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Res 85-109RESOLUTION NO. 85-109 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY PROVIDING FOR THE ISSUANCE OF SPECIAL TAX BONDS OF SOUTH POWAY COMMUNITY FACILITIES DISTRICT NO. 1 (POMERADO BUSINESS PARK PROJECT) AND AMENDING IN ITS ENTIRETY RESOLUTION NO. 85-107 Recitals Section 1. 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. TABLE OF CONTENTS Definitions Equality of Bonds, Pledge of Net Taxes Amount, Issuance, Purpose and Nature of Bonds No General Issuer Liability Description of Bonds; Interest Rates Medium and Payment Form of Bonds and Certificate of Authentication Execution and Authentication Registration of Exchange or Transfer Redemption of Bonds (a) Redemption (b) Selection of Bonds for Redemption (c) Notice of Redemption (d) Partial Redemption of Bonds (e) Effect of Notice and Availability of Redemption Money (f) Redemption Fund Funds and Accounts Disposition of Bond Proceeds Special Tax Fund Administrative Expense Fund Page 8 9 9 10 12 12 13 14 14 17 17 18 19 20 21 22 23 24 Section 15. Section 16. Section 17. Section 18. Section 19. Section 20. Section 21. Section 22. Section 23 Section 24 Section 25 Section 26 Section 27 Section 28 Section 29. Section 30. Section 31. Section 32. Section 33. Bond Fund Reserve Fund Acquisition Fund Investments Warranty Covenants Covenant 1. Covenant 2. Covenant 3. Covenant Punctual Payment Levy of Special Tax Commence Foreclosure Proceedings Arbitrage Mutilated, Lost, Destroyed or Stolen Bonds Defeasance Cancellation of Bonds Supplemental Resolutions or Orders Fiscal Agent Liability of Fiscal Agent Bond Register Execution of Documents and Proof of Ownership Provisions Constitute Contract Future Contracts Severability General Authorization Effective Date of This Resolution Exhibit A. Ballot Proposition Exhibit B. Form of Bond 25 27 28 29 31 31 31 32 32 33 33 34 36 36 39 41 42 42 44 46 46 47 47 A-1 B-1 RESOLUTION NO. 85-109 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY PROVIDING FOR THE ISSUANCE OF SPECIAL TAX BONDS OF SOUTH POWAY COMMUNITY FACILITIES DISTRICT NO. 1 (POMERADO BUSINESS PARK PROJECT) AND AMENDING IN ITS ENTIRETY RESOLUTION NO. 85-107 On this 30th day of December, 1985, on a motion of Council member Oravec, duly seconded by Council member Shepardson, and carried the following Resolution is adopted acting in their official capacity as the legislative body of the South Poway Community Facilities District No. 1 (Pomerado Business Park Pro3ect). WHEREAS, the City Council of the City of Poway, California (hereinafter referred to as the "legislative body of the local agency"), has heretofor undertaken proceedings and declared the necessity to issue bonds on behalf of a Community Facilities District pursuant to the terms and provisions of the "Mello-Roos Community Facilities Act of 1982," as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California. Said Community Facilities District is designated and known as SOUTH POWAY COMMUNITY FACILITIES DISTRICT NO. 1 (POMERADO BUSINESS PARK PROJECT) (hereinafter referred to as the "Issuer"); and, WHEREAS, pursuant to Ordinace No. 182 adopted by this legislative body on the 26th day of November, 1985, the bond proposition (attached as Exhibit A hereto and incorporated herein by reference) was approved by the sole qualified voter within the District: WHEREAS, based upon such approval for incurring said indebtedness and issuing special tax bonds the South Poway Community Facilities District No. 1 (Pomerado Business Park Project) is now authorized to issue bonds in the amount hereinafter set forth and for the purpose set forth in said proposition; and WHEREAS, on November 26, 1985, the legislative body did enact Ordinance No. 182 authorizing the levy of a special tax in the Community Facilities District; and 12-30-85 0609k/2345/04 -2- WHEREAS, the legislative body of the Community Facilities District hereby desires to proceed to issue its bonds in the aggregate principal amount of $30,000,000 designated as the City of Poway (San Diego County, California) South Poway Community Facilities District No. 1 (Pomerado Business Park Project) Special Tax Bonds Series 1985. WHEREAS, no bonds authorized pursuant to such an election have been previously issued and sold; WHEREAS, pursuant to the judgment in City of Poway v. Marjorie K. Wahlsten, (San Diego County Superior Court Case No. N31394) on December 24, 1985, the issuance of bonds of the Issuer to be paid by a Special Tax authorized under the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311, the seq., of the California Government Code) and collected within said Community Facilities District has been declared valid and consistent with Articles XII~ A and XIII B of the Constitution of the State of California; NOW, THEREFORE, the City Council of the City of Poway DOES HEREBY RESOLVE, DETERMINE AND ORDER as follows: Section 1. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings: 12-30-85 0609k/2345/04 -3- "Administrative Expenses" means the administrative costs with respect to the calculation and collection of the Special Taxes and any other costs related to Bonds or the Special Tax for which the Special Tax may be levied in accordance with the Applicable Bond Law. "Applicable Bond Law" means the Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311, the seq., of the California Government Code. "Authorized Investments" means subject to applicable law, United States Treasury notes, bonds, bills or certificates of indebtedness (including United States Treasury Obligations - State and Local Government Series ("SLGS") or other direct obligations issued by the United States Treasury for which the faith and credit of the United States are pledged for the payment of principal and interest); and (except with respect to Section 22) obligations issued by banks for cooperatives, federal and land banks, federal intermediate credit banks, federal home loan banks, the Federal Home Loan Bank Board, the Tennessee Valley Authority, or other federal agencies or United States government-sponsored enterprises; and (except with respect to Section 22) any other investment in which funds of the Issuer may be legally invested, including, taxable government money market portfolios restricted to obligations 12-30-85 0609k/2345/04 -4- with maturities of one year or less issued or fully guaranteed as to the principal and interest thereon by the full faith and credit of the United States of America. "Bond Register" means the books which the Fiscal Agent shall keep or cause to be kept on which the registration and transfer of the Bonds shall be recorded. "Bondowner" or "Owner" means the person or persons in whose name or names any Bond is registered. "Bonds" means the City of Poway (San Diego County, California) South Poway Community Facilities District No. 1 (Pomerado Business Park Project) Special Tax Bonds Series 1985. "City" means the City of Poway, California. "Fiscal Agent" means Security Pacific National Bank and any successor thereto. "Fiscal Year" means the period beginning on July 1 and ending on the next following June 30. 12-30-85 0609k/2345/04 -5- "Gross Taxes" means the amount of all Special Taxes and proceeds from the sale of property collected pursuant to the foreclosure provisions of this Resolution for the delinquency of such Special Taxes. "Interest Payment Date" means each March 2 and September 2, commencing September 2, 1986. "Issuer" means South Poway Community Facilities District No. 1 (Pomerado Business Park Project) of the City, established pursuant to the Applicable Bond Law. "Maximum Annual Debt Service" shall be the maximum sum obtained for any Fiscal Year prior to the final maturity on the Bonds by totaling the following for each Fiscal Year: (1) The principal amount of all outstanding Bonds payable in such Fiscal Year; and (2) The interest payable on the aggregate principal amount of the Bonds outstanding in such fiscal year if the Bonds are retired as scheduled; and (3) The amount, if any, necessary to maintain in the Reserve Fund an amount equal to the Reserve Requirement. 12-30-85 0609k/2345/04 -6- "Net Taxes" means the amount of all Gross Taxes minus Administrative Expenses. "Ordinance" means Ordinance No. 182 adopted by the City Council of the City on November 26, 1985, providing for the levying of the Special Tax. "Project" means collectively the reimbursement of sums expended by the owner of property within the South Poway Community Facilities District No. 1 (Pomerado Business Park Project) for acquisition of water and sewer facilities, major roads, drainage facilities and fire protection facilities as more particularly described in proceedings taken pursuant to the Resolution of Intention or any other facilities for the benefit of South Poway Community Facilities District No. 1 (Pomerado Business Park Project) which may be financed in accordance with the Applicable Bond Law. "Project Costs" means the costs of financing the Project, the costs of issuance of the Bonds and related costs. "Record Date" means February 15 and/or August 15 of any year in which any of the Bonds are outstanding. 