86R-091
CITY OP ARABEIII
RBSOLD'lIOR RO. 86R-9l
RESOLUTION OF THE CITY COURCIL OF THE CITY OF
ARAIIEIII, CALIPORRIA, AD'fHORIZIRG THE ISSOARCE
OF $7,160,000 WATER RBVERUE BOROS, 1986
S~ES, OP THE CITY; PROVIDING THE TERMS AND
CORDITIORS OF SUCH BOIIDS; AND APPROVING THE
EXBCtrrIOR AlID DELIVERY OP AR ESCROW AGRBBMBRT
IN CORRECTION THEREWITH
ADOPTED: MARCH 4, 1986
TABLE OF CON'J.'ENTS
paae
Section 1. DEFINITIONS. . . . . . . . . . . 5
Section 2. EQUALITY OF 1986 BONDS AND PARITY
BONDS; PLEDGE OF REVENUES. . . . . . 8
Section 3. PURPOSE OF THE 1986 BONDS. . . . . . 8
Section 4. SPECIAL OBLIGATIONS; NO GENERAL CITY
LIABILITY. . . . . . . . . . . . . . . . 9
Section 5. DESCRIPTION OF THE 1986 BONDS. . 9
Section 6. PLACE OF PAYMENT. . . . . . . . . . . . .lO
Section 7. EXECUTION AND AUTHENTICATION OF THE
1986 BONDS. . . . . . . . . . . . . . . .10
Section 8. REGISTRATION AND TRANSFER. .11
Section 9. REDEMPTION OF 1986 BONDS. . .12
Section 10. FUNDS AND ACCOUNTS. . . . . . . .l4
Section 11. DISPOSITION OF BOND PROCEEDS AND
CERTAIN AVAILABLE MONEYS. . . . . . . . .15
Section l2. REVENUE ACCOUNT. . . . . . . . . . . . .16
Section l3. M&O ACCOUNT. . . . . . . . . . .17
Section 14. BOND SERVICE ACCOUNT; SINKING
ACCOUNT. . . . . . . . . . .l7
Section 15. RESERVE FUND. . . . . . . . . . . . . . .19
Section l6. R&R ACCOUNT. . . . . . . . . . . . . . .20
Section l7. E&I ACCOUNT. . . . . . . . . . . . . . .2l
Section l8. SURPLUS MONEYS IN THE REVENUE
ACCOUNT. . . . . . . . . . . . . . .2l
Section 19. INVESTMENTS. . . . . . . . . . .21
Section 20. WARRANTY. . . . . . . . .22
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TABLE OF COIftENTS, Continued
Page
Section 21. COVENANTS. . . . . . . . . . . . . .22
Covenant 1. Punctual Payment. . . . . . . . .22
Covenant 2. Discharge Claims. . . . .22
Covenant 3. Operate Enterprise in
Efficient and Economical
Manner. . . . . . . . . . . . . .23
Covenant 4. Against Sale, Eminent Domain,
Existing and Future
Agreements. . . . . . . . . .23
Covenant 5. Insurance. . . . . . . . . . . .24
Covenant 6. Records and Accounts. . . . .25
Covenant 7. Collection of Charges. . . . . .25
Covenant 8. Rates and Charges. . . . . . . .25
Covenant 9. No Priority for Additional
Indebtedness. . . . . . . . . . .26
Covenant 10. Limits on Parity Bonds. .26
Covenant 11. Arbitrage. . . . . . . . . . . .27
Covenant 12. Tax Covenant. . . . . . . . .28
Covenant 13. Provisions and Restrictions
with Respect to Defeasance. . . .28
Section 22. LOST, STOLEN, DESTROYED, OR
MUTILATED 1986 BONDS. . . . . . . . . . .30
Section 23. CANCELLATION OF 1986 BONDS. . . . . .30
Section 24. CONSENT OF 1986 BONDHOLDERS. . . . . . .30
Section 25. 1986 BOND FORM. . . . . . . .34
Section 26. TEMPORARY 1986 BONDS. . . . . . . . .39
Section 27. APPROVAL OF THE EXECUTION AND
DELIVERY OF AN ESCROW AGREEMENT. . . . .39
Section 28. RESOLUTION CONSTITUTES CONTRACT. . . . .40
Section 29. DEFEASANCE. . . . . . . . . . . . . . . .4l
Section 30. FUTURE CONTRACTS. . . . . . . . . . . . .41
Section 31. SEVERABILITY. . . . . . . . .41
Section 32. SUBSTITUTES. . . . . . . . .41
Section 33. EFFECTIVE DATE. . . . . . . . . .42
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CITY OP ANAHEIM RESOLO'lION NO. 86R-9l
RBSOLU~ION OP THB CITY COUNCIL OP THB CITY OP ANAHBIM,
CALIPORRIA, AO'lHORIZIHG THE ISSUANCE OP $7,160,000 ~
RBVBNUB BORDS, 1986 SBRIBS, OP THB CITY; PROVIDING THB
TERMS AND CONDITIONS OP SUCH BORDS; AND APPROVING THE
EXBCO'1'ION AND DELIVERY OF AN BSClOf AGREBMBRT IN COHREC.rIOR
THBREWI'l'II
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 l210 of the Charter ("Section l210") 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
purpose 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 anyone 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 the (i) the aggregate principal amount of
such electric revenue bonds in anticipation of which such
electric revenue bond anticipation notes and the electric
revenue bond anticipation notes were issued outstanding in
accordance with their terms at anyone 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 anyone 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
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principal amount of such revenue anticipation notes
outstanding in accordance with their terms at anyone time
shall not exceed, for each of such utilities, an amount
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
WHBRBAS, Ordinance No. 2933 of the City Council, as amended
by Ordinance No. 4536 of the City Council, incorporating certain sec-
tions of the Revenue Bond Law of 1941 (Chapter 6, Part l, Division 2,
Title 5 of the Government Code of the State of California), estab-
lishes a procedure for the issuance of water revenue bonds as pro-
vided for in Section l2l0 (including refunding water revenue bonds as
provided for in Section l2l0.1); and
WHBRBAS, pursuant to Section 1210, Ordinance No. 2933 (as
originally adopted) and Resolution No. 78R-533 of the City Council, a
special municipal election was held in the City on November 7, 1978,
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 "1978 Proposition") was
approved by the votes of more than a majority of the voters voting on
the 1978 Proposition at said special municipal election; and
WHBRBAS, of said authorized amount of $14,000,000, the City
issued in 1980 $7,350,000 water revenue bonds designated "Water
Revenue Bonds, 1980 Series"; and
WBRRBAS, pursuant to Section l2l0, Ordinance No. 2933 (as
originally adopted) and Resolution No. 82R-391 of the City Council, a
special municipal election was held in the City on November 2, 1982,
for the purpose of submitting to the qualified voters of the City the
following proposition:
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"In order to provide a more economical market for the
remaining water revenue bonds authorized by a majority of
the voters in 1978 to provide more economical water ser-
vice, shall City Council Resolution No. 78R-533 be amended
to eliminate from such Resolution the maximum rate of
interest (eight percent) which may be paid on such bonds
and to provide instead in such Resolution that the City
Council shall, at or prior to the time of sale of any such
bonds, establish by resolution a maximum rate of interest
which may be paid on the bonds then being sold?"; and
WHEREAS, said proposition (the "l982 Proposition") was
approved by the votes of more than a majority of the voters voting on
the 1982 Proposition at said special municipal election: and
WHEREAS, of said authorized amount of $l4,000,000, the City
issued in 1982 $6,650,000 water revenue bonds designated "Water
Revenue Bonds, 1982 Series"; and
WHEREAS, Section l210.1 of the Charter ("Section 1210.1"),
added to the Charter pursuant to a vote of a majority of all of the
voters on June 2, 1981, provides as follows:
"Electric and water refunding revenue bonds may be
issued to purchase, redeem or retire any bonds heretofore
or hereafter issued pursuant to Section 1210 or this
Section 1210.1, whenever the City Council determines that
(1) costs of the City will be reduced by the refunding of
any bonds, or (2) issuance of the refunding bonds will oth-
erwise be financially advantageous to the City.
