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Home My WebLink About86-53 electric revenue bondsCITY OF UKIAH RESOLUTION NO. 86-53 A Resolution of the City Council of the City of Ukiah Providing for the Issuance of the City of Ukiah Electric Revenue Bonds (General Bond Resolution) Adopted June 4, 1986 TABLE OF CONTENTS Recitals Page 1 Section Section ARTICLE I -- Definitions; Equal Security 1.01. Definitions ............................ 1.02. Equal Security ......................... 1 14 ARTICLE Section 2.01. Section 2.02. Section 2.03. Section 2.04. Section 2.05. II -- Authorization and Issuance of Bonds Authorization of Bonds ................. Conditions for the Issuance of Bonds ............................. Procedure for the Issuance of Bonds .... Acquisition and Construction Fund ...... Refunding Fund ......................... 15 15 18 19 20 ARTICLE III -- Terms and Provisions of Bonds Section 3.01. Section 3.02. Section 3.03. Section 3.04. Section 3.05. Terms of Bonds ......................... Execution of Bonds ..................... Transfer and Exchange of Bonds ......... Mutilated, Destroyed, Stolen or Lost Bonds ................................ Temporary Bonds ........................ 20 22 22 23 24 Section 4.01. Section 4.02. Section 4.03. Section 4.04. Section 4.05. Section 4.06. ARTICLE IV -- Redemption of Bonds Privilege of Redemption of Bonds ....... Selection of Bonds for Redemption ...... Notice of Redemption ................... Partial Redemption of Bonds ............ Effect of Redemption of Bonds .......... Disposition of Redeemed Bonds .......... 24 25 25 26 26 26 Page ARTICLE V -- Net Revenues and Net Distribution Income Section 5.01. Receipt and Deposit of Revenues ........ 26 Section 5.02. Pledge of Net Revenues and Net Distribution Income .................. 27 Section 5.03. Use of Revenues and Net Distribution Income ............................... 27 Section 5.04. Rate Stabilization Fund ................ 31 ARTICLE VI -- Covenants of the City Section 6.01. Punctual Payment and Performance ....... 31 Section 6.02. Against Encumbrances ................... 31 Section 6.03. Against Sale or Other Disposition of Property .......................... 32 Section 6.04. Against Competitive Facilities ......... 32 Section 6.05. Against Federal Income Taxation ........ 32 Section 6.06. Acquisition and Construction of Projects ............................. 33 Section 6.07. Maintenance and Operation of the Enterprise; Budgets .................. 33 Section 6.08. Payment of Claims ...................... 33 Section 6.09. Insurance .............................. 34 Section 6.10. Accounting Records; Financial Statements and Other Reports .................... 35 Section 6.11. Protection of Security and Rights of Holders .............................. 36 Section 6.12. Payment of Governmental Charges and Compliance with Governmental Regulations .......................... 36 Section 6.13. Amount of Rates, Fees 'and Charges ...... 36 Section 6.14. Collection of Rates, Fees and Charges .. 37 Section 6.15. Eminent Domain Proceeds ................ 37 Section 6.16. Further Assurances ..................... 38 ARTICLE VII -- The Fiscal Agent Section 7.01. The Fiscal Agent ....................... 38 Section 7.02. Liability of the Fiscal Agent .......... 40 Section 7.03. Notice to the Fiscal Agent ............. 40 ARTICLE VIII -- Amendment of or Supplement to the Resolution Section 8.01. Amendment or Supplement by Consent of Holders ........................... 41 Section 8.02. Disqualified Bonds ..................... 42 ii Section . Section 8.03. 8.04. Endorsement or Replacement of Bonds After Amendment or Supplement ........ Amendment or Supplement by Mutual Consent .............................. Page 42 42 ARTICLE IX -- Events of Default and Remedies of Holders Section 9.01. Section 9.02. Section 9.03. Section 9.04. Section 9.05. Section 9.06. Events of Default and Acceleration of Maturities Application of Money Upon Acceleration . Other Remedies of Holders .............. Non-waiver Actions by Fiscal Agent as Attorney- in-Fact .............................. Remedies Not Exclusive ................. 43 44 45 45 46 46 Section 10.01. Section 10.02. ARTICLE X -- Defeasance Discharge of Bonds ..................... Unclaimed Money ........................ 46 48 ARTICLE XI -- Miscellaneous Section 11.01. Section 11.02. Section 11.03. Section 11.04. Section 11.05. Section 11.06. Section 11.07. Section 11.08. Section 11.09. Section 11.10. Section 11.11. Section 11.12. Section 11.13. Section 11.14. Liability of City Limited to Net Revenues and Net Distribution Income .......... Benefits of the Resolution Limited to Parties ........................... Successor is Deemed Included in All References to Predecessor ............ Execution of Documents by Holders ...... Deposit and Investment of Money in Accounts and Funds ................... Waiver of Personal Liability ........... Acquisition of Bonds by City ........... Content of Certificates and Reports .... Notice by Mail ......................... Accounts and Funds ..................... Article and Section Headings, Gender and References ................ Partial Invalidity ..................... Repeal of Inconsistent Resolutions ..... Effective Date of the Resolution ....... Adoption ............................................... 48 49 49 49 5O 51 51 52 52 52 53 53 53 54 54 iii CITY OF UKIAH RESOLUTION NO. 86-53 A Resolution of the City Council of the City of Ukiah Providing for the Issuance of the City of Ukiah Electric Revenue Bonds (General Bond Resolution) WHEREAS, the City of Ukiah now owns and operates a municipal electric generation and transmission system; and WHEREAS, the City Council of the City of Ukiah has determined that the public interest and necessity do now require and may in the future further require the acquisition and construction of additions, betterments, extensions or improvements to such municipal electric generation and transmission system or the refunding of obligations issued for such purpose; and WHEREAS, the City Council of the City of Ukiah has determined to finance the cost of the acquisition and construction of such additions, betterments, extensions or improvements or such refunding by the issuance of electric revenue bonds as authorized by law; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ukiah, As Follows: ARTICLE I DEFINITIONS; EQUAL SECURITY SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this section shall for all purposes hereof and of any Supplemental Resolution and of the Bonds and of any certificate, opinion, report, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein: Accountant's Report "Accountant's Report" means a report signed by an Independent Certified Public Accountant. Acquisition and Construction Fund "Acquisition and Construction Fund" means the fund by that name established in Section 2.04. Averaqe Annual Debt Servic~ "Average Annual Debt Service" means the total Debt Service for all Fiscal Years during the period beginning with the then current Fiscal Year and ending with the Fiscal Year in which the last Outstanding Bonds mature by their terms, divided by the number of such Fiscal Years. Bond Reserve Fund "Bond Reserve Fund" means the fund by that name established in Section 5.03. Bonds, Serial Bonds, Term Bonds, Variable Rate Bonds "Bonds" means all electric revenue bonds of the City authorized by and at any time Outstanding pursuant hereto that are executed, issued and delivered in accordance with Sections 2.02 and 2.03. "Serial Bonds" means Bonds for which no Minimum Sinking Fund Account Payments are established. "Term Bonds" means Bonds which are redeemable or payable on or before their specified maturity date or dates from Minimum Sinking Fund Account Payments established for the purpose of redeeming or paying such Bonds on or before their specified maturity date or dates. "Variable Rate Bonds" means Bonds which bear interest at a variable rate of interest. Certificate of the City "Certificate of the City" means an instrument in writing signed by the Mayor, or by any other officer of the City duly authorized by the Council for that purpose, and by the City Clerk, with the seal of the City affixed. City "City" means the City of Ukiah, a municipal corporation duly organized and existing under and by virtue of the Constitution and laws of the State of California. City Clerk "City Clerk" means the City Clerk of the City. Code amended. "Code" means the Internal Revenue Code of 1954, as Costs of Acquisition and Construction "Costs of Acquisition and Construction" means all costs of the idesign, acquisition or construction of a Project and all costs incidental thereto or connected therewith, including premiums for indemnity and surety bonds and insurance during construction, engineering fees and expenses, legal fees and expenses, fees and expenses of financing consultants, financing costs, audit fees, amounts, if any, required by any Supplemental Resolution to be deposited in the Interest Fund or in the Bond Reserve Fund upon the issuance of any Series of Bonds, payment when due on any obligations of the City (other than Bonds) incurred for such Project, costs of equipment, machinery and supplies and initial working capital and ~eserves required by the City for the commencement of operation 'of such Project and any other costs properly attributable to such design, acquisition or construction determined in accordance with Generally Accepted Accounting Principles, and including reimbursement to the City for any of the foregoing items theretofore paid by it. Council "Council" means the City Council of the City. Debt Service "Debt Service" means, for any Fiscal Year, the sum of (1) the interest payable during such Fiscal Year on all Outstanding Bonds, assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds are redeemed or paid as scheduled at the times of and in amounts equal to the Minimum Sinking Fund Account Payments applicable to such Term Bonds (except to the extent that such interest is to be paid as a Cost of Acquisition and Construction), (2) the principal amount of all Outstanding Serial Bonds maturing by their terms in such Fiscal Year, (3) the aggregate amounts of all Minimum Sinking Fund Account Payments required to be deposited in all Sinking Fund Accounts provided for in all Supplemental Resolutions in such Fiscal Year, and (4) all Guaranteed Obligation Requirements in such Fiscal Year; provided, that for the purpose of determining the interest payable on Variable Rate Bonds, the interest rate used in the foregoing determination shall be the prevailing interest rate on such Variable Rate Bonds at the time of calculation. Distribution System "Distribution System" means the whole and each and every part of the existing municipal electric distribution system of the City, together with all additions, betterments, extensions or improvements to such system or any part thereof hereafter acquired or constructed. Engineer's Report "Engineer's Report" means a report signed by'an Independent Engineer. Enterprise "Enterprise" means the whole and each and every part of the existing municipal electric generation and transmission system of the City, together with all additions, betterments, extensions or improvements to such system or any part thereof hereafter acquired or constructed. Event of Default "Event of Default" means an event by that name described in Section 9.01. Federal Securities "Federal Securities" means United States Treasury notes, bonds, bills or certificates of indebtedness, or other evidences of indebtedness for which the full faith and credit of the United States of America are pledged for the payment of interest and principal; obligations issued by federal home loan banks, the Federal Home Loan Bank Board or the Tennessee Valley Authority; obligations, participations or other instruments of or issued by, or fully guaranteed as to interest and principal by, the Federal National Mortgage Association; obligations, participations or other instruments of or issued by a federal agency or a United States of America government-sponsored enterprise fully guaranteed as to interest and principal by the United States of America; and also any securities now or hereafter authorized both the interest on and principal of which are guaranteed by the full faith and credit of the United States of America, as and to the extent that such securities are eligible for the legal investment of City funds. Fiscal AGent "Fiscal Agent" means Bank of America National Trust and Savings Association, a national banking association duly organized and existing under and by virtue of the laws of the United States of America and having a principal corporate trust office in San Francisco, California, and its successors or assigns, or any other bank or trust company which may at any time be substituted in its place as provided in Section 7.01. Fiscal Year "Fiscal Year" means the twelve-month period terminating on June 30 of each year, or any other annual accounting period hereafter selected and designated by the City as its Fiscal Year in accordance with applicable law. General Fund "General Fund" means the fund by that name existing in the treasury of the City created under applicable law. Generally Accepted Accounting Principles "Generally Accepted Accounting Principles" means the uniform accounting and reporting procedures set forth in publications of the American Institute of Certified Public Accountants or its successor and the National Council on Governmental Accounting or its successor, or by any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Governmental Accounting Standards Board or its successor. In the event of any dispute arising hereunder, the term "Generally Accepted Accounting Principles" shall be construed, as nearly as practicable, in conformity with the uniform system of accounts and accounting rules and regulations thereunder prescribed by the Federal Energy Regulatory Commission or its successor for private power companies which are subject to its jurisdiction and which are engaged in the business of acquiring, constructing, maintaining and operating electric generation, transmission and distribution systems comparable to the municipal electric generation, transmission and distribution system of the City. Guaranteed Obliqation Requirements "Guaranteed Obligation Requirements" means, with respect to any Guaranteed Obligations, the sum of the amounts required to be paid by the City in each Fiscal Year to a Qualified Bank as compensation for the payment from the proceeds of such Qualified Bank's Letter of Credit of the principal amount (in whole or in part) of such Guaranteed Obligations in accordance with the related Letter of Credit Agreement, but subject to the following provisions: (a) In the case of any calculation made prior to the fixed maturity date of the Guaranteed Obligations for each Fiscal Year, (i) in the calculation for the period .frOm the date of the calculation to and including the fixed maturity date of such obligations, there shall be excluded from the calculation the principal amount of the Guaranteed Obligations, and (ii) for the period after such fixed maturity date, there shall be included in the calculation for each Fiscal Year the maximum amount required to be paid by the City to such Qualified Bank in such Fiscal Year (whether by reason of scheduled payments, payments required to be made at the option or demand of such Qualified Bank, or otherwise) pursuant to the Letter of Credit Agreement as if the Letter