12-30-85 0609k/2345/04 -7- "Reserve Requirement" means on any date in any one year l0x of the original $30,000,000 aggregate principal amount of the Bonds. "Resolution" means this Resolution, as amended or supplemented pursuant to the terms hereof. "Resolution of Intention" means Resolution No. 85-080 adopted by the City Council of the City on October 22, 1985, stating the City's intention to form the South Poway Community Facilities District No. 1 (Pomerado Business Park Project). "Special Taxes" means the taxes authorized to be levied pursuant to the landowner approval referred to in the recitals and in accordance with the Applicable Bond Law on behalf of the Issuer by the City and described in the Resolution of Intention. "Treasurer" means the Treasurer of the City actiMg on behalf of the District. "Underwriter" means Drexel Burnham Lambert Incorporated. Section 2. Equality of Bonds, Pledqe of Net Taxes. Pursuant to the Applicable Bond Law and this Resolution, the Bonds shall be equally payable from the Net Taxes without 12-30-85 0609k/2345/04 -8- priority for number, date of the Bonds, date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of the Bonds and any premiums upon the redemption thereof shall be exclusively paid from the Net Taxes are hereby set aside for the payment of the'Bonds, and such Net Taxes and any interest earned on the Net Taxes shall constitute a trust fund for the payment of the interest on and principal of the Bonds and so long as any of the Bonds or interest thereon shall not be used for any other purpose, except as permitted by this Resolution and shall be held in trust for the benefit of the Bondowners and shall be applied pursuant to this Resolution, or to this Resolution as modified pursuant to provisions herein. Nothing in this Resolution shall preclude: the redemption prior to maturity of any Bonds subject to call and redemption and payment of said Bonds from proceeds of refunding bonds issued under the Applicable Bond Law as the same now exists or as hereafter amended, or under any other law of the State of California. Section 3. Amount, Issuance, Purpose and Nature of Bonds. Under and pursuant to the Applicable Bond Law, the Bonds in the amount of $30,000,000 shall be issued for the purposes of acquiring and completing the Project. The Bonds shall be and 12-30-85 0609k/2345/04 -9- are special obligations of the Issuer and shall be payable as to the principal thereof and interest thereon and any premiums upon the redemption thereof solely from, the Net Taxes, the amounts in the funds created hereunder and earnings thereon, and the Pledged Revenues (as defined hereinafter) and the Net Taxes and Pledged Revenues are ~ereby set aside for the payment of the Bonds. Section 4. No General Issuer Liability. The Bonds and interest thereon, together with any premium paid thereon upon redemption, are not obligations of the City. Except with respect to the Special Tax, neither the credit nor the taxing power of the Issuer or the City is pledged for the payment of the Bonds or the interest thereon, and no Owner of the Bonds may compel the exercise of the taxing power by the Issuer or the City or the forfeiture of any of their property. The principal of and interest on the Bonds and premiums upon the redemption of any thereof are not a debt of the Issuer nor a legal or equitable pledge, charge, lien, or encumbrance, upon any of its property, or upon any of its income, receipts, or revenues, except the Net Taxes which are, under the terms of this Resolution and the Applicable Bond Law, set aside for to the payment of the Bonds and interest thereon. 12-30-85 0609k/2345/04 -10- Section 5. Description of Bonds; Interest Rates. The Bonds shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof within a single maturity and shall be numbered as desired by the Fiscal Agent. The Bonds shall be designated CITY OF POWAY' (SAN DIEGO COUNTY, CALIFORNIA) SOUTH POWAY COMMUNITY FACILITIES DISTRICT NO. 1 (POMERADO BUSINESS PARK PROJECT) SPECIAL TAX BONDS SERIES 1985. The Bonds shall mature and be payable on March 2 in the years, in the aggregate principal amounts, and shall bear interest at the rates set forth as follows: YEAR 1987 1988 1989 1990 1991 1992 PRINCIPAL INTEREST AMOUNT RATE $360 000 $385 000 $410 000 $440 000 $475 000 $515 000 6.5% 7.0% 7.5% 8.0% 8.2% s. 4% 2000 $6,285,000 Term Bonds 9.5% 2011 $21,130,000 Term Bonds 9.75% 12-30-85 0609k/2345/04 -11- Interest shall be payable with respect to each Bond on each Interest Payment Date until the principal sum of that Bond has been paid; provided, however, that if at the maturity date of any Bond (or if the same is redeemable and shall be duly called for redemption, then at the date fixed for redemption) funds are available for the payment qr redemption thereof, in full accordance with terms of this Resolution, such Bonds shall then cease to bear interest. Section 6. Medium and Payment. The Bonds shall be payable both as to principal and interest, and as to any premiums upon the redemption thereof, in lawful money of the United States of America. The principal of the Bonds and any premiums due upon the redemption thereof shall be payable upon presentation thereof at the principal corporate trust office of ~the Fiscal Agent in Los Angeles, California. Interest on any Bond shall be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless (i) such~date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication or (iii) the date of authentication is prior to the close of business on 12-30-85 0609k/2345/04 -12- the first Record Date in which event interest shall be payable from December 2, 1985; provided, however, that if at the time of authentication of such Bond, interest is in default, interest on that Bond shall be payable from the last Interest Payment Date to which the interest has been'paid or made available for payment. Interest on any Bond shall be paid to the person whose name shall appear in the Bond Register as the Owner of such Bond as of the close of business on the Record Date. Such interest shall be paid by check or draft of the Fiscal Agent mailed to such Bondowner at his or her address as it appears on the Bond Register. Section 7. Form of Bonds and Certificate of Authentication. The Bonds shall be printed from steel engraved or lithographic plates, and the Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit B, which form is hereby approved and adopted as the form of the Bonds and of the certificate of authentication. Section 8. Execution and Authentication. The Bonds shall be signed on behalf of the Issuer by the facsimile signature of the Mayor of the City of Poway and the City Clerk, and the seal of the Issuer (or a facsimile thereof) shall be impressed, imprinted, engraved or otherwise reproduced thereon, and 12-30-85 0609k/2345/04 -13- attested by the signature of the City Clerk. In case any one or more of the officers who shall have signed or sealed any of the Bonds shall cease to be such officer before the Bonds so signed and sealed have been authenticated and delivered by the Fiscal Agent (including new Bonds delivered pursuant to the provisions hereof with reference to the transfer and exchange of Bonds or to lost, stolen, destroyed or mutilated Bonds), such Bonds may, nevertheless, be authenticated and delivered as herein provided, and may be issued as if the person who signed or sealed such Bonds had not ceased to hold such offices. The Bonds shall bear thereon a certificate of authentication, in the form set forth in Exhibit B hereto, executed manually by the Fiscal Agent. Only such Bonds as shall bear thereon such certificate of authentication shall be entitled to any right or benefit under this Resolution, and no Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Fiscal Agent. Section 9. Registration of Exchange or Transfer. The registration of any Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond for cancellation at the 12-30-85 0609k/2345/04 -14- principal corporate trust office of the Fiscal Agent, accompanied by delivery of written instrument of transfer in a form approved by the Fiscal Agent and duly executed by the Bondowner or his or her duly authorized attorney. Bonds may be exchanged at the principal corporate trust Office of the Fiscal Agent for a like aggregate principal amount of Bonds or other authorized denominations of the same maturity. The Fiscal Agent will not charge for any new Bond issued upon any exchange, but may require the Bondowner requesting such exchange to pay any tax or other governmental charge required to be paid with respect to such exchange. Whenever any