If as a result of issuing of refunding bonds pursuant
to this Section l210.1, the water or electric utility of
the City shall, in any Fiscal Year, realize a reduction in
principal and interest on debt issued to finance such util-
ity when the principal and interest paid on the refunding
bonds in such Fiscal Year is compared to the principal and
interest that would have been payable on the refunded bonds
in such Fiscal Year, the City Council shall, not later than
the last day of the next succeeding Fiscal Year, adjust
rates of such utility, if necessary, to reflect fully such
reduction in principal and interest payments as a reduction
in costs of service of such utility.
All provisions of Section 1210 are applicable to
refunding bonds, except that notwithstanding Section l210
no additional election shall be required to authorize their
issuance."
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WHEREAS, this City Council deems it necessary to issue for
the purposes hereinafter set forth, $7,l60,000 aggregate principal
amount of refunding water revenue bonds authorized by Section l2l0
and Section l2l0.l, to be designated "Water Revenue Bonds, 1986
Series"; and the Water Revenue Bonds, 1986 Series, shall be on a
parity with the City's outstanding Water Revenue Series 1971 Bonds,
Water Revenue Bonds, 1980 Series, Water Revenue Bonds, 1984 Series
and any other parity water revenue bonds which may be issued in the
future by the City; and
WHBRBAS, pursuant to Section l210.l this City Council
hereby determines that costs of the City will be reduced by the
refunding of those Water Revenue Bonds, 1984 Series, maturing on or
after April 1, 1996, such refunding to be accomplished through the
issuance of the Water Revenue Bonds, 1986 Series;
NOW, THEREPORE, 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:
(a) "Authorized Investments" means any obligations in
which the City may lawfully invest its funds.
(b) "1986 Bonds" means the $7,160,000 aggregate prin-
cipal amount of Bonds authorized and issued hereunder.
(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.
(f) "Escrow Account" means the account so designated
established pursuant hereto and the Escrow Agreement.
(g) "Escrow Agent" means the Escrow Agent which is a
party to the Escrow Agreement.
(h) "Escrow Agreement" means the Escrow Agreement,
executed and delivered pursuant to Section 27 hereof, as
amended and supplemented from time to time.
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(i) "Fiscal Agent" means the fiscal agent under the
1971 Bond Resolution, the 1980 Bond Resolution and the 1984
Bond Resolution.
(j) "Fiscal Year" means the year period beginning on
July 1 and ending on the next following June 30.
(k) "Maximum Annual Debt Service" as computed from
time to time under Section l5 and Covenant lO of Section 20
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:
(l) The principal amount of all serial 1986 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, pay-
able in such Fiscal Year with respect to the term 1986
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 1986
Bonds and Parity Bonds which would be outstanding in
such Fiscal Year if the serial 1986 Bonds and serial
parity Bonds outstanding on the date of such computa-
tion are retired as they mature and if the term 1986
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 resolution
providing for the issuance of such term Parity Bonds.
(1) "Net Revenues" of the Enterprise means the amount
of the Revenues less the Operating Expenses.
(m) "1971 Bond Resolution" means Resolution
No. 7lR-233 of the City Council, adopted June 1, 1971,
authorizing the issuance of the 1971 Bonds.
(n) "1971 Bonds" means the $2,000,000 water revenue
bonds designated "Water Revenue Series 1971 Bonds" referred
to in the recitals hereof.
(0) "1980 Bond Resolution" means Resolution
No. 80R-75 of the City Council, adopted February 26, 1980,
authorizing the issuance of the 1980 Bonds.
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(p) ,"1980 Bonds" means the $7,350,000 water revenue
bonds designated "Water Revenue Bonds, 1980 Series"
referred to in the recitals hereof.
(q) "1984 Bond Resolution" means Resolution
No. 84R-396 of the City Council, adopted October 9, 1984,
authorizing the issuance of the 1984 Bonds.
(r) "l984 Bonds" means the $6,650,000 water revenue
bonds designated "Water Revenue Bonds, 1984 Series"
referred to in the recitals hereof.
(s) "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.
(t) "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, 1986.
(u) "Parity Bonds" means the outstanding 1971 Bonds,
the 1980 Bonds, the 1984 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 1986
Bonds.
(v) "parity Bond Resolution" means any resolution
authorizing the issuance of Parity Bonds.
(w) "Refunded Bonds. means the Water Revenue Bonds,
1984 Series, maturing on or after April 1, 1996.
(x) "Registrar" means Securities Services Division in
Los Angeles or San Francisco of Bank of America National
Trust and Savings Association.
(y) .Resolution" means this Resolution No. 86R-91 of
the City Council.
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(z) "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.
(aa) "Treasurer" means the Treasurer of the City.
SECTION 2. Equality of 1986 Bonds and parity Bonds; Pledge
of Revenues. Pursuant to Section l2l0 and Section 12l0.l of the
City Charter, Ordinance No. 2933 and this Resolution, the 1986 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
1986 Bonds and all Parity Bonds and any premiums upon the redemption
of any thereof 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 1986 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 1986 Bonds and all parity Bonds, and so long
as any of the 1986 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 bondowners 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 1986 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 l8 hereof.
S~IOR 3. Purpose of the 1986 Bonds. Under and pursu-
ant to Section 1210 and Section 1210.l of the City Charter and
Ordinance No. 2933 and in accordance with the authorizations stated
in the recitals hereof, the 1986 Bonds shall be issued for the pur-
pose of advance refunding the Refunded Bonds, including the payment
of costs and expenses incidental thereto.
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SECTION 4. Special Obligations; No General City Liability.
The 1986 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 1986 Bonds or their interest, nor is the credit or taxing
power of the City pledged for the payment of the 1986 Bonds or their
interest. The holders of the 1986 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 1986
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 and the funds and
accounts established or maintained by this Resolution.
