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Ordinance No. 135 - RetiredINDEX TO ORDINANCE NO. !~ AN ORDINANCE PROVIDING FOR THE ISSUANCE OF. SEWER REVENUE BONDS, FIXING THE FORM OF BONDS AND PROVIDING COVENANTS FOR THEIR PROTECTION SOUTH TAHOE PUBLIC UTILITY DISTRICT $500,000 SEWER REVENUE BONDS OF 1967 A. GENERAL PROVISIONS 1. Bond Law 2. Definitions 3. Public Interest 4. Conditions Precedent 5. Purpose of Bonds 6. Project Cost 7. Complete Project (a) Adequate Funds (b/ Adequate Rates (c) Bond Payment 8. Single Transaction 9. Separate Fund 10. Legality o ISSUE, DENOMINATIONS AND INTEREST OF BONDS ll. Issue 12. Denominations 13. Interest 14. Interest After Maturity C. FORM, TERMS, NATURE, EXECUTION, DELIVERY AND REGISTRATION OF BONDS 15. Form of Bonds and Coupons 16. Where Payable 17. Source of Payment 18o Bonds Not a Debt 19o Entity Credit Not Encumbered 20. Bonds a Special Obligation 21. Negotiable Instruments 22. Execution of Bonds 23. Continuing Validity of Signatures 24. Delivery of Bonds 25. Transcript 26. Record of Bonds 27. Registration of Bonds /ii Principal and Interest Principal 0nly De-registration Re-registration CALLABLE BONDS AND PROCEDURE 28. 29. 30. 31. 32. 33. Callable Bonds Notice of Redemption Form of Notice - - Receipt of Notice Unnecessary Certificate of Notice Conclusive Redemption Fund Coupons Due Coupons Not Due Retransfers Page 2 2 2 4 5 5 5 5 5 6 6 6 6 6 6 6 6 6 ? ? ? ? ? ? ? 8 8 8 8 8 8 9 9 9 9 9 me Fe 34. 35. Effect of Notice of Redemption l~l Interest Terminates Matured Coupons Payable Purchase of Bonds PLEDGE OF REVENUES AND FUNDS 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 50~A~No Restriction on Other Powers 50-B Collection of Revenues Pledge of Revenues First Lien on Revenues Revenues a Trust Fund Equal Parity Ratio of Net Revenue Coverage Proceeds of Bonds /iiReserve Fund Acquisition Costs Construction Costs Incidental Expenses Bond Fund Sewer Revenue Fund Bond Fund Reserve Fund Maintenance and Operation Funds Surplus Fund Feeding Higher Priority Investment of Surplus Funds Inactive Deposits Sufficiency of Revenues Page 9 9 9 - lO COVENANTS BY THE ENTITY 51. Covenants 52. Acquire Project 53..Operate Enterprise 54. Good Repair 55. Preserve Security 56. Collect Revenues 57. Service Bonds 58. Pay Claims 59. Encumbrances 60. No Free Service 61. No Competition 62. Insurance 63. Fidelity Bonds 64. Engineers 65. Audit and Report 66. 67. 68. 69. 70. 71. Balance Sheet Revenue and Payments Insurance Customers Billing Rate Schedules Recapitulation Comments Unconditional Obligation Performance of Essence Recourse to Bond Law Indenture is Covenant Continuing Agreement Period of Agreement 10 10 10 10 11 11 11 11 11 11 11 11 12 12 12 13 13 14 14 14 14 14 14 15 15 15 15 ~5 15 15 15 15 15 15 16 16 16 16 16 16 16 16 16 16 16 16 17 17 17 17 17 17 17 ii Page Ge ADDITIONAL AND REFUNDING BONDS 72. Additional Bonds 73. Default 74. Terms 75. Net Revenues /~i While 1966 Bonds Outstanding After Term of 1966 Bonds 76. Estimated Additional Net Income /~/ idditiOnalCOnnectiOns Ac qu is it ions Construction Rate Increase 77. Refunding Bonds 78. Subordinate Lien Bonds 79. Issuance of Refunding Bonds 80. Amount of Refunding Bonds 81. Refunding 1966 Bonds 82. Deficiency Bonds 8B. Independent Certified Public Accountant 84. Independent Engineer H. MODIFICATIONS AND AMENDMENTS 85. 86. 87. 88. 89. 90. 91. 92. 93. Modifications Calling Bondholders' Meeting Notice of Meeting Notice Conclusive Voting Qualifications Attendance and Voting by Proxy Quorum and Procedure Vote Required Filing Certificate EVENTS OF DEFAULT AND REMEDIES 94. Event of Default Interest Covenants Bankruptcy 95. Acceleration 96. Application of Funds l!1 1966 Bonds Outstanding and Not in Default 1966 Bonds Outstanding and in Default - - After Term of 1966 Bonds i) Costs and Expenses ii) Interest on Undue Bonds iii) Principal and Interest on Due Bonds iv) Insufficient Funds (d) Procedure for Application to Bonds 97. Refunding Defaulted Bonds 98. Bondholder Remedies ........ ~ 99. I!/Accounting Injunction Mandamus Nature of Remedies Il} Cumulative · Waiver Delays Enforcement · StatUs~Quo 17 I7 17 18 18 18 18 19 19 19 19 19 19 19 19 20 20 20 20 21 21 21 21 21 21 22 22 22 22 23 23 23 23 23 23 23 23 25 iii J. FISCAL AGENT 100. Fiscal Agent 101. AcCeptance 102. Resignation 103.· Removal 104. Continued Service 105. Funds 106. Bond Redemption 10?. Records 108. Compensation 109. Responsibilities EXHIBIT "A" BOND FORM AND COUPON FORM, REGISTRATION FORM Page 25 26 26 26 26 26 26 26 i - iV iv WJM&L: j: s 2/2o/67 ORDINANCE NO. ~ AN ORDINANCE PROVIDING FOR THE ISSUANCE OF SEWER REVENUE BONDS, FIXING THE FORM OF BONDS AND PROVIDING COVENANTS FOR THEIR PROTECTION SOUTH TAHOE PUBLIC UTILITY DISTRICT $500,000 SEWER REVENUE BONDS OF 1967 BE IT ENACTED by the Board of Directors of the South Tahoe Public Utility District: WHEREAS, the South Tahoe Public Utility District, herein called "Entity", is a public utility district duly organized and now existing under and pursuant to the provisions of the Public Utilities Code of the State of California; WHEREAS, at an election duly held in the Entity on the 21st day of September 1965, the qualified electors of the Entity authorized the issU- ance of $~,400,000 of revenue-bonds for the purpose of acquiring, con- structing, improving and financing an Enterprise, as herein defined, which bonds were designated Sewer Revenue Bonds of 1966, and have been issued and sold and $1,~00,000 of which will be outstanding on the date of these bonds, and the acquisitions and improvements which said bonds were auth- orized to finance have been acquired, constructed and completed; WHEREAS, Section 47 of Resolution No. 641, A Resolution Providing for the Issuance of Sewer Revenue Bonds, Fixing the Form of Bonds and Providing Covenants for Their Protection, adopted by this Board on December 17, 1965, as amended, set forth the terms and conditions under which additional revenue bonds, payable from the revenues of the Enter- prise and on a'parity but not superior as to lien on said revenues, may be issued; and it has been determined that additional revenue bonds may be issued secured by a first and prior lien on the Revenues of the Enter- prise but subject and subordinate to the lien of said Sewer Revenue Bonds of 1966; WHEREAS, this Board adopted on January 5, 1967, Resolution No. 761, entitled "A Resolution of Intention to Acquire and Construct Solids Hand- ling System and Ammonia Stripping Tower and to Issue Sewer Revenue Bonds to Cover the Cost Thereof" providing for the acquisition, construction, improving and financing of'sanitary sewer facilities therein described and sometimes therein called "Works", herein referred to as "Project", said Project to serve an area within Entity therein described and herein called "Area"; WHEREAS, in accordance with law, a public hearing was duly held there- on, after due notice thereof, and no petition of owners was filed re- questing that the Board call and hold a special election of the property owners in the Area on the proposition of issuing said bonds, and written protests or objections by more than one-half of the owners of improved real property in the Area were not filed; and WHEREAS, Entity proposes herein to issue revenue Bonds to finance part of the cost of the acquisition, construction, improving and financing of the Project, and to provide that the principal of and interest on the Bonds shall be paid from a Bond Fund and that their payment be further secured by a Reserve Fund herein created, both of which funds will be main- tained from the Gross Revenues of the Enterprise, and said Revenues will be such that the Entity can and does herein determine that the principal of and interest on the Sewer Revenue Bonds of 1966 and the Bonds of this Issue, together with the payment of all other obligations which are, or may be, a charge against said Revenues, can be financed solely from said Rev- enues and to which its tax fund need not make any contribution at all. NOW, THEREFORE~ IT IS DETERMINED and ORDERED, as follows: A. GENERAl. PROVISIONS 1. Bond Law. The proceedings have been conducted and the Bonds are being issued pUrsuant to Chapter 5, Part B, Division 5 of the Health and Safety Code of the State of California, commonly referred to as the Sewer Revenue Bond Act of 19B~. 2. Definitions. As used herein the terms herein have the following meanings: (a) Annual means the fiscal year of the Entity, which is from-July I to June BO, both inclusive. (b) Area means the area to be served by the Project, as described in-'~esolution No. 761, including areas served by addi- tions, extensions, improvements and betterments thereto. (c) Bondholder or Holder of Bonds mean the holder of a bearer bond or the r'egistered owner of a registered bond. (d) Bond Law means the Sewer Revenue Bond Act of 19BB, as amended. (e) Bonds or Revenue Bonds or Bonds of This Issue mean the issue~of~Bo-'~in t~e total pri'ncipai amount of $500,0~0 herein authorized to be issued by the Entity. (f) Bond Year means the period between the dates of maturity of the annual Series of Bonds. (g) Charges mean fees, tolls, rates and rentals prescribed by the Legislative Body for the use of the Enterprise and the services and facilities thereof. (h) Clerk or Secretary mean the person elected or appointed as the Cler-~-~ Secretary of the Entity and its Legislative Body. (1) Enterprise means the sewage treatment plant and facili- ties, trunk sewers, pumping station and disposal facilities of the entire districts together with all additions and improvements to said system hereafter made. (J) ~ntitM means the South Tahoe Public Utility District. (k) Finance Officer or Treasurer means the officer designated by law to handle the fu~s of-~-~'~tY. (1) Fiscal AEent means the Bank of America N. T. & S. A., Main Office, Sau 'FranCisco, California, unless otherwise provided. (m) Fiscal Year means the fiscal year of the Entity which is from. July 1 to June BO, both inclusive. (n) Gross Revenues means annual revenues of the Enterprise. ioi Improve means to reconstruct, replace, extend, repair, better,.equiP, embellish Or otherwise improve. (P) .Ind.enture means this Ordinance. (q) Legislative Body means the Board of Directors, which is the governing body of the Entity. (r) Net Revenues or Net Revenues of the Enterprise means annual gross revenues of t'h'e Enterprise a~t'er deducting-all sums expended therefrom for the annual management, operation, maintenance and repair thereof, including all incidental costs, fees and ex- penses properly chargeable thereto. (s) .Presiding Officer means the President of the Legislative Body. (t) Project means the additions and improvements to the Enterprise, the Cost of acquiring, constructing, improving and financing of which~is to be paid from the proceeds of the Bonds of this Issue and from other sources set forth herein. (u) Revenues mean all charges received for, and all other income an~ receipts derived from the operation of the Enterprise or arising from the Enterprise, including revenues deposited in any funds to secure or to provide for the payment of the Sewer Revenue Bonds df 1966 and the Bonds of this Issue, and interest received on any invested moneys. (v) Sewer Revenue Bonds of 1966 means the.~outstanding and unpaid portion of' the $1,400,006 issue of reven~e bonds authorized to be' issued by Resolution No. 6~1 adopted by the Legislative Body on December 17, 1965, as amended. 3. Public Interest. The public interest, economy and general wel- fare will be served by ~he acquisition,~construction, improving and financing of the Project, including all expenses incidental thereto or connected therewith° 4. Conditions Precedent. All acts, conditions and things, required by law to exist, happen!and be performed precedent to and in the issuance of the Bonds have existed, have happened and have been performed in due time, formLand manner as required by law, and the Entity is now authorized, pursuant to each and every requirement o£ law, to issue Revenue Bonds in the manner and form as provided herein. 5. .Pu?p0se of Bonds. Revenue Bonds of the Entity shall be ~sued to pay part.of the cost of the acquisition, construction, improving and financing of the Project. 6. Project Cost. The total estimated cost of the Project, including construction of improvements, the engineering and other fees, and all other expenses incidental thereto including bond discount, if any, is the sum of.