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91-115 CITY OF ANAHEIM RESOLUTION NO. 91R-1~15 RESOLUTION OF THE CITY COUNCIL OF T~E CITY OF ANAHEIM, CALIFORNIA, AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $4,400,000 AGGREGATE PRINCIPAL AMOUNT OF ELE~rF~IC REVENUE BONDS, ISSUE OF 1991, OF THE CITY; AND PROVIDING THE T]f~z4S AND CONDITIONS FOR THE ISSUANCE OF SUC~ BOND~ W}IEREAS, the City of Anaheim (the "City") is a municipal corporation organized and existing under a charter duly and regularly adopted pursuant to the provisions of the Constitution of the State of California (the "Charter"); and WHEREAS, Section 1210 of the Charter ("Section 1210") pro- vides as follows: "Bonds which are payable only out of such revenues as may be specified in such bonds may be issued when the City Council by ordinance shall have established a procedure for the issuance of such bonds. Such bonds, payable only out of revenues, shall not constitute an indebtedness or gen- eral obligation of the City. No such bonds payable out of revenues shall be issued without the assent of a majority of the voters voting upon the proposition for issuing the same at an election at which such proposition shall have been duly submitted to the qualified electors of the City. "It shall be competent for the City to make contracts and covenants for the benefit of the holders of any such bonds payable only from revenues and which shall not con- stitute a general obligation of the city for the establish- ment of a fund or funds, for the maintaining of adequate rates or charges, for restrictions upon further indebted- ness payable out of the same fund or revenues, for restric- tions upon transfer out of such fund, and other appropriate covenants. Money placed in any such special fund for the payment of principal and/or interest on any issue of such bonds or to assure the application thereof to a specific purpose shall not be expended for any other purpose what- ever except for the purpose for which such special ftlnd 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. 94601.19.1080.01:15 "Notwithstanding the foregoing, the City may sell and issue at any time and from time to time revenue bond antic- ipation notes (including renewal revenue bond anticipation notes) in anticipation of the revenue bonds authorized by the voters on June 2, 1981; provided that the aggregate principal amount of such revenue bond anticipation notes and revenue bonds outstanding in accordance with their terms at any one time shall not exceed $92 million. Such revenue bond anticipation notes may be sold, issued and secured in such manner and subject to such terms and condi- tions as the City Council may prescribe by ordinance; pro- vided that such revenue bond anticipation notes shall not constitute an indebtedness or general obligation of the City of Anaheim and are not to be secured by the taxing power of said City; and "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 any one time shall not exceed the principal amount of such electric revenue bonds authorized by the voters and (ii) the aggregate principal amount of such water revenue bond anticipation notes and the water revenue bonds in anticipation of which such water revenue bond anticipation notes were issued outstanding in accordance with their terms at any one time shall not exceed the principal amount of such water revenue bonds authorized by the voters. Such revenue bond anticipation notes may be sold, issued and secured in such manner and subject to such terms and conditions as the City Council may prescribe by ordinance; provided that such revenue bond anticipation notes shall not constitute an indebtedness or general obligation of the City of Anaheim and are not to be secured by the taxing power of said City. "Notwithstanding the foregoing, the City may also sell and issue at any time and from time to time revenue antici- pation notes (including renewal revenue anticipation notes) in anticipation of the receipt of revenues of the City's water and electric utilities; provided that the aggregate principal amount of such revenue anticipation notes out- standing in accordance with their terms at any one 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 -2- forth in the audited financial statements of such utility for such year. Such revenue anticipation notes may be sold, issued, and secured in such manner and subject to such terms and conditions as the city Council may prescribe by ordinance; provided that such revenue anticipation notes shall not constitute an indebtedness or general obligation of the City of Anaheim and are not to be secured by the taxing power of said city."; and WHEREAS, Ordinance No. 2980 of the city Council, as amended by Ordinance No. 4158 and by Ordinance No. 4328, incorporating cer- tain sections of the Revenue Bond Law of 1941 (Chapter 6, Part 1, Division 2~ Title 5 of the Government Code of the State of California), establishes a procedure for the issuance of electric revenue bonds as provided for in Section 1210; and WHEREAS, pursuant to Section 1210, Ordinance No. 2980 and Resolution No. 74R-615 of the city Council, a special municipal elec- tion was held in the City on March 4, 1975, for the purpose of sub- mitting to the qualified voters of the City the following proposition: "In order to provide more economical electrical ser- vice, shall the City of Anaheim be authorized to finance the construction and acquisition of facilities, property and rights related to the generation, transmission and dis- tribution of electrical energy by issuing revenue bonds, not payable from property taxes, in an amount not to exceed 150 Million Dollars?"; and WHEREAS, said proposition (the "1975 Proposition") was approved by the votes of more than a majority of all the voters voting on the 1975 Proposition at said special municipal election; and WHEREAS, of said authorized amount of $150,000,000, the City has heretofore issued $6,000,000 electric revenue bonds desig- nated "Electric Revenue Bonds, Issue of 1976," $12,500,000 electric revenue bonds designated "Electric Revenue Bonds, Second Issue (Subordinated) of 1976," $84,000,000 electric revenue bonds desig- nated "Electric Revenue Bonds, Issue of 1980," $18,000,000 electric revenue bonds designated "Electric Revenue Bonds, Issue A of 1982" and $10,000,000 electric revenue bonds designated "Electric Revenue Bonds, Issue A of 1983"; and WHEREAS, pursuant to Section 1210, Ordinance No. 2980, as amended, 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: -3- "In order to provide a more economical market for the remaining electric revenue bonds authorized by a majority of the voters in 1975 to provide more economical electric service, shall City Council Resolution No. 74R-615 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 "1982 Proposition") was approved by the votes of more than a majority of all the voters voting on the 1982 Proposition at said special municipal election; and WHEREAS, this City Council deems it necessary to issue for the purposes hereinafter set forth $4,400,000 of the remaining $19,500,000 principal amount of electric revenue bonds authorized by the 1975 Proposition, to be designated "Electric Revenue Bonds, Issue of 1991" (the "Bonds"); and the Bonds, shall be on a parity with the City's outstanding Electric Revenue Bonds, Issue of 1972, Electric Revenue Bonds, Issue of 1976, Electric Revenue Bonds, Issue A of 1983, Electric Revenue Bonds, Issue B of 1983, Electric Revenue Bonds, Issue C of 1983, Electric Revenue Bonds, Issue of 1986 and Electric Revenue Bonds, Second Issue of 1986 and any other parity electric revenue bonds which may be issued in the future by the City; and WHEREAS, this City Council desires to sell the Bonds directly to purchasers registered with the City (the "Purchasers") pursuant to the terms and conditions hereof; and NOW, THEREFORE, 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: "Annual Debt Service" as computed from time to time under Covenant 10 of Section 21 hereof with respect to any Fiscal Year means the amount of principal (including required payments into any sinking account established for the Bonds or any Parity Bonds) and interest which will become due and payable or will accrue in such Fiscal Year on outstanding Bonds and Parity Bonds. "Authorized Investments" means any obligations in which the City may lawfully invest its funds. "Authorized Newspaper" shall mean a newspaper customarily published at least once a day for at least five -4- days (other than legal holidays) in each calendar week, printed in the English language, and of general circulation in the City. "Bonds" means the electric revenue bonds to be desig- nated "Electric Revenue Bonds, Issue of 1991" issued under this Resolution. "Business Day" means a day other than (i) a Saturday or Sunday or (ii) a day on which commercial banks in the city in which the Registrar maintains its principal or cor- porate office are authorized or required by law of execu- tive order to close or (iii) a day on which the New York Stock Exchange is closed. "City" means the City of Anaheim, California. "city Council" means the city Council of the City. "Code" means the Internal Revenue Code of 1986, as amended. "Eligible Investor" means