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RESOLUTION 94-002 SAFA Page 6 Maintenance and Operation Costs of the Water ~ystem shall also be deemed to include all such costs, as described above, incurred in connection with the City's sewer system, not to exceed $ in any Fisca~ Year. Payments with respect to Maintenance and Operation Obligations, hereinafter defined, shall be considered Maintenance and Operation Costs if they are incurred in connection with the Maintenance and Operation Costs described in the preceding paragraph. "Maintenance and Operation Obligation" means any contract or lease for the purchase of any facilities, properties, structures, or works, or any loan of credit to or guaranty of debts, claims or liabilities of any other person for the purpose of obtaining any facilities, properties, structures or works, the final payments under which are due more than five years following the effective date thereof, so long as in each case the payments thereunder are to constitute Maintenance and Operation Costs. BOND INS.UR~NCE: The successful bidder for the Series 1994 Bonds may, at it~ option and expense, purchase bond insurance for the Series 1994 Bonds. The Authority will cooperate in any ~ffort to qualify the Series 1994 Bonds for such bond insurance. All costs of qualification for and obtaining bond insurance and ratings based upon such bond insurance shall be the responsibility of the successful bidder and not the Authority. Any failure Of the Series 1994 Bonds to be so insured or rated or of any such policy of insurance to be issued shall not in any way relieve the successful bidder of its contractual obligation to purchase arising from the acceptance of its proposal to purchase the Series 1994 Bonds. TRUSTEE: First Interstate Bank of California Los Angeles, California, has been appointed trustee for the payment of principal and interest and for the registration of the Series 1994 Bonds, and holds in trust the Payment Fund, including therein, the Interest Account, Principal Account, Sinking Account and Redemption Account and the Reserve Fund, each such fund and account established,~pursuant to the Indenture. TAX EXEMPT STATUS: In the opinion of Orrick, Herrington & Sutcliffe, Los Angeles, California, the interest received by the owners of the Series 1994 Bonds, assuming compliance with certain covenants contained in the Indenture providing for the issuance of the Series 1994 Bonds, is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended, and is exempt from present State of California personal income taxes. See the discussion of Tax Exemption in the official statement hereinafter mentioned.