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or (iii) 125% of the sum of the Bond Debt Service for all Fiscal Years during the period commencing with the Fiscal Year in which such calculation is made (or if appropriate, the first full Fiscal Year following the execution and delivery of any Bonds) and terminating with the last Fiscal Year in which any Bond Debt Service is due, divided by the number of such Fiscal Years, all as computed and determined by the City and specified in writing to the Trustee; provided, however that in determining Bond Debt Service with respect to any Bonds that constitute Variable Rate Indebtedness, the interest rate on such Bonds for any period as to which such interest rate has not been established will be assumed to be: (1) with respect to Bonds which are Tax-Exempt, the ten year historical average of the SIFMA Index ending with the week preceding the date of calculation; and (2) with respect to Bonds which are not Tax-Exempt, the ten year historical average of the One Month USD LIBOR Rate ending with the month preceding the date the calculation is made or if the One Month USD LIBOR Rate is not available for such period, another similar rate or index selected by the City. “Debt Service Reserve Valuation Date” means the Business Day preceding each July 1, commencing July 1, 2009.
“Defeasance Securities” means any of the following securities, if and to the extent the same are at the time legal investments for funds of the City: (i) U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series – (SLGs)); (ii) Direct obligations of the U.S. Treasury which have been stripped by the U.S. Treasury itself; (iii) Resolution Funding Corporation obligations (“REFCORP”) (only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form are acceptable); (iv) Obligations issued by the following agencies which are backed by the full faith and credit of the United States: a. U.S. Export-Import Bank (Eximbank) direct obligations or fully guaranteed certificates of beneficial ownership; c. Farmers Home Administration (FmHA); c. Federal Financing Bank; d. General Services Administration Participation Certificates; e. U.S. Maritime Administration Guaranteed Title XI financing; f. U.S. Department of Housing and Urban Development (HUD) Project Notes, Local Authority Bonds, New Communities Debentures – U.S. government guaranteed debentures and U.S. Public Housing Notes and Bonds – U.S. government guaranteed public housing notes and bonds; and (v) Advance Refunded Municipal Securities.
“Depository” means any bank or trust company organized under the laws of any state of the United States (including the Trustee and its affiliates), or any national banking association which is willing and able to accept the office on reasonable and customary terms, authorized by law to act in accordance with the applicable provisions of the Indenture.
“DTC” means The Depository Trust Company, a limited purpose trust company organized under the laws of the State of New York or its successors and assigns. References in the Indenture to DTC include any Nominee of DTC in whose name any Bond is registered.
“Electric Service” means the services, commodities and products furnished, made available or provided by the Electric System.
“Electric System” means the electrical energy generation, transmission and distribution system of the City established pursuant to Ordinance No. 1022 of the City (codified as Section 2.91 of the City Administrative Code) and referred to in the City Administrative Code as the Vernon Electric System, comprising all electric generation, transmission and distribution facilities and all general plant facilities related thereto now owned by the City and all other facilities properties, structures or works for the generation, transmission or distribution of electricity later acquired by the City, including all contractual rights for electricity or the transmission thereof, together with all additions, betterments, extensions or improvements to such facilities, properties, structures or works or any part thereof, and any additional contract rights for electricity or the transmission thereof, later acquired. “Event of Default” means an event described as such in the Indenture.
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“Electronic” means, with respect to notice, notice through telecopy, telegraph, telex, facsimile transmission, internet, e-mail, dedicated electronic link or other electronic means of communication capable of producing a written record.
“Escrow Agent” means the Trustee or a bank or trust company organized under the laws of any state of the United States, or a national banking association, appointed by the City to hold in trust moneys set aside for the payment or redemption of, or interest installments on, a Bond or Bonds, or any portion thereof, deemed paid and defeased pursuant to the Indenture.
“Expense Stabilization Fund” means the City of Vernon Electric System Expense Stabilization Fund established pursuant to the Indenture.
“Event of Bankruptcy” means any of the following with respect to any Person: (i) the commencement by such person of a voluntary case under the Federal Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency or similar laws; (ii) failure by such Person to timely controvert the filing of a petition with a court having jurisdiction over such Person to commence an involuntary case against such person under the Federal Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency or similar laws; (iii) such Person admits in writing its inability to pay its debts generally as they become due; (iv) a receiver, trustee, custodian or liquidator of such Person or such Person’s assets are appointed in any proceeding brought against the Person or such Person’s assets; (v) assignment of assets by such person for the benefit of its creditors; or (vi) the entry by such Person into an agreement of composition with its creditors. “Favorable Opinion of Bond Counsel” means, with respect to any action requiring such an opinion, an Opinion of Bond Counsel to the effect that such action does not, in and of itself, adversely affect the TaxExempt status of interest on the Bonds or such portion thereof as specified in the provisions of the Master Indenture or the Supplemental Indenture requiring such an opinion. “Federal Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as the same may be amended and supplemented, and any successor statute. “Fiduciary” means the Trustee and any Paying Agent for Bonds appointed as provided in the Indenture.
“Final Compounded Amount” means the Accreted Value of any Capital Appreciation Obligation on its maturity date.
“Fiscal Year” means the period beginning on July 1 of each year and ending on the next succeeding June 30, or any other twelve-month period selected and designated as the official Fiscal Year of the City. “Franchise Payment” means the payment in lieu of franchise tax added to each Electric System customer bill to be paid to the City’s General Fund and any successor or replacement payment. “Fund” means each of the funds established under the Indenture. “Generally Accepted Accounting Principles” means generally accepted accounting principles applied on a consistent basis set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants applicable to a government-owned utility applying all statements and interpretations issued by the Governmental Accounting Standards Board and statements and pronouncements of the Financial Accounting Standards Board which are not in conflict with the statements and interpretations issued by the Governmental Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession, that are applicable to the circumstances as of the date of determination.
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“Indenture” means, the Master Indenture, as supplemented and amended from time to time by Supplemental Indentures.
“Independent Certified Public Accountant” means a Person which is: (i) a certified public accountant, or a firm of certified public accountants; (ii) appointed by the City to perform acts, prepare certificates or otherwise carry out the duties provided for an Independent Certified Public Accountant in the Master Indenture or any Supplemental Indenture; (iii) independent pursuant to the Statement on Auditing Standards No. 1 of the American Institute of Certified Public Accountants; (iv) of recognized standing with respect to accounting matters for municipally-owned electric utilities; and (v) licensed to practice in the State of California. “Independent Engineer” means a Person which is: (i) a consulting engineer, or a firm of consulting engineers; (ii) appointed by the City to perform acts, prepare certificates or otherwise carry out the duties provided for an Independent Engineer in the Master Indenture or any Supplemental Indenture; (iii) of national recognized standing with respect to engineering matters for electric utilities; and (iv) licensed to practice in the State of California.
“Information Services” means any of the following services which has been designated in a certificate of the City delivered to the Trustee: Financial Information, Inc.’s “Daily Called Bond Service,” 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services “Called Bond Service,” 65 Broadway, 16th Floor, New York, New York 10006; Moody’s Investors Service “Municipal and Government,” 99 Church Street, 8th Floor, New York, New York 10007, Attention:
Municipal News Reports; and Standard and Poor’s “Called Bond Record,” 25 Broadway, 3rd Floor, New York, New York 10004; or such other services providing information with respect to called bonds as the City may designate in a certificate of the City delivered to the Trustee. “Initial Amount” means the Accreted Value of a Capital Appreciation Obligation on its date of issuance and delivery to the original purchaser thereof. “Interest Account” means the account by that name in the Debt Service Fund established pursuant to the Indenture.
“Interest Payment Date” means, with respect to a Series of Bonds, each date on which interest on Bonds of such Series is scheduled to be paid as set forth in, or determined in accordance with, the Supplemental Indenture authorizing the issuance of such Series. “Issuing Instrument” means any, indenture, trust agreement or other instrument or agreement under which Obligations are issued.
“Light and Power Fund” means the Light and Power Department Fund established pursuant to Ordinance No. 950 of the City (codified as Section 2.65 of the City Administrative Code) and includes any successor or replacement fund established by the City for the collection of revenues and the payment of expenses of the Electric System.
“Master Indenture” means the Indenture of Trust, dated as of September 1, 2008 between the City and the Trustee, as the provisions thereof may be modified or amended from time to time in accordance with the Indenture.
“Maximum Adjusted Annual Debt Service” means, with respect to a certificate to be delivered in connection with Additional Parity Obligations pursuant to the Indenture, as of any date and with respect to the Applicable Parity Obligations, the maximum amount of Adjusted Debt Service becoming due on the Applicable Parity Obligations in the then current or any future Fiscal Year, as adjusted as provided in the Indenture and calculated by the City or by an Independent Engineer. For purposes of calculating Maximum Resolution No. 2022-10
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Adjusted Annual Debt Service, the determination of Debt Service on the Applicable Parity Obligations coming due in each Fiscal Year will be subject to the Debt Service Adjustments and Assumptions. “Moody’s” means Moody’s Investors Service, Inc. and any successor entity rating Parity Obligations at the request of the City.
“Net Payment” means with respect to a Qualified Swap Agreement, the amount payable by the City on each scheduled payment date under such Qualified Swap Agreement net of the amount payable by the counterparty under such Qualified Swap Agreement on such scheduled payment date. “Net Revenues” mean, for any period of time, the Revenues for such period less the Operation and Maintenance Expenses for such period.
“Net Transferable Income” means, with respect to any Fiscal Year, the Net Revenues for such Fiscal Year less the Debt Service for such Fiscal Year; provided that, commencing with the Fiscal Year ended June 30, 2013, the Net Transferable Income for any Fiscal Year may not exceed the difference between: (i) 11.5% of the retail sales for such Fiscal Year; and (ii) the sum of: (A) the amount paid pursuant to clause (d) of the definition of Operation and Maintenance Expenses in such Fiscal Year; plus (B) the amount, if any, paid to the City as a Franchise Payment in such Fiscal Year.
“Nominee” means the nominee of the Securities Depository for the Book-Entry Bonds in whose name such Bonds are to be registered. The initial Nominee will be Cede & Co., as the nominee of DTC. “Obligations” means: (i) obligations with respect to borrowed money and includes bonds, notes or other evidences of indebtedness, installment purchase payments under any contract, and lease payments under any financing or capital lease (determined to be such in accordance with Generally Accepted Accounting Principles), which are payable from the Net Revenues and/or amounts in the Light and Power Fund; (ii) obligations to replenish any debt service reserve fund with respect to obligations of the City described in clause (i) above; (iii) obligations under any Public Finance Contract payable from the Net Revenues and/or amounts in the Light and Power Fund; and (iv) Credit Provider Reimbursement Obligations. “One Month USD LIBOR Rate” means the British Banker’s Association average of interbank offered rates in the London market for United States dollar deposits for a one month period as reported in the Wall Street Journal or, if not reported in such newspaper, as reported in such other source as may be selected by the City.
“Operating Reserve” means, as of any date of calculation, an amount in the Light and Power Fund equal to the amount contained in the then current Budget for Operation and Maintenance Expenses for the four months next succeeding the month in which the date of calculation occurs. “Operation and Maintenance Expenses” mean the costs paid or incurred by the City for operating and maintaining the Electric System including, but not limited to: (i) all costs of electric energy and power generated or purchased by the City for resale, costs of transmission, fuel supply and water supply in connection with the foregoing; (ii) all costs and expenses of management of the Electric System; (iii) all costs and expenses of maintenance and repair, and other expenses necessary or appropriate in the judgment of the City to maintain and preserve, the Electric System in good repair and working order; (iv) all administrative costs of the several departments of the City that are charged directly or apportioned to the operation or maintenance of the Electric System, such as salaries and wages (including retirement benefits) of employees, overhead, taxes (if any) and insurance premiums; (v) payments in-lieu of taxes to any public agency other than the City in connection with the Electric System; (vi) all costs, expenses and charges of the City required to be paid by it to comply with the terms of any Issuing Instrument authorizing the issuance of Parity Obligations, such as compensation, reimbursement and indemnification of the trustee, remarketing agent, broker-dealer or auction agent or fees and expenses of Independent Certified Public Accountants, Independent Engineers and Resolution No. 2022-10
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other consultants; (vii) the fees, expenses and indemnification of Credit Providers and Reserve Financial Guaranty Providers; (viii) all amounts required to be paid by the City under contracts with a joint powers agencies for the purchase of capacity, rights in an electric generating station or electric transmission facilities, transmission capability or any other commodity right, or service in connection with the Electric System, which contracts require payments to be made by the City thereunder to be treated as operation and maintenance expenses of the Electric System; (ix) all deposits to be made to a rebate fund established with respect to Parity Obligations to provide for any rebate to the United States required to maintain the Tax-Exempt status of interest on such Parity Obligations; (x) any cost or expense paid by the City to comply with requirements of law applicable to the Electric System or the City’s ownership or operation thereof or in any capacity with respect thereto or any activity in connection therewith, including without limitation the Public Benefits uses required by Section 385 of the California Public Utilities Code; and (xi) any other cost or expense which, in accordance with Generally Accepted Accounting Principles, is to be treated as a cost of operating or maintaining the Electric System; but excluding in all cases depreciation, replacement and obsolescence charges or reserves therefor, amortization of intangibles, Franchise Payments to the City and Unrealized Items. Except as provided in clause (iv), no transfer of Revenues to the City, including the Franchise Payment, will constitute an Operation and Maintenance Expense.
“Opinion of Bond Counsel” means a written opinion signed by Bond Counsel. “Outstanding” when used as of any particular time with respect to Obligations, means, except as otherwise provided in the Indenture, all Obligations theretofore or thereupon being issued by the City, except:
(i) Obligations theretofore cancelled or surrendered for cancellation; (ii) Obligations paid or deemed to be paid within the meaning of any defeasance provisions of the Issuing Instrument pursuant such Obligations were issued; and (iii) Obligations in lieu of or in substitution for which replacement Obligations have been issued. “Paired Obligations” mean any Series (or portion thereof) of Parity Obligations designated as Paired Obligations in the Issuing Instrument authorizing the issuance thereof, which are simultaneously issued: (i) the principal of which is of equal amount maturing and to be redeemed (or cancelled after acquisition thereof) on the same dates and in the same amounts; and (ii) the interest rates which, taken together, result in an irrevocably fixed interest rate obligation of the City for the terms of such Paired Obligations. “Parity Obligations” means Bonds and any Obligations which are payable from the Net Revenues and amounts in the Light and Power Fund other than the Operating Reserve available for such payment in accordance with the Master Indenture on a parity with the payment of the Bonds and which satisfy the applicable conditions of the Indenture, including without limitation Credit Provider Reimbursement Obligations and, with respect to Qualified Swap Agreements, the Net Payments, but not the Termination Payments and other payments, due thereunder.
“Participants” means, with respect to a Securities Depository for Book-Entry Bonds, those participants listed in such Securities Depository’s book-entry system as having an interest in such Bonds. “Paying Agent” means, with respect to a Series of Bonds, the Trustee and any banking corporation, banking association or trust company designated as paying agent for such Series of Bonds pursuant to the Indenture, and its successor or successors appointed in the manner provided in the Indenture. “Permitted Investments” means any of the following obligations if and to the extent that they are permissible investments of funds of the City as stated in its current investment policy (the Trustee may rely on the investment directions of the City that the investment is approved by the City’s investment policy) and to the extent then permitted by law:
(i) Direct obligations of the United States (including obligations issued or held in bookentry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States.
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(ii) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States (stripped securities are only permitted if they have been stripped by the agency itself):
(1) U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership; (2) Farmers Home Administration (“FmHA”) Certificates of beneficial ownership; (3) Federal Financing Bank; (4) Federal Housing Administration Debentures (“FHA”); (5) General Services Administration Participation certificates; (6) Government National Mortgage Association (“GNMA”) GNMA - guaranteed mortgage-backed bonds GNMA - guaranteed pass-through obligations (participation certificates); and (7) United States Maritime Administration Guaranteed Title XI financing; (8) United States Department of Housing and Urban Development Project Notes, Local Authority Bonds and New Communities Debentures - U.S. government guaranteed debentures U.S. Public Housing Notes and Bonds - U.S. government guaranteed public housing notes and bonds.
(iii) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit United States government agencies (stripped securities are only permitted if they have been stripped by the agency itself): (1) Federal Home Loan Bank System Senior debt obligations; (2) Federal Home Loan Mortgage Corporation (“FHLMC”) Participation Certificates Senior debt obligations; (3) Federal National Mortgage Association (“FNMA”) Mortgage-backed securities and senior debt obligations; (4) Student Loan Marketing Association Senior debt obligations; (5) Resolution Funding Corporation obligations; and (6) Farm Credit System Consolidated system-wide bonds and notes. (iv) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of “AAAmG,” “AAA-m” or “AA-m” and if rated by Moody’s rated “Aaa,” “Aa1” or “Aa2,” including funds for which the Trustee or any of its affiliates (including any holding company, subsidiaries, or other affiliates) provides investment advisory or other management services, provided such funds satisfy the criteria contained in the Indenture.
(v) Certificates of deposit secured at all times by collateral described in (i) and/or (ii) above. Such certificates must be issued by commercial banks (including affiliates of the Trustee), savings and loan associations or mutual savings banks. The collateral must be held by a third party and the City or the Trustee must have a perfected first security interest in the collateral. (vi) Certificates of deposit, savings accounts, deposit accounts or money market deposits (including those of the Trustee and its affiliates) which are fully insured by FDIC, including BIF and SAIF. (vii) Investment agreements with, or guaranteed by, a domestic or foreign bank or corporation (other than a life or property casualty insurance company) the long-term debt of which is rated at least “AA” by S&P and “Aa” by Moody’s, and which agreements are acceptable to each Credit Provider whose acceptance is required by a Supplemental Indenture or a Credit Support Agreement. (viii) Commercial paper rated, at the time of purchase, “Prime - 1” by Moody’s and “A-1” or better by S&P.
(ix) Bonds or notes issued by any state or municipality which are rated by Moody’s and S&P in one of the two highest rating categories assigned by such agencies. (x) Federal funds or bankers acceptances with a maximum term of one year of any bank (including those of the Trustee and its affiliates) which has an unsecured, uninsured and unguaranteed obligation rating of “Prime - 1” or “A3” or better by Moody’s and “A-1” or “A” or better by S&P. (xi) Repurchase Agreements for 30 days or less must satisfy the following criteria.
Repurchase Agreements which exceed 30 days must be acceptable to each Credit Provider whose acceptance is Resolution No. 2022-10
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required by a Supplemental Indenture or a Credit Support Agreement. Repurchase agreements must be between the City or the Trustee and a dealer bank or securities firm. Primary dealers on the Federal Reserve reporting dealer list must be rated “A” or better by S&P and “A2” or better by Moody’s, or banks must be rated “A” or better by S&P and “A2” or better by Moody’s. The written repurchase agreements contract must include the following: (1) securities which are acceptable for transfer are: (a) Securities described in clauses (i) or (ii) of this definition; or (b) Securities of FNMA or FHLMC described in clause (iii) of this definition; (2) the collateral must be delivered to the City, the Trustee (if the Trustee is not supplying the collateral) or third party acting as agent for the Trustee (if the Trustee is supplying the collateral) before/simultaneously with payment; (3)(a) the securities must be valued weekly, marked-to-market at current market price plus accrued interest; (b) the value of collateral in the case of securities described in clauses (i) or (ii) of this definiton must be equal to 104% of the amount of cash transferred by the City or the Trustee to the dealer bank or security firm under the repurchase agreements plus accrued interest. The value of collateral in the case of securities of FNMA or FHLMC described in clause (iii) of this definition must be equal to 105% of the amount of cash transferred by the City or the Trustee to the dealer bank or security firm under the repurchase agreement plus accrued interest. If the value of securities held as collateral falls below the required percentage of the value of the cash transferred, then additional cash and/or acceptable securities must be transferred. An opinion of counsel selected by the City, which may be the City Attorney or other counsel retained by the City, to the effect that the repurchase agreement meets guidelines under state law for legal investment of public funds must be received by the City or the Trustee.
(xii) Any state administered pool investment fund in which the City is statutorily permitted or required to invest will be deemed a permitted investment, including, but not limited to the Local Agency Investment Fund in the treasury of the State.
(xiii) Advance Refunded Municipal Securities.
“Person” means an individual, corporation, firm, association, partnership, trust or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof. “Principal Account” means the account by that name in the Debt Service Fund established pursuant to the Indenture.
“Principal Office” means, with respect to: (i) the Trustee, the principal office of such Trustee in Los Angeles, California, or such other office of the Trustee designated thereby; and (ii) a Paying Agent or a Credit Provider, the office designated as such in writing by such party to the Trustee, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term will mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business is conducted. “Prudent Utility Practice” means any of the practices, methods, and acts which, in the exercise of reasonable judgment, in light of the facts, including but not limited to, the practices, methods, and acts engaged in or approved by a significant portion of the electric utility industry prior thereto, known at the time the decision was made, would have been expected to accomplish the desired result consistent with costeffectiveness, reliability, safety, and expedition. It is recognized that Prudent Utility Practice is not intended to be limited to optimum practice, method, or act to the exclusion of all others, but rather is a spectrum of possible practices, methods, or act which could have been expected to accomplish the desired result at the lowest reasonable cost consistent with cost-effectiveness, reliability, safety, and expedition. “Public Finance Contract” means: (i) any contract providing for payments based on levels of, or changes in, interest rates, currency exchange rates, stock or other indices; (ii) any contract to exchange cash flows or a series of payments; or (iii) any contract to hedge payment, currency, rate spread or similar exposure, including but not limited to interest, any interest rate swap agreement, currency swap agreement, forward payment conversion agreement or futures contract, any contract providing for payments based on levels of, or changes in, interest rates, currency exchange rates, stock or other indices, any contract to exchange cash flows Resolution No. 2022-10
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or a series of payments, or any contract, including, without limitation, an interest rate floor or cap, or an option, put or call, to hedge payment, currency, rate, spread or similar exposure, between the City and a counterparty. “Purchase Price” means: (i) with respect to Bonds of any Series, the purchase price set forth in or determined pursuant to the Supplemental Indenture authorizing the Bonds of such Series to be paid to the Owners of such Bonds when such Bonds are tendered for purchase or deemed tendered for purchase in accordance with the provisions of such Supplemental Indenture; and (ii) with respect to other Parity Obligations, the purchase price set forth in the Issuing Instrument authorizing such Parity Obligations to be paid to the owners of such Parity Obligations when such Parity Obligations are tendered or deemed tendered for purchase in accordance with the provisions of such Issuing Instrument. “Qualified Swap Agreement” means a Public Finance Contract entered into by the City and satisfying the conditions of the Indenture.
“Rating Agency” means, as of any time and to the extent it is then providing or maintaining a rating on Parity Obligations at the request of the City, each of Moody’s or Standard & Poor’s, or in the event that neither Moody’s or Standard & Poor’s then maintains a rating on Parity Obligations at the request of the City, any other nationally recognized rating agency then providing or maintaining a rating on the Bonds at the request of the City.
“Rating Category” means: (i) with respect to any long-term rating category, all ratings designated by a particular letter or combination of letters, without regard to any numerical modifier, plus or minus sign or other modifier; and (ii) with respect to any short-term or commercial paper rating category, all ratings designated by a particular letter or combination of letters and taking into account any numerical modifier, but not any plus or minus sign or other modifier.
“Rating Confirmation” means written evidence from each Rating Agency then rating Outstanding Parity Obligations at the request of the City to the effect that, following the event which requires the Rating Confirmation, the then current rating for each Outstanding Parity Obligation will not be lowered or withdrawn solely as a result of the occurrence of such event.
“Rebate Fund” means the City of Vernon Electric System Rebate Fund established pursuant to the Indenture.
“Record Date” means, with respect to an Interest Payment Date for a Series of Bonds, the date or dates specified as such in the Supplemental Indenture authorizing such Series of Bonds. “Redemption Date” means, with respect to any Bonds to be redeemed in accordance with the Master Indenture and the Supplemental Indenture authorizing such Bonds, the redemption date set forth in notice of redemption of such Bonds given in accordance with the terms of the Indenture. “Redemption Fund” means the City of Vernon Electric System Redemption Fund established pursuant to the Indenture.
“Redemption Price” means, with respect to any redemption of a Bond prior to its maturity, the amount to be paid upon such redemption of the Bond as set forth in, or determined in accordance with, the Supplemental Indenture authorizing such Bond.
“Refunding Bonds” means Bonds issued in accordance with the terms and conditions of the Indenture for the purposes, and satisfying the conditions of, the Indenture. “Refunding Parity Obligations” means Parity Obligations, including Refunding Bonds, issued for the purposes set forth in the Indenture and satisfying the conditions set forth in the Indenture .
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“Representation Letter” the letter or letters of representation from the City to, or other instrument or agreement with, a Securities Depository for Book-Entry Bonds, in which the City, among other things, makes certain representations to the Securities Depository with respect to the Book-Entry Bonds, the payment thereof and delivery of notices with respect thereto.
“Reserve Financial Guaranty” means a policy of municipal bond insurance or surety bond issued by a municipal bond insurer or a letter of credit issued by a bank or other institution if the obligations insured by such insurer or issued by such bank or other institution, as the case may be, have ratings at the time of issuance of such policy or surety bond or letter of credit in the highest rating category (without regard to qualifiers) by S&P and Moody’s and, if rated by A.M. Best & Company, also in the highest rating category (without regard to qualifiers) by A.M. Best & Company.
“Reserve Financial Guaranty Provider” means an issuer of a Reserve Financial Guaranty. “Revenues” mean all gross income and revenue received or receivable by the City from the ownership or operation of the Electric System, including all rates and charges for the Electric Service and the other services and facilities of the Electric System, all proceeds of insurance covering business interruption loss relating to the Electric System and all other income and revenue howsoever derived by the City from the ownership or operation of the Electric System or otherwise arising from the Electric System, including all net receipts pursuant to Public Finance Contracts entered into in connection with any Obligations or program of investments relating to the Electric System and all income from the deposit or investment of any money in the Light and Power Fund, but excluding: (i) proceeds of taxes; (ii) refundable deposits made to establish credit and advances; (iii) contributions in aid of construction; and (iv) line extension fees. “Rule 15c2-12” means Rule 15c2-12 of the Securities and Exchange Commission adopted pursuant to the Securities Exchange Act of 1934, as amended, as the same may be amended and supplemented from time to time.