~$1,300,000,~ of which it is estimated that~$800,O00 will be Contributedlby the United states under Public Law 75B of the 89th Congress, or other aPplicable law, and $500,000 will be paid from the~proceeds~of the Bonds of .this Issue. ~ 7. C~omplete ProJe.ct. It is hereby found and determined that the Entity has made all necessary arrangements for the financing of the Project. Accordingly, it is hereby found and determined that: (a) AdeQuate Fu.nds. The Project can be accomplished as part of the Enterprise to constitute a complete system from the funds to be available from the proceeds of the sale of the Bonds, and from the other sources set forth above. (b) Adequate Rates. Charges have been and will be fixed, levied and collected for the services and facilities to be furnished by the Enterprise. (c) Bond Payment. The charges and all other income and re- ceipts included in the definition of "Revenues" shall constitute the Revenues of the Enterprise pledged to service the Bonds as provided herein. 8. .Single Transactipn. The Enterprise, including the Project, is one transaction, complete in and of itself, and the proceeds of the Bonds of this Issue will be applied to the cost thereof as herein provided. 9. Separate Fund. The Entity, during the term of the Bonds, will operate the Enterprise.as a separate and distinct agency, and will create and maintain a separate and distinct special fund and account for the Enterprise into which all Revenues to be received are to be deposited, and from which all disbursements herein provided, relating to the Enterprise, are to be made during the term of the Bonds. 10. Legality. If any section, paragraph, subdivision, sentence, clause or phrase of this Indenture shall for any reason be adjudged by any court of competent Jurisdiction to be unconstitutional, unenforceable or invalid, such Judgment shall not affect the validity of the remaining por- tion of this Indenture. The Legislative Body hereby declares it would have adopted this Indenture and each and every other section, paragraph, subdivision, sentence, clause or phrase hereof and would have authorized the issuance of the Bonds pursuant hereto irrespective of the facts that any one or more sections, paragraphs, subdivisions, sentences, clauses or phrases of this Indenture may be held to be unconstitutional, unen- forceable or invalid. Bo ISSUE~, DENOMINATIONS~AND INTEREST OF BONDS ll. Issue. The Bonds shall be dated May l, 1967, shall be in the total aggregate amount of $500,000, shall be numbered consecutively, and shall mature on July I in each of the years and amounts, as follows: Bond Nos. (.Both Inclusive) $'1,000 De- $5,000 De- nominations nominations Annual Year of Principal Maturity Callable 1 - 5 1 6- l0 2 ii - 15 3 16 - 20 4 21 - 30 5 - 6 31 - 40 7 - 8 41 - 5o 9 - lO 51 - 60 ll - 12 61 - 70 13- 14 $5,000 1968 Non 5,000 1969 Non 5,000 1970 Non 5,000 1971 Non 10,000 1972 Non 10,000 1973 Non 10,000 1974 Non 10,000 1975 Non 10,000 1976 Non 4 Bond Nos. (Both Inclusive) $'1'000 'De- $5,000 De- nominations nominations 71 - 85 86 - lOO 101 - ll5 116 - 130 131 - 150 151 - 170 171 - 195 196 - 225 226 - 255 ~56 - ~90 291 - 325 326 - 365 366 - 405 406 - 450 451 - 500 Annual Year of Principal Maturity Callable 15 - 17 $15,000 1977 Non 18 - 20 15,000 1978 * Non 21 - 23 15,000 1979 Non 24 - 26 15,000 1980 Non 27 - 30 20,000 1981 Non 31 - 34 20,000 1982 Non 35 - 39 25,000 1983 Non 40 - 45 30,000 1984 Non 46 - 51 30,000 1985 Non 52 - 58 35,000 1986 On or after 7~1~78 59 - 65 35,000 1987 On or after 7~1~78 66 - 73 40,000 1988 On or after 7J1~78 74 - 81 40,000 1989 On or after 7~1~78 82 - 90 45,000 1990 On or after 7~1~78 91 - 100 50,000 1991 On or after 7/1/78 * First call date 12. Denominations. The Bonds shall be of the denomination of $1,000 or $5,000 each, as determined by the bid on which the Bonds are sold. If the bid of the successful bidder is silent as to the denomination of the Bonds, it shall be conclusively presumed that the bidder has elected to have the Bonds be of the denomination of $5,000 each. 13. Interest. The Bonds shall bear interest from their date until paid at the rate of not to exceed six per cent (6%) per annum. Said in- terest shall be payable semiannually on the 1st days of January and July of each year to the date of maturity, except for the first coupon which shall be for interest from the date of the Bonds to January l, 1968. Attached to each Bond shall be interest coupons payable at the times the respective interest payments thereon become due and for the amounts there- of, as determined from the accepted bid for the purchase of the Bonds. Bidders for the purchase of the Bonds must specify the rate or rates of interest which the Bonds shall bear. Bidders may bid different rates of interest irrespective of the maturities of the bonds; provided, that the spread from the lowest to the highest rate shall not exceed two and one-half percent (2-1/2%) per annum. The interest rates stated in the bid may be in multiples of any fraction of one percent (1%). Bidders shall not be permitted to cause the interest for a given period to be split and represented by more than one coupon° 14. Interest After Maturity. If, upon presentation at maturity, or if redeemable and duly ~called for redemption, payment of the Bonds or of any interest Coupons t~h'ereon is not made in full accordance with the terms of this Indenture, said Bonds or coupons, or both, shall continue to bear interest at the rate stated in the Bond until paid in full. FORM, TERMS, NATURE, EXECUTION, DELIVERY AND REGISTRATION OF BONDS 15. Form of Bonds and Coupons. The form of the Bonds, and of the interest coupons which shall be attached thereto at the time of their issuance, shall be substantially as provided in Exhibit "A" hereto attached and made a part hereof. 5 16. Where Pa~abIe. The principal and interest on the Bonds shall be payable in lawful money of the United States of America at the main office of the Bank of America National Trust and Savings Association, 300 Montgomery Street, San Francisco, California, herein appointed the Fiscal Agent of the Entity for the Bonds of this Issue, or at any other bank or trust company designated by said Fiscal Agent as a correspondent in the cities of New York, New York, Chicago, Illinois, or Los Angeles, California. lT. Source of payment. The Bonds shall recite they are issued pur- suant to the Bond Law and that they are payable solely from the Revenues. 18. Bonds Not a Debt° The Bonds and interest thereon shall not be a debt of t'he Entity, nor a charge, lien or encumbrance, legal or equitable, upon any of its property or upon any of its income or receipts or revenues, other than the Revenues of the Enterprise which have been pledged to the payment thereof as herein provided. 19. Ent.i.ty Credit Not Encumbered° No recourse shall be had for the payment of the Bonds, or of' the interest thereon, or any part thereof, against the General Fund of the Entity, nor shall its credit or taxing power be deemed to be pledged thereto, and the holders of the Bonds, or the coupons thereon, shall never have the right to compel the exercise of the taxing power of the Entity or the forfeiture of any of its property for the payment of the Bonds or the interest thereon. 20. Bonds a Special Obligation, The Bonds of this Issue and all additional bonds which may be issued in accordance with the terms and con- ditions hereof shall be a special obligation of the Entity and shall be payable from and secured by a lien upon the portions of the Gross Revenues of the Enterprise as herein provided. 21. NeEotiable Instruments. The Bonds are negotiable instruments and title thereto, unless registered, shall pass by physical delivery thereof. The Holders of the Bonds shall have all of the rights possessed by holders of negotiable instruments payable to bearer° 22. Execution of Bonds. When the Bonds have been prepared in accord- ance with this Indenture, they shall be executed on behalf of the Entity and under its official seal by the Presiding Officer by his printed, en- graved or lithographed facsimile signature and by the manual signature of the Clerk who shall affix thereto the corporate seal of the Entity, and the interest coupons shall be executed and authenticated by the printed, engraved or lithographed facsimile signature of the Finance Officer who by such signature shall ratify the execution of the same. The seal of the Entity may be affixed to the ~onds by a printed, lithographed or other reproduction thereof. 23. Continuing Validit~ of Signatures° If any officer whose sig- nature or countersignature appears on the Bonds or coupons ceases to be such officer before the delivery of the Bonds to the purchaser, his sig- nature or countersignature is nevertheless as valid and sufficient for all purposes as if he had remained in office. 24. DeliverM of Bonds. The Bonds shall be delivered to the purch- asers thereof. The Entity shall deliver the Bonds upon receipt of the purchase price and shall credit the proceeds to the special fund and account for the payment of the cost of the Project, as iprovided herein, but the purchasers shall not be required to see to the proper application thereof. 6 25. Transcript. The Clerk is hereby authorized to prepare and furn- ish to the purchasers of the Bonds issued hereunder and attorneys examining the same a complete set of certified copies of all ordinances, resolutions and documents of the Entity relating to the Project and the Enterprise and to the issuance of Bonds and of all other proceedings and records of the Legislative Body showing the right, power and authority to issue the Bonds and to provide the security therefor, and such certified copies and certificates shall be deemed representations of ~the Legislative Body as to all facts stated therein. 26. Record of Bonds. The Fiscal Agent shall keep a record of the names of the purchasers of the Bonds and of all successive holders of the Bonds issued hereunder so far as such information is furnished to it. 27. Registration of Bonds. Any Bond is subject to registration either as to principal and interest or as to principal only, upon written request of the Bondholder and presentation of the Bond to the Fiscal Agent for registration° (a) Principal and Interest. Upon presentation and request for registration as to principal and interest, the Fiscal Agent shall cut off the coupons and destroy them. It shall maintain a book in which it shall enter the numbers of all registered Bonds and the names and addresses of the owners of registered Bonds. Until such registration is cancelled as herein provided, the in- terest and principal thereof shall be payable only to the registered owner. There shall be provided on the back of each Bond a suitable blank showing the name and address of the registered owner, the date of registration or transfer, the type of registration and the signature of the Fiscal Agent° (b) Principal 0nl[. The Bonds may be registered as to principal only. When Bonds are registered as to principal only, a notation shall be made to that effect in the registration book and on the Bond. The coupons shall not be detached and the in- terest on such Bonds shall be paid upon presentation of such coupons in the same manner as unregistered Bonds. Principal, however, shall be paid only to the registered owner upon presen- tation of such Bond. (c) De-registration. The registration of any unmatured Bond may be cancelled upon written request of the registered owner. Upon receipt of such request, the Fiscal Agent shall cancel the registration in the bond registry book and on the back of the Bond, cause all unmatured coupons to be reprinted and re-attached to the Bond, and deliver the Bond and attached coupons to the owner. Until such Bond is re-registered, the principal thereof shall be payable to bearer, and the interest shall again be paid upon surrender of proper coupons° The cost of reprinting the coupons shall be paid by the person requesting de-registration. (d) .Reyre.gistration. De-registered Bonds are subject to re-registration in the same manner as previously unregistered Bonds. 