Resolution 1981-08
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09/02/80
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RESOLUTION NO. 81- 8
A RESOLUTION PROVIDING FOR THE ISSUANCE OF SEWER
REVENUE BONDS, FIXING THE FORM OF BONDS AND
PROVIDING COVENAN~S FOR THEIR PROTECTION
SEWER REVENUE BONDS OF 1980
(INDENTURE)
RESOLVED, by the City Council of the City of Gilroy, California,
that
RECITALS
WHEREAS, this City is authorized to acquire, construct, own or
operate an enterprise comprising all or any part of a system, plant,
works and facilities used for, or useful for, the purpose of
collecting, treating or disposing of sewage, waste or storm water,
including drainage~
WHEREAS, under the City of Gilroy Sewer Revenue Bond Ordinance,
revenue bonds may be authorized by resolution of this Council to
provide funds for acquiring, constructing and financing additions,
extensions, replacements and improvements to said enterprise;
WHEREAS, under said ordinance the interest rate on such revenue
bonds is limited to 8% per annum; and
WHEREAS, by Title 5, Division 2, Part 1, Chapter 3, Article 7
(commencing with Section 53530) of the Government Code, this Council is
authorized to provide in its discretion that such revenue bonds bear
interest at a higher rate but not to exceed 10% per annum;
NOW, THEREFORE, IT IS RESOLVED, DETERMINED, and ORDERED, as
follows:
RESOLUTION NO. 81 - 8
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ARTICLE I
GENERAL PROVISIONS
1.01. Proceedings. The proceedings have been conducted and the
Bonds shall be issued pursuant to the City of Gilroy Sewer Revenue Bond
Ordinance.
1.02. Definitions. Unless the context otherwise requires, as
used herein and in any certificate, opinion or document issued in
relation hereto, the terms herein have the following meanings:
Annual means with respect to the Fiscal Year of the Entity.
Bond Law means the provisions of the City of Gilroy Sewer
Revenue Bond Ordinance, including the applicable provisions of the
Revenue Bond Law of 1941, and Title 5, Division 2, Part 1, Chapter 3,
Articles 7, 10 and 11 of the Government Code of the State of California.
Bond Year means the period between the dates of Maturity of the
annual series of Bonds.
Bondholder, Holder of Bonds or Holder means, in the case of a
Bond which is an instrument registered as to principal only, or fully
registered, a Person in whose name such Bond is registered in the Bond
Register, and in the case of a Bond which is an instrument issued in
bearer form and which evidences a principal obligation or an interest
obligation but which is not registered as to principal or fully
registered, a Person who is in possession thereof.
Bonds means all instruments issued in bearer or registered form
by the Entity and authorized and at any time outstanding pursuant to
this Indenture and all Supplemental Resolutions, including such
instruments as evidence a principal (including a redemption premium, if
any) obligation, or an interest obligation, or both.
Charges means fees, tolls, rates and rentals prescribed by the
Legislative Body for the use of the Enterprise and the services or
facilities thereof, including, without limiting the generality of the
foregoing, availability of service charges.
Clerk or Secretary means the person elected or appointed as the
Clerk or Secretary of the Entity and its Legislative Body.
Enterprise means the facilities and the portion thereof of the
Entity for the collection, treatment and disposal of industrial
wastewater and sewage, including collecting, trunk line and outfall
sewers, treatment and disposal plant, pumping stations, and any other
works, property or structures used for or useful for industrial
wastewater and sewage collection, treatment and disposal, existing on
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the date hereof, together with all additions and improvements to said
facilities hereafter acquired or constructed; Enterprise does not
include the facilities nor that portion of facilities for the
collection, treatment and disposal of domestic and nonindustrial
sewage, nor any additions or improvements to such facilities.
Entity means the City of Gilroy, California.
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 is pledged for the payment of principal and interest;
obligations issued by federal intermediate credit banks, federal land
banks, banks for cooperatives or the Ten~essee Valley Authority;
obligations, participations, or other instruments of or issued by, or
fully guaranteed as to principal and interest by, the Federal National
Mortgage Association, federal home loan banks or the Federal Home Loan
Bank Board; and obligations, participations, or other instruments of,
or issued by, a federal agency or a United states Government-sponsored
enterprise, including, without limitation, the Federal Financing Bank,
the United states Postal Service, the Student Loan Marketing
Association, the Government National Mortgage Association and the
Federal Home Loan Mortgage Corporation.
Financial Newspaper means a newspaper or journal printed in the
English language, publishing financial news and selected by the Fiscal
Agent.
First Redemption Date means the earliest possible Redemption
Date for the Bonds.
Fiscal Agent means Bank of America National Trust and Savings
Association, appointed by the Entity in Section 7.01 and acting as an
independent trustee with the duties and powers herein provided, and its
successors and assigns, or any other corporation or association which
may at any time be substituted in its place, as provided in Section7.01.
Fiscal Year means the fiscal year of the Entity which is from
July I to June 30, both inclusive.
Gross means, when used with reference to Revenues or a
designated portion thereof, Annual Revenues, or such designated
portion, of the Enterprise.
Improve means to reconstruct, replace, extend, repair, better,
equip, embellish or otherwise improve.
Independent Engineer means any individual or firm of engineers
having special knowledge and experience in the utility field, appointed
and paid by the Entity, and who, or each of whom:
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(a) Is in fact independent and not under
domination of the Entity;
(b) Does not have any direct ,financial interest,
or any material indirect financial interest, in the
Entity;
(c) Is not connected with the Entity as an
officer or employee of the Entity, but who may be
regularly retained to make annual or other periodic
reports to the Entity.
Independent Public Accountant means any public accountant or
firm of public accountants duly licensed, certified or registered or
entitled to practice and practicing as such under the laws of the State
of California, appointed and paid by the Entity, and who, or each of
whom:
(a) Is in fact independent, and not under
domination of the Entity;
(b) Does not have any direct financial interest,
or any material indirect financial interest, in the
Entity;
(c) Is not connected with the Entity as an
officer or employee of the Entity, but who may be
regularly retained to make annual or other similar
audits of the books of the Entity.
Indenture means this resolution as originally adopted by the
Legislative Body providing for the issuance of the Bonds, fixing the
form thereof and providing covenants for their protection.
Bond.
Interest Payment Date means a Stated Maturity of interest of a
Legislative Body means the City Councilor other legally
provided governing body of the Entity.
Maturity means the date on which the principal of a Bond becomes
due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or
otherwise.
Net Revenues means Gross Revenues, after deducting all sums
expended therefrom for management, operation, maintenance and repair
thereof, including all incidental costs, fees and expenses properly
chargeable thereto.
paying Agent means any Person authorized by the Entity to pay
the principal of, redemption premium, if any, or interest on any Bonds.
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Person means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision
thereof.
Presiding Officer means the Mayor or other legally provided
person elected by the Legislative Body as principal officer of the
Entity.
project means the portion (which may but need not necessarily be
the whole) of the Enterprise, or of the redemption or retirement of
Bonds, the costs of which are to be paid from the proceeds of a
particular Series.
Redemption Date means the date fixed for redemption of any Bond
by or pursuant to this Indenture and any Supplemental Resolution.
Redemption Price means the price at which any Bond is to be
redeemed on a Redemption Date by or pursuant to this Indenture and any
Supplemental Resolution.
Registrar means the Fiscal Agent or the Treasurer, whichever
shall be so designated from time to time by the Legislative Body to
perform the duties of Registrar hereunder.
Revenues means all Charges received for, and all other income
and receipts derived from the operation of the Enterprise or arising
from the Enterprise, including (without limiting the generality
thereof) all amounts deposited in any fund to secure or to provide for
the payment of the Bonds, amounts received as penalties upon delinquent
Charges, and amounts received resulting from the investment of all such
Charges, income, receipts and amounts. Excluded from such definition
are sums collected from users of the Enterprise and required by
condition of State or Federal law or regulation to be held, distributed
or used for a special, designated or limited purpose.
Series means the Bonds described in a particular Series
Resolution.
Series Resolution means a Supplemental Resolution which is
adopted pursuant to Article II of this Indenture.
Stated Maturity means the date specified in a Bond as the fixed
date on which the principal, or interest, or both, as the case may be,
is due and payable.
Supplemental Resolution means a resolution of the Legislative
Body which is adopted pursuant to this Indenture.
Treasurer or Finance Officer means the individual designated
pursuant to law to perform the duties of Treasurer of the Entity.
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1.03. Conditions Precedent. All acts, conditions and things
required by law to exist, happen and be performed precedent to and in
the issuance of the Bonds have existed, have happened and have been
performed in due time, form and manner as required by law, and the
Entity is now authorized, pursuant to each and every requirement of
law, to issue the Bonds in the form as provided herein.
1.04. Public Interest. The public interest, economy and
general welfare will be served by the issuance of Bonds for the
funding, refunding, acquisition, construction, improving and financing
of the Enterprise, including all expenses incidental thereto or
connected therewith.
1.05. Purpose. Bonds shall be issued to pay the costs and
expenses of the acquisition, construction, improvement and financing of
the Enterprise, including the acquisition of lands, easements and
facilities necessary therefor, and all costs incidental thereto,
pursuant to the Bond Law.
1.06. Project Costs. The total estimated cost of each project,
including costs of construction, improvement and acquisition, costs of
the redemption or retirement of Bonds, and engineering and other fees
and incidental expenses (including the discount on the sale of any
Bonds), if any, shall be stated in the applicable Series Resolution.
1.07. Separate Fund. The Entity, during the term of the Bonds,
will operate the Enterprise as a separate and distinct agency and will
create and maintain a separate and distinct special fund and account
for the Enterprise into which all Revenues shall be allocated and from
which all disbursements herein provided, relating to the Enterprise,
shall be made, until the satisfaction and discharge of all covenents,
agreements and other obligations of the Entity under the Indenture as
provided in Article XI.
1.08. Legality. If any section, paragraph, subdivision,
sentence, clause or phrase of this Indenture shall for any reason be
adjudged by any court of competent jurisdiction to be unconstitutional,
unenforceable or invalid, such judgment shall not affect the validity
of the remaining portion of this Indenture. The Legislative Body
hereby declares it would have adopted this Indenture and each and every
other section, paragraph, subdivision, sentence, clause or phrase
hereof and would have authorized the issuance of the Bonds pursuant
hereto irrespective of the fact that anyone or more sections,
paragraphs, subdivisions, sentences, clauses or phrases of this
Indenture may be held to be unconstitutional, unenforceable or invalid.
1.09. Equal Security. This Indenture shall be deemed to be and
shall constitute a contract between the Entity and the Holders from
time to time of the Bonds; and the covenants and agreements herein set
forth to be performed on behalf of the Entity shall be for the equal
and proportionate benefit, security and protection of all Holders of
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Bonds without preference or priority as to security or otherwise of any
of the Bonds over any of the others by reason of the Series thereof or
the number or date thereof or the time of sale, execution or delivery
thereof, or otherwise for any cause whatsoever, except as otherwise
expressly provided in this Indenture.