Bond or Bonds shall be surrendered for registration of transfer or exchange, the Issuer shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds of the same maturity, for a like aggregate principal amount; provided that the Fiscal Agent shall not be required to register transfers or make exchanges of (i) Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any Bonds chosen for redemption. Section 10. Redemption of Bonds. (a)(i) Optional Redemption. The Bonds maturing on or before March 2, 1996 are not subject to call and redemption prior to maturity. The Bonds maturing on or after March 2, 12-30-85 0609k/2345/04 -15- 1997 may be redeemed, at the option of the Issuer on March 2, 1996, or on any Interest Payment Date thereafter, prior to maturity in whole or in part, in inverse order of maturity and by lot within a maturity, at the following redemption prices, expressed as a percentage of par value, together with accrued interest to the date of redemp%ion. Redemption Dates March 2, 1996 and September 2, 1996 March 2, 1997 and September 2, 1997 March 2, 1998 and September 2, 1998 March 2, 1999 and thereafter Redemption Prices 103% 102% 101% 100% In the event the Issuer shall elect to redeem Bonds as provided in this Section 10, the Issuer shall give written notice to the Fiscal Agent of its election so to redeem, the redemption date and the principal amount of the Bonds to be redeemed. Such notice shall be given at least 30 but no more than 90 days prior to the redemption date or such shorter period as shall be acceptable to the Fiscal Agent. (a) (ii) Mandatory Redemption. The outstanding Term Bonds maturing on March 2, 2000 will be called before maturity and redeemed from the money that has been deposited into the Redemption Fund on March 2, 1993, and on each March 2, 12-30-85 0609k/2345/04 -16- thereafter prior to maturity, in accordance with the Sinking Account Payment Schedule set forth below. The 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 to the redemption date without premium. Year Principal March 2 Amount 1993 $560,000 1994 615,000 1995 670,000 1996 735,000 1997 805,000 1998 880,000 1999 965,000 2000 1,055,000 (payment at maturity) The outstanding Term Bonds maturing on March 2, 2011 will be called before maturity and redeemed from the money that has been deposited into the Redemption Fund on March 2, 2001, and on each March 2, thereafter prior to maturity, in accordance with the Sinking Account Payment Schedule set forth below. The Bonds so called for redemption shall be redeemed at a redemption price 12-30-85 0609k/2345/04 -17- is obtained by dividing the principal amount of such Bond to be redeemed in part by $5,000. The Fiscal Agent shall promptly notify the Issuer in writing of the Bonds, or portions thereof, selected for redemption. (c) Notice of Redemption. When the Fiscal Agent shall receive notice from the Issuer of its election to redeem Bonds, the Fiscal Agent shall give notice, in the name of the Issuer, of the redemption of such Bonds. Such notice of redemption shall (a) specify the serial numbers and the maturity date or dates of the Bonds selected for redemption, except that where all the Bonds subject to redemption, or all the Bonds of one maturity, are to be redeemed, the serial numbers thereof need not be specified; (b) state the date fixed for redemption; (c) state the redemption price; (d) state the place or places where the Bonds are to be redeemed; and (e) in the case of Bonds to be redeemed only in part, state the portion of such Bond which is to be redeemed. Such notice shall further state that on the date fixed for redemption, there shall become due and payable on each Bond or portion thereof called for redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon shall cease to accrue and be payable. At least 30 days but no more than 90 days prior to the redemption date, the Fiscal Agent shall mail a copy of such notice, by 12-30-85 0609k/2345/04 -19- for each redeemed Bond equal to the Principal amount thereof, plus accrued interest to the redemption date without premium. Year March 2 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Principal Amount $1,155,000 1,270,000 1,390,000 1,530,000 1,675,000 1,840,000 2,020,000 2,215,000 2 435,000 2 670,000 2 930,000 (payment at maturity) (b) Selection of Bonds for Redemption. If less than all of the outstanding Bonds are to be redeemed, the Fiscal Agent shall select the Bonds to be redeemed by lot; provided, however, that the portion of any Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and that, in selecting portions of such Bonds for redemption, the Fiscal Agent shall treat each such Bond as representing that number of Bonds of $5,000 denomination which 12-30-85 0609k/2345/04 -18- first class mail, postage prepaid, to the respective Owners therof at their addresses appearing on the Bond Register. The actual receipt by the Owner of any Bond of Notice of such redemption shall not be a condition precedent thereto, and failure to receive such notice shall not affect the validity of the proceedings for the redemption of such Bonds, or the cessation of interest on the redemption date. A certificate by the Fiscal Agent that notice of such redemption has been given as herein provided shall be conclusive as against all parties and it shall not be open to any Bondowner to show that he or she failed to receive notice of such redemption. (d) Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the Issuer shall execute and the Fiscal Agent shall authenticate and deliver to the Bondowner, at the expense of the Issuer, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity. (e) Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in this Section 10, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption: 12-30-85 0609k/2345/04 -20- (1) The Bonds, or portions thereof, designated for redemption shall, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in this Resolution, anything in this Resolution or in the Bonds to the Contrary notwithstanding; (2) Upon presentation and surrender thereof at the principal corporate trust office of the Fiscal Agent, such Bonds shall be redeemed at the said redemption price; (3) After the redemption date the Bonds or portions thereof so designated for redemption shall be deemed to be no longer outstanding and such Bonds or portions thereof shall cease to bear further interest; and (4) After the date fixed for redemption no Owner of any of the Bonds or portions thereof so designated for redemption shall be entitled to any of the benefits of this Resolution, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available. 12-30-85 0609k/2345/04 -21- (f) Redemption Fund. Prior to the first redemption date there shall be established by the Fiscal Agent a redemption fund to be described or known as 1985 Bonds South Poway Community Facilities District No. 1 Redemption Fund (herein sometimes referred to as the "Redemption Fund"). PriOr to the redemption date, the Fiscal Agent shall deposit in the Redemption Fund moneys available for the purpose and sufficient to redeem, at the premiums payable as provided in this Resolution, the Bonds designated in such notice of redemption. Said moneys must be set aside in said fund solely for that purpose and shall be applied on or after the redemption date to the payment of principal and premium on the Bonds to be redeemed upon presentation and surrender of such Bonds and shall be used only for that purpose. If, after all of the Bonds have been redeemed and cancelled or paid and cancelled, there are moneys remaining in said Redemption Fund, said moneys shall be transferred to the Bond Fund; provided, that if said moneys are part of the proceeds of refunding bonds said moneys shall be transferred to the fund or account created for the payment of principal of and interest on such refunding bonds. Section 11. Funds and Accounts. There is hereby created and established and shall be maintained by the Treasurer of the Issuer within the treasury of the City the 1985 Bonds South Poway Community Facilities District No. 1, Acquisition Fund (hereinafter sometimes referred to as the "Acquisition Fund"). 12-30-85 0609k/2345/04 -22- The following funds and accounts are hereby created and established and shall be maintained by the Fiscal Agent for the administration and control of the Special Taxes. (1) 1985 Bonds South Poway Community Facilities District No. 1, Special Tax Fund (hereinafter sometimes referred to as the "Special Tax Fund"). There is hereby created in the Special Tax Fund a separate subaccount thereof designated as the "Special Tax Fund Pledged Revenues Subaccount". (2) 1985 Bonds South Poway Community Facilities District No. 1, Reserve Fund (hereinafter sometimes referred to as the "Reserve Fund"). (3) 1985 Bonds South Poway Community Facilities District No. 1, Administrative Expense Fund (hereinafter referred to as the "Administrative Expense Fund"). (4) 1985 Bonds South Poway Community Facilities District No. 1, Bond Fund (hereinafter referred to as the "Bond Fund"). There is hereby established in the Bond Fund the following special trust accounts: (i) the "Bond Interest Account", (ii) the "Serial Bond Payment Account" and (iii) the "Term Bond Sinking Fund Account". 