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88-011CITY OF ANAHEIM RESOLUTION NO. 88R-11 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM, CALIFORNIA, AUTHORIZING THE ISSUANCE OF $5,000,000 WATER REVENUE BONDS, 1988 SERIES, OF THE CITY AND PROVIDING THE '£~a~{S AND CONDITIONS OF SUCH BONDS ADOPTED: JANUARY 12, 1988 Covenant Covenant Covenant Covenant Covenant Covenant Covenant Covenant Section 22. Section 23. Section 24. Section 25. Section 26. Section 27. Section 28. Section 29. Section 30. Section 31. Section 32. Exhibit A TABLE OF CONTENTS, Continued Paqe 6. Insurance ............ 22 7. Records and Accounts ....... 22 8. Collection of Charges ...... 23 9. Rates and Charges ........ 23 10. No Priority for Additional Indebtedness. .24 11. Limits on Parity Bonds ..... ' 24 12. Tax Covenants Relating to the Internal Revenue Code of 1986 ............... 25 13. Water Revenue Anticipation Notes .............. 26 LOST, STOLEN, DESTROYED, OR MUTILATED 1988 BONDS ........... 26 CANCELLATION OF 1988 BONDS ........ 26 CONSENT OF 1988 BONDOWNERS. .26 1988 BOND FORM .............. 30 TEMPORARY 1988 BONDS ........... 37 RESOLUTION CONSTITUTES CONTRACT; CERTAIN AMENDMENTS, ETC ......... 37 DEFEASANCE ................ 39 FUTURE CONTRACTS ............. 39 SEVERABI LITY ............... 39 SUBSTITUTES ............... 39 EFFECTIVE DATE .............. 40 MATURITY SCHEDULE AND SINKING FUND ALLOCATIONS ............. A-1 -ii- Section 1. Section 2. Section 3. Section 4. Section 5. Section 6. Section 7. Section 8. Section 9. Section 10. Section 11. Section 12. Section 13. Section 14. Section 15. Section 16. Section 17. Section 18. Section 19. Section 20. Section 21. Covenant 1. Covenant 2. Covenant 3. Covenant 4. Covenant 5. TABLE OF CONTENTS Pag9 DEFINITIONS ............... 3 EQUALITY OF 1988 BONDS AND PARITY BONDS; PLEDGE OF REVENUES ........ 6 PURPOSE OF THE 1988 BONDS ........ 7 SPECIAL OBLIGATIONS; NO GENERAL CITY LIABILITY ................ 7 DESCRIPTION OF THE 1988 BONDS ...... 8 PLACE OF PAYMENT ........... 8 EXECUTION AND AUTHENTICATION OF THE 1988 BONDS ................ 9 REGISTRATION AND TRANSFER ........ 9 REDEMPTION OF 1988 BONDS ......... 10 FUNDS AND ACCOUNTS ............ 12 DISPOSITION OF BOND PROCEEDS ....... 13 REVENUE ACCOUNT ............. 14 M&O ACCOUNT ......... 14 BOND SERVICE ACCOUNT; SINKING ACCOUNT .............. 14 RESERVE FUND .............. 16 R&R ACCOUNT ............... 17 E&I ACCOUNT ............... 18 SURPLUS MONEYS IN THE REVENUE ACCOUNT ................. 18 INVESTMENTS ............... 18 WARRANTY ................ 19 COVENANTS ................ 19 Punctual Payment ....... 20 Discharge Claims ......... 20 Commence Acquisition and Construction ........... 20 Operate Enterprise in Efficient and Economical Manner .............. 20 Against Sale, Eminent Domain, Existing and Future Agreements ............ 21 -i- CITY OF ANAHEIM RESOLUTION NO. 88R-11 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM, CALIFORNIA, AUTHORIZING THE ISSUANCE OF $5,000,000 WA'I'kR{ REVENUE BONDS, 1988 SERIES, OF T}{E CITY AND PROVIDING TERMS AND CONDITIONS OF SUCH BONDS WHEREAS, the City of Anaheim (the "City") is a municipal corporation organized and existing under a charter duly and regularly adopted pursuant to the provisions of the Constitution of the State of California (the "Charter"); and WHEREAS, Section 1210 of the Charter ("Section 1210") pro- vides as follows: "Bonds which are payable only out of such revenues as may be specified in such bonds may be issued when the City Council by ordinance shall have established a procedure for the issuance of such bonds. Such bonds, payable only out of revenues, shall not constitute an indebtedness or gen- eral obligation of the City. No such bonds payable out of revenues shall be issued without the assent of a majority of the voters voting upon the proposition for issuing the same at an election at which such proposition shall have been duly submitted to the qualified electors of the City. It shall be competent for the City to make contracts and covenants for the benefit of the holders of any such bonds payable only from revenues and which shall not con- stitute a general obligation of the City for the establish- ment of a fund or funds, for the maintaining of adequate rates or charges, for restrictions upon further indebted- ness payable out of the same fund or revenues, for restric- tions upon transfer out of such fund, and other appropriate covenants. Money placed in any such special fund for the payment of principal and/or interest on any issue of such bonds or to assure the application thereof to a specific purpose shall not be expended for any other purpose what- ever except for the purpose for which such special fund was established and shall be deemed segregated from all other funds of the City and reserved exclusively for the purpose for which such special fund was established until the pur- pose of its establishment shall have been fully accomplished. Notwithstanding the foregoing, the City may sell and issue at any time and from time to time revenue bond antic- ipation notes (including renewal revenue bond anticipation notes) in anticipation of the revenue bonds authorized by the voters on June 2, 1981; provided that the aggregate principal amount of such revenue bond anticipation notes and revenue bonds outstanding in accordance with their terms at any one time shall not exceed $92 million. Such revenue bond anticipation notes may be sold, issued and secured in such manner and subject to such terms and condi- tions as the City Council may prescribe by ordinance; pro- vided that such revenue bond anticipation notes shall not constitute an indebtedness or general obligation of the City of Anaheim and are not to be secured by the taxing power of said City. Notwithstanding the foregoing, the City may also sell and issue at any time and from time to time revenue bond anticipation notes (including renewal revenue bond antici- pation notes) in anticipation of any electric or water rev- enue bonds theretofore or hereafter authorized by the voters; provided that (i) the aggregate principal amount of such electric revenue bond anticipation notes and the elec- tric revenue bonds in anticipation of which such electric revenue bond anticipation notes were issued outstanding in accordance with their terms at any one time shall not exceed the principal amount of such electric revenue bonds authorized by the voters and (ii) the aggregate principal amount of such water revenue bond anticipation notes and the water revenue bonds in anticipation of which such water revenue bond anticipation notes were issued outstanding in accordance with their terms at any one time shall not exceed the principal amount of such water revenue bonds authorized by the voters. Such revenue bond anticipation notes may be sold, issued and secured in such manner and subject to such terms and conditions as the City Council may prescribe by ordinance; provided that such revenue bond anticipation notes shall not constitute an indebtedness or general obligation of the City of Anaheim and are not to be secured by the taxing power of said City. .Notwithstanding the foregoing, the City may also sell and issue at any time and from time to time revenue antici- pation notes (including renewal revenue anticipation notes) in anticipation of the receipt of revenues of the City's water and electric utilities; provided that the aggregate principal amount of such revenue anticipation notes outstanding in accordance with their terms at any one time shall not exceed, for each of such utilities, an amount -2- equal to 25% of the gross revenue earned by the respective utility during the immediately preceding fiscal year as set forth in the audited financial statements of such utility for such year. Such revenue anticipation notes may be sold, issued, and secured in such manner and subject to such terms and conditions as the City Council may prescribe by ordinance; provided that such revenue anticipation notes shall not constitute an indebtedness or general obligation of the City of Anaheim and are not to be secured by the taxing power of said City."; and WHEREAS, Ordinance No. 2933 of the City Council, incor- porating certain sections of the Revenue Bond Law of 1941 (Chapter 6, Part 1, Division 2, Title 5 of the Government Code of the State of California), establishes a procedure for the issuance of water reve- nue bonds as provided for in Section 1210 (including refunding water revenue bonds as provided in Section 1210.1); and WHEREAS, pursuant to Section 1210, Ordinance No. 2933, and Resolution No. 87R-321 of the City Council, a special municipal elec- tion was held in the City on November 3, 1987, for the purpose of submitting to the qualified voters of the City the following proposition: "Shall the City of Anaheim be authorized to finance the acquisition and construction of additions to and improvements of the water system of said city by the issu- ance of revenue bonds, not payable from property taxes, in an amount not to exceed 14 million dollars?"; and WHEREAS, said proposition (the "1987 Proposition") was approved by the votes of more than a majority of the voters voting on the 1987 Proposition at said special municipal election; and WHEREAS, this City Council deems it necessary to issue for the purposes hereinafter set forth, $5,000,000 principal amount of water revenue bonds authorized by the 1987 Proposition, to be desig- nated "Water Revenue Bonds, 1988 Series"; and the Water Revenue Bonds, 1988 Series, shall be on a parity with the City's Water Revenue Bonds, 1980 Series, Water Revenue Bonds, 1984 Series, Water Revenue Bonds, 1986 Series and any other parity water revenue bonds which may be issued in the future by the City; NOW, T}{EREFORE, the City Council of the City of Anaheim, California, DOES HEREBY RESOLVE, DETERMINE AND ORDER as follows: SECTION 1. Definitions. As used in this Resolution, unless the context otherwise requires: -3- (a) "Authorized Investments" means any obligations in which the City may lawfully invest its funds. (b) "1988 Bonds" means the $5,000,000 aggregate prin- cipal amount of Bonds authorized and issued under this Resolution pursuant to the 1987 Proposition. (c) "City" means the City of Anaheim, California. (d) "City Council" means the City Council of the City. (e) "Enterprise" means the entire waterworks system of the City, including all additions to, and improvements and extensions of, said system later constructed or acquired. 1980 1986 (f) "Fiscal Agent" means the fiscal agent under the Bond Resolution, the 1984 Bond Resolution, and the Bond Resolution. (g) "Fiscal Year" means the year period beginning on July 1 and ending on the next following June 30. (h) "Information Services" means Financial Information, Inc. 