HomeMy WebLinkAboutRES NO 196-93(2)RESOLUTION NO. j' 9 6 ' g 8(2)
RESOLUTION SUPPLEMENTING AND AMENDING FOR
CLARITY RESOLUTION NO. 196-93 TO PROVIDE FOR THE
ISSUANCE OF THE CITY OF BAKERSFIELD SEWER
REVENUE BONDS, SERIES 1997, ON A PARITY WITH THE
SERIES 1994 REVENUE BONDS, IN THE AGGREGATE
PRINCIPAL AMOUNT OF NOT TO EXCEED $25.0 MILLION,
AND AUTHORIZING RELATED ACTIONS AND EXECUTION
OF RELATED INSTRUMENTS.
(Sewer Revenue Bonds, Series 1997)
WHEREAS, the City of Bakersfield (the "City") is a charter city organized and
existing under the laws of the State of California (the "State"); and
WHEREAS, the City now owns and operates a municipal sewer system (the
"Enterprise"); and
WHEREAS, by Resolution No. 196-93, duly adopted on December 15, 1993 (the
"1994 Resolution"), the City Council (the "Council") of the City provided for the issuance
of the sewer revenue refunding bonds, which were issued in February 1994 as the City's
Sewer Revenue Refunding Bonds, Series 1994 (the "Series 1994 Bonds"), and were sold
and delivered to the Bakersfield Public Financing Authority (the "Authority") as part of the
set of local obligations purchased by the Authority with proceeds of the Authority's Series
1994 Revenue Bonds; and
WHEREAS, the 1994 Resolution provides that the City may, by supplemental
resolution, provide for the issuance of Parity Obligations (as said term is defined in the
Resolution) from time to time, subject to the specific conditions set forth therein, and may
amend the 1994 Resolution, without the consent of any Owner of the Series 1994 Bonds,
to the extent permitted by law and for the purpose, among other purposes, of curing any
ambiguity or curing, correcting or supplementing any defective provision contained in the
1994 Resolution or resolving questions arising under the 1994 Resolution, as the City may
deem necessary or desirable and which shall not adversely affect the interests of the
Owners of the 1994 Bondsl and
WHEREAS, the City is in receipt of a written opinion of Orrick, Herrington & Sutcliffe
LLP, Bond Counsel to the City for the Series 1997 Bonds, that the amendments proposed
by this resolution are within the scope of amendments permitted by Section 6.01 of the
1994 Resolution without the consent of any Owners of the Bonds; and
WHEREAS, the conditions specified by the 1994 Resolution for the issuance of
Parity Obligations in the amount proposed for this sewer revenue bond issue (the "Series
1997 Bonds") have been satisfied, and the Council has determined that it is in the interests
of the City to issue the Series 1997 Bonds in the principal amount of not to exceed $25.0
Million pursuant to the 1994 Resolution, as supplemented by this Supplemental Resolution
(collectively, the 1994 Resolution and this Supplemental Resolution are referred to as the
"Resolution"), for the purpose of financing a portion of the cost and expense of certain
sewer system improvements to the Enterprise (as further defined herein, the "1997
Project"); and
WHEREAS, Section 33.3 of the Charter of the City, as implemented by Chapter
3.55 of the Municipal Code of the City, authorizes the City to issue enterprise revenue
bonds for such purposes; and
WHEREAS, on November 19, 1997, this Council previously adopted its Resolution
No. 196-93(1 ), in conformity with Resolution No. 196-93, to authorize issuance of and to
provide various terms and conditions respecting issuance of the Series 1997 Bonds; and
WHEREAS, the City is in receipt of conditional commitments from Financial
Guaranty Insurance Company ("FGIC") to issue both (a) a bond insurance policy and (b)
a reserve fund policy with respect to the Series 1997 Bonds, and in order to assure
compliance with the conditions imposed by FGIC with respect to issuance of both policies,
Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the City for the Series 1997 Bonds,
after further review of said conditions and discussion thereof with the City's Finance
Director, Disclosure Counsel to the City for the Series 1997 Bonds, and the Underwriter
of the Series 1997 Bonds, has prepared this resolution to further supplement and amend
Resolution No. 196-93 and has recommended that this Council adopt this resolution to
replace and supersede the previous resolution adopted on November 19, 1997.
NOW, THEREFORE, BE IT FOUND, DETERMINED AND RESOLVED by the
Council of the City of Bakersfield, as follows:
ARTICLE IX
AUTHORIZATION OF SERIES 1997 BONDS; DEFINITIONS
SECTION 9.01.
Authorization of Series 1997 Bonds. The City has reviewed all
proceedings heretofore taken and has found, as a result of such review, and hereby finds
and determines, that all things, conditions and acts required by law and the 1994
Resolution to exist, happen or be performed precedent to and in connection with the
issuance of the Series 1997 Bonds to exist, have happened and have been performed in
due time, form and manner as required by law and the 1994 Resolution, and the City is
now duly empowered, pursuant to each and every requirement of law and the 1994
Resolution, to issue the Series 1997 Bonds in the manner and form provided in this
Supplemental Resolution.
2
SECTION 9.02.
Definitions. The terms defined in Section 1.02 of the 1994 Resolution shall
for all purposes of this Supplemental Resolution have the meanings specified in the 1994
Resolution, unless otherwise provided in this Section 902
(a) The definition of the term "Bonds" is amended to read as follows:
"Bonds" means the Series 1994 Bonds, the
Series 1997 Bonds and any Parity Obligations
heretofore issued; provided that with respect to
Sections 2.01, 2.02, 2.03(a) and 3.06 of the
1994 Resolution, "Bonds" means the Series
1994 Bonds. "Series 1994 Bonds" means the
City of Bakersfield Sewer Revenue Refunding
Bonds, Series 1994. "Series 1997 Bonds"
means the City of Bakersfield Sewer Revenue
Bonds, Series 1997. Without limiting the
generality of the foregoing, the term "Parity
Obligations" expressly includes the Loan
Contract (the "State Loan"), between the City
and the State, acting by and through the State
Water Resources Control Board, presently
expected to be entered into on or about
December 1, 1997, repayment of which will be
secured by the Net Revenues on a parity with
the Series 1994 Bonds and the Series 1997
Bonds.
(b) The definitions of the terms "Aggregate Annual Debt Service," "Annual
Debt Service" and "Maximum Annual Debt Service" are amended to refer to "Fiscal Year"
in each place where each such definition presently refers to "Bond Year," with the result
that Aggregate Annual Debt Service, Annual Debt Service and Maximum Annual Debt
Service will be measured on a Fiscal Year basis rather than a Bond Year basis.
(c) The definition of the term "Net Revenues" is amended to read as
follows:
"Net Revenues" means, for any Fiscal Year, the Revenues for such
Fiscal Year less the Maintenance and Operation Costs for such Fiscal Year.
(d) The definition of the term "Resolution" is amended to read as follows:
"Resolution" means the 1994 Resolution,
adopted by the Council on December 15, t993,
under and pursuant to the Refunding Law, as
3
(e)
(f)
to read as follows:
supplemented and amended by the
Supplemental Resolution, adopted by the
Council on November 19, 1997, under and
pursuant to the 1994 Resolution and Chapter
3.55 of the Municipal Code of the City.
A definition of the term "Connection Fees" is added to read as follows:
"Connection Fees" means any fee or charge
imposed upon any person and payable as a
condition to establishing a physical connection
to the Enterprise through which sewage effluent
will be discharged into the Enterprise.
