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Resolution Number 91-1-15-2- 337 RESOLUTION NO. 91-1-15-2 RESOLUTION OF THE CITY COUNCIL OF CITY OF SAN JUAN CAPISTRANO PROVIDING FOR THE ISSUANCE OF ITS SERIES A OF 1991 GENERAL OBLIGATION BONDS (OPEN SPACE PROGRAM) IN THE AMOUNT OF NINE MILLION FIFTY THOUSAND DOLLARS ($9,050,000) FOR THE ACQUISITION AND CONSTRUCTION OF CERTAIN PARK, AGRICULTURAL, OPEN SPACE AND RELATED USES WHEREAS, pursuant to the provisions of Chapter 4 of Division 4 0£ Title 4 of the California Government Code (Sections 43600 et seg.), as amended, and pursuant to Ordinance No. 656 adopted by the City Council of the City of San Juan Capistrano on January 2, 1990 (the "Ordinance") and Resolution No. 90-1-16-5 adopted by the City Council of the City on January 16, 1990, a special election was duly and regularly held on the 10th day of April, 1990, in that territory included within the boundaries of the City (the "Election") at which election there was submitted to the qualified voters of said city the following: and PROPOSITION: Shall the City of San Juan Capistrano incur bonded indebtedness in the principal amount of $21,000,000 to acquire lands for park, agriculture, open space, and related uses, in order to save these lands from potential residential and commercial development and to develop youth, senior and other community facilities, all in accordance with the City's "Save Open Space" Program? WHEREAS, more than two-thirds of the votes cast at the Election were in favor of and assented to the incurring of such indebtedness, and all and singular the requirements of the Constitution and laws of the State of California have been complied with in the holding of the Election, and the City Council of the City was, as of the date of the Election, and is now authorized and empowered to provide for the form of bonds t of the City and for the issuance thereof for the purpose provided for in the aforesaid Ordinance and resolution, payable, principal and interest, from taxes levied exclusively upon the taxable property within the City as permitted or required by law; and WHEREAS, on August 23, 1990, the City issued $4,995,000 in aggregate principal amount of such bonds of the City (the 111990 Bonds") pursuant to the terms of Resolution No. 90-6-19-7 of the City Council, adopted by the City Council of the City on June 19, 1990 (the "1990 Resolution"); and WHEREAS, it is proper and the necessity therefor appears that the second series of said bonds in the amount of $9,050,000 be issued on a parity with the 1990 Bonds for the purpose hereinabove stated, and in the form and manner hereinafter provided (the "Series A of 1991 Bonds", the "Bond" or the "Bonds"); and WHEREAS, it is found and determined by this City Council that the best interests of the City would be served by proceeding according to the provisions of Chapter 4 of Division 4 of Title 4 of the California Government Code (Sections 43600 et seq.); -2- NOW, THEREFORE, the City Council of the City of San Juan Capistrano DOES HEREBY RESOLVE, DETERMINE AND ORDER as follows: SECTION 1. Definitions. Unless the context clearly otherwise requires, the following terms shall have the respective meanings ascribed to them in this Section 1: (a) Authorized Investments. The term "Authorized Investments" means any investment in which funds of the City may be legally invested pursuant to State of California Government Code Section 53635. (b) Bond Counsel. The term "Bond Counsel" means an attorney or firm of attorneys of nationally recognized standing in matters pertaining to the tax-exempt status of interest on bonds issued by states and their political subdivisions. (c) Bond Year. The term "Bond Year" means the twelve (12) month period commencing on March 15 and ending on the following March 14, except that the first Bond Year shall commence on the date on which the bonds are issued and end on March 14, 1992. (d) Closing Date. The term "Closing Date" is the date the bonds are delivered to the initial purchaser thereof. (e) Code. The term "Code" means the Internal Revenue Code of 1986, as amended. (f) Gross Proceeds. The term "Gross Proceeds" means, with respect to the Series A of 1991 Bonds and each issue of Parity Bonds, the proceeds of each such issue of bonds and any -3- funds (other than the proceeds of such issue of bonds) that are part of a reserve or replacement fund for each such issue of bonds within the meaning of Section 1.148-8T(d) of the Regulations. (g) Interest Payment Date. The term "Interest Payment Date" means each July 15 and January 15, commencing January 15, 1992. (h) Net Proceeds. The term "Net Proceeds" means the par amount of the Bonds plus accrued interest and premium, if any, less the proceeds of the Bonds applied to pay costs of issuance. (i) Nonpurpose Investment. The term "Nonpurpose Investment" means any "investment property" within the meaning of Section 1.148-8T(e) of the Regulations in which Gross Proceeds are invested and which is not acquired to carry out the