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HomeMy WebLinkAboutORD 5672CITY OF RENTON, WASHINGTON WATER AND SEWER REVENUE REFUNDING BONDS, 2012 ORDINANCE NO. 5672 AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, AUTHORIZING THE ISSUANCE OF WATER AND SEWER REVENUE REFUNDING BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $10,000,000 FOR THE PURPOSE OF REFUNDING A PORTION OF THE CITY'S WATER AND SEWER REVENUE BONDS, 2004; PROVIDING THE FORM, TERMS AND COVENANTS OF THE BONDS; AUTHORIZING THE APPOINTMENT OF AN ESCROW AGENT AND EXECUTION OF AN ESCROW AGREEMENT; DELEGATING CERTAIN AUTHORITY TO APPROVE THE FINAL TERMS OF THE BONDS; AND AUTHORIZING THE CASH REDEMPTION OF THE CITY'S WATER AND SEWER REVENUE REFUNDING BONDS, 1998. PASSED: Octoberl_5_th, 2012 PREPARED BY: PACIFICA LAW GROUP LLP Seattle, Washington ORDINANCE NO. 5672 TABLE OF CONTENTS* Section 1. Definitions 3 Section 2. Findings Regarding Parity Provisions 14 Section 3. Authorization and Description of Bonds 14 Section 4. Registration of Bonds and Book-Entry System 15 Section 5. Redemption; Purchase of Bonds 21 Section 6. Priority and Payment from the Waterworks Utility Fund 25 Section 7. Funds and Accounts 27 Section 8. Covenants 29 Section 9. Tax Covenants 33 Section 10. Future Parity Bonds 36 Section 11. Form of Bonds 39 Section 12. Execution of Bonds 42 Section 13. Lost, Stolen or Destroyed Bonds 42 Section 14. Sale of Bonds 43 Section 15. Application of Bond Proceeds; Plan of Refunding 45 Section 16. Bond Insurance 48 Section 17. Undertaking to Provide Continuing Disclosure 48 Section 18. Defeasance ofthe Bonds 53 Section 19. Amendments 53 Section 20. Call for Redemption of 1998 Bonds 56 Section 21. Contract; Savings Clause 56 Section 22. General Authorization, Ratification of Prior Acts 57 Section 23. Effective Date of Ordinance 57 This Table of Contents is provided for convenience only and is not a part of this ordinance. -i- CITY OF RENTON, WASHINGTON ORDINANCE NO. 5672 AN ORDINANCE OF THE CITY OF RENTON, WASHINGTON, AUTHORIZING THE ISSUANCE OF WATER AND SEWER REVENUE REFUNDING BONDS IN THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $10,000,000 FOR THE PURPOSE OF REFUNDING A PORTION OF THE CITY'S WATER AND SEWER REVENUE BONDS, 2004; PROVIDING THE FORM, TERMS AND COVENANTS OF THE BONDS; AUTHORIZING THE APPOINTMENT OF AN ESCROW AGENT AND EXECUTION OF AN ESCROW AGREEMENT; DELEGATING CERTAIN AUTHORITY TO APPROVE THE FINAL TERMS OF THE BONDS; AND AUTHORIZING THE CASH REDEMPTION OF THE CITY'S WATER AND SEWER REVENUE REFUNDING BONDS, 1998. WHEREAS, the City of Renton, Washington (the "City") has created and operates a waterworks utility of the City, including the water, sewer, wastewater and storm drainage systems (the "Waterworks Utility"); and WHEREAS, the City issued and now has outstanding the following series of water and sewer revenue bonds, each being payable on parity from the revenues of the Waterworks Utility: Series Authorizing Ordinance Original Principal Amount Outstanding Principal Amount 1998 2002 2003 2004 2007 2008A 2008B 4709 4976 5019 5098 5313 5313 5313 $ 6,120,000 11,980,000 8,035,000 10,335,000 9,750,000 9,975,000 2,035,000 $ 1,045,000 1,025,000 415,000 10,335,000 9,705,000 9,975,000 2,035,000 (collectively, the "Outstanding Parity Bonds"); and ORDINANCE NO. 5672 WHEREAS, the Outstanding Parity Bonds issued under date of November 1, 2004 mature in principal amounts and bear interest as follows: Maturity Date Principal Interest (December 1) Amount Rate 2013 $ 205,000 3.55% 2014 235,000 3.65 2015 250,000 3.75 2024* 4,605,000 5.00 2025 1,600,000 5.00 2026 1,680,000 5.00 2027 1,760,000 5.00 Term Bond (the "2004 Bonds"); and WHEREAS, the 2004 Bonds maturing on and after December 1, 2015 (the "Refunding Candidates"), are subject to optional redemption, in whole or in part, on any date on and after December 1, 2014, at a price of par plus interest accrued to the date of redemption; and WHEREAS, after due consideration it appears to this Council that all or a portion of the Refunding Candidates (the "Refunded Bonds") may be defeased and refunded by proceeds of water and sewer revenue refunding bonds authorized herein (the "Bonds") at a substantial savings to the City and its ratepayers; and WHEREAS, the respective ordinances authorizing the issuance ofthe Outstanding Parity Bonds permit the issuance of additional bonds on a parity with the Outstanding Parity Bonds for refunding purposes if certain conditions are met; and WHEREAS, the City has received a proposal from Seattle-Northwest Securities Corporation, Seattle, Washington (the "Underwriter") and now desires to issue and sell the Bonds to the Underwriter as set forth herein; and ORDINANCE NO. 5672 WHEREAS, the Outstanding Parity Bonds issued under date of March 1, 1998 (the "1998 Bonds") maturing on December 1, 2012 and December 1, 2013 are subject to optional redemption, in whole or in part, on any date on and after December 1, 2008, at a price of par plus interest accrued to the date of redemption; and WHEREAS, the City now desires to use available funds of the City refund in whole the outstanding 1998 Bonds on December 1, 2012; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF RENTON, WASHINGTON DOES ORDAIN AS FOLLOWS: Section 1. Definitions. As used in this ordinance, the following words shall have the following meanings: Acquired Obligations means the Government Obligations acquired by the City under the terms of this ordinance and the Escrow Agreement to effect the defeasance and refunding of the Refunded Bonds. Annual Debt Service for any year means all the interest on plus all principal (except principal of Term Bonds due in any Term Bond Maturity Year) of Parity Bonds, plus all mandatory redemption and sinking fund installments, less all bond interest payable from the proceeds of any such bonds, which will mature or come due in that year. Base Period means any consecutive 12-month period selected by the City out of the 24-month period next preceding the date of issuance of an additional series of Future Parity Bonds. ORDINANCE NO. 5672 Beneficial Owner means any person that has or shares the power, directly or indirectly to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). Bond Fund means that special fund of the City known as the Waterworks Revenue Bond Fund, 2012 created by this ordinance for the payment of the principal of and interest on the Bonds. Bond Insurance Policy means the municipal bond insurance policy, if any, issued by the Insurer insuring the payment when due of the principal of and interest on all or a portion of the Bonds as provided therein. Bond Purchase Contract means the contract for the purchase of the Bonds between the Underwriter and City, executed pursuant to Section 14 of this ordinance. Bond Register means the registration books showing the name, address and tax identification number of each Registered Owner of the Bonds, maintained pursuant to Section 149(a) ofthe Code. Bond Registrar means, initially, the fiscal agency of the State of Washington, for the purposes of registering and authenticating the Bonds, maintaining the Bond Register, effecting transfer of ownership of the Bonds and paying interest on and principal of the Bonds. Bond Year means each one-year period that ends on the date selected by the City. The first and last Bond Years may be short periods. If no day is selected by the City before the earlier of the final maturity date of the Bonds or the date that is five years after the date of issuance of the Bonds, Bond Years end on each anniversary of the date of issue and on the final maturity date of the Bonds. ORDINANCE NO. 5672 Bonds mean the City's Water and Sewer Revenue Refunding Bonds, 2012, authorized to be issued by this ordinance. Call Date for the Refunded Bonds means December 1, 2014. City means the City of Renton, Washington, a municipal corporation duly organized and existing by virtue of the laws of the State of Washington Code means the Internal Revenue Code of 1986, as amended, and shall include all applicable regulations and rulings relating thereto. Commission means the Securities and Exchange Commission. Council means the City Council as the general legislative authority of the City, as duly and regularly constituted from time to time. Coverage Requirement prior to the New Covenant Date means in any calendar year 1.25 times the Maximum Annual Debt Service. From and after the New Covenant Date, the term Coverage Requirement means in any calendar year 1.25 times the Annual Debt Service for such year. Credit Facility means a policy of municipal bond insurance, a letter of credit, surety bond, line of credit, guarantee or other financial instrument or any combination of the foregoing, which obligates a third party to make payment or provide funds for the payment of financial obligations of the City. There may be one or more Credit Facilities outstanding at any time. Designated City Representative means the Mayor, the Chief Administrative Officer and the Finance Director of the City and any successor to the functions of such offices. The signature of one Designated City Representative shall be sufficient to bind the City. ORDINANCE NO. 5672 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 depository for the Bonds pursuant to this ordinance. Escrow Agent means U.S. Bank National Association, Seattle, Washington. Escrow Agreement means the Escrow Deposit Agreement between the City and the Escrow Agent to be dated as of the date of closing and delivery of the Bonds. Finance Director means the City's Finance and Information Services Administrator or the successor to such officer. Fitch means Fitch, Inc., organized and existing under the laws ofthe State of Delaware, its successors and their assigns, and, if such organization shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, Fitch shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. Future Parity Bonds means all water and sewer revenue bonds of the City issued after the date of the issuance of the Bonds and having a lien and charge on Net Revenue on a parity with the lien and charge on Net Revenue for the payment of the principal of and interest on the Outstanding Parity Bonds and the Bonds. Government Obligations means those obligations now or hereafter defined as such in chapter 39.53 RCW. Gross Revenue means all of the earnings and revenues received by the City from the maintenance and operation of the Waterworks Utility and all earnings from the investment of money in the Reserve Fund or any Parity Bond Fund, and connection and capital improvement charges collected for the purpose of defraying the cost of capital facilities of the Waterworks ORDINANCE NO. 5672 Utility, except government grants, proceeds from the sale of Waterworks Utility property (other than timber), City taxes collected by or through the Waterworks Utility, principal proceeds of bonds and earnings or proceeds from any investments in a trust, defeasance or escrow fund created to defease or refund Waterworks Utility obligations (until commingled with other earnings and revenues of the Waterworks Utility) or held in a special account for the purpose of paying a rebate to the United States Government under the Code. Insurer means the municipal bond insurance company, if any, selected and designated by the Designated City Representative, pursuant to Section 16 of this ordinance, as issuer of a Bond Insurance Policy for all or a portion of the Bonds. Letter of Representations means the Blanket Issuer Letter of Representations from the City to DTC. Maintenance and Operation Expense means all reasonable expenses incurred by the City in causing the Waterworks Utility to be operated and maintained in good repair, working order and condition, including payments made to any other municipal corporation or private entity for water service and for sewage treatment and disposal service or other utility service in the event the City combines such service in the Waterworks Utility and enters into a contract for such service, and including pro-rata budget charges for the City's administration expenses where those represent a reasonable distribution and share of actual costs, but not including any depreciation or taxes levied or imposed by the City or payments to the City in lieu of taxes, or capital additions or capital replacements to the Waterworks Utility. ORDINANCE NO. 5672 Maximum Annual Debt Service means, at the time of calculation, the maximum amount of Annual Debt Service that will mature or come due in the current calendar year or any future calendar year on the Parity Bonds. Moody's means Moody's Investors Service, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, Moody's shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. MSRB means the Municipal Securities Rulemaking Board or any successors to its functions. Net Proceeds, when used with reference with the Bonds, means the principal amount of the Bonds, plus accrued interest and original issue premium, if any, and less original issue discount, if any. Net Revenue means Gross Revenue less Maintenance and Operation Expense. New Covenant Date means from and after the date when all Outstanding Parity Bonds issued prior to 2007 are no longer Outstanding. 