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Resolution No. 5308 " CITY OF VERNON . RESOLUTION NO. 5308 OR\G\NAl FIRST SUPPLEMENTAL RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON, CALFORNIA, AUTHO- RIZING THE ISSUANCE OF A SERIES OF BONDS DESIG- NATED "ELECTRIC SYSTEM REVENUE BONDS, 1986 PROJECT," IN THE PRINCIPAL AMOUNT OF $125,000,000 (ADOPTED AUGUST 19, 1986) '. .- TABLE OF CONTENTS Page ARTICLE I AUTHORITY AND DEFINITIONS Section 101. Section 102. Supplemental Resolution. ....... 2 Authority for this First Supplemental Resolution. ....... 2 Definitions. ............. 2 Section 103. ARTICLE II AWARD OF 1986 B3mS Section 201. Section 202. Section 203. Award to Best Bidder. .. Rejection of Unsuccessful Bids. Delivery of 1986 Bonds. ... . . . . 3 . 3 . . . . 3 ARTICLE III AUTHORIZATION OF 1986 BOlIa:J Section 301. Principal Amount, Designation and Series. . . . . . . . . . . . . . . . 3 Section 302. Purpose. . . . . . . . . . . . . . . . 3 Section 303. Date, Maturities and Interest. . . . . 3 Section 304. Form, Denomination, Numbers. . . . 4 Section 305. Place of Payment and Paying Agents. . . . . . . . . . . . . . . . 4 Section 306. Mandatory Purchase. . . . . . . . 4 Sect.ion 307. Redemption Terms and Prices. . . . . . 6 Sect.ion 308. Application of Proceeds of Sale of 1986 Bonds. . . . . . . . . . . . . . 7 Section 309. Cost. of Issuance Account. . . . . . . 8 Sect.ion 310. 1986 Project. Account. . . . . . . 8 Section 311. Applicat.ion of Revenues. . . . . . . .10 Section 312. Form of 1986 Bonds; Trustee's Cert.ificate of Authenticat.ion. . . . .10 -i- Section 401. Section 402. Section 403. Section 404. Section 405. Exhibit A Exhibit B TABLE OF CONTENTS, continued ARTICLE IV MISCELLANEOUS .. .. Page Official Statement. ........ .10 Basic Resolution to Remain in Effect. .............. 1986 Bond Proceedings Confirmed. Counterparts. ........ Effective Date. ...... Bid of Merrill Lynch Capital Markets ........... Form of Bond . . . . . . . . -ii- . .11 .11 . . . .11 . . .11 A-1 . . . . a-1 -. ," RESOLUTION NO. 5308 FIRST SUPPLEMENTAL RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON, CALIFORNIA, AUTHORIZING THE ISSUANCE OF A SERIES OF BONDS DESIGNATED -ELECTRIC SYSTEM REVENUE BONDS, 1986 PROJECT- IN THE PRINCIPAL AMOUNT OF $125,000,000 WHEREAS, the City Council of the City of Vernon (the "City") has heretofore adopted its Resolution No. 5309 (the "Basic ReSOlution") to provide for the issuance of Bonds and other obliga- tions to finance any Cost of the Enterprise (as such terms are defined therein): and WHEREAS, the City desires to issue $125,000,000 Electric System Revenue Bonds, 1986 Project, (the "1986 Bonds") in order to finance a portion of the Cost of the 1986 Project: and WHEREAS, after due notice, at the time and place fixed for the openinqof bids for the 1986 Bonds, all bids were publicly opened, examined and read, and a tabulation thereof has been entered in the minutes: and WHEREAS, the bid of the bidder hereinafter named is the best bid made by a responsible bidder for the 1986 Bonds: and WHEREAS, the 1986 Bonds will be issued and secured under the Basic ReSOlution as supplemented by this First Supplemental Resolution: and WHEREAS, all acts and thinqs have been done and performed which are necessary to make the 1986 Bonds, when executed and issued by the City, authenticated by the Trustee and delivered, the valid and bindinq leqal obliqations of the City in accordance with their terms and to make this First Supplemental Resolution a valid and bindinq aqreement for the security of bonds authenticated and deliv- ered under the Basic Resolution and this First Supplemental Resolution: NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: .. .. ARTICLE I AUTHORITY AND DEFINITIONS Section 101. Supp1ementa1 Resolution. T his. Fir s t Supplemental Resolution is supplemental to the Basic Resolution. Section 102. Authority for this First Supplemental Resolution. This First Supplemental Resolution is adopted (i) pursu- ant to the provisions of the Revenue Bond Law of 1941, Title 5, Division 2, Part 1, Chapter 6, of the Government Code of the State of California, as amended (the "Act") and (ii) in accordance with Article II and Article X of the Basic Resolution. Section 103. Definitions. (1) Except as provided by this First Supplemental Resolution, all terms which are defined in Section 101 of the Basic Resolution shall have the same meanings, respec- tively, in this First Supplemental Resolution as such terms are given in said Section 101 of the Basic Resolution. (2) In this First Supplemental Resolution: Fixed Rate shall mean the fixed long term interest rate or rates determined in accordance with section 206 hereof. 