Loading...
HomeMy WebLinkAboutReso 84-1977WJML: JLC :bs 5-23-77 6-8-77 (Rev) RESOLUTION NO. 84 -77 A RESOLUTION PROVIDING PROCEDURES FOR THE ISSUANCE OF SEWER REVENUE BONDS AUTHORIZED BYORDINANCE, FIXING. THE FORM OF THE BONDS AND PROVIDING COVENANTS FOR THEIR PROTECTION CITY OF SOUTH SAN FRANCISCO $1 , 100, '000 SEWER REVENUE ~ BONDS OF 1977 RESOLVED, by the City Council of the City of South San Francisco, California, that WHEREAS, the City of South San .Francisco, in the County of San Mateo, state of California, herein~called "City", is a general law City duly organized and existing under'and'pUrsuant to the provisions of the Government Code of the State of California; WHEREAS, this Council 'did, on April 6, 1977, adopt its Resolution No. 33-77 entitled ,,A Resolution of Intention to Issue Sewer RevenUe Bonds", providing for the acquisition, construction, and financing of certain sanitary sewage facilities therein described and referred to as "works" (herein referred to as "Works") to serve an area therein described and herein referred to as "Area"; WHEREAS, in accordance with law, a public hearing was duly held thereon, after due notice thereof, and no petition of owners or reg- istered voters was filed requesting that the Council call and hold a special election of registered voters in the Area on the proposition of acquiring or constructing'the proposed Works; WHEREAS,'City proposes herein to issue Revenue Bonds to finance its share of the cost of the acquisition, construction, and financing of the Works, exclusive of federal and state subventions,.and to provide that the principal of and interest on the Bonds shall be paid from a Bond Fund herein created, and that said principal and interest payments be further secured by a Reserve Fund herein created, both of which funds will be maintained from the Gross Revenues of the City sanitary sewage facilities. Said Revenues will be such that the City can and does herein determine that the principal of and in- terest on the Bonds of this Issue, together with the payment of all other obligations which are, or may be., a charge against said Revenues, and the City's share of the costs of the maintenance and operation of said Works, can be financed solely from said Revenues so that the City's tax fund need not make any contribution; WHEREAS, City has heretofore issued bonds entitled "Sewer Revenue Bonds of 1969", some of which have not matured,.remain outstanding, and are Unpaid. Pursuant to City Ordinance No. 588 providing for the issuance thereof, adopted on March 3, 1969, the gross revenues of the sanitary sewage facilities therein described have been pledged toward the payment of said bonds. NOW,.THEREFORE, IT IS DETERMINED and ORDERED, as follows: 1.01 General. The terms used herein Shall have the meanings set forth in this Article. 1.02 Annual. "Annual" means the Fiscal Year. 1.03 Area. "Area" means the area to be served by the Works, as described in Resolution No. 33-77, including areas served by additiOns, extensions, improvements and betterments thereto; said Area includes -2- all of the land within the City exclusive Of areas served by the North San Mateo County Sanitation District. 1.04 Bondholder(s); Holder(s)~ of Bonds; Holder(s). "Bondholder(s)", "Holder(s) of Bonds", or "Holder(s)" means the holder of a bearer bond or the registered owner of a registered bond. 1.05 Bond Law. "Bond Law" means Chapter 5 (commencing with Section 4950) of Part 3, Division 5 of the Health and Safety Code of the State Of California, cOmmonly referred to as the 'Sewer Revenue Bond Act of 1933. 1.06 Bond(s); Bonds of this Issue. "Bond(s)", or "Bonds of this Issue" means the issue of Bonds in the total principal amount of $1,100,000 herein authorized to be issued by the City. 1.07 Bonds of Prior Issue. "Bonds of Prior Issue" means bonds of the City entitled "Sewer Revenue Bonds of 1969", issued by the City. pursuant to its Ordinance No. 588, adopted on March 3, 1969. 1.08 Bond Year. "Bond Year" means the period between the dates of maturity of the annual series of Bonds. 1.09 Charges. "Charges" means fees, tolls, - rates and rentals prescribed within the Area by the City Council for the use and main- tenance of the Works and for payment of the principal, and interest on the Bonds, including charges on the sanitary sewage facilities pre- viously acquired and financed by other methods for the Area, users of which receive additional benefits from the construction of the Works, but excludin~ while the Bonds of Prior Issue are outstanding and unPaid, any and all charges heretofore pledged pursuant to the indenture therefor, being the Charges from the Area therein described. -3- 1.10 City. "City" means the City of South San Francisco° 1.11 City Council. "City Council" means the City Council of the City, the governing body of the City. 1.12 Clerk. "Clerk" means the person elected or appointed as the Clerk of the City and its City Council. 1.12A Facilities. "Facilities" means all of the sanitary sewage collection,-treatment purification and disposal facilities owned by City plus, to the extent of City's ownership, any Such facilities owned by the City and others. 1.13 Fiscal Year. "Fiscal Year" means the fiscal year of the City which is from July 1 to June 30, both inclusive. 1.14 Gross Revenues. "Gross Revenuer'means total annual revenueS. 1.15 Improve. "Improve" means to reconstruct, replace, extend, repair, better, equip, embellish or otherwise improve. 1.16 Indenture. "Indenture" means Ordinance No. ?$6-?7, An Ordinance Authorizing the Issuance of Sewer ReVenue Bonds, adopted June 15 , 1977, incorporating the provisions of this ResOlution. 1.17 Mayor. "Mayor" means the Mayor of the City. 1.18 Net Revenues; Net Revenues of the Facilities. "Net Revenues" or "Net Revenues of the Facilities" means annual Gross Revenues after deducting all sums expended therefrom for .the annual administration, management, operation, maintenance and repair of the Facilities,' in- elUding all incidental costs, fees and expenses properly chargeable thereto, 1.19 Revenues; Revenues of the Facilities. "Revenues" or "Revenues of the Facilities'' means all Charges, and all other income and receipts _4_ derived from the operation of the Facilities, or arising from the Facilities, or any improvements, additions, or extensions thereto, including revenues deposited in any funds to secure or t° provide for the payment of the Bonds, and interest received on the Revenues or re- Ceived on any invested moneys of the Facilities; provided, however, that while the Bonds of Prior Issue are outstanding and unpaid, any and all revenues theretofore pledged pursuant to the indenture therefor, are not Revenues as herein defined; and further Provided, however, ~that the portion Of the proceeds of any rates and charges required by the State of California or the United States Government to be levied and collected from users for the purpose of repaying all or part of any grants received in connection with the Works, or any special charges levied for the ex- press purpose of reimbursing others for all or a Portion of the cost of acquisition or construction of specific facilities, are not Revenues subject to the lien of the Bonds. 1.20 Treasurer. "Treasurer" means the Treasurer of the City. 1.21 Works. "Works" means the sanitary sewage facilities described in Resolution No. 33-77, the Cost of acquiring, constructing, and financing of which is.to be paid. from the proceeds of the Bonds of this~Issue, to serve the Area, to wit: The construction of subregional dechlorination facilities, in-plant improvements to the SoUth San Francisco-San Bruno wastewater treatment plant, and subregional wastewater solids treatment disposal and management facilities, together with the acquisition of lands, easements and rights necessary, for any of the above, all' as required to meet the discharge and disposal requirements and standards established by the San Francisco Bay Regional Water Quality Control Board on behalf of both the State of California and the Federal Environmental Protection Agency.. ARTICLE II - GENERAL PROVISIONS 2.01 Bond Law. The proceedings have been conducted and the Bonds are being issued pursuant to the Bond Law. 2.02 Public Interest. The public interest, economy and general welfare will be served by the acquisition, construction, and financing of the Works, including all expenses incidental thereto or connected therewith. 2.03 Conditions Precedent. All acts, conditions and things re- quired by law to exist, happen and be performed precedent to and in the issuance of the Bonds have existed, have happened and have been per- formed in due time, form and manner as required by law, and the City is now authorized, pursuant to each and every requirement of law, to issue Revenue Bonds in the manner and form as provided herein. 2.04 Purpose of Bonds. Revenue Bonds of the City shall be issued to pay its share of the cost of the acquisition, constructi°n, and fi- - nancing of the Works, exclusive of federal and state subventions. 2.05 Cost of Works. The total estimated cost of the Works, including Construction of improvements, the engineering and other fees, acquisition of lands and easements, and all other expenses in- cidental thereto including bond discount, if any. and bond reserve funds, working capital and estimated interest during construction and for 12 months thereafter, is the sum of $6,400,000, of which amount it is estimated $5,300,000 will be contributed by the United States of America, the State of California and local agencies, the remainder to be paid from the prOceeds of the Bonds of this Issue° 2.06 Complete Project° It is hereby found and determined that the City has made all necessary arrangements for the financing of the Works. Accordingly, it is hereby fOund and determined that: -6- (a) Adequate Funds° The acquiring, constructing and financing of the WOrks can be accomplished from the funds to be available from the oroceeds of the sale of the Bonds, together with the aforesaid contributions. (b) Adequate Rates. Charges have been and will be fixed, levied and collected; and (c) Bond Payment. The Charges and all other income and receipts included in the definition of "RevenUes" shall constitute the Revenues of the Facilities pledged to service the Bonds as provided herein. 