of Credit had been drawn upon in its full amount to pay the Guaranteed Obligations on the fixed maturity date thereof; and (b) In the case of any calculation made on or after the fixed maturity date of the Guaranteed Obligations, there shall be included in the calculation for the Fiscal Year in which the calculation is made and for each subsequent Fiscal Year the amount required to be paid by the City to such Qualified Bank during such Fiscal Year (whether by reason of scheduled payments, payments required to be made at the option or demand of such Qualified Bank, or otherwise) as compensation in accordance with the terms of the Letter of Credit Agreement, if at the time of, or prior to, the calculation the Letter of Credit shall have been drawn upon wholly or in part to pay the principal of the Guaranteed Obligations, or both the principal thereof and the interest thereon, as the case may be, and in such case the repayment obligations under the Letter of Credit Agreement shall be on a parity with all Outstanding Bonds. Guaranteed Obligations "Guaranteed Obligations" means Bonds the payment of which is additionally secured by a Letter of Credit issued by a Qualified Bank pursuant to a Letter of Credit Agreement. Holder "Holder" means any person who shall be the registered owner of any Outstanding Bond. Independent Certified Public Accountant "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under the laws of the State of California, appointed and paid by the City, and who, or each of whom -- (1) is in fact independent and not under the domination of the City; (2) does not have a substantial financial interest, direct or indirect, in the operations of the City; and (3) is not connected with the City as a councilmember, officer or employee of the City, but who may be regularly retained to audit the accounting records of and make reports thereon to the City. Independent Engineer "Independent Engineer" means any registered engineer or firm of registered engineers of national reputation in engineering matters relating to the acquisition, construction, maintenance and operation of municipal electric generation, transmission and distribution systems, appointed and paid by the City, and who, or each of whom -- (1) is in fact independent and not under the domination of the City; (2) does not have a substantial financial interest, direct or indirect, in the operations of the City; and (3) is not connected with the City as a councilmember, officer or employee of the City, but who may be regularly retained to make engineering reports to the City. Interest Fund "Interest Fund" means the fund by that name established in Section 5.03. Law "Law" means the Revenue Bond Law of 1941 (being Chapter 6 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California, as amended) and all laws amendatory thereof or supplemental thereto, including without limitation Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California. Legal Investments "Legal Investments" means bonds, notes, certificates of indebtedness, bills, acceptances or other securities in which funds of the City may now or hereafter be legally invested as provided by the law in effect at the time of such investment. Letter of Credit "Letter of Credit" means an irrevocable and unconditional letter of credit, a standby purchase agreement, a line of credit or other similar credit arrangement issued by a Qualified Bank to secure payment of Guaranteed Obligations or Variable Rate Bonds. Letter of Credit Agreement "Letter of Credit Agreement" means an agreement between the City and a Qualified Bank pursuant to which the Qualified Bank agrees to issue a Letter of Credit and which sets forth the repayment obligations of the City to the Qualified Bank on account of any draw under the Letter of Credit, which agreement shall be authorized by the City in the Supplemental Resolution which also authorizes the issuance of the Guaranteed Obligations or Variable Rate Bonds secured by such Letter of Credit.. Maintenance and Operation Costs "Maintenance and Operation Costs" means the reasonable and necessary costs paid or incurred by the City for maintaining and operating the Enterprise, determined in accordance with Generally Accepted Accounting Principles, including all costs of electricity generated or purchased by the City for resale through the Enterprise, and including all reasonable expenses of management and repair and other expenses necessary to maintain and preserve the Enterprise in good condition and working order, and including all administrative costs of the City that are charged directly or apportioned to the operation of the Enterprise, such as salaries and wages of employees, overhead, insurance, taxes (if any) and insurance premiums, and including all other necessary and reasonable costs of the City or charges required to be paid by it to comply with the terms of the Law or hereof or of the Bonds, such as compensation, reimbursement and indemnification of the Fiscal Agent and Letter of Credit fees and expenses and fees and expenses of Independent Certified Public Accountants and Independent Engineers; but excluding in all cases depreciation, replacement and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping entries of a similar nature, and excluding any payments of Debt Service. Maintenance and Operation Fund "Maintenance and Operation Fund" means the fund by that name established in Section 5.03. Maximum Annua~l Debt Service "Maximum Annual Debt Service" means the greatest Debt Service in any Fiscal Year during the period beginning with the then current Fiscal Year and ending with the Fiscal Year in which the last Outstanding Bonds mature by their terms. Mayor "Mayor" means the Mayor of the City. Minimum Sinking Fund Account Payments "Minimum Sinking Fund Account Payments" means the aggregate amounts required by all Supplemental Resolutions to be deposited in Sinking Fund Accounts for the payment of Term Bonds. Moody's "Moody's" means Moody's Investors Service, a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors or assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the City and approved by the Fiscal Agent. Municipal Bond Insurer "Municipal Bond Insurer" means any insurance company or companies which has or have issued a policy of municipal bond insurance insuring payment of the principal of and interest on any of the Bonds of any Series and are so designated as such in a Supplemental Resolution providing for the issuance of the Bonds of such Series. Net Distribution Income "Net Distribution Income" means, for any Fiscal Year, the net income and revenue received or receivable by the City for providing electric delivery service from the Distribution System during such Fiscal Year, determined in accordance with Generally Accepted Accounting Principles. Net Revenues "Net Revenues" means, for any period, the Revenues during such period less the Maintenance and Operation Costs during such period and less any transfers to the Rate Stabilization Fund during such period (but excluding all Maintenance and Operation Costs that were paid or discharged or are scheduled to be paid or discharged from money in the Rate Stabilization Fund). Opinion of Counsel "Opinion of Counsel" means a written opinion of counsel (who may be counsel for the City) retained by the City and who is acceptable to the Fiscal Agent. Outstanding "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 8.02) all Bonds except -- (1) Bonds cancelled by the Fiscal Agent or delivered to the Fiscal Agent for cancellation; (2) Bonds paid or deemed to have been paid within the meaning of Section 10.01; and (3) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered by the City pursuant to Section 3.04. For purposes of this definition and within the meaning of Article X, Bonds the principal of or interest on which has been paid by a Municipal Bond Insurer shall not be deemed paid by or on behalf of the City, shall not be defeased and shall remain Outstanding hereunder until paid by the City. Permitted Investments "Permitted Investments" means any of the following to the extent such securities are eligible for the legal investment of funds of the City: (1) Federal Securities; 10 (2) Time certificates of deposit or negotiable certificates of deposit issued by a state or nationally chartered bank or trust company, including the Fiscal Agent, or a state or federal savings and loan ~ association; provided, that such certificates of deposit shall be (i) continuously and fully insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or (ii) issued by any bank or trust company organized under the laws of any state of the United States of America or any national banking association (including the Fiscal Agent) having a combined capital and surplus of at least one hundred million dollars ($100,000,000), and such certificates shall have maturities of six (6) months or less, or (iii) continuously and fully secured by such securities as are described in clause (1) above, which securities shall have a market value (exclusive of accrue~3 interest) at all times at least equal to the principal amount of such certificates or deposit; (3) Any repurchase agreement with any bank or trust company organized under the laws of any state of the United States of America (including the Fiscal Agent) or any national banking association or government bond dealer reporting to, trading with and recognized as a primary dealer by, the Federal Reserve Bank of New York, which agreement is secured by any one or more of the securities described in clause (1) above; provided, that the underlying securities are (i) required by the repurchase agreement to be held by any such bank, trust company or primary dealer having a combined capital and surplus of at least one hundred million dollars ($100,000,000) and being independent of the issuer of such repurchase agreement, and (ii) continuously maintained at a market value of not less than the amount so invested; and (4) Bonds, notes, warrants or other evidence of indebtedness of the State of California or of any political subdivision or public agency thereof which are rated in one of the two highest short-term or long-term rating categories by Moody's and by Standard & Poor's. Principal Fund "Principal Fund" means the fund by that name established in Section 5.03. 11 Project "Project" means any additions, betterments, exte~si0ns or improvements to the Enterprise designated by the Council as a designated Project, the acquisition and construction of which is to be financed with the proceeds of any Bonds. Qualified Bank "Qualified Bank" means a state or national bank or trust company or savings and loan association or a foreign bank with a domestic branch or agency which is organized and in good standing under the laws of the United States of America or any state thereof or any foreign country which has a capital and surplus of twenty-five million dollars ($25,000,000) or more and which has a short-term debt rating of the highest rating category as provided by Moody's and by Standard & Poor's. Rate Stabilization Fund "Rate Stabilization Fund" means the fund by that name established in Section 5.04. Refunding Fund "Refunding Fund" means the fund by that name established in Section 2.05. Required Bond Reserve "Required Bond Reserve" means the lesser of (i) the amount of the Average Annual Debt Service on all Bonds then Outstanding (calculated for Variable Rate Bonds as of their date of issuance), or (ii) the amount permitted to be held in the Bond Reserve Fund by the arbitrage bond regulations issued by the United States Department of the Treasury under Section 103(c) of the Code, as such regulations are, at the time, applicable and in effect, without the imposition of yield restrictions (as such lesser amount is shown by a Certificate of the City, on which certificate the Fiscal Agent may conclusively rely); provided, that such Required Bond Reserve may be provided by a policy of insurance issued by a Municipal Bond Insurer, obligations insured by which have a rating by Moody's and by Standard & Poor's which is the highest rating category then issued by said rating agency, or by a Letter of Credit issued by a Qualified Bank. 12 Resolution "Resolution" means this Resolution No. 86-53 adopted by the Council on June 4, 1986, under and pursuant to the Law, as originally adopted and as it may from time to time be amended or supplemented by all Supplemental Resolutions adopted pursuant to the provisions hereof. Revenue Fund "Revenue Fund" means the City of Ukiah Electric Revenue Fund established in Section 5.02. Revenues "Revenues" means all gross income and revenue received or receivable by the City from the ownership or operation of the Enterprise, determined in accordance with Generally Accepted Accounting Principles, including all rates, fees and charges received by the City for providing electric generation and transmission service and the other services of the Enterprise and all proceeds of insurance covering business interruption loss relating to the Enterprise and all other income and revenue howsoever derived by the City from the ownership or operation of the Enterprise or arising from the Enterprise, and including all sums required by Section 11.05 to be deposited in or transferred to the Revenue Fund, but excluding refundable deposits made to establish credit and advances or contributions in aid of construction. Series "Series" means all Bonds authorized and established pursuant to a Supplemental Resolution as constituting a Series and delivered on original issuance in a simultaneous transaction pursuant to Article II, and any Bonds thereafter executed and delivered in lieu thereof or in substitution therefor pursuant to Section 3.04. Sinking Fund Account "Sinking Fund Account" means any special account established by any Supplemental Resolution in the Principal Fund for the payment of Term Bonds. Standard & Poor's "Standard & Poor's" means Standard & Poor's Corporation, a corporation duly organized and existing under and by virtue of the laws of the State of New York, and its successors or assigns, except that if such corporation shall 13 be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Standard & poOr's'' shall be deemed to refer to any other nationally recognized securities rating agency selected by the City and approved by the Fiscal Agent. Supplemental Resolution "Supplemental Resolution" means any resolution then in full force and effect which has been duly adopted by the Council under and pursuant to the Law at a meeting of the Council duly convened and held, at which a quorum was present and acted thereon, amendatory hereof or supplemental hereto; but only if and to the extent that such Supplemental Resolution is specifically authorized hereunder. Surplus Fund "Surplus Fund" means the fund by that name established in Section 5.03. Written Request of the City "Written Request of the City" means an instrument in writing signed by the Mayor, or by any other officer of the City duly authorized by the Council for that purpose, and by the City Clerk, with the seal of the City affixed. SECTION 1.02. Equal Security. In consideration of the acceptance of the Bonds by the Holders thereof, the Resolution shall be deemed to be and shall constitute a contract between the City and the Holders from time to time to secure the full and final payment of the interest on and principal of and redemption premiums, if any, on all Bonds which may from time to time be authorized, sold, executed, authenticated and delivered hereunder, subject to the agreements, conditions, covenants and terms contained herein; and all agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the City shall be for the equal and proportionate benefit, security and protection of all Holders without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the Series thereof or the number or date thereof or the time of authorization, sale, execution, authentication or delivery thereof or otherwise for any cause whatsoever, except as expressly provided herein or therein. 