may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of 1995 Bond owners. SECTION 7. Redemption of 1995 Bonds. (a) Optional Redemption. The 1995 Bonds maturing on or after September 1, 2006 are subject to redemption prior to maturity, at the option of the City, on or after September 1, 2005, in whole or in part on any date, at a price of par plus interest accrued thereon to the date fixed for redemption. If less than all of the 1995 Bonds subject to optional redemption are so called for redemption, the City shall choose the maturities to be redeemed. If less than the whole of a maturity is so called for redemption, the Bond Registrar shall choose by lot the 1995 Bonds to be redeemed. In the case of any redemption of 1995 Bonds at the election or direction of the City, the City shall give written notice to the Paying Agent, at least 45 days prior to the date of redemption, of the principal amounts of the 1995 Bonds of each maturity to be redeemed (all of which shall be determined by the City in its sole discretion, subject to the provisions of the Ordinance and this Supplemental Ordinance). (b) Mandatory Redemption. In the event that the successful bidder for the 1995 Bonds designates one or more maturities as Term Bonds, the Sale Resolution will provide for mandatory redemption of such Term Bonds in accordance with the maturity schedule set forth in the Notice of Sale. (c) Notice of Redemption. Notice of redemption and payment of redeemed 1995 Bonds shall be effected as provided in Article VI of the Ordinance, and the Bond Registrar -7- DOTOC8. DOC 95/07/31 shall provide additional notice of redemption of 1995 Bonds to each NRMSIR and SID, if any, in accordance with Section 16 hereof. SECTION 8. Construction Account. There is hereby authorized to be created in the office of the Treasurer a special fund of the City to be known as the "1995 Electric System Revenue Bond Construction Account" (the "Construction Account "). The Construction Account shall be maintained in existence and shall be used to pay those costs of the Plan to be financed by the 1995 Bonds and the costs of issuing the 1995 Bonds. If, after the payment in hull of all costs of any such additions, improvements and betterments or after adequate provision has been made for such payment, any money remain in the Construction Account, the balance so remaining shall be paid into the Bond Fund for credit to the Reserve Account therein, unless and until there shall then be credited to such Account money and Permitted Investments equal to the Average Annual Debt Service, and any further remainder shall be paid into the Contingency and Replacement Account. SECTION 9. Arbitrage Rebate. The City will pay the Rebate Amount, if any, to the United States of America at the times and in the amounts necessary to meet the requirements of the Code to maintain the federal income tax exemption for interest payments on the 1995 Bonds, in accordance with the Arbitrage and Tax Certification. SECTION 10. Investment of Funds. Money in the Construction Account and any arbitrage rebate fund not required for immediate disbursement for the purposes for which such Funds were created shall, to the fullest extent practicable and reasonable, be invested and reinvested by the City in Permitted Investments; provided that investments in any capitalized interest account hereafter created shall be those described in clauses (a), (b), (c), (e) and (f) of the definition of Permitted Investments. When no 1995 Bonds are outstanding and no Bonds are insured, City funds may be invested in any manner permitted by Washington law. SECTION 11. Disposition of the Proceeds from the Sale of the 1995 Bonds. The proceeds of the 1995 Bonds shall be deposited as follows: A. The amount equal to the interest accruing on the 1995 Bonds from their dated date to the date of their delivery shall be deposited in the Interest Account in the Bond Fund. B. The balance of the proceeds shall be deposited in the Construction Account and shall be used to pay the costs of the Plan and to pay the costs of issuance of the 1995 Bonds. -8- DOTOC8. DOC 95/07/31 SECTION 12. Tax Covenants; Special Designation. (a) The City shall comply with the provisions of this Section 12(a) unless, in the written opinion of bond counsel to the City, such compliance is not required in order to maintain the exemption of the interest on the 1995 Bonds from federal income taxation. The City hereby covenants that it will not make any use of the proceeds of sale of the 1995 Bonds or any other funds of the City which may be deemed to be proceeds of such 1995 Bonds pursuant to Section 148 of the federal Internal Revenue Code of 1986 and the applicable regulations thereunder that will cause the 1995 Bonds to be "arbitrage bonds" within the meaning of said section and said regulations. The City will comply with the requirements of Section 148 of the Internal Revenue Code of 1986, as amended (or any successor provision thereof applicable to the 1995 Bonds), and the applicable regulations thereunder throughout the term of the 1995 Bonds. The City further covenants that it will not take any action or permit any action to be taken that would cause the 1995 Bonds to constitute "private activity bonds" under Section 141 of the federal Internal Revenue Code of 1986, as amended. (b) The City hereby designates the 1995 Bonds as "qualified tax - exempt obligations" under Section 265(b) of the Code. The City does not expect to issue more than $10,000,000 principal amount of qualified tax- exempt obligations during 1995. SECTION 13. Sale of 1995 Bonds. The 1995 Bonds shall be sold at public sale and bids for the purchase of the 1995 Bonds shall be received on behalf of the City by Sound Finance Group, Inc., the financial advisors to the City, at the offices of Preston Gates & Ellis, bond counsel to the City, located at 701 Fifth Avenue (Floor 50), Seattle, Washington, until 10:00 a.m. on August 15, 1995, or at such other time and date as the Finance Director shall direct. Bids must be on an all or none basis. All bids must be accompanied by surety