1986 Bonds shall mean the City's Electric System Revenue Bonds, 1986 Project, authorized by Article II of this First Supplemental Resolution. Remarketing Agent shall mean the firm appointed by the City hereafter to perform the duties and carry out the responsibilities of remarketing agent as set forth in Section 306 hereof, provided that such firm shall be a member in good standing of the National Association of Securities Dealers having a capitalization of at least $150,000,000 and authorized by law to carry out and perform such duties and responsibilities. -2- ". ." ARTICLE II . AWARD OF 1986 BONDS Section 201. Award to Best Bidder. The bid of Merrill Lynch capital Markets, attached hereto and marked "Exhibit A," speci- fying the purchase price for the 1986 Bonds including accrued inter- est to the date of delivery and the initial interest rate per annum, is the bid for the 1986 Bonds producing the lowest effective interest rate to the city. Said bid is hereby accepted and the 1986 Bonds awarded to said best bidder in accordance with the terms of the bid. Section 202. Rejection of Unsuccessful Bids. All bid s other than the one accepted in Section 201 hereof are rejected, and the City Clerk is directed to return the check accompanying each rejected bid to the unsuccessful bidder. Section 203. Delivery of 1986 Bonds. The Treasurer is hereby directed to deliver the 1986 Bonds to the successful bidder upon payment therefor, including accrued interest to the date of delivery. ARTICLE III AUTHORIZATION OF 1986 J3OIIa; Section 301. Principal Amount, Designation and Series. Pursuant to the provisions of the Basic ReSOlution, a Series of Bonds entitled to the benefit, protection and security of such provisions is hereby authorized in the aggregate principal amount of $125,000,000. Such Bcmds shall be designated as, and shall be dis- tinguished from the Bonds of all other Series by the title, "Electric System Revenue Bonds, 1986 Project". Section 302. Purpose. The 1986 Bonds are issued for the purpose of financing a portion of the Cost of the 1986 Project. Section 303. Date, lfaturities and Interest. The 1986 Bonds shall be dated, and shall bear interest from, August 1, 1986 at a rate of interest per annum to be computed as follows: (1) From August 1, 1986 until March 1, 1990, the 1986 Bonds shall bear interest at an interest rate of six per- cent (6%) per annum. (2) After March 1, 1990 until maturity, the 1986 Bonds shall bear interest at the Fixed Rate, to be determined as provided herein. -3- Interest on the 1986 Bonds shall be payable commencing March 1, 1987 and semi-annually thereafter on September 1 and March 1 of each year until maturity. The 1986 Bonds shall mature on September 1 in each of the years and in the principal amounts as follows: -. . Year Principal Amount 2005 2015 2022 $21,815,000 44,285,000 58,900,000 Section 304. Form, Denoaination, Ntl11thers. The 1 9 8 6 Bonds shall be issued in fully registered form in the denomination of $5,000 or any integral multiple of $5,000. The 1986 Bonds initially issued shall be numbered from one upward within each maturity, with each such number designation preceded by the letter "R." Section 305. Place of Payment and Paying Aqents. The principal, mandatory purchase price and redemption price of the 1986 Bonds shall be payable at the First Interstate Bank of California, as trustee, Los Angeles, California. Such banking institution in its capacity as trustee is hereby appointed a paying Agent for the 1986 Bondl!J1 provided, however, that any such appointment shall become effective only if such institution shall have delivered to the City, on or before the date of delivery of the 1986 Bonds, written accep- tance of the office of the Paying Agent. The principal and redemp- tion price of and interest on all 1986 Bonds shall also be payable at any other place which may be provided for such payment by the appointment of any other Paying Agent or Paying Agents as permitted by the Basic Resolution. Interest on the 1986 Bonds shall be payable by check or draft of the Trustee mailed to the registered holder shown on. the registration records maintained by the Trustee as Bond Registrar as of the close of business on the fifteenth (15th) day of the calendar month immediately preceding the interest payment date. Section 306. Mandatory Purcbase. The 1986 Bonds will be subject to conversion to a Fixed Rate and mandatory purchase on March 1, 1990 (the "Mandato.ry Purchase Date") subject to the following: (1) At least twenty-five (25) days prior to March 1, 1990, the Trustee shall give notice of such mandatory purchase by pUblica- tion in a newspaper of general circulation in the City of Los -4- .. Angeles, California and in a daily newspaper or financial journal published in the Borough of Manhattan, City and state of New York. (2) The Trustee shall also provide written notice at least twenty-five (25) days prior to March 1, 1990 of such Mandatory Purchase Dat.e to the Holders of all Outstanding 1986 Bonds at the