Resolution 1277
EAW/RFR:dao 9/5/68
RESOLUTION NO. 1277
A RESOLUTION PROVIDING FOR THE ISSUANCE OF
WA TER REVENUE BONDS OF 1968, FIXING THE
FORM OF THE BONDS AND PROVIDING COVENANTS
FOR THEIR PROTECTION
CITY OF GILROY, CALIFORNIA
$350,000 WATER REVENUE BONDS OF 1968
RESOLVED, by the City Council of the City of Gilroy, Cali-
fornia, that
WHEREAS, the City of Gilroy, in the County of Santa Clara,
State of California, herein called "City", is a chartered City,
duly organized and existing under and pursuant to 'the provisions
of the Constitution of the State of California;
WHEREAS, by the terms of said Charter, the City is empowered
to make and enforce all laws and regulations in respect to munici-
pal affairs, subject only to such restrictions and limitations as
may be pro~ided in said Charter and said Constitution, and to ex-
ercise any and all rights, powers and privileges heretofore or
hereafter established, granted and prescribed by any law of the
State, said Charter, or by any other lawful authority, which a
municipal corporation might or could exercise under said Consti-
tution, including all powers not in conflict with the provisions
of said Charter now or hereafter granted to General Law Cities,
and wherein it is provided that the enumeration in said Charter
of any particular power shall not be held to be exclusive of or
any limitation upon said general grant of powers;
WHEREAS, the acquisition, construction, ownership, management,
maintenance, operation, repair, extension and improvement or ad-
dition of facilities for obtaining, conserving, treating and supply-
ing water for domestic, irrigation, sanitation, industrial, fire pro-
tection, recreation, and any other public and private uses, and the
issuance of bonds to pay the cost thereof is a municipal affair;
WHEREAS, pursuant to the powers vested in the Council pursuant
to its Charter, and at a meeting thereof duly held on July 1, 1968,
it adopted Ordinance No. 824 entitled "City of Gilroy Water Revenue
Bond Ordinanceil, wherein it established the procedure for issuing,
by resolution, revenue bonds payable solely from the revenues of
the City Water Works and System and other funds which may legally
be used therefor; and
WHEREAS, the City proposes herein to issue revenue bonds to
finance the costs of acquiring, constructing and financing improve-
ments to its City Water Works and System;
NOW, THEREFORE, IT IS HEREBY DETERMINED and ORDERED, as
follows:
EAW:RFR:da6 9/16/68 20c
RESOLUTION NO. 1277
A RESOLUTION PROVIDING FOR THE ISSUANCE OF
WATER REVENUE BONDS OF 1968, FIXING THE
FORM OF THE BONDS AND PROVIDING COVENANTS
FOR THEIR PROTECTION
CITY OF GILROY, CALIFORNIA
$350,000 WATER REVENUE BONDS OF 1968
I N D E X
Part 1
Definitions
1.01
1.02
1.03
1.04
1.05
1.06
1.07
1.08
1.09
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
General ----------------------------------
Annual ----------------------------------
Bond or Bonds ----------------------------
Bondholder -------------------------------
Charges ----------------------------------
Clerk ------------------------------------
City ------------------------------------
Council ----------------------------------
Director of Finance ----------------------
Director of Public Works -----------------
Enterprise -------------------------------
Gross Revenues ---------------------------
Improve ----------------------------------
Indenture --------------------------------
Mayor ------------------------------------
Net Revenues -----------------------------
Project ----------------------------------
Revenues ---------------------------------
Page
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Part 2 General Provisions
2.01 Bond Law --------------------------------- 3
2.02 Conditions Precedent --------------------- 3
2.03 Public Necessity ------------------------- 3
2.04 Project ---------------------------------- 3
2.05 Single Transaction ----------------------- 3
2.06 Separate Fund ---------------------------- 3
2.07 Complete Project ------------------~------ 3
lal Adequate Funds ---------------------- 3
b Adequate Rates ---------------------- 4
c Bond Payment ------------------------ 4
2.08 Legality --------------------------------- 4
Part 3 The Bonds
3001 Bond Issue ------------------------------- 4
3.02 The Bonds ------------------------------- 4
3003 Not Callable ----------------------------- 4
3004 Purchase of Bonds ------------------------ 4
3.05 Interest and Coupons --------------------- 4
3.06 Interest in Bid -------------------------- 4
3.07 Interest After Maturity -----------------~ 5
3008 Negotiable Instruments ------------------ 5
3.09 Where Bonds Payable ---------------------- 5
3.10 Source of Payment ------------------------ 5
3011 Bonds Not a Debt ------------------------ 5
(i)
I Iv 1'7
3.12
3.13
3.14
3.15
3.16
3.17
City Credit Not Encumbered --------------------
Bonds a Special Obligation --------------------
Execution -------------------------------------
Change in Officials ---------------------------
Delivery -------------------------------------
Trans cript -------- -- -- ------- - -- --- ----.- -----
Part 4 Registration
Article 1 -
4.01
4.02
4.03
4.04
4.05
4.06
Article 2 -
4.07
4008
4.09
4.10
4011
4.12
Against Theft ---------------------------------
Registration ---------------------------------
Principal and Interest ------------------------
Principal Only --------------------------------
Transfer --------------------------------------
Deregistration --------------------------------
Reregistration --------------------------------
Against Delinquency ---------------------------
Endorsement -----------------------------------
Record ----------------------------------------
Setting Aside Money ---------------------------
Notice and Payment ---------------------------
Order of Payment ------------------------------
Failure to Present ---------------------------
Pledge of Revenues and Funds
5.01 Pledge of Revenues ----------------------------
5.02 First Lien on Revenues ------------------------
5003 Revenues a Trust Fund ------------------------
5004 Equal Parity ----------------------------------
5005 Ratio of Net Revenue Coverage -----------------
5.06 Construction Fund -----------------------------
laj Acquisition Costs ------------------------
b Construction Costs ------------------------
c Incidental Expenses ----------------------
d Bond Fund --------------------------------
5007 Revenue Fund ----------------------------------
5.08 Bond Fund -------------------------------------
5.09 Maintenance and Operation Funds ---------------
5.10 Surplus Funds ---------------------------------
5011 Investment of Surplus Funds -------------------
5012 Inactive Deposits -----------------------------
Part 5
Part 6
Covenants
6.01 General ---------------------------------------
6002 Acquire Project -------------------------------
6003 Operate Enterprise ----------------------------
6004 Good Repair -----------------------------------
6005 Preserve Security -----------------------------
6006 Collect Revenues -----------------------------
6007 Service Bonds ---------------------------------
6008 Pay Claims ------------------------------------
6009 Encumbrances ----------------------------------
6010 No Free Service -------------------------------
6.11 . No Competition -------------------------------
6012 Insurance -------------------------------------
6.13 Fidelity Bonds --------------------------------
6014 Engineers -------------------------------------
6015 Audit and Report ------------------------------
~~~ ~:;:~~: ~~~e~ay~;~~~--=============:==:::=:
(c) Insurance --------------------------------
(ii)
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Part 7
Part 8
Part 9
6.16
6.17
6.18
6.19
6.20
6021
~~ ~~~i~~:rs __=::::::::::::::::::::::::::::::::::
(f Rate Schedules ------------------------------
~~ ~~~~~~~la~:~~--::::=::=::::=::::=::::::::::::
Unconditional Obligation -------------------------
Performance of Essence ---------------------------
Recourse to Bond Law -----------------------------
Indenture is Covenant ---------------------------
Continuing Agreement -----------------------------
Period of Agreement ------------------------------
Additional and Refunding Bonds
7.01 Additional Bonds ---------------------------------
7.02 Default ------------------------------------------
7.03 Terms --------------------------------------------
7.04 Net Revenues -------------------------------------
7.05 Estimated Additional Net Income ------------------
l~l ~~~~i~~~~~n~on~::~:~~~--:::=::::::::::::::::::
c Construction --------------------------------
d Rate Increase --------------------------------
Refunding Bonds ----------------------------------
Subordinate Lien Bonds ---------------------------
Issuance of Refunding Bonds ----------------------
Amount of Refunding Bonds ------------------------
Independent Certified Public Accountant ----------
Independent Engineer -----------------------------
7.06
7.07
7.08
7009
7.10
7.11
Modifications
8001 Modifications ------------------------------------
8.02 Consent Binding ----------------------------------
8.03 Calling Bondholders' Meeting ---------------------
8.04 Council Discretion ----~--------------------------
8.05 Notice of Meeting --------------------------------
8.06 Mailing ------------------------------------------
8007 List of Owners -----------------------------------
8.08 Certificate of Deposit ---------------------------
8.09 Limit on Voting ----------------------------------
8.10 Attendance and Voting by Proxy -------------------
8.11 Quorum and Procedure -----------------------------
8.12 Officers -----------------------------------------
8013 Votes --------------------------------------------
8.14 Vote Required ------------------------------------
8015 Certificate of Notice Conclusive -----------------
8.16 Filing Certificate -------------------------------
Default
9.01 Event of Default ---------------------------------
9002 Principal ----------------------------------------
9.03 Interest ----------------------------------------
9.04 Covenants ----------------------------------------
9005 Bankruptcy ---------------------------------------
9.06 Acceleration -------------------------------------
9.07 Application of Bonds -----------------------------
9.08 Costs and Expenses -------------------------------
9.09 Interest on Undue Bonds --------------------------
9.10 Principal and Interest on Due Bonds --------------
9.11 Insufficient Funds -------------------------------
9.12 Refunding Defaulted Bonds ------------------------
(iii)
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Part 10 Remedies of Bondholders
10001 Bondholder Remedies --------------------------- 20
10002 Accounting ------------------------------------ 20
10003 Injunction ------------------------------------ 20
10004 Mandamus ------------------------------------ 20
10005 Cumulative ------------------------------------ 20
10006 Waiver ---------------------------------------- 20
10007 Delays ---------------------------------------- 20
10008 Enforcement ----------------------------------- 20
10009 status Quo ----------------------------------- 21
(iv)
Part 1
Definitions
1.01 General. As used in this Indenture, the terms herein have
the meanings provided in this Part.