bond or a cashier's or certified check, as a good faith deposit, made payable to the order of the City, in an amount to be determined by the City's Finance Director in consultation with the City's financial advisor, as shall be set forth in the Notice of Bond Sale. The good faith check or surety bond of the successful bidder shall be security for the performance of its bid and shall be held as liquidated damages in case the successful bidder fails to take up and pay for the 1995 Bonds within 45 days if tendered for delivery. Upon the date and time established for the receipt of bids, the Finance Director or her designee shall open the bids, shall cause the bids to be mathematically verified and shall report to the City Council regarding the bids received. Such bids shall then be publicly read, considered and acted upon by the City Council in an open public meeting to be held on the same date that the bids are received. The 1995 Bonds shall be sold to the bidder offering to purchase them at the lowest true interest cost to the City; provided, however, that the City Council reserves the right to reject any and all bids for the 1995 Bonds. The City also reserves the right to waive any -9- DOTOC8.DOC 95/07/31 irregularity or informality in any bid. The City Council shall approve the sale of the 1995 Bonds and establish the interest rates and other provisions of the 1995 Bonds by the Sale Resolution. The Finance Director is hereby authorized and directed to prepare an Official Notice of Bond Sale for the 1995 Bonds substantially in the form and content attached as Exhibit A to this Supplemental Ordinance, with such changes not inconsistent with the Ordinance and this Supplemental Ordinance as the Finance Director shall approve. The Official Notice of Bond Sale or an abridged form thereof shall be published once prior to such sale date in The Daily Journal of Commerce and may be published in such other papers or financial journals as may be deemed desirable or appropriate by the Finance Director. Following the sale of the 1995 Bonds, the City shall cause definitive 1995 Bonds to be prepared, executed and delivered, which 1995 Bonds shall be in substantially the form set forth on Exhibit B attached hereto and shall be typewritten, lithographed or printed with engraved or lithographed borders. The proper City official are hereby authorized and directed to do everything necessary for the prompt issuance, execution and delivery of the 1995 Bonds to the successful bidder and for the proper use and application of the proceeds of sale of the 1995 Bonds. SECTION 14. Approval of Official Statement. The City Light Director of the Electric System (the "City Light Director ") and the Finance Director are hereby authorized and directed (i) to review and approve the information contained in the preliminary official statement (the "Preliminary Official Statement ") prepared in connection with the sale of the 1995 Bonds; (ii) for the sole purpose of the purchaser's compliance with paragraph (b)(1) of the Securities and Exchange Commission's Rule 15c2 -12 (the "Rule "), to "deem final" that Preliminary Official Statement as of its date, except for the omission of information on offering prices, interest rates, selling compensation, delivery dates, any other terms or provisions required by the City to be specified in a competitive bid, ratings, other terms of the 1995 Bonds dependent on such matters and the identity of the purchaser; and (iii) to authorize the distribution of the Preliminary Official Statement to prospective purchasers of the 1995 Bonds. The City Light Director and the Finance Director are hereby authorized and directed to review and approve on behalf of the City a final official statement with respect to the 1995 Bonds to be prepared following the sale thereof. The City agrees to cooperate with the successful bidder to deliver or cause to be delivered, within seven business days from the date of the public sale authorized herein and in sufficient time to accompany any confirmation that requests payment from any customer of the successful bidder, copies of a final official statement in sufficient quantity to comply with paragraph (b)(4) of the Rule and the rules of the Municipal Securities Rulemaking Board ( "MSRB "). SECTION 15. Bond Insurance. In the Sale Resolution, the Council may provide for the bonds to be insured by a municipal bond insurance company on terms and conditions to be set forth therein. -10- DOTOC8. DOC 95/07/31 SECTION 16. Undertaking to Provide Ongoing Disclosure. A. Contract/Undertaking. This section constitutes the City's written undertaking for the benefit of the owners of the 1995 Bonds as required by Section (b)(5) of the Rule. B. Financial Statements /Operating Data. The City agrees to provide or cause to be provided to each NRMSIR and to the SID, if any, in each case as designated by the Commission in accordance with the Rule, the following annual financial information and operating data for the prior fiscal year (commencing in 1997 for the fiscal year ended December 31, 1996): 1. Annual financial statements showing ending fund balances for the Electric System 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 1995 Bonds in the table entitled "Statement of Revenues, Expenses and Changes in Retained Earnings" under the heading "THE ELECTRIC SYSTEM" and in "APPENDIX B: Historical Financial Information "; 2. Principal amount of outstanding Bonds of the Electric System; 3. Debt service coverage for outstanding Bonds. 