Holders' addresses as they appear on the registration books main- tained by the Trustee as Bond Registrar; provided, however, that such notice from the Trustee shall not be effective unless (i) concur- rently with said notice, the City shall furnish to the Trustee and the Paying Agent an Opinion of Counsel to the effect that the conver- sion to the Fixed Rate is lawful under applicable law, is permitted by this First Supplemental ReSOlution, and will not adversely affect the exe.ption from federal income taxation of interest on the 1986 Bonds, and (ii) provision shall be made for payment to the Trustee of such amount as the City determines may be required in connection with the conversion including but not limited to the fees and expenses of the Trustee and the cost of printing new 1986 Bonds. (3) The notices given pursuant to subsections (1) and (2) of this Section shall state the Mandatory Purchase Date, that the 1986 Bonds will be purchased by the Paying Agent on the Mandatory Purchase Date, that the rating on the 1986 Bonds may be reduced or withdrawn by Standard & Poor's Corporation followinq such conversion and mandatory purchase and such other information as is deemed neces- sary by the Trustee or the City, and shall further state that each Holder must deliver his or her 1986 Bond to the Paying Agent on the Mandatory Purchase Date for purchase at Par, plus accrued interest, if any. Any 1986 Bond not so delivered by such date will nonetheless be deemed to have been delivered by and purchased from the respective Holders at such price on the Mandatory Purchase oate; from and after the Mandatory Purchase Date any such 1986 Bond so deemed to have thus been delivered and purchased will cease to bear interest. (4) The Fixed Rate shall be determined by the Remarketing Agent as the rate or rates, having due regard for prevailing market conditions, which, if borne by the 1986 Bonds, would be the interest rate or rates, but would not exceed the interest rate or rates, which would result in the market value (excludinq accrued interest) of the 1986 Bonds on the date of such computation being Par, provided, how- ever, that the Fixed Rate shall not exceed twelve percent (12%) per annum. The determination of the Fixed Rate by the Remarketing Agent in accordance with the provisions of this Section shall be conclusive and bindinq upon the Holders of the 1986 Bonds, the City and the Trustee. (5) Notwithstanding the foregoing, no 1986 Bond shall be purchased on the Mandatory Purchase Date if the Holder thereof delivers to the Trustee, the Paying Aqent and the Remarketing Agent -5- at least fifteen (15) calendar days prior to the Mandatory Purchase Date an irrevocable written notice electing not to have such Holder's 1986 Bond so purchased. (6) 1986 Bonds delivered or deemed to have peen delivered to the Paying Agent pursuant to the provisions of subparagraph 3 hereof shall be purchased and paid for with money provided pya pur- chaser or purchasers (other than the City) selected as the Remarketing Agent; and the City shall execute and the Trustee may authenticate and deliver new 1986 Bonds, reflecting the Fixed Rate, to be printed at the expense of the City and distributed to the respective purchasers thereof. (7) All 1986 :Bonds which are not tendered for purchase prior to the Mandatory Purchase Date shall be deemed purchased on the Mandatory Purchase Date at a price of par plus accrued interest to the Mandatory Purchase Date. If provided with written directions of the City the Trustee shall cancel 1986 Bonds not tendered by 1986 Bond Holders as required pursuant to the aforesaid notice and deliver to 1986 :Bond Holdersa.revised form of 1986 Bond, prepared by the City with the advice of its counsel and consistent with the terms of this Resolution, provided that the Trustee obtains the Opinion of Counsel that such cancellation of 1986 Bonds and delivery of. new 1986 Bonds will not result in the interest on the 1986 Bonds becoming includable in the gross income of the Holders thereof for Federal income tax purposes. Section 307. RedemptionT~and Prices. The 1 9 8 6 :Bonds will be subject to redemption according to the fOllowing provisions: (1) Prior to March 1, 1990, the 1986 Bonds will not be subject to redemption. (2) On March 1, 1990, the 1986 Bonds will be redeemed in whole only if (a) the condition set forth in subsection 2 of Section 310 hereof is not satisfied or (b) a Remarketing Agent is unable to remarket all of the 1986 Bonds after Mandatory Purchase pursuant to Section 306 herein. All 1986 Bonds redeemed according to this subsection (2) shall be redeemed from funds held in the 1986 Project Account in the Construction Fund at a price equal to the principal amount thereof plus accrued interest to the redemption date. (3) If the 1986 Bonds remain outstanding after March 1, 1990, such Bonds will be