SE~IOR 5. Description of the 1986 Bonds. The 1 9 8 6
Bonds shall all be in the denomination of $5,000 or any integral
multiple of $5,000, and numbered consecutively from R-l upwards. The
1986 Bonds shall be designated "WATER REVENUE BONDS, 1986 SERIES".
The 1986 Bonds shall be payable on April 1 in each year of maturity
in the amounts for each of the several years, shall bear interest
payable semi-annually on the first days of April and October of each
year, commencing October 1, 1986, as follows:
Principal Interest
Year Amounts Rate
1987 $ 30,000.00 5.000%
1988 70,000.00 5.250
1989 70,000.00 5.500
1990 75,000.00 5.700
1991 80,000.00 5.900
1992 85,000.00 6.000
1993 90,000.00 6.100
1994 95,000.00 6.200
1995 100,000.00 6.400
1996 300,000.00 6.500
1997 325,000.00 6.600
1998 345,000.00 6.700
1999 365,000.00 6.800
2000 390,000.00 6.850
200l 415,000.00 6.900
2004 l,405,000.00 5.750
2009 2,920,000.00 5.750
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The city Council hereby determines that the maximum rate of interest
which may be paid on the 1986 Bonds equals the highest interest rate
set forth above. Each 1986 Bond shall bear interest from the inter-
est payment date next preceding the date of its authentication,
unless such 1986 Bond is authenticated on an interest payment date,
in which event from such interest payment date, or unless such 1986
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 payment date, inclusive, in which event such 1986
Bond shall bear interest from such interest payment date; provided,
however, that if the date of authentication of any 1986 Bond shall be
prior to September 15, 1986, such 1986 Bond shall bear interest from
March l, 1986; provided, further, that if, as shown by the records of
the Registrar, interest on the 1986 Bonds shall be in default, 1986
Bonds issued in exchange for 1986 Bonds surrendered for transfer or
exchange shall bear interest from the interest payment date to which
interest has been paid in full on the 1986 Bonds surrendered or if no
interest has been paid, March 1, 1986.
The 1986 Bonds maturing in the years 1987 to 2001, inclu-
sive, are sometimes referred to herein as "serial 1986 Bonds" and the
1986 Bonds maturing in the years 2004 and 2009 are sometimes referred
to herein as "term 1986 Bonds."
SBCTIOB 6. Place of Payment. Each 1986 Bond shall bear
interest from its date until the principal sum thereof has been paid;
provided however, that if at the maturity date of any 1986 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 accor-
dance with the terms of this Resolution, said 1986 Bonds shall then
cease to bear interest. The 1986 Bonds and the interest thereon
shall be ~ayable in lawful money of the United States of America.
The princ1pal of the 1986 Bonds and any premium upon the redemption
thereof shall be payable at the Securities Services Division of Bank
of America National Trust and Savings Association in Los Angeles or
San Francisco, California, or at any other paying agent of the City
in New York, New York. Interest on the 1986 Bonds 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 1986 Bond is to be paid).
SBC'lIOB 7. Bzecution and Authentication of the 1986 Bonds.
The Mayor of the City and the Treasurer are hereby authorized and
directed to sign the 1986 Bonds by their printed, lithographed or
engraved facsimile signatures, and the City Clerk of the City is
hereby authorized and directed to countersign the 1986 Bonds by his
or her facsimile signature and to affix thereto or otherwise
reproduce thereon the corporate seal of the City.
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The 1986 Bonds shall bear thereon a certificate of
authentication, in substantially the form set forth in Section 25 of
the Resolution, executed manually by the Registrar. Only such 1986
Bonds as shall bear thereon such certificate of authentication shall
be entitled to any right or benefit under the Resolution and no 1986
Bond shall be valid or obligatory for any purpose until such certifi-
cate of authentication shall have been duly executed by the
Registrar. Such certificate of the Registrar upon any 1986 Bond exe-
cuted on behalf of the City shall be conclusive evidence that the
1986 Bond so authenticated has been duly authenticated and delivered
under the Resolution and that the owner thereof is entitled to the
benefits of the Resolution.
SBCrIOR 8. Registration and Transfer. The 1986 Bonds
shall be issued in fully registered form. The 1986 Bonds shall be
transferable only upon the books of the City, which shall be kept for
such purposes at the Securities Services Division in San Francisco 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 satisfactory to the Registrar
duly executed by the registered owner or his duly authorized
attorney. Upon the transfer of any such registered 1986 Bond, the
Registrar shall issue in the name of the transferee a new registered
Bond or 1986 Bonds of the same aggregate principal amount and matu-
rity as the surrendered 1986 Bond. The Registrar may, with the con-
currence of the City, designate an additional office where transfer
of registered 1986 Bonds may be effected by the Registrar provided in
this Section.
The City and each paying agent may deem and treat the
person in whose name any 1986 Bond shall be registered upon the books
of the City as the absolute owner of such 1986 Bond, whether such
1986 Bond shall be overdue or not, for the purpose of receiving pay-
ment of, or on account of, the principal or redemption price, if any,
of and interest on such 1986 Bond and for all other purposes, 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 1986 Bond to the extent of the sum or sums so paid, and
neither the City nor any paying agent shall be affected by any notice
to the contrary. The City agrees to indemnify and save each paying
agent harmless from and against any and all loss, cost, charge,
expense, judgment or liability incurred by it, acting in good faith
and without negligence under the Resolution, in so treating such reg-
istered owner.
In all cases in which the privilege of exchanging 1986
Bonds or transferring registered 1986 Bonds is exercised, the
Registrar shall authenticate and deliver 1986 Bonds in accordance
with the provisions of the Resolution. All 1986 Bonds surrendered in
any such exchanges or transfers shall forthwith be delivered to the
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Registrar and cancelled by the Registrar and returned to the City.
For every such exchange or transfer of 1986 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 1986 Bonds for a period of 15 days next preceding any
selection of 1986 Bonds to be redeemed or thereafter until after the
first publication or mailing of any notice of redemption or any 1986
Bonds called for redemption.
SECTIO. 9. Redeaption of 1986 Bonds. The 1986 Bonds
maturing on or after April 1, 1997 (except the 1986 Bonds maturing on
April l, 2004 and April l, 2009) may be redeemed prior to maturity,
at the option of the City, on and after April 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:
Redeaption Period
(Dates Inclusive)
RedeaDtion Price
April 1, 1996 and March 3l, 1997
April 1, 1997 and March 31, 1998
April l, 1998 and thereafter
102'
101
100
The 1986 Bonds maturing on April l, 2004 and April l, 2009
may be redeemed prior to maturity at the option of the City on or
after April 1, 1996, in whole at any time or in part on any interest
payment date, at the principal amount thereof, together with accrued
interest to the date of redemption.
The term 1986 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 l4 hereof. The term 1986 Bonds to be so redeemed shall be
selected by lot within the maturity to which such redemption
relates.