a person or entity with a registration address in California. "Enterprise" means the entire electric system of the City, including all improvements and extensions later con- structed or acquired. "Finance Director" means the Finance Director of the City. "First 1986 Bonds" means the Electric Revenue Bonds, Issue of 1986 referred to in the recitals hereof. "Fiscal Agent" means the fiscal agent under the 1972 Bond Resolution. "Fiscal Year" means the year period beginning on July 1 and ending on the next following June 30. "General Manager's Determination Certificate" means the Certificate completed and executed by the General Manager or the Assistant General Manager--Finance and Administration of the Public Utilities Department of the City at the time of initial issuance and delivery of the Bonds, in substantially the form attached hereto as Exhibit B. "Gross Revenues" means all rates, fees and charges for providing electric service to persons and real property and -5- all other fees, rents and charges and other income derived by the City, from the ownership, operation, use or services of the Enterprise. "Initial Dated Date" means the date set forth in the General Manager's Determination Certificate as the Initial Dated Date. "Maintenance and Operation Expenses" means the reason- able and necessary current expenses of maintaining, repair- ing and operating the Enterprise, including City adminis- trative expenses directly attributable to electric system functions, but excluding depreciation, interest and amorti- zation, all computed in accordance with sound accounting principles and consistent with existing accounting prac- tices of the City. "Maximum Annual Debt Service" as computed from time to time under Section 15 and Covenant 10 of Section 21 hereof means the largest of the sums obtained for the Fiscal Year of computation or any Fiscal Year thereafter by totaling the following for each such Fiscal Year: (l) The principal amount of all Bonds and serial Parity Bonds payable in such Fiscal Year and outstand- ing at the date of such computation; (2) The minimum sinking account payments, if any, pay- able in such Fiscal Year with respect to any term Parity Bonds outstanding at the date of such computa- tion; and (3) The interest which would be due during such Fiscal Year on the aggregate principal amount of Bonds and Parity Bonds which would be outstanding in such Fiscal Year if the Bonds and serial Parity Bonds outstanding on the date of such computation are retired as they mature and if 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. "Net Revenues" of the Enterprise means the amount of the Gross Revenues less the Maintenance and Operation Expenses. "1972 Bond Resolution" means Resolution No. 72R-83 of the City Council, adopted March 14, 1972, authorizing the issuance of the 1972 Bonds. -6- "1972 Bonds" means the Electric Revenue Bonds, Issue of 1972 referred to in the recitals hereof. "1976 Bond Resolution" means Resolution No. 76R-149 of the City Council, adopted March 30, 1976, authorizing the issuance of the 1976 Bonds. "1976 Bonds" means the Electric Revenue Bonds, Issue of 1976 referred to in the recitals hereof. "1980 Bonds" means the Electric Revenue Bonds, Issue of 1980 referred to in the recitals hereof. "1983 Bonds" means the Electric Revenue Bonds, Issue A of 1983, the Electric Revenue Bonds, Issue B of 1983 and the Electric Revenue Bonds, Issue C of 1983, referred to in the recitals hereof. "Ordinance No. 2980" means Ordinance No. 2980 of the City Council, adopted on November 9, 1971, as amended by Ordinance No. 4158 of the city Council adopted on September 9, 1980 and by Ordinance No. 4328 of the City Council adopted on April 27, 1982. "Owner" or "Owners" means any or all, as the case may be, of the registered owners of the Bonds whose names appear as such on the registration records maintained by the City. "Parity Bonds" means the outstanding 1972 Bonds, 1976 Bonds, 1983 Bonds, First 1986 Bonds, Second 1986 Bonds and any other revenue bonds, revenue notes or other similar evidences of indebtedness heretofore or hereafter issued for the acquisition, construction and financing of exten- sions of, additions to, repairs and replacements to, renew- als of, and improvements of the Enterprise, payable out of the revenues and which, as provided in this Resolution, rank on a parity with the Bonds. "Parity Bond Resolution" means any resolution autho- rizing the issuance of Parity Bonds. "Qualified Obligations" shall have the meaning ascribed thereto in Resolution No. 89R-295 of the city Council adopted on July 18, 1990. "Registrar" means the Treasurer, or any agent of the Treasurer appointed by the Treasurer to perform one or more of the functions of the Registrar. -7- "Resolution" means this Resolution No. 91R-__ of the City Council. "Second 1986 Bonds" means the Electric Revenue Bonds, Second Issue of 1986, referred to in the recitals hereof. "Second 1986 Bond Resolution" means Resolution No. 86R-490 of the City Council, adopted October 31, 1986, as amended, authorizing the issuance of the Second 1986 Bonds. "Tax Certificate" means the Tax and Non-Arbitrage Certificate and Instructions as to Compliance with the Provisions of Section 103(a) of the Internal Revenue Code of 1986, executed and delivered by the City, on the Delivery Date, as amended or supplemented from time to time. "Treasurer" means the Treasurer of the city. SECTION 2. Equality of Bonds, Pledge of Revenues. Pursuant to Section 1210 of the City Charter, Ordinance No. 2980 and this Resolution, the Bonds and all Parity Bonds outstanding shall be equally secured by a pledge, charge and lien upon the Gross Revenues of the Enterprise without priority for nLlmber, date of bonds, date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of the Bonds and all Parity Bonds outstand- ing shall be and are secured by an exclusive pledge of and charge and lien upon the Gross Revenues of the Enterprise, and all of the Gross Revenues of the Enterprise are hereby pledged, charged and assigned for the security of the Bonds and all Parity Bonds, and such Gross Revenues and any interest earned on the Gross Revenues shall consti- tute a trust fund for the security and payment of the interest on and principal of the Bonds and all Parity Bonds and so long as any of the Bonds and all Parity Bonds outstanding or interest thereon are unpaid, the Gross Revenues and interest thereon shall not be used for any other purpose, except as permitted by this Resolution and any Parity Bond Resolutions, and shall be held in trust for the benefit of the Owners and shall be applied pursuant to this Resolution, or to this Resolution as modified pursuant to provisions herein, and to any Parity Bond Resolutions. Nothing in this Resolution shall preclude: (a) the redemp- tion prior to maturity of any Bonds subject to call and redemption 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 indebtedness payable solely from surplus moneys in the Surplus Fund pursuant to Section 18 hereof. -8- SECTION 3. Purpose of Bonds. Under and pursuant to Section 1210 of the City Charter and Ordinance No. 2980 and in accor- dance with the authorizations stated in the recitals hereof, the Bonds shall be issued for the purpose of financing the costs of acquisition and construction of various improvements and additions to the Enterprise and to fund a portion of the Reserve Fund, if neces- sary, including the payment of costs and expenses incidental thereto. SECTION 4. Special Obligations; No General City Liability. The Bonds shall be special obligations of the city and shall be pay- able as to the principal thereof and interest thereon solely from the Gross Revenues. The general fund of the city is not liable for the payment of the Bonds or their interest, nor is the credit or taxing power of the city pledged for the payment of the Bonds or their interest. The Owners of the 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 Bonds 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 Gross Revenues. Subject to the foregoing provisions of this Section 4, nothing herein shall preclude the city from paying the principal of and interest on the Bonds, including payments of principal and inter- est upon redemption of the Bonds at the option of the Owner, from other lawfully available moneys of the city. SECTION 5. Description of Bonds. The Bonds shall all be in the denomination of $500, or any integral multiple of $500 and the Bonds shall each be numbered consecutively from 1 upwards. The Bonds shall be designated "ELECTRIC REVENUE BONDS, ISSUE OF 1991". The Bonds shall initially be dated the Initial Dated Date, and shall be payable on October 1 in each year of maturity in the maximum amounts for each of the several years (as adjusted and set forth in the General Manager's Determination Certificate so that the total aggre- gate principal amount shall not exceed $4,400,000), as follows: Principal Year ~oullts 1999 $800,000 2000 800,000 2001 800,000 2002 800,000 2003 800,000 2004 800,000 -9- The Bonds shall bear interest payable semiannually on the f~rst days of April and October of each year, commencing October 1, 1991. The City Council hereby determines that the interest rate on the Bonds of each maturity shall be the