1998 Bond Ordinance means Ordinance No. 4709 adopted by the City Council on March 9,1998 authorizing the issuance ofthe 1998 Bonds. 1998 Bonds mean the Outstanding City of Renton, Washington, Water and Sewer Revenue Refunding Bonds, 1998, with a dated date of March 1,1998. Outstanding means, as of any particular time, all Parity Bonds issued theretofore except (a) Parity Bonds theretofore canceled by the Bond Registrar after purchase by the City in the open market or because of payment at, or redemption prior to, maturity; (b) Parity Bonds for ORDINANCE NO. 5672 which funds have been deposited into a trust account pursuant to the ordinances authorizing the issuance of the Parity Bonds, but only to the extent that the principal of and interest on such Parity Bonds are payable from such trust account; (c) temporary, mutilated, lost, stolen or destroyed Parity Bonds for which new Parity Bonds have been issued pursuant to the ordinance authorizing their issuance; and (d) Parity Bonds exchanged for new Parity Bonds pursuant to the ordinances authorizing their issuance. Outstanding Parity Bond Ordinances mean the ordinances authorizing the issuance of the Outstanding Parity Bonds identified in the recitals to this ordinance. Outstanding Parity Bonds means the parity water and sewer revenue bonds of the City identified in the recitals to this ordinance. Parity Bonds means the Outstanding Parity Bonds, the Bonds and any Future Parity Bonds. Parity Bond Fund means any fund created for the payment and redemption of Parity Bonds. Parity Requirement means Net Revenues equal to or greater than: (a) 1.25 times the Maximum Annual Debt Service for all Parity Bonds plus the Future Parity Bonds proposed to be issued; and (b) 100% of Maximum Annual Debt Service for all subordinate lien evidences of indebtedness secured by Gross Revenue. Private Person means any natural person engaged in a trade or business or any trust, estate, partnership, association, company or corporation. ORDINANCE NO. 5672 Private Person Use means the use of property in a trade or business by a Private Person if such use is other than as a member of the general public. Private Person Use includes ownership of the property by the Private Person as well as other arrangements that transfer to the Private Person the actual or beneficial use ofthe property (such as a lease, management or incentive payment contract or other special arrangement) in such a manner as to set the Private Person apart from the general public. Use of property as a member of the general public includes attendance by the Private Person at municipal meetings or business rental of property to the Private Person on a day-to-day basis if the rental paid by such Private Person is the same as the rental paid by any Private Person who desires to rent the property. Use of property by nonprofit community groups or community recreational groups is not treated as Private Person Use if such use is incidental to the governmental uses of property, the property is made available for such use by all such community groups on an equal basis and such community groups are charged only a de minimis fee to cover custodial expenses. Professional Utility Consultant means an independent licensed professional engineer, certified public accountant or other independent person or firm selected by the City having a favorable reputation for skill and experience with municipal utilities of comparable size and character to the Waterworks Utility in such areas as are relevant to the purposes for which such consultant is retained. Qualified Insurance means any non-cancelable municipal bond insurance policy or surety bond issued by any insurance company licensed to conduct an insurance business in any state of the United States (or by a service corporation acting on behalf of one or more such insurance companies) which insurance company or companies, as of the time of issuance of -10- ORDINANCE NO. 5672 such policy or surety bond, are currently rated in the two highest rating categories by any Rating Agency but no lower than the highest then-existing rating for any of the Parity Bonds. Qualified Letter of Credit means any irrevocable letter of credit issued by a financial institution for the account of the City on behalf of registered owners of the Bonds, which institution maintains an office, agency or branch in the United States and as of the time of issuance of such letter of credit, is currently rated in the two highest rating categories by any Rating Agency but no lower than the highest then-existing rating for any of the Parity Bonds. Rate Stabilization Fund means the Waterworks Rate Stabilization Fund created by the City pursuant to Ordinance No. 4709. Rating Agency means Moody's, S&P or Fitch. Refunded Bonds means the 2004 Bonds designated by the Designated City Representative pursuant to Section 15. Refunding Account means the account by that name established pursuant to Section 15. Refunding Candidates mean the outstanding 2004 Bonds maturing on and after December 1, 2015. 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 shall be deemed to be the sole Registered Owner. Reserve Fund means that special fund of the City known as the Waterworks Revenue Bond Reserve Fund created by Ordinance No. 4709. Reserve Requirement prior to the New Covenant Date means Maximum Annual Debt Service. From and after the New Covenant Date, the term Reserve Requirement means with -11- ORDINANCE NO. 5672 respect to any issue of Parity Bonds, the lesser of (a) Maximum Annual Debt Service on all Outstanding Parity Bonds, and (b) 125% of average Annual Debt Service on all Outstanding Parity Bonds; provided, that the amount required to be deposited hereunder with respect to any Future Parity Bonds in order to meet the Reserve Requirement shall not exceed 10% of the net proceeds of such Future Parity Bonds under the Code. Rule means the SEC'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 rating Services, a Standard & Poor's Financial Services LLC business, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, S&P shall be deemed to refer to any other nationally recognized securities rating agency designated by the City. State means the State of Washington. Term Bonds mean any Parity Bonds identified as such in the Bond Purchase Contract or in the ordinance authorizing the issuance thereof, the payment of which is provided for by a requirement for mandatory deposits of money into the principal and interest account of the bond redemption fund created for the payment of such issue of Parity Bonds in accordance with a mandatory sinking fund requirement. Term Bond Maturity Year means any calendar year in which Term Bonds are scheduled to mature. 2004 Bond Ordinance means Ordinance No. 5098 adopted by the City Council on November 1, 2004 authorizing the issuance of the 2004 Bonds. -12- ORDINANCE NO. 5672 2004 Bonds means the Water and Sewer Revenue Bonds, 2004, of the City issued under date of November 1, 2004, as more particularly described in the recitals of this ordinance. Underwriter means Seattle-Northwest Securities Corporation, Seattle, Washington. Waterworks Utility means the combined water, sewer, wastewater and storm drainage systems of the City as the same may be added to, improved and extended for as long as any of the Parity Bonds are outstanding. Waterworks Utility Fund means that special fund of the City into which all Gross Revenue (except for earnings in any special fund for the redemption of revenue obligations of the Waterworks Utility) shall be deposited. Rules of Interpretation. In this ordinance, unless the context otherwise requires: (a) The terms "hereby," "hereof," "hereto," "herein, "hereunder" and any similar terms, as used in this ordinance, refer to this ordinance as a whole and not to any particular article, section, subdivision or clause hereof, and the term "hereafter" shall mean after, and the term "heretofore" shall mean before, the date of this ordinance; (b) Words of the masculine gender shall mean and include correlative words of the feminine and neuter genders and words importing the singular number shall mean and include the plural number and vice versa; (c) Words importing persons shall include firms, associations, partnerships (including limited partnerships), trusts, corporations and other legal entities, including public bodies, as well as natural persons; (d) Any headings preceding the text of the several sections of this ordinance, and any table of contents or marginal notes appended to copies hereof, shall be solely for -13- ORDINANCE NO. 5672 convenience of reference and shall not constitute a part of this ordinance, nor shall they affect its meaning, construction or effect; (e) All references herein to "articles," "sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof; and (f) Words importing the singular number include the plural number and vice versa. Section 2. Findings Regarding Parity Provisions. The City Council hereby finds that there is no deficiency in any Parity Bond Fund, that provisions hereinafter meet the conditions forthe issuance of Future Parity Bonds as set forth in the Parity Bond Ordinances for the Outstanding Parity Bonds, and that the issuance of the Bonds will result in a debt service savings for the Waterworks Utility and does not require an increase of more than $5,000 in any year for principal of and interest on the Bonds over and above the payments that were required to be made for the Refunded Bonds. The conditions contained in the Parity Bond Ordinances for the Outstanding Parity Bonds having been complied with or assured, the payments required herein to be made out of the Waterworks Utility Fund into the Bond Fund and the Reserve Fund to pay and secure the payment ofthe principal of and interest on the Bonds shall constitute a lien and charge upon the money in the Waterworks Utility Fund equal in rank with the lien and charge thereon for the payments required to be made for the Outstanding Parity Bonds. Section 