61. No Competition. It will not acquire, construct, operate or main- tain, and not permit any other public or private corporation or agency or any persons whatsoever to acquire, construct, operate or maintain within its boundaries or within any part thereof, any system or utility compet- itive with the Enterprise. 62. Insurance. It will procure and keep in force insurance upon all buildings and structures of the Enterprise and the machinery and equip- ment therein, which are usually insured by Entities operating like proper- ty, in good and responsible insurance companies. The amount of the insurance shall be such as may be required to adequately protect it and the Holders of the Bonds from loss due to any such casualty, and in the event of any such loss the proceeds shall be used to repair or restore the Enterprise or for the payment of the Bonds. 63. Fidelity Bonds. It will procure suitable fidelity bonds covering all of its officers and other employees charged with the operation of the Enterprise and the collection and disbursement of Revenues therefrom. 64. Engineers. It will employ consulting engineers of acknowledged reputation, skill and experience in the construction and operation of the Enterprise or any unusual or extraordinary items of extensions or better- ments as shall be required from time to time, all reports, estimates and recommendations of such consulting engineers to be filed with the Clerk and furnished to the purchasers of the Bonds issued hereunder if requested. 65. Audit and Report. It will employ a certified public accountant who shall prepare and file with the Finance Officer, the Fiscal Agent, and with the California Districts Securities Commission if the bonds shall at any time be certified by it, and make available to the purchaser of the Bonds if requested, annually within one hundred twenty (120) days after the close of each fiscal year on June 30th, eommencing in the year 1968, an annual audit for the preceding year which shall include: (a) Balance Sheet. A balance sheet including balances of all funds herein created. (b) Revenue and Payments, A statement in detail of the cash receipts and disbursements of the income and expenses of the Enterprise. (c) Insurance. A statement as to the insurance carried by it, including a brief description of each policy as to its coverage and name of company issuing it. (d) Customers. The number of customers classified by rate or charge for service groups, the number of properties connected to the Enterprise and the number of applications for services on hand but not connected. (e) Billing. billing per user° The annual billings and the average monthly (f) Rate Schedules. The schedules of the rates and charges prescribed by the rate ordinance then in effect. (g) Recapitulation. A recapitulation of funds and accounts created.by this Indenture into which are put moneys derived from the operation of the Enterprise and from the sale of the Bonds, which shall show balances at the beginning of the period, deposits and withdrawals made during the period and balances at the end of the period; and also monthly deposit requirements for funds during the next succeeding fiscal period. 16 ~h) Comments. Comments of the accountant relative to the fulfillment-of th~ provisions of this Indenture and the manner in which the Enterprise has been operated, and his recommendations for improving the operation of the Enterprise. 66. Unconditional 0bligatio~. Except alteratio~ of the Bonds or this ~ndenture, only as provided herein for nothing in this Indenture or in the Bonds or in the coupons contained shall affect or impair the Obli- gation of the Entity, which is absolute and unconditional, to pay the Principal of and interest on the Bonds to the respective Holders of the Bonds and coupons at the respective dates of maturity, or upon Prior redemption, as herein provided, and out of the Revenues herein pledged for such payment, or affect or impair the right of action, which is also absolute and unconditional, of such Holders to institute suit to enforce such payment by virtue of the contract embodied in the Bonds and coupons. 67. ~erformance of Essence. The Performance of the duties pre- scribed in this Indenture and i--n the Bond Law by the Entity or its proper officers, agents or employees, is of the essence of EntityUs contract with the Bondholders. 68. ~ecourse to Bond Law. Each taker and subsequent holder of the Bonds and attached or detached coupons has recourse to all of the provisions of this Indenture and of the Bond Law and is bound by their terms. 69. Indenture is Covenant. Each and all of the terms of this Indenture-Shall be and c0nsti~ute a covenant on the part of the Entity to and with each and every Bondholder from the time the Bonds are issued hereunder. 70. ~ontinuing AEreement. This Indenture and the covenants, agree- ments, provisions and conditions herein contained, constitutes a contin- uing agreement with the Holders of all of the Bonds issued or to be issued hereunder and then outstanding, to secure the full and final pay- ment of the principal of and premiums, if any, and the interest on all bonds which may from time to time be executed and delivered hereunder. 71. Period of Agreement. Whenever all o , then accrued thereon sha'll w .... ~ ...... f_the~Bonds and all interest '~= ~ ~u~y paid an~ discharged, the agree- ments in this Indenture contained shall cease and terminate, and the Entity shall be under no further obligation to apply the Revenues of the Enterprise as herein required, or otherwise to do or perform any of the covenants, conditions or agreements in this Indenture contained. G. ADDITIONAL AND REFUNDING BONDS 72. Additional Bonds. No additional bonds shall be issued or other obligatioh's incurred' w~i6h shall be payable from the Revenues and con- stitute a lien thereon which shall have priority over the Bonds of this Issue. The Entity may issue additional bonds payable as to principal and interest from the Revenues on a parity with the Bonds of this I~sue for the purpose of improving the Enterprise or for acquiring, construc- ting or improving additions, extensions or betterments to the Enterprise or for the purpose of refunding any outstanding bonds issued for the Enterprise or for any combination of such purposes and subject to the conditions provided in this Part Go 73. Default. The Entity shall not at the time of the issuance of such additional bonds be in default hereunder unless the bonds are for refunding such defaulted obligation. l? 74. Terms~ Such additional bonds shall mature on January 1 or July 1 in each year; the final maturity date of the additional bondS shall'be not earlier than the final maturity date of any bonds then Outstanding; and fixed serial maturities or minimum annual sinking fund payments or any combination thereof shall be established in amounts sufficient to provide for the payment and retirement of all such additional bonds on or before their respective maturity dates. 75. Net Revenues. The annual Net Revenues of the Enterprise for the latest fiscal or Bond Year prior to the issuance of such additional bonds, after having deducted therefrom the principal and interest payments required to be paid for said year on the Sewer Revenue Bonds of 1966, as shown by an audit, certificate or opinion of an independent certified public accountant employed by the Entity, plus the additional Net Reve- nues, estimated as provided in Section 76, shall have produced the following sums: (a) While 1.9~6 Bonds Outstandi~E. If such additional bonds are issued during the time that any of the Sewer Revenue Bonds of 1966 are outstanding, one and thirty-hundredths (1.30) times (i) the average annual amount of the principal of and interest on the then outstanding Bonds of this Issue to accrue during the term of the Sewer Revenue Bonds of 1966, plus (ii) the average annual amount of the principal of and interest on the additional bonds then proposed to be issued to accrue during the term of the Sewer Revenue Bonds of 1966, plus (iii) the average annual amount of any minimum annual sinking funds required to be transferred under the terms of the Indenture providing for the issuance of said proposed additional bonds to accrue during"the term of the Sewer Revenue Bonds of 1966. (bi) After Tesm of 1~66 Bonds. If such additional bonds are issued 'subsequent~ ~0 the term of the Sewer Revenue Bonds of 1966, one and thirty-hundredths (1.30) times A. (i) i.the average annual amount of the principal or, and interest on the then outstanding Bonds of this Issue to accrue during their term, plus (ii) the average annual amount of the principal OT~and interest on the additional bonds then proposed to B'e issued to accrue during their proposed term, plus (iii) the average annual amount of any minimUm ~.nnual sinking funds required to be transferred under the ~erms of the Indenture providing for the iSSuance of said proposed additional bonds to accrue during~their proposed term; or B. (i) ~the average annual amount computed under S:Ubdivision A(O of Part (b) of this Section, plus (ii) the average annual amount of that part of the sums provided~!n subdivisions A(~) and A(ifi) of Part (b) of this Section which will accrue during the term of the then outstanding Boflds of this Issue, whichever .'Shall be the lesser amount. 18 76. Estimated Additional Net Income. The Net Revenues estimated as provided in SectiOn 75 may be revised 'and enlarged in a written re- port of an independent engineer or the Entity engineer, as approved by a certificate or opinion of an independent certified public accountant, to include any or all of the following: (a) Additional Connections. The Net Revenues of the ad- ditional number of users connected to the Enterprise at the time of the issuance of said report, had such users been connected to the Enterprise for the entire fiscal or Bond Year used for the audit, certificate or opinion referred to in Section 75. (b) AcQuisitions... The Net Revenues to be derived from the users connected t6 a sewer system or facilities to be ac- quired by the Entity from the proceeds of the additional bonds. (c) Construction. Seventy-five percent (75%) of the ad- ditional Net Revenues estimated to be produced by the construc- tion of the Project for which additional bonds are to be issued, or by construction from other available revenues, in any twelve (12) months period out of the twenty-four (24) months next succeeding. (d) Rate Increase. Seventy-five percent (75%) of the ad- ditional revenues estimated to be derived from any increase in charges made by the Entity which have not been reflected in the audit, certificate or opinion for the full fiscal or bond year covered therein. 77. Refundin~ Bonds. In the event and to the extent that additional bonds are to be issued for the purpose of refunding and retiring any Bonds of this Issue, or of the Sewer Revenue Bonds of 1966, for the purpose of the calculations required under this Part G, the amounts of annual prin- cipal, interest and minimum sinking funds required to have been paid on the bonds to be refunded, as provided in Section 75 need not be taken into consideration in computing the coverage for such additional bonds. 78. Subordinate Lien Bonds. Nothing in this Indenture shall be deemed to limit or resb¥ict the power of the Entity to issue such ad- ditional bonds payable from but inferior as to the lien of any of the then outstanding Bonds on the Revenues without compliance with the provisions of this Part G or of any other provision of this Indenture. 79. Issuance of Refundin$ Bonds. The Legislative Body may, with the consent of the Holder of any noncallable Bond, and without the con- sent of the Holder of any callable Bond, refund said Bond as provided by law. The refunding bond shall be on a parity of lien with the refunded Bond, providing that the principal and the installments of interest thereof shall not increase any annual installment of principal and interest of the Bonds more than the minimum coverage ratio provided herein. Nothing here- in shall prohibit the Legislative Body from issuing such refunding bonds subordinate as to the lien of the Bonds and of bonds subsequently issued and payable from the same Revenue. For the purpose of curing a default or threatened default, the Legislative Body may issue additional bonds of this Issue and exchange such bonds for maturing or matured Bonds or sell them and use the proceeds thereof to pay said Bonds, provided that the new bonds shall be made to mature after the maturity of the Bonds and not later than forty ~40) years f~Om the date of the Bonds. 