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ARTICLE II
AUTHORIZATION AND ISSUANCE OF BONDS
2.01. Authorization and Designation of Bonds. Bonds designated
as "City of Gilroy Sewer Revenue Bonds of 1980ft are hereby authorized
to be issued by the Entity under this Indenture and the Bond Law. The
maximum principal amount of Bonds which may be issued hereunder is not
limited; subject, however, to the right of the Entity, 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 established
and authorized by the Entity pursuant to one or more Series
Resolutions. The designation of such Bonds shall include, in addition
to the name "Sewer Revenue Bonds of 1980", such further appropriate
particular designation for the Bonds of each Series as the Entity may
determine.
2.02. General Conditions for the Issuance of Bonds. The Entity
may at any time issue a Series payable from the Revenues and other
funds as herein provided and secured by a lien and charge upon the
Revenues and such other funds equal to the lien and charge securing the
Bonds theretofore or thereafter issued hereunder, subject to the
existence of the fOllowing conditions precedent to the issuance of any
such Series:
(a) The Entity shall not at the time of the
issuance of such Bonds be in default hereunder unless
the Bonds are for refunding such defaulted obligation.
(b) The issuance of such Series shall have been
duly authorized pursuant to the Bond Law; the issuance
of such Series shall have been provided for by a Series
Resolution which shall specify the following:
(1) The Project for which such Series is to
be issued, including a provision requiring the
proceeds of such Series to be applied solely for
(i) the funding, acquisition, construction,
improving and financing of the Enterprise or
portion thereof or for (ii) the refunding of any
Series or of the Bonds, including payment of
costs incidental to or connected with such
refunding, or for any combination of such
purposes;
(2) The authorized principal amount and
series designation of such Series;
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(3) The date and the Stated Maturity or
Stated Maturities of the Bonds of such Series,
provided that (i) each such Stated Maturity or
Stated Maturities shall fall on January 1 or July
1, except that as to instruments evidencing
principal obligations, January 1, (ii) all the
Bonds of such Series of like Stated Maturity
shall be identical in all respects except as to
denominations, number and the form thereof, which
may differ as to negotiability, and (iii) fixed
serial Stated Maturities or minimum annual
sinking fund requirements, or any combination
thereof, shall be established in amounts
sufficient to provide for the payment of all of
the Bonds of such Series on or before their
respective Stated Maturities;
(4) The semiannual Interest Payment Dates
for the Bonds of such Series, except that the
first such Interest Payment Date may be up to, or
may be, but shall not be more than, one year
following the date of the Bonds of such Series;
(5) The denomination or denominations and
method of numbering of the Bonds of such Series;
(6) The place or places of payment of the
interest and principal (and redemption premiums,
if any) of the Bonds of such Series;
(7) The redemption premiums and redemption
terms, if any, for the Bonds of such Series;
(8) The amount and due date of each sinking
fund account payment, if any, for the Bonds of
such Series;
(9) The form of the Bonds of such Series;
and
(10) Such other provisions as are necessary
or appropriate and not inconsistent with this
Indenture.
2.03. Special Condition for the Issuance of Enterprise Bonds.
One or more Series may be issued from time to time in such prrnCIPaI
amount for each such Series as is determined by the Entity for a
Project consisting of the funding, acquisition, construction, improving
and financing of the Enterprise or portion thereof, including payment
of expenses incidental to or connected therewith, subject to the
following specific conditions precedent to the issuance of any such
Series:
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(a) The Entity and all persons receiving or
proposing to receive service from the Enterprise shall
have entered into an agreement substantially the same as
the Sewer Revenue Agreement dated as of Ffebruary 17,
1981, and the obligations of any such Person shall have
been guaranteed if and as provided by paragraph 6
thereof.
(b) Consistent with the other covenants and
requirements of this Indenture, charges shall have been
established by the Entity such that the Net Revenues to
be received by the Entity shall aggregate a sum equal to
at least 1.25 times the principal of and interest on the
Bonds regularly maturing on each Stated Maturity within
each 12 month period; provided, that any such conditions
may be waived or modified by the written consent of the
Bondholders representing seventy-five percent (75%) of
the then outstanding Bonds.
2.04. Special Condition for the Issuance of Refunding Bonds.
One or more Series may be issued from time to time in such principal
amount for each such Series sufficient to provide funds as is
determined by the Entity for a Project consisting of refunding any
Series of Bonds or of the Bonds, inCluding
(a) All Bonds to be refunded by them;
(b) All expenses incident to the calling,
retiring, or paying of the outstanding Bonds and the
issuance of the refunding Bonds, including the
difference in amount between the par value of the
refunding Bonds and any amount less than that for which
the refunding Bonds may be sold;
(c) Either (i) interest upon the refunding Bonds
from the date of sale thereof to the date of payment of
the outstanding Bonds or to the date upon which the
outstanding Bonds will be paid pursuant to call or
agreement with the Holders, or (ii) interest upon the
outstanding Bonds from the date of sale of the refunding
Bonds to the date of payment of the outstanding Bonds or
to the date upon which the outstanding Bonds will be
paid pursuant to call or agreement with the Holders;
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(d) Any redemption premium necessary in the
calling or retiring of the outstanding Bonds;
and subject to the following specific conditions precedent to
the issuance of any such Series:
(a) The Entity and all Persons receiving or
proposing to receive service from the Enterprise shall
have entered into an agreement substantially the same as
the Sewer Revenue Agreement dated as of February 17,
1981, the execution and delivery of which by the Entity
has been authorized by Resolution No. , A
Resolution confirming and Authorizing Execution and
Delivery of Sewer Revenue Agreement, adopted February 17,
1980, by the Legislative Body, and the obligations of
any such Person shall have been guaranteed if and as
provided by paragraph 6 thereof.
(b) Consistent with the other covenants and
requirements of this Indenture, Charges shall have been
established by the Entity such that the Net Revenues to
be received by the Entity shall aggregate a sum equal to
at least 1.25 times the principal of and interest on the
Bonds regularly maturing on each stated Maturity within
each 12 month period; provided, that any such conditions
may be waived or modified by the written consent of the
Bondholders representing seventy-five percent (75%) of
the then outstanding Bonds.
2.05. Subordinate Lien Bonds. Nothing in this Indenture shall
be deemed to limit or restrict the power of the Entity to issue
additional obligations 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 Article or of any other provision of this
Indenture.
2.06. Reserved Rights - Refunding Bonds. For the purpose of
curing a default or threatened default, the Legislative Body may issue
and, with the consent of the Holder, exchange a Series for maturing or
matured Bonds or sell them and use the proceeds thereof to pay said
Bonds; provided that the principal of the new Bonds shall be made to
mature after the Maturity of the outstanding Bonds. In any event, the
final maturity of such new Bonds shall not extend later than forty (40)
years from their date.
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ARTICLE III
FORM, TERMS, NATURE, E~ECUTION,
DELIVERY AND REGISTRATION OF BONDS
3.01. Form of Bonds and Coupons. The form of Bonds, whether
bearer or registered, shall be substantially as provided in the Series
Resolution relating to the specific Series of Bonds.
The interest obligation of a Bond shall be represented by
coupons, attached at the time of payment to the Entity for the Bonds of
a Series of which it is a part and payable upon each Interest Payment
Date and in the amounts for interest then becoming due, unless the Bond
is fully registered. Any coupon representing interest which shall have
become due before the delivery by the Entity to its purchaser of the
Bond to which it is attached shall be detached and cancelled prior to
such delivery.
3.02. Interest - Before and After Maturit~. Each Bond issued
with attached coupons shall bear interest from its date except as
herein otherwise provided for matured coupons. Each fully registered
Bond shall bear interest from the Interest payment Date next preceding
the date of authentication and registration thereof unless the date of
authentication and registration is an Interest Payment Date, in which
event from such Interest Payment Date, or unless the date of
authentication and registration is prior to the first Interest Payment
Date, in which event it shall bear interest from its date, except as
provided in Section 3.03 for multiple advances.
If sufficient moneys to pay the principal of (redemption
premium, if any) and interest on any Bond on the due date have been
made available in the fund provided therefor, no interest shall accrue
thereafter with respect to such Bond; otherwise, in the case of fully
registered Bonds and the principal of Bonds registered as to principal,
only, without presentation, and in other cases, if presented on the due
date, the principal of such Bond shall continue to bear interest at the
rate stated therein, and such matured interest amount shall bear
interest from its due date at the rate stated in the Bonds to which it
appertains until moneys have been made so available.
3.03. Multiple Advances. In the event the state of California,
or the United States of America, through any agency thereof, is the
purchaser of a single fully registered Bond representing the Bonds of a
Series, said single Bond shall be deemed to evidence Bonds from time to
time delivered to, and paid for by such agency. The aggregate
principal amount of the Bonds of such Series shall not in such case
exceed the aggregate payments by the agency for said Bond, as said
payments and the dates thereof are endorsed thereon, and a principal
amount of the Bonds of such Series of the longest maturities
equivalent, in appropriate multiples, to the difference between such
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aggregate principal amount and such aggregate payments shall be deemed
under the Series Resolution to be unissued. Interest on said single
Bond shall be determined on the agency's aggregate payments for said
single Bond from the respective dates thereof, as said payments and
dates thereof are endorsed on said single Bond.
3.04. Where Payable. The principal and interest on the Bonds
shall be payable in lawful money of the united states of America at the
principal corporate trust office of the Fiscal Agent of the Entity in
San Francisco, California, or successor, or at such paying Agents or
correspondent banks as may, but need not, be from time to time
designated by the Entity.
principal and interest on fully registered Bonds and principal
on Bonds registered as to principal only, shall be paid by check, draft
or warrant mailed to the Holder at the address as it appears on the
register maintained in the office of the Registrar, except that the
principal thereof shall be paid only upon surrender of the Bonds to the
Fiscal Agent.
Should a single fully registered Bond be issued to represent all
of the Bonds of a Series, payments made thereon, regardless of when
made, shall be applied first to interest to the due date and next to
principal. Other payments, regardless of the source of funds from
which such payments may be made, shall, after payment of interest to
the due date, be applied to the principal last to become due under the
said registered Bond and shall not affect the obligation of the Entity
to pay the remaining installments as scheduled.
3.05. Transfer of Registered Bonds. Any fully registered Bond
may, in accordance with its terms, be transferred upon the books
required to be kept pursuant to the provisions of Section 3.07 hereof,
by the Holder, or by the Holder's duly authorized attorney, upon
surrender of such fully registered Bond for cancellation, accompanied
by delivery of a written instrument of transfer, in a form approved by
the Registrar, duly executed.
Whenever any fully registered Bond shall be surrendered for
transfer, the Entity shall cause to be executed and shall deliver a new
fully registered Bond or Bonds, of the same Series, interest rate or
rates and maturity or maturities and for a like aggregate principal
amount. No transfers of fully registered Bonds shall be required to be
made during the fifteen (15) days next preceding each Interest Payment
Date.
All transfers and registration of fully registered Bonds
pursuant to this section shall be made under such reasonable
regulations as the Registrar may prescribe and shall be at the expense
of the Holder of the Bonds; any taxes or other governmental charges
required to be paid with respect to transfer and registration shall be
paid by the Holder of the Bond requesting such transfer and
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registration as a condition precedent to the exercise of such privilege
except that the authentication and registration of a fully registered
Bond issued at the time of payment to the Entity for the Bonds of the
Series of which it is a part shall be without expense to its Holder.