3. Authorization and Description of Bonds. The City is hereby authorized to issue water and sewer revenue refunding bonds (the "Bonds") in an aggregate principal amount of not to exceed $10,000,000 for the purpose of providing the funds necessary to refund the -14- ORDINANCE NO. 5672 Refunded Bonds and pay all or a portion of the costs incidental to the foregoing and to the issuance ofthe Bonds. The Bonds shall be designated the "City of Renton, Washington Water and Sewer Revenue Refunding Bonds, 2012" with any additional series designation, if necessary; shall be dated as of their initial date of delivery; shall be fully registered as to both principal and interest; shall be in the denomination of $5,000 each, or any integral multiple thereof within a maturity, provided that no Bond shall represent more than one maturity; shall be numbered separately in such manner and with any additional designation as the Bond Registrar deems necessary for purposes of identification; shall bear interest from their date, payable semiannually on the interest payment dates set forth in the Bond Purchase Contract; and shall mature on December 1 in the years and principal amounts set forth and approved in the Bond Purchase Contract executed by the Designated City Representative pursuant to Section 14 of this ordinance. The Bonds shall be payable solely out ofthe Bond Fund and the Reserve Fund and shall not be general obligations ofthe City. Section 4. Registration of Bonds and Book-Entry System. (a) Bond Registrar/Bond Register. The City hereby specifies and adopts the system of registration approved by the Washington State Finance Committee from time to time through the appointment of state fiscal agencies. The City shall cause a bond register to be maintained by the Bond Registrar. So long as any Bonds remain outstanding, the Bond Registrar shall make all necessary provisions to permit the exchange or registration or transfer of Bonds at its principal corporate trust office. The Bond Registrar may be removed at any time -15- ORDINANCE NO. 5672 at the option of the Finance Director upon prior notice to the Bond Registrar and a successor Bond Registrar appointed by the Finance Director. No resignation or removal of the Bond Registrar shall be effective until a successor shall have been appointed and until the successor Bond Registrar shall have accepted the duties of the Bond Registrar hereunder. The Bond Registrar is authorized, on behalf of the City, to authenticate and deliver Bonds transferred or exchanged in accordance with the provisions of such Bonds and this ordinance and to carry out all ofthe Bond Registrar's powers and duties under this ordinance. The Bond Registrar shall be responsible for its representations contained in the Certificate of Authentication ofthe Bonds. (b) Registered Ownership. The City and the Bond Registrar, each in its discretion, may deem and treat the Registered Owner of each Bond as the absolute owner thereof for all purposes (except as provided in Section 17 of this ordinance), 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 4(h), but such Bond may be transferred as herein provided. All such payments made as described in Section 4(h) shall be valid and shall satisfy and discharge the liability of the City upon such Bond to the extent of the amount or amounts so paid. (c) DTC Acceptance/Letters of Representations. The Bonds initially shall be held by DTC acting as depository. To induce DTC to accept the Bonds as eligible for deposit at DTC, the City has executed and delivered to DTC a Blanket Issuer Letter of Representations. Neither the City nor the Bond Registrar will have any responsibility or obligation to DTC participants or the persons for whom they act as nominees (or any successor depository) with respect to the Bonds in respect of the accuracy of any records maintained by DTC (or any successor -16- ORDINANCE NO. 5672 depository) or any DTC participant, the payment by DTC (or any successor depository) or any DTC participant of any amount in respect of the principal of or interest on Bonds, any notice which is permitted or required to be given to Registered Owners under this ordinance (except such notices as shall be required to be given by the City to the Bond Registrar or to DTC (or any successor depository)), or any consent given or other action taken by DTC (or any successor depository) as the Registered Owner. For so long as any Bonds are held in by a depository, DTC or its successor depository shall be deemed to be the Registered Owner for all purposes hereunder, and all references herein to the Registered Owners shall mean DTC (or any successor depository) or its nominee and shall not mean the owners of any beneficial interest in such Bonds. If any Bond shall be duly presented for payment and funds have not been duly provided by the City on such applicable date, then interest shall continue to accrue thereafter on the unpaid principal thereof at the rate stated on such Bond until it is paid. (d) Use of Depository. (1) The Bonds shall be registered initially in the name of "Cede & Co.", as nominee of DTC, with one Bond maturing on each of the maturity dates for the Bonds in a denomination corresponding to the total principal therein designated to mature on such date. Registered ownership of such Bonds, or any portions thereof, may not thereafter be transferred except (A) to any successor of DTC or its nominee, provided that any such successor shall be qualified under any applicable laws to provide the service proposed to be provided by it; (B) to any substitute depository appointed by the Finance Director pursuant to subsection (2) below -17- ORDINANCE NO. 5672 or such substitute depository's successor; or (C) 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 Finance Director to discontinue the system of book entry transfers through DTC or its successor (or any substitute depository or its successor), the Finance Director may hereafter appoint a substitute depository. Any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it. (3) In the case of any transfer pursuant to clause (A) or (B) of subsection (1) above, the Bond Registrar shall, upon receipt of all outstanding Bonds, together with a written request on behalf of the Finance Director, issue a single new Bond for each maturity then outstanding, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such written request of the Finance Director. (4) In the event that (A) DTC or its successor (or substitute depository or its successor) resigns from its functions as depository, and no substitute depository can be obtained, or (B) the Finance Director determines that it is in the best interest of the beneficial owners of the Bonds that such owners be able to obtain physical Bond certificates, the ownership of such Bonds may then be transferred to any person or entity as herein provided, and shall no longer be held by a depository. The Finance Director shall deliver a written request to the Bond Registrar, together with a supply of physical Bonds, to issue Bonds as herein provided in any authorized denomination. Upon receipt by the Bond Registrar of all then outstanding Bonds together with a written request on behalf of the Finance Director to the ORDINANCE NO. 5672 Bond Registrar, new Bonds shall be issued in the appropriate denominations and registered in the names of such persons as are requested in such written request. (e) Registration of Transfer of Ownership or Exchange; Change in Denominations. The transfer of any Bond may be registered and Bonds may be exchanged, but no transfer of any such 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 forthe same aggregate principal amount in any authorized denomination, naming as Registered Owner the person or persons listed as the assignee on the assignment form appearing on the surrendered Bond, in exchange for such surrendered and cancelled Bond. Any Bond may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same date, maturity and interest rate, in any authorized denomination. The Bond Registrar shall not be obligated to register the transfer or to exchange any Bond during the 15 days preceding any interest payment or principal payment date any such Bond is to be redeemed. (f) 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 -19- ORDINANCE NO. 5672 officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the right ofthe Registered Owners of Bonds. (g) 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 ofthe Code. (h) Place and Medium of Payment. Both principal of and interest on the Bonds shall be payable in lawful money of the United States of America. Interest on the Bonds shall be calculated on the basis of a year of 360 days and twelve 30-day months. For so long as all Bonds are held by a depository, payments of principal and interest thereon 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 held by a depository, interest on the Bonds shall be paid by check or draft mailed to the Registered Owners at the addresses for such Registered Owners appearing on the Bond Register on the fifteenth day of the month preceding the interest payment date, or upon the written request of a Registered Owner of more than $1,000,000 of Bonds (received by the Bond Registrar at least 15 days prior to the applicable payment date), such payment shall be made by the Bond Registrar by wire transfer to the account within the United States designated by the Registered Owner. Principal of the Bonds shall be payable upon presentation and surrender of such Bonds by the Registered Owners at the principal office of the Bond Registrar. -20- ORDINANCE NO. 5672 Section 5. Redemption; Purchase of Bonds. (a) Mandatory Redemption of Term Bonds and Optional Redemption, if any. The Bonds shall be subject to optional redemption on the dates, at the prices and under the terms set forth in the Bond Purchase Contract approved by the Designated City Representative pursuant to Section 14. The Bonds shall be subject to mandatory redemption to the extent, if any, set forth in the Bond Purchase Contract and as approved by the Designated City Representative pursuant to Section 14. (b) Purchase of Bonds. The City further reserves the right to use at any time any surplus Net Revenue available after providing for the payments required by paragraphs (i) through (vi) of Section 6(b) of this ordinance, or other available funds, to purchase any of the Bonds that are offered to the City at any price deemed appropriate by the City. (c) Selection of Bonds for Redemption. For as long as the Bonds are held in book-entry only form, the selection of particular Bonds within a maturity to be redeemed shall be made in accordance with the operational arrangements then in effect at DTC. If the Bonds are no longer held in uncertificated form, the selection of such Bonds to be redeemed and the surrender and reissuance thereof, as applicable, shall be made as provided in the following provisions of this subsection (c). If the City redeems at any one time fewer than all of the Bonds having the same maturity date, the particular Bonds or portions of Bonds of such maturity to be redeemed shall be selected by lot (or in such manner determined by the Bond Registrar) in increments of $5,000. In the case of a Bond of a denomination greater than $5,000, the City and the Bond Registrar shall treat each Bond as representing such number of separate Bonds each of the denomination of $5,000 as is obtained by dividing the actual principal amount of -21- ORDINANCE NO. 5672 such Bond by $5,000. In the event that only a portion of the principal sum of a Bond is redeemed, upon surrender of such Bond at