2003 City Light Resolution

July 29, 2003

Version 1

Resolution 30618

A RESOLUTION providing for the sale and issuance of The City of Seattle, Washington, Municipal Light and Power Improvement and Refunding Revenue Bonds, 2003; specifying the amount, maturities, interest rates and other terms of the bonds; and ratifying, confirming and approving the notice of bond sale and the actions of the Director of Finance relating to the sale of the bonds.

Adopted July 29, 2003

Resolution 30618

A RESOLUTION providing for the sale and issuance of The City of Seattle, Washington, Municipal Light and Power Improvement and Refunding Revenue Bonds, 2003; specifying the amount, maturities, interest rates and other terms of the bonds; and ratifying, confirming and approving the notice of bond sale and the actions of the Director of Finance relating to the sale of the bonds.

WHEREAS, pursuant to Ordinance 116706 and Resolution 28751 (the "Refunded Bond Ordinance") The City of Seattle, Washington (the "City") issued its Four Hundred Fifty-Three Million Three Hundred Fifty-Five Thousand Dollars ($453,355,000) principal amount Municipal Light and Power Revenue and Refunding Revenue Bonds, 1993 (the "1993 Bonds"); and

WHEREAS, pursuant to Ordinance 121198 (the "Bond Ordinance"), the City authorized the issuance of not to exceed Two Hundred Eighty Million Dollars ($280,000,000) of its Municipal Light and Power Improvement and Refunding Revenue Bonds, 2003 (the "Bonds") to (1) pay part of the cost of carrying out the Plan of Additions specified, adopted and ordered to be carried out by the Bond Ordinance; (2) refund certain of the 1993 Bonds; and (3) pay the costs of issuing and selling the Bonds; and

WHEREAS, by the Bond Ordinance the City authorized the Director of Finance to conduct a public sale or to negotiate the sale of the Bonds and to recommend to the City Council for its approval by Resolution the interest rates and other terms of and matters relating to the Bonds consistent with the Bond Ordinance; and

WHEREAS, pursuant to the Bond Ordinance, a preliminary official statement dated July 22, 2003, for the public sale of the Bonds, including an official notice of that sale (the "Notice of Bond Sale"), has been prepared and distributed, bids have been received in accordance with the Notice of Bond Sale, and the proposed sale of the Bonds to Lehman Brothers Inc. has been recommended to the City Council for its approval with the interest rates and other terms of and matters relating to the Bonds set forth in this resolution; NOW, THEREFORE,

BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SEATTLE, THE MAYOR CONCURRING, THAT:

Section 1. Definitions. The following terms shall have the following meanings for all purposes of this resolution:

Acquired Obligations means those "Government Obligations" (as such term is defined in the Refunded Bond Ordinance) purchased to accomplish the refunding of the Refunded Bonds as authorized by this Resolution.

Bond Ordinance means Ordinance 121198 of the City authorizing the issuance of the Bonds.

Refunded Bonds means the outstanding the 1993 Bonds maturing on and after November 1, 2004.

Refunding Plan means:

(a) the placement of sufficient proceeds of the Bonds, which, with other money of the City, if necessary, will acquire the Acquired Obligations to be deposited, with cash, if necessary, with the Refunding Trustee;

(b) the payment of the interest on the Refunded Bonds when due up to and including November 1, 2003, and the call, payment and redemption on November 1, 2003, of all of the then-outstanding Refunded Bonds, at the following prices:

(i) for the Refunded Bonds maturing in the years 2004 through 2010, 102% of par; and

(ii) for the Refunded Bonds maturing in the year 2018, 101% of par.

Refunding Trustee means U.S. Bank National Association, serving as trustee or escrow agent or any successor trustee or escrow agent.

Refunding Trust Agreement means the Refunding Trust Agreement between the City and the Refunding Trustee relating to the Refunded Bonds, substantially in the form attached hereto as Exhibit D.

The meanings of all other capitalized terms used and not otherwise defined in this resolution shall be as set forth in the Bond Ordinance.

Section 2. The Bonds. The Bonds shall be called "The City of Seattle, Washington, Municipal Light and Power Improvement and Refunding Revenue Bonds, 2003"; shall be issued in the aggregate principal amount of Two Hundred Fifty-One Million Eight Hundred Fifty Thousand and no/100 Dollars ($251,850,000); shall be in the denomination of Five Thousand Dollars ($5,000) or any integral multiple thereof within a single maturity; shall be dated August 20, 2003; shall be registered as to both principal and interest; and shall bear interest from their date until the Bonds bearing such interest have been paid or their payment has been duly provided for, payable on the first day of each May and November , commencing November 1, 2003.

The Bonds shall mature on November 1 of the following years and in the following amounts and shall bear interest as follows:

Maturities

Principal

Amounts

Interest

Rates

2004

9,915,000

6.000%

2005

24,525,000

4.000

2006

22,745,000

5.000

2007

23,820,000

5.000

2008

11,875,000

5.000

2009

12,155,000

5.000

2010

12,770,000

5.000

2011

4,000,000

5.000

2012

4,200,000

5.000

2013

4,410,000

5.000

2014

4,630,000

5.250

2015

9,545,000

5.250

2016

10,045,000

5.250

2017

10,570,000

5.250

2018

11,125,000

5.250

2019

5,980,000

5.250

2020

6,295,000

5.250

2021

6,625,000

5.000

2022

6,955,000

5.000

2023

7,300,000

5.000

2024

7,665,000

5.000

2025

8,050,000

5.000

2028

26,650,000

5.000

Section 3. Optional Redemption. Bonds maturing on or before November 1, 2013, shall be issued without the right or option of the City to redeem those Bonds prior to their stated maturity dates. The City reserves the right and option to redeem Bonds maturing on and after November 1, 2014, prior to their stated maturity dates, at any time on and after November 1, 2013, as a whole or in part (within one or more maturities to be selected by the City and randomly within a maturity in such manner as the Bond Registrar shall determine), at a price of par plus accrued interest to the dated fixed for redemption.

Section 4. Mandatory Redemption. Bonds maturing in the year 2028 are designated as Term Bonds and, if not redeemed under the optional redemption provisions set forth above or purchased in the open market under the provisions set forth in Section 6(d) of the Bond Ordinance, shall be called for redemption in accordance with Section 6(b) of the Bond Ordinance at par plus accrued interest on November 1 in years and amounts as follows:

Term Bonds Maturing 2028

Mandatory Redemption Years

Mandatory Redemption Amounts

2026

8,455,000

2027

8,875,000

2028 (1)

9,320,000

(1) maturity

Section 5. Form of Bonds. The Bonds shall be substantially in the form attached hereto as Exhibit A and incorporated herein by this reference.

Section 6. Sale and Delivery of Bonds. The City finds that the sale and delivery of the Bonds to Lehman Brothers Inc. (the "Purchaser") at the interest rates and under the conditions set forth in the Bond Ordinance, this resolution, the Notice of Bond Sale, including the Official Bid Form, attached hereto as Exhibit B and the electronic bid of the Purchaser, a printed version of which is attached hereto as Exhibit C and by this reference incorporated herein, is in the City's best interest and therefore ratifies, confirms and approves the award of the Bonds to the Purchaser.

Section 7. Authorization of Official Statement. The Director of Finance is hereby authorized and directed to review and approve on behalf of the City a final official statement (the "Official Statement") with respect to the Bonds, substantially in the form of the Preliminary Official Statement and supplemented or amended as he, with the approval of bond counsel, deems necessary, desirable, or appropriate.

Section 8. Use of Bond Proceeds; Refunding Plan. The principal proceeds of the Bonds received by the City and, if necessary, other money of the City shall be applied as follows (the amounts to be determined by the Director of Finance prior to the issuance of the Bonds): (i) an amount sufficient to carry out the Refunding Plan shall be deposited immediately upon the receipt thereof with the Refunding Trustee and used to discharge the obligations of the City relating to the Refunded Bonds under the Refunded Bond Ordinance pursuant to the Refunding Plan, as defined herein and modified or amplified by the Refunding Trust Agreement; and (ii) the balance of the Bond proceeds shall be deposited in the account(s) within the Light Fund as designated by the Director of Finance and shall be used to pay costs of the Plan of Additions and costs of issuing the Bonds and for any other purposes described in the Bond Ordinance.

The Refunding Plan shall be carried out, and proceeds of the Bonds shall be applied, in accordance with the Bond Ordinance, the Refunded Bond Ordinance, this resolution and the laws of the State. To the extent practicable, the Refunded Bonds shall be discharged fully by the Refunding Trustee's simultaneous purchase of the Acquired Obligations, bearing such interest and maturing as to principal and interest in such amounts and at such times so as to provide, together with a beginning cash balance, if necessary, for the payment of the amounts required to be paid by the Refunding Plan. The Acquired Obligations shall be subject to substitution as set forth in the Refunding Trust Agreement.