1.02 Annual means the fiscal year of the City, which is from
July 1 to June 30>> both inclusive.
1.03 Bond or Bonds mean a Bond or Bonds herein authorized to
be issued.
1.04 Bondholder means the holder of a bearer bond, or the owner
of a registered bond.
1.05 Charges mean fees, tolls, rates and rentals prescribed by
the Council for connection to or the use of any of the services and
facilities, or other charges for the availability of the services or
facilities, of the Enterprise.
1.06
1.07
1.08
designated
Clerk means the Clerk of the City.
City means the City of Gilroy.
Council means the City Council of the City so created and
in its Charter.
1.09 Director of Finance means the head of the Department of
Finance of the City.
1.10 Director of Public Works means the head of the Department
of Public Works of the City.
1.11 Enterprise means the City water works and system and all
improvements which may hereafter be made thereto.
1.12 Gross Revenues mean all of the annual revenues of the
Enterprise.
1.13 Improve means reconstruct, replace, extend, repair, better,
equip, develop~ embellish or otherwise improve.
1.14 Indenture means this resolution.
1.15 Mayor means the Mayor of the City.
1.16 Net Revenues mean annual gross revenues of the Enterprise
after deducting all sums expended therefrom for all reasonable annual
administration, operation, maintenance and repair of the Enterprise,
including all incidental costs, fees and expenses properly charge-
ab18 thereto.
1.17 Project means the acquisition, construction and financing
of improvements to the Enterprise from the proceeds of the Bonds, and
all costs incidental to or connected therewith, including but not
limited to engineering, inspection~ legal and fiscal agent's fees,
costs of issuing the Bonds, and any working capital and bond~ltnterest
estimated to accrue..duringthe.construction and for a period not to
exceed twelve (12)~months, after comPletion of constructiOn.
- 2 -
1.18 Revenues mean all charges received for, and all other
income and receipts derived from the operation of the Enterprisej
including interest received on any invested moneys of the Enter-
prise>> and moneys deposited in the Revenue Fund and Bond Fund, and
any other fund to secure the Bonds or to provide for the payment
of them or the interest thereon9 and any funds, including contri-
butions>> from any source which the City may and shall legally apply
without creating an indebtedness.
Part 2
General Provisions
2.01 Bond Law. These proceedings have been had and the Bonds
herein authorized are being issued pursuant to the Gilroy Water
Revenue Bond Ordinance, being Ordinance No. 824, duly adopted by the
Council, July I, 1968, as amended, under authority of the home rule
provisions of the CityUs Freeholderus Charter, which Ordinance pro-
vides that the Revenue Bond Law of 1941, excepting certain provisions
thereof, shall apply to the issuance of water revenue bonds.
2.02 Conditions Precedent. All acts, conditions and things
required by law to exist, happen and be performed precedent to and
in the issuance of said bonds have existed, have happened and have
been performed in due time, form and manner as required by law, and
the City is now authorized, pursuant to each and every requirement
of law, to issue water revenue bonds in the manner and form as pro-
vided herein.
2.03 Public Necessity. The public interest, convenience and
necessity require, and the public economy and general welfare will
be served by, the acquisition, construction and financing of im-
provements to the CityUs water supply, storage and distribution works
and system, which works and system is herein called the Enterprise.
2.04 Project. The Project for which the Bonds are authorized
is the acquisition, construction and financing of improvements to
the Enterprise.
2.05 Single Transaction. The Enterprise, including the Project,
and the financing of each by revenue bonds, is one transaction, com-
plete in and of itself and the City will be able to meet all of the
obligations which are herein properly incurred wholly and solely
from the Revenues of the Enterprise including the Project.
2.06 Separate Fund. The City, during the term of the Bonds,
will continue to operate the Enterprise as a separate and distinct
agency, and will continue to maintain a separate and distinct spe-
cial fund for the Enterprise into which all Revenues to be received
are to be deposited, and from which all disbursements herein or in
Ord~.nance No. 824, as amended and supplemented, relating to the En-
terprise, are to be paid during the term of the Bonds.
2.07 Complete Pro~ect. It is hereby found and determined that
the City has made all necessary arrangements for the financing of the
Project. Accordingly, it is hereby found and determined that:
(a) Adequate Funds. The Project can be accomplished as
a complete system from the funds available from the proceedS
of the sale of the Bonds;
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(b) Adequate Rateso Charges have been fixed, levied
and collected for the services, facilities and water to be
furnished by the Enterprise, and
(c) Bond Payment 0 The charges shall constitute the
revenues of the Enterprise pledged to service the revenue
bonds as provided hereino
2008 Legality 0 If any section, subsection, sentence, clause
or phrase of this Indenture be for any reason held to be unconsti-
tutional9 such decision shall not affect the validity of the remain-
ing portions hereofo The Council hereby declares that it would have
passed this Indenture and each section, subsection, sentence, clause
or phrase hereof irrespective of the fact that anyone or more sec-
tions, subsections, sentences, clauses or phrases be declared to be
unconstitutional 0
Part 3
The Bonds
3001 Bond Issue. The Bonds shall be known as Water Revenue
Bonds of 1968, herein called Bondso They shall either be 350 in
number of the denomination of $1,000 each, numbered consecutively
from I to 350, inclusive, or shall be 70 in number of the denomina-
tion of $5,000 each, numbered consecutively 1 to 70, inclusive, and
shall be payable in numerical order, consecutively, commencing with
the lowest number, the denominations of which shall be determined
from the accepted bido Said Bonds shall be dated November 1,1968,
shall be payable on the 1st day of July of each year in the years
and amounts.9 and of the numbers, set forth in Exhibit "A" hereto
attached and by reference made a part hereofo
3002 The Bondso The Bonds and coupons shall be in form sub-
stantially as provided in Exhibit "BIl hereto attached and by ref-
erence made a part hereofo
3003 Not Callableo None of the Bonds shall be subject to call
prior to their respective fixed dates of maturityo
3004 Purchase of Bondso The City may, from time to time, pur-
chase any or all of the Bonds at prices offered 0 All Bonds pur-
chased shall be cancelled and shall not again be reissuedo
3005 Interest and Couponso The Bonds shall bear interest from
their date to their respective dates of maturity.9 at the rate or
rates provided in the accepted bid for the purchase of the Bonds,
but not to exceed six percent (6%) per annum 0 Said interest shall
be payable January 1.9 1969, and semiannually thereafter on the 1st
days of July and January in each yearo Attached to each Bond shall
be jnterest coupons payable at the times the respective interest
payments thereon become dueo
3006 Interest in Bid. Bidders for the purchase of the Bonds
must specify the rate or rates of interest which the Bonds shall
bear 0 Bidders may bid different rates of interest irrespective of
the maturities of the Bondso The interest rates stated in the bid
may be in multiples of any fraction of one percento Bidders shall
not be permitted to cause the interest for a given period to be split
and represented by more than one coupon 0
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3.07 Interest After Maturit~. If, upon presentation at ma-
turitY5J payment 01' the Bonds or 0 any interest coupons thereon is
not made in full accordance with the terms of this Indenture, said
Bonds or coupons, or both, shall continue to bear interest at the
rate stated in the Bond until paid in full.
