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1981-458 - CITY OF ANAHEIM RESOLUTION NO. 1981 R-458 RESOLUTION NO. 8lR-458 ,,.,.,... ~ RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ANAHEIM, CALIFORNIA APPROVING fHE FORM OF THE REVOLVING CREDIT AGREEMENT RELATING TO THE ELECTRIC SYSTEM REVENUE BOND AN~ICIPATION NOTES OF SAID CITY AND AUTHORIZING TH~ EXECUTION AND DELIVERY THEREOF. WHEREAS, the City Council of the City of Anaheim (the MCity") at its meeting on August IB, 1981, adopted an Ordinance des- ianated as Ordinance No. 4252, said Ordinance, as heretofore amended, providing for the procedures for the issuance and sale of the $92,000,000 Electric Revenue Bond Anticipation Notes of the City and providing the terms and conditions of sald Notes (the "Ordinance"); and WHEREAS, the City Council has h,retofore adopted two ordi- nances amending the Ordinance (the "Orcliinance Amendments"); and WHEREAS, the City Council has determined that it is neces- sary and required that the City Council by resolution authorize the Ci ty to enter into the Revolving Credit Agreement with Bank of America National Trust and Savings Asso~iation (the "Bank"); and WHEREAS, the City Council desires to authorize the proper officers of the City to take all necessary steps to complete the transactions contemplated by this Resolution and the Revolving Credit Ag reement ; """""", NOW, THEREFORE, THE COUNCIL OF THE CITY OF ANAHEIM DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: ,.,..,.. ~ ~ ~, SECTION 1. Revolving Credit A9reement. The City is hereby authorized to enter into a Revolving Cred it Ag reement wi th the Bank, in substantially the form attached as "~~''i,. Exhibit A hereto. In the event the Revolving Credit Agreement is terminated by any of the parties thereto ifor any reason, the. City is hereby authorized to enter into similar agreements with others for such purpo se . SECTION 2. Execution of the Rfvolving Credit Agreement. The Mayor of the City and the C[ty Clerk are hereby autho- rized to execute a'nd deliver the Revolving Credit Agreement with such additions and changes therein as the Mayor may approve, such approval to be conclusively evidenced by the signiing of the Revolving Credit Agreement. SECTION 3. Effective Date. This Resolution shall take effect upon adoption. ADOPTED, SIGNED AND APPROVED thi s 29th day of September, -~--:J~6~ lty e 1981. Attest: ~" -2- 1!lW'. .._____ STATE OF CALIFORNIA ) COUNTY OF ORANGE ) s s . CITY OF ANAHEIM ) , t I, LINDA D. ROBERTS, City Clerk of the City of A$aheim, do hereby certify that the foregoing Resolution No. 8lR-458 was introdu~ed and adopted at a regular meeting provided by law, of the City Council of the City of Anaheim held on the 29th day of September, 1981, by the followin$ vote of the members thereof: AYES: COUNCIL MEMBERS: Overholt, Kaywood, Bay, Roth and Seymour NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: None AND I FURTHER certify that the Mayor of the City of Anaheim signed said Resolution No. 8lR-458 on the 29th day of September, 1981. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the City of Anaheim this 29th day of September, 1981. ~.~~ CITY CLE OF THE c. TY OF AHEIM (SEAL) If LlllDA D. ROBERTS, City Clerk of the City of Anaheim, do hereby certify that the foregoing is the original of Resolution No. 8lR-458 duly passed and adopted by the Anaheim City Council on September 29, 1981. ~J.~ CITY CLE 'l -. , ..~" .~\ "~, ~... ---' ~ ~ 9/22/81 WRF REVOLVING CREDIT AG~EEMENT CITY OF ANAHEIM and BANK OF AMERICA NATIONAL TRUST A~D SAVINGS ASSOCIATION DATED AS OF , 1981 ~,- , ~'- ~ " -- - INDEX 1. Definitions . . . . . . . . . . . . . . . . . . . .' . . . . . . . . . . . . . . . 2. The Credit 3. Conditions Precedent . . . . . . . . . . ~ . . . . . . . . . . . . . . . 4. Representations and Warranties 5. 5.1 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 5.15 5.16 Punctual Payment . . . . . . . . . . . . . . . . . . . . . . . . Licenses, Permits, Etc. Payment of Taxes and C1a~s Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Accounting Records Financial Statements; Oth~r Documents . . . Obligation to Purchase Ma$ter Note Tax Indemnity Additiona~ Payments Dates and Place of Payments Use of Advances . . . . . . . . . . . . . . Amendments . . . . . . . . . . . . . . . . . . . Long Term Bonds ........................-. Legal Expenses .......................... Proceeds of Reacquisition No Liens, Security Intere$t, etc. . . . . . . . No Amendment of Purchase Agreement ...... Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 7. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 2 6 12 15 17 17 18 18 18 18 19 20 22 24 27 28 28 28 28 29 29 29 34 ....- - Exhibits "'~"- ~, A. Ordinance B. Ordinance Amendment Number Bl. Ordinance Amendment Number c. Purchase Agreement D. Resolution E. Master Note F. Opinion of Counsel G. Disbursement Request H. Supplemental Non-Arbitrage Cer~ificate I. Resolution-Bonds ~'" ~ -''1 ~. ... .........- ~ WRF Draft 9-22-81 Revolving Credit Agreement This Agreement is entered into as of 1981, between the City of Anaheim, a municipal corporation created and existing pursuant to the laws of the State of California ("the City") and Bank of AlPerica National Trust and Savings Association ("Bank"). WHEREAS, at a special munic~pal election held on June 2, 1981 (the UElectionU), the Cit.y was authorized by its voters to finance the construction an~ acquisition of facili- ties, property and rights related to the San Onofre Nuclear Generating Station ("SONGS") and the generation and transmission of electric energy by issuing revenue bonds and revenue bond anticipation notes, and any combinatipn thereof, not payable from property taxes, in an aggregate principal amount out- standing in accordance with their te~s at anyone time not to exceed $92,000,000: WHEREAS, Section 1210 of th~ Charter of City was amended pursuant to said election to permit the issuance of revenue bonds and revenue bond antic~ation notes as des- cribed above: WHEREAS, a letter agreement dated as of July 28, 1981 between City and