the principal office of the Bond Registrar there shall be issued to the Registered Owner, without charge therefor, for the then unredeemed balance of the principal sum thereof, at the option of the Registered Owner, a Bond or Bonds of like maturity and interest rate in any of the denominations herein authorized. (d) Notice of Redemption. (1) Official Notice. For so long as the Bonds are held in uncertificated form, notice of redemption (which notice may be conditional) shall be given in accordance with the operational arrangements of DTC as then in effect, and neither the City nor the Bond Registrar will provide any notice of redemption to any Beneficial Owners. Thereafter (if the Bonds are no longer held in uncertificated form), notice of redemption shall be given in the manner hereinafter provided. Unless waived by any owner of Bonds to be redeemed, official notice of any such redemption (which redemption may be conditioned by the Bond Registrar on the receipt of sufficient funds for redemption or otherwise) shall be given by the Bond Registrar on behalf of the City by mailing a copy of an official redemption notice by first class mail at least 20 days and not more than 60 days prior to the date fixed for redemption to the Registered Owner of the Bond or Bonds to be redeemed at the address shown on the Register or at such other address as is furnished in writing by such Registered Owner to the Bond Registrar. All official notices of redemption shall be dated and shall state: (A) the redemption date, (B) the redemption price, -22- ORDINANCE NO. 5672 (C) if fewer than all outstanding Bonds are to be redeemed, the identification by maturity (and, in the case of partial redemption, the respective principal amounts) of the Bonds to be redeemed, (D) any conditions precedent to redemption; (E) that if all of the conditions to redemption are met, on the redemption date the redemption price will become due and payable upon each such Bond or portion thereof called for redemption, and that interest thereon shall cease to accrue from and after said date, and (E) the place where such Bonds are to be surrendered for payment of the redemption price, which place of payment shall be the principal office of the Bond Registrar. On or prior to any redemption date, the City shall deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Bonds or portions of Bonds which are to be redeemed on that date. If the conditions to redemption have not been met prior to the date scheduled for redemption, then the City may revoke the redemption by giving notice in the same manner as set forth above. (2) Effect of Notice; Bonds Due. If an unconditional notice of redemption has been given as aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date such Bonds or portions of Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption in accordance with said notice, such Bonds shall be paid by the Bond Registrar at the redemption price. Installments of interest due on or prior to -23- ORDINANCE NO. 5672 the redemption date shall be payable as herein provided for payment of interest. All Bonds which have been redeemed shall be canceled by the Bond Registrar and shall not be reissued. (3) Additional Notice. In addition to the foregoing notice, further notice shall be given by the City as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. Each further notice of redemption given hereunder shall contain the information required above for an official notice of redemption plus (A) the CUSIP numbers of all Bonds being redeemed; (B) the date of issue of the Bonds as originally issued; (C) the rate of interest borne by each Bond being redeemed; (D) the maturity date of each Bond being redeemed; and (E) any other descriptive information needed to identify accurately the Bonds being redeemed. Each further notice of redemption may be sent at least 20 days before the redemption date to each party entitled to receive notice pursuant to Section 17 and with such additional information as the City shall deem appropriate, but such mailings shall not be a condition precedent to the redemption of such Bonds. (4) Amendment of Notice Provisions. The foregoing notice provisions of this Section 5, including but not limited to the information to be included in redemption notices and the persons designated to receive notices, may be amended by additions, deletions and changes in order to maintain compliance with duly promulgated regulations and recommendations regarding notices of redemption of municipal securities. -24- ORDINANCE NO. 5672 Section 6. Priority and Payment from the Waterworks Utility Fund. (a) Waterworks Utility Fund. A special fund of the City known as the "Waterworks Utility Fund" has heretofore been established by the City, into which shall be deposited all Gross Revenues as collected. Moneys in the Waterworks Utility Fund shall be trust funds and shall be held separate and apart from all other funds and accounts of the City. (b) Priority of Payments from the Waterworks Utility Fund. Gross Revenue on deposit in the Waterworks Utility Fund (other than in any bond redemption or federal rebate account) shall be used in the following order of priority: (i) To pay Maintenance and Operation Expense; (ii) To pay the interest on the Parity Bonds, including reimbursements to the issuer of a Credit Facility if the Credit Facility secures the payment of interest on Parity Bonds and the ordinance authorizing such Parity Bonds provides for such reimbursement; (iii) To pay the principal of the Parity Bonds, including reimbursements to the issuer of a Credit Facility if the Credit Facility secures the payment of principal on Parity Bonds and the ordinance authorizing such Parity Bonds provides for such reimbursement; (iv) To make all payments required to be made into any sinking fund or bond redemption fund hereafter created for the payment of Future Parity Bonds which are Term Bonds; -25- ORDINANCE NO. 5672 (v) To make all payments required to be made into the Reserve Fund, including any reimbursements required for Qualified Insurance or Qualified Letter of Credit; (vi) To make all payments required to be made into any revenue bond redemption fund or warrant redemption fund and debt service account or reserve account created to pay and secure the payment of the principal of and interest on any revenue bonds or revenue warrants of the City 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 (vii) To retire by optional redemption or purchase any outstanding revenue bonds or revenue warrants of the City, to make necessary additions, betterments, improvements and repairs to or extensions and replacements ofthe Waterworks Utility, to make deposits into the Rate Stabilization Fund, or for any other lawful City purpose, (c) Rate Stabilization Fund. The City has previously created a Waterworks Rate Stabilization Fund (the "Rate Stabilization Fund"). The City may, at anytime, as determined by the City and as consistent with subsection (b) of this section, deposit Gross Revenue into the Rate Stabilization Fund, excluding principal proceeds of Parity Bonds or other borrowing. The City may withdraw any or all of the money from the Rate Stabilization Fund for inclusion in Gross Revenue for any fiscal year of the City. Such deposits or withdrawals may be made up to and including the date 90 days after the end of the fiscal year for which the deposit or withdrawal will be included in Gross Revenue. No deposit of Gross Revenue will be made into -26- ORDINANCE NO. 5672 the Rate Stabilization Fund to the extent that such deposit would prevent the City from meeting the Coverage Requirement. Section 7. Funds and Accounts. (a) Bond Fund. There is hereby created in the City Treasury the Waterworks Revenue Bond Fund, 2012 (the "Bond Fund"), which shall be a "Parity Bond Fund" and a subaccount of the Waterworks Utility Fund. The Bond Fund shall be maintained for the purpose of paying the principal of and interest on the Bonds. As long as any Bonds remain outstanding, the City hereby irrevocably obligates and binds itself to set aside and pay from the Waterworks Utility Fund into the Bond Fund those amounts necessary, together with such other funds as are on hand and available in the Bond Fund, to pay the interest or principal and interest next coming due on outstanding Bonds. Such payments from the Waterworks Utility Fund to the Bond Fund shall be made in a fixed amount without regard to any fixed proportion following the closing and delivery ofthe Bonds on or before each date on which an installment of interest or principal and interest falls due on the Bonds equal to the installment of interest or principal and interest. (b) Reserve Fund. There has heretofore been created by the City a special fund of the City known as the Waterworks Revenue Bond Reserve Fund (the "Reserve Fund") for purpose of securing the payment of the principal of and interest on all Parity Bonds. The City hereby irrevocably covenants and agrees that on or prior to the date of issuance of the Bonds, the amount on deposit in the Reserve Fund will be at least equal to the Reserve Requirement. Except for withdrawals therefrom as authorized herein, the Reserve Fund shall be maintained at the Reserve Requirement at all times so long as any Parity Bonds are -27- ORDINANCE NO. 5672 Outstanding. When the total amount in the Bond Fund shall equal the total amount of principal and interest for all outstanding Bonds, no further payment need be made into the Bond Fund. Notwithstanding the first sentence of this paragraph, the Reserve Requirement may be decreased for any issue of Parity Bonds when and to the extent the City has redeemed or otherwise defeased any Outstanding Parity Bonds. If there shall be a deficiency in the Bond Fund to meet maturing installments of either principal or interest, as the case may be, on the Bonds, that deficiency shall be made up from the Reserve Fund by the withdrawal of cash therefrom for that purpose and after all cash has been depleted, then by draws on the Qualified Insurance or Qualified Letter of Credit for that purpose. Any deficiency created in the Reserve Fund by reason of any such withdrawal shall then be made up from Net Revenue first available after making necessary provisions for the required payments into the Bond Fund. Any money in the Reserve Fund in excess of the Reserve Requirement may be withdrawn and deposited in any Parity Bond Fund and spent for the purpose of retiring Parity Bonds or may be deposited in any other fund and spent for any other lawful Waterworks Utility purpose. The City may provide for the purchase, redemption or defeasance of Parity Bonds by the use of money on deposit in the Bond Fund or the Reserve Fund as long as the money remaining in those funds is sufficient to satisfy the required deposits in those funds for the remaining Parity Bonds. All money in the Bond Fund or Reserve Fund may be kept in cash or on deposit in the official bank depository of the City or in any national bank or may be invested in any legal investment for City funds. Interest on any of those investments or on that bank account shall -28- ORDINANCE NO. 5672 be deposited in the Reserve Fund until the total Reserve Requirement shall have been accumulated therein, after which time the interest shall be deposited in any Parity Bond Fund. Notwithstanding the provisions for the deposit or maintenance of earnings in the Bond Fund or the Reserve Fund, the City also may transfer out of the Bond Fund or Reserve Fund any money required in order to prevent any Parity Bonds from becoming "arbitrage bonds" under the Code. If the City fails to set aside