Allor any of the 1986 Bonds subject to redemption at the
option of the City may be called for redemption at anyone time. If
less than all of the 1986 Bonds are redeemed at the option of the
City at anyone time, such 1986 Bonds shall be redeemed by lot within
each maturity.
The interest payment date on which 1986 Bonds which are
called are to be presented for redemption is herein sometimes called
the "redemption date.ft
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(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 the registered owners
thereof at the addresses appearing on the registration records main-
tained by the Registrar, as of the date of such notice, a notice of
the intended redemption of 1986 Bonds. The notice of redemption
shall (a) state the redemption date; (b) state the redemption price;
(c) state the numbers and date of maturity of the 1986 Bonds to be
redeemed; provided, however, that whenever any call includes all of
the outstanding 1986 Bonds subject to redemption, the numbers of the
1986 Bonds need not be stated; (d) require that such 1986 Bonds be
surrendered at the Securities Services Division of Bank of America
National Trust and Savings Association in Los Angeles or San
Francisco, California, or at the option of the holder, at any other
paying agent of the City in New York, New York; and (e) give notice
that further interest on such 1986 Bonds will not accrue after the
designated redemption date. If this Resolution is amended to permit
the 1986 Bonds to be issued in coupon form, a similar notice of the
intended redemption shall be published once in a newspaper of general
circulation in the City of Anaheim, California, and once in a daily
newspaper or financial journal published in or near the Borough of
Manhattan, New York, said publications to be at least 30 days but not
more than 60 days prior to the redemption date.
The actual receipt by the holder of any 1986 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 1986 Bonds or the cessation of
interest on the redemption date. The mailed notice or notices
required by this section shall be given by the Registrar. A receipt
by the Registrar that notice of call and redemption has been given to
holders of registered Bonds as herein provided shall be conclusive as
against all parties, and no bondholder whose 1986 Bond is called for
redemption may object thereto or object to the cessation of interest
on the redemption date fixed by any claim or showing that he failed
to receive actual notice of call and redemption.
(b) Redeaption Pund. 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
1986 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
1986 Bonds to be redeemed upon presentation and surrender of such
1986 Bonds. Any accrued interest due on or prior to the redemption
date shall be paid from the Bond Service Account. Any interest due
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on or prior to the redemption date upon 1986 Bonds shall be paid from
the Bond Service Account. If, after all of the 1986 Bonds have been
redeemed and cancelled or paid and cancelled, there are moneys
remaining in the Redemption Fund, said moneys shall be transferred 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 principal of and
interest on such refunding bonds. The Redemption Fund may also be
used to provide for the redemption of outstanding parity Bonds.
(c) Effect of the Notice of Redeaption. When notice of
redemption has been given, and when the amount necessary for the
redemption of the 1986 Bonds called for redemption is set aside for
that purpose in the Redemption Fund, the 1986 Bonds designated for
redemption shall become due and payable on the redemption date, and
upon presentation and surrender of said 1986 Bonds at the place spec-
ified in the notice of redemption, such 1986 Bonds shall be redeemed
and paid at said redemption price out of the Redemption Fund, and no
interest will accrue on such 1986 Bonds called for redemption after
the redemption date specified in such notice, and the holders of said
1986 Bonds so called for redemption after such redemption date shall
look for the payment of such 1986 Bonds only to said Redemption
Fund. All 1986 Bonds redeemed shall be cancelled forthwith and shall
not be reissued.
All unpaid interest payable at or prior to the redemption
date shall continue to be payable to the respective registered owners
of such 1986 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 l210 of the City Charter, under the 1971
Bond Resolution and redesignated under the 1980 Bond Resolution, so
long as any of the 1986 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 wR&R Account"); and
(d> Water System Extension and Improvement
Account (the "E&I Account").
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B. The Fiscal Agent shall continue to maintain the follow-
ing funds so long as any of the 1971 Bonds and the 1980 Bonds remain
outstanding:
(1) Water System Revenue Bond and Interest Fund (the
"Bond Service Fund"); and
(2) Water System Revenue Bond Reserve Fund (the
"Reserve Fund").
From and after the retirement of all of the 1971 Bonds and
the 1980 Bonds (or the date on which provision for such retirement
has been made so that the 1971 Bonds are no longer outstanding within
the meaning of the 1971 Bond Resolution, and 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 1986 Bonds remain outstanding.
C. The Fiscal Agent shall continue to maintain the Water
System Revenue Bond Sinking Fund (the "l980 Sinking Fund") so long as
any of the 1980 Bonds remain outstanding.
D. The Treasurer shall continue to maintain the following
accounts in the Water Enterprise Fund so long as any of the 1986
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"); and
(3) Water System Revenue Bond, 1984 Construction
Account (the "1984 Construction Account").
E. The "Water System Revenue Bond, Costs of Issuance
Account (the "Costs of Issuance Account") is hereby created in the
Water Enterprise Fund and shall be maintained by the Treasurer so
long as any of the 1986 Bonds remain outstanding.
F. Additional accounts in the Water Enterprise Fund may be
created by subsequent resolutions of the City Council.
SBC~IO. 11. Disposition of Bond Proceeds and Certain
Available ....Ys.
A. Simultaneous with the issuance and delivery of the
Bonds, the following transfers and deposits of moneys which are
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attributable to or derived from proceeds of, the 1986 Bonds, shall be
made:
Cl) The amount necessary, if any, to cause the amount
in the Reserve Fund to equal the Maximum Annual Debt
Service for the 1971 Bonds, the 1980 Bonds, the 1984 Bonds
and the 1986 Bonds shall be transferred to the Fiscal Agent
and deposited in the Reserve Fund.
(2) An amount which, when combined with amounts
transferred to the Escrow Account as provided in paragraphs
(B) and (C) of Section 11, shall be sufficient to purchase
Escrow Securities Cas defined in the Escrow Agreement), the
principal of and interest on which when due, will provide
moneys which will be sufficient to pay Ca) the redemption
price on April 1, 1994 of the Refunded Bonds and (b) the
interest to become due on the Refunded Bonds on and prior
to April 1, 1994.
(3) The amount of the accrued interest received by
the City with respect to the Bonds shall be deposited in
the Bond Service Account.
(4) The remainder of the original proceeds of the
1986 Bonds shall be deposited in the Costs of Issuance
Account.
B. Simultaneous with the issuance and delivery of the 1986
Bonds, all or any portion of the moneys in the Reserve Account, if
any, in excess of an amount sufficient to provide a balance in the
Reserve Fund equal to Maximum Annual Debt Service (upon the authenti-
cation and delivery of the 1986 Bonds) and specified in writing by
the Public Utilities-General Manager, Public Utilities-Assistant
General Managers, City Treasurer or Finance Director of the City,
shall be transferred to the Escrow Account.
C. Simultaneous with the delivery of the 1986 Bonds, that
portion of the moneys in the Bond Service Account (constituting
moneys previously held in such Account) equal to the amount of inter-
est scheduled to be paid on April l, 1986 with respect to the
Refunded Bonds and specified in writing by the Public Utilities-
General Manager, Public Utilities-Assistant General Managers, City
Treasurer or Finance Director of the City, shall be transferred to
the Escrow Account.
