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Item 7 - Resolution Integrated Financing Dist. 96-1 -AGENDA REPORT SUMMARY ~ ~-Cf-C{ce TO: ~OM: INITIATED BY: Honorable Mayor and Members of the City Council James L. Bowersox, City Ma~ . John D. Fitch, Assistant City Manager~)~ Peggy A. Stewart, Director of Adminis~rative servic~ June 4, 1996 DATE: SUBJECI': Resolutions determining unpaid assessments and awarding the bonds of the Integrated Financing District No. 96-1 (High Valley Roads) ABSTRACI' The attached resolutions determine that the amount of unpaid non-contingent assessments for the Integrated Financing District is $586,470.69; authorize for the issuance of bonds in the aggregate principal amount of $586,470.69; approve the Continuing Disclosure Agreement; and award the bonds to the Miller Schroeder Financial, Inc. ENVIRONMENTAL REVIEW Environmental review not required for this agenda item according to CEQA guidelines. JFISCAL IMPACI' The bonds will be issued at a True Interest Cost of 6.22769947% (including accrued interest) with average annual gross debt service of $52,139.47 and average annual net debt service of $48,681.83. ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE No additional public notification. RECOMMENDATION It is recommended that the City Council approve Resolution Nos. , ,and determining the unpaid assessments, authorizing the issuance of bonds~nd awaraTng the bonds to the best bidder for Integrated Financing District No. 96-1 and authorize staff to complete the bond issuance. ACTION 1 of 39 JUN 4 1996 ITEM 7 --L- · AGENDA REPORT CITY OF POW A Y TO: FROM: INITIATED BY: Honorable Mayor and Members of the City Council James L. Bowersox, City Man~ John D. Fitch, Assistant City ManagerCi~ Peggy A. Stewart, Director of Administ~tive Services June 4, 1996 Resolutions determining unpaid assessments and awarding the bonds of the Integrated Financing district No. 96-1 (High Valley Road) DATE: SUBJECT: BACKGROUND On April 23, 1996, the City Council adopted Ordinance No. 460 approving formation of Integrated Assessment District No. 96-1 (High Valley Roads), and establishing the total amount of assessments at $753,647. A 30-day cash collection period was established for those residents who wished to prepay their assessments.The Council also approved documents authorizing the issuance of bonds and directing staff to proceed with the competitive sale for the issuance. FINDINGS During the statutory 30-day cash collection period for Integrated Financing District No. 96-1, prepayments in the amount of $110,322.39 for 39 parcels )including 2 partial payments) were received. The aggregate amount of unpaid non-contingent assessments is $585,470.69 Staff has proceeded with a competitive sale for the issuance of bonds in the aggregate principal amount of $585,470.69. The sale was held on June 4, 1996. The City received 5 bids, summarized in Attachment E. It is recommended that the bond issuance be awarded to Miller & Schroeder who made the best bid of 6.2509149, which when adjusted for accrued interest is a 6.22769947% True Interest Cost with a total debt service gross of $1,052,050.82. In order to final ize the sale of the bonds, it is necessary for the City Council to adopt and approve the following: Resolution Determining Unpaid Assessments The resolution determines that the amount of unpaid assessments in the District 96-1 are $586,470.69. ACTION: See summary page. 2 of 39 )) JUN 4 1996 ITEM 7 Staff Report June 4, 1996 Page 2 Bond Resolution of the City of Poway The resolution authorizes and provides for the issuance of the bonds for the Integrated Financing District in the aggregate principal amount of $5B5,470.69, and approves the Continuing Disclosure Agreement. This agreement names First Trust of California as the District's fiscal agent and dissemination agent. As such, First Trust is responsible for reporting to bond owners on Poway's Annual Reports and any significant events which would have material effects on the bonds. Resolution awards the bonds to the best bidder, yielding the lowest net interest cost. Continuing Disclosure Agreement Resolution Awarding the Bonds ENVIRONMENTAL REVIEW Environmental Review is not required for this agenda item according to CEQA guidelines. FISCAL IMPACT The bonds will be issued at a True Interest Cost of 6.22769947% (including accrued interest) with average annual gross debt service of $52,139.47 and average annual net debt service of $48,681.83. ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE No additional public notification was sent. RECOMMENDATION It is recommended that the City Council approve Resolution Nos. , ,and determining the unpaid assessments, authorizing the issuance of bonds~nd awaraTng the bonds to the best bidder for Integrated Financing District No. 96-1 and authorize staff to complete the bond issuance. Attachments: A. Resolution determining unpaid assessments B. Resolution authorizing and providing for the issuance of bonds. C. Continuing Disclosure Agreement D. Resolution awarding bonds to the best bidder E. Summary of Bids and Debt Service Schedule 3 of 39 JUN 4 1996 ITEM 7 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY DETERMINING UNPAID ASSESSMENTS IN INTEGRATED FINANCING DISTRICT NO. 96-1 (HIGH VALLEY ROADS) WHEREAS, this City Council has taken proceedings under the Municipal Improvement Act of 1913, Division 12 of the California Streets and Highways Code and the Integrated Financing District Act, commencing with Section 53175 of the California Government Code (collectively, the "Law"), for the formation of Integrated Financing District No. 96-1 (High Valley Roads) (the" Assessment District") and has confirmed an assessment, which assessment and a related diagram were recorded in the office of the Superintendent of Streets and with the County Recorder of the County of San Diego; and a notice of assessment, as prescribed in Section 3114 of the Code, has been recorded with the County Recorder of the County of San Diego, whereupon the assessment attached as a lien upon the property assessed within the Assessment District as provided in Section 3115 of the Code; and WHEREAS, said proceedings provided that bonds would be issued pursuant to the Improvement Bond Act of 1915, Division 10 of the California Streets and Highways Code; and WHEREAS, a list of unpaid assessments has been filed with the City Treasurer pursuant to Section 6420 of the Code, the Superintendent of Streets has listed all of the assessments as unpaid as of the date hereof, and the aggregate amount of unpaid non-contingent assessments is $586,470.69; NOW THEREFORE, the City Council of the City of Poway DOES HEREBY FIND, DETERMINE, RESOLVE AND ORDER as follows: SECTION 1. The unpaid non-contingent assessments upon the security of which the bonds are to be issued are determined to be as set forth in the recitals hereof. SECTION 2. Bonds representing the unpaid non-contingent assessments shall be issued pursuant to the Improvement Bond Act of 1915 in the manner provided for in a subsequent resolution of this City Council. SECTION 3. This Resolution shall take effect immediately upon its adoption. ATTACHMENT A 4 of 39 JUN 4 1996 ITEM 7 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POW A Y AUTHORIZING AND PROVIDING FOR THE ISSUANCE OF BONDS PURSUANT TO THE IMPROVEMENT BOND ACT OF 1915, DESIGNATED INTEGRATED FINANCING DISTRICT NO. 96-1 (HIGH VALLEY ROADS) LIMITED OBLIGATION IMPROVEMENT BONDS, AND APPROVING CERTAIN DOCUMENTS AND AUTHORIZING CERTAIN ACTIONS IN CONNECTION THEREWITH WHEREAS, the City Council of the City of Poway has previously undertaken proceedings pursuant to the terms and provisions of the Municipal Improvement Act of 1913 (Division 12 of the Streets and Highways Code of the State of California) and the Integrated Financing District Act (commencing with Section 53175 of the California Government Code) (collectively, the "Act") to form, and confirm assessments in, a special assessment district known and designated as City of Poway Integrated Financing District No. 96-1 (High Valley Roads) (referred to herein, alternatively, as the "Integrated Financing District" or the "Assessment District"); and WHEREAS, this City Council has heretofore undertaken proceedings pursuant to the Improvement Bond Act of 1915 (Division 10 of the Streets and Highways Code of the State of California, the "Bond Law") to notice the sale of the Bonds (as hereinafter defined) and has conducted the sale of Bonds as noticed; and WHEREAS, this City Council now wishes to issue limited obligation improvement bonds in the aggregate principal amount of $586,470.69 representing the unpaid non-contingent assessments pursuant to the Bond Law for the purpose of providing certain public improvements benefitting the land in the Assessment District (the "Improvements"), and it is necessary to establish terms and provisions of such issuance; and WHEREAS, in connection with the foregoing, there has been presented to this City Council a form of continuing disclosure agreement (the "Continuing Disclosure Agreement") by and between the City and First Trust of California, National Association; and WHEREAS, this City Council desires to approve the Continuing Disclosure Agreement and to provide such Continuing Disclosure Agreement for the benefit of bondholders in order to enhance the marketability of the Bonds; and to authorize the sale and iss"Jance of the Bonds, all as provided for herein; NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Poway that: Section I. The above recitals are all true and correct. ATTACHMENT B 6 of 39 JUN 4. 