4. Rates for the Electric System; and 5. Number of customers of the Electric System by type and revenues. Such annual information and operating data described above shall be available on or before July 1 of each year. The City may adjust such date if the City changes its Fiscal Year by providing written notice of the change of Fiscal Year and the new reporting date to each then existing NRMSIR and the SID, if any. In lieu of providing such annual financial information and operating data, the City may cross - reference to other documents the City provides to the NRMSIRs, the SID or to the Commission and, if such document is a final official statement within the meaning of the Rule, available from the MSRB. If not provided as part of the annual financial information discussed above, the City shall provide 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 to each then existing NRMSIR and the SID, if any. C. Material Events. The City agrees to provide or cause to be provided, in a timely manner, to the SID, if any, and to each NRMSIR or to the MSRB notice of the occurrence of any of the following events with respect to the 1995 Bonds: • Failure to pay principal of or interest on the 1995 Bonds when due; T DOTOCB.DOC 95/07/31 ♦ The occurrence of a Disclosure Default; • An unscheduled draw on the Reserve Account reflecting financial difficulties; ♦ Substitution of credit or liquidity providers (including, but not limited to, the Bond Insurer), if any, or their failure to perform; ♦ Unscheduled draws on credit enhancements for the Bonds (including, but not limited to, the Bond Insurance Policy), if any, reflecting financial difficulties; ♦ Adverse tax opinions or events affecting the tax - exempt status of the 1995 Bonds; • Adoption of a supplemental ordinance that modifies the rights of 1995 Bond owners; • Optional redemption of 1995 Bonds prior to their maturity in accordance with Section 7 of this Supplemental Ordinance; ♦ Defeasance of the 1995 Bonds in accordance with Section 14.2 of the Ordinance; ♦ Rating change for the 1995 Bonds if the City has received a written notice of the rating change; and ♦ Release, substitution or sale of property, if any, securing repayment of the 1995 Bonds. No property secures the repayment of the 1995 Bonds. As a result, the City does not expect that there will occur any release, substitution or sale of such property unless the City subsequently chooses to provide such property as security for the repayment of the 1995 Bonds. D. Notification Upon Failure to Provide Financial Data. The City agrees to provide or cause to be provided, in a timely manner, to each NRMSIR or to the MSRB and to the SID, if any, notice of its failure to provide the annual financial information described in subsection B above on or prior to the date set forth in subsection B above. E. Termination/Modification. The City's obligations to provide annual financial information and notices of material events shall terminate upon the defeasance, prior redemption or payment in full of all of the 1995 Bonds. This section, or any provision hereof, shall be null and void if the City (1) obtains an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require this section, or any such provision, are invalid, have been repealed retroactively or otherwise do not apply to the 1995 Bonds; and (2) notifies each then existing NRMSIR and the SID, if any, of such opinion and the cancellation of this section. -12- DOTOCB. DOC 95/07/31 Notwithstanding any other provision of this Ordinance, the City may amend this Section 15, and any provision of this Section 15 may be waived, provided that the following conditions are satisfied: 1. If the amendment or waiver relates to the provisions of Section 15B(1) -(5) or C, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the City with respect to the 1995 Bonds, or the type of business conducted; 2. The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the 1995 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and 3. The amendment or waiver either (i) is approved by the owners of the 1995 Bonds or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the owners or beneficial owners of the 1995 Bonds. In the event of any amendment or waiver of a provision of this Section 15, the City shall describe such amendment in the next annual report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a material event under subsection C, and (ii) the annual report for the year in which the change is made should 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. A 1995 Bond owner's right to enforce the provisions of this section shall be 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 1995 Bonds under this ordinance. SECTION 17. General Authorization. The Mayor, City Light Director, Finance Director and City Clerk and each of the other appropriate officers of the City are each hereby authorized and directed to take such steps, to do such other acts and things, and to execute such letters, certificates, agreements, papers, financing statements, assignments or instruments as in their judgment may be necessary, appropriate or desirable in order to carry out the terms and provisions of, and complete the transactions contemplated by, this Supplemental Ordinance. SECTION 18. Amending Flow of Funds in the Ordinance. In accordance with Section 10.1(4) of the Ordinance, Section 7.1(B)(1) of the Ordinance is amended as follows: -13- OOTOC8.DOC 95107/31 B. The Revenues of the City shall be deposited and credited to the following accounts in the Light Fund and used only for the following purposes and in the following order of priority: (1) All Revenues paid into the Light Fund shall first be credited to the General Account therein and applied as follows: (i) to pay Operating Expenses (excluding any taxes of the City or payments to the City in lieu of taxes) and to provide sufficient working capital for the operation of the Electric System; (ii) to make all payments required to be made into the Interest Account in the Bond Fund for the payment of accrued interest on the next interest payment date; (iii) to make all payments required to be made into the Principal Account in the Bond Fund for the payment of the principal amount of Serial Bonds next coming due, and into the Bond Retirement Account in the Bond Fund for the mandatory redemption of Term Bonds; (iv) to make all payments required to be made into the Reserve Account in the Bond Fund created to secure the payment of the Bonds; and (v) to pay any taxes of the City or payments to the City in lieu of taxes and to make all payments required to be made into any special fund or account created to pay or