3.08 Negotiable Instruments. The Bonds are negotiable in-
struments and title thereto, unless registered, shall pass by phys-
ical delivery thereof. The holders of the Bonds shall have all of
the rights possessed by holders of negotiable instruments payable
to bearer.
3.09 Where Bonds Payable. The principal and interest on the
Bonds shall be payable in lawful money of the United States of America
at the main office of the Bank of America National Trust and Savings
Association, 300 Montgomery Street, San Francisco, California, the
Paying Agent of the City, or at any other bank or trust company des-
ignated by said Paying Agent as a correspondent in the Cities of
New York, New York, and/or Chicago, Illinois.
3.10 Source of Payment. The Bonds shall recite that they are is-
sued pursuant to the Bond Law and that they are payable solely from
the Revenues.
3.11 Bonds Not a Debt. The Bonds and interest thereon shall
not be a debt of the City, nor a charge, lien or encumbrance, legal
or equitable, upon any of its property or upon any of its income or
receipts or revenues, other than the Revenues of the Enterprise
which have been pledged to the payment thereof as herein provided.
3.12 City Credit Not Encumbered. No recourse shall be had for
the payment of the Bonds, or of the interest thereon, or any part
thereof, against the General Fund of the City, nor shall its credit
or taxing power be deemed to be pledged thereto, and the holders of
the Bonds, or the coupons thereon, shall never have the right to
compel the exercise of the taxing power of the City or the forfeiture
of any of its property for the payment of the Bonds or the interest
thereon.
3.13 Bonds a Special Obligation. The Bonds of this issue and
all additional bonds which may be issued in accordance with the
terms and conditions hereof shall be a special obligation of the
City and shall be payable from and secured by a lien upon the por-
tions of the Gross Revenues of the Enterprise as herein provided.
3.14 Execution. When the Bonds have been prepared in accord-
ance with this Indenture, they shall be executed on behalf of the
City and under its official seal by the Mayor by his printed", engraved
or l-:thographed facsimile signature and by the manual signature of
the City Clerk who shall affix thereto the official seal of the City,
and the interest coupons shall be executed and authenticated by the
printed.\> engraved or lithographed facsimile signature of the Director
of FinanceJ who by such signatures shall ratify the execution of the
same. The seal of the Clty L:.1.Y be affixed to the Bonds bv prlnted)
11thographed or other reproduction ~hereof.
3.15 Change in Officials. If any officer whose signature or
countersignature appears on the bonds or coupons ceases to be such
officer before the delivery of the bonds to the purchaser, his sig-
nature or countersignature is nevertheless as valid and sufficient
for all purposes as if he had remained in office.
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3.16 Delivery. The Bonds shall be delivered to the purchasers
thereof. The City shall deliver the Bonds upon receipt of the pur-
chase price and shall credit the proceeds to the special fund and ac-
count for the payment of the cost of the Project, 'as provided herein,
but the purchasers. shall not be required to see to the proper ap-
plication thereof.
3.17 Transcript. The Clerk is hereby authorized to prepare and
furnish to the purchasers of the Bonds issued hereunder and attorneys
examining the same a complete set of certified copies of all ordinances,
resolutions and documents of the City relating to the Project and the
Enterprise and to the issuance of Bonds and of all other proceedings
and records of the City Council showing the right, power and authority
to issue the Bonds and to provide the security therefor, and such
certified copies and certificates shall be deemed representations of
the City Council as to all facts stated therein.
Part 4
Registration
Against Theft
Article I
4.01 Registration. Any Bond is subject to registration either
as to principal and interest or as to principal only upon written re-
quest of the bondholder and presentation of the Bond to the Paying
Agent.
4.02 Principal and Interest. Upon presentation and request for
registration as to principal and interest, the Paying Agent shall cut
off the coupons and destroy them. He shall maintain a book in which
he shall enter the numbers of all registered Bonds and the names and
addresses of the owners of registered Bonds. Until such registration
is cancelled as herein provided, the interest and principal thereof
shall be payable only to the registered owner. There shall be pro-
vided on the back of each Bond a suitable blank showing the name and
address of the registered owner, the date of registration or transferJ
the type of registration and the signature of the Paying Agent.
4.03 Principal Only. Upon presentation and request for regis-
tration as to principal only, a notation shall be made to that effect
in the registration book and on the Bond. The coupons shall not be
detached and the interest on such Bonds shall be paid upon presenta-
tion of such coupons in the same manner as unregistered Bonds. Prin-
cipal, however, shall be paid only to the registered owner upon pres-
entation of the Bond.
4.04 Transfer. A registered Bond may only be transferred by
the registered owner in writing, in person, or by attorney duly author-
ized, on presentation of the Bond to the Paying Agent and by his en-
dorsing thereon and in his record the fact of the transfer.
4.05 Deregistration. The registration of any unmatured Bond
may be cancelled upon written request of the registered owner. Upon
receipt of such request, the Paying Agent shall cancel the regis-
tration in the bond register and on the back of the Bond, reattach
all unmatured coupons to the Bond, and deliver the Bond and attached
coupons to the owner. Until such Bond is reregistered, the principal
thereof shall be payable to bearer, and the interest shall again be
paid upon surrender of proper coupons. The cost of reprinting the
coupons,shall be paid by the person requesting the deregistration.
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4.06 Reregistration. Deregistered Bonds are subject to reregis-
tration in the same manner as previously unregistered Bonds.
Article 2
Against Delinquency
4.07 Endorsement. When a bond or interest coupon is presented
to the Paying Agent for payment and is not paid for want of funds,
he shall endorse upon it "Not paid for want of funds," the date of
presentation, and a serial number indicating the order of payment,
and shall sign or stamp his name thereon, and give it a serial number.
4.08 Record. The Paying Agent shall keep a book or other record
in which shall be entered the number and series of the bonds and the
date and serial number of their registration, and, if known, the name
and address of its owner or other person who presented them.
4.09 Setting Aside Money. Upon receipt of the first money in
the treasury applicable to their payment, there shall be set apart
the amount necessary to pay the registered bonds and coupons.
4.10 Notice and Payment. The Paying Agent shall give notice
by registered mail to the owner or holder of the regi~tered bonds
and coupons, at the address last entered or to the person who presented
them, stating that he is ready to pay them.
4.11 Order of Payment. The bonds and coupons shall be paid in
the order of their serial numbers.
4.12 Failure to Present. If the registered bonds and coupons
are not presented for payment within 30 days from mailing of the
notice, or if the owner has failed to provide his name and address,
or the person who presented them is not known, the Paying Agent shall
apply the fund set aside to the payment of the unpaid registered bonds
and coupons next in order, until all registered bonds and coupons have
been paid.
Part 5
Pledge of Revenues and Funds
5.01 Pledge of Revenues. All of the Revenues are hereby pledged
to pay the principal of and interest on the Bonds, and. to provide:
(a) a Bond Fund,
(b) operation and maintenance funds, and
(c) surplus ~unds.
5.02 First Lien on Revenues. The sums required to meet the
payruent of interest on and principal of the Bonds shall be secured
by a first and prior lien upon and pledge of all of the Grass Revenues
of the Enterprise, including the Gross Revenues of improvements, ex-
tensions and additions thereto, together with any interest earned
thereon, and such Revenues may only be used as provided herein.