2°07 Single Transaction. The acquiring, constructing, and financing of the Works is one transaction, complete in and of itself and the proceeds'of the Bonds of this Issue will be applied to the cost thereof as herein provided. 2.08 Separate Fund. The City, during the term of the Bonds, will operate the Facilities as a separate and distinct agency, and will create and'maintain a separate and distinct special fund and account for the Facilities into which all Revenues of the Facilities to be received are to be deposited, and from which all disbursements herein provided, relating to the Facilities, are to be made during the term of the Bonds. 2.09 Legality. If any article, section, subSection, paragraph, sentence, clause or phrase of the Indenture is for any reason adjudged by any court of competent jurisdiction to be unconstitutional, unen- forceable or invalid, such decision shall not affect the validity of the remaining portions of the Indenture. The City Council hereby declares it would have passed the Indenture and each'and every article, section, subsection, paragraph, sentence, clause or phrase thereof would have authorized the issuance of. the Bonds pursuant thereto -7- irrespective of the fact that any one or more articles, sections, sub- sections, paragraphs, sentences, clauses or phrases of the Indenture be adjudged to be unconstitutional, unenforceable or invalid. ARTICLE III - THE BONDS 3.01 Issue. The Bonds shall be issued in the aggregate amount of $1,100,000, shall be known as "City of South San Francisco Sewer Revenue Bonds of 1977", shall be issued in the form df coupon bonds, registrable as to principal and interest, or as to principal alone, and of the denomination of $5,000 each. The Bonds shall be dated September 1, '1977, and shall be numbered consecutively and mature serially on the 1st day Of july in the amounts and years, as follows: Bond' Numbers Principal Year of (Inclusive) Amount Maturity 1-6 $ 30,000 1979 7-12 30,000 1980 13-19 35,000 1981 20-26 35,000 1982 27-34 40,000 1983 35~42 40,000 1984 43-51 45,000 1985 52~60 45,000 1986 61-70 50,000 1987 71-81 55,000 1988 82-93 60,000 1989 94-105 60,000 1990 106-118 65,000 1991 119-132 70,000- 1992 133-147 75,000 1993 148-163 80,000 1994 164-181 90,000 1995 182-200 95,000 1996 201-220 100,000 1997 3°02 Form of the Bonds and COupons° The Bonds and coupons thereto attached shall be in form substantially as provided in Exhibit "A" hereto attached and by reference made a part hereof. 3°03 Callable Bonds; Prior Redemption. Bonds maturing bY their terms on or before July 1, 1988 shall not be subject to call prior to their fixed maturity date. Bonds maturing on or after July 1, 1989, shall, by their terms, be subject to call and redemption, at the option of the City, in inverse numerical order, on July 1, 1988 (but not prior thereto except as hereafter provided), or on any interest date there- after and prior to their maturity date or dates, at the principal amount thereof and accrued interest thereon to the date of redemption, plus a redemption premium equal to one quarter of One percent (1./4 of 1%) of such principal amount for each whole twelve (12) month period, and for any remaining fraction of a tWelve (12) month period, from the date fixed for redemption to the maturity date of the bonds so redeemed, provided., however, that in no event shall the premium paid .on prior redemption by call on'any bond exceed twO percent (2'%).. Bonds maturing by their terms on or after July 1, 1991, shall, by their terms, be subject to call and redemption., at the option of the City, in inverse numerical order, on January 1, 1982 (but not prior thereto), or .on any interest date thereafter and prior to July 1, 1988, at the principal amount thereof and accr~ued interest thereon to the date of redemption, plus a redemption premium equal to two percent (2%) of Such principal amount. 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 office of the Treasurer, City Hall, South San Francisco, California. 3.05 Interest and CouPons. The Bonds shall bear interest from their date to t~eir respective dates of maturity, at the rate or rates provided in the accepted bid for the purchase of the' Bonds, but not to exceed Seven percent (7%) per annum. Said interest shall be payable on JUly 1 , 1978, and semiannually thereafter on the days of January and July in each Year to the -9- --- date of maturity. Attached to each Bond shall be interest coupons 'payable at the times the~respective interest payments thereon be- come due. 3.06 Interest After Maturity. If, upon presentation at or after maturity or date of call, payment of any Bond or of any interest coupons thereon is not made in full in accordance with the terms of this Indenture, said Bond or coupons, or both, shall continue to bear interest at the rate stated in such Bond until paid in full, 3.07 Negotiable Instruments. At issuance the Bonds will be negotiable instruments and title thereto, unless registered as herein- after-provided, shall pass by physical delivery thereof. The Holders of the Bonds shall have all of the rights possessed by holders of __ negotiable instruments payable to bearer. 3.08 Source of Payment. The Bonds shall recite that they are'issued pursuant to the Bond Law and that they are ~payabie solely from the Revenues. 3.09 Bonds Not a Debt. The Bonds and interest thereon shall not be a debt of the City, nor a charge, lien or enCumbrance, legal or equitable, upon any of its property or upon any of its income or receipts or revenues, other than the ReVenues of .the Facilities Which have been pledged to the payment thereof as herein provided. 3.10 City Credit Not Encumbered. No recourse shall be had for the payment of the Bonds, or of the interest thereon, or any part thereof, against the General Fund of the City,. nor shall its credit or taxing power be deemed to be pledged thereto, and the Holders of the Bonds, or the coupons thereon, shall never have the -10- right to compel the exercise of the taxing power of the City or the forfeiture of any of its property for the payment of the Bonds or · the interest thereon. 3.11 Bonds a Special Obligation. The Bonds and all additional Bonds which may be issued in accordance with the terms and conditions hereof shall be a special obligation of the City and shall be payable from and secured by a lien upon the GrOss Revenues of the Facilities as herein provided. 3.12 Execution of Bonds. Said Bonds shall be signed by the Mayor and countersigned by the Clerk. The official seal of the City shall be affiXed on each of said Bonds. The coupons attached to the Bonds shall be signed by the Treasurer. Ail of said signatures, except that of the Clerk, may be printed, engraved, lithographed, or stamped on the Bonds and coupons in lieu of signing by hand. The official seal may be similarly reproduced on the Bonds. Such signing, countersigning, and sealing shall constitute and be a sufficient and binding execution of each of said Bonds and coupons. 3.13 Continuing Validity of Signatures. If any officer whose signature or countersignature appears on the Bonds or coupons ceases to be such officer before delivery of the Bonds, such signature or countersignature is nevertheless valid and sufficient for all pur- poses as if such officer had remained in office. Any Bond or coupon may be signed and countersigned on behalf of the City by such persons as at the actual date of the execution of such Bond or coupon shall be the proper officers of the City although at the nominal date of such Bond or coUPon any -I1- such person shall not have been such officer of the City. 3.14 Delivery. The Bonds shall be delivered to the purchasers thereof. The City shall deliver the Bonds upon receipt of the pur- chase price and shall credit the proceeds to the special fund and account for the payment of the cost of the Works, as provided herein, but the purchasers shall not be required to see to the proper appli- cation thereof. 3.15 Transcript. The Clerk is hereby authorized to prepare and furnish to the purchasers of the Bonds issued hereunder and attorneys examining the same a complete set of certified copies of all ordinances, resolutions, and documents relating to the issuance of Bonds and of all other proceedings and records of the CitY COuncil showing the right, power, and authority to issue the Bonds and to provide the security therefor, and Such certified copies and certi- ficates shall be deemed representations of the City Council as to all facts stated therein. 3.16 PurchaSe of Bonds. The City may, from time to time, pur- chase in the open market any or all of the Bonds at prices offered. Ail BOnds purchased shall~be canceled and shall not again be reinstated. ARTICLE IV - REGISTRATION Part 1 -~Against Theft 4.01 ReKistration. Each of the Bonds may be registered as to principal and interest or as to principal alone, upmn the written request of the holder and presentation of the Bond to the Treasurer. 4.02 Principal and Interest. When a Bond is presented for registration as to both principal and interest, the coUpons shall -12- be removed therefrom and canceled (or preserved in a place of safe- keeping, at the option of the Treasurer), and the number of the Bond, the name and address of the holder in whose name it is to be registered, and the date of such registration shall be entered in the book of'registered bonds required to be maintained by the Treasurer, and a notation shall be made therein and on the back of the Bond that 'registration is as to both principal and interest, until such regis- tration is discharged as hereinafter proVided, the interest when due shall be payable only to the registered owner, and the princiPal when due shall be payable only to such owner upon surrender of~the Bond to the Treasurer. 