Resolution No. 2011-041RESOLUTION NO. 2011-41
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON APPROVING AN INDENTURE OF TRUST AND
AUTHORIZING CERTAIN OTHER MATTERS RELATING THERETO
WHEREAS, the City of Vernon (the "City") is a municipal
corporation and a chartered city of the State of California organized
and existing under its Charter and the Constitution of the State of
California; and
WHEREAS, the City is authorized pursuant to the provisions of
its Charter and the City of Vernon Municipal Facilities Revenue Bond
Law, constituting Article XI of the City Code of the City of Vernon, to
issue bonds, notes and other obligations payable from the net revenues
of the City's electric system (the "Electric System") to finance the
costs of any land, improvements, facilities, equipment and other
property of any nature whatsoever which are used in the Electric System
and to refund such bonds, notes and other obligations; and
WHEREAS, pursuant to a resolution adopted by this City
Council on March 8, 2011 (the "Prior Resolution") this City Council
approved the form of an Indenture of Trust and a First Supplemental
Indenture of Trust (collectively, the "Indenture") to be entered into
by the City and The Bank of New York Mellon Trust Company, N.A. or
other corporate trustee, providing the terms and conditions for the
issuance and securing of its Electric System Revenue Notes; and
WHEREAS, this City Council desires to approve amended forms
of the Indenture; and
WHEREAS, there have been prepared and are on file with the
City Clerk amended forms of the Indenture.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF VERNON, AS FOLLOWS:
SECTION 1: The City Council of the City of Vernon hereby
finds and determines that the recitals contained hereinabove are true
and correct.
SECTION 2: The Indenture, in substantially the form on file
with the City Clerk is hereby approved. Each of the Mayor, the Mayor
Pro Tem, and the City Administrator (each an "Authorized Officer"),
acting singly, is hereby authorized, in the name of and on behalf of
the City, to execute the Indenture in substantially the form on file
with the City Clerk with such changes, insertions and deletions as: (i)
are consistent with the terms of the Prior Resolution other than the
form of the Indenture; (ii) are not materially adverse to the City; and
(iii) are approved by the Authorized Officer executing the Indenture,
said execution being conclusive evidence of such approval. The City
Clerk of the City is hereby authorized to attest the signature of the
Authorized Officer to the Indenture. The Authorized Officer executing
the Indenture is hereby authorized to deliver the Indenture to The Bank
of New York Mellon Trust Company, N.A., or such other bank or corporate
trust company as shall be qualified as a successor trustee under the
Indenture as shall be appointed by the Authorized Officer executing the
Indenture, said execution being conclusive evidence of such approval.
SECTION 3: All the terms of the Prior Resolution shall
continue in full force and effect except as to the form of the
Indenture which is subject to the terms of this Resolution.
SECTION 4: The Mayor, the Mayor Pro Tem, the City
Administrator, the Treasurer, the City Clerk, the City Attorney, the
Director of the Light and Power Department and any other proper
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official, officer or employee of the City, acting singly, be and each
of them hereby is authorized to execute and deliver any and all
documents and instruments and to do and cause to be done any and all
acts and things necessary or convenient in carrying out the actions
authorized by this Resolution, the transactions contemplated by this
Resolution and the documents and instruments approved or authorized by
this Resolution.
SECTION 5: The City Clerk of the City of Vernon shall
certify to the passage, approval and adoption of this resolution, and
the City Clerk of the City of Vernon shall cause this resolution and
the City Clerk's certification to be entered in the File of Resolutions
of the Council of this City.
APPROVED AND ADOPTED this 22Id day of March, 2011.
Name: Hilario Gonzales
Title: Mayor / Mayor—PrtrTMtf
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
I, Willard G. Yamaguchi, City Clerk of the City of Vernon, do
hereby certify that the foregoing Resolution, being Resolution
No. 2011-41, was duly passed, approved and adopted by the City Council
of the City of Vernon at a regular meeting of the City Council duly
held on Tuesday, March 22, 2011, and thereafter was duly signed by the
Mayor or Mayor Pro-Tem of the City of Vernon.
Executed this d � day of March, 2011, at Vernon, California.
(SEAL)
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CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: March 28, 2011
TO: Rory Burnett, Finance Director/City Treasurer
Carlos Fandino, Director of Light & Power
Mark Whitworth, City Administrator/Fire Chief
FROM: Willard Yamaguchi, City Clerk
RE: Resolution No. 2011-41 — A Resolution of the City Council of the City of Vernon
Authorizing and Approving an Indenture of Trust and Authorizing Certain Other Matters
Relating Thereto
Transmitted herewith are copies of the fully executed documents and a copy of Resolution No. 2011-41
referenced above, which was approved by the City Council of the City of Vernon on March 22, 2011.
Thank you.
WY:dj
Attachment
c: Resolution No. 2011-41
Agreement File No. 11-029
FIRST SUPPLEMENTAL
INDENTURE OF TRUST
by and between
CITY OF VERNON
and
[THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.],
as Trustee
Dated as of [March] 1, 2011
Relating to
CITY OF VERNON
SUBORDINATE ELECTRIC SYSTEM REVENUE NOTE,
TAXABLE SERIES 2011
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TABLE OF CONTENTS
Page
ARTICLE I AUTHORITY AND DEFINITIONS...............................................................
2
Section 1.01.
Supplemental. Indenture of Trust.........................................................
2
Section 1.02.
Authority for the First Supplemental Indenture of Trust .....................
2
Section 1.03.
Definitions............................................................................................
2
Section 1.04.
Interpretation........................................................................................
3
ARTICLE II THE SERIES 2011 NOTE...............................................................................
4
Section 2.01.
Principal Amount; Form; Designation; Conditions to Issuance
.......... 4
Section 2.02.
Term of the Series 2011 Note; Registration; Denominations;
Payment of Principal and Interest........................................................
4
Section 2.03.
Transfer of the Series 2011 Note .........................................................
5
ARTICLE III REDEMPTION OF THE SERIES 2011 NOTE
Section 3.01.
Optional Redemption...........................................................................
5
Section 3.02.
Mandatory Redemption.......................................................................
5
ARTICLE IV APPLICATION
OF PROCEEDS....................................................................
6
Section 4.01.
Application of Proceeds of Series 2011 Note ......................................
6
Section 4.02.
Series 2011 Note Costs of Issuance Fund ............................................
6
Section 4.03.
Termination Payments Fund................................................................
8
Section 4.04.
Series 2011 Note Capital Improvements Fund ....................................
9
ARTICLE V MISCELLANEOUS
......................................................................................
10
Section 5.01.
Indenture to Remain in Effect............................................................
10
Section 5.02.
Notice to Rating Agencies.................................................................
10
Section5.03.
Notices...............................................................................................
10
Section 5.04.
Complete Agreement.........................................................................
11
Section 5.05.
Counterparts.......................................................................................
11
EXHIBIT A FORM OF SERIES 2011 NOTE.................................................................
A-1
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FIRST SUPPLEMENTAL INDENTURE OF TRUST
THIS FIRST SUPPLEMENTAL INDENTURE OF TRUST, dated as of [March] 1,
2011, is entered into by and between the City of Vernon, a municipal corporation and chartered
city of the State of California and [The Bank of New York Mellon Trust Company, N.A.], as
trustee, a national banking association duly organized and existing under and by virtue of the
laws of the United States of America, authorized to accept and execute trusts of the character in
the Indenture set forth;
WITNESSETH:
WHEREAS, the City (capitalized terms used herein shall have the meanings given such
terms pursuant to Section 1.03 of this First Supplemental Indenture) has entered into the Master
Indenture to provide for the issuance from time to time by the City of Notes to, among other
things, pay Costs of Capital Improvements; and
WHEREAS, the Master Indenture authorizes the City and the Trustee to enter into
Supplemental Indentures to provide for the issuance of a Series of Notes; and
WHEREAS, the City has determined to issue its City of Vernon Subordinate Electric
System Revenue Note, Taxable Series 2011 to provide funds to finance Costs of the 2011 Project
and to pay the Note Costs of Issuance of the Series 2011 Note; and
WHEREAS, the City has determined that all acts and things have been done and
performed which are necessary to make the Indenture, as supplemented by this First
Supplemental Indenture, a valid and binding agreement for the security of the Series 2011 Note
authenticated and delivered hereunder;
NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, THIS
FIRST SUPPLEMENTAL INDENTURE OF TRUST WITNESSETH:
That, in consideration of the premises, the acceptance by the Trustee of the trusts hereby
created and originally created by the Master Indenture, the mutual covenants herein contained
and the purchase and acceptance of the Series 2011 Note by the Owner thereof, and for other
valuable consideration, the receipt whereof is hereby acknowledged, and in order to secure the
payment of the principal, Redemption Price, Parity Purchase Price of, and interest on, the Series
2011 Note according to its tenor and effect, and the performance and observance by the City of
all the covenants and conditions in the Indenture and in the Series 2011 Note contained on its
part to be performed, it is agreed by and between the City and the Trustee as follows:
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ARTICLE I
AUTHORITY AND DEFINITIONS
Section 1.01. Supplemental Indenture of Trust. This First Supplemental Indenture is
supplemental to the Master Indenture.
Section 1.02. Authority for the First Supplemental Indenture of Trust. This First
Supplemental Indenture is entered into pursuant to the Charter and Bond Ordinance, and in
accordance with Article II and Article VII of the Master Indenture.
Section 1.03. Definitions.
(a) Except as otherwise defined by this First Supplemental Indenture, all
terms which are defined in Article I of the Master Indenture shall have the same meanings,
respectively, in this First Supplemental Indenture as such terms are given in said Article I of the
Master Indenture.
(b) Additional Definitions. The following terms shall, with respect to the
Series 2011 Note and for all purposes hereof, have the meanings set forth below:
"2011 Project" means (i) payment of the Termination Payments due on the
termination of the transactions under the Morgan Stanley Swap Agreement, (ii) obtaining
permits and governmental approvals in connection with the operation of the Property for renewal
electric energy sources, including permits under the California Environmental Quality Act
("CEQA") and, subject to the satisfaction of CEQA requirements with respect thereto,
amendment of the no -fly zone restrictions on the Property and (iii) improvements, additions and
replacements to the City's Electric System distribution system.
"Authorized Denomination" means, with respect to the Series 2011 Note and as
of any time, the unpaid principal amount of the Series 2011 Note as of such time.
"Business Day" means any day of the year other than (i) a Saturday, (ii) a Sunday,
(iii) any day which shall be in Los Angeles, California or New York, New York a legal holiday
or a day on which banking institutions are authorized or required by law or other government
action to close and (iv) any day the city in which the Principal Office of the Trustee is located is
required or authorized to close.
"Delivery Date" means [month] [day], 2011.
"First Supplemental Indenture" shall mean this First 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.
"Interest Payment Date" means each [month] 1 and [month] 1, commencing
[month] 1, 2011.
"Investor Letter" shall mean the Investor Letter as defined in Section 2.03 hereof.
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"Morgan Stanley Swap Agreement" means the ISDA Master Agreement, dated as
of July 2, 2004, between the City and Morgan Stanley Financial Services Inc., together with the
Schedule to ISDA Master Agreement, the Credit Support Annex to the Schedule to ISDA Master
Agreement and the Confirmations thereunder.
"Parity Purchase Price" means with respect to the Series 2011 Note an amount
equal to the principal amount thereof plus, if the Purchase Date is not an Interest Payment Date
for the Series 2011 Note, unpaid accrued interest on the Series 2011 Note to but not including the
Purchase Date.
"Principal Office" means, with respect to the Trustee, the designated corporate
trust office of the Trustee in Los Angeles, which as of the date hereof is located at [700 South
Flower Street, Suite 500, Los Angeles, CA 90017-4104, Attention: Corporate Trust
Department], or such other corporate trust office that the Trustee shall designate.
"Property" means the [property owned by the City in Kem County, California].
"Purchase Date" means with respect to the Series 2011 Note the thirtieth day
preceding each fifth anniversary of the Dated Date provided that if such thirtieth day is not a
Business Day, the next succeeding Business Day.
"Purchaser" means the initial purchaser of the Series 2011 Note.
"Qualified Institutional Buyer" means a qualified institutional buyer as defined in
Rule 144A under the Securities Act of 1933.
"Record Date" means, with respect to an Interest Payment Date, 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.
"Series 2011 Note Capital Improvements Fund" shall mean the Series 2011 Note
Subordinate Electric System Revenue Note, Taxable Series 2011 Capital Improvements Fund
established pursuant to Section 4.04 hereof.
"Series 2011 Note Costs of Issuance Fund" shall mean the Series 2011
Subordinate Electric System Revenue Note, Taxable Series 2011 Note Costs of Issuance Fund
established pursuant to Section 4.02 hereof.
"Series 2011 Note" shall mean the City's Subordinate Electric System Revenue
Note, Taxable Series 2011 authorized by Article II hereof.
"Sinking Fund Installment" means, with respect to the Series 2011 Note, the
amount required by Section 3.02 hereof to be paid by the City on any single date for the
retirement of such Series 2011 Note.
"Tender Notice" means a written notice from the Owner of the Series 2011 Note
to the City and the Trustee exercising such Owner's right to tender the Series 2011 Note for
purchase on a Purchase Date and specifying such Purchase Date.
OHS We L:261098415.3 -3-
"Termination Payments Fund" shall mean the Subordinate Electric System
Revenue Note, Taxable Series 2011 Termination Payments Fund established pursuant to Section
4.03 hereof.
Section 1.04. Interpretation.
(a) Unless the context otherwise indicates, defined terns shall include all
variants thereof, words expressed in the singular shall include the plural and vice versa and the
use of the neuter, masculine or feminine gender is for convenience only and shall be deemed to
mean and include the neuter, masculine or feminine gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof
are solely for convenience of reference, do not constitute a part hereof and shall not affect the
meaning, construction or effect hereof.
(c) Unless otherwise indicated, references herein to Articles and Sections
shall be to the Articles and Sections of this First Supplemental Indenture. The words "herein,"
"hereof .. "hereby," "hereunder" and other words of similar import refer to this First
Supplemental Indenture as a whole and not to any particular Article, Section or subdivision
hereof.
ARTICLE II
THE SERIES 2011 NOTE
Section 2.01. Principal Amount; Form, Designation; Conditions to Issuance.
(a) Pursuant to the provisions of the Master Indenture and this First
Supplemental Indenture and the provisions of the Charter and the Bond Ordinance, the Series
2011 Note entitled to the benefit, protection and security of such provisions is hereby authorized
in the aggregate principal amount of $ . Such Note shall be designated as, and shall be
distinguished from the Notes of all other Series by the title, "City of Vernon Subordinate Electric
System Revenue Note, Taxable Series 201 L" The Series 2011 Note shall be issued only as a
single note in a principal amount equal to the Authorized Denomination and shall not be
exchangeable for Notes of other denominations.
The Series 2011 Note shall bear interest at the rate of percent per annum.
(b) The Series 2011 Note shall be issued in substantially the form attached
hereto as Exhibit A, and may be printed, engraved, typewritten or otherwise produced with such
variations, insertions or omissions for the Series 2011 Note as are appropriate and not
inconsistent therewith and shall conform generally to the rules and regulations of any
governmental authority or usage or requirement of law with respect thereto.
(c) The Series 2011 Note is issued for the purpose of providing funds (i) to
finance Costs of the 2011 Project and (ii) to pay the Note Costs of Issuance of the Series 2011
Note.
(d) The Series 2011 Note shall be executed by the City for issuance under the
Indenture and delivered to the Trustee and thereupon shall be authenticated by the Trustee and
OHS We t:261098415.3 -4-
delivered to the City or upon its order but only upon receipt by the Trustee of the applicable
items required pursuant to Section 2.04 of the Master Indenture with respect to the Series 2011
Note.
Section 2.02. Term of the Series 2011 Note; Registration, Denominations.
(a) The Series 2011 Note shall be issued in fully registered form without
coupons in the Authorized Denomination, and ownership shall be reflected in the Note Register.
(b) The Series 2011 Note shall be dated the Delivery Date and shall bear
interest from such date calculated on the basis of a 360-day year consisting of twelve 30-day
months. Interest on the Series 2011 Note shall be payable on each Interest Payment Date..
(c) The Series 2011 Note shall mature on I -I-
Section 2.03. Transfer of the Series 2011 Note. Ownership of the Series 2011 Note
shall be transferable in the Note Register as provided in the Master Indenture, in whole but not in
part, but only to a Qualified Institutional Buyer who delivers to the City an Investor Letter in
form and substance acceptable to the City with the following content:
(a) Confirmation that the transferee is a sophisticated, experienced investor
capable of evaluating the merits of an investment in the Series 2011 Note and the risks inherent
therein and able to bear such risks;
(b) Acknowledgement that no disclosure document has been prepared in
connection with the offer and sale of the Series 2011 Note;
(c) Acknowledgement that the transferee has had the opportunity to review
the business of the Electric System and its operations and financial results, to review the affairs
of the City generally (including Assembly Bill 46, a proposed bill currently seeking
disincorporation of the City), to review the terms of the Series 2011 Note including the
Indenture, to ask the City representatives questions with respect to all of the foregoing and with
respect to anything else the transferee deemed relevant to its decision to invest in the Series 2011
Note; and
(d) Representations that the transferee is acquiring the Series 2011 Note for its
own investment and not with a current view or intent to resell or distribute the Note or interests
therein.
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ARTICLE III
REDEMPTION OF SERIES 2011 NOTE
Section 3.01. Optional Redemption. The Series 2011 Note is subject to redemption
prior to its stated maturity, at the option of the City and from any source of available funds, in
whole or in part (in such principal amounts as may be specified by the City), on any Business
Day at a Redemption Price equal to the unpaid principal amount of the Series 2011 Note to be
redeemed plus any unpaid accrued interest on the principal amount of the Series 2011 Note to be
redeemed to the date of redemption, without premium.
Section 3.02. Mandatory Redemption.
(a) The Series 2011 Note is subject to mandatory redemption in part prior to
its stated maturity from Sinking Fund Installments established .pursuant to subsection (b) of this
Section on any [month] [day] on or after [month] [day], 20. at a Redemption Price equal to the
principal amount of the Series 2011 Note to be redeemed plus any unpaid accrued interest on the
principal amount of the Series 2011 Note to be redeemed to the date of redemption, without
premium.
(b) The following shall be the Sinking Fund Installments for the Series 2011
Note. Such installments shall be due on [month] [day] of each of the years set forth in the
following table in the respective amounts set forth opposite such years in said table:
Sinking Fund
Installment Due Sinking Fund
Date ( ) Installment
* Maturity
(c) The City shall provide the Trustee with revised sinking fund schedules in
the event of partial redemption of the Series 2011 Note pursuant to this Section 3.01.
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ARTICLE IV
TENDER OF SERIES 2011 NOTE FOR PURCHASE
Section 4.01. Optional Tender. The Series 2011 Note is subject to purchase by the
City, in whole but not in part, on each Purchase Date at the option of the Owner. To exercise
such option, the Owner shall give the City and the Trustee a Tender Notice not less than sixty
days prior to the Purchase Date specifying the Owner's exercise of the purchase option and the
Purchase Date on which the Series 2011 Note is to be purchased. The Tender Notice may be
rescinded at any time prior to the time the City has entered into an agreement to finance the
Parity Purchase Price. Any such rescission of a Tender Notice shall be irrevocable. Unless the
Tender Notice is rescinded, the City will be obligated to purchase the Series 2011 Note on the
Purchase Date specified in the Tender Notice from the Owner but only from the Available
Funds.
Section 4.02. Payment of Parity Purchase Price. The Parity Purchase Price of the
Series 2011 Note to be purchased on a.Purehase Date pursuant to a Tender Notice shall be
payable only from the Available Funds and only upon surrender of the Series 2011 Note to the
Trustee at its Principal Office, together with an instrument of transfer thereof, in form
satisfactory to the Trustee, executed in blank by the Owner thereof or its duly authorized
attorney, with such signature guaranteed by a bank, trust company or member firm of the New
York Stock Exchange. If a Tender Notice is given by the Owner as aforesaid (and not rescinded)
and the Series 2011 Note is not tendered for purchase on the Purchase Date as provided in the
Tender Notice, the Series 2011 Note shall, nonetheless, be deemed to have been so tendered and,
upon provision for payment of the Parity Purchase Price thereof, shall be deemed to have been
purchased on the Purchase Date, after which no interest shall accrue thereon for the benefit of the
Owner required to so tender the Series 2011 Note and such Owner shall have no rights under the
Indenture as the Owner of the Series 2011 Note except the right to receive the Parity Purchase
Price thereof.
ARTICLE V APPLICATION OF PROCEEDS
Section 5.01. Application of Proceeds of Series 2011 Note. The proceeds of the sale
of the Series 2011 Note (equal to the principal amount thereof) shall be applied simultaneously
with the delivery of the Series 2011 Note, as follows:
(a) There shall be deposited in the Series 2011 Note Costs of Issuance Fund
the sum of $ ;
(b) There shall be deposited in the Termination Payments Fund the sum of
$ ; and
(c) There shall be deposited in the Capital Improvements Fund the sum of
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Section 5.02. Series 2011 Note Costs of Issuance Fund.
(a) The Trustee shall establish and maintain in trust a separate fund
designated as the "Subordinate Electric System Revenue Note, Taxable Series 2011 Costs of
Issuance Fund." Money deposited in said fund shall be used to pay Note Costs of Issuance with
respect to the Series 2011 Note as provided in this Section.
(b) The Trustee shall make payments from the Series 2011 Note Costs of
Issuance Fund, except payments and withdrawals pursuant to subsection (e) of this Section, in
the amounts, at the times, in the manner and on the other terms and conditions set forth in this
subsection. Before any such payment from the Series 2011 Note Costs of Issuance Fund shall be
made, there shall be filed with the Trustee a requisition therefor, signed by an Authorized City
Representative. Each such requisition shall state, in respect of the payment to be made (i) the
name of the Person to whom payment is due, (ii) the amount of such payment and (iii) the
particular item of the Note Cost of Issuance to be paid and that such payment in the stated
amount is a proper charge against the Series 2011 Note Costs of Issuance Fund and that no part
of such payment shall be applied to any item which has previously been paid as a Note Costs of
Issuance of the Series 2011 Note from moneys in the Series 2011 Note Costs of Issuance Fund.
The Trustee shall promptly issue its check to the City or to the Person identified in the
requisition in the amount or amounts specified in each such requisition or, if requested pursuant
to any such requisition, shall by wire transfer, interbank transfer or other method arrange to
promptly make each payment required by such requisition. The City shall apply, or cause to be
applied, all such moneys received from the Series 2011 Note Costs of Issuance Fund to the
payment of the Note Costs of Issuance of the Series 2011 Note identified in the requisition
relating to such moneys.
Each such requisition shall be sufficient evidence to the Trustee of the facts stated
therein and the Trustee shall have no duty to confirm the accuracy of such facts. Upon receipt of
each such requisition, signed by an Authorized City Representative, the Trustee shall pay the
amount set forth therein as directed by the terms thereof.
(c) Upon the receipt by the Trustee of a certificate of an Authorized City
Representative requesting the Trustee to close the Series 2011 Note Costs of Issuance Fund, and
after payment from the Series 2011 Note Costs of Issuance Fund of all amounts included in
requisitions submitted by the City pursuant to Section 4.02(b) hereof, the Trustee shall transfer
any moneys remaining in the Series 2011 Note Costs of Issuance Fund to the Series 2011 Note
Capital Improvements Fund. Upon such transfer the Trustee shall close the Series 2011 Note
Costs of Issuance Fund.
(d) Moneys held in the Series 2011 Note Costs of Issuance Fund may be
invested and reinvested to the fullest extent practicable in Permitted Investments which mature
not later than such times as shall be necessary to provide moneys when needed for payments to
be made from the Series 2011 Note Costs of Issuance Fund. Any investment earnings on
moneys on deposit in the Series 2011 Note Costs of Issuance Fund shall be deposited in the
Series 2011 Note Costs of Issuance Fund and be used in the same manner as other amounts on
deposit in the Series 2011 Note Costs of Issuance Fund.
