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HomeMy WebLinkAbout30-City Treasurer - . CIO OF SAN BERNARD()O - REQU&:JT FOR COUNCIL AC REC'U.;._ttt. L'II;''';''_t. City Treasurer SU~_. ISB1 SEP 23 ?r': I:' 2: OFFICE N Dept: CITY TREASURER 'S Amend Resolution authorizing the Issuance of Refunding Bonds for Assessment District #961 (Tri-City) From: CRAIG A. GRAVES, Dfte: September 11, 1987 Synoplis of Previous Council action: March 19, 1985 - Authorized Issuance of Bonds for Assessment District #961 (Tri-City) under 1915 Act December 8, 1986 - Authorized the Issuance of Refunding Bonds for Assessment District #961 (Tri-City) Recommended motion: Adopt Resolution Contact person: Craiq A. Graves Phone: <; 2 21 Supporting data attached: Yes Ward: Th i rd FUNDING REQUIREMENTS: Amount: None Sou rce: Finance: tfr, d~ Council Notal: 75-0262 Agenda Item No." ::? () CIW OF SAN BERNARoQO - REQU~T FOR COUNCIL AC,)ON STAFF REPORT In December of 1986, the Mayor and Common Council approved the refunding of the Assessment District Bonds for District #961, which is the Tri-City Project Area. The refunding was accomplished to take advantage of the ,lower interest rates and lower the assessments on the parcels of property. It was part of the overall agreement with the development of the Tri-City Area, the donation of the Fire Station land and the building of a new off-ramp from I-10. Since the close of the sale of the bonds, all of the documents were reviewed by the various counsels of the involved parties. The underwriter's and trustee's counsels' have since recommended some minor changes in the resolution. The changes have been reviewed by Deborah Thompson of Sabo and Deitsch, Bond Counsel and by the City Attorney's Office and are approved. The City Treasurer's Office has also reviewed the changes and recommends approval. The changes just clarify the responsibilities of the property owners and their obligations to pay the assessments more clearly providing further protection to both the Bondholders and the City. 75-0264 "-"., L ;r...... U ~'" "j CITY COUNCIL OF THE CITY OF SAN BERNARDINO AGENDA July 6, 1987 Item: RESOLUTION APPROVING AN AMENDMENT TO THE RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, AUTHORIZING THE ISSUANCE OF AN AGGREGATE PRlNCIPAL AMOUNT 'OF $12,450,000 OF REFUNDING BONDS OF SAID CITY TO REFUND PREVIOUSLY ISSUED $13,400,000 CITY OF SAN BERNARDINO, IMPROVEMENT BONDS, ASSESSMENT DISTRICT NO. 961, SERIES 1985 (PARK CENTRE) Action to be Taken: Adopt Resolution To be Published: N/A Newspaper: N/A Dates: N/A Certified copy of Resolution to be returned to Sabo & Deitsch. /2213S c c -" J ""' ,,"...,i SBE077-58/2213S/nb 06/02187 RESOLUTION NO. RESOLUTION APPROVING AN AMENDMENT TO THE RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, AUTHORIZING THE ISSUANCE OF AN AGGREGATE PRINCIPAL AMOUNT OF $12,450.000 OF REFUNDING BONDS OF SAID CITY TO REFUND PREVIOUSLY ISSUED $13,400,000 CITY OF SAN BERNARDINO. IMPROVEMENT BONDS, ASSESSMENT DISTRICT NO. 961, SERIES 1985 (PARK CENTRE) WHEREAS, the City of San Bernardino. California (the -City-), is a municipal corporation and a charter city, duly organized and existing, pursuant to the Constitution and the laws of the State of California and under the charter of the City and the powers of the City including the power to issue improvement bonds to represent and be secured by the assessments which shall be made to pay the cost of any work or improvement which is charged or assessed upon real property as provided in Part 3 of Division 10 (Improvement Bond Act of 1915) of the California Streets and Highways Code (the -1915 Act-) and the power to issue improvement refunding bonds for the purpose of paying or retiring improvement bonds previously issued by it as provided in the Refunding Act of 1984 for 1915 Improvement Act Bonds (Streets and Highways Code Section 9500, et seq.) (the -1984 Act-); and WHEREAS, the City has heretofore adopted its Resolution , No. 85-116 (the -1985 Reso1ution-), providing for the issuance of the -$13,400,000 City of San Bern~rdino, Improvement Bonds, - I - c ,.......'- , \, .I --. .J ''-0../ Assessment District No. 961, Series 1985 (Park Centre) (the "1985 Bonds"); and WHEREAS, pursuant to the 1984 Act the City may, at any time, determine by resolution that the pUblic interest and necessity requires the refunding of any outstanding 1985 Bonds issued pursuant to the 1915 Act and may declare its intention to refund the 1985 Bonds and to levy reassessments as security for the refunding bonds; and WHEREAS, the City has issued an aggregate principal amount not to exceed $12,450,000 of the improvement refunding bonds and has i bpnds to refund the used a portion of the proceeds of such outstanding 1985 Bonds; and WHEREAS, the City has previously ad9pted its Resolution entitled "RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, AUTHORIZING THE ISSUANCE OF AN AGGREGATE PRINCIPAL AMOUNT OF $12,450,000 OF REFUNDING BONDS OF SAID CITY TO REFUND PREVIOUSLY ISSUED $13,400,000 CITY i OF SAN BERNARDINO, IMPROVEMENT BONDS, ASSESSMENT DISTRICT NO. 961, SERIES 1985 (PARK CENTRE)" (the "Resolution of Issuance"); and WHEREAS, pursuant to said Resolution of Issuance, the City has issued an aggregate principal amount not to exceed $12,450,000 of improvement refunding bonds to be known as the "City of San Bernardino, California, Improvement Refunding Bonds, Assessment - 2 - c \. " " ) District No. 961, Series 1986", a portion of the proceeds of, which will be set apart and irrevocably segregated in a special trust fund (to be invested in Federal Securities, as defined in Section 13 of the Resolution of Issuance) in such principal amounts which, together with the interest earnings on, will be sufficient to defease the liens and covenants created by Resolution No. 85-116 by ensuring the payment of the principal of, premium, if any, and interest on the 1985 Bonds as the same become due or at certain designated dates (where the City has exercised a redemption privilege as set forth in Resolution No. 85-116) prior to the maturity dates of the 1985 Bonds, all as permitted by the 1984 Act; and WHEREAS, pursuant to Section 22 of the Resolution of Issuance, said Reso1ut,ion of Issuance may be amended subsequent to the issuance of the Bonds to incorporate certain modifications and clarifications to correct and clarify certain provisions of said Resolution of Issuance as set forth in Exhibit "A" attached hereto and incorporated herein by reference; and WHEREAS, the City has been requested by Miller & Schroeder Financial, Inc. (the "Underwriter") to supplement the provisions contained in the Resolution of Issuance if the City deems it desirable and necessary and not inconsistent with the Resolution of Issuance and not to adversely affect the interests of the Bondholders under the Resolution of Issuance; and - 3 - c ,""." ---" , ) ....".1 "./ WHEREAS. such an amendment would not conflict with or result in a breach of any of the terms, conditions or provisions of any legal restriction or investment to which th!e City is bound nor shall such an amendment constitute a default under the Resolution of Issuance; and WHEREAS, it is appropriate at this time for the City to consent to and approve a certain amendment to the Resolution of Issuance (the -Amendment") pursuant to this Resolution. NOW, THEREFORE, THE MAYOR AND COMMON, COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, DO HEREBY FIND, RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section l. The above recitals. and each of them, are true and correct. Section 2. The City hereby consents to and approves this Amendment to the Resolution of Issuance and hereby approves and agrees to accept and be bound by the changes, additions and deletions to the certain changed pages of the Resolution of Issuance as such pages are set forth hereto in Exhibit "A", with such changes, additions and deletions to the Resolution of Issuance as noted in the underscored portions of said Exhibit "A", - 4 - , \",,., ~ ... .....,,/ ,^) Section 3. This Resolution shall take effect upon adoption. I HEREBY adopted by the San Bernardino at held on the vote, to wit: resolution of the meeting , 1987, by the CERTIFY that the foregoing Mayor and Common Counci 1 a day of AYES: Council Members was duly' City of thereof, following NAYS: ABSENT: City Clerk of The foregoing resolution is hereby approved this , 1987. day Mayor of the City of San Bernardino Approved as to form: 4~~ - 5 - c ,", '~...j o srATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO) ss CITY OF SAN BERNARDINO ) I, SHAUNA CLARK, City Clerk in and for San Bernardino, DO HEREBY CERTIFY that the foregoing copy of San Bernardino City Resolution No. true and correct copy of that now on file in this office. the and is ,) City of attached a fu 11, IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Bernardino this day of . 1987. City Clerk c ,..'" r'O" \../ \... /" , ) SBE077-17/1546S/nb 01/12/87 EXHIBIT A RESOLUTION NO. RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, AUTHORIZING THE ISSUANCE OF AN AGGREGATE PRINCIPAL AMOUNT OF $12,450,000 OF REFUNDING BONDS OF SAID CITY TO REFUND PREVIOUSLY ISSUED $13,400,000 CITY OF SAN BERNARDINO, IMPROVEMENT BONDS, ASSESSMENT DISTRICT NO. 961, SERIES 1985 (PARK CENTRE) c Section l. Section 2. Section 3. Section 4. Section 5. Section 6. Section 7. Section 8. Section 9. Section 10. Section 11. Section 12. Section 13. Section 14. Section 15. Section 16. Section 17. c o TABLE OF CONTENTS Daf ini t ions.. .. .. .. . .. .. . . .. .. .. .. .. .. .. . .. .. .. .. .. .. .. .. .. . . .. .. . .. .. .. . Amount, Issuance and Purpose of Bonds......... Nature of Bonds............................... Description of Bonds.................,........ Interest. . . .. .. .. .. .. .. .. . . . .. . .. . .. . . . . .. .. .. . . .. . . .. . .. . .. . . . Place of Payment.............................. Temporary Bonds and Conversion................ Execution of Bonds............................ Form, Date and Exchange of Bonds.............. Bon-d Register..................... .. . . . .. .. .. .. . .. .. . . .. .. . . . . .~ .. Call and Redemption of Bonds Prior to Maturity................................. A. B. C. D. E. Terms of Redemption...................... Call and Redemption.. .................. .. Notice of Redemption..................... Redemption Fund... . . . . . . . . . . . . . . . . . . . . . . . Partial Redemption of Fully Registered Bonds....................... Effect of Redemption..................... F. Funds and Accounts............................ Sale of Bonds; Disposition of Bond Proceeds; Escrow Fund... . ................... . . .. ...... Revenues.. .. . . .. .. . . .. . . . .. .. .. . . . .. .. .. -. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. Deposits of Revenues into Funds............... Deposit and Investment of Moneys in Funds; Investment Earnings Account; Excess Investment Earnings Account................. Covenants of the City......................... Covenant I. Covenant 2. Covenant 3. Covenant 4. Covenant 5. To Carry Out Refunding......... Use of Proceeds................ No priority.................... Punctual Payment............... Purchase of Parcels Sold at Foreclosure Sale; Limited Liability................... . Books and Accounts; Financial Covenant 6. Statements.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. Covenant 7. Covenant 8. Reassessment of Property....... Protection of Security and Rights of Bondholders; No Arbitrage..................... Federal Guarantee Prohibition.. To Comply With Fiscal Agent Agreement.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. Covenant 9. Covenant 10. -i- :) Page 2 8 13 15 15 16 16 17 17 18 18 18 19 19 20 20 21 21 22 24 25 28 36 36 36 36 37 37 38 38 39 39 39 c Section 18. Section 19. Section 20. Section 21. Section 22. Section 23. Section 24. Section 25. Exhibit "A" ,,,.-.. ~..1 ,.-.., .....,.1 Superior Court Foreclosure.................... Fiscal Agent and Paying Agents................ Lost, Stolen, Destroyed or Mutilated Bonds.... Cancellation of Bonds......................... Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A. B. C. D. E. F. A. B. C. D. Calling Bondholders' Meeting............. Notice of Meeting........................ Voting Qualifications.................... Issuer-Owned Bonds....................... Quorum and Procedure..................... Vote Required............................ Proceedings Constitute Contract; Events o~ Default and Remedies of Bondholders......... Events of Defau1t........................ Certain Remedies of Bondholders.......... Non-waiver.............................. . Actions by Fiscal Agent as Attorney- in-Fact. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E. Genera 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Severability................................. . Effective Date................................ Form of Bond -ii- " .j 40 40 44 44 44 45 45 46 46 46 46 47 47 48 48 49 49 49 50 c --.. "'-"'. ) .....,) ......./ RESOLUTION NO. RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, AUTHORIZING THE ISSUANCE OF AN AGGREGATE PRINCIPAL AMOUNT OF $12,450.000 OF REFUNDING BONDS OF SAID CITY TO REFUND PREVIOUSLY ISSUED $13,400.000 CITY OF SAN BERNARDINO. IMPROVEMENT BONDS, ASSESSMENT DIST~ICT NO. 961. SERIES 1985 (PARK CENTRE) WHEREAS. the City of San Bernardino, California (the "City"), is a municipal corporation and a charter city. duly organized and existing, pursuant to the Constitution and the laws of the State of California and under the charter of the City and the powers of the City including the power to issue improvement bonds to represent and be secured by the assessments which shall be made to pay the cost of any work or improvement which is charged or assessed upon real property as provided in Part 3 of Division 10 (Improvement Bond Act of 1915) of the California Streets and Highways Code (the "1915 Act") and the power to issue improvement refunding bonds for the purpose of paying or retiring improvement bonds previously issued by it as provided in the Refunding Act of 1984 for 1915 Improvement Act Bonds (Streets and Highways Code Section 9500, et seq.) (the "1984 Act"); and WHEREAS, pursuant to the adoption of Resolution No. 84-551 (the "1985 Bonds Resolution of Intention"), improvement proceedings for Assessment District No. 961 (the "District") were initiated by the Mayor and Common Council on December 17. 1984, and such proceedings were conducted pursuant to the Ordinances hereinafter referred to, Division 12 (Municipal Bond Improvement Act of 1913) of the California Streets and Highways Code (the "1913 Act") and the 1915 Act; and WHEREAS, the City has heretofore adopted Ordinance No. 3902. as amended by Ordinance No. MC-426. adopted on January 7, 1985, and Ordinance No. MC-444, adopted on March 19. 1985 (collectively, the "Ordinance"), which' Ordinance modified certain of the provisions and procedures prescribed by the 1913 Act and the 1915 Act insofar as they relate to assessment district formation, assessment proceedings and the issuance of bonds by the City; and WHEREAS, the City has heretofore adopted its Resolution No. 85-116 (the "1985 Resolution"), providing for the issuance of the "$13,400,000 City of San Bernardino, Improvement Bonds, Assessment District No. 961, Series 1985 (Park Centre) (the "1985 Bonds"); and - 1 - . c () '"'"'" .......,) ..",..J' WHEREAS, pursuant to the 1984 Act the City may, at any time. determine by resolution that the public interest and necessity requires the refunding of any outstanding 1985 Bonds issued pursuant to the 1915 Act and may declare its intention to refund the 19a5 Bonds and to levy reassessments as security for the refunding bonds; and WHEREAS. the City has approved Resolution No. 86-421, adopted on October 20. 1986 (the "Resolution of Intention"). pursuant to which the City declared its intent ion to refund all outstanding 1985 Bonds and initiated certain proceedings in connection with said refunding as provided by the 1984 Act; and WHEREAS, the City deems it necessary to issue at this time an aggregate principal amount not to exceed $12,450,000 of the improvement refunding bonds and to use a portion of the proceeds of such bonds to refund the outstanding 1985 Bonds; and WHEREAS, the purposes stated above will be accomplished by issuing at this time an aggregate principal amount not to exceed $12,450,000 of improvement refunding bonds pursuant to this Resolution, to be known as the "City of San Bernardino, California, Improvement Refunding Bonds, Assessment District No. 961, Series 1986", a portion of the proceeds of which will be set apart and irrevocably segregated in a special trust fund (to be invested in Federal Securities, as defined in Section 13 hereof) in such pr incipa 1 amounts which, together with the interest earnings on, will be sufficient to defease the liens and covenants created by Resolution No. 85-116 by ensuring the payment of the principal of, premium, if any, and interest on the 1985 Bonds as the same become due or at certain designated dates (where the City has exercised a redemption privilege as set forth in Resolution No. 85-116) prior to the maturity dates of the 1985 Bonds, all as permitted by the 1984 Act. NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, CALIFORNIA, DO HEREBY FIND, RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section l. Definitions. As used in this Resolution, the following terms shall have the following meanings, unless the context otherwise requires: "Account" means anyone or more of the separate special trust accounts created in Section 12 hereof. "Bond" or "Bonds" means the aggregate principal amount not to exceed $12,450,000 of "City of San Bernardino, California, Improvement Refunding Bonds, Assessment District No. 961, Series 1986", authorized by this Resolution. "Bond attorneys at Counsel" means an law of nationally attorney at recognized law or standing a in firm of matters - 2 - . c c """" \..j .J pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions acceptable to the City and not objected to by the Fiscal Agent and duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia. "Bondholder" or "Holder of Bonds", or any similar term, means any person who shall be (i) the holder of any outstanding Bond payable to bearer, or (ii) the registered owner or his duly authorized attorney, trustee, representative or assign of any outstanding Bond which shall at the time be registered so as to be payable other than to bearer. For the purpose of Bondholders' voting rights or consents, Bonds owned by or held for the account of the City, directly or indirectly, shall not be counted. "Bond Year" means the twelve-month period beginning on December 15 of each year and ending on December 14 of the following year, commencing with the period beginning on December 15, 1986 and ending on December 14, 1987. "Charter" or "City Charter" means the City Charter of the City of San Bernardino, California. "City" means the City of San Bernardino, California. "City Treasurer" or means the officeT who is Treasurer of the City. "Treasurer" or "Treasurer of the Ci ty" then performing the functions of the "Closing Date" means the date upon which there is an exchange of the Bonds for the proceeds representing the purchase of the Bonds by the Original Purchaser. "Code" means the Internal Revenue Code of 1986 or any successor statute thereto, as in effect on the date in question. "Commission" means the Securities and Exchange Commission. "Counsel" means an attorney at law or a firm of attorneys at law (who may be an employee of, or counsel to, the City or the Fiscal Agent) duly admitted to the practice of law before the highest court of any state of the united States of America or the District of Columbia. "Debt Service" means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. "Escrow Bank" means First Interstate Bank of California, acting as escrow bank under the Escrow Agreement. "Escrow Agreement" means that certain Escrow Agreement by and between the City and the Escrow Bank, appointed by the City - 3 - . c c , '- ,1 ,,,, pursuant to this Resolution, dated for convenience as of