4.03 Principal Only. When a Bond is presented for registration as to princiPal only, 'the number of the Bond, the name and address of the holder in whose name it is to be registered, and the date of such registration shall be entered in'the book of registered bonds, and a notation shall be made therein and on the back of the Bond that registration is as to principal only. In such case, the coupons remain negotiable and transferable by delivery and'shall not be re- moved from the .Bond. Interest on Such Bond shall be paid to whoever presents the coupons for payment; principal., however, shall be paid only to the registered owner upon surrender of such bond to the Treasurer, 4.04 Transfer. A registered Bond may be transferred 0nly by · the registered owner in person, or by attorney duly authorized by a written instrument of transfer in form acceptable to the Treasurer, and by the Treasurer endorsing such transfer on the back of the -13- Bond and in the registry book. 4.05 Deregistration. A registered Bond may be discharged from registration upon written request of the registered owner. In such case, the Treasurer shall transfer the Bond to bearer by appropriate endorsement on the back of the Bond and in the registry book, cause all unmatured coupons that have been removed from the Bond to be reattaChed to the Bond (such coupons to be reprinted, if necessary), and deliver the Bond and coupons to the owner, and thereupon negotiability and transferability by delivery shall be restored. Until registered again, the principal of the Bond and the interest thereon' shall be payable when due to whoever surrenders the coupons and Bond to the Treasurer° 4.06 Reregistration. Deregistered Bonds may be registered --- again in the manner heretofore provided. 4.07 Charges. The person requesting registration, transfer, or deregistration shall pay any charges therefor~ including any cost of reprinting the coupons. 4°08 Form of Registration 'Endorsement. The form of registra- tion endOrsement to be provided on the back of each Bond is set forth in said Exhibit "A"o Part 2 - Against Delinquency 4o'09 Endorsement° When a~Bond or interest coupon is pre- sented tO the Treasurer for payment and is not paid for want of'funds, the Treasurer shall endorse thereon "not paid for want of funds", the date of presentation, a serial number indicating the order of payment, ___ and shall sign or stamp his name thereon° 4.10 Record° The Treasurer shall keep a book or other record · -14- in which shall be entered the number and designation or series of the Bonds., the date and serial number of their registration, and, if known, the names and addresses of their respective owners or persons who presented the Bonds or coupons for payment. 4,11 Setting Aside Money. Upon receipt of the first money applicable to their payment, there shall be set apart the amount necessary to pay the registered Bonds and couponS. 4.12 Notice and Payment. The Treasurer Shall give notice by registered or certified mail to the owner or Holder of the registered Bonds and coupons at the address last entered, or to the person who · presented them that funds are available to pay the Bonds and coupons. 4.13 Order of Payment. The Bonds and coupons Shall be paid in the order of their serial numbers. 4.14 Failure to Present. If the registered Bonds and coupons are not presented for payment' within 30 days from mailing of the notice, or if the name and address of the owner or person who pre- sented the Bonds or coupons is unknoWn, the Treasurer shall apply the amount set aside to the payment of the unpaid registered Bonds and coupons next in Order, until all registered Bonds and coupons. have been paid, ARTICLE V- CALL AND REDE}~TION 5.01 NOtice of 'Redemption. When Bonds are called for re- demption, the Treasurer shall cause notice of' redemption to be given by publication once, not less than thirty (30) days prior to the date of call, in a financial newspaper published in San Francisco, California, or in New York City, New York. The Treasurer shall also -15- cause such notice to be mailed by registered or certified mail, not less than thirty (30) days prior to the date of call, to the last known Holder of any bearer Bond so called, and to the registered owner of any registered Bond so Called, as shown on the records of the Treasurer. 5.02 Form of Notice. The notice of redemption shall: (a) State the redemption date; (b) state the redemption price; (c) State the numbers and dates of 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 stated; (d) Require that such Bonds be surrendered, together with all interest coupons maturing subsequent to the redemption .date, at the office of 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 City duly executed; and (f) GiVe nOtice that further interest, on such Bonds will not accrue after the designated redemption date. 5.03 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 no- tice-shall not affect the validity of the proceedings for the re- demption' of such Bonds or the cessation of interest on the date fixed fOr redemption. -16- 5.04 Cer'tifi,cate~ o'f, No~t'ie~e'conclusiVeo A~certificate by the Treasurer that notice of call and redemption has been given to owners of Bonds 'as herein provided shall be conclusive as against all parties, and no Bondholder 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 such Bondholder failed to aCtually receive such notice of call and redemption. 5.05 Redemption Fund. Prior to the time the City Council de- terminms to call and redeem any of said Bonds, the Treasurer shall establish a redemption fund to be .designated "City of South San Francisco Sewer Revenue Bonds of 1977 Redemption Fund", herein called "Redemption Fund". Prior to the publication of the notice of a redemption there must be set aside in said Redemption Fund moneys available for the purpose and sufficient to-redeem, at the premiums payable as herein provided, the Bonds designated in Such notice for redemption. (a) Use of 'Funds. Said moneys must be set aside in Said fund solely for that purpose and shall be applied on or after the redemption date to payment for the'Bonds to be redeemed upon pre- sentation and surrender of such Bonds and (except as t° Bonds re- gistered as to both principal and interest) all interest coupons maturing after the redemptiOn date, -and shall be used only for that purpose; (b) Coupons DUe. Any interest coupon due on or prior to the redemption date shall be paid from the Bond Fund provided in -17- Section 6.08 upon presentation and surrender thereof; (c) 'CoUpons Not' Due. Each Bond presented (if unregis- tered or registered as to principal only) must have attached thereto or presented therewith all interest coupons maturing after the re- demption date; '(d) Retransfers. If after all of the Bonds have been redeemed and canceled or paid and canceled, there are moneys remaining in said Redemption Fund, said moneys shall be transferred to the Revenue Fund; provided, however, that if said moneys are part of the proceeds of refunding bonds, said moneys shall be transferred to the fund created for the payment of principal of and interest on such refunding bonds. · 5.06 Ef'fect of' Notice of Redempti.on. When notice of redemption has been given substantially as provided in Sections 5.01 and 5.02, and when the amount necessary for the redemption of the Bonds called for redemption is set aside for that purpose in the Redemption Fund, as provided in Section 5.05, the Bonds designated for redemption shall become due and payable on the date fixed for redemption thereof, and, upon presentation and Surrender of said Bonds and (eXcept as ~p Bonds registered as to both principal and interest) all interest coupons maturing after the redemption date, to the Treasurer and, if any of said Bonds be registered, upon the appropriate assignment thereof, such Bonds shall be redeemed and paid at said redemption price out of the Redemption Fund. (a) Interest Terminates. No interest will accrue on such BondS called for redemption or on any interest coupons thereon -18- after the redemption date specified i~ such notice, and the Holders of said Bonds so called for redemption after such redemption date shall look for the payment of such Bonds and the premium thereon only to said Redemption Fund. Ail Bonds redeemed and all interest coupons thereon shall be canceled forthwith and Shall not be reissued; and (b) Matured Coupons Payable. Ail interest coupons, pertaining to any.redeemed Bonds, which coupons have matured on or prior to the time fixed for'redemption, shall continue to be payable to the respective holders thereof but Without interest thereon.. Ail unpaid interest payable at or prior to the date fixed for redemption upon Bonds registered in such manner that the interest is payable only to the registered owners shall continue to be payable to the respective registered owners of such Bonds, or their order, but without interest thereon. ARTICLE VI - PLEDGE OF REVENUES AND FUNDS 6.01 Pledge of Revenues. Ail of the Revenues are hereby pledged to pay the principal of and interest on the Bonds, and to provide' (a) a Bond Fund, (b) a Reserve Fund, (c) operation and.'maintenance fundS, -19- (d) a replacement or other similar fund required to be provided pursuant to applicable state or federal regulations, and (e) surplus funds. 6.02 First Lien on ReVenues. The sums required to meet the payment of interest on and principal of the Bonds shall be secured by a first and prior lien upon and pledge of all-of the' Gross Revenue s. 6.03 Revenues a Trust FUnd. The Revenues shall constitute a trust fund for the security and payment Of the Bonds. After the payment of the principal of and interest on the Bonds, there shall be paid from the Revenues such sums as may be required to pay the costs of necessary and reasonable maintenance and operation of the Facilities, which costs shall include the reasonable expenses of administration, management, operation, repair and other expenses necessary to maintain and preserve said FacilitieS in good repair and working order; proVided, however, that such costs and expenses may be paid from such sources of funds other than the Revenues as may be legally available for sUch. Purposes. 6.04. Equal 'parity. Ail of the Bonds shall be equally and ratablY secured Without preference or priority by reason of number, date, date of sale, or of execution or of delivery of the Bonds, by said lien upon the RevenUes in accordance with the Bond Law and -20- this Indenture. Said lien shall be prior and paramount to any and all other claims and obligations that have arisen or may arise or be incurred against the Revenues, except as otherwise herein provided. 