SBC'.rIOR 12. Revenue Account. The Rev en u e s 0 f the
Enterprise shall be deposited with the City 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
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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.
SBC~IOR 13. M&O Account. First, so long as any of the
1986 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 became 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 1986 Bonds are outstanding, in addition
to but on a parity with the transfers to the Bond Service Fund and
the 1980 Sinking Fund required by Section 15 of the 1971 Bond
Resolution and Section 16 of the 1980 Bond Resolution:
A. There shall be allocated to the Bond Service Account
the following amounts:
(l) one-sixth of the interest which will become due
and payable on the outstanding 1986 Bonds and Parity Bonds
(other than the 1971 Bonds and 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 1986 Bonds pursuant to Section II (c)
hereof, or 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 1986 Bonds
and serial Parity Bonds (other than the 1971 Bonds and 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 set forth
below, 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 set forth
below in order to pay the principal of the respective amounts of 1986
term Bonds which shall be called and redeemed on the dates set forth
below, unless such amounts are used to purchase 1986 term Bonds as
provided in this Section:
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Term Bonds Maturing April 1, 2004
Redemption Date
(April 1)
Amount
2002
2003
2004 (final maturity)
$445,000
465,000
495,000
Term Bonds Maturing April 1, 2009
Redemption Date
(April l)
Amount
2005
2006
2007
2008
2009 (final maturity)
$520,000
550,000
580,000
620,000
650,000
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 1986 Bonds and Parity Bonds (other than the 1971
Bonds and the 1980 Bonds) and any installment of principal on said
1986 Bonds and Parity Bonds (other than the 1971 Bonds and, with
respect to sinking fund payments, the 1980 Bonds) 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 Account, the Bond Service Fund, the 1980 Sinking Fund
and the Sinking Account, then the amounts available shall be allo-
cated 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.
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 may be reduced by an
amount equal to any investment income received during its preceding
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calendar month on moneys in the Bond Service Account or the Sinking
Account.
The 1986 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 1986 Bonds and term parity Bonds (other than the 1971 Bonds and
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 1986 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 1986 Bonds called for redemption prior to maturity.
Moneys in the Sinking Account may also be used, prior to
the date when any term 1986 Bonds or term Parity Bonds (other than
1971 Bonds, 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 1986
Bonds or term parity Bonds (other than 1971 Bonds or 1980 Bonds) at a
purchase price (including brokerage and other fees) not exceeding par
plus accrued interest.
If after all of the 1986 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 may be
transferred to the Revenue Account.
SECTIOR 15. Reserve Fund. Third, so long as any of the
1986 Bonds are outstanding, there shall be transferred to the Reserve
Fund an amount 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 1986 Bonds and
any Parity Bonds, in the event that moneys in the Bond Service Fund
(in the case of the 1971 Bonds) or 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 1986 Bonds and any
other Parity Bonds) are 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,
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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 l2 hereof in each month, moneys in the Reserve Fund
in excess of Maximum Annual Debt Service may 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 outstanding 1986 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 calculations 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
1986 Bonds or Parity Bonds at maturity, by redemption or by purchase
at a purchase price (including brokerage and other fees) not exceed-
ing par plus accrued interest.
SECTION 16. R&R Account. Fourth, so long as any of the
1986 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 2% 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, to the Bond Service Fund, to
the 1980 Sinking Fund or to the Sinking Account, as the case may be,
to prevent default in payment of the principal and interest on the
1986 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.
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.
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SECTION 17. E&I Account. Fifth, so long as the 1986
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 Councilor 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, to the Bond Service Fund,
to the 1980 Sinking Fund or to the Sinking Account, as the case may
be, to prevent default in payment of principal and interest on the
1986 Bonds or any Parity Bonds, or for extension and improvement of
the Enterprise.
SECTION 18. Surplus Moneys in the Revenue Account. All
moneys remaining in the Revenue Account after all transfers required
hereunder have been made, shall be applied to the payment of the
principal of and interest on the City's Water Revenue Anticipation
Notes issued pursuant to Section l2l0 of the City Charter and
Ordinance No. 4415 and Ordinance No. 4530 of the City Council, to the
extent required by the resolution(s) pursuant to which such Notes are
issued, and thereafter, to the extent available, may be (l) used for
the redemption of any 1986 Bonds or Parity Bonds which are subject to
call and redemption prior to maturity or for the purchase from to
time in the open market of any outstanding 1986 Bonds or Parity Bonds
whether or not subject to call and redemption (irrespective of the
maturity or number of such 1986 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 pur-
chase price (including brokerage and other charges, but excluding
accrued interest) shall not exceed the principal amount or the
redemption price of the callable 1986 Bonds or Parity Bonds on the
next redemption date, whichever is less; or (2) used for any lawful
purpose of the City, including but not limited to the security and
payment of other indebtedness incurred in connection with the
Enterprise.
SECTION 19. Investaents. 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 in~ome 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 con-
stituting a part of such funds and accounts shall be valued at the
then estimated or appraised market value of such investments. Moneys
in all funds and accounts described in Section 10 hereof shall be
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invested only in Authorized Investments, except that so long as any
of the 1971 Bonds and 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 guar-
anteed by the United States of America, or certificates of deposit of
recognized banks or trust companies fully secured by direct obliga-
tions 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.
SECTION 20. Warranty. The City shall preserve and pro-
tect the security of the 1986 Bonds and the rights of the owners of
the 1986 Bonds and warrant and defend their rights against all claims
and demands of all persons.
SBCTION 21. Covenants. So long as any of the 1986 Bonds
are outstanding, the City makes the following covenants with the
bondowners under the provisions of Section 1210 and Section 1210.l 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 1986 Bonds and tend to make them more market-
able; provided, however, that said covenants do not require the City
to expend any moneys other than the Revenues of the Enterprise.
Covenant 1. Punctual Pa~t. The City covenants that it
will duly and punctually payor cause to be paid the principal of and
interest on every 1986 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 1986 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 1986 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 1986 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 Clat.s. The City covenants that in
order to preserve and protect the priority and security of the 1986
Bonds the City shall pay from amounts available in the O&M 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 1986 Bonds and impair
the security of the 1986 Bonds. The City shall also pay from amounts
available in the O&M Account all taxes and assessments or other
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governmental charges lawfully levied or assessed upon or in respect
of the Enterprise or upon any part thereof or upon any of the reve-
nues thereof.
Covenant 3. Operate Enterprise in Efficient and SCOnaoical
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.
Covenant 4. Against Sale, Eainent Do.ain, Existing and
Puture 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 1986
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 1986 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 1986 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 payor call and redeem the outstanding 1986
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 payor call and
redeem the outstanding 1986 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.