secure the payment of the principal of and interest on any revenue bonds, warrants or other revenue obligations of the City having a lien upon Revenues and moneys in the Light Fund and Bond Fund and accounts therein junior and inferior to the lien thereon for the payment of the principal of and interest on the Bonds. SECTION 19. Prior Acts. All acts taken pursuant to the authority of this Supplemental Ordinance but prior to its effective date are hereby ratified and confirmed. SECTION 20. Severability. If any one or more of the covenants or agreements provided in this Supplemental Ordinance on the part of the City to be performed shall be declared by any court of competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or agreements shall be null and void and shall be deemed separable from the remaining covenants and agreements, and shall in no way affect the validity of the other provisions of this Supplemental Ordinance or of the 1995 Bonds issued hereunder. SECTION 21. Effective Date. This Supplemental Ordinance shall be in effect from and after its adoption in accordance with law. -14- DOTOC8. DOC 95/07/31 PASSED by the City Council of the City of Port Angeles, Washington, at a regular meeting thereof held this 1st day of August, 1995. Attest: City Clerk Carol A. Hagar, Deputy -15- DOTOC8.DOC 95107/31 EXHIBIT A OFFICIAL NOTICE OF BOND SALE $2,760,000 CITY OF PORT ANGELES, WASHINGTON ELECTRIC REVENUE BONDS, SERIES 1995 Sealed bids for the above - referenced bonds (the "1995 Bonds ") of the City of Port Angeles, Washington (the "City ") will be received at the offices of Preston Gates & Ellis, bond counsel to the City, located at 701 Fifth Avenue (Floor 50), Seattle, Washington, until 10:00 a.m., Seattle time, on August 15, 1995 or on such later day as may be established by the Finance Director of the City (the "Finance Director ") and communicated through Munifacts News Service not less than 24 hours prior to the time bids are to be received. All bids received with respect to the 1995 Bonds will be considered by the City Council (the "Council ") at its regularly scheduled meeting at 7:00 p.m. on the day bids are received. If the City accepts a bid, it will be awarded to the successful bidder and its terms will be approved by the Council at such meeting. If all bids for the 1995 Bonds are rejected, the Finance Director may fix a new date and time for the receipt of bids for such 1995 Bonds by giving notice communicated through Munifacts Wire Service not less than 24 hours prior to such new date and time. Any notice specifying a new date and /or time for the receipt of bids, following the rejection of bids received or otherwise, shall be considered an amendment to this Official Notice of Bond Sale. DESCRIPTION OF 1995 Bonds Bond Details. The 1995 Bonds will be dated August 15, 1995. Interest on the 1995 Bonds will be payable on March 1, 1996 and semiannually thereafter on each March 1 and September 1. The 1995 Bonds are issuable only as fully registered bonds. Principal of and interest on the 1995 Bonds are payable by the fiscal agency of the State of Washington in the cities of Seattle, Washington, and New York, New York, currently First Interstate Bank of Washington, N.A. and The Bank of New York. Election of Maturities. Bidders have the option to designate part or all of the maturities as Term Bonds, subject to mandatory redemption at par in the years and in the amounts set forth in the serial maturity A -1 DOTDCB. DOC 95/07/31 schedules for such Term Bonds. Any Term Bonds designated must consist of the total principal payments for two or more consecutive years and mature on the latest of such years. If no Term Bonds are designated, the 1995 Bonds will mature in the amounts (subject to adjustment as provided herein) and on the dates set forth in the serial maturity schedule set forth below: Serial Maturity Serial Maturity or Mandatory Principal or Mandatory Principal Redemption Amounts Redemption Amounts 1996 $ 40,000 2011 $ 100,000 1997 45,000 2012 105,000 1998 45,000 2013 110,000 1999 50,000 2014 120,000 2000 55,000 2015 125,000 2001 55,000 2016 135,000 2002 60,000 2017 140,000 2003 65,000 2018 150,000 2004 65,000 2019 160,000 2005 70,000 2020 170,000 2006 75,000 2021 180,000 2007 80,000 2022 190,000 2008 85,000 2023 200,000 2009 90,000 2024 215,000 2010 95,000 2025 225,000 Redemption. The 1995 Bonds maturing on and after September 1, 2006 will be subject to redemption prior to their maturity on and after September 1, 2005, in whole or in part (maturities to be selected by the City and by lot within a maturity in the manner chosen by the Bond Registrar), on any date, at par, plus accrued interest to the redemption date of such 1995 Bonds. The City shall retire by purchase or redemption pursuant to call the 1995 Term Bonds (if any) on or before September 1 of the years and in the amounts designated by the bidder to be mandatory redemptions as provided for above. Purpose. Proceeds of the 1995 Bonds will be used to provide funds to pay the costs of capital improvements to the Electric System in accordance with the City's Capital Improvement Plan and to pay costs of issuance of the 1995 Bonds. SECURITY The City currently has outstanding $2,840,000 principal amount of its Electric Revenue Bonds, Series 1992 (the "1992 Bonds "), which are secured by a lien on Revenues of the Electric A -2 DOTOC8.DOC 95/07/31 System that is equal to that of the 1995 Bonds. In the ordinances authorizing issuance of the 1995 Bonds (collectively, the "Bond Ordinance "), the City has pledged that it will set aside from the Revenues of the City's Electric System and pay into the "Electric System Revenue Bond Fund" (the "Bond Fund ") amounts sufficient to pay and secure the payment of the principal of and interest on the 1995 Bonds. In the Bond Ordinance, the City has reserved the right to issue Additional Bonds (together, the "Bonds ") on a parity with the 1992 Bonds and the 1995 Bonds on certain terms and conditions set forth therein. Principal of and interest on the 1992 Bonds, the 1995 Bonds and any Additional Bonds are