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(e) Notwithstanding any of the other provisions of this Section, to the extent
that other moneys are not available therefor, amounts in the Series 2011 Note Costs of Issuance
Fund shall be applied to the payment of Debt Service for the Series 2011 Note when due.
Section 5.03. Termination Payments Fund.
(a) The Trustee shall establish and maintain in trust a separate fund
designated as the "Subordinate Electric System Revenue Note, Taxable Series 2011 Termination
Payments Fund." Money deposited in said fund shall be used to pay Termination Payments as
provided in this Section.
(b) The Trustee shall make payments from the Termination Payments Fund,
except payments and withdrawals pursuant to subsection (e) of this Section, in the amounts, at
the times, in the manner and on the other terms and conditions set forth in this subsection.
Before any such payment from the Termination Payments Fund shall be made, there shall be
filed with the Trustee a requisition therefor, signed by an Authorized City Representative. Each
such requisition shall state, in respect of the payment to be made (i) the name of the Person to
whom payment is due, (ii) the amount of such payment and (iii) that such payment is to be
applied to the Termination Payments and that such payment in the stated amount is a proper
charge against the Termination Payments Fund and that no part of such payment shall be applied
to any item which has previously been paid as a Termination Payment from amounts in the
Termination Payments Fund. The Trustee shall promptly issue its check to the City or to the
Person identified in the requisition in the amount or amounts specified in each such requisition
or, if requested pursuant to any such requisition, shall by wire transfer, interbank transfer or other
method arrange to promptly make each payment required by such requisition. The City shall
apply, or cause to be applied, all such moneys received from the Termination Payments Fund to
the payment of the Termination Payments identified in the requisition relating to such moneys.
Each such requisition shall be sufficient evidence to the Trustee of the facts stated
therein and the Trustee shall have no duty to confirm the accuracy of such facts. Upon receipt of
each such requisition, signed by an Authorized City Representative, the Trustee shall pay the
amount set forth therein as directed by the terms thereof.
(c) Upon the receipt by the Trustee of a certificate of an Authorized City
Representative requesting the Trustee to close the Termination Payments Fund, and after
payment from the Termination Payments Fund of all amounts included in requisitions submitted
by the City pursuant to Section 4.03(b) hereof, the Trustee shall transfer any moneys remaining
in the Termination Payments Fund to the Series 2011 Note Capital Improvements Fund. Upon
such transfer the Trustee shall close the Termination Payments Fund.
(d) Moneys held in the Termination Payments Fund may be invested and
reinvested to the fullest extent practicable in Permitted Investments, which mature not later than
such times as shall be necessary to provide moneys when needed for payments to be made from
the Termination Payments Fund. Any investment earnings on moneys on deposit in the
Termination Payments Fund shall be deposited in the Termination Payments Fund and be used in
the same manner as other amounts on deposit in the Termination Payments Fund.
OHS W"t:261098415.3 -9-
(e) Notwithstanding any of the other provisions of this Section, to the extent
that other moneys are not available therefor, amounts in the Termination Payments Fund shall be
applied to the payment of Debt Service for the Series 2011 Note when due.
Section 5.04. Series 2011 Note Capital Improvements Fund.
(a) The Trustee shall establish and maintain in trust a separate fund
designated as the "Subordinate Electric System Revenue Note, Taxable Series 2011 Capital
Improvements Fund." Money deposited in said fund shall be used to pay the Costs of the 2011
Project, other than the Termination Payments. There shall be deposited in the Series 2011 Note
Capital Improvements Fund the amounts to be deposited therein pursuant to this First
Supplemental Indenture and such other amounts as are delivered to the Trustee for deposit
therein.
(b) The Trustee shall make payments from the Series 2011 Note Capital
Improvements Fund, except payments and withdrawals pursuant to subsection (e) of this Section,
in the amounts, at the times, in the manner and on the other terms and conditions set forth in this
subsection. Before any such payment from the Series 2011 Note Capital Improvements Fund
shall be made, there shall be filed with the Trustee a requisition therefor, signed by an
Authorized City Representative. Each such requisition shall state, in respect of the payment to
be made (i) the name of the Person to whom payment is due, (ii) the amount of such payment
and (iii) the particular item of the Cost and Capital Improvement to be paid and that such
payment in the stated amount is a proper charge against the Series 2011 Note Capital
Improvements Fund and that no part of such payment shall be applied to any item which has
previously been paid as a Cost of a Capital Improvement from amounts in the Series 2011 Note
Capital Improvements Fund. The Trustee shall promptly issue its check to the City or to the
Person identified in the requisition in the amount or amounts specified in each such requisition
or, if requested pursuant to any such requisition, shall by wire transfer, interbank transfer or other
method arrange to promptly make each payment required by such requisition. The City shall
apply, or cause to be applied, all such moneys received from the Series 2011 Note Capital
Improvements Fund to the payment of the Costs of Capital Improvements, as stated in subsection
(a) of this Section, identified in the requisition relating to such moneys.
Each such requisition shall be sufficient evidence to the Trustee of the facts stated
therein and the Trustee shall have no duty to confirm the accuracy of such facts. Upon receipt of
each such requisition, signed by an Authorized City Representative, the Trustee shall pay the
amount set forth therein as directed by the terms thereof.
(c) Upon the receipt by the Trustee of a certificate of an Authorized City
Representative requesting the Trustee to close the Series 2011 Note Capital Improvements Fund,
and after payment from the Series 2011 Note Capital Improvements Fund of all amounts
included in requisitions submitted by the City pursuant to Section 4.04(b) hereof, the Trustee
shall transfer any moneys remaining in the Series 2011 Note Capital Improvements Fund to such
account or accounts in the City of Vernon Electric System Note Parity Obligations Fund as
directed by an Authorized City Representative. Upon such transfer the Trustee shall close the
Series 2011 Note Capital Improvements Fund.
(d) Moneys held in the Series 2011 Note Capital Improvements Fund may be
invested and reinvested to the fullest extent practicable in Permitted Investments, which mature
OHS Wmt:261098415.3 -10-
not later than such times as shall be necessary to provide moneys when needed for payments to
be made from the Series 2011 Note Capital Improvements Fund. Any investment earnings on
moneys on deposit in the Series 2011 Note Capital Improvements Fund shall be deposited in the
Series 2011 Note Capital Improvements Fund and be used in the same manner as other amounts
on deposit in the Series 2011 Note Capital Improvements Fund.
(e) Notwithstanding any of the other provisions of this Section, to the extent
that other moneys are not available therefor, amounts in the Series 2011 Note Capital
Improvements Fund shall be applied to the payment of Debt Service for the Series 2011 Note
when due.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Indenture to Remain in Effect. Save and except as supplemented by this
First Supplemental Indenture, the Master Indenture shall remain in full force and effect.
Section 6.02. Notice to Rating Agencies. [The Trustee or the City, as appropriate, shall
provide each Rating Agency with prompt written notice of (i) the appointment of any successor
Trustee, (ii) the date no Series 2011 Note is Outstanding, (iii) any material amendments to the
Master Indenture or this First Supplemental Indenture, (iv) any acceleration of the Series 2011
Note pursuant to Section 10.04 of the Master Indenture and (v) any redemption in whole of the
Series 2011 Note.]
Section 6.03. Notices. Unless otherwise provided herein, all notices, certificates or
other communications hereunder shall be deemed sufficiently given upon actual receipt thereof
when received by the City, the Trustee and the Rating Agencies, as the case may be, at the
respective address provided pursuant to this Section or, if mailed by first class mail, postage
prepaid, addressed to the appropriate address provided pursuant to this Section, six Business
Days after deposit in the United States mail, the initial address for notices, counterparts and other
communications hereunder is as follows:
If to the City: City of Vernon
4305 S. Santa Fe Avenue
Vernon, CA 90058
Attention: City Attorney
If to the Trustee: [The Bank of New York Mellon Trust Company,
N.A.]
[700 South Flower Street, Suite 500
Los Angeles, CA 90017]
Attention: Corporate Trust Department
[If to S&P:] Standard & Poor's Ratings Services
55 Water Street, 38th Floor
New York, New York 10041
Attention: Municipal Structured Group
OHS We t:261098415.3 -11-
[If to Moody's:] Moody's Investors Service, Inc.
7 World Trade Center at 250 Greenwich Street
New York, NY 10007
Attn: Public Finance Municipal Structure Group
The City, the Trustee [and the Rating Agencies] may, by notice given hereunder,
designate any further or different addresses to which subsequent notices, certificates or other
communications shall be sent. Unless otherwise requested by the City, the Trustee [or the Rating
Agencies], any notice required to be given hereunder in writing may be given by any form of
Electronic Notice capable of making a written record. Each such party shall file with the Trustee
information appropriate to receiving such form of Electronic Notice.
Section 6.04. Counterparts. This First Supplemental Indenture may be executed in any
number of counterparts and by the different parties hereto on separate 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.
IN WITNESS WHEREOF, City of Vernon has caused these presents to be signed
in its name and on its behalf by its Mayor and attested by its City Clerk and to evidence its
acceptance of the trusts hereby created, the Trustee has caused these presents to be signed in its
name and on its behalf by one of its authorized officers, all as of the day of
2011.
ATTEST:
Willard Yamaguchi, City Clerk
APPROVED AS TO FORM:
Willard Yamaguchi, City Attorney
CITY OF VERNON
Hilario Gonzales, Mayor
[THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.], as Trustee
I�
Authorized Officer
OHS Wut:261098415.7 -12-
EXHIBIT A
FORM OF SERIES 2011 NOTE
CITY OF VERNON
SUBORDINATE ELECTRIC SYSTEM REVENUE NOTE,
TAXABLE SERIES 2011
No. R-
Interest Rate
REGISTERED OWNER:
PRINCIPAL AMOUNT:
Dated Date Maturity Date
[month] [day], 2011 [month] 1, _
CUSIP No.
CITY OF VERNON (herein called the "City"), a municipal corporation and
chartered city of the State of California, acknowledges itself indebted to, and for value received
hereby promises to pay (but only out of the Net Revenues (capitalized terms used herein shall
have the meanings given such terms pursuant to the Indenture mentioned below) and other assets
pledged therefor and available for such payment pursuant to the Indenture) to the Registered
Owner specified above or registered assigns, on the Maturity Date specified above (unless this
Note shall have been previously called for redemption in whole or in part and payment of the
Redemption Price shall have been duly made), the Principal Amount specified above, in lawful
money of the United States of America and to pay interest thereon (but only from said Net
Revenues and other pledged assets available for such payment pursuant to the Indenture) in like
lawful money on each 1 and 1, commencing 1, 2011 until payment of such
principal sum shall be paid (each an "Interest Payment Date"), at the rate set forth above;
provided that such payment shall be subordinate and junior in all respects to the payment from
such sources of any Senior Obligations as may be Outstanding from time to time, including
Senior Obligations issued after the issuance of this Note.
The principal or, if applicable, the Redemption Price hereof is payable upon surrender
hereof at the designated corporate trust office of [The Bank of New York Mellon Trust
Company, N.A.], in Los Angeles, California, as trustee under the Indenture (together with any
successor trustee under the Indenture, the "Trustee"). Interest hereon is payable by check mailed
on each Interest Payment Date to the Owner hereof as of the applicable Record Date at the
address appearing on the Note Register maintained by the Trustee; provided the Owner of the
Series 2011 Note may, at any time prior to a Record Date, give the Trustee written instructions
for payment of such interest on each succeeding Interest Payment Date for such Series 2011
Note by wire transfer or by deposit to an account within the United States of America. Interest on
this Note shall be computed on the basis of a 360-day year consisting of twelve 30-day months.
This Note is one of a duly authorized issue of notes of the City designated as
"City of Vernon Subordinate Electric System Revenue Notes" (the "Notes") and is the only Note
of a Series designated as the "Subordinate Electric System Revenue Note, Taxable Series 2011"
(the "Series 2011 Note"). This Note is issued pursuant to the Charter and the Bond Ordinance.
OHS We t:261098415.3 A -I
This Note has been issued in the aggregate principal amount of $50,000,000. This Note is issued
under, and, together with all other Notes issued and outstanding thereunder, are equally and
ratably secured by a pledge of the Note Trust Estate under, and entitled to the protection given
by, the Indenture of Trust, dated as of [March] 1, 2011 between the City and the Trustee, as
amended and supplemented by the First Supplemental Indenture of Trust, dated as of [March] 1,
2011 between the City and the Trustee (said Indenture of Trust, as so amended and supplemented
and as the same may be further amended and supplemented, is herein called the "Indenture");
provided that the pledge of the Net Revenues and amounts in the Light and Power Fund to the
payment of this Note and any other Notes issued pursuant to the Indenture is subordinate and
junior in all respects to the pledge of the Net Revenues and amounts in the Light and Power Fund
to the payment of the Senior Obligations, including Senior Obligations issued after the issuance
of this Note.
As provided in the Indenture, Notes of the City may be issued thereunder from
time to time pursuant to Supplemental Indentures in one or more Series, in various principal
amounts, may mature at different times, may bear interest at different rates and may otherwise
vary as in the Indenture provided. The aggregate principal amount of Notes which may be
issued under the Indenture is not limited except as provided in the Indenture, and all Notes issued
and to be issued under the Indenture are and will be equally secured by the pledge and covenants
made therein, except as otherwise expressly provided or permitted in the Indenture.
Copies of the Indenture are on file at the City Hall of the City and at the Principal
Office of the Trustee and reference is hereby made to the Indenture and to all amendments and
supplements thereto for a description of the provisions, among others, with respect to the nature
and extent of the security, the rights, duties and obligations of the City, the Trustee and the
Owners of the Notes and the terms upon which the Notes are secured and payable under the
Indenture, the rights and remedies of the Owner of the Series 2011 Note, the limitations on such
rights and remedies and the terms and conditions upon which Notes are issued and may be issued
thereunder. The Indenture provides that, in addition to Notes, other Note Parity Obligations
secured by a pledge of the available Net Revenues and amounts in the Light and Power Fund on
a parity with the Notes may be issued or incurred by the City on the terms set forth therein. By
acceptance of this Note, the Registered Owner accepts and agrees to the terms of the Indenture.
This Note is a special obligation of the City and the principal, Redemption Price,
and Parity Purchase Price of, and interest on, this Note are payable solely from the Net Revenues
and the amounts in the Light and Power Fund available for such payment pursuant to the
Indenture, and the amounts in the funds held by the Trustee under the Indenture; provided that
the payment of this Note from Net Revenues and the amounts in the Light and Power Fund shall
be subordinate and junior in all respects to the payment from such sources of the Senior
Obligations, including Senior Obligations issued after the issuance of this Note. The City's
obligation to pay and the principal, Redemption Price, and Parity Purchase Price of, and interest
on, this Note shall not constitute a charge against the general credit of the City. This Note is 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 Note Trust Estate pledged pursuant to the Indenture which
pledge is subject to the provisions of the Indenture permitting the application of the Note 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, Redemption Price, or Parity Purchase Price of, or the
interest on, this Note. The issuance of this Note shall not directly, indirectly or contingently
OHS We t:261098415.3 A-2
obligate the City Council of the City to levy or pledge any form of taxation or to make any
appropriation for the payment of this Note. The payment of the principal, Redemption Price, or
Parity Purchase Price of, or interest on, this Note 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 this Note, nor any officer or employee of the City shall be individually liable for the
principal, Redemption Price, or Parity Purchase Price of, or interest on, this Note or be subject to
any personal liability or accountability by reason of the issuance of this Note or in respect of any
undertakings by the City under the Indenture.
This Note was issued for the purpose of providing moneys to finance the 2011
Project and to pay the Note Costs of Issuance of the Series 2011 Note.
This Note is subject to redemption at the option of the City from any source of
available funds, in whole or in part (in such amounts as may be specified by the City), on any
Business Day at a Redemption Price equal to the principal amount of the Series 2011 Note to be
redeemed plus any unpaid accrued interest on the principal amount of the Series 2011 Note to be
redeemed to the date of redemption, without premium.
This Note is subject to mandatory redemption in part prior to its stated maturity
from Sinking Fund Installments established pursuant to the Indenture on any [month] [day] on or
after [month] [day], 20_, at a Redemption Price equal to the principal amount of the Series 2011
Note to be redeemed plus any unpaid accrued interest on the principal amount of the Series 2011
Note to be redeemed to the date of redemption, without premium.
This Note is payable upon redemption upon surrender thereof at the Principal
Office of the Trustee. The Trustee shall give notice, in the name of the City, of the redemption
of this Note, in whole or in part, which notice shall be mailed, by first class mail, postage
prepaid, not less than sixty (60) before the Redemption Date to the Owner of this Note at its
addresses appearing in the Note Register. Such notice shall identify that principal of this Note is
to be redeemed and specify the place or places where amounts due upon such redemption shall
be payable and, if less than all of the unpaid principal amount of this Note is to be redeemed,
such notice shall also specify the principal amount thereof to be redeemed. Subject to the
provisions of the next paragraph, such notice shall further state that on such redemption date
there shall become due and payable upon this Note the Redemption Price of this Note (or the
specified portion of the principal amount hereof to be redeemed in the case of this Note to be
redeemed in part only) and that from and after such date interest on this Note (or the portion of
this Note to be redeemed) shall cease to accrue and be payable.
In the event that funds required to pay the Redemption Price of the principal of
this Note 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 Owner of this Note, such notice shall 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 principal of this Note to be
redeemed, and that if such moneys shall not have been so received said notice shall be of no
force and effect and the City shall not be required to redeem such principal of this Note. In the
event a notice of redemption of principal of this Note contains such a condition and such moneys
are not so received, the redemption of such principal of this Note as described in the conditional
notice of redemption shall not be made and the Trustee shall, within a reasonable time after the
OHS We t:261098415.3 A-3
date on which such redemption was to occur, give notice to Owner of this Note that such moneys
were not so received and that there shall be no redemption of such principal of this Note pursuant
to the conditional notice of redemption.
Receipt of such notice of redemption shall not be a condition precedent to the
redemption of the principal of this Note and failure of the Owner of this Note to receive any such
notice or any insubstantial defect in such notice shall not affect the validity of the proceedings
for the redemption of the principal of this Note.
This Note is subject to purchase by the City from Available Funds at the option of
the Owner, in whole but not in part, on any Purchase Date at the Parity Purchase Price upon the
delivery to the City and the Trustee of a Tender Notice as provided in the Indenture. If a Tender
Notice is given by the Owner as aforesaid (and not rescinded) and this Note is not tendered for
purchase on the Purchase Date as provided in the Tender Notice, this Note shall, nonetheless, be
deemed to have been so tendered and, upon provision for payment of the Parity Purchase Price
thereof, shall be deemed to have been purchased on the Purchase Date, after which no interest
shall accrue thereon for the benefit of the Owner required to so tender this Note and such Owner
shall have no rights under the Indenture as the Owner of this Note except the right to receive the
Parity Purchase Price hereof. If a Tender Notice is given by the Owner as aforesaid (and not
rescinded) and the Series 2011 Note is not tendered for purchase on the Purchase Date as
provided in the Tender Notice, the Series 2011 Note shall, nonetheless, be deemed to have been
so tendered and, upon provision for payment of the Parity Purchase Price thereof, shall be
deemed to have been purchased on the Purchase Date, after which no interest shall accrue
thereon for the benefit of the Owner required to so tender the Series 2011 Note and such Owner
shall have no rights under the Indenture as the Owner of the Series 2011 Note except the right to
receive the Parity Purchase Price thereof. The Parity Purchase Price of this Note is payable upon
surrender hereof at the Principal Office of the Trustee.
To the extent and in the manner permitted by the terms of the Indenture, the
provisions of the Indenture, or any indenture amendatory thereof or supplemental thereto, may
be modified or amended by the City with, in certain cases, the written consent of the Owners of
at least a majority in principal amount of the Notes then Outstanding under the Indenture; and, in
case less than all of the Notes would be affected thereby, with such consent of the Owners of a
majority in principal amount of the affected Outstanding Notes; provided, however, that, if such
modification or amendment will, by its terms, not take effect so long as any Notes of any
specified like Series and maturity remain Outstanding, the consent of the Owners of such Notes
shall not be required and such Notes shall not be deemed to be Outstanding for the purpose of the
calculation of Outstanding Notes for purposes of such consent. No such modification or
amendment shall permit a change in the terms of any Sinking Fund Installment or the terms of
redemption or maturity of the principal of any Note or of any installment of interest thereon or a
reduction in the principal amount or Redemption Price or Parity Purchase Price thereof, or in the
rate of interest thereon, without the consent of the Owner of such Note, or shall reduce the
percentages or otherwise affect the classes of Notes the consent of the Owners of which is
required to effect any such modification or amendment, or shall change or modify any of the
rights or obligations of the Trustee or of any Paying Agent without its written assent thereto.
The Indenture may also be amended or supplemented without the necessity of the
consent of the Owner of this Note for any one or more of the purposes specified in the Indenture.
OHS Wmt:261098415.3 A-4
This Note is transferable only in whole and not in part, as provided in the
Indenture. If this Note is transferred, it shall only be transferred to a Qualified Institutional
Buyer who shall deliver to the City an Investor Letter in form and substance acceptable to the
City. Further, this Note is transferable, as provided in the Indenture, only upon the Note Register
kept for that purpose at the Principal Office of the Trustee, by the registered Owner hereof, or by
his duly authorized attorney, upon surrender of this Note together with a written instrument of
transfer satisfactory to the Trustee duly executed by the registered Owner or his duly authorized
attorney. Thereupon and upon payment of the charges prescribed in the Indenture a new
registered Series 2011 Note, without coupons, and for the same maturity and principal amount,
shall be issued to the transferee in exchange therefor as provided in the Indenture. The City, the
Trustee and any Paying Agent may deem and treat the Person in whose name this Note is
registered as the absolute owner hereof for the purpose of receiving payment of, or on account
of, the principal, Redemption Price and Parity Purchase Price hereof, and interest due hereon,
and for all other purposes.
The registered Owner of this Note shall have no right to enforce the provisions of
the Indenture or to institute action to enforce the covenants therein, or to take any action with
respect to any Event of Default under the Indenture, or to institute, appear in or defend any suit
or other proceedings with respect thereto, except as provided in the Indenture. In certain events,
on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all
the Notes issued under the Indenture and then Outstanding, including this Note, 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, including the City Charter and the Bond Ordinance, and the Indenture to exist, to have
happened and to have been performed precedent to and in the issuance of the Series 2011 Note,
exist, have happened and have been performed in due time, form and manner and that the Series
2011 Note, together with all other indebtedness of the City, comply in all respects with the
applicable laws of the State of California, including the City Charter and the Bond Ordinance.
This Note shall not be entitled to any benefit under the Indenture or be valid or
become obligatory for any purpose until this Note shall have been authenticated by the execution
by the Trustee of the Trustee's Certificate of Authentication hereon.
IN WITNESS WHEREOF, CITY OF VERNON has caused this Note to be
signed in its name and on its behalf by the manual or facsimile signature of its Mayor and the
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 the Dated Date specified
above.
[SEAL]
CITY OF VERNON
M
Hilario Gonzales, Mayor
OHS Wwt:261098415.3 A-5
ATTEST:
Willard Yamaguchi, City Clerk
OHS Wmt:261098415.3 A-6
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Series 2011 Note delivered pursuant to the within mentioned
Indenture.
Dated: 2011
[THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.], as Trustee
M
Authorized Signatory
OHS Wwt:261098415.3 A-%
ASSIGNMENT
FOR VALUE RECEIVED the undersigned sells, assigns and transfers unto
(Name, Address and Tax Identification or
Social Security Number of Assignee)
the within Note of the City of Vernon and does hereby irrevocably constitute and appoint
attorney to
transfer the said Note on the books kept for registration thereof with full power of substitution in
the premises.
Notice: The Signature of this assignment and
transfer must correspond with the name
as written upon the face of this Note in
every particular, without alteration or
enlargement or any change whatsoever.