governmental purpose of the Series A of 1991 Bonds or any Parity Bonds. (j) owner. The term "owner" or "Bond owner" or "owner of Bonds" or any similar term, when used with respect to the Bonds, means any person in whose name a Bond is registered in the books of registration maintained by the Paying Agent. (k) Parity Bonds. The term "Parity Bonds" means the ^+ 1990 Bonds and all other bonds, notes or other similar evidences of indebtedness heretofore or hereafter issued, payable from the taxes levied to secure bonded indebtedness authorized pursuant to the Election and which as provided in -4- this resolution or any supplemental resolution, rank on a parity with the Series A of 1991 Bonds. (1) Purchase Price. The term "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 Series A of 1991 Bonds or Parity Bonds are sold or, if the Series A of 1991 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 Investments, means the fair market - value of the Nonpurpose Investments on the date of use of Gross Proceeds for acquisition thereof, or, if later, on the date that investment property constituting a Nonpurpose Investment becomes a Nonpurpose Investment of the Series A of 1991 Bonds or Parity Bonds, as the case may be. (m) Rebate Installment Date. The term "Rebate Installment Date" means, with respect to the Bonds or any issue of Parity Bonds, the last day of the fifth Bond Year following the Delivery Date (as hereinafter defined) of such issue and each succeeding fifth Bond Year and the date that the last Bond of such issue is discharged. -5- (n) Record Date. The term "Record Date" shall mean the fifteenth day of the month preceding an Interest Payment Date. (o) Regulations. The term "Regulations" shall mean regulations adopted or proposed by the Department of Treasury from time to time with respect to obligations issued pursuant to Sections 103 and 141 to 150 of the Code. (p) Treasurer. The term "Treasurer" means the Treasurer of City. (q) Yield. The term "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 Investments which require payments in a form not characterized as principal and interest) on a Nonpurpose Investment or on the Series A of 1991 Bonds or Parity Bonds produces an amount equal to the Purchase Price of such Nonpurpose Investment, the Series A of 1991 Bonds or Parity Bonds, as the case may be, all computed as prescribed in the applicable Regulations. SECTION 2. Authorization to Issue. Bonds of the City in the sum of $9,050,000 shall be issued for the purpose stated in the proposition set out in the recitals hereof. Said Bonds are further issued pursuant to the provisions of I7I Chapter 4 of Division 4 of Title 4 of the California Government Code (Sections 43600 et seq.). -6- 343 1 Said Bonds shall be designated the "SERIES A OF 1991 GENERAL OBLIGATION BONDS OF THE CITY OF SAN JUAN CAPISTRANO (OPEN SPACE PROGRAM)." The Series A of 1991 Bonds shall be issued in the form of fully registered bonds in the denomination of $5,000 each or any whole multiple thereof and shall mature on January 15 in the amounts for each of the years as follows: The City Treasurer is hereby authorized and directed to cause the Financial Advisor to adjust the maturities set forth above if he deems such adjustment is necessary to achieve, as nearly as practicable, level debt service on the Bonds. The Bonds shall bear interest at a rate or rates to be hereafter fixed, but not to exceed twelve percent (12%) per annum, from March 15, 1991, payable on January 15, 1992 and thereafter semiannually on each July 15 and January 15. Each Bond shall bear interest until its principal sum has been paid; provided, however, that if funds are available for the payment thereof on such Bonds' applicable maturity date, in full -7- Principal Principal Years Amount Years Amount 1992 $235,000.00 2002 $435,000.00 1993 250,000.00 2003 460,000.00 1994 265,000.00 2004 490,000.00 1995 280,000.00 2005 525,000.00 1996 300,000.00 2006 560,000.00 1997 320,000.00 2007 600,000.00 1998 340,000.00 2008 640,000.00 1999 360,000.00 2009 685,000.00 2000 380,000.00 2010 735,000.00 2001 405,000.00 2011 785,000.00 The City Treasurer is hereby authorized and directed to cause the Financial Advisor to adjust the maturities set forth above if he deems such adjustment is necessary to achieve, as nearly as practicable, level debt service on the Bonds. The Bonds shall bear interest at a rate or rates to be hereafter fixed, but not to exceed twelve percent (12%) per annum, from March 15, 1991, payable on January 15, 1992 and thereafter semiannually on each July 15 and January 15. Each Bond shall bear interest until its principal sum has been paid; provided, however, that if funds are available for the payment thereof on such Bonds' applicable maturity date, in full -7- accordance with the terms of this Resolution, such Bond shall then cease to bear interest. The Bonds shall be numbered No. 1 and upwards and shall be dated as of the date of their authentication, except that Bonds issued upon exchanges and transfers of other Bonds shall be dated so that no gain or loss of interest shall result from the exchange or transfer. Interest on each Bond shall be paid by the Paying Agent by check or draft mailed by first class mail, postage prepaid, on the Interest Payment Date to the Owner as his/her name and address appear on the register kept by the Paying Agent at the close of business on the applicable Regular Record Date. At the request of any owner of at least $1,000,000 in aggregate principal amount of Bonds, interest on the Bonds will be paid by wire transfer in immediately available funds if such request is made.at least Regular Record Date fifteen days before the for such payment, any such designation to remain in effect until withdrawn. Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication with respect to which interest has been paid or provided for (unless (i) the date of authentication is prior to the first Regular Record Date, in which event from March 15, 1991, (ii) the date of authentication is after a Regular Record Date and before the r following Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is authenticated as of an Interest Payment Date, in which event it -8- 345 shall bear interest from such date) until the principal hereof shall have been paid. SECTION 3. Place of Payment. The Bonds shall be payable in lawful money of the United States of America upon surrender thereof at the principal corporate trust office of the Paying Agent, in San Francisco, California. SECTION 4. Paying Agent. The initial Paying Agent for the Bonds shall be Bankers Trust Company of California, San Francisco, California. SECTION S. Form of Bonds. The Bonds shall be substantially in the form attached hereto as Exhibit "A". Such form is hereby approved and adopted as the form of the Bonds and of the redemption, exchange, registration and assignment provisions pertaining to them, with necessary or appropriate variations, omissions, and insertions, as permitted or required by this Resolution. Any Bonds issued pursuant to this Resolution may be initially issued in temporary form exchangeable for definitive Bonds when the same are ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the City, shall be in fully registered form and may contain references to any of the provisions of this Resolution as may be appropriate. Every temporary Bond shall be executed by the City and be issued by the Paying Agent upon the same conditions and in substantially the same form and manner as the definitive fully registered -9- y bonds. If the City issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and, thereupon, the temporary Bonds shall be surrendered for cancellation at the principal office of the Paying Agent in San Francisco, California, or at such other place in California as the City may approve. The Paying Agent shall deliver in exchange for the surrendered temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations of this same issue. Until exchanged, the temporary Bonds shall be entitled to the same benefits under this Resolution as definitive Bonds of this same issue. SECTION 6. Execution and Authentication of the Bonds. The Bonds shall be signed on behalf of the City by its Mayor and by its Treasurer by facsimile signatures and by its City Clerk by facsimile signature, and the seal of the City shall be impressed, imprinted or reproduced thereon. The foregoing officers are hereby authorized and directed to sign the Bonds in accordance with this Section. If any City officer whose facsimile signature appears on the Bonds ceases to be an officer before delivery of the Bonds, his or her signature is as effective as if he or she had remained in office. The Paying Agent shall authenticate the Bonds on registration and/or exchange to effectuate the registration and exchange provisions set forth in this Section 5; and only those Bonds that have endorsed on them a certificate of authentication, substantially in the form set forth in the form -10- 347 of Bond, duly executed by the Paying Agent, shall be entitled to any rights, benefits or security under this Resolution. No Bond shall be valid or obligatory for any purpose unless and until the certificate of authentication thereon has been duly executed by the Paying Agent. The certificate of the Paying Agent upon any Bond shall be conclusive and the only evidence required that the Bond has been duly authenticated and delivered under this Resolution. The Paying Agent's certificate of authentication on any Bond shall be deemed to have been duly executed if signed by an authorized officer of the Paying Agent, but it shall not be necessary that the same officer sign the certificate of authentication on all of the Bonds that may be issued hereunder. SECTION 7. Registration, Transfers and Exchanges. Any Bond may, in accordance with its terms, be transferred,-. upon the registration books required to be kept by the Paying Agent, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrecder of such fully registered Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Paying