Loading...
Res 89-037 NO. 89-037' ' RESOLUTION RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY ACTING AS THE LEGISLATIVE BODY OF COMMUNITY FACILITIES DISTRICT NO. 88-1 OF THE h~]~;. CITY OF POWAY (PARKWAY BUSINESS CENTER) AUTHORIZING THE ISSUANCE OF ITS SERIES 1989 SPECIAL TAX BONDS IN A PRINCIPAL AMOUNT NOT TO EXCEED THIRTY MILLION DOLLARS ($30,000,000), AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH March 28 , 1989 WHEREAS, the City Council of the City of Poway, located in San Diego County, California (hereinafter sometimes referred to as the "legislative body of the District"), has heretofore undertaken proceedings and declared the necessity to issue bonds on behalf of the Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center) (the "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 (the "Act"); and WHEREAS, pursuant to Resolution Nos. 88-122 and 88-123 adopted by the legislative body of the District on the 18th day of October, 1988, the bond propositions attached as Exhibit A hereto and incorporated herein by reference were submitted to the qualified electors within the District, and were unanimously approved at an election held on November 1, 1988; and WHEREAS, based upon Resolution Nos. 88-122 and 88-123 and the election, the District is now authorized to issue bonds in one or more series, pursuant to the Act, in an aggregate principal amount not to exceed $45,000,000; and WHEREAS, the legislative body of the District hereby desires to proceed to issue its first series of bonds in an aggregate principal amount not to exceed $30,000,000 designated as the "Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center), Series 1989 Special Tax Bonds" (the 'Bonds"); and WHEREAS, the legislative body of the District has determined in accordance with Government Code Section 53360.4 that a negotiated sale of the Bonds to Drexel Burnham Lambert Resolution No. 89-037 Page 2 Incorporated and Smith Barney, Harris Upham & Co. Inc. (collectively, the "Underwriters") in accordance with the terms of the Bond Purchase Contract approved as to form by this legislative body herein will result in a lower overall cost to the District than a public sale; NOW, THEREFORE, the City Council of the City of Poway acting as the legislative body of Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center) DOES HEREBY RESOLVE, ORDER AND DETERMINE AS FOLLOWS: SECTION 1. Each of the above recitals is true and correct. SECTION 2. The City, by its Resolution No. 88-127, adopted on November 1, 1988, has declared that Proposition A and Proposition B presented to the qualified electors of the District on November 1, 1988, copies of which are attached as Exhibit A, have received a unanimous vote of the qualified electors voting at said election, and Proposition A and Proposition B each has carried, and, accordingly, the legislative body of the District is hereby authorized to issue from time to time as determined by the legislative body bonds for the benefit of the District for the purposes set forth in Proposition A and to take the necessary steps to levy the special tax authorized by Proposition A. SECTION 3. The issuance of the Bonds in a principal amount not to exceed $30,000,000 is hereby authorized pursuant to the Act with the exact principal amount to be determined by the officer signing the Bond Purchase Contract in accordance with Section 7 below. The Bonds shall mature on the dates and pay interest at the rates set forth in the Bond Purchase Contract to be executed on behalf of the District in accordance with Section 7 hereof and otherwise shall be substantially in the form set forth in Exhibit B hereto. All other provisions of the Bonds shall be governed by the terms and conditions set forth in a Supplement to Resolution to be prepared by Bond Counsel to the District and executed by the Mayor or the City Manager, or his written designee, which Supplement to Resolution shall be substantially in the form attached hereto as Exhibit B, with such additions thereto and changes therein as are recommended or approved by Bond Counsel to the District and the officers executing the same, with such approval to be conclusively evidenced by the execution and delivery of the Supplement to Resolution. Capitalized terms used in this Resolution which are not defined herein have the meaning ascribed to them in the form of the Supplement to Resolution attached hereto as Exhibit B. 2643n/2468/004 -2- Resoluticn No. 89-037 Page 3 SECTION 4. The Bonds shall be executed on behalf of the District by the manual or facsimile signature of the Mayor, and the seal of the District, or a facsimile thereof, shall be impressed or imprinted thereon and attested with the manual or facsimile signature of the City Clerk. The District hereby adopts as its seal the form of seal set forth in Exhibit C hereto. SECTION 5. The proceeds of the Bonds and the Special Taxes may be invested in an Investment Agreement satisfying the criteria set forth in Exhibit B. The City Council hereby determines that entering into such an Investment Agreement will reduce the risk of interest rate fluctuations on investments and reduce the overall cost of borrowing for the District. SECTION 6. The covenants set forth in the Supplement to Resolution to be executed in accordance with Section 3 above are hereby approved, shall be deemed to be covenants of the City Council in its capacity as the legislative body of the District and shall be complied with by the District and its officers. The Supplement to Resolution shall constitute a contract between the District and the Owners of the Bonds. SECTION 7. Security Pacific National Bank is hereby appointed to act as Fiscal Agent, Registrar and Transfer Agent for the Bonds and the City Manager, or his written designee, is hereby authorized to enter into an agreement with the Fiscal Agent to provide such services to the District. The forms of the Construction Management Agreement, the Bond Purchase Contract and the Preliminary Official Statement presented at this meeting are hereby approved and the Mayor and the City Manager are hereby authorized and directed to execute the Bond Purchase Contract, the Construction Management Agreement and a final Official Statement in substantially the form hereby approved, with such additions thereto and changes therein as are recommended or approved by Bond Counsel to the District and the officers executing the same, with such approval to be conclusively evidenced by the execution and delivery of such documents; provided, however, that the Bond Purchase Contract shall be signed only if the net interest cost on the Bonds does not exceed 9.25% per annum and the Underwriters' discount does not exceed 2.0% of the principal amount of the Bonds. The Underwriters are hereby authorized to distribute the Preliminary Official Statement to prospective purchasers, and the City Manager, or his written designee, shall approve the form of the final Official Statement to be delivered with the Bonds to the purchasers thereof. 2643n/2468/004 -3- Resolution No. 89-037 Page 4 SECTION 8. The City Manager, or his written designee, is authorized to contract for all services necessary to effect the issuance of the Bonds. Such services shall include, but not be limited to, printing the Bonds, the Preliminary Official Statement and the final Official Statement, obtaining legal services, paying agent services and any other services deemed appropriate as set forth in a certificate of the City Manager, or his written designee. The City Manager, or his written designee, is authorized to pay for the cost of such services, together with other Costs of Issuance, with Bond proceeds deposited to the Construction Fund established pursuant to the Supplement to Resolution. Without further approval of the legislative body of the District, the total amount disbursed by the City Manager for such Costs of Issuance shall not exceed 3% of the principal amount of the Bonds. SECTION 9. Ail actions heretofore taken by officers and agents of the District and the City with respect to the sale and issuance of the Bonds are hereby approved, confirmed and ratified, and the Mayor and City Manager and the other officers of the City and the District responsible for the fiscal affairs of the District are hereby authorized and directed to take any actions and execute and deliver any and all documents as are necessary to accomplish the issuance, sale and delivery of the Bonds in accordance with the provisions of this Resolution and the fulfillment of the purposes of the Bonds as described in the Supplement to Resolution. In the event that the Mayor is unavailable to sign any document authorized for execution herein, any other member of the City Council or the City Manager, or his written designee, may sign such document. Any document authorized herein to be signed by the City Clerk may be signed by a duly appointed deputy clerk. 2643n/2468/004 -4- Resolution No. 89-037 Page 5 PASSED, ADOPTED AND APPROVED, by the City Council of the City of Poway, California, at a regular meeting thereof this 28th day of March, 1989. C~a~l R Kru~e, Mayor ATTEST: Marjorie~K. Wahlsten, City Clerk STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO ) I, Marjorie K. Wahlsten, City Clerk of the City of Poway, do hereby certify under~Renalty of perjury that the foregoing Resolution No. 89-0J/ was duly adopted by the City Council acting in its capacity as the legislative body of Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center) at a meeting of said City Council held on the 28th day of March, 1989, and that it was so adopted by the following vote: AYES: NOES: ABSTAIN: ABSENT: BRANNON, EMERY, GOLDSMITH, HIGGINSON, KRUSE NONE NONE NONE MarjorielK. Wahlsten, City Clerk City o~oway -5- 6/A/CFD. 15 Resolution No. 89-037 Page 6 EXHIBIT A OFFICIAL BALLOT COMMUNITY FACILITIES DISTRICT NO. 88-1 OF THE CITY OF POWAY (PARKWAY BUSINESS CENTER) SPECIAL BOND AND SPECIAL TAX ELECTION November 1, 1988 This ballot represents votes. To vote, stamp a cross (+) in the voting square after the word 'YES' or after the word 'NO". All marks otherwise made are forbidden. All distinguishing marks are forbidden and make the ballot void. If you wrongly mark, tear, or deface this ballot, return it to the City Clerk and obtain another. PROPOSITION NO. A: Shall Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center) incur an indebtedness and issue bonds in the maximum aggregate principal amount of $45,000,000, with interest at a rate or rates not to exceed the greater of twelve percent (12%) per annum or the maximum interest rate then permitted by law, the proceeds of which will be used to design, acquire, construct, lease, modify or rehabilitate certain public facilities, consisting of roadway improvements, storm drains, a fire station and equipment, sewer, water and public utility improvements (the 'Facilities'), as provided in Reso- lution No. 88-122 (the "Resolution of Formation") of the City Council of the City of Poway, and shall a special tax with a rate and method of apportionment as provided in the Resolution of Forma- tion be levied to pay for the Facilities described in the Resolution of Formation, for the creation or replenishment of any necessary reserve funds, for any incidental expenses of the District associated with the Facilities or the bonds and for the principal of, premium, if any, and interest on such bonds? YES NO 2643n/2468/004 Resolution No. 89-037 Page 7 PROPOSITION NO. B: Shall the appropriations limit, as defined by subdivision (h) of Section 8 of Article XIII B of the California Consti- tution, for Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center) be an amount equal to $45,000,000? YES NO 2643n/2468/004 Resolution No. 89-037 Page 8 SUPPLEMENT TO RESOLUTION NO. 89- GOVERNING TERMS OF THE COMMUNITY FACILITIES DISTRICT NO. 88-1 (PARKWAY BUSINESS CENTER) OF THE CITY OF POWAY SERIES 1989 SPECIAL TAX BONDS Resolution No. 89-037 Page 9 SUPPLEMENT TO RESOLUTION NO. GOVERNING TERMS OF THE COMMUNITY FACILITIES DISTRICT NO. (PARKWAY BUSINESS CENTER) OF THE CITY OF POWAY SERIES 1989 SPECIAL TAX BONDS 89- ~3~ 88-1 TABLE OF CONTENTS Section 1.01 Section 2.01 Section 2.02 Section 2.03 Section 2.04 Section 2.05 Section 2.06 Section 2.07 Section 2.08 Section 2.09 Section 2.10 Section 2.11 Section 3.01 Section 3.02 Section 3.03 Section 3.04 Section 3.05 Section 3.06 Section 3.07 Article I Definitions Definitions ............................. Article II General Authorization and Bond Terms Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds ............... Type and Nature of Bonds and Parity Bonds ................................... Equality of Bonds and Parity Bonds, Pledge of Net Taxes ..................... Description of Bonds; Interest Rates .... Place and Form of Payment ............... Form of Bonds; Temporary Bonds .......... Execution and Authentication ............ Bond Register ........................... Registration of Exchange or Transfer .... Mutilated, Lost, Destroyed or Stolen Bonds ................................... Validity of Bonds and Parity Bonds ...... Article III Creation of Funds and Application of Proceeds and Net Taxes Creation of Funds ....................... Disposition of Bond Proceeds ............ Deposit and Disbursement of Special Tax Revenues ............................ Administrative Expense Account of the Special Tax Fund ........................ Interest Account and Principal Account of the Special Tax Fund ................. Redemption Fund of the Special Tax Fund. Reserve Account of the Special Tax Fund. Page 8 9 10 11 11 12 12 13 13 14 14 15 16 16 17 19 -i- Resolution No. 89-037 Page 10 Section 3.08 Section 3.09 Section 3.10 Section 3.11 Section 4.01 Section 4.02 Section 4.03 Section 4.04 Section 4.05 Section 5.01 Section 5.02 Section 6.01 Section 6.02 Section 6.03 Section 7.01 Section 7.02 Section 7.03 Section 7.04 Section 8.01 Section 8.02 Section 8.03 Excess Investment Earnings Fund ......... Special Reserve Fund .................... Construction Fund ....................... Investments ............................. Article IV Redemption of Bonds Redemption of Bonds ..................... Selection of Bonds and Parity Bonds for Redemption .......................... Notice of Redemption .................... Partial Redemption of Bonds or Parity Bonds ................................... Effect of Notice and Availability of Redemption Money ........................ Article V Covenants and Warranty Warranty ................................ Covenants ............................... Article VI Amendments to Resolution Supplemental Resolutions or Orders Not Requiring Bondowner Consent ............. Supplemental Resolutions or Orders Requiring Bondowner Consent ............. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity Bonds ................................... Article VII Paying Agent Paying Agent ............................ Removal of Paying Agent ................. Resignation of Paying Agent ............. Liability of Paying Agent ............... Article VIII Events of Default; Remedies Events of Default ....................... Remedies of Owners ...................... Actions by Fiscal Agent as Attorney- in-Fact ................................. Page 20 23 24 25 27 29 29 32 32 32 33 37 37 39 39 40 41 41 42 42 44 -ii- Resolution No. 89-037 Page 11 Article IX Defeasance and Parity Bonds Section 9.01 Section 9.02 Defeasance .............................. Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness ............................ Article X Miscellaneous Section 10.01 Section 10.02 Section 10.03 Section 10.04 Section 10.05 Section 10.06 Section 10.07 Section 10.08 Cancellation of Bonds ................... Execution of Documents and Proof of Ownership ............................... Unclaimed Moneys ........................ Provisions Constitute Contract .......... Future Contracts ........................ Further Assurances ...................... Severability ............................ Notices ................................. Signatures ............................................. Attachment 1 Attachment 2 Form of Special Tax Bond Requisition for Disbursement of Project Costs Page 44 46 49 49 5O 51 51 51 52 52 52 -iii- Resolution No. 89-037 Page 12 SUPPLEMENT TO RESOLUTION ARTICLE I DEFINITIONS Section 1.01. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings: "Acquisition Agreement" means that certain Acquisition, Funding and Disclosure Agreement between the District and ADI Properties dated as of , 1989 setting forth the conditions to the construction and acquisition of the Project and the expenditure of Bond proceeds. "Act" means the Mello-Roos Community Facilities Act of 1982, as amended, Sections 53311 et seq. of the California Government Code. "Administrative Expenses" means the administrative costs with respect to the calculation and collection of the Special Taxes, or costs otherwise incurred by the City staff on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of Formation and the fees and expenses of the Fiscal Agent. "Authorized Investments" means, subject to applicable law, (1) 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); (2) 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; (3) an Investment Agreement; (4) taxable government money market portfolios restricted to obligations with maturities of one year or less, insured or fully guaranteed as to the principal and interest thereon by the full faith and credit of the United States of America or by repurchase agreements having a term of one year or less and collateralized by such obligations which the Seller will repurchase on or before a specified date and for a specified amount and which the Seller will deliver to the District or the Fiscal Agent by book entry, physical deliver or by third-party custodial agreement; (5) tax-exempt obligations, including tax-exempt money market funds, rated in one of the two highest rating categories by either Standard & Poor's Corporation or Moody's Investors Service; and (6) any other investment in Resolution No. 89-037 Page 13 which funds of the District may be legally invested pursuant Go Government Code Section 53635; provided that moneys invested by the Fiscal Agent shall remain in the name and credit of the Fiscal Agent. "Bond Counsel" means an attorney at law or a firm of attorneys selected by the District of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions 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. "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 or Parity Bond is registered. "Bonds" means the Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center) Series 1989 Special Tax Bonds. "Bond Year" means the twelve (12) month period commencing on August 15 of each year and ending on August 14 of the following year. "Business Day" means a day on which the Fiscal Agent is open for business. "Certificate of the City Manager" means a written certificate executed by the City Manager, or his written designee. "Code" means the Internal Revenue Code of 1986, together with any amendments thereto. "Computation Year" means the twelve (12) .month period commencing on of each year and ending on of the following year. "Costs of Issuance" means the costs and expenses incurred in connection with the formation of the District and the issuance and sale of the Bonds or any Parity Bonds, including the acceptance and initial annual fees and expenses of the Fiscal Agent, legal fees and expenses, costs of printing the Bonds and the preliminary and final Official Statements, fees of financial consultants and other fees and expenses set forth in a Certificate of the City Manager, or his designee. "City" means the City of Poway, California. 3/23/89 2642n/2468/04 -2- Resolution No. 89-037 Page 14 "Delivery Date" means the date on which the Bonds were issued and delivered to the Underwriter. "District" means the Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center) established pursuant to the Act and the Resolution of Formation. "Fiscal Agent" means Security Pacific National Bank, and any successor thereto. "Fiscal Year" means the period beginning on July 1 of each year and ending on the next following June 30. "Gross Proceeds" means the sum of the following amounts: (i) original proceeds, being the amounts received by the District, or held by the Fiscal Agent as proceeds of the original issuance of the Bonds or Parity Bonds (after payment of all expenses of issuing the Bonds or Parity Bonds); (ii) investment proceeds, being amounts received at any time by the District or the Fiscal Agent, such as interest and dividends, resulting from the investment of proceeds of the Bonds or Parity Bonds, including profits and less losses received on such investment; (iii) transferred proceeds (as defined in Section 1.103-14(e)(2)(ii) of the Regulations), if any; (iv) amounts, other than original proceeds and investment proceeds, held in any fund or account and reasonably expected to be used to pay principal of or interest on the Bonds or Parity Bonds; (v) securities or obligations pledged as security for the payment of the Bonds or Parity Bonds by an ultimate obligor (or a related person) or the District; (vi) amounts used to pay principal or interest with respect to the Bonds or Parity Bonds; and (vii) amounts received as a result of investing the amounts listed in clauses (i) through (vi). "Gross Taxes" means the amount of all Special Taxes received by the District from the Treasurer, together with the proceeds collected from the sale of property pursuant to the foreclosure provisions of this Resolution for the delinquency of such Special Taxes. "Independent Financial Consultant" means a financial consultant or firm of such consultants generally recognized to be well qualified in the financial consulting field, appointed and paid by the District, who, or each of whom: (1) is in fact independent and not under the domination of the District; (2) does not have any substantial interest, direct or indirect, in the District; and 3/23/89 2642n/2468/04 -3- Resolution No. 89-037 Page 15 (3) is not connected with the District as a member, officer or employee of the District, but who may be regularly retained to make annual or other reports to the District. ~Interest Payment Date~! means each February 15 and August 15, commencing August 15, 1989; provided, however, that, if any such day is not a Business Day, interest up to the Interest Payment Date will be paid on the Business Day next succeeding such date. "Investment Agreement" means one or more agreements to be entered into between the District and an entity or entities whose long-term debt is rated in either of the two highest categories (without regard to gradations of plus and minus within such categories) by Standard & Poor's Corporation or Moody's Investors Service, Inc. or an agreement between the District and an entity which is rated in either of the two highest categories (without regard to gradations of plus and minus within such categories) by Standard & Poor's Corporation or Moody's Investors Service. "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 excluded from gross income for federal income tax purposes under Section 103 of the Code. "Maximum Annual Debt Service" means the maximum sum obtained for any Bond Year prior to the final maturity on the Bonds and any Parity Bonds.by adding the following for each Bond Year: (1) the principal amount of all Outstanding Bonds and any Parity Bonds payable in such Bond Year either at maturity or pursuant to a Sinking Fund Payment; and (2) the interest payable on the aggregate principal amount of the Bonds and any Parity Bonds Outstanding in such Bond Year if the Bonds and any Parity Bonds are retired as scheduled. "Net Taxes" means Gross Taxes minus amounts applied to pay Administrative Expenses. "Nonpurpose Obligation" means any s~curity or obligation (other than an obligation the interest on which is excludable from gross income for federal income tax purposes under Section 103 of the Code) in which Gross Proceeds are invested and which is not acquired to carry out tt~e governmental purpose of the Bonds or any Parity Bonds. 3/23/89 2642n/2468/04 -4- Resolution No. 89-037 Page 16 "OPA" means that certain Owner Participation Agreement between Poway Redevelopment Agency and Parkway Partners, a California general partnership dated November 15, 1988 setting forth certain public improvements to effectuate the Redevelopment Plan for the Paquay Redevelopment Project. "OPA Improvements" means those certain public improvements set forth in Exhibit A to the OPA. "Ordinance" means Ordinance No. legislative body of the District on -- for the levying of the Special Tax. adopted by the · 1989· providing "Outstanding" or "Outstanding Bonds and Parity Bonds" means all Bonds or Parity Bonds theretofore issued by the District, except: (1) Bonds or Parity Bonds theretofore cancelled or surrendered for cancellation in accordance with Section 10.01 hereof; and (2) Bonds or Parity Bonds for payment or redemption of which monies shall have been theretofore deposited in trust (whether upon or prior to the maturity or the redemption date of such Bonds or Parity Bonds), provided that, if such Bonds or Parity Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in this Resolution or any applicable Supplemental Resolution for Parity Bonds. "Parity Bonds" means all bonds, notes or other similar evidences of indebtedness hereafter issued, payable out of the Net Taxes and which, as provided in this Resolution or any Supplemental Resolution, rank on a parity with the Bonds. "Project" means those public facilities described in the Resolution of Formation which are to be acquired or constructed within and outside of the District, including all engineering, planning and design services and other incidental expenses related to such facilities and other facilities, if any, authorized by qualified electors within the District from time to time. "Project Costs" means the amounts necessary to finance the Project, to create and replenish any necessary reserve funds, to pay the initial and annual costs associated with the Bonds or any Parity Bonds· including, but not limited to, remarketing, credit enhancement, Fiscal Agent and other fees and expenses relating to the issuance of the Bonds and the formation of the District, and to pay any other "incidental expenses" of the District, as such term is defined in the Act. 3/23/89 2642n/2468/04 -5- Resolution No. 89-037 Page 17 "Purchase Price", for the purpose of computation of the Yield of the Bonds or Parity 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 or Parity Bonds are sold or, if the Bonds or Parity Bonds are privately placed, the price paid by the original purchaser or the acquisition cost of the original purchaser. The term "Purchase Price", for the purpose of computation of the Yield of Nonpurpose Obligations, means the fair market value of the Nonpurpose Obligations on the date of use of Gross Proceeds for acquisition thereof, or, if later, on the date that Investment Property constituting a Nonpurpose Obligation becomes a Nonpurpose Obligation of the Bonds or Parity Bonds, as the case may be. "Record Date" means the first day of the month in which any Interest Payment Date occurs, regardless of whether such day is a Business Day. "Regulations" means regulations adopted by the Department of Treasury from time to time with respect to obligations issued pursuant to Section 103 of the Code. "Reserve Requirement" means, as of any date of calculation, an amount equal to the lowest of (1) ten percent (10%) of the original proceeds of the Bonds and any Parity Bonds, or (2) Maximum Annual Debt Service, or (3) one hundred twenty-five percent (125~) of the average annual debt service of the Outstanding Bonds and Parity Bonds. "Resolution" means this Supplement to Resolution, together with Resolution No. 89-__ of the District, approving this Supplement to Resolution, and any Supplemental Resolution approved pursuant to Article VI hereof. "Resolution of Formation" means Resolution No. 88-122 adopted by the City Council of the City on October 18, 1988, pursuant to which the City formed the District. "SDG&E Facilities" means any facilities within the District intended for acquisition by the San Diego Gas & Electric Company. "Sinking Fund Payment" means the annual payment to be deposited in the Redemption Account to redeem a portion of the Term Bonds in accordance with the schedule set forth in Section 4.01(b) hereof and any annual sinking fund payment to retire any Parity Bonds. 3/23/89 2642n/2468/04 -6- Resolution No. 89-037 Page 18 "Special Taxes" means the taxes authorized to be levied by the District and in accordance with the Ordinance, the Resolution of Formation, the Act and the voter approval obtained at the November 1, 1988 election in the District. "Supplemental Resolution" means any resolution authorizing the issuance of any Parity Bonds. "Term Bonds" means the Bonds maturing on August 15, 2014. "Tax Collector/Treasurer" means the Tax Collector/Treasurer of the County of San Diego acting on behalf of the District. "Treasurer" means the Treasurer of the City acting in his capacity as the Treasurer of the District. "Underwriter" means Drexel Burnham Lambert Incorporated and Smith Barney, Harris Upham & Co. Inc. "Yield" 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 in a 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, as the case may be, all computed as prescribed in the applicable Regulations. ARTICLE II GENERAL AUTHORIZATION AND BOND TERMS Section 2.01. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds. Under and pursuant to the Act, the Bonds in the amount of $30,000,000, together with any Parity Bonds authorized by the legislative body in accordance with Section 9.02 hereof, shall be issued for the purposes of paying Project Costs, provided that the aggregate principal amount of the Bonds and any Parity Bonds shall not exceed the total indebtedness presently approved or subsequently approved by the qualified electors of the District in accordance with the Act. The Bonds and any Parity Bonds shall be and are limited obligations of the District and shall be payable as to the principal thereof and interest thereon and any premiums upon the redemption thereof solely from the Net Taxes and the amounts in the funds created hereunder, other than amounts in the Administrative Expense Account of the Special Tax Fund, the Construction Fund, the Excess Investment Earnings Fund and the Special Reserve Fund. 3/23/89 2642n/2468/04 -7- Resolution No. 89-037 Page 19 Section 2.02. Type and Nature of Bonds and Parity Bonds. Neither the faith and credit nor the taxing power of the City, the State of California or any political subdivision thereof is pledged to the payment of the Bonds and any Parity Bonds. Except for the Special Taxes, no other taxes are pledged to the payment of the Bonds or any Parity Bonds. The Bonds and any Parity Bonds are not general or special obligations of the City nor general obligations of the District, but are limited obligations of the District payable solely from certain amounts deposited by the District in the Special Tax Fund as more fully described herein. No Owner of the Bonds or any Parity Bonds may compel the exercise of the taxing power by the District or the City or the forfeiture of any of their property. The principal of and interest on the Bonds and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal or equitable pledge, charge, lien, or encumbrance, upon any of the District's property, or upon any of its income, receipts, or revenues, except the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are, under the terms of this Resolution and the Act, set aside for the payment of the Bonds, any Parity Bonds and interest thereon and neither the members of the legislative body of the District or the City Council of the City nor any persons executing the Bonds, or any Parity Bonds, are liable personally on the Bonds, or any Parity Bonds, by reason of their issuance. Notwithstanding anything to the contrary contained in this Resolution, the District shall not be required to advance any money derived from any source of income other than the Net Taxes for the payment of the interest on or the principal of the Bonds, any Parity Bonds, or for the performance of any covenants contained herein. The District may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose. Section 2.03. Equality of Bonds and Parity Bonds, Pledge of Net Taxes. Pursuant to the Act and this Resolution, the Bonds and any Parity Bonds shall be equally payable from the Net Taxes without priority for number, date of the Bonds or Parity 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 Parity Bonds and any premiums upon the redemption thereof, shall be exclusively paid from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account), which are hereby set aside for the payment of the Bonds and any Parity Bonds. The Net Taxes and any interest earned on the Net Taxes shall constitute 3/23/89 2642n/2468/04 -8- Resolution No. 89-037 Page 20 a trust fund held for the benefit of the Owners to be applied to the payment of the interest on and principal of the Bonds and any Parity Bonds and so long as any of the Bonds and any Parity Bonds or interest thereon remain Outstanding shall not be used for any other purpose, except as permitted by this Resolution or any Supplemental Resolution. Notwithstanding any provision contained in this Resolution to the contrary, Net Taxes deposited in the Special Reserve Fund, the Administrative Expense Account and the Excess Investment Earnings Fund shall no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Special Reserve Fund, the Excess Investment Earnings Fund nor the Administrative Expense Account shall be construed as a trust fund held for the benefit of the Owners. Nothing in this Resolution or any Supplemental Resolution shall preclude: (a) the redemption prior to maturity of any Bonds or Parity Bonds subject to call and redemption and payment of said Bonds or Parity Bonds from proceeds of bonds issued under the Act as the same now exists or as hereafter amended, or under any other law of the State of California; or (b) the issuance, subject to the limitations contained herein, of Parity Bonds which shall be payable from Net Taxes. Section 2.04. Description of Bonds; Interest Rates. The Bonds and any Parity 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 "COMMUNITY FACILITIES DISTRICT NO. 88-1 OF THE CITY OF POWAY (PARKWAY BUSINESS CENTER), SERIES 1989 SPECIAL TAX BONDS". The Bonds shall be dated as of February 1, 1989 and shall mature and be payable on August 15 in the years and in the aggregate principal amounts and shall be subject to and shall bear interest at the rates set forth in the table below: Maturity Date (August 15) 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2014 Principal Amount Interest Rate $ % 3/23/89 2642n/2468/04 -9- Resolution No. 89-037 Page 21 Interest shall be payable with respect to each Bond and Parity Bond on each Interest Payment Date until the principal sum of that Bond and Parity Bond has been paid; provided, however, that if at the maturity date of any Bond or Parity 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 or redemption thereof in full, in accordance with the terms of this Resolution, such Bonds and Parity Bonds shall then cease to bear interest. Interest due on the Bonds and Parity Bonds shall be calculated on the basis of a 360-day year comprised of twelve 30-day months. Section 2.05. Place and Form of Payment. The Bonds and Parity 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 Parity Bonds and any premiums due upon the redemption thereof shall be payable upon presentation and surrender thereof at the corporate trust office of the Fiscal Agent in Los Angeles, California. Interest on any Bond or Parity Bond shall be payable from the Interest Payment Date next preceding the date of authentication of that Bond or Parity 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 the first Record Date, in which event interest shall be payable from the dated date of such Bond or Parity Bond, as applicable; provided, however, that if at the time of authentication of such Bond or Parity Bond, interest is in default, interest on that Bond or Parity 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 or Parity Bond shall be paid to the person whose name shall appear in the Bond Register as the Owner of such Bond or Parity Bond as of the close of business on the Record Date. Such interest shall be paid by check of the Fiscal Agent mailed by first class mail, postage prepaid, to such Bondowner at his or her address as it appears on the Bond Register or, upon request in writing received by the Fiscal Agent on or before the applicable Record Date from a Bondowner of $1,000,000 or more in principal amount of Bonds, payment shall be made on the Interest Payment Date by wire transfer in immediately available funds to an account designated by such Bondowner. 