“Securities Depository” means a trust company or other entity which provides a book-entry system for the registration of ownership interests of Participants in securities and which is acting as security depository for Book-Entry Bonds.
“Serial Obligations” means Obligations for which no Sinking Fund Installments are established. “Serial Parity Obligations” means Serial Obligations which are Parity Obligations. “Series” means Obligations issued at the same time or sharing some other common term or characteristic and designated in the Issuing Instrument pursuant to which such Obligations were issued as a separate issue or series of Obligations.
“SIFMA Index” means, as of any date, The Securities Industry and Financial Markets Association Municipal Swap Index as of the most recent date for which such index was published or such other weekly, high-grade index comprised of seven-day, Tax-Exempt variable rate demand notes produced by Municipal Market Data, Inc., or its successor, or as otherwise designated by The Securities Industry and Financial Markets Association; provided, however, that, if such index is no longer produced by Municipal Market Data, Inc. or its successors, then “SIFMA Index” will mean such other reasonably comparable index as may be selected by the City.
“Sinking Fund Account” means the account by that name in the Debt Service Fund established pursuant to the Indenture.
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“Sinking Fund Installment” means, with respect to any Term Parity Obligations, each amount so designated for such Term Parity Obligations in the Issuing Instrument authorizing the issuance of such Parity Obligations requiring payments by the City to be applied to the retirement of such Parity Obligations on and prior to the stated maturity date thereof.
“Standard & Poor’s” means Standard & Poor’s Rating Services and any successor entity rating Parity Obligations at the request of the City.
“State” means the State of California.
“Subordinate Obligation” means any Obligation which is expressly made subordinate and junior in right of payment from the Net Revenues and amounts in the Light and Power Fund other than the Operating Reserve available for such payment in accordance with the Master Indenture to the payment of Parity Obligations and which complies with the provisions of the Indenture. “Supplemental Indenture” means any supplemental indenture supplementing or amending the Indenture as theretofore in effect, entered into by the City and the Trustee in accordance with the Indenture. “Tax Certificate” means a certificate relating to the requirements of the Code signed on behalf of the City and delivered in connection with the issuance of a Series of Bonds. “Tax-Exempt” means, with respect to interest on any obligations of a state or local government, including the Bonds, that such interest is excluded from the gross income of the holders thereof (other than any holder who is a “substantial user” of facilities financed with such obligations or a “related person” within the meaning of Section 147(a) of the Code) for federal income tax purposes, whether or not such interest is includable as an item of tax preference or otherwise includable directly or indirectly for purposes of calculating other tax liabilities, including any alternative minimum tax or environmental tax under the Code. “Tax-Exempt Securities” means bonds, notes or other securities the interest on which is Tax-Exempt. “Tender Indebtedness” means any Parity Obligations or portions of Parity Obligations, a feature of which is an option or obligation, on the part of the owners thereof under the terms of such Parity Obligations, to tender all or a portion of such Parity Obligations to the City, a fiscal agent, a paying agent, a tender agent or other agent for purchase and requiring that such Parity Obligations or portions thereof be purchased at the applicable Purchase Price if properly presented.
“Termination Payment” means with respect to a Qualified Swap Agreement, the amount payable by the City as a result of the termination of such Qualified Swap Agreement prior to its scheduled expiration date. “Term Obligations” means Obligations which are payable on or before their specified maturity dates from Sinking Fund Installments established for that purpose and calculated to retire such Obligations on or before their specified maturity dates.
“Term Parity Obligations” means Term Obligations which are Parity Obligations. “Trust Estate” means, subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein: (i) the Revenues; (ii) all amounts on deposit in the Light and Power Fund, including the investments, if any, thereof; and (iii) all amounts on deposit in the Funds, other than the Rebate Fund, held by the Trustee under the Indenture, including the investments, if any, thereof.
“Trustee” means, The Bank of New York Mellon Trust Company, N.A., as trustee for the Bonds under the Indenture and any successor satisfying the requirements of the Indenture.
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“Unrealized Item” means each item of revenue or expense of the Electric System recognized as a revenue or expense of the Electric System in accordance with Generally Accepted Accounting Principles which are due to unrealized gains or losses caused by marking assets or liabilities of the Electric System to market.
“Variable Rate Indebtedness” means any Obligation, other than Paired Obligations, the interest rate on which to the maturity thereof is not established at a rate which is not subject to fluctuation or subsequent adjustment, either at the time of issuance of such Obligation or some subsequent date.
Rules of Construction. Words of the masculine gender will be deemed and construed to include correlative words of the feminine and neutral genders. Except where the context otherwise requires, words importing the singular number include the plural number and vice versa, and words importing persons include corporations and associations, including districts, agencies and other public bodies, as well as natural persons.
The term “principal” when used with reference to a Capital Appreciation Obligation as of its maturity date refers to the Final Compounded Amount of such Capital Appreciation Obligation and as to any other date, the Accreted Value of such Capital Appreciation Obligation as of such date. The term “principal” when used with reference to a Parity Obligation which is a Qualified Swap Agreement refers to the Net Payments due under such Qualified Swap Agreement. The term “principal” when used with reference to a Parity Obligation which is a Credit Provider Reimbursement Obligation refers to the amount advanced by the Credit Provider to the extent not included in Parity Obligations as Credit Provider Bonds.
The term “issue” includes issuance, creation, incurrence, entering into an agreement or any other act pursuant to which a party may become obligated with respect to an Obligation.
AUTHORIZATION AND ISSUANCE OF BONDS
Authorization of Bonds. The Indenture provides certain terms and conditions upon which Bonds of the City to be designated as “City of Vernon Electric System Revenue Bonds” may be issued from time to time as authorized by Supplemental Indentures. The aggregate principal amount of Bonds which may be executed, authenticated and delivered under the Indenture is not limited except as may be provided therein or as may be limited by law.
Bonds Constitute Special Obligations. The Bonds do not constitute a charge against the general credit of the City but constitute and evidence special obligations of the City payable as to principal, Redemption Price, if any, and interest solely from the Net Revenues and the other funds pledged therefor and available for such payment in accordance with the Indenture and, with respect to any particular Bonds, from such other sources as are specified in the Supplemental Indenture authorizing the issuance of such Bonds. The Purchase Price for the Bonds of any Series which are Tender Indebtedness will be payable from such sources, other than the Revenues and the other amounts in the Light and Power Fund, as are specified in the Supplemental Indenture authorizing the issuance of such Series. The provisions of the Indenture do not preclude the payment, purchase or redemption of Bonds, at the election of the City, from any other legally available funds.
The Bonds are not secured by a legal or equitable pledge of, or lien or charge upon, any property of the City or any of its income or receipts except the Trust Estate pledged therefor pursuant to the Master Indenture which pledge is subject to the provisions thereof permitting the application of the Trust Estate for the purposes and on the terms and conditions set forth therein. Neither the faith and credit nor the taxing power of the State of California, the City or any other public agency is pledged to the payment of the principal or Redemption Price of or the interest on the Bonds. The issuance of the Bonds will not directly, indirectly or contingently obligate the City Council of the City to levy or pledge any form of taxation or to make any appropriation for the payment of the Bonds. The payment of the principal or Redemption Price of, or interest on, the Bonds does not constitute a debt, liability or obligation of the State of California or any public agency (other than the special obligation of the City as provided in the Indenture). Neither the members of the City Council of the City, nor any person executing a Bond, nor any officer or employee of the City will be liable personally for the Resolution No. 2022-10
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principal or Redemption Price of, or interest on, the Bonds or be subject to any personal liability or accountability by reason of the issuance of the Bonds or in respect of any undertakings by the City under the Indenture. The face of each Bond will contain a legend to the foregoing effect.
Indenture to Constitute Contract. In consideration of the purchase and acceptance of each Bond issued under the Indenture by those who own the same from time to time, the provisions of each Bond and the provisions of the Indenture applicable to such Bond will be deemed to be and will constitute a contract between the City and the Owner of such Bond.
Additional Bonds. One or more Series of Additional Bonds may be issued, authenticated and delivered upon original issuance for the purpose of paying all or a portion of the Costs of any Capital Improvement. Additional Bonds may be issued in a principal amount sufficient to pay such Costs, including making of any deposits into the funds or accounts required by the provisions of the Indenture and providing amounts for Costs of Issuance of such Additional Bonds.
Refunding Bonds.
(a) One or more Series of Refunding Bonds may be issued, authenticated and delivered upon original issuance for the purpose of refunding all or any portion of the Outstanding Parity Obligations.
Refunding Bonds may be issued in a principal amount sufficient to accomplish such refunding including providing amounts for the Costs of Issuance of such Refunding Bonds, and the making of any deposits into the funds and accounts required by the provisions of the Indenture. (b) Refunding Bonds of each Series will be authenticated and delivered by the Trustee only upon receipt by the Trustee (in addition to the documents required by the Indenture) of an Opinion of Bond Counsel to the effect that the Parity Obligations (or the portion thereof) to be refunded are deemed paid pursuant to the Issuing Instrument authorizing such Parity Obligations. Such Opinion of Bond Counsel may rely upon an Accountant’s Certificate as to the sufficiency of available funds to pay such Parity Obligations. The Trustee may conclusively rely on such Opinion of Bond Counsel in determining whether the conditions precedent for the issuance and authentication of such Series of Refunding Bonds have been satisfied. (c) The proceeds, including accrued interest, of the Refunding Bonds of each Series will be applied simultaneously with the delivery of such Bonds as provided in the Supplemental Indenture authorizing such Series of Refunding Bonds.
Conditions of Issuance of Subordinate Obligations.
(a) The City may, at any time or from time to time, issue Subordinate Obligations without satisfying the requirements of the Indenture with respect to Parity Obligations for any purpose in connection with the Electric System, including, without limitation, the financing of a part of the cost of acquisition and construction of any Capital Improvement or the refunding of any Subordinate Obligations or Outstanding Parity Obligations (or portions thereof). Such Subordinate Obligations may be secured by a pledge of Revenues and amounts in the Light and Power Fund, provided that any such pledge will be, and will be expressed to be, subordinate and junior in all respects to the pledge of the Revenues and amounts in the Light and Power Fund securing such Parity Obligations as may be Outstanding from time to time, including Parity Obligations issued after the issuance of such Subordinate Obligations. Such Subordinate Obligations may be payable from Net Revenues and amounts in the Light and Power Fund, other than the Operating Reserve, as may from time to time be available for such payment in accordance with the Master Indenture, provided that any such payment will be, and will be expressed to be, subordinate and junior in all respects to the payment from such sources of such Parity Obligations as may be Outstanding from time to time, including Parity Obligations issued after the issuance of such Subordinate Obligations.
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(b) The Issuing Instrument for Subordinate Obligations must contain provisions (which will be binding on all owners of such Subordinate Obligations) not more favorable to the owners of such Subordinate Obligations than the following:
(1) If an Event of Bankruptcy with respect to the City occurs and is continuing, the owners of all Outstanding Parity Obligations will be entitled to receive payment in full in cash of all principal, interest and all other payments due with respect to all such Parity Obligations, including any Termination Payments, before the owners of the Subordinate Obligations are entitled to receive any payment from the Net Revenues and amounts in the Light and Power Fund with respect to the Subordinate Obligations. (2) In the event that any Subordinate Obligation is declared due and payable before its expressed maturity because of the occurrence of an event of default (under circumstances when the provisions of clause (1) are not applicable), the owners of all Parity Obligations Outstanding at the time such Subordinate Obligation so becomes due and payable because of such event of default, will be entitled to receive payment in full in cash of all principal, interest and all other payments due with respect to all such Parity Obligations before the owners of such Subordinate Obligation are entitled to receive any accelerated payment from Net Revenues and amounts in the Light and Power Fund with respect to such Subordinate Obligation. For purposes of the foregoing, a termination payment with respect to a Public Finance Contract which is not a Qualified Swap Agreement will not be considered a declaration of amounts due and payable before expressed maturity even if declared due and payable because of the occurrence of an event of default. (3) If any default with respect to any Outstanding Parity Obligation has occurred and is continuing (under circumstances when the provisions of clause (1) above is not applicable), the owners of all Outstanding Parity Obligations will be entitled to receive payment in full in cash of all principal, interest and all other payments due with respect to all such Parity Obligations as the same become due and payable in accordance with the provisions of the Issuing Instrument authorizing the issuance of such Parity Obligations before the owners of the Subordinate Obligations are entitled to receive, subject to the provisions of clause (5), any payment from the Net Revenues and amounts in the Light and Power Fund with respect to the Subordinate Obligations.
(4) No Bondowner or owner of other Outstanding Parity Obligations will be prejudiced in his right to enforce subordination of the Subordinate Obligations by any act or failure to act on the part of the City or the Trustee.
(5) The Subordinate Obligations may provide that the provisions of clauses (1), (2), (3) and (4) are solely for the purpose of defining the relative rights of the Owners of the Bonds and the owners of all other Outstanding Parity Obligations on the one hand, and the owners of Subordinate Obligations on the other hand, and that nothing therein will impair, as between the City and the owners of the Subordinate Obligations, the obligation of the City, which may be unconditional and absolute, to pay to the owners of such Subordinate Obligations the principal thereof and premium, if any, and interest thereon in accordance with their terms, nor will anything in the Indenture prevent the owners of the Subordinate Obligations from exercising all remedies otherwise permitted by applicable law, or under the Subordinate Obligations or the Issuing Instruments authorizing the Subordinate Obligations, upon default under such Subordinate Obligations or Issuing Instruments, subject to the rights under clauses (1), (2), (3) and (4) above of the Owners of Outstanding Bonds and the owners of other Outstanding Parity Obligations to receive payment from the Net Revenues and amounts in the Light and Power Fund otherwise payable or deliverable to the owners of the Subordinate Obligations; and the Subordinate Obligations may provide that, insofar as a trustee, fiscal agent or paying agent for such Subordinate Obligations is concerned, the foregoing provisions do not prevent the application by such trustee, fiscal agent or paying agent of any moneys deposited with such trustee, fiscal agent or paying agent for the purpose of the payment of or on account of the principal (and premium, if any) and interest on such Subordinate Obligations if such trustee, fiscal agent or paying agent did not have knowledge at the time of such application that such payment was prohibited by the foregoing provisions.
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(c) Any Subordinate Obligations may have such rank or priority with respect to any other Subordinate Obligations as may be provided in the Issuing Instrument, authorizing the issuance or securing of such Subordinate Obligations and may contain such other provisions as are not in conflict with the provisions of the Indenture.
Credit Provider Bonds. Subject only to the provisions that are set forth under the caption “—Bonds Constitute Special Obligations,” notwithstanding any other provision contained in the Indenture to the contrary, Bonds which are Credit Provider Bonds will have terms and conditions, including terms of maturity, payment, prepayment and interest rate, as will be specified in the applicable Credit Support Agreement.
GENERAL TERMS AND PROVISIONS OF BONDS
Medium of Payment; Form and Date; Letters and Numbers.
(a) Unless otherwise provided with respect to a Series of Bonds in the Supplemental Indenture authorizing such Series, the Bonds of each Series will be payable, with respect to principal, Redemption Price, if any, Purchase Price, if any, and interest in any coin or currency of the United States of America which at the time of payment is legal tender for the payment of public and private debts. (b) The Bonds of each Series will be dated as provided in or determined pursuant to the Supplemental Indenture authorizing such Series. Unless otherwise provided with respect to a Series of Bonds in the Supplemental Indenture authorizing such Series, the Bonds of each Series will bear interest from the Interest Payment Date next preceding the date of authentication thereof unless: (i) such Bonds are authenticated on an Interest Payment Date, in which event from such Interest Payment Date; and (ii) unless such Bonds are authenticated after a Record Date and before the next succeeding Interest Payment Date for such Bonds, in which event from such Interest Payment Date; provided, however, that if the date of authentication of a Bond is prior to the Record Date for the first Interest Payment Date for such Bond, such Bond will bear interest from its original dated date. Notwithstanding the foregoing, if the City defaults in the payment of interest, then the Bonds will bear interest from the date to which interest has been paid or if no interest has been paid, from their original dated date. (c) Unless otherwise provided with respect to a Series of Bonds in the Supplemental Indenture authorizing such Series, the interest payable on Bonds will be calculated on the basis of a 360-day year of twelve thirty day months.
(d) Except as otherwise provided in the Representation Letter with a Securities Depository for Book-Entry Bonds (or, with respect to a Series of Bonds in the Supplemental Indenture authorizing such Series), interest on each Bond will be payable on each Interest Payment Date for such Bond and will be paid by check of the Trustee mailed on such Interest Payment Date to the Owner of such Bond shown on the Bond Register as of the close of business on the Record Date immediately preceding such Interest Payment Date.
Owners of at least $1,000,000 aggregate principal amount (or, with respect to a Series of the Bonds, such other principal amount as may be specified in the Supplemental Indenture authorizing such Series), of Bonds of any Series may, at any time prior to a Record Date with respect to the payment of interest on such Bonds, give the Trustee written instructions for payment of such interest on each succeeding Interest Payment Date for such Bonds by wire transfer or by deposit to an account within the United States of America. Notwithstanding the foregoing, however, if the City defaults in the payment of interest due on Bonds on any Interest Payment Date, such interest will cease to be payable to the persons in whose name such Bonds were registered in the Bond Register on the Record Date for such Interest Payment Date, and will be payable, when and if paid by the City, to the persons in whose names such Bonds are registered at the close of business on the record date fixed therefor by the Trustee, which may not be more than 15 days and not less than 10 days prior to the date of the proposed payment.
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(e) Unless redeemed prior to such date, the principal of each Bond will be payable on its maturity date and the Redemption Price of each Bond called for redemption prior to maturity, subject to the terms of the Indenture, will be payable on the applicable redemption date. Except as otherwise provided in the Representation Letter with a Securities Depository for Book-Entry Bonds, the principal and, if applicable, the Redemption Price of each Bond will be payable only upon presentation and surrender of such Bond at the Principal Office of the Trustee or any other Paying Agent for such Bond for cancellation; provided that the Trustee may agree with the Owner of any Bond that such Owner may, in lieu of surrendering the same for a new Bond, endorse on such Bond a record of partial payment of the principal of such Bond in the form set forth in the Indenture.
The Trustee will maintain a record of each such partial payment made in accordance with the foregoing agreement and such record of the Trustee will be conclusive. Such partial payment will be valid upon payment of the amount thereof to the Owner of such Bond, and the City and the Trustee will be fully released and discharged from all liability to the extent of such payment regardless of whether such endorsement has or has not been made upon such Bond by the Owner thereof and regardless of any error or omission in such endorsement.
Book-Entry Bonds.
(a) Unless otherwise provided with respect to a Series of Bonds in the Supplemental Indenture authorizing such Series, the Bonds of each Series will be issued as Book-Entry Bonds in fully registered form with no distribution of physical bonds made to the public. Except as otherwise provided in the Indenture, the Book-Entry Bonds of each Series will be registered in the name of the Securities Depository or its Nominee as directed by the Securities Depository. The payment of Book-Entry Bonds and the giving of notices will be governed by the terms of the Representation Letter with the Securities Depository for the Book-Entry Bonds.
DTC will act as the initial Securities Depository for the Book-Entry Bonds and has designated Cede & Co. as its Nominee. DTC has represented to the City that it will maintain a book-entry program in recording ownership interests in the Book-Entry Bonds of its Participants and the ownership interests of a Beneficial Owner of a Bond will be recorded through book entries on the records of the Participants. (b) Bonds of each Series which are not Book-Entry Bonds will be delivered to the Owners thereof as fully registered Bonds in the form specified in the Supplemental Indenture authorizing the issuance of such Series of Bonds, with the ownership of such Bonds being recorded in the Bond Register. (c) In the event that DTC or any successor Securities Depository ceases to act as Securities Depository for Bonds of a Series, then Bonds of such Series in certificated form will be issued to the Owners in substantially the form of the Bond delivered to the former Securities Depository or its Nominee with necessary changes to reflect non-book-entry status as approved by the officers of the City executing such Bonds. The issuance of individual Bonds in certificated form will be accomplished as provided in the Representation Letter.
(d) With respect to Bonds registered in the Bond Register in the name of a Securities Depository or a Nominee, the City, the Trustee and each Paying Agent have no responsibility or obligation to any Participant or to any Beneficial Owner. Without limiting the immediately preceding sentence, none of the City, the Trustee or any Paying Agent have any responsibility or obligation with respect to: (i) the accuracy of the records of a Securities Depository, its Nominee or any Participant as to any ownership interest in the Bonds; (ii) the delivery to any Participant, Beneficial Owner or any other person, other than an Owner as shown in the Bond Register, of any notice with respect to the Bonds; or (iii) the payment to any Participant, Beneficial Owner or any other person, other than an Owner as shown in the Bond Register, of any amount with respect to principal and Purchase Price of, premium, if any, or interest on the Bonds. The City, the Trustee and each Paying Agent may treat and consider the person in whose name each Bond is registered in the Bond Register as the absolute Owner of such Bond for the purpose of payment of principal and Purchase Price of, premium, if any, and interest on such Bond, for the purpose of registering transfers with respect to such Bond, Resolution No. 2022-10
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and for all other purposes whatsoever. None of the City, the Trustee or any Paying Agent will be affected by any notice to the contrary. All principal and Purchase Price of, premium, if any, and interest on the Bonds will be paid only to or upon the order of the respective Owner, as shown in the Bond Register, or their respective attorneys duly authorized in writing, and all such payments will be valid and effective to fully satisfy and discharge the City’s obligations with respect to payment of principal and Purchase Price of, Redemption Price, if any, and interest on the Bonds to the extent of the sum or sums so paid, and none of the City, the Trustee or any Paying Agent will be affected by any notice to the contrary. No person other than an Owner, as shown in the Bond Register, will receive a Bond evidencing the obligation of the City to make payments of principal and Purchase Price of, Redemption Price, if any, and interest pursuant to the Indenture. (e) Upon delivery by a Securities Depository to the City of written notice to the effect that the Securities Depository has determined to substitute a new Nominee in place of its current Nominee, and subject to the provisions in the Indenture with respect to Record Dates, the word Nominee for purposes of the Indenture refers to such new Nominee of the Securities Depository; and upon receipt of such a notice the City will promptly deliver a copy of the same to the Trustee. (f) Notwithstanding any other provision of the Indenture and so long as Book-Entry Bonds are registered in the name of a Nominee, the City and the Trustee will cooperate with the Securities Depository in effecting payment of the principal of, Redemption Price, if any, and interest on such Book-Entry Bonds by arranging for payment in such manner as the Securities Depository may reasonably instruct in writing that funds for such payments are properly identified and are made available on the date they are due, all in accordance with the Representation Letter, the provisions of which the Trustee may rely upon to implement the foregoing procedures.
(g) A Securities Depository for the Book-Entry Bonds may resign upon giving 30 days written notice of such resignation to the City and the Trustee. The City may terminate the use of the book-entry system of a Securities Depository for Book-Entry Bonds upon giving 30 days written notice of such termination to the Securities Depository and the Trustee. Any such resignation or termination will become effective upon the earlier of the appointment of a successor Securities Depository for Book-Entry Bonds by the City or the issuance of Bonds which are not Book-Entry Bonds pursuant to the Indenture.
Transfers Outside Book-Entry Program. In the event that the resignation or removal of a Securities Depository has become effective pursuant to the Indenture, then the City will thereupon discontinue the current book-entry program for the Book-Entry Bonds with such Securities Depository. In such event, the City will cause the Trustee to obtain from the former Securities Depository a list showing the interests of the Participants in the Book-Entry Bonds and will cause such Book-Entry Bonds to be surrendered to the Trustee on or before the date any replacement Bonds are to be issued. Furthermore, in the event that the City determines to use a substitute Securities Depository, the City will so notify the Trustee and each Paying Agent for Book-Entry Bonds. If, prior to the termination of the current Securities Depository’s book-entry system for the Book-Entry Bonds, the City fails to identify another qualified Securities Depository to replace the current Securities Depository, then the Book-Entry Bonds will no longer be required to be registered in the name of a Securities Depository or its Nominee and the City will issue, and the Trustee will authenticate, replacement Bonds in the appropriate amounts and in whatever name or names the Owners of the Book-Entry Bonds designate pursuant to the Representation Letter with the former Securities Depository. In the event that the City determines that the Beneficial Owners of the Bonds are able to obtain physical Bonds through a Securities Depository, the City may notify the Participants identified by the Securities Depository as having an interest in the Bonds of the availability of such physical Bonds and the Trustee will authenticate, transfer and exchange Bonds as required by the Securities Depository in the appropriate names and amounts, which will be in Authorized Denominations.
Bond Register. The Trustee will keep or cause to be kept, at its Principal Office, sufficient books for the registration and transfer of the Bonds of each Series which will at all times be open to inspection during regular business hours by the City upon reasonable notice, and, upon presentation for such purpose, the Resolution No. 2022-10
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Trustee will, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred on said Bond Register, Bonds of each Series as provided in the Indenture.
The City, the Trustee and each Paying Agent may rely on the address of the Owner of each Bond as it appears on the Bond Register for any and all purposes. It is the duty of the Owner of each Bond to give written notice to the Trustee of any change in the Owner’s address so that the Bond Register may be revised accordingly.
Interchangeability of Bonds. Upon surrender of a Bond at the Principal Office of the Trustee, together with a written instrument of transfer satisfactory to the Trustee and duly executed by the Owner or the Owner’s attorney duly authorized in writing, may, at the option of the Owner thereof, and upon payment by such Owner of any charges which the Trustee may make as provided in the Indenture, be exchanged for an equal aggregate principal amount of Bonds of the same Series, terms and maturity of any other Authorized Denominations.
Negotiability, Transfer and Registry. Each Bond will be transferable only upon the Bond Register, upon surrender thereof, together with a written instrument of transfer satisfactory to the Trustee, duly executed by the Owner or the Owner’s duly authorized attorney. Upon the transfer of any such Bond, the City will execute and the Trustee will authenticate, deliver and register in the Bond Register in the name of the transferee a new Bond or Bonds of the same aggregate principal amount, Series, terms and maturity as the surrendered Bond.