12-30-85 0609k/2345/04 -23- Section 12. Disposition of Bond Proceeds.. The proceeds of the sale of the Bonds shall be received by the Fiscal Agent and deposited as follows: (1). The. amount representing the accrued interest and capitalized interest in an amount equal to $4,230,919.34 on the Bonds shall be placed in the Bond Interest Account of the Bond Fund; (2) The Reserve Requirement shall be placed in the Reserve Fund; (3) A sum equal to the amount necessary to pay fees and expenses incurred in connection with the issuance and saIe of Bonds, as provided in a Certificate of the Issuer, shall be placed in the Bond Fund. To the extent any such moneys placed in the Bond Fund are not used to pay costs of issuance within 180 days after the delivery of the Bonds, then such moneys shall be transferred to the Bond Interest Account of the Bond Fund. (4) The balance shall be placed in the Acquisition Fund. Section 13. Special Tax Fund. The Fiscal Agent shall, on each date on which the Gross Taxes have been collected by the Treasurer and deposited with the Fiscal Agent, deposit the Gross Taxes in the Special Tax Fund, such Gross Taxes to be held in trust and transferred in the amounts and priority set forth below. 12-30-85 0609k/2468/01 -24- Notwithstanding anything herein to the contrary, moneys transferred to the Special Tax Fund from the Acquisition Fund shall, unless in the opinion of nationally recognized bond counsel another use of such funds will not impair the exemption of interest on any of the Bonds from Federal income taxation, be held in a separate account within the Special Tax Fund and moneys in such separate account shall not be invested at a yield in excess of the yield on the Bonds and shall be applied only (i) to the purchase of Bonds by the Issuer in the open market, at a price not to exceed the principal amount thereof plus accrued interest, which Bonds shall thereupon be cancelled, (ii) to make interest payments on the Bonds, or (iii) to redeem Bonds at the earliest redemption date permitted by this Resolution, without premium. The Treasurer of the District shall transfer to the Fiscal Agent certain moneys pledged by the Poway Redevelopment Agency for debt service on the Bonds (the "Pledged Revenues") in the Special Tax Fund Pledged Revenue Subaccount thereof. Such Pledged Revenues shall be transferred to the Special Tax Fund and shall, unless in the opinion of nationally recognized bond counsel another use of such funds will not impair the exemption of interest on any of the Bonds from Federal income taxation, be held in a separate account within the Special Tax Fund and such Pledged Revenues shall not be invested at a yield in excess of the yield on the Bonds and shall be applied only (i) to the 12-30-85 0609k/2345/04 -25- purchase of Bonds by the Issuer in the open market, at a price not to exceed the principal amount thereof plus accrued interest, which Bonds shall thereon be cancelled, (ii) to make interest payments on the Bonds, or (iii) to redeem Bonds at the earliest redemption date permitted by this Resolution, without premium. The Fiscal Agent shall transfer moneys from the Special Tax Fund to the Bond Fund as necessary to pay debt service on the Bonds. Section 14. Administrative Expense Fund. On or before the date amounts are needed to pay Administrative Expenses, the Fiscal Agent shall withdraw from the Special Tax Fund and place in the Administrative Expense Fund an amount necessary to pay all Administrative Expenses. Moneys in the Administrative Expense Fund may be invested in any Authorized Investments, provided that the maturity or maturities thereof shall not be later than the date or dates on which moneys must be available to meet scheduled Administrative Expenses. Section 15. Bond Fund. The interest on the Bonds until maturity shall be paid by the Fiscal Agent from the Bond Fund. At the maturity of the Bonds and, after all interest then due on the Bonds then outstanding has been paid or provided for, moneys 12-30-85 0609k/2345/04 -26- in the Bond Fund shall be applied to the payment of the principal, and premium, if any, 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 Special Taxes transferred to the Bond Fund from the Special Tax Fund shall be used in the following priority; provided, however, that to the extent that deposits have been made in any of the Accounts referred to below from the proceeds of the sale of the Bonds or otherwise, the deposits below need not be made: (A) Bond Interest Account. Deposits shall be made into the Bonds Interest Account so that the balance in said Account one (1) day prior to the date of the payment of any installment of interest of the Bonds shall be equal to such installment of interest. Moneys in the Bond Interest Account shall be used for the payment of interest on the Bonds as the same become due. (B) Serial Bond Payment Account. After the deposits have been made pursuant to subparagraph (a) above, deposits shall next be made into the Serial Bond Payment Account so that the balance in said Account on March 1 of each year shall equal the principal payment on the then outstanding serial Bonds on 12-30-85 0609k/2345/04 -27- the next succeeding March 2. Moneys in the Serial Bond Payment Account shall be used for the payment of the principal of such serial Bonds as the same become due. (C) Term Bond Sinkinq Fund Account. Commencing on March 2, 1993 and on each March 2 thereafter to and including March 2, 2000 for the Term Bonds maturing on March 2, 2000, and commencing on March 2, 2001 and on each March 2 thereafter to and including March 2, 2011 for the Term Bond maturing on March 2, 2011, and after the deposits have been made pursuant to the subparagraphs above, if the Special Taxes are sufficient therefor, deposits shall next be made into the Term Bond Sinking Fund Account so that the balance in said Account on such March 2 of the year involved shall equal the then current Minimum Sinking Fund Payment on the then outstanding Term Bonds. Moneys in the Term Bond Sinking Fund Account shall be used and applied by the Fiscal Agent to call and redeem the largest principal amount of outstanding term Bonds which can be called~with the moneys available therefor. Any such call and redemption shall be made in accordance with the provisions of Section 10 hereof and according to the schedule of Minimum Sinking Fund Payments. In lieu or partially in lieu of such call and redemption, moneys in the Term Bonds Sinking Fund Account may be used to purchase outstanding term Bonds in the manner hereinafter provided. Purchases of outstanding term Bonds may be made by the Issuer at 12-30-85 0609k/2345/04 -28- public or private sale as and when and when and at such prices as the Issuer may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest plus the premium applicable at the next following call date according to the schedule or schedules of Redemption Years and Premium for Optional Call established pursuant to the Resolution, and any accrued interest payable upon the purchase of term Bonds may be paid from the amount reserved in the Bond Interest Account for the payment of interest on the next following interest payment date. Section 16. Reserve Fund. There shall be maintained in the Reserve Fund an amount equal to the Reserve Requirement. Moneys in the Reserve Fund shall be used solely for the purpose of paying the principal of and interest on the Bonds in the event that the moneys in the Bond Fund are insufficient therefor, and for that purpose the Fiscal Agent shall withdraw from the Reserve Fund for deposit in the Bond Fund, moneys necessary for such purpose. Notwithstanding anything herein to the contrary, whenever moneys are withdrawn from the Reserve Fund, an equal amount of moneys shall be placed in the Reserve Fund by transfers from the first available moneys in the Special Tax Fund. 12-30-85 0609k/2345/04 -29- Notwithstanding any provision herein to the contrary, moneys in the Reserve Fund in excess of the Reserve Requirement shall be withdrawn from the Reserve Fund by the Fiscal Agent on September 2, 1986, and on each September 2 thereafter to and including September 2, 1988 and transferred to the Acquisition Fund. Commencing September 2, 1989 and on each September 2 thereafter moneys in the Reserve Fund in excess of the Reserve Requirement shall be transferred to the Bond Fund. Section 17. Acquisition Fund. (a) The moneys in the Acquisition Fund shall be applied exclusively to pay the Project Costs. (b) Upon payment or reimbursement