Signature guaranteed by:
Notice: Signature guarantee shall be made by a
guarantor institution participating in the
Securities Transfer Agents Medallion
Program or in such other guarantee
program acceptable to the Trustee.
OHS Wmt:261098415.3 - A-8
INDENTURE OF TRUST
by and between
CITY OF VERNON
and
[THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.],
as Trustee
Dated as of [March] 1, 2011
Relating to
CITY OF VERNON
SUBORDINATE ELECTRIC SYSTEM REVENUE NOTES
OHS We t:261098413.4
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND AUTHORITY...............................................................
2
Section 1.01
Terms Defined in the Bond Indenture .................................................
2
Section1.02
Definitions............................................................................................2
Section 1.03
Rules of Construction........................................................................19
Section 1.04
Authority for this Master Indenture ...................................................
20
ARTICLE II AUTHORIZATION AND ISSUANCE OF NOTES ....................................
20
Section 2.01
Authorization of Notes.......................................................................
20
Section 2.02
Notes Constitute Special Obligations ................................................
20
Section 2.03
Indenture to Constitute Contract........................................................
21
Section 2.04
General Provisions for Issuance of Notes ..........................................
21
Section 2.05
Additional Notes................................................................................
23
Section 2.06
Refunding Notes................................................................................
23
Section 2.07
Notes Subordinate to Senior Obligations ...........................................
23
Section 2.08
Conditions to Issuance of Note Parity Obligations ............................
25
Section 2.09
Conditions of Issuance of Subordinate Obligations ...........................
26
Section 2.10
Note Parity Credit Provider Notes .....................................................
29
ARTICLE III GENERAL TERMS AND PROVISIONS OF NOTES ................................
29
Section 3.01
Medium of Payment; Form and Date; Letters and Numbers ............. 29
Section3.02
Legends..............................................................................................
31
Section 3.03
Execution and Authentication............................................................
31
Section 3.04
Note Register.....................................................................................
31
Section 3.05
Interchangeability of Notes................................................................
31
Section 3.06
Negotiability, Transfer and Registry ..................................................
32
Section 3.07
Regulations With Respect to Exchanges and Transfers
.................... 32
Section 3.08
Notes Mutilated, Destroyed, Stolen or Lost .......................................
32
Section 3.09
Temporary Notes...............................................................................
32
Section 3.10
Cancellation and Destruction of Notes ..............................................
33
ARTICLE IV REDEMPTION OF NOTES..........................................................................
33
Section 4.01
Privilege of Redemption and Redemption Price ................................
33
Section 4.02
Redemption at the Direction of City ..................................................
33
Section 4.03
Redemption Otherwise Than at City's Direction ...............................
34
OHS Wmt:261098413.4 i
TABLE OF CONTENTS
(continued)
Page
Section 4.04
Selection of Notes to be Redeemed ...................................................
34
Section 4.05
Notice of Redemption........................................................................
34
Section 4.06
Partial Redemption of Notes..............................................................
36
Section 4.07
Effect of Notice and Availability of Redemption Money ..................
36
ARTICLE V ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF...........
37
Section 5.01
Pledge of Note Trust Estate...............................................................
37
Section5.02
Funds..................................................................................................
37
Section 5.03
Payments by City ........................................ :.................................. :...
37
Section 5.04
Note Payment Fund............................................................................
38
Section 5.05
Note Rebate Fund..............................................................................
40
Section 5.06
Depositories.......................................................................................
40
Section5.07
Deposits..............................................................................................
40
Section 5.08
Investment of Certain Funds..............................................................
41
Section 5.09
Valuation and Sale of Investments....................................................
41
ARTICLE VI COVENANTS AND OBLIGATIONS OF THE CITY.................................42
Section 6.01
Compliance with Indenture................................................................
42
Section 6.02
Rates for Electric Service....................................................................
42
Section 6.03
Colledien of Rates and CWrges........................................................
42
Section6.04
JDepawatnd Aipfllieation dRevenues................................................42
Section &05
C-reationmaf;Pfiar L wns on'Trust Estate .............................................
43
Section 6.0.6
Against=£ineunfbrxu¢ss.......................................................................
43
Section 6..07
Sale-err:QtherMi4piisition�, dflProperty................................................
44
Section 6..08
O_peratiun and.1&intenat=(nf the Electric System; Budgets ...........
44
Section6.'.W
Insunmae............................................................................................44
Section610
:Accourtti4g R=ofds;rFimncial Statements and Other Reports.........
44
Section 6..1 A
':Payment of -;maces W&"'on*. liance with Governmental
lRegulations............... ....—...................................................................
45
Section6.12
Tax(Covenmtts...._.....__.,................................................................45
Section16..1:3
-.'lranafiers;to=�G.eneoal;rund.................................................................46
Section 6.04
Additional`Parity"Obhgations.............................................................
46
ARTICLE VH AMENDMENTS TO INDENTURE.............................................................46
Section 7.Ul
Amendments Permitted......................................................................
46
,QRS We t:26109840.4 11
TABLE OF CONTENTS
(continued)
Page
Section 7.02
Effect of Supplemental Indenture......................................................
49
Section 7.03
Notes Owned by City.........................................................................
50
Section 7.04
Notation on Notes..............................................................................
50
ARTICLE VIII CONCERNING THE FIDUCIARIES...........................................................
50
Section 8.01
Trustee; Acceptance of Duties...........................................................
50
Section 8.02
Paying Agents; Appointment and Acceptance of Duties ...................
50
Section 8.03
Responsibilities of Fiduciaries...........................................................
51
Section 8.04
Evidence on Which Fiduciaries May Act ..........................................
54
Section 8.05
Compensation....................................................................................
55
Section 8.06
Certain Permitted Acts.......................................................................
55
Section 8.07
Resignation of Trustee.......................................................................
55
Section 8.08
Removal of Trustee............................................................................
55
Section 8.09
Appointment of Successor Trustee; Financial Qualifications of
Successor Trustee...............................................................................
56
Section 8.10
Transfer of Rights and Property to Successor Trustee .......................
57
Section 8.11
Merger or Consolidation....................................................................
57
Section 8.12
Adoption of Authentication...............................................................
57
Section 8.13
Resignation or Removal of Paying Agent and Appointment of
Successor............................................................................................
57
ARTICLE IX DEFEASANCE..............................................................................................
58
Section 9.01
Payment of Notes...............................................................................
58
Section 9.02
Notes Deemed Paid............................................................................
59
Section 9.03
Defeasance of Portion of Note...........................................................
60
Section 9.04
Discharge of Liability on Notes.........................................................
60
ARTICLE X EVENTS OF DEFAULT; REMEDIES.........................................................61
Section 10.01
Events of Default...............................................................................
61
Section 10.02
Accounting and Examination of Records After Default ....................
61
Section 10.03
Application of the Amounts in the Note Trust Estate After
Default................................................................................................
62
Section 10.04
Right to Accelerate Upon Default ......................................................
64
Section 10.05
Senior Obligations Not Limiting Other Remedies .............................
64
Section 10.06
Appointment of Receiver...................................................................
64
Section 10.07
Enforcement Proceedings..................................................................
64
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TABLE OF CONTENTS
(continued)
Page
Section 10.08
Restriction on Owner's Action..........................................................
65
Section 10.09
Remedies Not Exclusive....................................................................
66
Section 10.10
Effect of Waiver and Other Circumstances .......................................
66
Section 10.11
Notice of Default................................................................................
66
ARTICLE XI MISCELLANEOUS......................................................................................
66
Section 11.01
Execution of Documents and Proof of Ownership ............................
66
Section11.02
Severability........................................................................................67
Section 11.03
General Authorization........................................................................
67
Section 11.04
Moneys Held for Particular Notes .....................................................
67
Section 11.05
Note Panty Credit Providers..............................................................
68
Section 11.06
Incorporation of the Bond Indenture ..................................................
68
Section 11.07
No Recourse on Notes.......................................................................
68
Section 11.08
Unclaimed Moneys............................................................................68
Section11.09
Holidays.............................................................................................69
Section 11.10
Governing Law..................................................................................
69
Section 11.11
Headings Not Binding........................................................................
69
Section 11.12
Preservation and Inspection of Documents ........................................
69
Section 11.13
Parties Interested................................................................................69
OHS Wwt:261098413.4 iv
INDENTURE OF TRUST
Relating to
CITY OF VERNON
SUBORDINATE ELECTRIC SYSTEM REVENUE NOTES
THE INDENTURE OF TRUST, dated as of [March] 1, 2011, is entered into by and
between the City of Vernon, a municipal corporation and chartered city of the State of California
and [The Bank of New York Mellon Trust Company, N.A.], a national banking association duly
organized and existing under and by virtue of the laws of the United States of America,
authorized to accept and execute trusts of the character in the Indenture set forth,
WITNESSETH:
WHEREAS, the City (capitalized terms used in this Master Indenture shall have the
meanings given such terms pursuant to Article I) has been duly established and is duly existing
as a chartered city under its Charter and the Constitution of the State; and
WHEREAS, the City has established and operates the Electric System for supplying its
inhabitants and businesses and industries within the City with electricity; and
WHEREAS, the City is authorized under the Charter and the Bond Ordinance to issue
bonds, notes and other obligations payable from the Net Revenues and amounts in the Light and
Power Fund to finance the Costs of Capital Improvements and to refund any such bonds, notes or
other obligations; and
WHEREAS, the City has determined to provide for the financing of certain costs relating
to its Electric System through the issuance by the City of Notes;
WHEREAS, the City has determined to provide for the issuance of the Notes secured by
a pledge of the Note Trust Estate and payable from the Note Trust Estate, and with respect to
particular Notes, from such Note Parity Credit Support Instrument or Instruments as may be
provided for such Notes pursuant to the Supplemental Indenture authorizing such Notes; and
WHEREAS, the City has determined that each Series of the Notes should be issued on
the terms and conditions set forth in this Master Indenture as supplemented by a Supplemental
Indenture authorizing such Series of Notes; and
WHEREAS, the Notes shall be secured by a pledge of the Revenues and amounts in the
Light and Power Fund available for such payment in accordance with this Master Indenture
subordinate and junior in all respects to the pledge thereof securing the Senior Obligations; and
WHEREAS, the Notes shall be secured by a pledge of the Revenues and amounts in the
Light and Power Fund available for such payment in accordance with this Master Indenture on a
OHS We t:261098413.4 I
parity with the pledge of the Revenues and amounts in the Light and Power Fund securing other
Note Parity Obligations hereafter issued by the City in accordance with the Indenture; and
WHEREAS, the City has determined all acts and things which are necessary in
connection with the authorization, execution and delivery this Master Indenture have been done
and performed in due time, form and manner; and
WHEREAS, the Trustee has accepted the trust created and established by the Indenture
and in evidence thereof has joined in the execution of this Master Indenture;
NOW, THEREFORE, KNOW ALL PERSONS BY THESE PRESENTS, THE
INDENTURE OF TRUST WITNESSETH:
ARTICLE I
DEFINITIONS AND AUTHORITY
Section 1.01 Terms Defined in the Bond Indenture. Except as otherwise defined by
the Indenture, all terms which are defined in the Bond Indenture shall have the same meanings,
respectively, in the Indenture as such terms are given in said Bond Indenture as in effect on the
date hereof.
Section 1.02 Definitions. Unless the context otherwise requires, the following terms,
for all purposes of this Master Indenture and, unless otherwise provided therein with respect to
such Supplemental Indenture or any Series of Notes authorized by such Supplemental Indenture,
any Supplemental Indenture, shall have the meanings set forth below:
"Additional Notes" means Notes issued in accordance with the terms and conditions of
the Indenture for the purposes set forth in Section 2.05.
"Additional Note Parity Obligations" means Note Parity Obligations issued for the
purposes set forth in Section 2.05 and satisfying the conditions set forth in Section 2.08 of this
Master Indenture.
"Adjusted Note Parity Debt Service" means, for any period of time, the Note Parity Debt
Service for such period minus the sum of the amount of such Note Parity Debt Service with
respect to Outstanding Note Parity Obligations to be paid during such period from the proceeds
of Note Parity Obligations, Subordinate Obligations or other funds as set forth in a certificate of
the City.
"Adjusted Net Revenues" means, with respect to a certificate to be delivered in
connection with Additional Note Parity Obligations pursuant to Section 2.08(e), for any
Calculation Period, as calculated by the City or an Independent Engineer, the Adjusted Revenues
for such Calculation Period less the Operation and Maintenance Expenses and less the Senior
Obligations Costs for such Calculation Period, plus at the option of the City, any or all of the
following: (i) an allowance for any estimated increase in Revenues from any additions or
improvements to or extensions of the Electric System, made but not in service during the
applicable Calculation Period or to be made with the proceeds of any Additional Note Parity
OHS Wmt:261098413.4 2
Obligations with respect to which such certificate relates, with the proceeds of other Obligations
theretofore issued by the City and available for such purpose or with other available funds of the
City reserved by the City for such purpose, such allowance to be in an amount equal to the
estimated additional average annual Net Revenues to be derived from such additions,
improvements and extensions during the twelve month period after placing each such addition,
improvement or extension in service, all as shown by a certificate of the City or an Independent
Engineer; and (ii) an allowance for any increases in rates and charges for the Electric Service of
the Electric System which have been approved by the City Council but which during all or any
part of the applicable Calculation Period were not in effect, such allowance to be in an amount
equal to seventy-five percent (75%) of the amount by which the Revenues for the applicable
Calculation Period would have increased if such increase in rates and charges had been in effect
for that portion of such Calculation Period during which such increase was not in effect.
"Adjusted Revenues" means, for any period of time, the Revenues for such period less
the amount of such Revenues which have been deposited in the Expense Stabilization Fund
during such period plus the amount of withdrawals during such period from the Expense
Stabilization Fund.
"Aggregate Adjusted Annual Note Parity Debt Service" shall mean for any Fiscal Year
the aggregate amount of Adjusted Note Parity Debt Service on all Outstanding Note Parity
Obligations payable in such Fiscal Year. For purposes of calculating Aggregate Adjusted
Annual Note Parity Debt Service, the determination of Note Parity Debt Service on the
Outstanding Note Parity Obligations coming due in each Fiscal Year shall be subject to the Note
Parity Debt Service Adjustments and Assumptions.
"Authorized Denominations" means, with respect to a Note of any Series, the
denomination or denominations designated as such in the Supplemental Indenture authorizing
such Notes.
"Applicable Note Parity Obligations" means, with respect to a certificate to be delivered
in connection with Additional Note Parity Obligations pursuant to Section 2.08(e) and as of the
date of such certificate, all of the Note Parity Obligations Outstanding on such date plus the
Additional Note Parity Obligations proposed to be issued.
"Authorized City Representative" means the City Administrator of the City, and any
other officer of the City duly authorized to act as an Authorized City Representative for purposes
of the Indenture by the City Council or written authorization of the City Administrator of the
City.
"Available Funds" mean, for any period of time, the Revenues for such period less the
Operation and Maintenance Expenses for such period and less the Senior Obligations Costs
accrued during such period and amounts in the Light and Power Fund, including the investments,
if any, thereof, not required to pay Operation and Maintenance Expenses or the Senior
Obligations Costs.
OHS WW:261098413.4 3
"Available Net Revenues" mean, for any period of time, the Revenues for such period
less the Operation and Maintenance Expenses for such period and less the Senior Obligations
Costs for such period.
"Bond" or "Bonds" mean any of the City of Vernon Electric System Revenue Bonds
authorized pursuant to the Bond Indenture, all of which shall be senior to the Notes issued
pursuant to this Master Indenture.
"Bond Indenture" means the Master Indenture of Trust between the City and the Bank of
New York Mellon Trust Company, N.A., dated as of September 1, 2008, as the same may be
amended and supplemented.
"Bond Ordinance" means the City of Vernon Municipal Facilities Revenue Bond Law,
enacted as Ordinance No. 1004 of the City (codified as Article XI of the City Code of the City of
Vernon).
"Book -Entry Notes" means Notes whose ownership is registered in the Note Register in
the name of a securities depository or its nominee which holds such Notes on behalf of the
participants in such depository's book -entry system for the payment and transfer of securities.
"Budget" means, as of any date, the budget for the Electric System, prepared by the City
pursuant to Section 6.08 in effect as of such date.
"Business Day" means, with respect to each Series of Notes, unless otherwise provided
with respect to a Series of Notes in the Supplemental Indenture authorizing the issuance of such
Series, any day of the year other than (i) a Saturday, (ii) a Sunday, (iii) any day which shall be in
Los Angeles, California or New York, New York a legal holiday or a day on which banking
institutions are authorized or required by law or other government action to close, and (iv) any
day on which the banks are authorized or required by law or other government action to close in
the State of New York or State of California or any city in which the Principal Office of any
Paying Agent or any Note Parity Credit Provider for such Series of Notes is located.
"Calculation Period" means, with respect to any certificate to be provided pursuant to
Section 2.08(e), any twelve consecutive month period within the eighteen consecutive months
ending immediately prior to the issuance of the Additional Note Parity Obligations to which such
certificate relates.
"Capital Appreciation Obligations" mean any Obligations the interest on which is
compounded and not scheduled to be paid until the maturity or prior redemption of such
Obligations.
"Capital Improvement" means: (i) to the extent chargeable to a capital account of the
Electric System, or otherwise eligible for amortization, under Generally Accepted Accounting
Principles: (a) any land, improvement, facility, equipment and other property of any nature
whatsoever which is used in the Electric System including but not limited to any addition,
betterment, replacement, renewal, extension or improvement of or to the Electric System,
capacity rights in electric generation resources, rights to the transmission capability of electric
transmission resources, acquisition of emission credits or other environmental assets for facilities
OHS We t:261098413.4 4
of the Electric System, land or any interests therein; (b) capital costs for the extension,
reinforcement, enlargement or other improvement of facilities or property, or the acquisition of
interests therein, not included as part of the Electric System, determined by the City to be
necessary or convenient in connection with the utilization of the Electric System; and (ii) the
refinancing of any indebtedness relating to property of any nature whatsoever which is used in
connection with the Electric System.
"Charter" means the Charter of the City of Vernon.
"City" means the City of Vernon, California and its successors.
"City Administrative Code" means the Code of the City of Vernon.
"City Council" means the City Council of the City established pursuant to the Charter.
"Code" means the Internal Revenue Code of 1986, as amended from time to time. Each
reference to a section of the Code in the Indenture shall be deemed to include the applicable
United States Treasury Regulations thereunder and also includes all amendments and successor
provisions unless the context clearly requires otherwise.
"Cost" means, with respect to any Capital Improvement set forth in clause (i) of the
definition of "Capital Improvement,.'.'. to the extent permitted under the Bond Ordinance, all costs
and expenses of planning, designing, acquiring, constructing, installing and financing such
Capital Improvement, placing such Capital Improvement in operation, disposal of such Capital
Improvement, and obtaining governmental approvals, certificates, permits and licenses with
respect to the applicable Capital Improvement, paid or incurred by the City. Payment of Cost
shall include the reimbursement to the City for any of the costs included in this definition of Cost
paid by the City and not previously reimbursed to the City and which are not to be reimbursed
from contributions in aid of construction. The term Cost shall include, but shall not be limited
to:
(a) Costs of preliminary investigation and development, the performance or
acquisition of feasibility and planning studies, and the securing of regulatory approvals,
as well as costs for land and land rights, engineering and contractors' fees, labor,
materials, equipment, utility services and supplies, legal fees and financing expenses.
(b) Working capital and reserves therefor in such amounts as shall be
determined by the City.
(c) Interest accruing in whole or in part on Parity Obligations prior to and
during the acquisition, construction and installation of a Capital Improvement, or any
portion thereof, and for such additional period as the City may determine.
(d) The deposit or deposits from the proceeds of the Bonds in any funds or
accounts required by this Master Indenture or any Supplemental Indenture.
(e) The payment of principal, premium, if any, and interest when due
(whether at the maturity of principal or at the due date of interest or upon redemption or
OHS Wut261098413.4
otherwise) of any note or other evidence of indebtedness the proceeds of which were
applied to any of the costs of the applicable Capital Improvement described in this
definition.
(f) Training and testing costs which are properly allocable to the acquisition,
placing in operation, or construction of a Capital Improvement.
(g) All costs of insurance applicable to the period of the acquisition,
construction, installation and placing the Capital Improvement in operation.
(h) All costs relating to injury and damage claims arising out of the
acquisition, construction, installation and placing the Capital Improvement in operation
less proceeds of insurance.
(i) Legally required or permitted federal, state and local taxes and payments
in lieu of taxes applicable to the acquisition, construction, installation and placing the
Capital Improvement in operation, or any portion thereof;
0) Amounts due the United States of America as rebate of investment
earnings with respect to the proceeds of Parity Obligations the proceeds of which were
applied, in whole or in part, to the Capital Improvement or as penalties in lieu thereof.
(k) Amounts payable with respect to capital costs for the expansion,
reinforcement, enlargement or other improvement of facilities, whether or not such
facilities constitute a part of the Electric System, determined by the City to be necessary
in connection with the utilization of the applicable Capital Improvement and the costs
associated with the removal from service or reductions in service of any facilities as a
result of the expansion, reinforcement, enlargement or other improvement of such
facilities or the acquisition, construction, installation or placing in service of the Capital
Improvement.
(1) Costs of Issuance of any Parity Obligations the proceeds of which were
applied, in whole or in part, to the Capital Improvement.
(m) Fees and expenses pursuant to any lending or credit facility or agreement
applicable to the period of the acquisition, construction, installation and placing in
operation the Capital Improvement.
(n) To the extent chargeable to a capital account of the Electric System under
Generally Accepted Accounting Principles, all other costs incurred by the City, properly
allocable to the acquisition, construction, or installation of the Capital Improvement, or
any portion thereof, or the placing of the Capital Improvement or any portion thereof in
operation.
"Counsel" means Orrick, Herrington & Sutcliffe LLP or another attorney or firm of
attorneys of recognized national standing in the field of law relating to municipal securities and
to exclusion (or non -exclusion) of interest thereon from income for federal income tax purposes
selected by the City.
OHS We t:261098413.4 6
"Note Parity Credit Provider Notes" means any Notes paid as to principal, Redemption
Price, Purchase Price and/or interest with funds provided under a Note Parity Credit Support
Instrument for so long as such Notes are held by or for the account of, or are pledged to, the
applicable Note Parity Credit Provider or any assignee thereof in accordance with the applicable
Note Parity Credit Support Agreement.
"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
b. 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
U.S. Public Housing Notes and Bonds — U.S. government guaranteed
public housing notes and bonds
(v) Advance Refunded Municipal Securities.
"Electric Service" means the services, commodities and products furnished, made
available or provided by the Electric System.
OHS We t:261098417.4
"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 hereafter 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, hereafter acquired.
"Event of Default" means an event described as such in Section 10.01.
"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 Note or
Notes, or any portion thereof, deemed paid and defeased pursuant to Article IX.
"Event of Bankruptcy" means any of the following with respect to any Person: (a) 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; (b) 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; (c) such Person
shall admit in writing its inability to pay its debts generally as they become due; (d) a receiver,
trustee, custodian or liquidator of such Person or such Person's assets shall be appointed in any
proceeding brought against the Person or such Person's assets; (e) assignment of assets by such
person for the benefit of its creditors; or (f) the entry by such Person into an agreement of
composition with its creditors.
"Favorable Opinion of Counsel" means, with respect to any action requiring such an
opinion, an Opinion of Counsel to the effect that such action shall not, in and of itself, adversely
affect the Tax -Exempt status of interest on the Notes or such portion thereof as shall be specified
in the provisions of this 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 Notes appointed as provided in
Section 8.02.
"Final Compounded Amount" means the Accreted Value of any Capital Appreciation
Obligation on its maturity date.
OHS We t:261098413.4 8
"First Supplemental Indenture" means the First Supplemental Indenture of Trust, dated as
of [March] 1, 2011, between the City and the Trustee supplementing this Master Indenture and
relating to the Series 2011 Note.
"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.
"Indenture" means, this Master Indenture, as supplemented and amended from time to
time by Supplemental Indentures.