3.06. Transfer and Registration of Bearer Bonds. All Bonds
issued in bearer form shall be negotiable and transferable by delivery,
unless registered as to principal in the manner hereinafter provided.
The Holder of any such Bond may have the ownership of the principal
thereof registered on the books required to be kept pursuant to the
provisions of Section 3.07 hereof, and such registration shall be noted
on the Bonds. After such registration, no transfer shall be valid
unless made on said books at the request of the Holder or by the
Holder's duly authorized attorney and similarly noted on the Bond1 but
such Bonds may be discharged from registration by being in like manner
transferred to bearer and thereupon negotiability and transferability
by delivery shall be restored: and such Bond may again and from time to
time be registered or transferred to bearer, as before. Such
registration, however, shall not affect the negotiability of the
coupons, and every such coupon shall continue to be negotiable and
transferable by delivery merely and shall remain payable to bearer.
All transfers, registrations and discharges from registration of
Bonds issued in bearer form pursuant to this Section shall be made
under such reasonable regulations as the Registrar may prescribe and
shall be at the expense of the Holders of the Bonds: any taxes or other
governmental charges required to be paid with respect to the same shall
be paid by the Holder of the Bond requesting such transfer,
registration or discharge/from registration, as a condition precedent
to the exercise of such privilege.
3.07. Bond Register. There shall be kept by the Registrar
sufficient books for the registration and transfer of the Bonds and,
upon presentation for such purpose, the Registrar shall, under such
reasonable regulations as it may prescribe, register or transfer or
cause to be registered or transferred, on said register, Bonds as
hereinbefore provided.
3.08. Exchange of Bonds. Fully registered Bonds may be
exchanged at the office of the Registrar for a like aggregate principal
amount of Bonds issued in bearer form of authorized denominations of
the same Series, interest rate or rates and Maturity or Maturities (or
for a like aggregate principal amount of fully registered Bonds of
other authorized denominations of the same Series, interest rate or
rates and Maturity or Maturities), and Bonds issued in bearer form,
whether or not registered as to principal, may be exchanged for a like
aggregate principal amount of fully registered Bonds of authorized
denominations of the same Series, interest rate or rates and Maturity
or Maturities. All Bonds issued in bearer form surrendered for
exchange and delivered in exchange shall have attached thereto all
unmatured coupons appertaining thereto (and any matured coupons but
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unpaid). All exchanges shall be made under such reasonable regulations
as the Registrar may prescribe and shall be at the expense of the
Holders of the Bonds. The Registrar shall require the payment by the
Holder of the Bond requesting such exchange'of any tax or other
governmental charge required to be paid with respect to such exchange.
No such exchange shall be required to be made during the fifteen (15)
days next preceding each Interest payment Date.
3.09. Source of Payment. The Bonds shall recite they are
issued pursuant to the Bond Law and that they are payable solely from
the Revenues.
3.10. Bonds Not a Debt. The Bonds, including interest thereon,
shall not be a debt of the Entity, nor a charge, lien or encumbrance,
legal or equitable, upon any of its properties 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.
3.11. Entity Credit Not Encumbered. No recourse shall be had
for the payment of the Bonds, including the interest thereon, or any
part thereof, against the General Fund of the Entity, nor shall its
credit or authority to levy or receive taxes be deemed to be pledged
thereto, and the Holders of the Bonds shall never have the right to
compel the exercise of the taxing power on behalf of the Entity or the
forfeiture of any of its properties for the payment of Bonds, including
the interest thereon.
3.12. Bonds a Special Obligation. All Bonds which may be
issued in accordance with the terms and conditions hereof shall be
special obligations of the Entity and shall be payable from and secured
by a lien upon the Gross Revenues of the Enterprise as herein provided.
3.13. Execution of Bonds. Each of the Bonds shall be executed
by the Entity by the signIng, either manually or by printed,
lithographed, or engraved facsimile signature,
(a) In the case of Bonds issued in bearer form,
by the presiding Officer, by the countersigning manually
by the Secretary, and by the printing, engraving,
stamping or affixing of the official seal of the Entity,
as to Bonds evidencing a principal obligation,
(b) In the case of Bonds issued in bearer form,
by the Treasurer, as to Bonds evidencing an interest
obligation,
(c) In the case of Bonds issued in fully
registered form, by the Presiding Officer, by the
countersigning manually by the Secretary, and by the
printing, engraving, stamping or affixing of the
official seal of the Entity.
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Such signing, countersigning and sealing shall
constitute and be a sufficient and binding execution of each of
said Bonds except that fully registered Bonds shall not be
entitled to any benefit under this Indenture or any Series
Resolution or become valid or obligatory for any purpose until
the certificate of authentication and registration thereon
endorsed shall have been manually signed by the Registrar.
3.14. Continuin9: Valid!.!L.of Signatures. If any
officer whose signature or counterSIgnature appears on the
Bonds ceases to be such officer before delivery of the Bonds,
such signature or countersignature is nevertheless valid and
sufficient for all purposes as if such officer had remained in
office.
Any Bond may be signed and countersigned on behalf of
the Entity,by such persons as at the actual date of the
execution of such Bond shall be the proper officers of the
Entity although at the nominal date of such Bond any such
person shall not have been such officer of the Entity.
3.15. Preparation and Delivery of Bonds. The Secretary
is directed to cause Bonds of suitable quality to be
lithographed, printed, or engraved to comply with the provisons
hereof, and to procure their execution by the proper officers,
and to deliver them when so executed to the Treasurer, who
shall safely keep the same until they have been sold by the
Entity. The Treasurer shall deliver the Bonds to the
purchasers thereof on receipt of the issue price therefor. The
Presiding Officer and Secretary are further authorized and
directed to make, execute, and deliver to the purchasers of the
Bonds a signature and nO-litigation certificate in the form
usually required by purchasers of municipal bonds, generally
certifying to the genuineness and due execution of the Bonds,
and further certifying to all facts that in their knowledge are
relative to any litigation which mayor might affect the
Entity, and said officers or the Bonds, and the Treasurer is
authorized and directed to make, execute, and deliver to the
purchasers of the Bonds a Treasurer's receipt in the form
usually required by purchasers of municipal bonds, evidencing
the payment of the issue price of the Bonds, which receipt
shall be conclusive evidence that said purchase price has been
paid and has been received by the Entity. Any purchaser or
subsequent taker or Holder of the Bonds is hereby authorized to
rely upon and shall be justified in relying upon any such
signature and nO-litigation certificate and Treasurer's receipt
with respect to the Bonds executed pursuant to the authority of
this Indenture.
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3.16. Temporary Bonds. Any Series of Bonds may be
initially issued in temporary form exchangeable for definitive
Bonds when ready for delivery. The temporary Bonds may be
printed, lithographed or typewritten, shall be of such
denominations as may be determined by the Entity, shall be
without coupons and may contain such reference to any of the
provisions of this Indenture as may be appropriate. Every
temporary Bond shall be executed by the Entity upon the same
conditions and in substantially the same manner as the
definitive Bonds. If the Entity issues temporary Bonds, it
will execute and furnish definitive Bonds without delay, and
thereupon the temporary Bonds may be surrendered, for
cancellation, in exchange therefor at the office of the
Treasurer, and the Treasurer shall deliver in exchange for such
temporary Bonds an equal aggregate principal amount of
definitive Bonds of the same Series and Maturity or
Maturities. Until so exchanged, the temporary Bonds shall be
entitled to the same benefits under this Indenture as
definitive Bonds.
3.17. Mutilated, Destroyed, Lost and Stolen Bonds. If
(a) any mutilated Bond is surrendered to the Fiscal Agent or
the Entity receives evidence to its satisfaction of the
destruction, loss or theft of any Bond, and (b) there is
delivered to the Entity such security or indemnity as may be
required by it to save it harmless, then in the absence of
notice to the Entity that such Bond has been acquired by a bona
fide purchaser, the Entity shall execute, and if the Bond be in
fully registered form upon request of the Entity, the Registrar
shall authenticate, and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Bond, a new Bond
of like date, tenor, maturity and amount, bearing the same
number or numbers, and with such notations as the Entity shall
determine.
In case any such mutilated, destroyed, lost or stolen
Bond has become or is about to become due and payable, the
Entity in its discretion may, instead of issuing a new Bond pay
such Bond.
Upon the issuance of a new Bond, the Entity may require
the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the
Fiscal Agent and the Registrar) connected therewith.
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Every new Bond issued in lieu of any destroyed, lost or
stolen Bond shall constitute an original additional contractual
obligation of the Entity, whether or not the destroyed, lost or
stolen Bond shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Bonds duly issued
hereunder. However, the Entity 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 or for the purpose of any coverage condition or
covenant hereunder, but both the original and duplicate Bond
shall be treated as one and the same.
3.18. Transcript. The Secretary is hereby authorized
to prepare and furnish to the purchasers of Bonds provided to
be issued hereunder a complete set of certified copies of all
ordinances, resolutions and documents relating to the issuance
of such Bonds, and of all other proceedings and records of the
Legislative Body pertinent thereto.
3.19. Certified Copies. The Secretary is hereby
directed to provide a certified copy of this Resolution to the
Treasurer and to the Fiscal Agent.
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ARTICLE IV
CALLABLE BONDS AND PROCEDURE
4.01. Callable Bonds. Any Bonds subject to call and redemption
prior to maturity pursuant to a Series Resolution shall be redeemable
at the option of the Entity, 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 contained in this Article) as may be specified in the Series
Resolution authorizing the issuance of such Bonds.
The Entity may also, from time to time, purchase any or all of
the outstanding Bonds of a Series at prices offered, provided that if
Bonds of such Series are then callable, the purchase price is equal to
or less than the Redemption Price of such Bonds then callable. All
Bonds purchased shall be cancelled by the Fiscal Agent and shall not
again be reissued.
4.02. Determination to Call and Redeem or purchase. The option
of the Entity to call and redeem, or purchase, Bonds may be exercised
by the Treasurer on behalf of the Entity if less than all of the Bonds
of any Series maturing on any single date are to be called and
redeemed, or purchased, otherwise not. Whether the option is exercised
by the Entity or by the Treasurer on behalf of the Entity, if less than
all of the Bonds of any Series are to be called for redemption, the
Treasurer shall select the Bonds (including the principal amount of a
fully registered Bond) to be redeemed from the outstanding Bonds of
such Series not previously called for redemption by Maturity in
accordance with the Series Resolution and by lot as to Bonds having the
same Maturity, in such manner as the Treasurer shall deem appropriate
and fair. The Treasurer shall promptly notify the Fiscal Agent in
writing of the exercise of the option, whether by or on behalf of the
Entity, and if less than all of the Bonds of a Series are to be called,
the Bonds selected for redemption at least 45 days (unless shorter
notice shall be satisfactory to the Fiscal Agent) and not more than 60
days prior to the date proposed for redemption or if Bonds are to be
purchased, the Bonds to be purchased, on or prior to the date of
purchase.