19 80 Amount of Refunding Bonds. Funding or refunding bonds may be issued in a principal amount sufficient to provide funds for the payment of all of the following: (a) All Bonds to be funded or refunded by them° (b) All expenses incident to the calling, retiring, or paying of the outstanding Bonds and the issuance of the funding or refund- ing bonds, including the difference in amount between the par value of the funding or refunding bonds and any amount less than that for which the funding or refunding bonds may be sold. (c) Interest upon the funding or refunding bonds from the date of sale to the date of payment of the Bonds to be funded or refunded out of the proceeds of the sale or the date upon which the Bonds to be funded or refunded will be paid pursuant to the call or an agreement with the Holders of such Bonds. (d) Any premium necessary in the calling or retiring of the outstanding Bonds and the interest accruing on them to the date of the call or retirement. 81. Refundin$ 1966 Bonds. Nothing in this Indenture shall be deemed to limit or restrict the powers of the Entity to refund all or any of the Sewer Revenue Bonds of 1966, under Resolution. No. 641, as amended, or under the Bond Law to be secured by a lien on the Revenues of equal parity to that now existing under said Resolution. 82. Deficiency Bonds. If the proceeds of the Bonds for any reason are less than the cost of the Project, additional bonds may in like manner be issued and sold to provide for the amount of the deficit but not to exceed the amount necessary to complete the Project according to the orig- inal plans and specifications. Such deficiency bonds shall be deemed to be the same in all respects as the original issue, and shall be entitled to payment, without preference or priority over the Bonds first issued, and shall be disposed of in like manner° 83. Independent Certified Public Accountant means any registered or licensed certified public accountant Or firm of such certified public accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State of California, appointed and paid by the Entity, and who, or each of whom: (a) is in fact independent, and not under domination of the Entity; (b) does not have any substantial interest, direct or in- direct, with the Entity; (c) is not connected with the Entity as an officer or em- ployee of the Entity, but who may be regularly retained to make annual or other similar audits of the books of the Entity. 84. Independent Engineer means any individual or firm of engineers having special knowledge and experience in the field of sanitation, appointed and paid for by the Entity and who, or each of whom: (a) is in fact independent and not under domination of the Entity; (b) does not have ~ny substantial interest, direct or indirect, with the Entity; 2O (c) is not connected with the Entity as an officer or em- ployee of the Entity, but who may be regularly retained to make annual or other periodic reports to the Entity. H. MODIFICATIONS AND AMENDMENTS 85. Modifications. All of the provisions of this Indenture shall constitute a contract b'etween the Entity and the Holder or Holders of the Bonds. From and after the sale and delivery of any of the Bonds, no amend- ment, alteration, or modification of the Bonds or of the coupons appertain- ing thereto or of this Indenture, which shall impair, impede or lessen the rights of the Holders of the Bonds or the coupons appertaining thereto then outstanding shall be made without the prior written consent, or, alternatively, the prior consent given at a Bondholders' meeting, of the Holders of at least sixty-six and two-thirds percent (66-2/3%) of the aggregate principal amount of Bonds then outstanding, unless such amend- ment, alteration or modification be herein authorized° Any such amendment, alteration or modification which shall have received the consent of the Holders of said percentage of said outstanding Bonds as provided in this Section shall be binding on the Holders of all of the Bonds and coupons appertaining thereto, either attached to or detached from said Bonds. 86. Callin~ Bondholders' Meeting. If the Entity shall desire to or shall be required'to obtain'the consent of the Bondholders to a proposed action, the Legislative Body may adopt a resolution calling a meeting of the Bondholders for the purpose of considering the action~ the consent to which is desired or required° 87. Notice of Meeting. Notice specifying the purpose, place, date and hour of such m'eeting shall be given by mail thirty /30) days prior thereto and in addition shall be published once thirty (30) days prior thereto in a financial paper publimhed in San Francisco or New York. Such notice shall set forth the nature of the proposed action, consent to which is desired or required. The Finance Officer shall mail such notice by registered mail to the last known Holder or Holders of bearer Bonds, as shown by the records thereof, and to the registered owners of any regis- tered Bonds at their addresses shown on the bond registry books° The place, date and hour of holding such meeting and the date or dates of pub- lishing and mailing such notice shall be determined by the Legislative Body in its discretion. 88. Notice Conclusive. The actual receipt by any Bondholder of any notice required to be given by Section 87 of this Indenture shall not be a condition precedent to the undertaking, notice of which is required to be given, and failure to receive such notice shall not affect the validity of the proceedings thereat or prevent the notice from having the effect intended by the giving of notice; provided that notice has been published and has also been mailed to Bondholders to the extent known to the Finance Officer. No irregularity in the form of said notice shall affect its validity provided notice has been given and it shall not be open to any Bondholder to Bhow that he failed to receive notice. 89. Voting Qualifications. Any Holder of a bearer Bond may, prior to any such meeting, deliver s~ch Bond to any agency designated by the Entity for the purpose, and shall thereupon be entitled to receive a receipt for the Bond so deposited, calling for the redelivery of such Bond, or of a certificate of deposit thereof, satisfactory to the Finance 0fficer,~executed by a bank or trust company, at any time after the m~eting. The Finance Officer shall prepare and deliver to the chairman. of the meeting a list of the names and addresses of the registered owners of the Bonds as shown on the bond registry books, together with a state- ment of the maturities, series and numbers of the Bonds held by each 21 of such registered Bondholders, and, to the extent known by him, a list of the names and addresses of the owners of bearer Bonds deposited with the aforesaid agency, together with a statement of the maturities, series and numbers of the Bonds held and deposited by each of such Bondholders, and no Bondholder shall be entitled to vote at such meeting unless his name appears upon such lists or unless, at the meeting, he shall present his Bond or Bonds or such certificate of deposit thereof. No Bondholder shall be permitted to vote with respect to a larger aggregate principal amount of Bonds than is set against his name on such lists, unless he shall produce the Bonds upon which he desires to vote or such certificate of deposit. 90. Attendance a.nd Voting by Proxy. Attendance and voting by Bond- holders at such meeting may be by proxy. Owners of registered Bonds may, by an instrument in writing under their hands, appoint any person as their proxy to vote at any meeting for them, and such instrument when pre- sented at such meeting shall be sufficient to entitle such person to vote as the proxy of said registered owner. Any person may vote as the proxy of the owner of a bearer Bond on presentation of such Bond, certificate of deposit thereof and an instrument in writing under the hand of the Bond- holder appointing such person as his proxy to vote at such meeting for him, or if such instrument in writing has been delivered to the agency designated by the Entity at the time the Bond was delivered to such agency as provided for in Section 89 of this Indenture and such person's name appears on the list delivered by the Finance Officer to the chairman of the meeting as the proxy of the owner of such bearer Bond. 91. Quorum and Procedure. A representation of at least sixty-six and two-thirds percent (66-2/3%) in aggregate principal amount of the Bonds then outstanding, shall be necessary to constitute a quorum at any meeting of Bondholders, but less than. a quorum may adjourn the meeting, from time to time, and the meeting may be held as so adjourned without further notice, whether such adjournment shall have been had by a quorum or by less than a quorum. The Legislative Body shall, by an instrument in. writing, appoint a temporary chairman of the meeting, and the meeting shall be organized by the election of a permanent chairman and a secre- tary. At any meeting, each Bondholder shall be entitled to one vote for every $1,000 principal amount of Bonds with respect to which he shall be entitled to vote as aforesaid. The Legislative Body, by its duly authorized representative, may attend any meeting of the Bondholders, but shall not be required to do so. 92. Vote ReQuired. At any such meeting held as aforesaid, there shall be submitted for the consideration and action of the Bondholders a statement of proposed action, consent to which is desired or required, and if such action shall be consented to and approved by the Bondholders in person or by proxy holding at least sixty-six and two-thirds percent (66-2/3%) in aggregate amount of the Bonds then. outstanding, the chair- man and the secretary of the meeting shall so certify in writing to the Legislative Body, and such certificate signed by the chairman, and secre- tary of any such meeting shall be conclusive evidence and the only competent evidence of the matters stated in the certificate relating to the proceedings taken at such meeting, as against all parties. 93. Filing Certificate. The certificate shall be filed in. the office of the Finance Officer and shall be kept on file so long as any of the bonds and the interest thereon, are outstanding and unpaid. A duplicate original, if there is one, and, if not, then a reproduced copy thereof including the signatures thereon., shall be filed with the Clerk who shall likewise keep it filed with the papers of the proceedings authorizing the issuance of the affected Bonds. 22 I. EVENTS OF DEFAULT AND REMEDIES 94. Event of Default. One or more of the following events (herein called "eve'nts of default"') shall constitute an event of default: (a) Principal. If default shall be made in the due and punctual payment of the principal of any Bond when and as the same shall become due and payable, whether at maturity as there- in expressed, by proceedings for redemption, by declaration or otherwise; or (b) Interest. If default shall be made in the due and punctual payment of any installment of interest of any Bond when and as such interest installment shall become due and payable; or (c) Covenants. If default shall be made in the observa- tion of any of the covenants, agreements or conditions on its part herein or in the Bonds contained, and such default shall have continued for a period of thirty (30) days; or (d) Bankruptcy. ~If the Entity shall file a petition or answer seeking reorganization or arrangement under the Federal Bankruptcy laws or~ other applicable laws or statutes of the United States of America, or if a court of competent Jurisdiction shall approve a petition., filed with or without the consent of the Entity, seeking reorganization under the Federal Bankruptcy laws or any other applicable laws or statutes of the United States of America, or if, under the Federal Bankruptcy laws or the pro- visions of any other law for the relief or aid of debtors, any court of competent Jurisdiction shall assume custody or control of the Entity or of the whole or any substantial part of its property. 