1996 ITEM 7 Resolution No. 96- Page 2 PASSED, ADOPTED, AND APPROVED by the City Council of the City of Poway, California, at a regular meeting held on the day of , 1996. Don Higginson, 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 penalty of perjury, that the above and foregoing Resolution No. 96- was duly adopted by the City Council at a meeting of said City Council held on the of 1996 and that it was so adopted by the following vote: AYES: NOES: ABSTAIN: ABSENT: Marjorie K. Wahlsten, City Clerk, City of Poway . . . u. '2468.0013 5 of 39 JUN 4 1996 ITEM 7 Resolution No. 96- Page 2 Section 2. Bonds in an aggregate principal amount of $586,470.69 shall be issued pursuant to the provisions of the Act and the Bond Law upon the security of unpaid non-contingent assessments levied in accordance with the Act and under and pursuant to the proceedings thereunder duly had and taken (the" Assessments"). The Bonds herein provided to be issued shall be known as City of Poway Integrated Financing Assessment District No. 96-1 (High Valley Roads) Limited Obligation Improvement Bonds (the "Bonds"), shall be dated as of June 1, 1996, and shall bear such interest at such rates as set forth in the bid form attached hereto as Exhibit A, shall be in the aggregate principal amount of $586,470.69, and shall mature on the following dates and in the following amounts: 9/2/97 $ 16,470.69 9/2/07 $ 30,000.00 9/2/98 15,000.00 9/2/08 30,000.00 9/2/99 20,000.00 9/2/("1) 30,000.00 9/2/00 20,000.00 9/2/10 35,000.00 9/2/01 20,000.00 9/2/11 35,000.00 9/2/02 20,000.00 9/2/12 40,000.00 9/2/03 20,000.00 9/2/13 40,000.00 9/2/04 25,000.00 9/2/14 45,000.00 9/2/05 25,000.00 9/2/15 45,000.00 9/2/06 25,000.00 9/2/16 50,000.00 The Bonds shall be issued substantially in the form of bonds set forth in the Bond Law, except as such form may vary from the terms and conditions set forth in this Resolution, subject to the approval of Bond Counsel, and shall be only in fully registered form in denominations of $5,000 or any integral multiple thereof, except that one Bond shall be in the denomination of $6,470.69. Section 3. Each Bond shall be of a single maturity and shall bear interest at the applicable rate as set forth above, from the interest payment date next preceding the date on which it is authenticated and registered, unless said Bond is authenticated as of an interest payment date, or unless said Bond is authenticated prior to the first interest payment date, in which case it shall bear interest from its date; provided, however, that if at the time of authentication of any Bond, interest is in default, interest on that Bond shall be payable from the last interest payment date to which the interest has been paid or made available for payment or from the delivery date of the Bonds if no interest has been paid or made available for payment. Interest shall be payable on September 2, 1996, and semiannually thereafter on March 2 and September 2 of each year. Section 4. (a) All Bonds shall be initially issued in the form of a separate single certificated fully registered Bond for each maturity date. Upon initial issuance, the ownership of each Bond shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC. Except as "1"1.,36976 51138122468.0013 7 of 39 06/03/96 JUN 4 1996 ITEM 7 Resolution No. 96- Page 3 provided in Subsection (d) hereof, all outstanding Bonds shall be registered in the Bond Register in the name of Cede & Co., as nominee of DTC. (b) With respect to Bonds registered in the Bond Register in the name of Cede & Co., as nominee of DTC, the City and the Fiscal Agent shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant or any other person, other than an owner of Bonds (each, an "Owner"), as shown in the Bond Register, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any DTC Participant or any other person, other than an Owner, as shown in the Bond Register, of any amount with respect to principal of, premium, if any, and interest on the Bonds. The City and the Fiscal Agent may treat and consider the person in whose name each Bond is registered in the Bond Register as the holder and absolute owner of such Bond for the purpose of payment of principal, premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Fiscal Agent shall pay all principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective Owners, as shown in the Bond Register, as provided in Section 5 hereof, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the Bond Register, shall receive a certificated Bond evidencing the obligation of the City to make payments of principal, premium, if any, and interest pursuant to this Resolution. Upon delivery by DTC to the Fiscal Agent of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the provisions herein with respect to record dates, the word "Cede & Co." in this Resolution shall refer to such new nominee of DTC. (c) The delivery of a representation Jetter by the City and the Fiscal Agent shall not in any way limit the provisions of Subsection (b) hereof or in any other way impose upon the City or the Fiscal Agent any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the Bond Register. The Fiscal Agent shall take all action necessary for all representations in the representation letter with respect to the Fiscal Agent to be complied with at all times. (d) (i) DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the City and the Fiscal Agent and discharging its responsibilities with respect thereto under applicable law. (ii) The City, in its sole discretion and without the consent of any other person, may terminate the services of DTC with respect to the Bonds if the City determines that: PlIBL:36976_51138122468.0013 06/03/96 8 of 39 JUN 4 1996 ITEM 7 ; Resolution No. 96- Page 4 (A) Bonds, or DTC is unable to discharge its responsibilities with respect to the (B) a continuation of the requirement that all outstanding Bonds be registered in the Bond Register in the name of Cede & Co., or any other nominee of DTC, is not in the best interest of the Beneficial Owners of such Bonds. (Hi) Upon the termination of the services of DTC with respect to the Bonds pursuant to Subsection (d)(ii)(B) hereof, or upon the discontinuance or termination of the services of DTC with respect to the Bonds pursuant to subsection (d)(i) or Subsection (d)(ii)(A) hereof after which no substitute securities depository willing to undertake the functions of DTC hereunder can be found which, in the opinion of the City, is willing and able to undertake such functions upon reasonable and customary terms, the City is obligated to deliver Bond certificates, as described in this Resolution and the Bonds shall no longer be restricted to being registered in the Bond Register in the name of Cede & Co. as nominee of DTC, but may be registered in whatever name or names DTC shall designate to the Fiscal Agent in writing, in accordance with the provisions of this Resolution. (e) Notwithstanding any other provisions of this Resolution to the contrary, as long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal or, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the representation letter. Section 5. The principal of and redemption premium, if any, on the Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof at the corporate trust office of First Trust National Association, St. Paul, Minnesota, on behalf of First Trust of California, National Association (the "Fiscal Agent," "Registrar," "Paying Agent" and "Transfer Agent"). Interest on each Bond shall be paid by check to the registered owner thereof at his or her address as it appears on the books of registration, or at such address as may have been filed with the Registrar for that