6.05 Ratio of Net ReVenue Coverage. The City covenants that it will at all times establish, maintain and collect charges sufficient, with other Revenues received, to provide Net Revenues equal to not .less than 1.30 times the aggregate amount of the principal of and interest on the Bonds of this Iss~e which shall become due and payable within the next succeeding twelve (12) months. 6.06 Construction Fund. There is hereby created a special fund to be designated "City of South San Francisco Sewer Facilities Construction Fund", herein.called "Construction Fund", which shall be maintained by the Treasurer as a separate account, distinct from all other funds~ of the City. The proceeds of the Bonds' (other than accrued interest and premium, if~any, which shall be deposited in the Bond FUnd) together with the proceeds of any grants and contributions received by the City for such purposes, shall be de- .posited in the COnStruction FUnd and shall be expended as follOws: -21- (a) Bond Fund. A sum sufficient (along with said accrued interest and premium, if any) to provide for the first interest pay- ment on the Bonds shall forthwith be transferred from said Construc- tion Fund to the Bond Fund herein established. (b) Establishment of Reserve FUnd. A sum equal to the maximum annual amount of principal and interest to be paid on the Bonds during the term thereof, Shall forthwith be transferred from · said Construction Fund to the Reserve Fund herein established. (c) Acquisition Costs. The cost of acquiring any work, lands .and easements necessary for the Works for which contracts have been or shall be made, or .any interlocutory decree in eminent domain had and taken, shall be paid to the persons entitled theret°. (d) Construction Costs. The costs of constructing any part of the WOrks under contracts for constrUction work shall be paid to persons entitled thereto, on certificates of the Engineer having responsibility therefor, as to-the work completed substan~ tially in accordance with the plans and specifications adopted -. therefor and as said certificates are approved by the City Council. -22- (e) InCidental Expenses. The incidental expenses of said proceedings, consisting of all engineering, inspection, legal, financial and fiscal fees, and the costs ~of authorizing and' issuing the Bonds as approved by the City Council shall be paid to those persons entitled thereto or to the appropriate City fUnd to be reimbursed therefor. Subject tO the provisions of Section 3.0 3 hereof, any remaining balance in the ConstrUction'Fund upon completion of the purpose of the Bonds shall be transferred to the Reserve Fund. '6.07 Revenue Fund. There has been created a special fund designated "City of South ~San Francisco Sewer Revenue Fund", herein called "Revenue Fund", which shall be maintained and operated bY the Treasurer as a separate account, distinct from all other funds of the City, into Which ail Revenues shall be paid immediately following their receipt. So long as any Bonds of this Issue or any additional bonds authorized hereunder are outstanding, or any interest thereon is unpaid, said Fund shall be administered and disbursements shall be made therefrom in the manner and in the order progressively set forth in Sections 6.08, 6.09, 6.10, 6.11 and 6.12 hereof. 6.08 Bond Fund. There is hereby created a special, fund designated "city of South San FranCisCo 1977-Sewer Revenue Bond Fund", herein called "Bond FUnd", Which shall be maintained and operated -23 by the Treasurer as a s~'parate account distinct from all other funds of the City, to cover the payment of the principal of and interest on the Bonds. (a) Forthwith upon receipt of the proceeds.of the Bonds, the Treasurer shall transfer to the Bond Fund any funds re- ceived on account of premium and interest accrued on said Bonds from their date to the date of their delivery, together with sUCh additional amount from the Construction 'Fund as is necessary tO in- crease-the deposit in the Bond Fund to an amount sufficient to proVide for the first interest payment on the Bonds. (b) On the first day of each calendar month, as long aa any Bonds remain outstanding, beginning six months prior to the first i~erestpayment date for which funds have no~~ theret'o-fo~ been set ~aside, the Treasurer shall transfer from the Revenue Fund to the Bond Fund an equal aliquot part of the amount necessary to pay the next maturing installment of interest on the Bonds° (c) On the first day of each calendar month, as long as any Bonds remain outstanding, beginning twelve (12) months prior to the first maturity of the Bonds, the Treasurer 'shall transfer from the Revenue Fund to the Bond Fund an equal aliquot part. of the amount necessary to Pay the next maturing installment of Principal of the Bonds. (d) In the event that rates and charges are collected with, and not separately from, taxes, the 'Treasurer shall -24- transfer to the Bond Fund the amounts necessary to pay the next maturing installments of interest and principal forthwith as they become available in the same proportion as they are col- lected with the installments of taxes. Any amount reqUired to be set aside, transferred to and placed in the Bond Fund may be prepaid in whole or in part by being earlier set aside, transferred to and placed in the Bond Fund, and in that event the monthly transfer which has been so prepaid need not be made at the time appointed therefor~ In any event, all sums required for the payment thereof must be in the Bond Fund at least one week prior to the due date of the maturity of any Bonds and interest. Ail moneys in th'is Fund shall be used and withdrawn solely for the purpose of paying the principal of and interest on the Bonds as the same shall become due and payable. After full payment of the Bonds and interest, any balance in the Fund shall be returned to the ReVenue FUnd. 6.09 ReSerVe Fund. There is hereby created a special fund desi'gnated "City of South San Francisco 1977 Sewer Revenue Bond Reserve Fund", herein called "Reserve Fund", which shall be maintained by. the Treasurer as a Separate account, distinct from all other funds of the City, to fUrther secure the payment of· the principal of and interest on the BOnds. (a) Forthwith upon receipt of the proceeds of the Bonds, the Treasurer shall transfer from the Construction Fund to the ReServe Fund a Sum equal to the maximum annual amount of principal -25- and interest to be paid on the Bonds during the term thereof. (b) Whenever any moneys are withdrawn from the Reserve Fund to pay principal and interest of Bonds, the amount so with- drawn shall be restored from available surplus funds, and, if none, then by transfers from the Revenue Fund, commencing on the next following 1st day of January and continuing annually for the next successive two years, each equal to'at least one-third (1/3) of .the amount necessary to restore therein the gross amount provided in subdivision (a) of this Section. Moneys in the Reserve FUnd shall be used solely for the purpose of paying the principal of and interest on the Bonds in the event that moneys, deposited therein are in excess of the maxi- mum annual principal and interest requirement or in the event that the moneys in the Bond FUnd are insUfficient therefor and for either purpose may be withdrawn~ and transferred to the Bond Fund; provided, however, that moneys resulting from investment of the Reserve Fund shall~be withdrawn within one year of receipt and transferred to the Revenue FUnd. After reaching the year Of.maxi- mum debt service on the BondS, moneYs in said Fund in excess, of an ~oUnt equal' to the maximum annual principal and interest require- ments to accrue during the remaining period of the Bonds Shall be transferred from' the 'Reserve FUnd to the Bond Fund. similar trans- fers shall bemade upon reaching each successive year.of maximum debt service to the end that. the balance-in said. Fund is always 'equal to.,the maximum annual principal and interest requirement fOr the remaining Period of the Bonds. -26- The moneys in the Reserve Fund shall be tranSferred to the Bond Fund at the times and for the purposes necessary to pay the last remaining installments of principal and interest of the Bonds. Any balance thereafter shall be transferred to the Revenue Fund. 6.10 ' MaintenanCe 'and 'Operation Funds. From the moneys remaining in the Revenue Fund, the Treasurer shall pay the reasonable expenses of administration, management,~ operation, maintenance and repair costs of the Facilities, including all incidental costs, fees and expenses properly chargeable thereto. 6.11 RePlacement Funds. In the event that compliance with state or federal regulations requires the establishment, from revenues, of an account for capital outlays or replacement, the amount determined to be deposited therein shall be paid by the Treasurer from the funds remaining in the Revenue Fund as required. Such sums shall be used solely for the purposes authorized under said state or federal regulations. 6.12 SurPlus' Funds. The funds remaining in the Revenue Fund after the transfers therefrom to the Bond Fund and to ~the Reserve Fund, payment of costs of administration, management, maintenance, Operation and repair of the Facilities, and trans- fers to the replacement fund, shall constitute surplus funds -27- and may be used for any of the following purposes: (a) To pay the cost of unusual or extraordinary maintenance of or repair to the Facilities; (b) To extend, enlarge, replace, better or improve the Works or Facilities; (c) To pay the principal of and interest on the Bonds; (d) TO pay the principal, interest and premiums of Bonds called prior to maturity; (e) To pay the principal, interest, and premiums of Bonds pUrchased in the open market at prices offered at or below the sum required to be paid in the event of redemption bY call; (f) To pay the Principal and interest of general obli- gation or revenue-bonds heretofore or hereafter issued for sewer purposes, or to accl~ulate caPital funds for the purpose of con- struction of sanitary sewerage and sewage disposal systems for the City; (g) For any other lawful purpose. No moneys shall be paid or transferred from surplus funds unless all of the requirements of this Indenture then re- quired to be performed have been fully accomplished. 