5.03 Revenues a Trust Fund. The Revenues shall constitute a
trust fund for the security and payment of the Bonds. After the
payment of the principal and interest on the Bonds, there shall be
paid from the Revenues such sums as may be required to pay the costs
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of necessary and reasonable maintenance and operation of the Enter-
prise, which costs shall include the reasonable expenses of manage-
meht, operatioh,repair and other expenses necessary to maintain and
preserve the Enterprise in good repa+r and working order.
5.04 Equal Parity. All of the Bonds shall be equally and ratably
secured without preference or priority by reason of number, date, date
of sale, or of execution or of delivery of the Bonds, by said lien
upon the Revenues of the Enterprise in accordance with the Bond Law
and this Indenture. Said lien shall be prior and paramount to any
and all other claims and obligations that have arisen or may arise
or be incurred against the Revenues, except as herein provided.
5.05 Ratio of Net Revenue Coverage. The City covenants that it
will at all times establish, maintain and colledt Charges s~fficient,
with other Revenues received, to provide Net Re~enues equal to not
less than 1.30 times the aggregate amount of the principal of and
interest on the Bonds which shall become due and payable within the
next succeeding twelve (12) months.
,
5.06 Construction Fund. There is hereby created a special fund
to be designated 196e Water Construction Fund, herein called Con-
struction Fund, which shall be maintained by the Director of Finance
as a separate account, distinct from all other funds of the City. The
proceeds of the Bonds, or any part thereof, other than
accrued intere~t which shall be deposited in the Bond Fund, sold by
the City, shall be deposited in said Fund and shall be expended as
follows~
(a) Acquisition Costs. The cost of acquiring any lands
and easements for the Project for which contracts have been or
shall be made, or any interlocutory decree in eminent domain had
and taken, shall be paid to the persons entitled thereto.
(b) Construction Costs. The costs of constructing the
Project under contracts for construction work shall be paid to
persons entitled thereto, on certificates of the Engineer as
to the work completed substantially in accordance with the
plans and specifications adopted by the Council therefor and
as said certificates are approved by it.
(c) Incidental Expenses. The incidental expenses of said
proceedings, consisting of all engineering, inspection, legal
and fiscal fees and the costs of authorizing and issuing the
Bonds as approved by the Council shall be paid to those persons
entitled thereto or to the appropriate City fund to be reimbursed
therefor.
(d) Bond Fund. Any remaining balance may be transferred
to the Bond Fund.
Interest on the Bonds from their date to date of delivery shall
be deposited in the Bond Fund.
5.07 Revenue Fund. There is hereby created a special fund to be
designated Water Revenue Fund, herein called Revenue Fund, which
shall be maintained and operated by the Director of Finance as a
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separate account, distinct from all other funds of the City# into
which all Revenues shall be paid immediately following their receipt.
5.08 Bond Fund. There is hereby created a special funddesig-
nated 1968 Water Revenue Bond Fund, herein called Bond Fund, which
shall be maintained and operated by the Director of Finance as a sepa-
rate account distinct from all other funds of the City# to cover the
payment of the principal of and interest on the Bonds.
Dtlrlng the perioq that any of the principal of and interest
on the Bonds are unpaid and outstanding, the moneys in the Revenue
Fund shall be paid and disbursed as follows:
(a) On the first day of each calendar month, beginning
with the date of the bonds, the Director of Finance shall pay
into the Bond Fund an equal aliquot part of the amount neces-
sary to pay the next maturing installment of interest on the
Bonds.
(b) On the first day of each calendar month, beginning
with the date of the Bonds, the Director of Finance shall pay
into the Bond Fund an equal aliquot part of the " : ,',
amount necessary to pay the next maturing installment of prin-
cipal of the Bonds.
Any amount required to be set aside, transferred to and placed
in the Bond Fund may be prepaid in whole or in part by being earlier
set aside, transferred to and placed in the Bond Fund, and in that
event the monthly transfer which has been so prepaid need not be made
at the time appointed therefor. In any event# all sums required for
the payment thereof must be in the Bond Fund at least one month prior
to the due date of the maturity of any bonds and interest.
All moneys in this Fund shall be used and withdrawn solely for
the purpose of paying the principal of and interest on the Bonds as
the same shall become due and pa~table.. After full payment of the
Bonds and interest any balance in the Fund shall be returned to the
Revenue Fund.
5..09 Maintenance and Operation Funds.. From the moneys remain-
ing in the Revenue Fund, the Director of Finance shall pay the reason-
able expense of operation and maintenance of the Enterprise..
5.10 Surplus Funds.. The funds remaining in the Revenue Fund
after the monthly and other transfers therefrom to the Bond Fund and
payment of costs of management, maintenance, operation and repair of
the Enterpri,se, shall constitute surplus funds and be used as follows ~
(a) To pay the cost of unusual or ex,traordinary mainte'J
nance of or repair to the Enterprise;
(b) To improve the Enterprise;
(c) To pa.y the principal of and interest on the Bonds;
(d) To pay the principal, interest and premiums of Bonds
purchased in the open market at prices offered;
(e) To pay the principal and interest of general obliga-
tion water bonds heretofore or hereafter issued for water pur'-
poses;
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(f) To pay the principal and interest of water revenue
bonds which may hereafter be issued, of equal parity or sub-
ordinate as to the lien thereof to the lien of the Bonds, and
the premium upon any of such bonds called or purchased prior
to maturity; and
(g) For any other lawful purpose.
No moneys shall be otherwise paid or transferred therefrom un-
less all of the requirements of this Indenture then required to be
performed have been fully accomplished.
5.11 Investment of Surplus Funds. All moneys that are not
required to be used within such time may be invested in authorized
negotiable direct obligations of the United States of America, matur-
ing on a date or dates prior to the need for such moneys.
5.12 Inactive Deposits. Any moneys not then needed may be
deposited as inactive funds of the City.
Part 6
Covenants
6.01 General. For the protection and security of the Bonds,
the City covenants and agrees to and with the holders of the Bonds
as provided in this Part.
6.02 Acquire Project. It will commence and complete the ac-
quisition, construction and improvement of the Project with all
practical dispatch and in a sound and economical manner.
6.03 Operate Enterprise. It will operate the Enterprise in
an efficient and economical manner and will prescribe, revise and
collect such fees, tolls, rates and other charges for its services
and facilities that they may be furnished to the inhabitants of the
City and other users at the lowest possible cost consistent with
sound economy and prudent management.
6.04 Good Repair. It will operate, maintain, preserve and
keep or cause to be operated, maintained, preserved and kept, the
Enterprise and every part and parcel thereof, in good repair, work-
ing order and condition.
6.05 Preserve Security. It will preserve and protect the
security of the Bonds and the rights of the holders thereof, and
warrant and defend such rights against all claims and demands of
all persons whomsoever.
6.06 Collect Revenues. It will collect and hold in trust the
revenues or other funds pledged to the payment of the Bonds for the
benefit of the holders of the Bonds and apply such revenues or other
funds only as provided by this Indenture.
6.07 Service Bonds. It will pay and cause to be paid punc-
tually the principal of the Bonds and the interest thereon on the
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date or dates and at the place or places and in the manner mention-
ed in the Bonds and in the coupons thereto appertaining and in ac-
cordance with this Indenture.
6.08 Pay Claims. It will pay and discharge, or cause to be
paid and discharged, any and all lawful claims for labor, materials
and supplies, which, if unpaid~ might by law become a lien or charge
upon the Revenues of the Enterprise or any part of said Revenues,
or any funds thereof in its hands, prior to or superior to the lien
of the Bonds, or which might impair the security of the Bonds, to
the end that the priority and security of the Bonds shall be fully
preserved and protectedo
6.09 Encumbrances. It will not sell or dispose of any of the
Enterprise other than as herein provided, or mortgage or otherwise
encumber any of the Enterpri&e, or any of the Revenues thereof, nor
enter into any lease or agreement which would impair or impede
operation or any part thereof necessary to secure adequate Revenues
for the payment of the principal of and interest on the Bonds, or
which otherwise would impair or impede the rights of the holders of
the Bonds with respect to such Revenues or the operation thereof
without proviSion for the retirement of the Bonds of this issue then
outstanding from the proceeds thereof; provided, however, that ma-
terial and equipment worn out or not needed for the efficient and
proper operation of the Enterprise may be sold without the consent
of the Bondholders if the proceeds thereof are applied to the im-
provement or extension of the Enterprise or to the retirement of the
Bonds.