Southern California Edison Company providing for the purchase by the City from Edison of a 1.5% ownership interest in Units 2 and 3 of SONGS was entered into: - 1 - - - WHEREAS, City desires to sell bond anticipation notes to derive funds with which to pay the amounts required ~~ to be paid to Edison pursuant to the Purchase Agreement, including the Purchase Price described in the Purchase Agree- ment~ WHEREAS, the City desires to ~se the proceeds of Advances made by the Bank hereunder to finance the construc- tion and acquisition of facilities, property and rights related to Units 2 and 3 of SONGS, including the payment of principal and interest on such bond anticipation notes~ NOW, THEREFORE, in considerat~on of the mutual promises, covenants and conditions contained herein, the Parties agree as follows: 1. Definitions In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated for purposes of this Agreement: l.l "Additions to Tax" means any additions to tax and additional amounts as described in Subchapter A of Chapter 68 of the Code. "-""'c 1.2 "Advance" means a borrowing under the Credit. - 2 - .,j~ = - 1.3 "Authorized Officer" means each of the Public Utilities General Manager of the City, the Management Services Manager of the Public Utilities Department of the City, the "'-'" City Treasurer, and the Finance Director of the City, provided, however, that the City Council may by r$solution designate different officers to be Authorized Officers. 1.4 "Availability period" mecjlns the period com- mencing on the Closing Date and ending ~n September 30, 1983. 1.5 "Bank Office" means Bank's Corporate Service Center South 1235, 1000 West Temple Str~et, Los Angeles, California 90012. I.G "City Council" means the City Council of the City. 1.7 "Closing Date" means the date hereof. 1.8 "Code" shall mean the Inlternal Revenue Code of 1954, as amended. 1.9 "Counsel for the Bank" shall mean such counsel for the Bank as shall be recognized as knowledgeable in matters of federal income taxation. ~. 1.10 "Credit" means the credit described in Section 2.1 of this Agreement. - 3 - .. - 1.11 "Credit Resolution" means the Resolution de- scribed in Section 3.1(d} of this Agreement. """""< 1.12 "Edison" means Southerp California Edison Company. 1.13 "Electric System" mean~ the entire electric system of the City, including all imp~ovements and exten- sions later constructed or acquired. 1.14 "Event of Default" meaps any event listed in Article 6. 1.15 "Federal Gross Income" shall mean gross income for federal income tax purposels. 1.16 "Indemnitee" shall meaJn the Bank or any affiliated group within the meaning of Section 1504 of the Code (or any successor section there~o) of which the Bank is a part: provided, however, that s~ch term shall not include a "substantial user" or "related person" as those terms are used in Section 103(b}(10} of the Code and the regulations issued thereunder or any successor statutes and regulations. .,-..,~ 1.17 "Independent Tax Counsel" shall mean such independent counsel for the City as shall be recognized as knowledgeable in matters of federal income taxation. - 4 - ",,,",,, - 1.18 "Lending Rate" shall mean a fluctuating rate per annum equal to 115% of the Prime ~te. """....". I. 19 "Loan Documents" means .this Agreement, the Master Note, the Resolution, the Ordi~ance, the Ordinance Amendments, the Credit Resolution, anq the Purchase Agreement. 1.20 "Master Note" means th~ Note required under Section 2.2 ( c) . 1.21 "Notes" mean all bond ~nticipation notes issued pursuant to the Ordinance, inc~uding the Master Note. 1.22 "Ordinance" means Ordiqance Number of the City Council, a copy of which ts attached hereto as Exhibit A. 1.23 "Ordinance Amendments" mean Ordinance Number of the City Council, a copy of which is attached hereto as Exhibit B and Ordinance Num~er of the City Council, a copy of which is attached hereto as Exhibit Bl. ,....,.... 1.24 "Prime Rate" means the rate of interest pub- licly announced from time to time by Bank in San Francisco, California as its prime rate. Any change in the Prime Rate shall take effect on the day specified in the public announcement of such change. - 5 - ~ - 1.25 "Purchase Agreement" means the letter agreement between the City and Edison providing for the purchase by the City from Edison of a 1.5% ownership interest in Units """". 2 and 3 of SONGS, a copy of which is qttached hereto as Exhibit C. 1.26 "Resolution" means Resdlution Number of the City Council, a copy of which is attached hereto as Exhibit D. 1.27 "Resolution-Bonds" means Resolution Number of the City Council, a c09Y of which is attached hereto as Exhibit- I. 2. The Credit ,.-""" 2.1 (a) From time to time, during the Availability Period, Bank agrees to lend to the City principal sums which shall not exceed in the agg~egate outstanding at anyone time $80,000,000 (Eighty Million DOllars). The Credit is a revolving credit and the City may, during the Availability Period, reborrow amounts repaid. The City shall pay the principal amount of the Advances out- standing at the close of business on the last day of the Availability Period and shall have the right to prepay all or any part of any Advance as provided in Section 2.4 of this Agreement. The outstanding principal balance of the Credit shall bear interest until payment in full - 6 - ---- ..4., IP' -~ ~\ ~ ~ - Pf'!'''''''' - (computed daily on the basis of a three hundred sixty (360) day year and actual days elapsed) at a rate per annum equal to sixty percent (60%) qf the Prime Rate. The City shall pay such interest on the lOth calendar day after the last day of each successi~e calendar quarter commencing with the first such date to occur after the date of the first Advance hereunder and in full on the last day of the Availability Period. If the day for any payment on any Advance falls on Saturday, Sunday or bank holiday in California, such payment shall be made on the next business day and interest shal~ continue to accrue to the day such payment is made. (b) The Master Note, an~ Advance, and the Credit shall not constitute or evid~nce