6o13 Feeding Hi~her Priority° In the event that the balance in any fund is below its requirements, moneys from a fund of lower priority shall be transferred up to fill such deficiency in Said fund, and said higher fund shall have a first claim on the.moneys of said lower fund for said purpose. -28 6o14 Investment of Funds° Ail moneys in the various funds that are not required to be used within such time may be invested in any obligations which are then authorized by the laws of the State of California as investments for local agencies, maturing on a date or dates prior to the need for such moneys. 6.15 Inactive Deposits. Any moneys not then needed may be deposited as inactive funds of the City. 6.16. No RestriCtion on Other Powers. Nothing in this Indenture shall be construed to prevent the City from exercising any powers which it maY otherwise have, nor prevent the City from paying the costs of maintenance and operation from such funds other than those mentioned in this Article or in this Indenture, as are l~gally available for such purpose, including taxes. ARTICLE VII - COVENANTS BY THE CITY 7.01 'General° For the protection and security of the Bonds, the City covenants and agrees to and with the Holders of the Bonds as provided in this Article. 7.02 Acquire Works. It will commence and complete the acqui- sition, construction, and financing of the Works with all practical dispatch and in a sound and economical manner. 7.03 Operate Facilities. It will operate, or cause to be operated, the Facilities in an efficient'and economical manner andlwill prescribe, revise, and collect such-Charges that the processes and'services of the Facilities may be furnished to the users within the Area and other user~ at the lowest possible cost consistent with soUnd economy and prudent management. 7.04 GOod 'Repair. It will operate, maintain, preserve, and keep, or cause to be operated, maintained, preserved, and kept, the Facili- ties and every part thereof in gOod'repair, working order.'and cOndition. -29- 7°05 Preserve 'SecUrity. It will preserve and protect the security of the Bonds and the rights of the Holders thereof, and warrant and defend such rights against all claims and demands of all persons whomsoever. 7.06 Collect Revenues. It will collect and hold in trust the Revenues or other funds pledged to the payment of the Bonds for the benefit of the HOlders of the Bonds and apply such Revenues or other funds only as provided by this Indenture. 7.07 serVice Bo~ds. It will pay and cause to be paid punctually the primcipal 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 the~coupons thereto appertaining and in accordance with this Indenture. 7.08 Pay Claims. It will pay and discharge, or cause to be paid and discharged,'any and all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a lien or charge Upon the Revenues of the FacilitieS, or any part of said Revenues, or any fundS.thereof in its hands, prior to or superior to the lien of the Bonds, or whichmight impair the security of. the Bonds, to the end that the priority and securitY of the BOnds shall-be fully . preserved and protected... 7.09 E~c'Umb'ran¢.es.. It will not sell or dispose of any of the Facilities other than as. herein provided, or mortgage or otherwise encumber any of the Facilities, or any of the Revenues thereof, nor enter into any lease.or agreement which would impair or impede Operation of the Facilities, or any part thereof necessary t.o secUre -30- adequate Revenues for the payment of the principal cf and interest on the Bonds, or which otherwise would impair or impede the rights of the Holders of the Bonds with respect to such Revenues or the operation thereof without provision for the retirement of the Bonds then outstanding from the proceeds thereof; provided, however, that material and equipment worn out~ made obsolete or not needed for the efficient .and proper operation of the Facilities may be s01d without the consent of the Bondholders if the proceeds thereof are applied to the improvement or extension of the Facilities or to the retirement of the Bonds. 7.10 No Free Service. It will not permit any Part of the FaCili- ties t° 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 sub- division, city, co'anty, district, or agency of either, including this City° 7.11 NO Competition, It· will not acquire, construct, operate or maintain within the boundaries of the Area any system or utility competitiVe .with the Facilities. 7.12 insurance. It will procure and keep in force insurance -upon .all buildings and structures of the Fagilities over which it.has . ownership and 'physical control and machinery and equipment, therein" against loss Or damage by fire, flood, windstorm, or earthquake or other causes customarily insured against in connection with ·similar .311 enterprises with an insurer or insurers in good standing and in such amounts as may be required adequately to protect the City and the Holders o6 the Bonds from loss due to any such casualty, and in the event of such loss, the proceeds shall be used to repair or restore such portion of the Facilities or for the payment in full of all Bonds issued hereunder. 7.13 Fidelity Bonds. It will procure suitable fidelity bonds covering all of its officers and other employees charged with the operation of any portion of the Facilitiesv and the collection and disbursement of Revenues therefrom. 7.14 Engineers. It will employ, or cause to be employed, consulting engineers of acknowledged reputation, skill and experience in the construction and operation of .the Facilities or any unusual or extraordinary items of extensions or betterments as shall be re- quired frOm time to time, copies of all reports, estimates and recom- mendations of such consulting engineers to be filed with the Clerk and furnished to the Purchasers of the Bonds issued hereunder if requested. 7.15 Audit ~and RePort. It will employ an independent public accountant who shall prepare and file with the Treasurer and with the California Districts Securities Commission if the Bonds shall at any time be certified by it, and mare available to the purchaser of the Bonds if requested, annually, within one hundred twenty (120) days after the close of each fiscal year, commencing in the year 1978, an annual audit for the preceding year which shall include: (a) Balance~'S~heet. A Balance sheet including balances of all funds herein created. -32- (b) Revenues and Payments. A statement in detail of the cash receipts and disbursements of the Revenues and expenses of the Facilities. (c)' 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. (d) Customers. The number of customers classified by rate or charge for service groups, the number of properties con- nected to the Facilities and the number of appli¢.ations~-for service on hand but not connected. (e) Billing. The annual billings and the average monthly' billing per user, where sUch bills are collected by means other than 'the tax roll. (f) 'Rate Schedules. The schedules of the rates and charges prescribed by the rate ordinance then in effect° (g) RecaPitUlation. A recapitulation of funds and accounts created by this Indenture into which are put the Revenues and moneys derived 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 monthly deposit requirements for funds during the next succeeding fiscal period. (h) 'Comments. Comments of the accountant relative to the fulfillment of'the provisions of this Indenture and the manner in Which the Facilities have been operated, and his recommendations for improving the operation Of the Facilities. -33- 7.16 Unconditional Obligati'on. Except only as provided herein for alteration of the Bonds or this Indenture, nothing in this Indenture or in the Bonds or in the coupons contained shall affect or impair the obligation of the City which is absolute and unconditional, to pay the principal of and interest on the Bonds to the respective Holders of the Bonds and coupons at the respec- tive dates of maturity, or upon prior redemption, as herein pro- vided, 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' and coupons° 7.17 Performance of Essence. The performance of the duties prescribed in this Indenture and in the Bond Law by the City or its · proper officers, agents, or employees, is of the essence of City's contract with the Bondholders. 7.18 Recourse to Bond Law. Each taker and subsequent Holder of the Bonds and attached or detached coupons has recourse to all of the provisions.of this Indenture and of the Bond Law and is bound by their terms. 7.19 Indenture is Covenant. From the time the Bonds are issued hereunder, each and all of the terms of this Indenture shall be and constitute a covenant on the part of the City to, and with, each and every Bondholder. 7.20 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 -34- or to be issued hereunder and then outstanding, to secure the full and final payment of the principal of and premiums, if any, and the interest on all Bonds which may from time to time be executed and delivered hereunder. 7.21 'Period of Agreement. Whenever all of the Bonds and all interest then accrued thereon shall have been fully paid and discharged, and sufficient sums have been set aside for sUch pur- pose with the Fiscal Agent, the agreements'in this Indenture con- tained Shall cease and terminate, and the City shall be under no further obligation to apply the Revenues of the Facilities as herein required, or otherwise to do or perform any of the covenants, con- ditions, or agreements in this Indenture contained. ARTICLE VIII - ADDITIONAL AND REFUNDING BONDS 8.01 Additional Bonds. No additional bonds shall be issued or other obligations incurred which shall be payable from the Revenues and constitute a lien thereon which shall have priority over the Bonds of this Issue. The City may issue additional bonds payable as to principal and interest from the Revenues, on .a parity with the Bonds of this Issue for the purpose of improving the Facilities, or for acquiring, constructing or improving additions, extensions or better- ments to the Facilities, within or for the benefit of the Area, or for the purpose of refunding any outstanding bonds issued for the Worka or for any combination of such purposes and subject to the conditions provided in this Article. -35- 8.02 Default.