95. Acceleration. In each and every event of default, the Holders of not less .than sixty-six and two-thirds percent (66-2/3%) in aggregate principal am'ount of the!Bonds at the time outstanding shall be entitled, upon notice in writing to the Entity, to declare the principal of all of the Bonds then. outstanding hereunder and the interest accrued thereon to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in the Bonds contained to the contrary notwithstanding. 96. Application of Funds° When acceleration has been declared under Section 95 hereof, the Revenues shall be applied as set forth in this Section: (a) 1966 Bonds Outstanding and Not in Default° If any of the Sewer Revenue Bonds of 1966 are 0h~sb'anding and not in de- fault under subdivision (a) of Section 60 of Resolution 641, as amended, all sums then or thereafter in. the Bond and Reserve~Funds herein~provided for the Bonds of this Issue and, subject to the prior lien and claim of said Sewer Revenue Bonds of 1966, in the Surplus Fund shall be applied in the order set forth in sub- divisions (i), (ii), (iii) and (iv) of subdivision (c) hereof; (b) 1966 Bonds Outstanding and in Default° If any of the Sewer Revenue Bonds of 19bb 'are outstanding an'6 then in default under subdivision (a) of Section 60 of Resolution No. 641, as amended, and acceleration has been declared under subdivision (b) of said Section 60, the sums remaining after application thereof 23 under subdivision (c) of said Section 60, including all sums thereafter received, and the sums in the Bond and Reserve Funds herein provided shall be applied in the order set forth in sub- divisions (i), (ii), (iii) and (iv) of subdivision (c) hereof; (c) After Term of 1966 Bonds. Subsequent to the term of the Sewer Revenue Bonds of 1966, all of the Gross Revenues of the Enterprise, including all sums in all of the funds provided for in any Section hereof upon the date of the happening of any event of default and all sums thereafter received by the Entity hereunder shall be applied by it in. the following order: (i) Costs and Exp~nses.. To the payment of the costs and expenses of the Bondholders in declaring such event of default, including reasonable compensation to their agents, attorneys and counsel, and to the payment of the costs and expenses of the Finance Officer in carrying out the pro- visions of this Section, including reasonable compensation to his agents, attorneys and counsel. (ii) Interest on Undue Bonds. In case the principal of the Bonds shall not have become due and shall not then be due and payable, to the payment of the interest in default in the order of the maturity of the installments of such interest, with interest on the overdue installments at the same rate, such payments to be made ratably to the persons entitled thereto without discrimination or preference. (iii) Principal and Interest on Due Bonds° In case any principal of the Bonds sh'all have become anld shall be then due and payable, to the payment of the whole amount then owing and unpaid upon the Bonds for the principal and interest, with interest on the overdue principal and in- stallments of interest at the same rate. (iv) Insufficient Funds° In case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such principal and interest without preference or priority of principal over interest, or of interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest then due. (d) Procedure for Application to Bonds. No application of funds to the Bonds 'of this Issue shall be made except upon pres- entation of the several Bonds and coupons, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid. 97. Refundin$ Defaulted Bonds. The Entity may refund any defaulted Bond by the issuance of a new bond maturing after the maturity of the last Bond issued hereunder, but otherwise on a parity as to payment of interest with the Bonds issued hereunder, and with the consent of the Holder thereof, exchange such Bonds for such matured Bond, or, without his con- sent, issue and sell said refunding bond and pay said defaulted bond, and in such event such action shall be deemed to cure such default hereunder. 98. Bondholder Remedies Subject to any contractual limitations binding upon the Holders of a~y of the Bonds (including but not limited to, any limitations upon the exercise of any remedy to the Bondholders holding a specific proportion or percentage of such Bonds), any Holder of Bonds shall have the right, for the equal benefit and protection of all Holders of Bonds similarly situated, in addition to those provided in the Bond Law: (a) A. gco~nting. By action or suit in equity to require the Entity and its Legislative Body and other officers, agents and employees to account as the trustee of an express trust. (b) Injunction. By action or suit in equity to enjoin any acts or things which may be unlawful or in violation of the rights of the Bondholders. (c) Mandamus. By mandamus or other suit, action or proceeding at law or in equity to enforce his rights against the Entity and its and any of its officers, agents and employees, and to compel it or them to perform and carry out its and their duties and ob- ligations under the law and its and their covenants and agree- ments with Bondholders as provided herein. 99. Nature of Remedies. As to remedies to the Bondholders: (a) Cumulative. No remedy conferred hereby or by the law upon any Holder of Bonds is intended to be exclusive of any other remedy, but each such remedy is cumulative and in addi- tion to every other remedy and may be exercised without ex- hausting and without regard to any other remedy conferred hereby or by the law or by any other lawo (b) Waiver. No waiver of any default or breach of duty or contract by any Bondholder shall extend to or shall affect any subsequent default or breach of duty or contract or shall impair any rights or remedies thereof. (c) Delays. No delay or omission of any Bondholder to exer- cise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or acquiescence thereof° (d) Enforcement. Every substantive right and every remedy conferred upon the Bondholders may be enforced and exercised from time to time and as often as may be deemed expedient. (e) Status Quo. In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and then discontinued or abandoned, or shall be determined adversely to the Bondholders, then, and in every such case, the Entity and such Bondholders shall be restored to their former positions and rights and remedies as if no such suit, action or proceedings had been brought or taken° J. FISCAL AGENT 100. Fiscal Agent. The Entity hereby appoints the Bank of America N. T. & S. A., Main Office, 300 Montgomery Street, San Francisco, California, as the Fiscal Agent for this Issue of Bonds for the purpose of paying the principal of and interest on any of the Bonds presented for payment and for the purpose of performing all other duties assigned to or imposed upon it as herein provided. 25 101. Accepta.nc.e,. The Entity~and the Fiscal Agent have entered into an agreement by the terms of which the Fiscal Agent is obligated to perform the duties imposed on it by the terms of this Indenture. 102. ResiEnation. Any Fiscal Agent appointed hereunder may resign at any time. Upon the merger, consolidation, or other reorganizatiOn of any Fiscal Agent, the Legislative Body shall appoint a new Fiscal Agent which may be the corporation resulting from said reorganization. 10~. Removal. The Fiscal Agent initially appointed, and any suc, cessor thereof, may be removed by the Entity and a successor appointed; provided, that each such successor shall be a bank or trust company having trust powers doing business in and having an office in the State of California° 104. Continued Service. Any such Fiscal Agent designated by the Entity shall continue to be the Fiscal Agent of the Entity for all of said purposes until the appointment and qualification of a successor as such Fiscal Agent, and the Entity agrees that it will maintain a Fiscal Agent within the State so long as any of the Bonds are outstand- ing and unpaid. 105. Funds. The Fiscal Agent is hereby authorized and directed to keep the accounts and make the transfers of funds in the manner herein provided, and disburse all sums required for the payment of the princi- pal of and interest on the Bonds presented for payment at maturity, or on redemption prior to maturity. 106. Bond Redemption. The Fiscal Agent is hereby authorized to redeem said Bonds and the interest coupons pertaining thereto when duly presented to it for payment at maturity and to cancel all Bonds and cou- pons upon payment thereof and to return them so cancelled to the Finance Officer. 107. Records. The Fiscal Agent shall keep accurate records of all funds administered by it and of all Bonds and coupons paid and discharged by it. 108. Compensation. The Legislative Body is hereby authorized to compensate the Fiscal ~'gent for the services rendered as such pursuant to the provisions of this Indenture. 109. Responsibilities. The recitals of facts and all promises, covenants and agreements herein and in the Bonds of said authorized issue contained shall be taken as statements, promises, covenants and agree- ments of the Entity, and the Fiscal Agent assumes no responsibility for the correctness of the same, and makes no representations as to the validity or sufficiency of this Indenture or of the Bonds or coupons, and shall incur no responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to or imposed upon the Fiscal Agent° The Fiscal Agent shall be under no responsibility or duty with respect to the issuance of the Bonds for value. The Fiscal Agent shall not be liable in connection with the per- formance of its duties hereunder, except for its own negligence or de- fault. The Fiscal Agent shall not be required to bring any action to require the performance of any obligation hereunder. Clerk and ex-officio Secretary President o-f BYarG of Directors of the South Tahoe Public Utility District Do CALLABLE BONDS AND PROCEDURE 28. Callable Bonds. Bonds maturing by their terms on or before July l~ 1955~ shall n'ot be subject to call prior to their fixed maturity date. Bonds maturing on or after July l, 1986, shall, by their terms~ be subject to call and redemption, at the option of the Entity as a whole or in part, in inverse numerical order, on July l~ 1978 lbut not prior thereto) or on any interest payment date thereafter and prior to their maturity date or dates at the principal amount thereof and accrued interest to the date of redemption, plus a redemption premium equal to one-half of one percent,(1/2 of 1%) of such principal amount plus one- quarter of one percent (1/4 of 1%) for each whole twelve (12) months~ and for any remaining fraction of a twelve (12) month period from the date fixed for redemption to the maturity date of the bonds; provided, how- ever, that in no event shall the premium paid on prior redemption of any bond exceed the coupon rate applicable to said bond. 29. Notice of Redemption. At least thirty (30) days prior to the day of call of any BondS, n6tice of redemption shall be published once in a financial paper published in San Francisco or New York, and such notice shall be mailed by registered mail to the last known Holder or Holders of any bearer Bonds so called, and to the registered owner or owners of registered Bonds. No interest shall accrue, on said Bonds called for redemPtion or on any interest coupons thereon after the redemp- tion date specified in said notice. 30. Form of Notice. The notice of redemption shall: (a) State the redemption date. (b) State the redemption price. (c) State the numbers and dates of maturity of the Bonds to be redeemed; provided, however, that whenever any call includes all. of the Bonds of a maturity the numbers of the Bonds of such matur- ity need not be stated. (d). Require that such Bonds be surrendered with all interest coupons maturing subsequent to the redemption date (except that no coupons need be surrendered on Bonds registered as to both princi- pal and interest) at the office of the Fiscal Agent. (e) Require that Bonds which at the time of call are regis- tered so as to be payable otherwise than to bearer shall be accompanied by appropriate instruments of assignment to the Entity duly executed. (f) Give notice that further interest on such Bonds will not accrue after the designated redemption date. 31. Receipt of Notice Unnecessary. The actual receipt by the Holder of any Bond of notice of such redemption shall not be a condition prece- dent to redemption, and failure to receive such notice shall not affect the validity of the proceedings for the redemption of such Bonds or the cessation of interest on the date fixed for redemption. 