indebtedness of the City and are not secured by the taxing power of the City, but shall constitute and evidence only indebtedness of the Electric System, and the Master Note, any Advance and the Credit are payable both as to principal and interest solely from: (I) the proceeds of the sale of Elect~ic Revenue Bonds authorized by the Election~ or (2) the proceeds of the sale of Notes issued pursuant to the Ordina~ce under Section 1210 of the Charter~ or - 7 - ---- (3) sums paid to the City by Edison pursuant to the Purchase Price repayment pro- vision of the Purchase Agreem~nt; or A"'......' (4) any other lawf~lly available source' of funds permitted by Section 1210 of the Charter of the City and determined by resolution of the City Council to be a source of funds for the payment of the Notes. Nothing herein will be deemed to limit the right of the City, at its sole disc~etion, to pay the Master Note from any other lawfully available source of funds permitted by Section 1210 of the Charter of the City. All other sums due to Bank under this A9reement shall constitute obligations only of the Elec~ric System. ",.......,. 2.2 (a) Each Advance shall >>e made upon the written request of the City signed by an Authorized Officer received by Bank not less than three (3) days prior to the date of the Advance, specifying the date and the amount of the Advance; provided that disburse- ment shall be made at or prior to 11:00 a.m. Los Angeles time on the same day as receipt by Bank of an oral request therefor if (i) such receipt occurs prior to 10:00 a.m. Los Angeles time, and (ii) the Authorized Officer making such request is the Public Utilities - 8 - - -.- General Manager of the City and states that the state- ments in Paragraph 3.2(b) are true and correct as of the date of such request (or, with respect to the representation set forth in para~raph 3.2(b) (ii) furnishes an opinion of Bond counsel that any such litigation is without merit). (b) Each Advance shal] be in the amount of not less than One Hundred Tho~sand Dollars ($100,000). (c) Each Advance shal] be evidenced by the Master Note in the form attaqhed hereto as Exhibit E executed by the City, qated the Closing Date and providing for the payme~t of interest and principal in accordance with Par~graph 2.1. ~. (d) Notwithstanding tijat the Master Note shall be stated to be in the amo~nt of the Credit, interest shall be payable only on Advances actually made hereunder and only from the date of each such Advance. The amount and date of each Advance here- under and the amount and date of each payment of principal or interest hereunder $hall be endorsed by the Bank on the reverse of the Master Note or on a grid attached thereto so that the principal balance owing from the City to Bank and the date to which interest has been paid will be reflected on the - 9 - .'""" ~~ ~ - reverse of the Master Note or on the grid attached thereto. ~~, 2.3 Each Advance to the City and each payment to Bank under this Agreement shall be maoe at the Bank Office in immediately available funds. 2.4 The City may prepay anv Advance or Advances in whole or in part at any time witho~t premium or penalty provided that all interest accrued on such amount being prepaid to the date of prepayment is paid and any such pre- payment shall be deemed to be made with respect to Advances made on the earliest date which are then outstanding and unpaid. 2.5 The City shall pay to aank a commitment fee at the rate of three-eighths of one p~rcent (3/8%) per annum (computed quarterly on the basis of a. three hundred sixty (360) day year and actual days elapsed) on the average daily unused portion of the Credit; provided, however, that the City may upon three (3) days' notice to Bank irrevocably reduce the amount of the Credit hereuinder, and thereafter the computation of the commitment fee and Bank's obligations hereunder shall be based upon such reduced amount of the Credit. The commitment fee shall be computed quarterly as ~, of March 31, June 30, September 30 and December 31 of each calendar year and shall be payable with respect to each quarter - 10 - .. ..... - ~ 4- -. on the tenth calendar day after each such date, commencing with the first such date after the Closing Date. JIIIIII'""~'. 2.6 If at any time during th~ term of this Agree- ment the City has first lien electric u~ility revenue bonds out- standing with a rating of less than "A ~inus" from Standard & Poors Corporation and single "A" from Moody.s Investor's Service Inc. (or equivalent ratings fro~ other rating agencies), Bank may, upon written notic~ to the City cancel this Agreement (except with respect to the amount of Notes and accrued interest thereon outstandin9 on the date of which such notice is received by the City and the amount of interest on such amount of Notes (an4 any renewals thereof) from such date to the end of tne Availability Period) and (1) unilaterally increase tne rate of the commitment fee under this Agreement at any time after the downgrading to the rate of commitment fees then being charged by the Bank for credits comparable to. the Credit or (2) terminate its obligation to make Advances under this Agreement at any time after the downgrading and effective one year from the date of receipt by the City of notice of such termination (except with respect to the amount of Notes outstanding on the date on which such notice is received by the City with maturity or maturities ~ in excess of one.year from the date of receipt and accrued - II - - ~ ~ ~ ~ - interest on the amount of such Notes and the amount of interest on such amount of Notes (and any renewals thereof) from such date to the end of the Availability Period). ,..... 