- The City shall not at the time of the issuance of such additional bonds be in default hereunder un- less the additional bOnds are for refunding such defaulted obligation. 8.03 Terms. Such additional bonds shall mature on January or July 1 in each year; the final maturity date of such addi- tional bonds shall not be earlier than the final maturity date of any Bonds of this Issue then outstanding; and fixed serial maturities or minimum annual sinking fund payments or any combination thereof shall be established in. amounts sufficient to provide for the pay- ment and retirement of all such additional bonds~on or before their respectiv~maturity dates. 8.04 Net ReVenues. The annual Net Revenues of the Facilities, for the latest Bond Year prior to the issuance of such additional bonds, as shown by an audit, certificate or opinion of an inde- pendent public accountant employed by the City, plu~ the additional Net Revenues, estimated as provided in Section 8.05, shall have prodUced the folloWing sums: One and thirty~hundredths (1.30) times A. (i) the average annual-amount of the principal of and interest on the then outstanding Bonds of' this IssUe to accrue during their term, plus (ii) the average annual amount of the principal of and interest on the additional bonds then proposed to be issued to accrue during their proposed term, plus (iii) the average annual amount of any minimum annual sinking funds required to be transferred under the terms of the indenture providing for the issuance of said Proposed additional bonds to accrue during their proposed term; or B. (i) the average annual amount computed under subdivision A(i) above, plus (ii) the average annual amount of that part of the sums provided in subdivisions A(ii) and A(iii) above whichf Will accrue during the term of the- then outst.anding Bonds of this Issue, whichever Shall be the lesser amount. 8°05 Estimated Additional Net Income° The Net Revenues shown as provided in Section 8°04 may be revised and enlarged in a written report of an independent engineer or the City Engineer, as approved by a certificate or opinion of an indePendent public accountant, to include any or all of the folloWing: (a) Additional 'Connections. The Net Revenues of the additional number 'of users connected 'to the 'Facilities within the -37- Area at the time o'f the issuance of said report, had such users been connected to the Facilities and subject to Charges for the entire bond year used for the audit, certificate, or opinion referred to in Section 8.04. (b) Acquisitions. The Net Revenues to be derived from the users connected to a sewer system or facilities to be acquired by the City from the proceedS of the additional bonds° (c) Construction. Seventy-five percent (75%) of the additional Net Revenues estimated to be produced by the construction of the additiOns, extensions or betterments for which additional bonds are to be issued, or by construction from other available revenues, in any twelve (12) month period oUt of the twenty-foUr (24) months next succeeding the completion of construction. (d) Rate Increase. Seventy-five percent (75%) of the additional revenues estimated to be derived from any increase .in Charges made by the City which have not been reflected in the audit, certificate, or opinion for the bond Year covered therein. 8.06 Deficiency Bonds. If the proceeds of the Bonds for any reason-are less than the cost of the Works, deficiency Bonds may in like manner be issued and sold without'.compliance with the provisions of this Article to provide for the amount of the deficit but not to ex- ceed the amount necessary to finance the cOmpletion of the Works according -38- to the original plans and specifications. Such deficiency Bonds shall be deemed to be the same in all respects as the original issue, and shall be entitled to payment, without preference or priority over the Bonds first issued, and shall be disposed of in like manner. 8.07 RefUnding 'Bonds. In the event and to the extent that additional bonds are to be issued for-the Purpose of refunding and retiring any Bonds of this Issue, for the purpose of the calculations required under this Article, the amounts of annual principal, interest, and minimum sinking funds required to have been Paid on the Bonds to be refunded as provided in Section 8.01, need not be taken into con- sideration in computing the coverage for such additional bonds. 8.07(a) Refunding 'Bonds of Prior Issue. Nothing in this Indenture Shall be deemed to limit or restrict the powers of the City to refund all or any of the Bonds of Prior Issue pursuant to any indenture therefor or applicable law to be secured by a lien on the Revenues of equal parity to that now existing therefor. 8.08 Subordinate ~Lien Bonds. Nothing in this Indenture shall be deemed to limit or restrict the power of the City to issue bonds payable from the Revenues, but inferior as to the lien of any of the then outstanding Bonds on said Revenues, without compliance with the pro- visions of this Article or of any other provision of this Indenture. 8.09 Issuance of Refunding BOnds. The City Council may, with the consent of the Holder of any noncallable Bond, and without the consent of the Holder of any Callable Bond., refund said Bond as pro- vided by law. The refunding Bond Shall be on a parity of lien with -39- the refunded Bond, providing that the principal and the installments of interest thereof shall not increase any annual installment of principal and interest of the Bonds more than the minimum coverage ratio provided herein. Nothing herein shall prohibit the City Council from issuing such refunding Bonds subordinate as to the lien of the Bonds and of Bonds subsequently issued and payable~from the -same Revenue° For the purpose of curing a default or threatened default, the City council may issue additional Bonds of this Issue and, with the consent of the Bondholder, exchange such Bonds for maturing or matured Bonds, or sell them and use the proceeds' thereof to pay said Bonds, provided that the new Bonds shall be made t° mature 'after the matUrity of the Bonds and not later than forty (40) years from the date of the Bonds° 8o10 Amount of Refunding Bonds. Funding oz refunding Bonds may be issued in a principal amount sufficient to provide funds for the payment of all of the-following: (a) All Bonds to be funded or refunded by them° (b) All expenses incident to the calling, retiring, or paying of the outstanding Bonds and the issuance of the funding or refunding bonds, including the difference in amount'between the par value of the funding or refunding bonds and ~ny amount less than that for which the funding or refunding bonds may be sold. (¢) Interest upon the funding or refunding bonds from the date of sale to nhe date of payment Of the Bonds of this Issue to be funded or refunded will be paid pursuant to the call or an agreement with the Holders of such Bonds° (d) Any premium necessary in the calling or retiring of the outstanding Bonds and the interest accruing on them to the date of the call or retirement. -40- 8.11 Independent Public Accountant means any registered or licensed public accountant or firm of such public accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State of California, appointed and paid by the City, and who, or each of whom: (a) is in fact independent, and not under domination of the City; (b) does not have any substantial interest, direct or indirect, with the City; (c) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make annual or other similar audits of the books of the City. 8.12 Independent Engineer means any individual or firm of engineers having special knowledge and experience in the utility field, appointed and paid for by the City, and who, or each of whom: (a) is in fact independent and not under domination of the City; (b) does not have any substantial interest, direct or indirect, with the City; (c) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make annual or other periodic reports to the City. ARTICLE IX -' MODIFICATIONS 9.01 Modifications. From and after the sale and delivery of any of the Bonds, no amendment, ~alteration, or modification of the Bonds or of the coupons appertaining thereto or of this Indenture, which will impair, impede or lessen the rights of the Holders of the -41- Bonds or the coupoms appertaining thereto 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-six and two-thirds percent (66-2/3%) of the aggre- gate principal amount of affected Bonds then outstanding, unless the amendment, alteration, or modification be as herein authorized. 9.02 Consent Binding. 'Any amendment, alteration, or modi- fication which ~shall have received the cOnsent of the Holders of the percentage of said outstanding Bonds as provided in Section 9.~01 shall be binding, on ~he Holders of all of the Bonds and 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 9.01 shall apply only to the Bonds affected by the amendment, alteration, or modification. 9.03 Calling ~Bo~dhOIders' Meeting. If the City Council shall desire or Shall be required to.obtain the consent of the Bondholders to a proposed'action, it may adopt a resolution calling a meeting of the Bondholders affected by the proposed action for the purpose of considering the action, the consent to which is desired or required. 9.04 Discret~ion of City 'CounCil. The place, date, and hoUr of holding the meeting and the date o= dates o~ publishing and mailing notice shall be determined by the City Council in its discretion. 