4.03. Notice of Redemption. The Fiscal Agent shall cause
notice of redemption to be given in the name of the Entity. Notice of
redemption shall be published at least once not less than thirty (30)
days nor more than sixty (60) days prior to the date of redemption in
one or more Financial Newspapers of general circulation in San
Francisco and Los Angeles, California, and in the same or similar
Financial Newspapers of general circulation in each city in which a
paying Agent has been appointed for the Bonds of such Series to be
redeemed. Such notice shall also be mailed by registered or certified
mail not less than thirty (30) days peior to the Redemption Date to the
Holder as shown by the records of the Registrar.
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4.04. Form of Notice. The notice of redemption shall:
(a) State the Redemption Date1
(b) State the Redemption price;
(c) State the numbers and Maturity of the Bonds
to be redeemed; provided, however, that whenever any
call includes all of the Bonds of a Maturity, the
numbers of the Bonds of such Maturity need not be stated1
(d) Require that such Bonds be surrendered at a
designated office of the Fiscal Agent or at the office
of any paying Agent, including all interest coupons
maturing subsequent to the Redemption Date if Bonds
issued in bearer form are called, or where there is to
be partial redemption of a fully registered Bond, where
authorized hereunder, may require the Holder of such
Bond, in lieu of surrendering such Bond for a new Bond,
to endorse on the reverse of such Bond, or other
suitable place, a notation of partial redemption, in
form satisfactory to the Treasurer;
(e) Require that Bonds which at the time of call
are payable otherwise than to bearer shall be
accompanied by appropriate instruments of assignment to
the Entity duly executed1 and
(f) Give notice that further interest on such
Bonds will not accrue after the designated Redemption
Da te.
4.05. Receipt of Notice Unnecessary. The actual receipt by the
Holder of any Bond of notice of such redemption shall not be a
condition precedent to redemption, and failure to receive such notice
shall not affect the validity of the proceedings for the redemption of
such Bonds or the cessation of interest on the Redemption Date.
4.06. Certificate of Notice Conclusive. A certificate by the
Fiscal Agent that notice of call and redemption has been given as
herein provided shall be conclusive as against all parties, and no
Holder of a Bond whose Bond is called for redemption may object thereto
or object to the cessation of interest on the Redemption Date fixed by
any claim or showing that he failed to actually receive such notice of
call and redemption.
4.07. Redemption Funds. On or prior to the Redemption Date or
purchase date, the Treasurer shall deposit with or otherwise make
available to the Fiscal Agent moneys for the purpose and sufficient to
redeem the Bonds designated in the notice of redemption or identified
as to be purchased, together with the estimated call and redemption, or
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purchase, expenses. Said moneys must be set aside or be available
solely for that purpose and shall be applied on or after the Redemption
Date or purchase date to the payment of the Bonds to be redeemed or
purchased, as the case may be, and shall be used only for that
purpose. Interest due on or prior to the Redemption Date or purchase
date shall be paid from funds allocated to the Bond Account.
4.08. Effect of Notice of Redemption. When notice of
redemption has been given substantially as provided herein and when the
amount necessary for the redemption of the Bonds called for redemption
is set aside for that purpose, the Bonds designated for redemption
shall become due and payable on the Redemption Date thereof, and, upon
presentation and surrender of said Bonds to the Fiscal Agent (or
endorsement, in lieu of surrender, in the case of partial redemption of
a single fully registered Bond representing a Series), including all
interest coupons maturing after the Redemption Date (except as to fully
registered Bonds), and, if any of said Bonds are registered, upon the
appropriate assignment thereof, such Bonds shall be redeemed and paid
out of such moneys. No interest will accrue on such Bonds called for
redemption or on interest thereon after the Redemption Date specified
in such notice, and the Holders of the Bonds so called for redemption
after such Redemption Date shall look for the payment of such Bonds
only to said moneys. All Bonds redeemed shall be cancelled forthwith
by the Fiscal Agent and shall not be reissued. All interest coupons
pertaining to any redeemed Bonds, which coupons have matured on or
prior to the Redemption Date, shall continue to be payable to the
respective Holders thereof but shall not accrue further interest. All
unpaid interest payable at or prior to the Redemption Date upon fully
registered Bonds shall continue to be payable to the respective Holders
of such Bonds, or their order, but shall not accrue further interest.
If any Bond called for redemption shall not be so paid upon surrender
thereof for redemption, the Redemption price shall, until paid, bear
interest from the date noticed for redemption at the rate borne by the
Bond.
4.09. Partial Redemption of Registered Bond. Upon surrender of
any fully registered Bond redeemed in part only, there shall be
executed and delivered, without expense to the Holder, a new Bond or
Bonds of the same Series of authorized denominations equal in aggregate
principal amount to and in exchange for the unredeemed portion of the
Bond surrendered and of the same interest rate or rates and the same
Maturity or Maturities, which new Bond or Bonds may be, at the option
of the Holder, either in bearer or fully registered form. If a single
fully registered Bond is issued to represent a Series of Bonds, the
Holder of such Bond may, in lieu of surrendering such Bond for a new
Bond, endorse on the reverse of such Bond or other suitable place a
notation of such partial redemption, in such form as may be
satisfactory to the Treasurer and under such conditions as the
Treasurer may approve. Such partial redemption shall be valid upon
payment of the amount thereby required to be paid to such Holder, and
the Entity shall be released and discharged from all liability to the
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extent of such payment irrespective of whether such endorsement shall
or shall not have been made by such Holder and irrespective of any
error or omission in such endorsement.
4.10. Registration, Transfer or Exchange Limitation. No
registration, transfer or exchange involving fully registered Bonds or
bearer Bonds registered as to principal only shall be required to be
made during the fifteen (15) days next preceding the giving of a notice
of redemption pursuant to section 4.03 and no transfer or exchange
shall be required of any Bonds so noticed for redemption.
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ARTICLE V
REVENUES AND ACCOUNTS
5.01. Pled~e of Revenues; Revenue Fund. All of the Revenues
are hereby irrevocably pledged to the security of and punctual payment
of the interest on and principal of and redemption premiums, if any, on
the Bonds, and the Revenues shall not be used for any other purpose
while any of the Bonds remain outstanding; except that out of the
Revenues there may be apportioned such sums, for such purposes, as are
expressly permitted by this Article and by Article VI. This pledge
shall constitute a first and exclusive lien on the Revenues for the
payment of the Bonds in accordance with terms hereof and thereof.
All of the Revenues, except as otherwise provided by Sections
6.12 and 6.16, shall, so long as any Bonds shall be outstanding
hereunder, be allocated by the Entity to the "City of Gilroy Sewer
Revenue Bonds of 1980 Revenue Fund" (hereinafter called the "Revenue
Fund"), which fund is hereby created and which fund the Entity hereby
covenants and agrees to establish and maintain so long as any Bonds
shall be outstanding hereunder.
5.02. Receipt and Allocation of Revenues. The Entity covenants
and agrees that all Revenues, except as provided by Section 5.01, will
be received and held by the Entity in trust hereunder and will be
allocated to the Revenue Fund and will be accounted for through and
held in trust in the Revenue Fund, and deposited only as provided
hereunder, except that the Entity may withdraw such amounts in the
Revenue Fund as may be necessary to make refunds of amounts paid in
advance for sewer service, which such sewer service was not thereafter
made available or provided, or to reimburse such amount or amounts
erroneously paid by any public agency vested with capacity rights in
the Enterprise.
5.03. Establishment of Accounts for Revenues. A Gross Revenues
Account, a Bond Account, and a Surplus Account are hereby established
within the Revenue Fund, each of which the Entity hereby covenants and
agrees to maintain or cause to be maintained. The Treasurer shall
administer transfers between all accounts. Amounts allocated to the
Bond Account shall be deposited with the Fiscal Agent. All Revenues
allocated to the Revenue Fund and to each separate account therein
shall be held in trust and shall be applied, used and withdrawn only as
hereinafter provided.
5.04. Lien. The Bonds shall be equally secured by a pledge of,
and charge and lien upon, the Revenues, without priority for number,
Bond date, Bond execution date, Bond sale date, Bond delivery date, or
otherwise.
5.05. Gross Revenues Account. All Revenues allocated to the
Revenue Fund shall be allocated to the Gross Revenues Account.
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5.06. Bond Account. Amounts allocated to the Revenue Fund
shall be allocated to the Bond Account, as follows:
(a) Interest. On or before the 20th day of each
month, beginning with the month next succeeding the
month in which Bonds are delivered to a purchaser in
return for the issue price, the Treasurer shall allocate
from the Gross Revenues Account to the Bond Account an
equal alliquot portion of the amount of interest
becoming due and payable on the next succeeding Interest
Payment Date, taking into consideration any amounts
previously allocated to such account.
(b) principal. On or before the 20th day of
each month, beginning with the month next succeeding the
month in which Bonds are delivered to a purchaser in
return for the issue price, the Treasurer shall allocate
from the Gross Revenues Account to the Bond Account an
equal alliquot portion of the amount necessary to
accumulate the aggregate amount of principal becoming
due and payable on outstanding Bonds on the next
succeeding stated Maturity of principal, taking into
consideration any amounts previously allocated to such
account.
(c) Deposit. At the time of each monthly
allocation and on or before the 20th day of each month,
the Treasurer shall transfer to and deposit with the
Fiscal Agent the allocated amount.
(d) Use of Account. Amounts allocated to the
Bond Account and deposited with the Fiscal Agent shall
used and withdrawn by the Fiscal Agent solely for the
purpose of paying interest on and principal of the Bonds
as the same shall become due and payable.
Any amount required to be allocated to the Bond Account may be
prepaid in whole or in part by being earlier allocated to the Bond
Account and in that event, the transfer which has been so prepaid need
not be made at the times appointed therefor. In any event, all sums
required for the payment thereof shall be allocated to the Bond Account
at least 10 days prior to the stated Maturity of any Bonds.
5.07. Maintenance and Operation of Enterprise. If the interest
on and principal of the Bonds are paid when due, amounts for the
necessary and reasonable maintenance and operation costs of the
Enterprise, comprising, but not limited to, the reasonable expenses of
management, repair and other expenses necessary to maintain and
preserve the Enterprise in good repair and working order (including
billing and collection expenses) shall be allocated by the Treasurer
from the Gross Revenues Account and used for such purposes.
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5.08. Surplus Account. Amounts allocated to the Revenue Fund
shall be allocated to the Surplus Account, as follows:
(a) Annual Allocation. Annually, on or prior to
January 1 of each year, the Treasurer shall allocate the
remaining balance in the Gross Revenues Account to the
Surplus Account, except such amount as the Treasurer
estimates will be required to pay expenses authorized by
Section 5.07 to be paid, prior to the time that
sufficient Gross Revenues will be received to pay for
such expenses.