Regulations With Respect to Exchanges and Transfers. Subject to the terms of a Representation Letter with a Securities Depository for Book-Entry Bonds, in all cases in which the privilege of exchanging Bonds or transferring Bonds is exercised, the City will execute and the Trustee will authenticate and deliver Bonds in accordance with the provisions of the Indenture relating to such Bonds. All Bonds surrendered in any such exchanges or transfers will forthwith be delivered to the Trustee and cancelled by the Trustee. Unless the Indenture relating to such Bonds provides that such transfer or exchange is made without charge to the Owner, for every such exchange or transfer of Bonds, whether temporary or definitive, the City or the Trustee may make a charge sufficient to reimburse it for any tax, fee or other governmental charge required to be paid and any other cost incurred by the City or the Trustee with respect to such exchange or transfer.
Prior to any transfer of the Bonds outside the book-entry system (including, but not limited to, the initial transfer outside the book-entry system) the transferor will provide or cause to be provided to the Trustee all information that is necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045, as amended. The Trustee will conclusively rely on the information provided to it and has no responsibility to verify or ensure the accuracy of such information.
Bonds Mutilated, Destroyed, Stolen or Lost. Subject to the terms of a Representation Letter with a Securities Depository for Book-Entry Bonds, if any Bond becomes mutilated or is lost, stolen or destroyed, the City may execute and the Trustee will authenticate and deliver a new Bond of like date of Series, maturity, principal amount and terms as the Bond so mutilated, lost, stolen or destroyed; provided that: (i) in the case of such mutilated Bond, such Bond is first surrendered to City or the Trustee; (ii) in the case of any such lost, stolen or destroyed Bond, there is first furnished evidence of such loss, theft or destruction satisfactory to the Trustee together with indemnity satisfactory to the Trustee; (iii) all other reasonable requirements of the City and the Trustee are complied with; and (iv) expenses in connection with such transaction are paid by the Owner. Any Bond surrendered for exchange will be cancelled. Any such new Bond issued pursuant to the Indenture in substitution for a Bond alleged to be destroyed, stolen or lost will constitute original additional contractual obligations on the part of the City, whether or not the Bond so alleged to be destroyed, stolen or lost be at any time enforceable by anyone, and will be equally payable from the Net Revenues and the other funds pledged therefor and available under the Indenture on a parity with and entitled to equal and proportionate benefits with, all other Bonds.
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Temporary Bonds.
(a) Subject to the terms of a Representation Letter with a Securities Depository for Book-Entry Bonds, until the definitive Bonds are prepared, the City may execute, in the same manner as is provided in the Indenture with respect to definitive Bonds, and upon the request of the City, the Trustee will authenticate and deliver, in lieu of definitive Bonds, but subject to the same provisions, limitations and conditions as the definitive Bonds except as to the exchangeability for Bonds, one or more temporary Bonds substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued, in Authorized Denominations, and with such omissions, insertions and variations as may be appropriate to temporary Bonds.
The installments of interest payable on such temporary Bonds will be payable in the same manner as interest is payable on the definitive Bonds in lieu of which such temporary Bonds were issued. The City, at its own expense, will prepare and execute and, upon the surrender of such temporary Bonds for exchange and the cancellation of such surrendered temporary Bonds, the Trustee will authenticate and, without charge to the Owner thereof, deliver in exchange therefor, definitive registered Bonds of the same aggregate Series, principal amount, terms, maturity and date of issue as the temporary Bonds surrendered. Until so exchanged, the temporary Bonds of a Series will in all respects be entitled to the same benefits and security as definitive Bonds authenticated and issued pursuant to the Indenture authorizing the issuance of such Series of Bonds. (b) Temporary Bonds authorized in more than one denomination, upon surrender thereof at the Principal Office of the Trustee, may at the option of the Owner thereof, and upon payment by such Owner of any charges which may be made as provided in the Indenture be exchanged for an equal aggregate principal amount of temporary Bonds of the same Series, maturity, and containing the same terms, of any of the Authorized Denominations as requested by such Owner.
(c) All temporary Bonds surrendered in exchange either for another temporary Bond or Bonds or for a definitive Bond or Bonds will be forthwith cancelled by the Trustee.
Cancellation and Destruction of Bonds. All Bonds paid or redeemed, either at or before maturity, and all Bonds surrendered for transfer or exchange, will be delivered to the Trustee when such payment, redemption or surrender is made, and such Bonds, together with all Bonds purchased by the Trustee, will thereupon be promptly cancelled. Bonds so cancelled may at any time be destroyed by the Trustee, who will execute a certificate of destruction in duplicate by the signature of one of its authorized officers describing the Bonds so destroyed, and one executed certificate will be filed with the City and the other executed certificate will be retained by the Trustee.
REDEMPTION OF BONDS
Redemption at the Direction of the City. In the case of a redemption of Bonds of any Series at the option or direction of the City, the City will give written notice to the Trustee of the exercise of its option to redeem Bonds or of its direction to otherwise cause the redemption of Bonds at its direction, and of the redemption date, principal amounts of the Bonds of such Series and maturity to be redeemed (which Series, maturities and principal amounts shall be determined by the City in its sole discretion, subject to any limitations with respect thereto contained in the Supplemental Indenture authorizing such Series of Bonds and provided that, with respect to any Bond to be redeemed in part, the portion of such Bond which is not to be redeemed shall be in an Authorized Denomination). The City will provide the Trustee with such notice fortyfive (45) days prior to the redemption date or such shorter period as will be acceptable to the Trustee. In the event notice of redemption have been given as provided in the Indenture, other than a conditional notice, there shall be paid on or prior to the redemption date to the Trustee an amount in cash which, in addition to other moneys, if any, available therefor held by the Trustee, shall be sufficient to redeem on the applicable redemption date at the Redemption Price, all of the Bonds to be redeemed.
Redemption Otherwise Than at City’s Direction. Whenever by the terms of the Indenture, the Trustee is required or authorized to redeem Bonds otherwise than at the option or direction of the City and the Resolution No. 2022-10
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Indenture does not expressly set forth the principal amount of Bonds of each Series and maturity so subject to redemption to be redeemed, the City may select the principal amounts of the Bonds of each Series and maturity to be redeemed (which Series, maturities and principal amounts to be redeemed will be determined by the City in its sole discretion, subject to any limitations with respect thereto contained in the Indenture and provided that, with respect to any Bond to be redeemed in part, the portion of such Bond which is not to be redeemed is in an Authorized Denomination) and in the event that the City does not notify the Trustee of such Series, maturities, and principal amounts, to be redeemed on or before the 45th day preceding the redemption date, the Trustee will, in its sole discretion, subject to any limitations with respect to the Series, maturity, or principal amount of Bonds to be redeemed contained in the Indenture, select the Series, maturities and principal amounts of Bonds to be redeemed, which selection will be conclusive, give the notice of redemption and pay out of moneys available therefor the Redemption Price thereof to the Owners of the Bonds to be redeemed or to appropriate Paying Agents in accordance with the terms of the Indenture.
Selection of Bonds to be Redeemed. If less than all of the Outstanding Bonds, or less than all of the Outstanding Bonds of like Series and maturity, are called for prior redemption, except as otherwise provided with respect to Credit Provider Bonds in the Supplemental Indenture authorizing such Credit Provider Bonds or in the applicable Credit Support Agreement or except as otherwise provided with respect to Book-Entry Bonds in a Representation Letter, the particular Bonds or portions of Bonds to be redeemed will, subject to any limitations with respect thereto contained in the Indenture, be selected at random by the Trustee in such manner as the Trustee in its discretion may deem fair and appropriate; provided, however, that the portion of any Bond of a denomination greater than the minimum Authorized Denomination for the Bonds of a Series will be redeemed in part only in a principal amount such that the portion of such Bond which is not redeemed is in an Authorized Denomination for such Series and that, in selecting portions of Bonds of a Series for redemption, the Trustee will treat each Bond of each Series as representing that number of Bonds of the minimum Authorized Denomination for such Series which is obtained by dividing the principal amount of such Bond by the minimum Authorized Denomination for the Bonds of such Series.
Notice of Redemption.
(a) When the Trustee receives notice from the City of the exercise of its option to redeem Bonds or of its direction to otherwise cause the redemption of Bonds pursuant to the Indenture, and when redemption of Bonds of a Series is authorized or required pursuant to the Indenture, the Trustee will give notice, in the name of the City, of the redemption of such Bonds, which notice will be mailed, by first class mail, postage prepaid, not more than 60 nor less than 30 days before the redemption date to the Owners of any Bonds to be redeemed (in whole or in part) at their addresses appearing in the Bond Register. Such notice will specify the Series and maturity date of the Bonds to be redeemed, the redemption date and the place or places where amounts due upon such redemption will be payable and, if less than all of the Bonds of any like Series and maturity are to be redeemed, the letters and numbers or other distinguishing marks of such Bonds so to be redeemed, and, in the case of Bonds to be redeemed in part only, such notice will also specify the respective portions of the principal amount thereof to be redeemed. Such notice will further state that, except as provided in clause (b), on such date there will become due and payable upon each Bond to be redeemed the Redemption Price thereof, or the Redemption Price of the specified portion of the principal amount thereof to be redeemed in the case of a Bond to be redeemed in part only, and that from and after such date interest on such Bond or the portion of such Bond to be redeemed will cease to accrue and be payable.
Receipt of such notice is not a condition precedent to the redemption of Bonds and failure of any Owner of a Bond to receive any such notice or any insubstantial defect in such notice will not affect the validity of the proceedings for the redemption of Bonds. Any defect in such notice given to the Owners of less than all of the Bonds to be redeemed will not affect the validity of the proceedings for the redemption of the Bonds as to which the notice of redemption did not contain such defect. (b) In the event that funds required to pay the Redemption Price of Bonds to be redeemed at the option of the City are not on deposit with the Trustee at the time the Trustee gives notice of redemption to the Resolution No. 2022-10
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Owners of such Bonds, such notice will state that such redemption is conditional upon the receipt by the Trustee, on or prior to the date fixed for such redemption, of moneys sufficient to pay the Redemption Price of the Bonds to be redeemed, and that if such moneys have not been so received said notice will be of no force and effect and the City will not be required to redeem such Bonds. In the event a notice of redemption of Bonds contains such a condition and such moneys are not so received, the redemption of Bonds as described in the conditional notice of redemption will not be made and the Trustee will, within a reasonable time after the date on which such redemption was to occur, give notice to the persons and in the manner in which the notice of redemption was given that such moneys were not so received and that there will be no redemption of Bonds pursuant to the conditional notice of redemption.
(c) If upon the expiration of 60 days succeeding any redemption date, any Bonds called for redemption have not been presented to the Trustee for payment, the Trustee will no later than 90 days following such redemption date send written notice by first class mail to the Owner of each Bond not so presented. Failure to mail the notices required by the Indenture to any Owner, or any defect in any notice so mailed, will not affect the validity of the proceedings for redemption of any Bonds nor impose any liability on the Trustee.
(d) In addition to the notice of redemption required pursuant to clause (a), if any Bonds are to be redeemed, then at the written request of an Authorized City Representative received at least 45 days before the redemption date, at least 30 days before the redemption date, the Trustee will also give redemption notice by:
(i) registered or certified mail, return receipt requested, postage prepaid; (ii) telephonically confirmed facsimile transmission; or (iii) overnight delivery service, to one of the Information Services. Failure to give the foregoing notices or any defects therein will not in any manner affect the proceedings for redemption of any Bonds.
(e) Neither the City nor the Trustee have any responsibility for any defect in the CUSIP number that appears on any Bonds or in any redemption notice or other notice with respect thereto, and any such redemption notice or other notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the City nor the Trustee will be liable for any inaccuracy in such numbers.
Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the City will execute, and the Trustee will authenticate and deliver to the Owner of such Bond, at the expense of the City, a new Bond or Bonds of Authorized Denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered, of the same Series, maturity and terms as the surrendered Bond.
Effect of Notice and Availability of Redemption Money. Subject to the provisions of the Indenture, notice of redemption having been duly mailed to the Owners of the Bonds to be redeemed (in whole or in part), as provided in the Indenture, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption: (a) the Bonds, or portions thereof, designated for redemption will, on the date fixed for redemption, become due and payable at the applicable Redemption Price thereof, as provided in the Indenture, anything in such Indenture or in the Bonds to the contrary notwithstanding; (b) except as otherwise provided in a Representation Letter, upon presentation and surrender thereof at the Principal Office of the Trustee or another Paying Agent for such Bonds, the Bonds to be redeemed will be redeemed at the applicable Redemption Price; (c) the Bonds or portions thereof so designated for redemption will be deemed to be no longer Outstanding and such Bonds or portions thereof will cease to bear further interest; and (d) after the date fixed for redemption no Owner of any of the Bonds or portions thereof so designated for redemption will be entitled to any of the benefits of the Indenture, or to any other rights, except with respect to payment of the Redemption Price thereof from the amounts so made available.
Resolution No. 2022-10
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ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF
Pledge of Trust Estate. Subject to the application thereof on the terms and conditions provided in the Indenture, to secure the payment of all the Outstanding Bonds, including Credit Provider Bonds, and the interest payments becoming due thereon according to their tenor, purport and effect, and to secure the performance and observance of all of the covenants, agreements and conditions contained in the Outstanding Bonds, including Credit Provider Bonds, and the Indenture, the City has irrevocably granted a lien on and a security interest in, and pledges, the Trust Estate to the Trustee, for the benefit of the Owners of the Outstanding Bonds, including Credit Provider Bonds, which lien on, security interest in and pledge of the Revenues and amounts in the Light and Power Fund included in the Trust Estate will be on a parity with any pledge of Revenues and amounts in the Light and Power Fund securing Parity Obligations, including Credit Support Agreements for Parity Obligations and Qualified Swap Agreements. The lien on and security interest in and pledge of the Trust Estate constitutes a first pledge of and charge and lien upon the Trust Estate, will immediately attach and be effective, binding and enforceable against the City, its successors, purchasers of any of the Trust Estate, creditors and all others asserting rights therein to the extent set forth in, and in accordance with, the Indenture, irrespective of whether those parties have notice of the lien on, security interest in and pledge of the Trust Estate and without the need for any physical delivery, recordation, filing or further act.
The grant of a lien on and security interest in, and pledge of, the Trust Estate pursuant to the Indenture is made pursuant to the Bond Ordinance and Chapter 5.5 of Division 6 of Title 1 (commencing with Section 5450) of the Government Code of the State.
Funds. To ensure the payment when due and payable, whether at maturity or upon redemption or upon acceleration, of the principal of, Redemption Price, if any, and interest on the Bonds, there have been established the following funds and accounts, to be held and maintained by the Trustee and applied as provided in the Indenture for so long as any of the Bonds are Outstanding:
(a) the City of Vernon Electric System Debt Service Fund, comprised of an Interest Account, a Principal Account and a Sinking Fund Account;
(b) the City of Vernon Electric System Redemption Fund; (c) the City of Vernon Electric System Debt Service Reserve Fund; (d) the City of Vernon Electric System Expense Stabilization Fund; and (e) the City of Vernon Electric System Rebate Fund.
Debt Service Fund.
(a) From the moneys paid by the City to the Trustee pursuant to the Indenture, the Trustee, upon receipt of such moneys, will deposit the following amounts in the following specified accounts within the Debt Service Fund: (1) for deposit in the Interest Account, an amount equal to the interest payable on the Outstanding Bonds on the applicable Interest Payment Date; (2) for deposit in the Principal Account, an amount equal to the principal of the Outstanding Bonds maturing on the applicable maturity date; and (3) for deposit in the Sinking Fund Account, an amount equal to the Sinking Fund Installment due on the applicable Sinking Fund Installment due date.
(b) From the moneys paid by the City pursuant to the Trustee other than in connection with regularly scheduled payments on the Bonds or redemption of Bonds, the Trustee, upon receipt of such moneys, will deposit the following amounts in the following specified accounts within the Debt Service Fund: (1) for deposit in the Interest Account, an amount equal to the interest on the Outstanding Bonds then payable; and (2) for deposit in the Principal Account, an amount equal to the principal of the Outstanding Bonds then payable.
Resolution No. 2022-10
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(c) In the event that Bonds which are Term Obligations purchased or redeemed at the option of the City are deposited with the Trustee for the credit of the Sinking Fund Account not less than 45 days prior to the due date for any Sinking Fund Installment for such Bonds, such deposit will satisfy (to the extent of 100% of the principal amount of such Bonds) any obligation of the City to make a payment to the Trustee pursuant to the Indenture with respect to such Sinking Fund Installments. Any Bond so deposited with the Trustee will be cancelled and will no longer be deemed to be Outstanding for any purpose. Upon making the deposit with the Trustee of Bonds which are Term Obligations as provided in the Indenture, the City may specify the dates and amounts of Sinking Fund Installments for such Bonds as to which the City’s obligations to make a payment to the Trustee pursuant to the Indenture will be satisfied. (d) Except as provided in the Indenture: (1) amounts deposited in the Interest Account will remain therein until expended for the payment of interest on the Bonds; (2) amounts deposited in the Principal Account will remain therein until expended for the payment of principal of the Bonds; and (3) amounts deposited in the Sinking Fund Account will remain therein until expended for the redemption or payment at maturity from Sinking Fund Installments of Bonds which are Term Obligations. (e) The Trustee will apply amounts in the Interest Account to the payment when due of interest on the Outstanding Bonds. The Trustee will apply amounts in the Principal Account to the payment when due of principal of the Outstanding Bonds. The Trustee will apply amounts in the Sinking Fund Account to the redemption (or payment at maturity) of the Bonds which are Term Obligations.
In the event that one or more Paying Agents have been appointed for the Bonds, moneys may be transferred by the Trustee to such Paying Agents from the appropriate account in the Debt Service Fund for deposit into a special trust account to ensure the payment when due of the principal of, Redemption Price, if any, and interest on the Bonds. In the event that any principal of, Redemption Price or interest on, any Bond has been paid from amounts made available pursuant to a Credit Support Instrument, amounts in the appropriate accounts in the Debt Service Fund with respect to such Bond, and any such amounts transferred by the Trustee from the Debt Service Fund to a Paying Agent for such Bond pursuant to the Indenture, will be paid to the applicable Credit Provider as a reimbursement of the amounts so paid.
Redemption Fund. From the moneys paid by the City pursuant to the Indenture for redemption of Bonds, the Trustee will deposit in the Redemption Fund an amount equal to the Redemption Price of the Bonds to be redeemed. Said moneys will be set aside in said Fund and applied on or after the redemption date to the payment of the Redemption Price of the Bonds to be redeemed and, except as otherwise provided in the Indenture, will be used only for that purpose. In the event that one or more Paying Agents have been appointed for the Bonds which are to be redeemed with moneys in the Redemption Fund, amounts in the Redemption Fund may be transferred from such Fund by the Trustee to the Paying Agent for the Bonds to be redeemed for deposit into a special trust account held by such Paying Agent to ensure the payment when due the Redemption Price of the Bonds to be redeemed. In the event that the Redemption Price of a Bond has been paid by a Credit Provider pursuant to a Credit Support Instrument, amounts in the Redemption Fund with respect to such Redemption Price, and any such amounts transferred by the Trustee from the Redemption Fund to a Paying Agent for such Bonds pursuant to the Indenture, will be paid to such Credit Provider as a reimbursement of the amounts so paid. If, after all of the Bonds designated for redemption have been redeemed and cancelled or paid and cancelled, there are moneys remaining in the Redemption Fund, said moneys will be transferred to the Interest Account; provided, however, that if said moneys are part of the proceeds of Refunding Obligations said moneys will be applied as provided in the Issuing Instrument authorizing the issuance of such Refunding Obligations.
Debt Service Reserve Fund.
(a) If on any date on which the principal or Redemption Price of, or interest on, Bonds is due, the amount in the applicable account in the Debt Service Fund available for such payment is less than the amount Resolution No. 2022-10
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of the principal and Redemption Price of and interest on the Bonds due on such date, the Trustee will apply amounts from the Debt Service Reserve Fund to the extent necessary to make good the deficiency. (b) Except as provided in clause (e) below, if on the last Business Day of any month the amount on deposit in any Debt Service Reserve Fund exceeds the Debt Service Reserve Requirement, such excess will be applied to the reimbursement of each drawing on a Reserve Financial Guaranty deposited in or credited to such Fund and to the payment of interest or other amounts due with respect to such a Reserve Financial Guaranty and any remaining moneys will be deposited in the Interest Account. (c) Whenever the amount in the Debt Service Reserve Fund (excluding Reserve Financial Guaranties), together with the amount in the Debt Service Fund, is sufficient to pay in full all of the Outstanding Bonds in accordance with their terms (including principal or Redemption Price and interest thereon), the funds on deposit in the Debt Service Reserve Fund will be transferred to the Debt Service Fund. (d) In the event of the refunding of one or more Bonds (or portions thereof), the Trustee will, upon the written direction of an Authorized City Representative, withdraw from the Debt Service Reserve Fund any or all of the amounts on deposit therein (excluding Reserve Financial Guaranties) and deposit such amounts with itself as Trustee, or the Escrow Agent for the Bonds to be refunded, to be held for the payment of the principal or Redemption Price, if any, of, and interest on, the Bonds (or portions thereof) being refunded; provided that such withdrawal may not be made unless: (a) immediately thereafter the Bonds (or portions thereof) being refunded are deemed to have been paid pursuant to the Indenture; and (b) the amount remaining in the Debt Service Reserve Fund after such withdrawal (including the amount of any Reserve Financial Guaranties), taking into account any deposits to be made in the Debt Service Reserve Fund in connection with such refunding, is not less than the Debt Service Reserve Requirement.. (e) In lieu of the deposits and transfers to the Debt Service Reserve Fund required by the Indenture, the City may cause to be deposited in the Debt Service Reserve Fund a Reserve Financial Guaranty or Reserve Financial Guaranties in an amount equal to the difference between the Debt Service Reserve Requirement and the sums, if any, then on deposit in the Debt Service Reserve Fund or being deposited in such Fund concurrently with such Reserve Financial Guaranty or Guaranties. The Trustee will draw upon or otherwise take such action as is necessary in accordance with the terms of the Reserve Financial Guaranties to receive payments with respect to the Reserve Financial Guaranties (including the giving of notice as required thereunder): (1) on any date on which moneys are required to be withdrawn from the Debt Service Reserve Fund and applied to the payment of principal or Redemption Price of, or interest on, any Bonds and such withdrawal cannot be met by amounts on deposit in the applicable accounts in the Debt Service Reserve Fund; (2) on the first Business Day which is at least ten days prior to the expiration date of each Reserve Financial Guaranty, in an amount equal to the deficiency which would exist in the Debt Service Reserve Fund if the Reserve Financial Guaranty expired, unless a substitute Reserve Financial Guaranty with an expiration date not earlier than 180 days after the expiration date of the expiring Reserve Financial Guaranty (or the earlier maturity of all then Outstanding Bonds) is acquired prior to such date or the City deposits funds in the Debt Service Reserve Fund on or before such date such that the amount in the Debt Service Reserve Fund on such date (without regard to such expiring Reserve Financial Guaranty) is at least equal to the Debt Service Reserve Requirement.
If, upon the deposit of a Reserve Financial Guaranty into the Debt Service Reserve Fund pursuant to the Indenture, there is any amount in the Debt Service Reserve Fund in excess of the Debt Service Reserve Requirement, such excess amount may be applied to the cost of acquiring such Reserve Financial Guaranty and, to the extent not so applied, will be transferred to the Interest Account.
Expense Stabilization Fund. Moneys are required to be deposited in the Expense Stabilization Fund in such amounts, at such times and from such sources as determined by the City in its sole discretion. Moneys on deposit in the Expense Stabilization Fund may be withdrawn at any time no Event of Default exists upon the order of an Authorized City Representative and applied to any lawful purpose in connection with the Electric Resolution No. 2022-10
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System, including without limitation, payment of Operation and Maintenance Expenses, payment of Debt Service on Parity Obligations, payment of principal, premium or interest on Subordinate Obligations, payment of Costs of Capital Improvements, payment of the Costs of Issuance of Parity Obligations or payment of the costs of issuance of Subordinate Obligations, provided, however, that if an Event of Default has occurred and is continuing, the Trustee will transfer all moneys in the Expense Stabilization Fund first to the Interest Account, the amount by which the accrued interest on the Outstanding Bonds is greater than the amount then on deposit in the Interest Account and second to the Principal Account, the balance of the amount then in the Expense Stabilization Fund.
Rebate Fund. Each Supplemental Indenture authorizing a Series of Bonds which are Tax-Exempt Securities will establish an account in the Rebate Fund in connection with such Series. Each such account in the Rebate Fund will have such terms and conditions as provided in the Supplemental Indenture establishing such account.
Depositories. The Trustee will hold all moneys deposited with it pursuant to the Indenture or may deposit such moneys with one or more Depositories in trust. All moneys deposited under the provisions of the Indenture with the Trustee or any Depository will be held in trust and applied only in accordance with the provisions of the Indenture, and each of the Funds established by the Indenture will be a trust fund for the purposes of the Indenture.
Deposits. All moneys held by any Fiduciary under the Indenture may be placed on demand or time deposit, if and as directed by the City, provided that such deposits permit the moneys so held to be available for use at the time when reasonably expected to be needed. No Fiduciary will be liable for any loss or depreciation in value resulting from any investment made pursuant to the Indenture. Any such deposit may be made in the commercial banking department of any Fiduciary or its affiliates which may honor checks and drafts on such deposit with the same force and effect as if it were not such Fiduciary. All moneys held by any Fiduciary, as such, may be deposited by such Fiduciary in its banking department on demand or, if and to the extent directed by the City and acceptable to such Fiduciary, on time deposit, provided that such moneys on deposit be available for use at the time when reasonably expected to be needed. Such Fiduciary will allow and credit on such moneys such interest, if any, as it customarily allows upon similar funds of similar size and under similar condition or as required by law. All moneys deposited with a Fiduciary will be credited to the particular Fund to which such moneys belong.
Investment of Certain Funds. Moneys held in the Debt Service Fund and the Redemption Fund will be invested and reinvested by the Trustee to the fullest extent practicable in securities described in clauses (i) through (iii) of the definition of “Permitted Investments” which mature not later than such times as necessary to provide moneys when reasonably expected to be needed for payments to be made from such Funds.