interest rate set forth for such maturity in the General Manager's Determination Certificate but not exceeding the maximum rate of interest which may be paid on the Bonds which shall be 8%. Each Bond shall bear interest from the interest payment date next preceding the date of its authentication, unless such Bond is authenticated on an interest payment date, in which event from such interest payment date, or unless such 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 Bond shall bear interest from such interest payment date; provided, however, that if the date of authentication of any Bond shall be prior to September 15, 1991, such Bond shall bear interest from the Initial Dated Date; provided, further, that if, as shown by the records of the Registrar, interest on the Bonds shall be in default, Bonds issued in exchange for Bonds surrendered for transfer or exchange shall bear interest from the interest payment date to which interest has been paid in full on the Bonds surrendered or if no interest has been paid, from the Initial Dated Date. SECTION 6. Place of Payment. Each Bond shall bear interest ~lntil the principal sum thereof has been paid; provided, however, that if at the maturity date of any Bond or if the same is redeemable and has been duly called for redemption, funds are avail- able for the payment or redemption thereof in full accordance with the terms of this Resolution, said Bonds shall then cease to bear interest. The principal of the Bonds shall be payable in lawful money of the United States of America by check mailed by the Registrar to the registered owner on the registration records main- tained by the Registrar but only upon surrender of the Bond to the Registrar. Interest on the Bonds shall be payable by check mailed to the registered owner on the registration records maintained by the Registrar, determined as of the close of business on the 15th day of the calendar month immediately preceding an interest payment date (including the date on which the principal of a Bond is to be paid). SECTION 7. Execution, Authorization and Delivery of Bonds; Sale of the Bonds. (a) The Mayor of the city and the Treasurer are hereby authorized and directed to sign the Bonds by their printed, lithographed or engraved facsimile signatures, and the City Clerk of the City is hereby authorized and directed to countersign the Bonds by his or her facsimile signature and to affix thereto or otherwise reproduce thereon the corporate seal of the City. On the date of closing, the City Treasurer, as agent for the Owners, will accept delivery of the Bonds on behalf of the Owners; and the City Treasurer, as agent, will deliver the Bonds by mail or other means to the respective Owners as promptly as practicable after the date of the closing. -10- The Bonds shall bear thereon a certificate of authentica- tion, in substantially the form set forth in Exhibit A of the Resolution, executed manually by the Registrar. Only such Bonds as shall bear thereon such certificate of authentication shall be enti- tled to any right or benefit under the Resolution and no Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Registrar. Such certificate of the Registrar upon any Bond executed on behalf of the City shall be conclusive evidence that the 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. (b) The Bonds are hereby authorized to be sold directly by the City to Eligible Investors at a purchase price of 100% of the principal amount of the Bonds purchased by such Eligible Investors. SECTION 8. Registration and Transfer. The Bonds may only be registered in the name of an Eligible Investor. The maximum aggregate principal amount of Bonds which may be registered in the name of any one Eligible Investor shall be $5,000. The Bonds shall be issued only in fully registered form. The Bonds shall be transferable only upon the books of the city, which shall be kept for such purposes at the office of the Registrar in Anaheim, California, 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 autho- rized attorney. Upon the transfer of any such registered Bond, the Registrar shall issue in the name of the transferee a new registered Bond or Bonds of the same aggregate principal amount and maturity as the surrendered Bond. The Registrar may, with the concurrence of the City, designate an additional office where transfer of registered Bonds may be effected by the Registrar provided in this Section. The city, the Registrar and each paying agent may deem and treat the person in whose name any Bond shall be registered upon the books of the City as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal or redemption price, if any, of and interest on such 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 Bond to the extent of the sum or sums so paid, and neither the City, the Registrar nor any paying agent shall be affected by any notice to the contrary. The City agrees to indemnify and save 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 registered owner. ~11- In all cases in which the privilege of exchanging Bonds or transferring registered Bonds is exercised, the Registrar shall authenticate and deliver Bonds in accordance with the provisions of the Resolution. All Bonds surrendered in any such exchanges or transfers shall forthwith be delivered to the Registrar and cancelled by the Registrar and returned to the City. For every such exchange or transfer of Bonds, whether temporary or definitive, the City or the Registrar may charge a fee of $15.00 per Bond to be exchanqed or transferred and the City or the Registrar may make a charge ~uffi- cient 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 Bonds for a period of 15 days next preceding any selec- tion of Bonds to be redeemed or thereafter until after the first pub- lication or mailing of any notice of redemption or any Bonds called for redemption. SECTION 9. Redemption of Bonds (a) Any Bond is subject to redemption prior to maturity on the first Business Day of any month on or after October 1, 1992, at the option of the Owner upon receipt by the Registrar of at least 30 days' prior writtennotice. The amount to be paid with respect to any Bond so to be redeemed shall be 100% of the principal amount thereof, less a redemption fee of $15.00 per $500 principal amount to be redeemed, together with accrued interest to the redemption date. The City's agreement to redeem the Bonds at the option of the Owner is an unsecured obliga- tion payable only from lawfully available funds of the City from time to time on deposit in the Remaining Surplus Account of the Surplus Revenue Fund and failure to so redeem will not cause a default under the Resolution. (b) Except as provided in clause (a) of this Section 9, the Bonds shall not be subject to redemption prior to maturity. SECTION 10. Funds and Accounts. A. The Treasurer shall continue to maintain the following funds and accounts, heretofore created under the 1972 Bond Resolution, the 1976 Bond Resolution and Resolution No. 76R-276 of the City Council and pursuant to Section 1210 of the City Charter, so long as any of the Bonds remain outstanding: (1) Electric Revenue Fund, and the following accounts within said fund: (a) Electric Revenue Bonds, Bond Service Account (the "Bond Service Account"); (b) Electric Revenue Bonds, Issue of 1972, Electric System Maintenance and Operation Account (the "M&O Account"); and -12- (c) Electric Revenue Bonds, Issue of 1972, Electric System Renewal and Replacement Account (the "R&R Account"); and (2) Electric System Surplus Revenue Fund (the "Surplus Fund"). B. The Fiscal Agent shall continue to maintain the follow- ing funds so long as any of the 1972 Bonds remain outstanding: (1) Electric Revenue Bonds, Issue of 1972, Electric System Revenue Bond and Interest Fund (the "Bond Service Fund"); and (2) Electric Revenue Bonds, Issue of 1972, Electric System Revenue Bond Reserve Fund (the "Reserve Fund"). From and after the retirement of all of the 1972 Bonds (or the date on which provision for such retirement has been made so that they are no longer outstanding within the meaning of the 1972 Bond Resolution) the Reserve Fund shall be maintained by the Treasurer so long as any of the Bonds remain outstanding. C. The Treasurer shall continue to maintain the following accounts in the Electric Revenue Fund so long as any of the 1983 Bonds remain outstanding: (1) Electric Revenue Bonds, Issue A of 1983, Construction Account (the "1983 A Construction Account"); and (2) Electric Revenue Bonds, Issue B of 1983, Construction Account (the "1983 B Construction Account"). D. The Treasurer shall continue to maintain the following accounts in the Electric Revenue Fund so long as any of the Bonds, the First 1986 Bonds or the Second 1986 Bonds remain outstanding: (1) Electric Revenue Bonds, Electric System Revenue Account (the "Revenue Account"); (2) Electric Revenue Bonds, Interest During Construction Account (the "IDC Account"); and (3) Electric Revenue Bonds Sinking Account (the "Sinking Account"). E. The Treasurer shall continue to maintain the following account in the Electric Revenue Fund so long as any of the First 1986 Bonds remain outstanding: -13- (1) Electric Revenue Bonds, Issue of 1986, Costs of Issuance Account. F0 The Treasurer