3/23/89 2642n/2468/04 -10- Resolution No. 89-037 Page 22 Section 2.06. Form of Bonds; Temporary Bonds. The definitive 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 Attachment 1, which form is hereby approved and adopted as the form of the Bonds and of the certificate of authentication. Until definitive Bonds shall be prepared, the District may cause to be executed and delivered in lieu of such definitive Bonds temporary bonds in typed, printed, lithographed or engraved form and in fully registered form, subject to the same provisions, limitations and conditions as are applicable in the case of definitive Bonds, except that they may be in any denominations authorized by the'District. Until exchanged for definitive Bonds, any temporary bond shall be entitled and subject to the same benefits and provisions of this Resolution as definitive Bonds. If the District issues temporary Bonds, it shall execute and furnish definitive Bonds without unnecessary delay and thereupon any temporary Bond may be surrendered to the Fiscal Agent at its office, without expense to the Owner, in exchange for a definitive Bond of the same maturity, interest rate and principal amount in any authorized denomination. All temporary Bonds so surrendered shall be cancelled by the Fiscal Agent and shall not be reissued. Section 2.07. Execution and Authentication. The Bonds shall be signed on behalf of the District by the manual or facsimile signature of the Mayor and by the manual or facsimile signature of the City Clerk, or any duly appointed deputy clerk, in their capacity as officers of the District, and the seal of the District (or a facsimile thereof) shall be impressed, imprinted, engraved or otherwise reproduced thereon, and 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 shall nevertheless be valid and may 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 office. Only such Bonds as shall bear thereon such certificate of authentication in the form set forth in Attachment 1 hereto 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. 3/23/89 2642n/2468/04 -11- Resolution No. 89-037 Page 23 Section 2.08. Bond Register. The Fiscal Agent will keep' or cause to be kept, at its corporate trust office, sufficient books for the registration and transfer of the Bonds and any Parity Bonds which shall be open to inspection upon reasonable prior notice by the District during all regular business hours, 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 and any Parity Bonds as herein provided. The District and the Fiscal Agent may treat the Owner of any Bond or Parity Bond whose name appears on the Bond Register as the absolute Owner of that Bond or Parity Bond for any and all purposes, and the District and the Fiscal Agent shall not be affected by any notice to the contrary. The District 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's address so that the Bond Register may be revised accordingly. Section 2.09. Registration of Exchange or Transfer. The registration of any Bond or Parity 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 or Parity Bond for cancellation at the 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 or Parity Bonds may be exchanged at the corporate trust office of the Fiscal Agent for a like aggregate principal amount of Bonds or Parity Bonds, as applicable, of o%her authorized denominations of the same maturity. The Fiscal Agent shall not collect from the Owner any charge for any new Bond or Parity Bond issued upon any exchange or transfer, but shall require the Bondowner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Whenever any Bonds or Parity Bonds shall be surrendered for registration of transfer or exchange, the District 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 or, in the case of a surrender of a Parity Bond, a new Parity Bond or Parity 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 or Parity Bonds for a period of 15 days next preceding any selection of the Bonds or Parity Bonds to be redeemed, or (ii) any Bonds or Parity Bonds chosen for redemption. 3/23/89 2642n/2468/04 -12- Resolution No. 89-037 Page 24 Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds. If any Bond or Parity Bond shall become mutilated, the District shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond or Parity Bond of like tenor, date and maturity in exchange and substitution for the Bond or Parity Bond so mutilated at the expense of the Bondowner, but only upon surrender to the Fiscal Agent of the Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so surrendered to the Fiscal Agent shall be cancelled by the Fiscal Agent pursuant to Section 10.01. If any Bond or Parity 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 Fiscal Agent and, if any indemnity satisfactory to the District and the Fiscal Agent shall be given, the District, at the expense of the Bondowner, shall execute and the Fiscal Agent shall authenticate and deliver, a new Bond or in the case of a Parity Bond, a new Parity Bond, of like tenor and maturity, numbered and dated as such Fiscal Agent shall determine in lieu of and in substitution for the Bond or Parity Bond so lost, destroyed or stolen. Any Bond or Parity Bond issued in lieu of any Bond or Parity Bond alleged to be mutilated, lost, destroyed or stolen, shall be equally and proportionately entitled to the benefits hereof with all other Bonds or Parity Bonds issued hereunder. The Fiscal Agent shall not treat both the original Bond or Parity Bond and any replacement Bond or Parity Bond as being Outstanding for the purpose of determining the principal amount of Bonds or Parity Bonds which may be executed, authenticated and delivered hereunder or for the purpose of determining any percentage of Bonds or Parity Bonds Outstanding hereunder, but both the original and replacement Bond or Parity Bond shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new Bond or Parity Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the Fiscal Agent may make payment with respect to such Bonds or Parity Bonds. Section 2.11. Validity of Bonds and Parity Bonds. The validity of the authorization and issuance of the Bonds and any Parity Bonds shall not be affected in any way by any defect in any proceedings taken by the District for the financing of the Project, or by the invalidity, in whole or in part, of any contracts made by the District in connection therewith, and shall not be dependent upon the completion of the financing of the Project or upon the performance by any person of his obligation with respect to the Project, and the recital contained in the Bonds or any Parity Bonds that the same are issued pursuant to the Act and other applicable laws of the State shall be conclusive evidence of their validity and of the regularity of their issuance. 3/23/89 2642n/2468/04 -13- Resolution No. 89-037 Page 25 ARTICLE III CREATION OF FUNDS AND APPLICATION OF PROCEEDS AND NET TAXES Section 3.01. Creation of Funds. There is hereby created and established and shall be maintained by the Fiscal Agent the following funds and accounts: (1) The Community Facilities District No. 88-1, Special Tax Fund (the "Special Tax Fund") in which there shall be established and created an Interest Account (in which there shall be established and created a Capitalized Interest Subaccount), a Principal Account, a Redemption Account, a Reserve Account, an Administrative Expense Account and a Purchase Account. (2) The Community Facilities District No. 88-1, Excess Investment Earnings Fund (the "Excess Investment Earnings Fund"). (3) The Community Facilities District No. 88-1 Special Reserve Fund (the "Special Reserve Fund"). (4) The Community Facilities District No. 88-1, Construction Fund in which there shall be established and created a Costs of Issuance Account (the "Construction Fund"). The amounts on deposit in the foregoing funds shall be held by the Fiscal Agent and the Fiscal Agent shall invest the amounts in such funds and disburse investment earnings in accordance with the provisions of Section 3.11 hereof. In connection with the issuance of any Parity Bonds, the Fiscal Agent may create additional funds, or accounts within any of the foregoing funds for the purpose of accounting for the proceeds of the Bonds or any Parity Bonds. Section 3.02. Disposition of Bond Proceeds. The proceeds of the sale of the Bonds shall be received by the Fiscal Agent on behalf of the District and deposited as follows: (1) The amount representing the accrued interest on the Bonds shall be deposited in the Interest Account of the Special Tax Fund, and such amount shall be applied to the payment of interest on August 15, 1989; (2) $ in capitalized interest on the Bonds shall be deposited in the Interest Account of the Special Tax Fund, with $ of such amount being deposited 3/23/89 2642n/2468/04 -14- Resolution No. 89-037 Page 26 and credited to the Capitalized Interest Subaccount, and~ such amount shall be used to pay interest on the Bonds on August 15, 1989, February 15, 1990, August 15, 1990 and February 15, 1991; (3) $ shall be deposited in the Reserve Account of the Special Tax Fund; (4) $ shall be deposited in the Administrative Expense Account of the Special Tax Fund; (5) $ shall be deposited in the Cost of Issuance Account of the Construction Fund; and (6) After making the deposits required above, all remaining amounts of Bond proceeds shall be deposited in the Construction Fund. Section 3.03. Deposits to and Disbursements from Special Tax Fund. The Treasurer of the City of Poway shall, on each date on which the Special Taxes have been collected by the District from the Tax Collector/Treasurer and in no event later than seven days prior to the Interest Payment Date on which such Special Taxes will be needed to pay amounts due in accordance with the terms of this Resolution, transfer the Special Taxes to the Fiscal Agent for deposit in the Special Tax Fund, to be held in trust. The Fiscal Agent will then transfer the Special Taxes on the dates and in the amounts set forth in the following Sections, in the following order of priority, to: (1) The Administrative Expense Account of the Special Tax Fund; (2) The Interest Account of the Special Tax Fund; (3) The Principal Account of the Special Tax Fund; (4) The Redemption Account of the Special Tax Fund; (5) The Reserve Account of the Special Tax Fund; (6) The Excess Investment Earnings Fund; and (7) The Special Reserve Fund. Notwithstanding anything herein to the contrary, moneys transferred to the Purchase Account of the Special Tax Fund from the Construction Fund in accordance with Section 3.10(b) hereof shall, unless in the opinion of Bond Counsel another use 3/23/89 '2642n/2468/04 -15- Resolution No. 89-037 Page 27 of such funds will not impair the exclusion from gross incom~ for federal income tax purposes of interest on the Bonds or any Parity Bonds, be invested and applied only in accordance with the provisions of this paragraph. Moneys held in the Purchase Account shall be invested at the written direction of the District only in Authorized Investments the interest on which is excludable from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals and corporations under the Code) or in Authorized Investments at a Yield not in excess of the lowest Yield on the Bonds or any Parity Bonds and shall be applied only (i) to the purchase of Bonds by the District, 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 principal payments on the Bonds, or (iii) to redeem Bonds at the earliest redemption date permitted by this Resolution. Notwithstanding the foregoing, amounts on deposit in the Purchase Account may be invested at a Yield higher than that permitted by the preceding sentence upon receipt of an opinion of Bond Counsel that investment of such amounts at such higher Yield will not adversely affect the exclusion from gross income of interest on the Bonds or any Parity Bonds. Absent the receipt of the foregoing opinion of Bond Counsel, the Fiscal Agent shall not invest amounts in the Purchase Account in Authorized Investments at a Yield in excess of the Yield on the Bonds. At the maturity of the Bonds and any Parity Bonds and, after all principal and interest then due on the Bonds and any Parity Bonds then Outstanding has been paid or provided for, moneys in the Special Tax Fund and any accounts therein may be used by the District for any lawful purpose. Section 3.04. Administrative Expense Account of the Special Tax Fund. The Fiscal Agent shall withdraw from the Special Tax Fund and place in the Administrative Expense Account of the Special Tax Fund from time to time, as needed to make timely payment of Administrative Expenses, an amount specified to the Fiscal Agent by the District at the time the District makes the transfer pursuant to Section 3.03 hereof necessary to pay Administrative Expenses. Moneys in the Administrative Expense Account of the Special Tax Fund may be invested in any Authorized Investments, provided that the maturity or maturities thereof shall not exceed 30 days from the date of purchase or such longer maturity as the District advises the Fiscal Agent in writing is acceptable to it. Section 3.05. Interest Account and Principal Account of the Special Tax Fund. The principal and interest due on the Bonds and any Parity Bonds until maturity, otherwise than by 3/23/89 2642n/2468/04 -16- Resolution No. 89-037 Page 28 redemption, shall be paid by the Fiscal Agent from amounts from the Interest Account and the Principal Account of the Special Tax Fund. For the purpose of assuring that the payment of principal of and interest on the Bonds and any Parity Bonds will be made when due, after making the transfer required by Section 3.04, at least one Business Day prior to each February 15 and August 15, the Fiscal Agent shall make the following transfers first to the Interest Account and then to the Principal Account; provided, however, that to the extent that deposits have been made in the Interest Account or the Principal Account from the proceeds of the sale of the Bonds, any Parity Bonds, or otherwise, or to the extent that a transfer will be made from the Reserve Account to the Interest Account in accordance with the last paragraph of Section 3.07 hereof, the transfer from the Special Tax Fund need not be made: (a) To the Interest Account, an amount such that the balance in the Interest Account one (1) Business Day prior to each Interest Payment Date shall be equal to the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date. Moneys in the Interest Account shall be used for the payment of interest on the Bonds and any Parity Bonds as the same become due. (b) To the Principal Account, an amount such that the balance in the Principal Account one (1) Business Day prior to August 15 of each year commencing August 15, 1991 shall equal the principal payment due on the Bonds and any Parity Bonds maturing on such August 15. Moneys in the Principal Account shall be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity. The Bond proceeds deposited to the Interest Account