A definition of the term "Maintenance and Operations Costs" is added
"Maintenance and Operations Costs" means the
reasonable and necessary costs and expenses
paid or incurred by the City for maintaining and
operating the Enterprise, determined in
accordance with generally accepted accounting
principles, including all reasonable expenses of
management, repair and other expenses
necessary to maintain and preserve the
Enterprise in good repair and working order, and
including all administrative costs of the City that
are properly charged directly or apportioned to
the operation of the Enterprise, such as salaries
and wages of employees, overhead, taxes (if
any) and insurance premiums, and including all
other reasonable and necessary costs and
expenses of the City or charges required to be
paid by the City to comply with the terms hereof,
such as compensation, reimbursement and
indemnification of the Fiscal Agent and fees and
expenses of Independent Certified Public
Accountants and Independent Financial
Consultants; but excluding in all cases Annual
Debt Service, depreciation, replacement and
obsolescence charges or reserves therefor and
amortization of intangibles.
4
(g} The following terms used in this Supplemental Resolution shall have
the following meanings:
"Bond insurance Policy" means, with respect to the Series 1997
Bonds, the municipal bond new issue insurance policy issued by the Bond Insurer that
guarantees payment of principal of and interest on the Series 1997 Bonds.
"Bond Insurer" means, with respect to the Series 1997 Bonds,
Financial Guaranty Insurance Company, a New York Stock insurance company, or any
successor thereto.
"Bond InsureCs Fiscal Agent" means, with respect to the Series 1997
Bonds, State Street Bank and Trust Company, N.A., New York, New York, or its successor
as fiscal agent to the Bond Insurer.
"Bond Law" means Chapter 3.55 of the Municipal Code of the City,
entitled the "Enterprise Revenue Bond Law."
"1997 Closing Date" means, with respect to the Series 1997 Bonds,
the date on which the Series 1997 Bonds are delivered to the original purchaser thereof
upon payment of the purchase price thereof in immediately available funds.
"Corporate Trust Office" means the corporate trust office of the Fiscal
Agent at 550 South Hope Street, Suite 500, Los Angeles, California 90071; provided that,
for purposes of registration, transfer, exchange and payment of the Bonds, "Corporate
Trust Office" means in care of the corporate trust office of First Trust National Association
in St. Paul, Minnesota, or at such other address designated by the Fiscal Agent in written
notice filed with the City and the Owners of the Bonds.
"Fiscal Agent" means First Trust of California, National Association,
a national banking association duly organized and existing under the laws of the United
States of America, or any successor thereto appointed by the City.
"1997 Project" means the improvements to the Enterprise described
in the Preliminary Official Statement respecting the Series 1997 Bonds, dated November
24, 1997, in the section entitled "THE ENTERPRISE AND THE PROJECT - The Project."
"1997 Project Fund" means the fund by that name established and
held by the Fiscal Agent pursuant to Section 10.07(c).
"Rebate Fund" means the fund by that name established and held by
the Fiscal Agent pursuant to Section 11.02.
"1997 Reserve Fund" means the fund by that name established and
held by the Fiscal Agent pursuant to Section 11.01.
5
"1997 Reserve Policy" means the municipal bond debt service reserve
fund policy issued with respect to the Series 1997 Bonds by the Bond Insurer.
"1997 Reserve Policy Costs" means the sum of (1) any draws under
the 1997 Reserve Policy, (2) related reasonable expenses incurred by the Bond Insurer
in connection therewith, and (3) interest thereon at a rate equal to the lesser of (a) the
prime rate of Morgan Guaranty Trust Company of New York in effect from time to time plus
two percent (2%) per annum and (b) the highest rate permitted by law.
"1997 Reserve Requirement" means, as of any date of calculation, an
amount equal to the lesser of: (i) ten percent (10%) of the original principal amount of the
Series 1997 Bonds; (ii) one hundred twenty-five percent (125%) of average annual debt
service on the Series 1997 Bonds; and (iii) maximum annual debt service on all Series
1997 Bonds Outstanding.
"Supplemental Resolution" means this Supplemental Resolution,
specifically authorized by the 1994 Resolution.
ARTICLE X
THE SERIES 1997 BONDS
SECTION 10.01.
Authorization and Designation. The Series 1997 Bonds, in the aggregate
principal amount not to exceed $25.0 Million, are hereby authorized to be issued by the
City under and subject to the terms of the Resolution and the Bond Law. The Series 1997
Bonds shall be designated the "City of Bakersfield Sewer Revenue Bonds, Series 1997."
SECTION 10.02.
Terms of Series 1997 Bonds. The Series 1997 Bonds shall be issued in
fully registered form without coupons in denominations of $5,000 or any integral multiple
thereof, numbered consecutively upward in order of issuance. The Series 1997 Bonds
shall be initially issued and registered in the name of "Cede & Co.," as nominee of The
Depository Trust Company ("DTC"), and shall be evidenced by one Series 1997 Bond
maturing on each of the maturity dates specified in the maturity schedule set forth as
Appendix A ("Appendix A") to the Purchase Contract (the "Purchase Contract"), dated the
date of its execution and to be entered into between the City and George K Baum &
Company (the "Underwriter"), as original purchaser of the Series 1997 Bonds, and in a
denomination corresponding to the total principal designated in Appendix A to mature on
such date. Registered ownership of the Series 1997 Bonds, or any portion thereof, may
not thereafter be transferred except as set forth in Section 10.05 of this Supplemental
Resolution.
6
Concurrently with the adoption of this Supplemental Resolution, the
Council will adopt its resolution approving the form and substance of various documents
pertaining to the issuance, sale and delivery of the Series 1997 Bonds, including the
Purchase Contract, and providing for establishment of the maturity schedule, interest rates
and redemption provisions prior to execution thereof on behalf of the City.
The Series 1997 Bonds shall mature and become payable on the
Principal Payment Dates in each of the years and in the amounts as set forth and will be
subject to redemption in advance of maturity as set forth in Appendix A when executed on
behalf of the City.
The Series 1997 Bonds shall be dated as provided in the Purchase
Contract when executed on behalf of the City, and shall bear interest from said date at the
rates shown on Appendix A. Interest shall be paid on each Interest Payment Date to the
Owner in whose name the ownership of the Series 1997 Bonds is registered on the Bond
Registration Books at the close of business on the immediately preceding Record Date.
Interest shall be paid by check of the Fiscal Agent mailed by first class mail, postage
prepaid, on each Interest Payment Date to the Owners of the Series 1997 Bonds at their
respective addresses shown on the Bond Registration Books as of the close of business
on the preceding Record Date; or by wire transfer made on such Interest Payment Date
to any Owner of $1,000,000 or more in aggregate principal amount of Series 1997 Bonds
who shall have requested such transfer pursuant to written notice filed with the Fiscal
Agent, as registrar for the Series 1997 Bonds, received not later than the preceding
Record Date.
SECTION 10.03.
Redemption.
(a) Optional Redemption. The Series 1997 Bonds shall be
subject to redemption in whole or in part on any date on or after the September 15 to be
specified in Appendix A of the Purchase Contract for that purpose, in inverse order of
maturity and by lot within a maturity, at the option of the City from any available source of
funds, at a redemption price equal to one hundred percent (100%) of the principal amount
to be redeemed together with a redemption premium (computed upon the principal amount
of the Series 1997 Bonds to be redeemed) to be computed in accordance with a schedule
of redemption premiums to be set forth in Appendix A, plus accrued interest to the
redemption date; provided that the City and the Underwriter may provide in Appendix A,
in lieu of a schedule of redemption premiums, for a specific or set premium for redemption,
including a zero premium, and may also provide that the Series 1997 Bonds shall not be
subject to optional redemption in advance of maturity.
(b) Extraordinary Redemption. The Series 1997 Bonds are
also subject to redemption in whole or in part on any date in inverse order of maturity and
by lot within a maturity, at the option of the City, without premium, from the net proceeds
of insurance or eminent domain available therefor if the City does not apply such net
7
proceeds toward the acquisition or construction of additions, betterments, extensions or
improvements to the Enterprise at the principal amount thereof and accrued interest
thereon to the date fixed for such extraordinary redemption.