3. Conditions Precedent 3.1 Bank's obligation to d~sburse the Credit is subject to the condition precedent th~t, on the Closing Date, it shall have received, in form and s~bstance satisfactory to it: (a) An opinion, dated! the Closing Date, of the City Attorney for the Cit~, substantially in the form of Exh~bit F hereto with suph changes thereto as may be agreed upon by Bank and the City Attorney; (b) Opinions, dated the Closing Date, of Mudge Rose Guthrie & Alexander aind Rourke & Woodruff, Co-Bond Counsel; (c) A copy of the Resolution and the Ordinance certified by the City Clerk or ~ Deputy City Clerk as being in full force and effect an the Closing Date; ~ (d) A copy of a resolution or resolutions passed by the City Council ("Credit Resolution") certified by the City Clerk or a Deputy City Clerk as being in full force and effeQt on the Closing Date, authorizing the borrowing provided for herein and the execution, delivery and performance of this Agreement - 12 - ..... h.. - and any other documents to be executed by the City related to this transaction; .~'. (e) A certificate, sisned by the City Clerk or a Deputy City Clerk dat~d the Closing Date, as to the incumbency, and contai~ing the specimen signature or signatures, of the ~uthorized Officer or Officers executing and delivering this Agreement and any instrument or agreement required hereunder on behalf of the City; (f) A master non-arbitrage certificate, dated the Closing Date; (g) The Master Note; (h) A copy of the Ord~nance Amendments, each certified by the City Clerk or a Deputy City Clerk as having been" adopted by the City Council; and (i) a copy of the Res~lution-Bonds. 3.2 The obligation of Bank to make Advances is subject to the conditions that: ~ (a) Except as provided in Paragraph 2.2(a), prior to I:OO p.m. Los Angeles time on the date of each Advance there shall have been delivered to Bank: - 13 - ... ~ - ".....~.. (i) A disbursement request, dated the date of such Advance, substantially in the form of Exhibit G hereto (a "disbursement request"); and (ii) If such Advanc~ is to be made on other than the Closing Dat~, a supplemental non-arbitrage certificate, da~ed the date of such Advance, substantially i~ the form of Exhibit. H hereto or otherwise satisfactory to Bond Counsel (which certif~cate may be included in the disbursement tequest) (a "supplemental non-arbitrage c$rtificate"). (b) Prior to 1:00 p.m. toa Angeles time on the date of each Advance, the f~llowing statements shall be true and correct and, exc~pt as provided in Paragraph 2.2(a), Bank shall have received a certificate signed by an Authorized Officer, d~ted as of the date of such Advance, stating that: ~. (i) no event has occurred .and is continuing, or would result f~om such Advance which constitutes an Event of Default or would constitute an Event of Default but for the requirements that notice be given or time elapse or both; - 14 - -... ..",...--.., (ii) there is no litigation pending concerning the validity of the Master Note or an opinion of Bond Counsel that any such liti- gation is without merit~ (iii) the representa~ions and warran- ties of the City set forth in Article 4 are true and correct on the date of such Advance as though made on and as of sQch date~ and (iv) the Ordinance, Credit Resolution and Resolution are in full fo~ce and effect. 4. Representations and Warranties City represents and warrants that: 4.1 City is a municipal corp$ration duly organized and validly existing under the laws of the State of California, and has all requisite power and authority to conduct its business, to own its properties and to execute, deliver and- perform all of its obl~gations under the Loan D9Quments to which it is or is to be a party (subject to, in the case of the Ordinance Amendments, the effective~ess thereof). ~ 4.2 The execution, delivery and performance by the City of the Loan Documents (subject to, in the case of the Ordinance Amendments, the effectiveness thereof) have been - IS - ~ ",.. ~ 4>. - duly authorized and do not and will not (i) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to the City, (ii) result in a breach of or constitute a default und~r any resolution of the City with respect to the Electric System or any indenture or loan or credit agreement or any other agreement, lease or instrument with respect to the Electric System to which the City is a party or by which the City or any of its properties within the Electric System may be bound or affected, or (iii) result in, or require, the creation or imposition of any mortgage, deed of trust, pledge, ~ien, security interest or other charge or encumbrance of any nature, other than those imposed in the Loan Documents, upon or with respect to any of the assets now owned or hereaf~er acquired by the City for the Electric System; and the City is not in any material respect in violation of or in default under any such law, rule, regulation, order, writ, judgment, injunc- tion, decree, determination or award or any such indenture, agreement, lease or instrument material to its operations of the Electric System. 4.3 No authorization, consent, approval, license, exemption of or registration with any court or governmental department, commission, board, bureau, agency or instrumen- tality, domestic or foreign, has been or will be necessary - 16 - .... .l>. - for the valid execution, delivery and performance by the City of any of the Loan Documents to which it is or is to be a party except as set forth in the Purchase Agreement. ~" 4.4 This Agreement and each of the other Loan Documents (subject to, in the case of the Ordinance Amend- ments, the effectiveness thereof) to Which the City is or is to be a party constitute legal, valid and binding obligations of the City enforceable against the City in accordance with their respective terms, except as they may be limited by applicable bankruptcy, i~solvency, re~rganization or similar laws affecting the enforcement of cre~itors' rights generally. 4.5 Each of the Ordinance ~endrnents has been adopted by the City Council. Upon effectiven~ss of Ordinance Number , the pledge and assignment created by Section 13 of the Ordinance, as amended by Ordin~nce Number , will be valid and binding as provided in s~ch Section 13, as amended, except as may be limited by applicable bankruptcy, insolvency, reorganization, or similar laws affecting the enforcement of creditor's rights generally. 