's "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services "Called Bond Service," 55 Broad Street, 28th Floor, New York, New York 10004; Moody's "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; and Standard & Poor's "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; or to such other addresses and/or such other services providing information with respect to called bonds as the City may designate. (i) "Maximum Annual Debt Service" as computed from time to time under Section 15 and Covenant 11 of Section 21 hereof means the largest of the sums obtained for the Fiscal Year of computation or any Fiscal Year thereafter by totaling the following for each such Fiscal Year: (1) The principal amount of all serial 1988 Bonds and serial Parity Bonds payable in such Fiscal Year and outstanding at the date of such computation; (2) The minimum sinking account payments, if any, payable in such Fiscal Year with respect to the term -4- 1988 Bonds and any term Parity Bonds outstanding at the date of such computation; and (3) The interest which would be due during such Fiscal Year on the aggregate principal amount of the 1988 Bonds and Parity Bonds which would be outstanding in such Fiscal Year if the serial 1988 Bonds and serial Parity Bonds outstanding on the date of such computa- tion are retired as they mature and if the term 1988 Bonds and any term Parity Bonds outstanding on the date of such computation, if any, are retired as scheduled in this Resolution and in the Parity Bond Resolution providing for the issuance of such term Parity Bonds. (j) "Net Revenues" of the Enterprise means the amount of the Revenues less the Operating Expenses. (k) "1980 Bond Resolution" means Resolution No. 80R-75 of the City Council, adopted February 26, 1980, authorizing the issuance of the 1980 Bonds. (1) "1980 Bonds" means the $7,350,000 water revenue bonds designated "Water Revenue Bonds, 1980 Series". (m) "1984 Bond Resolution" means Resolution No. 84R-396 of the City Council, adopted October 9, 1984, authorizing the issuance of the 1984 Bonds. (n) "1984 Bonds" means the $6,650,000 water revenue bonds designated "Water Revenue Bonds, 1984 Series". (o) "1986 Bond Resolution" means Resolution No. 86R-91 of the City Council, adopted March 4, 1986, authorizing the issuance of the 1986 Bonds. (p) "1986 Bonds" means the $7,160,000 refunding water revenue bonds designated Water Revenue Bonds, 1986 Series. (q) "Operating Expenses" of the Enterprise means the reasonable and necessary current expenses of maintaining, repairing and operating the Enterprise, including City administrative expenses directly attributable to water system functions, but excluding depreciation and amortiza- tion, and debt service requirements of the City's general obligation water bonds, all computed in accordance with sound accounting principles and consistent with existing accounting practices of the City. -5- (r) "Ordinance No. 2933" means Ordinance No. 2933 of the City Council, adopted on June 1, 1971 as amended by Ordinance No. 4536, adopted on September 4, 1984. (s) "Parity Bonds" means the 1980 Bonds, the 1984 Bonds, 1986 Bonds and any other revenue bonds, revenue notes or other similar evidences of indebtedness hereafter issued for the acquisition, construction and financing of additions to, and improvements of the Enterprise, payable out of the Net Revenues and which, as provided in this Resolution, rank on a parity with the 1988 Bonds. (t) "Parity Bond Resolution" means any resolution authorizing the issuance of Parity Bonds. (u) "Registrar" means Wall Street Trust Company California and its successor or successors and any other corporation which may, within the sole discretion of the City, be substituted in its place by the City. (v) "Resolution" means this Resolution No. 88R-11 of the City Council. (w) "Revenues" means all rates, fees and charges for providing water service to persons and real property (including connection fees) and all other fees, rents and charges and other income derived by the City, from the ownership, operation, use or services of the Enterprise. (x) "Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11530, Fax-(516) 227-4039 or 4190; Midwest Securities Trust Company, Capital Structures-Call Notification, 440 South LaSalle Street, Chicago, Illinois 60605, Fax-(312) 663-2343; Philadelphia Depository Trust Company, Reorganization Division, 1900 Market Street, Philadelphia, Pennsylvania 19103, Attention: Bond Department, Dex-(215) 496-5058; or to such other addresses and/or such other securities depositories as the City may designate. (y) "Treasurer" means the Treasurer of the City. SECTION 2. Equality of 1988 Bonds and Parity Bonds; Pledge of Revenues. Pursuant to Section 1210 of the City Charter, Ordinance No. 2933 and this Resolution, the 1988 Bonds and all Parity Bonds shall be equally secured by a pledge, charge and lien upon the Net Revenues of the Enterprise without priority for number, date of bonds, date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of the 1988 Bonds and all -6- Parity Bonds and any premiums upon the redemption of any theroof shall be and are secured by an exclusive pledge of and charge and lien upon the Net Revenues of the Enterprise, and all of the Net Revenues of the Enterprise are hereby pledged, charged and assigned for the security of the 1988 Bonds and all Parity Bonds, and such Net Revenues and any interest earned on the Net Revenues shall constitute a trust fund for the security and payment of the interest on and principal of the 1988 Bonds and all Parity Bonds, and so long as any of the 1988 Bonds, Parity Bonds or interest thereon are unpaid, the Net Revenues and interest thereon shall not be used for any other purpose, except as permitted by this Resolution or any Parity Bond Resolution, and shall be held in trust for the benefit of the bond- owners and shall be applied pursuant to this Resolution, or to this Resolution as modified pursuant to provisions herein, and to any Parity Bond Resolution. Nothing in this Resolution shall preclude: (a) the redemp- tion prior to maturity of any 1988 Bonds subject to call and redemp- tion or payment of said Bonds at maturity from proceeds of refunding bonds issued under Section 1210.1 of the City Charter as the same now exists or as hereafter amended, or under any other law of the State of California; (b) the issuance, subject to the limitations contained herein, of Parity Bonds; or (c) the issuance of additional indebted- ness payable solely from surplus moneys in the Revenue Account pursu- ant to Section 18 hereof. SECTION 3. Purpose of the 1988 Bonds. Under and pursu- ant to Section 1210 of the City Charter and Ordinance No. 2933 and in accordance with the authorizations stated in the recitals hereof, the 1988 Bonds shall be issued for the purpose of financing the cost of the acquisition and construction of additions to and improvements of the Enterprise. SECTION 4. Special Obligations; No General City Liability. The 1988 Bonds shall be special obligations of the City and shall be payable as to the principal thereof and interest thereon and any pre- mium upon the redemption of any thereof solely from the Net Revenues. The general fund of the City is not liable for the payment of the 1988 Bonds or their interest, nor is the credit or taxing power of the City pledged for the payment of the 1988 Bonds or their interest. The holders of the 1988 Bonds shall not be entitled to compel the exercise of the taxing power by the City or the forfeiture of any of its property. The principal of and interest on the 1988 Bonds and any premium upon the redemption of any thereof are not a debt of the City or a legal or equitable pledge, charge, lien or encumbrance upon any of its property or upon any of its income, receipts or revenues, except the Net Revenues. -7- SECTION 5. Description of the 1988 Bonds. T h e 1 9 8 8 Bonds shall all be in the denomination of $5,000 or any integral multiple of $5,000, and numbered consecutively from R-1 upwards. The 1988 Bonds shall be designated "WATER REVENUE BONDS, 1988 SERIES". The 1988 Bonds shall be payable on October 1 in each year of maturity in the amounts for each of the several years, and shall bear interest payable semi-annually on the first days of April and October of each year, commencing April 1, 1988, as set forth in Section 1 of Exhibit A hereto. The City Council hereby determines that the maxi- mum rate of interest which may be paid on the 1988 Bonds equals the highest interest rate set forth in Section 1 of Exhibit A hereto. Each 1988 Bond shall bear interest from the interest payment date next preceding the date of its authentication, unless such 1988 Bond is authenticated on an interest payment date, in which event from such interest payment date or unless such 1988 Bond is authenticated as of a day during the period from the day after the record date immediately preceding an interest payment date to such interest pay- ment date, inclusive, in which event such 1988 Bond shall bear inter- est from such interest payment date; provided, however, that if the date of authentication of any 1988 Bond shall be on or prior to March 15, 1988, such 1988 Bond shall bear interest from January 1, 1988; provided, further, that if, as shown by the records of the Registrar, interest on the 1988 Bonds shall be in default, 1988 Bonds issued in exchange for 1988 Bonds surrendered for transfer or exchange shall bear interest from the interest payment date to which interest has been paid in full on the 1988 Bonds surrendered or if no interest has been paid, January 1, 1988. The 1988 Bonds designated as "Serial Bonds" in Section 1 of Exhibit A hereto are sometimes referred to herein as "serial 1988 Bonds" and the 1988 Bonds (if any) designated as "Term Bonds" in Section 1 of Exhibit A hereto are sometimes referred to herein as "term 1988 Bonds." SECTION 6. Place of Payment. If at the maturity date of any 1988 Bond or if the same is redeemable and has been duly called for redemption, funds are available for the payment or redemption thereof in full accordance with the terms of this Resolution, said 1988 Bonds shall then cease to bear interest. The 1988 Bonds and the interest thereon shall be payable in lawful money of the United States of America. The principal of the 1988 Bonds and any premium upon the redemption thereof shall be payable at the office of the Registrar in Los Angeles, California and at such other paying agent (if any) designated by the City. Interest on the 1988 Bonds shall be payable by check or draft mailed to the registered owner on the reg- istration records maintained by the Registrar, determined as of the close of business on the 15th day of the calendar month immediately preceding an interest payment date (including the date on which the principal of a 1988 Bond is to be paid). -8- SECTION 7. Execution and Authentication of the ]988 Bonds. The Mayor of the City and the Treasurer are hereby authorized and directed to sign the 1988 Bonds by their printed, lithographed or engraved facsimile signatures, and the City Clerk of the City is hereby authorized and directed to countersign the 1988 Bonds by fac- simile signature and to affix thereto or otherwise reproduce thereon the corporate seal of the City. The 1988 Bonds shall bear thereon a certificate of authen- tication, in the form set forth in Section 25 of this Resolution, executed manually by the Registrar. Only such 1988 Bonds as shall bear thereon such certificate of authentication shall be entitled to any right or benefit under this Resolution and no 1988 Bond shall be valid or obligatory for any purpose until such certificate of authen- tication shall have been duly executed by the Registrar. Such cer- tificate of the Registrar upon any 1988 Bond executed on behalf of the City shall be conclusive evidence that the 1988 Bond so authenti- cated has been duly authenticated and delivered under this Resolution and that the owner thereof is entitled to the benefits of this Resolution. SECTION 8. Registration and Transfer. The 1988 Bonds shall be issued in fully registered form. The 1988 Bonds shall be transferable only upon the books of the City, which shall be kept for such purposes at the office of the Registrar, by the registered owner thereof in person or by his attorney duly authorized in writing, upon surrender thereof together with a written instrument of transfer sat- isfactory to the Registrar duly executed by the registered ov~er or his duly authorized attorney. Upon the transfer of any such regis- tered 1988 Bond, the Registrar shall issue in the name of the trans- feree a new registered Bond or 1988 Bonds of the same aggregate prin- cipal amount and maturity as the surrendered 1988 Bond. The Registrar may, with the concurrence of the City, designate an addi- tional office where transfer of registered 1988 Bonds may be effected by the Registrar provided in this Section. The City, the Registrar and each paying agent may deem and treat the person in whose name any 1988 Bond shall be registered upon the books of the City as the absolute owner of such 1988 Bond, whether such 1988 Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal or redemption price, if any, and interest on such 1988 Bond and for all other pur- poses, and all such payments so made to any such registered owner or upon his order shall be valid and effectual to satisfy and discharge the liability upon such 1988 Bond to the extent of the sum or sums so paid, and neither the City, the Registrar nor any paying agent shall be affected by any notice to the contrary. The City agrees to indemnify and save the Registrar and each paying agent harmless from and against any and all loss, cost, charge, expense, judgment or -9- liability incurred by it, acting in good faith