shall be applied only to pay interest on the Bonds, and the Fiscal Agent shall first disburse the amount deposited to the Interest Account and once such amounts have been fully expended shall then disburse all Bond proceeds deposited to the Capitalized Interest Subaccount before applying any Special Tax proceeds to the payment of interest on the Bonds. Section 3.06. Redemption Account of the Special Tax Fund. (a) Commencing on August 15, 2002 and on each August 15 thereafter, after the deposits have been made to the Administrative Expense Account of the Special Tax Fund and the Interest Account and the Principal Account of the Special Tax Fund as required by Sections 3.04 and 3.05, the Fiscal Agent shall next transfer into the Redemption Account of the Special Tax Fund from the Special Tax Fund the amount needed to make the balance in the Redemption Account equal to the Sinking Fund 3/23/89 2642n/2468/04 -17- Resolution No. 89-037 Page 29 Payment due on any Outstanding Bonds or Parity Bonds on such August 15. Moneys so deposited in the Redemption Account shall be used and applied by the Fiscal Agent to call and redeem Term Bonds in accordance with the Sinking Fund Payment schedule set forth in Section 4.01(b) hereof and to redeem Parity Bonds in accordance with any Sinking Fund Payment schedule in the Supplemental Resolution for such Parity Bonds. (b) After making the deposits to the Administrative Expense Account of the Special Tax Fund and the Interest Account and the Principal Account of the Special Tax Fund pursuant to Sections 3.04 and 3.05 above and to the Redemption Account for Sinking Fund Payments then due pursuant to subparagraph (a) of this Section, then in accordance with the District's election to call Bonds for optional redemption as set forth in Section 4.01(a) hereof or as set forth in any Supplemental Resolution for Parity Bonds, the Fiscal Agent shall transfer from the Special Tax Fund and deposit in the Redemption Account moneys available for the purpose and sufficient to pay the principal and the premiums payable as provided in Section 4.01(a) hereof on the Bonds or Parity Bonds called for optional redemption. (c) Moneys set aside in the Redemption Account shall be used solely for the purpose of redeeming Bonds and shall be applied on or after the redemption date to the payment of principal of and premium on the Bonds or Parity Bonds to be redeemed upon presentation and surrender of such Bonds or Parity Bonds; provided, however, in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption Account as set forth above may be used to purchase Outstanding Bonds or Parity Bonds in the manner hereinafter provided. Purchases of Outstanding Bonds or Parity Bonds may be made by the District at public or private sale as and when and at such prices as the District may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest, or, in the case of purchases to be made from funds to be applied to a redemption pursuant to Section 4.01 or the corresponding redemption provisions of any Supplemental Resolution for Parity Bonds, par plus accrued interest, plus, in the case of moneys set aside for an optional redemption, the premium applicable at the next following call date according to the premium schedule established pursuant to Section 4.01(a) hereof, or in the case of Parity Bonds the premium established in any Supplemental Resolution. Any accrued interest payable upon the purchase of Bonds or Parity Bonds may be paid from the amount reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next following Interest Payment Date. 3/23/89 2642n/2468/04 -18- Resolution No. 89-037 Page 30 Section 3.07. Reserve Account of the Special Tax Fund. There shall be maintained in the Reserve Account of the Speci'al Tax Fund an amount equal to the Reserve Requirement. Moneys in the Reserve Account shall be used solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on the Bonds and any Parity Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due and for the purpose of making any required transfer to the Excess Investment Earnings Fund pursuant to Section 3.08 upon written direction from the District; provided, however, amounts in the Reserve Account may be applied to pay the principal and interest due on any Bonds or Parity Bonds in the final Bond Year in which any Bonds or Parity Bonds are Outstanding. If the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on the Bonds or any Parity Bonds when due or such amounts are insufficient to make transfers to the Excess Investment Earnings Fund when required, the Fiscal Agent shall withdraw from the Reserve Account for deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund, or in the Excess Investment Earnings Fund, as applicable, moneys necessary for such purpose. Following any transfer to the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund or to the Excess Investment Earnings Fund as described above, the District shall then take the steps necessary to cause to be deposited to the Reserve Account the amount needed to replenish the Reserve Account to the Reserve Requirement by transferring such amount from the Special Reserve Fund or, if the District so elects, by including such amount in the next annual Special Tax levy to the extent of the permitted maximum Special Tax rates. Notwithstanding anything herein to the contrary, whenever moneys are withdrawn from the Reserve Account, after making the required transfers to Sections 3.04, 3.05 and 3.06 above, the Treasurer shall transfer to the Reserve Account from available moneys in the Special Tax Fund the amount needed to restore the amount of such account to the Reserve Requirement. Moneys in the Special Tax Fund shall be deemed available for transfer to the Reserve Account only if such amounts will not be needed to make the deposits required to be made to the Administrative Expense Account, the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund for the next Interest Payment Date. 3/23/89 2642n/2468/04 -19- Resolution No. 89-037 Page 31 Notwithstanding any provision herein to the contrary, moneys in the Reserve Account in excess of the Reserve Requirement shall be withdrawn from the Reserve Account on the Business Day before each February 15 and August 15 and transferred at the option of the District to the Redemption Fund to be applied to the redemption of Bonds or Parity Bonds on the next August 15 or to the Principal Account of the Special Tax Fund to the extent required to make any principal payment on the next succeeding August 15, with any excess being transferred to the Purchase Account of the Special Tax Fund. Section 3.08. Excess Investment Earnings Fund. (a) The District shall calculate Excess Investment Earnings in accordance with paragraph (b) and shall pay Excess Investment Earnings to the United States government in accordance with paragraph (c). The term "Excess Investment Earnings" means an amount equal to the sum of: (i) the excess of: (A) the aggregate amount earned from the Delivery Date on all Nonpurpose Obligations in which Gross Proceeds of the Bonds are invested (other than amounts attributable to an excess described in this subparagraph (i)), over (B) the amount that would have been earned if the yield on such Nonpurpose Obligations (other than amounts attributable to an excess described in this subparagraph (i)) had been equal to the Yield on the Bonds, plus (ii) any income attributable to the excess described in paragraph (i). (b) At or prior to the last day of the first Computation Year, the District shall calculate the Excess Investment Earnings referenced in subparagraph (i) of paragraph (a) and shall deposit the same into the Excess Investment Earnings Fund to the extent funds are available from any legally available funds, including the Reserve Account of the Special Tax Fund. Thereafter, prior to the last day of each Computation Year and on the date of the retirement of the Bonds, the District shall calculate the amount of Excess Investment Earnings referenced in subparagraphs (i) and (ii) of paragraph (a) and the Fiscal Agent shall make corresponding transfers into the Excess Investment Earnings Fund from the sources specified in the preceding sentence. The calculations shall be made in accordance with the following: 3/23/89 2642n/2468/04 -20- Resolution No. 89-037 Page 32 (1) Except as provided in (2), in determining the amount described in subparagraph (i)(A) of paragraph (a), 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 Obligation 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 the 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 if any Nonpurpose Obligation is retained after such date. (2) In determining the amount described in subparagraph (i) of paragraph (a), an obligation or security 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 an obligation or security shall be computed with reference to such fair market value as its adjusted basis. (3) In determining the amount described in subparagraph (i)(B) of paragraph (a), the Yield on the Bonds shall be determined based on the actual Yield of the Bonds during the period between the Delivery Date and the date the computation is made (with adjustments for discount or premium). (4) In determining the amount described in subparagraph (ii) of paragraph (a), all income attributable to the excess described in subparagraph (i) of paragraph (a) 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." (5) In determining the amount described in subsection (a) of this Section, there shall be excluded any amount earned on any fund or account which is used primarily to achieve a proper matching of revenues and annual debt service on the Bonds during 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 (1/12) of annual debt service on the Bonds, as well as amounts earned on said earnings. 3/23/89 2642n/2468/04 -21- Resolution No. 89-037 Page 33 (c) Upon written direction of the District, the Fiscal Agent shall pay Excess Investment Earnings to the United Sta~es government in installments with the first payment to be made not later than thirty (30) days after the end of the fifth Computation Year and with subsequent payments to be made not later than five (5) years after the preceding payment was due. The District shall assure that each installment is in an amount equal to at least 90 percent of the Excess Investment Earnings with respect to the Bonds as of the close of the computation period. Upon the direction of the District, which direction shall be given not later than thirty (30) days after the retirement of the Bonds, the Fiscal Agent shall pay from the Excess Investment Earnings Fund, or the District shall pay directly from funds legally available for such purpose, 100 percent of the theretofore unpaid Excess Investment Earnings of the Bonds. The Fiscal Agent or the District shall remit such payments to the United States government at the address and in the manner directed by the District prescribed by the Regulations as the same may be in time to time in effect, together with such reports and statements prepared by District as may be prescribed by such Regulations. If the Fiscal Agent follows the written instructions as supplied by the District, it shall be deemed to have complied with this subsection and shall have no responsibility to calculate Excess Investment Earnings or to take action in the absence of instructions from the District. (d) In order to assure that Excess Investment Earnings are paid to the United States rather than to a third party, investments by the District in certificates of deposit and in Investment Agreements shall be made only in accordance with the Regulations therefor as from time to time in effect. (e) The District shall keep and retain for a period of six (6) years following the retirement of the Bonds records of the determinations made pursuant to this Section. The Fiscal Agent shall keep a record of all investments made with moneys on deposit in any Fund or Account established hereunder and shall provide such records to the District at least quarterly. Such records shall contain a reference to the date of purchase, the date of sale, the purchase price, the sales price, the principal amount and coupon rate of each obligation purchased or sold. (f) Payments pursuant to this Section shall be made to the maximum extent possible from moneys on deposit in the Excess Investment Earnings Fund and, to the extent of any deficiency therein for such purpose, shall be made from the Special Tax Fund. In the event of any remaining deficiency in available moneys for the purposes of such transfer, such deficiency shall be paid by the District from any legally available funds. 3/23/89 2642n/2468/04 -22- Resolution No. 89-037 Page 34 (g) The District shall compute Excess Investment Earnings on any Parity Bonds in accordance with the provisions of this Section 3.08 and may make a joint computation for the Bonds and any Parity Bonds with an opinion of Bond Counsel to the effect that a joint computation will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds then Outstanding. (h) Notwithstanding the foregoing, the foregoing method of computing Excess Investment Earnings may be modified, in whole or in part, without the consent of the Owners of the Bonds or any Parity Bonds, upon receipt by the District of an opinion of Bond Counsel to the effect that such modification will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds then Outstanding. Section 3.09. Special Reserve Fund. After making the transfers required by Sections 3.04, 3.05, 3.06, 3.07 and 3.08, on the first Business Day after each August 15, the Fiscal Agent shall transfer all remaining amounts in the Special Tax Fund to the Special Reserve Fund. Moneys deposited in the Special Reserve Fund may be transferred by the Fiscal Agent only upon written direction of the District (i) to the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund to pay the principal of, including Sinking Fund Payments, and interest on the Bonds and any Parity Bonds when due in the event that moneys in the Special Tax Fund and the Reserve Account of the Special Tax Fund are insufficient therefor, (ii) to the Reserve Account in order to replenish the Reserve Account to the Reserve Requirement, (iii) to the Administrative Expense Account of the Special Tax Fund to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense Account of the Special Tax Fund are insufficient to pay Administrative Expenses, or (iv) to the Construction Fund to pay Project Costs. The amounts in the Special Reserve Fund are not pledged to the repayment of the Bonds or the Parity Bonds and may be used by the District for any lawful purpose. In the event that the District reasonably expects to use any portion of the moneys in the Special Reserve Fund to pay debt service on the Bonds or any Outstanding Parity Bonds, the District will immediately instruct the Fiscal Agent, in writing, to segregate such amount into a separate subaccount and the moneys on deposit in such subaccount of the Special Reserve Fund shall at the District's written direction be invested only in Authorized Investments the interest on which is excludable from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals and corporations under 3/23/89 2642n/2468/04 -23- Resolution No. 89-037 Page 35 the Code) or in Authorized Investments at a Yield not in excess of the Yield on the Bonds or, if lower, the Yield on any Parity Bonds, unless, in the opinion of Bond Counsel, investment at a higher Yield will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds then Outstanding. Section 3.10. Construction Fund. (a) The moneys in the Construction Fund shall be applied exclusively to pay the Project Costs and any Costs of Issuance for the Bonds and any Parity Bonds. 'Amounts for Costs of Issuance shall be disbursed by the Fiscal Agent from the Cost of Issuance Account upon receipt of a Certificate of the City Manager, or such other person designated in writing by the City Manager, stating the amount due, the nature of the services rendered and the name of the payee. Amounts for Project Costs shall be disbursed by the Fiscal Agent only upon receipt of a Certificate of the City Manager, or such other person designated in writing by the City Manager, stating (1) that private financing sufficient for the construction, improvement and acquisition of all OPA Improvements has been obtained and that proof of such financing has been verified by such officer of the District as is satisfactory to the City Manager, (2) that a completion bond, as set forth in Section 14 of Amendment No. 3 to the OPA and as is satisfactory to the Poway Redevelopment Agency and the City Manager, is executed, and upon receipt of a sequentially numbered written requisition, substantially in the form attached hereto as Attachment 2, from the City Manager, or such other person designated in writing by the City Manager, or such other person as is designated in writing to the Fiscal Agent by the legislative body of the District, stating that (1) the conditions to the release of such funds stated in the Acquisition Agreement (or in the case of Parity Bonds any subsequent acquisition agreement, if any) have been satisfied, (2) the name of the person to whom payment is due, (3) the amount to be paid, (4) the purpose for which the obligation to be paid was incurred, and (5) there has not been filed with or served upon the District notice of any lien, right to lien or attachment upon, stop notice or claim affecting the right to receive payment of, any of the moneys payable to any of the persons named in such certificate or written requisition, which has not been released or will not be released simultaneously with the payment of such obligation, other than materialmen's or mechanic's liens accruing by mere operation of law. The Fiscal Agent shall have no liability for disbursing funds in accordance with the provisions of this Section 3.10(a). 