5. Covenants ~ 5.1 Punctual Payment. Thei City will punctually payor cause to be paid from the sources set forth in Section 2.I(b} the principal and interest to become due in respect of Advances made under the Master Note or this - 17 - """;.-- - ."',.. Agreement in strict conformity with the terms of the Master Note and this Agreement, and it will faithfully observe and perform all of the conditions, covenants and require- ments of the Master Note and this Agreement. 5.2 Licenses, Permits, Etcl. The City will at all times and in all material respects ma~ntain and comply with all necessary permits and licenses with respect to the Electric System issued by governmental authorities having jurisdiction over the Electric System. 5.3 Payment of Taxes and c~aims. The City will, from time to time, duly pay and disch~rge, or cause to be paid and discharged, any taxes, assessments or other govern- mental charges with respect to the Electric System when due (except to the extent such charges are being contested in good faith). 5.4 Notices. The City wil~ promptly give written notice to Bank of the occurrence of apy Event of Default or any event which, upon a lapse of time or notice or both, would become an Event of Default. ~~" " 5.5 Accounting Records. The City will maintain adequate books, accounts and records with respect to the Electric System in accordance with generally accepted accounting principles and practices consistently applied, and permit employees or agents of Bank at any reasonable time to inspect - 18 - - - ,.,..... . its Electric System properties, and to examine or audit its books, accounts and records with respect to the Electric System and make copies and memoranda thereof. 5.6 Financial Statementsr qther Documents. The City will deliver to Bank: (a) as soon as availaijle but no later than ninety (90) days after the close of each of the first three (3) quarters of each of its fiscal years, the balance sheet as of the close of such quarter for the Electric Utility Fund of the City, and the statement of income and retained earnings ~nd of changes in financial position for such quarter and that portion of the fiscal year ending with s~ch quarter for the Electric Utility Fund of the City certified by a re- sponsible officer of the City as being complete and correct and fairly presenting the financial condition and results of operations of the Electric Systemr ", (b) as soon as availa~le but no later than one hundred an~ eighty (180)daY$ after . the close of each of its fiscal years, a complete copy of the City's audit report, which shall include at least the balance sheet as of the close of such year for the Electric Utility Fund, and the statement of income and retained earnings and of changes in financial position - 19 - ;;.- AIao. > 4, ~ for such year for the Electric Utility Fund, certi- fied by an independent public accountant selected by the City and satisfactory to Bank. The City.s pre- sent independent public accounta~ts, Price, Water- house & Co., are satisfactory to the Bank for purposes of this Section 5.6(b). Such ce~tificate shall not be qualified or limited with respect to the Electric Utility Fund because of restricted or limited examination by such accountant of any material' portion of the City.s records wi~h respect to the Electric Utility Fund. (c) such other statem~nts, lists of prop- erty and accounts, budgets, fore~asts or reports with respect to the Electric System a8 Bank may reasonably request. 5.7 Obligation to purchasel Master Note. If at any time after the date hereof: .~. (a) Any amendment, modification, addition or change shall have been made in Section 103 or any other provision of the Code or in any regulation or temporary or proposed regulation thereunder; or any ruling shall have been issued or revoked by the Internal Revenue Service: or any other action shall have been taken by the Internal Revenue Service, the - 20 - ./ll.., _..-.. .It .....!lO...." ~'" Department of Treasury or any other governmental agency, authority or instrumentaliuy; or any opinion of any court shall have been rendered; or any other event shall occur or other conditiqn shall exist which does not exist on the date hereof; and as a consequence thereof Counsel for the Bank shall notify the Bank that it is unable to give an unqualified opinion that any payment of interest on the Master Note or any amount in part, made oq or after the date specified in such notice, is ~xcludable from any Indemnitee's Federal Gross Incqrne due; or (b) The Internal Revenuei Service shall have issued to any Indemnitee a report or notice of proposed adjustments with respect tp the receipt of any interest on the Master Note; .~\ Then the Bank may, at its election, require the City to purchase or cause to be purchased, frOm the Bank the outstanding Master Note forthwith at a purchase price equal to the aggregate unpaid principal amount of ,such Master Note, together with the accrued interest thereon; provided that in the case of the occurrence of any of the events referred to in paragraphs (a) or (b) of this Section 5.7, the Bank will not require the City to purchase, or cause to be purchased, the Master Note, if within five business days after notice from - 21 - "'.... ~ ~.,,,,",. ..""...~. the Bank the City notifies the Bank that it elects to make payments required by Section 5.8 hereof. Any sale of the Master Note by the Bank pursuant to this Section 5.7 shall be without recpurse to the Bank and without representation and warranty of any kind by the Bank. 5.8 Tax Indemnity - Addi~iFnal Payments. If at any time (whether before or after payment of the Master Note or any purchase thereof by or on behalf of the City) any of the events referred to in paragraphs (a) or (b) of Section 5.7 hereof shall occur, then, upon demand by the Bank, the City will pay to the Bank in Federal or other immediately available funds in accord~nce with Section 5.9 hereof: ,........ (a) An amount equal to (i) the amount of interest which would have been payable on the unpaid principal amount of the Master Note held by such Bank during the period with resp!ect to which the interest payable on the Master Nbte shall have been determined to be includable in the Federal Gross Income of such Bank if such Master Note had borne interest at a rate per annum equal to the Lending Rate, less (ii) the amount of interest actually paid or accrued on the Master Note during such period: - 22 - L -.... .~ ,-..... ~ . .. ..-.. (b) The amount of any interest or Addi- tions to Tax which are (i) payable to the United States Government as a consequence of the failure to include the interest referred to in Section 5.7(a) hereof in the Federal Gross Incqrne of any Indemnitee and (ii) deductible for Federal income tax purposes: (c) An amount which., after reduction for all taxes attributable to the inclusion of such amount in the gross income of any Indemnitee under the laws of any federal, state qr local governmen- tal or other taxing authority (such taxes to be calculated at the respective ma~imum statutory rates applicable to such indemnitee), shall be equal to the amount of any interest or Aqditions to Tax which are (i) payable to the United S~ates Government as a consequence of the failure to include the interest referred to in Section 5.7(a) nereof in the Federal Gross Income of such Indemnitee and (ii) not deduc- tible for federal income tax purposes: and (d) The reasonable out-of-pocket expenses (including reasonable fees and disbursements of counsel) of any Indemnitee arising out of the failure to include the interest referred to in Section 5.7(a) in the Federal Gross Income of such Indemnitee. - 23 - 11 5.9 Dates and Place of Payments. ,.!II/I"'.'"" (a) Payments under Section 5.8(a) hereof in respect of periods prior to the date of a demand therefor shall be paid by the City promptly on written demand by the Bank, which ~emand, or series of demands, as the case may be, mat be made at the time of, or subsequent to, the occ$rrence of any events referred to in Section 5.7 nereof. Payments under Section 5.8(a) hereof in reswect of periods subsequent to the date of the afor$said demand shall be payable on each date ther~after on which interest on the Master Note is due and payable. (b) Payments under Sect~ons 5.8(b) and 5.8(c) hereof shall be made by the City promptly on demand by the Bank, which demand, ~r series of demands, as the case may be, may be made for purposes of interest at the time of, or subsequent to, the occurrence of any event referred tp in Section 5.7(a) or (b) hereof and for purpo$es of Additions to Tax at the time of, or subsequent to, any notice by the Internal Revenue Service of its intention to assert such Addition to Tax. .,~ (c) Payments under Sectiion 5.8(d) hereof shall be made by the City promptly on written demand by the Bank. - 24 - ","'"-. (d) In the event of a contest pursuant to Section 5.9(f) hereof, payments under Section 5.8(a) (b) and (c) will be made by the City promptly on written demand therefor by the Bank; proVided, however, that, except in the event Bank elects to pay the tax and sue for refund or such contest is settled with the concurrence of the City, such demand will not be made prior to the receipt by the Bank of an adverse decision on the contested issue(s) by a court of competent jurisdiction which the Bank, in good faith, elects not to appeal. (e.) Payments under tho.s Section 5.9 shall be made at the Bank Office. If the City shall fail to pay any of the foregoing amounts within five days after the due date pursuant to this Section 5.9, the City to the extent permitted by law, shall also pay, without further demand, interest on such unpaid amount at a rate per annum equal to the Prime Rate, from the day following such due date until paid, on the basis of a 360 day year and actual days elapsed. ,-...." (f) (i) Bank shall Qe under no obligation whatsoever to contest any disallowance or adjustment or other action which. may result in payments under Section 5.8 ("Loss") unless: - 25 - ....AII- . ... ~",. taxing authority of a proposed disallowance or adjustment ("Disallowance"); 2) City requests the Bank to contest such payment within thirty (30) days after the Bank has notified the City thereof and within thirty (30) days thereafter delivers to the Bank an opini~n of Independent Tax Counsel that there is a reasonable basis to contest such Disallowance; 3) City timely pays the Loss if the Bank ele~ts to pay the tax and sue for a refund; and 4) City fully indem- nifies the Bank for all expen$es incurred by the Bank in contesting such L~ss, and promptly reimburses the Bank for all such expenses as incurred; .,.-... (ii) The Bank shall have full con- trol over any contest required by this Section 5.9(f) provided, however, that the City, at its sole option, may provide to the Bank written submissions containing material relevant to the issue(s) under contest to which the Bank hereby agrees to give reasonable consideration in contesting any loss as defined in Section 5.9(f) (i)i provided further, that the Bank reserves the exclusive right to settle any contest initiated pursuant to this Seiction 5.9(f) prior to a judicial decision on the contested - 26 - ~ . --11 prior to a judicial decision on the contested issues subject to the condition that, if such settlement is not concurred in by the City (such .".... . concurrence not to be unrea$onably withheld) the Bank agrees to waive its rights to amounts provided for in Section 5.8(a), (b) and (c) hereof: (iii) Any refund f~om the taxing authority received by Bank as a result of such a contest shall be paid by Bank to the City to the extent Bank has already received payment therefor from the City in aCcordance with Section 5.8 hereof. (g) This indemnity shlall survive the ternti- nation of this Agreement and the: payment of the Master Note. (h) Upon effectivenesls of Ordinance Number , Sections 5.8 and 5.9 of t~is Agreement shall become efffective as of the Closing Date. S.IO Use of Advances. The City will use the Advances to finance the construction and acquisition of facilities, property, and rights related to Units 2 and 3 of ,..