and without negligence under this Resolution, in so treating such registered owner. In all cases in which the privilege of exchanging 1988 Bonds or transferring registered 1988 Bonds is exercised, the Registrar shall authenticate and deliver 1988 Bonds in accordance with the provisions of this Resolution. All 1988 Bonds surrendered in any such exchanges or transfers shall forthwith be delivered to the Registrar and cancelled by the Registrar and returned to the City. For every such exchange or transfer of 1988 Bonds, whether temporary or definitive, the City or the Registrar may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer. Neither the City nor the Registrar shall be required to transfer or exchange any 1988 Bonds for a period of 15 days next pre- ceding any selection of 1988 Bonds to be redeemed or thereafter until after the first publication or mailing of any notice of redemption or any 1988 Bonds called for redemption. SECTION 9. Redemption of 1988 Bonds. The 19 88 Bonds maturing on or after October 1, 1997 may be redeemed prior to maturi- ty, at the option of the City, on and after October 1, 1996, in whole at any time or in part on any interest payment date, at the following redemption prices, expressed as a percentage of the principal amount, together with accrued interest to the date of redemption: Redemption Period (Dates InclusiveI Redemption Price October 1, 1996 and September 30, 1997 102% October 1, 1997 and September 30, 1998 101 October 1, 1998 and thereafter 100 The term 1988 Bonds are also subject to mandatory sinking fund redemption prior to maturity at the principal amount thereof plus accrued interest to the redemption date as provided in Section 14(B) hereof. The term 1988 Bonds to be so redeemed shall be selected by lot within the maturity to which such redemption relates. Ail or any of the 1988 Bonds subject to redemption at the option of the City may be called for redemption at any one time. If less than all of the 1988 Bonds are redeemed at the option of the City at any one time, such 1988 Bonds shall be redeemed in inverse order of maturity and by lot within each maturity. The interest payment date on which 1988 Bonds which are called are to be presented for redemption is herein sometimes called the "redemption date." -10- (a) Notice of Redemption. The Registrar shall, at least 30 days but not more than 60 days prior to the redemption date, mail by first-class, postage prepaid a notice to (i) the respective regis- tered owners thereof at the addresses appearing on the registration records maintained by the Registrar, as of the date of such notice and (ii) one or more Information Services. Notice of redemption shall also be given by telecopy, certified, registered or overnight mail to the Securities Depositories two (2) days prior to the mailing of notice of redemption to the holders and the Information Services. The notice of redemption shall (a) state the redemption date; (b) state the redemption price; (c) state the numbers and date of matu- rity of the 1988 Bonds to be redeemed; provided, however, that when- ever any call includes all of the outstanding 1988 Bonds subject to redemption, the numbers of the 1988 Bonds need not be stated; (d) require that such 1988 Bonds be surrendered at the Registrar, in Los Angeles, California, or at any paying agent which has been selected (in its sole discretion) by the City; and (e) give notice that fur- ther interest on such 1988 Bonds will not accrue after the designated redemption date. The actual receipt by the holder of any 1988 Bond of notice of such redemption shall not be a condition precedent to redemption, and failure to receive such notice shall not affect the validity of the proceedings for redemption of such 1988 Bonds or the cessation of interest on the redemption date. The mailed notice or notices required by this section shall be given by the City. Failure by the City to give notice pursuant to this Section 9(a) to any one or more of the Information Services or Securities Depositories shall not affect the sufficiency of the proceedings for redemption. Failure by the City to mail notice of redemption pursu- ant to this Section 9(a) to any one or more of the respective holders of any 1988 Bonds designated for redemption shall affect the suffi- ciency of the proceedings for redemption only with respect to the holder or holders to whom such notice was not mailed. An affidavit of an Authorized Officer of the City that notice of redemption was mailed to holders shall be conclusive evidence of the mailing of such notice. (b) Redemption Fund. Prior to the redemption date there shall be established a redemption fund to be described as the Water Revenue Bonds Redemption Fund (herein referred to as the "Redemption Fund"), and prior to the redemption date there shall be set aside in the Redemption Fund moneys available for the purpose and sufficient to redeem, at the prices payable as in this Resolution provided, the 1988 Bonds designated in such notice of redemption. Said moneys shall be set aside in the Redemption Fund solely for that purpose and shall be applied on or after the redemption date to payment of the 1988 Bonds to be redeemed upon presentation and surrender of such -11- 1988 Bonds. Any accrued interest due on or prior to the redemption date shall be paid from the 1988 Bond Service Account. Any interest due on or prior to the redemption date upon 1988 Bonds shall be paid from the 1988 Bond Service Account. If, after all of the 1988 Bonds have been redeemed and cancelled or paid and cancelled, there are moneys remaining in the Redemption Fund, said moneys shall be trans- ferred to the Revenue Account; provided, however, that if said moneys are part of the proceeds of refunding bonds said moneys shall be transferred to the fund or account created for the payment of princi- pal of and interest on such refunding bonds. The Redemption Fund may also be used to provide for the redemption of Parity Bonds. (c) Effect of the Notice of Redemption. When notice of redemption has been given, and when the amount necessary for the redemption of the 1988 Bonds called for redemption is set aside for that purpose in the Redemption Fund, the 1988 Bonds designated for redemption shall become due and payable on the redemption date, and upon presentation and surrender of said 1988 Bonds at the place spec- ified in the notice of redemption, such 1988 Bonds shall be redeemed and paid at said redemption price out of the Redemption Fund, and no interest will accrue on such 1988 Bonds called for redemption after the redemption date specified in such notice, and the holders of said 1988 Bonds so called for redemption after such redemption date shall look for the payment of such 1988 Bonds only to said Redemption Fund. All 1988 Bonds redeemed shall be cancelled forthwith and shall not be reissued. Ail unpaid interest payable at or prior to the redemption date shall continue to be payable to the respective registered owners of such 1988 Bonds, or their order, but without interest thereon. SECTION 10. Funds and Accounts. A. The Treasurer shall continue to maintain the following funds and accounts, heretofore created pursuant to Section 1210 of the City Charter, as provided for in the 1980 Bond Resolution, 1984 Bond Resolution and 1986 Bond Resolution, so long as any of the 1980 Bonds, 1984 Bonds, 1986 Bonds and 1988 Bonds remain outstanding: (1) Water Enterprise Fund (the "Water Enterprise Fund"), and the following accounts within said fund: (a) Water System Revenue Account (the "Revenue Account"); and (b) Water System Maintenance and Operating Account (the "M&O Account"); and (c) Water System Renewal and Replacement Account (the "R&R Account"); and -12- (d) Water System Extension and Improvement Account (the "E&I Account"). B. The Fiscal Agent shall continue to maintain the follow- ing funds so long as any of the 1980 Bonds remain outstanding: (1) Water System Revenue Bond and Interest Fund (the "Bond Service Fund"); (2) Water System Revenue Bond Reserve Fund (the "Reserve Fund"); and (3) Water System Revenue Bond Sinking Fund (the "1980 Sinking Fund"). From and after the retirement of all of the 1980 Bonds (or the date on which provision for such retirement has been made so that the 1980 Bonds are no longer outstanding within the meaning of the 1980 Bond Resolution) the Reserve Fund shall be maintained by the Treasurer so long as any of the 1984 Bonds, 1986 Bonds or 1988 Bonds remain outstanding. C. The Treasurer shall continue to maintain the following accounts, heretofore created under the 1984 Bond Resolution, so long as any of the 1984 Bonds, 1986 Bonds or 1988 Bonds remain outstanding: (1) Water System Revenue Bond and Interest Account (the "Bond Service Account"); (2) Water System Revenue Bond Sinking Account (the "Sinking Account"). D. The following additional account is hereby created in the Water Enterprise Fund and shall be maintained by the Treasurer so long as any of the 1988 Bonds remain outstanding: (1) Water System Revenue Bond, 1988 Construction Account (the "1988 Construction Account"). E. Additional accounts in the Water Enterprise Fund may be created by subsequent resolutions of the City Council. SECTION 11. Disposition of Bond Proceeds. A. The proceeds of the 1988 Bonds shall be deposited as follows: -13- (1) An amount sufficient (together with amounts currently on deposit) to cause the amount in the Reserve Fund to equal the Maximum Annual Debt Service for the 1980 Bonds, the 1984 Bonds, the 1986 Bonds and the 1988 Bonds shall be deposited in the Reserve Fund. (2) The amount of the accrued interest received by the City with respect to the 1988 Bonds shall be deposited in the Bond Service Account. (3) The remainder shall be deposited in the 1988 Construction Account. B. The City may deposit moneys, received from any source, in the 1988 Construction Account. The moneys set aside and placed in the 1988 Construction Account shall be expended solely for the pur- poses for which the 1988 Bonds were issued. C. If any sum remains in the 1988 Construction Account after the full accomplishment (as certified by the General Manager of the Public Utilities Department of the City) of the purposes for which the 1988 Bonds were issued, it shall be transferred to the Redemption Fund to be used to pay, by redemption or purchase at a purchase price (including brokerage and other fees) not exceeding par plus accrued interest, 1988 Bonds, or Parity Bonds issued for one or more of the same purposes for which the 1988 Bonds were issued. SECTION 12. Revenue Account. The Revenues o f the Enterprise shall be deposited with the Treasurer to the credit of the Revenue Account. On or before the twentieth day of each calendar month, there shall be withdrawn from the Revenue Account the entire amount on deposit in the Revenue Account and there shall be allocated and deposited such amount in the indicated priority to the following accounts and funds. SECTION 13. M&O Account. First, so long as any of the 1988 Bonds are outstanding, there shall be allocated to the M&O Account amounts sufficient for the payment of the Operating Expenses of the Enterprise as said expenses become due and payable. Amounts in the M&O Account shall be used solely to pay Operating Expenses. SECTION 14. Bond Service Account; Sinking Account. Second, so long as any of the 1988 Bonds are outstanding, in addition to but on a parity with the transfers to the 1980 Sinking Fund and the Sinking Account required by Section 16 of the 1980 Bond Resolution and Section 14 of the 1984 Bond Resolution and 1986 Bond Resolution: -14- A. There shall be allocated to the Bond Service Account the following amounts: (1) one-sixth of the interest which will become due and payable on the outstanding 1988 Bonds and Parity Bonds (other than the 1980 Bonds) within the next ensuing six months, except that, with respect to any interest payment date, the monthly sum allocated shall be the interest which will become due and payable on such interest payment date less any portion of such interest which has been provided for (a) by transfers required with respect to the 1988 Bonds by any Parity Bond Resolution, and (b) in the case of any other Parity Bonds, any transfers required with respect to such Parity Bonds by any other Parity Bond