payable solely from the Bond Fund. The pledge of the Revenues and of the amounts to be paid into and maintained into the Bond Fund and the other funds and accounts established under the Bond Ordinance to pay and secure the payments of the Bonds is a prior lien and charge on the Revenues and the amounts in such funds and accounts, subject to provision for operating capital and to the payment of Operating Expenses, and superior to all other liens and charges of any kind or nature. The 1995 Bonds are not general obligations of the City, and neither the full faith and credit of the City or of the State of Washington, nor any revenues of the City from sources other than the Electric System, are pledged to the payment thereof. BOND INSURANCE The City has obtained a commitment from for the issuance of a municipal bond insurance policy for the 1995 Bonds. The insurance premium and fees of any rating agency charged for rating the 1995 Bonds shall be paid by the City from proceeds of the 1995 Bonds. INTEREST RATES AND BIDDING INFORMATION Bids must be submitted on the official bid forms that are contained in the Preliminary Official Statement, or on photocopies or facsimiles of such forms. Bidders are invited to submit bids for the purchase of the 1995 Bonds fixing the interest rate or rates that the 1995 Bonds will bear. Interest rates bid shall be in multiples of 1/8 or 1/20 of 1 percent, or both. No more than one rate of interest may be fixed for any one maturity, and no rate of interest for any maturity of the 1995 Bonds shall be less than the rate of interest for a prior maturity. No bid will be considered for the 1995 Bonds for less than an amount equal to 99 percent of par plus accrued interest or for less than the entire offering of 1995 Bonds. The purchaser must pay accrued interest, if any, to the date of delivery of the 1995 Bonds. For the purpose of comparison only and not as a part of the bid, each bid shall state the true interest cost of the bid determined in the manner hereinafter stated. The true interest cost will be determined by doubling the semiannual interest rate (compounded semiannually) necessary to discount the debt service payments from the payment dates to the date of the 1995 Bonds and to the price bid, without regard to interest accrued to the date of delivery of the 1995 Bonds. A -3 DOTOC8.DOC 95/07/31 ISSUE PRICE INFORMATION Upon award of the 1995 Bonds, the successful bidder shall advise the City and Bond Counsel of the initial reoffering prices to the public of each maturity of the 1995 Bonds (the "Initial Reoffering Prices "). Simultaneously with or before delivery of the 1995 Bonds, the successful bidder shall furnish to the City and Bond Counsel a certificate in form and substance acceptable to Bond Counsel (a) confirming the initial Reoffering Prices, (b) certifying that a bona fide offering of the 1995 Bonds has been made to the public (excluding bond houses, brokers and other intermediaries), (c) stating the prices at which a substantial amount of each maturity of the 1995 Bonds was sold to the public (excluding bond houses, brokers, and other intermediaries), (d) stating the price at which any 1995 Bonds that remain unsold at the date of closing would have been sold on such date and (e) stating the offering price of each 1995 Bond sold to institutional or other investors at discount. BID DEPOSIT All bids shall be without condition, shall be made only on official bid forms furnished by the City or on photocopies or facsimiles of such forms and shall be sealed and accompanied by a good faith deposit in the amount of $27,600. The good faith deposit shall be in the form of cash or a certified or bank cashier's or treasurer's check made payable to the order of the City of Port Angeles or a Financial Surety Bond. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of Washington and preapproved by the City. Such bond must be submitted to the City in care of the Finance Director prior to the opening of the bids. The Financial Surety Bond must identify each bidder whose deposit is guaranteed by such Financial Surety Bond. If the 1995 Bonds are awarded to a bidder using a Financial Surety Bond, then that purchaser is required to submit its deposit to the City in the form of a certified or bank cashier's or treasurer's check or wire transfer as instructed by the City not later than 3:30 p.m., Seattle time, on the next business day following the award. If such deposit is not received by that time, the Financial Surety Bond may be drawn upon by the City to satisfy the deposit requirement. Each good faith deposit in a form other than a Financial Surety Bond shall be returned promptly if the bid is not accepted. The good faith deposit of the successful bidder shall be retained by the City as security for the performance of such bid and shall be applied to the purchase price of the 1995 Bonds upon the delivery of the 1995 Bonds to the successful bidder. Pending delivery of the 1995 Bonds, the good faith deposit may be invested for the sole benefit of the City. If the 1995 Bonds are ready for delivery and the successful bidder fails or neglects to complete the purchase of such 1995 Bonds within 40 days following the acceptance of its bid, the good faith deposit shall be forfeited to the City, and, in that event, the Council may accept the next best bid or call for additional proposals. AWARD The 1995 Bonds will be sold to the bidder making a bid conforming to the terms of the offering and offering the lowest true interest cost to the City. If there are two or more equal bids and those bids are the best bids received, the Council shall determine by lot which bid will be accepted. The City reserves the right to reject any or all bids submitted and to waive any A -4 DOTOC8.DOC 95/07/31 formality or irregularity in the bid or bidding process. If all bids are rejected, then the 1995 Bonds may be readvertised for sale in the manner provided by law. Any bid presented after the time specified for the receipt of bids will not be accepted, and any bid not accompanied by the required good faith deposit