32. Certificate of Notice Conclusive. A certificate by the Finance Officer that noG'ice of call and redemption has been given to owners of Bonds as herein .provided shall be conclusive as against all parties~ and no Bondholder whose Bond is called for redemption may object thereto or object to the cessation of interest on the redemption date fixed by any claim or showing that he failed to actually receive such notice of call and redemption. 8 t 33. ~gdemption Fund. Prior to the time ermines to Call and establish wit _ d~em any of t _ t~? Legislati _ known a ' ~ the_Fisca~ A en he Bo~ds, ~he Fi ye ~ody de- ~ .... s ~Nam~ of Entity% ~ t a redemption na~ce 0ffzcer s ~er c ,, ~, ~7 S fund to b~ hall alled Redemot' ~ ,,ewer Revenue B ~scribed an .- i~.. Fund . p~_ ~ ond Redem~o~^- ~ -,, d o£ a redemption, there must be set aside in said Redemption Fund moneys ~ ~o the publi a[~^~u~ , here- c_o .... ~ une notice available for the purpose and sufficient to redeem at the premiums pay- able as herein Provided, the Bonds designated in such notice of redemption. (a) U_U_se of FUnds. Said moneys must Fund Solely for that purpose and shall be be set aside in said the redemption date to payment for the Bonds to be redeemed Upon applied on or after Presentation and surrender of such Bonds and if not registered all interest coupons maturing after the redemption date shall be used only For that pUrpose. (b) Coupons Due. Any interest coupon due on or P~ior to the redemption date ~hal Section 43 upon Presen a~ paid from the Bond Fund Provided in t ...... and surrender thereof. (C) ~oupons Not Due. Each Unregistered Bond re have attached thereto or--Presented the~,~,~ ~ . ? sented shal maturing after the redemption date. -= .... '~ ~ ~n~erest coupons1 (d) R__etr.ansfers. If after all of the Bonds have been re- deemed and cancelled ~r paid and cancelled, there are moneys re- maining in said Redemption Fund, said moneys shall be transferred to the Revenue Fund~ provided, however, that if said moneys are Part of the proceeds of refunding bonds, said moneys shall be transferred to the fund created for the payment of Principal of and interest on such refunding bonds° 34. ~f~t~°fNotice of Rede been give~ W~n notice of redem tion h necessary for the redemption the Bonds called for redemption is set aside for that purpose in the Redemption Fund, as provided in Section 33 hereof, the Bonds designated for redemption shall become due and payable on the date fixed for redemption thereof, and, upon presentation and surrende~ of said Bonds and if not registered, all interest coupons ma- tu~ing after the redemption date, to the Fiscal Agent, and, if any o£ said Bonds be registered, upon the appropriate assignment thereof, such Bonds shall be redeemed and paid at said redemption price out of the Redemp- tion Fund. (a) Interest Terminates. No interest will accrue on such Bonds~call~ for redemption~r on any interest coupons thereon after'the redemption date specified in such notice, and the Holders of said Bonds so called for redemption after such redemption date shall look for the payment of such Bonds and the premium thereon only to said Redemption Fund. All Bonds redeemed and all interest cou- pons thereon shall be cancelled forthwith by the Fiscal Agent and shall not be reissued. (b) Matured Coupons PaMableo All interest coupons, pertain- ing to any redeemed Bonds, whic'h--coupons have matured on or prior to the time fixed for redemption, shall continue to be payable to the respective Holders thereof but without interest thereon. All unpaid znOeres~ payable at or prior to the date fixed for redemption upon Bonds registered in such manner that the interest is payable only to ~h~ ~egts~e~ea owners shall continue to be payable to the respective registered owners of such bonds, or their order, but without in- terest thereon. 9 35. Purchase of Bonds. The Entity may, from time to time, purchase in'the open marMet any or all of the Bonds at prices offered, at or be- low the sum required to be paid in the event of redemption by call. All Bonds purchas.ed or called shall be cancelled and shall not again be reinstated. E. PLEDGE OF REVENUES AND FUNDS 36. Pledge of Revenues. During the period that any of the Sewer Rev- enue Bonds of 1966 are outstanding and any of the principal of or interest on said bonds are unpaid, the Gross Revenues shall be subject to the prior first charge and lien thereon and shall be paid and disbursed in the manner provided in Sections 24, 25 and 31 through 37 of Resolution No. 641 adopted December 17, 1965, by the Legislative Body of the Entity~provid- lng for~their~iSsuance,~.as~'amended. The moneys remaining in the Surplus Fund created and maintained pursuant to Section 36 of said Resolution, subject to the prior obligation as provided in said Section 37 to use the moneys to fill any deficiencies in the funds and purposes created pur- suant to Sections 33 through 35, are hereby pledged to pay the principal of and interest on the Bonds of this Issue and to provide a Bond Fund and a Reserve Fund therefor. All of the Gross Revenues, effective upon the payment of all of the principal of and interest on the Sewer Revenue Bonds of 1966 are hereby pledged to pay the principal of and interest on the Bonds of this Issue and to provide: a) a Bond Fund, b) a Reserve Fund, c) operation and maintenance funds, and d) a Surplus Fund. 37. First Lien on Revenues. During the period that any of the prin- cipal of Or' interest on the Sewer Revenue Bonds of 1966 are unpaid and outstanding, the sums required to meet the payment of the principal of and interest on the Bonds of this Issue shall be secured by a first charge and lien upon that part of the Gross Revenues that is in the Sur- plus Fund created under Section 36,that are not required to meet de- ficiencies under Section 37 of Resolution No. 641, as amended, as de- scribed in Section 36 of this Indenture. After the principal of and interest on the Sewer Revenue Bonds of 1966 have been fully paid, the sums required to meet the payment of the principal of and interest on the bonds of this Issue shall be secured by a first charge and lien upon all of the Gross Revenues. 38. Revenues a Trust Fund. The Revenues shall constitute a trust fund for the security and payment of the Sewer Revenue Bonds of 1966, and also, subject thereto, for the security and payment of the Bonds of this Issue. Prior to the payment of the principal of and interest on the Bonds of this Issue during the term of the Sewer Revenue Bonds of 1966, and thereafter after the payment of the principal and interest on the Bonds of this Issue, there shall also be payable from the Revenues, such sums as may be required to pay the costs of necessary and reasonable main- tenance and operation of the Enterprise, which costs shall include the reasonable expenses of management, operation, repair and other expenses necessary to maintain and preserve the Enterprise in good repair and working order. lO 39. EQual Parity. Ail of the Bonds of this Issue shall be equally ..nd ratablY'secured without preference or priority by reasOn of Series, divisiOn, number, date, date of sale, execution or delivery of any"of the Bonds by a llen upon the Revenues of the Enterprise in accordance with this Indenture. 'Said lien shall be prior and paramount to any and all other obligations that have arisenor may arise or be incurred against the Revenues~ but subject and subordinate to the first lien of the Sewer Revenue Bonds of 1966 during the time that any of the principal of and in- terest on said bonds are unpaid, as provided in Sections 36 and 37 of this Indenture. 40. Ratio of Net Revenue~Coverage. Without in any waY qualifying or ~ diminishing~the covenant pr'ovided in Section 37 of said ReSolution No. 641, as amended, during the time that any of the principal of and interest on the Sewer Revenue Bonds of 1966 are unpaid, the Entity covenants that at all times it~will establish, maintain and collect Charges sufficient with other Revenues received to provide a balance of Net Revenues, after having~ deducted therefrom the principal of and interest on the Sewer Revenue Bonds of 1966 and other charges payable therefrom under Resolution No. 6~1, as amended, equal to not less than 1.30 times the combined aggregate amount of principal of and interest on all of the Bonds of this Issue which shall become due and payable within the next succeeding 12 months. 41. Proceeds of Bonds. There is hereby created a special fund to be designated "(Name of' E'nt~ty) 1967 Sewer Construction Fund", herein called '!Construction Fund", which shall be maintained by the~Finance Officer as - ~Jseparate account, dis$tnct from all other funds of the Entity. The prO- ceeds of the Bonds, or any part thereof (other than aby premium or accrued interest whi&h shall be deposited in the Bond Fund) shall be deposited in said Fund an~ shall be expended as follows: (a) Reserve Fund. The amount of five percent (5%) of the principal amount of the Bonds shall be paid to the Fiscal Agent for deposit in the Reserve Fund. (b~ Acquisition Costs. The cost of acquiring any lands and easements for the pr?ject for which contracts have been or shall be made,:or any interlocutory decree in eminent domain had and taken, shall be paid, to the persons entitled thereto. (c) .Construct~bn Costs. The costs of constructing the ProJectr~nder cont'rAb~t'S for construction work shaiil be paid to~ person~.,.entitled thereto, on certificatesof the Engineer as t~ the wor~ completed sUbstantially in accordance wi~h the plans and specifiCAtions adopted by the Legislative Body therefor and as: said cehtificates are approved by it. (d) Incidental:iExpenses. The incidental eXPenses of sa~d proceedingS, consisting of all engineering, inspection, legal ~nd. fiscallf~es and the~Costs of authorizing and issuing the Bonds as approved by the Legi~lative Body shall be paid t0I those persons entitled~thereto or:'to the appropriate Entity fund to be reimbursed thereforQ (e.):~ Bond Fund. Any remaining balance shall be transferrled to the lBond Fund. Interest on the:~Bonds from their date to date of delivery and anypremium on their sale shall be deposited in the Bond Fund. 11 42. Sewer Revenue Fund. There has heretofore been created, by said Resolution N0"'~ 64i, a'~" amended, the "(Name of Entity)1966 Sewer ReVenue Fund", which shall hereafter be known as the "(Name of Entity) Sewer Revenue Fund" herein called "Revenue' Fund", which shall continue to , be maintained and operated by the Finance 0ffic~r as a separate'account distinct frOm all other funds of the Entity, into which shall be paid on or before the first day of each month following the receipt thereof, the Revenues. 43. Bond FUnd. There is hereby created a special fund designated "(Name of Ehtity) 1~67 Sewer Revenue Bond Fund", herein called"Bond Fund", which shall be maintained and operated by the Fiscal Agent as a separate account distinct from all other funds of the Entity, to cover the payment of the principal of and interest on all of the Bonds. During the period that any of the principal of and interest on the Sewer Revenue Bonds of 1966 are unpaid and outstanding,'and subject to the prior lien and claim thereon Under Section 37 of Resolution No. 641, as amended, the moneys in said Surplus Fund, and, thereafter from the Revenue Fund, shall be paid and disbursed as follows: (a) On the first day of each calendar month, beginningwith the date of the Bonds, and after the moneys therein have been applied, the Finance Officer shall pay therefrOm to the Fiscal Agent for deposit in the Bond Fund an equal aliquot part of the amount necessary to pay the next maturing installment of interest on the Bonds; and (b) On the first day of each calendar month beginning twelve (12) months prior to the first maturity of the Bonds, the Finance Officer shall pay into the Bond Fund an equal aliquot part of the aggregate yearly amount necessary to pay the next maturing install- ment of principal of the Bonds. Any amount required to be set aside, transferred to and placed in the Bond Fund may be prepaid in whole or in part by being earlier set aside, transferred to and placed in the Bond Fund, and in that event the monthly transfer which has been so prepaid need not be made at the time appointed therefor. In any event at least one month prior to the due date of any maturity or installment of principal of or interest on the Bonds all sums required for the payment thereof must be in such Bond Fund in cash. All moneys in this Fund shall be used and withdrawn solely for the purpose of paying the principal of and interest on the Bonds as the same shall become due and payable. After full payment of the Bonds and in- terest any balance in the Fund shall be returned to the Revenue Fund. 44. Reserve Fund. There is hereby created a special fund designated "(Name of Entity) 1967 Sewer Revenue Bond Reserve Fund," herein called "Reserve Fund" which shall be maintained by the Fiscal Agent, as a separate account, distinct from all other funds of the Entity, to further secure the payment of the principal of and interest on the Bonds° (a) Forthwith upon receipt of the proceeds of the Bonds of this Issue the Finance Officer shall pay from the Construction Fund to the Fiscal Agent for deposit in the Reserve Fund an~ amount equal to five percent (5%) of the principal amount of Bonds sold and delivered~ 12 (b) On the first day of each calendar month following the date of.