subject to optional and mandatory redemption as follows. -6- ". The 1986 Bonds maturing in 2005 are not subject to optional redemption prior to maturity. The 1986 Bonds maturing in 2015 and 2022 may be redeemed, at the option of the city, from any source of funds, on September 1, 2000 or on any interest payment date thereaf- ter, as a whole or in part, in such manner as the City may determine, at a redemption price equal to the principal amount of the 1986 Bonds to be redeemed, accrued interest thereon to the redemption date and the following premiums (expressed as a percentage of the par value thereof) if redeemed at the following times: Redemption Dates September 1, 2000 to March 1, 2001....... september 1, 2001 to March 1, 2002....... September 1, 2002 to March 1, 2003....... September 1, 2003 to March 1, 2004....... September 1, 2004 and thereafter......... Premium 2 % 1-1/2% 1 % 1/2% o % The 1986 Bonds will be subject to mandatory sinking fund redemption in part by lot at the principal amount thereof plus accrued interest to the redemption date, without premium, in accor- dance with schedules to be determined by the remarketing agent, subject to the following guidelines, at the time of conversion of the 1986 Bonds to the Fixed Rate. The 1986 Bonds maturing in 2005 will be retired through mandatory annual Sinking Fund Installments com- mencing on September 1, 1995 and ending on September 1, 2005. The 1986 Bonds maturing in the year 2015 will be retired through manda- tory annual Sinking Fund Installments commencing on September 1, 2006 and ending on September 1, 2014. The 1986 Bonds maturing in the year 2022 will be retired through mandatory Sinking Fund Installments com- mencing on September 1, 2016 and ending on September 1, 2022. The aggregate amount of principal and interest due in the twelve months ending on any September 1 during the period september 1, 1995 to September 1, 2022, inclusive, shall not exceed by more than $20,000 the aggregate amount of principal and interest due in the twelve months ending on any other September 1 during said period. The Trustee shall give notice of redemption of the 1986 Bonds by publication in a newspaper of general circulation in the City of Los Angeles, California, and in a daily newspaper or finan- cial journal publiShed in the Borough of Manhattan, City and State of New York, and the Trustee shall mail notice of such redemption to all registered owners of the 1986 Bonds to be redeemed at their addresses as they. appear on the registration books maintained by the Trustee as Bond Registrar, said notice to be at least twenty-five (25) days prior to the redemption date. Section 308. Application of Proceeds of Sale of 1986 Bonds. The proceeds, including accrued interest, of the sale of -7- , the 1986 Bonds shall be deposited simultaneously with the delivery of the 1986 Bonds into the Construction Fund and allocated as follows: (a) The sum of $1,000,000 shall be deposited in the Cost of Issu~nC$ Account; and (b) The remaining balance of proceeds of the sale of the 1986 Bonds shall be deposited in the 1986 Project Account. Section 309. Cost of :Issuance Account. Moneys in the Cost of Issuance Account shall be applied by the Trustee to pay items of Cost attributable to the costs and expenses of issuing and selling the 1986 Bonds upon receipt by the Trustee of .arequisition of the City signed by an Authorized Officer stating the person or firm to which payment is to be made, the amount to be paid, and that such payment is a proper charge against the Cost of Issuance Account. On February 1, 1987, or upon the earlier written request of the City, the amount, if any, remaining in the Cost of Issuance Account shall be transferred to the 1986 Project Account. Section 310. 1986 Project Account. 1. Moneys in the 1986 Project Account shall be initially invested by the Trustee in the Investment Securities described in. written . instructions, signed by an Authorized Officer and delivered to the Trustee on or prior to the date of delivery of the 1986 Bonds. The amount of such moneys together with the earnings from such investment will be sufficient to pay the interest on the 1986 Bonds as the same becomes due on and prior to March 1,1990 and, if required, to pay the principal of the 1986 Bonds upon redemption pursuant to subsection (2) of Section 307 hereof. Such sufficiency will be verified by the r$port of an inde- pendent firm of certified public accountants engaged by the city. A copy of such report will be furnished to the Trustee on or prior to the date of delivery of the 1986 Bonds. The Trustee shall, at the written request of the City, immediately reinvest amounts received from the maturing principal of and interest on the Investment Securities initially purchased with moneys in the 1986 Project Account and referred to in the first sentence of this subsection 