3/23/89 2642n/2468/04 -24- Resolution No. 89-037 Page 36 Notwithstanding the foregoing, the Fiscal Agent shall not disburse any proceeds for SDG&E Facilities unless and until the Fiscal Agent receives a Certificate of City Manager certifying that a reimbursement agreement satisfying the requirements of Government Code Section 53313.5(e) has been entered into with SDG&E with respect to such Facilities. (b) Upon receipt of a Certificate of the City Manager, or such other person designated in writing by the City Manager, that all or a specified portion of the amount remaining in the Construction Fund is no longer needed to pay Project Costs or Costs of Issuance, the Fiscal Agent shall transfer all or such specified portion of the moneys remaining on deposit in the Construction Fund to the Purchase Account of the Special Tax Fund. (c) Upon the earlier of the payment of all Project Costs or July 1, 1992, the Fiscal Agent shall transfer any amounts remaining in the Construction Fund (other than amounts necessary to pay Project Costs incurred but not then due and payable as certified by the District) into the Redemption Account of the Special Tax Fund, for redemption of Bonds as provided in Section 4.01(b) hereof. Any amounts remaining in the Construction Fund subsequent to , 1992 shall be invested in accordance with the limitations set forth in Section 3.11(a) hereof. Section 3.11. Investments. Moneys held in any of the Funds and Accounts under this Resolution shall be invested at the direction of the Fiscal Agent in accordance with the limitations set forth below only in Authorized Investments which shall be deemed at all times to be a part of such Funds and Accounts. Any income realized or loss resulting from such Authorized Investments shall be credited or charged to the Fund or Account from which such investment was made; provided, however, (i) investment earnings on all amounts deposited in the Construction Fund shall be deposited in the Construction Fund until the amounts therein are fully expended, (ii) investment earnings on all amounts in the Excess Investment Earnings Fund and the Special Reserve Fund shall be deposited in those respective Funds, and (iii) all other investment earnings shall be deposited in the Interest Account of the Special Tax Fund; provided, however, that earnings on amounts in the Capitalized Interest Subaccount of the Interest Account shall be deposited in such Subaccount. Notwithstanding the foregoing, in the event that amounts in the Reserve Account are invested in Nonpurpose Obligations at a Yield in excess of the Yield on the Bonds, investment earnings on the Reserve Account shall not be transferred to the Interest Account until the District has computed Excess Investment Earnings for such Computation Year pursuant to Section 3.08 hereof. Moneys in 3/23/89 2642n/2468/04 -25- Resolution No. 89-037 Page 37 the Funds and Accounts held under this Resolution shall, at the written investment direction of the District, be invested by the Fiscal Agent, from time to time, in Authorized Investments subject to the following restrictions: (a) Moneys in the Construction Fund shall be invested in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available without penalty, as close as practicable to the date the District estimates the moneys represented by the particular investment will be needed for withdrawal from the Construction Fund. Notwithstanding anything herein to the contrary, the proceeds of any Bonds or Parity Bonds remaining on deposit in the Construction Fund on the date which is three years following the date of issuance of the Bonds, in the case of Bond proceeds, and the Parity Bonds, in the case of Parity Bond proceeds, shall be invested by the District only in Authorized Investments the interest on which is excluded from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals and corporations under the Code) or in Authorized Investments at a Yield not in excess of the lesser of the Yield on the Bonds or any Parity Bonds, unless in the opinion of Bond Counsel such restriction is not necessary to prevent interest on the Bonds or any Parity Bonds from being included in gross income for federal income tax purposes. (b) Moneys in the Interest Account, the Principal Account and the Redemption Account of the Special Tax Fund shall be invested only in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available for withdrawal without penalty, on such dates so as to ensure the payment of principal of, premium, if any, and interest on the Bonds or any Parity Bonds as the same become due. (c) One-half of the amount in the Reserve Account of the Special Tax Fund may be invested only in Authorized Investments which mature not later than two years from their date of purchase by the Fiscal Agent and one-half of such amount shall be invested in Authorized Investments which mature not more than three years from the date of purchase; provided that such amounts may be invested in an Investment Agreement to the later of the final maturity of the Bonds or any Parity Bonds so long as such amounts may be withdrawn at any time, without penalty, for application in accordance with Section 3.07 hereof; and provided that no such Authorized Investment shall mature later than the final maturity of the Bonds or, with respect to the portion of the amount on deposit in Reserve Account attributable to any Parity Bonds, later than the final maturity of such Parity Bonds. 3/23/89 2642n/2468/04 -26- Resolution No. 89-037 Page 38 (d) Moneys in the Excess Investment Earnings Fund shall be invested only in Authorized Investments of the type described in clause (1) of the definition thereof which by their terms will mature on the dates such amounts are needed to be paid to the United States Government pursuant to Section 3.08 hereof. The Fiscal Agent, at the written direction of the District, 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 to 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 Treasurer and the Fiscal Agent shall not be responsible for any loss from investments, sales or transfers undertaken in accordance with the provisions of this Resolution. The Fiscal Agent shall provide the District with monthly reports relating to the investments made in all Funds and Accounts and the investment earnings, income or loss posted to each Fund or Account. In the absence of written investment direction and except for the Excess Investment Earnings Fund and Purchase Account and any subaccount of the Special Reserve Fund, the Fiscal Agent shall invest solely in Authorized Investments set forth in (4) of the definition thereof. ARTICLE IV REDEMPTION OF BONDS Section 4.01. Redemption of Bonds. (a) Optional Redemption. The Bonds maturing on or before August 15, 1999 are not subject to call and redemption prior to maturity. The Bonds maturing on or after August 15, 2000 may be redeemed, at the option of the District on August 15, 1999, or on any Interest Payment Date thereafter, prior to maturity in whole or in part, by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption: Redemption Dates Redemption Prices August 15, 1999 and February 15, 2000 August 15, 2000 and February 15, 2001 August 15, 2001 and thereafter 102% lOl% 00% 3/23/89 2642n/2468/04 -27- Resolution No. 89-037 Page 39 In the event the District shall elect to redeem Bonds or - Parity Bonds as provided in this Section 4.01(a) or in any Supplemental Resolition in the case of Parity Bonds, the District shall give written notice to the Fiscal Agent of its election so to redeem, the redemption date and the principal amount of the Bonds or Parity Bonds to be redeemed. The notice to the Fiscal Agent shall be given at least 60 but no more than 90 days prior to the redemption date or such shorter period as shall be acceptable to the Fiscal Agent. In the event of a partial optional redemption of the Term Bonds maturing on August 15, 2014, each of the remaining Sinking Fund Payments for such Term Bonds, as described below, will be reduced, as nearly as practicable, on a pro rata basis. (b) Mandatory Redemption The Bonds are subject to mandatory redemption before maturity on August 15, 1992, in whole or in part, as nearly as practicable on a pro rata basis from each maturity and by lot within a maturity, from amounts transferred to the Redemption Account of the Special Tax Fund from the Construction Fund pursuant to Section 3.10 hereof on July 1, 1992 (rounded to the highest closest integral multiple of $5,000) after the payment of all costs of acquiring the Project (as defined herein). The Bonds so called for redemption will be redeemed at a redemption price equal to the principal amount thereof, plus accrued interest to the redemption date, without premium. (c) Mandatory Sinking Fund Redemption. The outstanding Bonds maturing on August 15, 2014 shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account, on August 15, 2002, and on each August 15 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The Term Bonds so called for redemption shall be selected by the Fiscal Agent by lot and 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, as follows: TERM BONDS MATURING AUGUST 15, 2014 Redemption Date (August 15) Principal Amount 2002 2003 2004 2005 2006 3/23/89 2642n/2468/04 -28- Resolution No. 89-037 Page 40 2007 2008 2009 2010 2011 2012 2013 2014(maturity) If during the six month period immediately preceding one of the redemption dates specified in (b)(i) or (ii) above the District purchases the applicable Term Bonds, at least 45 days prior to the redemption date the District shall notify the Fiscal Agent as to the principal amount purchased and the amount of Term Bonds so purchased shall be credited at the time of purchase, to the extent of the full principal amount thereof, to reduce such upcoming Sinking Fund Payment. All Bonds purchased pursuant to this subsection shall be cancelled. Section 4.02. Selection of Bonds and Parity Bonds for Redemption. If less than all of the Bonds or Parity Bonds Outstanding are to be redeemed, the portion of any Bond or Parity Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or an integral multiple thereof, and that, in selecting portions of such Bonds and Parity Bonds for redemption, the Fiscal Agent shall treat each such Bond or Parity Bond as representing that number of Bonds or Parity Bonds of $5,000 denominations which is obtained by dividing the principal amount of such Bond or Parity Bond to be redeemed in part by $5,000. The Fiscal Agent shall promptly notify the District in writing of the Bonds or Parity Bonds, or portions thereof, selected for redemption. Section 4.03. Notice of Redemption. When Bonds or Parity Bonds are due for redemption under Section 4.01(b) above and when the Fiscal Agent receives notice from the District of its election to redeem Bonds under Section 4.01(a) above or under another redemption provision set forth in a Supplemental Resolution relating to any Parity Bonds, the Fiscal Agent shall give notice, in the name of the District, of the redemption of such Bonds or Parity Bonds. Such notice of redemption shall (a) specify the CUSIP numbers, the serial numbers and the maturity date or dates of the Bonds or Parity Bonds selected for redemption, except that where all the Bonds or Parity Bonds are subject to redemption, or all the Bonds or Parity Bonds of one maturity, are to be redeemed, the serial numbers thereof need not be specified; (b) state the date fixed for redemption and surrender of the Bonds or Parity Bonds to be redeemed; (c) state the redemption price; (d) state the place or places where the Bonds or Parity Bonds are to be redeemed; (e) in the case 3/23/89 2642n/2468/04 -29- Resolution No. 89-037 Page 41 of Bonds or Parity Bonds to be redeemed only in part, state the portion of such Bond or Parity Bond which is to be redeemed; (f) state the date of issue of the Bonds or Parity Bonds as originally issued; (g) state the rate of interest borne by each Bond or Parity Bond being redeemed; and (h) state any other descriptive information needed to identify accurately the Bonds or Parity Bonds being redeemed as shall be specified by the District. Such notice shall further state that on the date fixed for redemption, there shall become due and payable on each Bond, Parity 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 60 days prior to the redemption date, the Fiscal Agent shall mail a copy of such notice, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register and shall publish such notice in a financial newspaper circulated in the City of Los Angeles. The actual receipt by the Owner of any Bond or Parity Bond of notice of such redemption shall not be a condition precedent thereto, and neither the failure to receive nor any defect in such notice shall affect the validity of the proceedings for the redemption of such Bonds or Parity 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 the Owner shall not be entitled to show that he or she failed to receive notice of such redemption. In addition to the foregoing notice, further notice shall be given by the Fiscal Agent as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed. Each further notice of redemption shall be sent at least 2 days before notice of redemption is mailed to the Bondowners pursuant to the first paragraph of this Section by registered or certified mail or overnight delivery service to the three registered securities depositories listed below and to any other registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds and Parity Bonds as shall be specified to the Fiscal Agent by the District to the national information services listed below that disseminate notice of redemption of obligations as the Bonds and Parity Bonds. 3/23/89 2642n/2468/04 -30- Resolution No. 89-037 Page 42 Registered Securities Depositories The Depository Trust Company 711 Stewart Avenue Garden City, New York 11530 Attention: Diana Difiglia Telecopy: (516) 227-4039 or 4190 Midwest Securities Trust Company Capital Structures-Call Notification 440 South LaSalle Street Chicago, Illinois 60605 Telecopy: (312) 663-2343 Philadelphia Depository Trust Company Reorganization Division 1900 Market Street Philadelphia, Pennsylvania 19103 Attention: Bond Department Telecopy: (215) 496-5058 National Information Services Financial Information, Inc.'s Financial Daily Called Bond Service 30 Montgomery Street, 10th Floor Jersey City, New Jersey 07302 Attention: Editor Kenny Information Service's Called Bond Service 55 Broad Street, 29th Floor New York, New York 10004 Moody's Municipal and Government 99 Church Street, 8th Floor New York, New York 10007 Attention: Municipal News Report Standard and Poor's Called Bond Record 25 Broadway, 3rd Floor New York, New York 10004 Upon the payment of the redemption price of any Bonds and Parity Bonds being redeemed, each check or other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity, the Bonds and Parity Bonds being redeemed with the proceeds of such check or other transfer. 3/23/89 2642n/2468/04 -31- Resolution No. 89-037 Page 43 Section 4.04. Partial Redemption of Bonds or Parity Bonds. Upon surrender of any Bond or Parity Bond to be redeemed in part only, the District shall execute and the Fiscal Agent shall authenticate and deliver to the Bondowner, at the expense of the District, a new Bond or Bonds or a new Parity Bond or Parity 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 or, in the case of surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to the foregoing limitations. Section 4.05. Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in Section 4.03, 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: (a) The Bonds and Parity 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 or the Parity Bonds to the contrary notwithstanding; (b) Upon presentation and surrender thereof at the corporate trust office of the Fiscal Agent, the redemption price of such Bonds and Parity Bonds shall be paid to the Owner thereof; (c) As of the redemption date the Bonds or the Parity Bonds, or portions thereof so designated for redemption shall be deemed to be no longer Outstanding and such Bonds or Parity Bonds, or portions thereof, shall cease to bear further interest; and (d) As of the date fixed for redemption no Owner of any of the Bonds, Parity Bonds, or portions thereof so designated for redemption shall be entitled to any of the benefits of this Resolution or any Supplemental 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. ARTICLE V COVENANTS AND WARRANTY Section 5.01. Warranty. The District shall preserve and protect the security pledged hereunder to the Bonds and any Parity Bonds against all claims and demands of all persons; 3/23/89 2642n/2468/04 -32- Resolution No. 89-037 Page 44 provided, however, that such warranty does not require the District to expend any funds or moneys other than Special Taxes. Section 5.02. Covenants. So long as any of the Bonds or Parity Bonds issued hereunder are Outstanding and unpaid, the District makes the following covenants with the Bondowners under the provisions of the Act and this Resolution (to be performed by the District or its proper officers, agents or employees), which covenants are necessary and desirable to secure the Bonds and Parity Bonds and tend to make them more marketable; provided, however, that said covenants do not require the District to expend any funds or moneys other than the Special Taxes: (a) Punctual Payment; Against Encumbrances. The District covenants that it will receive all Net Taxes in trust and will immediately deposit the Net Taxes with the Fiscal Agent, and the District shall have no beneficial right or interest in the amounts so deposited except as provided by this Resolution. All such Net Taxes shall be disbursed, allocated and applied solely to the uses and purposes set forth herein, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the District. The District covenants that it will duly and punctually pay or cause to be paid the principal of and interest on every Bond or Parity Bond issued hereunder, together with the premium, if any, thereon on the date, at the place and in the manner set forth in the Bonds and the Parity Bonds and in accordance with this Resolution to the extent Net Taxes are available therefor, and that the payments into the Funds and Accounts created hereunder will be made, all in strict conformity with the terms of the Bonds, any Parity Bonds, and this Resolution, and that it will faithfully observe and perform all of the conditions, covenants and requirements of this Resolution and all Supplemental Resolutions and of the Bonds and any Parity Bonds issued hereunder. The District will not mortgage or otherwise encumber, pledge or place any charge upon any of the Net Taxes, except as provided in the Resolution, and will not issue any obligation or security having a lien or charge upon the Net Taxes superior to or on a parity with the Bonds, other than Parity Bonds~ Nothing herein shall prevent the District from issuing or incurring indebtedness which is payable from a pledge of Net Taxes which is subordinate in all respects to the pledge of Net Taxes to repay the Bonds and the Parity Bonds. (b) Levy of Special Tax. The legislative body of the District shall cause the Tax Collector/Treasurer to levy the Special Tax in an amount sufficient to pay the principal of and 3/23/89 2642n/2468/04 -33- Resolution No. 89-037 Page 45 interest on the Bonds when due, any Parity Bonds and the Administrative Expenses and any amounts required to maintain the Reserve Account of the Special Tax Fund at the Reserve Requirement so long as any Bonds or Parity Bonds issued under this Resolution are Outstanding. (c) Commence Foreclosure Proceedings. The District covenants for the benefit of the Owners of the Bonds and any Parity Bonds that it will commence judicial foreclosure proceedings under the Act within the earlier of 150 days of notice of any delinquency in the aggregate Special Tax collections or 150 days from the 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. (d) Payment of Claims. The District will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon any portion of the Project acquired by the District, or upon the Net Taxes or any part thereof, or upon any funds in the hands of the Fiscal Agent, or which might impair the security of the Bonds or any Parity Bonds then Outstanding; provided that nothing herein contained shall require the District to make any such payments so long as the District in good faith shall contest the validity of any such claims. (e) Books and Accounts. The District will keep proper books of records and accounts, separate from all other records and accounts of the District, in which complete and correct entries shall be made of all transactions relating to the Project, the levy of the Special Tax and the deposits to the Special Tax Fund. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Fiscal Agent or of the Owners of not less than ten percent (10X) of the principal amount of the Bonds or the Owners of not less than ten percent (10X) of any issue of Parity Bonds then Outstanding or their representatives authorized in writing. (f) Tax Covenants. In order to preserve the exclusion from gross income of interest on the Bonds and any Parity Bonds for federal income tax purposes, the District covenants to comply with all applicable requirements of the Code, together with any amendments thereto or regulations promulgated thereunder necessary to preserve such exclusion from gross income and specifically covenants, without limiting the generality of the foregoing, that: 3/23/89 2642n/2468/04 -34- Resolution No. 89-037 Page 46 (1) it will make no use of the proceeds of the Bonda or Parity Bonds at any time which will cause the Bonds or Parity Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code and applicable Regulations adopted thereunder by the Internal Revenue Service; (2) it will not use in excess of 5~ of the proceeds of the Bonds or Parity Bonds to make or finance loans to any person other than a governmental unit (other than loans which are used to acquire or carry Nonpurpose Investments or are for the purpose of enabling the borrower to finance any governmental tax or assessment of general application for a specific essential governmental function, all as set forth in Section 141(c) of the Code) or to finance the construction of SDG&E Facilties; (3) it will neither use nor permit the use of more than l0x of the proceeds of the Bonds or Parity Bonds for any private business use, or enter into an arrangement such that more than l0x of the proceeds of the Bonds or Parity Bonds is, directly or indirectly, secured by any interest in (i) property used or to be used for a private business use or (ii) payments in respect of such property or to be derived from payments in respect of property, or borrowed money, used or to be used for a private business use, all as set forth in Section 141(b) of the Code, or take any other action which would cause the Bonds or Parity Bonds to be "private activity bonds" within the meaning of Section 141(a) of the Code; (4) it will ensure that the payment of principal of and interest on the Bonds or Parity 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 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 (1) during the initial period following issuance of the Bonds or Parity Bonds and ending on the final expenditure of the Bond or Parity Bond proceeds; (2) for amounts held in the Reserve Account of the Special Tax Fund, or other reserve funds satisfying Section 148(d) of the Code; (3) for amounts held in the Interest Account, the Principal Account 3/23/89 2642n/2468/04 -35- Resolution No. 89-037 Page 47 and the Redemption Account of the Special Tax Fund and other bona fide debt service funds; (4) for investments in obligations issued by the United States Treasury; (5) for investments in obligations guaranteed by the Federal National Mortgage Association, Government National Mortgage Association or Federal Home Loan Mortgage Corporation, or (6) for investments permitted under Regulations issued pursuant to Section 149(b)(3)(B) of the Code; and (5) (i) it shall keep a detailed accounting of all transactions contemplated under this Resolution or any Supplemental Resolution or in any way relating to the receipt or disbursement of any of the Gross Proceeds of the Bonds or Parity Bonds for a~period of six years after the later of the date of payment of all Excess Investment Earnings to the United States or the date the District disburses the last of the Gross Proceeds of the Bonds or Parity Bonds; (ii) except for the investment of moneys in tax-exempt bonds (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals and corporations under the Code) or Gross Proceeds invested during an applicable temporary period permitted under the Regulations, it will not allow Gross Proceeds of the Bonds or Parity Bonds to be invested at any time in Nonpurpose Obligations with a Yield in excess of the lesser of the Yield on the Bonds or the Parity Bonds without an opinion of Bond Counsel to the effect that investment at a higher Yield will not adversely affect the exclusion from gross income of interest on the Bonds or any Parity Bonds for federal income tax purposes; (iii) it will neither invest Gross Proceeds nor cause Gross Proceeds to be invested in Nonpurpose Obligations if the Yield on such Nonpurpose Obligations would be less than the Yield that would have resulted in an arm's-length transaction; and (iv) it will not sell or otherwise dispose of or cause to be sold or otherwise disposed of Nonpurpose Obligations, if such sale or disposition would result in a smaller profit or larger loss than would have resulted from a sale at fair market value arrived at in an arm's-length transaction. (g) Completion of Project. The District will diligently carry out and continue to completion with all practical dispatch the acquisition or construction of the Project in accordance with the Act and the proceedings for the formation of the District and in a sound and economical manner. The Project to be acquired or constructed may be amended as provided in the Act, but no amendment may be made which would substantially impair the security of the Bonds or any Parity Bonds or the rights of the Owners. Once acquired or constructed, the District will maintain the Project, or cause 3/23/89 2642n/2468/04 -36- Resolution No. 89-037 Page 48 it to be maintained by another public entity, in accordance with the customary and reasonable maintenance and repair practices for such facilities. ARTICLE VI AMENDMENTS TO RESOLUTION Section 6.01. Supplemental Resolutions or Orders Not Reguiring Bondowner Consent. The District may from time to time, and at any time, without notice to or consent of any of the Bondowners, 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 is not materially adverse to the interest of the Bondowners; (b) to add to the covenants and agreements of and the limitations and the restrictions upon the District contained in this Resolution, other covenants, agreements, limitations and restrictions to be observed by the District which are not contrary to or inconsistent with this Resolution as theretofore in effect; (c) to provide for the issuance of any Parity Bonds, and to provide the terms and conditions under which such Parity Bonds may be issued, subject to and in accordance with the provisions of this Resolution; (d) to modify, amend or supplement this Resolution in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Owners of the Bonds or any Parity Bonds then Outstanding; or (e) to modify, alter, amend or supplement this Resolution in any other respect which is not materially adverse to the Bondowners. Section 6.02. Supplemental Resolutions or Orders Requirinq Bondowner Consent. Exclusive of the resolutions or orders supplemental hereto set forth in Section 6.01, the Owners of not less than 60~ in aggregate principal amount of the Bonds and Parity Bonds Outstanding shall have the right to consent to and 3/23/89 2642n/2468/04 -37- Resolution No. 89-037 Page 49 approve the adoption by the District of such resolutions or orders supplemental hereto as shall be deemed necessary or desirable by the District for the purpose of waiving, modifying, altering, 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 or Parity Bond, (b) a reduction in the principal amount of, or redemption premium on, any Bond or Parity Bond or the rate of interest thereon, (c) a preference or priority of any Bond or Parity Bond over any other Bond or Parity Bond, or (d) a reduction in the aggregate principal amount of the Bonds and Parity Bonds the Owners of which are required to consent to such resolution or order, without the consent of the Owners of all Bonds and Parity Bonds then Outstanding. If at any time the District desires to adopt a resolution or order supplemental hereto, which pursuant to the terms of this Section shall require the consent of the Bondowners, the District shall so notify the Fiscal Agent and shall deliver to the Fiscal Agent a copy of the proposed resolution or order. The Fiscal Agent shall, at the expense of the District, cause notice of the proposed resolution or order to be mailed, by first class mail postage prepaid, to all Bondowners at'their addresses 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 Treasurer of the City 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 by the Owners of not less than 60~ in aggregate principal amount of the Bonds and Parity Bonds Outstanding as required by this Section. 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 and Parity Bonds 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 District substantially in the form of the copy referred to in such notice as on file with the Treasurer of the City, such proposed resolution or order, when duly adopted by the District, shall thereafter become a part of the proceedings for the issuance of the Bonds and any Parity Bonds. In determining whether the Owners of 60~ of the aggregate principal amount of the Bonds and Parity Bonds have consented to the adoption of any supplemental resolution or order, Bonds or Parity Bonds which are owned by the District or by any person 3/23/89 2642n/2468/04 -38- Resolution No. 89-037 Page 50 directly or indirectly controlling or controlled by or under the direct or indirect common control with the District, 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 not less than 60~ in aggregate principal amount of the Outstanding Bonds and Parity Bonds in instances where such consent is required pursuant to the provisions of this section, 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 District and all Owners of Outstanding Bonds and Parity Bonds shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such modifications and amendments. Section 6.03. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity Bonds. After the effective date of any action taken as hereinabove provided, the District may determine that the Bonds or any Parity Bonds may bear a notation, by endorsement in form approved by the District, as to such action, and in that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date and presentation of his Bond or Parity Bond for the purpose at the office of the Fiscal Agent or at such additional offices as the City Manager may select and designate for that purpose, a suitable notation as to such action shall be made on such Bonds or Parity Bonds. If the District shall so determine, new Bonds or Parity Bonds so modified as, in the opinion of the District, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date such new Bonds or Parity Bonds shall be exchanged at the corporate trust office of the Fiscal Agent or at such additional offices as the Fiscal Agent may select and designate for that purpose, without cost to each Owner of Outstanding Bonds or Parity Bonds, upon surrender of such Outstanding Bonds or Parity Bonds. ARTICLE VII FISCAL AGENT Section 7.01. Fiscal Agent. Security Pacific National Bank, having a corporate trust office in Los Angeles, California, is hereby appointed Fiscal Agent for the District for the purpose of receiving all money which the District is required to deposit with the Fiscal Agent hereunder and to allocate, use and apply the same as provided in this Resolution. 