~the Bonds, the Finance Officer shall pay from said Surplus Fund during the term of the Sewer Revenue Bonds of 1966 subject to the prior~lien and claim thereof, and thereafter from the Revenue Fund, to the Fiscal Agent for deposit in the ReserVe Fund an amount equal to one one-twentieth of the amount of principal and interest due during the next succeeding twelve months, until there shall have been accumulated therein an amount equal to the average annual aggregate amount of principal and interest to accrue during the term of the Bonds. (c) Whenever any moneys are withdrawn from the Reserve Fund to pay the principal and interest of Bonds, the amount so withdrawn shall be restored from available funds in the Surplus Fund during the term of the Sewer Revenue Bonds of 1966 subject to the prior lien and claim thereof, and thereafter from the Surplus Fund main- tained pursuant hereto, provided that if there are no funds therein available therefor after the term of the Sewer Revenue Bonds of 1966, then by monthly transfers from the Revenue~Fund on the first day of each calendar month thereafter in the sum of not less than $~00 or ~an amount equal to one-half the net surplus for the prior monthly service collection period, whichever shall be greater, until there has been restored therein the gross amount provided therefor in subdivision (b) of this Section. Money in the Reserve Fund shall be used solely for the purpose of paying the principal of and interest on the Bonds?in the event that Bond Fund are insufficient therefor and for that purpose the moneys !n the may be withdrawn and transferred to the Bond~Fund. After reaching the year of maximum debt service of the Bonds, moneys in said fund in'excess of an amount equal to the principal and interest to accrue duringLthe current fiscal year maY'~be transferred from the Reserve Fund to the Bond Fund.~ . ~ ~ T~ moneys in,the Reserve Fund shall be transferred to the Bond Fund at the~times and for the purposes necessary to pay the last remain- ing instaIiments of principal and interest of the Bonds. Any balance thereafter ~hall be transferred to the Revenue Fund.~ ~ 5. Maintenance and Operation Funds. During the period that any of the prindipal of andiinterest on the--Sewer Revenue Bonds of 1966 are unpaid, moneys for maintenance and operation shall be paid and disbursed as provided~in Section~5 of said Resolution No. 641" as amended.' After all of the ~rincipal o£~iand interest on said prior bonds are fully paid, the Finance~Officer shall pay from the Revenue Fund the necessary and reasonable expenses of~management, operation, maintenance, repair, a~d other expenses necessary to maintain and preserve the Enterprise.i ~ 46. Surplus Fund. During the period that any of the principal of and interest on the ~ewer Revenue Bonds of 1966 are Unpaid, the Surplus Fund shall~Be maintained as provided in Section 56 of Resolution No 641, as amended~~'which hereafter shall be known as the "(Name of EntitY) Sewer Revenue Bond Surplus Fund", herein called "Surplus Fund". After all of the'iPrincipal of,and interest on said bonds are paid, the Entity Shall contiaue to maintain the Surplus Fund. To theSurplus Fund~ after said prior'~bonds and the interest thereon have been paid, the Finance Officer sha~l continuei~° transfer monthly all moneys remaining l~ the Revenue Fund over and a~ove the amounts transferred or disbursed under Sections 4~i 4 and 45 hereof, excepting the sum of $10,000 which shall 4 cover unforeseen~ expenditures for ain d in the Revenue Fund to · v ~ ~.~ ~r be maint ~ ........ ~ ~ ~vs in th~s Fund ma. · the remainder or sal~ month, ~nu u ......... , any of the~following purposes: (a) For the purchase in'the open market of the outstanding unmatured Bonds of this Issue. (b) For extensions, or for the enlargement, replacement or betterment of the Enterprise. (c) For any other lawful purpose. No moneys shall be otherwise paid or transferred therefrom unless all of the requirements of this Indenture then required to be performed have been accomplished. 47. 'Feeding Higher Priority. In the event that the balance in any fund is below its requirements, moneys from a fund of lower priority shall be transferred up to fill such deficiency in said fund, and said higher fund shall have a first claim on the moneys of said lower fund for said purpose. 48. Investment .of Surplus Funds. All moneys that are not required to be used within such time may be invested in authorized negotiable di- rect obligations of the United States of America, maturing not more than the following period with moneys of the following funds: (a) Bond Fund - one hundred days; (b) Construction Fund - one hundred days; (c) Reserve Fund - twelve years for 75% of the money and one year 25% thereof; (d) Surplus Funds - five years. 49. Inactive Deposits. Any moneys not then needed may be deposited as inactive funds of the Entity. 50. Sufficiency of Revenues. The Charges now established for the services and facilities of the Enterprise are reasonable and may be sub- stantially increased without affecting detrimentally or at all the in- exhaustible and unlimited nature of the rate and amount of the Charges which the Entity has the power to establish and collect. As now estab- lished, the Charges produce and will continue to produce Gross Revenues sufficient not only for all of the purposes provided in Resolution No. 614, as amended, for the Sewer Revenue Bonds of 1966, but also by this In- denture for the Bonds of this Issue, and also to pay all other obligations which have been incurred or will be incurred by the Entity for the Enter- prise, including any outstanding general obligation bonds. 50-A. No Restriction on Other Powers° Nothing in this Indenture nor in said Resolution No. 641, as amended, shall be construed to prevent the Entity from exercising any powers which it may otherwise have, nor prevent the Entity from satisfying its obligation to pay costs of mainte- nance and operation from such funds other than those mentioned herein or in said Resolution No. 641, as amended, as are legally available for such purpose, including taxes. 50-B. Collection of Revenues° In the event the Entity elects to collect the Revenues in such a manner as to make them available less frequently than monthly, all provisions of this Part E which provide for monthly fund transfers shall be deemed modified to conform to the revenue collection period. 14 F. COVENANTS BY THE ENTITY 51. Covenants. For the protection and security of the Bonds, the Entity covenants and agrees to and with the Holders of the Bonds, as pro- vided in this Part F. 52. Acquire Project. It will commence the acquisition, construction and completion of the Project and continue the same with all practical dispatch and in a sound and economical manner. 53. 0per~.te Enterp.rise. It will operate the Enterprise in an effi- cient and economical manner and prescribe, revise and collect such Charges in connection therewith that the services and facilities of the Enterprise may be furnished to its inhabitants and other users at the lowest possible cost consistent.with sound economy andprudent management° 54. Good Repair. It will operate, maintain, preserve and keep the Enterprise and every part thereof in good repair, working order and condition. 55. Preserve Security. It will preserve and protect the security of the Bonds and the rights of the Holders thereof, and warrant and de- fend such rights against the claims and demands of all persons whomsoever. 56. Collect Revenues. It will collect and hold in trust the Rev- enues and other funds pledged to the payment of the Bonds and apply such Revenues or other funds only as provided by this Indenture° 57. Service Bonds. It will pay and cause to be paid punctually the principal of the Bonds and the interest thereon on the date or dates and at the place or places and in the manner mentioned in the Bonds and in the coupons thereto appertaining and in accordance with this Indenture. 58. Pay Claims° It will pay and discharge any and all lawful claims for labor, materials and supplies which, if unpaid, might by law become a lien or charge upon the Revenues of the Enterprise, or any part of said Revenues, or any funds in the hands of the Finance Officer or Fiscal Agent prior or superior to the lien of the Bonds or which might impair the security of the Bonds, to the end that the priority and security of the Bonds shall be fully preserved and protected. 59. Encumbrances. It will not mortgage or otherwise encumber, sell, lease or dispose of the Enterprise or any part thereof, nor enter into any lease or agreement which would impair or impede the operation of the Enterprise or any part thereof necessary to secure adequate Revenues for the payment of the principal and interest of the Bonds, or would other- wise impair or impede the rights of the Holders of the Bonds with respect to such Revenues or the operation of the Enterprise without provision for the retirement of the Bonds of this Issue then outstanding from the pro- ceeds thereof; provided, however, that material and equipment worn out or not needed for the efficient and proper operation of the Enterprise may be sold without the consent of the Bondholders if the proceeds thereof are applied to the improvement or extension of the Enterprise or to the retirement of the Bonds of this Issue or the Sewer Revenue Bonds of 1966. 60. No Free Service. It will not permit any part of the Enterprise to be used or taken advantage of free of charge by any person, firm or corporation or by the State of California or the United States of America, or by any public corporation, political subdivision, city, county, district or agency of either, including this Entity. 