6.10 No Free Service. It will not permit any part of the
Enterprise to be used or taken advantage of free of charge by any
person, firm or corporation or by the State of California or the
United States of America, or by any public corporation, political
subdivision, city, county, district or agency of either, including
this City.
6.11 No Competition 0 It will not acquire, construct, operate
or maintain, and not permit any other public or private corporation
or agency or any persons whatsoever to acquire, construct, operate
or maintain within its boundaries or within any part thereof, any
system or utility competitive with the Enterprise.
6.12 Insurance. It will procure and keep in force in-
surance on all buildings and structures of the Enterprise and the
machinery and equipment therein against loss or damage by fire,
flood, windstorm or earthquake or other causes customarily insured
against in connection with similar enterprises with an insurer or
insurers in good standing and in such amounts as may be required
adequately to protect the City and the holders of the Bonds from
loss due to any such casualty, and in the event of such loss, the
proceeds shall be used to repair or restore the Enterprise for the
payment in full of all Bonds issued hereunder.
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6.13 Fidelity Bonds. It will procure suitable fidelity bonds
covering all of its officers.and other employees charged with the
operation of the Enterprise and the collection and disbursement of
Revenues therefrom.
6014 Engineers 0 It will employ consulting engineers of ac-
knowledged reputation9 skill and experience in the construction and
operation of the Enterprise or any unusual or extraordinary items of
extensions or betterments as shall be required from time to time, all
reports, estimates and recommendations of such consulting engineers
to be filed with the Clerk and furnished to the purchasers of the Bonds
issued hereunder if requestedo
6015 Audit and Reporto It will employ a certified pUblic ac-
countant who shall prepare and file with the Director of Finance and
with the California Districts Securities Commission if the bonds
shall at any time be certified by it9 and make available to the pur-
chaser of the bonds if requested, annually within one hundred twenty
(~20) days after the close Of each fiscal year on June 30th9 commenc-
ing in the year 19699 an annual audit for the preceding year which
shall includeg
(a) Balance Sheet 0 A balance sheet including balances
of all funds herein created.
(b) Revenue and Payments. A statement in detail of the
cash receipts and disbursements of the income and expenses of
the Enterprise.
(c) Insurance. A statement as to the insurance carried
by it9 including a brief description of each poliCY as to its
coverage and name of company issuing it.
(d) Customers. The number of customers classified by
rate or charge for service groups9 the number of properties
connected to the Enterprise and the number of applications for
services on hand but not connected.
(e) Billing. The annual billings and the average monthly
billing per usero
(f) Rate Scheduleso The schedules of the rates and
charges prescribed by the rate ordinance then in effect.
(g) Recapitulation.. A recapitulation of funds and ac-
counts created by this Indenture into which are put moneys
derived from the operation of the Enterprise and from the sale
of the Bonds9 which shall show balances at the beginning of the
period9 deposits and withdrawals made during the period and
balances at the end of the period; and also monthly deposit
requirements for funds during the next succeeding fiscal period.
(h) Comments. Comments of the accountant relative to the
fulfillment of the provisions of this Indenture and the manner
in which the Enterprise has been operated9 and his recommendations
for improving the operation. of the Enterprise.
6.16 Unconditional Obligation. Except only as provided herein
for alteration of the Bonds or this Indentures nothing in this In-
denture or in the Bonds or in the coupons contained shall affect or
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impair the obligation of the City which is absolute and unconditional~
to pay the principal of and interest on the Bonds to the respective
holders of the Bonds and coupons at the respective dates of maturity,
or upon prior redemption~ as herein provided, and out of the Revenues
herein pledged for such payment, or affect or impair the right of
action, which is also absolute and unconditional, of such holders to
institute suit to enforce such payment by virtue of the contract em-
bodied in the Bonds and coupons.
6.17 Performance of Essence. The performance of the duties
prescribed in this Indenture and in the Bond Law by the City or its
proper officers, agents or employees, is of the essence of City's
contract with the Bondholders.
6.18 Recourse to Bond Law. Each taker and subsequent. holder of
the Bonds and attached or detached coupons has recourse to all of the
provisions of this Indenture and of the Bond Law and is bound by their
terms.
6.19 Indenture is Covenant. Each and all of the termscof this
Indenture shall be and constitute a covenant on the part of the City
to and with each and every Bondholder from the time the Bonds are
issued hereunder.
6.20 Continuing Agreement. This Indenture and the covenants,
agreements, provisions and conditions herein contained, constitutes
a continuing agreement with the holders of all of the Bonds issued or
to be issued hereunder and then outstanding, to secure the full and
final'payment of the principal of anG premiums, if any, and the in-
terest on all bonds which may from time to time be executed and "de-
livered hereunder. .
6.21 Period of. Agreement. Whenever all of the Bonds and all
interest then accrued thereon shall have been fully paid and dis-
charged, the agreements in this Indenture contained shall cease and
terminate, and the City shall be under no further obligation to apply
the Revenues of the Enterp~ise as herein required, or otherwise to
do or perform any of the covenants, conditions or agreements in this
Indenture contained.
Part 7
Additional and Refunding Bonds
7.01 Additional Bonds. No additional bonds shall be issued or
other obligations incurred which shall be payable from the Revenues
and constitute a lien thereon which shall have priority over the
Bonds of this issue. The City may issue additional bonds payable as
to principal and interest from the Revenues on a parity with the
Bonds for the purpose of improving the Enterprise or for acquiring,
copstructihg or improving additions, extensions or betterments to
the Enterprise or for the purpose of refunding any outstanding bonds
issued for the Enterprise or for any combination of such purposes and
subject to the conditions provided in this Part.
7.02 Default. The City shall not at the time of the issuance
of such additional bonds be in default hereunder unless the bonds are
for refunding such defaulted obligation.
7.03 Terms. Such additional bonds shall mature on January 1
or July 1 in each year; the final maturity date of the additional bonds
shall be not earlier than the final maturity date of any bonds then
- 13 =
outstanding; and fixed serial maturities or minimum annual sinking
fund payments or any combination thereof shall be established in
amounts sufficient to provide for the payment and retirement of all
such additional bonds on or before their respective maturity dates.
7.04 Net Revenues. The annual net revenues of the Enterprise
for the latest fiscal or bond year prior to the issuance of such ad-
ditional bonds, as shown by an audit~ certificate or opinion of an
independent certified public accountant employed by the City, plus
the additional net revenues, estimated as provided in Section 7.05,
shall have produced the following sums~
(a) One and thirty-hundredths (1.30) times
(i) the average annual amount of the principal of
and interest on the then outstanding bonds of this issue
to accrue during their term, plus
(ii) the average annual amount of the principal of
and interest on the additional bonds then proposed to be
issued to accrue during their proposed term~ plus
(iii) the average annual amount of any minimum annual
sinking funds required to be transferred under the terms
of the Indenture providing for the issuance of said pro-
posed additional bonds to accrue during their proposed
term; or
(b) One and thirty-hundredths (1.30) times
(i) the average annual amount computed under sub-
division (i) of part (a) of this Section~ plus
(ii) the average annual amount of that part of the
sums provided in subdivisions (ii) and (iii) of part (a)
of this Section which will accrue during the term of the
then outstanding Bonds of this issue, whichever shall be
the lesser amount.
7.05 Estimated Additional Net Income. The Net Revenues estimated
as provided in Section 7.04 may be revised and enlarged in a written
report of an independent engineer or the City Engineer~ as approved
by a certificate or opinion of an independent certified public ac-
countant, to include any or all of the following~
(a) Additional Connections. The Net Revenues of the ad-
ditional number of users connected to the Enterprise at the time
of the issuance of said report, had such users been connected
to the Enterprise for the entire fiscal or bond year used for
the audit, certificate or opinion referred to in Section 7.04.
(b) Acquisi.tions. The Net Revenues to be derived from
the users connected to a sewer system or facilities to be ac-
quired by the City from the proceeds of the additional bonds.