(c) Mandatory Sinking Fund Redemption. The Series 1997
Bonds designated as "Term Bonds," if any, in Appendix A are also subject to redemption
prior to their respective stated maturity or maturities, as the case may be, in part by lot,
from mandatory sinking account payments deposited in the "Mandatory Sinking Account,"
which the Fiscal Agent shall establish and maintain within the Principal Account in the
event Term Bonds are specified in Appendix A, on any September 15 as set forth in
Appendix A, at the principal amount thereof and interest accrued thereon to the date fixed
for redemption, without premium. Subject to the terms and conditions set forth in this
Section, such Series 1997 Bonds shall be redeemed (or paid at maturity, as the case may
be) by application of moneys in the Mandatory Sinking Account in the amounts and upon
the dates set forth in Appendix A.
In the event that Series 1997 Bonds subject to mandatory
sinking fund redemption pursuant to this Section, if any, are redeemed in part prior to their
stated maturity date from any moneys other than moneys in the Mandatory Sinking
Account, the remaining Mandatory Sinking Account Payments, as set forth in Appendix A,
for such Series 1997 Bonds shall be reduced proportionately in each year remaining until
and including the final maturity date of such Series 1997 Bonds.
SECTION 10.04.
Form of Series 1997 Bonds. The Series 1997 Bonds shall be substantially
in the form set forth in the Resolution, subject to such revisions, additions and omissions
as may be appropriate. Without limiting the generality of the foregoing reservation of
entitlement to make revisions to the bond form, the Series 1997 Bonds will be established
in a form appropriate for book-entry only systems and for authentication, registration and
administration by the Fiscal Agent and shall include an appropriate statement of insurance
respecting the Bond Insurance Policy.
SECTION 10.05.
Use of Depository. Notwithstanding any provisions of the Resolution or this
Supplemental Resolution to the contrary:
(a) 'The Series 1997 Bonds shall be initially issued as provided in
Section 10.02 hereof. Registered ownership of such Series 1997 Bonds, or any portions
thereof, may not thereafter be transferred except:
(i) to any successors of DTC or its nominee, or of any
substitute depository designated pursuant to clause (ii) of this subsection (a) ("substitute
depository"); provided that such successor of DTC or substitute depository is qualified
under any applicable laws to provide the service proposed to be provided by it;
(ii) to any substitute depository, upon (1) the resignation of
DTC or its successor (or any substitute depository or its successor) from its functions as
depository, or (2) a determination by the City that DTC or its successor is no longer able
to carry out its functions as depository; provided that any such substitute depository shall
be qualified under any applicable laws to provide the services proposed to be provided by
it; or
(iii) to any person as provided below, upon (1) the
resignation of DTC or its successor (or substitute depository or its successor) from its
functions as depository, or (2) a determination by the City that DTC or its successor (or
substitute depository or its successor) is no longer able to carry out its functions as
depository.
(b) In the case of any transfer pursuant to clause (i) or clause (ii)
of subsection (a) of this Section, upon receipt of all Outstanding Series 1997 Bonds by the
City, a single new Series 1997 Bond, which the City shall prepare or cause to be prepared,
shall be executed and delivered for each maturity of such Series 1997 Bond then
Outstanding, registered in the name of such successor or such substitute depository, or
their nominees, as the case may be. In the case of any transfer pursuant to clause (iii) of
subsection (a) of this Section, upon receipt of all Outstanding Series 1997 Bonds by the
City, new Series 1997 Bonds, which the City shall prepare or cause to be prepared, shall
be executed and delivered in such denominations and registered in the names of such
persons, subject to the limitations of Section 10.02 hereof.
(c) In the case of a partial redemption or an advance refunding of
any Series 1997 Bonds evidencing a portion of the principal maturing in a particular year,
DTC shall make an appropriate notation on the Series 1997 Bonds indicating the date and
amounts of such reduction in principal. The City shall not be liable for DTC's failure to
make such notations or DTC's errors in making such notations and the City may rely
conclusively on its records as to the registered owners of the Series 1997 Bonds.
(d) The City and any Fiscal Agent shall be entitled to treat the
person in whose name any Series 1997 Bond is registered as the Owner thereof for all
purposes of the Resolution and any applicable laws, notwithstanding any notice to the
contrary received by the City; and the City and the Fiscal Agent shall not have
responsibility for transmitting payments to, communicating with, notifying, or otherwise
dealing with any beneficial owners of the Series 1997 Bonds. Neither the City nor the
Fiscal Agent shall have any responsibility or obligations, legal or otherwise, to any such
beneficial owners or to any other party, including DTC or its successor (or substitute
depository or its successor), except for the Owner of any Series 1997 Bond.
(e) So long as all outstanding Series 1997 Bonds are registered
in the name of Cede & Co. or its registered assigns, the City and the Fiscal Agent shall
cooperate with Cede & Co., as sole registered Series 1997 Bondholder, and its registered
assigns in effecting payment of the principal of and redemption premium, if any, and
interest on the Series 1997 Bonds by arranging for payment in such manner that funds for
9
such payments are properly identified and are made immediately available on the date
they are due.
SECTION 10.06.
Sale of Bonds. The Finance Director is hereby authorized to negotiate
the sale of the Series 1997 Bonds with the Underwriter, in accordance with the terms and
conditions of the Purchase Contract; provided that the Purchase Contract may not provide
for a principal amount of the Series 1997 Bonds in excess of $25.0 Million, shall provide
that the purchase price for the Series 1997 Bonds (exclusive of any original issue discount,
if any) shall be not less than 98.8% of the par amount of the Series 1997 Bonds, and shall
provide for an average interest rate (excluding the impact of original issue discount or
premium, if any) on the Series 1997 Bonds of not to exceed 6.50% per annum.
SECTION 10.07.
Application of Proceeds from Sale of Series 1997 Bonds. Upon the
receipt of the proceeds from the sale of the Series 1997 Bonds, the Fiscal Agent shall
deposit said proceeds as follows:
(a) The Fiscal Agent shall deposit in the Interest Account the
amount of accrued interest and premium, if any, received upon the sale of the Series 1997
Bonds;
(b) The Fiscal Agent shall deposit in the Series 1997 Reserve
Account the amount of which equals the 1997 Reserve Requirement, to be calculated in
accordance with the definition of the 1997 Reserve Requirement set forth above in this
Supplemental Resolution; and
(c) The Fiscal Agent shall deposit the remainder of the proceeds
into the 1997 Project Fund, which fund is hereby created and shall be maintained by the
Fiscal Agent until the completion of the 1997 Project. The moneys in the 1997 Project
Fund shall be disbursed by the Fiscal Agent to pay (or to make reimbursements or cash
advances to the City or any other state agency, public agency or person, firm or
corporation for such costs) for costs of the 1997 Project, including Costs of Issuance
relating to the Series 1997 Bonds. Any Series 1997 Bond proceeds remaining in the 1997
Project Fund upon completion of the 1997 Project shall be applied by the Fiscal Agent to
the payment of debt service on the Series 1997 Bonds or in such other manner as may be
determined by the City; provided that, to the extent that any time prior to completion of the
1997 Project and the consequent closing of the 1997 Project Fund, amounts on deposit
in the Interest Account or Principal Account or the 1997 Reserve Account are insufficient
to pay interest on, principal of or Mandatory Sinking Account payments, if any, with respect
to any Series 1997 Bonds when due, on the date such amounts are due, the Fiscal Agent
shall transfer moneys on deposit in the 1997 Project fund to such accounts to make such
payments.
10
ARTICLE Xl
ADDITIONAL COVENANTS OF THE CITY
SECTION 11.01.
Reserve Account. The City shall cause the Fiscal Agent to establish and
hereby covenants to cause the Fiscal Agent to maintain, so long as any of the Series 1997
Bonds are Outstanding, an account separate from any other fund or account established
and maintained hereunder designated the "Series 1997 Reserve Account" (the "1997
Reserve Account"). The City hereby covenants to cause the Fiscal Agent to maintain in
the Reserve Account an amount equal to the 1997 Reserve Requirement.