9.05 Not'ice 'of Meeting. Notice specifying the~purpose, place, date, and hour of th~ meeting shall be given by mail and by publica- tion .at least once not less than thirty (30) nor more than sixty (60) -42- days prior thereto in one or more financial papers published in San Francisco, California, or in New York City, New York. The notice shall set forth the nature of the proposed action, consent to which is desired or required° 9.06 Mailing. The Treasurer shall mail notice by registered mail to the last known Holders of bearer Bonds, as shown bY the records in his office, and.to the registered owners of any regis- tered Bonds, at thei~ addresses shown on the bond registry books° 9.07 List of Owners. The Treasurer shall prepare and deliver to the chairman of the meeting a list of the names and addresses of the registered owners of the Bonds as shown on the bond registry books and, to the extent known by him, a list of the names and addresses of the owners of bearer Bonds, together with a statement of the maturities, series, and numbers of the Bonds held and de- po. sited by each, and no Bondholder shall be entitled to vote at the meeting unless his name appears upon the lists or unless, at the meeting, he shall present his Bond or Bonds or a certificate of deposit thereof. 9.08 Certificate of DePosit. A Holder of bearer Bonds may deposit his Bonds with a bank, trust company, investment banker, bond dealer or broker within or without the State, and obtain from the depositary a certificate of deposit which shall constitute proof of ownership and entitle the depositor named therein to vote upon filing it with the 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. -43- 9.09 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° 9.10 Attendance and Voting by ProXy. Attendance and voting by a Bondholder at the meeting may be by proxy. An owner of regis- tered Bonds may, by an instrument in writing under his hand, appoint any person as his proxy to vote at the meeting for him, and that instrument when presented at the meeting shall be sufficient to entitle that. person to vote as the proxy of the registered owner. Any person may vote as the proxy of the owner of a bearer Bond on presentation of the Bond or certificate of deposit thereof and an instrument in 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 City at the time the Bond was delivered to the agency as provided for in Section 9.08 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 the bearer bond. 9.11 Quorum and Procedure. A representation of at least sixty-six and two-thirds percent (66-2/3%) in aggregate princiPal amount of the Bonds affected by the proposed action'and then out, standing shall be necessary to constitute a quorum at the meeting of Bondholders, but less than a quorum may adjourn the meeting, -44- from time to time, and the meeting may be heid as so adjourned, without further notice, whether the adjournment shall have been by a quorum or less than a~quorum. 9.12 Officers. The City Council shall, by an instrument in writing, appoint a temporary chairman of the meeting, and the meeting shall be organized by the election of a permanent chairman and a secretary. 9.13 Votes. At the meeting, each Bondholder shall be entitled to one vote for every $5,000 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 City Council by its duly authorized repre- sentative, may attend the meeting of the Bondholders, but shall not be required to do so. 9.14 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 per- son or by proxy holding at least sixty-six and two-thirds percent (66-2/3%) of the aggregate principal amount of the Bonds affected by the proposed action and then outstanding, the chairman and the secretary of the meeting shall so certify in writing to the City CoUncil, and the certificate shall constitute complete evidence of the consent of the Bondholders. 9.15 Certifi'c~ate~ of Notice ConclUsiVe. The actual receipt by a Bondholder of the notice required to be given by Section 9.05 -45- 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 irregu- larity in the form of the notice shall affect its validity provided notice has been given. A certificate signed by t~e 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 t° receive notice. 9.16 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 with the Clerk who shall likewise keep it filed with the papers of the proceedings authorizing the issuance of the Bonds, ARTICLE X - EVENTS OF DEFAULT AND REMEDIES 10.01 Event 'of ~efaUlt. One or more of the following events shall constitute an event of default: (a) Princip'al. If default-shall be made in the due and punctual payment'of the principal of anY Bond when and as the same shall become due and payable because of the unavailability of -46- funds, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise, and such default shall continue for a period of fiVe days; (b) Interest. If default shall be made in the due and punc- tual payment of an installment of interest of any Bond when and as the interest installment shall become due and payable because of the unavaila- bility of funds, and such default shall continue for a period of five days; (c) Covenants. If default shall be made in the ob- servation of any'of the covenants, agreements, or conditions on its part herein or in the Bonds contained, and the default has con- tinued for a period of thirty (30) days; or (d) BankruptCy. If the City shall, file 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 if a court of competent jurisdiction Shall approve a petition filed with or without the consent of the City, seeking reorganization under the Federal bankruptcy laws or other applicable laws or statutes of the United states of America or if under the provisions of the Federal bankruptcy laws or the provi- sions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial Part of its property. 10.02 AcCeleration. Upon the happening of an event of default, the Holders of not leSs than sixty-six and two-thirds percent (66-2/3%) in aggregate principal, amount of the Bonds at the time outstanding shall be entitled, upon notice in writing to the City, to declare the principal of all of the Bonds then outstanding and the interest accrued --- thereon to be due and payable immediately, and upon such declaration the same shall become and shall be immediately due and payable, any- thing in this Indenture or in the Bonds contained to the contrary no twi th s t an ding. 10.03 Appl'ication of Funds. When acceleration has been de- clared under Section 10.02, all of the Gross Revenues pledged to the payment and security of the Bonds, including all sums in all of the funds provided therefor upon the date of the happening of an event of default, and all sums thereafter received by the City shall be apPlied by it, upon presentation of the several Bonds and coupons, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid, in the following order: (a) Costs ~and 'EXpenses. To the payment of the costs and expenses of the Bondholders in declaring an event of default, and to the payment of the costs and expenses of the Treasurer in carrying out the provisions of this Article, including reasonable compensation to each of their agents, attorneys and counsel. (b) 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, first, in the order of registration under Part 2 of Article IV of this Indenture, and then in the order of maturity of the installments of the interest. (c) Pri~cipaI and 'I~t~eres't on Due ~Bo~dS. In 'case the principal of the Bonds shall have become and shall be then due and -48- payable, said moneys shall be applied to the payment of the princi- pal and interest of the Bonds, first, in the order of registration under Part 2 of Ar.ticle IV of this Indenture, and then in the order of the maturity of the installments of principal and interest. (d) Insufficient Funds. In case the moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, under subsections (b) and (c) of this Section, 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 person entitled thereto without discrimi- nation or preference. 10.04 RefUnding Defaulted Bonds. The City may refund any defaulted Bond by the issuance of a new bond maturing after the maturity of the last Bond of this Issue, but otherwise on a parity as to payment of interest with the Bonds of this Issue, and'with the consent of the Holder thereof, eXchange such Bonds for such matured Bond, or, without his consent, issue and sell said refund- ing Bond and pay said defaulted Bond, and in either such event such action shall be deemed to cure such default hereunder. 10.05 ~Bondholder Remedies. Subject tO any contractual limitation binding upon the Holders of any of the Bonds (including but not limited to~ any limitations upon the exercise of any remedy to the Bondholders holding a specific proportion or'percentage of such Bonds), any Holder of BOnds shall have the right, for the equal benefit and protection of all Holders of Bonds similarly situated', in additiOn to those pro- vided in the Bond Law: -49- (a) AccOunting. By action or suit in equity to re- quire the City and its City Council and other officers, agents, and employees to account as the trustee of an express trust. (b) Injunction. By action or suit in equity to enjoin any acts or things which may be unlawful or in violation of the rights of the Bondholders. (c) Mandamus. By mandamus or Other suit, action, or proceeding at law or in equity to enforce their rights against the City and its and any of its officers, agents, and employees, and to 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 as provided herein. 10.06 Nature of Remedies. As to remedies of the Bondholders: (a) Cumulative. No remedy conferred hereby or by the law upon any Holder of Bonds is intended to be. exclusive of any other remedy, but each such remedy is cumulative and in addi- tion to every other remedy and may be exerciSed without exhausting and without regard to any other remedy conferred hereby or by the Bond Law or by any other law. (b) Waiver. No waiver of any default or breach of duty or contract by any Bondholder shall extend to or shall affect any subsequent default or breach of duty or contract or shall im- pair any rights or remedies thereof. (c) ~elays. No.delay or omission of any Bondholder to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a -50- waiver of any such default or acquiescence thereof. (d) Enfo~rcement. Every substantive right and every ._ remedy conferred upon the Bondholders may be enforced and exercised from time to time and as often as may be deemed expedient. (e) Status Quo. In case any suit, action, or proceeding to enforce any right or exercise any remedy shall be brought or taken and then discontinued or abandoned, or shall be determined adversely to-the Bondholders, then, and in every such case, the City and such Bondholders shall be restored to their former positions and rights and remedies as if no such suit, action, or proceedings had been brought or taken. ARTICLE XI - ARBITRAGE. 