December 1, 1986, to be approved by a supplemental resolution. "Excess Investment Earnings" shall ascribed to such term in Section 16 hereof. have the meaning "Excess Investment Earnings Account" means the Account by that name created by, and held by the Ci ty Treasurer pursuant to Section l~ hereof. "Federal Securities" means direct, general obligations of the United States of America, or any obligations unconditionally guaranteed as to the payment of principal and interest by the full faith and credit of the United States of America. "Fiscal Agent" or "Paying Agent" means the registrar. transfer and paying agent appointed by the City pursuant to Section 20 hereof, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in this Resolution. "Fiscal Year" means the year period beginning on July 1st and ending on the next following June 30th. "Fund" means anyone of the separate special trust funds created in Section 12 hereof. "Gross Proceeds" means the sum of the following amounts: (i) original proceeds, namely, net amounts (after payment of all expenses of issuing the Bonds) received by or for the City as a result of the sale of the Bonds, excluding original proceeds which become transferred proceeds (determined in accordance with applicable Regulations) of obligations issued to refund in whole or in part the Bonds; (ii) investment proceeds, namely, amounts received at any time by or for the. Ci ty, such as interest and dividends, resulting from the investment of any original proceeds (as referenced in clause (i) above), or investment proceeds (as referenced in this clause (ii)) in Nonpurpose Obligations, increased by any profits and decreased (if necessary, below zero) by any losses on such investments, excluding investment proceeds which become transferred proceeds (determined in accordance with applicable Regulations) of obligations issued to refund in whole or in part the Bonds; (iii) sinking fund proceeds, namely, amounts, other than original proceeds, investment proceeds or transferred proceeds (as referenced in clauses (i) and (ii) above) of the Bonds, which are held in the Redemption Fund and any other fund to the extent that the City reasonably expects to use such other fund to pay Debt Service on the Bonds; - 4 - ( 'lo.r" , i (iv) amounts in any fund established as a reasonably required reserve or replacement fund; (v) Investment Property pledged as security for payment of Debt Service on the Bonds by any developer within the District or a related person or by the City; (vi) amounts, other than as specified in this definition, used to pay Debt Service on the Bonds; and (vii) amounts received as a result of investing amounts described in this definition. "Independent Financi al Consultant", "Independent Engineer" or "Independent Cert if ied Public Accountant" means any indi vidua 1 or firm engaged in the profession involved, appointed by the City, and who, or each of whom, has a favorable reputation in the field in which his opinion or certificate will be given. and: (1) is in fact independent and not under domination of the City; and (2) does not have any substantial interest, direct or indirect, with the City; and (3) is not employee of the Ci ty, reports to the City. connected with the City as an officer or but who may be regularly retained to make "Interest Payment Date" means March 2 and September 2 of each year during which the Bonds are outstanding. "Investment Property" means any security (as said term is defined in Section 165(g) (2) (A) or (B) of the Code), obligation, annuity or investment-type property, excluding, however, obligations the interest on which is exempt from income tax under Section 103 of the Code. "Law" means the Refunding Act of 1984 for 1915 Improvement Act Bonds, Streets and Highways Code of the State of California, Section 9500, et seq., as cited in the recitals hereof. "Maximum Annual Debt Service" means the largest of the sums for any Fiscal Year after the computation is made, by the fOllowing "Annual Debt Service" for each such Fiscal obtained totaling Year. (1) The principal amount of all Bonds payable in such Fiscal Year; and - 5 - r ,... / 'eo..... ,j -, / (2) The interest which would be due during such Fiscal Year on the aggregate principal amount of Bonds which would be outstanding in such Fiscal Year if the Bonds outstanding on the date of such computation were to mature or be redeemed in accordance with the maturity schedule or schedules for the Bonds. At the time and for the purpose of making such computation, the amount of Bonds already retired in advance of the above-mentioned schedule or schedules shall be deducted pro rata from the remaining amounts thereon. "Mayor and Common Council" means the legislative body of the City acting under and pursuant to the City Charter. "Nonpurpose Obligation" means any Investment Property which is acquired with the Gross Proceeds of the Bonds and is not acquired to carry out the governmental purpose of the Bonds. "Opinion of Counsel" means a written opinion of an attorney or firm of attorneys of favorable reputation in the field of municipal bond law. Any opinion of such counsel may be based upon, insofar as it relates to factual matters, information which' is in the possession of the City as shown by a certificate or opinion of, or representation by, an officer or officers of the City, unless such counsel knows, or in the exercise of reasonable care should have known, that the certificate or opinion or representation with respect to the matters upon which his opinion may be based, as aforesaid, is erroneous. "Original Purchaser" means Miller & Schroeder Financial, Inc., as the purchaser of the Bonds on the Closing Date. "outstanding", as to the Bonds, means that they are unpaid or that provision for the full payment and discharge thereof at maturity or upon redemption thereof prior to maturity through the setting apart in the Redemption Fund or in a special trust fund (as the case may be) of money and/or securities, as provided in Section 11 hereof, sufficient to insure the payment at maturity or redemption thereof prior to maturity. For the purpose of determining whether the requi red consent of Bondholders has been obtained for any purposes hereunder, Bonds owned directly or indirectly by the City ("City-Owned Bonds") shall not be counted. "paying Agent" means the Fiscal Agent or any other bank or trust company designated pursuant to this Resolution to serve as the paying agent or place of payment for the Bonds. "Person" means any natural person, firm, partnership, association, corporation, trust, public body or other entity. "Prepaid Assessments" means property owner to the Ci ty Treasurer total of the unpaid assessment plus assessment, (ii) a premium of three those payments which payments (i) interest on percent (3\) on made by any include the the unpaid the unpaid - 6 - c c -....., .....,) " ) assessment, (Hi) the unpaid principal and interest posted on the current tax roll and any delinquent amounts and (iv) any costs of calling Bonds, less the proportionate amount credited from the Reserve Fund. .Project" means the acquisition of streets, sewers, fencing, landscaping, water mains, curbs, gutters, paving, sidewalks, e1ectroliers, street lights, traffic signals, wastewater treatment plant capacity rights and the construction of bridge approaches, a bridge over San Timoteo Creek, an extension of Hospitality Lane, traffic signal changes, e1ectroliers and street lights, together with appurtenances and appurtenant work related thereto. .Purchase Price," for the purposes of computation of the Yield of the Bonds, has the same meaning as the term "issue price" in Sections 1273(b) and 1274 of the Code, and, in general, means the initial offering price to the public (not including bond houses and brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Bonds are sold or, if the Bonds are privately placed, the price paid by the first buyer of the Bonds or the acquisition cost of the first buyer. The term "Purchase Price,. for the purpose of computation of the Yield of Nonpurpose Obligations, shall mean the fair market value of the Nonpurpose Obligations on the date of use of Gross Proceeds of the Bonds for acquisition thereof, or if later, on the date, that Investment Property constituting a Nonpurpose Obligation becomes a Nonpurpose Obligation of the Bonds. "Regular Record Date" means with respect to an Interest Payment Date the fifteenth (l5th) day of the month preceding such Interest Payment Date. "Regulations" means the temporary and permanent regulations with respect to the Code promulgated under Section 103 and Sections 148-150 from time to time by the United States Department of the Treasury. "Reserve Requirement" means an amount equal to $1,245,000 initially funded from Bond proceeds, which amount shall equal ten percent (10%) of the original proceeds of the Bonds (as said term is defined in the Code and the Regulations promulgated thereunder), less any reduction in the Reserve Fund as a result of the application of Section 15(b)(ii) hereof. "Revenues" means, collectively, that portion of unpaid reassessments levied against the private property within the District pursuant to reassessment proceedings and received by the City which are herein allocated and deposited into a special trust fund created by this Resolution for the redemption and payment of the principal of and interest on the Bonds pursuant to the 1984 Act, which funds include any amounts from the payment of any delinquent reassessment installment payments together with any penalties and interest due thereon received by the City after the purchase of the subject property at a foreclosure sale, from which the funds - 7 - c r--, '-" ~ J ) necessary for the payment of the principal of and interest on the Bonds are derived. all as more particularly set forth hereafter in Section 14 of this Resolution. .State" means State of California. .yie1d" means that yield which, when used in computing the present worth of all payments of principal and interest (or other payments in the case of Nonpurpose Obligations which require payments ina form not characterized as principal and interest) on a Nonpurpose Obligation or on the Bonds produces an amount equal to the Purchase Price of such Nonpurpose Obligation or the Bonds. all computed as prescribed in applicable Regulations and, in the case of variable rate obligations, as further prescribed in Section 16 hereof. "1984 Act" means the Refunding Act of 1984 Improvement Act Bonds, Streets and Highways Code of the California, Section 9500, et seq., as cited in the recitals for 1915 State of hereof. "1985 Bonds" means the $13,400,000 City of San Bernardino. Improvement Bonds, Assessment District No. 961. Series 1985 (Park Centre) authorized by Resolution No. 85-116 of the City. Section 2. Amount, Issuance and Purpose of Bonds. Under and pursuant to the Law and under and pursuant to this Resolution. Bonds of the City in the principal amount not to exceed $12,450,000 shall be issued by the City for the purpose of refunding the 1985 Bonds and the payment of the costs of issuing the Bonds, and such issue of Bonds is hereby created. Without, limiting the generality of the foregoing, the Bonds are issued, in part, for the refunding of the 1985 Bonds by providing funds for the payment of the interest on and principal of the 1985 Bonds, as the same becomes due, on and before the respective maturity dates and all expenses incident thereto and to the issuance of the Bonds. The 1985 Bonds were issued in the years and in the principal amounts as set forth below: Name: Ci ty of San Bernardino, Improvement Bonds, Assessment District No. 961, Series 1985 (Park Centre) Principal Amount: $13,400,000 Dated: March 1, 1985 Maturing: Serial Bonds maturing on September 1 on the dates and in the amounts set forth below - 8 - c /'~ ~ \J 1,... Issuing Resolution: No. 85-116 Interest Rate: Maturi ty Date (September I) 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 :) At the rate of interest per annum as set forth below: Principal Amount $ 230,000 250,000 275,000 300,000 330,000 360,000 400,000 440,000 485,000 535,000 590,000 655,000 720,000 800,000 890,000 985,000 1,095,000 1,215,000 1,350,000 1,495,000 Interest Rate 8.50% 9.00% 9.50% 9.75% 10.00% 10.10% 10.20% 10.30% 10.40% 10.50% 10 60% 10.70% 10.80% 10.90% 11. 00% ll. 00% 11.00% ll. 00% 11. 00% 11. 00% So far as applicable here, Section 9 of said Resolution No. 85-116 provides: The Ci ty Treasurer, on beha If of the City, shall receive the proceeds from the sale of the Bonds, upon the delivery of the Bonds to the initial purchaser therof (the "Underwriter"), and shall dispose of such proceeds as follows: (a) accrued Underwriter, plus the capitalized interest Interest"), shall be Redemption Fund; interest paid by the sum of $2,145,607.50 as (the "Capitalized deposited into the (b) the sum of $1,663,620.00 shall be deposited into the Special Reserve Fund; (c) the costs of issuance of the Bonds shall be paid in accordance with an Officer's Certificate. As used in this Resolution, the term "Officer' s Certificate" means a certificate of the City signed by an officer of the City (including, without limitation, the Treasurer of - 9 - C .,.,.-..." /"">'., ."" \.....I ~ ,j the City and the Director of Public Works/City Engineer of the City), with the seal of the City affixed, and filed with the City Treasurer. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument; (d) the "acquisition price" referred to in paragraph 1 of that certain Agreement as to Disbursement of Acquisition Price for Improvements within Assessment District No. 961 of the City of San Bernardino, dated as of March 1, 1985, by and among Park Centre Properties, a California general partnerShip, Rancho Consultants Realty Fund IV, a California limited partnerShip, and the Federal Savings and Loan Insurance Corporation as Receiver for San Marino Savings and Loan Association, shall be disbursed in accordance with the terms of such Agreement or as the parties may otherwise agree in a written agreement delivered to the City Treasurer; (e) an $134,000.00 shall Industrial Revenue Fund; administrative be deposited into Bond Reserve and fee of the City's Development (f) the sum of $50,000.00 deposited into the Bond Registration shall be used for the purposes set Section 8682.1 of the Code; and shall Fund, forth be and in (g) the balance of the proceeds from the sale of the Bonds shall be deposited into the Improvement Fund. So far as applicable here, Section 10 of said Resolution No. 85-116 provides: (a) Deposits in Redemption Fund. All sums received by the City from the collection of the assessments for Assessment District No. 961 and of the interest and penalties thereon shall be deposited into the Redemption Fund and all sums to become due for the principal of, premium, if any, and interest on the Bonds shall be paid by the Paying Agent from said fund and shall not be paid out of any other funds. - 10 - < c \'.,.1 () ) (b) Capitalized Interest. The assessment payments for each assessed lot or parcel of property within Assessment District No. 961 due on December 10, 1985 shall be reduced (pro rata, if necessary based upon the amount of such payment due for each such lot or parcel) by an aggregate amount equal to the sum of (A) the Capitalized Interest and (B) the total amount earned on the Capitalized Interest by such date and, to the extent such sum exceeds such payments, the assessment payments for each such assessed lot or parcel due on April 10, 1986 shall be similarly reduced by an amount equal to such excess and, to the extent such excess exceeds such payments. the assessment payments for each such assessed lot or parcel due on December 10, 1986 shall be similarly reduced by an amount equal to such excess. The Paying Agent shall use such sum, to the extent such sum is sufficient, to pay the interest due on the Bonds on September 1, 1985, on March 1, 1986 and on September 1, 1986. (c) Disbursements from Redemption Fund. The City Treasurer shall disburse to the Paying Agent, not less than three (3) days prior to each interest and principal payment date, sufficient moneys from the Redemption Fund to pay the principal of, premium, if any, and interest on the Bonds due on such date. (d) Accounting Procedures. The City Director of Finance is hereby directed and authorized, upon the written request of the City Treasurer, to establish and thereafter maintain and employ the payment and accounting procedures to be used by the City in connection with Assessment District No. 961, including, without limitation, accounting for deposits and withdrawals into and out of the Redemption Fund, the Special Reserve Fund and the Improvement Fund. So far as applicable here, Section II of said Resolution No. 85-116 further provides: (a) Transfer into Redemption Fund. During the term of the Bonds, the money in the Special Reserve Fund shall be available for transfer into the Redemption Fund pursuant to Sections 8800 through 8809 of the Code. The amounts so advanced shall be reimbursed to the Special Reserve Fund from the proceeds of - 11 - c r, V '"'" , ' \.J J redemption or sale of the lot or parcel for which payment of delinquent assessment installments was made from the Special Reserve Fund. (b) Prepayment of Assessment. If any assessment is prepaid prior to the final maturity of the Bonds, the amount of principal which the assessee is required to prepay shall be reduced by an amount which shall be determined by multiplying the then current balance of the Special Reserve Fund by the percentage which the original unpaid amount of the assessment to be prepaid is of the total amount of the original unpaid assessment on all land in Assessment District No. 961. The reduction in the amount of principal prepaid shall be compensated for by a transfer from the Special Reserve Fund to the Redemption Fund for the Bonds of a like amount. (c) Investment Income. If at any' time the amount of any income realized from the investment of money in the Special Reserve Fund plus the remaInIng principal amount thereof exceeds an amount equal to fifteen percent (15%) of the original aggregate principal amount of the Bonds, less any discount thereon, such excess shall be transferred to the Redemption Fund and expended for the advance retirement of Bonds within thirteen (13) months of the date of occurrence of such excess; otherwise, such investment income shall be retained in the Special Reserve Fund. (d) Retirement of Unmatured Bonds. When the amount in the Special Reserve Fund equals or exceeds the amount required to retire the remaining unmatured Bonds (whether by advance retirement or otherwise), the amount of the Special Reserve Fund shall be transferred to the Redemption Fund, and the remaining installments of principal and interest not yet due from assessed property owners sha 11 be cancelled without payment. So far as applicable here, Section 12 of said Resolution No. 85-116 further provides: All moneys in the Improvement Fund shall be withdrawn only upon warrants, drafts, or checks of the City, and in accordance with, to the extent applicable, the terms and conditions of the Agreement for Acquisition of Improvements by and between Park Centre Properties, a - 12 - - . c ............, ....1 ,'"'" ........,i '1 ...... California general partnership, Rancho Consultants Realty Fund IV, a California limited partnership, and the City, and shall be applied exclusively to the payment of the cost of the construction, installation and acquisition of the improvements referred to in the second Recital of this Resolution, and all expenses incidental thereto. Any surplus remaining in the Improvement Fund after payment of all costs and all legal charges, claims and expenses shall be used as set forth in the Resolution of Intention. So far as applicable here, Section 14 of said Resolution No. 85-116 further provides: The unpaid assessments shown on the List of Unpaid Assessments determined by the Mayor and Common Counci 1 to be correct, together with the interest thereon, shall remain and constitute a trust fund for the redemption and payment of the Bonds and of the interest which may be due thereon, and such assessments and each installation thereof and the interest and penalties thereon shall constitute a lien against the lots and parcels of land on which they are made, until the same shall be paid. Annual installments of each assessment shall be payable in each year preceding the date of maturity of each of the several series of Bonds which have been issued, sufficient to pay the Bonds when due. The annual proportion of each assessment coming due in any year, together with the annua 1 interest on such assessment, sha 11 be payable in the same manner and at the same time and in the same installments as the general taxes of the City on real property are payable, and such assessment installments and such annual interest on the assessment shall be payable and become delinquent on the same dates and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property in the City. Section 3. Nature of Bonds. The Bonds shall be and are obligations of the City and are secured by an irrevocable pledge of, and a first lien upon, and are payable as to principal, interest and premium, if any, from the Revenues and other funds as hereinafter provided. The Bonds, interest thereon and premium, if any, are not a debt of the City of San Bernardino, the State of California or any - 13 - , c o ,""" l ) '- ,'"" ......./ of its political subdivisions, and neither said City, said State nor any of its political subdivisions is liable on them, nor in any event shall the Bonds, interest thereon and premium, if any, be payable out of any funds or properties other than the Revenues as set forth in this Resolution. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Neither the Mayor and members of the Common Councilor officers of the City nor any persons executing the Bonds are liable personally on the flonds by reason of their issuance. The validity of the Bonds is not and shall not be dependent upon: (i) the completion of the Project or any part thereof. or (ii) the performance by anyone of his obligation relative to the Project, or (iii) the proper expenditures of the proceeds of the Bonds. Nothing in this Resolution shall preclude: (a) the payment of the Bonds from the proceeds of refunding bonds issued pursuant to the Law, or (b) the payment of the Bonds from any legally available funds. Nothing in this Resolution shall prevent the City from making advances of its own funds howsoever derived to any of the uses and purposes mentioned in this Resolution. If the City shall payor cause to be paid, or shall have made provision to pay upon maturity or upon redemption prior to maturity, to the Holders of the Bonds, the principal of, premium, if any, and interest to become due thereon, through setting aside trust funds or setting apart in a reserve fund or special trust account created pursuant to this Resolution or otherwise, or through the irrevocable segregation for that purpose in some sinking fund or other fund or trust account with the City Treasurer or Fiscal Agent or otherwise, moneys and/or Federal Securities which, in the opinion of an Independent Certified Public Accountant delivered to the City Treasurer and the Fiscal Agent, are sufficient therefor, including, but not limited to, interest earned or to be earned on Federal Securities, then the lien of this Resolution, including, without limitation, the pledge of the Revenues, and all other rights granted 'hereby, shall thereupon cease, terminate and become void and be discharged and satisfied, and the principal of, premium, if any, and interest on the Bonds shall no longer be deemed to be outstanding and unpaid; provided, however, that nothing in this Resolution shall require the deposit of more than such Federal Securities as may be sufficient, taking into account both the principal amount of such Federal Securities and the interest to become due thereon, to implement any refunding of the Bonds. In such event, the City Treasurer shall cause an accounting for such period or periods as shall be requested by the City to be prepared and filed with the City, and the City Treasurer or Fiscal Agent, upon the request of the City, shall release the rights of the Bondholders under this Resolution and execute and deliver to the City all such instruments as may be necessary to evidence such release, discharge and satisfaction, and the Fiscal Agent shall pay over or deliver to the City all moneys or securities held by it pursuant to this Resolution which are not required for the payment or redemption of Bonds not - 14 - . r.'. '\ C " ,.J , ) theretofore surrendered for such payment or redemption. As used in this paragraph, "Federal Securities" means those described in Sections 1360 and 1360.1 of the California Financial Code and includes United States Treasury notes, bonds, bi lIs or certi ficates of indebtedness, or obligations for which the faith and credit of the United States are pledged for the payment of principal and interest, including the guaranteed portions of small business administration loans, so long as such loans are obligations for which the faith and credit of the united States are pledged for the payment of principal and interest. Section 4. Description of Bonds. The Bonds shall be in the principal amount not to exceed $12,450,000 and shall be designated "CITY OF SAN BERNARDINO, CALIFORNIA, IMPROVEMENT REFUNDING BONDS, ASSESSMENT DISTRICT NO. 961, SERIES 1986". The Bonds shall be issued in the form of fully registered Bonds in denominations of $5,000 each or any integral multiple thereof, but in an amount not to exceed the aggregate principal amount of Bonds maturing in the year of maturity of the Bond for which the denomination is specified. The Bonds shall be dated as of December 15, 1986, which shall be the date on or after the date of the recording of the 'reassessment in accordance with Section 9604 of the 1984 Act (the "Date of the Bonds"), and shall mature in the principal amounts and on the dates as set forth below: Maturity Date (September 2) 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Principal Amount Interest Rate $ 5,000 350,000 370,000 390,000 410,000 435,000 465,000 490,000 525,000 560,000 600,000 645,000 690,000 740,000 795,000 855,000 920,000 990,000 1,065,000 1,150,000 4.750 5.000% 5.500% 5.750% 6.000% 6.250% 6.400% 6.600% 6.800% 7.000% 7.100% 7.200% 7 300% 7.400% 7.500% 7.600% 7.650% 7.700\ 7.750% 7.750% Section 5. Interest. Said Bonds shall bear interest at the rates of interest as set forth in Section 4 above. All interest shall be payable semiannually on March 2 and September 2 of each year, commencing September 2, 1987. Each Bond sha 11 bear interest - 15 - c ,-.. -.....' " "'-.I ~) . until the principal sum thereof has been paid; provided, however, that if funds are available for the payment thereof in full accordance with the terms of this Resolution, said Bond shall then cease to bear interest. The interest on the Bonds shall be payable commencing on September 2, 1987, in accordance with Section 9610 of the 1984 Act and as directed by the Mayor and Common Council pursuant to the terms of this Resolution in part from amounts deposited in the Redemption Fund representing accrued interest attributable to the sale of Bonds and received on the date of delivery of the Bonds and in part from certain amounts to be deposited thereafter representing installment payments of the assessments as originally levied for the 1985 Bonds due and payable by the respective property owners on or before April 10, 1987, for fiscal year 1986-87 assessment payments to be made by said property owners within the District. The fully registered Bonds shall be numbered in consecutive numerical order' commencing with R-one (R-l) upwards and shall be' dated as of the Date of the Bonds, and shall bear the date of authentication thereon; provided, however, that no Bond shall be authenticated during the period from the sixteenth (16th) day of the month preceding any Interest Payment Date and such Interest Payment Date. Each Bond shall bear interest from the Date of the Bonds as provided above or from the most recent Interest Payment Date to which interest has been paid or duly provided for, as the case may be. Interest on the Bonds shall be paid by the Fiscal Agent (from moneys received from the City Treasurer) by check or draft mailed on the Interest Payment Date to the registered owner as his name and address appear on the register kept by the Fiscal Agent at the close of business on the Regular Record Date. Section 6. Place of Payment. The Bonds and any premiums upon the redemption thereof p,rior to maturity shall be payable in lawful money of the United States of America and (except for interest on the Bonds which is payable by check or draft as stated above) shall be payable at the corporate trust office of the Fiscal Agent in Los Angeles, California. Section 7. Temporary Bonds and Conversion. Any Bonds issued pursuant to this Resolution may be initially issued in temporary form exchangeable for definitive Bonds when the same are ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the City, shall be without coupons and may contain such reference to any of the provisions of this Resolution as may be appropriate. Every temporary Bond shall be issued and executed by the City and authenticated by the Fiscal ~gent upon the same conditions and in substantially the same form and manner as the definitive fully registered Bonds. If the City issues temporary Bonds, it will execute and fUrnish definitive Bonds without delay, and, thereupon, the temporary Bonds shall be surrendered for cancellation at the corporate trust office of the Fiscal Agent in Los Angeles, California. The Fiscal Agent shall deliver in exchange for such temporary Bonds an equal aggregate principal amount of - 16 - c ,j ---. \. ) ~)' ...-. definitive Bonds of authorized denominations of this same issue. until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Resolution as definitive Bonds of this same issue delivered hereunder, except any interest which has accrued thereon shall not be paid until the exchange has been accomplished. Section 8. Execution of Bonds. The Bonds shall be executed on behalf of the City by its Treasurer by his manual or facsimile signature and shall be attested by its City Clerk by her manual or facsimile signature, and the seal of the City shall be impressed, imprinted or reproduced thereon. The foregoing officers are hereby authorized and directed to sign the Bonds in accordance with this Section. If any City official or officer whose manual or facsimile signature appears on the Bonds ceases to be such official or officer before delivery of the Bonds, his or her signature is as effective as if he or she had remained in office. The Fiscal Agent shall authenticate the Bonds on registration and/or exchange to effectuate the registration and exchange provisions set forth in, Section 9, and only such of the Bonds as shall have endorsed thereon a certificate of authentication, substantially in the form set forth in the Bond form as attached hereto as Exhibit A, duly executed by the Fiscal Agent, shall be entitled to any rights, benefits or security under this Resolution. No Bond shall be valid or obligatory for any purpose unless and until such certificate of authentication shall have' been duly executed by the Fiscal Agent, and such certificate of the Fiscal Agent, upon any such Bond shall be conclusive and the only evidence that such Bond has been duly authenticated and delivered under this Resolution. The Fiscal Agent's certificate of authentication on any Bond shall be deemed to have been duly executed if signed by an authorized signatory of the Fiscal Agent, but it shall not be necessary that the same signatory sign the certificate of authentication on all of the fully registered Bonds that may be issued hereunder at anyone time. Section 9. shall be issued in the hereto as Exhibit A. Form, Date and Exchange of Bonds. The Bonds form of fully registered Bonds as attached The person in whose name any Bond is registered at the Regular Record Date with respect to an Interest Payment Date shall be entitled to receive the interest payable on such Interest Payment Date (unless such Bond has been called for redemption on a redemption date which is prior to such Interest Payment Date) notwithstanding the cancellation of such Bond upon any registration of transfer or exchange thereof subsequent to such Regular Record Date and prior to such Interest Payment Date. ' A fully registered Bond or fully registered Bonds may be exchanged for a fully registered Bond or fully registered Bonds. Transfer of ownerShip of a fully registered Bond or fully registered Bonds shall be made by eXChanging the same for a new fully registered Bond or fully registered Bonds. All of such exchanges shall be made in such manner and upon such reasonable terms and - 17 - ,,",.. .,,-.-.... c, ,/ ,> ,...I conditions as may from time to time be determined and prescribed by the City and the Fiscal Agent; provided. however, no such transfer or exchange shall be made (i) between the sixteenth (16th) day of the month preceding any Interest Payment Date and such Interest Payment Date, (ii) for fifteen (15) days prior to the selection of Bonds for redemption and (iii) of any Bond (or portion thereof) so chosen for redemption. Such transfer or exchanges shall be free of any costs or charges to the person, firm or corporation requesting such transfer or exchange, except for any tax or governmental charge t,hat may be imposed in connection with such transfer or exchange. Each Bond issued pursuant to this Resolution shall be of a denomination which is $5,000 or a whole multiple thereof and shall be of the same issue. Section 10. Bond Register. The Fiscal Agent will keep or cause to be kept at its corporate trust office in the City of Los Angeles, California. sufficient books for the registration and transfer of the Bonds. which shall at all times be open to inspection by the City; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer, or cause to be registered or transferred, on said register, the Bonds as hereinbefore provided. Section 11. Maturity. Call and Redemption of Bonds Prior to A. Terms of Redemption. The outstanding Bonds may be called before maturity and redeemed as follows: The Bonds shall be subject to mandatory redemption prior to their respective maturity dates and redeemed in advance of maturity, in whole or in part. from any Prepaid Assessments deposited with the City Treasurer for deposit into the Redemption Fund by any property owner or as a result of the development and sale of parcels within the District which result in the Prepaid Assessments. on any March 2 or September 2 after the date of issuance of the Bonds by giving at least sixty (60) days' notice by registered mail to the registered owner thereof at the owner's address as it appears on the registration books of the Fiscal Agent. as further provided in subsection C hereof. Bonds so called for redemption shall be redeemed at a redemption price for each redeemed Bond equal to the principal amount thereof plus accrued interest thereon to the redemption date, together with a premium of three percent (3\). The Interest Payment Date on which Bonds are to be presented for redemption is herein sometimes called the "redemption date." Fully registered Bonds issued in denominations greater than $5,000 will be subject to redemption and payment in advance of maturi ty in increments of $5,000 as provided in the Ordinance and the 1984 Act and the 1915 Act, on the second (2nd) day of March or September. If less than the entire amount of a Bond is redeemed, a Bond representing the unredeemed portion shall be reissued to the registered owner thereof. - 18 - c r--, \j ,~ \...,/ ~) Determination of which Bond or Bonds (or portions thereof) are to be redeemed will be made by the City Treasurer in accordance with the 1984 Act and the 1915 Act. In selecting a Bond for retirement, the lowest Bond number of the annual series midway to the end of the Bond term will be chosen. Successive Bonds (or portions thereof) will be chosen from the lowest number of each annual series, before and after the series from which the first Bond number is selected, so that Bond called will be a pro rata portion of each annual series. It is intended that the relationShip of unpaid reassessments to Bonds outstanding be altered in as minimal amount as practicable by such call and redemption of Bonds. B. Call and Redemption. The City may (and, if required by Section 15 hereof, shall) by resolution direct the call and redemption prior to maturity of Bonds by the Fiscal Agent in such amounts required as are available therefor and shall give notice to the Fiscal Agent of such redemption at least fifteen (15) days prior to the date that the Fiscal Agent shall give notice of redemption to the Bondholders as set forth below. The Fiscal Agent, if so directed by the City, shall purchase bonds on the open market, on behalf of the City, at any time at a price not to exceed the principal amount of the Bonds plus the applicable premium and accrued interest, if any, to the date of purchase plus brokerage fees, if any. The City Treasurer shall disburse to the Fiscal Agent, not less than three (3) days prior to the redemption date sufficient moneys from the Redemption Fund to pay the principal of, premium, if any, and interest on the Bonds due and payable on such redemption date. The Fiscal Agent shall deposit and invest such moneys received from the City Treasurer pursuant to written di rectionsof the City. C. Notice of Redemption. In the case of refunding, notice shall also be given as provided in subsection B hereof. Notice of redemption prior to maturity shall be mailed by registered mail, at least sixty (60) days prior to the redemption date, to the original purchaser(s) of, the Bonds (or in the case of a syndicate, to the manager thereof) and to all Bondholders as set forth on the registration books of the Fiscal Agent; but neither failure to mail such notice nor any defect in any notice so mailed shall affect the sufficiency of the providing as for the redemption of any of the Bonds. The notice of redemption shall (a) state the redemption date; (b) state the redemption price; (c) state the numbers of the Bonds to be redeemed; provided, however, that whenever any call includes all of the outstanding Bonds, the numbers of the Bonds need not be stated; (d) require that Bonds be surrendered on the redemption date at the place or places of redemption; (e) state, as to any fully registered Bonds redeemed in part only, the registered bond numbers and the principal portion thereof to be redeemed; and (f) state that interest on the principal portion of the Bonds so designated for redemption shall cease to accrue from and after such - 19 - c ....,..1 ""'" " ,) redemption date and that on said date there shall become due and payable on each of such Bonds the redemption price th~reof. Such notice shall be deemed to have been given if such notice shall have been mailed by registered mail to each registered owner of such Bonds at his address as it appears on the register or at SUCh address as he may have filed with the Fiscal Agent for thatp'urpose. The actual receipt by the Holder of any Bond of notice of such redemption shall not be a condition precedent to redemption, and failure to receive such notice shall not affect the validity of the proceedings for the redemption of the Bonds or the cessation of interest on the redemption date. Notice of redemption of Bonds shall be given by the Fiscal Agent for and on behalf of the CitT at the expense of the City. A certificate by the Fiscal Agent that notice of redemption has been given 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. D. Redemption Fund. Prior to the notice of redemption being given as above required, the City Treasurer shall establish, maintain and hold in trust a separate fund which is hereby created for the purpose of this Resolution entitled "City of San Bernardino, California, Improvement Refunding Bonds, Assessment District No. 961, Series 1986, Redemption Fund" (hereinafter referred to as the "Redemption Fund"); and