Any surplus money resulting from the sale, transfer, other disposition or redemption of the Acquired Obligations and the substitutions therefor shall be released from the trust estate and transferred to the Light Fund to be used for any lawful purpose.

Section 9. Call for Redemption of the Refunded Bonds. In accordance with Section 13 of the Bond Ordinance, as a part of the Refunding Plan the City calls the Refunded Bonds for redemption on the early call dates, at the redemption prices set forth in the Refunding Plan plus accrued interest to the date of redemption.

Such call for redemption shall be irrevocable after the delivery of the Bonds to the Purchaser.

The proper officials of the City are authorized and directed to give or cause to be given such notices as are required, at the times and in the manner required, pursuant to the Refunded Bond Ordinance, in order to effect the redemption prior to their maturity of the Refunded Bonds.

Section 10. City Findings With Respect to Refunding. The City finds and determines that the issuance and sale of the Bonds will effect a savings to the City and its ratepayers and will be in the best interest of the City and in the public interest through the restructuring of debt service. In making such finding and determination, the City has given consideration to the fixed maturities and scheduled redemptions of the Bonds, the costs of issuance of the Bonds, and the known earned income from the investment of the proceeds of the issuance and sale of the Bonds and other money, if any, of the City used in the Refunding Plan pending payment and redemption of the Refunded Bonds. The City further finds and determines that the money to be deposited with the Refunding Trustee for the Refunded Bonds in accordance with the Bond Ordinance and this resolution will discharge and satisfy the obligations of the City with respect to the Refunded Bonds under the Refunded Bond Ordinance, and the pledges, charges, trusts, covenants and agreements of the City therein made or provided for as to the Refunded Bonds, and that the Refunded Bonds shall no longer be deemed to be outstanding under such ordinances immediately upon the deposit of such money with the Refunding Trustee.

Section 11. City Finding as to Sufficiency of Gross Revenues. The City finds and determines that the issuance and sale of the Bonds is in the best interest of the City and in the public interest. In making such findings and determinations, the City has exercised due regard for the cost of operation and maintenance of the Light System and to any portion of the Gross Revenues pledged for the payment of any bonds, warrants or other indebtedness, and that the Gross Revenues, at the rates established from time to time consistent with Section 17(d) of the Bond Ordinance, will be sufficient, in the judgment of the City Council, to meet all expenses of operation and maintenance of the Light System and to provide the amounts previously pledged for the payment of all outstanding obligations payable out of the Gross Revenue and pledged herein for the payment of the Bonds.

Section 12. Appointment of Refunding Trustee and Authorization of Refunding Trust Agreement. U.S. Bank National Association is appointed as Refunding Trustee. The Director of Finance is authorized and directed to execute and deliver to the Refunding Trustee the Refunding Trust Agreement with such modifications as the Director of Finance determines are necessary and appropriate and are consistent with the Bond Ordinance and this resolution.

Section 13. Undertaking to Provide Continuing Disclosure. This Section constitutes the written undertaking (the "Undertaking") for the benefit of the holders of the Bonds as required by United States Securities and Exchange Commission (the "SEC") Rule15c2-12 (the "Rule"), and pursuant to the Bond Ordinance. For purposes of this undertaking, the term "holders of the Bonds" shall have the meaning intended for such term under the Rule.

The City as an "obligated person" within the meaning of the Rule undertakes to provide or cause to be provided, either directly or through a designated agent:

(a) To each nationally recognized municipal securities information repository designated by the SEC in accordance with the Rule (each "NRMSIR"), and to a state information depository, if one is established in the State of Washington and recognized by the SEC (the "SID"), annual financial information and operating data regarding the Light System of the type included in the Official Statement for the Bonds as follows: (i) annual financial statements of the Light System, prepared in accordance with generally accepted accounting principles applicable to governmental units (except as otherwise noted herein), as such principles may be changed from time to time and as permitted by State law, which financial 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; (ii) a statement of authorized, issued and outstanding bond debt secured by the Gross Revenue of the Light System; (iii) debt service coverage ratios; (iv) sources of Light System power and the cost thereof; (v) general customer statistics, such as number and type of customer and power consumed, and revenues by customer class; and (vi) average revenue per kWh of sales for each customer class.

Annual financial information, as described above, will be provided to each NRMSIR and the SID, not later than the last day of the ninth month after the end of each fiscal year of the City, as such fiscal year may be changed as permitted or required by State law, commencing with the City's fiscal year ending December 31, 2003. The annual financial information may be provided in a single or in multiple documents, and may be incorporated by reference from other documents, including official statements of debt issues with respect to which the City is an obligated person as defined by the Rule, which documents have been filed with each NRMSIR and the SID. If the document incorporated by reference is a "final official statement" it must be available from the Municipal Securities Rulemaking Board ("MSRB").

(b) To each NRMSIR or to the MSRB, and to the SID, timely notice of the occurrence of any of the following events with respect to the Bonds, if material: (i) principal and interest payment delinquencies; (ii) non-payment related defaults; (iii) unscheduled draws on debt service reserves reflecting financial difficulties; (iv) unscheduled draws on credit enhancements reflecting financial difficulties; (v) substitution of credit or liquidity providers, or their failure to perform; (vi) adverse tax opinions or events affecting the tax-exempt status of the Bonds; (vii) modifications to the rights of the holders of the Bonds; (viii) Bond calls (other than scheduled mandatory redemptions of Term Bonds); (ix) defeasances; (x) release, substitution, or sale of property securing repayment of the Bonds; and (xi) rating changes.

(c) To each NRMSIR or to the MSRB and to the SID timely notice of a failure by the City to provide required annual financial information on or before the date specified in paragraph (a) above.

This Undertaking may be amended without the consent of any holder of any Bond, any broker, dealer, municipal securities dealer, participating underwriter, rating agency, NRMSIR, the SID or the MSRB, under the circumstances and in the manner permitted by the Rule. The City will give notice to each NRMSIR or the MSRB, and to the SID, of the substance (or provide a copy) of any amendment to the Undertaking and a brief statement of the reasons for the amendment. If the amendment changes the type of annual financial information to be provided, the annual financial information containing the amended information will include a narrative explanation of the effect of that change on the type of information being provided.

If the City fails to comply with this Undertaking, the City will proceed with due diligence to cause such noncompliance to be corrected as soon as practicable after the City learns of that failure. No failure by the City or other obligated person to comply with this Undertaking shall constitute a default with respect to the Bonds. The sole remedy of any holder of a Bond will be to take such actions as that holder deems necessary and appropriate to compel the City or other obligated person to comply with this Undertaking.

Section 14. Termination of Undertaking. The City's obligations under the Undertaking described in Section 13 of this resolution shall terminate upon the legal defeasance, prior redemption, or payment in full of all of the then outstanding Bonds. In addition, the Undertaking, or any provision thereof, will be null and void if the City (i) obtains an opinion of nationally recognized bond counsel or other counsel familiar with federal securities laws to the effect that those portions of the Rule which require the City to comply with the Undertaking, or any such provision, are invalid, have been repealed retroactively or otherwise do not apply to the Bonds; and (ii) notifies the SID and either the MSRB or each then existing NRMSIR of such termination.

Section 15. General Authorization. The Mayor and the Director of Finance and each of the other appropriate officers of the City are each authorized and directed to do everything as in their judgment may be necessary, appropriate or desirable in order to carry out the terms and provisions of, and complete the transactions contemplated by, the Bond Ordinance and this resolution.

Section 16. Severability. The provisions of this resolution are declared to be separate and severable. If a court of competent jurisdiction, all appeals having been exhausted or all appeal periods having run, finds any provision of this resolution to be invalid or unenforceable as to any person or circumstance, such offending provision shall, if feasible, be deemed to be modified to be within the limits of enforceability or validity. However, if the offending provision cannot be so modified, it shall be null and void with respect to the particular person or circumstance, and all other provisions of this resolution in all other respects, and the offending provision with respect to all other persons and all other circumstances, shall remain valid and enforceable.

Section 17. Ratification of Prior Acts. All acts taken pursuant to the authority of this resolution but prior to its effective date are ratified, approved and confirmed.

Section 18. Section Headings. Section headings in this resolution are used for convenience only and shall not constitute a substantive portion of this resolution.

ADOPTED by the City Council the _______ day of July, 2003, and signed by me in open session in authentication of its adoption this _______ day of July, 2003.