"Independent Certified Public Accountant" means a Person who 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 this Master Indenture or any Supplemental Indenture; (iii) which is
independent pursuant to the Statement on Auditing Standards No. 1 of the American Institute of
Certified Public Accountants; (iv) which is of recognized standing with respect to accounting
matters for municipally -owned electric utilities; and (v) which is licensed to practice in the State
of California.
"Independent Engineer" means a Person who 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 this Master Indenture or any
Supplemental Indenture; (iii) which is of national recognized standing with respect to
engineering matters for electric utilities; and (iv) which is 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, loth 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 Note Payment Fund
established pursuant to Section 5.02.
OHS We t:261098413.4 9
"Interest Payment Date" means, with respect to a Series of Notes, each date on which
interest on Notes 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 shall include 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 this Indenture of Trust, dated as of [March] 1, 2011 between
the City and the Trustee, as the provisions hereof may be modified or amended from time to time
in accordance with Article VII.
"Maximum Adjusted Annual Note Parity Debt Service" means, with respect to a
certificate to be delivered in connection with Additional Note Parity Obligations pursuant to
Section 2.08(e), as of any date and with respect to the Applicable Note Parity Obligations, the
maximum amount of Adjusted Note Parity Debt Service becoming due on the Applicable Note
Parity Obligations in the then current or any future Fiscal Year, as adjusted as provided in this
definition and calculated by the City or by an Independent Engineer. For purposes of calculating
Maximum Adjusted Annual Note Parity Debt Service, the determination of Note Parity Debt
Service on the Applicable Note Parity Obligations coming due in each Fiscal Year shall be
subject to the Note Parity Debt Service Adjustments and Assumptions.
"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 Transferable Income" means, with respect to any Fiscal Year, the Available Net
Revenues for such Fiscal Year less the Note Parity Debt Service for such Fiscal Year.
"Note" or "Notes" means the City of Vernon Subordinate Electric System Revenue Notes
authorized pursuant to Article II of this Master Indenture and a Supplemental Indenture.
"Note Costs of Issuance" means, to the extent permitted by the Bond Ordinance, all items
of expense directly or indirectly payable by or reimbursable to the City and related to the original
authorization, execution, sale and delivery of Notes, including but not limited to advertising and
printing costs, costs of preparation and reproduction of documents, including disclosure
documents and documents relating to the sale of such Notes, initial fees and charges (including
counsel fees) of any fiscal agent, any paying agent and any Note Parity Credit Provider, legal
fees and charges, financial advisor fees and expenses, fees and expenses of other consultants, and
professionals, rating agency fees, fees and charges for preparation, execution, transportation and
safekeeping of Notes and any other cost, charge or fee in connection with the authorization,
issuance, sale or original delivery of Notes.
OHS WW:261098413.4 10
"Note Parity Credit Provider" means any municipal bond insurance company, bank or
other financial institution or organization which is performing in all material respects its
obligations under any Note Parity Credit Support Instrument for some or all of the Note Parity
Obligations.
"Note Parity Credit Provider Reimbursement Obligations" means obligations of the City
to pay from the Available Funds amounts due under a Note Parity Credit Support Agreement,
including without limitation amounts advanced by a Note Parity Credit Provider pursuant to a
Note Parity Credit Support Instrument as credit support or liquidity for Note Panty Obligations
and the interest with respect thereto.
"Note Parity Credit Support Agreement" means, with respect to any Note Panty Credit
Support Instrument, the agreement or agreements (which may be the Note Parity Credit Support
Instrument itself) between the City and the applicable Note Parity Credit Provider, as originally
executed or as it may from time to time be replaced, supplemented or amended in accordance
with the provisions thereof, providing for the reimbursement to the Note Parity Credit Provider
for payments under such Note Parity Credit Support. Instrument or for extensions of credit made
to the City by the Note Parity Credit Provider, and the interest thereon, and includes any
subsequent agreement pursuant to which a substitute Note Parity Credit Support Instrument is
provided, together with any related pledge agreement, security agreement or other security,
document.
"Note Parity Credit Support Instrument' means a policy of insurance, a letter of credit, a
stand-by purchase agreement, revolving credit agreement or other credit arrangement pursuant to
which a Note Parity Credit Provider provides credit and/or liquidity support with respect to the
payment of interest, principal, Redemption Price or Purchase Price of any Note Panty
Obligation.
"Note Panty Debt Service" means, for any period of time, the sum of (a) the interest
payable during such period on all Outstanding Note Parity Obligations, assuming that all
Outstanding Serial Note Parity Obligations are retired as scheduled and that all Outstanding
Term Note Parity Obligations are redeemed or paid from Sinking Fund Installments as
scheduled; (b) that portion of the principal amount of all Outstanding Serial Note Panty
Obligations maturing on each principal payment date during such period, including the Final
Compounded Amount of any Capital Appreciation Obligations; (c) that portion of the principal
amount of all Outstanding Term Note Parity Obligations required to be redeemed or paid from
Sinking Fund Installments becoming due during such period (together with the premiums, if any,
thereon); and (d) Parity Purchase Price of tendered Note Parity Obligations.
"Note Parity Debt Service Adjustments and Assumptions" means, for purposes of
determining Aggregate Adjusted Annual Note Panty Debt Service and Maximum Adjusted
Annual Note Parity Debt Service, the following adjustments and assumptions to be made with
respect to Note Parity Debt Service:
(a) in determining the amount of Note Parity Debt Service constituting
principal due in each Fiscal Year, principal payments with respect to Note Panty
Obligations which are or upon issuance shall be, part of a Commercial Paper Program,
OHS Wmt:261098413.4 I I
but which would not constitute Balloon Indebtedness, shall be treated as if such Note
Parity Obligations were to be amortized with substantially level annual Note Parity Debt
Service payments over a term of 40 years commencing on the date the calculation of
Aggregate Adjusted Annual Note Parity Debt Service or Maximum Adjusted Annual
Note Parity Debt Service is made;
(b) if all or any portion or portions of the Note Parity Obligations constitute,
or upon issuance would constitute, Balloon Indebtedness, then, for purposes of
determining Aggregate Adjusted Annual Note Parity Debt Service and Maximum
Adjusted Annual Note Parity Debt Service, each maturity which constitutes, or upon
issuance would constitute, Balloon Indebtedness shall be treated as if it were to be
amortized with substantially level annual Note Parity Debt Service payments over a term
of 40 years commencing on the date which is the first anniversary of the initial issuance
of such Note Parity Obligations;
(c) if any Outstanding Note Parity Obligations constitute Tax -Exempt
Variable Rate Indebtedness (except to the extent paragraph (g) applies), the interest rate
on such Note Parity Obligations for any period as to which such interest rate has not been
established shall be assumed to be the ten year historical average of the SIFMA Index
ending with the week preceding the date of calculation;
(d) if any Outstanding Note Parity Obligations constitute Variable Rate
Indebtedness which is not Tax -Exempt (except to the extent paragraph (g) applies), the
interest rate on such Note Parity Obligations for any period as to which such interest rate
has not been established shall be assumed to be the ten year historical average of the One
Month USD LIBOR Rate ending with the month preceding the date the calculation of
Aggregate Adjusted Annual Note Parity Debt Service or Maximum Adjusted Annual
Note Parity Debt Service 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;
(e) if the Note Parity Obligations proposed to be issued shall be Tax -Exempt
Variable Rate Indebtedness (except to the extent subsection (h) applies), then the interest
rate on such Note Parity Obligations shall be assumed to be the ten year historical
average of the SIFMA Index ending with the week preceding the date the calculation of
Aggregate Adjusted Annual Note Parity Debt Service or Maximum Adjusted Annual
Note Parity Debt Service is made;
(f) if the Note Parity Obligations proposed to be issued shall be Variable Rate
Indebtedness which is not Tax -Exempt (except to the extent subsection (h) applies) then
the interest rate on such Note Parity Obligations shall be assumed to be 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;
(g) if a Qualified Swap Agreement has been entered into in connection with
any Outstanding Note Parity Obligations, the interest rate on such Outstanding Note
Parity Obligations for each Fiscal Year or portion thereof during which payments are to
OHS Ww:261098413.4 12
be exchanged by the parties under such Qualified Swap Agreement shall be determined
for purposes of calculating Aggregate Adjusted Annual Note Parity Debt Service and
Maximum Adjusted Annual Note Parity Debt Service by adding: (1) the amount of Note
Parity Debt Service paid or to be paid by the City as interest on the Outstanding Note
Parity Obligations during such Fiscal Year or portion thereof (determined as provided in
paragraph (c) or (d), as applicable, if such Outstanding Note Parity Obligations constitute
Variable Rate Indebtedness) and (2) the net amount (which may be a negative amount)
paid or to be paid by the City under the Qualified Swap Agreement (after giving effect to
payments made and received, and to be made and received, by the City under the
Qualified Swap Agreement) during such Fiscal Year or portion thereof, and for this
purpose any variable rate of interest agreed to be paid under the Qualified Swap
Agreement shall be deemed to be the rate at which the related Outstanding Note Parity
Obligations constituting Variable Rate Indebtedness is assumed to bear interest;
(h) if a Qualified Swap Agreement has been entered into, or upon issuance of
such Note Parity Obligation will be entered into, by the City with respect to any Note
Parity Obligations proposed to be issued, the interest on such proposed Note Parity
Obligations for each Fiscal Year or portion thereof during which payments are to be
exchanged under the Qualified Swap Agreement shall be determined for purposes of
calculating Aggregate Adjusted Annual Note Parity Debt Service and Maximum
Adjusted Annual Note Parity Debt Service by adding: (1) the amount of Note Parity
Debt Service to be paid by the City as interest on such Note Parity Obligations during
such Fiscal Year or portion thereof (determined as provided in paragraph (e) or (f), as
applicable, if such Note Parity Obligations are to constitute Variable Rate Indebtedness)
and (2) the net amount (which may be a negative amount) to be paid by the City under
the Qualified Swap Agreement (after giving effect to payments to be made and received
by the City under the Qualified Swap Agreement) during such Fiscal Year or portion
thereof, and for this purpose any variable rate of interest agreed to be paid under the
Qualified Swap Agreement shall be deemed to be the rate at which the related Note
Parity Obligations which are to constitute Variable Rate Indebtedness shall be assumed to
bear interest; and
(i) if any of the Note Parity Obligations are, or upon issuance shall be, Paired
Obligations, the interest thereon shall be the resulting linked rate or effective fixed rate to
be paid with respect to such Paired Obligations.
"Note Parity Obligations" means the Outstanding Notes and any Obligations which are
payable from the Available Funds on a parity with the payment of the Notes and which satisfy
the applicable conditions of Section 2.08, including without limitation the Note Parity Credit
Provider Reimbursement Obligations and, with respect to Qualified Swap Agreements, the Net
Payments, but not the Termination Payments and other payments, due thereunder.
"Note Payment Fund" means the City of Vernon Subordinate Electric System Note
Payment Fund established pursuant to Section 5.02
"Note Rebate Fund" means the City of Vernon Subordinate Electric System Note Rebate
Fund established pursuant to Section 5.02.
OHS Wmt:261098413.4 13
"Note Register" means the registration books for the ownership of Notes maintained by
the Trustee pursuant to 3.04.
"Note Trust Estate" means: (i) subject to the provisions of the Indenture permitting the
application thereof for the purposes and on the terms and conditions set forth therein and subject
further to the rights of the owners of the Panty Obligations with respect to the Net Revenues and
amounts in the Light and Power Fund, the Available Funds and (ii) all amounts on deposit in the
in the Funds, other than the Note Rebate Fund, held by the Trustee under the Indenture,
including the investments, if any, thereof.
"Noteowner" or "Owner" means, with respect to a Note, the registered owner of such
Note as set forth in the Note Register.
"Obligations" means (a) 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, (b) obligations to replenish any debt service reserve fund
with respect to obligations of the City described in (a) above; (c) obligations under any Public
Finance Contract payable from the Net Revenues and/or amounts in the Light and Power Fund;
and (d) Note Parity Credit Provider Reimbursement Obligations and Note Parity Credit Provider
Reimbursement Obligations.
"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 (a) 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; (b) all costs and expenses of
management of the Electric System; (c) 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; (d) 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; (e) payments in -lieu of taxes to any public
agency other than the City in connection with the Electric System; (f) 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 other
consultants; (g) the fees, expenses and indemnification of Note Parity Credit Providers and
Reserve Financial Guaranty Providers; (h) 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; (i) 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; 0) any cost or expense paid by the City to
OHS West:261098413.4 14
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 (k) 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 (d) of this paragraph, no transfer of Revenues to the City,
including the Franchise Payment, shall constitute an Operation and Maintenance Expense.
"Opinion of Counsel" means a written opinion signed by Counsel.
"Outstanding" when used as of any particular time with respect to Obligations, means,
except as otherwise provided in Article VII with respect to the Notes, all Obligations theretofore
or thereupon being issued by the City, except (a) Obligations theretofore cancelled or
surrendered for cancellation; (b) Obligations paid or deemed to be paid within the meaning of
any defeasance provisions of the Issuing Instrument pursuant such Obligations were issued; and
(c) Obligations in lieu of or in substitution for which replacement Obligations have been issued.
"Paired Obligations" shall mean any Series (or portion thereof) of Note Parity
Obligations designated as Paired Obligations in the Issuing Instrument authorizing the issuance
thereof, which are simultaneously issued (a) 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 (b) 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 Purchase Price" means the Purchase Price of Note Parity Obligations which: (i)
are Tender Indebtedness; (ii) which have been tendered or deemed tendered for purchase in
accordance with the Issuing Instrument for such Note Parity Obligations; (iii) the Purchase Price
of which is not payable from a Note Parity Credit Support Instrument; and (iv) the Purchase
Price of which is payable from Available Funds.
"Paying Agent" means, with respect to a Series of Notes, the Trustee and any banking
corporation, banking association or trust company designated as paying agent for such Series of
Notes pursuant to Section 8.01(b) or Section 8:02, and its successor or successors appointed in
the manner provided in the Indenture.
"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 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 Note Parity Credit Provider, the office designated as such in writing by
such party to the Trustee, except that with respect to presentation of Notes for payment or for
registration of transfer and exchange such term shall mean the office or agency of the Trustee at
which, at any particular time, its corporate trust agency business shall be conducted.
OHS We t:261098413.4 15
"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 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 Notes of any Series, the purchase price set
forth in or determined pursuant to the Supplemental Indenture authorizing the Notes of such
Series to be paid to the Owners of such Notes when such Notes are tendered for purchase or
deemed tendered for purchase in accordance with the provisions of such Supplemental Indenture;
and (ii) with respect to other Note Parity Obligations, the purchase price set forth in the Issuing
Instrument authorizing such Note Parity Obligations to be paid to the owners of such Note Panty
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 Section 2.08(a).
"Rating Agency" means, as of any time and to the extent it is then providing or
maintaining a rating on Notes 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 Notes at the
request of the City, any other nationally recognized rating agency then providing or maintaining
a rating on the Notes at the request of the City.
"Rating Category" means (1) 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 (2) 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 Notes at the request of the City to the effect that, following the event which requires
the Rating Confirmation, the then current rating for each such Outstanding Notes shall not be
lowered or withdrawn solely as a result of the occurrence of such event.
"Record Date means, with respect to an Interest Payment Date for a Series of Notes, the
date or dates specified as such in the Supplemental Indenture authorizing such Series of Notes.
"Redemption Account" means the account in the Note Payment Fund so designated and
established pursuant to Section 5.02.
OHS We t:261098413.4 16
"Redemption Date means, with respect to any Notes to be redeemed in accordance with
this Master Indenture and the Supplemental Indenture authorizing such Notes, the redemption
date set forth in notice of redemption of such Notes given in accordance with the terms of the
Indenture.
"Redemption Price" means, with respect to any redemption of a Note prior to its
maturity, the amount to be paid upon such redemption of the Note as set forth in, or determined
in accordance with, the Supplemental Indenture authorizing such Note.
"Refunding Note Parity Obligations" means Note Parity Obligations, including
Refunding Notes, issued for the purposes set forth in Section 2.06 and satisfying the conditions
set forth in Section 2.08.
"Refunding Notes" means Notes issued in accordance with the terms and conditions of
this Master Indenture for the purposes, and satisfying the conditions of Section 2.06.
"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.
"Senior Obligations" means Bonds and any other Parity Obligations.
"Senior Obligations Costs" means those payments with respect to Senior Obligations
required to be made pursuant to the Issuing Instrument for such Senior Obligations as, including
payments for debt service and debt service reserves for Senior Obligations.
"Serial Note Parity Obligations" means Note Parity Obligations which are Serial
Obligations.
"Serial Obligations" means Obligations for which no Sinking Fund Installments are
established.
"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.
OHS We t:2610984UA 17
"Series 2011 Note" means the City of Vernon Subordinate Electric System Revenue
Note, Taxable Series 2011 issued pursuant to this Master Indenture as supplemented by the First
Supplement Indenture.
"Sinking Fund Account" means the account in the Note Payment Fund so designated and
established pursuant to Section 5.02.
"Sinking Fund Installment" means, with respect to any Term Note, each amount so
designated for such Term Note in the Supplemental Indenture authorizing the issuance of such
Note requiring payments by the City to be applied to the retirement of such Note on and prior to
the stated maturity date thereof.
"Special Record Date" has the meaning set forth in Section 3.02(f).
"Standard & Poor's" or "S&P" 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 Available Funds to the payment of Note Parity Obligations
and which complies with the provisions of Section 2.09.
"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
Article VIL
"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 Notes.
"Tax -Exempt" means, with respect to interest on any obligations of a state or local
government, including the Notes, 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 Note Parity Obligations or portions of Note Parity
Obligations, a feature of which is an option or obligation, on the part of the owners thereof under
the terms of such Note Parity Obligations, to tender all or a portion of such Note Parity
Obligations to the City, a fiscal agent, a paying agent, a tender agent or other agent for purchase
and requiring that such Note Parity Obligations or portions thereof be purchased at the applicable
Purchase Price if properly presented.
OHS W ut:26 W98413.4 18
"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 Note Panty Obligations" means Note Parity Obligations which are Term
Obligations.
"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.
"Trustee" means, [The Bank of New York Mellon Trust Company, N.A.], as trustee for
the Notes under the Indenture and any successor satisfying the requirements of Section 8.09.
"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.
Section 1.03 Rules of Construction. Words of the masculine gender shall 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 shall include the plural
number and vice versa, and words importing persons shall include corporations and associations,
including districts, agencies and other public bodies, as well as natural persons. Unless
otherwise indicated, references in this Master Indenture to subsections, Sections and Articles are
to such subsections, Sections and Articles of this Master Indenture. Unless the context requires
otherwise, the terns "herein," "hereof," "hereunder" and any similar terns, as used in this
Master Indenture, shall refer to this Master Indenture as a whole and not to any particular
provisions of this Master Indenture. Defined terms shall include any variant of the terms set
forth in this Article.
The tern "principal" when used with reference to a Capital Appreciation Obligation as of
its maturity date shall refer 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 Note Parity Obligation
which is a Qualified Swap Agreement shall refer to the Net Payments due under such Qualified
Swap Agreement. The tern "principal" when used with reference to a Note Parity Obligation
which is a Note Panty Credit Provider Reimbursement Obligation shall refer to the amount
advanced by the Note Parity Credit Provider to the extent not included in Note Parity Obligations
as Note Panty Credit Provider Notes.
The tern "issue" shall include issuance, creation, incurrence, entering into an agreement
or any other act pursuant to which a party may become obligated with respect to an Obligation.
OHS We t:261098413.4 19
The term "include" shall not be construed to be limited to the items or the type of items listed
after such word, which items are by way of example and not limitation, but the term shall be
construed as meaning "including without limitation."
Section 1.04 Authority for this Master Indenture. This Master Indenture is entered
into by the City pursuant to the provisions of the Charter and the Bond Ordinance.
ARTICLE II
AUTHORIZATION AND ISSUANCE OF NOTES
Section 2.01 Authorization of Notes.
(a) This Master Indenture provides certain terms and conditions upon which
Notes of the City to be designated as "City of Vernon Subordinate Electric System Revenue
Notes" may be issued from time to time as authorized by Supplemental Indentures. The
aggregate principal amount of Notes which may be executed, authenticated and delivered
under the Indenture is not limited except as may hereafter be provided in the Indenture or as
may be limited by law.
(b) The Notes may be issued in one or more Series, and the designation thereof,
in addition to the name "City of Vernon Subordinate Electric System Revenue Notes," shall
include such further appropriate particular designation added to or incorporated in such title for
the Notes of any particular Series as the City may determine. Each Note shall bear upon its
face the designation so determined for the Series to which it belongs.
Section 2.02 Notes Constitute Special Obligations. The Notes shall not constitute a
charge against the general credit of the City but shall constitute and evidence special obligations
of the City payable as to principal, Redemption Price, if any, Parity Purchase Price and interest
solely from the Available Funds and the other funds pledged therefor pursuant to the Indenture
and, with respect to any particular Notes, from such other sources as shall be specified in the
Supplemental Indenture authorizing the issuance of such Notes; provided that any such payment
shall be, and shall be expressed to be, subordinate and junior in all respects to the payment from
Net Revenues and amounts in the Light and Power Fund of any Senior Obligations as may be
Outstanding from time to time, including. Senior Obligations issued after the issuance of such
Notes or Note Parity Obligations. The Purchase Price for the Notes of any Series which are
Tender Indebtedness shall be payable from such sources, including with respect to Parity
Purchase Price the Available Funds, as are specified in the Supplemental Indenture authorizing
the issuance of such Series. The provisions of this Section shall not preclude the payment,
purchase or redemption of Notes, at the election of the City, from any other legally available
moneys. The Notes 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 Note Trust Estate pledged
therefor pursuant to this Master Indenture which pledge is subject to the provisions hereof
permitting the application of the Note Trust Estate for the purposes and on the terms and
conditions set forth herein. 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 or Purchase Price of or the interest on the Notes. The issuance of the Notes
OHS We t:261098413,4 20
shall 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 Notes. The
payment of the principal or Redemption Price or Purchase Price of, or interest on, the Notes 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 Note, nor any officer or employee of the
City shall be liable personally for the principal or Redemption Price or Purchase Price of, or
interest on, the Notes or be subject to any personal liability or accountability by reason of the
issuance of the Notes or in respect of any undertakings by the City under the Indenture. The face
of each Note shall contain a legend to the effect set forth in this Section.
Section 2.03 Indenture to Constitute Contract. In consideration of the purchase and
acceptance of each Note issued under the Indenture by those who shall own the same from time
to time, the provisions of each Note and the provisions of the Indenture applicable to such Note
shall be deemed to be and shall constitute a contract between the City and the Owner of such
Note.
Section 2.04 General Provisions for Issuance of Notes.