3/23/89 2642n/2468/04 -39- Resolution No. 89-037 Page 51 The Fiscal Agent is hereby authorized to and shall mail by first class mail, postage prepaid, interest payments to the Bondowners, to select Bonds and Parity Bonds for redemption, and to maintain the Bond Register. The Fiscal Agent is hereby authorized to pay the principal of and premium, if any, on the Bonds and Parity 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 and Parity Bonds presented to it for such purposes, to provide for the cancellation of Bonds and Parity Bonds all as provided in this Resolution, and to provide for the authentication of Bonds and Parity 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 Bonds and Parity Bonds paid, discharged and cancelled by it. The Fiscal Agent is hereby authorized to redeem the Bonds and Parity Bonds when duly presented for payment at maturity, or on redemption prior to maturity. The Fiscal Agent shall cancel all Bonds and Parity Bonds upon payment thereof in accordance with the provisions of Section 10.01 hereof. The District shall from time to time, subject to any agreement between the District and the Fiscal Agent then in force, pay to the Fiscal Agent compensation for its services, reimburse the Fiscal Agent for all its advances and expenditures, including, but not limited to, advances to and fees and expenses of independent accountants or counsel employed by it in the exercise and performance of its powers and duties hereunder, and indemnify and save the Fiscal Agent harmless against expenses and liabilities not arising from its own negligence or willful misconduct which it may incur in the exercise and performance of its powers and duties hereunder. Section 7.02. Removal of Fiscal Agent. In the absence of an Event of Default, the District may, in its sole discretion, remove the Fiscal Agent initially appointed, and any successor thereto, by delivering to the Fiscal Agent a written notice of its decision to remove the Fiscal Agent and may appoint a successor or successors thereto; provided that any such successor, other than the Treasurer, shall be a bank or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least fifty million dollars ($50,000,000), and subject to supervision or examination by federal or state authority. Any removal shall become effective only upon acceptance of appointment by the successor Fiscal Agent or the Treasurer. If any bank or trust company appointed as a successor publishes a report of condition at least annually, pursuant to law or to the requirements of any 3/23/89 2642n/2468/04 -40- Resolution No. 89-037 Page 52 supervising or examining authority above referred to, then for the purposes of this section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Section 7.03. Resignation of Fiscal Agent. The Fiscal Agent may at any time resign by giving written notice to the District and by giving to the Owners notice of such resignation, which notice shall be mailed to the Owners at their addresses appearing in the registration books in the office of the Fiscal Agent. Upon receiving such notice of resignation, the District shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent and appointment of a successor Fiscal Agent shall become effective only upon acceptance of appointment by the successor Fiscal Agent. Section 7.04. Liability of Fiscal Agent. The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds and any Parity Bonds shall be taken as statements, promises, covenants and agreements of the District, 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 specifically set forth herein, in the Bonds and any Parity 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 negligence or willful misconduct. The Fiscal Agent shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, Bond, Parity Bond or other paper or document believed by it to be genuine 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 District, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of 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 Owner of a Bond or Parity Bond unless and until such Bond or Parity Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed. 3/23/89 2642n/2468/04 -41- Resolution No. 89-037 Page 53 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 be herein specifically prescribed) may, in the absence of bad faith on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a written certificate of the District, and such certificate shall be full warrant 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 to it may seem reasonable. ARTICLE VIII EVENTS OF DEFAULT; REMEDIES Section 8.01. Events of Default. Any one or more of the following events shall constitute an "event of default": (a) Default in the due and punctual payment of the principal of or redemption premium, if any, on any Bond or Parity Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; (b) Default in the due and punctual payment of the interest on any Bond or Parity Bond when and as the same shall become due and payable; or (c) Except as described in (a) or (b), default shall be made by the District in the observance of any of the agreements, conditions or covenants on its part contained in this Resolution, the Bonds or any Parity Bonds, and such default shall have continued for a period of thirty (30) days after the District shall have been given notice in writing of such default by the Fiscal Agent or the Owners of twenty-five percent (25~) of the Outstanding Bonds and Parity Bonds; provided, however, the District shall be given an extension of time to cure such default if such default is such that it cannot be corrected within thirty (30) days and corrective action is instituted by the District within that period and is being diligently pursued. Section 8.02. Remedies of Owners. Following the occurrence of an event of default, any Owner shall have the right for the equal benefit and protection of all Owners similarly situated: 3/23/89 2642n/2468/04 -42- Resolution No. 89-037 Page 54 (a) By mandamus or other suit or proceeding at law or in equity to enforce his rights against the District and any of the members, officers and employees of the District, and to compel the District or any such members, officers or employees to perform and carry out their duties under the Act and their agreements with the Owners as provided in this Resolution; (b) By suit in equity to enjoin any actions or things which are unlawful or violate the rights of the Owners; or (c) By a suit in equity to require the District and its members, officers and employees to account as the trustee of an express trust. Nothing in this Article or in any other provision of this Resolution, the Bonds or any Parity Bonds shall affect or impair the obligation of the District, which is absolute and unconditional, to pay the interest on and principal of the Bonds and any Parity Bonds to the respective Owners thereof at the respective dates of maturity, as herein provided, out of the Net Taxes pledged for such payment, or affect or impair the right of action, which is also absolute and unconditional, of such Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds or any Parity Bonds and in this Resolution. A waiver of any default or breach of duty or contract by any Owner shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission by any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners by the Act or by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners. If any suit, action or proceeding to enforce any right or exercise any remedy is abandoned or determined adversely to the Owners, the District and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law. 3/23/89 2642n/2468/04 -43- Resolution No. 89-037 Page 55 In case the moneys held by the Fiscal Agent after an event of default pursuant to Section 8.01(a) or (b) shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds or any Parity Bonds, then all available amounts shall be applied to the payment of such principal and interest without preference or priority of principal over interest, or interest over principal, or of any installment of interest over any other installment of interest, ratably to ~he aggregate of such principal and interest. Section 8.03. Actions by Fiscal Agent as Attorney-in-Fact. Any suit, action or proceeding which any Owner 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 Owners, and the Fiscal Agent is hereby appointed (and the successive respective Owners of the Bonds and interest coupons issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact bf the Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the Owners as a class or classes, as may be necessary or advisable in the opinion of the Fiscal Agent as such attorney-in-fact. ARTICLE IX DEFEASANCE AND PARITY BONDS Section 9.01. Defeasance. If the District shall pay or cause to be paid, or there shall otherwise be paid, to the Owners of all Outstanding Bonds and Parity Bonds the interest due thereon and the principal thereof, at the times and in the manner stipulated, in this Resolution or any Supplemental Resolution, then the Owners of such Bonds and Parity Bonds shall cease to be entitled to the pledge of Net Taxes, and all covenants, agreements and other obligations of the District to the Owners of such Bonds and Parity Bonds under this Resolution and any Supplemental Resolution relating to such Parity Bonds shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Fiscal Agent shall execute and deliver to the District all such instruments as may be desirable to evidence such discharge and satisfaction, and the Fiscal Agent shall pay over or deliver to the District's general fund all money or securities held by it pursuant to this Resolution which are not required for the payment of the interest due on and the principal of such Bonds and Parity Bonds. Any Outstanding Bond and Parity Bond shall be deemed to have been paid within the meaning expressed in the first paragraph of this section if the Bonds and Parity Bonds are paid in any one or more of the following ways: 3/23/89 2642n/2468/04 -44- Resolution No. 89-037 Page 56 (a) by paying or causing to be paid the principal of, premium, if any, and interest on all Outstanding Bonds and Parity Bonds, 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 Special Tax Fund (exclusive of the Administrative Expense Account thereon), is fully sufficient to pay the principal of, premium, if any, and interest on all Outstanding Bonds and Parity Bonds, as and when the same shall become due and payable; or (c) by depositing with the Fiscal Agent, in trust, direct, noncallable Authorized Investments, of the type defined in clause (1) thereof, in which the District may lawfully invest its money, in such amount as an Independent Financial Consultant shall determine will be sufficient, together with the interest to accrue thereon and moneys then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account therein), together with the interest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on all Outstanding Bonds and Parity Bonds, as and when the same shall become due and payable; then, at the election of the District, and notwithstanding that any Outstanding Bonds and Parity Bonds shall not have been surrendered for payment, all obligations of the District under this Resolution and any Supplemental Resolution with respect to all Outstanding Bonds and Parity 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 Outstanding Bonds and Parity Bonds not so surrendered and paid, all sums due thereon and except for the covenants of the District contained in Section 5.02(f) or any covenants in a Supplemental Resolution relating to compliance with the Code. Notice of such election shall be filed with the Fiscal Agent not less than thirty (30) days prior to the proposed defeasance date. On or prior to the def6asance date, there shall be provided to the Fiscal Agent a certificate of a certified public accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Fiscal Agent to pay and discharge the principal of and interest on all Outstanding Bonds and Parity Bonds as and when the same shall become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that the Outstanding Bonds and Parity Bonds have been legally defeased in accordance with this Resolution. Upon being provided with the required report of a certified public accountant and opinion of Bond Counsel, the Fiscal Agent, upon request of the District, shall release the 3/23/89 2642n/2468/04 -45- Resolution No. 89-037 Page 57 rights of the Bondowners under this Resolution and any Supplemental Resolution and execute and deliver to the District all such instruments as may be desirable to evidence such release, discharge and satisfaction, and the Fiscal Agent shall pay over or deliver to the District any funds held by the Fiscal Agent at the time of a defeasance, which are not required for the purpose of paying and discharging the principal of or interest on the Bonds or Parity Bonds when due or for the purpose of paying any amounts due the Fiscal Agent hereunder. The Fiscal Agent shall, at the written direction of the District, mail, first class, postage prepaid, a notice to the Bondowners, in the form directed by the District, stating that the defeasance has occurred. Section 9.02. Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness. The District may at any time after the issuance and delivery of the Bonds hereunder issue Parity Bonds payable from the Net Taxes and secured by a lien and charge upon the Net Taxes equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued hereunder or under any Supplemental Resolution, but only subject to the following specific conditions, which are hereby made conditions precedent to the issuance of any such Parity Bonds: (a) The District shall be in compliance with all covenants set forth in this Resolution and any Supplemental Resolution and a certificate of the District to that effect shall have been filed with the Treasurer of the City; provided, however, that Parity Bonds may be issued notwithstanding that the District is not in compliance with all such covenants so long as immediately following the issuance of such Parity Bonds the District will be in compliance with all such covenants. (b) The issuance of such Parity Bonds shall have been duly authorized pursuant to the Act and all applicable laws, and the issuance of such Parity Bonds shall have been provided for by a Supplemental Resolution duly adopted by the District which shall specify the following: (1) The purpose for which such Parity Bonds are to be issued and the fund or funds into which the proceeds thereof are to be deposited, including a provision requiring the proceeds of such Parity Bonds to be applied solely for (i) the purpose of aiding in financing the Project, including payment of all costs incidental to or connected with such financing, and/or (ii) the purpose of refunding any Outstanding Bonds and Parity Bonds, including payment of all costs incidental to or connected with such refunding; 3/23/89 2642n/2468/04 -46- Resolution No. 89-037 Page 58 (2) The authorized principal amount of such Parity Bonds; (3) The date and the maturity date or dates of such Parity Bonds; provided that (i) each maturity date shall fall on an August 15, (ii) all such Parity Bonds of like maturity shall be identical in all respects, except as to number, and (iii) fixed serial maturities or Sinking Fund Payments, or any combination thereof, shall be established to provide for the retirement of all such Parity Bonds on or before their respective maturity dates; (4) The description of the Parity Bonds, the place of payment thereof and the procedure for execution and authentication; (5) The denomination and method of numbering of such Parity Bonds; (6) The redemption premiums, if any, and the redemption terms, if any, for such Parity Bonds; provided that, in the event that less than all of such Parity Bonds are to be redeemed at any one time, the Fiscal Agent shall redeem that amount of Outstanding Bonds and Parity Bonds issued prior to the issuance of such Parity Bonds and that amount of such Parity Bonds in the proportion which the principal amount of Outstanding Bonds and Parity Bonds issued prior to the issuance of such Parity Bonds bears to the then outstanding principal amount of such Parity Bonds; (7) The amount and due date of each mandatory Sinking Fund Payment, if any, for such Parity Bonds; (8) The amount, if any,.to be deposited from the proceeds of such Parity Bonds in the Reserve Account of the Special Tax Fund to increase the amount therein to the Reserve Requirement; (9) The form of such Parity Bonds; and (10) Such other provisions as are necessary or appropriate and not inconsistent with this Resolution. (c) The Fiscal Agent shall have received the following documents or money or securities, all of such documents dated or certified, as the case may be, as of the date of delivery of such Parity Bonds by the Fiscal Agent (unless the Fiscal Agent shall accept any of such documents bearing a prior date): (1) A certified copy of the Supplemental Resolution authorizing the issuance of such Parity Bonds; 3/23/89 2642n/2468/04 -47- Resolution No. 89-037 Page 59 (2) A written request of the District as to the delivery of such Parity Bonds; (3) An opinion of Bond Counsel and/or City Counsel to the effect that (a) the District has the right and power under the Act to adopt this Resolution and the Supplemental Resolutions relating to such Parity Bonds, and this Resolution and all such Supplemental Resolutions have been duly and lawfully adopted by the District, are in full force and effect and are valid and binding upon the District and enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights); (b) this Resolution creates the valid pledge which it purports to create of the Net Taxes as provided in this Resolution, subject to the application thereof to the purposes and on the conditions permitted by this Resolution; and (c) such Parity Bonds are valid and binding limited obligations of the District, enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors' rights) and the terms of this Resolution and all Supplemental Resolutions thereto and entitled to the benefits of this Resolution and all such Supplemental Resolutions, and such Parity Bonds have been duly and validly authorized and issued in accordance with the Act (or other applicable laws) and this Resolution and all such Supplemental Resolutions; and a further opinion of Bond Counsel to the effect that, assuming compliance by the District with certain tax covenants, the issuance of the Parity Bonds will not adversely affect the exclusion from gross income for federal income tax purposes of interest on any Outstanding Bonds and Parity Bonds theretofore issued or the exemption from State of California personal income taxation of interest on any Outstanding Bonds and Parity Bonds theretofore issued; (4) A certificate of the District containing such statements as may be reasonably necessary to show compliance with the requirements of this Resolution; (5) A certificate from one or more Independent Financial Consultants which when taken together certify that (i) the amount of maximum Special Taxes that may be levied by the District pursuant to the Act and the applicable resolutions and ordinances of the District is at least 1.15 times Maximum Annual Debt Service on all Outstanding Bonds and Parity Bonds theretofore issued and the Parity Bonds proposed to be issued, and (ii) the fair market value of the land and then existing improvements in the District, as 3/23/89 2642n/2468/04 -48- Resolution No. 89-037 Page 60 determined by an appraisal performed on a basis consistent with the appraisal provided to the District in connection with the issuance of the Bonds, is at least 2 times the sum of (A) the aggregate principal amount of all Bonds and Parity Bonds then Outstanding, plus (B) the aggregate principal amount of the additional Parity Bonds proposed to be issued, plus (C) the aggregate principal amount of all assessment district bonds then outstanding and payable from assessments to be levied on parcels of land within the District, plus (D) a portion of the aggregate principal amount of other community facilities district or general obligation bonds then outstanding and payable at least partially from taxes to be levied on parcels of land within the District (the "Other Bonds") equal to the aggregate principal amount of the Other Bonds multiplied by a fraction, the numerator of which is the amount of taxes levied for the Other Bonds on parcels within the District, and the denominator of which is the total amount of taxes levied for the Other Bonds on all parcels of land, based upon information from the most recent available fiscal year. For purposes of making the certifications required by this paragraph (c), the Independent Financial Consultants may rely on reports or certificates of such other persons as may be acceptable to the District, the City, Bond Counsel and the initial purchasers of the proposed Parity Bonds; and (6) Such further documents, money and securities as are required by the provisions of this Resolution and the Supplemental Resolution providing for the issuance of such Parity Bonds. ARTICLE X MISCELLANEOUS Section 10.01. Cancellation of Bonds and Parity Bonds. Ail Bonds and Parity Bonds surrendered to the Fiscal Agent for payment upon maturity or for redemption shall upon payment therefor and any Bond or Parity Bond purchased by the District as authorized herein and delivered to the Fiscal Agent for cancellation shall be cancelled forthwith and shall not be reissued. The Fiscal Agent shall destroy such Bonds and Parity Bonds, as provided by law, and furnish to the District a certificate of such destruction. Section 10.02. 