Resolution; and (2) one-twelfth of the principal amount which will mature and be payable on the outstanding serial 1988 Bonds and serial Parity Bonds (other than the 1980 Bonds) within the next ensuing twelve months. B. There shall be allocated to the Sinking Account, each month during the twelve-month period preceding the dates (if any) set forth in Section 2 of Exhibit A hereto, in addition to any amounts which may be specified in any Parity Bond Resolution with respect to any term Parity Bonds to be issued by the City in the future, one- twelfth of the amount (if any) set forth in Section 2 of Exhibit A hereto in order to pay the principal of the respective amounts of 1988 term Bonds which shall be called and redeemed on the dates (if any) set forth in Section 2 of Exhibit A hereto, unless such amounts are used to purchase 1988 term Bonds as provided in this Section. C. In any event, such sums shall be allocated from the Revenue Account to the Bond Service Account and the Sinking Account so that the full amount required to pay, as it becomes due, the interest on said 1988 Bonds and Parity Bonds (other than the 1980 Bonds) and any installment of principal on said 1988 Bonds and Parity Bonds (other than the 1980 Bonds with respect to sinking fund payments) shall be set aside in the Bond Service Account and the Sinking Account at least five days prior to the date the installment of interest or principal becomes due. If for any reason in any month there are insufficient amounts in the Revenue Account to make all required deposits in the Bond Service Fund, Bond Service Account, the 1980 Sinking Fund, and the Sinking Account, then the amounts available shall be allocated pro rata towards the required deposits and the deficiencies shall be added to and become a part of the allocations required for the following calendar month. -15- Any moneys required to be set aside in the Bond Service Account or the Sinking Account may be prepaid in whole or in part by being earlier set aside therein, and in that event the monthly allo- cation which has been so prepaid need not be made at the time appointed therefor. Each monthly transfer shall be reduced by an amount equal to any investment income received during its preceding calendar month on moneys in the Bond Service Account or the Sinking Account. The 1988 Bonds shall recite that they are payable from the Water Enterprise Fund, but notwithstanding such recital shall be paid from the Bond Service Account, or from the Redemption Fund estab- lished in accordance with Section 9(b) of this Resolution. Moneys in the Sinking Account shall be used to redeem any term 1988 Bonds and term Parity Bonds (other than the 1980 Bonds) at the times and in the amounts as provided in this Section and any Parity Bond Resolution. Any such call and redemption of term 1988 Bonds shall be made in accordance with Section 9 hereof, and for that purpose moneys in the Sinking Account may be transferred to the Redemption Fund for the payment of principal upon redemption of any term 1988 Bonds called for redemption prior to maturity. Moneys in the Sinking Account may also be used, prior to the date when any term 1988 Bonds or term Parity Bonds (other than 1980 Bonds) are selected by lot, in lieu of (or partially in lieu of) mandatory call and redemption on the next succeeding sinking fund redemption date, for the purchase of any such term 1988 Bonds or term Parity bonds (other than 1980 Bonds) at a purchase price (including brokerage and other fees) not exceeding par plus accrued interest. If after all of the 1988 Bonds and any Parity Bonds have been redeemed and cancelled or paid and cancelled (or provision is made therefor) there are moneys remaining in the Bond Service Account, the Sinking Account or the Reserve Fund, said moneys shall be transferred to the Revenue Account. SECTION 15. Reserve Fund. Third, so long as any of the 1988 Bonds are outstanding, there shall be transferred to the Reserve Fund an amount (when added to amounts on deposit therein) which is sufficient to provide a balance in the Reserve Fund equal to Maximum Annual Debt Service. Moneys in the Reserve Fund shall be used solely for the purpose of paying the principal of and interest on the 1988 Bonds and any Parity Bonds, in the event that moneys in the Bond Service Fund or the 1980 Sinking Fund (in the case of the 1980 Bonds), or the Bond Service Account or the Sinking Account (in the case of the 1984 Bonds, 1986 Bonds, 1988 Bonds or any other Parity Bonds) are -16- insufficient therefor. For that purpose, the Fiscal Agent or the Treasurer, as appropriate, shall withdraw and transfer sufficient moneys from the Reserve Fund to the Bond Service Fund, the Bond Service Account, the 1980 Sinking Fund, or the Sinking Account, as the case may be. If at any time the moneys in the Reserve Fund are insufficient to make all such required transfers, the available moneys in the Reserve Fund shall be distributed pro rata towards the required deposits. Whenever moneys are withdrawn from the Reserve Fund an equal amount of moneys shall be placed in the Reserve Fund by transfers from the first available moneys in the Revenue Account. Prior to the initial transfer from the Revenue Account pur- suant to Section 12 hereof in each month, moneys in the Reserve Fund in excess of Maximum Annual Debt Service shall be withdrawn from the Reserve Fund and transferred to the Revenue Account. If on the first day of a Fiscal Year in which the Maximum Annual Debt Service calculated excluding such Fiscal Year is less than the Maximum Annual Debt Service calculated including such Fiscal Year (in both cases after giving effect to any proposed redemption or refunding of any 1988 Bonds or Parity Bonds during such Fiscal Year), then in each month during such Fiscal Year, prior to the transfer from the Revenue Account pursuant to Section 12 in each month, there may be transferred from the Reserve Fund to the Revenue Account an amount equal to one-twelfth of the difference between the two calcu- lations of Maximum Annual Debt Service. For purposes of calculating amounts required to be in the Reserve Fund during such Fiscal Year, the amounts so transferred shall be deemed to be on deposit in the Reserve Fund. Such amounts shall be used only for the purposes set forth in Section 3 hereof or to pay the principal of 1988 Bonds or Parity Bonds at maturity, by redemption or by purchase at a purchase price (including brokerage and other fees) not exceeding par plus accrued interest. SECTION 16. R&R Account. Fourth, so long as any of the 1988 Bonds are outstanding, there shall be allocated to the R&R Account an amount equal to 2% of the Revenues received in the preced- ing calendar month until a balance is established, or reestablished, therein equal to 1% of the depreciated book value of the land, gen- eral plant and equipment which constitute the net utility plant of the Enterprise or such other balance as the consulting engineer may recommend. The moneys contained in the R&R Account shall be used for transfer to the Bond Service Account, the Bond Service Fund, the 1980 Sinking Fund, or the Sinking Account, as the case may be, to prevent default in payment of the principal and interest on the 1988 Bonds or any Parity Bonds, or for extraordinary maintenance and repairs, renewals and replacements to the Enterprise, but not for additions to and extensions of the Enterprise. -17- If at any time the balance in the R&R Account exceeds the minimum balance herein identified, said excess may be transferred to the Revenue Account. SECTION 17. E&I Account. Fifth, so long as the 1988 Bonds are outstanding, there shall be set aside out of the Revenue Account into the E&I Account such amounts as shall be deemed desir- able by the City Council or appropriate city staff by appointment of the City Council. The moneys contained in said Account shall be used for transfer to the Bond Service Account, the Bond Service Fund, the 1980 Sinking Fund, or the Sinking Account, as the case may be, to prevent default in payment of principal and interest on the 1988 Bonds or any Parity Bonds, or for extension and improvement of the Enterprise. SECTION 18. Surplus Moneys in the Revenue Account. Ail moneys remaining in the Revenue Account after all transfers required hereunder have been made, shall be applied (i) to the payment of the principal and interest on the City's Water Revenue Anticipation Notes issued pursuant to Section 1210 of the City Charter and Ordinance No. 4415 and Ordinance No. 4530 of the City Council, to the extent available, (ii) for the redemption of any 1988 Bonds or Parity Bonds which are subject to call and redemption prior to maturity or for the purchase from time to time in the open market of any outstanding 1988 Bonds or Parity Bonds whether or not subject to call and redemption (irrespective of the maturity or nu~er of such 1988 Bonds or Parity Bonds) at prices and in such manner, either at public or private sale, or otherwise, as the Treasurer in his or her discretion may determine, but such purchase price (including brokerage and other charges, but excluding accrued interest) shall not exceed the princi- pal amount or the redemption price of the callable 1988 Bonds or Parity Bonds on the next redemption date, whichever is less; or (iii) for any lawful purpose of the City, including but not limited to the security and payment of other indebtedness incurred in cornnec- tion with the Enterprise. SECTION 19. Investments. Obligations purchased as investments of moneys in any of the funds and accounts in which investments are authorized shall be deemed at all times to be a part of such funds and accounts and any income realized from such invest- ments shall be credited to such funds and accounts and any losses resulting from such investments shall be charged to such funds and accounts. The Fiscal Agent or the Treasurer, as the case may be, shall sell at the best price obtainable or present for redemption any obligations so purchased whenever it may be necessary to do so in order to provide moneys to meet any payment or transfer from such funds and accounts. For the purpose of determining at any given time the balance in any such funds and accounts, any such investments constituting a part of such funds and accounts shall be valued at the -18- then estimated or appraised market value of such investments. Moneys in all funds and accounts described in Section 10 hereof shall be invested only in Authorized Investments, except that so long as any of the 1980 Bonds are outstanding, amounts in the Revenue Account, the M&O Account, the R&R Account, the E&I Account, the 1980 Sinking Fund, the Bond Service Fund and the Reserve Fund shall be invested only in direct obligations of or obligations guaranteed by the United States of America, or certificates of deposit of recognized banks or trust companies fully secured by direct obligations of or obligations guaranteed by the United States of America. All investments of moneys in such funds and accounts shall mature not later than such times as the Treasurer estimates such moneys shall be needed for the purposes for which such moneys are held. Notwithstanding any other provision of this Resolution, and except as provided below, none of the moneys contained in any of the funds and accounts created or continued by this Resolution shall be: (i) used in making loans guaranteed by the United States (or any agency or instrumentality thereof), (ii) invested directly or indi- rectly in deposits or accounts insured by the Federal Deposit Insurance Corporation, the National Credit Union Administration or any other similar Federally chartered corporation, or (iii) otherwise invested directly or indirectly in obligations guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof); provided, h9wever, that the above restrictions do not apply (a) during the initial three year temporary period following issuance and delivery of the 1988 Bonds, (b) to the investment of moneys held in the Bond Service Account or the Sinking Acount or any other bona fide debt service funds, (c) to investments in the Reserve Fund, (d) to investments in direct obligations of the United States Treasury, (e) to investments in obligations guaranteed by the Federal National Mortgage Association, Government