and pay into the Bond Fund or the Reserve Fund the amounts set forth above, the Registered Owner of any of the outstanding Bonds may bring an action against the City to compel that setting aside and payment. (c) Pledge of Revenue and Lien Position. The Net Revenue is hereby pledged to the payment of the Parity Bonds, and the Parity Bonds shall constitute a lien and charge upon such Net Revenue prior and superior to any other charge whatsoever. (d) Regarding Sufficiency of Revenues. The Council hereby finds that in fixing the amounts to be paid into the Bond Fund out of the Gross Revenues, it has exercised due regard forthe Maintenance and Operation Expense and has not obligated the City to set aside and pay into such Fund a greater amount of such Gross Revenues than in its judgment will be available over and above the Maintenance and Operation Expense. Section 8. Covenants. The City covenants and agrees with the Registered Owner of each Bond at any time outstanding as follows: (a) Rate Covenant. It will establish, maintain and collect rates and charges for all services and facilities provided by the Waterworks Utility which will be fair and nondiscriminatory, and will adjust those rates and charges from time to time so that: -29- ORDINANCE NO. 5672 (1) Gross Revenue will at all times be sufficient to (A) pay all Maintenance and Operation Expense on a current basis, (B) pay when due all amounts that the City is obligated to pay into the Reserve Fund and any Parity Bond Funds and (C) pay all taxes, assessments or other governmental charges lawfully imposed upon the Waterworks Utility or other revenue therefrom or payments in lieu thereof and any and all other amounts which the City may now or hereafter become obligated to pay from Gross Revenue by law or contract; and (2) Net Revenue in each calendar year will be at least equal to the Coverage Requirement. (b) Maintenance and Repair. It will at all times maintain and keep the Waterworks Utility in good repair, working order and condition and also will at all times operate such Utility and the business in connection therewith in an efficient manner and at a reasonable cost. (c) Disposal of Waterworks Utility. It will not sell, lease, mortgage or in any manner encumber or otherwise dispose of the Waterworks Utility in its entirety unless, simultaneously with such sale or other disposition, all Parity Bonds are defeased pursuant to the provisions of this ordinance. It will not sell, lease, mortgage or in any manner encumber or otherwise dispose of any part of the Waterworks Utility (other than timber), including all additions and improvements thereto and extensions thereof at any time made, that are used, useful or material in the operation of the Waterworks Utility, unless provision is made for the replacement thereof or for payment into the Bond Fund of the greatest of the following: -30- ORDINANCE NO. 5672 (1) An amount which will be in the same proportion to the net amount of any Parity Bonds then outstanding (defined as the total amount of those bonds less the amount of cash and investments in the Reserve Fund and any Parity Bond Funds) that Gross Revenue from the portion of the Waterworks Utility sold or disposed of for the preceding year bears to the total Gross Revenue for that period; (2) An amount which will be in the same proportion to the net amount of any Parity Bonds then outstanding (as defined above) that the Net Revenue from the portion of the Waterworks Utility sold or disposed of for the preceding year bears to the total Net Revenue for that period; or (3) An amount which will be in the same proportion to the net amount of any Parity Bonds then outstanding (as defined above) that the depreciated cost value of the facilities sold or disposed of bears to the depreciated cost value of the entire Waterworks Utility immediately prior to such sale or disposition. Notwithstanding any other provision of this subsection, (l)the City in its discretion may sell or otherwise dispose of any of the works, plant, properties or facilities of the Waterworks Utility or any real or personal property comprising a part ofthe same which shall have become unserviceable, inadequate, obsolete or unfit to be used in the operation of the Waterworks Utility, or no longer necessary, material to or useful to the operation of the Waterworks Utility, without making any deposit into the Bond Fund, and (2) the City may transfer the Waterworks Utility to another municipal corporation so long as Net Revenue of the portion of the Waterworks Utility so transferred is used for payment of debt service on the Parity Bonds prior -31- ORDINANCE NO. 5672 to any other purpose. In no event shall such proceeds be treated as Gross Revenue for purposes of this ordinance. (d) Books and Records. It will keep proper books, records and accounts with respect to the operations, income and expenditures of the Waterworks Utility in accordance with proper accounting procedures and any applicable rules and regulations prescribed by the State. It will prepare annual financial and operating statements within 270 days of the close of each fiscal year showing in reasonable detail the financial condition of the Waterworks Utility as of the close of the previous year, and the income and expenses for such year, including the amounts paid into the Bond Fund and Reserve Fund and into any and all special funds or accounts created pursuant to this ordinance, the status of all funds and accounts as of the end of such year, and the amounts expended for maintenance, renewals, replacements and capital additions to the Waterworks Utility. (e) No Free Service. Except to aid the poor or infirm, to provide for resource conservation or to provide for the proper handling of hazardous materials, it will not furnish or supply or permit the furnishing or supplying of any service or facility in connection with the operation of the Waterworks Utility free of charge to any person, firm or corporation, public or private, other than the City, so long as any Parity Bonds are outstanding. On at least an annual basis, it will determine all accounts that are delinquent and will take all necessary action to enforce payment of such accounts against those property owners whose accounts are delinquent. (f) Insurance. It at all times will carry fire and extended coverage and such other forms of insurance, including public liability and property damage insurance, with responsible -32- ORDINANCE NO. 5672 insurers and with policies payable to or on behalf of the City and any additional insureds on such of the buildings, equipment, works, plants, facilities and properties of the Waterworks Utility, and against such claims for damages, as are ordinarily carried by municipal or privately owned utilities engaged in the operation of like systems, or will implement and maintain a self-insurance or an insurance pool program with reserves adequate, in the reasonable judgment ofthe City, to protect the Waterworks Utility and the Registered Owners ofthe Parity Bonds against loss. (g) Maintenance and Operation Expense. It will pay all Maintenance and Operation Expense and the debt service requirements for the outstanding Parity Bonds, and otherwise meet the obligations of the City as herein set forth. Section 9. Tax Covenants. The City covenants that it will not take or permit to be taken on its behalf any action that would adversely affect the exemption from federal income taxation of the interest on the Bonds and will take or require to be taken such acts as may reasonably be within its ability and as may from time to time be required under applicable law to continue the exemption from federal income taxation of the interest on the Bonds. (a) Arbitrage Covenant. Without limiting the generality of the foregoing, the City covenants that it will not take any action or fail to take any action with respect to the proceeds of sale of the Bonds or any other funds of the City which may be deemed to be proceeds of the Bonds pursuant to Section 148 of the Code and the regulations promulgated thereunder which, if such use had been reasonably expected on the date of delivery of the Bonds to the initial purchasers thereof, would have caused the Bonds as "arbitrage bonds" within the meaning of such term as used in Section 148 ofthe Code. -33- ORDINANCE NO. 5672 The City represents that it has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is an issuer whose arbitrage certifications may not be relied upon. The City will comply with the requirements of Section 148 of the Code and the applicable regulations thereunder throughout the term of the Bonds. (b) Private Person Use Limitation for Bonds. The City covenants that for as long as the Bonds are outstanding, it will not permit: (1) More than 10% of the Net Proceeds of the Bonds to be used for any Private Person Use; and (2) More than 10% of the principal or interest payments on the Bonds in a bond year to be directly or indirectly: (A) secured by any interest in property used or to be used for any Private Person Use or secured by payments in respect of property used or to be used for any Private Person Use, or (B) derived from payments (whether or not made to the City) in respect of property, or borrowed money, used or to be used for any Private Person Use. The City further covenants that, if: (3) More than five percent of the Net Proceeds of the Bonds are to be used for any Private Person Use; and (4) More than five percent of the principal or interest payments on the Bonds in a bond year are (under the terms of this ordinance or any underlying arrangement) directly or indirectly: (A) secured by any interest in property used or to be used for any Private Person Use or secured by payments in respect of property used or to be used for any Private Person Use, or -34- ORDINANCE NO. 5672 (B) derived from payments (whether or not made to the City) in respect of property, or borrowed money, used or to be used for any Private Person Use, then, (i) any Private Person Use of the projects described in subsection (3) hereof or Private Person Use payments described in subsection (4) hereof that is in excess of the five percent limitations described in such subsections (3) or (4) will be for a Private Person Use that is related to the state or local governmental use of the project refinanced with the Bonds, and (ii) any Private Person Use will not exceed the amount of Net Proceeds of the Bonds used for the state or local governmental use portion of the project to which the Private Person Use of such portion of the project relates. The City further covenants that it will comply with any limitations on the use of the projects by other than state and local governmental users that are necessary, in the opinion of its bond counsel, to preserve the tax exemption of the interest on the Bonds. (c) Modification of Tax Covenants. The covenants of this section are specified solely to assure the continued exemption from regular income taxation ofthe interest on the Bonds. To that end, the provisions of this section may be modified or eliminated without any requirement for formal amendment thereof upon receipt of an opinion of the City's bond counsel that such modification or elimination will not adversely affect the tax exemption of interest on any Bonds. (d) Qualified Tax-Exempt Obligation. The City hereby designates the Bonds as "qualified tax-exempt obligations" under Section 265(b)(3) of the Code for investment by financial institutions. The City reasonably does not expect to issue more than $10,000,000 in qualifying tax-exempt debt during calendar year 2012. -35- ORDINANCE NO. 5672 Section 