(a) All (but not less than all) the Notes of each Series shall be executed by the
City for issuance under the Indenture and delivered to the Trustee and thereupon shall be
authenticated by the Trustee and by it delivered to the City or upon its order; but only upon the
receipt by the Trustee of the following items (upon which the Trustee may conclusively rely in
determining whether the conditions precedent for the issuance and authentication of such
Series of Notes have been satisfied):
(1) An executed counterpart of this Master Indenture, as
amended to the date of the initial delivery of such Series of
Notes, and an executed counterpart of the Supplemental
Indenture authorizing the issuance of such Series of Notes,
which Supplemental Indenture shall specify: (i) the sources
of payment for the Notes of such Series other than the Note
Trust Estate, if any; (ii) the Series designation of such
Notes; (iii) the authorized principal amount of the Notes of
such Series; (iv) the purposes for which such Series of
Notes are being issued, which, for Notes other than the
Series 2011 Note, shall be one of the purposes specified in
Section 2.05 or 2.06; (v) the date or manner of determining
the date of the Notes of such Series; (vi) the maturity date
or dates of the Notes of such Series and either the principal
amount of the Notes of such Series maturing on each such
maturity date or the method for determining such principal
amount; (vii) which, if any, of the Notes of such Series
shall constitute Serial Obligations and which, if any, shall
constitute Term Obligations; (viii) the interest rate or rates
on the Notes of such Series or the manner of determining
such interest rate or rates; (ix) the Interest Payment Dates
OHS Wmt:261098413.4 21
for the Notes of such Series or the manner of establishing
such Interest Payment Dates; (x) the Authorized
Denominations of the Notes of such Series; (xi) the
Redemption Price or Prices, if any, and, subject to Article
IV, the redemption terms for the Notes of such Series; (xii)
the Sinking Fund Installments, if any, for the Notes of such
Series which constitute Term Obligations, provided that
each Sinking Fund Installment, if any, shall fall upon an
Interest Payment Date for the Notes of such Series; (xiii) if
any of the Notes of such Series constitute Tender
Indebtedness: (A) the source of payment of the Purchase
Price of such Notes, (B) the terms and conditions, including
Purchase Price, for the exercise by the Owners of such
Notes of the purchase, (C) any extension options granted
with respect to such Notes and (D) the terms and
conditions, including Purchase Price, upon which the Notes
of such Series shall be subject to mandatory tender for
purchase; (xiv) if the Notes of such Series are to be Book -
Entry Notes, a statement to such effect and the provisions
implementing the book -entry system; (xv) if the Notes of
such Series are Tax -Exempt Securities, the account in the
Rebate Fund established for such Series and the terms and
conditions thereof; (xvi) the application of the proceeds of
the sale of such Series of Notes including the amount, if
any, to be deposited in the funds and accounts under the
Indenture; (xvii) the forms of the Notes of such Series and
of the certificate of authentication thereon; and (xviii) the
appropriate funds and accounts, if any, relating to such
Series of Notes established under such Supplemental
Indenture;
(2) An Opinion of Counsel, dated the date of the initial
delivery of such Series of Notes, to the effect that this
Master Indenture, as amended to such date, as
supplemented by the Supplemental Indenture authorizing
the issuance of such Series of Notes, constitutes the valid
and binding obligations of the City;
(3) With respect to any Additional Notes other than the Series
2011 Note, the Trustee shall have received the certificate
referred to in Section 2.08(e);
(4) With respect to any Refunding Notes, the Trustee shall
have received a copy of the Opinion of Counsel required in
Section 2.06(b); and
OHS West261098413.4 22
(5) Such further documents, moneys and securities as are
required by the applicable provisions of Section 2.05 or
Section 2.06 or of the Supplemental Indenture authorizing
the issuance of such Series of Notes.
(b) After the original issuance of Notes of any Series, no Notes of such Series
shall be issued except in lieu of or in substitution for other Notes of such Series pursuant to the
Indenture.
Section 2.05 Additional Notes. One or more Series of Additional Notes 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 Notes 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 Note Costs of Issuance of
such Additional Notes.
Section 2.06 Refunding Notes.
(a) One or more Series of Refunding Notes may be issued, authenticated and
delivered upon original issuance for the purpose of refunding all or any portion of the
Outstanding Parity Obligations and/or Note Parity Obligations. Refunding Notes may be
issued in a principal amount sufficient to accomplish such refunding including providing
amounts for the Note Costs of Issuance of such Refunding Notes, and the making of any
deposits into the funds and accounts required by the provisions of the Indenture.
(b) Refunding Notes of each Series shall be authenticated and delivered by the
Trustee only upon receipt by the Trustee (in addition to the documents required by
Section 2.04) of an Opinion of Counsel to the effect that the Parity Obligations and/or Note
Parity Obligations (or the portion thereof) to be refunded are deemed paid pursuant to the
Issuing Instrument authorizing such Parity Obligations and/or Note Panty Obligations. Such
Opinion of Counsel may rely upon an Accountant's Certificate as to the sufficiency of
available moneys to pay such Note Parity Obligations. The Trustee may conclusively rely on
such Opinion of Counsel in determining whether the conditions precedent for the issuance and
authentication of such Series of Refunding Notes have been satisfied.
(c) The proceeds, including accrued interest, of the Refunding Notes of each
Series shall be applied simultaneously with the delivery of such Notes as provided in the
Supplemental Indenture authorizing such Series of Refunding Notes.
Section 2.07 Notes Subordinate to Senior Obligations.
(a) Any and all Notes issued under the Indenture are subordinate and junior in
all respects to the Senior Obligations, even if such Senior Obligations are issued after the
issuance of such Notes. The pledge of the Net Revenues and amounts in the Light and Power
Fund securing the Notes is subordinate and junior in all respects to the pledge of the Net
Revenues and amounts in the Light and Power Fund securing the Senior Obligations that may
be Outstanding from time to time, including Senior Obligations issued after the issuance of
such Note Parity Obligations. The Notes are payable from the Available Funds; provided that
OHS Ww:261098413A 23
any such payment from Net Revenues and amounts in the Light and Power Fund shall be, and
shall be expressed to be, subordinate and junior in all respects to the payment from the Net
Revenues and amounts in the Light and Power Fund of the Senior Obligations Outstanding
from time to time, including Senior Obligations issued after the issuance of such Note Parity
Obligations.
(b) The Notes shall be subject to the following conditions:
(1) If an Event of Bankruptcy with respect to the City shall
occur and be continuing, the owners of all Outstanding
Parity Obligations shall 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 Notes
are entitled to receive any payment from the Net Revenues
and amounts in the Light and Power Fund with respect to
the Notes.
(2) In the event that the Notes is declared due and payable
before their expressed maturity because of the occurrence
of an Event of Default (under circumstances when the
provisions of (1) above shall not be applicable), the owners
of all Parity Obligations Outstanding at the, time the Notes
so becomes due and payable because of such Event of
Default, shall 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
the Notes are entitled to receive any accelerated payment
from Net Revenues and amounts in the Light and Power
Fund.
(3) If any default with respect to the Outstanding Notes shall
have occurred and be continuing (under circumstances
when the provisions of (1) above shall not be applicable),
the owners of all Outstanding Parity Obligations shall 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 Notes are entitled to receive any payment
from the Net Revenues and amounts in the Light and Power
Fund with respect to the Note Parity Obligations.
(4) No Owner of an Outstanding Parity Obligation shall be
prejudiced in his right to enforce the subordination of the
Notes to the Senior Obligations as provided in the
OHS We t:261098413.4 24
Indenture by any act or failure to act on the part of the City
or the Trustee.
(c) The above provision (b) is 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 Notes on the other hand, and nothing therein shall impair, as
between the City and the Owners of the Notes, the obligation of the City, which shall be
unconditional and absolute, to pay, but solely from the Note Trust Estate and any other funds
pledged therefor, to the Owners the principal, Redemption Price, Purchase Price of, and
interest on, the Notes in accordance with their terms, nor shall anything in the Issuing
Instruments for Parity Obligations prevent the Owners of the Notes from exercising all
remedies otherwise permitted by applicable law, or under the Notes or the Indenture, upon
default under the Notes or the Indenture, subject to the rights under provision (b) above of the
owners of the 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
Notes. Insofar as the Trustee or any Paying Agent for Note is concerned, the foregoing
provision (b) shall not prevent the application by the Trustee or such Paying Agent of any
moneys deposited with the Trustee or such Paying Agent for the purpose of the payment of or
on account of the principal, Redemption Price, Purchase Price of, and interest on, the Notes if
the Trustee or such Paying Agent did not have knowledge at the time of such application that
such payment was prohibited by the foregoing provisions.
Section 2.08 Conditions to Issuance of Note Parity Obligations.
(a) Without regard to subsection (e) of this Section, the City may, at any time
and from time to time, issue or enter into a transaction under a Qualified Swap Agreement, the
Net Payments under which shall constitute Note Parity Obligations, provided (i) the transaction
shall relate to a principal amount of Outstanding Note Parity Obligations or investments held
under an Issuing Instrument for Note Parity Obligations, in each case as specified by an
Authorized City Representative; (ii) the notional amount of the transaction shall not exceed the
principal amount of the related Note Parity Obligation or the amount of such investments, as
applicable; and (iii) either: (x) at the time of entering into the transaction, the counterparty (or a
guarantor of the counterparty's obligations under the transaction) shall be rated at least "Aa"
by Moody's or "AA" by S&P and the Qualified Swap Agreement shall include the Collateral
Requirements; or (y) the City has received a Rating Confirmation from each Rating Agency
then rating Note Parity Obligations at the request of the City with respect to such transaction.
(b) The City may, at any time and from time to time, issue Refunding Note
Parity Obligations provided that either: (i) the requirements set forth in subsection (e) of this
Section are satisfied upon the issuance of such Refunding Note Parity Obligations and the
application of the proceeds thereof; or (ii) the City has provided to the Trustee a certificate
showing that the Aggregate Adjusted Annual Note Parity Debt Service for all Note Parity
Obligations to be Outstanding after the issuance of such Refunding Note Parity Obligations
shall not exceed the Aggregate Adjusted Annual Note Parity Debt Service for all Note Parity
Obligations Outstanding immediately prior to the issuance of such Refunding Note Parity
Obligations in each Fiscal Year from the date of issuance of such Refunding Note Parity
Obligations to the last Fiscal Year in which any Note Parity Obligations Outstanding
OHS Ww:261098413.4 25
immediately prior to and subsequent to the issuance of such Refunding Note Parity Obligations
are scheduled to remain Outstanding.
(c) Without regard to subsection (e) of this Section, the City may issue the
Series 2011 Note.
(d) Without regard to subsection (e) of this Section, the City may, at any time
and from time to time, enter into Note Parity Credit Support Agreements or otherwise become
obligated for Note Parity Credit Provider Reimbursement Obligations with respect to Note
Parity Obligations.
(e) The City may, at any time and from time to time, issue any Additional Note
Parity Obligations, provided the City obtains or provides either (i) a certificate or certificates,
prepared by the City or at the City's option by an Independent Engineer, showing that the
Adjusted Net Revenues for the applicable Calculation Period, which Calculation Period shall
be selected by the City in its sole discretion, shall have amounted to at least 1.00 times the
Maximum Adjusted Annual Note Parity Debt Service on all Note Parity Obligations to be
Outstanding immediately after the issuance of the proposed Additional Note Parity Obligations
or (ii) a certificate or certificates, prepared by the City or at the City's option by an
Independent Engineer, showing that the projected Adjusted Net Revenues during each of the
five complete Fiscal Years beginning with the first Fiscal Year following the issuance of such
Note Parity Obligations in which interest thereon is not capitalized, in whole or in part, shall
have amounted to at least 1.00 times the Maximum Adjusted Annual Note Parity Debt Service
on all Note Parity Obligations to be Outstanding during the applicable Fiscal Year. For
purposes of preparing the certificate or certificates described in clause (i) of this subsection, the
City and any Independent Engineer shall utilize and rely on financial statements prepared by
the City which have been subject to audit by an Independent Certified Public Accountant but
may utilize and rely upon the books and records of the City or any financial statements
prepared by the City which have not been subject to audit by an Independent Certified Public
Accountant if audited financial statements for the particular Calculation Period selected by the
City are not available.
Section 2.09 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 Section 2.08 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 Outstanding
Parity Obligation, Outstanding Note Parity Obligations, or Outstanding Subordinate
Obligations (or portions of any 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
shall be, and shall 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 the Note Parity Obligations as
may be Outstanding from time to time, including Note 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 as may from time to time be available
for such payment in accordance with the Indenture, provided that any such payment shall be,
OHS West:261098413.4 26
and shall be expressed to be, subordinate and junior in all respects to the payment from such
sources of such Note Parity Obligations as may be Outstanding from time to time, including
Note Parity Obligations issued after the issuance of such Subordinate Obligations.
(b) The Issuing Instrument for Subordinate Obligations shall contain provisions
(which shall 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 shall
occur and be continuing, the owners of all Outstanding
Note Parity Obligations shall be entitled to receive payment
in full in cash of all principal, interest and all other
payments due with respect to all such Note 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 (1) above shall not be applicable),
the owners of all Note Parity Obligations Outstanding at
the time such Subordinate Obligation so becomes due and
payable because of such event of default, shall be entitled
to receive payment in full in cash of all principal, interest
and all other payments due with respect to all such Note
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 this subdivision (2), a termination payment
with respect to a Public Finance Contract which is not a
Qualified Swap Agreement shall 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 Note Parity
Obligation shall have occurred and be continuing (under
circumstances when the provisions of (1) above shall not be
applicable), the owners of all Outstanding Note Parity
Obligations shall be entitled to receive payment in full in
cash of all principal, interest and all other payments due
with respect to all such Note Parity Obligations as the same
become due and payable in accordance with the provisions
OHS West:261098413.4 27
of the Issuing Instrument authorizing the issuance of such
Note Parity Obligations before the owners of the
Subordinate Obligations are entitled to receive, subject to
the provisions of (5) below, any payment from the Net
Revenues and amounts in the Light and Power Fund with
respect to the Subordinate Obligations.
(4) No Noteowner or owner of other Outstanding Note Parity
Obligations shall 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 (1), (2), (3) and (4) above are solely for the
purpose of defining the relative rights of the Owners of the
Notes and the owners of all other Outstanding Note Parity
Obligations on the one hand, and the owners of Subordinate
Obligations on the other hand, and that nothing therein
shall 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, redemption
price and purchase price thereof, and interest thereon, in
accordance with their terms, nor shall 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 (1), (2), (3) and (4) above of the Owners of
Outstanding Notes and the owners of other Outstanding
Note 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 shall 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.
OHS WW:261098413.4 28
(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.
Section 2.10 Note Parity Credit Provider Notes. Subject only to Section 2.02,
notwithstanding any other provision contained in the Indenture to the contrary, Notes which are
Note Parity Credit Provider Notes shall have terms and conditions, including terms of maturity,
payment, prepayment and interest rate, as shall be specified in the applicable Note Parity Credit
Support Agreement.
ARTICLE III
GENERAL TERMS AND PROVISIONS OF NOTES
Section 3.01 Medium of Payment; Form and Date; Letters and Numbers.
(a) Unless otherwise provided with respect to a Series of Notes in the
Supplemental Indenture authorizing such Series, the Notes of each Series shall 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 Notes shall be issued in the form of fully registered notes without
coupons in Authorized Denominations.
(c) Each Note shall be lettered and numbered as determined by the Trustee so as
to be distinguished from every other Note.
(d) The Notes of each Series shall be dated as provided in or determined
pursuant to the Supplemental Indenture authorizing such Series. Unless otherwise provided
with respect to a Series of Notes in the Supplemental Indenture authorizing such Series, the
Notes of each Series shall bear interest from the Interest Payment Date next preceding the date
of authentication thereof unless: (i) such Notes are authenticated on an Interest Payment Date,
in which event from such Interest Payment Date; and (ii) unless such Notes are authenticated
after a Record Date and before the next succeeding Interest Payment Date for such Notes, in
which event from such Interest Payment Date; provided, however, that if the date of
authentication of a Note shall be prior to the Record Date for the first Interest Payment Date for
such Note, such Note shall bear interest from its original dated date. Notwithstanding the
foregoing, if the City shall default in the payment of interest, then the Notes shall bear interest
from the date to which interest has been paid or if no interest has been paid, from their original
dated date.
(e) Unless otherwise provided with respect to a Series of Notes in the
Supplemental Indenture authorizing such Series, the interest payable on Notes shall be
calculated on the basis of a 360-day year of twelve, thirty day months.
OHS Ww:261098413.4 29
(f) Except as otherwise provided with respect to a Series of Notes in the
Supplemental Indenture authorizing such Series, interest on each Note shall be payable on each
Interest Payment Date for such Note and shall be paid by check of the Trustee mailed on such
Interest Payment Date to the Owner of such Note shown on the Note 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 Notes, such
other principal amount as may be specified in the Supplemental Indenture authorizing such
Series), of Notes of any Series may, at any time prior to a Record Date with respect to the
payment of interest on such Notes, give the Trustee written instructions for payment of such
interest on each succeeding Interest Payment Date for such Notes by wire transfer or by deposit
to an account within the United States of America. Notwithstanding the foregoing, however, if
the City shall default in the payment of interest due on Notes on any Interest Payment Date,
such interest shall cease to be payable to the persons in whose name such Notes were
registered in the Note Register on the Record Date for such Interest Payment Date, and shall be
payable, when and if paid by the City, to the persons in whose names such Notes are registered
at the close of business on the record date fixed therefor by the Trustee (each a "Special Record
Date"), which shall not be more than 15 days and not less than 10 days prior to the date of the
proposed payment.
(g) Unless redeemed prior to such date, the principal of each Note shall be
payable on its maturity date and the Redemption Price of each Note called for redemption prior
to maturity, subject to the terms of Section 4.05(b), shall be payable on the applicable
redemption date. Except as otherwise provided, the principal and, if applicable, the
Redemption Price of each Note shall be payable only upon presentation and surrender of such
Note at the Principal Office of the Trustee or any other Paying Agent for such Note for
cancellation; provided that the Trustee may agree with the Owner of any Note that such Owner
may, in lieu of surrendering the same for a new Note, endorse on such Note a record of partial
payment of the principal of such Note in the form set forth below (which shall be typed or
printed on such Note):
PAYMENTS ON ACCOUNT OF PRINCIPAL
Principal Balance of Principal Signature
Payment Date Amount Paid Amount Unpaid of Owner
The Trustee shall maintain a record of each such partial payment made in
accordance with the foregoing agreement and such record of the Trustee shall be conclusive.
Such partial payment shall be valid upon payment of the amount thereof to the Owner of such
Note, and the City and the Trustee shall be fully released and discharged from all liability to the
extent of such payment regardless of whether such endorsement shall or shall not have been
made upon such Note by the Owner thereof and regardless of any error or omission in such
endorsement.
OHS Wmt:261098413.4 30
Section 3.02 Legends. Notes may contain or have endorsed thereon such provisions,
specifications and descriptivewords not inconsistent with the provisions of the Indenture as may
be necessary or desirable to comply with custom, the rules of any securities exchange,
commission or brokerage agent, or otherwise, as may be determined by the City prior to the
authentication and delivery thereof.
Section 3.03 Execution and Authentication.
(a) The Notes shall be executed in the name of the City by the manual or
facsimile signature of the Mayor or City Administrator of the City and its seal (or a facsimile
thereof) shall be impressed, imprinted, engraved or otherwise reproduced thereon and attested
by the facsimile or manual signature of the City Clerk of the City, or in such other manner as
may be authorized by Supplemental Indenture or required by law. In case any one or more of
the officers who shall have signed or sealed any of the Notes shall cease to be such officer
before the Notes so signed and sealed shall have been authenticated and delivered by the
Trustee, such Notes may, nevertheless, be authenticated and delivered as provided in the
Indenture, and may be issued as if the persons who signed or sealed such Notes had not ceased
to hold such offices. Any Note may be signed and sealed on behalf of the City by such persons
as at the time of the execution of such Note shall be duly authorized or hold the proper office in
City, although at the date borne by such Notes such persons may not have been so authorized
or have held such office.
(b) The Notes of each Series shall bear thereon a certificate of authentication, in
the form set forth in the Supplemental Indenture authorizing such Series, executed manually by
the Trustee, including any Paying Agent appointed as agent for the Trustee pursuant to
Section 8.01(b). Only such Notes as shall bear thereon such certificate of authentication shall
be entitled to any right or benefit under the Indenture and no Note shall be valid or obligatory
for any purpose until such certificate of authentication shall have been duly executed by the
Trustee. Such certificate of the Trustee upon any Note executed on behalf of the City shall be
conclusive evidence that the Note so authenticated has been duly authenticated and delivered
under the Indenture and that the Owner thereof is entitled to the benefits of the hndenture.
Section 3.04 Note Register. The Trustee shall keep or cause to be kept, at its Principal
Office, sufficient books for the registration and transfer of the Notes of each Series which shall at
all times be open to inspection during regular business hours by the City upon reasonable notice,
and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as
it may prescribe, register or transfer or cause to be registered or transferred on said Note
Register, Notes 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 Note as it appears on the Note Register for any and all purposes. It shall be the duty of the
Owner of each Note to give written notice to the Trustee of any change in the Owner's address
so that the Note Register may be revised accordingly.
Section 3.05 Interchangeability of Notes. Upon surrender of a Note 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
OHS We t:261098413.4 31
option of the Owner thereof, and upon payment by such Owner of any charges which the Trustee
may make as provided in Section 3.07, be exchanged for an equal aggregate principal amount of
Notes of the same Series, terms and maturity of any other Authorized Denominations.
Section 3.06 Negotiability, Transfer and Registry. Each Note shall be transferable
only upon the Note 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 Note, the City shall execute and the Trustee shall
authenticate, deliver and register in the Note Register in the name of the transferee a new Note or
Notes of the same aggregate principal amount, Series, terms and maturity as the surrendered
Note.
Section 3.07 Regulations With Respect to Exchanges and Transfers. In all cases in
which the privilege of exchanging Notes or transferring Notes is exercised, the City shall execute
and the Trustee shall authenticate and deliver Notes in accordance with the provisions of the
Indenture relating to such Notes. All Notes surrendered in any such exchanges or transfers shall
forthwith be delivered to the Trustee and cancelled by the Trustee. Unless the Indenture relating
to such Notes provides that such transfer or exchange shall be made without charge to the
Owner, for every such exchange or transfer of Notes, 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.
Section 3.08 Notes Mutilated, Destroyed, Stolen or Lost. If any Note becomes
mutilated or is lost, stolen or destroyed, the City may execute and the Trustee shall authenticate
and deliver a new Note of like date of Series, maturity, principal amount and terms as the Note
so mutilated, lost, stolen or destroyed; provided that (i) in the case of such mutilated Note, such
Note is first surrendered to City or the Trustee, (ii) in the case of any such lost, stolen or
destroyed Note, 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 Note surrendered for exchange shall be cancelled.
Any such new Note issued pursuant to this Section in substitution for a Note alleged to be
destroyed, stolen or lost shall constitute original additional contractual obligations on the part of
the City, whether or not the Note so alleged to be destroyed, stolen or lost be at any time
enforceable by anyone, and shall be equally payable from the Available Funds 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 Notes.
Section 3.09 Temporary Notes.
(a) Until the definitive Notes are prepared, the City may execute, in the same
manner as is provided in Section 3.03, and upon the request of the City, the Trustee shall
authenticate and deliver, in lieu of definitive Notes, but subject to the same provisions,
limitations and conditions as the definitive Notes except as to the exchangeability for Notes,
one or more temporary Notes substantially of the tenor of the definitive Notes in lieu of which
such temporary Note or Notes are issued, in Authorized Denominations, and with such
OHS We t:261098413.4 32
omissions, insertions and variations as may be appropriate to temporary Notes. The
installments of interest payable on such temporary Notes shall be payable in the same manner
as interest is payable on the definitive Notes in lieu of which such temporary Notes were
issued. The City, at its own expense, shall prepare and execute and, upon the surrender of such
temporary Notes for exchange and the cancellation of such surrendered temporary Notes, the
Trustee shall authenticate and, without charge to the Owner thereof, deliver in exchange
therefor, definitive registered Notes of the same aggregate Series, principal amount, terms,
maturity and date of issue as the temporary Notes surrendered. Until so exchanged, the
temporary Notes of a Series shall in all respects be entitled to the same benefits and security as
definitive Notes authenticated and issued pursuant to the Indenture authorizing the issuance of
such Series of Notes.
(b) Temporary Notes 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 Section
3.07 be exchanged for an equal aggregate principal amount of temporary Notes of the same
Series, maturity, and containing the same terms, of any of the Authorized Denominations as
shall be requested by such Owner.
(c) All temporary Notes surrendered in exchange either for another temporary
Note or Notes or for a definitive Note or Notes shall be forthwith cancelled by the Trustee.
Section 3.10 Cancellation and Destruction of Notes. All Notes paid or redeemed,
either at or before maturity, and all Notes surrendered for transfer or exchange, shall be delivered
to the Trustee when such payment, redemption or surrender is made, and such Notes, together
with all Notes purchased by the Trustee, shall thereupon be promptly cancelled. Notes so
cancelled may at any time be destroyed by the Trustee, who shall execute a certificate of
destruction in duplicate by the signature of one of its authorized officers describing the Notes so
destroyed, and one executed certificate shall be filed with the City and the other executed
certificate shall be retained by the Trustee.