there sha 11 be set as ide in the Redemption Fund moneys for the purpose and sufficient to pay the principal of and interest on the Bonds and to redeem, at the premiums, if any, payable as provided in this Resolution, the Bonds designated in such notice of redemption. Said moneys must be set aside in said Redemption Fund solely for that purpose and shall be applied on or after the Interest Payment Date or the redemption date, as applicable, to the payment of principal of, premium, if any, and interest on the Bonds to be paid or redeemed upon presentation and surrender of the Bonds pursuant to the final paragraph of Section II B and Section 15(a) hereof. E. Partial Redemption of Fully Reqistered Bonds. Upon surrender of any fully registered Bond redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the registered owner thereof, at the expense of the City, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the fully registered Bond surrendered and of the same interest rate or rates and same maturity or maturities. In the event the Bonds are to be redeemed in part, the Bonds to be redeemed shall be selected and redeemed only in multiples of $5,OOO.J\ - 20 - c \. ./ """ \ j '" ,j F. Effect of Redemption. Notice of redemption having been duly given as aforesaid, and moneys for payment of the principal of, premium, if any, and interest payable upon redemption of the Bonds being set aside as aforesaid, the Bonds, or parts thereof, as the case may be, so called for redemptionshllll, on, the redemption date, become due and payable at t'he redeniptitm price specified in such notice, interest on the Bonds, or parts thereof, as the case may be, so called for redemption shall cease to accrue and said Bonds, or parts thereof, as the case may be, shall cease to be entitled to any lien, benefit or security under this Resolution, and the Holders of said Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof, and, in the case of partial redemption of fully registered Bonds, to also receive a new Bond or Bonds for the unredeemed balance as aforesaid. All unpaid interest installments which shall have become due and payable on or prior to the redemption date designated in such notice shall continue to be payable to the respective Holders of the Bonds but without interest thereon. All Bonds, or parts thereof, as the case may be, redeemed pursuant to the provisions of this Section shall be cancelled upon surrender of the Bonds and delivered to, or, upon the order of the City, destroyed as hereinafter provided. Section 12. Funds and Accounts. There is hereby created with the City Treasurer a special trust fund called the "City of San Bernardino, California, Improvement Refunding Bonds, Assessment District No. 961, Series 1986, Reserve Fund" (hereinafter sometimes called the "Reserve Fund"). Such Reserve Fund shall be held and maintained by the City Treasurer in an amount equal to the Reserve Requirement. So long as any of the Bonds herein authorized, or any interest thereon, remain unpaid, the moneys in the Reserve Fund shall be used for no purposes other than those required or permitted by this Resolution and any resolution providing for the issuance of refunding bonds pursuant to the 1984 Act and the 1915 Act. There is hereby created with the City Treasurer a special temporary trust fund called the "City of San Bernardino, California, Improvement Refunding Bonds, Assessment District No. 961, Series 1986, Issuance Expense Fund" (herein sometimes called the "Issuance Expense Fund"). Such Issuance Expense Fund shall be' held' and maintained by the City Treasurer and shall be used to pay the necessary expenses in connection with the issuance, sale and delivery of the Bonds inclUding, but not limited to, all expenses incident to the calling, retiring or paying of the 1985 Bonds, inCluding any bond counsel, financial consultants, underwriters, certified public accountants, rating agency fees, printing and advertising costs, city administrative expenses and expenSes and fees of the Fiscal Agent and the Escrow Bank, for payment, of interest on the Bonds from the Date of the Bonds to no later than September 2, 1988, any accrued and unpaid interest on the 1985 BOnds - 21 - ,r'---'. ~"' /'''' (., 1...,; " / ........1 together with any premium necessary in the calling or retiring of the 1985 Bonds and any amount that the City pays or transfers, or has previously paid or transferred, either from a special reserve fund or from surplus funds, into the redemption fund for the 1985 Bonds and the penalties and interest thereon, i~ the amounts and the penalties and interest thereon are included in and limited to the particular reassessments levied upon those subdivisions of property securing the original reassessment installments which are delinquent and for which the payments or transfers are made. Any amounts remaining therein after the payment of the costs of issuance shall be transferred to the Redemption Fund. There is hereby created with the Escrow Bank, a special trust fund called the "City of San Bernardino, California, Improvement Bonds, Assessment District No. 961, Series 1985, Escrow Fund" (herein sometimes called the "Escrow Fund"). Such Escrow Fund shall be used for no purposes other than those required or permitted by this Resolution or the Escrow Agreement. Section 13. Sale of Bonds; Disposition of Bond Proceeds; Escrow Fund. The City may provide by resolution for the sale of the Bonds in the manner provided by the Law. A. Prior to or simultaneously with the delivery of the Bonds, the City Treasurer shall sell all securities then held by the City Treasurer pursuant to the 1985 Resolution at the best price obtainable and shall pay over and deliver to the City Treasurer or the Fiscal Agent hereunder, as appropriate, all moneys (including the proceeds of the sale of such securities as aforesaid) held by it in the 1985 Reserve Fund or 1985 Improvement Fund (after the completion of all improvements and the payment of all claims) pursuant to said resolution. Such moneys shall be used, to the extent practicable as hereinafter determined in subsection B(2), for the refunding of the 1985 Bonds and, for such purpose, shall be deposited into the Escrow Fund; provided, however, that any surplus remaining in the 1985 Improvement Fund, after the completion of all improvements and the payment of all claims, may, at the direction of the City, be used as a credit upon the reassessments in the manner provided in Section 10427.1 of the Streets and Highways Code of the State of California or as otherwise provided in Section 10427 of the Streets and Highways Code of the State of California. B. The City Treasurer shall receive (i) the proceeds from the sale of the Bonds, upon the delivery of the Bonds to the purchasers thereof, and (i i) all moneys held by the City Tre,asurer pursuant to the 1985 Resolution (except for an amount equal to $604,596.13 which shall remain on deposit with the City Treasurer in the 1985 Improvement Fund) together with (iii) all amounts received from the fiscal year 1986-87 for assessment installment payments which were due and payable by the property owners within the District on or before December 10, 1986, as provided in subsection A above, and shall dispose of such proceeds and moneys as follows: - 22 - c () - .~) J (1) Accrued interest and premium, if any, paid by the purchasers of the Bonds shall be deposited by the City Treasurer in the Redemption Fund. (2) Bond proceeds in an amount which, when added to the deposits made as set forth above, together with all amounts received from the' fiscal year 1986-87 for assessment installment payments which were due and payable by the property owners within the District on or before December 10, 1986, will, in the opinion of an Independent Certified Public Accountant, be sufficient, taking into account the interest to be earned on any investments in Federal Securities as allowed by the applicable Treasury Regulations, to implement the refunding of the 1985 Bonds shall be transferred to the Escrow Bank by the City Treasurer for deposit in the Escrow Fund for the purchase of the Federal Securities described in the Escrow Agreement and to provide any required initial cash balances. (a) The City shall cause calculations to be diligently made and verified prior to the delivery of the Bonds as to the amount of Federal Securities necessary to implement the refunding of the 1985 Bonds and so defease the liens established by the aforementioned 1985 Resolution providing for the issuance of the 1985 Bonds (including payment of the interest on such 1985 Bonds, as the same becomes due on March 1, 1987, and provide for the call and redemption, together with the applicable premium, if any, on or before the respective maturity dates of the 1985 Bonds, and all expenses incident thereto and to the issuance of the Bonds), taking into account both the principal amount of such Federal Securities and the interest to become due thereon. Using such calculations, an amount in the Escrow Fund equal to the amount of such Federal Securities which, together with cash, if any, is necessary to implement the refunding, shall be used by the City for the acquisition of such Federal Securities. To the extent required by law (as determined by an Opinion of Counsel based upon the certificate or opinion of an Independent Certified Public Accountant), such Federal Securities shall be purchased from the issuer thereof or from any governmental fiscal agent therefor. Any moneys remaining in the Escrow Fund after the purchase of such Federal Securities and deposit thereof under the Escrow Agreement and not necessary to implement the refunding shall be transferred to the City Treasurer in accordance with the Escrow Agreement for deposit in the Issuance Expense Fund and used for the purpose of paying all expenses incident to the refunding of the 1985 Bonds and the issuance of the Bonds, including, without limiting the generality of the foregoing, charges of the Fiscal Agent in connection with this Resolution and charges of the Fiscal Agent and Escrow Bank in connection with the Escrow Agreement, for the payment of interest on the Bonds from the date of the Bonds to no later than September 2, 1988, and for any other payments designated as costs of issuing the Bonds by the City as further provided in Section 11 hereof. The Escrow Bank shall withdraw moneys from the Escrow Fund in sufficient amount and time to permit the payment by the paying agent for the 1985 Bonds - 23 - . c ,-. u - J ) without default of the amount described above for which the Escrow Fund was established. If for any reason the amount in the Escrow Fund shall at any time be insufficient to carry out the purposes of its establishment, the City Treasurer shall forthwith transfer the appropriate amount from the Reserve Fund to the Escrow Bank, who shall deposit the same into the Escrow Fund. If, for any reason, the calculations above required, are delayed or some amounts have been inadvertently used incorrectly, the City shall cause calculations to be diligently made or remade, as the case may be, as soon as possible after issuance and delivery of the Bonds and the appropriate adjustments, transfers or additions shall be made. The Fiscal Agent and Escrow Bank shall have no responsibility for the correctness of the calculations. (b) For the purposes of Securities" shall mean only direct States of America or bonds or other full faith and credit of the United payment of principal and interest. the Escrow Fund, "Federal obligations of the United obligations for which the States is pledged for the (3) Bond Requirement shall Reserve Fund. proceeds in an be deposited by amount equal to the Reserve the City Treasurer into the (4) Bond proceeds in the amount of $290,734.32 shall be deposited by the City Treasurer into the Issuance Expense Fund to be used to pay the necessary expenses in connection wi th the issuance and sale of the Bonds and the fees and expenses of the Fiscal Agent and the Escrow Bank. Sect ion 14. Revenues. The Revenues sha 11 be those amounts received by the City as payments of the reassessments levied as to the real property located within the District in accordance with the 1984 Act, and shall be the sole source of funds pledged by the City for the payment of the principal of. premium, if any, and interest on the Bonds. The Revenues are hereby irrevocably pledged for the payment of the principal of, premium, if any, and interest on the Bonds, as in this Resolution provided, and until all of the Bonds, and all interest thereon, have been paid (or until moneys for that purpose have been irrevocably set aside) the Revenues shall be applied solely to the payment of the Bonds and the interest thereon as in this Resolution provided. Such pledge is for the exclusive benefit of the Holders of the Bonds and shall be irrevocable. The Bonds as issued hereunder and the payment of the reassessments for the debt service Obligations on the Bonds, which reassessments are filed with respect to the District, together with interest on the Bonds, shall remain and constitute a trust fund for the redemption and payment of the Bonds and the interest thereon. - 24 - c ..-.". ---'. \. cfl ,) , Section 15. Deposits of Revenues into Funds. (a) Redemption Fund. All Revenues shall be deposited by the City Treasurer in the Redemption Fund. In addition, on or prior to September 2, 1987, any amounts received from the fiscal year 1986-87 for the assessment installment payments which were due and payable by the property owners wi thin the District on or before April 10, 1987, shall be deposited by the City Treasurer in the Redemption Fund; provided, however, that such assessment installment payments shall only be deposited in the Redemption Fund to the extent and in the amounts required which, when accumulated with the amounts then on deposit in the Redemption Fund, shall be equal to that amount which shall be sufficient on September 2, 1987, to pay the interest due and payable on the Bonds on said September 2, 1987. Any surplus from the amounts received representing the assessment installments which were due and payable by the property owners within the District on or before April 10, 1987 (the "Assessment Amounts"), after the above-mentioned deposit to the Redemption Fund and the deposit, if any, to the Reserve Fund required to replenish any amounts advanced from the Reserve Fund for the interest payment on the Bonds due on September 2, 1987, pursuant to subsection (b) hereof, shall be transferred by the City Treasurer for deposit into the 1985 Improvement Fund to the extent that such deposit to the 1985 Improvement Fund shall not exceed the amount required to reimburse certain advances made from said 1985 Improvement Fund on the original date of delivery of the Bonds that were utilized to fund in part the Escrow Fund and that provide for the call and redemption of the 1985 Bonds. Any Assessment Amounts remaining after the above deposits and transfers have been made shall be used as a credit upon the reassessment in the manner provided in Section 10427.1 of the Streets and Highways Code or as otherwise provided in Section 10427 of the Streets and Highways Code. The principal of, premium, if any, and interest on the Bonds until maturity or upon call and redemption, as applicable, shall be paid by the Fiscal Agent from moneys transferred by the City Treasurer from the Redemption Fund three (3) days prior to each interest and principal payment date or redemption date, as applicable, in a sufficient amount to pay the principal of, premium, if any, and interest on the Bonds as the same become due. The Fiscal Agent shall deposit and invest such moneys received from the City Treasurer pursuant to written directions of the City. At the maturity of the Bonds, and, after all interest then due on the Bonds then outstanding has been paid or provided for, moneys in the Redemption Fund shall be applied to the payment of the principal of any of such Bonds. Without limiting the generality of the foregoing and for the purpose of assuring that the payments referred to above will be made as scheduled, the Revenues accumulated in the Redemption Fund shall,be used in the following priority: (i) for the payment of interest on the Bonds as the same become due; and (ii) for the payment of principal on the Bonds as the same become due; and - 25 - c r-- \,.,,,.' --.. ".J ,.I (i ii) in the event of any advanced maturity and in the event that the City Treasurer has sufficient surplus moneys in other funds of the City or there are surplus moneys on deposit in the Redemption Fund for such retirement, for the payment of any redemption premium, if any, for the Bonds; provided, however, that the City shall not be obligated to advance available funds from the City treasury to cure any deficiency that may occur in the Redemption Fund but that the City may, in its sole discretion, so advance such funds to cure any such deficiency. (iv) The Fiscal Agent, if so directed by the City, shall purchase bonds on the open market, on behalf of the City, at any time at a price not to exceed the principal amount of the Bonds plus the applicable premium and accrued interest, if any, to the date of purchase plus brokerage fees, if any. (v) The City Director of Finance or other such authorized officer of the City is hereby directed and authorized, upon the written request of City Treasurer to establish and thereafter maintain and employ the payment and accounting procedures to be used by the City in connection with the District, including, without limitation, accounting for deposits and withdrawals into and out of the redemption fund, the Reserve Fund and the Issuance Expense Fund as is City Director of Finance. (b) Reserve Fund. Pursuant to the 1984 Act, the 1915 Act and the Resolution of Intention, as subject to the arbitrage provisions of Section 148(d) of the Internal Revenue Code of 1986, the Reserve Fund in the amount equal to the Reserve Requirement will be established with the City Treasurer from the proceeds of the sale of the Bonds. The Reserve Fund will constitute a trust fund for the benefit of the Holders of the Bonds. The Reserve Fund will be maintained, used, transferred, reimbursed and liquidated as follows: (i) Whenever there are insufficient funds in the Redemption Fund to pay the next maturing installment of principal of or interest on the Bonds, an amount necessary to make up such deficiency will be transferred by the City Treasurer from the Reserve Fund, to the extent of available funds, to the Redemption Fund. The amounts so advanced will be reimbursed from the proceeds of redemption or sale of the parcels for which payment of delinquent installments of the original assessments or reassessments, as applicable, and interest thereon or real property taxes has been made from the Reserve Fund; provided, however, that in the event that moneys are advanced from the Reserve Fund to cure a deficiency in the Redemption Fund to pay the interest installment on the Bonds due on September 2, 1987, the amount so advanced will be reimbursed first from any delinquent payments if and to the extent received from the fiscal year 1986-87 assessment installment payments which were due and payable by the property owners wi thin the District on or before April 10, 1987, and then from the redemption or sale of the parcels in the manner as previously set forth and from such delinquent payments of the original assessments as the same may be periodically received by the City Treasurer and deposited in the - 26 - ~~ ..........., ,..I \ } (, \.. J Reserve Fund to the extent required to replenish the Reserve Fund for said advance. After any available funds from the Reserve Fund as above set forth have been transferred, in the event that there is a deficiency in the Redemption Fund to pay the principal of and interest on the outstanding Bonds, the Fiscal Agent, pursuant to written directions received from the City, shall pay to the Holders of such outstanding and unpaid Bonds a proportionate share of the Bonds as the amount of money on deposit in the Redemption Fund bears to the total amount of the unpaid principal of