shall continue to maintain the following accounts in the Electric Revenue Fund so long as any of the Second 1986 Bonds remain outstanding and shall continue to maintain the Rebate Account so long as any of the Bonds remain outstanding: (1) Electric Revenue Bonds, Second Issue of 1986, Costs of Issuance Account (the "Costs of Issuance Account"); and (2) Electric Revenue Bonds, Second Issue of 1986, Rebate Account (the "Rebate Account"). G. The following additional account is hereby created in the Electric Revenue Fund and shall be maintained by the Treasurer so long as any of the Bonds remain outstanding: (1) Electric Revenue Bonds, Issue of 1991, Construction Account (the "1991 Construction Account"). H. Additional accounts in the Electric Revenue Fund may be created by subsequent resolutions of the city Council. SECTION 11. Disposition of Bond Proceeds. Simulta- neously with the issuance and delivery of the Bonds, the following transfers and deposits of moneys which are attributable to, or derived from proceeds of, the Bonds, shall be made: (1) The amount necessary, if any, specified in the General Manager's Determination Certificate to cause the amount in the Reserve Fund to equal Maximum Annual Debt Service shall be transferred to the Fiscal Agent and depos- ited in the Reserve Fund. (2) The amount of accrued interest, if any, received by the City with respect to the Bonds shall be deposited in the Bond Service Account. Commencing the Initial Dated Date, the amount of such accrued interest shall be credited against the monthly transfer or transfers required with respect to the Bonds by Section 13.A.(1) hereof until no accrued interest remains. (3) The remainder of the original proceeds of the Bonds shall be deposited in the 1991 Construction Account. SECTION 12. Revenue Account. The Treasurer shall deposit the Gross Revenues of the Enterprise as received in the Revenue Account. On or before the twentieth day of each calendar month, the Finance Director shall withdraw the entire amount on -14- deposit in the Revenue Account and shall allocate and deposit such amount in the indicated priority to the following accounts and funds. SECTION 13. Bond Service Account; Sinking Account. First, so long as any of the Bonds are outstanding, in addition to but on a parity with the transfers to the Bond Service Fund required by Section 14 of the 1972 Bond Resolution: A. The Finance Director shall allocate to the Bond Service Account the following amounts: (1) one-sixth of the interest which will become due and payable on the outstanding Bonds and Parity Bonds (other than the 1972 Bonds) within the next ensuing six months, except that, with respect to any interest payment date, the monthly sum allocated shall be based upon 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) in the case of the Bonds, by any transfers required with respect to the Bonds by any Parity Bond Resolution, and (b) in the case of any other Parity Bonds, by 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 Bonds and serial Parity Bonds (other than the 1972 Bonds) within the next ensuing twelve months. B. The Finance Director shall allocate to the Sinking Account 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. 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 Parity Bonds (other than the 1972 Bonds) and any installment of principal on said Parity Bonds (other than the 1972 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 and the Sinking Account, then the amounts available shall be allocated pro rata towards the required deposits and the deficiencies shall be added to and become a part of the allocations required for the following calendar month. -15- Any moneys required to be set aside in the Bond Service Account or the Sinking Account may be prepaid in whole or in part by being earlier set aside therein, and in that event the monthly allo- cation which has been so prepaid need not be made at the time appointed therefor. Each monthly transfer may be reduced by an amount equal to any investment income received during its preceding calendar month on moneys in the Bond Service Account or the Sinking Account. The Bonds shall recite that they are payable from the Electric Revenue Fund, but notwithstanding such recital shall be paid from the Bond Service Account. Moneys in the Sinking Account shall be used to redeem any outstanding parity term bonds (other than the 1972 Bonds) at the times and in the amounts as provided in this Section and any Parity Bond Resolution. Moneys in the Sinking Account may also be used, prior to the date when any parity term bonds (other than 1972 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 parity term bonds (other than 1972 Bonds) at a purchase price (including brokerage and other fees) not exceeding par plus accrued interest. If after all of the 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. SECTION 14. M&O Acco~mt. Second, so long as any of the Bonds are outstanding, the Finance Director shall allocate to the M&O Account amounts sufficient for the payment of the Maintenance and Operation Expenses of the Enterprise as said expenses become due and payable. Amounts in the M&O Account shall be used solely to pay Maintenance and Operation Expenses. SECTION 15. Reserve Fund. Third, so long as any of the Bonds are outstanding, the Finance Director shall transfer 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 outstanding Bonds and any outstanding Parity Bonds, in the event that moneys in the Bond Service Fund (in the case of the 1972 Bonds) or the Bond Service Account or the Sinking Account (in the case of the Bonds and any other Parity Bonds) are insufficient therefor. For that purpose, the Fiscal Agent or the Treasurer, as appropriate, shall withdraw and -16- transfer sufficient moneys from the Reserve Fund to the Bond Service Fund, the Bond Service Account, or the Sinking Account, as the case may be. If at any time the moneys in the Reserve Fund are insuffi- cient to make all such required transfers, the available moneys in the Reserve Fund shall be distributed pro rata towards the required deposits. Prior to the transfer from the Revenue Account pursuant to Section 12 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 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 Bonds or Parity Bonds at maturity, by redemption or by purchase at a purchase price (including brokerage and other fees) not exceeding par plus accrued interest. SECTION 16. R&R Account. Fourth, so long as any of the Bonds are outstanding, the Finance Director shall allocate to the R&R Account an amount equal to 1% of the Gross Revenues received in the preceding calendar month until a balance is established, or reestab- lished, therein equal to 2% of the depreciated book value of the land, general plant and equipment which constitute the net utility plant of the Enterprise. The moneys contained in the R&R Account shall be used for transfer to the Bond Service Account, to the Bond Service Fund, or to the Sinking Account, as the case may be, to pre- vent default in payment of the principal and interest on the 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; provided, however, that when moneys are used for such purpose or purposes, they shall be returned by the transfer of an additional 1% of the Gross Revenues of the preceding calendar month commencing no later than 90 days after such use, until such balance is reestablished. 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. -17- SECTION 17. Arbitrage Rebate. The Treasurer shall, on or before the dates specified in Section 4 of the Tax Certificate, pay, from amounts on deposit in the Rebate Account, the amount, if any, necessary to satisfy any required rebate to the United States Treasury Department, as set forth in the Tax Certificate. SECTION 18. Surplus Revenue Fund. All moneys remaining in the Revenue Account after all transfers required hereunder have been made, and all covenants contained herein have been duly per- formed, shall be transferred to the Surplus Revenue Fund. Moneys in the Surplus Revenue Fund not required to be transferred for any other purpose to any other account in the Electric Revenue Fund pursuant to this Section or any Parity Bond Resolution shall be applied to the payment of principal and interest or other payments with respect to outstanding Qualified Obligations and the payment of the principal of and interest on the City's Electric Revenue Anticipation Notes issued pursuant to Section 1210 of the City Charter and Ordinance No. 5032 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 (1) used for the redemption of any outstanding 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 Bonds or Parity Bonds whether or not subject to call and redemption (irrespective of the maturity or number of such 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 Bonds or Parity Bonds on the next redemption date, whichever is less; or (2) used for any lawful pur- pose of the City, including but not limited to the security and pay- ment of other indebtedness incurred in connection with the Enterprise. SECTION 19. Investments. Obligations purchased as investments of moneys in any of the funds and accounts in which investments are authorized shall be deemed