14 ARTICLE II AUTHORIZATION AND ISSUANCE OF BONDS SECTION 2.01. Authorization of Bonds. Bonds designated as "City of Ukiah Electric Revenue Bonds" are hereby authorized to be issued by the City under and pursuant to the Law and under and pursuant hereto, and the maximum principal amoUnt of Bonds which may be issued hereunder is not limited (subject, however, to the right of the City, Which is hereby reserved, to limit or restrict the aggregate principal amount of Bonds which may at any time be issued or Outstanding hereunder). Bonds may be issued in one or more Series as from time to time shall be authorized and established by the City pursuant to one or more Supplemental Resolutions. The designation of the Bonds shall include, in addition to the name "City of Ukiah Electric Revenue Bonds," such further appropriate particular designation added to or incorporated in the title for the Bonds of each Series as the City may determine or as shall be required by the Law, and each Bond shall bear up6n its face the designation so determined for the Series to which it belongs. The Bonds may contain or have endorsed thereon such other descriptive provisions, specifications and words not inconsistent with the provisions hereof as maybe desirable or necessary to comply with custom, the rules of any securities exchange or commission or brokerage board or otherwise as may be determined by the City prior to the delivery thereof. SECTION 2.02. Conditions for the Issuance of Bonds. The City may at any time issue a Series of Bonds payable from the Net Revenues and the Net Distribution Income as provided herein and secured by a pledge of and charge or lien upon the Net Revenues and the Net Distribution Income as provided herein equal to the pledge, charge and lien securing all other Series of Bonds issued or to be issued hereunder, but only subject to the following conditions, which are hereby made conditions precedent to the issuance of such Series of Bonds: (a) The issuance of such Series of Bonds shall have been authorized under and pursuant to the Law and under and pursuant hereto and shall have been provided for by a Supplemental Resolution which shall specify the following: (1) The purpose for which such Series of Bonds is to be issued; provided, that the proceeds of sale of such Series of Bonds shall be applied solely for (i) the purpose of providing funds to acquire or construct a Project, including payment of costs incidental to or connected with the acquisition or 15 construction of such Project, and/or (ii) the purpose of providing funds to refund any Bonds then Outstanding or other outstanding obligations payable from the Net Revenues and the Net Distribution Income, including payment of costs incidental to or connected with the refunding of such Bonds or other obligations; (2) The principal amount and designation of such Series of Bonds and the denomination or denominations of the Bonds of such Series; (3) The date, the maturity date or dates, the interest payment dates and the dates on which Minimum Sinking Fund Account Payments are due, if any, for such Series of Bonds; provided, that (i) no maturity date shall be earlier than one year after the date of such Series of Bonds, (ii) the Serial Bonds of such Series of Bonds shall be payable as to principal either semiannually on June 1 and December 1 of each year in which principal falls due or annually on June 1 of each year in which principal falls due, and the Term Bonds of such Series of Bonds shall have semiannual mandatory redemption on June 1 and December 1, or annual mandatory redemption on June 1, (iii) the Bonds of such Series of Bonds shall be payable as to interest semiannually on June 1 and December 1 of each year, except that the first installment of interest may be payable on either June 1 or December 1 and shall be for a period of not longer than twelve (12) months and the interest shall be payable thereafter semiannually on June 1 and December 1, and except that interest on any Variable Rate Bonds of such Series of Bonds may be payable on such payment dates as shall be specified in the Supplemental Resolution providing for the issuance of such Series of Bonds, (iv) all Bonds of like maturity shall be identical in all respects, except as to number or denomination, and (v) serial maturities of Serial Bonds or Minimum Sinking Fund Account Payments for Term Bonds, or any combination thereof, shall be established to provide for the redemption or payment of such Series of Bonds on or before their respective maturity dates; (4) The redemption premiums and terms, if any, for such Series of Bonds; (5) The form of such Series of Bonds; 16 (6) The amount, if any, to be deposited from the proceeds of sale of such Series of Bonds in the Interest Fund and provisions concerning its use to pay interest on such Series of Bonds; (7) The amount, if any, to be deposited from the proceeds of sale of such Series of Bonds in the Bond Reserve Fund; provided, that the Bond Reserve Fund shall be increased at the time that such Series of Bonds becomes Outstanding to an amount at least equal to the Required Bond Reserve, and an amount at least equal to the Required Bond Reserve shall thereafter be maintained in the Bond Reserve Fund; (8) The amount to be deposited from the proceeds of sale of such Series of Bonds in the applicable account within the Acquisition and Construction Fund or the applicable account within the Refunding Fund, and provisions concerning its use; and (9) Such other provisions as are appropriate or necessary and not inconsistent with the provisions hereof. (b) The City shall be in compliance with all agreements, conditions, covenants and terms contained herein and in all Supplemental Resolutions required to be observed or performed by it. (c) The Net Revenues and the Net Distribution Income for any period of twelve (12) consecutive calendar months within the twenty-four (24) calendar month period next preceding the date of the adoption by the Council of the Supplemental Resolution authorizing the issuance of such Series of Bonds, as shown by an Accountant's Report on file with the Fiscal Agent; plus (i) an allowance for Net Revenues that would have been derived from each addition, betterment, extension or improvement to the Enterprise and/or for Net Distribution Income that would have been derived from each addition, betterment, extension or improvement to the Distribution System which was acquired or constructed prior to the adoption of such Supplemental Resolution but which, during all or any part of such twelve-month period, was not in existence, in an amount equal to seventy-five per cent (75~) of the estimated additional Net Revenues or Net Distribution Income, as the case may be, that would have been derived from each such addition, betterment, extension or improvement if it had been acquired or 17 constructed prior to the beginning of such twelve-month period, as shown by an Engineer's Report on file with the Fiscal Agent; and (ii) an allowance for Net Revenues that would have been derived from any increase in the rates, fees and charges fixed and prescribed for the electric generation and transmission service provided by the Enterprise and/or for Net Distribution Income that would have been derived from any increase in the rates, fees and charges fixed and prescribed for the electric distribution service provided by the Distribution System which (in either case) became effective prior to the adoption of such Supplemental Resolution but which, during all or any part of such twelve-month period, was not in effect, in an amount equal to seventy-five per cent (75~) of the estimated additional Net Revenues or Net Distribution Income, as the case may be, that would have been derived from such increase in rates, fees and charges if it had been in effect prior to the beginning of such twelve-month period, as shown by an Engineer's Report on file with the Fiscal Agent; shall have produced a sum equal to at least one hundred twenty-five per cent (125~) of the Maximum Annual Debt Service on all Bonds to be Outstanding after the issuance of such Series of Bonds; provided, that if such Series of Bonds are to be issued for the purpOse of providing funds to refund any Bonds then Outstanding, then for the purpose of this subsection it shall be sufficient if the Debt Service in each Fiscal Year during the period beginning with the then current Fiscal Year and ending with the Fiscal Year in which the last Outstanding Bonds not being refunded mature by their terms will not be increased by reason of the issuance of such Series of Bonds. Nothing contained herein shall limit the issuance of any electric revenue bonds of the City payable"from the Net Revenues and the Net Distribution Income as provided herein and secured by a pledge of and charge and lien upon the Net Revenues and the Net Distribution Income as provided herein if after the issuance and delivery of such electric revenue bonds none of the Bonds theretofore issued hereunder will be Outstanding. SECTION 2.03. Procedure for the Issuance of Bonds. At any time after the sale of any Series of Bonds in accordance with the Law, such Series of Bonds shall be executed by the City for issuance hereunder and shall be delivered to the Fiscal Agent and thereupon shall be authenticated and delivered by the Fiscal Agent, but only upon 18 receipt by the Fiscal Agent of the following documents or money:~ (a) A certified copy of the Supplemental Resolution authorizing the issuance of such Series of Bonds; (b) A Written Request of the City as to the delivery of such Series of Bonds; (c) An Opinion of Counsel to the effect that (i) the Council has the right and power under the Law to adopt the Resolution and all Supplemental Resolutions and the Resolution and all Supplemental Resolutions have been duly and lawfully adopted by the Council, are in full force and effect and are valid and binding upon the City and enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights) and no other authorization for the adoption thereof is required; (ii) the Resolution and all Supplemental Resolutions create the valid pledge of and charge and lien upon the Net Revenues and the Net Distribution Income which they purport to create as provided therein, subject to the application thereof to the purposes and on the terms and conditions permitted thereby; and (iii) the Bonds of such Series are valid and binding special obligations of the City enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights) and the terms of the Law and hereof and entitled to the benefits of the Law and hereof, and the Bonds of such Series have been duly and validly authorized, sold, executed, authenticated and delivered in accordance with the Law and herewith; (d) A Certificate of the City containing such statements as may be reasonably necessary to show compliance with the requirements hereof; (e) The proceeds of sale of such Series of Bonds; and (f) Such further documents or money as are required by the provisions hereof or by the provisions of the Supplemental Resolution authorizing the issuance of such Series of Bonds. SECTION 2.04. Acquisition and Construction Fund. There is hereby created in the treasury of the City a fund to be known as the Acquisition and Construction Fund. The City 19 shall establish within the Acquisition and Construction Fund a separate account for each Project, and there shall be deposited in each such account the amount required to be deposited therein by the provisions of the Supplemental Resolution providing for the issuance of such Series of Bonds. The amount in each such account shall be applied to the payment of the Cost~ of Acquisition and Construction of the Project for which such account was established; provided, that any remaining amount in each such account, after the completion of such purpose, shall be deposited as provided in the applicable Supplemental Resolution. SECTION 2.05. Refundinq Fund. There is hereby created a fund to be known as the Refunding Fund, to be held by the Fiscal Agent. The City shall establish within the Refunding Fund a separate account for each Series of Bonds issued to provide funds to refund any Bonds then Outstanding or other outstanding obligations payable from the Net Revenues and the Net Distribution Income, and there shall be deposited in each such account the amount required to be deposited therein by the Supplemental Resolution providing for the issuance of such Series of Bonds. The amount in each such account shall be applied to refund the Bonds then Outstanding or other outstanding obligations payable from the Net Revenues and the Net Distribution Income for which such account was established; provided, that any remaining amount in each such account, after the completion of such purpose, shall be deposited as provided in the applicable Supplemental Resolution. ARTICLE III TERMS AND PROVISIONS OF BONDS SECTION 3.01. Terms of Bonds. (a) The interest on and principal of and redemption premiums, if any, on the Bonds shall be payable in lawful money of the United States of America at the office of the Fiscal Agent. (b) The Bonds of each Series shall be issued as fully registered Bonds in such denominations as may be authorized in the Supplemental Resolution authorizing the issuance of the Bonds of such Series (but not to exceed the principal amount of Bonds of such Series maturing on any one date) and shall be dated as provided in such Supplemental Resolution. The Bonds of each Series shall be numbered as determined by the Fiscal Agent. 