(b) Use of Account. Amounts allocated to the
surplus Account shall be used for the following purposes:
(i) to pay expenses authorized by Section
5.07 to be paid which are in excess of the
estimated or budgeted amount or for which no
estimate or budget exists;
(ii) to pay the costs of replacements,
extensions, improvements, or unusual or
extraordinary maintenance and repairs to the
Enterprise;
(iii) (A) until the First Redemption Date,
to pay the purchase price of such Bonds as shall
be tendered for repurchase by the Holder;
(B) upon and after the First
Redemption Date, and on each Interest payment
Date thereafter, to pay the purchase price or
Redemption price of such Bonds as either shall be
called for redemption or shall be tendered for
repurchase by the Holder; and
(iv) to purchase or pay principal of
(redemption premium, if any) and interest on
general obligation bonds, revenue bonds, notes
and other evidences of indebtedness which have
been or may hereafter be issued on behalf of the
Entity for the purposes of the Enterprise;
but shall, if in excess of amounts necessary to pay the purchase
price or Redemption price referred to in subparagraph (iii), be
reallocated to the Gross Revenues Account if the balance in such
account is insufficient for the purposes of the Account.
(c) Transfer to Entity. Provided that all
requirements of this Indenture and each Supplemental
Resolution then required to be performed have been fully
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accomplished, the Entity may from time to time allocate,
transfer and withdraw any balance in the Surplus Account
for any lawful purposes of the Entity including Entity
general fund purposes. .
5.09. Deposit and Investment of Revenue Fund.
(a) Deposits. Except as otherwise provided
hereunder, amounts allocated to the Revenue Fund shall
be held in time or demand deposits in any bank or trust
company (which may include the Fiscal Agent) authorized
to accept deposits of public funds 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
amounts as are at the time invested in accordance with
this section.
(b) Investments. All amounts allocated to each
of the following accounts and not estimated to be
required for use within the time specified for such
account or part thereof may be invested as follows:
(i) Gross Revenues Account: may, and at
the direction of the Entity shall, be invested by
the Treasurer in any lawful investment maturing
on or prior to the date on which such amounts are
estimated to be required to be paid out:
(ii) Bond Account: may, and at the
direction of the Entity shall, be invested by the
Fiscal Agent in Federal Securities maturing on or
prior to the date on which such amounts are
estimated to be required to be paid out:
(iii) Surplus Account: may, and at the
direction of the Entity shall, be invested by the
Treasurer in any lawful investment.
Amounts received from deposits or investments shall, upon
receipt, be allocated to the Gross Revenues Account and shall be the
first amounts expended. The Fiscal Agent may act as principal or agent
in the making or disposing of any deposit or investment. The Fiscal
Agent shall not be responsible for any loss on the disposition of any
deposit or investment except as provided by Section 7.03.
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5.10. No Restriction on Other Powers. Nothing in this
Indenture shall be construed to prevent the Entity from exercising any
powers which it may otherwise have, nor prevent the Entity from
satisfying its obligation to pay costs of maintenance and operation
from such moneys other than those mentioned herein as are legally
available for such purpose, including taxes.
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ARTICLE VI
COVENANTS BY THE ENTITY
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6.01. Covenants. For the protection and security of the Bonds,
the Entity covenants and agrees to and with the Holders of the Bonds,
as provided in this Article VI.
6.02. Acquire project. It will commence the acquisition,
.construction and completion of any project for which proceeds of the
Bonds have been obtained and continue the same with all practical
dispatch and in a sound and economical manner so as to complete the
same as soon thereafter as possible.
6.03. Operate Enterprise. It will operate the Enterprise in an
efficient and economical manner and prescribe, revise and collect such
Charges in connection therewith that the services or facilities of the
Enterprise may be furnished at the lowest possible cost consistent with
sound economy, prudent management, and the security and payment of the
Bonds.
6.04. Good Repair. It will operate, maintain, preserve and
keep the Enterprise and every part thereof in good repair, working
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 the claims and demands of all
persons whomsoever. It will collect and hold in trust the Revenues
pledged to the payment of the Bonds and apply such Revenues only as
provided by this Indenture. In this connection, and without limiting
the generality of the foregoing, so long as any of the Bonds are
outstanding, the Entity will enforce the covenants and obligations of
the other parties to the agreement referred to in Section 2.03 or 2.04
as a specific condition precedent to the issuance of a Series,
including the obligations of a Person who shall have guaranteed any of
the obligaions of one of such other parties to such agreement, and the
Entity will not enter into any agreement with any such other party or
any such guarantor amending, modifying or otherwise changing such
agreement or guarantee thereof, or consenting to any of such, except as
provided by Article VIII hereof.
6.06. Collect Revenues. It will collect and hold in trust the
Revenues pledged to the payment of the Bonds and apply such Revenues
only as provided by this Indenture.
6.07. Service Bonds. It will pay and cause to be paid
punctually the principal of the Bonds and the interest thereon on the
date or dates and at the place or places and in the manner mentioned in
the Bonds and in accordance with this Indenture and any Supplemental
Resolution.
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6.08. Pay Claims. It will pay and discharge 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 in the hands of the Fiscal Agent
prior or superior to the lien of the Bonds or which might become a lien
or claim upon the Enterprise or otherwise impair the security of the
Bonds, to the end that the priority and security of the Bonds shall be
fully preserved and protected.
6.09. Sales or Encumbrances. It will not mortgage or otherwise
encumber, sell, lease or dispose of the Enterprise or any part thereof,
nor enter into any lease or agreement which would impair or impede the
operation of the Enterprise or any part thereof necessary to secure
adequate Revenues for the payment of the principal and interest of the
Bonds, or which would otherwise impair or impede the rights of the
Holders of the Bonds with respect to such Revenues or the operation of
the Enterprise without provision for the retirement of the Bonds then
outstanding from the proceeds thereof; provided, however, that
material, equipment and land 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
improvement 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 Entity.
6.11. No Competition. It will not acquire, construct, operate
or maintain, and will not permit any other public or private
corporation or agency or any persons whatsoever to acquire, construct,
operate or maintain within the boundaries of the Entity or within any
part thereof, any system or utility competitive with the Enterprise.
6.12. Insurance. Except as herein provided, it will procure
and keep in force insurance upon all buildings and structures of the
Enterprise and the machinery and equipment therein, which are usually
insured by Entities operating like property, in good and responsible
insurance companies. The amount of the insurance shall be such as may
be required to adequately protect the Entity and the Holders of the
Bonds from loss due to any such casualty, and, in the event of any such
loss, the proceeds shall be used to repair or restore the Enterprise or
for the payment of the Bonds issued hereunder.
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. The Entity
shall cause such work of repair, reconstruction or replacement to begin
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promptly after such damage or destruction shall occur and to continue,
and to be properly completed, as expeditiously as possible. If the
proceeds received by reason of any such loss shall exceed the costs of
such repair, reconstruction or replacement, 'the excess shall be
deposited in the Revenue Fund and applied as provided therefor for
Gross Revenues.
Alternatively, if the proceeds of such insurance are sufficient
to enable the Entity to retire all outstanding Bonds, the Entity may
elect not to repair, reconstruct or replace the damaged or destroyed
portion of the Enterprise, and thereupon, such proceeds shall be
applied to redeem or purchase all outstanding Bonds in the manner
specified in Section 6.l6(a).
If at any time fOllowing an analysis of insurance needs and
costs by the Entity, the Legislative Body determines that
self-insurance or coinsurance is more appropriate and cost effective
than continued maintenance of insurance with a qualified insurance
company, and approves a program which provides substantially the same
amount of coverage as would otherwise be provided hereunder, such
self-insurance or coinsurance program may be substituted for all or any
part of the required commercial insurance, unless such substitution
would result in a significant reduction of security to the Bondholders.
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.
6.14. Engineers. It will employ consulting engineers of
acknowledged reputation, 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 Secretary and furnished to the purchaser of the Bonds
if requested.
6.15. Audit and Report.
(a) It will employ an Independent Public
Accountant who shall prepare and file with the Treasurer
and Fiscal Agent and make available to the purchaser of
the Bonds, if requested, annually within one hundred
twenty (120) days after the close of each Fiscal Year on
June 30, commencing in the year 1981, an audited
statement (prepared in accordance with generally
accepted accounting principles) for the preceding Fiscal
Year which shall include:
(1) Balance Sheet. A balance sheet including
balances of all Funds and Accounts herein
created.
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(2) Revenue and payments. A statement in detail
of the Revenue receipts and the
disbursements from said Revenues of the
Enterprise.
(3) Insurance. A statement as to the insurance
carried by it, including a brief description
of each policy as to its coverage and name
of company issuing it.
(4) Customers. The number of customers
classified by rate or Charge for service
groups, the number of properties connected
to the Enterprise and the number of
applications for services on hand but not
connected.
(5) Billing. The annual billings and the
average periodic billings per user or other
customer or property.
(6) Rate Schedules. The schedules of the rates
and Charges prescribed by the rate ordinance
then in effect.
(7) Recapitulation. A recapitulation of Funds
and Accounts created by this Indenture into
which are put moneys derived from the
operation of the Enterprise or arising from
the Enterprise and from the sale of the
Bonds, which shall show balances at the
beginning of the period, deposits and
withdrawals made during the period and
balances at the end of the period and, also,
deposit requirements for Funds and Accounts
during the next succeeding fiscal period.
(8) Comments. Comments of the accountant
relative to the fulfillment of the
provisions of this Indenture and the manner
in which the Enterprise has been operated
and his recommendations for improving the
operation of the Enterprise.
(b) The Entity will cause to be prepared and
filed with the Clerk and the Treasurer, annually within
one hundred twenty (120) days after the close of each
Fiscal Year (commencing with the Fiscal Year ending June
30, 1981) a summary statement showing the amount of the
Revenues and the disbursements from the Revenues, in
reasonable detail, for the preceding Fiscal Year, and a
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general statement of the financial and physical
condition of the Enterprise. The Entity will furnish a
copy of such summary statement to any Holder upon
request, and will furnish to the Trea'surer such
reasonable number of copies thereof (not exceeding 200
copies) as may be required for distribution to
investment bankers, securities dealers and others
interested in the Bonds.
6.16. Eminent Domain. If all or any part of the Enterprise
shall be taken by eminent domain proceedings, the net proceeds realized
by the Entity therefrom shall be deposited by the Treasurer or the
Fiscal Agent in a special fund in trust and shall be applied and
disbursed by the Entity subject to the fOllowing conditions:
(a) If such proceeds are sufficient to provide
for the payment of the entire amount of principal on all
of the then outstanding parity lien Bonds so as to
enable the Entity to retire all of such outstanding
parity lien Bonds, either by call prior to maturity or
by payment at Maturity or partly by call prior to
Maturity and partly by payment at Maturity, the Entity
shall promptly direct the use of the proceeds for either
of the following alternatives:
(i) The Legislative Body may determine to
retire all of such Bonds, in which event it shall
direct the Fiscal Agent to, and the Fiscal Agent
shall, provide for the application of such moneys
to such retirement and to the payment of such
interest. The balance of such moneys, if any,
shall be transferred to the Entity and shall be
available for use by the Entity for any lawful
purpose.