at the time of opening that bid will not be read or considered. DELIVERY The City will deliver the 1995 Bonds (consisting of one typewritten certificate for each maturity) to DTC in New York, New York, prior to the date of closing. Closing shall occur within 40 days after the sale date. Settlement shall be in federal funds available in Seattle, Washington on the date of delivery. Delivery is expected to be on or about August 30, 1995. It is understood that if, prior to the delivery of the 1995 Bonds, the interest receivable by the owners of the 1995 Bonds becomes includable in gross income for federal income tax purposes, or becomes subject to federal income tax other than as described in the Official Statement for the 1995 Bonds, the successful bidder, at its option, may be relieved of its obligation to purchase the 1995 Bonds and in that case the good faith deposit accompanying its bid will be returned without interest. The approving legal opinion of Preston Gates & Ellis, Seattle, Washington, Bond Counsel, will be provided to the purchaser at the time of the delivery of the 1995 Bonds. Bond counsel's opinion shall express no opinion concerning the completeness or accuracy of any Official Statement, offering circular or any other sales material issued or used in connection with the 1995 Bonds. A no- litigation certificate will be included in the closing papers of the 1995 Bonds. CUSIP NUMBERS It is anticipated that CUSIP identification numbers will be printed on the 1995 Bonds, but neither the failure to print such numbers on the 1995 Bonds nor any error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the 1995 Bonds in accordance with the terms of this Official Notice of Sale. All expenses in relation to the printing of the CUSIP numbers on the 1995 Bonds shall be paid by the City, but the charge of the CUSIP Bureau shall be paid by the purchaser. SECONDARY DISCLOSURE The City covenants and agrees to enter into a written agreement or contract, constituting an undertaking to provide ongoing disclosure about the City and the Electric System, for the benefit of the owners of 1995 Bonds on or before the date of delivery of the 1995 Bonds as required by Section (b)(5)(i) of the SEC's Rule 15c2 -12 (the "Rule "), which undertaking shall be a part of the Bond Ordinance and in the form as summarized in the Preliminary Official Statement, with such changes as may be agreed to in writing by the Underwriter. The City has not previously entered into any other written undertakings under the Rule with respect to any of its obligations. A -5 DOTOC8.DOC 95/07/31 OFFICIAL STATEMENT AND OTHER INFORMATION The Preliminary Official Statement is in a form deemed final by the City for the purpose of SEC Rule 15c2- 12(b)(1), but is subject to revision, amendment and completion in a final Official Statement, which the City will deliver, at the expense of the City, to the purchaser through its designated representative not later than seven business days after the City's acceptance of the purchaser's bid. The City will provide no more than 100 copies of the final Official Statement. Additional copies will be provided at the purchaser's expense. By submitting the successful bid, the purchaser's designated senior representative agrees to file, or cause to be filed, within one business day following the receipt from the City, the final Official Statement with a nationally recognized municipal securities information repository designated by the Securities and Exchange Commission. Further information regarding the 1995 Bonds and copies of the preliminary official statement may be obtained upon request made to Joan Egan, Sound Finance Group, Financial Advisor to the City, 1212 E. Newton, Seattle, Washington 98102 (206) 328 -9251. DATED at Port Angeles, Washington, this day of August, 1995. /s/ Katherine Godbey Finance Director, City of Port Angeles A -6 DOTOC8.DOC 95!07131 EXHIBIT B FORM OF THE 1995 BOND UNITED STATES OF AMERICA STATE OF WASHINGTON CITY OF PORT ANGELES, WASHINGTON ELECTRIC REVENUE BOND SERIES 1995 No. $ The City of Port Angeles, Washington, a municipal corporation of the State of Washington (hereinafter called the "City "), hereby acknowledges itself to owe and for value received promises to pay to the Registered Owner identified above, or registered assigns, on the Maturity Date identified above, the Principal Amount indicated above and to pay interest thereon from August 15, 1995, or the most recent date to which interest has been paid or duly provided for until payment of this bond at the Interest Rate set forth above, payable on the first days of each March and September, commencing on March 1, 1996. Principal of and interest and premium, if any, on this bond are payable solely out of the special fund of the City known as the 'Electric System Revenue Bond Fund" (the "Bond Fund ") created and established by Ordinance No. 2709, passed by the Council of the City on September 1, 1992. Both principal of and interest on this bond are payable in lawful money of the United States of America. Interest shall be paid by mailing a check or draft to the registered owner or assigns at the address shown on the Bond Register as of the 15th day of the month prior to the interest payment date. Principal shall be paid to the registered owner or assigns upon presentation and surrender of this bond at the principal office of the fiscal agency of the State of Washington in either Seattle, Washington, or New York, New York (hereinafter referred to collectively as the "Bond Registrar "). Reference is hereby made to additional provisions of this bond set forth below and such additional provisions shall for all purposes have the same effect as if set forth on this space. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance (as hereinafter defined) until the Certificate of Authentication hereon shall have been manually signed by the Bond Registrar. 