(c) Construction. Seventy-five percent (75%) of the ad-
ditional Net Revenues estimated to be produced by the con-
struction of the project for which additional bonds are to be
issued, or by construction from other available revenues, in
any twelve (12) month period out of the twenty-four (24) months
next succeeding. the completion of construction.
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(d) Rate Increase. Seventy-five percent (75%) of the
additional revenues estimated to be derived from any increase
in charges made by the City which have not been reflected in
the audit, certificate or opinion for the full fiscal or bond
year covered therein.
7.06 Refunding Bonds. In the event and to the extent that ad-
ditional bonds are to be issued for the purpose of refunding and re-
tiring any Bonds of this issue, for the purpose of the calculations
required under this Part, the amounts of annual principal, interest
and minimum sinking funds required to have been paid on the bonds to
be refunded, as provided in Section 7.01, need not be taken into con-
sideration in computing the coverage for such additional bonds.
7.07 Subordinate Lien Bonds. Nothing in this Indenture shall
be deemed to limit or restrict the power of the City to issue such
additional bonds payable from but inferior as to the lien of any of
the then outstanding Bonds on the Revenues without compliance with
the provisions of this Part or of any other provision of this In-
denture.
7.08 Issuance of Refunding Bonds. The Council may, with the
consent of the holder of any noncallable Bond, and without the con-
sent of the holder of any callable Bond, refund said Bond as provided
by law. The refunding bond shall be on a parity of lien with the re-
funded Bond, providing that the principal and the installments of in-
terest thereof shall not increase any annual installment of principal
and interest of the Bonds more than the minimum coverage ratio pro-
vided herein. Nothing herein shall prohibit the Council from issuing
such refunding bonds subordinate as to the lien of the Bonds and of
bonds subsequently issued and payable from the same Revenue. For
the purpose of curing a default or threatened default, the Council
may issue additional bonds of this issue and exchange such bonds for
maturing or matured Bonds or sell them and use the proceeds thereof
to pay said Bonds, provided that the new bonds shall be'made to ma-
ture after the maturity of the Bonds and not later than forty (40)
years from the date of the Bonds.
7.09 Amount of Refunding Bonds. Funding or refunding bonds
may be issued in a principal amount sufficient to provide funds for
the payment of all of the following:
(a) All bonds to be funded or refunded by them.
(b) All expenses incident to the calling, retiring, or
paying of the outstanding bonds and the issuance of the funding
or refunding bonds, including the difference in amount between
the par value of the funding or refunding bonds and any amount
less than that for which the funding or refunding bonds may be
sold.
(c) Interest upon the funding or refunding bonds from
the date of sale to the date of payment of the bonds to be
funded or refunded out of the proceeds of the sale or the
date upon which the bonds to be funded or refunded will be
paid pursuant to the call or an agreement with the holders of
such bonds.
(d) Any premium necessary in the calling or retiring of
the outstanding bonds and the interest accruing on them to the
date of the call or retirement.
- 15 -
7010 Independent Certified Public Accountant means any regis-
tered or licensed certified public accountant or firm of such certi-
fied pUblic accountants duly licensed or registered or entitled to
practice and practicing as such under the laws of the State of Cali-
fornia, appointed and paid by the City, and who>> or each of whom~
(a) is in fact independent, and not under domination of
the City;
(b) does not have any substantial interest>> direct or
indirect, with the City;
(c) is not connected with the City as an officer or em-
ployee of the City, but who may be regularly retained to make
annual or other similar audits of the books of the Cityo
7011 Independent Engineer means any individual or firm of en-
gineers having special knowledge and experience in the utility field,
appointed and paid for by the City and who, or each of whom~
(a) is in fact independent and not under domination of
the City;
(b) does not have any substantial interest, direct or
indirect, with the City;
(c) is not connected with the City as an officer or em-
ployee of the City, but who may be regularly retained to make
annual or other periodic reports to the City 0
Part 8
Modifications
8.01 Modifications 0 From and after the sale and delivery of
any of the Bonds, no amendment, alteration or modification of the
Bonds or of the coupons appertaining thereto or of this Indenture,
which will impair, impede or lessen the rights of the holders of
the Bonds or the coupons appertaining thereto then outstanding shall
be made without the prior written consent, or alternatively, the
prior consent given at a Bondholdersi meeting, of the holders of at
least sixty-six and two-thirds percent (66-2/3%) of the aggregate
principal amount of affected Bonds then outstanding, unless the
amendment, alteration or modification be as herein authorizedo
8.02 Consent Blndingo Any amendment, alteration or modifi-
cation which shall have received the consent of the holders of the
percentage of said outstanding Bonds as provided in Section 8001 of
this Part shall 'be binding on the holders of all of the Bonds and
coupons appertaining thereto, either attached to or detached from
the Bondso If any alteration, amendment or modification shall affect
less than all outstanding Bonds of this issue, then the provisions
of Section 8001 of this Part shall apply only to the Bonds affected
by the amendment>> alteration or modificationo
8003 Calling Bondholdersi Meeting 0 If the Council shall desire
or shall be required to obtain the consent of the bondholders to a
proposed action>> it may adopt a resolution calling a meeting of the
bondholders affected by the proposed action for the purpose of con-
sidering the action, the consent to which is desired or requiredo
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8004 Council Discretiono The place, date and hour of holding
the meeting and the date or dates of publishing and mailing notice
shall be determined by the Council in its discretiono
8005 Notice of Meetingo Notice specifying the purpose, place~
date and hour of the meeting shall be given by mail and by publica-
tion at least once not less than thirty (30) nor more than sixty (60)
days prior thereto in one or more financial papers published in San
Francisco or New Yorko The notice shall set forth the nature of the
proposed action, consent to which is desired or requiredo
8.06 Mailing 0 The Director of Finance shall mail notice by
registered mail to the last-known holders of bearer Bonds, as shown
by the records in his office, and to the registered owners of any
registered Bonds, at their addresses shown on the bond registry books 0
8007 List of Ownerso The Director of Finance shall prepare and
deliver to the chairman of the meeting a list of the names and addresses
of the registered owners of the Bonds as shown on the bond registry
books, and, to the extent shown by him, a list of the names and ad-
dresses of the owners of bearer Bonds, together with a statement of
the maturities, series and numbers of the Bonds held and deposited by
each, and no bondholder shall be entitled to vote at the meeting un-
less his name appears upon the lists or unless, at the meeting, he
shall present his Bond or Bonds or a certificate of deposit thereof 0
8008 Certificate of Deposito A holder of bearer Bonds may de-
posit his Bonds with a bank, trust company, investment banker, bond
dealer or broker within or without the state, and obtain from the
depositary a certificate of deposit which shall constitute proof of
ownership and entitle the depositor named therein to vote upon filing
it with the Director of Finance who shall add it to the list of ownerso
The Director of Finance may designate a depositary where the Bonds
may be deposited, which shall be an agency for that purpose.
8009 Limit on Votingo No bondholder shall be permitted to vote
with respect to a larger aggregate principal amount of Bonds than is
set against his name on the list, unless he shall produce the addi-
tional Bonds upon which he desires to vote or a certificate of deposito
8010 Attendance and Voting by Prox~o Attendance and voting by
a bondholder at the meeting may be by proxyo An owner of registered
Bonds may, by an instrument in writing under his hand, appoint any
person as his proxy to vote at the meeting for him, and that instrument
when presented at the meeting shall be sufficient to entitle that
person to vote as the proxy of the registered owner. Any person may
vote as the proxy of the owner of a bearer Bond on presentation of
the Bond or certificate of deposit thereof and an instrument in writ-
ing under the hand of the bondholder appointing the person as his
proxy to vote at the meeting for him, or if the instrument in writing
has been delivered to the agency designated by the City at the time
the Bond was delivered to the agency as provided for in Section 8008
of this Part and the personDs name appears on the list delivered by
the Director of Finance to the chairman of the meetlng, the certificate
of deposit may verify him as the proxy of the owner of the bearer
bond 0
8011 Quorum and Procedureo A representation of at least sixty-
six and two-thirds percent (66-2/3%) in aggregate princlpal amount of
the Bonds affected by the proposed action and then outstanding shall
- 17 -
be necessary to constitute a quorum at the meeting of bondholdersJ
but less than a quorum may adjourn the meeting~ from time to time,
and the meeting may be held as so adjourned without further notice,
whether the adjournment shall have been by a quorum or less than a
quorum.