(ii) The Legislative Body may determine to
apply such proceeds to the cost of additions or
improvements to the Enterpris~. The Legislative
Body may determine to apply such proceeds to the
cost of additions or improvements to the
Enterprise if (a) the Entity first secures an
Independent Engineer's report containing (1) the
loss in Gross Revenues, if any, suffered, or to
be suffered, by the Entity by reason of such
eminent domain proceedings, (2) a general
description of the additions or improvements then
proposed to be acquired by the Entity from such
proceeds, and (3) an estimate of the additional
Gross Revenues to be derived from such additions
or improvements; and (b) the Legislative Body, on
the basis of such Engineer's report, determines
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that such additional Gross Revenues will
sufficiently offset the loss of Revenues
resulting from such eminent domain proceedings so
that the ability of the Entity to meet its
obligations hereunder will not be substantially
impaired. Such determination by the Legislative
Body shall be final and conclusive. The Entity
shall then promptly proceed with the construction
of the additions or improvements substantially in
accordance with such Engineer's report. Payments
for such construction shall be made from such
eminent domain proceeds. Any balance of such
proceeds not required by the Entity for the
purposes aforesaid shall be deposited in the
Revenue Fund and applied as provided therefor for
Gross Revenues.
(b) If such proceeds are insufficient to provide
the moneys required for the purposes set forth in the
foregoing subsection (a), the Legislative Body shall by
resolution determine to apply such proceeds for the
following purpose, subject to the conditions hereinafter
in this subsection (b) set forth:
(i) The Legislative Body may determine to
apply such proceeds to the purchase or call of
outstanding parity lien Bonds if (a) the Entity
first secures an Independent Engineer's report
containing (1) the loss in Gross Revenues, if
any, suffered, or to be suffered, by the Entity
by reason of such eminent domain proceedings, and
(2) a general description of the portion of the
Enterprise affected: and (b) the Legislative Body
on the basis of such Engineer's report,
determines that such reduced Revenues will be
substantially in the same proportion to the Gross
Revenues (prior to such reduction) as the
principal amount of the Bonds outstanding after
application of such proceeds to the purchase or
call of Bonds bears to the aggregate principal
amount of all the outstanding Bonds. Such
determination by the Legislative Body shall be
final and conclusive. In that event, such
proceeds shall be applied to the purchase or call
of such outstanding Bonds. If the Entity is
unable to call or purchase in lieu of call, or
deems it inadvisable to purchase when Bonds are
not callable, outstanding Bonds in amounts
sufficient to exhaust such proceeds, the
remainder of such moneys shall be held in trust
and applied to the payment of Bonds evidencing a
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principal obligation as the same become due by
their terms, and, pending such application, such
remaining moneys may be deposited and invested,
as specified by Article V for 'amounts allocated
to the Gross Revenues Account.
(c) If such eminent domain proceedings have had
no effect or, at the most, a relatively immaterial
effect upon the Revenues and the security of the then
outstanding Bonds, and an Independent Engineer's report
filed with the Legislative Body so concludes, the
Legislative Body may so determine. Such determination
by the Legislative Body shall be final and conclusive
and, the eminent domain proceeds shall forthwith be
deposited in the Revenue Fund and applied as provided
therefor for Gross Revenues.
6.17. Ratio of Net Revenue Coverage. Consistent with the other
covenants and requirements of this Indenture, the Entity covenants that
it will at all times establish, maintain and collect Charges sufficient
to provide Net Revenues which will equal not less than 1.25 times the
aggregate amount of the principal of and interest on the Bonds
regularly maturing on each Stated Maturity within the next succeeding
12 months. The Entity may make adjustments from time to time in such
rates, fees and Charges and may make such classifications thereof as it
deems advisable but shall not reduce such rates, fees and Charges below
those then in effect unless an Independent Engineer's report reflects
that the Net Revenues from such reduced rates, fees and Charges will at
all times meet the requirements hereof.
6.18. Unconditional Obligation. Except only as provided herein
for alteration of the Bonds or this Indenture, nothing in this
Indenture or in the Bonds contained shall affect or impair the
obligation of the Entity, which is absolute and unconditional, to pay
the principal of and interest on the Bonds to the respective Holders of
the Bonds at the respective dates of Maturity, 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 embodied in the Bonds.
6.19. performance of Essence. The performance of the duties
prescribed in this Indenture and in the Bond Law by the Entity or its
proper officers, agents or employees is of the essence of the Entity's
contract with the Bondholders.
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6.20. Recourse to Bond Law. Each taker and subsequent Holder
of the Bonds has recourse to all of the provisions of this Indenture
and of the Bond Law and is bound by their terms.
6.21. Indenture is Covenant. Each and all of the terms of this
Indenture shall be and constitute a covenant on the part of this Entity
to and with each and every Bondholder from the time Bonds are issued
hereunder.
6.22. Continuing Agreement. This Indenture and the covenants,
agreements, provisions and conditions herein contained constitute a
continuing agreement with the Holders of all of the Bonds issued or to
be issued hereunder and from time to time outstanding, to secure the
full and final payment of the principal of (premiums, if any) and the
interest on all Bonds which may from time to time be executed and
delivered hereunder.
6.23. Period of Agreement. Whenever all of the outstanding
Bonds and all interest then accrued thereon shall have been fully paid
or discharged, the agreements in this Indenture contained shall cease
and terminate, and the Entity shall be under no further obligation to
apply the Revenues of the Enterprise as herein required, or otherwise
to do or perform any of the covenants, conditions or agreements in this
Indenture contained.
6.24. Arbitrage. The Entity covenants that upon and after the
First Redemption Date of the Bonds and on each Interest Payment Date
thereafter, such Bonds shall be called for redemption to the extent
that amounts allocated to the Surplus Account are sufficient therefor
and are not required for any of the other authorized purposes of such
account.
6.25. Statement as to Compliance. The Entity will cause to be
prepared and filed with the Clerk and the Fiscal Agent, annually within
one hundred twenty (120) days after the close of each Fiscal Year on
June 30, commencing in the year 1981, a written statement signed by the
Presiding Officer and by the Treasurer, stating, as to each signer
thereof, that a review of the activities of the Entity during such year
and of performance under this Indenture has been made under his
supervision and to the best of his knowledge, based on such review, the
Entity has fulfilled all its obligations under this Indenture
throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known
to him and the nature and status thereof.
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ARTICLE VII
THE FISCAL AGENT AND THE PAYING AGENTS
7.01. The Fiscal Agent. The Bank of America National Trust and
savings Association, through its principal corporate trust office in
San Francisco, California, is hereby appointed Fiscal Agent for the
Entity for the purpose of receiving all moneys which the Entity is
required to deposit with the Fiscal Agent hereunder and to alloc~te,
use and apply the same and to transfer funds as required to itself as
paying Agent, and to any paying Agents hereafter appointed, as provided
in this Indenture. The Entity covenants that it will maintain a Fiscal
Agent having a principal office in the State of California, so long as
any Bonds are outstanding.
The Entity may at any time remove the Fiscal Agent initially
appointed, and any successor thereto, and may appoint a successor or
successors thereto, provided that any such successor shall be a bank or
trust company doing business and having a principal office in the State
of California, authorized under the laws of such state to exercise
corporate trust powers, having a combined capital and surplus of at
least ten million dollars ($10,000,000), 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 purposes 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
to the Entity and by giving to the Holders of the Bonds notice by
publication of such resignation, which notice shall be published once a
week for two successive weeks in one or more Financial Newspapers of
general circulation in San Francisco or LoS Angeles, California. Upon
receiving such notice of resignation, the Entity shall promptly appoint
a successor Fiscal Agent by an instrument in writing. Any resignation
or removal of the Fiscal Agent and appointment of a successor Fiscal
Agent shall become effective only upon acceptance of appointment by the
successor Fiscal Agent.
The Fiscal Agent is hereby authorized to redeem the Bonds when
duly presented for payment at Maturity or Stated Maturity, as the case
may be, or to purchase identified Bonds, and to cancel all Bonds upon
payment thereof and return the same so cancelled, or provide
certificates of destruction thereof, to the Entity.
The Entity shall from time to time, subject to any agreement
between the Entity and the Fiscal Agent then in force, pay to the
Fiscal Agent compensation for its services, reimburse the Fiscal Agent
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for all its advances and expenditures, including but not limited to
advances to and fees and expenses of independent accountants, counsel
and engineers or other experts employed by it in the exercise and
performance of its powers and duties hereunder, and indemnify and save
the Fiscal Agent harmless against liabilities not arising from its own
negligence or willful misconduct which it may incur in the exercise and
performance of its powers and duties hereunder.
7.02. The paying Agents. The Entity may appoint paying Agents
for the Bonds of any Series pursuant to Supplemental Resolutions. Each
paying Agent shall signify its acceptance of the duties and obligations
imposed upon it by the Indenture by executing and delivering to the
Entity and to the Fiscal Agent a written acceptance thereof. The
Entity may remove any paying Agent and any successor thereto, and
appoint a successor or successors thereto; provided, however, that any
such paying Agent designated by the Entity shall continue to be a
paying Agent of the Entity for the purpose of paying the interest on
and principal of and redemption premiums, if any, on the Bonds of such
Series until the designation of a successor as such paying Agent or
until expressly relieved of such obligation by written release of the
Entity.
The Entity covenants that it will maintain a paying Agent having
a principal office in San Francisco, California, so long as any Bonds
are outstanding, in the event that a principal office of the Fiscal
Agent shall not be located in San Francisco or Los Angeles, California.
Each paying Agent is hereby authorized to redeem Bonds of the
Series for which it has been appointed when duly presented to it for
payment or redemption, which Bonds shall thereafter be delivered to the
Fiscal Agent for cancellation and returned to the Entity, if required.
The paying Agent shall keep accurate records of all Bonds paid and
discharged.
7.03. Liability of Agents. The recitals of facts, covenants
and agreements herein and in the Bonds contained shall be taken as
statements, covenants and agreements of the Entity, and neither the
Fiscal Agent nor any paying Agent assumes any responsibility for the
correctness of the same, or makes any representation as to the validity
or sUfficiency of the Indenture or of the Bonds, or shall incur any
responsibility in respect thereof, other than in connection with the
duties or obligations herein or in the Bonds assigned to or imposed
upon it. Neither the Fiscal Agent nor any Paying Agent shall be liable
in connection with the performance of its duties hereunder, except for
its own negligence or willful misconduct.
7.04. Notice to Agents. The Fiscal Agent and any paying Agent
shall be protected in acting upon any notice, resolution, request,
consent, order, certificate, report, Bond or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Fiscal Agent and any paying Agent may
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consult with counsel, who may be counsel to the Entity, with regard to
legal questions, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or
suffered hereunder in good faith and in accordance therewith.
Neither the Fiscal Agent nor any paying Agent shall be bound to
recognize any person as the Holder of a Bond unless and until such Bond
is submitted for inspection, if required, and his title thereto
satisfactorily established, if disputed.
Whenever in the administration of its duties under this
Indenture the Fiscal Agent or any paying Agent shall deem it necessary
or desirable that a matter be proved or established prior to taking or
suffering any action hereunder, such matter (unless other evidence in
respect thereof be herein specifically prescribed) may, in the absence
of bad faith on the part of the Fiscal Agent or the paying Agent, be
deemed to be conclusively proved and established by a certificate of
the Entity and such certificate shall be full warrant to the Fiscal
Agent or the paying Agent for any action taken or suffered under the
provisions of the Indenture or any Supplemental Resolution, but in its
discretion the Fiscal Agent or any Paying Agent may, in lieu thereof,
accept other evidence of such matter or may require such additional
evidence as it may deem reasonable.