-.... SONGS, including the payment of principal and interest on Notes. No Note (except the Master Note) shall mature more than eighteen months from the date of issuance thereof. - 27 - -- ~ ~ ~ .-- .~ ~ --- ~ "..-..... 5.11 Amendments. Except for the amendments to the Ordinance contained in the Ordinance Amendments, the City will not modify or amend the Resolution, the Credit Resolution, the Ordinance or the Ordinamce Amendments without the prior written consent of Bank which consent will not unreasonably be withheld. 5.12 Long Term Bonds. Within one hundred and eighty days of the date upon which the City has obtained all required approval from, NRC and CPU~ for the sale by Edison and purchase by the City of a 1.5% interest in SONGS 2 and 3, City will use its best efforts to (a) issue and sell its electric revenue bonds ("Long term Bonds") in an amount sufficient to retire, at or priot to their maturities, all Notes and to repay all other sums d~e Bank under this Agreement and (b) use the proceeds of the Long Term Bonds so issued and sold to retire, at or prior to their maturity, all Notes and all other sums due Bank under this Agreement. 5.13 Legal Expenses. The City will reimburse Bank itemized legal expenses up to a maximum of $15,000 for prep- aration of this Agreement and related documentation. 5.14 Proceeds of Reacquisiti~n. The City will use the amounts (if any) received pursuant to clauses (i) through (v) of Paragraph II of the Purchase Agreement to pay all amounts outstanding on Notes and all other sums due to Bank under this Agreement. - 28 - ~, .~. -.. ._----.-. ..0-"'" 5.15 No Liens, Security Inter~st,. etc. Except for security interests, liens, and encumbrances applicable to each participant in Units 2 and 3 of SONGS and arising out of or in connection with the acquisition or construction of such Units, the City will not create, a$sume, or suffer to exist any security interest, lien (incl~ding the lien of an attachment, judgment, or execution) or ~ncumbrance securing a charge or obligation on the OWnership Interest (as the term OWnership Interest is used in the Purch~se Agreement) other than the mortgage lien presently existi~g on the Ownership Interest and will not sell, assign, tra~sfer or hypothecate the Ownership Interest except as is set forth in the Purchase Agreement. 5.16 No Amendment of purchas~ Agreement. The City will not amend or modify the Purchase Agreement, except as permitted by Paragraph 11 of the Purcha~e Agreement, without the consent of Bank which consent will not be unreasonably withheld. 6. Events of Default Regardless of the terms of the Master Note or this Aqreement, the occurrence of any of the following events shall, upon written notice by Bank to the City, terminate any obligation on the part of Bank to make or continue the Credit and, at the option of Bank (exercised by written notice to the City), - 29 - ""."...~ ~ ^~. ~ shall make all sums of interest and principal remaining on the Master Note and all other sums outstanding under or in respect of this Agreement tmIDediately due and payable (subject to Section 2.l(b) hereof), witpout notice of default, presentment or demand for payment, prot~st or notice of nonpayment or dishonor, or other notices or demands of any kind or character, except as hereinafter specified: 6.1 The City shall fail to p~y, when due, any instalment of interest or principal or any other sum due under the Master Note or this Agreement. in accordance with the terms thereof or hereof; 6.2 Any representation or wa~ranty made by the City to the Bank herein or in any agre~ent, instrument or certificate executed pursuant hereto' or in connection with any transaction contemplated hereb~ which is material insofar as the business or financial c~ndition of the Electric System is concerned shall pro~e to have been false or misleading in any material respect when made; 6.3 Any involuntary lien or liens in the aggregate sum of Five Million Dollar~ ($5,000,0001) or more, of any kind or character, shall attach to any assets or property of the Electric System, except for the permitted encumbrances set forth below: - 30 - .U ~. (a) Liens for taxes, assessments, or govern- mental charges for the then current year and taxes, assessments or governmental chargeS not then delin- quent; and liens for taxes, assessments or governmental charges already delinquent, but wh~se validity is at the time being contested in good faith by the City; (b) Liens and charges incidental to con- struction or current operation whi~h have not at such time been filed or asserted or the payment of which has been adequately secured or whi~h, in the opinion of counsel, are insignificant in ~ount; (c) Liens, securing obliigations neither assumed by the City nor on account of which it cus- tomarily pays interest directly or indirectly, existing, either at the date hereo!f, or, as to prop- erty hereafter acquired, at the time of acquisition by the City, upon real estate or rights in or relating to real estate acquired b~ the City for substation or transmission, distr~ution or other right-of-way purposes; (d) Judgment liens; ~ (e) Any defects in titles to right-of- way easements; - 31 - - . "'....... ~- (f) Easements or reservations with respect to any property of the City for the purpose of rights-of-way, including transm~ssion and distribution lines, and similar pu~poses, zoning ordinances, regulations, reservatiqns, restric- tions, covenants, party wall agre~ents, condi- tions of record and other encumbra~ces (other than to secure the payment of mone1)i (g) Any lien or encumbr~nce, moneys sufficient for the discharge of which have been deposited in trust with the truste~ or mortgagee under the instrument evidencing su~h lien or encumbrance, with irrevocable auth~rity to such trustee or mortgagee to apply such moneys to the discharge of such lien or encumbrance to the extent required for such purposei and (h) Any lien reserved a$ sec~rity for rent or for compliance with other provisions of the lease in the case of any lease~old estate. ~ 6.4 A judgment or judgments shall be entered against the City payable from funds of the Electric System in the aggregate amount of Five Million Dollars ($5,000,000) or more on a claim or claims not covered by insurance and such judgment or judgments are not appealed - 32 - c.,.,.....'