President __________________ of the City Council

THE MAYOR CONCURRING:

_________________________________

Gregory J. Nickels, Mayor

Filed this _______ day of _______________, 2003.

(SEAL)

City Clerk

LIST OF EXHIBITS

Exhibit A Bond Form

Exhibit B Notice of Bond Sale

Exhibit C Printed Version of Electronic Bid

Exhibit D Refunding Trust Agreement

50379428.02

EXHIBIT A

Bond Form

No. R-______ $___________

Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to City or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

UNITED STATES OF AMERICA

STATE OF WASHINGTON

THE CITY OF SEATTLE

MUNICIPAL LIGHT AND POWER IMPROVEMENT AND REFUNDING REVENUE BOND, 2003

INTEREST RATE: MATURITY DATE: CUSIP No.:

Registered Owner: CEDE & CO.

Principal Amount: [_______________]

THE CITY OF SEATTLE, WASHINGTON (the "City"), a municipal corporation of the State of Washington, for value received, promises to pay the Registered Owner identified above on the Maturity Date identified above, the Principal Amount identified above and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) thereon from the later of the date of this Bond or from the most recent interest payment date to which interest has been paid at the Interest Rate per annum set forth above, payable semiannually on each May 1 and November 1, commencing November 1, 2003, to the maturity or earlier redemption of this Bond. If this Bond is duly presented for payment and not paid on its maturity or call date, then interest shall continue to accrue at the Interest Rate identified above until this Bond, both principal and interest, is paid in full or until sufficient money for its payment in full is on deposit in the Bond Account and this Bond has been called for payment by giving notice to the Registered Owner.

Principal of and premium, if any, and interest on this Bond are payable in lawful money of the United States of America. Principal of and premium, if any, are payable only to the Registered Owner upon presentation and surrender of this Bond at the principal office of the fiscal agency of the City (presently The Bank of New York, New York, New York) or such other paying agents as designated by the City upon notice to the Registered Owners of the Bonds (the "Bond Registrar"). Payment of each installment of interest shall be made to the Registered Owner whose name appears on the registration books of the City maintained by the Bond Registrar (the "Bond Register") at the close of business on the 15th day of the month next preceding the interest payment date (the "Record Date") and shall be paid by check or draft of the Bond Registrar mailed on the interest payment date to the Registered Owner at the address appearing on the Bond Register or, when requested in writing to the Bond Registrar before the applicable Record Date by the Registered Owner of $1,000,000 or more in principal amount of the Bonds, by wire transfer on the interest payment date. Notwithstanding the foregoing, as long as this Bond is registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), payment of principal, premium, if any, and interest shall be made as provided in the Letter of Representations.

This Bond is one of an authorized issue of bonds designated The City of Seattle, Washington, Municipal Light and Power Improvement and Refunding Revenue Bonds, 2003, aggregating $251,850,000 in principal amount, maturing on November 1 in the years 2004 through 2025, inclusive, and in the year 2028, of like date, tenor and effect, except as to numbers, denominations, options of redemption, maturity dates and interest rates. The Bonds are issued by the City pursuant to Ordinance 121198 and Resolution 30618 of the City (the "Bond Legislation") for the purposes of paying part of the costs of the Plan of Additions described in the Bond Legislation, refunding certain of the outstanding 1993 Bonds, and paying the costs of issuing and selling the Bonds, all as provided in the Bond Legislation. The Bonds are issued in fully registered form in the denomination of $5,000 or any integral multiple thereof within a single maturity.

The Bonds are special limited obligations of the City and are payable solely out of the Parity Bond Fund and, if necessary, out of the Reserve Fund, into which funds the City irrevocably pledges to set aside and pay certain fixed amounts out of the Gross Revenues of the Light System sufficient to pay the Bonds when due, all at the times and in the manner set forth in the Bond Legislation.

The Gross Revenues of the Light System are pledged to make the required payments into the Parity Bond Fund and the Reserve Fund, which pledge constitutes a charge upon such Gross Revenues prior and superior to all other charges whatsoever, save and except reasonable charges for maintenance and operation of the Light System, and except that the Bonds shall have a lien and charge upon such Gross Revenues on a parity with the lien and charge of the Outstanding Parity Bonds and any Future Parity Bonds.

THE BONDS ARE SPECIAL AND LIMITED OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE SOURCES IDENTIFIED HEREIN AND IN THE BOND LEGISLATION AND ARE NOT GENERAL OBLIGATIONS OF THE CITY, THE STATE OF WASHINGTON OR ANY OTHER POLITICAL SUBDIVISION THEREOF. THE BONDS DO NOT CONSTITUTE A LIEN OR CHARGE UPON ANY GENERAL FUND OR UPON ANY MONEY OR OTHER PROPERTY OF THE CITY, THE STATE OR ANY OTHER POLITICAL SUBDIVISION THEREOF NOT SPECIFICALLY PLEDGED THERETO BY THE BOND LEGISLATION.

Bonds maturing on or before November 1, 2013, are issued without the right or option of the City to redeem those Bonds prior to their stated maturity dates. The City reserves the right and option to redeem Bonds maturing on and after November 1, 2014, prior to their stated maturity dates, at any time on or after November 1, 2013, as a whole or in part within one or more maturities to be selected by the City (and by lot within a maturity in such manner as the Bond Registrar shall determine except that so long as the Bonds are registered in the name of DTC or its nominee, DTC shall select the Bonds or portions thereof to be redeemed in accordance with the Letter of Representations), at par plus accrued interest, if any, to the dated fixed for redemption.

Bonds maturing in the year 2028 are Term Bonds and, if not redeemed under the optional redemption provisions set forth above or purchased in the open market under the provisions set forth below, shall be called for redemption by lot (in such manner as the Bond Registrar shall determine) at par plus accrued interest on November 1 in years and amounts as follows:

Term Bonds Maturing 2028

Mandatory Redemption Years

Mandatory Redemption Amounts

2026

8,455,000

2027

8,875,000

2028 (1)

9,320,000

(1) maturity

The par amount of the Term Bonds previously redeemed by call or purchased in the open market (irrespective of their actual redemption prices) shall be credited at the par amount thereof against the remaining mandatory redemption requirements as directed by the Director of Finance, or otherwise pursuant to the Bond Legislation.

Notwithstanding the foregoing, for so long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, selection of Bonds for redemption shall be in accordance with the Letter of Representations.

Any Bond in the principal amount of greater than $5,000 may be redeemed partially in any integral multiple of $5,000. In such event, upon surrender of that Bond at either of the principal offices of the Bond Registrar, there shall be issued to the Registered Owner a new Bond (or Bonds, at the option of the Registered Owner) of the same maturity and interest rate in any of the denominations authorized by the Bond Legislation in the aggregate principal amount remaining unredeemed, without charge therefor.

Notice of any such intended redemption shall be sent by first-class mail, postage prepaid, not less than 30 nor more than 60 days prior to the date fixed for redemption, to the Registered Owner of each Bond to be redeemed at the address appearing on the Bond Register at the time the Bond Registrar prepares the notice, and this requirement shall be deemed to be complied with when notice is so mailed, whether or not it is actually received by the owner of any Bond. If such notice has been given, this Bond will cease to bear interest on the date fixed for redemption, provided that funds sufficient to pay all Bonds called for redemption are on deposit with the Bond Registrar on such date, and this Bond shall no longer be deemed outstanding. In addition, the redemption notice shall be mailed within the same period, postage prepaid, to Moody's Investors Service, Inc., and Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc., at their offices in New York, New York, or their successors, to Lehman Brothers Inc.at its office in New York, New York, or its successor, or its successor, and to such other persons and with such additional information as the Director of Finance shall determine, but such mailings shall not be a condition precedent to the redemption of such Bonds. Notwithstanding the foregoing, for so long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, notice of redemption shall be given in accordance with the Letter of Representations.

The City has further reserved the right and option to purchase any or all of the Bonds in the open market at any time at a price acceptable to the City plus accrued interest to the date of such purchase. Bonds so purchased shall be retired and canceled.

Reference is made to the Bond Legislation for other covenants and declarations of the City and other terms and conditions upon which this Bond has been issued, which terms and conditions, including, but not limited to, terms pertaining to defeasance, are made a part hereof by this reference. Reference also is made to the Bond Legislation for the definitions of the capitalized terms used and not otherwise defined herein. The City irrevocably and unconditionally covenants that it will keep and perform all of the covenants of this Bond and of the Bond Legislation.

This Bond shall not be valid or become obligatory for any purpose until the Certificate of Authentication hereon has been signed by the Bond Registrar.