of the Project Costs, the Treasurer shall transfer moneys on deposit in the Acquisition Fund, to the extent such moneys are not needed for Project Costs, to the Fiscal Agent to be placed in the SpeciJl Tax Fund. (c) Notwithstanding anything herein to the contrary, if on December 2, 1988, any funds remain on deposit in the Acquisition Funds, the Treasurer shall immediately restrict the yield on such amounts such that the yield on such amounts is not in excess of the yield on the Bonds (as set forth in the Non-Arbitrage Certificate of the Issuer), unless in the opinion 12-30-85 0609k/2345/04 -30- of nationally recognized bond counsel such restriction is not necessary. Section 18. Investments. Obligations purchased as investments of moneys in any of the funds and accounts in which investments are authorized, including the moneys in the Acquisition Fund, shall be deemed at all times to be a part of such funds and accounts and any income realized from such investments shall be credited to such funds and any loss resulting from such investments shall be charged to such funds and accounts; provided, however, all investment earnings on all amounts deposited in (i) the Reserve Fund and (ii) the Special Tax Fund shall be deposited (1) in the Bond Fund until the Project is completed, and (2) thereafter, in the Reserve Fund an amount, if any, required to maintain the Reserve Requirement, and second, in the Special Tax Fund. Moneys in said funds and accounts may be from time to time invested by the Treasurer or by the Fiscal Agent at the written direction of the Treasurer subject to the following restrictions: (a) Moneys in the Acquisition Fund shall be invested in obligations which will by their terms mature as close as practicable to the date the Issuer estimates the moneys represented by the particular investment will be needed for withdrawal from such fund. 12-30-85 0609k/2345/04 -31- (b) Moneys in the Bond Fund shall be invested only in obligations which will by their terms mature on such dates so as to ensure the payment of principal and interest on the Bonds as the same become due. (c) Half of the moneys in the Reserve Fund may be invested in obligations which shall mature not more than five years form the date of purchase by the Fiscal Agent and the balance shall be invested in obligations which shall mature not more than ten years from the date of purchase by the Fiscal Agent, provided that no such security shall mature later than the final maturity of the Bonds. The Fiscal Agent shall sell at the best price obtainable or present for redemption any obligations so purchased whenever it may be necessary to do so in order to provide moneys to meet any payment or transfer for such funds and accounts or from such funds and accounts. For the purpose of determining at any given time the balance in any such funds, any such investments constituting a part of such funds and accounts shall be valued at their cost. Notwithstanding anything herein to the contrary, the Fiscal Agent shall not be responsible for any loss from investments, sale or transfer authorized pursuant to this Resolution. 12-30-85 0609k/2345/04 -32- Section 19. Warranty. The Issuer shall preserve and protect the security of the Bonds and the rights against all claims and demands of all persons. Section 20. Covenants. So long as any of the Bonds issued hereunder are outstanding and unpaid, the Issuer makes the following covenants with the Bondowners under the provisions of the Applicable Bond Law and this Resolution (to be performed by the Issuer or its proper officers, agents or employees), which covenants are necessary, convenient and desirable to secure the Bonds and tend to make them more marketable; provided, however, that said covenants do not require the Issuer to expend any funds or moneys other than the Gross Taxes. Covenant 1. Punctual Payment. The Issuer covenants that it will duly and punctually pay or cause to be paid the principal of and interest on every Bond issued hereunder, together with the premium thereon, if any be payable, on the date, at the place and in the manner mentioned in the Bonds and in accordance with this Resolution to the extent Net Taxes are available therefor, and that the payments into the Bond Fund and the Reserve Fund will be made, all in strict conformity with the terms of said Bonds and this Resolution, and that it will faithfully observe and perform all of the conditions, covenants and requirements of this Resolution and all resolutions 12-30-85 0609k/2345/04 -33- supplemental hereto and of the Bonds issued hereunder, and that time of such payment and performance is of the essence of the Issuer's contract with the Bondowners. Covenant 2. Levy of Special Tax. The City Council of the City on behalf of the Issuer shall levy the Special Tax to pay principal, interest and Administrative Expenses of the Bonds and any amounts required to replace monies withdrawn from the Reserve Fund in order to maintain the Reserve Fund at the Reserve Requirement so long as any Bonds issued under this Resolution are outstanding. The levy of the Special Tax may be reduced by the amount of funded interest, accrued interest and the Pledged Revenues deposited in the Bond Fund provided such amounts are available to pay principal and interest. Covenant 3. Commence Foreclosure Proceedings. The Issuer covenants for the benefit of the Owners of the Bonds that it will commence appropriate foreclosure proceedings within the earlier of 120 days of notice from the County of San Diego of a delinquency in the aggregate Special Tax collections or 120 days from receipt of Special Taxes from the County in an amount which is less than the Special Tax levied, and diligently pursue to completion such foreclosure proceedings in the event any Special Tax installment becomes delinquent. 12-30-85 0609k/2345/04 -34- Covenant 4. No Arbitraqe; No Consumer Loans. The Issuer covenants and agrees to take no action which, in the opinion of Bond Counsel, would result in the interest received by the Bondholders becoming taxable under federal income tax laws. The Issuer hereby covenants to the purchasers of the Bonds that it will make no use of the proceeds of the Bonds at any time during the term thereof which, if such use had been reasonably expected at the date the Bonds are issued, would have caused such Bonds to be "arbitrage bonds" within the meaning of Section 103(c) of the United States Internal Revenue Code of 1954, as amended, and applicable regulations adopted thereunder by the Internal Revenue Service, and the Issuer hereby assumes the obligation to comply with such Sections 103(c) and such regulations throughout the term of the Bonds. Notwithstanding any other provision of this Resolution, except as provided below, the payment of principal of and interest on the Bonds shall not be directly or indirectly guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof) and no portion of the moneys contained in any of the funds or accounts created herein shall be (i) used in making loans guaranteed by the United States (or any agency or instrumentality thereof); (ii) invested directly or indirectly in deposits or accounts insured by the Federal Deposit Insurance Corporation, Federal Savings and Loan 12-30-85 0609k/2345/04 -35- Insurance Corporation, National Credit Union Administration or any other similar federally chartered corporation; (iii) otherwise invested directly or indirectly in obligations guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof); except (a) during the initial three year temporary period following issuance of the Bonds and ending on December 15, 1988; and (b) amounts held in the Reserve Fund or other reserve funds satisfying Section 103(c)(4)(B) of the Code; (c) amounts held in the Bond Service Account and other bona fide debt service funds; (d) investments in obligations issued by the United States Treasury; (e) investments in obligations guaranteed by the Federal National Mortgage Association, Government National Mortgage Association or Federal Home Loan Mortgage Corporation, or (f) investments permitted under regulations issued pursuant to Section 103(h)(3)(B) of the Code; (iv) used directly or indirectly to make or finance loans (other than loans that enable the borrower to finance any governmental tax or assessment of general application for an essential governmental function or that are used to acquire or carry nonpurpose obligations) to persons who are not exempt persons so as to cause the issue to be deemed a private loan bond within the meaning of Section 103(o) of the Internal Revenue Code of 1954, as amended, and any regulations of the United States Department of the Treasury issued thereunder; or (v) such other investments as, in the opinion of 12-30-85 0609k/2345/04 -36- Bond Counsel, do not jeopardize the tax exempt status of interest on the Bonds. Section 21. Mutilated, Lost, Destroyed or Stolen Bonds. If any Bond shall become mutilated, the Issuer'shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor, date, maturity and number in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be cancelled and delivered to the Issuer. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such evidence is satisfactory to the Issuer and, if any indemnity satisfactory to the Issuer a~d the Fiscal Agent shall be given, the Issuer, at the expense of the Bondowner, shall execute and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and maturity, numbered and dated as such Fiscal Agent shall determine in lieu of and in substitution for the Bond so lost, destroyed or stolen. Any Bond issued under the provisions of this Section 21 in lieu of any Bond alleged to be lost, destroyed or stolen, shall be equally and proportionately entitled to the benefits hereof with all other Bonds issued hereunder. The Fiscal Agent shall not treat both the original Bond and any duplicate Bond as being outstanding for the purpose 12-30-85 0609k/2345/04 -37- deposit in the Bond Fund together with the interest to accrue thereon, be fully sufficient to pay and discharge the principal of and interest on all Bonds outstanding as and when the same shall become due and payable; then, at the election of the Issuer, and notwithstanding that any Bonds shall not have been surrendered for payment, all o~ligations of the Issuer under this Resolution with respect to all outstanding Bonds shall cease and terminate, except for the obligation of the Fiscal Agent to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid, all sums due thereon. Notice of such election shall be filed with the Fiscal Agent not less than sixty (60) days prior to such deposit, and shall be accompanied by a certificate of a certified public accountant and an opinion of a nationally recognized bond counsel certifying as to the continued tax exempt status of the Bonds. Any funds held by the Fiscal Agent, at the time of receipt of such notice from the Issuer, which are not required for the purpose above mentioned, shall be paid over to the Special Tax Fund. Section 23. Cancellation of Bonds. Ail Bonds surrendered to the Fiscal Agent for payment upon maturity or for redemption shall upon payment therefor be cancelled immediately and forthwith transmitted to the Treasurer. Any Bond purchased by the Issuer as authorized herein shall be delivered to the Fiscal Agent and cancelled forthwith and shall not be 12-30-85 0609k/2345/04 -39- of determining the principal amount of Bonds which may be executed, authenticated and delivered hereunder or for the purpose of determining any percentage of Bonds outstanding hereunder, but both the original and duplicate Bond shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the Fiscal Agent may make payment with respect to such Bonds. Section 22. Defeasance. paid and discharged in any one or more of the following ways: (a) by paying or causing to be paid the principal of and interest with respect to all Bonds outstanding, as and when the same become due and payable; (b) by depositing with the Fiscal Agent, in trust, at or before maturity, money which, together with the amounts then on deposit in the Bond Fund, is fully sufficient to pay'the principal of and interest on all Bonds outstanding as and when the same shall become due and payable; or (c) by depositing with the Fiscal Agent, in trust, direct obligations of, or obligations guaranteed by, the United States of America, in which the Issuer may lawfully invest its money, in such amount as the Fiscal Agent shall determine will, together with the interest to accrue thereon and moneys then on If all outstanding Bonds shall be ~- 12-30-85 0609k/2345/04 -38- reissued. All of the cancelled Bonds shall be transferred to and shall remain in the custody of the Treasurer until destroyed pursuant to due authorization. Section 24. Supplemental Resolutions or Orders. The Issuer may from time to time, and at any time, without notice to or consent of any of the Bondholders, adopt resolutions or orders supplemental hereto for any of the following purposes: (a) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provision herein, or to make any other provision with respect to matters or questions arising under this Resolution or in any additional resolution or order, provided that such action shall not adversely affect the interest of the Bondholders; (b) to the covenants and agreements of and the limitations and the restrictions upon the Issuer contained in this Resolution, other covenants, agreements, limitations and restrictions to be observed by the Issuer which are hot contrary to or inconsistent with this Resolution as theretofor in effect; (c) to modify, alter, amend or supplement this Resolution in any other respect which is not materially adverse to the Bondholders. 12-30-85 0609k/2345/04 -40- Exclusive of the resolutions or orders supplemental hereto covered by the first paragraph of this Section 24, the Owners of not less than 60~ in aggregate principal amount of the Bonds then outstanding shall have the right to consent to and approve the adoption by the Issuer of such resolutions or orders supplemental hereto as shall b~ deemed necessary or desirable by the Issuer for the purpose of waiving~ modifying, alternate, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Resolution; provided, however, that nothing herein shall permit, or be construed as permitting, (a) an extension of the maturity date of the principal, or the payment date of interest on, any Bond (b) a reduction in the principal amount of, or redemption premium on, any Bond or the rate of interest thereon, (c) a preference or priority of any Bond or Bonds over any other Bond or Bonds, or (d) a reduction in the aggregate principal amount of the Bonds the Owners of which are required to consent to such resolution or order, without the consent of the Owners of all Bonds then outstanding~ If at any time the Issuer shall desire to adopt a resolution or order supplemental hereto, which pursuant to the terms of this Section 24 shall require the consent of the Bondowners, the Issuer shall so notify the Fiscal Agent and shall deliver to the Fiscal Agent a copy of the proposed 12-30-85 0609k/2345/04 -41- resolution or order. The Fiscal Agent shall, at the expense of the Issuer, cause notice of the proposed resolution or order to be mailed, by first class mail postage prepaid, to all Bondowners at their address as they appear in the Bond Register. Such notice shall briefly set forth the nature of the proposed resolution or order and shall state that a copy thereof is on file at the office of the Fiscal Agent for inspection by all Bondowners. The failure of any Bondowners to receive such notice shall not affect the validity of such resolution or order when consented to and approved as in this Section 24 provided. Whenever at any time within one year after the date of the first mailing of such notice, the Fiscal Agent shall receive an instrument or instruments purporting to be executed by the Owners of not less than 60~ in aggregate principal amount of the Bonds then outstanding, which instrument or instruments shall refer to the proposed resolution or order described in such notice, and shall specifically consent to and approve the adoption thereof by the Issuer substantially in the form of the copy there if referred to in such notice as on file with the Fiscal Agent, such proposed resolution or order, when duly adopted by the Issuer, shall thereafter become a part of the proceedings for the issuance of the Bonds as referred to in Section 30 hereof. In determining whether the Owners of 60~ of the aggregate principal amount of the Bonds have consented to the adoption of 12-30-85 0609k/2345/04 -42- any supplemental resolution or order, Bonds which are owned by the Issuer or by any person directly or indirectly controlling or controlled by or under the direct or indirect common control with the Issuer, shall be disregarded and shall be treated as though they were not outstanding for the purpose of any such determination. Upon the adoption of any resolution or order supplemental hereto and the receipt of consent to any such resolution or order from the Owners of the appropriate aggregate principal amount of Bonds in instances where such consent is required pursuant to the provisions of this Section 24, this Resolution shall be, and shall be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Resolution of the Issuer and all Owners of Bonds then outstanding shall thereafter be determined, exercised and enforced hereunder, subject to all respects to such modifications and amendments. Section 25. Fiscal Agent. The Issuer hereby appoints Security Pacific National Bank as Fiscal Agent for the Bonds. The Fiscal Agent is hereby authorized to and shall mail by first class