the Bonds and the interest which has accrued or will accrue thereon. Thereafter, as moneys representing payments of reassessments are periodically deposi ted by the City Treasurer into the Redemption Fund, similar proportionate payments shall be made by the Fiscal Agent, on behalf of the City, to the Holders of the Bonds. In the event that the Reserve Fund is completely depleted from such advances and prior to reimbursement from resales of property or delinquency redemptions, payments to the Holders of the Bonds will be dependent upon reimbursement of the Reserve Fund. (ii) If any reassessment is prepaid prior to the final maturity of the Bonds, the amount of principal of the reassessment to be prepaid will be reduced by an amount which will be determined by multiplying the then current balance of the Reserve Fund by the percentage which the original unpaid amount of the Prepaid Assessment is to the total amount of the original unpaid reassessment on all land in the District. The reduction in the amount of principal prepaid shall be compensated for by a transfer of a like amount from the Reserve Fund to the Redemption Fund. (iii) Investment income from the Reserve Fund will remain in the Reserve Fund to the extent necessary to restore the balance therein to the Reserve Requirement which is an amount equal to ten percent (10%) of the original proceeds of the Bonds, less any reduction in the Reserve Fund as a result of the application of subparagraph (ii) hereof. If at any time the amount of any income realized from the investment of the money in the Reserve Fund plus the remaining principal amount thereof exceeds the Reserve Requirement and subject to the arbitrage and rebate requirements under Section 148 of the Code, such excess shall be apportioned to each parcel upon which a reassessment remains unpaid and credited against the next installment or installments due thereon. (iv) When the balance in the Reserve Fund is sufficient to retire all Outstanding Bonds (whether by advance retirement or otherwise), the amount of the Reserve Fund will be transferred to the Redemption Fund, the remaining installments of principal and interest not yet due from reassessed property owners will be cancelled without payment and the Reserve Fund shall be liquidated upon the retirement of the Bonds. (v) In the event that the balance in the Reserve Fund at the time of liquidation exceeds the amount necessary to retire all Outstanding Bonds, the excess shall be apportioned to each parcel upon which the individual reassessment remained unpaid at the time the balance in the Reserve Fund was equal to the amount necessary to retire all of the Outstanding Bonds. The payments - 27 - c ~ ........, ,) ) ,j shall be made in cash provided, however, that dollars ($1,000) such Treasurer for deposit in to the respective owners of the parcels; if the excess is less than one thousand excess may be transferred by the City the General Fund of the City. Section 16. Deposi t and Investment of Moneys in Funds; Investment Earnings Account; Excess Investment EarninQs Account. A. SUbject to the provisions of Covenant 9 of Section 17 hereof, all moneys held by the City in the Redemption Fund and in the Reserve Fund, except such moneys which are at the time invested, shall, if the same are held in time or demand deposits in any bank or trust company authorized to accept deposits of pUblic funds (including the banking department of the Fiscal Agent), be secured at all times by bonds or other obligations which are authorized by law as security for public deposits, of a market value at least equal to the amount required by law. Moneys in the Redemption Fund and in the Reserve Fund shall be invested by the City Treasurer as provided by law and subject to the fOllowing restrictions: (1) Moneys in the Redemption Fund shall be invested only in obligations of the type or types and which will by their terms mature on such dates as to ensure that before each Interest Payment Date there will be in such Fund, from matured obligations and other moneys already in such Fund, cash equal to the principal and interest payable on such date, all as may be recommended from time to time by the opinion of an Independent Financial Consultant appointed by the City. (2) Moneys in the Reserve Fund may be temporarily invested in any authorized investments pursuant to Article I (commencing with Section 53600) of Chapter 4 of Part I of Title 5 of the Government Code, or in any authorized investments pursuant to law in the case of money resulting from reassessments levied for the Bonds, provided, however, that such investments shall be of the type or types and which will by their terms mature on such date or dates which shall not be later than the date on which the money may be required for the Redemption Fund pursuant to the 1915 Act, all as may be recommended from time to time by the opinion of an Independent Financial Consultant appointed by the City. B. Obligations purchased as an investment of moneys in any of said Funds shall be deemed at all times to be a part of such Fund and the interest accruing thereon and any gain realized from such investment shall be credited to such Fund and any loss resulting from any such authorized investment shall be charged to such Fund without liability to the City or the members and officers thereof or to the Fiscal Agent; provided, however, that interest earnings on investments of moneys in the Reserve Fund shall remain in the Reserve Fund unless and until the time that any amount of investment income plus the remaining principal amount thereof exceeds ten percent (10\) of the Reserve Requirement and such excess shall be apportioned to each parcel upon which a reassessment - 28 - - - c r", \.~j r", ,) , j remains unpaid and credited against the next installment or installments due thereon. The City Treasurer or the Fiscal Agent, as the case may be, shall sell at the best price obtainable or present for redemption any obligation so purchased whenever it shall be necessary to do so in order to provide moneys to meet any payment or transfer from such Fund as required by this Resolution. For the purpose of determining at any given time the balance in any such Fund, any such investment constituting a part of such Fund shall be valued at the lesser of either the then estimated or appraised market value of such investment or the face amount thereof; provided, however, that investments in the Redemption Fund shall be valued at the face amount thereof. Notwi thstanding the foregoing, the investments of the Escrow Fund in Federal Securities and the uses thereof shall be as set forth in the Escrow Agreement. In making investment recommendations the Independent Financial Consultant shall, to the extent reasonably pract icab1e, attempt to maximize interest returns, subject to the arbitrage and rebate requirements contained herein. Any other provision in this Section 16 to the contrary notwi thstanding, for purposes of the arbitrage requi rements under Section 148 of the Code and the regulations proposed or promulgated thereunder, in computing the amount in' any Fund or Account held by the City Treasurer or the Fiscal Agent, as applicable, under the provisions of this Resolution, investments shall be valued at cost, except if any investment is purchased at a discount, or if the amount of interest accruing in any period is greater than the amount of interest in the prior period (thus reflecting the reinvestment of interest as principal) the amount of such discount or excess interest shall be added to the cost of the investment ratably each year over its term. Notwi thstanding the foregoing provisions of subsection B Section 16, all such provisions shall be subject provisions of subsections C, D and E of this Section 16. C. The City shall not take, nor permit nor suffer to be taken by the City Treasurer or Fiscal Agent or otherwise, any action with respect to the Gross Proceeds of the Bonds which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of the issuance of the Bonds would have caused the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Code and Regulations promulgated thereunder. this to the D. Investment in Nonpurpose Obligations; Limitation of Yield. (1) General Rule. Except as provided in paragraph (2) of this subsection D, at no time during any Bond Year shall the City permit the aggregate amount of Gross Proceeds of the Bonds invested in Nonpurpose Obligations with a Yield higher tha,n the Yield on the - 29 - --"._- c ......., v ......, , ,J -)' " Bonds to exceed one hundred fifty percent (150%) of the Debt Service on the Bonds for such Bond Year. In addition, the City shall assure that, beginning with the fourth Bond Year. said aggregate amount of Gross Proceeds of the Bonds invested in Nonpurpose Obligations with a Yield higher than the Yield on the Bonds is promptly and appropriately reduced as the principal amount of the Bonds is reduced. In order to comply with the preceding sentence. the Ci ty shall assure the reduction of said investment in Nonpurpose Obligations with a Yield higher than the Yield on the Bonds within not to exceed thirty (30) days following the expiration of the third Bond Year and each Bond Year thereafter and within not to exceed thirty (30) days following the payment of any principal on the Bonds (by maturity, redemption, acceleration or otherwise), provided. however, that said reduction may be made by the disposition within the applicable 30-day period of Nonpurpose Obligations with a Yield higher than the Yield on the Bonds which are in excess of one hundred fifty percent (150%) of Debt Service on the Bonds and that said reduction need not be made if the failure to make said reduction will not violate the one hundred fifty percent (150%) requirement set forth in the first sentence of this Section. (2) Exclusions. For the purpose of paragraph (2) of this subsection. the aggregate amount of Gross Proceeds invested in Nonpurpose Obligations shall be determined without regard to those Gross Proceeds which are: (a) invested for a period not in excess of three (3) years from the date of issuance of the Bonds, until needed for accrued interest or for the governmental purpose of the Bonds. and which constitute original proceeds or investment proceeds (within the meaning of clauses (i) and (ii) of the definition of Gross Proceeds); (b) invested for a period not in excess of thi rteen (13) months, from the date of deposit. in a fund that is used primarily to achieve a proper matching of revenues and Debt Service on the Bonds within each Bond Year and that is depleted at least once a year except for a reasonable carryover amount not in excess of the greater of one year's earnings on the fund or one-twelfth of annual Debt Service on the Bonds and which do not constitute original proceeds or investment proceeds within the meaning of clauses (i) and (ii) of the definition of Gross Proceeds; (c) invested for a period not in excess of thirty (30) days, from the date of deposit, in a fund that is reasonably expected to be used to pay Debt Service on the Bonds and which do not constitute original proceeds or investment proceeds within the meaning of clauses (i) and (ii) of the definition of Gross Proceeds; - 30 - c c --. ,) "'.." ....,.1 (d) invested for a period not in excess of one (1) year. from the date of receipt. in a fund that is reasonably expected to be used to pay Debt Service on the Bonds and which constitute amounts received from investment of amounts deposited ina fund that is reasonably expected to be used to pay Debt Service on the Bonds but do not constitute original proceeds or investment proceeds within the meaning of clauses (i) and (ii) of the definition of Gross Proceeds; (e) invested for a period not in excess of one (I) year, from the date of receipt, and constitute amounts received frOm investment of original proceeds or investment proceeds (within the meaning of clauses (i) and (ii) of the definition of Gross Proceeds); or (f) invested for a period not in excess of years, from the date of receipt, in a revolving constitute receipts from the sale of real or tangible acquired with proceeds of the Bonds and that will be the acquisition of additional real or tangible property. three (3) fund and property used for (3) Determination of Amount Invested. For the purpose of paragraph (I) of this subsection, in determining the aggregate amoUnt of Gross Proceeds of the Bonds invested in Nonpurpose Obligations, each Nonpurpose Obligation in which Gross Proceeds are invested shall be valued as if the Nonpurpose Obligation was acquired for its fair market value on the date of acquisition or, if later, on the date upon which the Investment Property cons t i tut ing the Nonpurpose Obligation becomes a Nonpurpose Obligation with respect to the Bonds (for example, Investment Property earlier acquired which is later pledged as security for the Bonds). Revaluation following said date is not required unless this Resolution elsewhere requires revaluation following said date in accordance with fair market value on a later date. in which event said revaluation shall apply for the purpose of paragraph (1) of this Section. (4) Determination of Yield of Variable Rate Nonpurpose Obligations. For the purpose of paragraph (1) of this subsection, the Yield on a Nonpurpose Obligation that consists of variable rate Investment Property shall be determined as of the date the Nonpurpose Obligation is acquired and as of the first day of each Bond Year by assuming that the rate of interest will be the weighted average rate of interest for such Investment Property during the preceding one-year period (or portion thereof in which the Nonpurpose Obligation was outstanding) . wi th respect to a Nonpurpose Obligation purchased on its date of issue, the Yield for the first Bond Year shall be determined by assuming that the rate of interest will be the initial rate of interest for such Nonpurpose Obligation as determined under the prescribed formula on such date of issue (without regard to any fixed rate initially applicable to such Nonpurpose Obligation). - 31 - c ~ ----, " V \. .) "j (5) Determination of Yield of Variable Rate Bonds. For the purpose of paragraph (1) of this subsection, the Yield and the Debt Service on the Bonds bearing a variable rate of interest shall be determined as of the first day of each Bond Year, by assuming that the rate of interest on the Bonds will be (i) for the first Bond Year, the initial rate of interest for such portion as determined under the prescribed formula on the date of issuance of the' Bonds (without regard to any fixed rate initially applicable to such portion), and (ii) for any subsequent Bond Year, the weighted average rate of interest for the Bonds during the preceding Bond Year. (6) For the purpose of paragraph (1) hereof, Nonpurpose Obligations sUbject to such subsection need not be sold or disposed of if such sale or disposition would result in the realization of a loss for federal income tax purposes that exceeds that amount that would be paid to the United States pursuant to subsection E hereof (but for such sale or disposition) at the time of such sale or disposition (not including amounts that have been previously paid to the United States pursuant to subsection E) if a payment under subsection E were due at such time; provided, however, that the preceding sentence shall not apply to the extent that other Nonpurpose Obligations acquired with the Gross Proceeds of the Bonds may be sold or disposed of without incurring a loss in excess of the amount that would be paid to the United States pursuant to subsection E (but for such sale or disposition) at the time of such sale or disposition if a payment under subsection E were due at such time; and provided, further, that with respect to any Nonpurpose Obligation that, under the rule described in this subsection need not be sold or disposed of, said rule shall cease to apply thirty (30) days after the last day of the first computation period ending thereafter on which the Nonpurpose Obligation in question can be sold or disposed of without incurring a loss in excess of the amount that would be paid to the United States pursuant to subsection E (but for such sale or disposition) if a payment under subsection E were due at such time. For the purposes of this paragraph 6, Nonpurpose Obligations in which Gross Proceeds of the Bonds are invested which are acquired at different times or with different interest rates or maturity periods shall be treated as separate issues of Nonpurpose Obligations. E. Investment Earnings Account. Earnings Account; Excess Investment (1) Creation of Accounts. There are hereby created, to be held by the City Treasurer as separate accounts distinct from all other funds and accounts held by the City Treasurer under this Resolution, the Investment Earnings Account and the Excess Investment Earnings Account. All interest earnings and prof i ts on amounts in all Funds and Accounts established under this Resolution, other than interest earnings on the Redemption Fund and any other funds referenced in paragraph (3)(e) of this subsection if such earnings in any Bond Year are less than $100,000, shall, upon receipt by the City Treasurer, be deposited in the Investment - 32 - c ~\ '-,,/ ~ , ) ~'."'.' ",-".:; Earnings Account. In addition, all interest earnings and profits on Gross Proceeds in any Funds held by the Fiscal Agent, if any, shall, upon receipt, be paid to the City Treasurer for deposit in the Investment Earnings Account. On any Interest Payment Date during the Interim Period, the City Treasurer shall transfer the amount of interest due on the Bonds due on such Interest Payment Date to the Redemption Fund. Annually, on the last day of each Bond Year or on the preceding business day in the event that such last day is not a business day, the City Treasurer shall transfer from the Investment Earnings Account to the Excess Investment Earnings Account for purposes of ultimate rebate to the United States an amount equal to Excess Investment Earnings, all as more particularly described in this subsection E. FOllowing the transfer referenced in the preceding sentence, the City Treasurer shall transfer all amounts remaining in the Investment Earnings Account to the Redemption Fund to be used for the payment of Debt Service on the Bonds on the next interest payment date and for such purpose, Debt Service due on such date shall be credited by an amount equal to the amount so transferred. (2) Definition of Excess Investment Earnings. The City shall calculate Excess Investment Earnings in accordance with this paragraph (2) and shall assure payment of an amount equal to Excess Investment Earnings to the United States in accordance with paragraphs (3) and (4). The term "Excess Investment Earnings" means an amount equal to the sum of: (a) the excess of (i) the aggregate amount earned from the date of delivery of the Bonds on all Nonpurpose Obligations in which Gross Proceeds of the Bonds are invested (other than amounts attributable to an excess described in this subparagraph (a)), over (i i) the amount that would have been ea rned if the Yield on such Nonpurpose Obligations (other than amounts attributable to an excess described in this subparagraph (a)) had been equal to the Yield on the Bonds, plus (b) any income attributable to the excess described in paragraph (a). "(3) Calculation of Excess. Prior to the last day of the first Bond Year, the City shall calculate the Excess Investment Earnings referenced in subparagraph (a) of paragraph (2). Thereafter, prior to the last day of each Bond Year and on the date of the retirement of the Bonds, the City shall calculate the amount of Excess Investment Earnings referenced in subparagraphs (a) and (b) of paragraph (2). Said calculations shall be made or caused to be made by the City in accordance with the following: - 33 - c I"'" U -'\ " ; :) (a) Except as provided in subparagraph (b) below, in determining the amount described in subparagraph (a) (i) of paragraph (2), the aggregate amount earned on Nonpurpose Obligations shall include (i) all income realized under federal income tax accounting principles (whether or not the person earning such income is subject to federal income tax) with respect to such Nonpurpose Obligations and with respect to the reinvestment of investment receipts from such Nonpurpose Obligations (without regard to the transaction costs incurred in acquiring, carrying, selling or redeeming such Nonpurpose Obligations), including, but not limited to, gain or loss realized on the disposition of such Nonpurpose Obligations (without regard to when such gains are taken into account under Section 453 of the Code relating to taxable year of inclusion of gross income), and income under Section 1272 of the Code (relating to original issue discount) and (ii) any unrealized gain or loss as of the date of retirement of the Bonds in the event that any Nonpurpose Obligation is retained after such date. (b) In determining the amount described in subparagraph (a) of paragraph (2), Investment Property shall be treated as acquired for its fair market value at the time it becomes a Nonpurpose Obligation, so that gain or loss on the disposition of such' Investment Property shall be computed with reference to such fair market value at its adjusted basis. (c) In determining the amount described in subparagraph (a) (ii) of paragraph (2), the Yield on the Bonds shall be determined based on the actual Yield of the Bonds during the period between the date of issuance of the Bonds and the date the computation is made (with adjustments for discount or premium). (d) In determining the amount described in subparagraph (b) of paragraph (2), all income attributable to the excess described in subparagraph (a) of paragraph (2) must be taken into account, whether or not that income exceeds the Yield on the Bonds, and no amount may be treated as "negative arbitrage". (e) In determining the amount described in paragraph (2) , there shall be excluded any amount earned on any fund or account which is used primarily to achieve a proper matching of revenues and Debt Service within each Bond Year and which is depleted at least once a year except for a reasonable carryover amount not in excess of the greater of one year's earnings on such fund or account or one-twelfth of annual Debt Service as well as amounts earned on said earnings if the gross earnings on all such funds and accounts for the Bond Year is less than $100,000. (4) Payment to the United States. The City Treasurer shall pay from the Excess Investment Earnings Account an amount equal to Excess Investment Earnings to the United States in installments with the first payment to be made not later than thirty (30) days after the end of the fifth Bond Year and with subsequent payments to be made not later than five (5) years after the - 34 - "",,, .