10. Future Parity Bonds. The City reserves the right to issue Future Parity Bonds if the following conditions are met and complied with at the time of issuance of those additional bonds: (a) There shall be no deficiency in any Parity Bond Fund. (b) The ordinance providing for the issuance of such Future Parity Bonds shall provide for the payment of the principal thereof and interest thereon out of a Parity Bond Fund. (c) The ordinance providing for the issuance of such Future Parity Bonds shall provide for the deposit into the Reserve Fund from the proceeds of those Future Parity Bonds of (1) an amount equal to the increase in the Reserve Requirement attributable to those Parity Bonds or (2) Qualified Letter of Credit or Qualified Insurance or an amount plus Qualified Letter of Credit or Qualified Insurance equal to the increase in the Reserve Requirement attributable to those Future Parity Bonds. At the discretion of the City, the City may provide for deposit into the Reserve Fund of other legally available money from Net Revenue or Qualified Letter of Credit or Qualified Insurance on or prior to the date of issuance of such Future Parity Bonds. (d) The ordinance authorizing the issuance of such Future Parity Bonds shall provide for the payment of mandatory redemption or sinking fund requirements into the applicable Parity Bond Fund for any Term Bonds to be issued and for regular payments to be made forthe payment of the principal of such Term Bonds on or before their maturity, or, as an alternative, the mandatory redemption of those Term Bonds prior to their maturity date from money in the applicable Parity Bond Fund. -36- ORDINANCE NO. 5672 (e) There shall be on file with the City either: (1) a certificate of the Finance Director demonstrating that Net Revenue for the Base Period, without regard to deposits into or withdrawals from the Rate Stabilization Fund, is equal to at least the Parity Requirement; or (2) prior to the New Covenant Date, a certificate of a Professional Utility Consultant that in such Consultant's opinion, Net Revenue for any 12 consecutive calendar months, without regard to deposits into or withdrawals from the Rate Stabilization Fund, shall be equal to at least the Parity Requirement. After the New Covenant Date, this section shall be amended to read as follows: a certificate of a Professional Utility Consultant that in such Consultant's opinion Net Revenue for the Base Period, as adjusted, without regard to deposits into or withdrawals from the Rate Stabilization Fund, shall be equal to at least the Parity Requirement. The Professional Utility Consultant, in estimating Net Revenue available for debt services, may adjust Net Revenue to reflect: (A) Any changes in rates in effect and being charged or expressly committed by ordinance to be made in the future; (B) Income derived from customers of the Waterworks Utility who have become customers during the 12 consecutive month period or thereafter adjusted to reflect one year's Net Revenue from those customers; (C) Income from any customers to be connected to the Waterworks Utility who have paid the required connection charges; -37- ORDINANCE NO. 5672 (D) The Professional Utility Consultant's estimate of the Net Revenue to be derived from customers anticipated to connect for whom building permits have been issued; (E) Income received or to be received which is derived from any person, firm corporation or municipal corporation under any executed contract for water, sewage disposal or other utility service, which revenue was not included in the historical Net Revenue; (F) The Professional Utility Consultant's estimate of the Net Revenue to be derived from customers with existing homes or buildings which will be required to connect to any additions to and improvements and extensions of the Waterworks Utility constructed and to be paid for out of the proceeds of the sale of the additional Future Parity Bonds or other additions to and improvements and extensions of the Waterworks Utility when such additions, improvements and extensions are not completed; and (G) Any increases or decrease in Net Revenue as a result of any actual or reasonably anticipated changes in Maintenance and Operation Expense subsequent to the 12-month period. (f) Refunding Obligations. If Future Parity Bonds proposed to be so issued are for the sole purpose of refunding outstanding bonds payable from any Parity Bond Fund, such certification of coverage shall not be required if the amount required for the payment of the principal and interest in each year for the refunding bonds is not increased more than $5,000 over the amount for that same year required for the bonds or the portion of that bond issue to -38- ORDINANCE NO. 5672 be refunded thereby and if the maturities of such refunding bonds are not extended beyond the maturities of the bonds to be refunded thereby. Nothing contained herein shall prevent the City from issuing Future Parity Bonds to refund maturing Parity Bonds, money for the payment of which is not otherwise available. (g) Subordinate Lien Obligations. Nothing contained herein shall prevent the City from issuing revenue bonds that are a charge upon Gross Revenue subordinate to the payments required to be made therefrom into any Parity Bond Fund. Section 11. Form of Bonds. The Bonds shall be in substantially the following form: [DTC LANGUAGE] UNITED STATES OF AMERICA NO. $ STATE OF WASHINGTON CITY OF RENTON WATER AND SEWER REVENUE REFUNDING BOND, 2012 INTEREST RATE: MATURITY DATE: CUSIP NO.: REGISTERED OWNER: CEDE & Co. PRINCIPAL AMOUNT: The City of Renton, Washington, a municipal corporation organized and existing under and by virtue of the laws of the State of Washington (herein called the "City") hereby acknowledges itself to owe and for value received promises to pay, but only from the sources and as hereinafter provided, 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 the date of delivery, or the most recent date to which interest has been paid or duly provided for, at the Interest Rate set forth above, payable on , 20 , and semiannually thereafter on the first days of each December and June until such principal sum is paid or payment has been duly provided for. Both principal of and interest on this bond are payable in lawful money of the United States of America. Interest and principal shall be paid as provided in the Blanket Issuer Letter of -39- ORDINANCE NO. 5672 Representations (the "Letter of Representations") by the City to The Depository Trust Company ("DTC"). The fiscal agency of the State of Washington has been appointed by the City as the authenticating agent, paying agent and registrar for the bonds of this issue (the "Bond Registrar"). Capitalized terms used in this bond that are not specifically defined have the meanings given such terms in Ordinance No. of the City adopted on , 2012 (the "Bond Ordinance"). Reference is made to the Bond Ordinance and any and all modifications and amendments thereto for a description of the nature and extent of the security for the bonds of this issue, the funds or revenues pledged, and the terms and conditions upon which such bonds are issued. This bond is one of an authorized issue of bonds of the City of like date and tenor except as to number, amount, rate of interest and date of maturity in the aggregate principal amount of $ . The bonds of this issue are being issued for the purpose of refunding certain outstanding water and sewer revenue refunding bonds of the City and paying costs of issuance ofthe bonds of this issue. The bonds of this issue are subject to redemption prior to their scheduled maturities as provided in the Bond Ordinance and in the Bond Purchase Contract. The bonds of this issue have been designated as "qualified tax-exempt obligations" for investment by financial institutions under Section 265(b) ofthe Internal Revenue Code of 1986, as amended (the "Code"). The bonds of this issue are payable solely from the Bond Fund and the Reserve Fund. The City has irrevocably obligated and bound itself to pay into the Bond Fund out of the Net Revenue or from such other moneys as may be provided therefor certain amounts necessary to pay and secure the payment of the principal and interest on such bonds. The bonds of this issue are not general obligations ofthe City. The City does hereby pledge and bind itself to set aside from the Waterworks Utility Fund out of the revenue of the Waterworks Utility and to pay into the Bond Fund and the Reserve Fund the various amounts required by the Bond Ordinance to be paid into and maintained in such Funds, all within the times provided by the Bond Ordinance. To the extent more particularly provided by the Bond Ordinance, the amounts so pledged to be paid from the Waterworks Utility Fund out ofthe revenue ofthe Waterworks Utility into the Bond Fund shall be a lien and charge thereon equal in rank to the lien and charge upon said revenue of the amounts required to pay and secure the payment of the Outstanding Parity Bonds and any revenue bonds of the City hereafter issued on a parity with the bonds of this issue and superior to all other liens and charges of any kind or nature except Maintenance and Operation Expense. The bonds of this issue are issued under and in accordance with the provisions of the Constitution and applicable statutes ofthe State of Washington and duly adopted ordinances of the City. The City hereby covenants and agrees with the owner of this bond that it will keep and perform all the covenants of this bond and of the Bond Ordinance to be by it kept and -40- ORDINANCE NO. 5672 performed, and reference is hereby made to the Bond Ordinance for a complete statement of such covenants. This bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Bond Ordinance until the Certificate of Authentication hereon shall have been manually signed by the Bond Registrar. It is hereby certified that all acts, conditions, and things required by the Constitution and statutes of the State of Washington to exist, to have happened, been done, and performed precedent to and in the issuance of this bond have happened, been done, and performed. IN WITNESS WHEREOF, the City of Renton, Washington has caused this bond to be signed with the facsimile or manual signature of the Mayor, to be attested by the facsimile or manual signature of the City Clerk, all as of this day of , 2012. CITY OF RENTON, WASHINGTON [SEAL] By /si facsimile or manual Mayor ATTEST: Is/ facsimile or manual City Clerk The Bond Registrar's certificate authentication on the Bonds shall be in substantially the following form: CERTIFICATE OF AUTHENTICATION Date of Authentication: ,20 This bond is one ofthe bonds described in the within-mentioned Bond Ordinance and is one of the Water and Sewer Revenue Refunding Bonds, 2012 of the City of Renton, Washington, dated , 2012. WASHINGTON STATE FISCAL AGENCY, Registrar By Authorized Signer -41- ORDINANCE NO. 5672 Section 12. Execution of Bonds. The Bonds shall be executed on behalf of the City by the facsimile or manual signatures ofthe Mayor and the City Clerk and shall have the seal ofthe City impressed or a facsimile thereof imprinted, or otherwise reproduced thereon. In the event any officer who shall have signed or whose facsimile signatures appear on any of the Bonds shall cease to be such officer of the City before said Bonds shall have been authenticated or delivered by the Bond Registrar or issued by the City, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issuance, shall be as binding upon the City as though said person had not ceased to be such officer. Any Bond may be signed and attested