15 EXHIBIT "A" UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF EL DORADO SOUTH TAHOE PUBLIC UTILITY DISTRICT SEWER REVENUE BOND OF No. KNOW ALL MEN BY THESE PRESENTS, that the South Tahoe Public Utility District, a public corporation, in the County of E1 Dorado, State of California, hereinafter referred to as "District", for value received, has obligated itself to pay to the bearer (or if this Bond is registered, to the registered owner hereof), from its 1967 Sewer Revenue Bond Fund, On the 1st day of July, 19 , the sum of THOUSAND DOLLARS, with interest thereon from date at the rate of ~ per annum, as evidenced by interest coupons attached hereto at the time of issuance, said interest payable January l, 1968 and semiannually thereafter on the 1st day of July and the 1st day of January in each year, all as more particularly set Forth in the Ordinance providing for the issuance of this Bond° If, upon presentation at maturity, or if redeemable and duly called for redemption, payment of this Bond or any interest coupon thereof, or both, is not made in full accordance with the terms of the Ordinance providing for the issuance hereof, said Bond or coupon, or both, shall continue to bear interest at the rate stated herein until paid in full. The holder of this Bond has all the rights of a negotiable instru- ment payable to bearer. Bonds maturing by their terms on or before July l, 1985, shall not be subject to call prior to their fixed maturity date° Bonds maturing on or after July l, 1986, shall, by their terms, be subject to call and re- demption, at the option of the Entity,.as a whole or in part, in inverse numerical order, on July l, 1978 (but not prior thereto) or on any in- terest payment date thereafter and prior to their maturity date or dates at the principal amount thereof and accrued interest to the date of re- demption, plus a redemption premium equal to one-half of one percent (1~2 of 1%) of such principal amount plus one-quarter of one percent (1/4 of 1%) for each whole twelve (12) months, and for any remaining frac- tion of a twelve (12) month period from the date fixed for redemption to the maturity date of the Bonds; provided, however, that in no event shall the premium paid on prior redemption of any Bond exceed the coupon rate applicable to said Bond. At least thirty (30) days prior to the day of call of any Bonds, notice of redemption shall be published once in a financial paper published in San Francisco or New York, and such notice shall be mailed by regis- tered mail to the last known Holder or Holders of any bearer Bonds so called, and to the registered owner or owners of registered Bonds° No '.nterest shall accrue on said Bonds called for redemption or any interest coupons thereon after the redemption date specified in said notice° The District may also, from time to time, purchase any or all of said outstanding Bonds at prices offered, at or below the sum required to be paid in the event of redemption by callo All Bonds purchased or called will be cancelled and will not again be reissued° Both principal and interest are payable in lawful money of the United States of America at the Main Office of the Bank of America National Trust and Savings Association, 300 Montgomery Street, San Francisco, California, the Fiscal Agent of the District, or at any other bank or trust company designated by said Fiscal Agent as a corre- spondent in the cities of New York, New York, Chicago, Illinois, or Los Angeles, California. This Bond is one of an issue in the total principal amount of ~500,000, all of like date and tenor except as to number, maturity, prior redemption (and interest rate), all issued by the District for the pur- pose of providing money to finance a Project consisting of additions and improvements to an Enterprise consisting of the District Sewer System~ as set forth and described in Ordinance NOo entitled "An Ordinance Providing for the Issuance of Sewer Revenue Bonds, Fixing the Form of Bonds and Providing Covenants for Their Protection, Sewer Revenue Bonds of 1967", adopted on February 23, 1967, to which reference is hereby made for the obligations, duties, rights and privileges hereby created, and as authorized by law and in strict accordance with Chapter 5, Part 9, Division 5 of the Health and Safety Code of the State of California, commonly referred to as the Sewer Revenue Bond Act of 19~3, and Resolu- tion No. 761 entitled "A Resolution of Intention to Acquire and Construct Solids Handling System and Ammonia Stripping Tower and to Issue Sewer Revenue Bonds to Pay the Cost Thereof", adopted by the Board of Directors of the South Tahoe Public Utility District on January 5, 1967o Both principal and interest are payable solely from the Revenues of the Enterprise hereinabove referred to and the District is not obli- gated to pay the principal hereof or interest hereon except from the Revenues of said Enterprise. The Bonds constitute a first and prior lien upon said Revenues except that additional bonds may be issued on a parity of lien in accordance with the Ordinance hereinbefore referred to. Said lien is, however, subject and subordinate to the prior first charge and lien imposed thereon pursuant to Resolution NOo 641, as amended, entitled "A Resolution Providing for the Issuance of Sewer Rev- enue Bonds, Fixing the Form of Bonds and Providing Covenants for Their Protection, Sewer Revenue Bonds of 1966", adopted by the Board of Direc- tors on December l?, 1965, during the period that any of the Sewer Revenue Bonds of 1966 issued pursuant to said resolution are outstand- ing and unpaid, of which ~1,400,000 are outstanding and unmaturedo All of the Revenues to be derived from the sewer service charges imposed for the use of the Enterprise and the services and facilities thereof, including Revenues from improvements, additions and extensiOns thereto which may hereafter be constructed or acquired, and from other charges, are pledged to pay the principal of and interest on the Bonds, and to provide (1) a Bond Fund, (2) a Reserve Fund, (3) operation and maintenance funds, and (4) a Surplus Fund, as provided in said Ordinance, subject to the terms of said Resolution No. 641, as amended° This Bond is subject to registration as to principal and interest upon written request of the owner and presentation of the Bond to the Fiscal Agent for registration. Thereafter, the principal hereof and in- terest hereon shall be payable only to such registered owner° Bonds may also be registered as to principal only, in which event the coupons shall not be removed. Registered Bonds may be de-registered and again become payable to bearer. The District has created a special Sewer Revenue Bond Fund for the payment of said principal and interest and has agreed to set aside in said fund on the first day of each calendar month, commencing with the date hereof, an equal aliquot part necessary to pay interest which shall ii become on the next succeeding interest payment date, and, commencing twelve (12) months prior to the first maturity of the Bonds, an equal aliquot part of the amount necessary to pay the installment of Principal which shall fall due at the next ensuing principal payment date. For the further protection of the payment of the Bonds and the in- terest thereon when due, the District has created a special Sewer Revenue Bond Reserve Fund, into which it has agreed to pay from the proceeds of the Bonds an amount equal to five percent (5%) of the principal amount of the Bonds sold and delivered, and commencing on the first day of each calendar month following the date hereof, pay to the Fiscal Agent for deposit in the Reserve Fund an amount equal to one one-twentieth of the amount of principal and interest due during the next succeeding twelve months on the Bonds, until there shall have been accumulated therein an amount equal to the average annual aggregate amount of principal and in- terest to accrue during the term of the Bonds, which fund shall be used solely as a guarantee for the payment of the principal of and interest on said Bonds. IT IS HEREBY CERTIFIED AND RECITED that all acts, conditions and things required by the Constitution and laws of the State of California to be done, to happen and to be performed precedent to and in the issuance of this Bond have been done, have happened and have been performed in regular due form, time and manner as required by law; that the District is authorized by law to operate the Enterprise herein referred to and the Board of Directors, by ordinance duly adopted, has established and has covenanted to maintain rates and Charges for services and facilities thereof sufficient, with other Revenues received, after having paid there- from all funds required in said Resolution NOo 641, as amended, providing for the issuance of the Sewer Revenue Bonds of 1966, to provide Net Revenues equal to not less than 1o30 times the combined aggregate amount of principal and interest which shall become due and payable within the next succeeding twelve (12) months on all of the Bonds then outstanding. IN WITNESS WHEREOF, the South Tahoe Public Utility District, by its Board of Directors, has caused this Bond to be executed in its behalf and under its official seal by its President by his printed, lithographed or engraved facsimile signature hereon, and by the manual signature of its Clerk, and has caused the interest coupons to be executed and authenti- cated by the facsimile signature of its Treasurer, all as of May 1,1967. President of South Tahoe Public Utility District Clerk form: Inte~.est Coupon Form. The coupons shall be in the following iii FORM OF COUPON SOUTH TAHOE PUBLIC UTILITY DISTRICT EL DORADO COUNTY, CALIFORNIA SEWER REVENUE BOND OF 1967 The sum shown hereon is payable to bearer (unless registered) in lawful money as interest (subject to any prior redemption right reserved) at Bank of America N. T. & S. A. Main Office, San Francisco, California, the Fiscal Agent of the District, or the designated correspondent bank at New York, N. Y., Chicago, Illinois, or Los Angeles, California. Dated: May l, 1967 ON Coupon No. Bond No. 1, Treasurer Registration Form. The form of endorsement on said Bonds for regis- tration shall be as follows: This Bond is registered in the name of the registered owner whose name and address appear last in the space below and both the principal of and interest on this Bond are payable to such registered owner, unless it is registered as to principal only, in which case only the principal is so payable. NOTE: There must be no writing in the space below except by the Fiscal Agent. Date of Registry Type of Name of Address of Signature of Registration* Registered Owner Registered Owner Fiscal AEent Principal only and Interest Principal only and Interest Principal only and Interest In the event registration is as to principal only, strike the words "and interest"; if as to principal and interest, strike the word "only". iv I hereby certify that the foregoing Ordinance was duly and regularly introduced and adopted by the Board of Directors of the South Tahoe Public Utility District, E1 Dorado County, California, at a meeting thereof duly held on the 2~rd day of February, 1967, by the following vote: AYES, Directors: FESLER, WAKEMAN, KORTES HEGARTY, MELIKEAN NOES, Directors: NONE ABSENT, Directors: NONE Clerk and ex-officio Secretary WJML:RFR:dao 2/21/67 7c AFFIDAVIT OF POSTING ORDINANCE NO. 155 , AN ORDINANCE PROVIDING FOR THE ISSUANCE O~ SEWER R~YENUE BONDS, FIXING THE FORM OF BONDS AND PROVIDING COVENANTS FOR THEIR PROTECTION SOUTH TAHOE PUBLIC UTILITY DISTRICT $500,000 SEWER REVENUE BONDS OF 1967 STATE OF CALIFORNIA County of E1 Dorado SS DAVIDW. CALLAHAN , being first duly sworn, deposes and says: That for and on behalf of the Clerk of the South Tahoe Public Utility District, and on the ... 1st day of MARCH , 1967, he posted full, true and correct copies of the hereto attached Ordinance No. l~S, An Ordinance Providing for the Issuance of Sewer Revenue Bonds, Fixing the Form of Bonds and Providing Covenants for Their Protection, South Tahoe Public Utility District, Sewer Revenu, Bonds of 1967, in three public places in said District, to wit: TAHOE VALLEY POST OFFICE, TAHOE VALLEY~ CAI.IFo BIJOU POST OFFICE, BIJOU, CALIFORNIA STATELINE POST OFFICE ~ STATELINE, CALIFORNIA. That a copy of said Ordinance is attached hereto marked Exhibit "A" and made a part hereof. Subscribed and sworn to before me this 1st day of MARCH , 1967. IINotary aPublic in and f~he County l of E1 Dorado, State o~~ California. My commission expires 11/22/70 REC'B MAR 9 PASTE COPY HERE STATE OF CALIFORNIA Cou~t~ o~ E] c. F. BRA~D~, ~ duly swan acco~ to law, ~ and says: THAT he is and at ail times herein mentioned was a citizen of the United States over the age of ~.1 y~ars and that he is not a party to, nor intere~ed in the above enlitled matter; that he is the printer of LAKE TAHOE NEWS, a weekly ~p~ of gene~l ~tto~ dui,/~....dtcsted by the Superior Court of the State o~ Calt/omla ia ~/or the County of El Dorado, in filed July ~, 1~, to be a in the }udieial Township of Lake V_~!~ ~nd in the County of E1 Dorado and in the State of C~lifomia. ~ the notice anm~d ber~ wu lished in said newspa~ in type not smaller than preceded with words printed in b~ type, not smaller than nonpareil, describing or exl~ressing in general tenns the purpose or character o~ the not/ce intended to be ~lven, and said notice has bee. pub~s~l in each re~ml~ sad entire issue of said newspaper and not in .ny supplement thereo/ on the/ollowing dates, to-wit: me thJ. ....... 9~h_ .... ~ o~ __ I/.~h ................... is 67 ....... the CounW o~ ~l Dorado, State of Califonga