- r \ ,/ '.-.,,/ I ....,. , preceding payment was due. The City shall assure that each such installment is in an amount equal to at least ninety percent (90%) of the Excess Investment Earnings with respect to the Bonds as of the close of the computation period. Not later than sixty (60) days after the retirement of the Bonds, the City Treasurer shall pay from the Excess Investment Earnings Account to the Uni ted States one hundred percent (100%) of the theretofore unpaid Excess Investment Earnings on the Bonds. If there are any amounts remaining in the Excess Investment Earnings Account following the payment required by the preceding sentence, the City may use such amounts for any lawful purpose of the City. The City sha II remi t payments to the Uni ted States at the address prescribed by the Regulations as the same may be in time to time in effect with such reports and statements as may be prescribed by such Regulations. If, for any reason, amounts in the Excess Investment Earnings Account are insufficient to make the payments to the Uni ted States which are requi red by thi s paragraph (4), the City shall assure that such payments are made to the united States, on a timely basis, from any funds lawfully available therefor. (5) Further Obligation of the City. The City shall assure that Excess Investment Earnings are not paid or disbursed except as required in this subsection (e). To that end the City shall assure that investment transactions are on an arm's length basis. In the event that Nonpurpose Obligations consist of "certificates of deposit or investment contracts, investment in such Nonpurpose Obligations shall be made in accordance with the procedures described in applicable Regulations as from time to time in effect. (6) Maintenance retain for a period of six Bonds, records of the subsection E. of Records. The City shall keep, (6) years following the retirement of determinations made pursuant to and the this (7) Independent Consultants. In order to provide for the administration of this subsection E and subsection D hereof, the City may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the City may deem appropriate. F. INVESTMENTS; ARBITRAGE; SPECIAL ARBITRAGE RESTRICTION. Subject to the provisions of subsections C, D and E hereof, the City Treasurer or Fiscal Agent, as applicable, may make any and all investments permitted by the provIsIons of this Section 16 hereof. As and when any amount invested pursuant to this Section may be needed for disbursement, the City Treasurer or Fiscal Agent, as applicable, may cause a sufficient amount of such investments to be sold and reduced to cash to the credit of the applicable Fund or Account; provided, however, that the Fiscal Agent shall be conclusively deemed to have complied with the provisions of the paragraph if it follows all investment directions provided to it by the City. The City and the Fiscal Agent may conclusively rely on the opinions, calculations, determinations, directions and advice of such individual attorneys, accountants and consultants employed hereunder. - 35 - ( ...,. ,~ ~, :) 'I / The City covenants with all Owners of the Bonds from time to time Outstanding that so long as any of the Bonds remain Outstanding, moneys on deposit with the City Treasurer or the Fiscal Agent under this Resolution, whether or not such moneys were derived from the proceeds of the sale of the Bonds or from any other source, will not be used in a manner which, if such use had been made on the date of issuance of the Bonds, would have caused the bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code, and any lawful regulations proposed or promulgated thereunder, including sections 1.103-13, 1.103-14 and 1.103-15 of the Income Tax Regulations (26 CFR Part 1), as the same exist on this date, or may from time to time hereafter be amended, supplemented or revised and provided further that the City's responsibility under this paragraph shall be limited to actions within its control. Section 17. Covenants of the City. As long as the Bonds are outstanding and unpaid, the City shall (through its proper members, officers, agents or employees) faithfully perform and abide by all of the covenants, undertakings and provisions contained in this Resolution or in any Bond issued hereunder, including the following Covenants and agreements for the benefit of the Bondholders which are necessary, convenient and desirable to secure the Bonds and will tend to make them more marketable; provided, however, that said Covenants do not require the City to expend any funds other than the Revenues pledged to the payment of the principal of, premium, if any, and interest on the Bonds: Covenant 1. To Carry Out Refunding. The City covenants and agrees that it will diligently carry out and perform all acts, take all steps and proceedings, provide all notices, and do all acts and things necessary or convenient for the refunding of the 1985 Bonds that are not prohibited by the United States Constitution or the California Constitution and in accordance with its duty so to do under and in accordance with the 1984 Act. Covenant 2. Use of Proceeds. The City covenants and agrees that the proceeds of the sale of the Bonds will be deposited and used as provided in this Resolution and that it will as permitted under federal and State law use its best efforts to maintain in the Escrow Fund, Redemption Fund, Issuance Expense Fund and the Reserve Fund reasonable balances as required hereunder in connection with the issuance of the Bonds and the refunding of the 1985 Bonds. Covenant 3. No Priority. The City covenants and agrees that it will not issue any obligations payable, either as to principal or interest, from the Revenues which have, or purport to have, any lien upon the Revenues prior or superior to the lien of the Bonds herein authorized. The City will not issue any obligations, payable as to principal or interest, from the Revenues, which have, or purport to have, any lien upon the Revenues on a parity with the Bonds herein authorized. Notwithstanding the - 36 - <....... ~ I , ; \" , foregoing, nothing in this Resolution shall prevent the City from issuing and selling pursuant to law refunding obligations payable from and having any lawful lien upon the Revenues, if such refunding obligations are issued for the purpose of, and are sufficient for the purpose of, refunding all of the Outstanding Bonds. Covenant 4. Punctua 1 Payment. The Ci ty covenants and agrees that it wi II duly and punctually payor cause to be paid the principal of and interest on each of the Bonds issued hereunder on the date, at the place and in the manner provided in the Bonds. Without limiting the generality of the foregoing, the City covenants and agrees that it will make the provisions necessary hereunder for the payment of interest and the call and redemption and final payment on maturity of the Bonds, and, in case of any default therein, will notify the Fiscal Agent and the manager or managers of the original syndicate that purchased the Bonds from the City. Covenant 5. Purchase of Parcels Sold at Foreclosure Sale; Limited Liability, The City covenants that if parcels of property within the District are sold at foreclosure sale for delinquent installments on reassessments and if there is no other purchaser at such sale it will purchase such parcels by bidding in the amount of its foreclosure judgment. The City shall not be Obligated to use any available funds (including surplus funds), other than the Reserve Fund, to pay the delinquent installments and future installments on the reassessments on such delinquent parcels. The City may, at its option and in its sole discretion, use any available surplus funds inCluding those funds on deposit in the Reserve Fund, to purchase such delinquent parcels or pay the delinquent installment and future installments on the reassessments on such parcels. The City may not, however, make a direct transfer of such available surplus funds to the Redemption Fund following a reassessment installment delinquency prior to its purchase of the subject property at a foreclosure sale. Notwithstanding anything in this Resolution, the Bonds, Sections 8800 through 8809 of the 1915 Act, the 1984 Act, any other provision of law, or in any of the Resolutions adopted in connection with the proceedings for the District to the contrary, the Bonds shall be a special obligation of the City, and the City shall not under any circumstances (including, without limitation, after any installment of principal or interest of any assessment levied on any lot or parcel in the District becomes delinquent or after the City acquires title to any such lot or parcel whether through foreclosure or otherwise) be obligated to pay principa 1, premium, if any, or interest on the Bonds from any source whatsoever other than the Redemption Fund (including any transfers thereto from the Reserve Fund). In addition, in the event the City files an action and forecloses the lien of any delinquent assessment levied in the District, the City shall not, except as provided in this sentence, be liable or otherwise obligated in any way whatsoever to purchase or otherwise acquire any lot or parcel of property sold at the execution sale pursuant to the judgment in any such action - 37 - <." _r"- :) :) " J foreclosing such lien; provided, however, if there is no other purchaser at such sale, the City shall purchase such lot or parcel at such sale, provided that the obligation of the City to so purchase shall be limited solely to bidding in the amount of such judgment (and any other amount permitted or required by law) at such sale and the City shall not be liable or otherw'ise obligated in anyway whatsoever to furnish any funds (cash or otherwise) in connection with such purchase. In the event that the City so purchases any such lot of parcel, it shall not thereafter be liable or otherwise obligated in any way whatsoever to pay any delinquent or future assessments or taxes on such lot or parcel. Neither the City (except as provided in the first two sentences of this paragraph), the Mayor, the Common Council, the officers or employees of the Ci ty, any person or entity acting for or on beha If of the City in connection with the issuance of the Bonds or in connection with the formation or operation of the District, nor any persons executing the Bonds, shall be liable personally on the Bonds or be subject to any personal liability for the Bonds or any personal liability or accountability whatsoever by reason of or in connection wi th the issuance of the Bonds or by reason of any act or acts or the failure or omission to take any act or acts (including, without limitation, a negligent act or omission) in connection with or related to the operation of the District. Covenant 6. Books and Accounts; Financial Statements. The City covenants and agrees that it will at all times keep, or cause to be kept, proper and current books and accounts (sepa rate from all other records and accounts) in which complete and accurate entries shall be made of all transactions relating to the Revenues and other funds relating to said Project, and will prepare within one hundred twenty (120) days after the close of each of its Fiscal Years a complete financial statement or statements for such year in reasonable detail covering such Revenues and other funds, accompanied by a certificate or opinion of an Independent Certified Public Accountant appointed by the City, and will furnish a copy of such statement or statements to the original purchaser(s) of the Bonds (in the case of a syndicate, the manager thereof) and any rating agency which maintains a rating on the Bonds, and upon written request to any Bondholder. Covenant 7. Reassessment of Property. The Ci ty covenants that the reassessments and interest thereon shall be collected on the assessment roll and are subject to reassessment, amendment and prepayment, and are otherwise SUbject to all of the provisions of the 1915 Act in the same manner and subject to the same remedies on default and to the payment of interest and penalties on the enforcement thereof as were the original assessments which were superseded and replaced by the reassessments. For these purposes, the applicable provisions of Part,s 8, 9, 10, 10.5, 11, 11.1, 13, 14 and 15 of Division 10 of the California Streets and Highways Code are hereby referred to and incorporated herein by reference. The reassessments and any reassessments which may be issued thereon or in lieu thereof, - 38 - /-~, ~. \. j " ,-_.,.,t' c " .,i together with interest thereon, shall be deposited into the Redemption Fund for the redemption and payment of the Bonds and the interest thereon. Covenant 8. Protection of Security and Rights of Bondholders; No Arbitraqe, The City covenants and agrees to preserve and protect the security of the Bonds and the rights of the Bondholders and to defend their rights under all claims and demands of all persons and the other covenants and agreements of this Resolution shall not be deemed or be held to limit the generality of the foregoing provision of this sentence. The City covenants and agrees to direct the City Treasurer or Fiscal Agent, as applicable, upon delivery of the Bonds, to transfer the necessary funds or otherwise effectuate the investment of such funds as hereinbefore provided. The City covenants and agrees to contest by court action or otherwise: (a) the assertion by any officer of any government unit or any other person whatsoever against the City that (i) the Law is unconstitutional, or (ii) the Revenues pledged hereunder cannot be paid to the City for the debt service on the Bonds; or (b) any other action affecting the validity of the Bonds or diluting the security therefor; or (c) any assertion by the united States of America or any department or agency thereof or any other person that the interest received by the Bondholders is taxable under federal income tax laws. The City covenants and agrees to take no action which, in the Opinion of Counsel, would, result in (a) the Revenues being withheld unless the withholding thereof is being contested in good faith, or (b) the interest received by the Bondholders becoming taxable under federal income tax laws. The City hereby covenants and agrees that the proceeds of the Bonds wi 11 not be used at any time during the term of the Bonds which, if such use had been reasonably expected at the date the Bonds were issued, would have caused such Bonds to be "arbitrage bonds" within the meaning of Section 148 of the United States Internal Revenue Code of 1986 and applicable regulations adopted thereunder by the Internal Revenue Service, and the City hereby assumes the Obligation to comply with such Section 148 and such regulations throughout the term of the Bonds. The Ci ty further covenants that the amount of money on deposit in the Reserve Fund shall be reduced proportionately upon any payment, in whole or in part, of any reassessment and the City Treasurer shall transfer from the Reserve Fund to the Redemption Fund an amount equal to the reduction in the reassessment, which amount shall b~ used for the redemption of the Bonds. Covenant 9. Federal Guarantee Prohibition. The City shall take no action nor permit nor suffer any action to be taken if the result of the same would be to cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code. Covenant 10. To Comply With Fiscal Agent Aqreement. The City covenants and agrees to comply with the terms and provisions of a certain Fiscal Agent Agreement dated December 30, 1986, by and between the City and the Fiscal Agent, and to diligently carry out - 39 - - ~" ,-...... c "'- ,/ , , and perform all acts, take all steps and proceedings and do all acts and things necessary to carry out the intent thereof. Section 18. Superior Court Foreclosure. In the event of delinquency in the payment of any installment of an unpaid reassessment, the City may order institution of an action in the State Superior Court of the County of San Bernardino to foreclose the lien of such delinquent reassessment, as authorized in the 1915 Act and the 1984 Act. In such an action the real property subject to the 'delinquent unpaid reassessment may be sold at judicial foreclosure sale. The City covenants with the registered owners of the Bonds that the Ci ty Treasurer and the Ci ty Attorney wi II cause to be commenced, and thereafter diligently prosecuted, court foreclosure proceedings upon any parcel against which there are dp.linquent unpaid reassessments as authorized by law, Unless the City shall, at its option, have deposited sufficient funds into the Reserve Fund to maintain therein an amount equal to the Reserve Requirement after the application thereof for the payment of any delinquent unpaid reassessment such foreclosure proceedings shall be commenced within one hundred twenty (120) days following the date of such a delinquency. Section 19. Fiscal Agent and Paying Aqents. The City hereby appoints First Interstate Bank of California, Los Angeles, California, as Fiscal Agent to act as the transfer agent, registrar, paying agent and authenticating agent of the City for the purpose of paying principal of, premium, if any, and interest on the Bonds as provided in this Resolution, and to perform such other duties and powers of the Fiscal Agent as are prescribed in this Resolution. As used in this Resolution, "Fiscal Agent" means First Interstate Bank of California