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 3/23/89 2642n/2468/04 -49- Resolution No. 89-037 Page 61 attorneys appointed by an instrument in writing for that 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 or Parity 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 or Parity 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 or Parity 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. 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 or Parity Bond shall bind every future Owner of the same Bond or Parity Bond in respect of anything done or suffered to be done by the Fiscal Agent in pursuance of such request or consent. Section 10.03. Unclaimed Moneys. Anything in this Resolution to the contrary notwithstanding, any money held by the Fiscal Agent in trust for the payment and discharge of any of the Outstanding Bonds and Parity Bonds which remain unclaimed for five (5) years after the date when such Outstanding Bonds and Parity Bonds have become due and payable, if such money was held by the Fiscal Agent at such date, or for five (5) years after the date of deposit of such money if deposited with the Fiscal Agent after the said date when such Outstanding Bonds and Parity Bonds become due and payable, shall, at the written request of the District, be repaid by the Fiscal Agent to the 3/23/89 2642n/2468/04 -50- Resolution No. 89-037 Page 62 District, as its absolute property and free from trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of such Outstanding Bonds or Parity Bonds; provided, however, that, before being required to make any such payment to the District, the Fiscal Agent shall, at the expense of the District, cause to be mailed to the registered Owners of such Outstanding Bonds or Parity Bonds at their addresses as they appear on the registration books of the Fiscal Agent a notice that said money remains unclaimed and that, after a date named in said notice, which date shall not be less than thirty (30) days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the District. Section 10.04. Provisions Constitute Contract. The provisions of this Resolution shall constitute a contract between the District and the Bondowners and the provisions hereof shall be construed in accordance with the laws of the State of California. In case any suit, action or proceeding to enforce 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 Bondowners or the Fiscal Agent, then the District, the Fiscal Agent and 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. Section 10.05. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the District from making contracts or creating bonded or other indebtedness payable from a pledge of the Net Taxes which are subordinate to the pledge hereunder, the general fund of the District or from taxes or any source other than the Net Taxes as defined herein. Section 10.06. Further Assurances. The District will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Resolution, and for the better assuring and confirming unto the Owners of the Bonds or any Parity Bonds the rights and benefits provided in this Resolution. 3/23/89 2642n/2468/04 -51- Resolution No. 89-037 Page 63 Section 10.07. 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, shall be deemed severable and shall not be affected thereby, and this Resolution, the Bonds and any Parity 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. Section 10.08. Notices. Any notices required to be given to the District with respect to the Bonds or this Resolution shall be mailed, first class, or. personally delivered to the City Manager of the City of Poway, 13325 Civic Center Drive, Poway, California 92064, and all notices to the Fiscal Agent shall be mailed, first class, or personally delivered to the Fiscal Agent at 333 South Beaudry Avenue, 24th Floor, Los Angeles, California 90017, Attention: Corporate Trust Division, W24-30, Ref. No. SIGNED AND APPROVED this th day of , 1989 by the Mayor of the City of Poway acting on behalf of the Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center). Mayor of the City of Poway 3/23/89 2642n/2468/04 -52- Resolution No. 89-037 Page 64 No. ATTACHMENT "1" UNITED STATES OF AMERICA STATE OF CALIFORNIA COMMUNITY FACILITIES DISTRICT NO. 88-1 OF THE CITY OF POWAY (PARKWAY BUSINESS CENTER) SERIES 1989 SPECIAL TAX BONDS INTEREST RATE FDITURITY DATE- DATED DATE April 1, 1989 REGISTERED OWNER: PRINCIPAL AMOUNT CUSIP NI/MBER COMMUNITY FACILITIES DISTRICT NO. 88-1 OF THE CITY OF POWAY (PARKWAY BUSINESS CENTER) (the "District") situated in the City of Poway, State of California (the "City"), FOR VALUE RECEIVED, hereby promises to pay, solely from amounts held under the Resolution (as hereinafter defined), to the Registered Owner named above, or registered assigns, on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal A~nount set forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication hereof, unless (i) the 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 (as hereinafter defined) 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 the first Record Date in which event interest shall be payable from April 1, 1989; provided, however, that if at the time of authentication of this Bond, interest is in default, interest on this Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from April 1, 1989. Interest will be paid semiannually on February 15 and August 15 (each an "Interest Payment Date"), commencing August 15, 1989, at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment. 3/23/89 2642n/2468/04 1-1 Resolution No. 89-037 Page 65 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 corporate trust office of Security Pacific National Bank (the "Fiscal Agent") in Los Angeles, California. Interest on this Bond shall be paid by check of the Fiscal Agent mailed, by first class mail, postage prepaid, to the Registered Owner hereof as of the close of business on the first day of 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. This Bond is one of a duly authorized issue of "Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center), Series 1989 Special Tax Bonds" (the "Bonds") issued in the aggregate principal amount of $30,000,000 pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311, et seq., of the California Government Code (the "Act"), for the purpose of paying the cost of constructing and acquiring certain public facilities, paying certain costs related to the issuance of the Bonds and establishing a reserve fund. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City of Poway acting in its capacity as the legislative body of the District (the "Legislative Body") on March 28, 1989 and a Supplement to Resolution executed in connection therewith (collectively, the "Resolution"), and this reference incorporates the Resolution herein, and by acceptance hereof the Registered Owner of this Bond assents to said terms and conditions. The Resolution is adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California. Pursuant to the Act and the Resolution, the principal of, premium, if any, and interest on this Bond are payable solely from the portion of the annual special taxes authorized under the Act to be levied and collected within the District and pledged to the repayment of the Bonds (the "Special Taxes") and certain other amounts held in the funds and accounts established pursuant to the Resolution. Any amounts for the payment hereof shall be limited to the Special Taxes pledged and collected or foreclosure proceeds received following a default in payment of the Special Taxes, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law. The District has covenanted for the benefit of the owners of the Bonds that under certain circumstances it will commence and diligently pursue to completion appropriate foreclosure proceedings in the event of delinquencies of Special Tax installments levied for payment of principal and interest on the Bonds. The District 3/23/89 2642n/2468/04 1-2 Resolution No. 89-037 Page 66 is currently authorized to issue up to $15,000,000 in additional bonds payable from the Special Taxes which will rank equally as to security with the Bonds, but only upon satisfaction of certain terms and conditions set forth in the Resolution. The Bonds are subject to mandatory redemption before maturity on August 15, 1992, in whole or in part, as nearly as practicable on a pro rata basis from each maturity and by lot within a maturity, from amounts transferred to the Redemption Account of the Special Tax Fund from the Construction Fund on July 1, 1992 (rounded to the highest closest integral multiple of $5,000). The Bonds so called for redemption will be redeemed at a redemption price equal to the principal amount thereof, plus accrued interest t.o the redemption date, without premium. _ Bonds maturing on or prior to August 15, 1999 shall not be subject to redemption prior to maturity. The Bonds maturing on August 15, 2000 or thereafter may be redeemed, at the option of the District on August 15, 1999, 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 the principal amount thereof, together with accrued interest to the date of redemption: Redemption Dates Redemption Prices August 15, 1999 and February 15, 2000 August 15, 2000 and February 15, 2001 August 15, 2001 and thereafter 102% 101% 100% In addition, the Term Bonds maturing on August 15, 2014 are subject to mandatory sinking fund redemption prior to maturity commencing on August 15, 2002 in part, by lot, from Sinking Fund Payments (as defined in the Resolution) at a price equal to the principal amount thereof, without premium, together with accrued interest to the date of redemption, 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 mailed to the registered owners thereof no less than 30 nor more than 60 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books. Neither the failure of the Registered Owner hereof to receive nor any defect in such notice will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified 3/23/89 2642n/2468/04 1-3 Resolution No. 89-037 Page 67 redemption date; provided that funds for the redemption are on deposit with the Fiscal Agent on the redemption date. Thereafter, the registered owners of such Bonds shall have no rights under the Resolution except the right to receive payment of the redemption price upon the surrender of the Bonds. This Bond shall be registered in the name of the Registered Owner hereof, as to both principal and interest, and the District and the Fiscal Agent may treat the Registered Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary. The Fiscal Agent shall not be required to register transfers or make exchanges of (i) any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed, or (ii) any Bonds chosen for redemption. The Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple of $5,000 and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Resolution. This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the corporate trust office of the Fiscal Agent in Los Angeles, California, but only in the manner, subject to the limitations and upon payment of the charges provided in the Resolution, upon surrender and cancellation of this Bond. Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor. The rights and obligations of the District and of the registered owners of the Bonds may be amended at any time, and in certain cases without notice to or the consent of the registered owners, to the extent and upon the terms provided in the Resolution. THE BONDS DO NOT CONSTITUTE OBLIGATIONS OF THE CITY OF POWAY OR OF COMMUNITY FACILITIES DISTRICT NO. 88-1 OF THE CITY OF POWAY (PARKWAY BUSINESS CENTER) FOR WHICH THE CITY OF POWAY OR THE DISTRICT IS OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, ANY TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE FROM THE SPECIAL TAXES BUT ARE NOT A DEBT OF THE CITY OF POWAY, THE STATE OF CALIFORNIA OR ANY OTHER POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION. 3/23/89 2642n/2468/04 1-4 Resolution No. 89-037 Page 68 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 do exist, have happened and have been performed in due time, form and manner as'required by law, and that the amount of this Bond, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California. IN WITNESS WHEREOF, Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center) has caused this Bond to be dated as of , 1989, to be signed on behalf of the District by the Mayor of the City of Poway by his facsimile signature and attested by the facsimile signature of the City Clerk and has caused its seal to be reproduced hereon. ATTEST: Mayor of the City of Poway, on behalf of Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center) City Clerk of the City of Poway, on behalf of Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center) 3/23/89 2642n/2468/04 1-5 Resolution No. 89-037 Page 69 FORM OF FISCAL AGENT'S CERTIFICATE OF AUTHENTICATION AND REGISTRATION This is one of the Bonds described in the within defined Resolution. Dated: By: as Fiscal Agent By: Authorized Signatory 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 Fiscal Agent with full power of substitution in the premises. Dated: Signature Guaranteed Note: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. Notice: The signature on this assignment must correspond with the name(s) as written on the face of the within Bond in every particular without alteration or enlargement, 'or any change whatsoever. 3/23/89 2642n/2468/04 Resolution No. 89-037 Page 70 ATTACHMENT "2" REQUISITION FOR DISBURSEMENT OF PROJECT COSTS Requisition No. The undersigned, a duly authorized representative of Community Facilities District No. 88-1 of the City of Poway (Parkway Business Center), hereby certifies to the Fiscal Agent for purposes of disbursing funds from the Construction Fund to pay Project Costs that: (1) The Fiscal Agent is to pay to the payees set forth on Attachment 1 hereto the amount set forth next to each Payee's name for the item described on Exhibit A hereto; (2) The conditions to the release of these amounts from the Construction Fund have been satisfied; and (3) There has not been filed with or served upon the District notice of any lien, right to lien or attachment upon, stop notice or claim affecting the right to receive payment of, any of the moneys payable to any of the payees named on Exhibit A hereto which has not been released or will not be released simultaneously with the payment of such amounts, other than materialmen's or mechanic's liens accruing by mere operation of law. Add: Purpose for which obligation incurred [See Section 3.10(a).] Dated: COMMUNITY FACILITIES DISTRICT NO. 88-1 OF THE CITY OF POWAY (PARKWAY BUSINESS CENTER) By: Authorized Officer 3/23/89 2642n/2468/04 Resolution No. 89-037 Page 71 EXHIBIT A Payee Amount Due Purpose of Expenditure 3/23/89 2642n/2468/04