on behalf of the City by such persons who, at the actual date of execution of such Bond shall be the proper officer of the City, although at the original date of such Bond such persons were not such officers ofthe City. Only such Bonds as shall bear thereon a Certificate of Authentication manually executed by an authorized representative of the Bond Registrar shall be valid or obligatory for any purpose or entitled to the benefits of this ordinance. Such Certificate of Authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this ordinance. The Bond Registrar shall be responsible for its representations contained in the Certificate of Authentication on the Bonds. Section 13. Lost, Stolen or Destroyed Bonds. In case any Bonds shall be 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 upon the Registered Owner's paying -42- ORDINANCE NO. 5672 the expenses and charges of the Bond Registrar and the City in connection therewith and upon his filing 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 ownership thereof, and upon furnishing the City and the Registrar with indemnity satisfactory to both. Section 14. Sale of Bonds. (a) Bond Sale. The Bonds shall be sold at negotiated sale to the Underwriter pursuant to the terms of the Bond Purchase Contract. The Underwriter has advised the Council that market conditions are fluctuating and, as a result, the most favorable market conditions may occur on a day other than a regular meeting date of the Council. The Council has determined that it would be in the best interest ofthe City to delegate to the Designated City Representative for a limited time the authority to approve the final interest rates, aggregate principal amount, principal amounts of each maturity of the Bonds, selection of the Refunded Bonds, and redemption rights. The Designated City Representative is hereby authorized to approve the final interest rates, aggregate principal amount, principal maturities, selection of the Refunded Bonds, and redemption rights for the Bonds in the manner provided hereafter so long as (i) the aggregate principal amount of the Bonds does not exceed $10,000,000, (ii) the final maturity date for the Bonds is no later than December 1, 2027, (iii) the Bonds are sold (in the aggregate) at a price not less than 98% and not greater than 120%, (iv) the Bonds are sold for a price that results in a minimum net present value debt service savings over the Refunded Bonds of 10%, and (v) the true interest cost for the Bonds (in the aggregate) does not exceed 3.25%. -43- ORDINANCE NO. 5672 In determining whether or not to acquire a Bond Insurance Policy and determining the final interest rates, aggregate principal amounts, principal maturities and redemption rights, the Designated City Representative shall take into account those factors that, in his or her judgment, will result in the lowest true interest cost on the Bonds to their maturity, including, but not limited to current financial market conditions and current interest rates for obligations comparable in tenor and quality to the Bonds. Subject to the terms and conditions set forth in this section, the Designated City Representative is hereby authorized to execute the Bond Purchase Contract. The signature of one Designated City Representative shall be sufficient to bind the City. Following the execution of the Bond Purchase Contract, the Designated City Representative shall provide a report to the Council describing the final terms of the Bonds approved pursuant to the authority delegated in this section. The authority granted to the Designated City Representative by this Section 14 shall expire 120 days after the effective date of this ordinance. If a Bond Purchase Contract for the Bonds has not been executed within 120 days after the effective date of this ordinance, the authorization for the issuance of the Bonds shall be rescinded, and the Bonds shall not be issued nor their sale approved unless such Bonds shall have been re-authorized by ordinance of the Council. The ordinance re-authorizing the issuance and sale of such Bonds may be in the form of a new ordinance repealing this ordinance in whole or in part or may be in the form of an amendatory ordinance approving a bond purchase contract or establishing terms and conditions for the authority delegated under this Section 14. -44- ORDINANCE NO. 5672 (b) Delivery of Bonds; Documentation. Upon the passage and approval of this ordinance, the proper officials of the City including the Designated City Representative, are authorized and directed to undertake all action necessary for the prompt execution and delivery of the Bonds to the Underwriter and further to execute all closing certificates and documents required to effect the closing and delivery of the Bonds in accordance with the terms ofthe Bond Purchase Contract. (c) Preliminary and Final Official Statements. The Finance Director is hereby authorized to ratify and to deem final the preliminary Official Statement relating to the Bonds for the purposes of the Rule. The Finance Director is further authorized to ratify and to approve for purposes of the Rule, on behalf of the City, the Official Statement relating to the issuance and sale of the Bonds and the distribution of the Official Statement pursuant thereto with such changes, if any, as may be deemed by her to be appropriate. Section 15. Application of Bond Proceeds; Plan of Refunding. (a) Refunding Plan. For the purpose of realizing a debt service savings and benefiting the City's ratepayers, the Council proposes to refund and defease the Refunded Bonds as set forth herein. The Refunded Bonds shall include those Refunding Candidates designated by the Designated City Representative when the Bonds are sold pursuant to the Bond Purchase Contract. Proceeds of the Bonds shall be deposited with the Escrow Agent pursuant to the Escrow Deposit Agreement to be used immediately upon receipt thereof to defease the Refunded Bonds as authorized by the 2004 Bond Ordinance and to pay costs of issuance ofthe Bonds. -45- ORDINANCE NO. 5672 The net proceeds deposited with the Escrow Agent shall be used to defease the Refunded Bonds and discharge the obligations thereon by the purchase of certain Government Obligations (which obligations so purchased, are herein called "Acquired Obligations"), bearing such interest and maturing as to principal and interest in such amounts and at such times which, together with any necessary beginning cash balance, will provide for the payment of: (1) interest on the Refunded Bonds due and payable on and prior to the Call Date; and (2) the redemption prices ofthe Refunded Bonds on the Call Date. Such Acquired Obligations shall be purchased at a yield not greater than the yield permitted by the Code and regulations relating to acquired obligations in connection with refunding bond issues. (b) Escrow Agent/Escrow Agreement. The City hereby appoints U.S. Bank National Association, Seattle, Washington, as the Escrow Agent for the Refunded Bonds (the "Escrow Agent"). A beginning cash balance, if any, and the Acquired Obligations shall be deposited irrevocably with the Escrow Agent in an amount sufficient to defease the Refunded Bonds. The proceeds of the Bonds remaining after acquisition of the Acquired Obligations and provision for the necessary beginning cash balance shall be utilized to pay expenses of the acquisition and safekeeping ofthe Acquired Obligations and expenses ofthe issuance ofthe Bonds. In order to carry out the purposes of this Section 15, the Finance Director is authorized and directed to execute and deliver to the Escrow Agent, an Escrow Deposit Agreement. -46- ORDINANCE NO. 5672 (e) Call for Redemption of Refunded Bonds. The City hereby irrevocably sets aside sufficient funds out of the purchase of Acquired Obligations from proceeds of the Bonds to make the payments described in Section 15(d). The City hereby irrevocably calls the Refunded Bonds for redemption on their Call Date in accordance with the provisions of the 2004 Bond Ordinance authorizing the redemption and retirement of the 2004 Bonds prior to their fixed maturities. Said defeasance and call for redemption of the Refunded Bonds shall be irrevocable after the issuance of the Bonds and delivery of the Acquired Obligations to the Escrow Agent. The Escrow Agent is hereby authorized and directed to provide for the giving of notices of the redemption of the Refunded Bonds in accordance with the applicable provisions of the 2004 Bond Ordinance. The costs of publication of such notices shall be an expense of the City. The Escrow Agent is hereby authorized and directed to pay to the Finance Director, or, at the direction of the Finance Director, to the paying agent for the Refunded Bonds, sums sufficient to pay, when due, the payments specified in Section 15. All such sums shall be paid from the moneys and Acquired Obligations deposited with the Escrow Agent, and the income therefrom and proceeds thereof. All such sums so paid to said Finance Director shall be credited to the Refunding Account. All moneys and Acquired Obligations deposited with the Escrow Agent and any income therefrom shall be held, invested (but only at the direction of the Finance Director) and applied in accordance with the provisions of this ordinance and with the laws of the State of Washington for the benefit of the City and owners of the Refunded Bonds. -47- ORDINANCE NO. 5672 The City will take such actions as are found necessary to see that all necessary and proper fees, compensation and expenses of the Escrow Agent for the Refunded Bonds shall be paid when due. Section 16. Bond Insurance. The Finance Director is hereby further authorized to solicit proposals from municipal bond insurance companies for the issuance of a Bond Insurance Policy. In the event that the Finance Director receives multiple proposals in response to a solicitation, the Finance Director may select the proposal having the lowest cost and resulting in an overall lower interest cost with respect to the Bonds to be insured. The Finance Director may execute a commitment received from the Insurer selected by the Finance Director. The Council further authorizes all proper officers, agents, attorneys and employees of the City to cooperate with the Insurer in preparing such additional agreements, certificates, and other documentation on behalf of the City as shall be necessary or advisable in providing for the Bond Insurance Policy. Section 17. Undertaking to Provide Continuing Disclosure. (a) Contract/Undertaking. This section constitutes the City's written undertaking for the benefit of the Registered Owners and Beneficial Owners of the Bonds required by subsection (b)(5) ofthe Rule. (b) Financial Statements/Operating Data. The City hereby agrees to provide or cause to be provided to the Municipal Securities Rulemaking Board ("MSRB"), the following annual financial information and operating data for the prior fiscal year, commencing in 2013 with the calendar year ending December 31, 2012: -48- ORDINANCE NO. 5672 (1) Annual financial statements prepared in accordance with the generally accepted accounting principles applicable to governmental units, as such principles may be changed from time to time by the Washington State Auditor pursuant to RCW 43.09.200, which statements will not be audited, except that if and when audited financial statements are otherwise prepared and available to the City, they will be provided (the "Annual Financial Statements"); (2) A statement of authorized, issued and outstanding bonded debt secured by Net Revenue; (3) Debt service coverage ratios; and (4) General customer statistics for the Waterworks Utility contained in the final official statement for the Bonds and identified in a closing certificate executed by the Designated City Representative and referencing this section. Items (2) through (4) shall be required only to the extent that such information is not included in (1). The information and data described above shall be provided on or before nine months after the end of the City's fiscal year. The City's current fiscal year ends December 31. The City may adjust such fiscal year by providing written notice of the change of fiscal year to the MSRB. In lieu of providing such annual financial information and operating data, the City may cross-reference to other documents available to the public on the MSRB's internet website or filed with the Commission. 