and its successors and any corporation resulting from or surviving any consolidation or merger to which it or its successors may be a party and any successor Fiscal Agent at the time serving as successor Fiscal Agent under this Resolution. The City Treasurer is hererby authorized and directed to enter into, in the name of the City, such agreements and credit arrangements with the Fiscal Agent as shall be necessary and desirable in order to enable the Fiscal Agent to carry out the duties of its office. The Fiscal Agent is hereby authorized to redeem the Bonds and corresponding interest on the Bonds when duly presented for payment at maturity, and on redemption prior to maturity, and to cancel all Bonds and corresponding interest on the Bonds upon payment thereof, and to return the same cancelled to the City Treasurer. The Fiscal Agent shall keep accurate records of all Bonds and interest paid and discharged. The City may remove the Fiscal Agent initially appointed or any successor thereto and in such case sha II forthwi th appoint a successor thereto but any successor shall be a bank or trust company doing business and having an office in the City of Los Angeles, having a combined capital and surplus of at least $50,000,000. The - 40 - c r- " ~ :) ) Fiscal Agent herein appointed or any substituted Fiscal Agent may at any time resign as such by writing filed with the City in which event the City shall forthwith appoint a substitute Fiscal Agent or Paying Agent and the resignation shall become effective upon such appointment. Upon receiving such notice of resignation, the City shall promptly appoint a successor Fiscal Agent or Paying Agent by an instrument in writing; provided, however, that in the event the City fails to appoint a successor Fiscal Agent or Paying Agent who shall have accepted its appointment within thirty (30) days following receipt of such written notice of resignation, the resigning Fiscal Agent may petition the appropriate court having jurisdiction to appoint a successor Fiscal Agent or Paying Agent. In the event that the Fiscal Agent or any successor becomes incapable of acting as such, the City shall forthwith appoint a substitute Fiscal Agent or Paying Agent. Any bank or trust company into which the Fiscal Agent may be merged or wi th which it may be consolidated shall become the Fiscal Agent without action of the City. The Fiscal Agent may become the owner of any of the Bonds authorized by this Resolution with the same rights it would have had if it were not the Fiscal Agent. The City shall from time-to-time, on demand, pay to the Fiscal Agent reasonable compensation for its services and shall reimburse the Fiscal Agent for all its advances and expenditures, including, but not limited to, advances to and fees and expenses of independent appraisers, accountants, consultants, counsel, agents and attorneys-at-law or other experts employed by it in the exercise and performance of its powers and duties hereunder. Such compensation and reimbursement shall be paid by the City and amounts owing therefor shall constitute a lien prior to that of the Bondholders on all moneys held by it hereunder, The Fiscal Agent may appoint agents to exercise any of the powers, rights or remedies granted to the Fiscal Agent under this Resolution, and to hold title to property or to take any other action which may be desirable or necessary. The Fiscal Agent shall not be liable for any error in judgment made in good faith by a responsible officer, unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts. The Fiscal Agent shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in aggregate principal amount of the Bonds at the time outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Fiscal Agent, or exercising any trust or power conferred upon the Fiscal Agent, under this Resolution. Whenever in the administration of Resolution, the Fiscal Agent shall deem it that a matter be proved or established prior its duties under this necessary or desirable to taking or suffering - 41 - C ,/"'-" .--,-, ", \. J' " ,/ / any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) shall be deemed to be conclusively proved and established by the certificate of the City Treasurer or other such authorized officer of the City and such certificate shall be full warranty to the Fiscal Agent for any action taken or suffered under the provisions of this Resolution upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable. The Fiscal Agent may become the Holder .of the Bonds wi th the same rights it would have if it were not the Fiscal Agent; may acquire and dispose of other notes, bonds, certificates, coupons or evidences of indebtedness of the City and enforce its rights as Holder thereof to the same extent as if it were not Fiscal Agent hereunder; and may act as a depositary for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Holders of Bonds, whether or not such committee shall represent the Holders of the majority in principal amount of the Bonds then Outstanding. The recitals, statements and representations by the City contained in this Resolution or in the Bonds shall be taken and construed as made by and on the part of the City and not by the Fiscal Agent, and the Fiscal Agent does not assume, and shall not have, any responsibility or obligation for the correctness of any such recitals, statements and representations. The Fiscal Agent may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder, and the Fiscal Agent shall not be answerable for the default or misconduct of any such attorney, agent, or receiver selected by it with reasonable care. The Fiscal Agent shall not be answerable for the exercise of any discretion or power under this Resolution, except only for its own willful misconduct or negligence. No provision of this Resolution shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. The Fiscal Agent shall not be responsible for the validity or sufficiency of this Resolution or the Escrow Agreement. The Fiscal Agent shall not be responsible for the use by the City of the Bonds or the proceeds thereof. The permissive right of the Fiscal Agent to do or omit to do anything hereunder shall not be construed as a duty, - 42 - . ,r, ~~ I , . \,.., "- ,/ \. ) j The Fiscal Agent shall have no duty or obligation whatsoever to enforce the collection of or to exercise diligence in the enforcement of the collection of funds assigned to it hereunder, or as to the correctness of any amounts received, but its liability shall be limited to the proper accounting for such funds as it shall actually receive. The Fiscal Agent shall have no obligation or responsibility for providing information to the Holders concerning the investment character of the Bonds, for the sufficiency or collection of any moneys required to be paid to it hereunder, or for the actions or representations of the City under this Resolution, The Fiscal Agent shall have no obligation or liability to any of the other parties or the Holders of the Bonds with respect to this Resolution or the failure or refusal of the City to perform any covenant or agreement made by any of them under this Resolution but shall be responsible solely for the performance of the duties expressly imposed upon it hereunder, The City hereby indemnifies and agrees to save the Fiscal Agent, its officers, directors, agents and employees harmless from and against all claims, suits and actions brought against it, or to which it is made a party, and from all expenses, losses and damages suffered by it as a result thereof, where and to the extent such claim, suit or action arises out of the actions of the Fiscal Agent or the City including but not limited to the ownership, operation or use of the Redevelopment Project by the City, No indemnification is made under this Section or elsewhere in this Resolution for any claims, suits and actions brought against the Fiscal Agent, its officers, directors, agents and employees for wilfull misconduct or negligence under this Resolution or breach of t.he duties specifically imposed upon and to be performed by it pursuant to this Resolut ion. In the event the Ci ty is requi red to indemnify the Fiscal Agent, its officers, directors, agents and employees as herein provided, the City shall be subrogated to the rights of the Fiscal Agent to recover such losses or damages from any other person or entity. The recitals of fact and all promises, covenants and agreements herein, in the Escrow Agreement and in the Bonds shall be taken as statements, promises, covenants and agreements of the City, and the Fiscal Agent shall have no responsibility for the correctness of the same, and makes no representations as to the validity or sufficiency of this Resolution or of the Bonds, 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 not be liable in connection with the performance of its duties hereunder, except for its own negligence or default. At the option of the City it may provide for Paying Agents in other cities for the convenience of the Bondholders. All Paying Agents shall serve at the sole discretion of the City. notice, The Fiscal resolution, Agent shall be protected request, consent, order, in acting upon any certificate, report, - 43 - c r, ".I .......... ,) ",/ bond or other paper or document believed by it to be geniune and to have been signed or presented by the proper party or parties. The Fiscal Agent may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection and respect to any action taken or suffered hereunder in good faith and in accordance therewith. The Fiscal Agent shall not be bound to recognize any person as the holder of a Bond unless and until such Bond is submitted for inspection, if required by the Fiscal Agent, his title thereto satisfactorily established, if disputed. Whenever in the administration of its duties under this Resolution, the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof is specifically prescribed herein) may, in the absence of bad faith on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a certificate of the City, and such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of this Resolution or any supplemental Resolution; provided, however, that in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter and may require such additional evidence as it may seem reasonable. Section 20. Lost, Stolen, Destroyed or Mutilated Bonds. In the event that any Bond is lost, stolen, destroyed or mutilated, the City will cause to be issued a new Bond similar to the original to replace the same in such manner and upon such reasonable terms and conditions, including the payment of costs and the posting of a surety bond if the City deems such surety bond necessary, as may from time to time be determined and prescribed by resolution. The City may authorize such new Bond to be signed and authenticated in such manner as it determines in said resolution. Section 21, Cancellation of Bonds. All Bonds surrendered to the Fiscal Agent or any Paying Agent for payment at the maturity thereof, or, in the case of call and redemption prior to maturity, at the redemption date, shall upon payment therefor be cancelled immediately and forthwith transmitted to the Treasurer or destroyed by the Fiscal Agent at the direction of the City, in which latter event a certificate of destruction shall forthwith be transmitted to the City Treasurer. Any Bonds purchased by the Fiscal Agent as aforesaid shall be cancelled immediately and forthwith transmitted to the City Treasurer or destroyed as aforesaid. All of the cancelled Bonds not theretofore destroyed shall remain in the custody of the City Treasurer until destroyed pursuant to due authorization. Section 22. Amendments. This Resolution, and the rights and Obligations of the City and of the Holders of the Bonds issued hereunder, may be modified or amended at any time by supplemental resolution adopted by the City: (a)' without the consent of Bondholders, if such modification or amendment is for the purpose of curing any ambiguities, defects or inconsistent provisions in this Resolution or to insert such provisions clarifying matters or - 44 - c {' \,.". .......... " ) """... questions arIsIng under this Resolution as are necessary and desirable to accomplish the same, provided that, such modifications or amendments do not adversely affect the rights of the Bondholders, as shown by an Opinion of Counsel, and/or (b) with the consent of Bondholders holding sixty percent (60%) in aggregate principal amount of the outstanding Bonds, exclusive of Bonds, if any, owned by the City, and obtained as hereinafter set forth; provided, however, that no such modification or amendment shall, without the express consent of the Holder or registered owner of the Bond affected, reduce the principal amount of any Bond, reduce the interest rate payable thereon, extend its maturity or the times for paying interest thereon or change the monetary medium in which principal and interest is payable, or reduce the percentage of consent required for amendment or modification; and provided further that no such amendment shall affect the rights, duties or liabilities of the Fiscal Agent without its consent. Any act done pursuant to a modification or amendment so consented to shall be binding upon the Holders of all of the Bonds, and shall not be deemed an infringement of any of the provisions of this Resolution or of the 1984 Act, whatever the character of such act may be, and may be done and performed as fully and freely as if expressly permitted by the terms of this Resolution, and after such consent relating to such specified matters has been given, no Bondholder shall have any right or interest to Object to such action or in any manner to question the propriety thereof or to enjoin or restrain the City or any officer thereof from taking any action pursuant thereto. A. Callinq desire to obtain any calling a meeting of action the consent to Bondholders' Meeting, If the City shall such consent it shall duly adopt a resolution Bondholders for the purpose of considering the which is desired, B. Notice of Meeting, Notice specifying the purpose, place, date and hour of such meeting shall be published once in a financial newspaper or journal of national circulation published in the City of New York, New York, such publication to be not less than sixty (60) days nor more than ninety (90) days prior to the date fixed for the meeting. Such notice shall set forth the nature of the proposed action consent to which is desired. The City shall, on or before the publication of such not ice, cause to be mai led a similar notice, postage prepaid, to the respective registered owners thereof at their addresses appearing on the bond register in the hands of the Fiscal Agent. The place, date and hour of holding such meeting and the date or dates of pUblishing and mailing such notice shall be determined by the City in its discretion. The actual receipt by any Bondholder of notice of any such meeting shall not be a condition precedent to the holding of such meeting, and failure to receive such notice shall not affect the validity of the proceedings thereat. A certificate by the City Clerk approved by resolution of the City, that the meeting has been called and that notice thereof has been given as herein provided, - 45 - . (, ."...- ~ \./ "'".1 shall be conclusive as against all parties and it shall not be open to any Bondholder to show that he failed to receive actual notice of such meeting. C. Votinq Qualifications. The Fiscal Agent shall prepare and deliver to the chairman of the meeting, no less than five (5) business days prior to the date of the meeting, a statement of the names and addresses shown on the registration books of the Fiscal Agent of the registered owners of fully registered Bonds, such statement to show maturities, serial numbers and the principal amounts so that voting qualifications can be determined. No Bondholders shall be entitled to vote at such meeting unless their names appear upon such statement. No Bondholders shall be permitted to vote with respect to a larger aggregate principal amount of Bonds than is set against their names on such statement. D. Issuer-Owned Bonds. The City covenants that it will present at the meeting a certificate, signed and verified by one member thereof and by the City Treasurer, stating the serial numbers, maturities and principal amounts of all Bonds owned by, or held for account of, the Ci ty, direct ly or indi rect ly. No person shall be permitted at the meeting to vote or consent with respect to any Bond appearing upon such certificate, or any Bond which it shall be established at or prior to the meeting is owned by the City, directly or indirectly, and no such Bond (in this Resolution referred to as "issuer-owned Bond") shall be counted in determining whether a quorum is present at the meeting. E. Quorum and Procedure, A representation of at least sixty percent (60%) in aggregate principal amount of the Bonds then outstanding (exclusive of issuer-owned Bonds, if any) 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 ~djournment shall have been had by a quorum or by less than a quorum. The City 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 secretary. At any meeting each Bondholder shall be entitled to one vote for every $5,000 principal amount of Bonds with respect to which he shall be qualified to vote as aforesaid, and such vote may be given in person or by proxy duly appointed by an instrument in writing presented at the meeting. The City and/or the Fiscal Agent, by their dUly authorized representative and counsel, may attend any meeting of the Bondholders, but shall not be required to do so. . F. Vote Required. At any such meeting held as aforesaid there shall be submitted for the consideration and action of the Bondholders a statement of the proposed action consent to which is desired, and if such action shall be consented to and approved by Bondholders holding at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of issuer-owned Bonds) the chairman and secretary of the meeting shall so certify in writing to the City, and such certificate shall - 46 - . C /...