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 B -1 DOTOCB.DOC 95/07/31 been performed in due time, form and manner as prescribed by law, and that the amount of this bond, together with all other obligations or indebtedness of the City, does not exceed any constitutional or statutory limitations of indebtedness. IN WITNESS WHEREOF, the City of Port Angeles, Washington, has caused this bond to be executed in its name with the manual or facsimile signature of its Mayor and attested by the manual or facsimile signature of the City Clerk, and the manual or facsimile seal of said City to be imprinted hereon, all as of the 15th day of August, 1995. (SEAL) Attest: City Clerk Carol A. Haga Deputy CERTIFICATE OF AUTHENTICATION CITY OF PORT ANGELES, WASHINGTON Date of Authentication: This bond is one of the bonds described in the within- mentioned Bond Ordinance and is one of the Electric System Revenue Bonds, Series 1995 of the City of Port Angeles, Washington, dated August 15, 1995. WASHINGTON STATE FISCAL AGENCY, Bond Registrar By Authorized Officer ADDITIONAL BOND PROVISIONS This bond is one of a duly authorized series of bonds aggregating $2,760,000 in principal amount and designated as "Electric System Revenue Bonds, Series 1995" (the "1995 Bonds "). The 1995 Bonds are issued under and pursuant to Ordinance No. 2709 of the City, Ordinance B -2 DOT0C8.DOC 95/07/31 No. of the City, and Resolution No. of the City Council (together, the "Bond Ordinance "), and under the authority of and in full compliance with the Constitution and laws of the State of Washington. The 1995 Bonds are issued for the purpose of paying a portion of the costs of improvements to the Electric System. The Bond Ordinance permits the issuance of Additional Bonds payable from the Bond Fund ranking on a parity with the 1995 Bonds and secured by an equal charge and lien on the Revenues of the Electric System (as such terms are defined in the Bond Ordinance). Copies of the Bond Ordinance are on file at the principal office of the City and at the principal office of each paying agent for this 1995 Bond, and reference thereto, and to any and all modifications and amendments thereof, is hereby made for a more complete description of the Revenues available for the payment of the principal of, premium, if any, and interest on the 1995 Bonds and the rights and remedies of the owners of the 1995 Bonds with respect thereto, the terms and conditions upon which the 1995 Bonds have been issued, and the terms and conditions upon which this 1995 Bond shall no longer be secured by the Bond Ordinance or deemed to be outstanding hereunder if moneys or certain specified securities sufficient for the payment of this 1995 Bond shall have been set aside in a special account and held in trust solely for the payment thereof. Under the Bond Ordinance, the City is obligated to set aside and pay into the Bond Fund out of the Revenues of said Electric System, certain fixed amounts sufficient to pay the principal of and interest and premium, if any, on the City's Electric System Revenue Bonds, Series 1992 (the "1992 Bonds "), the 1995 Bonds and any Additional Bonds at any time outstanding issued on a parity therewith (collectively, the "Bonds "), all as is more fully provided in the Bond Ordinance. The pledge of the Revenues and of the amounts to be paid into and maintained into the Bond Fund and the other funds and accounts established under the Bond Ordinance to pay and secure the payments of the Bonds is a prior lien and charge on the Revenues and the amounts in such funds and accounts, subject to provision for operating capital and to the payment of Operating Expenses, and superior to all other liens and charges of any kind or nature. In and by the Bond Ordinance, the City covenants to establish, maintain and collect rates or charges for electric energy and other services, facilities and commodities sold, furnished or supplied by the Electric System that shall be fair and nondiscriminatory and adequate to provide Revenues sufficient for the fixed amounts that the City is obligated to set aside in the Bond Fund to pay the principal of and interest and premium, if any, on the Bonds and for the proper operation and maintenance of the Electric System, and all necessary repairs thereto and replacements and renewals thereof. The 1995 Bonds maturing after September 1, 2006 are subject to redemption prior to maturity, at the option of the City, on or after September 1, 2005, in whole or in part on any date, upon written notice as provided hereinafter, at a price of par together with the interest accrued thereon to the date fixed for redemption. If less than all of the 1995 Bonds subject to optional redemption are to be called for redemption, the City shall choose the maturities to be redeemed. In the event that less than all of B -3 DOTOC8. DOC 95/07/31 the 1995 Bonds of any maturity are called for redemption, the particular 1995 Bonds of such maturity to be redeemed shall be selected by lot by the Bond Registrar. Written notice of redemption shall be given by first class mail, postage prepaid, not less than 30 days nor more than 60 days before the redemption date to the registered owners of the 1995 Bonds to be redeemed in whole or in part at their last addresses, if any, appearing on the Bond Register, but failure to mail or to receive any such notice shall not affect the validity of the proceedings for redemption of 1995 Bonds. Notice of redemption having been given by mailing, as aforesaid, the 1995 Bonds so called for redemption shall on the date specified in such notice become due and payable at the applicable redemption price herein provided, and from and after the date so fixed for redemption (unless the City shall default in the payment of the 1995 Bonds so called for redemption) interest on said 1995 Bonds so called for redemption shall cease to accrue. Portions of the principal sum of this 1995 Bond in installments of $5,000 or any integral multiple thereof may be redeemed, and if less than all of the principal sum hereof is to be redeemed, in such case upon the surrender of this 1995 Bond at the principal office of one of the Paying Agents, there shall be issued to the registered owner, without charge therefor, for the then unredeemed