On or before the last Business Day of each February and August, so
long as any Series 1997 Bonds are Outstanding, commencing in February 1998, and after
first making the required transfer, if any, to the Trustee for the Pool Bonds for deposit in
the Pool Bonds Reserve Fund, the City shall transfer to the Fiscal Agent for deposit in the
1997 Reserve Account that amount of money which shall be required to maintain the 1997
Reserve Account in the full amount of the 1997 Reserve Requirement. Without limiting the
generality of the foregoing, in the event of any withdrawal from the 1997 Reserve Account
by the Fiscal Agent for transfer to the Interest Account or the Principal Account to fund any
deficiency at any time in either of such accounts, the City shall transfer to the Fiscal Agent
for deposit in the 1997 Reserve Account that amount of money which shall restore the
1997 Reserve Account to the full amount of the 1997 Reserve Requirement within twelve
months of the date of such withdrawal and transfer.
All money in the 1997 Reserve account shall be used and withdrawn
by the Fiscal Agent solely for the purpose of replenishing the Interest Account or the
Principal Account, in that order, in the event of any deficiency at any time in either of such
accounts, but solely for the purpose of paying the interest on or principal of or redemption
premiums, if any, on the Series 1997 Bonds or for the retirement of all the Series 1997
Bonds then Outstanding, except that so long as the City is not in default hereunder, any
cash amounts in the 1997 Reserve Account in excess of the 1997 Reserve Requirement
shall be withdrawn from the 1997 Reserve Account on each September 16, beginning
September 16, 1998 and deposited in the 1997 Project Fund during construction of the
1997 Project and, upon completion of the 1997 Project, in the Debt Service Fund.
All money in the 1997 Reserve Account shall be used and withdrawn
by the Fiscal Agent solely for the benefit of the Owners of the Series 1997 Bonds and for
the purpose of replenishing the Interest Account or the Principal Account with respect to
the Series 1997 Bonds. In the event of issuance of Parity Obligations, any debt service
reserve account established with respect to such Parity Obligations shall be separate and
apart from the 1997 Reserve Account.
The 1997 Reserve Requirement may be satisfied by crediting to the
1997 Reserve Account moneys, a letter of credit, a reserve fund insurance policy, any, o
11 ,:.
other comparable credit facility or any combination thereof, which in the aggregate make
funds available to the 1997 Reserve Account in an amount equal to the 1997 Reserve
Requirement; provided, however, that such letter of credit, reserve fund insurance policy
or other comparable credit facility, must be issued by a financial institution whose long
term debt or claims paying ability is rated "AA" or better by Moody's and S&P at the time
of delivery of such letter of credit, reserve fund insurance policy or other comparable credit
facility; and provided further that, so long as the 1997 Reserve Policy is in force, any other
credit facility credited to the 1997 Reserve Account shall conform to all requirements
imposed by the Bond Insurer with respect to the Bond Insurance Policy and the 1997
Reserve Policy. Upon the deposit with the Fiscal Agent of such letter of credit, reserve
fund insurance policy or other comparable credit facility, the Fiscal Agent shall release
moneys then on hand in the 1997 Reserve Account to the City in an amount equal to the
face amount of the letter of credit, reserve fund insurance policy or other comparable credit
facility.
SECTION 11.02.
Rebate Fund. The City shall cause the Fiscal Agent to maintain a fund
separate from any other fund established and maintained hereunder designated the
"Series 1997 Bonds Rebate Fund" (the "Rebate Fund"). Subject to a tax certificate dated
the 1997 Closing Date and prepared in connection with the issuance, sale and delivery of
the Series 1997 Bonds (the "Tax Certificate"), as such Tax Certificate may be amended
and supplemented from time to time, moneys held in the Rebate Fund are hereby pledged
to secure payments to the United States of America. The City or the Owners shall have
no rights in or claim to such moneys. The City specifically covenants that the City will
comply with such Tax Certificate and will pay or cause to be paid to the United States of
America the rebate amounts as such term is used in such Tax Certificate at the times and
in the amounts determined therein. The allocation of money in the Revenue Fund, the
investments of money in any fund or account, the application of funds upon acceleration
and the defeasance of Outstanding Series 1997 Bonds, all amounts required to be
deposited into or on deposit in the Rebate Fund shall be governed exclusively by this
Section and by the Tax Certificate (which is incorporated herein by reference).
Any funds remaining in the Rebate Fund after redemption and
payment with respect to all of the Series 1997 Bonds or provision made therefor, including
accrued interest and satisfaction of the Rebate Requirement (as defined in the 1997 Tax
Certificate), shall be withdrawn by Fiscal Agent and remitted to the City for any lawful
purpose.
SECTION 11.03.
Continuincj Disclosure. The City hereby covenants and agrees that it will
comply with and carry out all of the provisions of that certain continuing disclosure
certificate to be entered into in connection with the issuance of the Series 1997 Bonds (the
"Continuing Disclosure Certificate"). Notwithstanding any other provision of the
Resolution, failure of the City to comply with the Continuing Disclosure Certificate shall not
be considered an Event of Default hereunder; however, the Participating Underwriter (as
defined in the Continuing Disclosure Certificate) or the Owners of at least 25% aggregate
principal amount of Outstanding Series 1997 Bonds, may take such actions as may be
necessary and appropriate, including seeking specific performance by court order, to
cause the City to comply with its obligations under this Section.
SECTION 11.04.
Unclaimed Moneys. Anything contained herein to the contrary
notwithstanding, any money held by the Fiscal Agent in trust for the payment and
discharge of the interest or premium (if any) on or principal of the Series 1997 Bonds
which remains unclaimed for two (2) years after the date when the payments of such
interest, premium and principal have become payable, if such money was held by the
Fiscal Agent at such date, or for two (2) years after the date when the payments of such
interest, premium and principal have become payable, if such money was held by the
Finance Director (or duly appointed agent hereunder) at such date, or for two (2) years
after the date of deposit of such money if deposited with the Fiscal Agent after the date
when the interest and premium (if any) on and principal of such Series 1997 Bonds have
become payable, shall at the Written Request of the City be repaid by the Fiscal Agent to
the City as its absolute property free from trust, and the Fiscal Agent shall thereupon be
released and discharged with respect thereto and the Series 1997 Bond Owners shall look
only to the City for the payment of the interest and premium (if any) on and principal of
such Series 1997 Bonds. The provisions of this Section shall be subject to any contrary
provisions of applicable law of the State.
ARTICLE Xll
AMENDMENT OF 1994 RESOLUTION
SECTION 12.01.
Amendment of Section 2.03 of the 1994 Resolution. Subparagraphs (b)
and (e) of Section 2.03 of the 1994 Resolution are amended to read as follows:
"(b) Notice of Redemption. The Fiscal Agent shall mail (by
first class mail) notice of any redemption to the respective
owners of any Bonds designated for redemption, at least thirty
(30) but not more than sixty (60) days prior to the redemption
date, at their addresses appearing on the Bond Registration
Books; but such mailing shall not be a condition precedent to
such redemption, and neither failure to mail or to receive any
such notice nor any defect therein shall affect the validity of
the proceedings for the redemption of such Bonds. Such
notice shall state the redemption date and the redemption
price (including the amount of premium, if any) and, if less
than all of the then Outstanding Bonds are to be called for
13
redemption, shall designate the numbers of the Bonds to be
redeemed by giving the individual number of each Bond or by
stating that all Bonds between two stated numbers, both
inclusive, or by stating that all of the Bonds of one or more
Principal Payment Dates have been called for redemption, and
shall require that such Bonds be surrendered at the Corporate
Trust Office of the Fiscal Agent for redemption at the said
redemption price (including the amount of premium, if any),
giving notice also that further interest on such Bonds will not
accrue from and after the redemption date. Such notice shall
further either (1) explicitly state that the proposed redemption
is conditioned on there being on deposit in the applicable fund
or account on the redemption date sufficient money to pay the
full redemption price of the Bonds to be redeemed, or (2) be
sent only if sufficient money to pay the full redemption price of
the Bonds to be redeemed is on deposit in the applicable fund
or account."