mail, postage prepaid interest payments to the Bondowners, select Bonds for redemption, give notice of redemption and meetings of Bondowners, maintain the Bond 12-30-85 0609k/2345/04 -43- Register and maintain and administer the Special Tax Fund, the Redemption Fund, the Reserve Fund and the Bond Fund. The Fiscal Agent is hereby authorized to pay the principal of and premium, if any, on the Bonds when the same are duly presented to it for payment at maturity or on call and redemption, to provide for the registration of transfer and exchange of Bonds presented to it for such purposes, to provide for the cancellation of Bonds all as provided in this Resolution, and to provide for the authentication of Bonds, and shall perform all other duties assigned to or imposed on it as provided in this Resolution. The Fiscal Agent shall keep accurate records of all funds administered by it and all Bond paid and discharged by it. The Fiscal Agent initially appointed, and any successor thereto, may be removed by the Issuer and a successor or successors shall be a bank or a trust company doing business in and having an office in the city where the predecessor did business and had an office. So long as any Bonds are outstanding and unpaid the Fiscal Agent and any successor or successors thereto designated by the Issuer shall continue to be Fiscal Agent successors thereto designated by the Issuer shall continue to be Fiscal Agent of the Issuer for all of said purposes until the designation of a successor or successors as Fiscal Agent. 12-30-85 0609k/2345/04 -44- A Fiscal Agent appointed hereunder may resign at any time upon 60 days' written notice and after appointment of successor. Upon merger, consolidaton, or reorganization of a Fiscal Agent, the Issuer will appoint a new Fiscal Agent, which may be the corporation resulting from such reorganization. Section 26. Liability of Fiscal Agent. The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds shall be taken as statements, promises, covenants and agreements of the Issuer, and the Fiscal Agent assumes no responsibility for the correctness of the same and makes no representations~as to the validity or sufficiency of this Resolution or of the Bonds, and shall incur no responsibility in respect thereof, other than in connection with its duties or obligations herein or in the Bonds or in the certificate of authentication assigned to or imposed upon the Fiscal Agent. The Fiscal Agent shall be under no responsibility or duty with respect to the issuance of the Bonds for value. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own gross negligence or default. Section 27. Bond Register. The Fiscal Agent will keep or cause to be kept, at its principal corporate trust office, sufficient books for the registration and transfer of the Bonds 12-30-85 0609k/2345/04 -45- which shall at all times be open to inspection by the Issuer, 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 transferred on said Bond Register, Bonds as herein provided. The Issuer and the Fiscal Agent may treat the Owner of the Bond whose name appears on the Bond Register as the absolute Owner of the Bond for any and all purposes, and the Issuer and the Fiscal Agent shall not be affected by any notice to the contrary. The Issuer and the Fiscal Agent may rely on the address of the Bondowner as it appears in the Bond Register for any and all purposes. It shall be the duty of the Bondowner to give written notice to the Fiscal Agent of any change in the Bondowner to give written notice to the Fiscal Agent of any change in the Bondowner's address so that the Bond Register may be revised accordingly. Section 28. Execution of Documents and Proof of Ownership. Any request, direction, consent, revocation of consent, or other instrument in writing required or permitted by this Resolution to be signed or executed by Bondowners may be in any number of concurrent instruments of similar tenor may be signed or executed by such Owners in person or by their attorneys appointed by an instrument in writing for that 12-30-85 0609k/2345/04 -46- purpose, or by the bank, trust company or other depository for such Bonds. Proof of the execution of any such instrument, or of any instrument appointing any such attorney, and of the ownership of Bonds shall be sufficient for the purposes of this Resolution (except as otherwise herein provided), if made in the following manner: (a) The fact and date of the execution by any Owner or his or her attorney of any such instrument and of any instrument appointing any such attorney, may be proved by a signature guarantee of any bank or trust company located within the United States of America. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such signature guarantee shall also constitute sufficient proof of his authority. (b) As to any Bond, the person in whose name the same shall be registered in the Bond Register shall be deemed and regarded as the absolute Owner thereof for all purposes, and payment of or on account of the principal of any such Bond, and the interest thereon, shall be made only to or upon the order of the registered Owner thereof or his or her legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond and the interest thereon to the extent of the sum or sums to be paid. The Fiscal Agent shall not be affected by any notice to the contrary. 12-30-85 0609k/2345/04 -47- Nothing contained in this Resolution shall be construed as limiting the Fiscal Agent to such proof, it being intended that the Fiscal Agent may accept any other evidence of the matters herein stated which the Fiscal Agent may deem sufficient. Any request or consent of the Owner of any Bond shall bind every future Owner of the same Bond in respect of anything done or suffered to be done by the Fiscal Agent in pursuance of such request or consent. Section 29. Provisions Constitute Contract. The provisions of this Resolution shall constitute a contract between the Issuer and the Bondowners and the provisions hereof and thereof shall be enforceable by any Bondowner for the equal benefit and protection of all Bondowners 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 competant jurisdiction. Said contract is made under and is to be construed in accordance with the laws of the State of California. No remedy conferred hereby upon any Bondowner 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 12-30-85 0609k/2345/04 -48- remedy confrred ay the Applicable Bond Law or any other law of the State of California. No waiver of any default or breach of duty or contract by any Bondowner 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 Bondo~ner 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 Bondowners may be enforced and exercised as often as may be deemed expedient. In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and the Bondowner shall prevail, said Bondowner shall be entitled to receive from the Special Tax Fund reimbursement for reasonable costs, expense, outlays and attorney's fees and should said suit, action or proceeding be abandoned, or be determined adversely to the Bondowners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. After the issuance and delivery of the Bonds this Resolution shall be irrepealable, but shall be subject to modifications to the extent and in the manner provided in this Resolution, but to no greater extent and in no other manner. 12-30-85 0609k/2345/04 -49- Section 30. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the Issuer from making contracts or creating bonded or other indebtedness payable from the general fund of the Issuer or from taxes or any source other than the revenues of the Project as defined herein, and, from and after the sale of the Bonds, the general fund of the Issuer shall not include the revenues of the Project and no contract or other obligations payable from the general fund of the Issuer shall be payable from the revenues of the Project, except as provided herein. Section 31. 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 provision, or portion thereof, to other persons or circumstances, ~hall be deemed severable and shall not be affected thereby, and this Resolution and the Bonds issued pursuant hereto shall remain valid and the Bondowners shall retain all valid rights and benefits accorded to them under the laws of the State of California. 