20 (c) Each Bond shall bear interest from the interest payment date next preceding the date of registration thereof, unless it is registered on a day during the period from the sixteenth (16th) day of the month next preceding an interest payment date to such interest payment date, both inclusive, in which event it shall bear interest from such interest payment date, or unless it is registered on a day on or before the fifteenth (15th) day of the month next preceding the first interest payment date, in which event it shall bear interest from its date~ provided, that if at the time of registration of any Bond interest is then in default on the Outstanding Bonds of such Series, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds of such Series. Payment of interest on the Bonds due on or before the maturity or prior redemption thereof shall be made only to the person whose name appears in the registration books required to be kept by the Fiscal Agent pursuant to Section 3.03 as the registered owner thereof on the fifteenth (15th) day of. the month next preceding each interest payment date, such in%erest to be paid by check mailed to such registered owner at his address as it appears on such books or at such other address as he may have filed with the Fiscal Agent for that purpose. Payment of the principal of and redemption premiums, if any, on the Bonds shall be made only to the person whose name appears in the registration books required to be kept by the Fiscal Agent pursuant to Section 3.03 as the registered owner thereof, such principal and redemption premiums, if any, to be paid only on the surrender thereof at the office of the Fiscal Agent at maturity or on redemption prior to maturity. (d) The Bonds shall recite in substance that the interest on and principal of and redemption premiums, if any, on the Bonds are payable solely from the Net Revenues and the Net Distribution Income pledged for the payment thereof, and that the City is not obligated to pay the Bonds except from the Net Revenues and the Net Distribution Income; that the General Fund of the City is not liable and the full faith and credit or taxing power of the City is not pledged for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, and no tax or assessment shall ever be levied or collected to pay the interest on or principal of or redemption premiums, if any, on the Bonds; and that the Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any of the property of the City or any of its income or receipts except the Net Revenues and the Net Distribution Income as provided herein, and neither the payment of the interest on or principal of or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the City. 21 (e) From and after the issuance of the Bonds of each Series the findings and determinations of the Council respecting that Series shall be conclusive evidence of the existence of the facts so found and determined in any action or proceeding in any court in which the validity of such Bonds is at issue, and no bona fide purchaser of any of such Bonds shall be required to see to the existence of any fact or to the performance of any condition or to the taking of any proceeding required prior to such issuance or to the application of the purchase price paid for such Bonds. The validity of the issuance of each Series of Bonds shall not be dependent on or affected in any way by (i) any proceedings taken by the City for the acquisition and construction of any Project, or (ii) any contracts made by the City in connection therewith, or (iii) the failure to complete the acquisition and construction of any Project. The recital contained in the Bonds that the Bonds are issued under and pursuant to the Law and under and pursuant hereto shall be conclusive evidence of their validity and of the regularity of their issuance and all Bonds shall be incontestable from and after their issuance. Bonds shall be deemed to be issued, within the meaning hereof, whenever the definitive Bonds (or any temporary Bonds exchangeable therefor) have been delivered to the purchaser thereof and the purchase price thereof received. SECTION 3.02. Execution of Bonds. The Bonds shall be signed on behalf of the City by the facsimile signature of the Mayor and by the facsimile signature of the City Clerk, and the seal of the City shall be impressed thereon by facsimile reproduction. In case any officer of the. City who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall have been delivered to the purchaser by the Fiscal Agent, such Bonds may nevertheless be delivered and issued and, upon such delivery and issuance, shall be as binding upon the City as though such officer who signed the same had continued to be such officer until such delivery and issuance. Also, any Bond may be signed on behalf of the City by any person who on the actual date of the execution of such Bond shall be the proper officer of the City, although on the nominal date of such Bond such person shall not have been such officer of the City. Only those Bonds that bear thereon a certificate of authentication executed by the Fiscal Agent shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any purpose, and such certificate of the Fiscal Agent shall be conclusive evidence that the Bonds so authenticated have been duly authorized, sold, executed, authenticated and delivered hereunder and are entitled to the benefits hereof. SECTION 3.03. Transfer and Exchange of Bonds. The Fiscal Agent will keep at its office sufficient books for the 22 transfer and exchange of the Bonds, which books shall at all times be open to inspection by the City or by any Holder. Any Bond may, in accordance with its terms, be transferred or exchanged on such books by the person in whose name it is registered, in person or by his duly authorized attorney, upon payment by the Holder requesting such transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange and upon surrender of such Bond for cancellation accompanied by delivery of a duly executed written instrument of transfer or exchange in a form approved by the Fiscal Agent. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of the same Series and maturity and of authorized denominations for the same aggregate principal amount, except that the City shall not be required to transfer or exchange any Bond which has been selected for redemption in whole or in part, except the unredeemed portion of such Bond selected for redemption in part, from and after the day of the mailing of a notice of redemption of such Bond selected for redemption in whole or in part under Article IV. The City and the Fiscal Agent may deem and treat the registered owner of any Bond as the absolute owner of such Bond for all purposes hereof, whether such Bond shall be overdue or not, and neither the City nor the Fiscal Agent shall be affected by any notice or knowledge to the contrary; and payment of the interest on such Bond shall be made only to the registered owner thereof on the fifteenth (15th) day of the month next preceding each interest payment date and payment of the principal of and redemption premium, if any, on such Bond shall be made only to such registered owner, which payments shall be valid and effectual to satisfy and discharge the liability on such Bond to the extent of the sum or sums so paid. SECTION 3.04. Mutilated, Destroyed, Stolen or Lost Bonds. In case any Bond shall become mutilated in respect of ~he body of such Bond or shall be believed by the City to have been destroyed, stolen or lost, upon proof of ownership satisfactory to the City and upon the surrender of such mutilated Bond at the office of the Fiscal Agent, or upon the receipt of evidence satisfactory to the City of such destruction, theft or loss and upon receipt of indemnity satisfactory to the City, and also upon payment of all expenses incurred by the City in the premises, the City shall execute and the Fiscal Agent shall authenticate and deliver at such office a new Bond or Bonds of the same Series and maturity for the same aggregate principal amount of like tenor and date and bearing the same number or numbers and with such notations as the City shall determine in exchange and 23 substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for the Bond so destroyed, stolen or lost. If any such destroyed, stolen or lost Bond shall have matured or shall have been called for redemption, payment of the amount due thereon may be made by the City upon receipt of like proof, indemnity and payment of expenses. Any such duplicate Bonds issued pursuant to this section shall be entitled to equal and proportionate benefits with all other Bonds issued hereunder, and the City and the Fiscal Agent shall not be required to treat both the original Bond and any duplicate Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued hereunder or for the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and the duplicate Bond shall be treated as one and the same. SECTION 3.05. Temporary Bonds. Any Series of Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds shall be printed, lithographed or typewritten, shall be of such denominations as may be determined by the City, shall be issued in fully registered form and shall contain such reference to any of the provisions hereof as may be appropriate. Each temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds may be surrendered in exchange therefor at the office of the Fiscal Agent, and the Fiscal Agent shall deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations of the same Series and maturity or maturities, and until so exchanged, the temporary Bonds shall be entitled to the same benefits as definitive Bonds issued hereunder. ARTICLE IV REDEMPTION OF BONDS SECTION 4.01. Privileqe of Redemption of Bonds. Any Series of Bonds subject to redemption prior to maturity pursuant to a Supplemental Resolution shall be redeemable, upon notice being given as provided in this article, at such times, upon payment of such redemption premiums, if any, and upon such terms (in addition to and consistent with the terms 24 contained in this article) as may be specified in the Supplemental Resolution authorizing the issuance of the Bonds of such~Series. SECTION 4.02. Selection of Bonds for Redemption. If less than all the Outstanding Bonds of any Series of any one maturity date are to be redeemed at any one time, the Fiscal Agent shall select the Bonds or the portions thereof of such maturity date to be redeemed in any manner that it deems appropriate and fair, and the Fiscal Agent shall promptly notify the City in writing of the numbers of the Bonds selected for redemption in whole or in part. SECTION 4.03. Notice of Redemption. The Fiscal Agent shall cause notice of any redemption to be mailed pursuant to Section 11.09 to the respective registered owners of all Bonds designated for redemption in whole or in part at their addresses appearing in the registration books required to be kept by the Fiscal Agent pursuant to Section 3.03, but receipt of any such notice shall not be a condition precedent to such redemption and failure to receive any such notice shall not affect the validity of the proceedings for the redemption of such Bonds. Such notice shall state the redemption date and the redemption price and shall designate the serial numbers of the Bonds to be redeemed in whole or in part by giving the number of each Bond called for redemption in whole or in part, and shall require that such Bonds be surrendered at the principal corporate trust office of the Fiscal Agent for redemption at the redemption price thereof, giving notice also that further interest on such Bonds or the portions thereof redeemed will not accrue after the redemption date. If any Bond so chosen for redemption shall not be redeemable in whole, such notice shall also state that such Bond is to be redeemed in part only and that upon presentation of such Bond for redemption there will be issued in lieu of the unredeemed portion of principal thereof a new Bond or Bonds of the same Series and maturity of authorized denominations equal in aggregate principal amount to such unredeemed portion. The Fiscal Agent shall mail a notice of redemption of Bonds upon receipt of a Written Request of the City (which request shall be given to the Fiscal Agent at least thirty (30) days prior to the date fixed for redemption), but only after the City shall have deposited with or otherwise made available to the Fiscal Agent the money required for payment of the redemption price of all Bonds or the portions thereof then to be called for redemption (or the Fiscal Agent determines that money will be deposited with or otherwise made available to it in such amount and in sufficient time for such purpose), together with the estimated expense of giving such notice. 25 SECTION 4.04. Partial Redemption of Bonds. Upon surrender of any Bond redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the ~egistered owner thereof at the expense of the City a new Bond or Bonds of the same Series and maturity and of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered. SECTION 4.05. Effect of Redemption of Bonds. If notice of redemption has been duly given as aforesaid and money for the payment of the principal of and redemption premiums, if any, on, together with interest to the redemption date on, the Bonds or portions thereof so called for redemption is held by the Fiscal Agent, then on the redemption date designated in such notice such Bonds or such portions thereof shall become due and payable, and from and after the date so designated interest on the Bonds or such portions thereof so called for redemption shall cease to accrue and the Holders of such Bonds shall have no rights in respect thereof except to receive payment of the principal or such portions thereof and redemption premiums, if any, thereof and interest accrued thereon to the redemption date. SECTION 4.06. Disposition of Redeemed Bonds. Ail Bonds redeemed pursuant to the provisions of this article shall be cancelled by the Fiscal Agent and surrendered to the City and shall not be reissued. ARTICLE V NET REVENUES AND NET DISTRIBUTION INCOME SECTION 5.01. Receipt and Deposit of Revenues. The City agrees and covenants that all Revenues, when and as received, will be received and held in trust by the City hereunder, and will be deposited as received in the Revenue Fund, which fund is hereby created and shall be known as the City of Ukiah Electric Revenue Fund and which fund the City hereby agrees and covenants to maintain so long as any Bonds are Outstanding hereunder, and such Revenues will be accounted for through and held in trust in the Revenue Fund, and the City shall only have such beneficial right or interest in such money as provided herein. All such Revenues, whether held by the City as trustee or deposited with the Fiscal Agent as trustee, all as herein provided, shall nevertheless be disbursed, allocated and applied solely to the uses and purposes hereinafter in this article set forth, and shall be accounted for separately and apart from all other accounts, funds, money or other resources of the City. 26 SECTION 5.02. Pledge of Net Revenues and Net Distribution Income. Ail Net Revenues and all Net Distribution Income are hereby irrevocably pledged to the punctual payment of the interest on and principal of and redemption premiums, if any, on the Bonds, and the Net Revenues and the Net Distribution Income shall not be used for any other purpose while any of the Bonds remain Outstanding; except that out of the Net Revenues and the Net Distribution Income there may be apportioned such sums for such purposes as are expressly, permitted by Sections 5.03 and 5.04. This pledge shall Constitute a first and exclusive lien on the Net Revenues and the Net Distribution Income for the payment of the Bonds in accordance with the terms hereof and thereof. SECTION 5.03. Use of Revenues and Net Distribution Income. All Revenues in the Revenue Fund and all Net Distribution Income shall be set aside by the City in the treasury of the City or deposited by the City with the Fiscal Agent in the following respective special funds (each of which is hereby created and each of which the City hereby agrees and covenants to maintain or cause to be maintained) in the following order of priority: City), (1) Maintenance and Operation Fund (held by the (2) Interest Fund (held by the Fiscal Agent), (3) Principal Fund (held by the Fiscal Agent), and (4) Bond Reserve Fund (held by the Fiscal Agent), (5) Surplus Fund (held by the City). Ail Revenues and all Net Distribution Income in each of such funds shall be held in trust by the City or the Fiscal Agent and shall be applied, used and withdrawn only for the purposes hereinafter authorized in this section. (1) Maintenance and Operation Fund. On or before the first day of each month, the City shall, from the money in the Revenue Fund, deposit in the Maintenance and Operation Fund a sum equal to the amount required by the City for the payment of budgeted Maintenance and Operation Costs during such month. If no budget