1 in such other Investment Securities as the City may designate. Atthe written request of the City, the Trustee shall also have the .power to sell, transfer, request the redemption or otherwise dispose of some or all of the :Investment Securities referred to in the first sentence of this.subsec::tionl and to substitute other Investment Securities therefor, but only if (a) the Trustee receives th.e report of .an inde- pendent firm of certified public accountants eDg'aged by the City ver- ifyingthat, immediately after such transaction, the principal of and interest on the :Investment Securities in the 1986 Project Account will, together with other moneys available for such purpose, be -8- sufficient to pay the interest on the 1986 Bonds as the same becomes due on and prior to March 1, 1990, and to pay the principal of the 1986 Bonds on March 1, 1990; and (b) the Trustee receives evidence from Standard & Poor's Corporation to the effect that such transac- tion will not, by itself, result in a reduction of its rating of the 1986 Bonds from the rating which then prevails. 2. Except as provided in subsection 3 of this Section, no amount may be withdrawn by the City from the 1986 Project Account unless the City shall have filed with the Trustee, on or before January 15, 1990, a certificate that (i) the Federal Energy Regulatory Commission ("FERC") or the Director of the Office of Hydropower Licensing has issued a license to the City for the 1986 Project; (ii) the order granting such license has become final for all purposes; and (iii) the City has filed with FERC its written acknowledgement of acceptance of such license. 3 . Notwi thstanding the provisions of subsection 2 of this Section, amounts in the 1986 Project Account: (a) shall be withdrawn by the Trustee and trans- ferred to the Debt Service Account and applied to the extent necessary to pay principal and interest on the 1986 Bonds as the same become due; and (b) may be withdrawn and applied to pay any Cost of the 1986 Project, but only if and to the extent that the City certifies to the Trustee in writing that the balance remaining in the 1986 Project Account after such withdrawal, together with the interest earnings resulting from the investment of moneys in the 1986 Project Account pursuant to subsection 1 of this Section, will be sufficient to pay the interest on the 1986 Bonds as the same becomes due on and prior to March 1, 1990 and to pay the principal of the 1986 Bonds on March 1, 1990. 4. On or after March 1, 1990, but not later than the last business day in March, 1990, unless the 1986 Bonds shall have been called for redemption pursuant to subsection (2) of Section 307 hereof, the Trustee shall transfer amounts from the 1986 Project Account as follows: (a) To the Debt Service Account an amount to be specified in written instructions to the Trustee signed by an Authorized Officer; -9- (b) To the Debt Service Reserve Account an amount equal to the Debt Service Reserve Requirement i and (c) To the City for deposit in the Contingency Fund an amount equal to the Contingency Fund Requirement. Moneys remaining in the 1986 Project Account after the foregoing transfers have been made shall be applied by the Trustee in accordance with the Resolution. Section 311. Application of Revenues. Revenues shall be applied in accordance with Section 505 of the Basic Resolution, pro- vided that no transfer or payment out of the Revenue Fund pursuant to subsections (2) through (5) of said Section 505 need be made prior to the last business day in March, 1990. Section 312. Form of 1986 Bonds; Trustee's certificate of Authentication. The form of the 1986 Bonds and the Trustee I scertif- icate of authentication shall be of substantially the tenor as set forth in EXhibit C hereto. ARTICLE IV MISCELLANEOUS Section 401. Official sta~. 1. The final Official Statement dated August 19, 1986 relating to the 1986 Bonds (the "Official Statement"). in Substantially the form of the Preliminary Official statement dated August 12, 1986 with such changes thereto as are necessary to reflect the actual terms of the 1986 Bonds and such other changes as the City Administrator shall approve (such approval to be conclusively evidenced by his execution and delivery .thereof), is hereby approved. This City Council hereby further approves the use of the Official statement by the successful. bidder in connection with the resale of the 1986 Bonds. The City Administrator is hereby authorized and directed to execute the Official Statement and any amendment or supplement thereto which he deeJllS necessary, in the. name and on behalf of the City, and thereupon to cause the. final Official Statement and any such amendment or s~plement to be. delivered to the successful bidder. The city Administrator is further authorized and directed to execute and deliver to the successful bidder, at