The principal of and premium, if any, and interest on this Bond shall be paid only to the Registered Owner as of the Record Date set forth above and to no other person or entity, and this Bond may not be assigned except on the Bond Register.

In the manner and subject to the limitations set forth in the Bond Legislation, this Bond may be transferred by the Registered Owner or by such Owner's authorized agent at the Bond Registrar on completion of the assignment form appearing hereon and surrender and cancellation of this Bond. Upon such transfer, a new Bond (or Bonds, at the option of the new Registered Owner) of an equal aggregate principal amount and of the same maturity and interest rate in any authorized denomination will be issued to the new Registered Owner, without charge, in exchange therefor. This Bond and other Bonds may be surrendered to the Bond Registrar and exchanged, without charge, for an equal aggregate principal amount of Bonds of the same maturity and interest rate in any authorized denomination. The Bond Registrar shall not be obligated to transfer or exchange any Bond during the period between the record date and the next succeeding principal or interest payment or redemption date.

The City and the Bond Registrar may deem and treat the Registered Owner of this Bond as its absolute owner for the purpose of receiving payment of principal, premium, if any, and interest and for all other purposes, and neither the City nor the Bond Registrar shall be affected by any notice to the contrary other than proper notice of assignment. As used herein, "Registered Owner" means the person or entity named as Registered Owner of this Bond on the front hereof and on the Bond Register.

It is certified and declared that all acts, conditions and things required to be done precedent to and in the issuance of this Bond have been done, have happened and have been performed as required by law.

IN WITNESS WHEREOF, the City has caused this Bond to be executed on behalf of the City by the facsimile signatures of its Mayor and Director of Finance and a facsimile reproduction of the seal of the City to be printed hereon, this 20th day of August, 2003.

THE CITY OF SEATTLE, WASHINGTON

Date of Authentication: ____________________

CERTIFICATE OF AUTHENTICATION

This Bond is one of the fully registered The City of Seattle, Washington, Municipal Light and Power Improvement and Refunding Revenue Bonds, 2003, described in the Bond Legislation.

WASHINGTON STATE FISCAL AGENCY

Bond Registrar

By:__________________________________

ASSIGNMENT

For value received, the undersigned Registered Owner does sell, assign and transfer unto:________________________________________________________________ _________

(Name, address and social security or other identifying number of assignee)

the within-mentioned Bond and irrevocably constitutes and appoints:______________________

to transfer the same on the Bond Register with full power of substitution in the premises.

DATED:________________________

Registered Owner

(NOTE: The signature above must correspond with the name of the Registered Owner as it appears on the front of this Bond in every particular, without alteration or enlargement or any change whatsoever.)

Signature Guaranteed:

(NOTE: Signature must be guaranteed

pursuant to law.)

EXHIBIT B

Notice of Bond Sale

EXHIBIT C

Printed Version of Purchaser's Electronic Bid for the Bond

EXHIBIT D

Refunding Trust Agreement

S. Sakamoto

2003 City Light Resolution

July 29, 2003

Version 1

11 -

A-6

OFFICIAL NOTICE OF BOND SALE

$256,815,000*

THE CITY OF SEATTLE, WASHINGTON

MUNICIPAL LIGHT AND POWER IMPROVEMENT AND REFUNDING REVENUE BONDS, 2003

Sealed and electronic bids (as described below) for purchase of The City of Seattle Municipal Light and Power Improvement and Refunding Revenue Bonds, 2003 (the "Bonds"), will be received by The City of Seattle, Washington (the "City"), at the office of the Director of Finance, 600 Fourth Avenue, Seattle, Washington, and, in the case of electronic bids, via Bidcomp/Parity's electronic bidding service ("Parity"), in the manner described below, until

8:00A.M., PACIFIC DAYLIGHT TIME, ON JULY 29, 2003

or such other day or time and under such other terms and conditions as may be established by the Director of Finance and communicated by wire service not less than 24 hours prior to the time bids are to be received. All proper bids received with respect to the Bonds will be considered and acted on by the City Council by July 30, 2003.

Bids must be submitted either:

(i) in a sealed envelope to the Director of Finance, as described herein, or

(ii) electronically via Parity in accordance with this notice. For further information about Parity, potential bidders may contact Bidcomp/Parity at 212-404-8102.

No bid will be received after the time for receiving bids specified above.

DESCRIPTION OF THE BONDS

Bond Details

The Bonds will be dated the date of their initial delivery. Interest on the Bonds will be paid semiannually on each May 1 and November 1, beginning November 1, 2003.

Registration and Book-Entry Only System

The Bonds are issuable only as fully registered bonds and when issued will be registered in the name of Cede & Co. as registered owner and nominee for The Depository Trust Company ("DTC"), New York, New York. DTC will act as initial securities depository for the Bonds. Purchases of the Bonds will be made in book-entry form, in the denomination of $5,000 or any integral multiple thereof. Purchasers will not receive certificates representing their interest in the Bonds purchased. The principal of and interest on the Bonds are payable by the City's Bond Registrar, currently the fiscal agent of the State of Washington (currently The Bank of New York in New York, New York) to DTC, which is obligated in turn to remit such payments to its participants for subsequent disbursement to beneficial owners of the Bonds.

Election of Maturities

The successful bidder shall designate whether some or all of the principal amounts of the Bonds set forth below shall be retired on November 1 of each respective year as serial bonds maturing in such year or as amortization installments of Term Bonds maturing in the years specified by the bidder.

Term Bonds, if any, must consist of the total principal payments of two or more consecutive years and mature in the latest of those years. Bonds subject to optional redemption by the City may not be grouped with Bonds not subject to optional redemption by the City when creating any single maturity of Term Bonds.

Serial Maturities Serial Maturities

or Amortization or Amortization

Years Installments* Years Installments*

2004 $ 11,660,000 2017 $ 10,405,000

2005 26,060,000 2018 10,930,000

2006 24,080,000 2019 5,955,000

2007 24,745,000 2020 6,250,000

2008 12,355,000 2021 6,565,000

2009 12,405,000 2022 6,895,000

2010 12,910,000 2023 7,235,000

2011 4,145,000 2024 7,600,000

2012 4,315,000 2025 7,920,000

2013 4,485,000 2026 8,260,000

2014 4,665,000 2027 8,620,000

2015 9,445,000 2028 8,995,000

2016 9,915,000

Redemption

The Bonds maturing on or after November 1, 2014, are subject to redemption prior to maturity at the option of the City on and after November 1, 2013, in whole or in part at any time (maturities to be selected by the City and within a maturity randomly in such manner as the Bond Registrar may determine and, so long as the Bonds are in book-entry form, in accordance with the procedures established by the securities depository) at the price of par plus accrued interest to the date of redemption.

Security

The Bonds are special limited obligations of the City. The principal of and interest on the Bonds are payable out of the Seattle Municipal Light Revenue Parity Bond Fund (the "Parity Bond Fund"). The City has agreed to pay into the Parity Bond Fund on or prior to the respective dates on which principal of and premium, if any, and interest on Parity Bonds will be payable, certain amounts from the Gross Revenues of the Light System sufficient to pay such principal and interest as the same become due. The Gross Revenues of the Light System are pledged to make such payments, which pledge constitutes a lien and charge upon such revenues prior and superior to all other charges whatsoever except reasonable charges for maintenance and operation of the Light System. Gross Revenues include the proceeds received by the City directly or indirectly from the sale, lease or other disposition of any of the properties, rights or facilities of the Light System but do not include Bond proceeds and certain insurance proceeds. Maintenance and operation charges do not include any taxes paid to the City, but do include the unconditional obligation to make payments under certain power purchase contracts. The lien of the Parity Bonds upon the Gross Revenues is prior and superior to the lien upon Gross Revenues of the Municipal Light and Power Revenue Anticipation Notes, 2002, and the Subordinate Lien Bonds, unless and until such Subordinate Lien Bonds are converted to fixed rate Parity Bonds in compliance with the requirements for the issuance of additional Parity Bonds.

The Bonds do not constitute general obligations of the City, the State of Washington (the "State") or any political subdivision of the State, or a charge upon any general fund or upon any money or other property of the City, the State or any political subdivision of the State not specifically pledged thereto by the Bond Ordinance. Neither the full faith and credit nor the taxing power of the City, nor any revenues of the City derived from sources other than the Light System, are pledged to the payment of the Bonds.