8.12 Officers. The Council shall, by an instrument in writing,
appoint a temporary chairman of the meeting, and the meeting shall
be organized by the election of a permanent chairman and a secretary.
8.13 Votes. At the meeting, each bondholder shall be entitled
to one vote for every $1,000 principal amount of Bonds with respect
to which he shall be entitled to vote, and the vote may be given in
person or by proxy. The Council by its duly authorized representative,
may attend the meeting of the bondholders, but shall not be required to
do so.
8.14 Vote Required. At the meeting, there shall be submitted
for the consideration and action of the bondholders a statement of
proposed action, consent to which is desired or required, and if the
action shall be consented to and approved by the bondholders in person
or by proxy holding at least sixty-six and two-thirds percent (66-2/3%)
of the aggregate principal amount of the Bonds affected by the pro-
posed action and then outstanding, the chairman and the secretary of
the meeting shall so certify in writing to the Council, and the certi-
ficate shall constitute complete evidence of the consent of the bond-
holders.
8.15 Certificate of Notice Conclusive. The actual receipt by a
bondholder of the notice required to be given by Section 8.05 of this
Part shall not be a condition precedent to the undertaking, notice of
which is required to be given, and failure to receive notice shall not
affect the validity of the proceedings thereat or prevent the notice
from having the effect intended by the giving of notice, provided
that notice has been published and has also been mailed to bondholders
to the extent known to the Director of Finance. No irregularity in the
form of the notice shall affect its validity provided notice has been
given. A certificate signed by the chairman and secretary of the
meeting shall be conclusive evidence and the only competent evidence
of the matters stated in the certificate relating to the proceedings
taken at the meeting, as against all parties and it shall not be open
to a bondholder to show that he failed to receive notice.
8.16 Filing Certificate. The certificate shall be filed in the
office of the Director of Finance and shall be kept on file so long
as the Bonds and the interest thereon are outstanding and unpaid. A
duplicate original, if there is one, and, if notJ then a reproduced
copy thereof including the signatures thereon, shall be filed with
the Clerk who shall likewise keep it filed with the papers of the
proceedings authorizing the issuance of the affected Bonds.
Part 9
Default
9.01 Event of Default. One or more of the events provided in
this Part shall constitute an event of default.
9.02 Principal. A default in the due and punctual payment of
the principal of a Bond when and as the same shall become due and
payable, whether at maturity as therein expressed, by proceedings for
redemptionJ by declaration or otherwise.
- 18 -
9.03 Interest. A default in the due and punctual payment of
an installment of interest of a Bond when and as the interest in-
stallment shall become due and payable.
9.04 Covenants. A default in the observation of any of the
covenants, agreements or conditions on its part herein or in the
Bonds contained, the default has continued for a period of thirty
(30) days.
9.05 Bankruptcy. The filing by the City of a petition or
answer seeking reorganization or arrangement under the Federal bank-
ruptcy laws or other applicable laws or statutes of the United states
of Ame~ica, or the approval of such a petition by a court of com-
petent jurisdiction, filed with or without the consent of the City,
seeking reorganization under the Federal bankruptcy laws or other
applicable laws or statutes of the United States of America or the
assumption or control of the City or of the whole or any substantial
part of its property by a court of competent jurisdiction under the
provisions of other laws for the relief or aid of debtors.
9.06 Acceleration. Upon the happening of an event of default,
the holders of not less than sixty-six and two-thirds percent
(66-2/3%) in aggregate principal amount of the Bonds at the time
outstanding shall be entitled, upon notice in writing to the City,
to declare the principal of all of the Bonds then outstanding and the
interest accrued thereon to be due and payable immediately, and upon
such declaration the same shall become and shall be immediately due
and payable.
9.07 Application of Bonds. All of any gross revenues pledged
to the payment and security of the Bonds, including all sums in all
of the funds provided therefor upon the date of the happening of an
event of default~ and all sums thereafter received by the City shall
be applied by it, upon presentation of the several Bonds and coupons,
and the stamping thereon of the payment if only partially paid, or
upon the surrender thereof if fully paid, in the order provided in
Sections 9.08 through 9.11 of this Part.
9.08 Costs and Expenses. Said moneys shall be applied to the
payment of the costs and expenses of the bondholders in declaring an
event of default, including reasonable compensation to their agents,
attorneys and counsel, and to the payment of the costs and expenses
of the Director of Finance in carrying out the provisions of this
Part, including reasonable compensation to his agents~ attorneys
and counsel.
9.09 Interest on Undue Bonds. In case the principal of the
Bonds shall not have become due and shall not then be due and pay-
able, said moneys shall be applied to the payment of the interest
in default, first, in the order of registration under Article 2 of
Part 4 of this Indenture~ and then in the order of maturity of the
installments of the interest.
9.10 Principal and Interest on Due Bonds. In case the principal
of the Bonds shall have become and shall be then due and. payable,
said moneys shall be applied to the payment of the principal and in-
terest of the Bonds, firstJ in the order of registration under Ar-
ticle 2 of Part 4 of this Indenture, and then in the order of the
maturity of the installments of principal and interest.
- 19 -
9.11 Insufficient Funds. In case the moneys shall be insuf-
ficient to pay in full the whole amount so owing and unpaid upon the
Bonds I under Sections 9.09 and 9.10 of this Partl then the moneys
shall be applied to the payment, firstl of interest, and then of
principal, ratably to the aggregate of the interest or principal then
due to the persons entitled thereto without discrimination or pref-
erence.
9012 Refunding Defaulted Bonds. The City may refund any defaulted
Bonds by the issuance of new bonds maturing after the maturity of the
last Bond of this issue, but otherwise on a parity as to payment with
the Bonds of this issue, and sell the Bonds and use the proceeds to pay
the defaulted Bondsl in which event the action shall be deemed to avoid
or cure a default under this Part. With the consent of the bondholder,
the refunding bonds may be exchanged for the bonds refunded.
Part 10
Remedies of Bondholders
10.01 Bondholder Remedies. subject to any contractual limitations
binding upon the holders of the Bonds (including, but not limited tOI
limitations upon the exercise of a remedy to the bondholders holding a
specific proportion or percentage of the Bonds)1 the holders of Bonds
shall have the rightl for the equal benefit and protection of all
holders of Bonds similarly situated, as provided in this Part.
10.02 Accounting. By action or suit in equity, they may require
the City and the Council and other officers, agents and employees to
account as the trustee of an express trust.
10.03 Injunction. By action or suit in equity, they may enjoin
acts or things which may be unlawful or violate the rights of the bond-
holders.
10.04 Mandamus. By mandamus or other suit, action or proceeding
at law or in equity, they may enforce their rights against the City
and its Council and other officers, agents and employees, and to re-
quire and compel it or them to perform and carry out its and their
duties and obligations under the law and its and their covenants and
agreements with bondholderso
10005 Cumulative. No remedy conferred by this Part or by the law
is intended to be exclusive of any other remedYI but each remedy is
cumulative and in addition to every other remedy and may be exercised
without exhausting and without regard to any other remedy conferred
by this Part or by the lawo
10.06 Waiver. No waiver of a default or breach of duty or con-
tract by any bondholder shall extend to or shall affect a subsequent
default or breach of duty or contract or shall impair rights or reme-
dies thereof.
10.07 Delays. No delay or omission of a bondholder to exercise
a right or power accruing upon a default shall impair the rights or
power or shall be construed to be a waiver of the default or ac-
quiescence thereof.
10.08 Enforcement 0 Every substantive right and every remedy con-
ferred upon the bondholders may be enforced and exercised from time
to time and as often as may be deemed expedient.
- 20 -
10.09 Status Quo. In case an action, suit or proceeding to en-
force a right or exercise a remedy shall be brought or taken and then
discontinued or abandoned, or shall be determined adversely to the
bondholders, then, and in every case, the City and the bondholders
shall be restored to their former positions and rights and remedies
as if no suit, action or proceeding has been brought or taken.
* * * * *
PASSED AND ADOPTED this 16th day of September, 1968, by the following
V0te:
AVES:
COUNCIL MEMBERS: Duffin, Kennedy, Quartiroli, Silv., and
Goodrich.