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 -49- ORDINANCE NO. 5672 Budgeting 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 the MSRB. (c) Listed Events. The City agrees to provide or cause to be provided to the MSRB, in a timely manner not in excess of ten business days after the occurrence of the event, notice of the occurrence of any of the following events with respect to the Bonds: • Principal and interest payment delinquencies; • Non-payment related defaults, if material; • 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, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; • Modifications to the rights of Bondholders, if material; • Bond calls, if material, and tender offers; • Defeasances; • Release, substitution, or sale of property securing repayment of the Bonds, if material; • Rating changes; • Bankruptcy, insolvency, receivership or similar event of the City; -50- ORDINANCE NO. 5672 • The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and • Appointment of a successor or additional trustee or the change of name of a trustee, if material. The City shall promptly determine whether the events described above are material. (d) Format for Filings with the MSRB. 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) Notification Upon Failure to Provide Financial Data. The City agrees to provide or cause to be provided, in a timely manner, to the MSRB 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. (f) Termination/Modification. The City's obligations to provide annual financial information and notices of certain listed events shall terminate upon the legal 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 ofthe Rule that requires that provision is invalid, has been repealed retroactively or -51- ORDINANCE NO. 5672 otherwise does not apply to the Bonds and (ii) notifies the MSRB of such opinion and the cancellation of this section. The City may amend this section with an opinion of nationally recognized bond counsel in accordance with the Rule. In the event of any amendment of this section, the City shall describe such amendment in the next annual report, and shall include, a narrative explanation of the reason for the amendment and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (A) notice of such change shall be given in the same manner as for a listed event under Subsection (c), and (B) the annual report for the year in which the change is made shall 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. (g) Bond Owner's Remedies Under This Section. The right of any bondowner or Beneficial Owner of Bonds to enforce the provisions of this section shall be limited to a right to obtain specific enforcement of the City's obligations under this section, and any failure by the City to comply with the provisions of this undertaking shall not be an event of default with respect to the Bonds. (h) No Default. Except as otherwise disclosed in the City's Official Statement relating to the Bonds, the City is not and has not been in default in the performance of its obligations of any prior undertaking for ongoing disclosure with respect to its obligations. -52- ORDINANCE NO. 5672 Section 18. Defeasance of the Bonds. In the event that money and/or Government Obligations maturing or having guaranteed redemption prices at the option of the holder at such time or times and bearing interest to be earned thereon in amounts (together with such money, if any) sufficient to redeem and retire part or all of the Bonds in accordance with the their terms, are hereafter irrevocably set aside in a special account and pledged to effect such redemption and retirement, then no further payments need be made into the Bond Fund or any account therein for the payment of the principal of and interest on the certain Bonds so provided for and such Bonds shall then cease to be entitled to any lien, benefit or security of this ordinance, except the right to receive the funds so set aside and pledged, and such Bonds shall no longer be deemed to be Outstanding hereunder, or under any ordinance authorizing the issuance of bonds or other indebtedness of the City. Within 30 days of any defeasance of Bonds the Bond Registrar shall provide notice of defeasance of Bonds to Registered Owners of the Bonds being defeased and to each party entitled to receive notice in accordance with Section 17. Section 19. Amendments. (a) The City Council from time to time and at any time may pass 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 to surrender any right or power herein reserved. -53- ORDINANCE NO. 5672 (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 matters or questions arising under such ordinances as the City Council may deem necessary or desirable and not inconsistent with such ordinances and which shall not adversely affect, in any material respect, the interest of the owners of Bonds. In any such supplemental ordinance 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. (b) With the consent of the owners of not less than sixty-five percent (65%) in aggregate principal amount of the Bonds at the time outstanding, the City Council may pass 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 Bonds, or reduce the rate of interest thereon, or extend the time of payment 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 Registered Owner of each Bond so affected; or (2) Reduce the aforesaid percentage of Bondowners required to approve any such supplemental ordinance, without the consent of the owners of all of the Bonds then outstanding. It shall not be necessary for the consent of Bondowners 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. For the purpose of consenting to -54- ORDINANCE NO. 5672 amendments under this subsection (b), the Insurer shall be deemed to be the sole Registered Owner of the Bonds then outstanding. (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 modifications and amendments, and all 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. (d) Bonds executed and delivered after the execution of any supplemental ordinance passed pursuant to the provisions of this section may have a notation as to any matter provided for in such supplemental ordinance, and if such supplemental ordinance shall so provide, new Bonds so modified as to conform, in the opinion of the City Council, to any modification of this ordinance contained in any such supplemental ordinance, may be prepared and delivered without cost to the owners of any affected Bonds then outstanding, upon surrender for cancellation of such Bonds in equal aggregate principal amounts. (e) Exclusion of Bonds Owned by City. Bonds owned or held by or for the account of the City shall not be deemed outstanding for the purpose of any vote or consent or other action or any calculation of outstanding Bonds in this ordinance provided for, and shall not be entitled to vote or consent or take any other action in this ordinance provided for. (f) Bonds Held by Securities Repositories. For so long as the Bonds are held in book entry only form, communications with the owners shall be made with the securities depository -55- ORDINANCE NO. 5672 who is the "Registered Owner" ofthe Bonds and communications with (and obtaining consents from) beneficial owners shall be made in accordance with the operational procedures of the securities depository that is the "Registered Owner" of the Bonds. Section 20. Call for Redemption of 1998 Bonds. For the purpose of realizing a debt service savings and benefiting the ratepayers ofthe City, the City Council hereby authorizes the refunding of the 1998 Bonds identified in the recitals to this ordinance. Available funds of the City in the amount necessary to refund the 1998 Bonds, in whole, shall be used on or before December 1, 2012 for the payment of interest on and the redemption price of the 1998 Bonds on such date. The City hereby irrevocably calls the 1998 Bonds for redemption on December 1, 2012 in accordance with the provisions of the 1998 Bond Ordinance authorizing the redemption and retirement of the 1998 Bonds prior to their fixed maturities. The City's Finance and Administrative Services Administrator is hereby authorized and directed to provide for the giving of notice of the redemption of the 1998 Bonds in accordance with the applicable provisions of the 1998 Bond Ordinance. The costs of such notice shall be an expense of the City. Section 21. Contract; Savings Clause. The covenants contained in this ordinance and in the Bonds shall constitute a contract between the City and the Registered Owner of each and every Bond. If any one or more of the covenants or agreements provided in this ordinance to be performed on the part of the City shall be declared by any court of competent jurisdiction and after final appeal (if any appeal be taken) to be contrary to law, then such covenant or covenants, agreement or agreements, shall be null and void and shall be deemed separable -56- ORDINANCE NO. 5672 from the remaining covenants and agreements in this ordinance and shall in no way affect the validity ofthe other provisions of this ordinance or ofthe Bonds. Section 22. General Authorization; Ratification of Prior Acts. The Mayor, the Chief Administrative Officer, the Finance Director and other appropriate officers of the City are authorized to take any actions and to execute documents as in their judgment may be necessary or desirable in order to carry out the terms of, and complete the transactions contemplated by, this ordinance. All acts taken pursuant to the authority of this ordinance but prior to its effective date are hereby ratified. Section 23. Effective Date of Ordinance. This ordinance shall be effective upon its passage, approval, and thirty (30) days after publication. PASSED by the City Council this 15th day of October, 2012. Bonnie I. Walton, City Clerk APPROVED BY THE MAYOR this 15th day of October, 2012. Denis Law, Mayor Approved as to form: >- Bond Counsel Date of Publication: 10/19/2012 (Summary) -57- ORDINANCE NO. 5672 CERTIFICATE I, the undersigned, City Clerk of the City Council of the City of Renton, Washington (the "City"), DO HEREBY CERTIFY: 1. The attached copy of Ordinance No. (the "Ordinance") is a full, true and correct copy of an ordinance duly passed at a regular meeting of the City Council of the City held at the regular meeting place thereof on October , 2012, as that ordinance appears on the minute book ofthe City; and the Ordinance will be in full force and effect after publication in the City's official newspaper as provided by law; and 2. A quorum of the members of the City Council was present throughout the meeting and a majority of those members present voted in the proper manner for the passage ofthe Ordinance. IN WITNESS WHEREOF, I have hereunto set my hand this day of October, 2012. Bonnie I. Walton, City Clerk