BIDDING INFORMATION AND AWARD

Bidders are invited to submit bids for the purchase of the Bonds fixing the interest rate or rates that the Bonds will bear. Interest rates bid shall be in multiples of 1/8 or 1/20 of one percent, or both. No more than one rate of interest may be fixed for any one maturity. No bid will be considered for the Bonds that is less than an amount equal to 100 percent of the par value of the Bonds nor more than an amount equal to 105 percent of the par value of the Bonds, or for less than the entire offering of the Bonds. All bids shall be without condition. For the purpose of comparison only and not as a part of the bid, each bid shall state the true interest cost of the bid.

The City strongly encourages the inclusion of Women and Minority Business Enterprise firms in bidding syndicates. Bidders are requested, but not required, to fax a list of syndicate members to Michael van Dyck, City of Seattle, Department of Finance, (206) 6848286, prior to July 29, 2003.

Modification of Par Amount Before Bid Opening

Bidders are advised that the City may modify the total par amount of the Bonds and/or the amounts of individual maturities prior to the bidding if the City decides to alter or not to proceed with the Refunding Plan (as described in the Preliminary Official Statement under "Plan of Finance-Refunding Plan").

Bidding Process

Sealed Bids. All sealed bids shall be made only on the Official Bid Form furnished by the City or on photocopies or facsimiles of such form, and shall be sealed. Bids must not be submitted by fax directly to the City, but may be sent via fax to an agent for the bidder, for delivery by that agent to the bid site in a sealed envelope.

Electronic Bids. If a bidder submits an electronic bid for the Bonds, such bidder thereby agrees to the following terms and conditions:

(i) If any provision in this Official Notice of Bond Sale conflicts with information or terms provided to or required of the bidder by Parity, this Official Notice of Bond Sale, including any amendments issued by wire service, shall control. Information provided by Parity to bidders shall form no part of any bid or of any contract between the successful bidder and the City unless that information is included in this Official Notice of Bond Sale or in the Official Bid Form provided by the City.

(ii) The bidder is solely responsible for making necessary arrangements to access Parity for purposes of submitting a timely bid that is in compliance with the requirements of this Official Notice of Bond Sale, including any amendments issued by the City through a wire service, and the Official Bid Form.

(iii) The City shall have no duty or obligation to provide or assure access to Parity, and shall not be responsible for the proper operation of, or have any liability for, any delays or interruptions of, or any damages caused by, use or attempted use of Parity.

(iv) Parity is not the City's agent, but rather is an acceptable bidder's agent for the bidder's convenience in submitting its bid to the City.

(v) The City will regard the electronic transmission of each bid it receives through Parity (including information regarding the purchase price of the Bonds and interest rates for any maturity of the Bonds) as though the information were submitted on the Official Bid Form, including any amendments issued by the City through a wire service, and executed on behalf of the named bidder by a duly authorized signatory.

(vi) If an electronic bid is accepted by the City, this Official Notice of Bond Sale (including any amendments issued by the City through a wire service), the Official Bid Form and the information regarding the purchase price of the Bonds, any Term Bonds specified, and the interest rates for any maturity of the Bonds that is submitted electronically to the City through Parity shall form a contract between the bidder and the City, and the bidder shall be bound by the terms of such contract whether or not the bidder in fact attempted or intended to submit a bid on those terms.

Good Faith Deposit

All bids must be backed by a good faith deposit in the amount of $2,500,000. The good faith deposit shall be in the form of either a financial surety bond or a certified or bank cashier's check, each payable to the order of The City of Seattle and received by the City not later than the time bids are to be received. Each such check will be returned promptly if the bid is not accepted. The City reserves the right to invest the deposit of the successful bidder pending payment for the Bonds, and the successful bidder will not receive credit for any earnings on such investment. The deposit will be applied to the purchase price of the Bonds.

If a financial surety bond is used, it must be from a surety company preapproved by the City. The City has preapproved Financial Security Assurance Inc. Acknowledgement that such financial surety bond has been issued must be received by the City's Financial Advisor prior to the bid opening and must identify each bidder whose deposit is guaranteed. If the Bonds are awarded to a bidder using a financial surety bond, that bidder shall submit its good faith deposit to the City in the form of a certified or bank cashier's check or by wire transfer, no later than 2:00 p.m., Pacific Daylight Time, on the next business day following the award. If the deposit in such form is not received by that time, the City may draw on the financial surety bond to satisfy the deposit requirement. If the financial surety bond is called upon and the City has not received the good faith deposit in such form from the surety company that provided the bond within two business days following the bid award, the City may cancel the bid award and have no further obligation to that bidder. The City may, in addition and without limitation, take such steps as it deems appropriate against the provider of the financial surety bond or the successful bidder or both to obtain the amount of the good faith deposit and, in the event the City cancels the bid award, retain the recovered amount as reasonable liquidated damages and not as a penalty.

The good faith deposit of the successful bidder shall be retained by the City as security for the performance of the successful bid and shall be applied to the purchase price of the Bonds upon the delivery of the Bonds to the successful bidder. Pending delivery of the Bonds, the good faith deposit may be invested for the sole benefit of the City. If the Bonds are ready for delivery and the successful bidder fails or neglects to complete the purchase of such Bonds within 30 days following the acceptance of its bid, the good faith deposit shall be retained by the City as reasonable liquidated damages and not as a penalty.

Award

The Bonds will be sold to the bidder making a bid conforming to the terms of the offering and which, on the basis of the City's determination of the lowest true interest cost, is the best bid. The true interest cost to the City will be the rate that, when used to discount to the date of the Bonds all future payments of principal and interest (using semiannual compounding and a 30/360-day basis), produces an amount equal to the bid amount. If there are two or more equal bids and those bids are the best bids received, the Director of Finance will determine by lot which bid will be accepted, which bid will be presented to the City Council.

The City reserves the right to reject any or all bids submitted and to waive any formality or irregularity in the bid or bidding process. If all bids are rejected, then the Bonds may be sold in the manner provided by law. Any bid presented after the time specified for the receipt of bids will not be accepted, and any bid not backed by the required good faith deposit at the time of opening that bid will not be read or considered. The successful bid shall remain in effect until 5:00 p.m., Pacific Daylight Time, on the date following such bid opening.

Adjustment of Principal Amounts and Bid Price After Bid Opening

The City has reserved the right to increase or decrease the preliminary principal amount of the Bonds by an amount not to exceed ten percent (10%) following the opening of the bids. The City also reserves the right to increase or decrease the preliminary principal amount of any maturity shown on the Official Bid Form by an amount not to exceed fifteen percent (15%) of the preliminary principal amount of that maturity. The price bid by the successful bidder will be adjusted by the City on a proportionate basis to reflect an increase or decrease in the principal amount and maturity schedule within 24 hours of the bid opening. In the event that the City elects to alter the bond size after the bid pursuant to the Official Notice of Sale, the underwriter's discount, expressed in dollars per thousand, will be held constant. The City will not be responsible in the event and to the extent that any adjustment affects (i) the net compensation to be realized by the successful bidder, or (ii) the true interest cost of the winning bid or its ranking relative to other bids.

Issue Price Information

Upon award of the Bonds, the successful bidder shall advise the City and Bond Counsel of the initial reoffering prices to the public of each maturity of the Bonds (the "Initial Reoffering Prices"). Simultaneously with or before delivery of the Bonds, the successful bidder shall furnish to the City and Bond Counsel a certificate in form and substance acceptable to Bond Counsel:

(i) confirming the Initial Reoffering Prices,

(ii) certifying that a bona fide offering of the Bonds has been made to the public (excluding bond houses, brokers and other intermediaries),

(iii) stating the prices at which a substantial amount of each maturity of the Bonds was sold to the public (excluding bond houses, brokers and other intermediaries),

(iv) stating the price at which any Bonds that remain unsold at the date of closing would have been sold on such date,

(v) stating which maturities, if any, are amortization installments of Term Bonds maturing in the years specified by the bidder, and

(vi) stating the offering price of each Bond sold to institutional or other investors at discount.

Insurance

Bids for the Bonds shall not be conditioned upon obtaining insurance or any other credit enhancement. If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor, any purchase of such insurance or commitment therefor shall be at the sole option and expense of the bidder and any increased costs of issuance of the Bonds resulting by reason of such insurance, unless otherwise paid, shall be paid by such bidder, but shall not, in any event, be paid by the City. Any failure of the Bonds to be so insured or of any such policy of insurance to be issued shall not in any way relieve the purchaser of its contractual obligations arising from the City's acceptance of such purchaser's bid for the Bonds.

Modifications

The terms and conditions of this Official Notice of Bond Sale are subject to modification by the Director of Finance. Any such modification will be communicated by wire service not less than 24 hours prior to the time the bids are to be received.