has yet been prepared for such month, such deposit shall be of a sum equal to the amount expended by the City for the payment of Maintenance and Operation Costs for the same calendar month in the next preceding year. All money in the Maintenance and Operation Fund shall be used only to 27 pay Maintenance and Operation Costs as they become due and payable. (2) Interest Fund. On or before the first day of each May and November, the City shall, from the money in the Revenue Fund and from the Net Distribution Income, deposit with the Fiscal Agent in the Interest Fund an amount of money equal to (i) the aggregate amount of interest becoming due and payable on all Outstanding Bonds (except for Variable Rate Bonds) on the next succeeding interest payment date, plus (ii) one hundred twenty-five per cent (125~) of the estimated aggregate amount of interest accruing during the next six-month period on all Outstanding Variable Rate Bonds (provided, that the amount of such deposit into the Interest Fund may be reduced by the amount by which the prior deposit for interest estimated to accrue on all Outstanding Variable Rate Bonds exceeded the actual amount of interest accrued during the prior six-month period on all Outstanding Variable Rate Bonds, and provided further, that the amount of such deposit into the Interest Fund shall be increased by the amount by which the prior deposit for interest estimated to accrue on all Outstanding Variable Rate Bonds was less than the actual amount of interest accruing during the prior six-month period on all Outstanding Variable Rate Bonds). No deposit need be made into the Interest Fund if the amount of money contained therein is at least equal to the amount required by the terms of the preceding paragraph to be deposited therein at the times and in the amounts therein provided. Ail money in the Interest Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity). (3) Principal Fund. On or before the first day of each May and November, the City shall, from the money in the Revenue Fund and from the Net Distribution Income, deposit with the Fiscal Agent in the Principal Fund an amount of money equal to (a) one-half (1/2) of the aggregate amount of principal becoming due and payable on the Outstanding Serial Bonds of all Series having annual maturity dates on the next succeeding June 1, plus (b) the aggregate amount of principal becoming due and payable on the Outstanding Serial Bonds of all Series having semiannual maturity dates on the next succeeding June 1 or December 1, as the case may be, plus 28 (c) one-half (1/2) of the aggregate of the Minimum Sinking Fund Account Payments required by all Supplemental Resolutions to be made during the year ~ending on the next succeeding June 1 into the respective Sinking Fund Accounts for all Term Bonds for which annual mandatory redemption is required from such Sinking Fund Accounts, plus (d) the aggregate of the Minimum Sinking Fund Account Payments required by all Supplemental Resolutions'to be made during the six-month period ending on the next succeeding June 1 or December 1, as the case may be, into the respective Sinking Fund Accounts for all Term Bonds for which semiannual mandatory redemption is required from such Sinking Fund Accounts, plus (e) if any Guaranteed Obligations shall be outstanding, sufficient money to pay when due the Guaranteed Obligation Requirements of such Guaranteed Obligations. All of the aforesaid Minimum Sinking Fund Account Payments shall be made without priority of any payment of any Minimum Sinking Fund Account Payment over any other Minimum Sinking Fund Account Payment. In the event that the moneys in the Principal Fund on any June 1 or December 1 are not equal to the amount of principal to become due and payable on the Outstanding Serial Bonds of all Series on such June 1 or December 1 plus the principal of and redemption premiums on the Outstanding Term Bonds required to be redeemed or paid at maturity on such June 1 Or such December 1 plus the Guaranteed Obligation Requirements of all outstanding Guaranteed Obligations, then such moneys shall be applied pro rata in such proportion as such Serial Bonds, such Term Bonds and such Guaranteed Obligation Requirements shall bear to each other, after first deducting for such purposes from such Term Bonds any of such Term Bonds required to be redeemed annually as shall have been redeemed or purchased during the twelve-month period ending on such June 1 and commencing on the immediately preceding June 2 and any of such Term Bonds required to be redeemed semiannually as shall have been redeemed or purchased during the six-month period ending on such June 1 and commencing on the immediately preceding December 2, or ending on such December 1 and commencing on the immediately preceding June 2. No deposit need be made into the Principal Fund if the amount of money contained therein is at least equal to the amount required by the terms of the preceding paragraph to be deposited therein at the times and in the amounts therein provided. Ail money in the Principal Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of paying the principal of and redemption premiums, if any, 29 on the Bonds as they shall become due and payable and for paying the Guaranteed Obligation Requirements when due and payable, except that any money in any Sinking Fund .Account shall be used and withdrawn by the Fiscal Agent only to purchase or to redeem Term Bonds for which such Sinking Fund Account was created as provided in any Supplemental Resolution. (4) Bond Reserve Fund. On or before the first day of each May and November, the City shall, from the money in the Revenue Fund and from the Net Distribution Income, deposit with the Fiscal Agent in the Bond Reserve Fund such amount of money as shall be required to restore the Bond Reserve Fund to a sum equal to the Required Bond Reserve. No deposit need be made into the Bond Reserve Fund if the amount of money contained therein is at least equal to the amount of money required by the above paragraph to be on deposit therein. If on any June 1 the amount of money in the Bond Reserve Fund exceeds the amount of money required by the above paragraph to be on deposit therein and if the City is not then in default hereunder, the Fiscal Agent shall withdraw the amount of any such excess from such fund and shall pay such amount to the City for deposit in the Surplus Fund; and for the purpose of determining the amount of money in the Bond Reserve Fund, all investments therein shall be valued on June 1 of each year at the face value thereof if such investments mature within twelve (12) months from the date of valuation, or if such investments mature more than twelve (12) months after the date of valuation, at the price at which such investments are redeemable by the holder at his option, if so redeemable, or if not so redeemable, at the lesser of (i) the cost of such investments plus the amortization of any premium or minus the amortization of any discount, or (ii) the market value of such investments. Except for such withdrawals, all money in the Bond Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of replenishing the Interest Fund or the Principal Fund, in such order, in the event of any deficiency in either of such funds, or for the purpose of paying the interest on or principal of or redemption premiums, if any, on the Bonds in the event that no other money of the City is available therefor. (5) Surplus Fund. Ail money remaining in the Revenue Fund on June 1 of each year, after withdrawing all of the sums required to be withdrawn therefrom by the 3O City by the provisions of Sections 5.03(1), (2), (3) and (4) hereof, shall be deposited by the City in the Surplus Fund. All money in the Surplus Fund shall be used as and ~when needed to eliminate any deficiency which may exist at any time in any of the funds established by Sections 5.03(1), (2), (3) and (4) in such order, and may be expended by the City at any time to pay Maintenance and Operation Costs or to pay costs of the acquisition and construction of any additions, betterments, extensions or improvements to the Enterprise. On the May 31 following each such June 1 deposit into the Surplus Fund, any balance remaining therein shall be withdrawn therefrom and deposited in the Rate Stabilization Fund or deposited in the General Fund, as directed by the Council. SECTION 5.04. Rate Stabilization Fund. There is hereby created in the treasury of the City a fund to be known as the Rate Stabilization Fund, which fund the City hereby agrees and covenants to maintain so long as any Bonds are Outstanding hereunder. From time to time the City may deposit in the Rate Stabilization Fund from authorized withdrawals from the Surplus Fund such amounts as the City shall determine. The City may withdraw amounts from the Rate Stabilization Fund only for payment of Maintenance and Operation Costs in any Fiscal Year, such withdrawals to be made until (but not after) one hundred twenty (120) days after the end of such Fiscal Year. ARTICLE VI COVENANTS OF THE CITY SECTION 6.01. Punctual Payment and Performance. The City will punctually pay the interest on and principal of and redemption premium, if any, to become due on every Bond issued hereunder in strict conformity with the terms of the Law and hereof and of the Bonds, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein and in the Bonds required to be observed and performed by it. SECTION 6.02. Against Encumbrances. The City will not make any pledge of or place any charge or lien upon the Enterprise or the Distribution System or any part of either thereof or upon the Net Revenues or the Net Distribution Income except as provided herein. The City may at any time, or from time to time, issue evidences of indebtedness for any purpose which are payable from and secured by a pledge of and charge or lien upon any money in the Surplus Fund as may from time to time be deposited therein or transferred thereto (as 31 provided in Section 5.03(5)), provided, that such pledge, charge or lien shall be subordinate in all respects to the pledge of and charge or lien upon the Net Revenues and the Net Distribution Income provided herein for the benefit of the Bonds. SECTION 6.03. Against Sale or Other Disposition of Property. The City will not sell, lease or otherwise dispose of the Enterprise or the Distribution System or any part of either thereof essential to the proper operation of the Enterprise or the Distribution System or to the maintenance of the Revenues or the Net Distribution Income. The City will not enter into any agreement or lease which impairs the operation of the Enterprise or the Distribution System or any part of either thereof necessary to secure adequate Net Revenues and Net Distribution Income for the payment of the interest on and principal of and redemption premiums, if any, on the Bonds, or which would otherwise impair the rights of the Holders with respect to the Net Revenues and the Net Distribution Income or the operation of the Enterprise or the Distribution System. Any real or personal property which has become nonoperative or which is not needed for the efficient and proper operation of the Enterprise or the Distribution System, or any material or equipment which has become worn out, may be sold at not less than the market value thereof if such sale will not reduce the Revenues or the Net Distribution Income and if the net proceeds of such sale are treated as Revenues. SECTION 6.04. Against Competitive Facilities. The City will not acquire, construct, maintain or operate and will not, within the scope of its powers, permit any other public or private corporation, political subdivision, district or agency or any person whomsoever to acquire, construct, maintain or operate within the City any electric generation, transmission and distribution system competitive with the Enterprise or the Distribution System. SECTION 6.05. Against Federal Income Taxation. In the case of each Series of Bonds for which, at the time of original issuance, the City has received an Opinion of Counsel that the interest on such Series of Bonds is exempt from federal income taxation, the City will not make any use of the proceeds of such Bonds or any other funds of the City which would cause such Bonds to be "arbitrage bonds" subject to federal income taxation by reason of Section 103(c) of the Code, "consumer loan bonds" subject to federal income taxation by reason of Section 103(o) of the Code, or obligations subject to federal income taxation because they are "federally guaranteed" as provided in Section 103(h) of the Code; and to that end the City, with respect to the proceeds of such Bonds 32 and such other funds, will comply with all requirements of such sections of the Code and all regulations of the United States Department of the Treasury issued thereunder to the extent that such requirements are, at the time, applicable and in effect. In the case of each Series of Bonds for which, at the time of original issuance, the City has received an Opinion of Counsel that the interest on such Series of Bonds is exempt from federal income taxation, the City will not make any use of the proceeds of such Bonds or of the Enterprise or the Distribution System or any part of either thereof which would cause such Bonds to be "industrial development bonds" subject to federal income taxation by reason of Section 103(b) of the Code. SECTION 6.06. Acquisition and Construction of Projects. The City will acquire and construct each Project with all practicable dispatch and in an expeditious manner and in conformity with law so as to complete the same as soon as possible. SECTION 6.07. Maintenance and Operation of the Enterprise; Budgets. The City will maintain the Enterprise in good condition, repair and working order at all times and will operate the Enterprise in an efficient and economical manner and consistent with the Agreement between the City and the United States of America, acting through its Corps of Engineers, Department of the Army, dated as of April 5, 1984, and will pay all Maintenance and Operation Costs as they become due and payable. The City will adopt and file with the Fiscal Agent, on or before the date of issuance of the initial Series of Bonds hereunder, a budget approved by the Council setting forth the estimated Maintenance and Operation Costs for the period from such date until the close of the then current Fiscal Year. On or before the first day of each Fiscal Year thereafter, the City will adopt and file with the Fiscal Agent a budget approved by the Council setting forth the estimated Maintenance and Operation Costs for such Fiscal Year. Any budget for any Fiscal Year adopted and approved in accordance with this section may (subject to such approval) be amended at any time during such Fiscal Year. SECTION 6.08. Payment of Claims. The City will pay and discharge any and all lawful claims which, if unpaid, might become a charge or lien upon the Net Revenues or the Net Distribution Income or any part thereof or upon any funds in the hands of the City or the Fiscal Agent prior to or on a parity with the charge or lien upon the Net Revenues and the Net Distribution Income securing the Bonds, or which might impair the security of the Bonds. 