ARTICLE IV
REDEMPTION OF NOTES
Section 4.01 Privilege of Redemption and Redemption Price. Notes of each Series
subject to redemption prior to maturity pursuant to the Supplemental Indenture authorizing such
Series shall be redeemable, upon giving notice as provided in this Article IV, at such times and at
such redemption prices as shall be specified in or pursuant to the Supplemental Indenture
authorizing such Series and upon such terms as may be specified in this Article IV.
Section 4.02 Redemption at the Direction of City. In the case of a redemption of
Notes of any Series at the option or direction of the City, the City shall give written notice to the
Trustee of the exercise of its option to redeem Notes or of its direction to otherwise cause the
redemption of Notes at its direction, and of the redemption date, principal amounts of the Notes
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
OHS Wct:261098413.4 33
contained in the Supplemental Indenture authorizing such Series of Notes and provided that, with
respect to any Note to be redeemed in part, the portion of such Note which is not to be redeemed
shall be in an Authorized Denomination). The City shall provide the Trustee with such notice
not less than sixty (60) days prior to the redemption date or such shorter period as shall be
acceptable to the Trustee. In the event notice of redemption shall have been given as in Section
4.05 provided, other than a conditional notice pursuant to Section 4.05(b), 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 Notes to be redeemed.
Section 4.03 Redemption Otherwise Than at City's Direction. Whenever by the
terms of the Indenture, the Trustee is required or authorized to redeem Notes otherwise than at
the option or direction of the City and the Indenture does not expressly set forth the principal
amount of Notes of each Series and maturity so subject to redemption to be redeemed, the City
may select the principal amounts of the Notes of each Series and maturity to be redeemed (which
Series, maturities and principal amounts to be redeemed shall 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 Note to be redeemed in part, the portion of such Note which is
not to be redeemed shall be in an Authorized Denomination) and in the event the City does not
notify the Trustee of such Series, maturities, and principal amounts, to be redeemed on or before
the sixtieth (60th) day preceding the redemption date, the Trustee shall, in its sole discretion,
subject to any limitations with respect to the Series, maturity, or principal amount of Notes to be
redeemed contained in the Indenture, select the Series, maturities and principal amounts of Notes
to be redeemed, which selection shall be conclusive, give the notice of redemption and pay out of
moneys available therefor the Redemption Price thereof to the Owners of the Notes to be
redeemed or to appropriate Paying Agents in accordance with the terms of this Article IV.
Section 4.04 Selection of Notes to be Redeemed. If less than all of the Outstanding
Notes, or less than all of the Outstanding Notes of like Series and maturity, shall be called for
prior redemption, except as otherwise provided with respect to Note Parity Credit Provider Notes
in the Supplemental Indenture authorizing such Note Parity Credit Provider Notes or in the
applicable Note Parity Credit Support Agreement, the particular Notes or portions of Notes to be
redeemed shall, 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 Note of a denomination greater than
the minimum Authorized Denomination for the Notes of a Series shall be redeemed in part only
in a principal amount such that the portion of such Note which is not redeemed shall be in an
Authorized Denomination for such Series and that, in selecting portions of Notes of a Series for
redemption, the Trustee shall treat each Note of each Series as representing that number of Notes
of the minimum Authorized Denomination for such Series which is obtained by dividing the
principal amount of such Note by the minimum Authorized Denomination for the Notes of such
Series.
Section 4.05 Notice of Redemption.
(a) When the Trustee shall receive notice from the City of the exercise of its
option to redeem Notes or of its direction to otherwise cause the redemption of Notes pursuant to
OHS We t:261098413.4 34
Section 4.02, and when redemption of Notes of a Series is authorized or required pursuant to
Section 4.03, the Trustee shall give notice, in the name of the City, of the redemption of such
Notes, which notice shall be mailed, by first class mail, postage prepaid, not more than sixty (60)
nor less than thirty (30) days before the redemption date to the Owners of any Notes to be
redeemed (in whole or in part) at their addresses appearing in the Note Register. Such notice
shall specify the Series and maturity date of the Notes to be redeemed, the redemption date and
the place or places where amounts due upon such redemption shall be payable and, if less than
all of the Notes of any like Series and maturity are to be redeemed, the letters and numbers or
other distinguishing marks of such Notes so to be redeemed, and, in the case of Notes to be
redeemed in part only, such notice shall also specify the respective portions of the principal
amount thereof to be redeemed. Such notice shall further state that, except as provided in
subsection (b) of this Section, on such date there shall become due and payable upon each Note
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 Note to be redeemed in part only,
and that from and after such date interest on such Note or the portion of such Note to be
redeemed shall cease to accrue and be payable.
Receipt of such notice shall not be a condition precedent to the redemption of
Notes and failure of any Owner of a Note to receive any such notice or any insubstantial defect
in such notice shall not affect the validity of the proceedings for the redemption of Notes. Any
defect in such notice given to the Owners of less than all of the Notes to be redeemed shall not
affect the validity of the proceedings for the redemption of the Notes 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 Notes 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 Owners of such Notes, such notice shall 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 Notes to be redeemed, and
that if such moneys shall not have been so received said notice shall be of no force and effect and
the City shall not be required to redeem such Notes. In the event a notice of redemption of Notes
contains such a condition and such moneys are not so received, the redemption of Notes as
described in the conditional notice of redemption shall not be made and the Trustee shall, 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 shall be no redemption of Notes pursuant to the conditional notice
of redemption.
(c) If upon the expiration of sixty (60) days succeeding any redemption date,
any Notes called for redemption shall not have been presented to the Trustee for payment, the
Trustee shall no later than ninety (90) days following such redemption date, send written notice
by first class mail to the Owner of each Note not so presented. Failure to mail the notices
required by this subsection to any Owner, or any defect in any notice so mailed, shall not affect
the validity of the proceedings for redemption of any Notes nor impose any liability on the
Trustee.
OHS Wmt:261098413.4 35
(d) In addition to the notice of redemption required pursuant to subsection (a) of
this Section, if any Notes are to be redeemed, then at the written request of an Authorized City
Representative received at least sixty (60) days before the redemption date, at least thirty (30)
days before the redemption date, the Trustee shall 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 notices described in this subsection or any defects therein, shall
not in any manner affect the proceedings for redemption of any Notes.
(e) Neither the City nor the Trustee shall have any responsibility for any defect
in the CUSIP number that appears on any Notes 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 shall be liable for any inaccuracy in such
numbers.
Section 4.06 Partial Redemption of Notes. Upon surrender of any Note to be
redeemed in part only, the City shall execute, and the Trustee shall authenticate and deliver to the
Owner of such Note, at the expense of the City, a new Note or Notes of Authorized
Denominations equal in aggregate principal amount to the unredeemed portion of the Note
surrendered, of the same Series, maturity and terms as the surrendered Note.
Section 4.07 Effect of Notice and Availability of Redemption Money. Subject to the
provisions of Section 3.01(g), notice of redemption having been duly mailed to the Owners of
the Notes to be redeemed (in whole or in part), as provided in Section 4.05, 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 Notes, or portions thereof, designated for redemption shall, 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 Notes to the contrary
notwithstanding;
(b) upon presentation and surrender thereof at the Principal Office of the
Trustee or another Paying Agent for such Notes, the Notes to be redeemed shall be redeemed at
the applicable Redemption Price;
(c) the Notes or portions thereof so designated for redemption shall be deemed
to be no longer Outstanding and such Notes or portions thereof shall cease to bear further
interest; and
(d) after the date fixed for redemption no Owner of any of the Notes or portions
thereof so designated for redemption shall 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.
OHS Wmt:261098413.4 36
ARTICLE V
ESTABLISHMENT OF FUNDS AND APPLICATION THEREOF
Section 5.01 Pledge of Note Trust Estate. Subject to the application thereof on the
terms and conditions provided in the Indenture, to secure the payment when due of the principal,
Redemption Price and Parity Purchase Price of all the Outstanding Notes, including Note Parity
Credit Provider Notes, 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 Notes, including Note Parity Credit
Provider Notes, and the Indenture, the City hereby irrevocably grants a lien on and a security
interest in, and pledges, the Note Trust Estate to the Trustee, for the benefit of the Owners of the
Outstanding Notes, including Note Parity Credit Provider Notes, which lien on, security interest
in and pledge of the Revenues and amounts in the Light and Power Fund included in the Note
Trust Estate shall be junior and subordinate to the pledge thereof securing Senior Obligations and
which lien on, security interest in and pledge of Available Funds shall be on a parity with any
pledge of Available Funds securing other Note Parity Obligations, including Note Parity Credit
Support Agreements for Note Parity Obligations and Qualified Swap Agreements. The lien on
and security interest in and pledge of the Note Trust Estate shall immediately attach and be
effective, binding, and enforceable against the City, its successors, purchasers of any of the Note
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 Note Trust Estate made pursuant to the Indenture 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 Note Trust Estate pursuant to this Section 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.
Section 5.02 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, purchase
price, if any, and interest on the Notes, there are hereby established the following fund and
account, to be held and maintained by the Trustee and applied as provided in the Indenture for so
long as any of the Notes are Outstanding:
(a) the City of Vernon Electric System Note Payment Fund, consisting of an
Interest Account, a Principal Account, a Sinking Fund Account and a Redemption Account;
and
(b) the City of Vernon Electric System Note Rebate Fund.
Section 5.03 Payments by City. During each Fiscal Year the City shall pay the Trustee,
from the Available Funds of such Fiscal Year the following amounts at the following times:
(a) on the fourth Business Day prior to each Interest Payment Date for any
Outstanding Notes, an amount equal to the interest payable on the Outstanding Notes on such
Interest Payment Date; provided, however, that such payments shall be reduced by any
OHS Wmt:261098413.4 37
available amounts on deposit in the Interest Account which are to be applied to such upcoming
interest payment;
(b) on the fourth Business Day prior to each date on which the principal of
Outstanding Notes which are Serial Obligations mature, an amount equal to the principal of
such Outstanding Notes maturing on such date; provided, however, that such payments shall be
reduced by any available amounts on deposit in the Principal Account which are to be applied
to the upcoming principal payment;
(c) on the fourth Business Day prior to each Sinking Fund Installment due date
for Outstanding Notes which are Term Obligations, an amount equal to the Sinking Fund
Installments due with respect to all Outstanding Notes which are Term Obligations on such
Sinking Fund Installment due date; provided, however, that such payments shall be reduced by
any available amounts on deposit in the Sinking Fund Account which are to be applied to the
redemption or payment of such Notes on such Sinking Fund Installment due date and by the
amount by which the City's obligations to make payments with respect to such Sinking Fund
Installments have been satisfied pursuant Section 5.04(d);
(d) at least one Business Day prior to each date fixed for the redemption of
Outstanding Notes (other than from Sinking Fund Installments or other than an optional
redemption of Notes as to which a conditional notice of redemption has been sent to the
Owners pursuant to subsection (b) of Section 4.05), an amount equal to the Redemption Price
of the Notes to be redeemed;
(e) on the date on which the principal of or interest on any Outstanding Note
becomes due and payable other than as provided in (a) through (d) above, including the
purchase price of any Notes tendered for purchase by the Owner thereof in accordance with the
Indenture, the City shall pay an amount in funds which are immediately available to the
Trustee by 10:00 a.m. (Pacific Time) on the due date, equal to the principal of and interest on
the Outstanding Notes (including as part of the purchase price of the Note) due on such date;
and
(f) in the event that on any date upon which the City is to make a payment
pursuant to subsections (a), (b), (c), (d), and/or (e) of this Section and the amount of Available
Funds is not sufficient to make such payment and any payment required to be made on such
date with respect to the principal and redemption premium, if any and purchase price of, and
interest on, other Note Parity Obligations (including, with respect to transactions under
Qualified Swap Agreements, the Net Payments due), then the City shall apply the Available
Funds to the payments required by subsections (a), (b), (c), (d), and/or (e) of this Section and
such payments with respect to the other Note Parity Obligations ratably (based on the
respective amounts to be paid), without any discrimination or preferences.
Section 5.04 Note Payment Fund
(a) From the moneys paid by the City pursuant to Section 5.03(a), (b) and (c),
the Trustee, upon receipt of such moneys, shall deposit the following amounts in the following
specified accounts within the Note Payment Fund:
OHS We t:261098413.4 38
(1) For deposit in the Interest Account, an amount equal to the
interest payable on the Outstanding Notes on the applicable
Interest Payment Date;
(2) For deposit in the Principal Account, an amount equal to
the principal of the Outstanding Notes 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 Section 5.03(d), or otherwise
provided to the Trustee in connection with the redemption of Notes other than redemption from
Sinking Fund Installments, the Trustee, upon receipt of such moneys, shall deposit such
amounts in the Redemption Fund.
(c) From the moneys paid by the City pursuant to Section 5.03(e), the Trustee,
upon receipt of such moneys, shall deposit the following amounts in the following specified
accounts within the Note Payment Fund:
(i) For deposit in the Interest Account, an amount equal to the interest
on the Outstanding Notes then payable; and
(ii) For deposit in the Principal Account, an amount equal to the
principal of the Outstanding Notes then payable.
(d) In the event that Notes 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 sixty (60) days prior to the due date for any Sinking Fund Installment for
such Notes, such deposit shall satisfy (to the extent of 100% of the principal amount of such
Notes) any obligation of the City to make a payment to the Trustee pursuant to Section 5.03(c)
with respect to such Sinking Fund Installments. Any Note so deposited with the Trustee shall
be cancelled and shall no longer be deemed to be Outstanding for any purpose. Upon making
the deposit with the Trustee of Notes which are Term Obligations as provided in this
subsection, the City may specify the dates and amounts of Sinking Fund Installments for such
Notes as to which the City's obligations to make a payment to the Trustee pursuant to Section
5.03(c) shall be satisfied.
(e) Except as hereafter in this subsection provided: (i) amounts deposited in the
Interest Account shall remain therein until expended for the payment of interest on the Notes;
(ii) amounts deposited in the Principal Account shall remain therein until expended for the
payment of principal of the Notes; (iii) amounts deposited in the Sinking Fund Account shall
remain therein until expended for the redemption or payment at maturity from Sinking Fund
Installments of Notes which are Term Obligations; and (iv) amounts deposited in the
Redemption Account shall remain therein until expended for the redemption of Notes.
OHS We t:261098413.4 39
(f) The Trustee shall apply amounts in the Interest Account to the payment
when due of interest on the Outstanding Notes. The Trustee shall apply amounts in the
Principal Account to the payment when due of principal of the Outstanding Notes. The
Trustee shall apply amounts in the Sinking Fund Account to the redemption (or payment at
maturity) of the Notes which are Term Obligations. The Trustee shall apply amounts in the
Redemption Account to the redemption of the Notes other than redemption from Sinking Fund
Installments.
In the event one or more Paying Agents have been appointed for the Notes, moneys may
be transferred by the Trustee to such Paying Agents from the appropriate account in the Note
Payment 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 Notes. In the event that any principal
of, Redemption Price or interest on, any Note has been paid from amounts made available
pursuant to a Note Parity Credit Support Instrument, amounts in the appropriate accounts in the
Note Payment Fund with respect to such Note, and any such amounts transferred by the Trustee
from the Note Payment Fund to a Paying Agent for such Note pursuant to this Section, shall be
paid to the applicable Note Parity Credit Provider as a reimbursement of the amounts so paid.
Section 5.05 Note Rebate Fund. Each Supplemental Indenture authorizing a Series of
Notes which are Tax -Exempt Securities shall establish an account in the Note Rebate Fund in
connection with such Series. Each such account in the Note Rebate Fund shall have such terms
and conditions as shall be provided in the Supplemental Indenture establishing such account.
Section 5.06 Depositories. The Trustee shall 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 shall be held
in trust and applied only in accordance with the provisions of the Indenture, and each of the
Funds established by the Indenture shall be a trust fund for the purposes hereof.
Section 5.07 Deposits.
(a) 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 shall permit
the moneys so held to be available for use at the time when reasonably expected to be needed.
No Fiduciary shall 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 shall 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.
(b) All moneys deposited with a Fiduciary shall be credited to the particular
Fund to which such moneys belong.
OHS Wwt:261098417.4 40
Section 5.08 Investment of Certain Funds. Moneys held in the Note Payment Fund
shall be invested and reinvested by the Trustee to the fullest extent practicable in securities
described in clauses (a) through (c) of the definition of "Permitted Investments" in Section 1.01
of the Bond Indenture which mature not later than such times as shall be necessary to provide
moneys when reasonably expected to be needed for payments to be made from such Funds. The
Trustee shall make all such investments of moneys held by it in accordance with directions of an
Authorized City Representative, which directions shall be consistent with the Indenture and
applicable law, and which directions shall be written. In the absence of any such written
investment directions, the Trustee shall, unless otherwise provided in this Section 5.08, invest
such moneys in the money market funds described in clause (d) of the definition of "Permitted
Investments."
Interest or other income earned on any moneys or investments in any Fund
created under the Indenture shall 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 so combined shall be separately accounted for.
Section 5.09 Valuation and Sale of Investments. Obligations purchased as an
investment of moneys in any Fund shall be deemed at all times to be a part of such Fund and any
profit realized from the liquidation of such investment shall be credited to such Fund and any
loss resulting from the liquidation of such investment shall be charged to the respective Fund.
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 it shall be 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 shall be consistent with the
Indenture and applicable law and which directions shall 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 shall 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
acknowledges that to the extent 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 specifically waives 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 hereunder.
OHS We t:261098413.4 41
ARTICLE VI
COVENANTS AND OBLIGATIONS OF THE CITY
The City covenants with the Owners of the Outstanding Notes and with each Note Parity
Credit Provider as set forth in this Article VI. Each of said covenants shall remain in full force
and effect so long as any of the Notes shall be Outstanding and unpaid, any Note Parity Credit
Support Instrument remains outstanding, and any Note Parity Credit Provider Reimbursement
Obligations remain unpaid.
Section 6.01 Compliance with Indenture. The City shall punctually pay the Notes in
strict conformity with the terms of the Indenture and the Notes, and shall faithfully observe and
perform all the agreements, conditions, covenants and terms contained in the Indenture required
to be observed and performed by it, which obligations shall be absolute and unconditional but
which shall be special obligations of the City as provided in Section 2.02.
Section 6.02 Rates for Electric Service. The City shall at all times fix, prescribe and
collect rates and charges for the Electric Service of the Electric System during each Fiscal Year
which shall be at least sufficient to yield, without duplication, Adjusted Revenues for such Fiscal
Year at least equal to the sum of the following for such Fiscal Year: (i) Operation and
Maintenance Expenses; (ii) Senior Obligations Costs; (iii) Adjusted Note Parity Debt Service;
and (iv) all other payments required to be paid in such Fiscal Year to meet any other obligations
of the City which are charges, liens or encumbrances upon or payable from the Revenues
(including Net Revenues), including all amounts owed to a Note Parity Credit Provider under the
terms of its Note Parity Credit Support Agreement.
Section 6.03 Collection of Rates and Charges. The City shall 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 shall 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 shall prevent 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 shall not relieve the City of its
obligations under the Indenture.
Section 6.04 Deposit and Application of Revenues. (a) Subject to the provisions of
subsection (b) of this Section, the City shall deposit or cause to be deposited all Revenues into
the Light and Power Fund upon receipt thereof. The City shall apply the Revenues received in
each Fiscal Year: first to the Operation and Maintenance Expenses; second to the Senior
Obligation Costs as provided in Section _ of the Bond Indenture as in effect on the date
hereof; third to the payments specified in of
5.03; fourth to the payment of amounts due
with respect to Subordinate Obligations; and fifth to any lawful purpose.
OHS Wmt:261098413.4 42
(b) 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 Bond Indenture and the Issuing Instrument for any Parity
Obligations, the Indenture and the Issuing Instruments for any Note 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.
Section 6.05 Creation of Prior Liens on Trust Estate.
(a) The City shall not issue any bond, note, or other evidence of indebtedness
payable from or secured by the Net Revenues and amounts in the Light and Power Fund
included in the Trust Estate securing the Outstanding Bonds or any part thereof on a basis
which is in any manner prior or superior to the lien on, pledge of and security interest in such
Net Revenues and amounts in the Light and Power Fund. Except for Parity Obligations issued
in accordance with the Bond Indenture as in effect on the date hereof, the City shall not issue
any bond, note, or other evidence of indebtedness payable from or secured by the Net
Revenues and amounts in the Light and Power Fund included in the Trust Estate securing the
Outstanding Bonds or any part thereof on a basis which is in any manner on a parity with the
lien on, pledge of and security interest in the Revenues and amounts in the Light and Power
Fund securing the Outstanding Bonds pursuant to the Indenture.
(b) Except for Parity Obligations issued in accordance with the Bond Indenture
as in effect on the date hereof with respect to Revenues and/or amounts in the Light and Power
Fund, the City shall not issue any bond, note, or other evidence of indebtedness payable from
or secured by the Note Trust Estate or any part thereof on a basis which is in any manner prior
or superior to the lien on, pledge of and security interest in the Note Trust Estate securing the
Outstanding Notes pursuant to the Indenture. Except for Note Parity Obligations with respect
to the Net Revenues and/or amounts in the Light and Power Fund, the City shall not issue any
bond, note, or other evidence of indebtedness payable from or secured by the Note Trust Estate
or any part thereof on a basis which is in any manner on a parity with the lien on, pledge of and
security interest in the Available Funds securing the Outstanding Notes pursuant to the
Indenture.
(c) Nothing in the Indenture shall prevent the City from issuing Subordinate
Obligations in accordance with 2.09.
Section 6.06 Against Encumbrances. The City shall 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 shall keep the Electric System free of any
and all liens against any portion of the Electric System. In the event any such lien attaches to or
is filed against any portion of the Electric System, the City shall 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 shall not materially impair operation of the Electric System. If any such lien
shall be reduced to final judgment and such judgment or any process as may be issued for the
OHS We t:261098413.4 43
enforcement thereof is not promptly stayed, or if so stayed and such stay thereafter expires, the
City shall forthwith pay or cause to be paid and discharged such judgment.
Section 6.07 Sale or Other Disposition of Property. The City shall 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
Section 6.02.
Section 6.08 Operation and Maintenance of the Electric System; Budgets. The City
shall maintain and preserve the Electric System in good repair and working order at all times and
shall operate the Electric System in an efficient and economical manner and shall pay all
Operation and Maintenance Expenses as they become due and payable.
The City shall 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, Senior Obligations Costs, which includes debt service in accordance
with the Bond Indenture, scheduled Note Panty 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 shall include 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 the City fails to have a Budget approved by the City Council
as required by this Section 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 shall 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 ten percent 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.
Section 6.09 Insurance. The City shall procure and maintain such insurance relating to
the Electric System which it shall deem advisable or necessary to protect its interests and the
interests of the Trustee and the Owners of the Notes, which insurance shall afford 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 shall provide that the Trustee shall be
given thirty (30) days' written notice of any intended cancellation thereof or reduction of
coverage provided thereby.
Section 6.10 Accounting Records; Financial Statements and Other Reports.
(a) The City shall keep appropriate accounting records in which complete and
correct entries shall be made of all transactions relating to the Electric System, which records
shall be available for inspection by the Trustee at reasonable hours and under reasonable
conditions.
OHS Ww:261098413.4 44
(b) The City shall prepare and file with the Trustee annually within one hundred
eighty (180) days after the close of each Fiscal Year (commencing with the Fiscal Year ending
June 30, 2011):
(i) 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
(ii) a detailed report as to all insurance policies maintained and self-
insurance 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.
Section 6.11 Payment of Taxes and Compliance with Governmental Regulations.
The City shall pay and discharge all taxes, assessments and other governmental charges which
may hereafter be lawfully imposed upon the Electric System or any part thereof when the same
shall become due. The City shall 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 shall not be required to comply with any regulations or
requirements so long as the validity or application thereof shall be contested in good faith and
contesting such validity or application shall not materially impair the operations or financial
condition of the Electric System or the performance of the City under the Indenture and all
Outstanding Notes.