DELIVERY

The City will deliver the Bonds (consisting of one certificate for each maturity) to DTC in New York, New York, or to the Bond Registrar on behalf of DTC by Fast Automated Securities Transfer, on or prior to the date of closing. Closing shall occur within 45 days after the sale date. Settlement shall be in immediately available federal funds in Seattle, Washington, on the date of delivery.

If, prior to the delivery of the Bonds, the interest receivable by the owners of the Bonds becomes includable in gross income for federal income tax purposes, or becomes subject to federal income tax other than as described in the Official Statement for the Bonds, the successful bidder, at its option, may be relieved of its obligation to purchase the Bonds and in that case the good faith deposit accompanying its bid will be returned without interest.

Legal Opinion

The approving legal opinion of Foster Pepper & Shefelman PLLC, Seattle, Washington, Bond Counsel will be provided to the purchaser at the time of the delivery of the Bonds. A no-litigation certificate will be included in the closing papers of the Bonds.

CUSIP Numbers

It is anticipated that CUSIP identification numbers will appear on the Bonds if requested by the purchaser, but neither the failure to insert such numbers on the Bonds nor any error with respect thereto shall constitute cause for a failure or refusal by the purchaser thereof to accept delivery of and pay for the Bonds in accordance with the terms of this Official Notice of Bond Sale. The purchaser is responsible for obtaining CUSIP numbers for the Bonds, and the charge of the CUSIP Bureau shall be paid by the purchaser.

CONTINUING DISCLOSURE UNDERTAKING

In order to assist bidders in complying with paragraph (b)(5) of SEC Rule 15c2-12, the City will undertake to provide certain annual financial information and notices of the occurrence of certain events, if material. A description of this undertaking is set forth in the Preliminary Official Statement and also will be set forth in the final Official Statement.

OFFICIAL STATEMENT AND OTHER INFORMATION

At closing, the City will furnish a certificate of an official or officials of the City, relying on the opinions of Bond Counsel where appropriate, stating that, to the best knowledge of such official(s) as of the date of the Official Statement and as of the date of delivery of the Bonds,

(i) the information (including financial information) regarding the City and the Light System contained in the Official Statement was and is true and correct in all material respects and did not and does not contain any untrue statement of a material fact or omit any statement or information which is necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (however, the City will make no representation regarding Bond Counsel's form of opinion or the information provided by DTC, The Bank of New York or any entity providing bond insurance, reserve insurance or other credit facility); and

(ii) the descriptions and statements, including financial data, of or pertaining to other bodies and their activities contained in the Official Statement have been obtained from sources that the City believes to be reliable, and the City has no reason to believe that they are untrue in any material respect.

The Preliminary Official Statement is in a form that has been deemed final by the City for the purpose of paragraph (b)(1) of SEC Rule 15c2-12, but is subject to revision, amendment and completion in a final Official Statement, which the City will deliver, at the City's expense, to the purchaser through its designated representative not later than seven business days after the City's acceptance of the purchaser's bid. The City will provide no more than 250 copies of the final Official Statement without charge. Additional copies will be provided at the purchaser's expense.

By submitting the successful bid, the purchaser's designated senior representative agrees to file the final Official Statement or cause it to be filed with the Municipal Securities Rulemaking Board within one business day following its receipt from the City.

The Preliminary Official Statement (with the Official Notice of Bond Sale and the Official Bid Form) and further information regarding the details of the Bonds may be obtained upon request to the City's Debt Manager, 700 Fifth Avenue, Suite 4200, Seattle, Washington, 98104 (telephone: (206) 684-8347) or to Seattle-Northwest Securities Corporation, 1420 Fifth Avenue, Suite 4300, Seattle, Washington, 98101 (telephone: (206) 628-2882).

DATED at Seattle, Washington, this 29th day of July, 2003.

/s/

Dwight D. Dively

Director of Finance

OFFICIAL BID FORM

$256,815,000*

THE CITY OF SEATTLE, WASHINGTON

MUNICIPAL LIGHT AND POWER IMPROVEMENT AND REFUNDING REVENUE BONDS, 2003

Mr. Dwight D. Dively

Director of Finance

The City of Seattle

Seattle, Washington

Dear Sir:

For the above-referenced bonds (the "Bonds") described in the Official Notice of Bond Sale, which is hereby made a part of this bid, and for all but not less than all of the Bonds, with interest rates per annum on the Bonds maturing on November 1 in the years and amounts set forth in this Official Bid Form as indicated below:

Serial Maturities Serial Maturities

Years or Amortization Years or Amortization

(November 1) Amounts Rates (November 1) Amounts Rates

2004 $ 11,660,000 2017 $ 10,405,000

2005 26,060,000 2018 10,930,000

2006 24,080,000 2019 5,955,000

2007 24,745,000 2020 6,250,000

2008 12,355,000 2021 6,565,000

2009 12,405,000 2022 6,895,000

2010 12,910,000 2023 7,235,000

2011 4,145,000 2024 7,600,000

2012 4,315,000 2025 7,920,000

2013 4,485,000 2026 8,260,000

2014 4,665,000 2027 8,620,000

2015 9,445,000 2028 8,995,000

2016 9,915,000

we offer to pay the sum of $_____________________________________________

(which is not less than $256,815,000* nor more than $269,655,750*).

In accordance with the terms of the Official Notice of Bond Sale, a good faith deposit in the amount of $2,500,000 has been provided in the form of either a certified or bank cashier's check or a financial surety bond, each payable to the order of The City of Seattle. The good faith deposit is to be applied in accordance with the terms of the Official Notice of Bond Sale if the Bonds are awarded to us. If the Bonds are not awarded to us and a check has been submitted, such check is to be returned to us. If the Bonds are not awarded to us and we provided the good faith deposit in the form of a surety bond, neither we nor the City have any further obligations with respect to the surety bond.

This bid is submitted in accordance with and subject to all provisions contained in the Official Notice of Bond Sale, including any amendments issued by the City through the wire service and, if applicable, the terms and conditions contained therein under "Bidding Information and Award-Bidding Process-Electronic Bids," which is incorporated by reference herein and made a part of this bid.

If our bid to purchase the Bonds is successful, the person at the designated senior representative's office whom the City or its representatives should contact regarding closing is _______________________________ at the following telephone number: _______________________________.

Very truly yours,

Designated Representative

Representing:

(Bidders are requested, but not required, to furnish separately by fax to (206) 684-8286 a list of any syndicate members.)

* Preliminary, subject to change.

* Preliminary, subject to change.

* Preliminary, subject to change.

B-8

EXHIBIT B

1

B-1

REFUNDING TRUST AGREEMENT

(Municipal Light and Power Improvement and Refunding Revenue Bonds, 2003)

THIS REFUNDING TRUST AGREEMENT is made and entered into as of the 20th day of August, 2003, by and between THE CITY OF SEATTLE, WASHINGTON (the "City"), a municipal corporation, and U.S. BANK NATIONAL ASSOCIATION of Seattle, Washington (the Refunding Trustee"). All capitalized terms not defined herein have the respective meanings given in Ordinance 121198 and Resolution 30618 of the City (collectively, the "Bond Legislation"). All schedules and exhibits attached hereto are incorporated herein by reference.

WHEREAS, pursuant to the Bond Legislation, the City has determined that the Refunded Bonds identified in Schedule 1 be refunded out of a portion of the proceeds of the sale of its Municipal Light and Power Improvement and Refunding Revenue Bonds, 2003 (the "Bonds"), for the purpose of realizing a debt service savings for the City; and

WHEREAS, the current refunding of the Refunded Bonds will be accomplished pursuant to this Refunding Trust Agreement and the Bond Legislation, which documents provide for and, for the purpose of Sections 103, 148, and 149(d) of the Internal Revenue Code of 1986, as amended (the "Code"), are to be considered as the Refunding Plan, by:

(a) The delivery by the City to the Refunding Trustee on the date the Bonds are delivered to the original purchaser thereof and the City receives full payment therefor (the "Date of Closing") of proceeds of the Bonds allocated to the Refunding Plan;

(b) The purchase by the Refunding Trustee on the Date of Closing of the Government Obligations listed on Exhibit A (the "Acquired Obligations"), which Acquired Obligations satisfy the requirements of the Verification described in paragraph (c);

(c) The delivery to the City and the Refunding Trustee of a verification (the "Verification") by a nationally recognized independent certified public accounting firm verifying the mathematical accuracy of the computations (which computations shall be attached to that report) showing that the Acquired Obligations to be purchased by the Refunding Trustee pursuant to the Bond Legislation and this Refunding Trust Agreement, together with the specified beginning cash balance, if any, and the maturing principal of and interest on such Acquired Obligations, will provide sufficient money (assuming that all principal of and interest on the Acquired Obligations are paid on the due dates thereof and assuming no reinvestment of such maturing principal and interest) to pay interest on the Refunded Bonds up to and including November 1, 2003, and call, pay and redeem on November 1, 2003, all of the outstanding Refunded Bonds at the redemption prices set forth in Schedule 1 hereto;