NOES:
COUNCIL MEMBERS: None
ABSENT:
COUNCIL MEMBERS: Allemand and Wentworth.
approved:
);~~~~'-<
Mayor
ATTEST:
, oj 2/tdt,4Mi,j & yjt;;:::;;'h
City Clerk -1'
- 21 -
CITY OF GILROY, CALIFORNIA
SCHEDULE OF MATURITIES
$350,000 WATER REVENUE BONDS OF 1968
Bond Numbers Annual Year
Denominations Principal of
j 1,000 .$5,000 Amount Maturity
1 - 25 l - 5 $25,000 1969
26 - 55 6 - 11 30,000 1970
56 - 85 12 - 17 30,000 1971
86 115 18,,,; 23 30,000 1972
116 - 150 24 - 30 35,000 1973
151 - 185 31 - 31. 35,000 1974
186 - 225 38 - 45 40,000 1975
226 - 265 46 - 53 40,000 1976
266 - 305 54 - 61 40,000 1977
306 - 350 62 - 70 45,000 1978
EXHIBIT "A"
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
CITY OF GILROY
WATER REVENUE BOND OF 1968
No.
$
KNOW ALL MEN BY THESE PRESENTS, that the City of Gilroy, a munici-
pal corporation, in the County of Santa Clara, State of California, here-
inafter referred to as "City", for value received, has obligated itself
to pay to the bearer (or, if this Bond is registered, to the registered
owner hereof), from its Water Revenue Bond Fund, on the 1st day of July,
19~ the sum of THOUSAND DOLLARS, with interest thereon
from date at the rate of ~ per annum, as evidenced by interest coupons
attached hereto at the time of issuance. Said interest shall be payable
January 1, 1969, and semiannually thereafter on the 1st days of July and
January in each year, all as more particularly set forth in the Resolution
providing for the issuance of this Bond.
Both principal and interest are payable in lawful money of the
United States of America at the main office of the Bank of America National
Trust and Savings Association, 300 Montgomery Street, San Francisco, Cali-
fornia, the Paying Agent of the City, or at any other bank or trust company
designated by said Paying Agent as a correspondent in the Cities of New
York, New York, and/or Chicago, Illinois.
If, upon presentation at maturity, payment of this Bond or any in-
terest coupon thereof, or both, is not made in full accordance with the
terms of the Resolution providing for the issuance hereof, said Bond or
coupon, or both, shall continue to bear interest at the rate stated herein
until paid in full.
This Bond is a negotiable instrument payable to bearer and title
thereto, unless registered, shall pass by physical delivery thereof.
This Bond is registrable as to principal and interest upon written
request of the owner and presentation of the Bond to the Paying Agent for
registration. Thereafter, the principal hereof and interest hereon shall
be payable only to such registered owner. Bonds may also be registered
as to principal only. Registered Bonds may be deregistered and again
become payable to bearer or be transferred.
The Bonds and coupons appertaining thereto and the Resolution pro-
viding for the issuance thereof may be amended, altered or modified,
with the consent of the holders of sixty-six and two-thirds percent
(66-2/3%) of the aggregate principal amount of Bonds then outstanding,
in the manner, to the extent and upon the terms provided in said Reso-
lution.
The City may, from time to time, purchase any or all of the Bonds
at prices offered. All Bonds purchased will be cancelled and will not
again be reissued.
This Bond is one of an issue in the total principal amount of
$350,000, all of like date and tenor except as to number, maturity (and
interest rate), all issued by the City for the purpose of providing
money to finance a Project consisting of improvements to an Enterprise
EXHIBIT liB"
comprising the entire City water works and system, as set forth and de-
scribed in Resolution No. entitled, "A Resolution Providing for
the Issuance of Water Revenue Bonds of 1968, Fixing the Form of the Bonds
and Providing Covenants for Their Protection, City of Gilroy, $350,000
Water Revenue Bonds of 1968" adopted on September 16, 1968, to which ref-
erence is hereby made for the obligations, duties, rights and privileges
hereby created, and as authorized by law and in strict accordance with
the City of Gilroy Water Revenue Bond Ordinance, being Ordinance No. 824,
duly adopted by the Council, July 1, 1968, as amended, under authority
of the home rule provisions of the City's Freeholder's Charter, which
Ordinance provides that the Revenue Bond Law of 1941, excepting certain
provisions thereof, shall apply to the issuance of water revenue bonds.
Both principal and interest are payable solely from the Re.venues of
the Enterprise hereinabove referred to and the City is not obligated to
pay the principal hereof or interest hereon except from the Revenues of
said Enterprise. The Bonds constitute a first and prior lien upon the
said Revenues except that additional bonds may be issued on a parity of
lien in accordance with the Resolution hereinbefore referred to, or sub-
ordinate as to the lien thereof.
All of the Revenues to be derived from the water service charges
imposed for the use of the Enterprise and the services and facilities
thereof, including Revenues from improvements, additions and extensions
thereto which may hereafter be constructed or acquired, and from other
charges, are pledged to pay the principal of and interest on the Bonds
of this issue, and to provide (1) a Bond Fund, (2) operation and mainte-
nance funds, and (3) surplus funds, as prov,ided in said Resolution.
The City has created a special Water Revenue Bond Fund for the
payment of said principal and interest and has agreed to set aside in
said fund on the first day of each calendar month, commencing with the
date hereof, an equal aliquot part of the amount necessary to pay in-
terest and principal which shall fall due at the next ensuing interest
and principal payment dates.
IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and
things required by the Constitution and laws of the State of California
to be done, to happen and to be performed precedent to and in the is-
suance of this Bond have been done, have happened and have been performed
in regular due form, time and manner as required by law; that the City
i~ authorized by law to operate the Enterprise herein referred to and
the City Council, by ordinance duly adopted, has established and has
covenanted to maintain rates and charges for services and facilities
thereof sufficient, with other Revenues received, to provide Net Revenues
equal to not less than 1.30 times the combined aggregate amount of prin-
cipal and interest which shall become due and payable within the next
succeeding twelve (12) months on all of the Bonds then outstanding.
IN WITNESS WHEREOF, the City of Gilroy, by its City Council, has
caused this Bond to be executed in its behalf and under its official
seal by its Mayor by his printed, lithographed or engraved facsimile
signature hereon, and by the manual signature of its Clerk, and has
caused the interest coupons to be executed and authenticated by the
facsimile signature of its Director of Finance, all as of November 1,
1968.
Mayor of the City of Gilroy
City Clerk
ii
'Interest Coupon Form. The coupons shall be substantially in the
fOllowing form:
FORM OF COUPON
CITY OF GILROY, CALIFORNIA
Water Revenue Bonds of 1968 -
The sum shown hereon is payable
to bearer (unless registered)
in lawful money as interest at
the Bank of America N.T.& S.A.,
main office, San Francisco,
California, the Paying Agent
of the City, or the designated
correspondent bank at New York,
New York, or Chicago, Illinois.
Dated: November 1, 1968.
On
1,
19_
$
Coupon No.
Bond No.
Director of Finance
Registration Form. The form of endorsement on said bonds for
registration shall be substantially as follows:
This bond is registered in the name of the registered owner whose
name and address appear last in the space below and both the principal
of and interest on this bond are payable to such registered owner, un-
less it is registered as to principal only, in which case only the
principal is so payable.
NOTE:
There must be no writing in the space below except by the
Paying Agent.
Type of
Registrai:;ion*
Principal only
and Interest
Principal only
and Interest
Principal only
and Interest
Name of
Registered Owner
Address of
Registered Owner
Signature of
Paying Agent
Date of
Registry
*In the event registration is as to principal
only, strike the words "and interest"; if as
to principal and interest, strike the word' "only".
* * * * *
iii
I, SUSANNE E. STEINMETZ, City Clerk of the City of Gilroy, do
hereby certify that the attached Resolution No. 1277
i s an ori g i na 1
resolution, duly adopted by the Council of the City of Gilroy at a
regular meeting of said Council held on the 16th day of September
, 19 68 , at which meeting a quorum was present.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
official seal of the City of Gilroy, this
17th day of September
, 196~.
(
..0) 2?tkJ1JZ1J~ (p
City Clerk of the City of Gilroy
JIk:u