the time of delivery of the 1986 Bonds, a certificate to the effect that to the best of his knowledge and belief, and after reasonable investiga- tion, (a) neither the Official Statement noranyamendment.or supplement thereto contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements -10- : therein, in light of the circumstances in which they were made, not misleading; (b) since the date of the Official statement, no event has occurred which should have been set forth in an amendment or sup- plement to the Official statement which has not been set forth in such an amendment or supplement; and (c) there has not been any mate- rial adverse change in the operations or financial affairs of the City since the date of the Official statement. 2. The City Administrator is hereby authorized and directed to cause to be furnished to the successful bidder a reasonable number of copies of the Official statement. Section 402. Basic Resolution to Re1Iain in Effect. Save and except as supplemented by this First Supplemental Resolution, the Basic Resolution shall remain in full force and effect. Section 403. 1986 Bond Proceedings Confirmed. All actions and proceedings heretofore taken in connection with the authorization, issuance and sale of the 1986 Bonds are hereby rati- fied and confirmed. Section 404. Counterparts. This First Supplemental Resolution may be executed in any number of counterparts, each of which, when so executed and delivered, shall be an original; but such counterparts shall together constitute but one and the same instrument. Section 405. Effective Date. T his sup pIe men t a I Resolution shall take effect immediately. ADOPTED, SIGHED AIm APP.ROVED this nineteenth day of August, 1986. [SEAL] ~). --- Mayor. ATTEST: d -../%/4'f City Clerk -11- .. Exhibit B . [FORM OF BOND] CITY OF VERHOlf Electric System Revenue Bond, 1986 Project No. R $ The CITY OF VERJlOlf (herein called "the City"), a municipal corporation and political subdivision of the State of California, acknowledqes itself indebted to, and for value received hereby prom- ises to pay to the reqistered holder named above, or reqistered assiqns, on the Maturity Date stated above, but solely from the Trust Estate (as defined in the Resolution hereinafter mentioned) pledged therefor, upon presentation and surrender of this bond at the princi- pal corporate trust office of First Interstate Bank of california, Los Anqeles, California, as trustee (such bank and any successors thereto beinq referred to herein as the "Trustee"), the principal sum stated above in any coin or currency of the United States of America which at the time of payment is leqal tender for the payment of public and private debts~ and to pay to the reqistered holder hereof interest on such principal sum by check or draft of the Trustee mailed to such holder at such holder's address as shown on the reqis- tration books, at the rate of interest determined asset forth below, commencinq on March 1, 1987, thereafter payable on the first days of September and March in each year, until the City'S obliqation with respect to the payment of such principal sum shall be discharged. Such interest shall be payable from the interest payment date next precedinq the date of authentication of this bond (unless this bond is authenticated as of an interest payment date, in which event it shall bear interest from such interest payment date, or unless this bond is authenticated prior to March 1, 1987, in which event it shall bear interest from August 1, 1986, or unless this bond is authenti- cated on a date between the 15th day of the calendar month next pre- cedinq an interest payment date and such interest .payment date, in which event it shall bear interest from such interest payment date). The interest so payable on any interest payment date will be paid to the person in whose name this bond is reqistered at the close of business on the 15th day of the calendar month immediately preceding such interest payment date. THE TERMS AND PROVISIONS OF THIS BOND AND DEFINITIONS OF CERTAIN TERMS USED HEREIN ARE CONTINUED ON THE REVERSE SIDE OF THIS BOND AND SUCH CONTINUED TERMS AND PROVISIONS AND DEFINITIONS SHALL B-1 " FOR ALL PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH ON THE FRONT OF THIS BOND. ~ This bond is one of a duly authorized series of bonds of the City designated as its "Electric System Revenue Bonds, 1986 Project" (herein called the "bonds"), in the aggregate principal amount of $125,000,000 issued pursuant to the provisions of the Revenue Bond Law of 1941, found in Title 5, Division 2, Part 1, Chapter 6, of the Government Code of the State of California, as amended (herein called the "Act"). The bonds are all issued under and are equally and ratably secured and entitled to the protection given by R.esolution No. 5309, duly adopted by the City Council of the City on