Section 6.12 Tax Covenants. (a) The City hereby covenants it shall 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 Note under Section 103 of the Code, if such Note is Tax -
Exempt. Without limiting the generality of the foregoing, the City shall comply with the
requirements of the Tax Certificate, if any, delivered in connection with the issuance of each
Series of Notes.
In the event that at any time the City is of the opinion that, in order to comply with its
obligations under subsection (a) of this Section, 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 shall 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 this Section, if the City shall provide to
the Trustee an Opinion of Counsel to the effect that any specified action required under this
Section 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 Notes under Section 103 of the Code, the
City and the Trustee may conclusively rely on such opinion in complying with the
requirements of this Section and of the applicable Tax Certificate, and the covenants hereunder
shall be deemed to be modified to that extent.
(c) The covenants in this Section shall survive payment in full or discharge of
the Notes.
OHS We t:261098413.4 45
Section 6.13 Transfers to General Fund. The City covenants that it shall not transfer
Net Revenues for any Fiscal Year to the City's General Fund in an amount exceeding the Net
Transferable Income for such Fiscal Year, which amount shall be determined at the end of such
Fiscal Year. Notwithstanding the preceding sentence, so long as an Event of Default has
occurred and is continuing, the City shall not transfer any Net Transferable Income to the City's
General Fund.
Section 6.14 Additional Parity Obligations. The City covenants that it shall not issue
or incur any Additional Parity Obligations without the prior written consent of the Owner and
further covenants that in satisfying the conditions of Section 2.07(e) of the Bond Indenture it will
provide certificates of an Independent Engineer acceptable to the Owner. The City covenants
that it shall not issue or incur any Additional Note Parity Obligations without the prior written
consent of the Owner and further covenants that in satisfying the conditions of Section 2.07(e) of
this Master Indenture it will provide certificates of an Independent Engineer acceptable to the
Owner.
ARTICLE VII
AMENDMENTS TO INDENTURE
Section 7.01 Amendments Permitted.
(a) Subject to the provisions of subsection (d) of this Section, the provisions of
this Master Indenture or of any Supplemental Indenture and the rights and obligations of the City
and of the Owners of the Outstanding Notes 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 Note Parity Credit Provider whose consent is
required by a Supplemental Indenture or a Note Parity Credit Support Agreement, when the
written consent of the Owners of at least a majority in aggregate principal amount of the Notes
then Outstanding shall have been filed with the Trustee; or if less than all of the Outstanding
Notes are affected, the written consent of the Owners of at least a majority in aggregate principal
amount of all affected Outstanding Notes; provided that if such modification, amendment or
supplement shall, by its terms, not take effect so long as any Notes of any particular Series and
maturity remain Outstanding, and, with respect to Notes which are Tender Indebtedness if the
conditions of subsection (d) of this Section are satisfied, the consent of the Owners of such Notes
shall not be required and such Notes shall not be deemed to be Outstanding for the purpose of
any the calculation of Outstanding Notes for purposes of this Section. No such modification,
amendment or supplement shall (1) reduce the aforesaid percentage of Notes 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 Notes then Outstanding; (2) extend the fixed maturity of
any Note, 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 Note or extend the time of payment of interest thereon, without the
consent of the Owner of each Note so affected; (3) except as otherwise provided with respect to a
Note constituting Tender Indebtedness in the Supplemental Indenture authorizing such Note and
subject to the satisfaction of the conditions of subsection (g) of this Section, reduce the
Redemption Price due on the redemption of any Note or change the date or dates when any Note
OHS We t:261095413.4 46
is subject to redemption; or (4) modify the rights or obligations of any Fiduciary without the
consent of such Fiduciary.
It shall not be necessary for the consent of the Owners to approve the particular form of
any Supplemental Indenture, but it shall be sufficient if such consent shall approve the substance
thereof.
Unless waived by the Owner of an affected Note or Notes, prior to the entry into any
Supplemental Indenture by the City and the Trustee for any of the purposes of this Section, the
City shall cause notice of the proposed Supplemental Indenture to be mailed, by first class mail,
postage prepaid, to the Owners of all Outstanding Notes (or the affected Outstanding Notes) at
their addresses appearing on the Note Register. Such notice shall briefly set forth the nature of
the proposed Supplemental Indenture and shall state that copies thereof are on file at the office of
the Trustee for inspection by each Owner of an Outstanding Note.
Whenever, at any time after the date of the mailing of notice of the proposed entry into a
Supplemental Indenture pursuant to this subsection, the City shall have received an instrument or
instruments in writing executed in accordance with Section 11.01 by or on behalf of the Owners
of not less than a majority in aggregate principal amount of the Notes then Outstanding, or if less
than all of the Outstanding Notes are affected, by the Owners of not less than a majority in
aggregate principal amount of the affected Outstanding Notes, which instrument or instruments
shall refer to the proposed Supplemental Indenture described in the notice of the proposed
Supplemental Indenture and shall consent 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 Note, whether or not such Owner shall have consented thereto.
(b) This 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 Note Panty Credit
Provider whose consent is required by a Supplemental Indenture or a Note Parity Credit Support
Agreement but without the consent of the Owner of any Note, to provide for the issuance of a
Series of Additional Notes or a Series of Refunding Notes in accordance with the terms and
conditions of Article II, and establishing the terms and conditions thereof, including the rights of
any Note Panty Credit Provider for such Additional Notes or Refunding Notes, which may
include permitting such Note Parity Credit Provider to act for and on behalf of the Owners of
such Additional Notes or Refunding Notes for any or all purposes of the Indenture except that no
such Note Panty Credit Provider shall be authorized to extend the fixed maturity of any Note, 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 Note or extend the time of payment of interest thereon, without the consent of the
Owner of each Note so affected; or except as otherwise provided with respect to a Note
constituting Tender Indebtedness in the Supplemental Indenture authorizing such Note and
subject to the satisfaction of the conditions of subsection (g) of this Section, reduce the
Redemption Price due on the redemption of any Note or change the date or dates when any Note
is subject to redemption.
OHS WW:261098413.4 47
(c) This Master Indenture and any Supplemental Indenture and the rights and
obligations of the City, the Fiduciaries and the Owners of the Outstanding Notes 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 Note Panty Credit Provider whose consent is required by a Supplemental
Indenture or a Note Parity Credit Support Agreement but without the consent of any Owners of
Notes (but with the consent of any affected Fiduciary), so long as such modification, amendment
or supplement shall not materially, adversely affect the interests of the Owners of the
Outstanding Notes, including without limitation, for any one or more of the following purposes:
(i) to add to the covenants and agreements of the City contained in
this 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;
(ii) to pledge, provide or assign any additional security for the Notes
(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 shall 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 Notes then Outstanding, and with the consent of each Note Parity Credit Provider
whose consent is required by a Supplemental Indenture or a Note Parity Credit Support
Agreement;
(iii) to add to the covenants and agreements of the City contained in
this Master Indenture or a Supplemental Indenture other covenants and agreements
thereafter to be observed, to pledge, provide or assign any security for the Notes (or any
portion thereof), or to surrender any right or power in the Indenture reserved to or
conferred upon the City;
(iv) to make such provisions for the purpose of curing any ambiguity,
inconsistency or omission, or of curing or correcting any defective provision, contained
in this Master Indenture or a Supplemental Indenture, or in regard to matters or questions
arising under this Master Indenture or a Supplemental Indenture, as the City may deem
necessary or desirable; or
(v) to modify, amend or supplement this 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
hereafter 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 this Section, the provisions of
this 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 subsection (a) of this Section, without the consent of
OHS We t:261098413.4 48
the Owners of Notes constituting Tender Indebtedness if either (i) the effective date of such
Supplemental Indenture is a date on which such Notes are subject to mandatory tender for
purchase pursuant to the Indenture or (ii) the notice described in the third paragraph of
subsection (a) of this Section is given to Owners of such Notes at least thirty (30) days before
the effective date of such Supplemental Indenture, and on or before such effective date, the
Owners of such Notes have the right to demand purchase of such Notes pursuant to the
Indenture.
(e) If the Supplemental Indenture authorizing the issuance of a Series of Notes
provides that a Note Parity Credit Provider for all or any portion of the Notes of such Series
shall have the right to consent to Supplemental Indentures which require the consent of the
Owners of the Notes of such Series pursuant to this Section, then for the purposes of sending
notice of any proposed Supplemental Indenture and for determining whether the Owners of the
requisite percentage of Notes have consented to such Supplemental Indenture, but subject to
the provisions of subsection (b) of this Section, references to the Owners of such Notes shall be
deemed to be to the applicable Note Parity Credit Provider.
(f) For purposes of this Section, it shall not be necessary that consents of the
Owners of any particular percentage of Outstanding Notes of any affected Series be obtained
but it shall be sufficient for purposes of this Section if the consent of the Owners of a majority
in aggregate principal amount of the combination of affected Outstanding Notes shall be
obtained.
(g) Notwithstanding anything to the contrary contained in this Section, if
authorized by the Supplemental Indenture authorizing the issuance of a Note constituting
Tender Indebtedness, any premium due on the redemption of such Note and the date or dates
when such Note is subject to redemption may be modified or amended as provided in such
Supplemental Indenture if either: (i) the effective date of such modification or amendment is a
date on which such Note is subject to mandatory tender for purchase pursuant to such
Supplemental Indenture; or (ii) notice of such modification or amendment has been mailed to
the Owner of such Note at the address set forth in the Note Register at least thirty (30) days
before the effective date of such modification or amendment and on or before such effective
date, the Owner of such Note has the right to demand purchase of such Note pursuant to such
Supplemental Indenture.
Section 7.02 Effect of Supplemental Indenture. Upon the City and the Trustee
entering into any Supplemental Indenture pursuant to this Article, the Indenture shall 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 Notes shall 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 shall 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 Section 7.01(a), upon the City and the Trustee entering into any Supplemental
Indenture pursuant to this Article, no Owner of any Note shall have 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
OHS Wmt:261098413.4 49
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.
Section 7.03 Notes Owned by City. For purposes of this Article, Notes owned or held
by or for the account of the City, or any funds of the City, shall not be deemed Outstanding for
the purpose of consent or other action or any calculation of Outstanding Notes provided for in
this Article, and the City shall not be entitled with respect to such Notes to give any consent or
take any other action provided for in this Article as an Owner of Notes. At the time of any
consent or other action taken under this Article, the City shall furnish the Trustee a certificate of
an Authorized City Representative upon which the Trustee may rely, describing all Notes so to
be excluded.
Section 7.04 Notation on Notes. Notes authenticated and delivered after the effective
date of any Supplemental Indenture entered into by the City and the Trustee as in this Article
provided 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 Note Outstanding on such
effective date and presentation of the Note for the purpose at the Principal Office of the Trustee
or upon any transfer or exchange of any Note Outstanding on such effective date, suitable
notation shall be made on such Note or upon any Note issued upon any such transfer or exchange
by the Trustee as to any such action.
ARTICLE VIII
CONCERNING THE FIDUCIARIES
Section 8.01 Trustee; Acceptance of Duties. The Trustee shall signify its acceptance
of the duties and obligations imposed upon it by the Indenture, including the duties of Paying
Agent for the Notes, by the execution and the delivery of this Master Indenture to the City and
by such execution and delivery the Trustee shall be deemed to have accepted such duties and
obligations with respect to all the Notes thereafter to be issued, but only, however, upon the
terms and conditions set forth in the Indenture and no implied covenants shall be read into the
Indenture against the Trustee.
Section 8.02 Paying Agents; Appointment and Acceptance of Duties.
(a) The City hereby appoints the Trustee as a Paying Agent for the Notes 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 Section 8.13 as an additional Paying Agent for the Notes of
one or more Series.
(b) Each Paying Agent other than the Trustee shall 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.
OHS Wmt:261098413.4 50
(c) 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 Notes.
Section 8.03 Responsibilities of Fiduciaries.
(a) Any recitals of fact in the Indenture and in the Notes contained shall 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 Notes issued thereunder or as to the security afforded by the Indenture,
and no Fiduciary shall incur any liability in respect thereof. No Fiduciary shall 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 shall, however, be responsible for its representation contained
in its certificate of authentication on the Notes. No Fiduciary shall be 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 shall be 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 subsection (b) of this Section, no Fiduciary shall 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 shall 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 shall be subject to the provisions of this Section.
Without limiting the generality of the foregoing:
(1) the Trustee shall not be liable for any error of judgment
made in good faith by any officer of the Trustee, unless it
shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(2) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in
accordance with the direction of a Note Parity Credit
Provider or the Owners of 25% in aggregate principal
amount of the Outstanding Notes 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;
OHS Wut:261098413.4 51
(3) no provision of the Indenture shall require 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 exercise of any of its rights or
powers, if it shall have 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 shall be 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 or a Note Parity
Credit Provider pursuant to the Indenture (except for
declaring an acceleration of the Notes or requesting credit
and/or liquidity support pursuant to a Note Parity Credit
Support Instrument), unless such Owners or such Note
Parity Credit Provider shall 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 shall not be 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 shall determine to make
such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the City,
personally or by agent or attorney;
(6) the Trustee shall not be required to take notice of and shall
not be deemed to have knowledge of any Event of Default
(other than an Event of Default specified in subsections (i)
or (ii) of Section 10.01) or any event which would, with the
passage of time, the giving of notice, or both, constitute an
Event of Default, unless the Trustee shall have been
notified of such Event of Default or other event by the City
or a Note Parity Credit Provider, or the Owners of 10% in
aggregate principal amount of Notes Outstanding;
(7) the Trustee shall not be 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 Section 6.10; and
OHS We t:261098413.4 52
(8) The Trustee may perform its duties under the Indenture
through agents and attorneys and the Trustee shall not be
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 shall the Trustee be liable for any failure or
delay in the performance of its obligations hereunder
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 shall have 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 Notes.
(11) The Trustee agrees to accept and act upon instructions or
directions pursuant to the Indenture sent by unsecured e-
mail, facsimile transmission or other similar unsecured
electronic methods, provided, however, that, the Trustee
shall have received an incumbency certificate listing
persons designated to give such instructions or directions
and containing specimen signatures of such designated
persons, which such incumbency certificate shall be
amended and replaced whenever a person is to be added or
deleted from the listing. If the City elects to give the
Trustee e-mail or facsimile instructions (or instructions by a
similar electronic method) and the Trustee in its discretion
elects to act upon such instructions, the Trustee's
understanding of such instructions shall be deemed
controlling. The Trustee shall 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 such instructions conflict or
are inconsistent with a subsequent written instruction. The
City agrees to assume all risks arising out of the use of such
electronic methods to submit instructions and directions 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.
OHS We t:261098413.4 53
(12) Whenever in the administration of the trusts imposed upon
it by the Indenture the Trustee shall deem it necessary or
desirable that a matter be proved or established prior to
taking or suffering any action hereunder, such matter
(unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively
proved and established by a certificate of the Authority, and
such certificate shall 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 hereunder and its rights to payment of its fees and
expenses shall survive its resignation or removal and final
payment or defeasance of the Notes. All indemnifications
and releases from liability granted herein to the Trustee
shall 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 shall be subject to
the provisions of this Article.
Section 8.04 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, shall examine such instrument to determine whether
it conforms to the requirements, if any, of the Indenture and shall 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 Counsel or
counsel to the City, and the opinion of such counsel shall 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 shall deem 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 be therein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate of an Authorized City Representative, and
such certificate shall 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.
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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 shall be sufficiently executed in the name
of the City by an Authorized City Representative.
Section 8.05 Compensation. The City shall 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 Notes remain Outstanding or
any amounts due to a Note Parity Credit Provider under a Note Parity Credit Support Agreement,
no Fiduciary shall have a lien therefor on any and all funds at any time held by it under the
Indenture. Subject to the provisions of Section 8.03, the City .further agrees 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.
Section 8.06 Certain Permitted Acts. Any Fiduciary may become the Owner of any
Notes, 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 Notes or to effect or aid in any reorganization growing out of the
enforcement of the Notes or the Indenture, whether or not any such committee shall represent the
Owners of a majority in principal amount of the Notes then Outstanding.
Section 8.07 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 and each Note Parity Credit Provider, specifying the date when such
resignation shall take effect; provided that no such resignation shall take effect until a successor
shall have been appointed in accordance with Section 8.09.
Section 8.08 Removal of Trustee. The Trustee may be removed (i) with the consent (to
the extent required by a Supplemental Indenture) of each Note Parity Credit 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 (ii) with the consent (to the extent required by a Supplemental Indenture) of each Note
Parity Credit 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 Notes then
Outstanding or their attorneys -in -fact duly authorized, excluding any Notes held by or for the
account of the City or (iii) with the consent (to the extent required by a Supplemental Indenture,)
of each Note Parity Credit 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 shall be effective until 30 days have lapsed
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from the filing of such instrument with the Trustee and until a successor shall have been
appointed in accordance with Section 8.09.
Section 8.09 Appointment of Successor Trustee; Financial Qualifications of
Successor Trustee.
(a) In case at any time the Trustee shall resign or shall be removed or shall
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or if a receiver,
liquidator or conservator of the Trustee, or of its property shall be appointed, or if any public
officer shall take 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 Notes then Outstanding,
excluding any Notes held by or for the account of the City, with (to the extent required by a
Supplemental Indenture) the consent of each Note Parity Credit Provider, by an instrument or
concurrent instruments in writing signed and acknowledged by such Owners of the Notes 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 shall have been appointed by the Owners of the Notes as aforesaid, the City,
by a duly executed written instrument signed by an Authorized City Representative shall
forthwith appoint a Trustee to replace such resigning Trustee or to fill such vacancy until a
successor Trustee shall be appointed by the Owners of the Notes as authorized in this Section.
Any successor Trustee appointed by the City shall, immediately and without further act, be
superseded by the Trustee appointed by the Owners of the Notes. Any resignation or removal of
the Trustee and appointment of a successor Trustee shall become effective only upon acceptance
of appointment by the successor Trustee.
(b) If in a proper case no appointment of a successor Trustee shall be made
pursuant to the foregoing provisions of this Section within 45 days after the Trustee shall have
given to the City written notice as provided in Section 8.07 or after a vacancy in the office of the
Trustee shall have occurred by reason of its inability to act, removal, or for any other reason
whatsoever, the Trustee (in the case of its resignation under Section 8.07) or the Owner of any
Note (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 this Article or any successor
to the Trustee shall 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 shall 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
OHS We t:261098413.4 56
for the purposes of this Section the combined capital and surplus of such bank, trust company, or
national banking association shall be deemed to be its combined capital and surplus set forth in
its most recent report of condition so published.
Section 8.10 Transfer of Rights and Property to Successor Trustee. Any successor
Trustee appointed under the Indenture shall 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, shall 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 shall 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 shall 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 shall, on request, and so far as may be authorized by
law, be executed, acknowledged and delivered by the City. Any such successor Trustee shall
promptly notify the Paying Agents of its appointment as Trustee.
Section 8.11 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 shall be a party or any company to which any
Fiduciary may sell or transfer all or substantially all of its corporate trust business, provided such
company shall be a bank or trust company organized under the laws of any state of the United
States or a national banking association, shall satisfy the applicable standards of a successor set
forth in the Indenture, and shall be authorized by law to perform all the duties imposed upon it
by the Indenture, shall be the successor to such Fiduciary without the execution or filing of any
paper or the performance of any further act.
Section 8.12 Adoption of Authentication. In case any of the Notes contemplated to be
issued under the Indenture shall have been authenticated but not delivered, any successor Trustee
may adopt the certificate of authentication of any predecessor Trustee so authenticating such
Notes and deliver such Notes so authenticated; and in case any of the said Notes shall not have
been authenticated, any successor Trustee may authenticate such Notes in the name of the
predecessor Trustee, or in the name of the successor Trustee, and in all such cases such
certificate shall have the full force which it is anywhere in said Notes or provided in the
Indenture that the certificate of the Trustee shall have.
Section 8.13 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
OHS We t:261098413.4 57
Trustee, each Note Parity Credit 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 shall be appointed
by the City with the approval of the Trustee (and each Note Parity Credit Provider required by a
Supplemental Indenture) and shall 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 this Section the combined capital and surplus of
such bank, trust company, or national banking association shall 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 shall 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 shall be a
vacancy in the office of any Paying Agent, the Trustee shall act as such Paying Agent.
ARTICLE IX
DEFEASANCE
Section 9.01 Payment of Notes. If the City shall pay, or cause to be paid, or there shall
otherwise be paid, to the Owners of all Notes the principal amount or any redemption premium,
if applicable, of the Notes, and interest due or to become due on the Notes, 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 subsection (b) of this Section, the Indenture, and the pledge of and lien on
the Note Trust Estate hereunder and all covenants, agreements and obligations of the City
contained herein, shall cease and terminate and shall be completely discharged and satisfied and
the City shall be released therefrom and the Trustee shall 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 hereunder free and clear of any liens or encumbrances hereon pursuant to the Indenture
and shall execute such documents as may be reasonably required by the City in this regard.
(b) Notwithstanding the termination, satisfaction and discharge of the
Indenture or the satisfaction discharge of the Indenture in respect of any Notes, those provisions
of the Indenture relating to the maturity of the Notes, interest payments and dates thereof, tender
and exchange provisions, exchange and transfer of Notes, replacement of mutilated, destroyed,
lost or stolen Notes, the safekeeping and cancellation of Notes, nonpresentment of Notes,
compliance by the City of the covenants contained in Section 6.12 hereof and the duties of the
Trustee in connection with all of the foregoing, shall remain in effect and shall be binding upon
the City, the Trustee and the Owners and the Trustee shall 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 Notes, 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
OHS Ww:261098413.4 58
Notes 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 Notes, those
provisions of the Indenture contained in Section 8.05 hereof relating to the compensation of the
Trustee shall remain in effect and shall be binding upon the Trustee and the City.
Section 9.02 Notes Deemed Paid. Notes (or portions of Notes) for the payment or
redemption of which moneys shall have been set aside and shall 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, shall be deemed to have been paid within the meaning and
with the effect expressed in Section 9.01. Any Outstanding Note (or any portion thereof such
that both the portion thereof which is deemed paid and the portion which is not deemed paid
pursuant to this Section shall be in an Authorized Denomination) shall 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 Section 9.01 (except that the obligations under the Indenture set
forth in Section 9.01 (b) and the giving of the notices of the redemption of Notes to be redeemed
as provided in Article IV shall continue) if (1) in case said Note (or portion thereof) is to be
redeemed on any date prior to maturity, the City shall have given the Trustee irrevocable
instructions to give notice of redemption of such Note (or portion thereof) on said date as
provided in Article IV, (2) there shall have been deposited with an Escrow Agent either moneys
in an amount which shall be sufficient, or Defeasance Securities, the principal of and the interest
on which when due shall provide moneys which, together with the moneys, if any, held by such
Escrow Agent for such purpose, shall be 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
Note (or portion thereof) and interest due and to become due on said Note (or portion thereof) on
and prior to the redemption date, maturity date or other payment date thereof, as the case may be,
and (3) if such Note (or portion thereof) is not to be paid or redeemed within 60 days of the date
of the deposit required by (2) above, the City shall have 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 Note, at the last address, if any, appearing upon the Note Register, a notice that the
deposit required by (2) above has been made with an Escrow Agent and that said Note (or the
applicable portion thereof) is deemed to have been paid in accordance with this Section 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 Note. Any notice given pursuant to clause (3) of this
Section with respect to Notes which constitute less than all of the Outstanding Notes of any
Series and maturity shall specify the letter and number or other distinguishing mark of each such
Note. Any notice given pursuant to clause (3) of this Section with respect to less than the full
principal amount of a Note shall specify the principal amount of such Note which shall be
deemed paid pursuant to this Section and notify the Owner of such Note that such Note must be
surrendered as provided in Section 9.03. The receipt of any notice required by this Section shall
not be a condition precedent to any Note being deemed paid in accordance with this Section and
the failure of any Owner to receive any such notice shall not affect the validity of the
proceedings for the payment of Notes in accordance with this Section. Neither Defeasance
Securities nor moneys deposited with an Escrow Agent pursuant to this Section, nor principal or
interest payments on any such Defeasance Securities, shall be withdrawn or used for any purpose
other than, and shall be held in trust for, the payment of the principal amount of, and any
redemption premiums on, said Notes and the interest thereon; provided that any cash received
from principal or interest payments on such Defeasance Securities deposited with an Escrow
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Agent, (A) to the extent such cash shall not be required at any time for such payment, as
evidenced by an Accountant's Certificate, shall 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 Notes, and (B) to the extent such cash shall be required for
such payment at a later date, shall, to the extent practicable, at the written direction of an
Authorized City Representative, be 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, shall be sufficient to pay when due the principal amount of, and any redemption
premiums on, said Notes and the interest to become due on said Notes 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 shall prevent the City from substituting for the Defeasance
Securities held for the payment or redemption of Notes (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, shall be sufficient to pay when due the principal
amount of, and any redemption premiums on, the Notes (or portions thereof) to be paid or
redeemed, and the interest due on the Notes (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 shall deliver to the Escrow Agent a Favorable Opinion of Counsel with respect to such
substitution.