.... "'- ,.........", -...........--- ~ - ,,- within the time period permitted by law or paid within 90 days of the date such judgment or judgm~nts are entered; 6.5 The City shall fail to p~y its debts generally as they come due, or shall file any pet~tion or action for relief under any bankruptcy, reorganiza~ion, insolvency or moratorium law, or any other law or laws for the relief of, or relating to, debtors; 6.6 An involuntary petition $hall be filed under any bankruptcy statute against the City,. or a custodian, receiver, trustee, assignee for the ben~fit of creditors (or other similar official) shall be apnointed to take possession, custody or control of the p~operties of the City unless such petition or appointment is set aside or with- drawn or ceases to be in effect within sixty (60) days from the date of said filing or appointment; 6.7 Any breach or default sh4ll occur under any other agreement involving the borrowing of money or the extension of credit for the Electric SY$tem in an amount in- excess of $5,000,000 under which the City is obl~gated as borrower or guarantor, if such default ~onsists of the failure to pay such indebtedness when due or if such default has caused the acceleration of any such indebtedness or the termi- nation of any such commitment to lend; - 33 - - ,..'" 6.8 City shall breach or default under, any term, condition or provision contained in this Agreement not specifically referred to in this Article or any breach or default shall occur under the Master Note or other instrument or agreement required hereunder, and su~h breach or default shall continue for a period of Forty-Fi~e (45) days after written notice thereof is received by t~e City from the Bank. 6.9 The Purchase Agreement i$ modified or amended in any material respect in violation of Section 5.16. 7. Miscellaneous. 7.1 Except as otherwise provtded herein, any communications between the parties hereto or notices provided herein to be given may be given by mailing the s~ne, postage prepaid, or by transmitting by ~able, telegraph, telex, or other telecommunication equip$ent to each party at its address set forth on the signatute pages hereto, or to such other addresses as either patty may in writing hereafter indicate. .,-....." 7.2 This Agreement shall bin~ and inure to the benefit of the parties hereto and their respective successors and assigns: provided, however, that the City shall not assign this Agreement or any of the rights of the City hereunder without the prior written consent of Bank. - 34 - - 7.3 Bank may at any time sell, assign, grant participations in, or otherwise transfer to any other person, firm or corporation (a "participant") all or part ..---- ~~, ''\ of the indebtedness of the City outstanding under this Agreement or the Master Note. The C~ty hereby authorizes Bank and each such participant, in c~se of default by the City hereunder, to proceed directly, by right of setoff, banker1s lien, or otherwise, against any Electric System funds of the City which may at the t~me of such default be in the hands of Bank or any such participant. 7.4 No delay or omission QY Bank to exercise any right under this Agreement shall imp~ir any such right, nor shall it be construed to be a waiver thereof. No waiver of any single breach or default under tnis Agreement shall be deemed a waiver of any other breach or default. Any waiver, consent or approval under this Agree~ent must be in writing to be effective. 7.5 The City agrees to pay to Bank on demand all costs, expenses and attorneys' fees (including allocated costs for in-house legal services) incurred by Bank in connection with the enforcement of this Agreement or any instrument or agreement required hereunder or in c~nnection with any ,........, refinancing or restructuring of the Credit in the nature of a "work-out". - 35 - ...",.".". '--' - 7.6 This Agreement and any agreement, document or instrument attached hereto or referred to herein integrate all the terms and conditions mentioned herein or incidental ..",.... hereto, and supersede all oral negotiat~ons and prior writings in respect to the subject matter hereof. 7.7 All financial computatio~s required under this Agreement shall be made, and all financ~al information required under this Agreement shall be prepared, in accordance with generally accepted accounting principles and practices con- sistently applied. 7.8 This Agreement, and any ~nstrument or agreement required hereunder, shall be governed by and construed under the laws of the State of California. 7.9 Paragraph headings are fqr reference only, and shall not affect the interpretation or meaning of any provision of this Agreement. 7.10 The illegality or unenforiceability of any provision of this Agreement shall not in any way affect or ~pair the legality or enforceability of the remaining provisions of this Agreement. ,.......". 7.11 This Agreement may be am~nded by mutual written agreement of the parties and under terms and provisions as agreed upon by the parties. - 36 - - 7.12 This Agreement may be executed in as many coun- terparts as may be deemed necessary or convenient, and by the . """" . different parties hereto on separate counterparts each of which, when so executed, shall be deemed an ~riginal but all such counterparts shall constitute but one and the same agreement. IN WITNESS WHEREOF, the par~ies hereto have executed this Agreement by their duly authoriz.d officers as of the day and year first above written. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION CtTY OF ANAHEIM By: Br: Title: Title: By: By: T i tl e : Tlitle: Address: A(idress: 555 South Flower Street Los Angeles, California 90071 200 South Anaheim Boulevard Anaheim, California 92805 Attn: Alan Rogers Utilities/Telecom- munications #5164 Attn: City Clerk cc: Corporate Service Center 1000 West Temple Street Los Angeles, ~ 90012 Attn: Maria Gonzalez cc: Public Utilities General Manager .~ - 37 - ..