at all times to be a part of such funds and accounts and any income realized from such invest- ments shall be credited to such funds and accounts and any losses resulting from such investments shall be charged to such funds and accounts. The Fiscal Agent or the Treasurer, as the case may be, shall sell at the best price obtainable or present for redemption any obligations so purchased whenever it may be necessary to do so in order to provide moneys to meet any payment or transfer from such funds and accounts. For the purpose of determining at any given time the balance in any such funds and accounts, any such investments 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 -18- invested only in Authorized Investments, except that so long as any of the 1972 Bonds are outstanding, amounts in the Revenue Account, the M&O Account, the R&R Account, the Bond Service Fund and the Reserve Fund shall be invested only in direct obligations of or obli- gations guaranteed by the United States of America, or certificates of deposit of recognized banks or trust companies fully secured by direct obligations of or obligations guaranteed by the United States of America. All investments of moneys in such funds and accounts shall mature not later than such times as the Treasurer estimates such moneys shall be needed for the purposes for which such moneys are held. SECTION 20. Warranty. The city shall preserve and pro- tect the security of the Bonds and the rights of the Owners and war- rant and defend their rights against all claims and demands of all persons. SECTION 21. Covenants. So long as any of the Bonds are outstanding, the city makes the following covenants with the Owners under the provisions of Section 1210 of the City Charter (to be per- formed by the City or its proper officers, agents or employees) which covenants are necessary, convenient and desirable to secure the Bonds and tend to make them more marketable; provided, however, that said covenants do not require the City to expend any moneys other than the Gross Revenues of the Enterprise. Covenant 1. P~nctual Payment. The City covenants that it will duly and punctually pay or cause to be paid the principal of and interest on every Bond issued hereunder, together with the premium thereon, if any be payable, on the date, at the place and in the manner mentioned in the Bonds and coupons 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 Bonds and of this Resolution, and that it will faithfully observe and perform all of the conditions, cove- nants and requirements of this Resolution and all resolutions supple- mental thereto and of the Bonds issued hereunder, and that time of such payment and performance is of the essence of the City's contract with the Owners. Covenant 2. Discharge Claims. The city covenants that in order to preserve and protect the priority and security of the Bonds the City shall pay from amounts available in the M&O Account and dis- charge 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 Gross Revenues of the Enterprise prior or superior to the lien of the Bonds and impair the security of the Bonds. The City shall also pay from amounts avail- able in the M&O Account all taxes and assessments or other governmental charges lawfully levied or assessed upon or in respect -19- of the Enterprise or upon any part thereof or upon any of the revenues thereof. Covenant 3. Operate Enterprise in Efficient and Economical Manner. The City covenants to operate the Enterprise in an efficient and economical manner and to operate, maintain and preserve the Enterprise in good repair and working order. Covenant 4. Against Sale, Eminent Domain, Existing and Future Agreements. Except as provided herein, the City covenants that the Enterprise shall not be mortgaged or otherwise encumbered, sold, leased, pledged, any charge placed thereon, or disposed of as a whole or substantially as a whole unless such sale or other disposi- tion be so arranged as to provide for sums adequate to provide for the immediate payment of the principal of and interest on and premi- ums, if any, due upon the call and redemption thereof, of the Bonds. The City further covenants that the Gross Revenues of the Enterprise or any other funds pledged or otherwise made available to secure pay- ment of the principal of and interest on the Bonds shall not be mort- gaged, 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 Bonds or which otherwise would impair the rights of the Owners with respect to the Gross 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 con- struction of improvements and extensions of the Enterprise or shall be placed in the appropriate funds or accounts and shall be used to pay or call and redeem the outstanding Bonds and any Parity Bonds in the manner provided in this Resolution or in any Parity Bond Resolution. The City covenants that any amounts received as awards as a result of the taking of all or any part of the Enterprise by the lawful exercise of eminent domain, if and to the extent that such right can be exercised against such property of the City, shall either be used for the acquisition and/or construction of improve- ments and extension of the Enterprise or shall be placed in the appropriate funds or accounts and shall be used to pay or call and redeem the outstanding Bonds and any Parity Bonds in the manner pro- vided 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. Any proceeds from the sale or disposition of any part of the Enterprise shall be placed in the Revenue Account. -20- 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 Bonds and any Parity Bonds issued for the Enterprise and for such purpose paid into the appro- priate funds or accounts. The money collected from any loss of reve- nues insurance shall be deposited in the Revenue Account. The city shall also maintain with responsible insurers worker's compensation insurance and insurance against public liabil- ity and property damage to the extent reasonably necessary and obtainable to protect the City and the Owners. Notwithstanding the foregoing, the City may provide any insurance required by this Covenant 5 through a self-insurance program. 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 Owners of not less than 10% of the outstanding 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 Owner. Covenant 7. Collection of Charges. The City will permit no free use or services of the Enterprise. The City will pay promptly into the Revenue Account from the City's General Fund (or other available funds) for all City use and services of the Enterprise. The City will not grant or establish within any class of service preferential or discriminatory rates, fees or charges for use and services of the Enterprise. For the purposes of setting such rates, fees and charges, service 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 Bonds are outstanding maintain and enforce valid regulations for the payment of bills for electric service and that such regulations shall at all times during such period provide that -21- the city shall discontinue electric service to any user whose electric 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) The interest on and principal payments (including any sinking account payments) of the outstanding Bonds and Parity Bonds as they become due and payable; (b) All current expenses for the necessary and rea- sonable Maintenance and Operation Expenses of the Enterprise as said expenses 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 Gross Revenues of the Enterprise; and the charges shall be so fixed that the Net Revenues shall at least equal 1.10 times the amounts payable under (a), provided that so long as any of the 1972 Bonds remain outstanding said charges shall be so fixed that the Net Revenues shall at least equal 1.25 times the amounts payable under (a). For purposes of this Section, Net Revenues shall include all investment income on all accounts established in the Electric Revenue Fund and on all other funds established for the benefit of the Owners of outstanding 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 Gross Revenues of the Enterprise over the Bonds. Covenant 10. Limits on Parity Bonds. (a) Parity bonds may be issued to finance or re-finance any repairs, improvements, enlargements or extensions of the Enterprise, provided that the city covenants that no such additional indebtedness evidenced by revenue bonds, revenue notes or any other evidence of indebtedness payable out of the Gross Revenues of the Enterprise and ranking on a parity with the Bonds shall be created or incurred unless: -22- 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 (c) of this covenant, shall have amounted to at least 1.10 times the Annual Debt Service in the Fiscal Year next succeeding the Fiscal Year in which such additional indebtedness is incurred on all outstanding Bonds and Parity Bonds, and, so long as any of the 1972 Bonds remain outstanding, at least 1.25 times the Maximum Annual Debt Service in any Fiscal Year thereafter on all indebtedness to be outstanding immediately subse- quent to the incurring of such additional indebtedness. (b) Parity Bonds may also be issued to refund outstanding Bonds or Parity Bonds if, after giving effect to the application