National Mortgage Association or the Federal Home Loan Mortgage Corporation, (f) to investments permitted under regulations issued pursuant to Section 149(b) (3) (B) of the Internal Revenue Code of 1986, as amended, (g) to investments of amounts in the R & R Account or the E & I Account, or (h) to such other investments as, in the opinion of Mudge Rose Guthrie Alexander & Ferdon, are permitted investments under the Resolution which do not jeopardize the exclusion from gross income for Federal income tax purposes of the interest on the 1988 Bonds. SECTION 20. Warranty. The City shall preserve and pro- tect the security of the 1988 Bonds and the rights of the owners of the 1988 Bonds and warrant and defend their rights against all claims and demands of all persons. SECTION 21. Covenants. So long as any of the 1988 Bonds are outstanding, the City makes the following covenants with the -19- bondowners under the provisions of Section 1210 of the City Charter (to be performed by the city or its proper officers, agents or employees) which covenants are necessary, convenient and desirable to secure the 1988 Bonds and tend to make them more marketable; pro- vided, however, that said covenants do not require the City to expend any moneys other than the Revenues of the Enterprise. Covenant 1. Punctual Payment. The City covenants that it will duly and punctually pay or cause to be paid the principal of and interest on every 1988 Bond issued hereunder, together with the pre- mium thereon, if any be payable, on the date, at the place and in the manner mentioned in the 1988 Bonds and in accordance with this Resolution, and that the payments into the Bond Service Account, the Sinking Account and the Reserve Fund will be made, all in strict con- formity with the terms of the 1988 Bonds and of this Resolution, and that it will faithfully observe and perform all of the conditions, covenants and requirements of this Resolution and all resolutions supplemental thereto and of the 1988 Bonds issued hereunder, and that time of such payment and performance is of the essence of the City's contract with the Bondowners. Covenant 2. Discharge Claims. The City covenants that in order to preserve and protect the priority and security of the 1988 Bonds the city shall pay from amounts available in the M&O Account and discharge all lawful claims for labor, materials and supplies furnished for or in connection with the Enterprise which, if unpaid, may become a lien or charge upon the property or Revenues of the Enterprise prior or superior to the lien of the 1988 Bonds and impair the security of the 1988 Bonds. The City shall also pay from amounts available in the M&O Account all taxes and assessments or other gov- ernmental charges lawfully levied or assessed upon or in respect of the Enterprise or upon any part thereof or upon any of the revenues thereof. Covenant 3. Commence Acquisition and Construction. The City covenants that as soon as funds are available therefor, the City will commence (to the extent not already commenced) the accomplish- ment of the purposes for which the 1988 Bonds are issued and will continue the same to completion with all practicable dispatch and in an economical manner. Covenant 4. Operate Enterprise in Efficient and Economical Manner. The City covenants to operate the Enterprise in an efficient and economical manner and to operate, maintain and preserve the Enterprise in good repair and working order. -20- Covenant 5. Against Sa]e, Eminent Domain, Existing and Future Agreements. Except as provided herein, the City covenants that the Enterprise shall not be mortgaged or otherwise encumbered, sold, leased, pledged, any charge placed thereon, or disposed of as a whole or substantially as a whole unless such sale or other disposi- tion be so arranged as to provide for sums adequate to provide for the immediate payment of the principal of and interest on and premi- ums, if any, due upon the call and redemption thereof, of the 1988 Bonds. The City further covenants that the Revenues of the Enterprise or any other funds pledged or otherwise made available to secure payment of the principal of and interest on the 1988 Bonds shall not be mortgaged, encumbered, sold, leased, pledged, any charge placed thereon, or disposed of or used except as authorized by the terms of this Resolution. The City further covenants that it will not enter into any agreement which impairs the operation of the Enterprise or any part of it necessary to secure adequate revenues to pay the principal of and interest on the 1988 Bonds or which other- wise would impair the rights of the bondowners with respect to the Revenues of the Enterprise. If any substantial part of the Enterprise is sold, the payment therefor shall either be used for the acquisition and/or construction of improvements and extensions of the Enterprise or shall be placed in the appropriate funds or accounts and shall be used to pay or call and redeem the 1988 Bonds and any Parity Bonds in the manner provided in this Resolution or in any Parity Bond Resolution. The City covenants that any amounts received as awards as a result of the taking of all or any part of the Enterprise by the lawful exercise of eminent domain, if and to the extent that such right can be exercised against such property of the City, shall either be used for the acquisition and/or construction of improve- ments and extension of the Enterprise or shall be placed in the appropriate funds or accounts and shall be used to pay or call and redeem the 1988 Bonds and any Parity Bonds in the manner provided in this Resolution or in any Parity Bond Resolution. The City will not sell, lease or otherwise encumber any part of the Enterprise except properties or facilities no longer useful or necessary to its efficient and economical operation. Notwithstanding any other provisions contained herein, the City may: (i) sell or dispose of customer connections (and related distribution lines) located outside the City limits; (ii) take all action necessary to fulfill its commitments under its existing agree- ments with Yorba Linda County Water District, and any subsequent implemental agreements; and (iii) enter into, and take all actions necessary to fulfill its commitments under, contractual agreements concerning water service to all or part of any areas which are annexed to the City of Anaheim after the sale and delivery of the -21- 1988 Bonds, with parties organized to provide water service to all or part of any such area. Any proceeds from the sale or disposition of any part of the Enterprise or the granting of any service rights or privileges pursuant to the preceding sentence shall be used to defray the cost of renewals, replacements, additions and extensions to the Enterprise or shall be held for the redemption prior to maturity or open market purchase of 1988 Bonds or Parity Bonds then outstanding, but such purchase price (including brokerage and other charges, but excluding accrued interest) shall not exceed 103% of the principal amount or the redemption price of the callable bonds on the most recent redemption date, whichever is less. Any proceeds from the sale or disposition of any part of the Enterprise shall be placed in the Revenue Account. Covenant 6. Insurance. The City covenants that it shall at all times maintain with responsible insurers all such insurance on the Enterprise as is customarily maintained by similar utilities sys- tems with respect to works and properties of like character against accident to, loss of or damage to such works or properties. If any useful part of the Enterprise shall be damaged or destroyed such part shall be restored to use. The money collected from insurance against accident, loss or damage shall be used for repairing or rebuilding the lost, damaged or destroyed works and properties, and to the extent not so applied, shall be applied to the retirement of out- standing 1988 Bonds and any Parity Bonds issued for the Enterprise and for such purpose paid into the appropriate funds or accounts. The City shall also maintain with responsible insurers workers' compensation insurance and insurance against public liabil- ity and property damage to the extent reasonably necessary to protect the City and the Bondowners. Notwithstanding the insurance required by this program. foregoing, Covenant 6 the City may provide any through a self-insurance Covenant 7. Records and Accounts. The City covenants that it shall keep proper books of record and accounts of the Enterprise, separate from all other records and accounts, in which complete and correct entries shall be made of all transactions relat- ing to the Enterprise. Said books shall at all times be subject to the inspection of the holders of not less than 10% of the outstanding 1988 Bonds or their representatives authorized in writing. The City covenants that it will cause the books and accounts of the Enterprise to be audited annually by an independent certified public accountant or firm of certified public accountants and shall furnish a copy of the audit report, upon request, to any bondowner. -22- Covenant 8. Collection of Charges. The City w~]l permit no free connections with, or use and services of the Enterprise except for the following: (i) public fire hydrants; (ii) public fire flows; (iii) watering of public street dividers; and (iv) to the extent, if any, provided in the City's existing agreements with Yorba Linda County Water District. The City will pay promptly into the Revenue Account from the City's General Fund (or other available funds) for all City connections with, use and services of, the Enterprise except the foreqoing. The City will not grant or estab- lish within any class of service preferential or discriminatory rates, fees or charges for connections with, and use and services of, the Enterprise except as provided in the City's existing agreements with Yorba Linda County Water District and subsequent implemental agreements. For the purposes of setting such rates, fees and charges, connections located outside the city limits of the City of Anaheim may be considered as separate classes of service. The City covenants that it shall at all times during the period any of the 1988 Bonds are outstanding maintain and enforce valid regulations for the payment of bills for water service and that such regulations shall at all times during such period provide that the City shall discontinue water service to any user whose water bill has not been paid within the time fixed by said regulations. Covenant 9. Rates and Charges. The City shall and hereby covenants that it shall prescribe, revise and collect such charges for the services and facilities of the Enterprise which, after making allowances for contingencies and error in the estimates, shall be at least sufficient to pay the following amounts in the order set forth: (a) Ail current expenses for the necessary and rea- sonable Operating Expenses of the Enterprise as said expenses become due and payable; (b) The interest on and principal payments (including any sinking account payments) of the outstanding 1988 Bonds and Parity Bonds as they become due and payable; (c) All payments required for compliance with this Resolution including transfers required to be made from the Revenue Account to other funds and accounts; and (d) All payments required to meet any other obliga- tions of the City which are charges, liens or encumbrances upon or payable from the Revenues of the Enterprise; and the charges shall be so fixed that the Net Revenues shall at least equal 1.50 times the amounts payable under (b). For purposes of this Section, Net Revenues shall include all investment income on -23- all accounts established in the Water Enterprise Fund and on all other funds established for the benefit of the holders of the 1988 Bonds or Parity Bonds. Covenant 10. No Priority for Additional Indebtedness. The City covenants that no additional indebtedness shall be incurred pursuant to Section 1210 and other provisions of the City Charter or any law of the State of California having any priority in payment of principal or interest out of the Revenues of the Enterprise over the 1988 Bonds. Covenant 11. Limits on Parity Bonds. (a) Parity Bonds may be issued to finance or re-finance any repairs, improvements, enlargements