"(e) Manner of Redemption. Whenever any Bonds are to be
selected for redemption, the Fiscal Agent shall determine by
lot, the Bonds or portions thereof to be redeemed. All Bonds
redeemed pursuant to this Section 2.03 shall be canceled
upon surrender to the Fiscal Agent."
SECTION 12.02.
Amendment of Section 2.11 of the 1994 Resolution. Subparagraph (b)
of Section 2.11 of the 1994 Resolution is amended to read as follows:
"(b) An Independent Financial Consultant shall prepare and
file a Report with the Finance Director demonstrating and
stating (1) that, for the most-recently completed Fiscal Year,
Net Revenues (as adjusted for such rate increases for the
Enterprise as have been adopted and are either in effect or
are to become effective not later than the date on which
issuance of the Parity Obligations is authorized) are equal to
at least one hundred twenty-five percent (125%) of Maximum
Annual Debt Service (including estimated Maximum Annual
Debt Service for the Parity Obligations)."
In addition, new subparagraphs (e) and (f) of Section 2.11 shall be added to
read as follows:
"(e) For the period during which any 1997 Reserve Policy
Costs remain due and owing to the Bond Insurer, no Parity
Obligations can be issued.
14
(f) In the event the City intends to issue Parity Obligations, the
City shall provide the Bond Insurer with written notice of such
intention and shall not proceed with such issuance without the
prior written consent of the Bond Insurer."
SECTION 12.03.
Amendment of Section 3.02 of the 1994 Resolution. The following
sentences are hereby added to the end of Section 3.02 of the 1994 Resolution:
"The City may make adjustments from time to time in such
charges and may make such classification thereof as it deems
necessary, but shall not reduce the charges then in effect
unless the revenues generated by such charges will at all
times be sufficient to meet the requirements of this Section;
provided, that all fees and charges of the City in connection
with the Enterprise shall comply with the requirements of
Article XItlD, Section 6(b) and 6(c) of the California
Constitution to the extent deemed applicable. Furthermore, for
any period during which any 1997 Reserve Policy Costs are
due and owing to the Bond Insurer, such Net Revenues shall
at all times be equal to or greater than one times the amount
of such 1997 Reserve Policy Costs due and owing."
SECTION 12.04.
Amendment of Section 3.04 of the 1994 Resolution. Section 3.04 of the
1994 Resolution is amended to read as follows:
"SECTION 3.04. Transfer from Wastewater Treatment Fund:
Establishment of Debt Service Fund. There is hereby created a special
fund to be known as the City of Bakersfield Sewer Revenue Bond Debt
Service Fund (the "Debt Service Fund"), to be held and maintained by the
Fiscal Agent. On each March 10 and September 10 while any of the Bonds
remain Outstanding, the City shall transfer from the Wastewater Treatment
Fund held by the City to the Fiscal Agent for deposit in the Debt Service
Fund the Net Revenues; provided, however, that such obligation to transfer
Net Revenues shall be limited to an amount of Net Revenues which, when
added to other available amounts in the Debt Service Fund, equals the
amounts required to be deposited into the Interest Account and the Principal
Account pursuant to Section 3.05 and to be deposited in the 1997 Reserve
Account pursuant to Section 11.01 ."
15
SECTION 12.05.
Amendment of Section 3.05 of the 1994 Resolution. Subparagraphs (a)
and (b) of Section 3.05 of the 1994 Resolution are hereby amended to read as follows:
"(a) On or before each March 10 preceding a March 15
Interest Payment Date and each September 10 preceding a
September 15 Interest Payment Date, beginning March 10,
1998, the Fiscal Agent shall debit the Debt Service Fund and
credit the Interest Account with an amount which, when added
to any amount already credited to the Interest Account, will be
equal to the amount of interest coming due and payable on the
Outstanding Bonds on said next succeeding Interest Payment
Date. No credit need be made to the Interest Account if the
amount contained therein is equal to or greater than the
amount of interest coming due on said next succeeding
Interest Payment Date. All monies in the Interest Account
shall be used and withdrawn by the Fiscal Agent solely for the
purpose of paying the interest on the Bonds as it becomes due
and payable (including interest on any Bonds purchased or
redeemed prior to maturity pursuant to this Resolution)."
"(b) On or before each September 10 preceding a
September 10 Principal Payment Date, beginning September
10, 1998, the Fiscal Agent shall debit the Debt Service Fund
and credit the Principal Account with an amount which, when
added to any amount already credited to the Principal
Account, will be equal to the principal coming due and payable
on the Outstanding Bonds on said Principal Payment Date.
No credit need be made to the Principal Account if the amount
contained therein is equal to or greater than the amount of
principal coming due on the next succeeding Principal
Payment Date. All moneys in the Principal Account shall be
used and withdrawn by the Fiscal Agent solely for the purpose
of paying the principal on the Bonds as it becomes due and
payable."
SECTION 12.06.
Addition of Section 3.07 to the 1994 Resolution. Section 3.07 is hereby
added to the 1994 Resolution to read as follows:
"SECTION 3.07 Investment of Funds and Accounts.
Amounts in all of the funds and accounts established pursuant
to the Resolution may be invested by the Fiscal Agent in
securities that are permitted investments for City funds under
16
California law, as supplemented by the adopted investment
policy of the City, as the same may be amended from time to
time. Investment income is to remain in such funds and
accounts unless otherwise provided herein."
SECTION 12.07.
All references to "Paying Agent" in the 1994 Resolution shall be deemed to
refer to the "Fiscal Agent," the City having appointed a Fiscal Agent to administer the
Bonds and related funds and accounts. Correspondingly, all references to the "City" in the
1994 Resolution with respect to administration of the Bonds shall be deemed to refer to
the "Fiscal Agent." In the event of appointment of a successor to the Fiscal Agent, the City
shall provide notice to the Bond Insurer and an address for notifications to the successor
fiscal agent pursuant to Section 13.07 hereof.
ARTICLE Xlll
BOND INSURANCE AND RESERVE POLICY PROVISIONS
SECTION 13.01.
General. The provisions of this Article Xllt are intended to assure
compliance with the requirements of the Bond Insurer imposed as conditions to issuance
of the Bond Insurance Policy and the 1997 Reserve Policy, as provided by the respective
commitments of the Bond Insurer for issuance of the Bond Insurance Policy and the 1997
Reserve Policy, each dated November 14, 1997. These provisions should be liberally
construed to effectuate their purpose of compliance with such conditions, and all conflicts
with other provisions of the 1994 Resolution or this Supplemental Resolution should be
resolved in favor of these provisions of this Article XIII.
SECTION 13.02.
Default-Related Provisions.
(a) In the event that, on any Interest Payment Date or Principal
Payment Date, the moneys available in the funds and accounts established under the
provisions of the 1994 Resolution and this Supplemental Resolution (including the
proceeds of any available draws on the 1997 Reserve Policy and any Additional 1997
Reserve Policy, if any) for any interest and/or principal payable on said date are
insufficient for that purpose, the Fiscal Agent shall transfer moneys on deposit in the 1997
Project Fund to the applicable Interest Account or Principal Account, as the case may be,
to make such payments.
(b) In determining whether an Event of Default has occurred under
Section 7.01 of the 1994 Resolution, no effect shall be given to payments made under the
Bond Insurance Policy.
17 ~-
(c) Notwithstanding the provisions of Article VII of the 1994
Resolution respecting acceleration upon the occurrence of an Event of Default, any
declaration of the City of acceleration pursuant to Section 7.01 thereof shall be subject to
the prior written consent of the Bond Insurer (if it has not failed to comply with its payment
obligations under the Bond insurance Policy).