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Notwithstanding any other prov1s10ns contained herein, the
City may: (1) sell or dispose of customer connections (and related
distribution lines) located outside the City limits1 (2) 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 (3) enter into, and take all actions nec-
essary to fulfill its commitments under, contractual agreements con-
cerning water service to all or part of any areas which are annexed
to the City of Anaheim after the sale and delivery of the 1986 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 Water System 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 1986 Bonds or Parity Bonds then outstanding, but such
purchase price (including brokerage and other charges, but excluding
accrued interest) shall not exceed l04% of the principal amount or
the redemption price of the callable bonds on the last 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 5. 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 and
against loss of revenues. 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 outstanding 1986 Bonds and any Parity
Bonds issued for the Enterprise and for such purpose paid into the
appropriate funds or accounts. The money collected from any loss of
revenues insurance shall be deposited in the Revenue Account.
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 and
obtainable to protect the City and the Bondowners.
Notwithstanding the foregoing, the City may provide any
insurance required by this Covenant 5 through a self-insurance
program.
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Covenant 6. 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 lO% of the outstanding
1986 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
bondholder.
Covenant 7. Collection of Charges. The City will permit
no free connections with, or use and services of the Enterprise
except for the following: (1) public fire hydrants; (2) public fire
flows; (3) watering of public street dividers; and (4) 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 foregoing. The City will not grant or establish 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 pur-
poses 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 1986 Bonds are outstanding main-
tain 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 8. 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) All current expenses for the necessary and rea-
sonable Operating Expenses of the Enterprise as said
expenses become due and payable;
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(b) The interest on and principal payments (including
any sinking account payments) of the outstanding 1986 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
all accounts established in the Water Enterprise Fund and on all
other funds established for the benefit of the holders of the out-
standing 1986 Bonds or Parity Bonds.
Covenant 9. 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
1986 Bonds.
Covenant 10. Liaits 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 1986 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 1986 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
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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
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 co~
pleted Fiscal Years, as shown by the certificate or
opinion of an independent certified accountant or firm
of certified 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 1986 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: (1) the City has complied fully with all provisions of the
Resolution and has made all payments required to that time by the
Resolution; (2) the Reserve Fund contains an amount equal to no less
than the maximum combined annual principal and interest requirements
of all 1986 Bonds and Parity Bonds then outstanding.
Covenant 11. Arbitrage. The City covenants that under no
circumstances shall any initial investment, subsequent investment or
reinvestment o~"the proceeds of the 1986 Bonds be made in such a
manner as.to result in the loss of exemption from federal income tax-
ation of interest on the 1986 Bonds.
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Covenant 12. Tax Covenant. In order to maintain the
exemption from Federal income taxation of interest on the 1986 Bonds,
and for no other purpose, the City covenants to comply with each
applicable requirement of the Tax Reform Bill of 1985 (H.R. 3838), as
adopted by the United states House of Representatives on December 17,
1985 (the "Bill") except any such requirement with respect to which.
the city receives an opinion of counsel of recognized standing in the
field of law relating to municipal bonds to the effect that continu-
ing compliance by the city with such requirement of the Bill is not
required in order to maintain the Federal income tax exemption of
interest on the 1986 Bonds. In furtherance of this covenant, the
City agrees to comply with the H.R. 3838 Letter of Instructions (the
"Letter") provided to the City by Mudge Rose Guthrie Alexander &
Ferdon, as Co-Bond Counsel, on the date of issuance and delivery of
the 1986 Bonds as such Letter may be amended fram time to time, as a
source of guidance for compliance with the Bill. The provisions of
this Covenant 12 of Section 21 shall no longer be of any force or
effect upon receipt of an opinion of counsel of recognized standing
in the field of law relating to municipal bonds to the effect that
noncompliance with the applicable requirements of the Bill will not
change the then current Federal income tax status of the interest on
the 1986 Bonds.
Notwithstanding any other provision of the ReSOlution to
the contrary, upon the City's failure to observe, or refusal to
comply with, the above covenant the Holders of any Parity Bonds,
other than the 1986 Bonds, shall not be entitled to exercise any
right or remedy provided to Bondholders under the Resolution or oth-
erwise based upon the City's failure to observe, or refusal to comply
with, the above covenant.
Covenant 13. provisions and Restrictions with Respect to
Defeasance.
(l) In the event the City shall seek, prior to the
maturity or redemption date thereof, to payor cause to be
paid, within the meaning and with the effect expressed in
Section 28 hereof, all then outstanding 1986 Bonds, and the
provisions of Covenant 12 of Section 21 hereof shall then
be of any force or effect, then, notwithstanding the provi-
sions of Section 29 hereof, such 1986 Bonds shall not be
deemed to have been paid within the meaning and with the
effect expressed in Section 29 unless, in addition to all
other requirements of Section 29 hereof:
(a) The City shall have delivered to the escrow
agent for the 1986 Bonds a certificate of an
authorized officer (the "Certificate") to the effect
that:
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(i) the City is then in compliance with
Covenant 12 of Section 2l hereof; and
(ii) the City has irrevocably deposited with
such escrow agent such moneys, securities,
documents and other things and issued such
irrevocable instructions to such escrow
agent and the Registrar so that any remain-
ing and continuing applicable requirements
of the Bill, with respect to the 1986
Bonds, from compliance with which the City
has not theretofore been relieved under the
provisions of Section 29 hereof, are minis-
terial and reportorial in nature; and
(iii) the City has irrevocably authorized such
escrow agent, and delegated to such escrow
agent the authority, to perform such
remaining and continuing applicable
requirements on the City's behalf, and such
escrow agent has undertaken so to do; and
(b) There shall have been delivered to such
escrow agent an opinion of counsel of recognized
standing in the field of law relating to municipal
bonds to the effect that based upon the matters set
forth in the Certificate described in (a) above and
assuming compliance by such escrow agent with its
undertaking described in (a) (iii) above, no further
action by or on the part of the City will be required
under the applicable requirements of the Bill to main-
tain the Federal income tax exemption of interest on
the 1986 Bonds.
(2) In the event the City shall seek, prior to the
maturity or redemption date thereof, to payor cause to be
paid, within the meaning and with the effect expressed in
the Resolution, less than all of the outstanding 1986
Bonds, and the provisions of Covenant 12 of Section 21
hereof shall then be of any force or effect, then, notwith-
standing the provisions of Section 29 hereof, the 1986
Bonds which the City then seeks to payor cause to be paid
shall not be deemed to have been paid within the meaning
and with the effect expressed in Section 29 hereof unless
there shall have been delivered to the escrow agent for the
1986 Bonds an opinion of counsel of recognized standing in
the field of law relating to municipal bonds to the effect
that either (i) noncompliance thereafter with the
applicable provisions of the Bill will not change the then
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current Federal income tax status of the interest on such
1986 Bonds, or (ii) there are no provisions of the Bill
which must thereafter be complied with by the City in order
to maintain the Federal income tax exemption of interest on
such 1986 Bonds.
SBC~IOR 22. Lost, Stolen, Destroyed, or Mutilated 1986
Bonds. In the event that any 1986 Bond is lost, stolen, destroyed
or mutilated, the City will cause to be issued a new 1986 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 1986 Bond to be signed
and authenticated in such manner as it determines in said
resolution.