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ARTICLE VIII
MODIFICATIONS
8.01 Modifications. From and after the sale and delivery of
any of the Bonds, no amendment, alteration or modification of the Bonds
or of this Indenture which will impair, impede or lessen the rights of
the Holders of the Bonds then outstanding shall be made without the
prior written consent, or alternatively, the prior consent given at a
Bondholders' meeting, of the Holders of at least sixty percent (60%) of
the aggregate principal amount of affected Bonds then outstanding,
unless a higher percentage or different method is otherwise provided
for or unless the amendment, alteration or modification be as otherwise
authorized herein. No such modification or amendment shall extend the
Maturity of or reduce the interest rate on, or otherwise alter or
impair the obligation of the Entity to pay the interest or principal or
redemption premiums at the time and place and at the rate and in the
currency provided therein of any Bond without the express written
consent of the Holder of such Bond, nor reduce the percentage of Bonds
required for the written consent to any such amendment or modification.
8.02. Amendment without Consent. This Indenture and the rights
and obligations of the Entity and of the Holders of the Bonds may also
be modified or amended at any time by a Supplemental Resolution which
shall become binding upon adoption, without the consent of any Holders
of Bonds, but only to the extent permitted by law and only for anyone
or more of the following purposes:
(a) To add to the covenants and agreements of
the Entity in this Indenture contained, other covenants
and agreements thereafter to be observed, or to
surrender any right or power herein reserved to or
conferred upon the Entity;
(b) To make such provisions for the purpose of
curing any ambiguity, or of curing, correcting or
supplementing any defective provision contained in this
Indenture or in regard to questions arising under this
Indenture, as the Entity may deem necessary or desirable
and not inconsistent with this Indenture, and which
shall not adversely affect the interest of the Holders
of the Bonds; or
(c) To provide for 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 and
in accordance with the provisions of Article II.
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8.03. Consent Binding. Any amendment, alteration or
modification which shall have received the consent of the Holders of
the percentage of said outstanding Bonds as provided in Section 8.01 of
this Article shall be binding on the Holders of all of the Bonds,
including coupons appertaining thereto, either attached to or detached
from the Bonds. If any alteration, amendment or modification shall
affect less than all outstanding Bonds, then the provisions of Section
8.01 of this Article shall apply only to the Bonds affected by the
amendment, alteration. or modification.
8.04. Calling Bondholders' Meeting. If the Legislative Body
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 considering the action, the consent to which is desired or
required.
8.05. Discretion of Legislative Body. The place, date and hour
of holding the meeting and the date or dates of publishing and mailing
notice shall be determined by the Legislative Body in its discretion.
8.06. Notice of Meeting. Notice to Bondholders specifying the
purpose, place, date and hour of the meeting shall be given by mail and
by publication at least once not less than thirty (30), nor more than
sixty (60) days prior thereto in one or more Financial Newspapers
circulated in San Francisco or Los Angeles. The notice shall set forth
the nature of the proposed action, consent to which is desired or
required.
8.07. List of Owners. The Treasurer shall prepare and deliver
to the chairman of the meeting a list of the names and addresses of
Bondholders, to the extent known by him, together with a statement of
the Maturities, series and numbers of th~ Bonds held by each, and no
Bondholder shall be entitled to vote at the meeting unless his name
appears upon the list or unless, at the meeting, he shall present his
Bond or Bonds or a certificate of deposit thereof.
8.08. Certificate of Deposit. Holders of bearer Bonds may
deposit them 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
Treasurer, who shall add it to the list of owners. The Treasurer may
designate a depositary where the Bonds may be deposited, which shall be
an agency for that purpose.
8.09. Limit on Voting. 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
additional Bonds upon which he desires to vote or a certificate of
deposit.
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8.10. Attendance and voting by Proxy. Attendance and voting by
a Bondholder at the meeting may be by proxy. An owner of fully
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 said 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 writing
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 Entity at the time the Bond
was delivered to the agency as provided for in Section 8.08 of this
Article and the person's name appears on the list delivered by the
Treasurer to the chairman of the meeting, the certificate of deposit
may verify him as the proxy of the owner of said bearer Bond.
8.11. Quorum and Procedure. A representation of at least sixty
percent (60%) in aggregate principal amount of the Bonds affected by
the proposed action and then outstanding shall be necessary to
constitute a quorum at the meeting of Bondholders, 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 Legislative Body 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 each $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 Legislative Body, 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 percent (60%) of the aggregate
principal amount of the Bonds affected by the proposed action and then
outstanding, the chairman and the secretary of the meeting shall so
certify in writing to the Legislative Body, and the certificate shall
constitute complete evidence of the consent of the Bondholders.
8.15. Disqualified Bonds. Bonds owned or held by or for the
account of the Entity or the District (but excluding Bonds held in any
employees' retirement fund) shall not be deemed outstanding for the
purpose of any consent or other action or any calculation of
outstanding Bonds in this Article provided for, and shall not be
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entitled to consent to, or take any other action in, this Article
provided for.
8.16. Certificate of Notice Conclusive. The actual receipt by
a Bondholder of the notice required to be given by Section 8.06 of this
Article 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 Treasurer. 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.
8.17. Filing Certificate. The certificate shall be filed in
the office of the Treasurer 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 not, then a reproduced copy thereof,
including the signatures thereon, shall be filed by the Entity with the
pape~s of the proceedings authorizing the issuance of the Bonds.
8.18. Endorsement or Replacement of Bonds After Amendment.
After the effective date of any action taken as hereinabove prOVIded,
the Entity may determine that the Bonds shall bear a notation, by
endorsement in form approved by the Entity, as to such action, and in
that case upon demand of the Holder of any Bond outstanding at such
effective date and presentation of his Bond for the purpose at the
office of the Registrar, and at such additional offices as the
Registrar may select and designate for that purpose, a suitable
notation as to such action shall be made on such Bond. If the Entity
shall so determine, new Bonds so modified as, in the opinion of the
Entity, 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 at such effective date, such new Bonds shall be exchanged
at the office of the Registrar and at such additional offices as the
Registrar may select and designate for that purpose without cost to
each Holder, for Bonds then outstanding, upon surrender of such
outstanding Bonds with all unmatured coupons appertaining thereto.
8.19. Agreement and Agreement Guaranty Amendments without
Consent. The Entity and the other parties at the time to the agreement
referred to in Section 2.03 or 2.04 as a specific condition precedent
to the issuance of a Series, including a Person which shall have
guaranteed any of the obligations of one of such other parties to such
agreement, may, without the consent of or notice to the Bondholders,
enter into or consent to any amendment, change or modification of such
agreement, (a) as may be required by the agreement or the guarantee of
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obligations thereunder, or (b) for the purpose of curing any ambiguity
or formal defect or omission, or (c) in connection with amendments to
be made in the project or any part thereof when and to the extent
required or permitted by the agreement, or (d) in connection with any
other change therein which does not adversely affect the interest of
the Holders of the Bonds.
8.20. Agreement and Agreement Guaranty Amendments With Consent
of Bondholders. Except as provided by Section 8.19 of this Indenture,
the Entity shall not enter into or consent to any amendment, change or
modification of such agreement or the guarantee of obligations thereof
without the prior written consent, or alternatively, the prior consent
given at a Bondholder's meeting, of the Holders of the percentage of
said outstanding Bonds provided in Section 8.01 of this Article. Any
amendment, alteration or modification which shall have received such
consent shall be binding on the Holders of all of the Bonds, including
coupons appertaining thereto, either attached to or detached from the
Bonds.
8.21. Amendment by Mutual Consent. The provisions of this
Article shall not prevent any Holder of Bonds from accepting any
amendment as to the particular Bonds held by him, provided that due
notation is made on such Bonds.
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ARTICLE IX
DEFAULT
9.01. Event of Default. One or more of the events provided in
this Section shall constitute an event of default:
(a) 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
redemption, by declaration or otherwise, and such
default shall have continued for a period of thirty (30)
days:
(b) Interest. A default in the due and punctual
payment of an installment of interest of a Bond when and
as the interest installment shall become due and
payable, and such default shall have continued for a
period of thirty (30) days:
(c) Covenants. A default in the observation of
any of the covenants, agreements or conditions herein on
the Entity's part or in the Bonds contained, and such
default shall have continued for a period of sixty (60)
days: or
(d) Bankruptcy. The filing by the Entity of a
petition or answer seeking reorganization or arrangement
under the Federal bankruptcy laws or other applicable
laws or statutes of the United States of America, or the
approval of such a petition by a court of competent
jurisdiction, filed with or without the consent of the
Entity, seeking reorganization under the Federal
bankruptcy laws or other applicable laws or statutes of
the United States of America or the assumption of
control of the Entity 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.
9.02. Acceleration. Upon the happening of an event of default,
the Holders of not less than fifty percent (50%) in aggregate principal
amount of the Bonds at the time outstanding by notice in writing to the
Entity, may 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. No such acceleration shall be declared or become
effective solely for the reason that all or any part of the principal
and interest is paid within the period specified in Section 9.01{a) or
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(b) by, or with moneys received from, a reputable municipal bond
insurer or any state or Federal Agency.
9.03. Application of Funds. All of any Gross Revenues pledged
to the payment and security of the Bonds, including all sums in all of
the Funds and Accounts provided therefor upon the date of the happening
of an event of default, and all sums thereafter received therefor by
the Entity and transmitted to the Fiscal Agent shall be applied by it,
upon presentation of the several Bonds, 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 ~/O~ through 9fO~7 of
this Article.
9.04. 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 Fiscal Agent in carrying out the provisions of this Article, if
any, including reasonable compensation to its agents, attorneys and
counsel.
9.05. Interest on Undue Bonds. In case the principal of the
Bonds shall not have become due and shall not then be due and payable,
said moneys shall be applied to the payment of the interest in default
in the order of Stated Maturity, with interest after maturity as
provided by Section 3.02.
9.06. 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 interest of the Bonds in the order of the Maturity or Stated
Maturity, as the case may be, of the principal and interest, with
interest after maturity as provided by Section 3.02.
9.07. Insufficient Funds. In case the moneys shall be
insufficient to pay in full the whole amount so owing and unpaid upon
the Bonds, under Sections 9.05 and 9.06 of this Article, then the
moneys shall be applied to the payment, first 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
preference, with interest after maturity as provided by Section 3.02.
9.08. Maintenance and Operation Costs. Any moneys remaining
shall be used for the payment of the maintenance and operation costs of
the Enterprise and only thereafter for any other authorized purpose.
9.09. Refunding Defaulted Bonds. The Entity may refund any
defaulted Bonds by the issuance of new Bonds pursuant to this Indenture
in which event the action shall be deemed to avoid or cure a default
under this Article. with the consent of the Bondholder, the refunding
Bonds may be exchanged for the Bonds refunded.
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ARTICLE X
REMEDIES OF BONDHOLDERS
10.01. Bondholder Remedies. Subject to any contractual
limitations binding upon the Holders of the Bonds (including, but not
limited to, limitations upon the exercise of a remedy to the
Bondholders holding a specific proportion or percentage of the Bonds) ,
the Holders of the Bonds shall have the rights, for the equal benefit
and protection of all Holders of Bonds similarly situated, as provided
in this Article.