purpose, as of the 15th day immediately preceding the applicable interest payment date by check mailed by first-class mail. Section 6. The City of Poway will not obligate itself to advance available funds from the treasury of the City to cure any deficiency which may occur in the Redemption Fund for the Bonds. However, the City covenants for the benefit of the owners of the Bonds that if the total amount of delinquencies in the payment of assessment installments exceed in any fiscal year five percent (S %) of the total assessment installments for such fiscal year. the City will cause superior court foreclosure proceedings to be commenced pursuant to Section 8830 et seq. of the Streets and Highways Code not later than October 1 of the following fiscal year and will cause such proceedings to be diligently prosecuted to completion. PUBc:36976 51138122468.0013 06/03/96 9 of 39 JUN 4 1996 ITEM 7 Resolution No. 96- Page 5 Additionally, the City covenants to contribute or advance, as applicable, the following amounts to the extent needed for the construction of the Improvements, but not to exceed in the aggregate $478,000, to include the following: (a) the contribution of $125,000 from the City's general fund or other legally available funds of the City; (b) the contribution of $128,000 from certain water funds of the City; (c) the advance from the City's general fund or other legally available funds to Integrated Financing District No. 96-1 of; (i) $125,000, to be repaid from the County of San Diego (the "County") contribution to Integrated Financing District No. 96-1 proposed to be paid by the County in the 1996-97 fiscal year, and (ii) up to $117,750, to be repaid by additional County contributions to Integrated Financing District No. 96-1, as and when first available. The foregoing City contributions and advances shall be applied to the costs of the improvements identified in the Report, if needed, or, otherwise, as a credit to the assessment or to call bonds pursuant to Section 10427 of the California Streets and Highways Code. Section 7. Each Bond shall be subject to redemption and payment in advance of maturity in increments of $5,000, as provided in Section 8768 of the Streets and Highways Code, on March 2 or September 2 in any year, by giving the notice provided in said law to the registered owner thereof at his or her address as it appears on the books of registration and by paying the principal amount to be redeemed and accrued interest on such amount, (a) together with a 3 % premium (expressed as a percentage of the principal amount to be redeemed) for Bonds maturing on or before September 2,2006, and (b) without premium for Bonds maturing on September 2, 2007 and thereafter. If less than the entire Bond is redeemed, a new Bond in the amount of the unredeemed portion shall be authenticated and delivered to the registered owner thereof. In lieu of payment at maturity or redemption, monies in the Redemption Fund may be used and withdrawn by the Fiscal Agent for purchase of outstanding Bonds, upon the filing with the Fiscal Agent prior to the selection of Bonds for redemption of a written request from the City requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such request may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, the premium, if any, plus interest accrued to the date of maturity or redemption that would otherwise be payable. PURI.,36976 <1118122468.0013 10 of 30 06/03/% JUN 4 1996 II t:M 7 Resolution No. 96- Page 6 If less than all of the outstanding Bonds or portions thereof are to be redeemed, the City shall select the Bonds to be redeemed in authorized denominations in such a way that the ratio of outstanding Bonds to issued Bonds shall be approximately the same in each maturity insofar as possible; provided, however, that the portion of any serial 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 for redemption, the City shall treat each such Bond as representing that number of Bonds of $5,000 denomination which is obtained by dividing the principal amount of such Bonds to be redeemed in part by $5,000. The City shall promptly notify the Fiscal Agent in writing of the Bonds, or portions thereof, selected for redemption. So long as the Bonds are held in book-entry form only, all notices of redemption will be mailed by the Fiscal Agent to DTC, or its nominee, and not to the owners of beneficial interests in the Bonds. Notice of redemption will be provided to such beneficial owners only in accordance with the procedures governing the DTC book-entry system. At least 30 days but no more than 45 days prior to the redemption date, the Fiscal Agent is required under this Resolution to give by registered or certified mail or by personal service, a redemption notice to the respective owners of the Bonds to be redeemed at their addresses appearing on the bond register. Such notice of redemption shall (a) specify the numbers of the Bonds selected for redemption, except that where all the Bonds are subject to redemption or all the Bonds of a maturity date are subject to redemption, the numbers thereof need not be specified; (b) state the date fixed for redemption; (c) state the redemption price; (d) state the place or places where the Bonds are to be redeemed; (e) in the case of Bonds to be redeemed only in part, state the portion of the Bond which is to be redeemed; and (f) the CUSIP numbers of the Bonds to be redeemed. Such notice shall further state that on the date fIXed for redemption there shall become due and payable on each Bond, or portion thereof called for redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon shall cease to accrue and be payable. Neither failure of an Owner to receive the notice described above nor any defect therein shall in any manner affect the redemption of the Bonds. Notice of redemption having been duly given as provided in this Resolution, 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, from and after the redemption date, the Bonds or portions thereof so designated for redemption shall be deemed to be no longer outstanding and such Bonds or portions thereof shall cease to bear further interest. From and after the date fIXed for redemption, no owner of any of the Bonds or portion thereof so designated for redemption shall be entitled to any of the benefits of this Resolution, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available. Section 8. Any Bond may, in accordance with its terms, be transferred upon the books of registration required to be kept pursuant to the provisions of this Resolution by the PUBL:36976 51138122468.0013 11 of 39 06/03/96 JUN 4 1996 ITEM 7 Resolution No. 96- Page 7 Owner in whose name it is registered, or by his or her duly authorized attorney or legal representative, upon surrender of such Bond for registration of such transfer, accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Transfer Agent. The Transfer Agent shall require the payment by the bondowner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer and such charges as may be required by the Transfer Agent. No such transfer shall be required to be registered during the fifteen days next preceding the selection of Bonds to be redeemed or with respect to any Bond selected for redemption. Section 9. Fully registered Bonds may be exchanged at the office of the Transfer Agent for a like aggregate principal amount of Bonds of the same series, interest rate and maturity, subject to the terms and conditions provided in the system of registration for registered debt obligations, including the payment of certain charges, if any, upon surrender and cancellation of the Bonds. Upon such transfer and exchange, a new registered Bond or Bonds of any authorized denomination or denominations of the same maturity for the same aggregate principal amount will be issued to the transferee in exchange therefor. Section 10. There shall be kept by the Registrar sufficient books for the registration and transfer of the Bonds and, upon presentation for such purpose, the Registrar shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said register, Bonds as hereinabove provided. Section 11. The Bonds shall be executed by either manual or facsimile signature by the City Treasurer and the City Clerk, and the seal of the City shall be imprinted in manual or facsimile form thereon, as hereinafter provided. In case an officer who shall have signed any of the Bonds by facsimile or otherwise shall cease to be such officer before the authentication, delivery and issuance of the Bonds, such Bonds nevertheless may be authenticated, delivered and issued; and upon such authentication, delivery and issuance, they shall be as binding as though those who signed the same had remained in office. Section 12. Only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form below, manually executed by the Transfer Agent and Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this Resolution, and such certificate of the Transfer Agent and Registrar shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Resolution. PUBL:36976 51138122468.0013 12 of 39 06/03/96 JUN 4 1996 ITEM 7 Resolution No. 96- PageS FORM OF CERTIFICATE OF AUTHENTICATION AND REGISTRATION This bond has been authenticated and registered on First Trust of California, National Association, as Registrar and Transfer Agent By: Section 13. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal and redemption premium, if any, of any such Bond, and the interest on any such Bond, 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, including the redemption premium, if any, and interest thereon, to the extent of the sum or sums so paid. Section 14. In case any Bond secured hereby shall become mutilated or be destroyed, stolen or lost, the City Treasurer shall cause to be executed and authenticated a new Bond of like date and tenor in exchange and substitution for and upon the cancellation of such mutilated Bond or in lieu of and in substitution for such Bond destroyed, stolen or lost, upon the owner's paying the reasonable expenses and charges in connection therewith, and, in the case of a Bond destroyed, stolen or lost, his or her filing with the Registrar of evidence satisfactory to it and to the City Treasurer, or her designee, that such Bond was destroyed, stolen or lost, and of his or her ownership thereof, and furnishing the City with indemnity satisfactory to it. Section 15. All Bonds paid or redeemed, either at or before maturity, shall be cancelled upon the payment or redemption of such Bonds and shall be delivered to the Transfer Agent and Registrar when such payment or redemption is made. All Bonds cancelled under any of the provisions of this Resolution shall be destroyed as provided by law by the Transfer Agent and Registrar, who shall execute a certificate in duplicate describing the Bonds so destroyed and shall retain said executed certificate in its permanent files for the issue. Section 16. There is hereby created a special reserve fund for the Bonds to be held by the Fiscal Agent to be designated by the name of the Assessment District and specified as the Reserve Fund. Concurrently with the issuance of the Bonds there shall be transferred from the net proceeds derived from the sale of the Bonds and deposited in the Reserve Fund such amounts as may be specified in writing by the City Treasurer, or her designee. Moneys in the Reserve Fund shall be applied as follows: PUBI.:36976 51138122468.0013 13 of 39 JUN 4 1996 IiEM 7 Resolution No. 96- Page 9 A. Amounts in the Reserve Fund shall be transferred to the Redemption Fund for the Bonds if, as a result of delinquencies in the payment of assessments, there are insufficient moneys in said Redemption Fund to pay principal of and interest on the Bonds when due. Amounts so transferred shall be repaid to the Reserve Fund from proceeds from the redemption or foreclosure of property with respect to which a assessment is unpaid and from payments of the delinquent assessments; B. The earnings from investment of moneys amount in the Reserve Fund shall be credited thereto, provided that the balance on deposit in the Reserve Fund shall at no time exceed the "Reserve Requirement" , which for purposes of this Resolution shall be the least of (i) maximum annual debt service on the outstanding Bonds, (ii) 125 % of average annual debt service on the outstanding Bonds, or (Hi) 10% of the principal amount of Bonds outstanding as of the date of calculation (the "Reserve Requirement"). If, on July 1 of each year, commencing July 1, 1996, while any Bond remains outstanding, the Fiscal Agent determines that the amount then on deposit in the Reserve Fund exceeds the Reserve Requirement, the Fiscal Agent shall withdraw the excess amounts from the Reserve Fund and shall deposit such amount in the Redemption Fund to be applied to the payment of debt service on the Bonds on the next interest payment date or shall deposit any amount required to be deposited in the Excess Investment Earnings Fund, as set forth in Section 24 hereof. C. Whenever moneys in the Reserve Fund are sufficient to retire all of the Bonds outstanding (including paying the accrued interest thereon and any redemption premium applicable thereto), such moneys shall be transferred to the Redemption Fund for the Bonds and collection of the remaining unpaid assessments shall cease. D. The amount of the annual Reserve Fund transfer to the Redemption Fund pursuant to subsection B hereinabove shall be credited toward installments of unpaid assessments each year during which any part of the Bonds remain outstanding. The Auditor's Record, prepared pursuant to Section 8682 of the Streets and Highways Code, shall reflect credits against each of the unpaid assessments in the manner provided in Section 10427.2 of said Code, in amounts equal to each parcel's proportionate share of the annual Reserve Fund transfer. Subject to the limitations contained in subsection B hereinabove, no portion of the annual Reserve Fund transfer shall be made in any year in excess of the amount which would cause the Reserve Fund to fall below the then applicable Reserve Requirement. E. In the event assessment is paid in cash in advance of the final maturity date of the Bonds, the Fiscal Agent is authorized to reduce the amount in the Reserve Fund PUBL:36976_51138122468.0013 14 of 39 06/03/96 JUN 4 1996 ITEM 7 Resolution No. 96- Page 10 and transfer to the Redemption Fund an amount in the proportion which the assessment paid in cash bears to the total original unpaid assessments. Section 17. There is hereby created a special fund for the Bonds to be held by the Fiscal Agent and to be designated by the name of the Assessment District and specified as the Costs of Issuance Fund. There shall be deposited in the Costs of Issuance Fund from the proceeds derived from the sale of the Bonds the amount specified in writing by the City's Director, Administrative Services at the time of the issuance of the Bonds. Amounts on deposit in the Costs of Issuance Fund shall be applied to the payment of the costs of issuing the Bonds. After payment of all such costs or on October 1, 1996, whichever is the first to occur, any moneys remaining in the Costs of Issuance Fund shall be transferred to the Redemption Fund. Section 18. The City will levy Contingent Assessments in the manner and at the times provided in the resolution of intention to form the Assessment District and in the ordinance of the City confirming assessments for the Assessment District. Section 19. After making the deposits to the Reserve Fund and the Costs of Issuance Fund described in Sections 16 and 17, respectively, the Treasurer shall deposit all remaining Bond proceeds, and all moneys received pursuant to Section 6 hereof, in the Improvement Fund heretofore established for the Assessment District, and shall apply such amounts to the costs of the Improvements. Any surplus remaining in the Improvement Fund after completion of the Improvements shall be applied pursuant to the Act. Section 20. Principal of and interest on said Bonds shall be paid out of the Redemption Fund created pursuant to Section 8671 of the California Streets and Highways Code, to be held and maintained by the Fiscal Agent. Accrued and capitalized interest paid by the initial purchaser of the Bonds shall be deposited by the Fiscal Agent in the Redemption Fund. Except as otherwise provided herein, the Fiscal Agent shall deposit as received all installments of the assessments, other than the annual assessments to pay for administrative costs collected pursuant to Section 10312 of the California Streets and Highways Code which shall be applied pursuant to Section 21 below, and the Fiscal Agent shall hold all such moneys, in the Redemption Fund and use the same for the payment of principal of and interest on the Bonds. The Fiscal Agent shall establish a separate account within the Redemption Fund to be designated the "Contingent Assessment Account" and shall deposit in the Contingent Assessment Account the contingent assessments, if any, received in connection with the Assessment District. Amounts on deposit in the Contingent Assessment Account shall be withdrawn therefrom and applied to the redemption of Bonds or to credit assessments (both prepaid and due) from time to time, at the discretion of the