August 19, 1986, as supplemented by Resolution No. 5308, duly adopted by the City council of the City on August 19, 1986 (said res- olutions being herein referred to collectively as the "Resolution"). Copies of the Resolution are on file at the office of the City Clerk and at the principal corporate trust office of the Trustee and refer- ence is hereby made to the Resolution and the Act and to all amend- ments and supplements thereto for a description of the provisions, among others, with respect to the nature and extent of the security, the rights and obligations of the City and the Trustee and the rights and remedies of the holders of the bonds, to all of which provisions the holder of this bond, by acceptance hereof, assents and agrees. As provided in the Resolution, bonds of the City may be issued from time to time pursuant to supplemental resolutions in one or more series, in various principal amounts , may mature at different times, may bear1nterest at different rates and may otherwise vary as in the Resolution provided. The aggregate principal amount of bonds which lllay be issued under the Resolution is not limited except as provided in the ReSOlution, and all bonds issued and to. be issued under the Resolution are and will be equally secured by the pledge and assignment and covenants made therein, except as otherwise expressly provided or permitted in the Resolution. In the manner provided by the Resolution, the provisions of the ReSOlution, or any resolution amendatory thereof or supplemental thereto, may (with certain exceptions stated in the ReSOlution) be modified or amended by the City with the written consent of the hold- ers of at least a majority in principal amount of the bonds then outstanding. The bonds are issuable in the form of registered bonds without coupo.ns in the denomination of $5,000 or any integral multi- ple thereof. This bond shall bear interest from its date to and including March I, 1990 at the rate of 6% per annum. on said date, unless redeemed as a whole as described below, the bonds of the B-2 '. I , . series of which this bond is one shall be converted to a :fixed annual rate or rates of interest as determined pursuant to the Resolution. This bond shall be purchased on March 1, 1990, unless redeemed on said date as described below or unless the holder thereof elects to retain ownership thereof, subject to the procedures set forth in the Resolution. The Trustee shall give notice of such mandatory. purchase by pUblication in a newspaper of general circulation in the City of Los Angeles, California and in a daily newspaper or financial journal published in the Borough of Manhattan, City and state of New York, and the Trustee shall mail notice of such mandatory purchase to all registered holders of the bonds to be purchased at their addresses as they appear on the registration books maintained by the Trustee as bond registrar, said notice to be at least 25 days prior to March 1, 1990. Prior to March 1, 1990, the bonds of the series of which this bond is one will not be subject to redemption. Such bonds will be redeemed in whole on March 1, 1990 in the event that certain con- ditions shall not have been satisfied prior to said date, as set forth in the Resolution. If the bonds are not redeemed on March 1, 1990, they will be Subject to mandatory and optional redemp- tion as set forth below. If this bond matures on September 1, 2015 or September 1, 2022, it is redeemable, in whole or in part, in the manner and SUbject to the terms and provisions, and with the effect, set forth in the ReSOlution, at the option of the City, on september 1, 2000, or on any interest payment date thereafter prior to maturity, at a redemption price equal to the principal amount thereof plus the fol- lowing premiums (percentage of par value) if redeemed at the follow- ing times: Redemption Dates september 1, 2000 to March 1, 2001 September 1, 2001 to March 1, 2002 September 1, 2002 to March 1, 2003 September 1, 2003 to March 1, 2004 September 1, 2004 and thereafter Premiums 2 % 1 1/2% 1 % 1/2% o If this bond matures on september 1, 2005, it is subject to mandatory redemption at par plus accrued interest, without premium, from sinking fund installments beginning on September 1, 1995. If this bond matures on September 1, 2015, it is subject to mandatory redemption at par plus accrued interest, without premium, from B-3 " sinking fund installments beginning on September 1, 2006. If this bond matures on September 1, 2022, it is subject to mandatory redemp- tion from sinking fund installments beginning on September 1,..2016. Schedules of minimum sinking fund installments shall be determined at the time of conversion of the interest rate hereon to anew fixed interest rate, asset forth above. , ~ The Trustee shall give notice of redemption of the bonds by publication in a newspaper of general