10.02. Accounting. By action or suit in equity, they may
require the Entity and the Legislative Body 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
en}Oln acts or things which may be unlawful or violate the rights of
the Bondholders.
10.04. Mandamus. By mandamus or other suit, action or
proceeding at law or in equity, they may enforce their rights against
the Entity and its Legislative Body and other officers, agents and
employees, and require 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 Bondholders.
10.05. Cumulative. No remedy conferred by this Article or by
the law is intended to be exclusive of any other remedy, 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 Article or by law.
10.06. Waiver. No waiver of a default or breach of duty or
contract by any Bondholder shall extend to or shall affect subsequent
default or breach of duty or contract or shall impair rights or
remedies thereof.
10.07. Delays. No delay or omission of a Bondholder to
exercise a right or power accruing upon a default shall impair the
right or power or shall be construed to be a waiver of the default or
acquiescence thereof.
10.08. Enforcement. Every substantive right and every remedy
conferred upon the Bondholder may be enforced and exercised from time
to time and as often as may be deemed expedient.
10.09. Status Quo. In case an action, suit or proceeding to
enforce a right or exercise a remedy shall be brought or taken and then
discontinued or abandoned, or shall be determined adversely to the
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Bondholders, then, and in every case, the Entity and the Bondholders
shall be restored to their former positions and rights and remedies as
if no suit, action or proceedings has been brought or taken.
10.10. Actions by Fiscal Agent. Any suit, action or proceeding
which any Bondholder 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 Bondholders similarly situated, and the
Fiscal Agent is hereby appointed (and the successive respective Holders
of Bonds issued hereunder, by taking and holding the same, shall be
conclusively deemed so to have appointed it) the true and lawful
attorney-in-fact of the respective Bondholders for the purpose of
bringing any such suit, action, or proceeding and to do and perform any
and all acts and things for and on behalf of the respective Bondholders
as a class or classes, as may be necessary or advisable in the opinion
of the Fiscal Agent as such attorney-in-fact.
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ARTICLE XI
DEFEASANCE
11.01. Discharge of Indebtedness.
(a) If the Entity shall payor cause to be paid,
or there shall otherwise be paid, to the Holders of all
outstanding Bonds the principal (redemption premiums, if
any) and interest due or to become due thereon, at the
times and in the manner stipulated therein and in this
Indenture and all Supplemental Resolutions, then the
Holders of such Bonds and coupons shall cease to be
entitled to the pledge of Revenues, and all covenants,
agreements and other obligations of the Entity to the
Holders of such Bonds under the Indenture shall
thereupon cease, terminate and become void and be
discharged and satisfied. In such event, the Fiscal
Agent shall cause an accounting for such period or
periods as shall be requested by the Entity to be
prepared and filed with the Entity and, upon the request
of the Entity shall execute and deliver to the Entity
all such instruments as may be desirable to evidence
such discharge and satisfaction, and the Fiscal Agent
and the paying Agents shall pay over or deliver to the
Entity all moneys or securities held by them pursuant to
this Indenture which are not required for the payment of
principal (redemption premiums, if any) or interest on
Bonds.
(b) Bonds for the payment or redemption of which
moneys shall have been set aside (through deposit by the
Entity or otherwise) to be held in trust by the
Treasurer for such payment or redemption at the Maturity
or Stated Maturity, as the case may be, shall be deemed,
as of the date of such setting aside, to have been paid
within the meaning and with the effect expressed in
subsection (a) of this section.
(c) All outstanding Bonds of any Series shall,
prior to the Maturity or Stated Maturity, as the case
may be, 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 Stated
Maturity, the Entity shall have given to the
Fiscal Agent in form satisfactory to it,
irrevocable instructions to publish notice of
redemption of such Bonds on said date,
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(2) There shall have been deposited with
the Fiscal Agent either moneys in an amount which
shall be sufficient, or Federal Securities
(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 principal of and the interest on which when
paid will provide moneys which, together with the
moneys, if any, deposited with the Fiscal Agent
at the same time, shall be sufficient to pay when
due the principal (redemption premiums, if any) .
and interest due and to become due on such Bonds
on and prior to the Stated Maturity or Maturity
thereof, as the case may be, and
(3) In the event such Bonds are not by
their terms subject to redemption within the next
succeeding sixty (60) days, the Entity shall have
given the Fiscal Agent in form satisfactory to
it, irrevocable instructions to publish, as soon
as practicable, at least in one or more Financial
Newpapers of general circulation in San Francisco
and Los Angeles, California, and in the same or a
similar Financial Newspaper of general
circulation in each city in which a paying Agent
has been appointed for the Bonds to be redeemed,
a notice to the Holders of such Bonds that the
deposit required by (2) above has been made with
the Fiscal Agent and that such Bonds are deemed
to have been paid in accordance with this section
and stating such Maturity or Stated Maturity upon
which moneys are to be available for the payment
of the principal (redemption premiums, if any),
and interest on such Bonds. .
(d) Neither Federal Securities nor moneys
deposited with the Fiscal Agent pursuant to this section
or principal or interest payments on any such Federal
Securities shall be withdrawn or used for any purpose
other than, and shall be held in trust for, the payment
of the interest on and principal and redemption
premiums, if any, of such Bonds; provided that any cash
received from such principal or interest payments on
such Federal Securities deposited with the Fiscal Agent,
if not then needed for such purpose, shall, to the
extent practicable, be reinvested in Federal Securities
maturing at times and in amounts sufficient to pay when
due the principal and interest and redemption premiums,
if any, to become due on such Bonds on and prior to
Maturity or Stated Maturity thereof, as the case may
be, and amounts received resulting from such
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reinvestments shall be paid over to the Entity as
received by the Fiscal Agent, free and clear of any
trust, lien or pledge. For the purposes of this
section, Federal Securities shall mean and include only
such securities as are not subject to redemption prior
~o their maturity.
11.02. Unclaimed Moneys. Anything in this Indenture to the
contrary notwithstanding, any moneys held by the Fiscal Agent in trust
for the payment and discharge of any of the Bonds which remain
unclaimed for five years after the date when such Bonds have become due
and payable, either at Stated Maturity or Maturity, if such moneys were
held by the Fiscal Agent at such date, or for five years after the date
of deposit of such moneys if deposited with the Fiscal Agent after the
said date when such Bonds become due and payable, shall, at the written
request of the Entity, be repaid by the Fiscal Agent to the Entity as
its absolute property and free from trust, and the Fiscal Agent shall
thereupon be released and discharged with respect thereto and the
Bondholders shall look only to the Entity for the payment of such
Bonds: provided, however, that before being required to make any such
payment to the Entity, the Fiscal Agent shall, at the expense of the
Entity, cause to be published at least once in one or more Financial
Newspapers of general circulation in San Francisco and Los Angeles,
California, and in the same or in a similar Financial Newspaper of
general circulation in each city in which a Paying Agent has been
appointed, a notice that said moneys remain unclaimed and that, after a
date named in said notice, which date shall not be less than thirty
(30) days after the date of the first publication of such notice, the
balance of such moneys then unclaimed will be returned to the Entity.
.
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ARTICLE XII
MISCELLANEOUS
12.01. Benefits of the Indenture Limited to Parties. Nothing
in the Indenture expressed or implied, is intended to give to any
person other than the Entity, the Treasurer, the Fiscal Agent, the
paying Agents and the Holders of Bonds, any right, remedy or claim
under or by reason of this Indenture. Any covenants, stipulations,
promises or agreements in this Indenture contained by and on behalf of
the Entity or the Treasurer shall be for the sole and exclusive benefit
of the Fiscal Agent and the Paying Agents and the Holders of the Bonds.
12.02. Content of Certificates and Opinions. Every certificate
or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include (a) a statement that the
person or persons making or giving such certificate or opinion have
read such covenant or condition and the definitions herein relating
thereto; (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are 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 covenant or
condition has been complied with; and (d) a statement as to whether, in
the opinion of the signers, such condition or covenant has been
complied with.
Any such certificate made or given by an officer of the Entity
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of or representations by counsel, unless such
officer knows that the certificate or opinion or representations with
respect to the matters upon which his certificate may be based, as
aforesaid, are erroneous, or in the exercise of reasonable care should
have known that the same were erroneous. Any such certificate or
opinion or representation made or given by counsel may be based,
insofar as it relates to factual matters, information with respect to
which is in the possession of the Entity, upon the certificate or
opinion of or representations by an officer or officers of the Entity,
unless such counsel knows that the certificate or opinion or
representations with respect to the matters upon which his certificate,
opinion or representation may be based, as aforesaid, are erroneous, or
in the exercise of reasonable care should have known that the same were
erroneous.
12.03. Execution of Documents by Bondholders. Any request,
declaration or other instrument which this Indenture may require or
permit to be executed by Bondholders may be in one or more instruments
of similar tenor, and shall be executed by Bondholders in person or by
their attorneys appointed in writing.
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Except as otherwise herein expressly provided, the fact and date
of the execution by any Bondholder or his attorney of such request,
declaration or other instrument, or of such 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, that
the person signing such request, declaration or other instrument or
writing acknowledged to him the execution thereof, or by an affidavit
of a witness of such execution, duly sworn to before such notary public
or other officer.
Except as otherwise herein expressly provided, the amount of
Bonds transferable by delivery held by any person executing such
request, declaration or other instrument or writing as a Bondholder,
and the numbers thereof, and the date of his holding such Bonds, may be
proved by a certificate which need not be acknowledged or verified,
satisfactory to the Fiscal Agent, executed by a trust company, bank or
other depositary wherever situated, showing that at the date therein
mentioned such person had on deposit with such depositary the Bonds
described in such certificate. Continued ownership after the date of
deposit stated in such certificate may be proved by the presentation of
such certificate if the certificate contains a statement by the
depositary that the Bonds therein referred to will not be surrendered
without the surrender of the certificate to the depositary, except with
the consent of the Fiscal Agent. The Fiscal Agent may nevertheless in
its discretion require further or other proof in cases where it deems
the same desirable. The ownership of registered Bonds and the amount,
maturity, number and date of holding the same shall be proved by the
registration books provided for herein.
Any request, declaration or other instrument in 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 Entity in good
faith and in accordance therewith.
12.04. Waiver of personal Liability. No member of the
Legislative Body, officer, agent or employee of the Entity 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 such member, officer, agent or
employee from the performance of any official duty provided by law or
this Indenture.
12.05. Destruction of Cancelled Bonds. Whenever in this
Indenture proviSIOn is made for the surrender to the Entity of any
Bonds which have been paid or cancelled pursuant to the provisions of
the Indenture, the Fiscal Agent may destroy such Bonds and furnish to
the Entity a certificate of such destruction.
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12.06. Effective Date of this Resolution. This Resolution
shall take effect from and after its passage and approval.
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I hereby certi~y that the foregoing resolution was duly and
regularly adopted and passed by the city Council of the City of Gilroy,
California, at a regular meeting thereof held on the l7thday
of February , 1981, by the following vote of the members thereof:
AYES, and in favor thereof, Councilmembers: ALBERT, CUN~INGHAM,
HUGHAN, LINK, PATE, TAYLOR and GOODRICH.
NOES, Councilmembers:
None
ABSENT, Councilmembers:
None
APPROVED:
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