City, as provided for in the Act. Section 21. There is hereby created a special fund for the Assessment District to be held by the Fiscal Agent and to be designated by the name of the Assessment District and specified as the Administrative Expense Fund. The Fiscal Agent shall deposit in the Administrative Expense Fund as received all annual assessments to pay for administrative costs P\JBL,3~97~ < 1118122468.0013 06/03/96 JUN 4 1996 ITEM 7 15 of 39 Resolution No. 96- Page 11 collected pursuant to Section 10312 of the California Streets and Highways Code. The Fiscal Agent shall pay to the City from the Administrative Expense Fund such amounts as the City's Director, Administrative Services may specify in writing from time to time to be used by the City for the purposes permitted by the California Streets and Highways Code. Section 22. The City Treasurer, or his or her designee, is hereby instructed to cause Bonds, as set forth above, to be printed or typewritten, and to cause said Bonds to be authenticated and delivered to an authorized representative of the initial purchaser of the Bonds, upon payment of the purchase price as set forth in Exhibit A to the Resolution of this City Council Awarding The Bonds of the Assessment District to the Best Bidder, adopted this day by this City Council. Section 23. Notwithstanding any other provision of this Resolution, absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds will not be adversely affected for federal income tax purposes by reason of the City's failure to do so, the City covenants to comply with all applicable requirements of the Internal Revenue Code of 1986, as amended (the "Code"), necessary to preserve such exclusion from gross income and specifically covenants, without limiting the generality of the foregoing, as follows: (a) Private Activity. The City will not take or omit to take any action or make any use of the proceeds of the Bonds or of any other moneys or property which would cause the Bonds to be "private activity bonds" within the meaning of Section 141 of the Code. (b) Arbitral!e. The City will make no use of the proceeds of the Bonds or of any other amounts or property, regardless of the source, or take or omit to take any action which would cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code. (c) Federal Guarantee. The City will make no use of the proceeds of the Bonds or take or omit to take any action that would cause the Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Code. (d) Information Reportinl!. The City will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code. (e) Miscellaneous. The City will take no action inconsistent with its expectations stated in the Tax Certificate delivered in connection with the issuance of the Bonds and will comply with the covenants and requirements stated therein and incorporated by reference herein. Section 24. The Fiscal Agent shall establish a special fund with respect to the Bonds designated as the "High Valley Roads Assessment District Excess Investment Earnings Fund" (the "Excess Investment Earnings Fund"). All money at any time deposited in the Excess Investment Earnings Fund shall be held by the Fiscal Agent in trust, for payment to the United States Treasury. All amounts on deposit in the Excess Investment Earnings Fund shall be PUBL:36976_51138122468.0013 16 of 39 06/03/96 JUN 4 1996 ITEM 7 Resolution No. 96- Page 12 governed by this section and the aforesaid Tax Certificate, unless the City obtains an opinion of Bond Counsel that the exclusion from gross income of the interest on the bonds will not be adversely affected for federal income tax purposes if such requirements are not satisfied. Within 55 days of the end of each Bond Year, the City shall calculate or cause to be calculated the amount of rebatable arbitrage, in accordance with Section 148(f) of the Code and Section 1.148-3 of the Rebate Regulations, for this purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Rebate Regulations (the "Rebatable Arbitrage"). As used herein the term "Bond Year" means the period beginning on the date the Bonds are delivered to the initial purchaser thereof (the "Delivery Date") and ending on any date during the one-year period beginning on the Delivery Date, selected by the City in the Tax Certificate, and each successive twelve month (or shorter) period thereafter until there are no longer any Bonds outstanding; and the term "Rebate Regulations" means the Regulations issued under Section 148(f) of the Code. The City shall obtain expert advice as to the amount of the Rebatable Arbitrage to comply with this Section. Within 55 days of the end of each Bond Year, an amount shall be deposited in the Excess Investment Earnings Fund by the Fiscal Agent, as directed in writing by the City, from the Reserve Fund, if and to the extent required, so that the balance in the Excess Investment Earnings Fund shall equal the amount of Rebatable Arbitrage. In the event that immediately following the transfer required by the previous sentence, the amount then on deposit to the credit of the Excess Investment Earnings Fund exceeds the amount required to be on deposit therein, the Fiscal Agent shall withdraw the excess from the Excess Investment Earnings Fund and then credit the excess to the Reserve Fund. The Fiscal Agent, as directed in writing by the City, shall pay to the United States Treasury, out of amounts in the Excess Investment Earnings Fund: (X) Not later than 60 days after the end of (A) the fifth Bond Year, and (B) each fifth Bond Year thereafter, an amount equal to at least 90 % of the Rebatable Arbitrage calculated as of the end of such Bond Year; and (Y) Not later than 60 days after the payment of all Bonds, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code. In the event that, prior to the time of any payment required to be made from the Excess Investment Earnings Fund, the amount in the Excess Investment Earnings Fund is not sufficient to make such payment when such payment is due, the City shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source described herein equal to such deficiency in the Excess Investment Earnings Fund prior to the time such payment is due. Each payment required to be made pursuant to this subsection shall be made to the Internal Revenue Service Center, Philadelphia, Pennsylvania PUBL:36976 51138122468.0013 17 of 39 06/03/96 JUN 4 1996 ITEM 7 Resolution No. 96- Page 13 19255 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038- T, or shall be made in such other manner as provided under the Code. Any funds remaining in the Excess Investment Earnings Fund after the repayment of the Bonds and the payments described in the preceding paragraph may be withdrawn by the City and utilized in any manner by the City. Notwithstanding anything in this section to the contrary, the obligation to comply with the requirements of this section shall survive the defeasance of the obligation represented by the Bonds. Section 25. In the absence of any other written direction from the City's Director, Administrative Services, the Fiscal Agent shall invest all amounts on deposit in any of the funds established hereby in money market mutual funds registered with the Securities and Exchange Commission, meeting the requirements of Rule 2a-7 promulgated under the Investment Company Act of 1940, and rated in the highest applicable rating category by a nationally- recognized rating agency, including such funds for which the Fiscal Agent or any affiliate acts as manager, advisor or sponsor; provided that the City's Director, Administrative Services may from time to time direct the investment of any or all of such amounts in any Authorized Investment which is hereby defined to include the following to the extent such securities are eligible for the legal investment of funds of the City: (1) United States Treasury notes, bonds, bills or certificates of indebtedness, or those for which the faith and credit of the United States is pledged for the payment of principal and interest; (2) Time certificates of deposit or negotiable certificates of deposit issued by a bank or trust company, including the Fiscal Agent, or a state or federal savings and loan association; provided, that such certificates of deposit shall be (i) continuously and fully insured by the Federal Deposit Insurance Corporation, or (Ii) issued by any bank or trust company licensed under the laws of any state of the United States of America or any national banking association (including the Fiscal Agent) having a rating of its long-term unsecured obligations in either of the two highest (excluding any modifier) categories by Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service ("Moody's "); (3) Bills of exchange or time drafts drawn on and accepted by a commercial bank (including the Fiscal Agent), otherwise known as bankers' acceptances, which are eligible for purchase by members of the Federal Reserve System; provided such bank is rated in one of the top three rating categories by Moody's or S&P, or such bank shall be the lead bank of a bank holding company whose unsecured obligations are rated in one of the top three rating categories of Moody's or S&P; PUBL:36976_51138122468.0013 18 of 39 06/03/96 JUN 4 1996 ITEM 7 Resolution No. 96- Page 14 (4) Commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided by either Moody's or S&P, which commercial paper is limited to issuing corporations that are organized and operating within the United States of America and that have an "A" or higher rating for the issuer's debenture. other than commercial paper, as provided by either Moody's or S&P; (5) Obligations issued by the Government National Mongage Association, the Federal Farm Credit System, the Federal Home Loan Bank System, the Federal National Mortgage Association, the Student Loan Marketing Association, the Federal Home Loan Mortgage Company, Export-Impon Bank of the United States, Federal Financing Bank, Farmers Home Administration and the Federal Housing Administration; (6) Bonds, notes, warrants or other evidence of indebtedness of the State of California or of any political subdivision or public agency thereof which are rated in one of the two highest short-term or long-term rating categories by either Moody's or S&P; (7) Units of a taxable government money market portfolio restricted to obligations issued or guaranteed as to payment of principal and interest by the full faith and credit of the United States of America; (8) The Local Agency Investment Fund established pursuant to Section 16429.1 of the Government Code of the State of California to the extent such deposits remain in the name and control of the Fiscal Agent; and (9) Any investment agreement with any investment agreement provider that is rated in one of the top two long-term rating categories by Moody's or S&P. Section 26. First Trust of California, National Association is hereby designated Fiscal Agent, Transfer Agent, Dissemination Agent, Paying Agent and Registrar with respect to these proceedings and the Bonds to be issued. Section 27. The City's Director, Administrative Services is hereby authorized to make such Preliminary Official Statement final as of its date, except for the omission of certain information, as permitted by Section 240. 15c2-12(b)(I) of Title 17 of the Code of Federal Regulations (the "Rule"); and the distribution of such Preliminary Official Statement in connection with the sale of the Bonds, with such changes included, is hereby authorized. The Director, Administrative Services is authorized and directed to execute and deliver a certificate relating to compliance with the Rule and a final Official Statement in substantially the form of the Preliminary Official Statement hereby approved, with such additions thereto and changes therein as are approved by said Director, Administrative Services, such approval to be conclusively PUBL:3697651138122468.0013 19 of 39 JUN 4 1996 OWfM 7 Resolution No. 96- Page 15 evidenced by the execution and delivery thereof. The distribution of the Official Statement is hereby authorized as finally executed to those persons who may be interested in the purchase of the Bonds and distribution to all actual purchasers is hereby directed. The City's Director, Administrative Services is hereby further authorized to execute and deliver a Continuing Disclosure Agreement in substantially the form presented herewith together with such changes as may be deemed appropriate by such officer to conform such document to the terms of the Bonds and the requirements of the Rule. Section 28. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to consummate the sale and delivery of the Bonds, and otherwise to effectuate the purposes of this Resolution; and such actions previously taken by such officers are hereby ratified and confirmed. Section 29. Should the Mayor, City Manager or Director, Administrative Services be unavailable to execute any of the documents specified above, then any other member of this City Council and any other officer of the City is hereby authorized to sign such documents on behalf of the City in the place of such officer. Section 30. Any action authorized to be taken hereunder by the City's Director, Administrative Services may also be taken, with the same force and effect as if taken by her, by her designee as specified in a written instrument filed with the City Clerk and the Fiscal Agent. PUBL:36976 51 1381 22468'(lOI3 20 of 39 06/03/96 JUN 4 1996 ITEM 7 Resolution No. 96- Page 16 PASSED, ADOPTED, AND APPROVED by the City Council of the City of Po way, California, at a regular meeting held on the day of , 1996. Don Higginson, 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 penalty of perjury, that the above and foregoing Resolution No. 96- was duly adopted by the City Council at a meeting of said City Council held on the of 1996 and that it was so adopted by the following vote: AYES: NOES: ABSTAIN: ABSENT: Marjorie K. Wahlsten, City Clerk, City of Poway PUBL:36976 51138122468.0013 21 of 30 JUN' 1996 JUN 4 1996 06/03/96 ( ITEM 7 PlfRI ,~"Q'1" <I J1.3122468.0013 22 of 39 EXHIBIT A BID FORM OF WINNING BIDDER [To Be Provided on June 4, 1996 by Public Financial Management, Inc., on behalf of the City] A-I 06/03/96 JUN 4 1996 ITEM 7 , CONTINUING DISCLOSURE AGREEMENT This Continuing Disclosure Agreement (the "Disclosure Agreement") is executed and delivered by the City of Poway (the "City") and First Trust of California, National Association, as fiscal agent and as dissemination agent, in connection with the issuance and delivery of $586,470.69 City of Poway Integrated Financing District No. 96-1 (High Valley Roads) Limited Obligation Improvement Bonds, Series 1996 (the "Bonds"). The Bonds are being issued pursuant to a Resolution of Issuance authorizing the issuance of the Bonds approved June 4, 1996 by the City Council of the City (the "Resolution of Issuance"). The City and First Trust of California, National Association, as fiscal agent and dissemination agent, covenant as follows: SECTION 1. Puroose of the Disclosure A!!reement. This Disclosure Agreement is being executed and delivered by the City and First Trust of California, National Association, as fiscal agent and dissemination agent, for the benefit of the Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule. SECTION 2. Definitions. In addition to the definitions set forth in the Resolution of Issuance, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement. "Disclosure Representative" shall mean the City Director of Administrative Services or his or her designee, or such other officer or employee as the City shall designate in writing to the Dissemination Agent from time to time. "Dissemination Agent" shall mean, initially, First Trust of California, National Association, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the City and which has been filed with the then current Dissemination Agent and Fiscal Agent a written acceptance of such designation. "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement. "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purpose of the Rule. Currently, the following are National Repositories: Bloomberg Municipal Repository P. O. Box 840 Princeton, New Jersey 08542-0840 Phone: (609) 279-3200 Fax: (609) 279-5962 ATTACHMENT C 23 of 39 JUN 4 1996 ITEM 7 The Bond Buyer Attention: Municipal Disclosure 395 Hudson Street New York, New York 10004 Phone: (212) 807-3814 Fax: (212) 989-9282 Disclosure, Inc. Attention: Document Augmentation/Municipal Securities 5161 River Road Bethesda, Maryland 20816 Phone: (301) 951-1450 (for issuer-related questions) (800) 638-8241 (for purchase of documents) Fax: (301) 718-2329 Kenny Information Systems, Inc. Attention: Kenny Repository Service 65 Broadway, 16th Floor New York, New York 10006 Phone: (212) 770-4595 Fax: (212) 797-7994 Moody's NRMSIR Public Finance Information Center 99 Church Street New York, New York 10007 Phone: (800) 339-6306 Fax: (212) 553-1460 Municipal Securities Disclosure Archive 559 Main Street Hudson, Massachusetts 01749 Phone: (800) 580-3670 "Participating Underwriter" shall mean any of the original purchasers of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Repository" shall mean each National Repository and each State Repository. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "State Repository" shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository. 24 of 39 .'8122468.0013 2 JUN 4 1996 ITEM 7 l "Tax-exempt" shall mean that interest on the Bonds is excluded from gross income for federal income tax purposes, whether or not such interest is includable as an item of tax preferences or otherwise includable directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax or environmental tax. SECTION 3. Provision of Annual Reoorts. (a) The City shall, or shall cause the Dissemination Agent by written direction to such Dissemination Agent to, not later than six (6) months after the end of the City's fiscal year, commencing with the report for the 1996 fiscal year, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the City may be submitted separately from and later than the balance of the Annual Report if they are not available by the date required above for the filing of the Annual Report. The Annual Report shall be provided at least annually notwithstanding any fiscal year longer than 12 calendar months. The City's fiscal year is currently effective from July 1 to the immediately succeeding June 30 of the following year. The City will promptly notify each Repository or the Municipal Securities Rulemaking Board and, in either case, the Fiscal Agent and the Dissemination Agent of a change in the fiscal year dates. (b) Not later than fifteen (IS) Business Days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the City shall provide the Annual Report to the Dissemination Agent and the Fiscal Agent (if the Fiscal Agent is not the Dissemination Agent). If by fifteen (IS) Business Days prior to such date the Fiscal Agent has not received a copy of the Annual Report, the Fiscal Agent shall contact the City and the Dissemination Agent to determine if the City is in compliance with subsection (a). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent and the Fiscal Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent and Fiscal Agent may conclusively rely upon such certification of the City and shall have no duty or obligation to review such Annual Report. (c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice to each Repository, in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and (ii) file a report with the City and (if the Dissemination Agent is not the Fiscal Agent) the Fiscal Agent certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided. The Dissemination Agent's duties under this clause (ii) shall exist only if the City provides the Annual Report to the Dissemination Agent for filing. DI1DI .~7lUlR 11 Q8122468.oo13 25 of 39 3 JUN 4 1996 ITEM 7 SECTION 4. Content of Annual Reoorts. The City's Annual Report shall contain or include by reference the following: (a) Annual Reoorts. The City's Annual Report shall contain or incorporate by reference (i) the audited financial statements of the City for the most recent fiscal year of the City then ended (or, if not available at the time of filing, the unaudited financial statements) and (ii) the financial information or operating data with respect to the City, for each fiscal year of the City, as described under the heading "THE ASSESSMENT DISTRICT" under the subheading "- "- Tax Delinquencies" of the Official Statement. Audited financial statements, if any, of the City shall be audited by such auditor as shall then be required or permitted by State law or the Resolution of Issuance. Audited financial statements shall be prepared in accordance with generally accepted accounting principles as prescribed for governmental units by the Governmental Accounting Standards Board; provided, however, that the City may from time to time, if required by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the City shall modify the basis upon which its financial statements are prepared, the City shall provide a notice of such modification to each Repository, including a reference to the specific federal or state law or regulation specifically describing the legal requirements for the change in accounting basis. (b) All Reoorts. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The City shall clearly identify each such other document so included by reference. SECTION 5. Reoortin2 of Si2nificant Events. (a) Pursuant to the provisions of this Section 5, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: (l) principal and interest payment delinquencies. (2) non-payment related defaults. (3) unscheduled draws on the Reserve Fund reflecting financial difficulties. (4) unscheduled draws on any credit enhancements securing the Bonds reflecting financial difficulties. (5) any change in the provider of any letter of credit or any municipal bond insurance policy securing the Bonds or any failure by the providers of such letters of credit or municipal bond insurance policies to perform on the letter of credit or municipal bond insurance policy. (6) adverse tax opinions or events adversely affecting the tax-exempt status of the Bonds. 1)"1)1 .'l'7Sl.ll:Sl 111~8122468.0013 26 of 39 4 JUN 4 1996 ITEM 7 (7) amendment to the Resolution of Issuance or this Disclosure Agreement modifying the rights of Bond Owners. (8) unscheduled redemption of any Bond. (9) defeasances. (10) any release, substitution, or sale of property securing repayment of the Bonds. (11) rating changes. (b) The Fiscal Agent shall, promptly upon obtaining actual knowledge of the occurrence of any of the Listed Events, contact the City Director of Administrative Services, inform such person of the event, and request that the City promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (t). The Fiscal Agent shall have no responsibility or duty to determine the materiality of any such Listed Events. For purposes of this Disclosure Agreement, "actual knowledge" of the occurrence of such Listed Events shall mean actual knowledge by the officer at the corporate trust office of the Fiscal Agent with regular responsibility for the administration of matters related to the Resolution of Issuance. (c) Whenever the City obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Fiscal Agent pursuant to subsection (b) or otherwise, the City shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) If the City has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the City shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (t). (e) If in response to a request under subsection (b), the City determines that the Listed Event would not be material under applicable federal securities laws, the City shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (t). (t) If the Dissemination Agent has been instructed by the City to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with (i) the Municipal Securities Rulemaking Board or (ii) the National Repository, and in either case, to each State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Resolution of Issuance. In each case of the Listed Event, the Dissemination Agent shall not be obligated to file a notice as required in this subsection (t) prior to the occurrence of such Listed Event. (g) The City hereby agrees that the undertaking set forth in this Disclosure Agreement is the responsibility of the City and that the Fiscal Agent or the Dissemination Agent shall not be PUBL:37888 11138122468.0013 27 of 39 5 JUN 4. 1996 ITEM 7 responsible for determining whether the City's instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule. SECTION 6. Termination of ReDortin~ Obli~ation. The obligation of the City, the Fiscal Agent and the Dissemination Agent under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5. SECTION 7. Dissemination A~ent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Fiscal Agent shall be the Dissemination Agent. The initial Dissemination Agent shall be First Trust of California, National Association. The Dissemination Agent may resign by providing (i) thirty days written notice to the City and the Fiscal Agent and (ii) upon appointment of a new Dissemination Agent hereunder. SECTION 8. Amendment. (a) This Disclosure Amendment may be amended, by written agreement of the parties, without the consent of the Owners, if all of the following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law (including rules or regulations) or in interpretations thereof, or a change in the identity, nature or status of the City or the type of business conducted thereby, (2) this Disclosure Agreement as so amended would have complied with the requirements of the Rule as of the date of this Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, (3) the City shall have delivered to the Fiscal Agent an opinion of a nationally