12-30-85 0609k/2345/04 -50- Section 32. General Authorization. The Mayor of the City Council and the City Clerk are hereby respectively authorized to do and perform from time to time any and all acts and things consistent with this Resolution necessary or appropriate to carry the same into effect. Section 33. Effective Date. This Resolution shall take effect upon its adoption. PASSED, ADOPTED AND APPROVED, by the City Council of the City of Poway, California, at an adjourned regular meeting thereof this 30th day of December, 1985. Carl R. Kruse, Mayor, City of Poway, for the South Poway Community Facilities District No. 1 ATTEST: ~le3~kl 'Cit~ of Poway, fior~ the South Poway Community Facilities District No. 1 12-30-85 0609k/2345/04 -51- EXHIBIT PROPOSITION CITY OF POW-AY (SOUTH POWAY ~TY FACILITIES DISTRICT NO. 1) AUTHORIZATION TO INCUR BOhDED I~DEBT~DNESS AUTHORIZATION FOR SPECIAL TAX LEVY Shall the South Poway (km,u,u~.ity Facilities District No. 1, City of Poway) incur a bonded indebtedness in an amount not to excc~ $60,000,000.00 in 1985 dollars, to pay for certain public facilities for the construction, expansion, rehabilitation or purchase of certain local facilities, including but not limited to, park facilities, local recreational use parks, street and access improvements, sewer improv~nents and drainage improv~nents, together with appur- tenances and appurtenant work, and 2) levy a special max to secure said bonded indebtedness and/or pay for the public capital facilities. The appropriate mark placed in the voting square after the word "YES" shall be counted in favor of the adoption of the proposition, and the appropriate mark placed in the voting s~re after the word "NO" in the manner as authorized, shall be counted against the adoption of said proposition. EXHIBIT "B" No. INTEREST RATE REGISTERED OWNER: PRINCIPAL AMOUNT UNITED STATES OF AMERICA STATE OF CALIFORNIA CITY OF POWAY (SAN DIEGO COUNTY) SOUTH POWAY COMMUNITY FACILITIES DISTRICT NO. 1 (Pomerado Business Park Project) SPECIAL TAX BOND SERIES 1985 MATURITY DATE DATED DATE December 2, 1985 Drexel Burnham Lambert Incorporated CUSIP SOUTH POWAY COMMUNITY FACILITIES DISTRICT NO. 1 OF THE CITY OF POWAY (the "District") situated in the County of San Diego, State of California (the "City"), FOR VALUE RECEIVED, hereby promises to pay solely from Special Taxes and Pledged Revenues (as hereinafter defined) to be collected in District, the registered owner named above, or registered assigns, on the maturity date set forth above, unless redeemed prior thereto as hereinafter provided, the principal amount set forth above, and to pay interest on such principal amount from December 2, 1985 or from the most recent interest payment date to which interest has been paid or duly provided for, semiannually on March 2 and September 2, commencing September 2, 1986 at the interest rate set forth above, until the principal amount hereof is paid or made available for payment. The principal of and premium, if any, on this Bond are payable to the registered owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the principal corporate trust office of Security Pacific National Bank in Los Angeles, California (the "Fiscal Agent"). Interest on this Bond shall be paid by check or draft of the Fiscal Agent mailed to the registered owner hereof as of the close of business on the 15th day of the month preceding the month in which the interest payment date occurs (the "Record Date") at such registered owner's address as it appears on the registration books maintained by the Fiscal Agent. 12-30-85 0609k/2345/04 -52- This Bond is one of a duly authorized issue of "City of Poway (San Diego County) South Poway Community Facilities District No. 1 (Pomerado Business Park Project) Special Tax Bonds Series 1985" (the "Bonds") issued in the aggregate principal amount of $30,000,000 pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311, et seq., of the California Government Code (the "Mello-Roos Act) for the purpose of financing the acquisition of certain improvements in the District (the"Project"). The creation of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the.City Council of the City on December 30, 1985 (the "Resolution"), and this reference incorporates the Resolution herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. The Resolution is adopted under, this Bond is issued under and both are to be construed in accordance with, the laws of the State of California. Pursuant to the Mello-Roos Act and the Resolution, the principal of, premium, if any, and interest on this Bond are payable solely from the annual special taxes authorized under the Mello-Roos Act to be collected within the District (the "Special Taxes"). Interest on this Bond shall be payable from the interest payment date next preceding the date of registration hereof, unless such date of registration is after a Record Date but on or prior to an interest payment date, in which event interest will be payable from such interest payment date, or unless such date of registration is prior to the first Record Date, in which event interest will be payable from December 2, 1985. Any tax for the payment hereof shall be limited to the Special Tax and Pledged Revenues, except to the extent that provision for payment has been made by the City Coundil of the City, as may be permitted by law. The Bonds do not constitute obligations of the City or the District for which the City or the District is obligated to levy or pledge, or has levied or pledged, general or special taxation other than described hereinabove. The City Council of the City has covenanted for the benefit of the owners of the Bonds that it will commence within 120 days and diligently pursue to completion appropriate foreclosure actions in the event of delinquencies of any Special Tax installments levied for payment of principal and interest. The Bonds maturing on or after March 2, 1997 may be redeemed prior to maturity, in whole or in part, at the option of the District on March 2, 1996, or on any interest payment date thereafter prior to maturity, upon at least 30 days, but not more than 90 days, prior written notice mailed to the 12-30-85 0609k/2345/04 -53- registered owners at the addresses appearing on the bond registry books, at the following redemption prices, expressed as a percentage of par value, together with accrued interest to the date of redemption: Redemption Dates March 2, 1996 and September 2, 1996 March 2, 1997 and September 2, 1997 March 2, 1998 and September 2, 1998 March 2, 1999 and thereafter Redemption Prices 103% 102% 101% 100% In addition, the Term Bonds maturing on March 2, 2000 and March 2, 2011 shall be subject to mandatory redemption prior to maturity, in part, by lot, at a price of par to the extent, in the manner and subject to the terms of the Resolution. Notice of redemption with respect to the Bonds to be redeemed shall be given to the registered owners thereof, in the manner, to the extent and subject to the provisions of the Resolution. This Bond shall be registered in the name of the Owner hereof, as to both principal and interest. Each registration and transfer of registration of this Bond shall be entered by the Fiscal Agent in books kept by if for this purpose and authenticated by its manual signature upon the certificate of authentication and registration endorsed hereon. No transfer hereof shall be valid for any purpos~ unless made by the registered owner, by execution of the form of assignment endorsed hereon, and authenticated as herein provided, and the principal hereof, interest hereon and any redemption premium shall be payable only to the registered owner or to such owner's order. Interest on this Bond shall be payable to the person whose name appears upon the registry books as the registered owner hereof as of the close of business on the 15th day of the month preceding the month in which the interest payment date occurs, or to such person's order. The Fiscal Agent shall require the Bondowner requesting transfer or exchange to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange. 12-30-85 0609k/2345/04 -54- This Bond shall not 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. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond have existed, happened and been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtgdness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California. IN WITNESS WHEREOF, South Poway Community Facilities District No. 1 has caused this Bond to be dated this 2nd day of December, 1985, to be signed by the Mayor of the City Council of the City by his facsimile signature and attested by the facsimile signature of the City Clerk. Carl R. Kruse, Mayor City of Poway, for the South Poway Community Facilities District No. 1 ATTEST: Marjorie K. Wahlsten, City Clerk City of Poway, for the South Poway Community Facilities District No. 1 12-30-85 0609k/2345/04 -55- FORM OF FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION AND REGISTRATION This is one of the Bonds described in the within defined Resolution. Dated: SECURITY PACIFIC NATIONAL BANK as Fiscal Agent By: Authorized Officer FORM OF ASSIGNMENT FOR VALUE RECEIVED, the undersigned do(es) hereby sell, assign and transfer unto the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the books of the Registrar with full power of substitution in the premises. Dated: 12-30-85 0609k/2345/04 -56-