(d) Upon receipt of actual knowledge of an Event of Default by
either the Fiscal Agent or the City, the Fiscal Agent or the City, as the case may be, shall
immediately provide written notice to the Bond Insurer of such Event of Default.
(e) For all purposes of the 1994 Resolution and this Supplemental
Resolution governing Events of Default and the remedies pertaining thereto as applied to
the Series 1997 Bonds, except for the giving of notice of default to Owners of the Series
1997 Bonds, the Bond Insurer shall be deemed to be the sole owner of the Series 1997
Bonds (if it has not failed to comply with its payment obligations under the Bond Insurance
Policy).
(f) Pursuant to Section 8.01 of the 1994 Resolution, the Bond
Insurer shall be deemed to be a party in interest with respect to all matters pertaining to
the Series 1997 Bonds entitled to the benefits of the 1994 Resolution and this
Supplemental Resolution as a deemed Owner of the Series 1997 Bonds and, without
limiting the generality of the foregoing, shall be entitled to (1) notify the City, the Fiscal
Agent or any applicable receiver, if any, of the occurrence of an Event of Default and (2)
request the receiver, if any, to intervene in judicial proceedings that affect the Series 1997
Bonds or the security therefor. The receiver, if any, shall be required to accept notice of
default from the Bond Insurer.
SECTION 13.03.
Bond Insurance Policy Payment Provisions.
(a) If, on the third day preceding any Interest Payment Date for the
Series 1997 Bonds, there is not on deposit with the Fiscal Agent sufficient moneys
available to pay all principal of and interest on the Series 1997 Bonds due on such date,
the Fiscal Agent shall immediately notify the Bond Insurer and the Bond Insurer's Fiscal
Agent of the amount of such deficiency. If, by said Interest Payment Date, the City has not
provided the amount of such deficiency, the Fiscal Agent shall simultaneously make
available to the Bond Insurer and to the Bond Insureds Fiscal Agent the Bond Registration
Books maintained by the Fiscal Agent. In addition, the following shall apply:
(b) The Fiscal Agent shall provide the Bond Insurer with a list of
the Owners of the Series 1997 Bonds entitled to receive principal or interest payments
from the Bond Insurer under the terms of the Bond Insurance Policy and shall make
arrangements for the Bond Insurer and its Fiscal Agent (i) to mail checks or drafts to the
Owners of the Series 1997 Bonds entitled to receive full or partial interest payments from
the Bond Insurer and (ii) to pay principal of the Series 1997 Bonds surrendered to the
18
Bond Insurer's Fiscal Agent by the Owners of the Series 1997 Bonds entitled to receive
full or partial principal payments from the Bond Insurer; and
(c) The Fiscal Agent shall, at the time it makes the Bond
Registration Books available to the Bond Insurer pursuant to subparagraph (a) above,
notify the Owners of the Series 1997 Bonds entitled to receive the payment of principal of
or interest on the Series 1997 Bonds from the Bond Insurer (i) as to the fact of such
entitlement, (ii) that the Bond Insurer will remit to them all or part of the interest payments
coming due pursuant to and subject to the terms of the Bond Insurance Policy, (iii) that,
except as provided in subparagraph (b) of this Section 13.03, in the event that any Owner
of any Series 1997 Bond is entitled to receive full payment of principal from the Bond
Insurer, such Owner must tender the subject Series 1997 Bond with the instrument of
transfer in the form provided on the subject Series 1997 Bond executed in the name of the
Bond Insurer, and (iv) that, except as provided in subparagraph (b) of this Section 13.03,
in the event that such Owner is entitled to receive partial payment of principal from the
Bond Insurer, such Owner must tender the subject Series 1997 Bond for payment first to
the Fiscal Agent, which shall note on such Series 1997 Bond the portion of principal paid
by the Fiscal Agent, and then, with an acceptable form of assignment executed in the
name of the Bond Insurer, to the Bond Insurer's Fiscal Agent, which will then pay the
unpaid portion of principal to the Owner pursuant to and subject to the terms of the Bond
Insurance Policy.
(d) In the event that the Fiscal Agent has received notice that any
payment of principal of or interest on a Series 1997 Bond has been recovered from an
Owner pursuant to the United States Bankruptcy Code from a trustee in bankruptcy in
accordance with the final, nonappealable order of a court having competent jurisdiction,
the Fiscal Agent shall, at the time it provides notice to the Bond Insurer, notify all Owners
of the Series 1997 Bonds that in the event that any such Owner's payment is so recovered,
such Owner will be entitled to payment from the Bond Insurer to the extent of such
recovery, and the Fiscal Agent shall furnish to the Bond Insurer its records evidencing the
payments of principal of and interest on the Series 1997 Bonds which have been made by
the Fiscal Agent and subsequently recovered from such Owners, and the dates on which
such payments were made,.
(e) The Bond Insurer shall, to the extent it makes payment of
principal of or interest on the Series 1997 Bonds, become subrogated to the rights of the
recipients of such payments in accordance with the terms of the Bond Insurance Policy
and, to evidence such subrogation, (1) in the case of subrogation as to claims for past due
interest, the Fiscal Agent shall note the Bond Insurer's rights as subrogee on the Bond
Registration Books upon receipt from the Bond Insurer of proof of the payment of interest
thereon to the Owners of such Series 1997 Bonds and (2) in the case of subrogation as
to claims for past due principal, the Fiscal Agent shall note the Bond Insurer's rights as
subrogee on the Bond Registration Books upon receipt of proof of the payment of principal
thereof to the Owners of such Series 1997 Bonds. Notwithstanding anything in this
19
Supplemental Resolution or the Series 1997 Bonds to the contrary, the Fiscal Agent shall
make payment of such past due interest and past due principal directly to the Bond Insurer
to the extent that the Bond Insurer is a subrogee with respect thereto.
SECTION 13.04.
Amendments and Supplements. Any amendment or supplement to the
1994 Resolution or this Supplemental Resolution shall be subject to the prior written
consent of the Bond Insurer; provided that a supplemental resolution for the purpose of
authorizing Parity Obligations in compliance with the conditions of Section 2.11 of the 1994
Resolution, as amended by this Supplemental Resolution, shall not require consent of the
Bond Insurer. Any rating agency rating the Series 1997 Bonds must receive notice of each
amendment and a copy thereof at least 15 days in advance of its execution or adoption.
The Bond Insurer shall be provided with a full transcript of all proceedings relating to the
execution of any such amendment or supplement.
SECTION 13.05.
Defeasance Provisions, Only cash, direct non-callable obligations of the
United States of America and securities fully and unconditionally guaranteed as to the
timely payment of principal and interest by the United States of America, to which direct
obligation or guarantee the full faith and credit of the United States of America has been
pledged, Refcorp interest strips, CATS, TIGRS, STRPS, or defeased municipal bonds
rated "AAA" by S&P or "Aaa" by Moody's (or any combination of the foregoing) shall be
used to effect defeasance of the Bonds unless the Bond Insurer otherwise approves. In
the event of an advance refunding, the City shall cause to be delivered a verification report
of a nationally recognized Independent Certified Public Accountant. If a forward supply
contract is employed in connection with the refunding, (a) such verification report shall
expressly state that the adequacy of the escrow to accomplish the refunding relies solely
on the initial escrowed investments and the maturing principal thereof and interest income
thereon and does not assume performance under or compliance with the forward supply
contract, and (b) the applicable escrow agreement shall provide that in the event of any
discrepancy or difference between the terms of the forward supply contract and the escrow
agreement (or this Supplemental Resolution, if no separate escrow agreement is utilized),
the terms of the escrow agreement (or this Supplemental Resolution, if applicable) shall
be controlling.
SECTION 13.06.
Reporting Requirements.