recognized bond counselor counsel expert in federal securities laws, addressed to the City and the Fiscal Agent, to the same effect as set forth in clause (2) above, (4) the City shall have delivered to the Dissemination Agent an opinion of nationally recognized bond counselor counsel expert in federal securities laws, addressed to the City, to the effect that the amendment does not materially impair the interests of the Owners, and (5) the City shall have delivered copies of such opinion and amendment to each Repository. (b) This Disclosure Agreement may be amended, by written agreement of the parties, upon obtaining consent of Owners at least 25 % of the outstanding Bonds. (c) To the extent any amendment to this Disclosure Agreement results in a change in the type of financial information or operating data provided pursuant to this Disclosure Agreement, the first Annual Report providea thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change. (d) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the ----- ,"M" ., "'8122468_0013 28 of 39 6 JUN 4 1996 ITEM 7 accounting principles and the impact of the change in the accounting principles on the presentation of the financial information. SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the City shall have no obligation under this Agreement to update such information or include it in any future Annual Report or notice if occurrence of a Listed Event. The City acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5 promulgated under the Securities Exchange Act of 1934, may apply to the City, and that under some circumstances compliance with this Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the City under such laws. SECTION 10. Default. In the event of a failure of the City or the Dissemination Agent to comply with any provision of this Disclosure Agreement, any Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Resolution of Issuance, and the sole remedy under this Disclosure Agreement in the event of any failure of the City or the Fiscal Agent to comply with this Disclosure Agreement shall be an action to compel performance. SECTION 11. Duties. Immunities and Liabilities of Fiscal Al!ent and Dissemination Al!ent. The provisions of the Fiscal Agent Agreement dated June I, 1996 by and between the City and the Fiscal Agent (the "Fiscal Agent Agreement") are hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Fiscal Agent Agreement and the Dissemination Agent shall be entitled to the same protections, limitations from liability and indemnities afforded the Fiscal Agent thereunder. The Dissemination Agent and the Fiscal Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the City agrees to indemnify and save the Dissemination Agent and the Fiscal Agent and their respective officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's or the Fiscal Agent's respective negligence or wilful misconduct. The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent and the Fiscal Agent shall have no duty or obligation to review any information provided to them hereunder. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence any action against the Fiscal Agent, as -..-. ........n ., '...~122468.0013 29 of 39 7 JUN 4 1996 ITEM 7 Dissemination Agent, seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination Agent and the Fiscal Agent shall not be liable under any circumstances for monetary damages to any person for any breach under this Disclosure Agreement. SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the City, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and Owners from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 13. Notices. Notices should be sent in writing to the following addresses. The following information may be conclusively relied upon until changed in writing. Disclosure Representative: Director, Administrative Services City of Poway 13325 Civic Center Drive Poway, California 92064 Dissemination Agent: First Trust of California, National Association 550 South Hope Street, 5th Floor Los Angeles, California 90071 Fiscal Agent: First Trust of California, National Association 550 South Hope Street, 5th Floor Los Angeles, California 90071 h"DI.1:.,g91l 111':1RI22468.0013 8 JUN 4 1996 ITEM 7 30 of 39 SECTION 14. Counteroarts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Date: CITY OF POW A Y By: FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Dissemination Agent and Fiscal Agent By: Authorized Officer -..-. --..- ., "8122468,0013 31 of 39 9 JUN 4 1996 ITEU 7 EXHffiIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of City: City of Poway Name of Bond Issue: City of Poway Integrated Financing Assessment District No. 96-1 (High Valley Roads) Limited Obligation Improvement Bonds, Series 1996 Date of Issuance: ,1996 NOTICE IS HEREBY GIVEN that the City of Poway (the "City") has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Agreement, dated as of , 1996, by and between the City and First Trust of California, National Association, as fiscal agent and dissemination agent. [The City anticipates that the Annual Report will be filed by .J Dated: FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as Dissemination Agent cc: City DIIDI.1.7IU/Q 111':18122468.0013 32 of 39 10 JUN 4 1996 ITEM 7 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POWAY AWARDING THE BONDS OF INTEGRATED FINANCING DISTRICT NO. 96-1 TO THE BEST BIDDER WHEREAS, at the time and place fixed for the opening of bids for the improvement bonds of the City of Poway (the "City") designated "Integrated Financing District No. 96-1 Limited Obligation Improvement Bonds" (the "Bonds"), all bids were publicly opened, examined and read, a tabulation thereof has been entered in the minutes; and WHEREAS, the bid of the bidder hereinafter named is the best bid made by a responsible bidder for the Bonds; NOW, THEREFORE, the City Council of the City of Poway DOES HEREBY RESOLVE, DETERMINE AND ORDER as follows: SECTION 1. That the bid of Miller & Schroeder Financial, Inc. offering $586,470.69 plus accrued interest to date of delivery for the Bonds, bearing interest payable on September 2, 1996 and thereafter semiannually on September 2 and March 2 at the following rates: BONDS MATURING PRINCIPAL (Seotember 2) AMOUNT INTEREST RATE 1997 $ 16,470.69 6.20% 1998 15,000.00 6.20 1999 20,000.00 6.25 2000 20,000.00 6.25 2001 20,000.00 6.25 2002 20,000.00 6.25 2003 20,000.00 6.25 2004 25,000.00 6.25 2005 25,000.00 6.25 2006 25,000.00 6.25 2007 30,000.00 6.25 2008 30,000.00 6.25 2009 30,000.00 6.25 2010 35,000.00 6.25 2011 35,000.00 6.25 2012 40,000.00 6.25 2013 40,000.00 6.25 2014 45,000.00 6.25 2015 45,000.00 6.25 2016 50,000.00 6.25 " , 33~ 39 t:x b JUN 4 1996 ITEM 7 Resolution No. 96- Page 2 is the best bid for the Bonds, yielding the lowest net interest cost. Said bid is hereby accepted and the Bonds are awarded to said best bidder in accordance with the terms of the proposal. SECTION 2. That the interest rates on the Bonds are hereby fixed at the rates stated in Section 1 hereof. SECTION 3. That the City Clerk of the City is hereby directed to deliver the whole or such portion of the Bonds representing unpaid non-contingent assessments to the successful bidder upon payment therefor and accrued interest, if any, to date of delivery . SECTION 4. That all bids for the Bonds other than the one accepted in Section 1 hereof are rejected, and the Financial Advisor of the City is directed to return the checks, if any, accompanying said rejected bids to the respective bidders. ?H ~ 3j PUBL:39071_' I 138122468.0013 JUN 4 1996 ITEM 7 Resolution No. 96- Page 3 PASSED, ADOPTED, AND APPROVED by the City Council of the City of Poway, California, at a regular meeting held on the day of , 1996. Don Higginson, 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 penalty of perjury, that the above and foregoing Resolution No. 96- was duly adopted by the City Council at a meeting of said City Council held on the of 1996 and that it was so adopted by the following vote: AYES: NOES: ABSTAIN: ABSENT: Marjorie K. Wahlsten, City Clerk, City of Poway '34 A- i21 ~ 1381224680013 JUN 4 1996 ITEM 7 06/04/96 Tl'E 11:55 FAX 714 721 9437 35 of 39 PFII Newport Bch ~ , ;e ::l ~ ... I~ I ;; .0 $ l" F! ::: .. .. ~ '" .. ! $ 8 g: 18 i ~ i .eV'i ..I 18 ::: :E 'Iii gi '" "'..: .. .,; .. ~ $ 8 ." ... #. - .. I '" ~g ~~ :i "" ... .. ~~ ... .. .,; .. i ~ 8 Il i1: #. .. co ;! g~ ~ ! ~ l€8 '" ~ ... olI Zl ;7, . .,; ill ! .. 5 '" $ 8 Q g It 'Iii Zl ... N ... -: 00 Z ~ ~ $ '" r.:! ... ~ ~ ~ ... .... ;; - ~ ATTACHMENT E 19J002 ! JUN 4 1996 ITEM 7 J ii c-h l i5~ gfJ .. 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