33 SECTION 6.09. Insurance. (a) The City will maintain insurance on the Enterprise with responsible insurers in such amounts and against such risks (including accident to or destruction of the Enterprise) as are usually covered in connection with municipal electric generation and transmission systems similar to the Enterprise so long as such insurance is available on the open market from responsible insurers at reasonable cost, and all such iinsurance policies shall contain a loss payable clause making any loss thereunder payable to the Fiscal Agent as its interests may appear. In the event of any damage to or destruction of the Enterprise caused by the perils covered by such insurance, the proceeds of such insurance shall be applied to the repair, reconstruction or replacement of the damaged or destroyed portion of the Enterprise; and the City shall cause such repair, reconstruction or replacement to begin promptly after such damage or destruction shall occur and to continue and to be properly completed as expeditiously as possible, .and the Fiscal Agent shall pay out of the proceeds of s~ch insurance all costs and expenses in connection with such repair, reconstruction or replacement so that the same shall be completed and the Enterprise shall be free and clear of all claims and liens. If the proceeds received by reason of any such loss shall exceed the costs of such repair, reconstruction or replacement, the Fiscal Agent shall transfer such excess to the City and the City shall treat such excess as Revenues. Notwithstanding the foregoing, if the proceeds of such insurance are sufficient to enable the City to retire all Outstanding Bonds, whether at maturity or on redemption prior to maturity or any combination thereof, the City may elect not to repair, reconstruct or replace the damaged or destroyed portion of the Enterprise, and thereupon, upon receipt of a Written Request of the City as appropriate, the proceeds of such insurance shall be applied by the Fiscal Agent to the payment when due of the interest to become due on all Outstanding Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and to the payment of the principal of and redemption premiums, if any, on all Outstanding Bonds at maturity or on redemption prior to maturity, as the case may be. (b) The City will maintain such other insurance which it shall deem advisable or necessary to protect its interests and the interests of the Holders, which insurance shall afford protection in such amounts and against such risks as are usually covered in connection with municipal electric generation and transmission systems similar to the Enterprise; provided, that any such insurance may be maintained under a self-insurance program so long as such self-insurance is maintained in the amounts and manner usually maintained in 34 connection with municipal electric generation and transmission systems similar to the Enterprise. Ail policies of insurance required to be maintained herein shall provide that the Fiscal Agent shall be given thirty (30) days' written notice of any intended cancellation thereof or reduction of coverage provided thereby; provided, that the Fiscal Agent shall not be responsible for the sufficiency of any insurance required herein and shall be fully protected in accepting payment on account of such insurance for any adjustment, compromise or settlement of any loss agreed to by it. SECTION 6.10. Accounting Records; Financial Statements and Other Reports. (a) The City will keep appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the Enterprise, which accounting records shall at all times during business hours be subject to the inspection of the Fiscal Agent or of any Holder (or his representative authorized in writing). (b) The City will prepare and file with the Fiscal Agent annually within one hundred twenty (120) days after the close of each Fiscal Year (commencing with the Fiscal Year ending June 30, 1986) -- (1) financial statements of the City for the preceding Fiscal Year prepared in accordance with Generally Accepted Accounting Principles, together with an Accountant's Report thereon and a special report prepared by the Independent Certified Public Accountant who examined such financial statements stating that nothing came to his attention in connection with such examination that caused him to believe that the City was not in compliance with any of the financial agreements or covenants contained herein; and (2) a report containing a statement of the physical condition of the Enterprise and a statement that the City is not in default hereunder and a statement listing all insurance policies maintained and self-insurance programs maintained by the City with respect to the Enterprise as of the close of such Fiscal Year, including the names of the insurers which have issued the policies and the amounts thereof and the property or risks covered thereby. (c) The City will prepare annually not more than one hundred twenty (120) days after the close of each Fiscal 35 Year (commencing with the Fiscal Year ending June 30, 1986) a summary report.showing in reasonable detail the Revenues and the Maintenance and Operation Costs and the Net Distribution Income for the preceding Fiscal Year and containing a general statement of the physical condition of the Enterprise. The City will furnish a copy of such summary report without charge to any Holder and to any investment banker, security dealer or other person interested in the Bonds requesting a copy thereof. SECTION 6.11. Protection of Security and Rights of Holders. The City will preserve and protect the security of the Bonds and the rights of the Holders and will warrant and defend their rights against all claims and demands of all persons. SECTION 6.12. Payment of Governmental Charges and Compliance with Governmental Requlations. The City will pay and discharge all taxes or payments in lieu of taxes, assessments and other governmental charges or liens that may be levied, assessed or charged upon the Enterprise or any part thereof or upon the Revenues or any part thereof or upon the Net Distribution Income or any part thereof promptly as and when the same shall become due and payable, except that the City shall not be required to pay any such governmental charges so long as the application or validity thereof shall be contested in good faith and the City shall have set aside reserves to cover such charges. The City will duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the Enterprise or any part thereof, except that the City shall not be required to comply with any such regulations or requirements so long as the application or validity thereof shall be contested in good faith. SECTION 6.13. Amount of Rates, Fees and Charqes. The City will fix, prescribe and collect rates, fees and charges for the electric generation and transmission service provided by the Enterprise and for the electric distribution service provided by the Distribution System which are fair and nondiscriminatory and which will be sufficient to yield Net Revenues and Net Distribution Income during each Fiscal Year equal to at least one hundred twenty-five per cent (125%) of the Debt Service for such Fiscal Year. The City may make adjustments from time to time in such rates, fees and charges and may make such classification thereof as it deems necessary, but shall not reduce the rates, fees and charges then in effect unless the Net Revenues and the Net Distribution Income from such reduced rates, fees and charges will at all times be sufficient to meet the reqUirements of this section. 36 SECTION 6.14. Collection of Rates, Fees and Charges. The City will have in effect at all times rules and regulations requiring each consumer or customer located on any premises connected with the Enterprise to pay the rates, fees and charges applicable to the electric generation and transmission service provided by the Enterprise to such premises and providing for the billing thereof and for a due date and delinquency date for each bill. In each case where such bill remains unpaid in whole or in part after it becomes delinquent, the City may disconnect such premises from the Enterprise, and such premises shall not thereafter be reconnected to the Enterprise until all delinquent bills and penalties (if any) have been paid or provision satisfactory to the City for such payment shall have been made, together with the charges for reconnection to the Enterprise. The City will not (except as required by Federal Energy Regulatory Commission License No. 2841 for the Lake Mendocino Power Project) permit any part of the Enterprise, or any facility thereof, to be used or taken advantage of free of charge by any person, firm or corporation, or by any public agency (including the United States of America, the State of California and any public corporation, political subdivision, city, county, district or agency of any thereof). SECTION 6.15. Eminent Domain Proceeds. If all or any part of the Enterprise shall be taken by eminent domain proceedings, the net proceeds realized by the City thereby shall be deposited by the City with the Fiscal Agent in a special fund in trust, and shall be applied as follows -- (a) If (1) the City obtains and files with the Fiscal Agent an Engineer's Report showing (i) the estimated loss of annual Net Revenues, if any, suffered by the City by reason of such eminent domain proceedings, (ii) a general description of the additions, betterments, extensions or improvements to the Enterprise proposed to be acquired or constructed by the City from such proceeds, and (iii) an estimate of the additional annual Net Revenues to be derived from such additions, betterments, extensions or improvements, and (2) the Fiscal Agent, on the basis of such Engineer's Report, determines that the estimated additional annual Net Revenues will sufficiently offset the estimated loss of annual Net Revenues resulting from such eminent domain proceedings so that the ability of the City to meet its obligations hereunder will not be substantially impaired (which determination shall be final and conclusive), then the City shall promptly proceed with the acquisition or construction of such additions, betterments, extensions or improvements substantially in accordance with such Engineer's Report and such proceeds shall be applied by 37 the Fiscal Agent for the payment of the costs of such acquisition or construction, and any balance of such proceeds not required by the City for such purpose shall ~be transferred to the City and the City shall treat such balance as Revenues. (b) If the foregoing conditions are not met, then such proceeds shall be applied to the extent available by the Fiscal Agent for the redemption or purchase of Bonds, and if the Fiscal Agent is unable to purchase or redeem Bonds in an amount sufficient to exhaust the available money, such money shall be held in trust by the Fiscal Agent and applied to the extent available to the payment when due of the interest to become due on all Outstanding Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and to the payment of the principal of and redemption premiums, if any, on all Outstanding Bonds at maturity or on redemption prior to maturity, as the case may be, and pending such application such remaining money may be invested by the Fiscal Agent in the manner provided in Section 11.05 for the investment of money in the Bond Reserve Fund. (c) If such eminent domain proceedings will have no effect, or at most a relatively immaterial effect, upon the Net Revenues and the security of the Bonds, and if the City obtains and files with the Fiscal Agent an Engineer's Report to such effect, then the Fiscal Agent shall transfer such proceeds to the City and the City shall treat such proceeds as Revenues. SECTION 6.16. Further Assurances. The City will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Holders of the rights and benefits provided herein. ARTICLE VII THE FISCAL AGENT SECTION 7.01. The Fiscal AGent. Bank of America National Trust and Savings Association at its principal corporate trust office in San Francisco, California, is hereby appointed Fiscal Agent of the City for the purpose of receiving all money which the City is required to deposit with the Fiscal Agent hereunder and for the purpose of allocating, applying and using such money as provided herein and for the 38 purpose of paying the interest on and principal of and redemption premiums, if any, on all the Bonds. The City agrees that it will at all times maintain a Fiscal Agent having a principal corporate trust office either in Los Angeles or in San Francisco, California. The City may at any time in its sole discretion remove the Fiscal Agent initially appointed and any successor thereto and may appoint a successor or successors thereto by an instrument in writing; provided, that any such successor shall be a bank or trust company doing business and having a principal corporate trust office either in Los Angeles or in San Francisco, California, having a combined capital (exclusive of borrowed capital) and surplus of at least fifty million dollars ($50,000,000) and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Fiscal Agent may at any time resign by giving written notice of such resignation to the City and by giving notice of such resignation by mail to the Holders. Upon receiving such notice of resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of a Fiscal Agent and appointment of a successor Fiscal Agent shall become effective only upon the acceptance of appointment by the successor Fiscal Agent. If within thirty (30) days after notice of the removal or resignation of the Fiscal Agent no successor Fiscal Agent shall have been appointed and shall have accepted such appointment, the removed or resigning Fiscal Agent may petition any court of competent jurisdiction for the appointment of a successor Fiscal Agent, which court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint a successor Fiscal Agent having the qualifications required hereby. The Fiscal Agent is hereby authorized to pay interest on the Bonds due on or before the maturity or prior redemption thereof to the Holders as their names appear on the fifteenth (15th) day of the month next preceding each interest payment date on the registration books required to be kept by the Fiscal Agent pursuant to Section 3.03 as the registered owners thereof, such interest to be paid by check mailed to the Holders at their addresses appearing on such books or at such other addresses as they may have filed with the Fiscal Agent for that purpose, and to pay to the Holders or their 39 legal assignees the principal of and redemption premiums, if any, on the Bonds upon presentation and surrender of the Bonds to the Fiscal Agent at maturity or on redemption prior to maturity. The Fiscal Agent shall cancel all Bonds upon payment thereof or upon the surrender thereof by the City and shall return them so cancelled to the City. The Fiscal Agent shall keep accurate records of all Bonds paid and discharged and cancelled by it. The! City shall from time to time, subject to any agreement between the City and the Fiscal Agent then in force, pay the Fiscal Agent compensation for its services, reimburse the Fiscal Agent for all its advances and expenditures, including but not limited to advances to and fees and expenses by independent accountants, counsel and engineers or other experts employed by it in the exercise and performance of its rights and obligations hereunder, and indemnify and save the Fiscal Agent harmless against liabilities not arising from its own gross negligence or willful misconduct which it may incur in the exercise and performance of its rights and obligations hereunder. SECTION 7.02. Liability of the Fiscal Aqent. The recitals of facts, agreements and covenants contained herein