(d) The receipt by the Refunding Trustee of the maturing installments of principal of and interest on the Acquired Obligations; and

(e) The Refunding Trustee's payment to the fiscal agencies of the State of Washington of money sufficient to make the payments on the Refunded Bonds set forth herein;

and

WHEREAS, upon the issuance of the Bonds to carry out the Refunding Plan under the authority of chapter 39.53 RCW and other laws of the State of Washington (collectively, the "Refunding Bond Act"), the principal amount of the Refunded Bonds no longer shall be considered outstanding pursuant to the defeasance provisions of Ordinance 116706 and Resolution 28751 (collectively, the "Refunded Bond Legislation") that authorized the issuance of each issue of the Refunded Bonds; and

WHEREAS, the City Council, pursuant to the Bond Legislation, has duly and validly authorized the execution and delivery of this Refunding Trust Agreement, the delivery of a portion of the proceeds of the Bonds to the Refunding Trustee, the purchase by the Refunding Trustee of the Acquired Obligations and the carrying out of the Refunding Plan;

NOW, THEREFORE, in consideration of the mutual covenants hereinafter contained and for the benefit of the City, the parties hereto agree as follows:

Section 1 . Establishment of Refunding Trust Account; Delivery of Money to Refunding Trustee. The Refunding Trustee is directed to establish an account known as The City of Seattle Municipal Light and Power Refunding Trust Account, 2003 (the "Refunding Trust Account"). On the Date of Closing, the City shall cause to be delivered to the Refunding Trustee $123,967,452.00 of the principal proceeds of the Bonds for deposit into the Refunding Trust Account.

Section 2 . Investment and Expenditure of Money. On the Date of Closing, the Refunding Trustee shall apply $123,967,451.00 to pay on behalf of the City the purchase and/or subscription prices of the Acquired Obligations, from the sources, in the principal amounts, with the dates of maturity and bearing the interest rates or yields set forth in Exhibit A, and $1.00 to establish a beginning cash balance. Upon receipt thereof, the Refunding Trustee shall deliver to the City copies of the documents evidencing the purchase of and payment for the Acquired Obligations. Investments in mutual funds and unit investment trusts are prohibited.

Section 3 . Sufficiency of Escrow. Based upon the Verification, the City represents that the Acquired Obligations, the maturing principal thereof and the interest thereon, if paid when due, together with the beginning cash balance, shall be sufficient to make when due the payment required by the Refunding Plan. Such payment is sometimes referred to hereinafter as the "payment described in Section 3." The schedules of the sources, amounts, maturities, and interest rates or yields of the Acquired Obligations and of the Refunded Bonds that will fulfill the foregoing requirements are set forth in the Verification.

Section 4 . Collection of Proceeds of Acquired Obligations and Application of Such Proceeds and Money. The Refunding Trustee shall present for payment and shall collect and receive on the due dates thereof the maturing installments of the principal of and the interest on the Acquired Obligations. The Refunding Trustee shall make payment, but only in the amounts received pursuant to this section, in a timely manner to the Bond Registrar of the amounts to be paid on the Refunded Bonds as shown in the Verification. That payment shall be made by check, wire transfer, or such other method of transfer of funds as shall be agreed upon by the Refunding Trustee and the Bond Registrar.

Section 5 . All Obligations and Money and Proceeds Thereof Held in Trust. The Refunding Trustee irrevocably agrees to hold the Acquired Obligations, the principal thereof and interest thereon, and any other money it may receive pursuant to this Refunding Trust Agreement, in trust and separate at all times from all other funds and investments held by the Refunding Trustee, solely for the purpose of making the payment described in Section 3. The City irrevocably conveys, transfers, and assigns to the Refunding Trustee the Acquired Obligations, the principal thereof and the interest thereon, and any other money and investments deposited with the Refunding Trustee pursuant to this Refunding Trust Agreement, for the purpose of making such payments. The Refunding Trustee shall not sell, transfer, assign, or hypothecate any Acquired Obligations or reinvestments, except pursuant to Sections 10 and 12 hereof.

Section 6 . Notices of Defeasance and Redemption. The Refunding Trustee agrees to give a notice of defeasance and a notice of redemption of the Refunded Bonds pursuant to the terms of the Refunded Bonds and the Refunded Bond Legislation, in substantially the form attached hereto and as described in Exhibits B and C, respectively, to the Bond Registrar for distribution as described therein. The notice of defeasance shall be given immediately following the execution of this Refunding Trust Agreement, and the notice of redemption shall be given in accordance with the Refunded Bonds and the Refunded Bond Legislation. The cost of giving the notices shall be paid by the City.

Section 7 . Notice of Insufficiency. If the maturing principal of and interest on the Acquired Obligations and other money held by the Refunding Trustee pursuant to this Refunding Trust Agreement shall be insufficient or shall be projected to become insufficient at any time in the future to make the payment described in Section 3, the Refunding Trustee shall give the City prompt notice of such insufficiency or projected insufficiency.

Section 8 . Amendments to Refunding Trust Agreement. The Refunding Trustee and the City recognize that the owners of the Refunded Bonds and the Bonds from time to time have a beneficial interest in the Acquired Obligations and money to be held by the Refunding Trustee as herein provided. Therefore, this Refunding Trust Agreement is irrevocable and shall not be subject to amendment except for the purpose of clarifying any ambiguity herein, increasing the protection of the rights of the owners of the Refunded Bonds or the Bonds, or preserving the exclusion of the interest on the Refunded Bonds and the Bonds from gross income for federal income tax purposes, and only if such amendment is accompanied by an opinion addressed to the City and the Refunding Trustee from Bond Counsel to the effect that such change is necessary for one of the above reasons and does not detrimentally affect the owners of the outstanding Refunded Bonds and the Bonds or that it strengthens the protection of the owners of the Refunded Bonds and the Bonds and does not detrimentally affect the owners of the Refunded Bonds and the Bonds. If such amendment affects the amount of money and investments in the escrow account or the application thereof, prior to the amendment's taking effect there also shall be a verification by a nationally recognized independent certified public accounting firm satisfactory to the Refunding Trustee to the effect that after such amendment the Acquired Obligations and other money in the escrow account will be sufficient to make the payment described in Section 3. A copy of such verification shall be delivered to the Refunding Trustee.

Section 9 . Limitation of Liability of Refunding Trustee. None of the provisions contained in this Refunding Trust Agreement shall require the Refunding Trustee to use or advance its own funds in the performance of any of its duties or the exercise of any of its rights or powers hereunder. The Refunding Trustee shall be under no liability for the payment of interest on any funds or other property received by it hereunder except to the extent the Refunding Trustee is required by the express terms of this Refunding Trust Agreement to invest such funds.

The Refunding Trustee's liabilities and obligations in connection with this Refunding Trust Agreement are confined to those specifically described herein. The Refunding Trustee is authorized and directed to comply with the provisions of this Refunding Trust Agreement and is relieved from all liability for so doing notwithstanding any demand or notice to the contrary by any party hereto. The Refunding Trustee shall not be responsible or liable for the sufficiency, correctness, genuineness, or validity of the Acquired Obligations deposited with it; the performance or compliance by any party other than the Refunding Trustee with the terms or conditions of any such instruments; or any loss which may occur by reason of forgeries, false representations, or the exercise of the Refunding Trustee's discretion in any particular manner unless such exercise is negligent or constitutes willful misconduct.

If any controversy arises between the City and any third person, the Refunding Trustee shall not be required to determine the same or to take any action in the premises, but it may institute, in its discretion, an interpleader or other proceedings in connection therewith as it may deem proper, and in following either course, it shall not be liable.

Section 10 . City Deposit of Additional Money. The City agrees that it will deposit with the Refunding Trustee in time to make the then current scheduled debt service payment the additional money specified in the Refunding Trustee's notice of insufficiency given pursuant to Section 6 hereof.

Section 11 . Remittance of Funds When Refunded Bonds Paid in Full. At such time as the Refunding Trustee has received the representation of the City that the payment described in Section 3 has been made and the confirmation of such representation by the Bond Registrar, together with such other evidence of such payment as shall be satisfactory to the City and the Refunding Trustee, the Refunding Trustee shall deliver forthwith or remit to the City any remaining Acquired Obligations and money held pursuant to this Refunding Trust Agreement.