balance of the principal sum hereof, fully registered 1995 Bonds of like maturity and interest rate in any of the denominations authorized by the Bond Ordinance. This 1995 Bond shall be transferable by the registered owner at the principal offices of the Bond Registrar upon surrender and cancellation of this 1995 Bond, and thereupon a new registered 1995 Bond of the same principal amount and interest rate and maturity will be issued to the transferee as provided in the Bond Ordinance. The City, the paying agents and any other person may treat the person in whose name this 1995 Bond is registered as the absolute owner hereof for the purpose of receiving payment hereof and for all purposes and shall not be affected by any notice to the contrary, whether this 1995 Bond be overdue or not. The City has designated the 1995 Bonds as "qualified tax- exempt obligations" under Section 265(b) of the Code for investment by certain financial institutions. 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 B -4 DOTOC8.DOC 95/07/31 of , or its successor, as Bond Registrar to transfer said bond on the books kept for registration thereof with full power of substitution in the premises. DATED: SIGNATURE GUARANTEED: B -5 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. DOTOC8.DOC 95/07/31 OFFICIAL BID FORM FOR THE PURCHASE OF $2,760,000 CITY OF PORT ANGELES, WASHINGTON ELECTRIC REVENUE BONDS, SERIES 1995 Ms. Katherine Godbey Finance Director City of Port Angeles c/o Preston Gates & Ellis 701 Fifth Avenue (Floor 50) Seattle, Washington Dear Madam: For Two Million Seven Hundred Sixty Thousand Dollars ($2,760,000) par value Electric Revenue Bonds, Series 1995 (the "1995 Bonds "), of the City of Port Angeles, Washington, dated August 15, 1995, described in the attached Official Notice of Bond Sale, which is hereby made a part of this bid, and for all but not less than all of the 1995 Bonds, with interest rates per annum on the 1995 Bonds maturing on September 1 in the years and amounts set forth in this Official Bid Form as indicated below: Year Principal Interest Serial Mandatory Amount Rate Maturity Redemption Year Principal Interest Serial Mandatory Amount Rate Maturity Redemption 1996 $ 40,000 2011 $ 100,000 1997 45,000 2012 105,000 1998 45,000 2013 110,000 1999 50,000 2014 120,000 2000 55,000 2015 125,000 2001 55,000 2016 135,000 2002 60,000 2017 140,000 2003 65,000 2018 150,000 2004 65,000 2019 160,000 2005 70,000 2020 170,000 2006 75,000 2021 180,000 2007 80,000 2022 190,000 2008 85,000 2023 200,000 2009 90,000 2024 215,000 2010 95,000 2025 225,000 We offer to pay the sum of Dollars ($ ) together with accrued interest, if any, to the date of delivery. The mandatory redemptions checked above, if any, shall be applied to Term Bonds maturing September 1, of the following year(s) in the following principal amount(s) and bearing interest as follows: $ Term Bonds maturing on September 1, at % per annum. $ Term Bonds maturing on September 1, at % per annum. $ Term Bonds maturing on September 1, at % per annum. In accordance with the terms of the Official Notice of Bond Sale there is enclosed a Financial Surety Bond or a certified or bank cashier's or treasurer's check for $27,600 payable to the order of the City of Port Angeles. The proceeds of this check are to be applied in accordance with the terms of the Official Notice of Bond Sale if the 1995 Bonds are awarded to us, or the check is to be returned to us if the 1995 Bonds are not awarded to us. This bid is submitted in accordance with and subject to all provisions contained in the Official Notice of Bond Sale which is attached hereto and made a part of this bid. If our proposal to purchase the 1995 Bonds is successful, the person whom the City or its representatives should contact regarding closing arrangements is at the following telephone number: Estimated true interest cost (Note: Not a part of the bid.) Return of the good faith deposit in the amount of $ is hereby acknowledged Representing: Very truly yours, Representing: CERTIFICATE I, the undersigned, City Clerk of the City of Port Angeles, Washington, DO HEREBY CERTIFY: 1. That the attached is a true and correct copy of Ordinance No. 2877 (the "Supplemental Ordinance ") of the City, duly passed at a regular meeting of the City Council (the "Council ") of the City held on the 1st day of August, 1995. 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 Supplemental Ordinance; that all other requirements and proceedings incident to the proper passage of said Supplemental 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 3rd day of August, 1995. Deputy City Cie/ DOTOCB.DOC 95/07/31 Summaries of Ordinances Adopted by the Port Angeles City Council on August 1, 1995 Ordinance No. 2875 This Ordinance of the City of Port Angeles alters the rates for the sale of electricity and amends Ordinance 2776, as amended, and Chapter 13.12 of the Port Angeles Municipal Code. Ordinance No. 2876 This Ordinance of the City of Port Angeles rezones 5.37 acres of land located on Eighteenth Street west of "N" Street from RS -9, Residential Single - Family, to RMD, Residential Medium Density, and amends the Official Zoning Map. Ordinance No. 2877 This Ordinance of the City of Port Angeles establishes a plan and system for Capital Improvements; authorizes the issuance of a series of electric revenue bonds in the principal amount of $2,760,000 to finance a portion of the City's electric utility capital improvement program; and authorizes the sale of such bonds by competitive bid. Ordinance No. 2878 This Ordinance of the City of Port Angeles revises the requirements for disposal of surplus real and personal property and amends Ordinance 2168 as amended, and Chapter 2.50 of the Port Angeles Municipal Code. The full texts of the Ordinances are available at City Hall in the City Clerk's office or will be mailed upon request. Office hours are Monday through Friday from 8:00 a.m. to 5:00 p.m. These Ordinances shall take effect five days after the date of publication of these summaries. Publish: August 6, 1995 Becky J. Upton City Clerk 11