or extensions of the Enterprise, provided that the City covenants that, except for bonds issued to refund any 1988 Bonds or Parity Bonds, no such additional indebtedness evidenced by revenue bonds, revenue notes or any other evidence of indebtedness payable out of the Revenues of the Enterprise and ranking on a parity with the 1988 Bonds shall be created or incurred unless: First: The City is not in default under the terms of this Resolution. Second: The Net Revenues of the Enterprise, calculated on sound accounting principles, as shown by the books of the City for each of the last two com- pleted Fiscal Years prior to the adoption of the reso- lution approving the sale of such additional indebted- ness as shown by an audit certificate or opinion of an independent certified public accountant or firm of certified public accountants employed by the City, plus, at the option of the City, the allowance for earnings hereinafter set forth in subparagraph (b) of this covenant, shall have amounted to at least 1.50 times the Maximum Annual Debt Service in any Fiscal Year thereafter on all indebtedness to be outstanding immediately subsequent to the incurring of such addi- tional indebtedness. (b) For the purposes of this covenant, the following may be added to the Net Revenues of the Enterprise for the purpose of apply- ing the restrictions contained in this covenant: An allowance for earnings arising from any increase in the charges made for service from the Enterprise which has become effective prior to the incurring of such additional indebtedness but which, during all or any part of said last two completed Fiscal Years, was not in effect, in an amount equal to -24- 75% of the amount by which the Net Revenues should have been increased if such increase in charges had been in effect during the whole of said last two com- pleted Fiscal Years, as shown by the certificate or opinion of an independent certified accountant or firm of certifie~ public accountants employed by the City. (c) For purposes of this Section, Net Revenues shall include all investment income on all accounts established in the Water Enterprise Fund and on all other funds established for the ben- efit of the holders of the 1988 Bonds or Parity Bonds. (d) Junior lien bonds (payable in whole or in part from the Net Revenues) may be issued to finance or refinance any repairs, enlargements, extensions or improvements of the Enterprise, but no Revenues may be used for the payment of such junior lien bonds (interest, principal, redemption premium or sinking fund installments) or the establishment or maintenance of any funds or accounts created in conjunction with their issuance, unless and until: (i) the City has complied fully with all provisions of the Resolution and has made all payments required to that time by the Resolution; (ii) the Reserve Fund contains an amount equal to no less than the maximum combined annual principal and interest requirements of all 1988 Bonds and Parity Bonds then outstanding. Covenant 12. Tax Covenants Relating to the Internal Revenue Code of 1986. The City shall do the following with respect to the 1988 Bonds which, when initially issued, are the subject of an Opinion of Counsel to the effect that interest thereon is excluded from gross income for Federal income tax purposes pursuant to the Internal Revenue Code of 1986 or any successor thereto: (a) In order to maintain the exclusion of interest on the 1988 Bonds from gross income for Federal income tax purposes, and for no other purpose, the City shall take actions necessary under the provisions of the Internal Revenue Code of 1986 (the "Code"). In furtherance of the covenant contained in the preceding sentence, the City agrees to comply with the provisions of the Tax and Non-Arbitrage Certificate and Instructions as to Compliance with the Provisions of Section 103(a) of the Internal Revenue Code of 1986 (the "Tax Certificate") delivered by Mudge Rose Guthrie Alexander & Ferdon on the date of initial issuance and delivery of the 1988 Bonds, as such Tax Certificate may be amended from time to time, as a source of guidance for achieving compliance with the Code. (b) The City shall make any and all payments required to be made to the United States Department of the Treasury in connection with the 1988 Bonds pursuant to Section 148(f) of the Internal -25- Revenue Code of 1986 from amounts on deposit in the funds and accounts established under this Resolution and available therefor. (c) Notwithstanding any other provision of this Resolution to the contrary, so long as necessary in order to maintain the exclu- sion from gross income of interest on the 1988 Bonds for Federal income tax purposes, the covenants contained in this Section shall survive the payment of the 1988 Bonds and the interest thereon, including any payment or defeasance thereof pursuant to Section 28 of this Resolution. Covenant 13. Water Revenue Anticipation Notes. The City covenants that it will retire its Water Revenue Anticipation Notes so that no such Note or Notes will remain outstanding under Ordinance No. 4415 of the City Council, as amended by Ordinance No. 4530 of the City Council, after the 1980 Bonds are no longer deemed to be out- standing in accordance with their terms and under the 1980 Bond Resolution. SECTION 22. Lost, Stolen, Destroyed, or Mutilated 1988 Bonds. In the event that any 1988 Bond is lost, stolen, destroyed or mutilated, the City will cause to be issued a new 1988 Bond simi- lar to the original to replace the same in such manner and upon such reasonable terms and conditions, including the payment of costs and the posting of a surety bond if the City deems such surety bond nec- essary, as may from time to time be determined and prescribed by resolution. The City may authorize such new 1988 Bond to be signed and authenticated in such manner as it determines in said resolution. SECTION 23. Cancellation of 1988 Bonds. Ail 1988 Bonds surrendered to the Registrar or any paying agent of the City for pay- ment upon maturity or for redemption shall upon payment therefor be cancelled immediately. Any 1988 Bonds purchased by the City as authorized herein shall be cancelled forthwith and shall not be reissued. SECTION 24. Consent of 1988 Bondowners. Except as per- mitted by paragraphs (c) and (d) of Section 27 hereof, no amendment, waiver or modification of any provision of this Resolution shall be effective until the consent provided for by this Section 24 shall have been obtained. Any act relating to the amendment, waiver or modification of any of the provisions of this Resolution consented to by bondowners holding 66 2/3% in aggregate principal amount of the outstanding 1988 Bonds, exclusive of 1988 Bonds, if any, o~ed by the City, shall be binding upon the holders of all of the 1988 Bonds, and shall not be deemed an infringement of any of the provisions of this Resolution, whatever the character of such act may be, and may be done and performed as fully and freely as if expressly permitted by -26- the terms of this Resolution, and after such consent relating to such specified matters has been given, no bondowner shall have any right or interest to object to such action or in any manner to question the propriety thereof or to enjoin or restrain the city or any officer thereof from taking any action pursuant thereto. Bondowners may consent by affirmative vote at a bondowners' meeting or may consent in writing without a meeting, all as hereinaf- ter provided. No such amendment, waiver or modification shall be made which will permit (i) a change in the maturity or term of redemption of the principal of any 1988 Bond or any installment of interest thereon or a reduction in the principal amount of or redemption price or redemption premium or rate of interest upon any 1988 Bond without the consent of the holder of such 1988 Bond; or (ii) a reduction of the percentage of the principal amount of 1988 Bonds the vote or con- sent of which is required to effect any such amendment. (a) Calling Bondowners' Meeting. If the City shall desire to obtain any such consent it may call a meeting of bondowners, by resolution, for the purpose of considering the action, the consent to which is desired. (b) Notice of Meeting. Notice specifying the purpose, place, date and hour of such meeting shall be published once in a financial newspaper or journal of national circulation published in or near the City of New York, New York, not less than sixty days and not more than ninety days prior to the date fixed for the meeting. Such notice shall set forth the nature of the proposed action, con- sent to which is desired. The City Clerk of the City shall also on or before the first publication of such notice, mail a similar notice, postage prepaid, to the respective registered owners thereof at their addresses appearing on the 1988 Bond registry books. The place, date and hour of holding such meeting and the date or dates of publishing and mailing such notice shall be determined by the city, in its discretion. The actual receipt by any bondowner of notice of any such meeting shall not be a condition precedent to the holding of such meeting, and failure to receive such notice shall not affect the validity of the proceedings thereat. A certificate by the city Clerk, approved by resolution of the City Council, that the meeting has been called and that notice thereof has been given as herein pro- vided shall be conclusive as against all parties and it shall not be open to any bondowner to show that he failed to receive notice of such meeting. -27- (c) Voting Qualifications. Any bondowner may, prior to any such meeting, deliver his 1988 Bond or 1988 Bonds to any agency designated by the City for the purpose, and shall thereupon be enti- tled to receive an appropriate receipt for the 1988 Bond or 1988 Bonds so deposited, calling for the redelivery of such 1988 Bond or 1988 Bonds at any time after the meeting. The Treasurer shall pre- pare and deliver to the chairman of the meeting a list of the names and addresses of the registered owners of 1988 Bonds, with a state- ment of the maturities and serial numbers of the 1988 Bonds held and deposited by each of such bondowners, and no bondowner shall be enti- tled to vote at such meeting unless his name appears upon such list or unless he shall present his 1988 Bond or 1988 Bonds at the meeting or a certificate of deposit thereof, satisfactory to the City, exe- cuted by a bank or trust company. No bondowner shall be permitted to vote with respect to a larger aggregate principal amount of 1988 Bonds than is set against his name on such list, unless he shall produce the 1988 Bonds upon which he desires to vote, or a certifi- cate of deposit thereof as above provided. (d) Issuer-owned 1988 Bonds. The City covenants that it will present at the meeting a certificate, signed and verified by one member of the City Council and by the Treasurer stating the maturi- ties and serial numbers of all 1988 Bonds owned by, or held for account of, the City, directly or indirectly. No person shall be permitted at the meeting to vote or consent with respect to any 1988 Bond appearing upon such such certificate, or any 1988 Bond which it shall be established at or prior to the meeting is owned by the City, directly or indirectly, and no such 1988 Bond (in this Resolution referred to as an "issuer-owned 1988 Bond") shall be counted in determining whether a quorum is present. (e) Quorum and Procedure. A representation of at least 66 2/3% in aggregate principal amount of the 1988 Bonds then out- standing (exclusive of issuer-owned 1988 Bonds) shall be necessary to constitute a quorum at any meeting of bondowners, but less than a quorum may adjourn the meeting from time to time, and the meeting may be held as so adjourned without further notice, whether such adjourn- ment shall have been had by a quorum or by less than a quorum. The City shall, by an instrument in writing, appoint a temporary chairman of the meeting, and the meeting shall be organized by the election of a permanent chairman and a secretary. At any meeting each bondowner shall be entitled to one vote for every $5,000 principal amount of 1988 Bonds with respect to which he shall be entitled to vote as aforesaid, and such vote may be given in person