Moneys held in the Debt Service Reserve Fund will be invested and reinvested by the Trustee to the fullest extent practicable in securities described in clauses (i), (ii), (iii), (vii), (x) and (xiii) of the definition of “Permitted Investments” which mature, or which may be drawn upon without penalty at any time upon not more than two Business Days’ notice, not later than five years from the time of such investment. Moneys held in the Expense Stabilization Fund may be invested and reinvested in Permitted Investments which mature, or which may be drawn upon without penalty at any time upon not more than two Business Days’ notice, not later than ten years from the time of such investment. The Trustee will make all such investments of moneys held by it in accordance with directions of an Authorized City Representative, which directions must be consistent with the Indenture and applicable law, and which directions must be written. In the absence of any such written investment directions, the Trustee will, unless otherwise provided in the Indenture, invest such moneys in the money market funds described in clause (iv) of the definition of “Permitted Investments.” Interest or other income earned on any moneys or investments in any Fund created under the Indenture will be paid into such Fund. In making any investment in any Permitted Investments with moneys in any Fund established under the Indenture, the Trustee may combine such moneys with moneys in any other Fund but solely for the purposes of making such investment in such Investments and provided that any amount Resolution No. 2022-10
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so combined will be separately accounted for. Nothing in the Indenture prevents any Permitted Investments acquired as investments of moneys in any Fund from being issued or held in book-entry form on the books of the Department of the Treasury or the Federal Reserve System of the United States.
Valuation and Sale of Investments. Obligations purchased as an investment of moneys in any Fund will be deemed at all times to be a part of such Fund and any profit realized from the liquidation of such investment will be credited to such Fund and any loss resulting from the liquidation of such investment will be charged to the respective Fund.
In computing the amount in the Debt Service Reserve Fund for any purpose under the Indenture, obligations purchased as an investment of moneys in the Debt Service Reserve Fund are to be valued at the amortized cost thereof.
Except as otherwise provided in the Indenture, the Trustee may sell or present for redemption, or otherwise liquidate any security purchased as an investment, and take all actions necessary to draw funds under any such investment, whenever necessary in order to provide moneys to meet any payment or transfer from any Fund held by it or in accordance with directories of an Authorized City Representative, which directions must be consistent with the Indenture and applicable law and which directions must be written. Any security purchased as an investment may be credited on a pro-rata basis to more than one Fund and need not be sold in order to provide for the transfer of amounts from one Fund to another, provided that such obligation is an appropriate Permitted Investment for the purposes of the Fund to which it is to be transferred. The Trustee will not be liable or responsible for making any such investment in the manner provided above or for any loss resulting from any such investment. The City has acknowledged that to the extent that regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City has specifically waived receipt of such confirmations to the extent permitted by law. The Trustee will furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Trustee under the Indenture.
COVENANTS AND OBLIGATIONS OF THE CITY
The City has covenanted with the Owners of the Outstanding Bonds and with each Credit Provider as set forth in the Indenture. Each of said covenants will remain in full force and effect so long as any of the Bonds are Outstanding and unpaid, any Credit Support Instrument remains outstanding and any Credit Provider Reimbursement Obligations remain unpaid.
Compliance with Indenture. The City will punctually pay the Bonds in strict conformity with the terms of the Indenture and the Bonds, and will faithfully observe and perform all of the agreements, conditions, covenants and terms contained in the Indenture required to be observed and performed by it, which obligations are absolute and unconditional but which are special obligations of the City as provided in the Indenture.
Collection of Rates and Charges. The City will have in effect at all times rules and regulations requiring each consumer or customer located on any premises connected with the Electric System to pay the rates and charges applicable to the Electric Service provided to such premises and providing for the billing thereof and for a due date and a delinquency date for each bill. The City may not permit any part of the Electric System or any facility thereof to be used or taken advantage of free of charge by any corporation, firm or person, or by any public agency (including the United States of America, the State of California and any city, county, district, political subdivision, public corporation or agency of any thereof). Nothing in the Indenture prevents the City, in its sole and exclusive discretion, from permitting other parties from selling electricity to retail customers within the service area of the Electric System; provided, however, that permitting such sales do not relieve the City of its obligations under the Indenture.
Resolution No. 2022-10
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Deposit and Application of Revenues. During each Fiscal Year, and subject to the provisions of the Indenture, the City may apply amounts in the Light and Power Fund, other than the Revenues for such Fiscal Year, to any lawful purpose as determined by the City; provided that so long as an Event of Default has occurred and is continuing, or the Trustee otherwise has control of amounts in the Light and Power Fund, no amounts may be paid from the Light and Power Fund except for Operation and Maintenance Expenses, amounts required to be paid in such Fiscal Year pursuant to the Indenture and the Issuing Instrument for any Parity Obligations or the Issuing Instruments for Subordinate Obligations, or when such payment has been certified by an Independent Engineer as being consistent with Prudent Utility Practice.
Against Encumbrances. The City will pay or cause to be paid when due all sums of money that may become due or purporting to be due for any labor, services, materials, supplies or equipment furnished, or alleged to have been furnished, to or for the City in, upon, about or relating to the Electric System and will keep the Electric System free of any and all liens against any portion of the Electric System. In the event that any such lien attaches to or is filed against any portion of the Electric System, the City will cause each such lien to be fully discharged and released at the time the performance of any obligation secured by any such lien matures or becomes due, except that if the City desires to contest any such lien it may do so if contesting such lien will not materially impair operation of the Electric System. If any such lien is reduced to final judgment and such judgment or any process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and such stay thereafter expires, the City will forthwith pay or cause to be paid and discharged such judgment.
Sale or Other Disposition of Property. The City will not sell, transfer or otherwise dispose of any of the works, plant, properties, facilities or other part or rights of the Electric System or any real or personal property comprising a part of the Electric System if such sale, transfer or disposition would cause the City to be unable to satisfy the requirements of the rate covenant that is described under the caption “SECURITY AND SOURCES OF PAYMENT—Rate Covenant” of this Official Statement.
Operation and Maintenance of the Electric System; Budgets. The City will maintain and preserve the Electric System in good repair and working order at all times, operate the Electric System in an efficient and economical manner and pay all Operation and Maintenance Expenses as they become due and payable.
The City will prepare, not later than the last day of each Fiscal Year, a Budget for the Electric System approved by the City Council setting forth the estimated Revenues, Operation and Maintenance Expenses, scheduled Debt Service and other payments estimated to be paid from the Revenues and amounts in the Light and Power Fund during the next succeeding Fiscal Year. The Electric System Budget for any Fiscal Year may be amended at any time during such Fiscal Year provided that such amended Budget includes all payments coming due in such Fiscal Year with respect to Obligations payable from Revenues or amounts in the Light and Power Fund. In the event that the City fails to have a Budget approved by the City Council as required by the Indenture with respect to any Fiscal Year, then references in the Indenture to the amount of Operation and Maintenance Expenses included in the Budget as of any time will be deemed to be the Operation and Maintenance Expenses in the latest Budget approved by the City Council as adjusted for an inflation factor equal to 10% for each Fiscal Year from the approval of such Budget by the City Council to the applicable time of determination of the Operation and Maintenance Expenses included in the Budget.
Insurance. The City will procure and maintain such insurance relating to the Electric System which it deems advisable or necessary to protect its interests and the interests of the Trustee and the Owners of the Bonds, which insurance affords protection in such amounts and against such risks as are usually covered in connection with public electric utility systems similar to the Electric System; provided that any such insurance may be maintained under a self-insurance program so long as such self-insurance is maintained in the amounts and manner as is, in the opinion of an accredited actuary, actuarially sound. All policies of insurance required to be maintained under the Indenture must provide that the Trustee be given 30 days’ written notice of any intended cancellation thereof or reduction of coverage provided thereby.
Resolution No. 2022-10
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Accounting Records; Financial Statements and Other Reports. (a) The City will keep appropriate accounting records in which complete and correct entries are made of all transactions relating to the Electric System, which records are available for inspection by the Trustee at reasonable hours and under reasonable conditions. (b) The City will prepare and file with the Trustee annually within 180 days after the close of each Fiscal Year (commencing with the Fiscal Year ending June 30, 2008): (1) financial statements of the City for such Fiscal Year prepared in accordance with Generally Accepted Accounting Principles, together with an Accountant’s Report thereon; and (2) a detailed report as to all insurance policies maintained and selfinsurance programs maintained by the City with respect to the Electric System as of the close of such Fiscal Year, including the names of the insurers which have issued the policies and the amounts thereof and the property or risks covered thereby.
Payment of Taxes and Compliance with Governmental Regulations. The City will pay and discharge all taxes, assessments and other governmental charges which may be lawfully imposed upon the Electric System or any part thereof when the same become due. The City will duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the Electric System or any part thereof, but the City is not required to comply with any regulations or requirements so long as the validity or application thereof is contested in good faith and contesting such validity or application does not materially impair the operations or financial condition of the Electric System or the performance of the City under the Indenture and all Outstanding Bonds.
Tax Covenants.
(a) The City has covenanted it will not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the Tax-Exempt status of interest on any Bond under Section 103 of the Code. Without limiting the generality of the foregoing, the City will comply with the requirements of the Tax Certificate, if any, delivered in connection with the issuance of each Series of Bonds.
In the event that at any time the City is of the opinion that, in order to comply with the foregoing obligations, it is necessary or helpful to restrict or limit the yield on the investment of any moneys in any of the Funds held by the Trustee pursuant to the Indenture, the City will so instruct the Trustee in writing, and cause the Trustee to take such action as may be necessary in accordance with such instructions. (b) Notwithstanding any provisions of the Indenture, if the City provides to the Trustee an Opinion of Bond Counsel to the effect that any specified action required under the Indenture or a Tax Certificate is no longer required or that some further or different action is required to maintain the Tax-Exempt status of the Bonds under Section 103 of the Code, the City and the Trustee may conclusively rely on such opinion in complying with the requirements of the Indenture and of the applicable Tax Certificate, and the covenants under the Indenture will be deemed to be modified to that extent. (c) The foregoing covenants will survive payment in full or discharge of the Bonds.
AMENDMENTS TO INDENTURE
Amendments Permitted.
(a) Subject to the provisions of the Indenture or of any Supplemental Indenture, the rights and obligations of the City and of the Owners of the Outstanding Bonds and of the Fiduciaries may be modified, amended or supplemented from time to time and at any time by a Supplemental Indenture or Supplemental Indentures, with the written consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Support Agreement, when the written consent of the Owners of at least a majority in Resolution No. 2022-10
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aggregate principal amount of the Bonds then Outstanding have been filed with the Trustee; or if less than all of the Outstanding Bonds are affected, the written consent of the Owners of at least a majority in aggregate principal amount of all affected Outstanding Bonds; provided that if such modification, amendment or supplement will, by its terms, not take effect so long as any Bonds of any particular Series and maturity remain Outstanding, and, with respect to Bonds which are Tender Indebtedness if the conditions of the Indenture are satisfied, the consent of the Owners of such Bonds will not be required and such Bonds will not be deemed to be Outstanding for the purpose of any the calculation of Outstanding Bonds for purposes of the Indenture. No such modification, amendment or supplement may: (1) reduce the aforesaid percentage of Bonds the consent of the Owners of which is required to effect any such modification, amendment or supplement without the consent of the Owners of all of the Bonds then Outstanding; (2) extend the fixed maturity of any Bond, or reduce the principal amount thereof, or reduce the amount of any Sinking Fund Installment therefor, or extend the due date of any such Sinking Fund Installment, or reduce the rate of interest on any Bond or extend the time of payment of interest thereon, without the consent of the Owner of each Bond so affected; (3) except as otherwise provided with respect to a Bond constituting Tender Indebtedness in the Supplemental Indenture authorizing such Bond and subject to the satisfaction of the conditions of the Indenture, reduce the Redemption Price due on the redemption of any Bond or change the date or dates when any Bond is subject to redemption; or (4) modify the rights or obligations of any Fiduciary without the consent of such Fiduciary.
It is not necessary for the consent of the Owners to approve the particular form of any Supplemental Indenture, but it is sufficient if such consent approves the substance thereof.
Unless waived by the Owner of an affected Bond or Bonds, prior to the entry into any Supplemental Indenture by the City and the Trustee for any of the purposes of the Indenture, the City will cause notice of the proposed Supplemental Indenture to be mailed, by first class mail, postage prepaid, to the Owners of all Outstanding Bonds (or the affected Outstanding Bonds) at their addresses appearing on the Bond Register.
Such notice will briefly set forth the nature of the proposed Supplemental Indenture and state that copies thereof are on file at the office of the Trustee for inspection by each Owner of an Outstanding Bond.
Whenever, at any time after the date of the mailing of notice of the proposed entry into a Supplemental Indenture pursuant to the Indenture, the City has received an instrument or instruments in writing executed in accordance with the Indenture by or on behalf of the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, or if less than all of the Outstanding Bonds are affected, by the Owners of not less than a majority in aggregate principal amount of the affected Outstanding Bonds, which instrument or instruments refers to the proposed Supplemental Indenture described in the notice of the proposed Supplemental Indenture and consents to such Supplemental Indenture in substantially the form referred to in such notice, thereupon, but not otherwise, the City and the Trustee may enter into such Supplemental Indenture in substantially such form, without liability or responsibility to any Owner of any Bond, whether or not such Owner has consented thereto.
(b) The Master Indenture or any Supplemental Indenture may be supplemented from time to time and at any time by a Supplemental Indenture or Supplemental Indentures, which the City and the Trustee may enter into with the consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Support Agreement but without the consent of the Owner of any Bond, to provide for the issuance of a Series of Additional Bonds or a Series of Refunding Bonds in accordance with the terms and conditions of the Master Indenture, and establishing the terms and conditions thereof, including the rights of any Credit Provider for such Additional Bonds or Refunding Bonds, which may include permitting such Credit Provider to act for and on behalf of the Owners of such Additional Bonds or Refunding Bonds for any or all purposes of the Indenture except that no such Credit Provider will be authorized to extend the fixed maturity of any Bond, or reduce the principal amount thereof, or reduce the amount of any Sinking Fund Installment therefor, or extend the due date of any such Sinking Fund Installment, or reduce the rate of interest on any Bond or extend the time of payment of interest thereon, without the consent of the Owner of each Bond so affected; or except as otherwise provided with respect to a Bond constituting Tender Indebtedness in the Supplemental Indenture Resolution No. 2022-10
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authorizing such Bond and subject to the satisfaction of the conditions of the Indenture, reduce the Redemption Price due on the redemption of any Bond or change the date or dates when any Bond is subject to redemption. (c) The Master Indenture and any Supplemental Indenture and the rights and obligations of the City, the Fiduciaries and the Owners of the Outstanding Bonds may also be modified, amended or supplemented from time to time and at any time by a Supplemental Indenture or Supplemental Indentures, which the City and the Trustee may enter into with the consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Support Agreement but without the consent of any Owners of Bonds (but with the consent of any affected Fiduciary), so long as such modification, amendment or supplement does not materially, adversely affect the interests of the Owners of the Outstanding Bonds, including without limitation, for any one or more of the following purposes:
(1) to add to the covenants and agreements of the City contained in the Master Indenture or a Supplemental Indenture other covenants and agreements thereafter to be observed, or to surrender any right or power in the Indenture reserved to or conferred upon the City; (2) to pledge, provide or assign any additional security for the Bonds (or any portion thereof), including transferring control of the amounts in the Light and Power Fund to the Trustee; provided that if the City transfers control of the amounts in the Light and Power Fund to the Trustee, the Trustee will return such control at the request of the City only if no Event of Default has occurred and is continuing and if such return has been consented to by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding and with the consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Support Agreement;
(3) to add to the covenants and agreements of the City contained in the Master Indenture or a Supplemental Indenture other covenants and agreements thereafter to be observed, to pledge, provide or assign any security for the Bonds (or any portion thereof), or to surrender any right or power in the Indenture reserved to or conferred upon the City;
(4) to make such provisions for the purpose of curing any ambiguity, inconsistency or omission, or of curing or correcting any defective provision, contained in the Master Indenture or a Supplemental Indenture, or in regard to matters or questions arising under the Master Indenture or a Supplemental Indenture, as the City may deem necessary or desirable; or (5) to modify, amend or supplement the Master Indenture or a Supplemental Indenture in such manner as to permit the qualification of the Indenture under the Trust Indenture Act of 1939, as amended, or any similar federal statute later in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute.
(d) Notwithstanding anything to the contrary in the Indenture, the provisions of the Master Indenture or any Supplemental Indenture may also be modified, amended or supplemented by a Supplemental Indenture or Supplemental Indentures, including amendments which would otherwise be described in clause (a) above, without the consent of the Owners of Bonds constituting Tender Indebtedness if either: (1) the effective date of such Supplemental Indenture is a date on which such Bonds are subject to mandatory tender for purchase pursuant to the Indenture; or (2) the notice described in the third paragraph of clause (a) is given to Owners of such Bonds at least 30 days before the effective date of such Supplemental Indenture, and on or before such effective date, the Owners of such Bonds have the right to demand purchase of such Bonds pursuant to the Indenture.
(e) If the Supplemental Indenture authorizing the issuance of a Series of Bonds provides that a Credit Provider for all or any portion of the Bonds of such Series has the right to consent to Supplemental Indentures which require the consent of the Owners of the Bonds of such Series pursuant to the Indenture, then for the purposes of sending notice of any proposed Supplemental Indenture and for determining whether the Resolution No. 2022-10
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Owners of the requisite percentage of Bonds have consented to such Supplemental Indenture, but subject to the provisions of the Indenture, references to the Owners of such Bonds will be deemed to be to the applicable Credit Provider.
(f) For purposes of the Indenture, it is not necessary that consents of the Owners of any particular percentage of Outstanding Bonds of any affected Series be obtained but it is sufficient for purposes of the Indenture if the consent of the Owners of a majority in aggregate principal amount of the combination of affected Outstanding Bonds is obtained.
(g) Notwithstanding anything to the contrary contained in the Indenture, if authorized by the Supplemental Indenture authorizing the issuance of a Bond constituting Tender Indebtedness, any premium due on the redemption of such Bond and the date or dates when such Bond is subject to redemption may be modified or amended as provided in such Supplemental Indenture if either: (1) the effective date of such modification or amendment is a date on which such Bond is subject to mandatory tender for purchase pursuant to such Supplemental Indenture; or (2) notice of such modification or amendment has been mailed to the Owner of such Bond at the address set forth in the Bond Register at least 30 days before the effective date of such modification or amendment and on or before such effective date, the Owner of such Bond has the right to demand purchase of such Bond pursuant to such Supplemental Indenture.
Effect of Supplemental Indenture. Upon the City and the Trustee entering into any Supplemental Indenture pursuant to the Indenture, the Indenture will be deemed to be modified, amended or supplemented in accordance therewith, and the respective rights, duties and obligations under the Indenture of the City, the Fiduciaries and all Owners of Outstanding Bonds will thereafter be determined, exercised and enforced subject in all respects to such modification, amendment and supplement, and all the terms and conditions of any such Supplemental Indenture will be deemed to be part of the terms and conditions of the Indenture for any and all purposes. Except for Supplemental Indentures requiring the consent of such Owner pursuant to the Indenture, upon the City and the Trustee entering into any Supplemental Indenture pursuant to the Indenture, no Owner of any Bond has any right to object to the entry into such Supplemental Indenture by the City and the Trustee, or to object to any of the terms and provisions contained therein or the operation thereof or in any manner to question the propriety of the entry into such Supplemental Indenture, or to enjoin or restrain the City or the Trustee from entering into the same or to enjoin or restrain the City or the Trustee from taking any action pursuant to the provisions thereof whether or not such Owner gave his consent to such Supplemental Indenture.
Bonds Owned by City. For purposes of the Indenture, Bonds owned or held by or for the account of the City, or any funds of the City, will not be deemed Outstanding for the purpose of consent or other action or any calculation of Outstanding Bonds provided for in the Indenture, and the City is not entitled with respect to such Bonds to give any consent or take any other action provided for in the Indenture as an Owner of Bonds.
At the time of any consent or other action taken under the Indenture, the City will furnish the Trustee a certificate of an Authorized City Representative upon which the Trustee may rely, describing all Bonds so to be excluded.
Notation on Bonds. Bonds authenticated and delivered after the effective date of any Supplemental Indenture entered into by the City and the Trustee as provided in the Indenture may bear a notation by endorsement or otherwise in a form approved by the City as to such action, and in that case upon demand of the Owner of any Bond Outstanding on such effective date and presentation of the Bond for the purpose at the Principal Office of the Trustee or upon any transfer or exchange of any Bond Outstanding on such effective date, suitable notation will be made on such Bond or upon any Bond issued upon any such transfer or exchange by the Trustee as to any such action.
CONCERNING THE FIDUCIARIES
Resolution No. 2022-10
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Trustee; Acceptance of Duties. The Trustee will signify its acceptance of the duties and obligations imposed upon it by the Indenture, including the duties of Paying Agent for the Bonds, by the execution and the delivery of the Master Indenture to the City and by such execution and delivery the Trustee will be deemed to have accepted such duties and obligations with respect to all the Bonds thereafter to be issued, but only, however, upon the terms and conditions set forth in the Indenture, and no implied covenants may be read into the Indenture against the Trustee.
Paying Agents; Appointment and Acceptance of Duties. The City has appointed the Trustee as a Paying Agent for the Bonds of each Series, and may at any time or from time to time appoint one or more other Paying Agents having the qualifications set forth in the Indenture as an additional Paying Agent for the Bonds of one or more Series. Each Paying Agent other than the Trustee will signify its acceptance of the duties and obligations imposed upon it by the Indenture by executing and delivering to the City and to the Trustee a written acceptance thereof. The Principal Offices of the Paying Agents are designated as the respective offices or agencies of the City for the payment of the principal and any applicable Redemption Price of the Bonds.
Responsibilities of Fiduciaries.
(a) Any recitals of fact contained in the Indenture and in the Bonds will be taken as the statements of the City and no Fiduciary assumes any responsibility for the correctness of the same. No Fiduciary makes any representations as to the validity or sufficiency of the Indenture or of any Bonds issued thereunder or as to the security afforded by the Indenture, and no Fiduciary will incur any liability in respect thereof. No Fiduciary will be responsible for or have any liability with respect to the Electric System or any act or omission of the City with respect thereto. The Trustee is, however, responsible for its representation contained in its certificate of authentication on the Bonds. No Fiduciary is under any responsibility or duty with respect to the application of any moneys paid by such Fiduciary in accordance with the provisions of the Indenture. No Fiduciary is under any obligation or duty to perform any act which would involve it in expense or liability or to institute or defend any suit in respect thereof, or to advance any of its own moneys, unless properly indemnified. Subject to the provisions of the Indenture, no Fiduciary will be liable in connection with the performance of its duties under the Indenture except for its own negligence or willful misconduct. (b) The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in the Indenture. In case an Event of Default has occurred (which has not been cured) the Trustee will exercise such of the rights and powers vested in it by the Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. Any provision of the Indenture relating to action taken or to be taken by the Trustee or to evidence upon which the Trustee may rely will be subject to the provisions of the Indenture.
Without limiting the generality of the foregoing:
(1) The Trustee is not liable for any error of judgment made in good faith by any officer of the Trustee, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. (2) The Trustee is not liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of a Credit Provider or a Reserve Financial Guaranty Provider or the Owners of 25% in aggregate principal amount of the Outstanding Bonds relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under the Indenture.
(3) No provision of the Indenture requires the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties under the Indenture, or in the Resolution No. 2022-10
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exercise of any of its rights or powers, if it has reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (4) The Trustee is under no obligation to exercise any of the rights or powers vested in it by the Indenture at the request or direction of any of the Owners, a Credit Provider or a Reserve Financial Guaranty Provider pursuant to the Indenture (except for declaring an acceleration of the Bonds or requesting credit and/or liquidity support pursuant to a Credit Support Instrument), unless such Owners, such Credit Provider or such Reserve Financial Guaranty Provider have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. (5) The Trustee is not bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, coupon, facsimile transmission, electronic mail or other paper or document but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee determines to make such further inquiry or investigation, it will be entitled to examine the books, records and premises of the City, personally or by agent or attorney. (6) The Trustee is not required to take notice of and will not be deemed to have knowledge of any Event of Default (other than a payment or covenant Event of Default specified in the Indenture) or any event which would, with the passage of time, the giving of notice, or both, constitute an Event of Default, unless the Trustee has been notified of such Event of Default or other event by the City, a Credit Provider or a Reserve Financial Guaranty Provider, or the Owners of 10% in aggregate principal amount of Bonds Outstanding. (7) The Trustee is not responsible for any moneys or funds held by the City), or for monitoring the accounting and investment practices of the City, other than requiring the delivery of the Annual Budget and annual financial statements and reports pursuant to the Indenture. (8) The Trustee may perform its duties under the Indenture through agents and attorneys and the Trustee is not liable for the negligence or misconduct on the part of any agent or attorney appointed with due care by it under the Indenture if the City has a right to proceed directly against such agent or attorney for any such negligence or misconduct.
(9) In no event will the Trustee be liable for any failure or delay in the performance of its obligations under the Indenture because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of services contemplated by the Indenture. (10) The Trustee has no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds.
(11) The Trustee has the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to the Indenture and delivered using Electronic Means (“Electronic Means” means the following communications methods: e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services under the Indenture); provided, however, that the City will provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of such Authorized Officers, which incumbency certificate will be amended by the City whenever a person is to be added or deleted from the listing. If the City elects to give the Trustee Instructions using Electronic Means and the Trustee in its discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions will be deemed controlling. The City has understood and agreed Resolution No. 2022-10
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that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee will conclusively presume that directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Officer. The City is responsible for ensuring that only Authorized Officers transmit such Instructions to the Trustee and that the City and all Authorized Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the City. The Trustee will not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Instructions notwithstanding the fact that such directions conflict or are inconsistent with a subsequent written instruction. The City has agreed: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the City and that there may be more secure methods of transmitting Instructions than the method(s) selected by the City; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
(12) Whenever in the administration of the trusts imposed upon it by the Indenture the Trustee deems it necessary or desirable that a matter be proved or established prior to taking or suffering any action under the Indenture, such matter (unless other evidence in respect thereof is specifically prescribed in the Indenture) may be deemed to be conclusively proved and established by a certificate of the Authority, and such certificate will be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of the Indenture in reliance upon such certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable. (13) The Trustee’s rights to immunities and protection from liability under the Indenture and its rights to payment of its fees and expenses will survive its resignation or removal and final payment or defeasance of the Bonds. All indemnifications and releases from liability granted in the Indenture to the Trustee will extend to the directors, officers, employees and agents of the Trustee.