SECTIOR 23. Cancellation of 1986 Bonds. All 1986 Bonds
surrendered to any paying agent of the city for payment upon maturity
or for redemption shall upon payment therefor be cancelled
immediately. Any 1986 Bonds purchased by the City as authorized
herein shall be cancelled forthwith and shall not be reissued.
SEerIOR 24. Consent of 1986 Bondholders. The consents
of bondowners provided for in this Section shall relate solely to the
amendment, waiver or modification of the covenants specified in
Section 20 hereof and shall not be effective to waive or modify any
other provisions of this Resolution or any other proceedings for the
issuance of the 1986 Bonds. Any act relating to the amendment,
waiver or modification of any of the said covenants consented to by
bondowners holding 66 2/3% in aggregate principal amount of the out-
standing 1986 Bonds, exclusive of 1986 Bonds, if any, owned by the
city, shall be binding upon the holders of all of the 1986 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
the terms of this Resolution, and after such consent relating to such
specified matters has been given, no bondholder 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.
Bondholders may consent by affirmative vote at a
bondownersf meeting or may consent in writing without a meeting, all
as hereinafter provided.
No such amendment, waiver or modification shall be made
which will permit (a) a change in the maturity or term of redemption
of the principal of any 1986 Bond or any installment of interest
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thereon or a reduction in the principal amount of or redemption price
or redemption premium or rate of interest upon any 1986 Bond without
the consent of the holder of such 1986 Bond; or (b) a reduction of
the percentage of the principal amount of 1986 Bonds the vote or con-
sent of which is required to effect any such amendment.
Notwithstanding the foregoing, this Resolution may be
amended without 1986 Bondowner approval to supplement and amend this
Resolution to permit the 1986 Bonds to be issued in coupon form pro-
vided that the City receives an opinion of nationally recognized Bond
Counsel that the issuance of the 1986 Bonds will not affect the
exemption from Federal income taxation of the interest on the 1986
Bonds, and the City shall mail or cause to be mailed notice to the
owners of the 1986 Bonds of the availability of exchanging registered
1986 Bonds for coupon 1986 Bonds.
(a) Calling Bondholders' Meeting. If the City shall
desire to obtain any such consent it may call a meeting of bond-
owners, 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 1986 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 bondholder 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 bondholder to show that he failed to receive notice of
such meeting.
(c) Voting Qualifications. Any bondholder may, prior to
any such meeting, deliver his 1986 Bond or 1986 Bonds to any agency
designated by the City for the purpose, and shall thereupon be
entitled to receive an appropriate receipt for the 1986 Bond or 1986
-31-
Bonds so deposited, calling for the redelivery of such 1986 Bond or
1986 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 1986 Bonds, with a state-
ment of the maturities and serial numbers of the 1986 Bonds held and
deposited by each of such bondowners, and no bondholder shall be
entitled to vote at such meeting unless his name appears upon such
list or unless he shall present his 1986 Bond or 1986 Bonds at the
meeting or a certificate of deposit thereof, satisfactory to the
City, executed by a bank or trust company. No bondholder shall be
permitted to vote with respect to a larger aggregate principal amount
of 1986 Bonds than is set against his name on such list, unless he
shall produce the 1986 Bonds upon which he desires to vote, or a cer-
tificate of deposit thereof as above provided.
(d) Issuer-owned 1986 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 1986 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 1986
Bond appearing upon such such certificate, or any 1986 Bond which it
shall be established at or prior to the meeting is owned by the City,
directly or indirectly, and no such 1986 Bond (in this Resolution
referred to as an "issuer-owned 1986 Bond") shall be counted in
determining whether a quorum is present.
(e) Quorua and Procedure. A representation of at least
66 2/3% in aggregate principal amount of the 1986 Bonds then out-
standing (exclusive of issuer-owned 1986 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 bondholder
shall be entitled to one vote for every $5,000 principal amount of
1986 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.
(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 1986
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Bonds then outstanding (exclusive of issuer-owned 1986 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 1986 Bondholders. 1ft h e C i t Y
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 bondholder 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
bondholder to show that he failed to receive such resolution and
consent.
Each written consent shall be accompanied by proof of
ownership of the 1986 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 1986 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 princi-
pal amount of the 1986 Bonds then outstanding (exclusive of
issuer-owned 1986 Bonds) shall have consented in writing, the City
Council shall adopt a resolution accepting such consents and such
resolution shall constitute complete evidence of the consent of bond-
owners under this Resolution.
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(h) Publication of Consent. Not ice s p e c i f Y i n g the
amendment, waiver or modification that has received the consent of
bondowners 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.
SBCrIOR 25. 1986 Bond FODB. Subject to the provisions
of the Resolution, the 1986 Bonds shall be issued in registered form,
and the form of the 1986 Bonds and the Registrar's Certificate of
Authentication shall be substantially as follows:
[801m FORlll
UNITED STATES OF AllERICA
STATB OF CALIFOBRIA
COmnY OF ORAlGE
CITY OF ARAIIEIII
WATER RBYBIIUB BOND, 1986 SBRIBS
No. R-
Interest Rate:
Maturity Date:
Dated Date:
CUSIP:
The CITY OP 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
the Maturity Date stated hereon, 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
October l, 1986, until the City's obligation with respect to the pay-
ment of such principal 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 prior
to September 15, 1986, in which case from March l, 1986, 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, further, that if, as shown by the records of the Registrar,
-34-
interest on the 1986 Bonds shall be in default, 1986 Bonds issued in
exchange for 1986 Bonds surrendered for transfer or exchange shall
bear interest from the interest payment date to which interest has
been paid in full on the 1986 Bonds surrendered or if no interest has
been paid, March 1, 1986.
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.
It is hereby certified and recited that any and all acts,
conditions and things required to exist, to happen and to be per-
formed 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.
-35-
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, and has caused this bond to be dated March 1, 1986.
Mayor
COUNTERSIGNED:
City Treasurer
City Clerk
(SEAL)
[FORM OF CERTIFICATE OF AUTHENTICATION ON ALL BONDS]
REGISTRAR'S CERTIFICATE OF AUTHENTICATION
This bond is one of the Bonds delivered pursuant to the
within-mentioned Resolution.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
Registrar
By:
Authorized Officer
Date of Authentication
and Registration:
-36-
[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
Securities Services Division of Bank of America National Trust and
Savings Association in Los Angeles or San Francisco, California, or,
at the option of the holder, at any other paying agent of 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 lSth day of the calendar month immediately preceding an inter-
est 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, 1986 Series" (the "bonds"), all
of which have been issued pursuant to Section 1210 and Section 1210.1
of the City Charter and Ordinance No. 2933 of the City Council, as
amended (the "Ordinance"), for the purpose of advance refunding that
portion of the City's Water Revenue Bonds, 1984 Series maturing on or
after April l, 1996 which were issued to finance 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 1986 Bonds are provided for by the resolution of
the City Council authorizing the 1986 Bonds adopted March 4, 1986,
designated Resolution No. 86R-91 (the "Resolution"), and this refer-
ence incorporates the Resolution and Section 1210 and Section l2l0.l
of the City Charter and the Ordinance, and by acceptance hereof the
holder of this bond assents to said terms and conditions. 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
-37-
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 bonds
as they become due and payable in addition to all other payments
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 bonds, exclusive of issuer-owned bonds.