and in the Bonds shall be taken as statements, agreements and covenants of the City, and the Fiscal Agent does not assume any responsibility for the correctness of the same and does not make any representation as to the sufficiency or validity hereof or of the Bonds, and shall not incur any responsibility in respect thereof other than in connection with the rights and obligations assigned to or imposed upon it herein or in the Bonds, and shall not be liable in connection with the performance of its duties hereunder except for its own gross negligence or willful misconduct. SECTION 7.03. Notice to the Fiscal Agent. The Fiscal Agent shall be protected in acting upon any Bond, certificate, consent, notice, opinion, report, request, resolution or other document or paper believed by it to be genuine and to have been signed or presented by the proper party or parties. The Fiscal Agent may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection with respect to any action taken or suffered hereunder in good faith and in accordance therewith. Whenever in the administration of its rights and obligations hereunder the Fiscal Agent shall deem it necessary or desirable that a matter be established or proved prior to taking or suffering any action hereunder, such matter (unless 4O other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Fiscal Agent, be deemed to be conclusively established or proved by a Certificate of the City, which shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions hereof upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable. ARTICLE VIII AMENDMENT OF OR SUPPLEMENT TO THE RESOLUTION SECTION 8.01. Amendment or Supplement by Consent of Holders. The Resolution and the rights and obligations of the City and of the Holders may be amended or supplemented at any time by a Supplemental Resolution which shall become binding when the written consents of the Holders of sixty per cent (60~) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.02, are filed with the Fiscal Agent. No such amendment or supplement shall (1) extend the maturity of or reduce the interest rate on or otherwise alter or impair the obligation of the City to pay the interest on or principal of or redemption premium, if any, on any Bond at the time and place and at the rate and in the currency provided herein without the express written consent of the Holder of such Bond, or (2) permit the creation by the City of any pledge of or charge or lien upon the Net Revenues and the Net Distribution Income superior to the pledge, charge and lien created hereby for the benefit of the Bonds, or (3) reduce the percentage of Bonds required for the written consent to any such amendment or supplement, or (4) modify any rights or obligations of the Fiscal Agent without its prior written assent thereto. The Resolution and the rights and obligations of the City and of the Holders may also be amended or supplemented at any time by a Supplemental Resolution which shall become binding upon adoption without the prior written consent of any Holders, but only to the extent permitted by law and only for any one or more of the following purposes -- (a) To add to the agreements and covenants required herein to be performed by the City other agreements and covenants thereafter to be performed by the City which shall not adversely affect the interests of the Holders, or to surrender any right or power reserved herein to or 41 conferred herein upon the City which shall not adversely affect the interests of the Holders; (b) To make such provisions for the purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision contained herein or in regard to questions arising hereunder which the City may deem desirable or necessary and not inconsistent herewith and which shall not adversely affect the interests of the Holders; or (c) To authorize the issuance of a Series of Bonds and to provide the terms and conditions under which such Series of Bonds may be issued, subject to the conditions and upon compliance with the procedure set forth in Article II. SECTION 8.02. Disqualified Bonds. Bonds owned or held by or for the account of the City shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds provided for in this article or in Article IX, and shall not be entitled to consent to or take any other action provided for in this article or in Article IX. SECTION 8.03. Endorsement or Replacement of Bonds After Amendment or Supplement. After the effective date of any action taken as hereinabove provided, the City may determine that the Bonds may bear a notation by endorsement in form approved by the City as to such action, and in that case upon demand of the Holder of any Bond Outstanding on such effective date and presentation of his Bond for such purpose at the office of the Fiscal Agent a suitable notation as to such action shall be made on such Bond. If the City shall so determine, new Bonds so modified as, in the opinion of the City, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Holder of any Bond Outstanding on such effective date such new Bonds shall be exchanged at the office of the Fiscal Agent, without cost to each Holder, for Bonds then Outstanding upon surrender of such Outstanding Bonds. SECTION 8.04. Amendment or Supplement by Mutual Consent. The provisions of this article shall not prevent any Holder from accepting any amendment or supplement as to any particular Bonds held by him; provided, that due notation thereof is made on such Bonds. 42 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES OF HOLDERS SECTION 9.01. Events of Default and Acceleration of Maturities. If one or more of the following Events of Default shall happen, that is to say -- (a) if default shall be made in the due and punctual payment of the interest on any Bond when and as the same shall become due and payable; (b) if default shall be made in the due and punctual payment of the principal of or redemption premium, if any, on any Bond when and as the same shall become due and payable, whether at maturity or by proceedings for redemption; (c) if default shall be made by the City in the performance of any of the other agreements or covenants required hereby to be performed by it, and such default shall have continued for a period of sixty (60) days after the City shall have been given notice in writing of such default by the Fiscal Agent; or (d) if the City shall file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the City seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property; then and in each and every such case during the continuance of such Event of Default the Fiscal Agent may, and upon the written request of the Holders of not less than twenty-five per cent (25~) in aggregate principal amount of the Bonds then Outstanding shall, by notice in writing to the City, declare the principal of all Bonds then Outstanding and the interest accrued thereon to be due and payable immediately, and upon any such declaration the same shall become due and payable, anything contained herein or in the Bonds to the contrary notwithstanding. 43 This provision, however, is subject to the condition that if at any time after the principal of all Bonds then Outstanding shall have been so declared due and payable and before any judgment or decree for the payment of the money due shall have been obtained or entered the City shall deposit with the Fiscal Agent a sum sufficient to pay all matured interest on all the Bonds and the principal of the Bonds matured prior to such declaration, with interest at the rate borne by such Bonds on such overdue interest and principal, and the reasonable expenses of the Fiscal Agent, and any and all other defaults known to the Fiscal Agent (other than in the payment of interest on and principal of the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Fiscal Agent or provision deemed by the Fiscal Agent to be adequate shall have been made therefor, then and in every such case the Fiscal Agent may, and upon the written request of the Holders of not less than twenty-five per cent (25~) in aggregate principal amount of the Bonds then Outstanding shall, by notice in writing to the City, rescind and annul such declaration and its consequences; provided, that no such rescission and annulment shall extend to or shall affect any subsequent Event of Default or shall impair or exhaust any right or power consequent thereon. SECTION 9.02. Application of Money Upon Acceleration. Ail money in the accounts and funds provided in Sections 5.02, 5.03 and 5.04 upon the date of the declaration of acceleration by the Fiscal Agent as provided in Section 9.01 and all Revenues and Net Distribution Income thereafter received by the City hereunder shall be transmitted to the Fiscal Agent and shall be applied by the Fiscal Agent in the following order -- First, to the payment of the costs and expenses of the Holders in providing for the declaration of such Event of Default, including reasonable compensation to their accountants, counsel and engineers, and to the payment of the costs and expenses of the Fiscal Agent, if any, hereunder, including reasonable compensation to its accountants, counsel and engineers; Second, to the payment of the Maintenance and Operation Costs; and Third, upon presentation of the several Bonds and the stamping thereon of the amount of the payment if only partially paid or upon the surrender thereof if fully paid, to the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal, with 44 interest on the overdue interest and principal at the rate borne by such Bonds, and in case such money shall be insufficient to pay in full the whole amount so owing and ~unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue interest and principal without preference or priority among such interest, principal and interest on overdue interest and principal ratably to the aggregate of such interest, principal and interest on overdue interest and principal. SECTION 9.03. Other Remedies of Holders. Any Holder shall have the right for the equal benefit and protection of all Holders similarly situated -- (a) by mandamus or other suit or proceeding at law or in equity to enforce his rights against the Council or the City or any of the councilmembers, officers or employees of the Council or the City, and to compel the Council or the City or any such councilmembers, officers or employees to perform and carry out their duties under the Law and the agreements and covenants with the Holders contained herein; (b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Holders; or (c) by suit in equity upon the happening of an Event of Default to require the Council or the City or its councilmembers, officers and employees to account as the trustee of an express trust. SECTION 9.04. Non-waiver. Nothing in this article or in any other provision herein or in the Bonds shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the interest on and principal of and redemption premiums, if any, on the Bonds to the respective Holders of the Bonds at the respective dates of maturity or upon redemption prior to maturity as provided herein from the Net Revenues and the Net Distribution Income pledged for such payment, or shall affect or impair the right of such Holders, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein and in the Bonds. A waiver of any default or breach of duty or contract by any Holder shall not affect any subsequent default or breach of duty or contract and shall not impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by any Holder to exercise any right or remedy accruing upon any default or breach of 45 duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right and remedy conferred upon the Holders by the Law or hereby may be enforced and exercised from time to time and as often as shall be deemed expedient by the Holders. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to any Holder, the City and such Holder shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. SECTION 9.05. Actions by Fiscal Agent as Attorney-in-Fact. Any action, proceeding or suit which any Holder shall have the right to bring to enforce any right or remedy hereunder may be brought by the Fiscal Agent for the equal benefit and protection of all Holders, and the Fiscal Agent is hereby appointed (and the successive Holders, by taking and holding the Bonds issued hereunder, shall be conclusively ~eemed so to have appointed it) the true and lawful attorney-in-fact of the Holders for the purpose of bringing any such action, proceeding or suit and for the purpose of doing and performing any and all acts and things for and on behalf of the Holders as a class or classes as may be advisable or necessary in the opinion of the Fiscal Agent as such attorney-in-fact. SECTION 9.06. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Holders is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Law or any other law. ARTICLE X DEFEASANCE SECTION 10.01. Discharqe of Bonds. (a) If the City shall pay or cause to be paid or there shall otherwise be paid to the Holders of all Outstanding Bonds the interest thereon and the principal thereof and the redemption premiums, if any, thereon at the times and in the manner stipulated therein and herein, then the Holders of such Bonds shall cease to be entitled to the pledge of and charge and lien upon the Net Revenues and the 46 Net Distribution Income as provided herein, and all agreements, covenants and other obligations of the City to the Holders of such Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Fiscal Agent shall execute and deliver to the City all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Fiscal Agent shall pay over or deliver to the City all money or securities held by it pursuant hereto which are not required for the payment of the interest on and principal of and redemption premiums, if any, on such Bonds. (b) Any Outstanding Bonds shall on the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if there shall be on deposit with the Fiscal Agent money which is sufficient to pay the interest due on such Bonds on such date and the principal and redemption premiums, if any, due on such Bonds on such date. (c) Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in subsection (a) of this section if (1) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the City shall have given to the Fiscal Agent in form satisfactory to it irrevocable instructions to mail notice of redemption of such Bonds on such date, (2) there shall have been deposited with the Fiscal Agent either money in an amount which shall be sufficient or Federal Securities for which the full faith and credit of the United States of America are pledged for the payment of interest and principal or municipal obligations which have been defeased with the foregoing Federal Securities and which are rated in the highest rating category by Moody's and by Standard & Poor's which are not subject to redemption except by the holder thereof prior to maturity (including any Federal Securities issued or held in book-entry form on the books of the Department of the Treasury of the United States of America) the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with the Fiscal Agent at the same time, shall be sufficient to pay when due the interest to become due on such Bonds on and prior to the maturity date or redemption date thereof, as the case may be, and the principal and redemption premiums, if any, on such Bonds, as evidenced by an Accountant's Report, and (3) in the event such Bonds are not by their terms subject to redemption