(a) The City shall provide the Bond Insurer with the following
information:
Within 180 days after the end of each of the City's Fiscal Years, the
budget for the succeeding year, the annual audited financial statements, a statement of
the amount on deposit in the 1997 Reserve Account as of the last valuation, and, if not
presented in the audited financial statements, a statement of the Revenues pledged to
payment of the Series 1997 Bonds in each such Fiscal Year.
(i) The official statement or other disclosure document, if
any, prepared in connection with the issuance of any additional debt secured by the
Revenues, whether on a parity with the Series 1997 Bonds or subordinate thereto, within
30 days after the sale of such additional debt.
(ii) The official statement or other disclosure document, if
any, prepared in connection with the issuance of any additional debt secured by the
Revenues, whether on a parity with the Series 1997 Bonds or subordinate thereto, within
30 days after the sale of such additional debt.
(iii) Notice of any drawing upon or deficiency due to market
fluctuation in the amount, if any, on deposit, in the 1997 Reserve Fund.
(iv) Notice of the redemption, other than mandatory sinking
fund redemption, of any of the Series 1997 Bonds, or of any advance refunding of the
Series 1997 Bonds, including the principal amount, maturities and CUSIP numbers thereof.
(v) Simultaneously with the delivery of the annual audited
financial statements, a statement of the following:
(1) The number of Enterprise system users as of the
end of the Fiscal Year;
(2) Notification of the withdrawal of any Enterprise
system user providing five percent (5%) or more of Enterprise system Revenues since the
last reporting date;
(3) Any significant wastewater treatment plant
retirements or expansions planned or undertaken since the last reporting date;
(4) Maximum and average daily flows for the Fiscal
Year;
(5) Updated capital plans for expansion and
improvement projects respecting the Enterprise; and
(6) Results of annual engineering inspections, if any,
occurring during the Fiscal Year.
(vi) Such additional information as the Bond Insurer may
reasonably request from time to time.
21
SECTION 13.07.
Notice Addresses. The notice addresses for the Bond Insurer, the Bond
Insurer's Fiscal Agent and the Fiscal Agent are as follows:
If to the Bond Insurer:
Financial Guaranty Insurance Company
115 Broadway
New York, New York 10006
Attention: Risk Management
If to the Bond Insurer's
Fiscal Agent:
State Street Bank and Trust Company, N.A.
61 Broadway
New York, New York 10006
Attention: Corporate Trust Department
If to the Fiscal Agent:
First Trust of California, National
Association
550 South Hope Street, Suite 500
Los Angeles, CA 90071
Attention: Corporate Trust Department
SECTION 13.08.
1997 Reserve Policy Payment and Reimbursement Provisions.
(a) If, on the third day preceding any Interest Payment Date for the
Series 1997 Bonds, the amount of money on deposit in the 1997 Reserve Fund is
insufficient to cure any deficiency in the Interest Account or the Principal Account to pay
the amount of any interest or principal coming due on said Interest Payment Date, the
Fiscal Agent shall notify the Bond Insurer as provided by and in accordance with the 1997
Reserve Policy, and subject to the limitations as to the amounts to be advanced and the
terms and conditions of the 1997 Reserve Policy, the Bond Insurer shall advance to the
Fiscal Agent, for deposit in the 1997 Reserve Fund, the amount of the insufficiency;
provided that the obligation of the Bond Insurer pursuant to the 1997 Reserve Policy to
advance such amounts shall be limited to the amount which, when combined with the cash
balance available in the 1997 Reserve Fund at that time, is equal to the amount of the
insufficiency and that the entire amount of any such cash balance shall be exhausted
before or concurrently with any such advance by the Bond Insurer pursuant to the 1997
Reserve Policy. If at the time of any such advance by the Bond Insurer pursuant to the
1997 Reserve Policy, there is any other credit facility (the "Additional 1997 Reserve
Policy") on deposit in the 1997 Reserve Fund, draws upon the 1997 Reserve Policy and
any such Additional 1997 Reserve Policy shall be made on a pro-rata basis (calculated by
reference to the maximum amounts available thereunder) after applying all available cash
in the 1997 Reserve Fund and prior to replenishment of any such cash draws,
respectively.
22
(b) Repayment of 1997 Reserve Policy Costs shall commence in
the first month following each draw, and each such monthly payment shall be in an amount
at least equal to one-twelfth of the aggregate of 1997 Reserve Policy Costs related to such
draw. If and to the extent that cash was also on deposit in the 1997 Reserve Fund at the
time of such draw, repayment of any 1997 Reserve Policy Costs shall be made prior to
replenishment of any such cash amounts. If, in addition to the 1997 Reserve Policy, any
Additional 1997 Reserve Policy is on deposit in the 1997 Reserve Fund at the time of any
such draw, repayment of 1997 Reserve Policy Costs and reimbursement of amounts due
under the Additional 1997 Reserve Policy shall be made on a pro-rata basis (calculated
by reference to the maximum amounts available thereunder).
(c) If the City shall fail to repay any 1997 Reserve Policy Costs in
accordance with the requirements of subparagraph (b) hereof, the Bond Insurer shall be
entitled to exercise any and all remedies available at law or under this Supplemental
Resolution document other than (i) acceleration of the maturity of the Series 1997 Bonds
or (ii) remedies which would adversely affect Owners of the Bonds.
(d) This Supplemental Resolution shall not be discharged until all
1997 Reserve Policy Costs owing to the Bond Insurer shall have been paid in full.
(e) As security for the City's repayment obligations with respect to
the 1997 Reserve Policy, the Bond Insurer shall be granted a security interest (subordinate
only to that of the Owners of the Bonds) in all Revenues and collateral pledged as security
for the Series 1997 Bonds.
SECTION 13.09.
Requirement for Additional Reserve Policy.
(a) Such Additional Reserve Policy shall be issued by a company
licensed to issue an insurance policy guaranteeing the timely payment of debt service on
the Series 1997 Bonds (a "municipal bond insurer") and may be deposited in the 1997
Reserve Account Fund to meet the Reserve Requirement if the claims paying ability of the
issuer thereof shall be rated "AAA" or "Aaa" by S&P or Moody's, respectively. The form
and substance of such Additional Reserve Policy and the issuer thereof shall be approved
by the Bond Insurer prior to deposit into the 1997 Reserve Account.
(b) Such Additional Reserve Policy, if an unconditional irrevocable
letter of credit issued by a bank, may be deposited in the 1997 Reserve Account to meet
the Reserve Requirement if the issuer thereof is rated at least "AA" by S&P. The letter of
credit shall be payable in one or more draws upon presentation by the beneficiary of a
sight draft accompanied by its certificate that it then holds insufficient funds to make a
required payment of principal of or interest on the Series 1997 Bonds. The draws shall be
payable within two days of presentation of the sight draft. The letter of credit shall be
required to notify the City and the Fiscal Agent, not later than 30 months prior to the stated
23
expiration date of the letter of credit, as to whether such expiration date shall be extended,
and if so, shall indicate the new expiration date.
If such notice indicates that the expiration date shall not be extended, the
City shall deposit in the 1997 Reserve Account an amount sufficient to cause the cash or
permitted investments on deposit in the 1997 Reserve Account together with any other
qualifying credit instruments, to equal the Reserve Requirement on all outstanding Bonds,
such deposit to be paid in equal installments on at least a semi-annual basis over the
remaining term of the letter of credit unless the 1997 Reserve Account credit instrument
is replaced by a 1997 Reserve Account credit instrument meeting the requirements
specified above. The letter of credit shall permit a draw in full not less than two weeks
prior to the expiration or termination of such letter of credit if the letter of credit has not
been replaced or renewed, and the Fiscal Agent shall draw upon the letter of credit prior
to its expiration or termination unless an acceptable replacement is in place or the 1997
Reserve Account is fully funded in its required amount.