[Prior to the defeasance of any Notes bearing interest at a variable rate becoming
effective under this Section, the Trustee shall have received a Rating Confirmation from each
Rating Agency.]
Section 9.03 Defeasance of Portion of Note. Subject to the provisions of Section
3.01(g), if there shall be deemed paid pursuant to Section 9.02 less than all of the full principal
amount of a Note, the City shall execute and the Trustee shall authenticate and deliver, upon the
surrender of such Note, without charge to the Owner of such Note, a new Note or Notes for the
principal amount of the Note so surrendered which is deemed paid pursuant to Section 9.02 and
another new Note or Notes for the balance of the principal amount of the Note so surrendered, in
each case of like Series, maturity and other terms, and in any of the Authorized Denominations.
Section 9.04 Discharge of Liability on Notes. 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 Section 9.01 or Section 9.02, as applicable) to
pay or redeem Outstanding Notes (or portions thereof), and to pay the interest thereto to such
maturity or redemption date, as applicable, (provided that, if such Notes are to be redeemed prior
to the maturity thereof, notice of such redemption shall have been given as in Article IV
provided or provision satisfactory to the Trustee shall have been made for giving such notice), all
liability of the City in respect of such Notes shall cease, terminate and be completely discharged,
except that the City shall remain liable for such payment but only from, and the Noteowners
shall 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 Sections 6.12 and 9.02; provided that no Note which constitutes Tender
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Indebtedness shall be deemed to be paid within the meaning of the Indenture unless the Purchase
Price of such Note, 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 Note Panty Credit Support Instrument is provided in connection with such
Purchase Price.
ARTICLE X
EVENTS OF DEFAULT;
Section 10.01 Events of Default. Each of the following shall constitute an Event of
Default under the Indenture:
(i) if default shall be made in the payment of the principal or
Redemption Price or Parity Purchase Price of, or Sinking Fund Installment for, or interest
on, any Outstanding Note when and as the same shall become due and payable, whether
on an Interest Payment Date, at maturity, by call for redemption, or otherwise;
(ii) if default shall be made by the City in the performance or
observance. of any other of the covenants, agreements or conditions on its part in the
Indenture or in the Outstanding Notes contained, and such default shall continue 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 Notes
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 shall not constitute an Event
of Default if corrective action is instituted by the City within thirty (30) days of the City's
receipt of the notice of the default required by this paragraph and diligently pursued until
the default is corrected;
(iii) an Event of Bankruptcy shall have occurred and be continuing with
respect to the City; or
(iv) if an event of default (as defined in the applicable Issuing
Instrument) shall have occurred and be continuing with respect to any [Panty Obligation
or] Note Panty Obligation.
Section 10.02 Accounting and Examination of Records After Default.
(a) The City covenants that if an Event of Default shall have happened and shall
not have been remedied, the books of record and accounts of the City and all other records
relating to the Electric System shall at all times be subject to the inspection and use of the
Trustee and of its agents and attorneys.
(b) The City covenants that if an Event of Default shall have happened and shall
not have been remedied, the City, upon demand of the Trustee, shall 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 shall be stated in such demand.
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Section 10.03 Application of the Amounts in the Note Trust Estate After Default.
(a) Notwithstanding anything to the contrary contained in the Indenture,
including Article V of the Indenture, the City covenants that if an Event of Default shall happen
and shall not have been remedied, and no other control or application of Revenues and amounts
in the Light and Power Fund is applicable pursuant to a Senior Obligation, the City, upon the
demand of the Trustee, shall cause control of amounts in the Light and Power Fund to be
transferred to the Trustee and shall 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 and if no other control or
application of Revenues and amounts in the Light and Power Fund is applicable pursuant to a
Senior Obligation, the Trustee shall apply all funds and amounts in the Note Trust Estate,
whether from Net Revenues or from 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 this
Article, in the following order of priority, without duplication:
First: To the payment of the Operation and Maintenance Expenses.
Second: To the payment of Senior Obligations Costs, including the
payment in full in cash of all principal, interest and all other payment due with
respect to all Senior Obligations including any Termination Payments.. In any
case, the owners of all Senior Obligations Outstanding at the time any Note
becomes due and payable because of an Event of Default, shall be entitled to
receive payment in full in cash of all principal, interest and all other payments due
with respect to all such Senior Obligations, in accordance with the Issuing
Instrument authorizing the issuance of such Senior Obligations, before the Owner
of such Note is entitled to receive any accelerated payment from Net Revenues
and amounts in the Light and Power Fund with respect to such Note.
Third: 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 Note Parity Obligations, including reasonable fees of counsel.
Fourth: To the payment of the principal and Redemption Price and Parity
Purchase Price of, and interest on, the Outstanding Notes, and the principal and
redemption price of and interest on the other Outstanding Note 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 included in the Note Trust
Estate and available for such payment are not sufficient to make all the payments
required by this clause, the Trustee shall apply such available amounts to the
payment of the principal and Redemption Price and Parity Purchase Price of, and
interest on, all Outstanding Note Parity Obligations then due and payable ratably
(based on the respective amounts to be paid), without any discrimination on
preferences.
OHS WuC261098413.4 62
Fifth: 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 amounts in the Light and Power Fund included in
the Note Trust Estate and available for such payment are not sufficient to make all
the payments required by this clause with respect to all Qualified Swap
Agreements, the Trustee shall apply the such available amounts 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.
Sixth: To the payment of amounts due with respect to outstanding
Subordinate Obligations (which shall 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-
(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 included in the Note Trust Estate and
available for such payment are not made in full as required by this Section, then no payment
shall be made which has a priority under this Section 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
Notes and Outstanding Note Parity Obligations, together with the reasonable and proper fees,
charges, expenses and liabilities of the Trustee and any other fiduciary for Note 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
Notes and Outstanding Note Parity Obligations and unpaid interest on all Outstanding Notes and
Outstanding Note Panty Obligations which shall then be payable, shall be paid for by the
account of the City, or provision satisfactory to the Trustee shall be made for such payment, and
all defaults under the Indenture, the Outstanding Notes and the Outstanding Note Parity
Obligation shall be made good or secured to the satisfaction of the Trustee or provision deemed
by the Trustee to be adequate shall be 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 Notes then
Outstanding and with the consent of each Note Parity Credit Provider whose consent is required
by a Supplemental Indenture or a Note Panty Credit Support Agreement, shall 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
shall 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 shall 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 Notes for various purposes hereof, including without limitation,
payment of defaulted interest and giving direction or consent to the Trustee.
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Section 10.04 Right to Accelerate Upon Default. Subject to the provisions of Section
2.07 of the Indenture, upon the occurrence of an Event of Default, the Trustee may, with the
consent of each Note Parity Credit Provider whose consent is required by a Supplemental
Indenture or a Note Parity Credit Support Agreement, and shall, at the direction of the Owners of
a majority in principal amount of Outstanding Notes (other than Notes owned by or on behalf of
the City) by written notice to the City, declare the principal of the Outstanding Notes and the
interest thereon to be immediately due and payable, whereupon such principal and interest shall,
without further action, become and be immediately due and payable.
Section 10.05 Senior Obligations Not Limiting Other Remedies. The relatives rights
of the Owners of Notes on one hand and the owners of Senior Obligations on the other hand,
shall not impair as between the City and the Owners of the Notes, the obligation of the City,
which is unconditional and absolute, to pay to the Owners of the Notes from the available
moneys in the Note Trust Estate the principal and Redemption Price and Parity Purchase Price
of, and interest on, the Notes in accordance with their terms; nor shall anything in the Indenture
or the Bond Indenture prevent the Owners of the Note Parity Obligations from exercising all
remedies otherwise permitted by applicable law or under the Indenture, subject to the right of the
owners of Senior Obligations to first receive payment from the Revenues and amounts in the
Light and Power Fund otherwise payable or deliverable to the Owners of the Note Parity
Obligations as described in 10.03 of this Master Indenture.
Section 10.06 Appointment of Receiver. If an Event of Default shall happen and shall
not have 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 Notes under the
Indenture, the Trustee shall be 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 shall confer.
Section 10.07 Enforcement Proceedings.
(a) If an Event of Default shall happen and shall not have been remedied, then
and in every such case, the Trustee, by its agents and attorneys, may, with the consent of each
Note Parity Credit Provider whose consent is required by a Supplemental Indenture or a Note
Parity Credit Support Agreement, proceed, and upon the written request of the Owners of not
less than a majority in principal amount of the Notes at the time Outstanding (other than Notes
owned by or on behalf of the City), with the consent of each Note Parity Credit Provider whose
consent is required by a Supplemental Indenture or a Note Parity Credit Support Agreement,
after receiving indemnification satisfactory to it as set forth in (d) below, shall proceed to protect
and enforce its rights and the rights of the Owners of the Outstanding Notes 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 Note Trust Estate
granted pursuant to the Indenture, or in aid of the execution of any power granted in the
Indenture or 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,
shall deem most effectual to enforce any of its rights or to require the City to perform any of its
duties under the Indenture.
OHS Ww:261098413.4 64
(b) All rights of action under the Indenture may be prosecuted and enforced by
the Trustee without the possession of any of the Notes or the production thereof in the trial or
other proceedings, and any such suit or proceedings instituted by the Trustee shall be brought in
its own name as trustee of an express trust.
(c) If an Event of Default shall occur and be 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 shall 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 shall have
power to, but unless requested in writing by the Owners of a majority in principal amount of the
Notes then Outstanding and furnished with reasonable security and indemnity, shall be under no
obligation to, institute and maintain such suits and proceedings as it may be advised shall be
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 shall be necessary or expedient to preserve or protect its interests and the
interests of the Owners of the Notes.
(e) If the Trustee or any Owner or Owners of Outstanding Notes 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 shall,
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 shall continue as though no such proceeding had been instituted.
Section 10.08 Restriction on Owner's Action.
(a) Except as otherwise provided in paragraph (b) of this Section, no Owner of
any Note shall have 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 shall have previously given to the Trustee written notice of the happening of an
Event of Default, as provided in this Article, and the Owners .of at least twenty-five percent in
principal amount of the Notes then Outstanding shall have filed a written request with the
Trustee, and shall 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 shall have offered to the Trustee
adequate security and indemnity against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee shall have 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 Notes shall 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 shall be instituted, had and maintained
OHS We t:261098413.4 65
in the manner provided in the Indenture and for the ratable benefit of all Owners of the
Outstanding Notes, subject only to the provisions of Section 11.04.
(b) Nothing in the Indenture or in the Notes contained shall affect or impair 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 Available Funds and the amounts
in the Funds, other than the Rebate Fund, held by the Trustee under the Indenture, the principal
amount, or Redemption Price or Parity Purchase Price of the Notes, and the 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.
Section 10.09 Remedies Not Exclusive. No remedy by the terms of the Indenture
conferred upon or reserved to the Trustee or the Owners of the Notes is intended to be exclusive
of any other remedy, but each and every such remedy shall be cumulative and shall 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 this Master Indenture. The assertion or
employment of any right or remedy, under the Indenture or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
Section 10.10 Effect of Waiver and Other Circumstances.
(a) No delay or omission of the Trustee or any Owner of a Note to exercise any
right or power arising upon the happening of an Event of Default shall impair any right or power
or shall be construed to be a waiver of any such Event of Default or be an acquiescence therein;
and every power and remedy given by this Article to the Trustee or to the Owners of the Notes
may be exercised from time to time and as often as may be deemed expedient by the Trustee or
by the Owners of the Notes.
(b) The Owners of not less than sixty percent in principal amount of the Notes
at the time Outstanding, or their attorneys -in -fact duly authorized, may on behalf of the Owners
of all of the Notes, waive any Event of Default and its consequences. No such waiver shall
extend to any subsequent Event of Default or impair any right consequent thereon unless the
provisions of this subsection (b) have been satisfied with respect to such subsequent Event of
Default.
Section 10.11 Notice of Default. The Trustee shall, within thirty (30) days after
obtaining knowledge thereof, mail written notice of the occurrence of any Event of Default to
each Note Parity Credit Provider and each Owner of Notes then Outstanding at such Owner's
address appearing in the Note Register.
&I'A 110)11 *.*41
MISCELLANEOUS
Section 11.01 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 Notes may be in any number of concurrent instruments of
OHS We t:261098413.4 66
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 Notes. Proof of the execution of any such instrument, or of any instrument
appointing any such attorney, and of the ownership of Notes shall 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 shall also constitute sufficient proof of his authority.
(b) As to any Note, the Person in whose name the same shall be registered in
the Note Register shall be deemed and regarded as the absolute owner for all purposes. None of
the City, the Trustee or any Paying Agent shall be affected by any notice to the contrary.
(c) Nothing contained in the Indenture shall 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 this Section which the City or the Trustee may deem sufficient.
Any request or consent of the Owner of any Note shall bind every future Owner of the same
Note in respect to anything done or suffered to be done by the City or the Trustee in pursuance of
such request or consent.
Section 11.02 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, shall be deemed severable and shall not be affected thereby, and the Indenture
and the Notes shall remain valid, and the Owners of the Notes shall retain all valid rights and
benefits accorded to them under the Indenture, the Charter, and the Constitution and statutes of
the State. The City and the Trustee hereby declare that they would have executed and delivered
the Indenture and each and every other article, section, paragraph, subdivision, sentence, clause
and phrase hereof and would have authorized the issuance of the Series 2011 Note pursuant
hereto irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions,
sentences, clauses or phrases hereof or the application thereof to any Person or circumstances
may be held to be contrary to law, unenforceable or invalid.
Section 11.03 General Authorization. The Authorized City Representatives, each
acting singly, are hereby 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.
Section 11.04 Moneys Held for Particular Notes. Except as otherwise provided in the
Supplemental Indenture authorizing a Series of Notes, the amounts held by the Trustee, any
Paying Agent or any Escrow Agent for the payment of principal, premium if any, Purchase Price
OHS Wmt:261098413.4 67
or interest due on any date with respect to particular Notes of such Series shall, 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 Notes entitled thereto. None of the City, the Trustee, any Paying Agent or any Escrow Agent
shall be liable to any Owner for interest on amounts so held in trust.
Section 11.05 Note Parity Credit Providers. (a) Except as limited by Section 7.01(b),
a Supplemental Indenture authorizing a Series of Notes may provide that any Note Panty Credit
Provider providing a Note Parity Credit Support Instrument with respect to Notes of such Series
may exercise any right under this Master Indenture or the Supplemental Indenture authorizing
the issuance of such Series of Notes given to the Owners of the Notes to which such Note Parity
Credit Support Instrument relates in lieu of such Owners.
(b) All provisions under this Master Indenture or a Supplemental Indenture
authorizing the exercise of rights by a Note Parity Credit Provider with respect to Notes of a
Series, including without limitation actions relating to consents, approvals, directions, waivers,
appointments and requests, shall be deemed not to require or permit such consents, approvals,
directions, waivers, appointments, requests or other actions and shall be read as if the Note Parity
Credit Provider were not mentioned therein (i) during any period during which there is a default
by such Note Panty Credit Provider under the applicable Note Parity Credit Support Instrument
or (ii) after the applicable Note Parity Credit Support Instrument shall for any reason cease to be
valid and binding on the Note Parity Credit Provider, or shall be declared to be null and void by
final judgment of a court of competent jurisdiction, or after the Note Panty 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 Note Parity Credit
Provider; provided, however, that the payment of amounts due or that may become due
(including without limitation all indemnity payments) to the Note Parity Credit Provider or any
other person identified under such Note Parity Credit Provider's Note Parity Credit Support
Agreement pursuant to the terms of this Master Indenture, any Supplemental Indenture and/or
such Note Parity Credit Support Agreement shall continue in full force and effect. The foregoing
shall not affect any other rights of a Note Parity Credit Provider, including rights as the Owner of
a Note Parity Credit Provider Note.
(c) All provisions in the Indenture relating to the rights of a Note Parity Credit
Provider shall be of no force and effect if there is no Note Parity Credit Support Instrument in
effect and all amounts owing to the Note Parity Credit Provider under the Note Panty Credit
Support Agreement have been paid.
Section 11.06 Incorporation of the Bond Indenture. The terms and provisions of the
Bond Indenture are incorporated herein.
Section 11.07 No Recourse on Notes. Neither the members of the City nor the officers
or employees of the City shall be individually liable on the Notes or in respect of any
undertakings by the City under this Master Indenture, any Supplemental Indenture or any Note.
Section 11.08 Unclaimed Moneys. Anything in this 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 Notes
OHS We t:261098413.4 68
which remain unclaimed for two years after the date when such Notes 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 Notes or the Purchase Price thereof became
due and payable, shall 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
Notes, and such Trustee, Escrow Agent or Paying Agent shall thereupon be released and
discharged with respect thereto and the Owners of such Notes shall look only to the City for the
payment of such Notes; 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, shall, at the
expense of the City, mail, postage prepaid to the Owners of such Notes, at the last address
appearing upon the Note Register a notice that said moneys remain unclaimed and that, after a
date named in said notice, which date shall be not less than 30 days after the date of the mailing
of such notice, the balance of such moneys then unclaimed shall be returned to the City.
Section 11.09 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, shall not be 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 shall accrue for the period after such nominal date.
Section 11.10 Governing Law. The Indenture and each Note shall 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, without reference to conflict of laws principles.
Section 11.11 Headings Not Binding. The headings in this Master Indenture are for
convenience only and in no way define, limit or describe the scope or intent of any provisions or
sections of this Master Indenture.
Section 11.12 Preservation and Inspection of Documents. All documents received by
the Trustee, any Paying Agent or any Escrow Agent under the provisions of the Indenture shall
be retained in its possession and shall be subject at all reasonable times to the inspection by the
City, the Trustee, any Note Parity Credit Provider and any Owner of an Outstanding Note and
their agents and their representatives, any of whom may make copies thereof.
Section 11.13 Parties Interested. Nothing in the Indenture expressed or implied is
intended or shall be construed to confer upon, or to give to, any Person, other than the City, the
Trustee, each Paying Agent, each Escrow Agent, the Note Parity Credit Providers and the
Owners of the Notes, any right, remedy or claim under or by reason of the hndenture or any
covenant, condition or stipulation thereof; and all the covenants, stipulations, promises and
agreements in the Indenture contained by the City shall be for the sole and exclusive benefit of
the City, the Trustee, each Paying Agent, each Escrow Agent, the Note Parity Credit Providers
and the Owners of the Notes.
[The remainder of this page is intentionally left blank]
OHS We t:261098413.4 69
IN WITNESS WHEREOF, the City of Vernon has caused these presents to be signed in
its name and on its behalf by its Mayor and attested by its City Clerk, and to evidence its
acceptance of the trust hereby created, [The Bank of New York Mellon Trust Company, N.A.]
has caused these presents to be signed in its name and on its behalf by an authorized officer, in
each case all as of the date first above written.
ATTEST:
0
Willard Yamaguchi, City Clerk
• • • �1�/�17:I.YLIL�I�L�lsiuF
M
Willard Yamaguchi, City Attorney
CITY OF VERNON
LE
Hilario "Larry" Gonzales, Mayor
[THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A.], as Trustee
Authorized Officer
OHS Wmt:261098413.4 70
STATE OF CALIFORNIA
Bill Lockyer
Stale Treasurer and Chair
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION
915 CAPITOL MALL ROOM 400
PO BOX 942809
SACRAMENTO CA 94209-0001
TELEPHONE: (916) 653-3269
FAX: (916) 654-7440
March 24, 2011
TO: Sean J Baxter
Orrick Herrington & Sutcliffe
777 South Figueroa St. Suite 3200
Los Angeles, CA 90017-5855
FROM:tKNOWLEDGEMENT
rk bell, Executive Director
RE: OF REPORT OF PROPOSED DEBT ISSUANCE
California Government Code Section 8855 requires written notice to be given to the California Debt and
Investment Advisory Commission (CDIAC) no later than 30 days prior to the proposed sale of any public
agency debt issue.
CDIAC acknowledges receipt of your notice of the following proposed debt issuance:
CDIAC Number:
2011-0251
Issuer:
Vernon
Project:
Electric Sys
Proposed Amount:
$50,000,000
Proposed Sale Date:
April 20, 2011
Date Notice Recieved:
March 18, 2011
Issuers may electronically file the Report of Final Sale through CDIAC's website, using the following information:
CDIAC Number: 2011-0251
Password: 115500
A CDIAC Number and Password will be provided for each electronic tiling of the Report of Proposed Debt
Issuance. This information is unique to this filing and must be used for any subsequent reporting under this CDIAC
Number.
Please submit the Report of Final Sale and the Official Statement/Offering Memorandum or other Bond Documents
in accordance with Government Code Section 8855 on this issue within 45 days of the signing of the bond purchase
contract or the acceptance of a bid to purchase the debt, to www.treasurer.ca.gov/cdiae/repoiiing.asp under the
heading "Reporting Forms". Official Statements/Offering Memorandums or other Bond Documents can be sent by
e-mail to CDIAC_issuance@treasurecca.gov.
Any questions regarding reporting requirements may be directed to CDIAC's Data Unit at (916) 653-3269.
Cc: Mark Whitworth
City Administrator
Juarez, Debbie
From: Enomoto, Kristen
Sent: Wednesday, August 24, 2011 7:16 AM
To: Juarez, Debbie
Subject: RES. NO. 2011-41 STATUS OF INDENTURE OF TRUST
Hi Debbie,
Still open. Sorry, no update at this time.
Thanks.
Kristen
-----Original Message -----
From: Juarez, Debbie
Sent: Tuesday, August 23, 2011 12:06 PM
To: Enomoto, Kristen
Subject: RES. NO. 2011-41 STATUS OF INDENTURE OF TRUST
Hi Kristen. Please let me know the status of the documents for the above -referenced
resolution. Thank you.
1
STAFF REPORT
LIGHT & POWER
DATE: March 17, 2011
TO: Honorable Mayor and City Council
FROM: Carlos R. Fandino, Jr.
Director of Light & Power
RE: 2011 Electric System Revenue Note
PURPOSE
Changes to the 2011 Electric System Revenue Note structure have been made to give
the City Administrator further options to negotiate Note at taxable market rates and
options for coverage tests for additional Light & Power Bonds or Refunding Bonds.
This flexibility allows the City Administrator to negotiate note terms depending on
market factors (i.e., Japan situation, Middle East, etc.).
The issuance of a 2011 Electric System Revenue Note to be authorized for the following
purposes:
(i) The payment of the termination amounts due on the Morgan Stanley
SWAPS;
(ii) That portion of the development of the wind -farm property relating to
CEQA and the no -fly zone; and
(iii) Improvements, additions and replacements to the Electric System
distribution system.
RECOMMENDATION
We recommend Light and Power Department issue a Note that includes the above
changes to fund the expenditures and request City Council approval at the March 22,
2011 meeting.
CRF:ah