11.01 Certification. On the basis of the facts, estimates, and circumstances now in existence and in existence on the date of issue of the Bonds, as determined by the Treasurer, the City hereby covenants and warrants and the Treasurer is authorized to certify that it is not expected that the proceeds of the Bonds will be Used in a manner that would cause such Obligations to be arbitrage bonds. 11.02 Covenant. The City covenants that with respect to acquired obligations which are allocated to the proceeds of the Bonds, except obligations in the Reserve Fund and obligations held only during the temporary period, the yield on such shall ~not exceed such yield as would constitute the Bonds "arbitrage bonds" within the meaning of Section 103(c) of the 2nternal Revenue Code of 1954 and temporary, proposed or final regulations thereunder. -51- I hereby certify that the foregoing resolution was regularly introduced and adopted by the City Council of the City of South San Francisco at a regular meeting held this 15th day of June , 1977, by the following vote: AYES, NOES, ABSENT, COUNCILMEMBERS Richard A. Battaglia, William A. BOrba, Emanuele N. Damonte, Terry J. Mirri and Leo Padreddii COUI~CILF[EMBERS None COUNCILMEMBERS None ATTEST:~ EXHIBIT "A" Bond Form: The Bonds shall be substantially in the following form: UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF SAN MATEO CITY OF SOUTH SAN FRANCISCO SEWER REVENUE BOND OF 1977 No. $5,000 CITY OF SOUTH SAN FRANCISCO, a municipal corporation, in the County of San Mateo, State of California, hereby acknowledges itself indebted and for value received promises to pay to the bearer hereof (unless this bond be registered as hereinafter provided) on the 1st day of July, FIVE THOUSAND DOLLARS ($5,000) together with interest thereon from date to the maturity date hereof at the rate of percent ( %) per annum, said interest to be payable on July 1, 197~, and thereafter semi- annually on January 1 and July 1 in each year, upon presentation and surrender of the interest coupons hereto attached as they respectively become due. Both the principal of'and interest on this bond are payable in lawful money of the United States of America at the Office of · the City Treasurer, City Hall, South San Francisco, California. If payment of this bond or of any interest coupon thereon is not i~ade in full accordance with the terms of the Ordinance provid- ing for their issuance, such bond or coupon, or both, shall continue to bear interest at the rate stated herein until paid in full. This bond is one of an issue of bonds of said City designated City of South San Francisco Sewer Revenue Bonds of 1977 (the "Bonds"), aggregating One Million One Hundred Thousand Dollars ($1,100;000) in principal amount, all of like tenor (except for such variation as may be required to designate number, maturity, redemption pro- visions, or interest rate), and all issued by the City for the purpose of providing money to pay the cost of acquiring, constructing, and financing certain sewage facilities (the "Works") to serve an area (the "Area"), both more fully described in Resolution No. 33-77, A Resolution of Intention to Issue Sewer Revenue. Bonds, adopted by ~he City CoUncil on April 6, 1977, and as authorized by Ordinance No. , An Ordinance Authorizing the Issuance of Sewer Revenue Bonds, adopted by the City Council on , 1977, (the "Ordinance"), to which reference is hereby made for the Obligations, duties, rights, and privileges hereby created, and in strict accordance with law and Chapter 5 (commencing with Section 4950), Part 3, Division 5 of the Health and Safety Code of the State of California, co~nonly referred to as the Sewer Revenue Bond Act of 1933. Bonds maturing on or prior to July 1, 1988, are not subject to redemption by call, except as hereafter set forth. Bonds matur- ing on or after July 1, 1989, are subject to call and redemption, at the option of the City Council of said City, in inverse numerical order, on J~ly 1, 1988 (but not prior thereto, except as hereafter set forth), or on any interest payment date thereafter prior to their maturity date or dates at the principal amount, thereof and accrued interest thereon to the date of redemption, plus a redemption premium equal to one-quarter of one percent (1/4 of 1%) of such principal ~nount for each whole twelve (12) month period, and for any remaining fraction of a twelve (12) month period, f~om the date fixed for redemption to the maturity date of the bond so redeemed, provided, however, that in no event shall the premium paid on prior redemption by call on any bond exceed two percent (2%). Bonds maturing on or after July 1, 1991, are subject to call and redemption, 'at the option of the City Council of said City, in inverse numerical order, on January 1, 1982 (but not prior thereto), or on any interest payment date thereafter and prior ~o July 1, 1988, at the principal amount thereOf and accrued interest thereon to the date of redemption, plus a redemption pre- mium equal tc two percent (2%) of the principal amount. At least thirty (30) days prior to the date of call of any Bonds, notice of redemption shall be published once in a financial paper published in San Francisco or New York City, and :~uch notice shall be mailed by registered or certified mail to the last known holder or holders of any bearer 'Bonds so called, and to the regis- tered owner or owners of any registered~Bonds so called. No inter- est shall accrue on said BOnds called for redemption or any interest coupons thereon after the redemption date specified in said notice. The City may also, from time to time, purchase any or all of the Bonds at prices offered. All Bonds purchased will be canceled and will not again be reissUed. This bond may be registered as to principal and interest or as to principal alone; if registered, it may be deregistered, reregistered or the ownership thereof transferred, upon written request of the owner and presentation of the bond to the Treasurer and payment of any charges therefor, including any cost of reprinting the coupons, all as set forth in the Ordinance. The Bonds and coupons appertaining thereto and the Ordinance may be amended, altered or modified, with the consent of the holders of sixty-six and two-thirds percent (66-2/3%) of the aggregate principal amount.of Bonds then outstanding, in the manner, to the extent and upon the terms provided in the Ordinance. Both principal and interest are payable solely from the Revenues as defined in the Ordinance and said City is not obligated to pay the principal hereof or interest hereon except from the Revenues. The Bonds constitute a first and prior lien upon the said Revenues except that additional bonds may be issued on a parity of lien in accordance with the Ordinance, or subordinate as to the lien thereof. -ii- Ail of the Revenues are pledged to pay the principal of and interest on the Bonds, and to provide (1) a bond fund, (2) a reserve fund, (3) operating, maintenance and replacement ~unds, and (4) surplus funds c.s providod in tho The City has created a special 1977 Sewer Revenue Bond Fund for the payment of said principal and interest and has agreed to set aside in said fund at the times provided in the Ordinance, an equal aliquot part of the amount necessary to pay interest and principal which shall fall due at the next ensuing interest and principal payment dates. It is hereby certified, recited and declared that all acts, conditions and things required by law to exist, happen and be per- formed precedent to and in the issuance of this bond have existed, happened and been performed in due time, form and manner as re- quired by law; and that the City council has established and has covenanted to maintain rates and charges sufficient, with other revenues received, to provide net revenues equal to not le~s than 1.30 times the aggregate amount of principal and interest which shall become due and payable within the next succeeding twelve (12) months on all of the Bonds then outstanding. IN WITNESS WHEREOF, the City Council of the City of South San Francisco has caused this bond to be signed by its Mayor, countersigned by its Clerk,. the seal of said City to be hereto affiXe'd, the coupons attached hereto to be signed by its Treasurer, and this bond to be dated the 1st day of September, 1977. COUNTERSIGNED: Mayor, City of South San Francisco Clerk, City of South San Francisco (SEAL) --iii- Interest Coupon Form. The coupons shall be substantially in the- following form: The CITY OF SOUTH SAN FRANCISCO, San Mateo County, California, will on the due date hereof, unless the bond designated herein is redeemed prior thereto, pay to the bearer hereof the sum hereon at the office 'of the City Treasurer, City Hall, South San Francisco, California, as interest on its SEWER REVENUE BOND OF 1977, dated September 1, 1977, bearing No. Due $ Coupon No. ll Treasurer, City of South San Francisco Registration Form. The form of endorsement for registration on said bonds shall be substantially as follows: · This bond is registered in the name of the registered owner last entered below, and both the principal of and interest on %his bond are payable only to such owner, unless registered as to prin- cipal alone, in which event only the principal is so payable; pro- vided that this bond may be registered to bearer and thereby discharged from registration and the negotiabilitY hereof restored. NOTE: There must be no writing below except by the Treasurer. Date of TYpe of Name and Address of Signature of Registry Registration* Registered Owner Treasurer Principal only and interest Principal only and interest Principal only and interest Principal only and interest *If registration is as to principal only, strike the words "and interest"; if as to principal and interest, strike the word "only". -iv-