(¢) The use of any Additional Reserve Policy pursuant to this
Section 13.09 shall be subject to receipt of an opinion of counsel acceptable to the Bond
Insurer and in form and substance satisfactory to the Bond Insurer as to the due
authorization, execution, delivery and enforceability of such instrument in accordance with
its terms, subject to applicable laws affecting creditors' rights generally, and, in the event
the issuer of such credit instrument is not a domestic entity, an opinion of foreign counsel
in form and substance satisfactory to the Bond Insurer. In addition, the use of an
irrevocable letter of credit shall be subject to receipt of an opinion of counsel acceptable
to the Bond Insurer and in form and substance satisfactory to the Bond Insurer to the effect
that payments under such letter of credit would not constitute avoidable preferences under
Section 547 of the U.S. Bankruptcy Code or similar state laws with avoidable preference
provisions in the event of the filing of a petition for relief under the U. S. Bankruptcy Code
or similar state laws by or against the issuer of the bonds (or any other account party
under the letter of credit).
(d) The obligation to reimburse the issuer of an Additional 1997
Reserve Policy for any fees, expenses, claims or draws upon such an Additional 1997
Reserve Policy shall be subordinate to the payment of debt service on the Series 1997
Bonds. The right of the issuer of an Additional 1997 Reserve Policy to payment or
reimbursement of its fees and expenses shall be subordinated to cash replenishment of
the 1997 Reserve Account, and, subject to the last sentence of the foregoing
subparagraph (c) of this Section 13.09, its right to reimbursement for claims or draws shall
be on a parity with the cash replenishment of the 1997 Reserve Account. The Additional
1997 Reserve Policy shall provide for a revolving feature under which the amount
available thereunder will be reinstated to the extent of any reimbursement of draws or
claims paid. If the revolving feature is suspended or terminated for any reason, the right
of the issuer of the Additional 1997 Reserve Policy to reimbursement will be further
subordinated to cash replenishment of the 1997 Reserve Account to an amount equal to
the difference between the full original amount available under the Additional 1997
Reserve Policy and the amount then available for further draws or claims. If (a) the issuer
24
of an Additional 1997 Reserve Policy becomes insolvent or (b) the issuer of an Additional
1997 Reserve Policy defaults in its payment obligations thereunder or (c) the claims-
paying ability of the issuer of the insurance policy or surety bond falls below a S&P "AAA"
or a Moody's "Aaa" or (d) the rating of the issuer of the letter of credit falls below a S&P
"AA", the obligation to reimburse the issuer of the Additional 1997 Reserve Policy shall be
subordinate to the cash replenishment of the 1997 Reserve Account.
(e) If (a) the revolving reinstatement feature described in the
preceding subparagraph (d) is suspended or terminated or (b) the rating of the claims
paying ability of the issuer of the surety bond or insurance policy falls below a S&P "AAA"
or a Moody's "Aaa" or (c) the rating of the issuer of the letter of credit falls below a S&P
"AA", the Issuer shall either (i) deposit into the 1997 Reserve Account an amount sufficient
to cause the cash or permitted investments on deposit in the 1997 Reserve Account to
equal the Reserve Requirement on all outstanding Series 1997 Bonds, such amount to be
paid over the ensuing five years in equal installments deposited at least semiannually or
(ii) replace such instrument with a surety bond, insurance policy or letter of credit meeting
the requirements specified above for an Additional 1997 Reserve Policy within six months
of such occurrence. In the event (a) the rating of the claims-paying ability of the issuer of
the surety bond or insurance policy falls below "A" or (b) the rating of the issuer of the
letter of credit falls below "A" or (c) the issuer of the 1997 Reserve Account defaults in its
payment obligations or (d) the issuer of the 1997 Reserve Account becomes insolvent, the
Issuer shall either (i) deposit into the 1997 Reserve Account an amount sufficient to cause
the cash or permitted investments on deposit in the 1997 Reserve Account to equal the
Reserve Fund Requirement on all outstanding Series 1997 Bonds, such amount to be paid
over the ensuing year in equal installments on at least a monthly basis or (ii) replace such
instrument with a surety bond, insurance policy or letter of credit meeting the requirements
specified above for an Additional 1997 Reserve Policy within six months of such
occurrence.
(f) Where applicable, the amount available for draws or claims
under the Additional 1997 Reserve Policy may be reduced by the amount of cash or
permitted investments deposited in the 1997 Reserve Account pursuant to the provisions
of preceding subparagraph (d).
(g) If the City chooses the above described alternative as to a
cash-funded 1997 Reserve Account, any amounts owed by the City to the issuer of such
credit instrument as a result of a draw thereon or a claim thereunder, as appropriate shall
be included in any calculation of debt service requirements required to be made pursuant
to the 1994 Resolution or this Supplemental Resolution for any purpose, e.g., rate
covenant or additional bond test.
(h) The Fiscal Agent shall ascertain the necessity for a claim or
draw upon the Additional 1997 Reserve Policy and to provide notice to the issuer of the
Additional 1997 Reserve Policy in accordance with its terms not later than three days (or
such longer period as may be necessary depending on the permitted time period for
25
honoring a draw under the Additional 1997 Reserve Policy prior to each interest payment
date.
(i) Cash on deposit in the 1997 Reserve Account shall be used (or
investments purchased with such cash shall be liquidated and the proceeds applied as
required) prior to any drawing on any Additional 1997 Reserve Policy. If and to the extent
that more than one Additional 1997 Reserve Policy is deposited in the 1997 Reserve
Account, drawings thereunder and repayments of costs associated therewith shall be
made on a pro rata basis1 calculated by reference to the maximum amounts available
thereunder.
ARTICLE XlV
MISCELLANEOUS
SECTION 14.01.
Terms of Series 1997 Bonds Subject to the 1994 Resolution. Except as
in this Supplemental Resolution expressly provided, every term and condition contained
in the 1994 Resolution shall apply to this Supplemental Resolution and to the Series 1997
Bonds with the same force and effect as if the same were herein set forth at length, with
such omissions, variations and modifications thereof as may be appropriate to make the
same conform to this Supplemental Resolution.
This Supplemental Resolution and all the terms and provisions herein
contained shall form part of the 1994 Resolution as fully and with the same effect as if all
such terms and provisions had been set forth in the 1994 Resolution. The 1994
Resolution is hereby ratified and confirmed and shall continue in full force and effect in
accordance with the terms and provisions thereof, as amended and supplemented hereby.
SECTION 14.02.
Conflict of Terms. If there is any conflict between the terms of this
Supplemental Resolution and the terms of the 1994 Resolution, the terms of this
Supplemental Resolution shall control. Except as expressly modified by this Supplemental
Resolution, however, the terms of the 1994 Resolution shall remain in full force and effect.
SECTION 14.03.
November 19, 1997 Resolution Rescinded and Superseded. This
Supplemental Resolution supersedes Resolution No. 196-93(1), adopted by this Council
on November 19, 1997, to supplement and amend Resolution No. 196-93, and said
Resolution No. 196-93(1 ) is hereby rescinded in its entirety.
26
SECTION 14.04.
Effective Date of Supplemental Resolution.
Resolution shall take effect immediately upon its adoption.
This Supplemental
.............. o0o ..............
27
I HEREBY CERTIFY that the foregoing Resolution was passed and adopted by the
Council of the City of Bakersfield at a regular meeting thereof held on DEC ~ 1997, by the
following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
COUNCILMEMBER CARSON, DEMOND, ~M~T-H, MCDERMOTT, ROWLES, SULLIVAN, SALVAGGIO
COUNCILMEMBER
COUNCILMEMBER
COUNCILMEMBER
CITY CLERK and Ex Officio C~.et'k of the
Council of the City of Bakersfield
APPROVED DEC' 3 1997
MAYOR of Bakersfield
APPROVED as to form:
JUDY K. SKOUSEN
City Attorney
J_I~DY K. S,,(OUSE.
ty Attorney
JAN:dlr\fet
S:~:OUNCIL~RES~SEWERBND.AMD
28