within the next succeeding sixty (60) days, the City shall have given the Fiscal Agent in form satisfactory to it irrevocable instructions to mail a notice to the Holders of such Bonds that the deposit required by clause (2) above has been made 47 with the Fiscal Agent and that such Bonds are deemed to have been paid in accordance with this section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such Bonds. SECTION 10.02. Unclaimed Money. Anything contained herein to the contrary notwithstanding, any money held by the Fiscal Agent in trust for the payment and discharge of any of the Bonds or any interest thereon which remains unclaimed for six (6) years after the date when such Bonds or interest thereon have become due and payable, either at their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Fiscal Agent on such date, or for six (6) years after the date of deposit of such money if deposited with the Fiscal Agent after the date when such Bonds or interest thereon became due and payable, shall, at the Written Request of the City, be repaid by the Fiscal Agent to the City as its absolute property free from trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Holders shall look only to the City for the payment of such Bonds and interest thereon; provided, that before being required to make any such payment to the City the Fiscal Agent shall, at the expense of the City, cause to be mailed a notice to the Holders of all Outstanding Bonds that such money remains unclaimed and that after a date named in such notice, which date shall not be less than thirty (30) days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the City. ARTICLE XI MISCELLANEOUS SECTION 11.01. Liability of City Limited to Net Revenues and Net Distribution Income. Notwithstanding anything contained herein, the City shall not be required to advance any money derived from any source of income other than the Net Revenues and the Net Distribution Income as provided herein for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds or for the performance of any agreements or covenants contained herein. The City may, however, advance funds for any such purpose so long as such funds are derived from a source legally available for such purpose and may be used by the City for such purpose. The Bonds are special obligations of the City and are payable, as to interest thereon, principal thereof and any premiums upon the redemption of any thereof, solely from the Net Revenues and the Net Distribution Income as provided 48 herein, and the City is not obligated to pay them except from the Net Revenues and the Net Distribution Income. All the Bonds are equally secured by a pledge of and charge and lien upon~the Net Revenues and the Net Distribution Income, and the Net Revenues and the Net Distribution Income constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the Bonds as provided herein. The Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or statutory limitation or restriction, and neither the Council nor the City nor any councilmember, officer or employee thereof shall be liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds otherwise than from the Net Revenues and the Net Distribution Income as provided herein. SECTION 11.02. Benefits of the Resolution Limited to Parties. Nothing contained herein, express or implied, is intended to give to any person other than the Council, the City, the Fiscal Agent and the Holders any right, remedy or claim under or by reason hereof. Any agreement or covenant required herein to be performed by or on behalf of the Council or the City or any councilmember, officer or employee thereof shall be for the sole and exclusive benefit of the Fiscal Agent and the Holders. SECTION 11.03. Successor is Deemed Included in Ail References to Predecessor. Whenever either the Council or the City or any councilmember, officer or employee thereof is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions with respect to the administration, control and management of the affairs of the City that are presently vested in the Council or the City or such councilmember, officer or employee, and all agreements and covenants required herein to be performed by or on behalf of the Council or the City or any councilmember, officer or employee thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. SECTION 11.04. Execution of Documents by Holders. Any declaration, request or other instrument which is permitted or required herein to be executed by Holders may be in one or more instruments of similar tenor, and shall be executed by Holders in person or by their attorneys duly authorized in writing. The fact and date of the execution by any Holder or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act 49 that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness to such execution duly~sworn to before such notary public or other officer. The ownership of Bonds and the amount, maturity, number and date of holding the same shall be provided by the registration books required to be kept by the Fiscal Agent pursuant to Section 3.03. Any declaration, request or other instrument or writing of the Holder of any Bond shall bind all future Holders of such Bond with respect to anything done or suffered to be done by the City in good faith and in accordance therewith. SECTION 11.05. Deposit and Investment of Money in Accounts and Funds. All money held by the City or the Fiscal Agent in any accounts and funds established herein shall be deposited in time or demand deposits (including certificates of deposit) and shall be secured at all times by such obligations as are required by law and to the fullest extent required by law, except such money that is at the time invested in accordance with this section. Money in the Revenue Fund and in any Project account in the Acquisition and Construction Fund and in the Surplus Fund and in the Rate Stabilization Fund may, and at the written direction of the City, shall be invested by the Treasurer of the City in Legal Investments maturing not later than the date on which it is estimated that such money will be required to be paid out hereunder. Money in the Interest Fund and in the Principal Fund may, and at the written direction of the City received by the Fiscal Agent at least two (2) days prior to the date of investment, shall be invested by the Fiscal Agent in Permitted Investments maturing not later than the date on which it is estimated that such money will be required to be paid out hereunder, and money in the Bond Reserve Fund may, and at the written direction of the City received by the Fiscal Agent at least two (2) days prior to the date of investment, shall be invested in Federal Securities maturing not more than five (5) years from the date of purchase by the Fiscal Agent, or the final maturity date of any Outstanding Bonds, whichever is earlier. Ail money invested by the Fiscal Agent shall be invested so as to obtain the highest yield which the Fiscal Agent deems practicable, having due regard for the safety of such money, and the Fiscal Agent may act as principal or agent in the acquisition or disposition of any such investment; provided, that before the Fiscal Agent shall be required to make any investments in Permitted Investments or in Federal Securities, the City shall supply to the Fiscal Agent a 50 Certificate of the City setting forth which of the investments specified under the definition of Permitted Investments or Federal Securities, as the case may be, are then legal investments of funds of the City, and if at any time any of the investments stated to be legal investments in such Certificate of the City shall cease to be legal investment, the City shall so advise the Fiscal Agent by a subsequent Certificate of the City. The Fiscal Agent shall not be responsible for the failure to make any investments if the City shall not originally supply such a Certificate of the City to the Fiscal Agent, or for making any investment which is not a legal investment of the City if the City shall not have previously delivered a Certificate of the City advising the Fiscal Agent that such investment was no longer a legal investment. The Fiscal Agent shall not be liable or responsible for any loss suffered in connection with any such investment made by it under the terms of and in accordance with this section. The Fiscal Agent may sell or present for redemption any obligations so purchased whenever it shall be necessary in order to provide money to meet any payment of the money so invested, and the Fiscal Agent shall not be liable or responsible for any losses resulting from any such investment sold or presented for redemption.. The Fiscal Agent may commingle any of the moneys held by it pursuant hereto for investment purposes; provided, that the Fiscal Agent shall account separately for the moneys belonging to each account or fund established pursuant hereto. Ail interest received on any money so deposited or invested which exceeds the requirements of the account or fund from which such money was deposited or invested shall be deposited in or transferred to the Revenue Fund, except that all interest received on any money so deposited or invested in any Project account in the Acquisition and Construction Fund shall be deposited in or transferred to such Project account, and all losses on any such deposits or investments shall be borne by the account or fund from which the deposit or investment was made. SECTION 11.06. Waiver of Personal Liability. No councilmember, officer or employee of the Council or the City shall be individually or personally liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, but nothing herein contained shall relieve any councilmember, officer or employee of the Council or the City from the performance of any official duty provided by the Law or any other applicable provisions of law or hereby. SECTION 11.07. Acquisition of Bonds by City. Ail Bond acquired by the City, whether by purchase or gift or 51 otherwise, shall be surrendered to the Fiscal Agent for cancellation. . SECTION 11.08. Content of Certificates and Reports. Every certificate or report with respect to compliance with an agreement, condition, covenant or term provided herein shall include (a) a statement that the person or persons making or giving such certificate or report have read such agreement, condition, covenant or term and the definitions herein relating thereto; (b) a brief statement as to the nature'and scope of the examination or investigation upon which the opinion contained in such certificate or report is based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such agreement, condition, covenant or term has been complied with; and (d) a statement as to whether, in the opinion of the signers, such agreement, condition, covenant or term has been complied with. · Any'such certificate made or given by an officer of the City may be based, insofar as it relates to legal matters, upon a representation made in an Opinion of Counsel unless such officer knows that the representation with respect to the matters upon Which his certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Any such Opinion of Counsel may be based, insofar as it relates to factual matters information with respect to which is in the possession of the City, upon a representation by an officer or officers of the City unless the counsel giving such Opinion of Counsel knows that the representation with respect to the matters upon which his representation may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. SECTION 11.09. Notice by Mail. Any notice required to be given to Holders by mail shall be given by mailing a copy of such notice, first class postage prepaid, to the Holders of all the Bonds at their addresses appearing in the books required to be kept by the Fiscal Agent pursuant to the provisions of Section 3.03 not less than ten (10) days nor more than thirty (30) days following the action or prior to the event concerning which notice thereof is required to be given; provided, that failure to receive any such notice shall not affect the validity of the proceedings taken in connection with the action or the event concerning which such notice was given. SECTION 11.10. Accounts and Funds. Any account or fund required herein to be created and maintained by the City 52 or the Fiscal Agent may be created and maintained in the accounting records of the City or the Fiscal Agent in its customary manner either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any financial reports or statements with respect thereto, be treated either as an account or as a fund; but all such accounting records with respect to all such accounts and funds shall at all times be maintained in accordance with Generally Accepted Accounting Principles and with due regard for the protection of the security of the Bonds and the rights of the Holders. SECTION 11.11. Article and Section Headinqs, Gender and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the construction, effect or meaning hereof, and words of any gender shall be deemed and construed to include all genders. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding articles, sections or subdivisions hereof; and the words "hereby," "herein," "hereof," "hereto," "herewith" and "hereunder" and other words of similar import refer to the Resolution as a whole and not to any particular article, section or subdivision hereof. SECTION 11.12. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be observed or performed by the City or the Fiscal Agent shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements or covenants or portions thereof and shall in no way affect the validity hereof or of the Bonds; and the Holders shall retain all the rights and benefits accorded to them under the Law or any other applicable provisions of law. The City hereby declares that it would have adopted the Resolution and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more of the articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 11.13. Repeal of Inconsistent Resolutions. Any resolution of the City and any part of any resolution inconsistent herewith is hereby repealed to the extent of such inconsistency. 53 CITY CLERK'S CERTIFICATE I, Yvette S. Haves City of Ukiah, hereby certify as follows: , City Clerk of the The foregoing is a full, true and correct copy of a resolution duly adopted at a regular meeting of the City Council of the City of Ukiah duly and regularly and legally held at the regular meeting place thereof on June 4, 1986, of which meeting all the members of said City Council had due notice and at which a majority thereof was present. At said meeting said resolution was adopted by the following vote: AYE S: NOES: Councilmembers Henderson, Kier, Hickey, Kelley, and Mayor Myers None -ABSENT:N0ne I have carefully compared the same with the original minutes of said meeting on file and of record in my office and the foregoing is a full, true and correct copy of the original resolution adopted at said meting and entered in said minutes, and said original resolution has not been amended, modified or rescinded since the date of its adoption and the same is now in full force and effect. Dated: ( SEAL ) June~, 1986. SECTION 11.14. Effective Date of the Resolution. The Resolution shall take effect from and after its passage and approval. vote: PASSED AND ADOPTED on June 4, 1986, by the following AYES: NOES: Councilmembers Henderson, Kier, Hickey, Kelley, and Mayor Myers None ABSENT:None (Seal) Mayor of City of Ukiah City Cler ~of the 54