Whether or not therein expressly provided, every provision of the Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee will be subject to the foregoing provisions.
Evidence on Which Fiduciaries May Act.
(a) Each Fiduciary, upon receipt of any notice, resolution, request, requisition, consent, order, certificate, report, opinion, bond, or other paper or document furnished to it pursuant to any provision of the Indenture, will examine such instrument to determine whether it conforms to the requirements, if any, of the Indenture and will be protected in acting upon any such instrument believed by it to be genuine and to have been signed or presented by the proper party or parties. Each Fiduciary may consult with counsel, who may or may not be Bond Counsel or counsel to the City, and the opinion of such counsel will be full and complete authorization and protection in respect of any action taken or suffered by it under the Indenture in good faith and in accordance therewith.
(b) Whenever any Fiduciary deems it necessary or desirable that a matter be proved or established prior to taking or suffering any action under the Indenture, such matter (unless other evidence in respect thereof is specifically prescribed in the Indenture) may be deemed to be conclusively proved and established by a certificate of an Authorized City Representative, and such certificate will be full warrant for any action taken or suffered in good faith under the provisions of the Indenture upon the faith thereof; but in its discretion the Fiduciary may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evidence as to it may seem reasonable.
Resolution No. 2022-10
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(c) Except as otherwise expressly provided in the Indenture, any request, requisition, order, notice or other direction required or permitted to be furnished pursuant to any provision of the Indenture by the City to any Fiduciary will be sufficiently executed in the name of the City by an Authorized City Representative.
Compensation. The City will cause to be paid to each Fiduciary from time to time reasonable compensation for all services rendered under the Indenture, and also all reasonable expenses, charges, counsel fees and other disbursements, including those of its attorneys, agents, and employees, incurred in and about the performance of their powers and duties under the Indenture; provided, however, that so long as any Bonds remain Outstanding or any amounts due to a Credit Provider under a Credit Support Agreement or a Reserve Financial Guaranty Provider under a Reserve Financial Guaranty, no Fiduciary will have a lien therefor on any and all funds at any time held by it under the Indenture. Subject to the provisions of the Indenture, the City has further agreed to indemnify and save each Fiduciary harmless against any losses, expenses (including legal fees and expenses) and liabilities which it may incur arising out of or in the exercise and performance of its powers and duties under the Indenture or in any way arising out of the Electric System or the transactions contemplated by the Indenture, and which are not due to its negligence or willful misconduct.
Certain Permitted Acts. Any Fiduciary may become the Owner of any Bonds, with the same rights it would have if it were not a Fiduciary. To the extent permitted by law, any Fiduciary may act as depositary for, and permit any of its officers or directors to act as a member of or in any other capacity with respect to, any committee formed to protect the rights of the Owners of the Bonds or to effect or aid in any reorganization growing out of the enforcement of the Bonds or the Indenture, whether or not any such committee represents the Owners of a majority in principal amount of the Bonds then Outstanding.
Resignation of Trustee. The Trustee may at any time resign and be discharged of the duties and obligations created by the Indenture by giving not less than 60 days written notice to the City, each Credit Provider and each Reserve Financial Guaranty Provider, specifying the date when such resignation will take effect; provided that no such resignation will take effect until a successor has been appointed in accordance with the Indenture.
Removal of Trustee. The Trustee may be removed: (a) with the consent (to the extent required by a Supplemental Indenture) of each Credit Provider and each Reserve Financial Guaranty Provider, at any time when no Event of Default has occurred and is continuing and when no event has occurred which, with notice or the passage of time, would become an Event of Default which has not been cured, by an instrument in writing signed by an Authorized City Representative and filed with the Trustee; or (b) with the consent (to the extent required by a Supplemental Indenture) of each Credit Provider and each Reserve Financial Guaranty Provider, at any time by an instrument or concurrent instruments in writing, filed with the Trustee, and signed by the Owners of a majority in principal amount of the Bonds then Outstanding or their attorneys-in-fact duly authorized, excluding any Bonds held by or for the account of the City; or (c) with the consent (to the extent required by a Supplemental Indenture,) of each Credit Provider and each Reserve Financial Guaranty Provider, at any time by an instrument in writing signed by an Authorized City Representative and filed with the Trustee, for any breach of its fiduciary duties under the Indenture; provided that no such removal will be effective until 30 days have lapsed from the filing of such instrument with the Trustee and until a successor has been appointed in accordance with the Indenture.
Appointment of Successor Trustee; Financial Qualifications of Successor Trustee. (a) In case at any time the Trustee resigns or is removed or becomes incapable of acting, or is adjudged a bankrupt or insolvent, or if a receiver, liquidator or conservator of the Trustee, or of its property is appointed, or if any public officer takes charge or control of the Trustee or of its property or affairs, a successor may be appointed by the Owners of a majority in principal amount of the Bonds then Outstanding, excluding any Bonds held by or for the account of the City, with (to the extent required by a Supplemental Indenture) the consent of each Credit Provider and each Reserve Financial Guaranty Provider, by an Resolution No. 2022-10
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instrument or concurrent instruments in writing signed and acknowledged by such Owners of the Bonds or by their attorneys-in-fact duly authorized and delivered to such successor Trustee, notification thereof being given to the City and the predecessor Trustee; provided, nevertheless, that unless a successor Trustee has been appointed by the Owners of the Bonds as aforesaid, the City, by a duly executed written instrument signed by an Authorized City Representative will forthwith appoint a Trustee to replace such resigning Trustee or to fill such vacancy until a successor Trustee is appointed by the Owners of the Bonds as authorized in the Indenture.
Any successor Trustee appointed by the City will, immediately and without further act, be superseded by the Trustee appointed by the Owners of the Bonds. Any resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon acceptance of appointment by the successor Trustee. (b) If in a proper case no appointment of a successor Trustee is made pursuant to the foregoing provisions of the Indenture within 45 days after the Trustee has given to the City written notice as provided in the Indenture or after a vacancy in the office of the Trustee has occurred by reason of its inability to act, removal, or for any other reason whatsoever, the Trustee (in the case of its resignation under the Indenture) or the Owner of any Bond (in any case) may apply to any court of competent jurisdiction to appoint a successor Trustee. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Trustee.
(c) The Trustee appointed under the provisions of the Indenture or any successor to the Trustee must be a bank or trust company organized under the laws of any state of the United States or national banking association, doing business and having its principal corporate trust office in New York, New York, or Chicago, Illinois, or Los Angeles, California, or San Francisco, California, duly authorized to exercise trust powers and subject to examination by federal or state authority. Each successor Trustee will have capital stock and surplus aggregating at least $50,000,000, or have all of its obligations under the Indenture guaranteed by a bank or trust company organized under the laws of the United States, or any state thereof, with a capital stock and surplus or net worth of $50,000,000, if there be such a bank or trust company or national banking association willing and able to accept the office on reasonable and customary terms and authorized by law to perform all the duties imposed upon it by the Indenture. If such bank, national banking association, or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of the Indenture the combined capital and surplus of such bank, trust company, or national banking association will be deemed to be its combined capital and surplus set forth in its most recent report of condition so published.
Transfer of Rights and Property to Successor Trustee. Any successor Trustee appointed under the Indenture will execute, acknowledge and deliver to its predecessor Trustee and the City an instrument accepting such appointment, and thereupon such successor Trustee, without any further act, deed or conveyance, will become fully vested with all moneys, estates, properties, rights, power, duties and obligations of such predecessor Trustee, with like effect as if originally named as Trustee; but the Trustee ceasing to act will nevertheless, at the written request of the City, or of the successor Trustee, execute, acknowledge, deliver, file and record such instrument of conveyance and further assurance and do such other things as may reasonably be required for more fully and certainly vesting and confirming in such successor Trustee all the right, title and interest of the predecessor Trustee in and to any property held by it under the Indenture or covered by the pledge of the Indenture, and will pay over, assign and deliver to the successor Trustee any money or other property subject to the trust and conditions in the Indenture set forth. Should any deed, conveyance or instrument in writing from the City be required by such successor Trustee for more fully and certainly vesting in and confirming to such successor Trustee any such lien, estates, rights, power and duties, any and all such deeds, conveyances and instruments in writing will, on request, and so far as may be authorized by law, be executed, acknowledged and delivered by the City. Any such successor Trustee will promptly notify the Paying Agents of its appointment as Trustee.
Merger or Consolidation. Any company into which a Fiduciary may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it is a party or any company to which any Fiduciary may sell or transfer all or substantially all of its corporate Resolution No. 2022-10
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trust business, provided that such company is a bank or trust company organized under the laws of any state of the United States or a national banking association, will satisfy the applicable standards of a successor set forth in the Indenture, and will be authorized by law to perform all the duties imposed upon it by the Indenture, will be the successor to such Fiduciary without the execution or filing of any paper or the performance of any further act.
Adoption of Authentication. In case any of the Bonds contemplated to be issued under the Indenture have been authenticated but not delivered, any successor Trustee may adopt the certificate of authentication of any predecessor Trustee so authenticating such Bonds and deliver such Bonds so authenticated; and in case any of the said Bonds have not been authenticated, any successor Trustee may authenticate such Bonds in the name of the predecessor Trustee, or in the name of the successor Trustee, and in all such cases such certificate will have the full force which it is anywhere in said Bonds or provided in the Indenture that the certificate of the Trustee has.
Resignation or Removal of Paying Agent and Appointment of Successor. (a) Any Paying Agent may at any time resign and be discharged of the duties and obligations created by the Indenture by giving at least 60 days written notice to the City, the Trustee, each Credit Provider, each Reserve Financial Guaranty Provider and the other Paying Agents. Any Paying Agent may be removed at any time by an instrument filed with such Paying Agent and the Trustee and signed by an Authorized City Representative. Any successor Paying Agent will be appointed by the City with the approval of the Trustee (and each Credit Provider and each Reserve Financial Guaranty Provider required by a Supplemental Indenture) and will be a commercial bank or trust company organized under the laws of any state of the United States or a national banking association, having capital stock and surplus aggregating at least $25,000,000, and willing and able to accept the office on reasonable and customary terms and authorized by law to perform all the duties imposed upon it by the Indenture. If such bank, national banking association, or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority, then for the purposes of the Indenture the combined capital and surplus of such bank, trust company, or national banking association will be deemed to be its combined capital and surplus set forth in its most recent report of condition so published.
(b) In the event of the resignation or removal of any Paying Agent, such Paying Agent will pay over, assign and deliver any moneys held by it as Paying Agent to its successor, or if there be no successor, to the Trustee. In the event that for any reason there is a vacancy in the office of any Paying Agent, the Trustee will act as such Paying Agent.
DEFEASANCE
Payment of Bonds.
(a) If the City pays, or cause to be paid, or there is otherwise paid, to the Owners of all Bonds the principal amount or any redemption premium, if applicable, of the Bonds, and interest due or to become due on the Bonds, at the times and in the manner stipulated therein and in the Indenture, together with all other sums payable by the City under the Indenture, including all fees and expenses of the Trustee, then and in that case, subject to the provisions of clause (b) below, the Indenture, and the pledge of and lien on the Trust Estate thereunder and all covenants, agreements and obligations of the City contained therein, will cease and terminate and be completely discharged and satisfied and the City will be released therefrom and the Trustee will assign and transfer to or upon the order of the City all property (in excess of the amounts required for the foregoing) then held by the Trustee thereunder free and clear of any liens or encumbrances thereon pursuant to the Indenture and will execute such documents as may be reasonably required by the City in such regard. (b) Notwithstanding the termination, satisfaction and discharge of the Indenture or the satisfaction discharge of the Indenture in respect of any Bonds, those provisions of the Indenture relating to the Resolution No. 2022-10
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maturity of the Bonds, interest payments and dates thereof, tender and exchange provisions, exchange and transfer of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, nonpresentment of Bonds, compliance by the City of the tax covenants contained in the Indenture and the duties of the Trustee in connection with all of the foregoing, will remain in effect and be binding upon the City, the Trustee and the Owners and the Trustee will continue to be obligated to hold in trust any monies and investments then held by the Trustee for the payment of the principal or Redemption Price of, and interest on, the Bonds, to pay to the Owners, but only from the monies and investments so held by the Trustee, the principal or Redemption Price of, and interest on the Bonds as and when such payment becomes due.
Notwithstanding the satisfaction and discharge of the Indenture or the satisfaction discharge of the Indenture in respect of any Bonds, those provisions of the Indenture relating to the compensation of the Trustee will remain in effect and be binding upon the Trustee and the City.
Bonds Deemed Paid. Bonds (or portions of Bonds) for the payment or redemption of which moneys have been set aside and will be held in trust by an Escrow Agent at the maturity date, redemption date or other date when the Owner is entitled to receive the principal thereof, as applicable, will be deemed to have been paid within the meaning and with the effect expressed in the Indenture. Any Outstanding Bond (or any portion thereof such that both the portion thereof which is deemed paid and the portion which is not deemed paid pursuant to the Indenture are in an Authorized Denomination) will prior to the maturity, redemption date or other payment date thereof, be deemed to have been paid within the meaning and with the effect expressed in the Indenture (except that the obligations under the Indenture set forth clause (b) above under the caption “— Payment of Bonds” and the giving of the notices of the redemption of Bonds to be redeemed as provided in the Indenture will continue) if: (a) in case said Bond (or portion thereof) is to be redeemed on any date prior to maturity, the City has given the Trustee irrevocable instructions to give notice of redemption of such Bond (or portion thereof) on said date as provided in the Indenture; (b) there has been deposited with an Escrow Agent either moneys in an amount which are sufficient, or Defeasance Securities, the principal of and the interest on which when due will provide moneys which, together with the moneys, if any, held by such Escrow Agent for such purpose, are sufficient, in each case as evidenced by an Accountant’s Certificate, to pay when due the principal amount of, and any redemption premiums on, said Bond (or portion thereof) and interest due and to become due on said Bond (or portion thereof) on and prior to the redemption date, maturity date or other payment date thereof; as the case may be; and (c) if such Bond (or portion thereof) is not to be paid or redeemed within 60 days of the date of the deposit required by clause (b) above, the City has given the Trustee, in form satisfactory to it, instructions to mail, as soon as practicable, by first class mail, postage prepaid, to the Owner of such Bond, at the last address, if any, appearing upon the Bond Register, a notice that the deposit required by clause (b) above has been made with an Escrow Agent and that said Bond (or the applicable portion thereof) is deemed to have been paid in accordance with the Indenture and stating such date upon which moneys are to be available for the payment of the principal amount of, and any redemption premiums on, said Bond. Any notice given pursuant to clause (c) above with respect to Bonds which constitute less than all of the Outstanding Bonds of any Series and maturity will specify the letter and number or other distinguishing mark of each such Bond. Any notice given pursuant to clause (c) above with respect to less than the full principal amount of a Bond must specify the principal amount of such Bond which is deemed paid pursuant to the Indenture and notify the Owner of such Bond that such Bond must be surrendered as provided therein. The receipt of any notice required by the Indenture is not a condition precedent to any Bond being deemed paid in accordance with the Indenture and the failure of any Owner to receive any such notice will not affect the validity of the proceedings for the payment of Bonds in accordance with the Indenture. Neither Defeasance Securities nor moneys deposited with an Escrow Agent pursuant to the Indenture, nor principal or interest payments on any such Defeasance Securities, will be withdrawn or used for any purpose other than, and will be held in trust for, the payment of the principal amount of, and any redemption premiums on, said Bonds and the interest thereon; provided that any cash received from principal or interest payments on such Defeasance Securities deposited with an Escrow Agent: (1) to the extent that such cash is not required at any time for such payment, as evidenced by an Accountant’s Certificate, will be paid over upon the written direction of an Authorized City Representative, including a transfer to the City free and clear of any trust, lien, pledge or assignment securing said Bonds; and (2) to the extent such cash is required for such payment at a later date, will, to the extent practicable, at the written direction of an Authorized City Representative, be Resolution No. 2022-10
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reinvested in Defeasance Securities maturing at times and in amounts, which together with the other funds to be available to the Escrow Agent for such purpose, are sufficient to pay when due the principal amount of, and any redemption premiums on, said Bonds and the interest to become due on said Bonds on and prior to such redemption date, maturity date or other payment thereof, as the case may be, as evidenced by an Accountant’s Certificate.
Nothing in the Indenture prevents the City from substituting for the Defeasance Securities held for the payment or redemption of Bonds (or portions thereof) other Defeasance Securities which, together with the moneys held by the Escrow Agent for such purpose, as evidenced by an Accountant’s Certificate, are sufficient to pay when due the principal amount of, and any redemption premiums on, the Bonds (or portions thereof) to be paid or redeemed, and the interest due on the Bonds (or portions thereof) to be paid or redeemed at the times established with the initial deposit of Defeasance Securities for such purpose provided that the City delivers to the Escrow Agent a Favorable Opinion of Bond Counsel with respect to such substitution.
Prior to the defeasance of any Bonds bearing interest at a variable rate becoming effective under the Indenture, the Trustee must receive a Rating Confirmation from each Rating Agency.
Defeasance of Portion of Bond. Subject to the provisions of the Indenture, if there is deemed paid pursuant to the Indenture less than all of the full principal amount of a Bond, the City will execute and the Trustee will authenticate and deliver, upon the surrender of such Bond, without charge to the Owner of such Bond, a new Bond or Bonds for the principal amount of the Bond so surrendered which is deemed paid pursuant to the Indenture and another new Bond or Bonds for the balance of the principal amount of the Bond so surrendered, in each case of like Series, maturity and other terms, and in any of the Authorized Denominations.
Discharge of Liability on Bonds. Upon the deposit with an Escrow Agent, in trust, at or before maturity or the applicable redemption date, of money or Defeasance Securities in the necessary amount (as provided in the Indenture) to pay or redeem Outstanding Bonds (or portions thereof), and to pay the interest thereto to such maturity or redemption date, as applicable, (provided that, if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption has been given as provided in the Indenture or provision satisfactory to the Trustee has have been made for giving such notice), all liability of the City in respect of such Bonds will cease, terminate and be completely discharged, except that the City will remain liable for such payment but only from, and the Bondowners will thereafter be entitled only to payment (without interest accrued thereon after such redemption date or maturity date, as applicable) out of, the money and Defeasance Securities deposited with the Escrow Agent as aforesaid for their payment, subject, however, to the provisions of the Indenture; provided that no Bond which constitutes Tender Indebtedness will be deemed to be paid within the meaning of the Indenture unless the Purchase Price of such Bond, if tendered for purchase in accordance with the Indenture, could be paid when due from such moneys or Defeasance Securities (as evidenced by an Accountant’s Certificate) or a Credit Support Instrument is provided in connection with such Purchase Price.
EVENTS OF DEFAULT; REMEDIES
Events of Default. Each of the following constitute an Event of Default under the Indenture: (a) if default is made in the payment of the principal or Redemption Price of or Sinking Fund Installment for, or interest on, any Outstanding Bond when and as the same become due and payable, whether on an Interest Payment Date, at maturity, by call for redemption, or otherwise; (b) if default is made by the City in the performance or observance of any other of the covenants, agreements or conditions on its part contained in the Indenture or in the Outstanding Bonds, and such default continues for a period of 120 days after written notice thereof to the City by the Trustee or to the City and to the Trustee by the Owners of not less than 10% in principal amount of the Bonds Outstanding; provided, however, if such default is such that it can be corrected by the City but not within the applicable period specified above, it will not constitute an Event of Default if corrective action is instituted by the City within 30 days of the City’s receipt of the notice of the default Resolution No. 2022-10
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required by the Indenture and diligently pursued until the default is corrected; (c) an Event of Bankruptcy has occurred and is continuing with respect to the City; or (d) an event of default (as defined in the applicable Issuing Instrument) has occurred and is continuing with respect to any Parity Obligation.
Accounting and Examination of Records After Default. The City has covenanted that if an Event of Default has happened and has not been remedied, the books of record and accounts of the City and all other records relating to the Electric System will at all times be subject to the inspection and use of the Trustee and of its agents and attorneys. The City has covenanted that if an Event of Default has happened and has not been remedied, the City, upon demand of the Trustee, will account, as if it were the trustee of an express trust, for all Revenues and other moneys, securities and funds pledged or held under the Indenture for such period as stated in such demand.
Application of Revenues and Other Moneys After Default. (a) Notwithstanding anything to the contrary contained in the Indenture, the City has covenanted that if an Event of Default happens and has not been remedied, the City, upon the demand of the Trustee, will cause control of amounts in the Light and Power Fund to be transferred to the Trustee and will cause to be paid over to the Trustee by the first Business Day of each month, all Revenues received by the City with respect to the preceding month.
(b) During the continuance of an Event of Default, the Trustee will apply all Revenues and amounts in the Light and Power Fund received by or available to the Trustee pursuant to any right given or action taken under the provisions of the Indenture, in the following order of priority: First: To the payment of the reasonable and proper charges, expenses and liabilities of the Fiduciaries, including reasonable fees of counsel, and the payment of the reasonable and proper charges, expenses and liabilities of the fiduciaries for Parity Obligations, including reasonable fees of counsel. Second: To the payment of the Operation and Maintenance Expenses. Third: To the payment of the principal and Redemption Price of and interest on the Outstanding Bonds, and the principal and redemption price of and interest on the other Outstanding Parity Obligations, then due and payable; provided however, that in the event the amount of Net Revenues and amounts in the Light and Power Fund available for such payment are not sufficient to make all the payments required by the Indenture, the Trustee will apply the Net Revenues and available amounts in the Light and Power Fund to the payment of the principal and Redemption Price of and interest on all Outstanding Parity Obligations then due and payable ratably (based on the respective amounts to be paid), without any discrimination on preferences. Fourth: To the payment of any Termination Payments due and payable under the Qualified Swap Agreements; provided however, that in the event the amount of Net Revenues and available amounts in the Light and Power Fund are not sufficient to make all the payments required by the Indenture with respect to all Qualified Swap Agreements, the Trustee will apply the Net Revenues and available amounts in the Light and Power Fund to the payment of the Termination Payments then due and payable under all Qualified Swap Agreements ratably (based on the respective amounts to be paid), without any discrimination on preferences. Fifth: To the transfer to the Debt Service Reserve Fund for the Bonds and to each debt service reserve fund for other Outstanding Parity Obligations, the amount, if any, necessary so that the amount on deposit in the Debt Service Reserve Fund equal the Debt Service Reserve Requirement and the amount in each debt service reserve fund for other Outstanding Parity Obligations equal the amount required to be on deposit in such debt service reserve fund under the applicable Issuing Instrument; provided that in the event that the amount of Net Revenues and amounts in the Light and Power Fund available for such payment are not sufficient to make all the payments required by the Indenture, the Trustee will apply the Net Revenues and available amounts in the Light and Power Fund to the transfer to the Debt Service Reserve Fund and each debt service reserve fund for other Outstanding Parity Obligations ratably (based on the respective amounts to be paid), without any discrimination or preferences. Sixth: To the payment of amounts due with respect to outstanding Subordinate Obligations (which do not include Termination Payments for Qualified Swap Agreements) in accordance with the provisions of the Issuing Instrument pursuant to which such Subordinate Obligations have been issued.
Resolution No. 2022-10
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(c) In the event that on any date all payments required to be made from Net Revenues and amounts in the Light and Power Fund available for such payment are not made in full as required by the Indenture, then no payment will be made which has a priority under the Indenture lower than the delinquent payment until all delinquent payments with a higher priority have been made in full. (d) If and whenever all overdue installments of interest on all Outstanding Bonds and Outstanding Parity Obligations, together with the reasonable and proper fees, charges, expenses and liabilities of the Trustee and any other fiduciary for Parity Obligations, including reasonable fees of counsel, and all other sums payable for the account of the City under the Indenture, including the principal and Redemption Price of all Outstanding Bonds and Outstanding Parity Obligations and unpaid interest on all Outstanding Bonds and Outstanding Parity Obligations which are then payable, will be paid for by the account of the City, or provision satisfactory to the Trustee is made for such payment, and all defaults under the Indenture, the Outstanding Bonds and the Outstanding Parity Obligation are made good or secured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate is made therefor, the Trustee, at the request of the City and with the consent of the Owners of a majority in aggregate principal of the Bonds then Outstanding and with the consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Support Agreement, will transfer control of amounts in the Light and Power Fund to the City and pay over all unexpended Revenues in the hands of the Trustee (except Revenues deposited or pledged, or required by the terms of the Indenture to be deposited or pledged, with the Trustee), and thereupon the City and the Trustee will be restored, respectively, to their former positions and rights under the Indenture. No such payment by the Trustee nor such restoration of the City and the Trustee to their former positions and rights will extend to or affect any subsequent default under the Indenture or impair any right consequent thereon. (e) The Trustee may in its discretion establish special record dates for the determination of the Owners of Bonds for various purposes of the Indenture, including without limitation, payment of defaulted interest and giving direction or consent to the Trustee.
Right to Accelerate Upon Default. Notwithstanding anything contrary in the Indenture or in the Bonds, upon the occurrence of an Event of Default, the Trustee may, with the consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Support Agreement, and will, at the direction of the Owners of a majority in principal amount of Outstanding Bonds (other than Bonds owned by or on behalf of the City) by written notice to the City, declare the principal of the Outstanding Bonds and the interest thereon to be immediately due and payable, whereupon such principal and interest will, without further action, become and be immediately due and payable.
Appointment of Receiver. If an Event of Default happens and has not been remedied, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Owners of the Bonds under the Indenture, the Trustee is entitled to make application for the appointment of a receiver or custodian of the Revenues and amounts in the Light and Power Fund, pending such proceedings, with such power as the court making such appointment confers.
Enforcement Proceedings.