Section 12 . Compensation of Refunding Trustee. The payment arrangement heretofore made between the Refunding Trustee and the City on compensation and expenses of the Refunding Trustee for services rendered by it pursuant to the provisions of this Refunding Trust Agreement is satisfactory to it and to the City, and no further payment to the Refunding Trustee shall be required for such services. Such payment is intended as compensation for and payment of expenses incurred in connection with the ordinary services as contemplated by this Refunding Trust Agreement, and if the Refunding Trustee renders any service hereunder not provided for in this Refunding Trust Agreement, or the Refunding Trustee is made a party to or intervenes in any litigation pertaining to this Refunding Trust Agreement or reasonably institutes interpleader proceedings relative hereto, the Refunding Trustee shall be compensated reasonably by the City for such extraordinary services and reimbursed for all fees, costs, liability, and expenses (including reasonable attorneys' fees) necessarily occasioned thereby. The Refunding Trustee shall not have a lien against or otherwise be compensated for its services and expenses from the Acquired Obligations and money held pursuant to this Refunding Trust Agreement to make the payment described in Section 3.

Section 13 . Successor Refunding Trustee. The obligations assumed by the Refunding Trustee pursuant to this Refunding Trust Agreement may be transferred by the Refunding Trustee to a successor if (a) the Refunding Trustee has presented evidence satisfactory to the City and to Bond Counsel that the successor trustee meets the requirements of RCW 39.53.070, as now in effect or hereafter amended; (b) the City approves the appointment of the successor trustee; (c) the successor trustee has assumed all of the obligations of the Refunding Trustee under this Refunding Trust Agreement and has been compensated; and (d) all of the Acquired Obligations and money then held by the Refunding Trustee pursuant to this Refunding Trust Agreement have been duly transferred to such successor trustee.

Notwithstanding anything to the contrary contained in this Agreement, any company into which the Refunding Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion, or consolidation to which the Refunding Trustee is a party, or any company to which the Refunding Trustee may sell or transfer all or substantially all of its corporate trust business shall be the successor to the Refunding Trustee without execution or filing of any paper or further act, if such company is eligible to serve as Refunding Trustee under RCW 39.53.070.

Section 14 . Miscellaneous. This Refunding Trust Agreement is governed by Washington law without regard to the conflict of laws provisions thereof and may not be modified except by a writing signed by the parties and subject to the limitations of Section 7. If any one or more of the provisions contained in this Refunding Trust Agreement shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Refunding Trust Agreement, but this Refunding Trust Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein.

Section 15 . Notice to Rating Agencies. The Refunding Trustee shall notify all national rating agencies maintaining (at the request of the City) a rating on the Refunded Bonds or the Bonds (collectively, the "Rating Agencies"), in writing upon timely receipt of notice or evidence of either of the following circumstances:

(a) Prior to their taking effect, any amendments to this Refunding Trust Agreement under Section 7, enclosing the proposed amendatory documents; and

(b) The holding (referred to in Section 13) that one or more provisions of this Refunding Trust Agreement are invalid, illegal, or unenforceable in any respect, enclosing a copy of that holding.

Such notices shall be sent to the Rating Agencies by first class mail to the addresses advised by those Rating Agencies.

Section 16 . Counterparts. This Agreement may be executed in counterparts.

IN WITNESS WHEREOF, the parties have executed and delivered this Refunding Trust Agreement pursuant to due and proper authorization, all as of the date and year first above written.

THE CITY OF SEATTLE, WASHINGTON

By

Title: Director of Finance

U.S. BANK NATIONAL ASSOCIATION, as Refunding Trustee

By

Title: Vice President

SCHEDULE 1

Refunded Bonds

Maturity Dates

Principal Amounts

Redemption Prices

(% of Par)

11/01/2004

$8,310,000

102%

05/01/2005

21,215,000

102%

11/01/2005

465,000

102%

05/01/2006

20,000,000

102%

05/01/2007

21,020,000

102%

05/01/2008

8,675,000

102%

**

**

**

11/01/2010

18,170,000

102%

**

**

**

11/01/2018

21,040,000

101%

EXHIBIT A

THE CITY OF SEATTLE, WASHINGTON

MUNICIPAL LIGHT AND POWER IMPROVEMENT AND REFUNDING REVENUE BONDS, 2003

ACQUIRED OBLIGATIONS

Type

Maturity

Date

Par

Amount

Interest

Rate

Purchase

Price

SLG/Cert

11/02/2003

$123,967,451.00

0.920%

$123,967,451.00

.

EXHIBIT B

Notice of Defeasance*

The City of Seattle, Washington

Municipal Light and Power Revenue and Refunding Bonds, 1993

NOTICE IS HEREBY GIVEN to the owners of the above-captioned bonds with respect to which, pursuant to the Refunding Trust Agreement dated as of August 20, 2003, by and between The City of Seattle, Washington (the "City"), and U.S. Bank, National Association (the "Refunding Trustee), there has been deposited into an escrow account, held by the Refunding Trustee, cash and non-callable direct obligations of the United States of America, the principal of and interest on which, when due, will provide money to pay each year, to and including the respective maturity or redemption dates of such bonds so provided for, the principal thereof and interest thereon (the "Refunded Bonds"). Such Refunded Bonds are therefore deemed to be no longer outstanding pursuant to the Bond Legislation relating to the Refunded Bonds (described below), but will be paid by application of the assets in such escrow account.

The Refunded Bonds are described as follows:

Maturity Dates

Principal Amounts

Interest Rates

Redemption Price

CUSIP Nos.

11/01/2004

$8,310,000

5.00%

102 %

05/01/2005

21,215,000

5.10

102

11/01/2005

465,000

5.20

102

05/01/2006

20,000,000

5.20

102

05/01/2007

21,020,000

5.30

102

05/01/2008

8,675,000

5.40

102

11/01/2010

18,170,000

5.45

102

11/01/2018

21,040,000

5.375

101

*This notice shall be given immediately by first class mail to each registered owner of the Refunded Bonds and to each Nationally Recognized Securities Information Repository.

50390668.01

EXHIBIT C

Notice of Redemption(

The City of Seattle, Washington

Municipal Light and Power Revenue and Refunding Bonds, 1993

NOTICE IS HEREBY GIVEN that The City of Seattle, Washington, has called for redemption on November 1, 2003, a portion of its outstanding Municipal Light and Power Revenue and Refunding Bonds, 1993, as described below (the "Refunded Bonds").

The Refunded Bonds will be redeemed at the redemption prices set forth below (expressed as a percentage of par), plus accrued interest to November 1, 2003. The redemption price of the Refunded Bonds is payable on presentation and surrender of the Refunded Bonds at the office of:

The Bank of New York

Fiscal Agency Department

Ground Floor

101 Barclay Street, 7 East

New York, NY 10286

Or

Wells Fargo Bank,

National Association

999 Third Avenue

Seattle, WA 98104

Interest on all Bonds or portions thereof which are redeemed shall cease to accrue on November 1, 2003.

The following Refunded Bonds are being redeemed:

Maturity Dates

Principal Amounts

Interest Rates

Redemption Price

CUSIP Nos.

11/01/2004

$8,310,000

5.00%

102 %

05/01/2005

21,215,000

5.10

102

11/01/2005

465,000

5.20

102

05/01/2006

20,000,000

5.20

102

05/01/2007

21,020,000

5.30

102

05/01/2008

8,675,000

5.40

102

11/01/2010

18,170,000

5.45

102

11/01/2018

21,040,000

5.375

101

By Order of The City of Seattle, Washington

The Bank of New York, as Paying Agent

Dated:

Pursuant to the Economic Growth and Tax Relief Reconciliation Act of 2001 (the "Act"), when presenting the Bonds for payment, Bondowners must also submit a completed IRS Form W-9 or an exemption certificate equivalent. Failure to provide a properly completed Form W-9 or an exemption certificate equivalent may result in 30% back up withholding on the amount of the payment under the provisions of the Act.

(This notice shall be given not less than 30 nor more than 60 days prior to November 1, 2003, by first class mail, postage prepaid, to each registered owner of the redeemed bonds. In addition, notice shall be mailed within the same period, postage prepaid, to Moody's Investors Service, Inc., and Standard & Poor's at their offices in New York, New York; Lehman Brothers Inc., Citgroup Global Markets Inc., J.P. Morgan Securities, Inc., PaineWebber Incorporated and Artemis Capital Group, Inc. (collectively, the "Underwriters"), at their respective principal offices in New York, New York; and The Depository Trust Company of New York, New York.

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50392526.01

50392526.01

50392526.01

50392526.01