-~ ~ '"",,, , ~ ) I constitute complete evidence of consent of the Bondholders under the provisions of this Resolution. A certificate signed and verified by the chairman and the secretary of any such meeting shall be conclusive evidence and the only competent evidence of matters stated in such certificate relating to proceedings taken at such meeting, Section 23. Proceedings Constitute Contract; Events of Default and Remedies of Bondholders. The provisions of this Resolution, of the resolutions providing for the sale of the Bonds and awarding the Bonds and fixing the interest rate thereon, and of any other resolution supplementing or amending this Resolution, shall constitute a contract between the City and the Bondholders and the provisions thereof shall be enforceable by any Bondholder for the equal benefit and protection of all Bondholders similarly situated by mandamus, accounting, mandatory injunction or any other suit, action or proceeding at law or in equity that is now or may hereafter be authorized under the laws of the State of California or the United States of America in any court of competent jurisdiction. Said contract is made under and is to be construed in accordance with the laws of the State of California, except as it is subject to the exercise by the United States of America of powers delegated to it by the Constitution of the United States, The following provisions shall not limit the generality of the foregoing. A. Events of Default. If one or more of the following events ("events of default") shall happen, that is to say-- (1) if default shall be made in the due and punctual payment of any installment of interest on any Bond when and as such interest insta Ilment sha II become due and payable, and such def ault shall have continued for a period of thirty (30) days; (2) if def au lt sha 11 be made in the due and punctua 1 payment of the principal of any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise;~ (3) if default shall be made by the City in the observance of any of the covenants, agreements or conditions contained in this Resolution or in the Bonds, and such default shall have continued for a period of thirty (30) days~ ^ Then, and in each and continuance of such event of Bondholder(s) may, but shall not all remedies deemed appropriate in every such case during thel default, the Fiscal Agent or be required to, exercise any and the circumstances. Notwithstanding anything to the contrary expressed in this Resolution the Fiscal Agent shall not be deemed to have knowledge of any event of default hereunder unless and until it shall have actual knowledge thereof, or shall have received written notice thereof, at - 47 - (, \ ,/ ....) its corporate trust office in Los Angeles, California. Except as otherwise expressly provided herein, the Fiscal Agent shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, covenants or agreements herein or as to the existence of an event of default hereunder. A B. Certain Remedies of Bondholders. Upon the occurrence of any event of default, any Bondholder shall have the rIght, for the equal benefit and protection of all Bondholders similarly situated-- (1) by mandamus, suit, action or proceeding, to compel the City and its members, officers, agents or employees to perform each and every term, provision and covenant contained in this Resolution and. in the Bonds, and to require the carrying out of any or all such covenants and agreements of the City and the fulfillment of all duties imposed upon it by the 1984 Act; (2) by suit, action or proceeding in equity, to enJoIn any acts or things which are unlawful, or the violation of any of the Bondholders' rights; or (3)^by suit, action or competent jurisdiction, to require employees to account as if it and express trust. proceeding in any court of the City and its members and they were the trustees of an C. Non-waiver. The provisions of this Resolution and of any other resolution supplementing or amending this Resolution, shall constitute a contract between the City and the Bondholders and the provisions thereof shall be enforceable by any Bondholder for the equal benefit and protection of all Bondholders similarly situated, by mandamus, accounting, mandatory injunction or any other suit, action or proceeding at law or in equity that is now or may hereafter be authorized under the laws of the State of California in any court of competent jurisdiction. Such contract is made under and is to be construed in accordance with the laws of the State of California. No rem~dy conferred hereby upon any Bondholder is intended to be exclusive of any other remedy, but each such remedy is cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred by the 1984 Act or any other law of the State of California or the United States of America. No waiver of any default or breach of duty or contract by any Bondholder shall affect any subsequent default or breach of duty or contract or shall impair any rights or remedies on said subsequent default or breach. No delay or omission of any Bondholder to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed as a waiver of any such default or acquiescence therein. Every substantive right and every remedy conferred upon the Bondholders may be enforced and exercised as often as may be deemed expedient. In case any suit, action or proceeding to enforce - 48 - c' ,/ i any right or exercise any remedy shall be brought or taken and should said suit, action or proceeding be abandoned, or be determined adversely to the Bondholders, then, and in every such case, the City and the Bondholders shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. D. Actions by Fiscal Aqent as Attorney-in-Fact. Any suit, action or proceeding which any Holder of Bonds shall have the right to bring to enforce any right or remedy hereunder may be brought by the Fiscal Agent for the equal benefit and protection of all Holders of Bonds similarly situated and the Fiscal Agent is hereby appointed (and the successive respective Holders and registered owners of the Bonds issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective Holders and registered owners of the Bonds for the purpose of bringing any such sui t, action, or proceeding and to do and per form any and all acts and things for and in behalf of the respective Holders and registered owners of the Bonds as a class or classes, as may be necessary or advisable in the opinion of the Fiscal Agent as such attorney-in-fact; provided that the Fiscal Agent shall not be required to enforce any of said rights or remedies unless the Fiscal Agent is indemnified against all costs and expenses including attorney's fees arising from such actions. E. General. After the Bonds, this Resolution, and any shall be irrepealable, but shall amendment to the extent and in Resolution, but to no greater extent issuance and delivery of the supplemental resoluti0ns hereto, be subject to modif ication or the manner provided in this and in no other manner. CUSIP identification numbers will be imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the Bonds and no liability shall hereafter attach to the City or any of the officers or agents thereof because of or on account of said numbers. Any error or omission with respect to said numbers shall not constitute cause for refusal by the successful bidder to accept delivery of and pay for the Bonds. Section 24. Severability. If any covenant, agreement or provision, or any portion thereof, contained in this Resolution, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder. of this Resolution and the application of any such covenant, agreement or provisions, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected, and this Resolution and the Bonds issued pursuant hereto shall remain valid and the Bondholders shall retain all valid rights and benefits accorded to them under this Resolution and the Constitution and laws of the State of California. If the provisions relating to the appointment and duties of a Fiscal Agent (paying agent) are held to be unconstitutional, invalid or unenforceable, said duties shall be performed by the City Treasurer. - 49 - c ", '.. ,." " .I .) Section 25. effect upon adoption. Effective Date. This Resolution shall take I HEREBY CERTIFY that adopted by the Mayor and San Bernardino at a held on the day of the following vote, to wit: the foregoing resolution Common Counci 1 of the meeting was duly City of thereof, 1986, by AYES: Council Members NAYS: ABSENT: City Clerk day of The foregoing resolution is hereby approved this , 1986. Mayor of the City of San Bernardino Approved as to form and legal content: 8f~) Ci t ~t: orney STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO) sS CITY OF SAN BERNARDINO ) I, SHAUNA CLARK, City Clerk in and for San Bernardino, DO HEREBY CERTIFY that the foregoing copy of San Bernardino City Resolution No. true and correct copy of that now on file in this office. the and is City of attached a full, IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Bernardino this day of , 1986. City Clerk - 50 - ~ c \ ) EXHIBIT "A" (FORM OF BOND) FORM OF FULLY REGISTERED BO~D UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF SAN BERNARDINO Registered Reqistered No. $ CITY OF SAN BERNARDINO, CALIFORNIA IMPROVEMENT REFUNDING BOND ASSESSMENT DISTRICT NO. 961 SERIES 1986 Interest Rate Maturity Date Date of the Bonds Cusip Number December 15, 1986 Registered Owner: Principal Amount: Dollars Under and by virtue of the Refunding Act of 1984 for 1915 Improvement Act Bonds (commencing with Section 9500 of the California Streets and Highways COde) (the "Act"), the City of San Bernardino, County of San Bernardino, State of California (the "City") will out of the Redemption Fund established under the Resolution of Issuance (as hereinafter defined) for the payment of the Bonds issued upon the unpaid portion of reassessments made upon the properties within Assessment District No. 961 (the "District") more fully described in proceedings taken pursuant to Resolution of Intention No. 86-421, adopted by the Mayor and Common Council of the City on the 20th day of October, 1986 (the "Resolution of Intention"), pay to the Registered Owner set forth above or registered assigns (herein sometimes referred to as "registered owner"), on the Maturity Date stated above, the Principal Amount stated above, in lawful money of the United States of America and will pay in a like manner interest from the Date of the Bonds as provided above or from the most recent Interest Payment Date, to which interest has been paid or duly provided for. This Bond shall be dated December 15, 1986 (the "Date of the Bonds") and shall bear the date of authentication hereon. This Bond shall bear interest until the payment of the Principal Amount stated above shall have been discharged; provided, however, that if funds are available for the payment hereof in full accordance with the terms of the A-I c r" I.. ~ ) \.... /' Resolution of Issuance, this Bond shall then cease to bear interest. This Bond shall bear interest at the Interest Rate stated above, payable semiannually on March 2 and September 2 in each year (each an -Interest Payment Date") commencing on September 2, 1987. Both the principal hereof and redemption premium hereon are payable at the corporate trust office of First Interstate Bank of California as Transfer Agent, Registrar, and Paying Agent in Los Angeles, California (the "Fiscal Agent"), and the interest hereon is payable by check or draft mailed to the registered owner hereof at the owner's address as it appears on the records of the Fiscal Agent or at suCh address as may have been filed with the Fiscal Agent for that purpose, as of the fifteenth (15th) day of the month immediately preceding each Interest Payment Date. This Bond will continue to bear interest after maturity at the rate above stated; provided, it is presented at maturity and payment thereof is refused upon the sole ground that there are not sufficient moneys in said Redemption Fund with which to pay same. If it is not presented at maturity any interest thereon will run until maturity. The Bonds shall be and are obligations of the City and are secured by an irrevocable pledge of, and a first lien upon, and are payable as to principal, interest and premium, if any, from the Revenues (as defined in the Resolution of Issuance) and which constitute the reassessment lien, and other funds as provided in the Resolution of Issuance. The Bonds, interest thereon and premium, if any, are not a debt of the City of San Bernardino, the State of California or any of its political subdivisions, and neither said City, said State nor any of its political subdivisions is liable on them, nor in any event shall the Bonds, interest thereon and premium, if any, be payable out of any funds or properties other than the Revenues as set forth in the Resolution. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, Neither the Mayor nor the members of the Common Councilor officers of the City nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance. REFERENCE IS HEREBY MADE TO THE PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE SIDE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH IN THIS PLACE. This Bond shall not be entitled to any benefit under the Act or the resolution of the Mayor and Common Council authorizing the issuance of the Bonds (the -Resolution of Issuance-), or become valid or obligatory for any purpose, until the Certificate of Authentication and Registration hereon endorsed shall have been dated and signed by the Fiscal Agent. A-2 (" '"" ,/ It is hereby recited, certified and declared that any and all acts, conditions and things required to exist, to happen and to be performed precedent to and in the issuance of this Bond exist, have happened and have been performed in due time, form and manner as required by the Constitution and the laws of the State of California. A-3 c ~, /--, , " / , ':j ~ IN WITNESS WHEREOF, the City of San Bernardino, California, has caused this Bond to be signed by the manual or facs~mile signature of the Treasurer of said City and attested by the manual or facsimile signature of the City Clerk and has caused its corporate seal to be reproduced hereon all as of the day of December, 1986. CITY OF SAN BERNARDINO, CALIFORNIA Treasurer of the City of San Bernardino, California City Clerk of the City of San Bernardino, California [SEAL] A:-'4' (, Date of Authentication: """--- "'...r' A-S> --- \. .~I .~ .; CERTIFICATE OF AUTHENTICATION AND REGISTRATION FIR~T I~TeRSTATE CALtFORNtA, as Fisc.a 1 Agent BANK OF By: Authorized Signatory r'~ """" ,.J ,) c \.. ./ REVERSE SIDE OF BOND This Bond is one of several serial maturities of Bonds of like date, tenor, and effect, but differing in, registered alllo\.!nts, maturities, and interest rates, issued by the City under the Act and the Resolution of Issuance, for the purpose of redeeming the $13,400,000 City of San Bernardino, Improvement Bonds, AsSessment District No. 961, Series 1985 (Park Centre) (the "1985 Bonds") as described in the proceedings, and is secured by the moneys in the Redemption Fund established under the Resolution of Issuance and by the unpaid portion of the reassessments which shall be levied or issued upon the properties within the District, and, including principal and interest, is payable exclusively out of said Redemption Fund. This Bond is transferable by the registered owner hereof, in person or by the owner' s attorney duly authorized in writing, at the office of the Fiscal Agent, sUbject to the terms and conditions provided in the Resolution of Issuance, including the payment of certain charges, if any, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond or Bonds, of any authorized denomination or denominations, of the same maturity, for the same aggregate principal amount will be issued to the transferee in exchange therefor. The Bonds shall be registered only in the name of an individual (including joint owners), a corporation, a partnership, or a trust. The Fiscal Agent or any successor issuing registration agent may treat the registered owner absolute owner for all purposes, and the Fiscal successor issuing agency and any registration agent affected by any notice to the contrary. agency hereof Agent sha II and as or not any the any be This Bond or any portion of it in the amount of five thousand dollars ($5,000), or any integral multiple thereof, may be redeemed and paid in advance of maturity upon the second (2nd) day of March or September in any year by giving at least sixty (60) days' notice by registered mail to the registered owner hereof at the owner's address as it appears on the registration .books of the Fiscal Agent by paying the principal of and accrued interest hereon to the redemption date, together with a premium equal to three percent (3\) of the principal amount. The presented for date." Interest Payment Date on which Bonds are to be redemption is herein sometimes called the "redemption A-6 1IiI!i"""'" - ~,...."" - c '-..../ \ / "\ '-"'" If less than the entire amount of a Bond is redeemed, a Bond representing the unredeemed portion shall be reissued to the registered owner thereof. Determination of which Bond or Bonds (or portions thereof) are to be redeemed will be made by the City Treasurer _ in accordance with the Act. In selecting a Bond for retirement, the lowest Bond number of the annUal series midway to the end of the Bond term will be chosen. Successive Bonds (or portions thereof) will be chosen from the lowest number of each annual series, before and after the series from which the first Bond number is selected, so that Bonds called will be a pro rata portion of each annual series. It is intended that the relationship of unpaid reassessments to Bonds outstanding be altered in as minimal amount as practicable by such call and redemption of Bonds. The actual receipt by the Holder of any Bond (as defined in the Resolution of Issuance) of notice of such redemption shall not be a condition precedent to redemption, and failure to receive such notice shall not affect the validity of the proceedings for the redemption of the Bonds. or the cessation of interest on the redemption date. Notice of redemption of Bonds shall be given by the Fiscal Agent for and on behalf of the City at the expense of the City. The Revenues shall be those amounts received by the City as payment of the reassessment .levied as to the real property located within the District in accordance with the Act, and shall be the sole source of funds pledged by the City for the payment of the principal of, premium, if any, and interest on the Bonds. The Resolution of Issuance, and the rights and obligations of. the City and of the Holders of the BOnds issued thereunder, may be modified or amended at any time by supplemental resolution adopted by the City: (a) without the consent of Bondholders (as defined in the Resolution of Issuance), if sucq modification or amendment is for the purpose of curing any ambigttities, defects or inconsistent provisions in the Resolution of Issulmce or to insert such provisions clarifying matters or questions llrising under the Resolution of Issuance as are necessary and desirable to accomplish the same, provided that such modifications or 'lmendments do not adversely affect the rights of the Bondholders,: as shown by an Opinion of Counsel (as defined in the Resolut~on of Issuance), and/or (b) with the consent of Bondholders holding sixty percent (60%) in aggregate principal amount of the o~tstanding Bonds, exclusive of Bonds, if any, owned by the City, an<l, obtained as set forth in the Resolution of Issuance; provided, however, that no such modification or amendment shall, without the express consent of the Holder or registered owner of the Bond affected, reduce the principal amount of any Bond, reduce the interest rate payable thereon, extend its maturity- or the times for paying interest thereon or change the monetary medium in which principal and inte.rest is payable, or reduce the percentage of consent required for amendment or modification. A-7 c "M.., "'--../' .......... \, ~) " ,..I The following events are "events of default" under the terms of the Resolution of Issuance: (1) if default shall be made in the due and punctual payment of any installment of interest on any ~on~when and as such interest installment shall become due and payable, and such default shall have continued for a period of thirty (30) days; (2) 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 therein expressed, by declaration or otherwise; or - (3) if default shall be made by the City in the observance of any of the covenants, agreements or conditions contained in this Resolution or in the Bonds, and such default shall have continued for a period of thirty (30) day~ ^ Then, and in each and every such case during the continuance of such event of default, the Fiscal Agent or the Bondholder(s may, but shall not be re uired to exercise any and all remedies deeme approprIate In the CIrcumstances all as further set forth in the Resolution of Issuance. A-8 c """" ........ I.,' J '",j (FORM OF ENDORSEMENT ON FULLY REGISTERED BONDS) This Fully Registered Bond (issued in fully registered form without coupons) is issued in the denomination of $5,000, or any whole multiple thereof, aggregating the face value her~of; and Fully Registered Bonds of this same issue and of 'the' denomination of $5,000 will be issued in exchange for this Bond in the manner, with the effect and under the terms and conditions stated on the face of the Bond and in the Resolution referred to therein. (FORM OF ASSIGNMENT OF FULLY REGISTERED BONDS) For assigns and whose social is Bonds and hereby irrevocably constitutes and value received transfers unto security number hereby sells, or other taxpayer identification number the within-mentioned appoints , attorney, to transfer the same on the books of the Fiscal Agent with full power of substitution in the premises. Dated: Signature Guaranty NOTE: The signature to this assignment must correspond with the name as written on the face of the within Bond in every particular, witho~t alteration or enlargement or any change whatsoever. A-9