If this bond matures on or after April 1, 1997 (except the
bonds maturing on April l, 2004 and April 1, 2009), 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 April 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 prepaid to the owner
of recor d of thi s bond as of the date of such notice, which shall be
at least 30 days' prior to the date fixed for redemption. Such
redemption shall occur at the following redemption prices, expressed
as a percentage of the principal amount, together with accrued inter-
est to the date of redemption:
Redemption Period
(Dates Inclusive)
Redeaption Price
April 1, 1996 and March 31, 1997
April 1, 1997 and March 31, 1998
April l, 1998 and thereafter
102%
101
100
If this bond matures on April l, 2004 or April l, 2009, it
is subject to redemption at the principal amount thereof, together
with accrued interest to the date of redemption, commencing on
April 1, 1996, as more fully set forth in Resolution.
If this bond matures on April 1, 2004 or April 1, 2009, it
is subject to mandatory sinking fund redemption prior to maturity at
the principal amount thereof, together with accrued interest to the
date of redemption, as more fully set forth in the Resolution.
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The Bonds are issuable in the form of registered Bonds
without coupons in the denominations of $5,000 or any integral multi-
ple of $5,000. The owner of any Bond or 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 autho-
rized attorney) at the Securities Services Division of Bank of
America National Trust & Savings Association in San Francisco,
California, as Registrar, in exchange for an equal aggregate princi-
pal amount of registered 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 Securities Services Division of the Registrar, by the
registered owner hereof in person, or by his duly authorized attor-
ney, upon surrender of this bond together with a written instrument
of transfer satisfactory to the Registrar duly executed by the regis-
tered owner or his duly authorized attorney, and thereupon a new reg-
istered 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 and the paying agents of
the City may deem and treat the person in whose name this bond is
registered as the absolute owner hereof for the purpose of receiving
payment of, or on account of, the principal and interest due hereon
and for all other purposes.
SBCrIOR 26. Teaporary 1986 Bonds. Any 1986 Bonds may be
initially issued in temporary form exchangeable for definitive 1986
Bonds. The temporary 1986 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 1986 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 1986
Bonds it will execute and furnish definitive Bonds without delay and
thereupon the temporary 1986 Bonds may be surrendered for cancella-
tion at the office of the Treasurer, and the Treasurer shall deliver
in exchange for such temporary 1986 Bonds an equal aggregate princi-
pal amount of definitive 1986 Bonds of the same interest rates and
maturities. Until so exchanged, the temporary 1986 Bonds shall be
entitled to the same benefits under this Resolution as definitive
1986 Bonds issued hereunder.
SBCTIOB 27. Approval of the Execution and Delive~ of an
Escrow Agreeaent. The City Council hereby approves the Escrow
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Agreement, dated as of March l, 1986, relating to the defeasance of
the Refunded Bonds, by and between the City and the Escrow Agent in
substantially the form presented to this meeting, with such changes
as the Mayor of the City shall approve (such approval to be conclu-
sively evidenced by his execution of such Agreement). The City
Council hereby creates the Escrow Account provided for in such Escrow
Agreement, such Account to be held and applied in accordance with the
Escrow Agreement.
The City Council hereby authorizes the Mayor to execute the
Escrow Agreement on behalf of the City and to deliver the Escrow
Agreement to the proper officials of Bank of America NT&SA.
SE~IOR 28. Resolution Constitutes Contract. The pro-
visions of this Resolution shall constitute a contract between the
City and the bondowners and the provisions hereof shall be enforce-
able by any bondowner for the equal benefit and protection of all
bondowners similarly situated by mandamus, accounting, mandatory
injunction or any other suit, action or proceeding at law or in
equity that is now or may hereafter be authorized under the laws of
the State of Cal ifornia in any court of competent j ur isdiction. Said
contract is made under and is to be construed in accordance with the
laws of the State of Cal ifornia.
No remedy conferred hereby upon a~ bondholder is intended
to be exclusive of any other remedy, but each such remedy is cmnula-
tive and in addition to every other remedy and may be exercised with-
out 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 bondholder shall affect any subsequent default or breach of
duty or contract or shall impair a~ rights or remedies on said sub-
sequent default or breach. No delay or anission of any bondholder 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 bondholder shall prevail, said bondholder 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
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.
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Prior to the issuance of the 1986 Bonds, the terms and
conditions of this Resolution and the rights and obligations of the
City and of the holders of the 1986 Bonds and coupons thereunder may
be modified or amended in any respect without the consent of any
person, upon the adoption by the City of one or more supplemental
resolutions.
After the issuance and delivery of the 1986 Bonds, this
Resolution shall be irrepealable, but shall be subject to modifica-
tion to the extent and in the manner provided in this Resolution, but
to no greater extent and in no other manner.
S~IOR 29. Defeasance. Allor any portion of the 1986
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 1986 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 30. Puture 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 1986
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 31. 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 1986 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 32. Substitutes. The Mayor Pro-Tempore, any
Deputy City Clerk, and any duly authorized substitute for the
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Treasurer, may act in the place and stead of the Mayor, the City
Clerk and the Treasurer, respectively, in the performance of any and
all things authorized or provided for in this Resolution, inCluding
the signing of the 1986 Bonds.
SBCrIOR 33. Effective Date. This Resolution shall take
effect immediately.
ADOPTED, SIGNED AND APPROVED this fourth day of March,
1986.
~a:f~
[SEAL]
Attest:
~~;l(~
City Clerk
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STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF ANAHEIM
)
) SSe
)
I, Leonora N. Sohl, city Clerk of the City of Anaheim, do
hereby certify that the foregoing Resolution No. 86R-9l was intro-
duced and adopted at a regular meeting provided by law, of the City
Council of the City of Anaheim held on the 4th day of March, 1986, by
the following v~te of the members thereof:
AYES:
NOES:
ABSENT:
COUNCIL MEMBERS: Kaywood, Overholt, Pickler and Roth
COUNCIL MEMBERS: None
COUNCIL MEMBERS: Bay
AND I FURTHER certify that the Mayor of the City of Anaheim
signed said Resolution No. 86R-91 on the 4th day of March, 1986.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the seal of the City of Anaheim this 4th day of March, 1986.
~~d ~(~~
CITY CLERK OF THE CITY OF
ANAHEIM
(SEAL)
I, LEONORA N. SOHL, City Clerk of the city of Anaheim, do
hereby certify that the foregoing is the original of Resolution
No. 86R-9l duly passed and adopted by the Anaheim City Council on
March 4, 1986.
~~ /(S'~
City Clerk
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