(a) If an Event of Default happens and has not been remedied, then and in every such case, the Trustee, by its agents and attorneys, may, with the consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Support Agreement, proceed, and upon the written request of the Owners of not less than a majority in principal amount of the Bonds at the time Outstanding (other than Bonds owned by or on behalf of the City), with the consent of each Credit Provider whose consent is required by a Supplemental Indenture or a Credit Support Agreement, after receiving indemnification satisfactory to it as set forth in clause (d) below, will proceed to protect and enforce its rights and the rights of the Owners of the Outstanding Bonds by a suit or suits in equity or at law, whether for damages or the specific performance of any covenant contained in the Indenture, to enforce the security interest in, pledge of and lien on the Trust Estate granted pursuant to the Indenture, or in aid of the execution of any power granted in the Indenture or Resolution No. 2022-10
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any remedy granted under applicable provisions of the laws of the State of California, or for an accounting by the City as if the City were the trustee of an express trust, or in the enforcement of any other legal or equitable right as the Trustee, being advised by counsel, deems most effectual to enforce any of its rights or to require the City to perform any of its duties under the Indenture. (b) All rights of action under the Indenture may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in the trial or other proceedings, and any such suit or proceedings instituted by the Trustee will be brought in its own name as trustee of an express trust. (c) If an Event of Default occurs and is continuing, upon commencing a suit in equity or upon other commencement of judicial proceedings by the Trustee to enforce any right under the Indenture, the Trustee will be entitled to exercise any and all rights and powers conferred in the Indenture and otherwise provided by law to be exercised by the Trustee as the trustee of an express trust. (d) Regardless of the happening of an Event of Default, the Trustee has power to, but unless requested in writing by the Owners of a majority in principal amount of the Bonds then Outstanding and furnished with reasonable security and indemnity, is under no obligation to, institute and maintain such suits and proceedings as it may be advised are necessary or expedient to prevent any impairment of the security under the Indenture by any acts which may be unlawful or in violation of the Indenture, and such suits and proceedings as the Trustee may be advised are necessary or expedient to preserve or protect its interests and the interests of the Owners of the Bonds.
(e) If the Trustee or any Owner or Owners of Outstanding Bonds have instituted any proceeding to enforce any right or remedy under the Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Owner or Owners, then and in every such case the City, the Trustee and the Owners will, subject to any determination in such proceeding, be restored severally and respectively to their former positions under the Indenture, and thereafter all rights and remedies of the Trustee and the Owners will continue as though no such proceeding had been instituted.
Restriction on Owner’s Action.
(a) Except as otherwise provided in clause (b) below, no Owner of any Bond has any right to institute any suit, action or proceeding at law or in equity for the enforcement of any provision of the Indenture or the execution of any trust under the Indenture or for any remedy given under the Indenture or existing at law or in equity or by statute unless such Owner has previously given to the Trustee written notice of the happening of an Event of Default, as provided in the Indenture, and the Owners of at least 25% in principal amount of the Bonds then Outstanding have filed a written request with the Trustee, and have offered it reasonable opportunity, either to exercise the powers granted in the Indenture or by the applicable laws of the State of California or to institute such action, suit or proceeding in its own name, and unless such Owners have offered to the Trustee adequate security and indemnity against the costs, expenses and liabilities to be incurred therein or thereby, and the Trustee has refused to comply with such request for a period of 60 days after receipt by it of such notice, request and offer of indemnity, it being understood and intended that no one or more Owners of Bonds have any right in any manner whatever by his or their action to affect, disturb or prejudice the pledge created by the Indenture, or to enforce any right under the Indenture, except in the manner therein provided; and that all proceedings at law or in equity to enforce any provision of the Indenture will be instituted, had and maintained in the manner provided in the Indenture and for the ratable benefit of all Owners of the Outstanding Bonds, subject only to the provisions of the Indenture. (b) Nothing contained in the Indenture or in the Bonds affects or impairs the obligation of the City, which is absolute and unconditional, to pay on the respective due dates thereof and at the places therein expressed, but solely from the Net Revenues, amounts in the Light and Power Fund available for such payment in accordance with the Master Indenture and the amounts in the Funds, other than the Rebate Fund, held by the Trustee under the Indenture, the principal amount, or Redemption Price if applicable, of the Bonds, and the Resolution No. 2022-10
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interest thereon, to the respective Owners thereof, or affect or impair the right, which is also absolute and unconditional, of any Owner to institute suit for the enforcement of any such payment from such sources.
Remedies Not Exclusive. No remedy by the terms of the Indenture conferred upon or reserved to the Trustee or the Owners of the Bonds is intended to be exclusive of any other remedy, but each and every such remedy will be cumulative and will be in addition to every other remedy given under the Indenture or existing at law or in equity or by statute whether effective on or after the effective date of the Master Indenture. The assertion or employment of any right or remedy, under the Indenture or otherwise, does not prevent the concurrent assertion or employment of any other appropriate right or remedy.
Effect of Waiver and Other Circumstances.
(a) No delay or omission of the Trustee or any Owner of a Bond to exercise any right or power arising upon the happening of an Event of Default will impair any right or power or be construed to be a waiver of any such Event of Default or be an acquiescence therein; and every power and remedy given by the Indenture to the Trustee or to the Owners of the Bonds may be exercised from time to time and as often as may be deemed expedient by the Trustee or by the Owners of the Bonds. (b) The Owners of not less than 60% in principal amount of the Bonds at the time Outstanding, or their attorneys-in-fact duly authorized, may on behalf of the Owners of all of the Bonds, waive any Event of Default and its consequences. No such waiver will extend to any subsequent or Event of Default or impair any right consequent thereon unless the provisions of the Indenture have been satisfied with respect to such subsequent Event of Default.
Notice of Default. The Trustee will, within 30 days after obtaining knowledge thereof, mail written notice of the occurrence of any Event of Default to each Credit Provider, each Reserve Financial Guaranty Provider and each Owner of Bonds then Outstanding at such Owner’s address appearing in the Bond Register.
MISCELLANEOUS
Execution of Documents and Proof of Ownership. Any request, direction, consent, or other instrument in writing required or permitted by the Indenture to be signed or executed by Owners of Bonds may be in any number of concurrent instruments of similar tenor, and may be signed or executed by such Owners in person or by their attorneys appointed by an instrument in writing for that purpose, or by any bank, trust company or other depository for such Bonds. Proof of the execution of any such instrument, or of any instrument appointing any such attorney, and of the ownership of Bonds will be sufficient for any purpose of the Indenture (except as otherwise provided in the Indenture), if made in the following manner:
(a) The fact and date of the execution by any Owner or his or her attorney of any such instrument and of any instrument appointing any such attorney, may be provided by a signature guarantee of any bank or trust company located within the United States of America. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such signature guarantee will also constitute sufficient proof of his authority. (b) As to any Bond, the Person in whose name the same is registered in the Bond Register will be deemed and regarded as the absolute owner for all purposes. None of the City, the Trustee or any Paying Agent will be affected by any notice to the contrary.
(c) Nothing contained in the Indenture will be construed as limiting the City or the Trustee to such proof, it being intended that the City or the Trustee may accept any other evidence of the matters stated in the Indenture which the City or the Trustee may deem sufficient. Any request or consent of the Owner of any Bond will bind every future Owner of the same Bond in respect to anything done or suffered to be done by the City or the Trustee in pursuance of such request or consent.
Resolution No. 2022-10
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Severability. If any covenant, agreement or provision, or any portion thereof, contained in the Indenture, or the application thereof to any Person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of the Indenture, and the application of any such covenant, agreement or provision, or portion thereof; to other Persons or circumstances, will be deemed severable and will not be affected thereby, and the Indenture and the Bonds will remain valid, and the Owners of the Bonds will retain all valid rights and benefits accorded to them under the Indenture, the Charter, and the Constitution and statutes of the State.
General Authorization. The Authorized City Representatives, each acting singly, have been respectively authorized to do and perform from time to time any and all acts and things consistent with the Indenture necessary or appropriate to carry the same into effect.
Moneys Held for Particular Bonds. Except as otherwise provided in the Supplemental Indenture authorizing a Series of Bonds, the amounts held by the Trustee, any Paying Agent or any Escrow Agent for the payment of principal, premium if any, Purchase Price or interest due on any date with respect to particular Bonds of such Series will, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owners of the Bonds entitled thereto. None of the City, the Trustee, any Paying Agent or any Escrow Agent will be liable to any Owner for interest on amounts so held in trust.
Credit Providers.
(a) Except as limited by the Indenture, a Supplemental Indenture authorizing a Series of Bonds may provide that any Credit Provider providing a Credit Support Instrument with respect to Bonds of such Series may exercise any right under the Master Indenture or the Supplemental Indenture authorizing the issuance of such Series of Bonds given to the Owners of the Bonds to which such Credit Support Instrument relates in lieu of such Owners.
(b) All provisions under the Master Indenture or a Supplemental Indenture authorizing the exercise of rights by a Credit Provider with respect to Bonds of a Series, including without limitation actions relating to consents, approvals, directions, waivers, appointments and requests, will be deemed not to require or permit such consents, approvals, directions, waivers, appointments, requests or other actions and will be read as if the Credit Provider were not mentioned therein: (1) during any period during which there is a default by such Credit Provider under the applicable Credit Support Instrument; or (2) after the applicable Credit Support Instrument will for any reason cease to be valid and binding on the Credit Provider, or be declared to be null and void by final judgment of a court of competent jurisdiction, or after the Credit Support Instrument has been rescinded, repudiated or terminated (other than in accordance with its terms), or after a receiver, conservator or liquidator has been appointed for the Credit Provider; provided, however, that the payment of amounts due or that may become due (including without limitation all indemnity payments) to the Credit Provider or any other person identified under such Credit Provider’s Credit Support Agreement pursuant to the terms of the Master Indenture, any Supplemental Indenture and/or such Credit Support Agreement will continue in full force and effect. The foregoing does not affect any other rights of a Credit Provider, including rights as the Owner of a Credit Provider Bond.
(c) All provisions in the Indenture relating to the rights of a Credit Provider will be of no force and effect if there is no Credit Support Instrument in effect and all amounts owing to the Credit Provider under the Credit Support Agreement have been paid.
Reserve Financial Guaranty Providers.
(a) All provisions under the Master Indenture or a Supplemental Indenture authorizing the exercise of rights by a Reserve Financial Guaranty Provider with respect to Bonds of a Series, including without limitation actions relating to consents, approvals, directions, waivers, appointments and requests, will be deemed not to require or permit such consents, approvals, directions, waivers, appointments, requests or Resolution No. 2022-10
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other actions and will be read as if the Reserve Financial Guaranty Provider were not mentioned therein:
(1) during any period during which there is a default by such Reserve Financial Guaranty Provider under the applicable Reserve Financial Guaranty; or (2) after the applicable Reserve Financial Guaranty will for any reason cease to be valid and binding on the Reserve Financial Guaranty Provider, or will be declared to be null and void by final judgment of a court of competent jurisdiction, or after the Reserve Financial Guaranty has been rescinded, repudiated or terminated, or after a receiver, conservator or liquidator has been appointed for the Reserve Financial Guaranty Provider; provided, however, that the payment of amounts due (including without limitation all indemnity payments) to the Reserve Financial Guaranty Provider pursuant to the terms of the Master Indenture, any Supplemental Indenture, and/or any Reserve Financial Guaranty will continue in full force and effect. The foregoing will not affect any other rights of a Reserve Financial Guaranty Provider. (b) All provisions in the Indenture relating to the rights of a Reserve Financial Guaranty Provider will be of no force and effect if there is no Reserve Financial Guaranty in effect issued by such Reserve Financial Guaranty Provider and all amounts owing to such Reserve Financial Guaranty Provider under the Reserve Financial Guaranty have been paid.
No Recourse on Bonds. Neither the members of the City nor the officers or employees of the City are individually liable on the Bonds or in respect of any undertakings by the City under the Master Indenture, any Supplemental Indenture or any Bond.
Unclaimed Moneys. Anything in the Master Indenture or any Supplemental Indenture to the contrary notwithstanding, any moneys held by the Trustee, an Escrow Agent or any Paying Agent in trust for the payment and discharge of any of the Bonds which remain unclaimed for two years after the date when such Bonds have become due and payable, either at their stated maturity dates, tender for purchase or by call for redemption, if such moneys were held by the Trustee, an Escrow Agent or a Paying Agent at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee, an Escrow Agent or a Paying Agent after the date when such Bonds or the Purchase Price thereof became due and payable, will be repaid by such Trustee, Escrow Agent or Paying Agent to the City, as its absolute property and free and clear of any trust, lien, pledge or assignment securing said Bonds, and such Trustee, Escrow Agent or Paying Agent will thereupon be released and discharged with respect thereto and the Owners of such Bonds will look only to the City for the payment of such Bonds; provided, however, that before being required to make any such payment to the City, the Trustee, the Escrow Agent or the Paying Agent, as applicable, will, at the expense of the City, mail, postage prepaid to the Owners of such Bonds, at the last address appearing upon the Bond Register a notice that said moneys remain unclaimed and that, after a date named in said notice, which date is not less than 30 days after the date of the mailing of such notice, the balance of such moneys then unclaimed will be returned to the City.
Holidays. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in any Indenture, is not a Business Day, such payment may be made or act performed or right exercised on the next succeeding Business Day, with the same force and effect as if done on the nominal date provided in the Indenture, and, unless otherwise specifically provided in a Supplemental Indenture, no interest will accrue for the period after such nominal date.
Governing Law. The Indenture and each Bond will be interpreted, governed by and construed for all purposes in accordance with the laws of the State for contracts executed and to be performed in the State.
Preservation and Inspection of Documents. All documents received by the Trustee, any Paying Agent or any Escrow Agent under the provisions of the Indenture will be retained in its possession and will be subject at all reasonable times to the inspection by the City, the Trustee, any Credit Provider and any Owner of an Outstanding Bond and their agents and their representatives, any of whom may make copies thereof Parties Interested. Nothing in the Indenture expressed or implied is intended or will be construed to confer upon, or to give to, any Person, other than the City, the Trustee, each Paying Agent, each Escrow Resolution No. 2022-10
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Agent, the Credit Providers, the Reserve Financial Guaranty Providers and the Owners of the Bonds, any right, remedy or claim under or by reason of the Indenture or any covenant, condition or stipulation thereof; and all of the covenants, stipulations, promises and agreements in the Indenture contained by the City will be for the sole and exclusive benefit of the City, the Trustee, each Paying Agent, each Escrow Agent, the Credit Providers, the Reserve Financial Guaranty Providers and the Owners of the Bonds.
SEVENTH SUPPLEMENTAL INDENTURE
AUTHORITY AND DEFINITIONS
Supplemental Indenture of Trust. The Seventh Supplemental Indenture is supplemental to the Master Indenture.
Authority for the Seventh Supplemental Indenture. The Seventh Supplemental Indenture is entered into: (a) pursuant to the Charter and Bond Ordinance; and (b) in accordance with the Master Indenture. “Authorized Denominations” means, with respect to the 2022 Series A Bonds, $5,000 and any integral multiple thereof.
“Interest Payment Date” means, with respect to the 2022 Series A Bonds, February 1 and August 1 of each year, commencing August 1, 2022.
“Record Date” means, with respect to an Interest Payment Date for the 2022 Series A Bonds, the fifteenth day of the month preceding the month in which such Interest Payment Date falls, whether or not such day is a Business Day.
“Refunded 2012 Bonds” means the Refunded 2012 Series A Bonds and the Refunded 2012 Series B Bonds.
“Refunded 2012 Series A Bonds” means all of the City’s Electric System Revenue Bonds, 2012 Series A refunded pursuant to the terms of the 2012 Escrow Agreement. “Refunded 2012 Series B Bonds” means the portion of the City’s Electric System Revenue Bonds, 2012 Taxable Series B refunded pursuant to the terms of the 2012 Escrow Agreement. “Seventh Supplemental Indenture” means the Seventh Supplemental Indenture of Trust, supplementing the Master Indenture, as the same may be amended and supplemented in accordance with the provisions of the Master Indenture.
“2012 Escrow Agreement” means the Escrow Agreement, dated as of December 1, 2021, between the City and The Bank of New York Mellon Trust Company, N.A., as trustee for the Refunded 2012 Bonds. “2012 Escrow Fund” means the Escrow Fund established pursuant to the 2012 Escrow Agreement. “2022 Continuing Disclosure Agreement” means the Continuing Disclosure Agreement, dated as of May 5, 2022, by and between the City and the Trustee, acting in its capacity as dissemination agent, relating to the 2022 Series A Bonds.
“2022 Delivery Date” means May 5, 2022.
“2022 Series A Bonds” means the City’s Electric System Revenue Bonds, 2022 Series A authorized by the Seventh Supplemental Indenture.
Resolution No. 2022-10
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TAX COVENANTS
Tax Covenants. Notwithstanding any other provision of the Indenture, absent an Opinion of Bond Counsel that the exclusion from gross income of the portion of interest on the 2022 Series A Bonds will not be adversely affected for federal income tax purposes, the City has covenanted to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income with respect to the 2022 Series A Bonds and has specifically covenanted, without limiting the generality of the foregoing, as follows:
(a) Private Activity. The City will take no action, refrain from taking any action and make no use of the proceeds of the 2022 Series A Bonds or of any other moneys or property which would cause the 2022 Series A Bonds to be “private activity bonds” within the meaning of Section 141 of the Code;
(b) Arbitrage. The City will make no use of the proceeds of the 2022 Series A Bonds or of any other amounts or property, regardless of the source, and will take no action and refrain from taking any action which will cause the 2022 Series A Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code;
(c) Federal Guarantee. The City will make no use of the proceeds of the 2022 Series A Bonds and will not take or omit to take any action that would cause the 2022 Series A Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code; (d) Information Reporting. The City will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code necessary to preserve the exclusion of interest on the 2022 Series A Bonds pursuant to Section 103(a) of the Code;
(e) Hedge Bonds. The City will make no use of the proceeds of the 2022 Series A Bonds or any other amounts or property, regardless of the source, and will not take any action or refrain from taking any action that would cause the 2022 Series A Bonds to be considered “hedge bonds” within the meaning of Section 149(g) of the Code unless the City takes all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income of interest on the 2022 Series A Bonds for federal income tax purposes; and
(f) Miscellaneous. The City will take no action and refrain from taking any action inconsistent with its expectations stated in the Tax Certificate executed by the City in connection with the issuance of the 2022 Series A Bonds and will comply with the covenants and requirements stated therein and incorporated by reference in the Seventh Supplemental Indenture.
The tax covenants set forth in the Seventh Supplemental Indenture will not be applicable to, and nothing contained therein will be deemed to prevent the City from issuing Bonds or causing the Trustee to execute and deliver contracts payable on a parity with the 2022 Series A Bonds, the interest with respect to which has been determined by Bond Counsel to be subject to federal income taxation.
Rebate Account.
Establishment. As provided in the Master Indenture, the Trustee will establish an account for the 2022 Series A Bonds within the Rebate Fund designated the “2022 Series A Rebate Account” when required in accordance with the Seventh Supplemental Indenture. Absent an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest on the 2022 Series A Bonds will not be adversely affected, the City will cause to be deposited in the 2022 Series A Rebate Account such amounts as are required to be deposited therein pursuant to the Indenture and the Tax Certificate relating to the 2022 Resolution No. 2022-10
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Series A Bonds. All money at any time deposited in the 2022 Series A Rebate Account will be held by the Trustee in trust for payment to the United States Treasury. All amounts on deposit in the 2022 Series A Rebate Account will be governed by the Seventh Supplemental Indenture and the Tax Certificate relating to the 2022 Series A Bonds, unless and to the extent that the City delivers to the Trustee an Opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest on the 2022 Series A Bonds will not be adversely affected if such requirements are not satisfied. Notwithstanding anything to the contrary contained in the Seventh Supplemental Indenture or in the Tax Certificate relating to the 2022 Series A Bonds, the Trustee: (i) will be deemed conclusively to have complied with the provisions thereof if it follows all written requests of the City; (ii) will have no liability or responsibility to enforce compliance by the City with the terms of the Tax Certificate relating to the 2022 Series A Bonds; (iii) may rely conclusively on the City’s calculations and determinations and certifications relating to rebate matters; and (iv) will have no responsibility to independently make any calculations or determinations or to review the City’s calculations or determinations thereunder.
(i) Annual Computation. Within 55 days of the end of each Bond Year (as such term is defined in the Tax Certificate relating to the 2022 Series A Bonds), the City will calculate or cause to be calculated the amount of rebatable arbitrage, in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Treasury Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage, described, if applicable, in the Tax Certificate relating to the 2022 Series A Bonds (e.g., the temporary investments exceptions of Section 148(f)(4)(B) and the construction expenditures exception of Section 148(f)(4)(C) of the Code), and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the “1½% Penalty”) has been made), for such purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Treasury Regulations (the “Rebatable Arbitrage”). The City will obtain expert advice as to the amount of the Rebatable Arbitrage to comply with the Seventh Supplemental Indenture. (ii) Annual Transfer. Within 55 days of the end of each Bond Year, upon the written request of the City, an amount will be deposited to the 2022 Series A Rebate Account by the Trustee from any Net Revenues legally available for such purpose (as specified by the City in the aforesaid written request), if and to the extent required so that the balance in the 2022 Series A Rebate Account will equal the amount of Rebatable Arbitrage so calculated in accordance with clause (i) of paragraph (a) above. In the event that immediately following the transfer required by the previous sentence, the amount then on deposit to the credit of the 2022 Series A Rebate Account exceeds the amount required to be on deposit therein, upon written request of the City, the Trustee will withdraw the excess from the 2022 Series A Rebate Account and then credit the excess to the Debt Service Fund.
(iii) Payment to the Treasury. The Trustee will pay, as directed by written Request of the City, to the United States Treasury, out of amounts in the 2022 Series A Rebate Account:
(A) Not later than 60 days after the end of: (X) the fifth Bond Year; and (Y) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year; and
(B) Not later than 60 days after the payment of all of the 2022 Series A Bonds, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code and Section 1.148-3 of the Treasury Regulations.
In the event that, prior to the time of any payment required to be made from the 2022 Series A Rebate Account, the amount in the 2022 Series A Rebate Account is not sufficient to make such payment when such payment is due, the City will calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. Each payment required to be made pursuant to paragraph (a) will be made to the Internal Revenue Resolution No. 2022-10
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Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and will be accompanied by Internal Revenue Service Form 8038-T (prepared by the City), or will be made in such other manner as provided under the Code.
Disposition of Unexpended Funds. Any funds remaining in the 2022 Series A Rebate Account after redemption and payment of the 2022 Series A Bonds and the payments described in paragraph (a) above being made may be withdrawn by the City and utilized in any manner by the City.
Survival of Defeasance. Notwithstanding anything in the Seventh Supplemental Indenture to the contrary, the obligation to comply with the Rebate Account requirements of the Seventh Supplemental Indenture will survive the defeasance or payment in full of the 2022 Series A Bonds.
MISCELLANEOUS
Indenture to Remain in Effect. Save and except as amended and supplemented by the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture, the Fifth Supplemental Indenture, Sixth Supplemental Indenture and the Seventh Supplemental Indenture, the Master Indenture will remain in full force and effect.
Notice to Rating Agencies. The Trustee or the City, as appropriate, will provide each Rating Agency with prompt written notice of: (a) the appointment of any successor Trustee; (b) the first date on which no 2022 Series A Bonds are Outstanding; (c) any material amendments to the Master Indenture or the Seventh Supplemental Indenture; (d) any acceleration of the 2022 Series A Bonds pursuant to the Master Indenture; or (e) any redemption in whole of the 2022 Series A Bonds.
Counterparts. The Seventh Supplemental Indenture may be executed in any number of counterparts and by the different parties thereto on separate counterparts, each of which, when so executed and delivered, will be an original; but such counterparts will together constitute but one and the same instrument.
Resolution No. 2022-10
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APPENDIX C
PROPOSED FORM OF OPINION OF BOND COUNSEL
On the date of delivery of the 2022 Bonds, subject to the terms and conditions of the Forward Delivery Purchase Contract (as defined in the Official Statement), Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, proposes to render its final approving opinion in substantially the following form:
May __, 2022
City of Vernon
4305 South Santa Fe Avenue
Vernon, California 90058
Re: City of Vernon Electric System Revenue Bonds, 2022 Series A Members of the City Council:
We have examined a certified copy of the record of the proceedings of the City of Vernon (the “City”) relative to the issuance of the $_______ City of Vernon Electric System Revenue Bonds, 2022 Series A (the “2022 Bonds”), dated the date hereof, and such other information and documents as we consider necessary to render this opinion. In rendering this opinion, we have relied upon certain representations of fact and certifications made by the City, the initial purchaser of the 2022 Bonds and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us.
The 2022 Bonds are being issued pursuant to an Indenture of Trust, dated as of September 1, 2008, by and between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), as amended and supplemented, including as supplemented by the Seventh Supplemental Indenture of Trust, dated as of December 1, 2021 (collectively, the “Indenture”). The 2022 Bonds mature on the dates and in the amounts referenced in the Indenture. The 2022 Bonds are dated their date of delivery and bear interest at the rates per annum referenced in the Indenture. The 2022 Bonds are registered in the form set forth in the Indenture.
Based on our examination of existing law as Bond Counsel, certified copies of such legal proceedings and such other proofs as we deem necessary to render this opinion, we are of the opinion, as of the date hereof and under existing law, that:
1. The proceedings of the City show lawful authority for the issuance and sale of the 2022 Bonds under the laws of the State of California now in force, and the Indenture has been duly authorized, executed and delivered by the City. Assuming due authorization, execution and delivery by the Trustee, as appropriate, the 2022 Bonds and the Indenture are valid and binding obligations of the City enforceable against the City in accordance with their terms.
2. The obligation of the City to make the payments of principal of and interest on the 2022 Bonds from Net Revenues (as such term is defined in the Indenture) is an enforceable obligation of the City and does not constitute an indebtedness of the City in contravention of any constitutional or statutory debt limit or restriction.
3. Under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the 2022 Bonds is excluded from gross income for federal income tax Resolution No. 2022-10
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purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals.
4. Interest (and original issue discount) on the 2022 Bonds is exempt from State of California personal income tax.
5. The difference between the issue price of a 2022 Bond (the first price at which a substantial amount of the 2022 Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to such 2022 Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a 2022 Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a 2022 Bond Owner will increase the 2022 Bond Owner’s basis in the applicable 2022 Bond. The amount of original issue discount that accrues to the 2022 Bond Owner is excluded from the gross income of such 2022 Bond Owner for federal income tax purposes, is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals (as described in paragraph 3 above) and is exempt from State of California personal income tax.