or by proxy duly appointed by an instrument in writing presented at the meeting. The City, by its duly authorized representative, may attend any meeting of the bondowners, but shall not be required to do so. -28- (f) Vote Required. At any such meeting held as aforesaid there shall be submitted for the consideration and action of the bondowners a statement of proposed action, consent to which is desired, and if such action shall be consented to and approved by bondowners holding at least 66 2/3% in aggregate amount of the 1988 Bonds then outstanding (exclusive of issuer-owned 1988 Bonds) the chairman and secretary of the meeting shall so certify in writing to the City, and such certificate shall constitute complete evidence of consent of bondowners under the provisions of this Resolution. A certificate signed and verified by the chairman and the secretary of any such meeting shall be conclusive evidence and the only competent evidence of matters stated in such certificate relating to proceed- ings taken at such meeting. (g) Written Consent of 1988 Bondowners. If the city shall desire to obtain any such consent in writing, without a meeting of bondowners, the city Council may, by resolution, propose the action, to which consent is desired. A copy of such resolution, together with a request to bondowners for their consent to the action proposed therein, shall be published once in a financial newspaper or journal of national circulation published in or near the City of New York, New York. The City Clerk of the City shall also, on or before the publication of such resolution and request, mail a copy thereof to each registered owner at the address appearing on the bond registry books. The actual receipt by any bondowner of such resolution and request shall not affect the validity of the proceedings for the obtaining of such consent. A certificate by said City Clerk, approved by resolution of the City Council, that said resolution and request has been published and mailed as herein provided shall be conclusive as against all parties, and it shall not be open to any bondowner to show that he failed to receive such resolution and consent. Each written consent shall be accompanied by proof of ownership of the 1988 Bonds for which such consent is given. Proof of ownership shall be made in such manner as shall be prescribed by the resolution proposing the action. Any such written consent shall be binding upon the holder of the 1988 Bonds giving such consent and on any subsequent holder (whether or not such subsequent holder has notice thereof) unless such consent is revoked in writing by the holder giving such consent or by the subsequent holder. To be effec- tive, any revocation of consent must be filed before the adoption of the resolution accepting consents as hereinafter provided. After the holders of at least 66 2/3% in aggregate principal amount of the 1988 Bonds then outstanding (exclusive of issuer-owned 1988 Bonds) shall have consented in writing, the City -29- Council shall adopt a resolution accepting such consents and such resolution shall constitute complete evidence of the consent of bond- owners under this Resolution. (h) Publication of Consent. Notice specifying the amend- ment, waiver or modification that has received the consent of bond- owners as required by this section shall be published once in a financial newspaper or journal of national circulation published in or near the City of New York, New York, not less than sixty days fol- lowing the final action in the proceedings for the obtaining of such consent. Said notice is only for the information of bondowners and failure to publish such notice or any defect therein shall not affect the validity of the proceedings theretofore taken in the obtaining of such consent. SECTION 25. 1988 Bond Form. Subject to the provisions of the Resolution, the form of the 1988 Bonds and the Registrar's Certificate of Authentication shall be substantially as follows: -30- No. R-__ [ BOND FOP2~I] UNITED STATES OF AJ~R~[CA STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF ANAHEIM WATER REVENUE BOND, 1988 SERIES Interest Rate: Maturity Date: Dated Date: CUSIP: The CITY OF ANAHEIM, a municipal corporation situated in the County of Orange, State of California (the "City"), FOR VALUE RECEIVED, hereby promises to pay, solely from the Water Enterprise Fund, as hereinafter provided, to or registered assigns, on October 1, __, upon presentation and surrender of this bond, the sum of DOLLARS, with interest thereon at the Interest Rate per annum stated hereon, payable semiannually on the first day of April and October of each and every year, commencing April 1, 1988, until the city's obligation with respect to the payment of such prin- cipal sum shall be discharged. Such interest shall be payable from the most recent interest payment date next preceding the date hereof to which interest has been paid, unless the date hereof is an April 1 or October 1 to which interest has been paid, in which case from the date hereof, or unless the date hereof is on or prior to March 15, 1988, in which case from January 1, 1988, or unless the date hereof is between a record date and the next succeeding interest payment date, in which case from such interest payment date; provided, fur- ther, that if, as shown by the records of the Registrar, interest on the 1988 Bonds shall be in default, 1988 Bonds issued in exchange for 1988 Bonds surrendered for transfer or exchange shall bear interest from the interest payment date to which interest has been paid in full on the 1988 Bonds surrendered or if no interest has been paid, January 1, 1988. The terms and provisions of this bond and definitions of certain terms used herein may be continued on the reverse side of this bond and such continued terms and provisions and definitions shall for all purposes have the same effect as though fully set forth on the front of the bond. This bond shall be negotiable, subject with respect to transfer to the provisions for registration set forth on the reverse hereof and in the Resolution. -31- It is hereby certified and recited that any and all acts, conditions and things required to exist, to happen and to be performed precedent to and in the incurring of the indebtedness evi- denced by this bond and in issuance of this bond exist, have hap- pened, and have been performed in due time, form and manner as required by the Constitution and laws of the State of California and the City Charter and that this bond, together with all other indebt- edness of the City pertaining to the City's water system, is within every debt and other limit prescribed by the Constitution and laws of the State of California and the City Charter. This bond shall not be entitled to any benefit under the Resolution or be valid or become obligatory for any purpose until this note shall have been authenticated by the execution by the Registrar of the Registrar's Certificate of Authentication hereon. IN WITNESS WHEREOF, the City of Anaheim has caused this bond to be signed by the Mayor and the City Treasurer of the City by their facsimile signatures, countersigned by the City Clerk of said City by her facsimile signature, and sealed with the corporate seal of the City. COUNTERSIGNED: Mayor (SEAL) City Clerk City Treasurer -32- [FORM OF CERTIFICATE OF AUTHENTICATION ON ALL BONDS] REGISTRAR'S CERTIFICATE OF AUTHENTICATION This bond is one of the Bonds delivered pursuant to within-mentioned Resolution. Registrar By: Authorized officer Date of Authentication and Registration: the -33- [REVERSE OF BOND] Both principal of and interest on this bond are payable in lawful money of the United States of America. The principal on this bond and any premium upon the redemption thereof are payable at the corporate trust office of The Bank of New York in New York, New York, at the corporate trust office of Wall Street Trust Company California in Los Angeles, California, or, at any other paying agent which has been selected (in its sole discretion) by the City in New York, New York. Interest on this bond shall be payable by check or draft mailed to the registered owner on the registration records maintained by the Registrar, determined as of the close of business on the 15th day of the calendar month immediately preceding an interest payment date (including the date on which the principal of a Bond is to be paid). This bond is one of a duly authorized issue of bonds of the City designated "Water Revenue Bonds, 1988 Series" (the "1988 Bonds"), all of which have been issued pursuant to Section 1210 of the City Charter and Ordinance No. 2933, as amended of the City Council (the "Ordinance"), for the purpose of financing the cost of the acquisition and construction of additions to and improvements of the City's water system, and the creation of said issue and the terms and conditions of the 1988 Bonds are provided for by the resolution of the City Council authorizing the 1988 Bonds adopted January 12, 1988, designated Resolution No. 88R-11 (the "Resolution"), and this reference incorporates the Resolution and Section 1210 of the City Charter and the Ordinance, and by acceptance hereof the holder of this bond assents to said terms and conditions. The 1988 bonds are hereinafter referred to as the "1988 Bonds." The Resolution is adopted under, and this bond, is issued under and, is to be construed in accordance with, the City Charter, the Ordinance and the laws of the State of California. This bond and the interest hereon and any premium upon the redemption hereof are not a debt of the City, nor a legal or equita- ble pledge, charge, lien or encumbrance upon any of its property or upon any of its income, receipts, or revenues, except the Net Revenues (as defined in the Resolution) of the City's water system pledged to its payment, and the principal of and the interest on this bond and any premium upon the redemption hereof are payable solely from the Net Revenues of the City's water system pledged to its pay- ment and said City is not obligated to pay such principal, interest and premium except from said Net Revenues. The Water Enterprise Fund is established under and pursuant to Section 1210 of the City Charter, the Ordinance and the Resolution, and under the provisions of the Resolution the Revenues of the City's water system are required to be deposited to the credit of the Water Enterprise Fund -34- and used only for the purposes authorized by the Resolution, including the payment of principal and interest of the bonds. By the terms of Section 1210 of the City Charter and the Ordinance and by covenant expressed in the Resolution, the City is obligated to prescribe, revise and collect charges for the services and facilities of the water system of the City such as to provide revenues sufficient to pay the interest on and principal of the 1988 Bonds as they become due and payable in addition to all other pay- ments required for compliance with the Resolution and the necessary and reasonable maintenance and operation costs of the City's water system, is prohibited from issuing bonds having any priority with respect to payment from the Revenues of the City's water system, and is subject to conditions with respect to any sale of said water system. In the manner provided in the Resolution, any or all of the obligations referred to in this paragraph and certain other obliga- tions mentioned in the Resolution may be waived with the consent of the holders of 66 2/3% in aggregate principal amount of the outstand- ing 1988 Bonds, exclusive of issuer-owned bonds. If this bond matures on or after October 1, 1997, it is redeemable in the manner and subject to the terms and provisions, and with the effect, set forth in the Resolution referred to on the face of this bond, at the option of the City, on and after October 1, 1996, in whole at any time or in part on any interest payment date. Notice of such redemption shall be mailed first-class, postage pre- paid to the owner of record of this bond as of the date of such notice, which shall be at least 30 days' prior to the date fixed for redemption. If the 1988 Bonds are permitted to be issued in coupon form, notice of redemption shall also, at least 30 days prior to the date fixed for redemption, be published in a newspaper of general circulation