of the proceeds thereof either (i) Annual Debt Service will not be increased in any Fiscal Year in which Bonds or Parity Bonds (outstanding on the date of issuance of such refunding Parity Bonds, but excluding such refunding Parity Bonds) not being refunded are outstanding, or (ii) 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 completed Fiscal Years prior to the adoption of the resolution approving the sale of such additional indebtedness 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 (c) of this covenant, shall have amounted to at least 1.10 times the Annual Debt Service in the Fiscal Year next succeeding the Fiscal Year in which such additional indebtedness is incurred on all outstanding Bonds and Parity Bonds; provided, however, that nothing contained in this subparagraph (b) shall limit the City's power to issue Parity Bonds to refund the out- standing 1972 Bonds as a whole. (c) For the purposes of this covenant, the following may be added to the Gross Revenues of the Enterprise for the purpose of applying the restrictions contained in this covenant: An allowance for earnings arising from any increase in the charges made for service from the -23- 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 95% of the amount by which the Gross Revenues should have been increased if such increase in charges had been in effect during the whole of said last two com- pleted Fiscal Years, as shown by the certificate or opinion of an independent certified accountant or firm of certified public accountants employed by the city. (d) For purposes of this Section, Net Revenues shall include all investment income on all accounts established in the Electric Revenue Fund and on all other funds established for the ben- efit of the Owners of Bonds or Parity Bonds. Covenant 11. Tax Covenant. In order to maintain the exemption from Federal income taxation of interest on the Bonds, and for no other purpose, the City covenants to comply, as of the date of issuance of the Bonds, with each applicable requirement of the Code except any such requirement with respect to which the City receives an opinion Of Mudge Rose Guthrie Alexander & Ferdon to the effect that continuing compliance by the city with such requirement of the Code is not required in order to maintain the Federal income tax exemption of interest on the Bonds. In furtherance of this covenant, the City agrees to comply with the Tax Certificate. Without limiting the generality of the foregoing, the City agrees to make any and all payments required to be made to the United States Department of the Treasury in connection with the Bonds pursuant Code Section 148(f), as amended. 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 Owners of any Parity Bonds other than the Bonds, shall not be entitled to exercise any right or remedy provided to Owners under the Resolution or otherwise based upon the City's failure to observe, or refusal to comply with, the above covenant. SECTION 22. Lost, Stolen, Destroyed, or Mutilated Bonds. In the event that any Bond is lost, stolen, destroyed or mutilated, the City will cause to be issued a new Bond similar 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 necessary, as may from time to time be determined and prescribed by resolution. The City or Registrar may charge a fee of $15.00 per Bond issued to replace such lost, stolen, destroyed or mutilated Bond. The City may authorize such new Bond to be signed and authenticated in such manner as it determines in said resolution. -24- SECTION 23. Cancellation of Bonds. A 1 1 B o n d s surrendered to the City, the Registrar or any paying agent thereof for payment upon maturity or for redemption shall upon payment there- for be cancelled immediately. Any Bonds purchased by the City as authorized herein together with all unpaid coupons pertaining thereto shall be cancelled forthwith and shall not be reissued. SECTION 24. Consent of Owners. Except as permitted by paragraphs (c) and (d) of Section 27 hereof, no amendment, waiver or modification of any provision of this Resolution shall be effective until the consent provided for by this Section 24 shall have been obtained. Any act relating to the amendment, waiver or modification of any of the provisions of this Resolution consented to by Owners holding a majority in aggregate principal amount of the outstanding Bonds, exclusive of Bonds, if any, owned by the City, shall be bind- ing upon the Owners of all of the 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 Owners 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. Owners may consent by affirmative vote at an Owners' meet- ing 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 Bond or any installment of interest thereon or a reduction in the principal amount of or redemption price or rate of interest upon any Bond without the consent of the Owner of such Bond; or (b) a reduction of the percentage of the principal amount of Bonds the vote or consent of which is required to effect any such amendment. (a) Calling Owners' Meeting. If the City shall desire to obtain any such consent it may call a meeting of Owners, by resolu- tion, 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, consent to which is desired. The city Clerk of the City shall, on or before the first publication of such notice, mail a similar notice, -25- postage prepaid, to the respective registered owners thereof at their addresses appearing on the 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 Owner of notice of any such meet- ing shall not be a condition precedent to the holding of such meet- ing, 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 provided shall be conclusive as against all parties and it shall not be open to any Owner to show that he failed to receive notice of such meeting. (c) Voting Qualifications. Any Owner may, prior to any such meeting, deliver his Bond or Bonds to any agency designated by the City for the purpose, and shall thereupon be entitled to receive an appropriate receipt for the Bond or Bonds so deposited, calling for the redelivery of such Bond or Bonds at any time after the meeting. The Treasurer shall prepare and deliver to the chairman of the meeting a list of the names and addresses of the registered owners of Bonds, with a statement of the maturities and serial num- bers of the Bonds held and deposited by each of such Owners, and no Owner shall be entitled to vote at such meeting unless his name appears upon such list or unless he shall present his Bond or Bonds at the meeting or a certificate of deposit thereof, satisfactory to the City, executed by a bank or trust company. No Owner shall be permitted to vote with respect to a larger aggregate principal amount of Bonds than is set against his name on such list, unless he shall produce the Bonds upon which he desires to vote, or a certificate of deposit thereof as above provided. (d) Issuer-owned 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 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 Bond appearing upon such such certificate, or any Bond which it shall be established at or prior to the meeting is owned by the City, directly or indi- rectly, and no such Bond (in this Resolution referred to as an "issuer-owned Bond") shall be counted in determining whether a quorum is present. (e) Quorum and Procedure. A representation of at least a majority in aggregate principal amount of the Bonds then outstanding (exclusive of issuer-owned Bonds) shall be necessary to constitute a quorum at any meeting of Owners, but less than a quorum may adjourn the meeting from time to time, and the meeting may be held as so -26- adjourned without further notice, whether such adjournment 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 Owner shall be enti- tled to one vote for every $500 principal amount of 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 instru- ment in writing presented at the meeting. The city, by its duly authorized representative, may attend any meeting of the Owners, 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 Owners a statement of proposed action, consent to which is desired, and if such action shall be consented to and approved by Owners of at least a majority in aggregate amount of the Bonds then outstanding (exclusive of issuer-owned 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 Owners under the provisions of this Resolution. A certificate signed and verified by the chairman and the secretary of any such meeting shall be conclu- sive evidence and the only competent evidence of matters stated in such certificate relating to proceedings taken at such meeting. (g) Written Consent of Owners. If the City shall desire to obtain any such consent in writing, without a meeting of Owners, the City Council may, by resolution, propose the action, to which consent is desired. A copy of such resolution, together with a request to Owners 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. If any of the Bonds shall be so registered as to be pay- able otherwise than to bearer, the City Clerk of the City shall, 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 Owner 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 Owner to show that he failed to receive such resolution and consent. Each