6. The amount by which a 2022 Bond Owner’s original basis for determining loss on sale or exchange in the applicable 2022 Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable bond premium, which must be amortized under Section 171 of the Internal Revenue Code of 1986, as amended (the “Code”); such amortizable bond premium reduces the 2022 Bond Owner’s basis in the applicable 2022 Bond (and the amount of tax-exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of 2022 Bond premium may result in a 2022 Bond Owner realizing a taxable gain when a 2022 Bond is sold by the 2022 Bond Owner for an amount equal to or less (under certain circumstances) than the original cost of the 2022 Bond to the 2022 Bond Owner. Purchasers of the 2022 Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable bond premium.
The opinions expressed herein as to the exclusion from gross income of interest (and original issue discount) on the 2022 Bonds are based upon certain representations of fact and certifications made by the City and are subject to the condition that the City complies with all requirements of the Code, that must be satisfied subsequent to the issuance of the 2022 Bonds to assure that such interest (and original issue discount) on the 2022 Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the 2022 Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the 2022 Bonds.
The City has covenanted to comply with all such requirements.
The opinions expressed herein may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Our engagement ends as of the date of issuance of the 2022 Bonds. The Indenture and the Tax Certificate relating to the 2022 Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. No opinion is expressed herein as to the effect on the exclusion from gross income of interest (and original issue discount) on the 2022 Bonds for federal income tax purposes with respect to any 2022 Bond if any such action is taken or omitted based upon the opinion or advice of counsel other than ourselves. Other than expressly stated herein, we express no other opinion regarding tax consequences with respect to the 2022 Bonds.
By delivering this letter, we are not expressing any opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of setoff, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the Indenture or the 2022 Bonds, nor are we expressing any opinion with respect to the state or quality of title to or interest in any assets described in or as Resolution No. 2022-10
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subject to the lien of the Indenture or the 2022 Bonds or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets.
The opinions that are expressed herein are based upon our analysis and interpretation of existing laws, regulations, rulings and judicial decisions and cover certain matters which are not directly addressed by such authorities. We call attention to the fact that the rights and obligations under the Indenture and the 2022 Bonds are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State of California.
Our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.
We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement relating to the 2022 Bonds or other offering material relating to the 2022 Bonds and expressly disclaim any duty to advise the owners of the 2022 Bonds with respect to matters contained in the Official Statement.
Respectfully submitted,
Resolution No. 2022-10
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APPENDIX D
INFORMATION CONCERNING DTC
The information in this section concerning DTC and DTC’s book entry only system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the 2022 Bonds, payment of principal, premium, if any, accreted value, if any, and interest on the 2022 Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the 2022 Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC.
The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the 2022 Bonds. The 2022 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered 2022 Bond will be issued for each annual maturity of the 2022 Bonds, each in the aggregate principal amount of such annual maturity, and will be deposited with DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”).
DTC is rated AA+ by Standard & Poor’s. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of 2022 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2022 Bonds on DTC’s records. The ownership interest of each actual purchaser of each 2022 Bonds (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase.
Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2022 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive bonds representing their ownership interests in 2022 Bonds, except in the event that use of the book entry system for the 2022 Bonds is discontinued.
To facilitate subsequent transfers, all 2022 Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of 2022 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no Resolution No. 2022-10
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knowledge of the actual Beneficial Owners of the 2022 Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such 2022 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of 2022 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2022 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2022 Bonds documents. For example, Beneficial Owners of 2022 Bonds may wish to ascertain that the nominee holding the 2022 Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the 2022 Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to 2022 Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts 2022 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the 2022 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records.
Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Trustee or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
A 2022 Bond Owner shall give notice to elect to have its 2022 Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such 2022 Bond by causing the Direct Participant to transfer the Participant’s interest in the 2022 Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of 2022 Bond in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the 2022 Bond are transferred by Direct Participants on DTC’s records and followed by a book entry credit of tendered 2022 Bond to the Trustee’s DTC account.
DTC may discontinue providing its services as depository with respect to the 2022 Bonds at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered.
The City may decide to discontinue use of the system of book entry only transfers through DTC (or a successor securities depository). In that event, 2022 Bonds will be printed and delivered to DTC.
THE TRUSTEE, AS LONG AS A BOOK ENTRY ONLY SYSTEM IS USED FOR THE 2022
BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC Resolution No. 2022-10
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PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR
EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE 2022 BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.
Resolution No. 2022-10
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APPENDIX E
FORM OF CONTINUING DISCLOSURE AGREEMENT
At the time of issuance of the 2022 Bonds, there will be executed and delivered a Continuing Disclosure Agreement in substantially the following form:
This Continuing Disclosure Agreement (the “Disclosure Agreement”) is executed and delivered by and between the City of Vernon (the “City”) and The Bank of New York Mellon Trust Company, N.A., in its capacity as dissemination agent (the “Dissemination Agent”), in connection with the issuance of the City of Electric System Revenue Bonds, 2022 Series A in an aggregate principal amount of $______ (the “Bonds”).
The Bonds are being issued by the City pursuant to the provisions of that certain Indenture of Trust, dated as of September 1, 2008, by and between the City and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), as amended and supplemented, including as supplemented by the Seventh Supplemental Indenture of Trust, dated as of December 1, 2021 (collectively, the “Indenture”). The City and the Dissemination Agent hereby certify, covenant and agree as follows:
Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the parties hereto for the benefit of the holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized terms used in this Disclosure Agreement, unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.
“Annual Report Date” shall mean each April 1 after the end of the City’s fiscal year, the end of which, as of the date of this Disclosure Agreement, is June 30. “Beneficial Owner” shall mean any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds for federal income tax purposes.
“Dissemination Agent” shall mean, initially, The Bank of New York Mellon Trust Company, N.A., acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent that is so designated in writing by the City and has filed with the then-current Dissemination Agent a written acceptance of such designation.
“Financial Obligation” shall mean a: (A) debt obligation; (B) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (C) guarantee of (A) or (B). The term “Financial Obligation” shall not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.
“Listed Events” shall mean any of the events listed in Sections 5(a) and (b) of this Disclosure Agreement.
“MSRB” shall mean the Municipal Securities Rulemaking Board.
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“Official Statement” shall mean the Official Statement dated _______ __, 20__, relating to the Bonds. “Participating Underwriter” shall mean Goldman Sachs & Co. LLC, the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” shall mean Rule 15c2-12 adopted by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time.
“SEC” shall mean the Securities and Exchange Commission.
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing April 1, 2023 with the Annual Report for fiscal year 2021-22, provide to the MSRB an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Agreement; provided that the filing of the Official Statement with the MSRB shall constitute compliance with this obligation for the first Annual Report Date. Not later than 15 calendar days prior to such date, the City shall provide its Annual Report to the Dissemination Agent, if such Dissemination Agent is a different entity than the City. The Annual Report must be submitted in an electronic format as prescribed by the MSRB, accompanied by such identifying information as is prescribed by the MSRB, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that any audited financial statements of the City may be submitted separately from the balance of the Annual Report, and not later than the date required above for the filings of the Annual Report. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(a). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished hereunder. The Dissemination Agent may conclusively rely upon such certification of the City and shall have no duty or obligation to review such Annual Report. (b) If the City is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the City in a timely manner shall send to the MSRB a notice in an electronic format as prescribed by the MSRB, accompanied by such identifying information as prescribed by the MSRB. (c) The Dissemination Agent shall:
1. provide any Annual Report received by it to the MSRB by the date required in subsection (a);
2. file a report with the City and the Trustee (if the Dissemination Agent is other than the Trustee) certifying that the Annual Report has been provided to the MSRB pursuant to this Disclosure Agreement and stating the date it was provided; and
3. take any other actions as are mutually agreed upon between the Dissemination Agent and the City.
Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following:
(a) Audited financial statements of Electric Fund of the City (Vernon Public Utilities) for the prior fiscal year, which include information regarding the funds and accounts of the Electric System, if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If such audited financial statements are not available at the time that the Annual Report is required to be filed pursuant to Section 3(a), Resolution No. 2022-10
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the Annual Report shall contain unaudited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) An update of the information for the prior fiscal year only in substantially the form set forth in the following tables in the Official Statement under the caption “THE ELECTRIC SYSTEM”:
1. Resources Used to Satisfy City Load Requirements;
2. Average Billing Price (Cents per Kilowatt Hour); and
3. Customers, Retail Energy Sales, Revenues and Demand. (c) An update of the information for the prior fiscal year only in substantially the form set forth in the following tables in the Official Statement under the caption “ELECTRIC SYSTEM FINANCIAL INFORMATION”:
1. Historical Revenues, Expenses and Debt Service Coverage Under Indenture.
Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, that are available to the public on the MSRB’s Internet website or filed with the SEC. If the document included by reference is a final official statement, it must be available from the MSRB. The City shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the City shall give, or shall cause the Dissemination Agent to give, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than ten (10) Business Days after the event:
1. Principal and interest payment delinquencies.
2. Unscheduled draws on debt service reserves reflecting financial difficulties.
3. Unscheduled draws on credit enhancements reflecting financial difficulties.
4. Substitution of credit or liquidity providers, or their failure to perform.
5. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability or Notices of Proposed Issue (IRS Form 5701 TEB).
6. Tender offers.
7. Defeasances.
8. Rating changes.
9. Bankruptcy, insolvency, receivership or similar proceedings.
Note: For the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law Resolution No. 2022-10
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in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.
10. Default, event of acceleration, termination event, modification of terms or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties. (b) Pursuant to the provisions of this Section 5, the City shall give, or shall cause the Dissemination Agent to give, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner not more than ten (10) Business Days after occurrence:
1. Unless described in Section 5(a)(5), other notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other events affecting the tax status of the Bonds.
2. Modifications to the rights of Bondholders.
3. Bond calls.
4. Release, substitution or sale of property securing repayment of the Bonds.
5. Non-payment related defaults.
6. The consummation of a merger, consolidation or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms.
7. Appointment of a successor or additional trustee or the change of the name of a trustee.
8. Incurrence of a Financial Obligation of the City, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect security holders.
(c) If the City determines that knowledge of the occurrence of a Listed Event under subsection (b) would be material under applicable federal securities laws, and if the Dissemination Agent is other than the City, the City shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to file a notice of such occurrence with the MSRB in an electronic format as prescribed by the MSRB in a timely manner not more than ten (10) Business Days after the event. (d) If the City determines that a Listed Event under subsection (b) would not be material under applicable federal securities laws and if the Dissemination Agent is other than the City, the City shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence. (e) The City hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the City and, if the Dissemination Agent is other than the City, the Dissemination Agent shall not be responsible for determining whether the City’s instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule.
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Section 6. Termination of Reporting Obligation. The obligations of the City and the Dissemination Agent specified in this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(a).
Section 7. Dissemination Agent. The City may from time to time appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the City shall act as Dissemination Agent.
The initial Dissemination Agent shall be The Bank of New York Mellon Trust Company, N.A.
Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the City may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to annual or event information to be provided hereunder, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of the City or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver: (i) is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders; or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interest of Bond owners.
The City shall describe any amendment to this Disclosure Agreement in the next Annual Report filed after such amendment takes effect.
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the annual financial information containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the MSRB.
Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice of Resolution No. 2022-10
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occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the City shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the City to comply with any provisions of this Disclosure Agreement, any Participating Underwriter or any holder or Beneficial Owner of the Bonds, or the Trustee on behalf of the holders of the Bonds (after receiving indemnification to its satisfaction), may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed to be a default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the City or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Dissemination Agent has undertaken no responsibility with respect to any reports, notices or disclosures provided to it under this Agreement, and has no liability to any person, including any holder of Bonds, with respect to the content of any such reports, notices or disclosures. The fact that the Dissemination Agent or any affiliate thereof may have any fiduciary or banking relationship with the City shall not be construed to mean that the Dissemination Agent has actual knowledge of any event or condition except as may be provided by written notice from the City. The City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities that it may incur arising out of or in the exercise or performance of its duties as described hereunder, if any, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. The Dissemination Agent shall not be responsible in any manner for the format or content of any notice or Annual Report prepared by the City pursuant to this Disclosure Agreement. The City shall pay the reasonable fees and expenses of the Dissemination Agent for its duties as described hereunder.
Section 12. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given to the Dissemination Agent (if other than the City) and to the City as follows:
City: City of Vernon
4305 South Santa Fe Avenue
Vernon, California 90058
Attention: City Administrator
Dissemination Agent: The Bank of New York Mellon Trust Company, N.A. 333 S. Hope Street, Suite 2525
Los Angeles, California 90071
Attention: Corporate Trust
Reference: City of Vernon 2020 Electric Bonds
Section 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the Dissemination Agent, the Trustee, the Participating Underwriter and holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
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Section 14. Counterparts. This Disclosure Agreement may be executed in multiple counterparts, all of which shall constitute one and the same instrument, and each of which shall be deemed to be an original.
Date: ____ __, 20__
CITY OF VERNON
By:
City Administrator
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.
as Dissemination Agent
By:
Authorized Signatory
Resolution No. 2022-10
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Resolution No. 2022-10
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City Council Agenda Item Report
Submitted by: Veronica Petrosyan
Submitting Department: Health and Environmental Control Department Meeting Date: April 19, 2022
SUBJECT
Single-Use Foodware Accessories and Standard Condiments Recommendation:
A. Find that the proposed action is exempt from the California Environmental Quality Act (CEQA), in accordance with CEQA Guidelines Section 15061(b)(3), the general rule that CEQA only applies to projects that may have a significant effect on the environment; and CEQA Guidelines Section 15308, because the new regulations, which strengthen requirements for the handling of solid waste, represent actions by a regulatory agency for the protection of the environment;
B. Waive full reading and introduce and conduct first reading of Ordinance No. 1280 adding Chapter 8.15 to Title 8 Health and Safety to the Vernon Municipal Code regulating single-use foodware accessories and standard condiments; and C. Direct staff to schedule second reading and adoption for the May 3, 2020 City Council meeting.
Background:
According to Californians Against Waste (CAW), every year in the United States, an estimated 561 billion disposable foodware items are used, resulting in a whopping 4.9 million tons of waste. Per CAW, unused food accessories including utensils, straws, napkins, condiment packages, and others clog landfills, complicate recycling, and pollute streets and waterways in our communities. CAW estimates that providing food and beverage accessories only upon request to customers and requiring reusable food service ware for specified on-site dining will significantly reduce unnecessary waste and save businesses and local governments money.
Research estimates that restaurants in the U.S. spend $19 billion purchasing disposable foodware items. Per CAW, California restaurants that have voluntarily made the transition to a combination of by request and reusable foodware have been proven to save between $3,000 and $21,000 per year, while reducing waste and greenhouse gas emissions.
CAW estimates, California’s local governments and taxpayers spend over $428 million annually in ongoing efforts to clean up and prevent litter in streets, storm drains, parks and waterways.
Existing law prohibits a full-service restaurant from providing single-use plastic straws to consumers unless requested by the consumer and places the duty to enforce this prohibition on specified state and local health and environmental health officers and their agents. Existing law specifies that the first and 2nd violations of these provisions result in a notice of violation, and any subsequent violation is an infraction punishable by a fine of $25 for each day the fullservice restaurant is in violation, but not to exceed an annual total of $300.
In October 2021, Governor Newsom signed into law California State Assembly Bill (AB) 1276.
AB 1276 prohibits a food facility from providing any single-use foodware accessory or standard condiment, as defined, to a consumer unless requested by the consumer, as provided. The bill prohibits those items from being bundled or packaged in a way that prohibits the consumer from taking only the item desired. The bill authorizes a food facility to ask a drive-through consumer if the consumer wants a single-use foodware accessory in specified circumstances. The bill requires a food facility using a third-party food delivery platform to list on its menu the availability of single-use foodware accessories and standard condiments and only provide those items when requested, as provided. The bill excludes from these requirements correctional institutions, health care facilities, residential care facilities, and public and private school cafeterias.
AB 1276 requires a city, county, or city and county, on or before June 1, 2022, to authorize an enforcement agency to enforce these requirements. AB 1276 would specify that the first and 2nd violations of these provisions result in a notice of violation, and any subsequent violation is an infraction punishable by a fine of $25 for each day in violation, but not to exceed an annual total of $300. By creating a new crime and imposing additional duties on local governing bodies, this bill would impose a state-mandated local program.
Fiscal Impact:
There is no fiscal impact associated with this report.
Attachments:
1. Ordinance No. 1280
ORDINANCE NO. 1280
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF VERNON
ADDING CHAPTER 8.15 TO TITLE 8 HEALTH AND SAFETY TO THE
VERNON MUNICIPAL CODE REGULATING SINGLE-USE FOODWARE
ACCESSORIES AND STANDARD CONDIMENTS
SECTION 1. Recitals.
A. The California State Legislature has recognized that littered plastic products have caused and continue to cause significant environmental harm and have burdened local governments with significant environmental cleanup costs (California Public Resources Code Section 42355).
B. Californians Against Waste (CAW) estimates that 561 billion disposable foodware items are used every year in the United States, resulting in 4.9 million tons of waste.
C. CAW further estimates that California’s local governments and taxpayers spend over $428 million annually in ongoing efforts to clean up and prevent litter in public streets, storm drains, parks and waterways.
D. According to the California Coastal Commission, more than 30 percent of all waste collected during its annual beach clean-ups is from disposable foodware and accessories.
E. In October 2021, Governor Newsom signed into law California State Assembly Bill (AB) 1276 which expands on existing law prohibiting restaurants from providing single-use plastic straws unless requested by the consumer, by prohibiting food facilities from providing any single-use foodware accessory or standard condiment, as defined, to a consumer unless requested by the consumer.
F. Single-use foodware accessories, including napkins, straws, condiments, forks, spoons, sporks, knives, and other disposable flatware create waste and environmental hazards, and therefore should only be made available upon request in compliance with AB 1276.
G. Over one hundred municipalities in California have adopted ordinances prohibiting or restricting single-use foodware accessories, which have reduced the volume of single-use foodware accessories in waste streams and throughout the natural environment.
H. AB 1276 requires the City to authorize an enforcement agency to enforce the new state requirements.
I. The City of Vernon seeks to implement AB 1276 by authorizing an enforcement Ordinance No.
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agency to enforce its requirements prohibiting distribution of single-use foodware accessories and standard condiments unless requested by the consumer on or before June 1, 2022.
THE CITY COUNCIL OF THE CITY OF VERNON HEREBY ORDAINS:
SECTION 2. The City Council of the City of Vernon hereby finds and determines that the above recitals are true and correct and are a substantial part of this ordinance.
SECTION 3. This ordinance was assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the City. The City Council hereby finds that this ordinance is not subject to CEQA in accordance with CEQA Guidelines Section 15061(b)(3), the general rule that CEQA only applies to projects that may have a significant effect on the environment; and CEQA Guidelines Section 15308, because the new regulations, which strengthen requirements for the handling of solid waste, represent actions by a regulatory agency for the protection of the environment.
SECTION 4. Chapter 8.15 to Title 8 Health and Safety is hereby added to the Vernon Municipal Code to read as follows:
Chapter 8.15 Single-Use Foodware Accessory and Standard Condiment Reduction Ordinance
8.15.010 Purpose
8.15.020 Definitions
8.15.030 Requirements for Food Service Vendors
8.15.040 Exemptions
8.15.050 Enforcement and Penalties
8.15.010 Purpose
The City Council finds and declares that the purpose of this Chapter is to comply with AB 1276 and mandate that all single-use foodware accessories and standard condiments be made available upon request only.
8.15.020 Definitions
“AB 1276” means the California State Assembly Bill regulating the distribution of singleuse foodware accessories by food vendors to be made available only upon request of the consumer. The new law applies to plastic and non-plastic single-use foodware items and standard condiments. This law requires the City of Vernon to authorize an enforcement agency on or before June 1, 2022.
“Digital Ordering Platform” means the digital technology provided by an internet website or Ordinance No.
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mobile application used by customers to order food and/or schedule food delivery. “Food Service Vendor” means any business, organization, entity, group, or individual providing prepared food or beverages for public consumption on or off its premises within the City of Vernon.
“Refillable Self-service Dispenser” means a container or equipment that is used to hold disposable foodware accessories for customers to obtain at their discretion. “Single-use Foodware Accessories” means disposable products intended for single or limited number of uses, used in the restaurant and food service industry for serving or transporting prepared, ready-to-consume food or beverages. Single-use foodware includes, but is not limited to, plates, cups, bowls, trays, hinged or lidded containers, straws, stirrers, lid plugs, lids and utensils. This does not include disposable packaging for unprepared foods.
“Standard Condiment” means relishes, spices, sauces, confections, or seasonings that require no additional preparation and that are usually used on a food item after preparation, including ketchup, mustard, mayonnaise, soy sauce, hot sauce, salsa, salt, pepper, sugar, and sugar substitutes.
8.15.030 Requirements for Food Service Vendors
A. Food Service Vendors shall only distribute single-use foodware accessories and standard condiments upon the request of the customer, unless a local, county or State emergency order is in effect requiring distribution of such single-use foodware accessories and standard condiments. However, employees are not prohibited from asking customers if they would like any single-use foodware accessories or standard condiments and providing the amount requested by the customer.
B. Food Service vendors shall place signs on the premises to inform customers and employees that single-use foodware accessories and standard condiments are offered only upon request.
C. Food Service vendors shall include, in its Digital Ordering Platforms for ordering food, a statement that communicates that single-use foodware accessories are offered only upon request and shall include the ability for customers to select desired foodware accessories or standard condiments. The food service vendor shall customize its menu with a list of available single-use foodware accessories and standard condiments, and only those single-use foodware accessories or standard condiments selected by the consumer shall be provided by the food facility. If a consumer does not select any single-use foodware accessories or standard condiments, no single-use foodware accessory or standard condiment shall be provided by the food facility for delivery of ready-to-eat food.
Ordinance No.
1280 Page 4 of 6
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D. Food Service Vendors shall instruct employees to inform customers that singleuse foodware accessories and standard condiments are offered only upon request.
E. Food Service Vendors shall not package single-use foodware accessories and standard condiments in a manner that prohibits a customer from taking only the type of single-use foodware accessory or standard condiment desired without also having to take a different type of single-use foodware accessory or standard condiment.
F. Food Service Vendors may ask a drive-through customer if the consumer wants a single-use foodware accessory if the single-use foodware accessory is necessary for the consumer to consume ready-to-eat food, or to prevent spills of or safely transport ready-to-eat food, or to prevent spills of or safely transport ready-to-eat food.
8.15.040 Exemptions
A. This chapter shall not apply to refillable self-service dispensers. Food Service Vendors may therefore make standard condiments and single-use foodware accessories available for customers to obtain as needed. Food Service Vendors are encouraged to use bulk dispensers for the condiments rather than condiments packaged for single-use.
B. This chapter shall not apply to the following institutions or facilities, as defined under California Public Resources Code Section 42273:
a. Correctional institutions, which has the same meaning as in California Penal Code Section 7502.
b. Health care facilities licensed pursuant to Health and Safety Code Section 1250, et seq.or facilities that are owned or operated by a health care service plan licensed pursuant to Health and Safety Code Section 1340, et seq. .
c. Residential care facilities licensed pursuant to Health and Safety Code Section 1200, et seq.
d. Public and private school cafeterias, as referenced in Health and Safety Code Section 113789(b)(1). (1)(b).
8.15.050 Enforcement and Penalties
A. The first and second violations of this chapter shall result in a notice of violation, and any subsequent violation shall be punishable by a fine of twenty-five dollars ($25) for each day in violation, but not to exceed an amount of three hundred dollars ($300) annually.
B. Unless otherwise provided for in this Chapter 8.15, the City’s procedures on imposition of administrative fines, Chapter 1.08, Section 1.08.070, are hereby incorporated in their entirety, as modified from time to time, and shall govern the imposition, enforcement, collection, and review of administrative citations issued to enforce this article and any rule or regulation adopted pursuant to this article, except as Ordinance No.
1280 Page 5 of 6
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otherwise indicated in this article. This article shall only apply to those entities subject to the City’s regulatory jurisdiction.
C. The Director of Health and Environmental Control, or designee, shall have primary responsibility for enforcement of this chapter and shall have authority to issue citations for violation of any provision of this chapter. The Director of Health and Environmental Control, or designee, may establish regulations or administrative procedures and take any actions reasonable and necessary to further the purposes of this chapter or to obtain compliance with this chapter, including, without limitation, performing an inspection of a retail establishment’s premises to verify compliance with this chapter.
D. The remedies and penalties provided in this chapter are cumulative and not exclusive, and nothing in this chapter shall preclude the City from pursuing any other remedies. The City Attorney may seek legal, injunctive, or any other relief to enforce the provisions of this chapter and any regulation or administrative procedure developed pursuant hereto.
SECTION 5. Any provision of the Vernon Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is repealed or modified to that extent necessary to affect the provisions of this Ordinance.
SECTION 6. If any section, subsection, paragraph, sentence, clause, phrase, or portion thereof, of this Ordinance is declared by a court of competent jurisdiction to be unconstitutional or otherwise invalid, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, paragraph, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, paragraphs, sentences, clauses, phrases, or portions thereof, be declared invalid or unconstitutional. To this end, the provisions of this Ordinance are declared to be severable.
/ / /
/ / /
/ / /
Ordinance No.
1280 Page 6 of 6
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SECTION 7. The City Clerk shall certify the adoption and publish this ordinance as required by law.
APPROVED AND ADOPTED this __ day of _____, 2022.
_____________________________
MELISSA YBARRA, Mayor
ATTEST:
LISA POPE, City Clerk
(seal)
APPROVED AS TO FORM:
___________________________
ZAYNAH N. MOUSSA,
Interim City Attorney
City Council Agenda Item Report
Submitted by: Adriana Ramos
Submitting Department: Public Utilities
Meeting Date: April 19, 2022
SUBJECT
Purchase Contract with Performance Contracting, Inc. (PCI) Recommendation:
A. Find that the proposed action is categorically exempt from California Environmental Quality Act (CEQA) review, in accordance with CEQA Guidelines Section 15301, because the project consists of the maintenance, repair or minor alteration of an existing facility and involves negligible or no expansion of an existing use; B. Find that the best interests of the City are served by a direct award of a purchase contract to Performance Contracting, Inc. (PCI), without a competitive selection process pursuant to Section 3.32.110(B)(2) of the Vernon Municipal Code (VMC); C. Approve the issuance of a Purchase Contract in an amount not-to-exceed $313,836 with PCI for scaffolding and insulation services needed at the Malburg Generation Station (MGS) during the Malburg Spring 2022 Outage (Spring Outage); and D. Authorize the City Administrator to execute Attachment A – Amendment to Purchase Order/Contract (Services) between the City of Vernon and PCI and related proposal for scaffolding and insulation services, as incorporated in the Amendment, in substantially the same form as submitted.