circulation in the City of Los Angeles, California and in a daily newspaper or financial journal published in the Borough of Manhattan, City and State of New York, and the Trustee shall mail notice of such redemptiontdallregis- tered holders of the bonds to be redeemed at their addresses as they appear on the registration books maintained. by the.Trusteeas bond registrar, said notice to be at least 25 days prior to the redemption date. If notice of redemption shall have been published as afore- said, the bonds or portions thereof specified in said notice shall become due and payable on the redemption date therein fixed, and . if, on the redemption date, moneys for the redemption of all .the bonds and portions thereof to be redeemed, together with interest .to the redemption date, shall be available for such payment on said date, then from and after the redemption date interest on such bonds or portions thereof so called for redemption shall cease to accrue and be payable. The principal or redemption price, if any,. of and interest on this bond and the series of which this bond is one are not a debt of the City nor a legal or equitable pledge, charge, lien or encum- brance upon any of its property or upon any of its income, receipts or revenues, except the Trust Estate (as defined in the Res.olution), and such principal or redemption price and interest are payable solely from the Trust Estate. This bond is transferable as provided in the Resolution, only upon the books of the City kept for that purpose at the above-mentioned office of the Trustee, by the registered holder thereof in person, or by his duly authdrized attorney, upon surrender of this bond together with a written instrument of transfer satisfac- tory to the Trustee d~ly executed by the registered holder or his duly authorized attorney, and thereupon a new t'egistered bond or bonds, without coupons, and in the same aggregate principal amount, shall be issued to the transferee in exchange therefor as provided in the ReSOlution, and upon payment of the charges therein prescribed. The City, the Trustee and any Paying Agent may deem and treat the person in.. whose name this bond is registered as the absolute holder thereof for the purpose of receiving payment of, or on account of, the principal or redemption price thereof and intet'est due thereon and for all other purposes. B-4 '. .. , I The holder of this bond shall have no right to enforce the provisions of the Resolution or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Resolution, or to institute, appear in or defend any suit or other proceedings with respect thereto, except as pro- vided in the Resolution. In certain events, on the conditions, in the manner and with the effect set forth in the ReSOlution, the prin- cipal of all the bonds issued under the Resolution and then outstand- ing may become or may be declared due and payable before the stated maturity thereof, together with interest accrued thereon. It is hereby certified and recited that all conditions, acts and things required by law and the Resolution to exist, to have happened and to have been performed precedent to and in the issuance of this bond, exist, have happened and have been performed and that the series of bonds of which this is one, together with all other indebtedness of the City, complies in all respects with the appli- cable laws of the state of California, including, particularly, the Act. This bond shall not be entitled to any benefit under the Resolution or be valid or become obligatory for any purpose until this bond shall have been authenticated by the execution by the Trustee of the Trustee's Certificate of Authentication hereon. III WITIIESS WHBRBOP, TBB CITY OP VJStCIIUII has caused this bond to be executed in its name and on its behalf by the manual or facsim- ile signature of its Mayor and its seal (or a facsimile thereof) to be hereunto affixed, imprinted, engraved or otherwise reproduced and attested by the manual or facsimile signature of its City Clerk, as of August 1, 1986. CITY OP VERROR [SEAL] By: Mayor Attest: City Clerk B-5 '. , . I [FORM OF CERTIFICATE OF AUTHENTICATION ON ALL BONDS] TRUSTEE' S CERTIFICATE OF AU'~'~ICAT:IOH This bond is one of the bonds described in the within- mentioned Resolution, which has been registered on First Interstate Bank of California, Trustee By: Authorized Officer B-6 " 1 2 3 4 STATE OF CALIFORNIA ) ) ss. COUNTY OF LOS ANGELES ) I, BRUCE V. MALKENHORST, City Clerk of the City of 5 Vernon, do hereby certify that the foregoing Resolution, being 6 Resolution No. 5308, was duly adopted by the City Council of the City of Vernon, and was approved by the Mayor of said City at a special meeting of the City Council held on Tuesday, 7 8 9 10 11 12 13 14 (SEAL) August 19, 1986. i{#u4//!P4 BRUC V. MALKENHORST, City Clerk 15 16 17 18 19 20 21 22 23 24 25 26 27 28