written consent shall be accompanied by proof of ownership of the 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 Owner of the Bonds giving such consent and on any -27- subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or by the subsequent Owner. To be effective, any revocation of consent must be filed before the adoption of the reso- lution accepting consents as hereinafter provided. After the Owners of at least a majority in aggregate prin- cipal amount of the Bonds then outstanding (exclusive of issuer-owned Bonds) shall have consented in writing, the City Council shall adopt a resolution accepting such consents and such resolution shall con- stitute complete evidence of the consent of Owners under this Resolution. (h) Publication of Consent. Notice specifying the amend- ment, waiver or modification that has received the consent of Owners as required by this Section shall be published once in a financial newspaper or journal of national circulation published in or near the City of New York, New York, not less than sixty days following the final action in the proceedings for the obtaining of such consent. Said notice is only for the information of Owners and failure to pub- lish such notice or any defect therein shall not affect the validity of the proceedings theretofore taken in the obtaining of such consent. SECTION 25. Bond Form. (a) subject to the provisions of the Resolution, the Bonds shall be issued in registered form, and the form of the Bonds and the Registrar's Certificate of Authentication shall be substantially in the form set forth in Exhibit A hereto. SECTION 26. Temporary Bonds. Any Bonds may be initially issued in temporary form exchangeable for definitive Bonds. The tem- porary 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 Bond shall be executed and sealed by the City in substantially the same manner as provided in Section 7 hereof. If the City issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds may be surrendered for cancellation at the office of the Treasurer, and the Treasurer shall deliver in exchange for such temporary Bonds an equal aggregate principal amount of defini- tive Bonds of the same interest rates and maturities. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Resolution as definitive Bonds issued hereunder. SECTION 27. Resolution Constitutes Contract. ( a ) T h e provisions of this Resolution shall constitute a contract between the city and the Owners and the provisions hereof shall be enforceable by any Owner for the equal benefit and protection of all Owners similarly situated by mandamus, accounting, mandatory injunction or any other suit, action or proceeding at law or in equity that is now -28- or may hereafter be authorized under the laws of the State of California in any court of competent jurisdiction. Said contract is made under and is to be construed in accordance with the laws of the State of California. (b) No remedy conferred hereby upon any Owner is intended to be exclusive of any other remedy, but each such remedy is cumula- 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. 2980 or any law of the State of California. No waiver of any default or breach of duty or contract by any Owner shall affect any subsequent default or breach of duty or contract or shall impair any rights or remedies on said subsequent default or breach. No delay or omission of any Owner 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 con- ferred upon the Owners may be enforced and exercised as often as may be deemed expedient. In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and the Owner shall prevail, said Owner shall be entitled to receive from the Electric Revenue 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 Owners then, and in every such case, the city and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. (c) Prior to the issuance and delivery of the Bonds, the terms and conditions of this Resolution and the rights and obliga- tions of the City and of the Owners of the Bonds and coupons thereun- der 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. (d) After the issuance and delivery of the Bonds, the pro- visions of this Resolution shall be irrepealable, but shall be subject to modification, waiver and amendment to the extent and in the manner provided in this Resolution, but to no greater extent and in no other manner. For any one or more of the following purposes and at any time or from time to time, a supplemental resolution may be executed and delivered by the City which shall be fully effective in accordance with its terms: (1) To close the Resolution against, or provide limi- tations and restrictions in addition to the limitations and restrictions contained in the Resolution on, the authenti- cation and delivery of Parity Bonds or the issuance of other evidences of indebtedness; or -29- (2) To add to the covenants and agreements of the City in the Resolution, other covenants and agreements to be observed by the City which are not contrary to or incon- sistent with the Resolution as theretofore in effect; or (3) To add to the limitations and restrictions in the Resolution, other limitations and restrictions to be observed by the City which are not contrary to or inconsis- tent with the Resolution as theretofore in effect; or (4) To confirm, as further assurance, the pledge cre- ated under the Resolution; or (5) To modify any of the provisions of the Resolution in any other respect whatsoever, provided that (i) no Bonds shall be Outstanding at the date of the adoption of such supplemental resolution or (ii) such modification shall be, and be expressed to be, effective only after all Bonds out- standing at the date of the adoption of such supplemental resolution shall cease to be outstanding; or (6) To cure any ambiguity, supply any omission, or cure or correct any defect or inconsistent provision in the Resolution; or (7) To insert such provisions clarifying matters or questions arising under the Resolution as are necessary or desirable and are not contrary to or inconsistent with the Resolution as theretofore in effect. SECTION 28. Defeasance. All or any portion of the Bonds shall no longer be deemed to be outstanding and unpaid if the City shall have made adequate provision for the payment, in accordance with the Bonds and this Resolution, of the principal and interest to become due thereon at maturity or upon call and redemption prior to maturity. Such provision shall be deemed to be adequate if the city shall have irrevocably set aside, in a special trust fund or account, moneys which when added to the interest earned or to be earned from the investment or deposit thereof shall be sufficient to make said payments as they become due. Moneys so set aside may be invested in any direct obligations of, or obligations guaranteed by, the United States of America, in which the City may lawfully invest its money. SECTION 29. F~ture 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 Gross Revenues of the Enterprise, and from and after the sale of the Bonds the general fund of the City shall not include the Gross Revenues of the Enterprise and no contract or other obligation -30- payable from the general fund of the city shall be payable from the Gross Revenues of the Enterprise, except as provided herein. SECTION 30. Unclaimed Moneys. Moneys held by the Registrar or otherwise for the payment and discharge of the principal or interest with respect to any of the Bonds which remain unclaimed for one (1) year after the date when the payment shall have become due and payable, shall, at the written request of the City be repaid by the Registrar to the City, as its absolute property and free from trust, and the Registrar shall thereupon be released and discharged with respect thereto and the Owner shall look only to the City for the payment of such principal or interest; provided, however, that before making any such payment to the City, the Registrar shall, at the expense of the City, cause to be published at least twice, at an interval of not less than seven (7) days between publication, in an Authorized Newspaper, a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall not be less than thirty (30) days after the date of the first publication of such notice, the balance of such moneys then unclaimed will be returned to the City. 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 Bonds shall remain valid and the Owners 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 Finance Director or the Treasurer, may act in the place and stead of the Mayor, the City Clerk, the Finance Director and the Treasurer, respectively, in the performance of any and all things authorized or provided for in this Resolution, including the signing of Bonds. -31- SEEION 33. Effective ~te. This Resolution shall take effect immediately. ADORED, SIGNED ~D APPRO~D this 16th day of April, 1991. Mayor [SEAL] Attest: City Clerk -32- STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. CITY OF ANAHEIM ) I, LEONORA N. SOHL, City Clerk of the City of Anaheim, do hereby certify that the foregoing Resolution No. 91R-115 was introduced and adopted at a regular meeting provided by law, of the Anaheim City Council held on the 16th day of April, 1991, by the following vote of the members thereof: AYES: COUNCIL MEMBERS: Simpson, Daly, Pickler, Ehrle and Hunter NOES: COUNCIL MEMBERS: None ABSENT: COUNCIL MEMBERS: None AND I FURTHER certify that the Mayor of the City of Anaheim signed said Resolution No. 91R-115 on the 17th day of April, 1991. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the City of Anaheim this 17th day of April, 1991. 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. 91R-115, duly passed and adopted by the City Council of the city of Anaheim on April 16, 1991. CITY CLERK OF THE CITY OF ANAHEIM EXHIBIT A [BOND FORM] UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF ANAHEIM ELECTRIC REVENUE BOND, ISSUE OF 1991 No. Interest Rate: Maturity Date: Dated Date: CUSIP: The CITY OF ANAHEIM, a municipal corporation situated in the County of Orange, State of California (the "City"), FOR VALUE RECEIVED, hereby promises to pay, solely from the Electric Revenue 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 1, 1991, 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 interest payment date next preceding the date of authentication, unless the date of authentication is an April 1 or October 1, in which case from the April 1 or October 1, or unless this Bond is authenticated as of a day during the period from the day after a record date and the next succeeding interest payment date, in which case from such interest payment date; provided, however, that if the date of authentication is prior to September 15, 1991, inter- est shall accrue from the Initial Dated Date; provided, further, that if, as shown by the records of the Registrar, interest on the Bonds shall be in default, Bonds issued in exchange for Bonds surrendered for transfer or exchange shall bear interest from the interest pay- ment date to which interest has been paid in full on the Bonds sur- rendered or if no interest has been paid, from the Initial Dated Date. The terms and provisions of this bond and definitions of certain terms used herein are 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. All capitalized undefined terms used herein which are defined in the Resolution shall have the meanings specified in the Resolution. A-1 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 electric 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 bond shall have been authenticated by the execution by the Registrar of the Registrar's Certificate of Authentication hereon. IN WITNESS WHEREOF, the CITY OF ANAHEIM has caused this bond to be signed by the Mayor and the city Treasurer of the City by their facsimile signatures, countersigned by the City Clerk of said City by her facsimile signature, and sealed with the corporate seal of the City. Mayor COUNTERSIGNED: City Clerk City Treasurer (SEAL) A-2 [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. CITY TREASURER Registrar By: Authorized Officer Date of Authentication and Registration: A-3 [REVERSE OF BOND] This bond is one of a duly authorized issue of bonds of the city designated "Electric Revenue Bonds, Issue of 1991" (the "Bonds"), all of which have been issued pursuant to Section 1210 of the City Charter and Ordinance No. 2980, as amended, of the City Council (the "Ordinance"), for the purpose of financing the costs of acquisition and construction of various improvements and additions to the City's electric system and to fund a portion of the Reserve Fund, and the creation of said issue and the terms and conditions of the Bonds are provided for by the resolution of the City Council autho- rizing the Bonds adopted April __, 1991, designated Resolution No. 91R- (the "Resolution"), and this reference incorporates the Resolution and Section 1210 of the City Charter and the Ordinance, and by acceptance hereof the Owner of this bond assents to said terms and conditions. The Resolution is adopted under, and this bond is to be construed in accordance with, the City Charter, the Ordinance and the laws of the State of California. The principal on this bond is payable in lawful money of the United States of America by check mailed by the Registrar to the registered owner on the registration records maintained by the Registrar, but only upon surrender of the Bond to the Registrar. Interest on this bond shall be payable by check mailed to the regis- tered owner on the registration records maintained by the Registrar, determined as of the close of business on the 15th day of the calen- dar month immediately preceding an interest payment date (including the date on which the principal of a Bond is to be paid). This bond and the interest hereon are not a debt of the City, nor a legal or equitable pledge, charge, lien or encumbrance upon any of its property or upon any of its income, receipts, or rev- enues, except the Gross Revenues (as defined in the Resolution). The principal of and the interest on this Bond are payable solely from Gross Revenues. The Electric Revenue 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 Gross Revenues of the City's electric system are required to be deposited to the credit of the Revenue Account 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 by covenant expressed in the Resolution, the City is obligated to pre- scribe, revise and collect charges for the services and facilities of the electric system of the City which, after making allowances for contingencies and error in the estimates, shall be at least suffi- cient to pay the interest on and principal payments of the outstand- ing Bonds and Parity Bonds as they become due and payable, all current expenses for the necessary and reasonable maintenance and operation expenses of the City's electric system, all payments A-4 required for compliance with the Resolution and all payments required to meet any other obligations of the City which are charges, liens or encumbrances upon or payable from the Gross Revenues; is prohibited from incurring indebtedness having any priority in payment of princi- pal or interest out of the Gross Revenues of the City's electric system; and is subject to conditions with respect to any sale of the City's electric system. In the manner provided in the Resolution, any or all of the obligations mentioned in the Resolution may be amended, waived or modified with the consent of the Owners of a majority in aggregate principal amount of the outstanding Bonds, exclusive of issuer-owned Bonds. Any Bond is subject to redemption prior to maturity on the first Business Day of any month on or after October 1, 1992, at the option of the Owner upon receipt by the Registrar of at least 30 days' prior written notice at 100% of the principal amount, less a redemption fee of $15.00 per $500 principal amount to be redeemed, together with accrued interest to the redemption date. The City's agreement to redeem the Bonds at the option of the Owner is an unse- cured obligation payable only from lawfully available funds of the City from time to time on deposit in the Remaining Surplus Account of the Surplus Revenue Fund and failure to so redeem will not cause a default under the Resolution. The Bonds are issuable in the form of registered Bonds without coupons in the denominations of $500 or any integral multiple of $500. The Bonds may only be registered in the name of an Eligible Investor. The maximum aggregate principal amount of Bonds which may be registered in the name of any one Eligible Investor is $5,000. This bond is transferable, as provided in the Resolution, only upon the books of the City kept for that purpose at the office of the Registrar in Anaheim, California, or at any other office des- ignated by the Registrar, with the concurrence of the city, 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. Upon such transfer a new registered bond or bonds in the same aggregate principal amount and maturity as the surrendered Bond, shall be issued to the trans- feree in exchange therefor as provided in the Resolution, and upon payment of the charges therein prescribed. The City, the Registrar and any 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 or redemption price, if any, and interest due hereon and for all other purposes. A-5 ASSlGN~fNT FOR VALUE RECEIVED, the Undersigned hereby sells, assigns and trans- fers unto the within Bond and does hereby irrevocably constitute and appoint attorney to trans- fer said Bond on the books kept for registration of said Bond, with full power of substitution in the premises. Dated: Signature Guaranteed: A-6 EXHIBIT B FORM OF GENERAL MANAGER'S DETERMINATION CERTIFICATE I, , [Public Utilities General Manager] of the City of Anaheim (the "City") do hereby certify that (i) the prin- cipal amount of the Electric Revenue Bonds, Issue of 1991 (the "Bonds") for each year of maturity, (ii) the interest rate on the Bonds, which does not exceed 8%, (iii) the Initial Dated Date for the Bonds, and (iv) the deposit to be made to the Reserve Account (if any) are each set forth below: Principal Interest October 1 Amounts Rate 1999 $ % 2000 2001 2002 2003 2004 Initial Dated Date: Deposit to Reserve Account (if any): All capitalized terms employed herein which are not defined herein shall have the same meanings as in Resolution No. __ of the City, adopted April 16, 1991. Dated: , 1991 By: [Public Utilities General Manager] B-1