in the City of Anaheim and in a daily newspaper or finan- cial journal published in or near the Borough of Manhattan, New York. Such redemption shall occur at the following redemption prices, expressed as a percentage of the principal amount, together with accrued interest to the date of redemption: Redemption Dates Redemption Price October 1, 1996 and September 30, 1997 102% October 1, 1997 and September 30, 1998 101 October 1, 1998 and thereafter, 100 If this bond matures on October 1, __ or October 1, __, it is also subject to mandatory redemption from payments required to be made from time to time to the Sinking Account provided for by the Resolution, at 100% of the principal amount so redeemed plus accrued interest to the date of redemption. -35- The 1988 Bonds are issuable in the form of registered 1988 Bonds without coupons in the denominations of $5,000 or any integral multiple of $5,000. The owner of any 1988 Bond or 1988 Bonds may surrender the same (together with a written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or his duly authorized attorney) at the corporate trust office of The Bank of New York in New York, New York, at the corporate trust office of Wall Street Trust Company California, or, at any other paying agent which has been selected (in its sole discretion) by the City, in New York, New York, in Los Angeles, California in exchange for an equal aggregate principal amount of registered 1988 Bonds of any other authorized denominations. Such exchanges shall be in the manner, subject to the conditions and upon the payment of the charges provided in the Resolution. This bond is transferable, as provided in the Resolution, only upon the books of the City kept for that purpose at the above-mentioned corporate trust office of The Bank of New York in New York, New York, at the corporate trust office of Wall Street Trust Company California in Los Angeles, California, or, at any other paying agent which has been selected (in its sole discretion) by the City, in New York, New York, by the registered owner hereof in person, or by his duly authorized attorney, upon surrender of this bond together with a written instrument of transfer satisfactory to the Registrar duly executed by the registered owner or his duly authorized attorney, and thereupon a new registered bond or bonds of this series, without coupons and in the same aggregate principal amount, shall be issued to the transferee in exchange therefor as provided in the Resolution, and upon payment of the charges therein prescribed. The City, the Registrar and the paying agents of the City may deem and treat the person in whose name this bond is regis- tered as the absolute owner hereof for the purpose of receiving pay- ment of, or on account of, the principal and interest due hereon and for all other purposes. -36- SECTION 26. Temporary 1988 Bonds. Any 1988 Bonds may be initially issued in temporary form exchangeable for definitive 1988 Bonds. The temporary 1988 Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the City, shall be without coupons and may contain such reference to any of the provisions of this Resolution as may be appropriate. Every temporary 1988 Bond shall be executed and sealed by the City and authenticated by the Registrar in substantially the same manner as provided in Section 7 hereof. If the City issues temporary 1988 Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary 1988 Bonds may be surrendered for cancella- tion at the office of the Treasurer, and the Treasurer shall deliver in exchange for such temporary 1988 Bonds an equal aggregate princi- pal amount of definitive 1988 Bonds of the same interest rates and maturities. Until so exchanged, the temporary 1988 Bonds shall be entitled to the same benefits under this Resolution as definitive 1988 Bonds issued hereunder. SECTION 27. Resolution Constitutes Contract; Certain Amendments, etc. (a) The provisions of this Resolution shall con- stitute a contract between the City and the bondowners and the provi- sions hereof shall be enforceable by any bondowner for the equal ben- efit and protection of all bondowners similarly situated by mandamus, accounting, mandatory injunction or any other suit, action or pro- ceeding at law or in equity that is now or may hereafter be autho- rized under the laws of the State of California in any court of com- petent jurisdiction. Said contract is made under and is to be con- strued in accordance with the laws of the State of California. (b) No remedy conferred hereby upon any bondowner is intended to be exclusive of any other remedy, but each such remedy is cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred by the Charter, Ordinance No. 2933 or any law of the State of California. No waiver of any default or breach of duty or contract by any bondowner shall affect any subsequent default or breach of duty or contract or shall impair any rights or remedies on said sub- sequent default or breach. No delay or omission of any bondowner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed as a waiver of any such default or acquiescence therein. Every substantive right and every remedy conferred upon the bondowners may be enforced and exercised as often as may be deemed expedient. In case any suit, action or pro- ceeding to enforce any right or exercise any remedy shall be brought or taken and the bondowner shall prevail, said bondowner shall be entitled to receive from the Water Enterprise Fund reimbursement for reasonable costs, expenses, outlays and attorneys' fees and should said suit, action or proceeding be abandoned, or be determined adversely to the bondowners then, and in every such case, the City -37- and the bondowners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. (c) Prior to the issuance of any 1988 Bonds under this Resolution, any prevision of this Resolution and the rights and obli- gations of the City and of the holders of the 1988 Bonds and coupons thereunder may be modified or amended in any respect without the con- sent of any person, upon the adoption by the City of one or more sup- plemental resolutions. (d) After the issuance and delivery of the 1988 Bonds, the provisions of this Resolution shall be irrepealable, but shall be subject to modification, waiver and amendment to the extent and in the manner provided in this Resolution, but to no greater extent and in no other manner. For any one or more of the following purposes and at any time or from time to time, a supplemental resolution may be executed and delivered by the City which shall be fully effective in accordance with its terms: (1) To close the Resolution against, or provide limi- tations and restrictions in addition to the limitations and restrictions contained in the Resolution on, the authenti- cation and delivery of Parity Bonds or the issuance of other evidences of indebtedness; or (2) To add to the convenants and agreements of the City in the Resolution, other covenants and agreements to be observed by the City which are not contrary to or incon- sistent with the Resolution as theretofore in effect; or (3) To add to the limitations and restrictions in the Resolution, other limitations and restrictions to be observed by the City which are not contrary to or inconsis- tent with the Resolution as theretofore in effect; or (4) To confirm, as further assurance, the pledge cre- ated under the Resolution; or (5) To modify any of the provisions of the Resolution in any other respect whatsoever, provided that (i) no 1988 Bonds shall be Outstanding at the date of the adoption of such supplemental resolution or (ii) such modification shall be, and be expressed to be, effective only after all 1988 Bonds outstanding at the date of the adoption of such supplemental resolution shall cease to be outstanding; or -38- (6) To cure any amb~quJty, supply any omission, or cure or correct any defect or inconsistent provision in the Resolution; or (7) To insert such provisions clarifying matters or questions arising under the Resolution as are necessary or desirable and are not contrary to or inconsistent with the Resolution as theretofore in effect. SECTION 28. Defeasance. Ail or any portion of the 1988 Bonds shall no longer be deemed to be outstanding and unpaid if the City shall have made adequate provision for the payment, in accor- dance with the 1988 Bonds and this Resolution, of the principal, interest and premium, if any, to become due thereon at maturity or upon call and redemption prior to maturity. Such provision shall be deemed to be adequate if the City shall have irrevocably set aside, in a special trust fund or account, moneys which when added to the interest earned or to be earned from the investment or deposit thereof shall be sufficient to make said payments as they become due. Moneys so set aside may be invested in any direct obligations of, or obligations guaranteed by, the United States of America, in which the City may lawfully invest its money. SECTION 29. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the City from making con- tracts or creating bonded or other indebtedness payable from the gen- eral fund of the City or from taxes or any source other than the Revenues of the Enterprise, and from and after the sale of the 1988 Bonds the general fund of the City shall not include the Revenues of the Enterprise and no contract or other obligation payable from the general fund of the City shall be payable from the Revenues of the Enterprise, except as. provided herein. SECTION 30. Severability. If any provision, or any por- tion thereof, contained in this Resolution, or the application thereof to any person or circumstance is held to be unconstitutional, invalid or unenforceable, the remainder of this Resolution and the application of any such provision, or portion thereof, to other per- sons or circumstances shall be deemed severable and shall not be affected thereby, and this Resolution and the 1988 Bonds shall remain valid and the bondowners shall retain all valid rights and benefits accorded to them under this Resolution, the City Charter and the Constitution and laws of the State of California. SECTION 31. Substitutes. The Mayor Pro-Tempore, any Deputy City Clerk, and any duly authorized substitute for the Treasurer, may act in the place and stead of the Mayor, the City Clerk and the Treasurer, respectively, in the performance of any and -39- all things authorized or provided for the signing of the 1988 Bonds. SECTION 32. Effective Date. effect immediately. ADOPTED, 1988. in this Resolution, including This Resolution shall take SIGNED AND APPROVED this twelfth day of January, [SEAL] Attest: City Clerk -40- CUEKK STALE OF CAXIFORNiA ) COUNTY OF ORA~qGE ) ss. CITY OF AJqAHEiM ) I, LEONORA N. SOHL, City Cler~ of the City of Anaheim, do hereby certify that the foregoing Resolution No. 88R-11 was introduced and adopted at a regular meeting provided by law, of the City Council of the City of Anaheim held on tae 12t~ day of January, 1988, by the following vote of the members thereof: AYES: COUNCIL MEMBERS: Ehrle, Hunter, Kaywood, Pickler and Bay NOES: COUNCIL M~BERS: None A~SEi~T: COUNCIL MEMBERS: None AND I FURTHER certify that the Mayor of the City of Anaheim signed said Resolution No. 88R-11 on time 12tl~ day of January, 1988. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the City of Anaheim taisl2th day of January, 1988. CITY CLERK OF THE CITY £, LEONORA N. SOHL, City Clerk of the City of Anaheim, do hereby certify that the foregoing is the original of Resolution No. 88R-11 duly passed and adopted by the Anaaeim City Council on January 12, 1988. CIT¥CLE~ OF THE CITY OF ~ANE~ EXHIBIT A Section 1: Maturity Schedule: Year of Maturity 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Principal Amount $ 85 000 90 000 100 000 105000 110 000 120 000 125 000 135 000 145 000 155 000 165 000 175 000 190 000 200 000 215 000 235 000 250 000 270 000 290 000 315 000 340 000 365,000 395,000 425,000 Interest Rate 6.30% 6.30 6.30 6.30 6.30 6.30 6.30 6.45 6.60 6 75 6 9O 7 O0 7 10 7 15 7 20 7 25 7 30 7 35 7 40 7.45 7.50 7.55 7.60 7.60 "Serial Bonds." All 1988 Bonds are "Serial Bonds." "Term Bonds." There are no "Term Bonds." Section 2: Sinking Account Allocations: Because there are no "Term Bonds," there are no Sinking Account Allocations. 2383m011288