Background:
The Malburg Generation Station (MGS) undergoes a scheduled major planned outage every 30,000 equivalent operating hours or roughly 3 to 4 years and mostly in the fall and spring when the electricity demand is lower. During a scheduled outage, the power plant will optimize downtime by scheduling facility upgrades, repairs, and other maintenance work while the power plant is offline.
Temporary scaffolding is required in multiple areas of MGS during the Spring Outage, scheduled from May 1, 2022 to May 31, 2022. Scaffolding allows workers to perform tasks safely and efficiently at elevated heights. Scaffolding erection and required inspections that are specialized in nature, are performed by qualified individuals. Each scaffold is unique in construction though all scaffolds must meet specific construction standards. Typically, scaffolding costs are split between mobilization and demobilization, rental, and labor, with labor constituting the most expensive component.
Insulation shields personnel from potential contact with high-temperature piping and turbine components and is a critical component in the plant’s overall efficiency. During the outage, insulation must be removed (destructively) and then replaced in multiple locations to provide access points for inspection or other outage related activities. Insulation is then either repaired or replaced in these select location.
Historically, purchase contracts are awarded to vendors for this type of work approximately 6- months before a scheduled outage to ensure labor and material availability. However, based on the truncated time available between the acquisition of MGS and the need to engage a multitude of vendors for the various tasks associated with the Spring Outage, staff could not comply with the City’s established purchasing guidelines.
Nonetheless, in an effort to obtain a competitive price for the City, Staff solicited quotes from four (4) vendors with industrial power plant or refinery experience that were likely to submit quotes to provide both scaffolding and insulation services. One of the four vendors solicited failed to conduct a job walk for insulation and, as a result, was not considered. A second vendor did not provide a breakdown of the work details, as requested, and then declined when given the opportunity to reformat their estimate. Of the remaining two vendors, Performance Contracting, Inc. (PCI) provided the lowest quote in response to the informal solicitation of scaffold and insulation services.
As such, and due to the time-sensitive nature of this upcoming Spring Outage, it is in the best interest of the City to award a purchase contract to PCI in support of MGS to provide the necessary scaffold and insulation services during the Spring Outage with respect to the following areas: High Energy Non-Destructive Examination (NDE), Lube Oil Cooler, Combustion Turbine (CT) units, Carbon Monoxide (CO) Catalyst, and Selective Catalytic Reduction (SCR) Catalyst.
The proposal received from PCI to complete the necessary work is $278,836. In anticipation of additional work and services that may be needed once the scaffolding and insulation services commence, staff recommends adding a contingency of $35,000, bringing the total purchase contract value to a not-to-exceed amount of $313,836.
PCI has agreed to utilize and abide by the City's standard Purchase Contract, albeit with a proposed Amendment that will be referenced as Attachment A to the Purchase Contract with the City. As incorporated in the Amendment, PCI also requires that the City execute its proposal. The Proposal and Amendment have been reviewed and approved as to form by the City Attorney’s Office.
Fiscal Impact:
Sufficient funds for the Spring Outage services are available in the VPU Generation and Operations Account No. 055.9190.500230.
Attachments:
1. PCI - Attachment A - Amendment to City Purchase Contract
ATTACHMENT A
AMENDMENT TO PURCHASE ORDER/CONTRACT (SERVICES)
BETWEEN
CITY OF VERNON
AND
PERFORMANCE CONTRACTING, INC.
This attachment constitutes an amendment to that certain Purchase Order/Contract (Services (the “Purchase Order/Contract””) by and between CITY OF VERNON (the “City”) and PERFORMANCE CONTRACTING, INC. (the “Contractor”) for work to be performed with respect to such projects as may, from time to time, be pending between the parties. Notwithstanding any language in the contract documents to the contrary, the provisions of this Amendment shall be controlling in the event of any discrepancies, inconsistencies or ambiguities between this Amendment and any other contract document. References in this Amendment to specific sections in the Purchase Order/Contract are by way of illustration and not intended to limit the applicability of provisions contained herein. 1) For the purposes of clarification of matters of Scope and expectations, Contractor’s Proposal is attached hereto and incorporated by this reference as though fully set forth herein. 2) Contractor’s obligations of indemnification and defense shall be only to the extent of the negligence or willful misconduct of Contractor or Contractor’s lower tier subcontractors. Contractor shall have no obligation to indemnify or defend City from their own negligence or willful misconduct or the negligence and willful misconduct of those not under Contractor’s control. Reference Section 12.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed this _____ day of ________, 20__.
CITY OF VERNON PERFORMANCE CONTRACTING, INC.
By: _____________________________________ By: _________________________________________ Title: ___________________________________ Title: _______________________________________
s
In the event CONTRACTOR’s price is included within your bid, then CONTRACTOR’s bid will be deemed to have been accepted.
This proposal is subject to change and will be withdrawn if not accepted within 30 days of the above date; it is subject to and includes all terms and conditions described herein (and such other terms as may be mutually agreed upon).
Contract Price $ See above PERFORMANCE CONTRACTING, INC.
Acceptance Date: By: Nick Naretta
By: Title: Project Manager
Customer Name: By:
Title: Approval Date:
4955 E. Landon Drive
Anaheim, CA. 92897
Phone: (714) 701-9141
Fax: (714) 701-9168
PROPOSAL
INSULATION SERVICES DIVISION
08-04-03
To: Malburg Generating Station
4963 S. Soto Street
Vernon, CA 90058
ATTN: Ian Everts
Date: 3/16/2022
Page One
Architect/Engineer:
Job Name Malburg Outage Support - Prevailing Location Vernon, CA Performance Contracting, Inc. (hereinafter designated as “CONTRACTOR”) proposes to furnish all materials and labor required for the application of the following (hereinafter designated as the “Work”) for the amount stated below:
Specification Section(s): none
Per Job Walk Dated: 02/07/2022 Addenda noted: none
Scope of work:
Provide scaffold & insulation support at the following areas:
1. High Energy NDE Area #1
a. Install & remove scaffold for four areas, remove & re-insulate 6 10” elbows and one tee for inspection.
i. Scaffolding: $27,762.00
ii. Insulation removal & re-insulation: $17,193.00
2. High Energy NDE Area #2
a. Install & remove scaffold for seven areas, remove & re-insulate seven 10” elbows for inspection.
i. Scaffolding: $34,087.00
ii. Insulation removal & re-insulation: $13,651.00
3. High Energy NDE Area #3
a. Install & remove scaffold for three areas, remove & re-insulate two 10” elbows, one tee and 12LF of piping for inspection.
i. Scaffolding: $9,659.00
ii. Insulation removal & re-insulation: $6,541.00
08-04-03
4955 E. Landon Drive
Anaheim, CA. 92897
Phone: (714) 701-9141
Fax: (714) 701-9168 PROPOSAL
4. Lube Oil
a. Scaffold structures for Lube Oil Cooler maintenance for both units. i. $9,766.00
5. CT Outage
a. Construct two scaffold structures for both units. Approximate size of 15’W x 40’L x 20’H. Structure will be shrink-wrapped, with a 8x15 flap cut out on the front side, and exit space on the back side. Roof to be shrink-wrapped as well. b. Provide two scaffold builders on day & night shift 10 hr shifts from May 2nd– May 21st.
i. Scaffold structures w/ shrink-wrap: $28,714.00
ii. Scaffold Support Time: $97,840.00
6. CO Catalyst
a. Construct & tear down two scaffold structures 4’L x 7’W x 40’H i. $11,903.00
7. SCR Catalyst
a. Construct & tear down four scaffold structures approximate size of 4’L x 9’W x 40’H i. $21,720.00
The total quoted T&M budget price for above referenced work is $278,836.00 • Price includes Sales Tax.
• Price does not include furnishing of bonds. If bonds are required, add 1% to the base price.
Scope Exclusions and Clarifications
• The terms of this proposal are conditioned upon PCI being able to perform its work in the timeframe and using the methods anticipated in the RFP and/or other bidding documents provided. Should the project be affected by any delays or additional requirements related to COVID-19 or any ramifications thereof, this proposal may be adjusted accordingly. • Prices are based on drive-up truck access to all elevations. • Customer to provide all crane and forklift service as required. • It is assumed the scaffold erection and the scaffold dismantle will be accomplished from start to finish.
One mobilization for erection of each building and one mobilization for dismantle of each building.
Additional mobilizations may be an added cost.
• Scaffolds may be yellow tagged due to obstacles and obstructions. Customer must tie off 100% in these areas.
• Scaffolds must not be altered.
• After Scaffold is tagged and turned over for use via signed turnover sheet, customer is responsible for scaffold inspections performed with their competent person. • Customer to provide their own safety equipment as required. • Scaffolds will be tied to the wall, sidewalks or structure as required. Customer to perform all patching as the scaffold comes down.
• Adequacy of the existing structure to support scaffold dead, live and wind loading is not the responsibility of Performance Contracting Inc. and can be supplied for an additional cost, if requested. If provided, engineering supplied will detail the adequacy of the scaffolding system only.
Engineering has been provided.
• Job is figured for straight time. Normal day shifts are included. OT has been included for the CT Outage support only.
• PCI utilizes Union Labor.
08-04-03
4955 E. Landon Drive
Anaheim, CA. 92897
Phone: (714) 701-9141
Fax: (714) 701-9168 PROPOSAL
• Standard Schedule of Pricing
Insulation Rates Cost Per Hour
Straight time Overtime Double Time
General Foreman $121.58 $163.70 $205.83
Foreman $117.20 $157.39 $197.59
Insulator Mechanic $112.80 $151.06 $189.32
5 th year apprentice $93.47 $126.31 $159.14
4 th year apprentice $84.33 $113.01 $141.69
3 rd year apprentice $75.36 $99.89 $124.42
2 nd year apprentice $57.14 $77.51 $97.88
1 st year apprentice $48.15 $64.36 $80.57
Pickup Truck $9.35/HR
Scaffold Rates - Prevailing Cost Per Hour
Straight time Overtime Double Time
General Foreman $102.49 $135.30 $168.11
Foreman $100.74 $132.72 $164.71
Insulator Mechanic $95.50 $124.99 $154.49
8 th year apprentice $86.97 $113.52 $140.07
7 h year apprentice $80.74 $104.34 $127.94
6 th year apprentice $76.43 $98.55 $120.67
5th year apprentice $73.31 $93.96 $114.61
4th year apprentice $68.99 $88.17 $107.34
3 rd year apprentice $64.33 $82.03 $99.73
Pickup Truck $9.35/HR
Flatbed Truck @ $250/ haul
MATERIALS & 3RD PARTY RENTALS
Material & Rentals to be charged at Cost + 10%
Scaffolding will be charged per truckload at $1,500 per month
08-04-03
4955 E. Landon Drive
Anaheim, CA. 92897
Phone: (714) 701-9141
Fax: (714) 701-9168 PROPOSAL
Contractual Clarifications
• CONTRACTOR’s price is based on clarifications stated in this proposal (and is conditional upon acceptance of mutually agreed-upon contract terms and conditions). CONTRACTOR’s attached Standard Terms and Conditions, including CONTRACTOR’s Standard Insurance, will apply to this project. • Protection of finished Work is excluded. CONTRACTOR’s Work must be approved and accepted on an area-byarea basis prior to removal of scaffolding and other equipment necessary to perform the Work. Once approval has been given and such equipment has been removed, and CONTRACTOR has left the area, CONTRACTOR cannot be responsible for damage to its Work.
• Any damage to CONTRACTOR’s Work, which is not specifically caused by CONTRACTOR, will be considered damage by other trades. CONTRACTOR will be compensated for any repairs of damage by others via change order to the subcontract.
• CONTRACTOR will be reimbursed for material received and stored in warehouse or pre-stocked at jobsite. • This Proposal is per existing plans and specifications. Except as may be explicitly provided otherwise in this Proposal, all necessary design, architectural and engineering services, whether already performed or contemplated, shall be provided by others. This qualification overrides any condition requiring CONTRACTOR to furnish such services. Any assistance given to the Owner’s or General Contractor’s design professionals is furnished as an accommodation to the Owner and/or General Contractor, and such services do not make CONTRACTOR liable or responsible for any design Work. The Owner’s design professionals shall approve any required shop drawings. Shop drawings submitted by CONTRACTOR do not constitute design, architectural or engineering services, and any shop drawings shall be deemed to be approved by the appropriate design professionals working for the Owner and/or General Contractor unless CONTRACTOR is promptly notified of needed modifications. Any contract awarded shall specify that design, architectural and engineering services are the responsibility of others. • CONTRACTOR shall not be responsible for damaged work in place arising from or relating to weather, environmental conditions, or other parties, except to the extent that such damage is covered by insurance (excluding deductibles).
• As used in this Proposal, “costs” shall mean all costs associated with the performance of the Work, including but not limited to supervisory costs, engineering costs, and all other expenditures reasonable and necessary to complete the Work required under the terms of this Proposal, or any modification thereto.
Commercial Clarifications:
• This proposal is based on a normal 40-hour week. No shift work or premium time has been included. • CONTRACTOR will provide equipment and other safety precautions for the protection of CONTRACTOR’s installers only.
• Temporary facilities such as light, power, heat, drinking water, and toilets are to be provided at locations convenient to the Work at no cost to CONTRACTOR. Such facilities will be adequate to ensure the proper installation of all of CONTRACTOR’s Work under all environmental conditions.
Schedule:
• This proposal is predicated upon CONTRACTOR’s scope of Work scheduled to begin no later than as directed by your representative and be completed no later than as directed by your representative. Some minor variation in this schedule has been anticipated; however, any change in this schedule will require reevaluation of the Work and this proposal.
• CONTRACTOR shall be afforded the opportunity to establish the activities and working time necessary to perform and complete the Work included in this proposal.
• This proposal is predicated upon the Work being released to CONTRACTOR in an orderly and logical sequence. • In the event CONTRACTOR is unable to finish the Work on or about the scheduled completion date through no fault of its own, CONTRACTOR shall be entitled to additional compensation for escalation of cost, lost efficiency factor, or any other cost resulting from the delay, plus overhead and profit.
Changes:
• The cost of any extra Work, modifications, or additions required by jobsite conditions or directed by CONTRACTOR shall be added to contract price plus 15% for markup and fee. CONTRACTOR shall be entitled to payments for said extra Work, as directed by Customer, whether issued verbally or in writing.
08-04-03
4955 E. Landon Drive
Anaheim, CA. 92897
Phone: (714) 701-9141
Fax: (714) 701-9168 PROPOSAL
• No charges will be made to CONTRACTOR’s account for Work performed or material furnished by others, without notifying CONTRACTOR and receiving its written approval before proceeding with such Work.
08-04-03
Standard Terms and Conditions
The Work: CONTRACTOR will supply and perform only that work specifically described herein (the “Work”), notwithstanding anything to the contrary contained in any bid documents presented by the Customer (the “Bid Documents”). It is specifically understood that the scope of work described herein shall supersede anything to the contrary provided in the Bid Documents. Any work to be done beyond that described herein shall require that a change order be executed. Customer shall notify CONTRACTOR if CONTRACTOR’s work is to be stopped upon reaching any aggregate contract sum.
Schedule: CONTRACTOR will supply and perform the Work in accordance with the schedule (the “Schedule”) described herein or in the absence thereof, in accordance with the Bid Documents. CONTRACTOR’s obligation hereunder is based upon the Schedule, both as to duration and sequence. In the event of any significant change in the Schedule, the contract price and the Schedule shall be equitably adjusted. In the event CONTRACTOR is delayed in its Work or is otherwise required to accelerate or resequence its Work for reasons other than the fault of CONTRACTOR or others under CONTRACTOR’s control, then CONTRACTOR shall be entitled to additional compensation.
Work Week: Customer will cooperate with CONTRACTOR in scheduling all Work, including disconnections, reconnections, interruption of services and utilities, and similar matters. In the event that Customer requires CONTRACTOR to work outside of normal daytime business hours, CONTRACTOR shall be entitled to additional compensation for such overtime.
Guarantee: CONTRACTOR warrants and guarantees that its Work will be performed in compliance with all Federal, State and/or Local regulations and, at the time of Customer’s acceptance inspection, will meet the specifications in the Contract Documents specifically relating to CONTRACTOR’s Work. CONTRACTOR’s obligation to repair or replace defective Work will expire one year from the completion of CONTRACTOR’s Work. THIS WARRANTY
IS IN LIEU OF ANY WARRANTIES PROVIDED IN THE BID DOCUMENTS AND IN LIEU OF
ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Insurance: CONTRACTOR shall supply workers compensation insurance in the form and amount required by law. CONTRACTOR shall supply general liability insurance, evidenced by its standard certificate of insurance, the price of which shall be included in the bid price unless otherwise specified herein.
Protection of Work: CONTRACTOR shall be responsible for protecting the Work, or portions thereof, during the time the Work or portions of it are under its control; provided, however, that during such time, CONTRACTOR shall not be responsible for loss or damage caused by others, nor for any damages whatsoever while CONTRACTOR is not on site.
Storage and Facilities: Customer will provide at its expense sufficient storage space to CONTRACTOR, which is fully protective of materials and equipment furnished for the Work at the place of performance of the Work. Customer will provide at its expense all light, heat, power and water which is required by CONTRACTOR for performance of the Work in the custom and practice of CONTRACTOR’s trade.
Taxes: Customer will pay for any and all taxes which are now or may be imposed on the Work by any Federal, State or Local taxing authority, law, ordinance, rule or regulation, unless otherwise specified herein.
Bonds: Upon the request and at the expense of Customer, CONTRACTOR will furnish performance and payment bonds written by a corporate surety. The cost of any such bonds is not included in the bid price and shall be paid for by Customer.
Indemnity: CONTRACTOR will indemnify and hold harmless Customer from all or such portion of such loss or damage to persons or property to the extent arising directly from CONTRACTOR’s performance of the Work and which is caused solely by the willful misconduct or negligent acts of CONTRACTOR, its employees, or anyone under its control.
Customer will indemnify and hold harmless CONTRACTOR from all or such portion of such loss or damage to persons or property to the extent arising directly from the willful misconduct or negligent acts of Customer, its employees or anyone under its control, including other contractors.
Payments: For Work commenced and completed in any one calendar month, Customer will pay the full contract price in full upon the completion and acceptance of the Work. Otherwise, all progress payments for the value of the Work completed plus the amount of materials and equipment suitably stored on or off site, and final payment, shall be paid by the Customer to CONTRACTOR within thirty (30) days after the Customer’s receipt of CONTRACTOR’s payment application therefor.
Inspection and Acceptance: CONTRACTOR’s Work shall be considered complete when CONTRACTOR notifies Customer that the Work has been completed in accordance with the specifications. The Customer’s inspection of the Work shall take place within twentyfour (24) hours from receipt of notice from CONTRACTOR. Customer’s acknowledgement on the Acceptance Form shall constitute acceptance of the Work.
Retention: For Work completed, ninety-five percent (95%) of the contract value of Work performed during each payment period will be payable as provided above up to a maximum retention of $50,000.00. In any event, the full balance of the contract price shall be payable in full upon completion and acceptance of the Work.
Late Payments and Attorney’s Fees: All sums not paid to CONTRACTOR when due, for whatever reason, shall bear an interest rate of one and one-half percent (1½%) per month or the maximum legal rate permitted by law, whichever is less; and all costs of collection, including a reasonable attorney’s fee, shall be paid by Customer.
Changes: CONTRACTOR may only be ordered in writing by the Customer to make changes in the Work within the general scope of the Work consisting of additions, deletions, changes to the Schedule in duration or sequence, or other revisions, and the contract price and the Schedule shall be adjusted accordingly. Before starting the changed Work, CONTRACTOR will submit to the Customer a request for adjustment to the contract price and/or the Schedule.
CONTRACTOR will not commence any such changed or revised Work until receipt of a written change order from the Customer incorporating an adjustment to the contract price and/or Schedule in accordance with the above.
Force Majeure: CONTRACTOR shall not be responsible for delays or defaults where occasioned by any causes of any kind and extent beyond its control, including but not limited to: delays caused by the Owner, Customer, other subcontractors, architect and/or engineers, delays in transportation, shortages of raw materials, civil disorders, acts of the government, either in its sovereign or contractual capacity, labor difficulties or shortages, vendor allocations, freight embargoes, fires, floods, epidemics, quarantine restrictions, accidents, unusually severe weather, and acts of God. CONTRACTOR shall be entitled to an equitable adjustment in the Schedule and Contract Sum for such delays as described above.
Customer Supplied Property: If the Work described herein requires Customer to supply materials, equipment or other property, then Customer warrants that such items shall be fit for the use for which they were intended. If such items do not conform, CONTRACTOR shall notify Customer within a reasonable time after CONTRACTOR’s notice of the nonconformance and CONTRACTOR may request additional compensation by change order.
CONTRACTOR Supplied Property: Whenever the Customer, its employees, contractors and subcontractors (other than CONTRACTOR) use ladders, scaffolding, tools, vehicles, equipment or property of any kind, either owned or rented by CONTRACTOR, Customer shall indemnify and hold CONTRACTOR harmless from any and all claims, demands, damages, causes of action and suits of whatsoever nature and kind, arising out of or connected with the use of such, except when caused by the sole active negligence of CONTRACTOR.
Differing Site Conditions: If CONTRACTOR encounters conditions at the site differing materially from those indicated in the Bid Documents, or unknown physical conditions at the site of unusual nature differing materially from those ordinarily encountered by CONTRACTOR’s trade, then CONTRACTOR shall promptly notify the Customer, stop its Work and await instructions from Customer. If such conditions cause a change in the cost of, or the time required for, performance of any portion of the Work, an equitable price adjustment shall be made and the Schedule modified accordingly.
Notices: Any notice or written claim required to be submitted to the Customer on account of charges, extras, delays, acceleration, or otherwise, shall be furnished within a reasonable time period, and in a manner to permit the Customer to satisfy the requirements of the Contract, notwithstanding any shorter time period otherwise provided therein.
Liens: Nothing shall serve to void CONTRACTOR’s right to file a lien or claim on its behalf in the event that any payment to CONTRACTOR is not timely made.
Damages: Notwithstanding anything to the contrary in the Bid or Contract Documents, CONTRACTOR will in no event be liable for consequential, incidental or special damages of any kind for any reason whatsoever, whether arising in contract, tort or equity. This release includes but is not limited to claims of negligence.
Preparation of Work Areas: The Customer shall prepare all Work areas so as to be acceptable for mobilization by CONTRACTOR. CONTRACTOR will not be called upon to start Work until sufficient areas are ready to ensure continued Work until job completion.
CONTRACTOR shall not be responsible for damage to any property (a) which is to be replaced by Customer, or (b) which is damaged as a result of removal by CONTRACTOR prior to performance of the Work in order to perform Work despite CONTRACTOR exercising reasonable care to prevent damage.
Termination and Suspension: If the Customer does not pay CONTRACTOR in a timely manner within seven (7) days from the time payment should be made as provided herein (except where such nonpayment is due to defective Work by CONTRACTOR or other material breach by CONTRACTOR), then CONTRACTOR may, without prejudice to any other remedy it may have, upon two (2) additional days’ written notice to the Customer, stop its Work until payment of the amount owing has been received. In the event CONTRACTOR resumes its Work, the Schedule shall be equitably adjusted, and CONTRACTOR shall incur no liability for such termination. Further, the contract price shall, by appropriate adjustment, be increased by the amount of CONTRACTOR’s reasonable costs of shutdown, delay and startup. Further, if CONTRACTOR’s Work is terminated or suspended for the convenience of the Customer or any other party, then CONTRACTOR shall be paid for all Work performed to-date, for equipment and materials already ordered, and for CONTRACTOR’s costs of early termination, or in the case of suspension, CONTRACTOR’s costs of shutdown, delay and startup.
Notwithstanding anything herein to the contrary, CONTRACTOR shall not be liable for any damage while CONTRACTOR is not on site.
Waiver: CONTRACTOR’s waiver of any term herein shall not be construed as a waiver of such terms at any subsequent time.
Cooperation and Safety: CONTRACTOR’s Work shall be performed in accordance with all applicable requirements of the Environmental Protection Agency, OSHA and other Federal, State and Local regulations. Customer will cooperate with CONTRACTOR in all respects and take all necessary actions to enable CONTRACTOR to meet all such requirements with respect to the Work and the Project. Customer will cooperate with CONTRACTOR to assure that all areas where the Work is being performed are closed to access by unauthorized persons. Customer shall provide adequate security, including security personnel, to prevent unauthorized entry into CONTRACTOR’s Work areas. The Customer will ensure that its employees, representatives, agents and tenants will abide by all safety procedures applied by CONTRACTOR on the Project. CONTRACTOR shall provide for its Work all safety signs, direction signs and warning signs for the Project in accordance with statutory requirements.
All visitors to the Work areas shall be required to comply with CONTRACTOR’s safety requirements. Customer agrees that CONTRACTOR’s insurers’ representatives shall have the right to inspect CONTRACTOR’s Work and Project without hindrance.
Legal Effect: This proposal offers to the Customer the terms and conditions upon which CONTRACTOR will perform the Work described herein and is made without regard to any of the provisions in the Bid Documents not expressly incorporated herein by reference or otherwise agreed to in writing signed by CONTRACTOR. Acceptance of the proposal is expressly limited to the terms stated herein. Additional or inconsistent terms of Customer’s form or other documents are objected to and rejected and shall be deemed a material alteration thereof. Upon acceptance, this proposal will represent the entire agreement of the parties with regard to performance and payment for the Work. The proposal may be changed or withdrawn at any time prior to acceptance by notice to the Customer and will be deemed withdrawn if not accepted by the Customer within thirty (30) days from the date hereof.