Agent, duly executed. Whenever any Bond or Bonds shall be surrendered for transfer, the Paying Agent shall authenticate and deliver a new Bond or Bonds of the same series and maturity, for the like aggregate principal amount of Bond or Bonds surrendered. -11- Bonds may be exchanged at the principal corporate trust office of the Paying Agent in San Francisco, California for a like aggregate principal amount of Bonds of other authorized denominations of the same series and maturity. The person, firm or corporation requesting the transfer or exchange shall pay any costs or charges in connection with the transfer or exchange as are established by the Paying Agent, in addition to paying any tax or governmental charge that may be imposed in connection with the transfer or exchange. The Paying Agent shall not be required, however, to register a transfer or make an exchange of any Bond (i) during the 15 days before the selection of Bonds for redemption, or (ii) if such Bond has been called for redemption in whole or in part. SECTION 8. Registration Books. The Paying Agent will keep at its principal corporate trust office in the City of San Francisco, California, or at such other place in California as the City may approve, sufficient books for the registration.and transfer of the Bonds. The books shall at all times be open to inspection by the City; and, upon presentation for such purpose, the Paying Agent shall under such reasonable regulations as it may prescribe, register or transfer, or cause to be registered or transferred, on the register, the Bonds as ^ hereinbefore provided. -12- 349 SECTION 9. Optional Redemption. The Bonds maturing prior to January 15, 2001 are not subject to call and redemption prior to maturity. The Bonds maturing on or after January 15, 2001 may be redeemed prior to maturity at the option of the City, from any source of funds, on January 15, 2000 or on any Interest Payment Date thereafter, as a whole or in part among maturities, and if in part as nearly as practicable on a pro -rata basis, 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 January 15, 2000 or July 15, 2001 January 15, 2001 or July 15, 2002 January 15, 2002 or July 15, 2003 January 15, 2003 or July 15, 2004 January 15, 2004 and thereafter Redemption Prices 102.0% 101.5 101.0 100.5 100.0 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, in selecting portions of such Bonds and Parity Bonds for redemption, the Paying 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 Paying Agent -13- shall promptly notify the City in writing of the Bonds or Parity Bonds, or portions thereof, selected for redemption. SECTION 10. Acquisition and Construction Fund. The proceeds of the sale of the Bonds (except premium and accrued interest, if any, which shall be deposited in the Debt Service Fund (as hereinafter defined)) shall be forthwith placed in the treasury of the City to the credit of the "City of San Juan Capistrano (Open Space Program) Bond Acquisition and Construction Fund" and the moneys in said fund shall be applied exclusively to the acquisition and construction of the works and the payment of the costs described in the recitals hereof, except as provided in the provisions of Chapter 4 of Division 4 of Title 4 of the California Government Code (Sections 43600 et seq.)- SECTION 11. Excess Investment Earnings Fund. (a) Unless the City expends all of the "gross proceeds" except the lesser of $100,000 or 5% of the "gross proceed" (as such term is defined pursuant to Section 148(f)(4)(B)(i) and (ii) of the Code) of the Bond issue within six (6) months after the Delivery Date (as hereinafter defined) and expends the remaining gross proceeds (not to exceed 5% of the "gross proceeds" or $100,000, whichever is less) no later than one year after the Delivery Date (as hereinafter defined) or otherwise qualifies for an exception to the rebate requirement established pursuant to the Code, the City shall calculate Excess Investment Earnings for the Bonds in -14- 351 accordance with this Section 11 and shall pay Excess Investment Earnings to the United States government in accordance with paragraph (c). The City shall establish the City of San Juan Capistrano (Open Space Program) Bond Excess Investment Earnings Fund (the "Excess Investment Earnings Fund") for the Bonds forthwith and shall maintain the Excess Investment Earnings Fund thereafter until such time as the City Treasurer determines such fund is no longer required to meet the rebate requirements pertaining to the Bonds. The term "Excess Investment Earnings" means an amount equal to the sum of: plus (i) the - excess of: (A) the aggregate amount earned from the date the City issued and delivered the Bonds to the initial purchaser thereof (the "Delivery Date") on all Nonpurpose Investments in which Gross Proceeds of the Bonds are invested or allocated (other than investments attributable to an excess described in this subparagraph (i)), over (B) the amount that would have been earned if the Yield on such Nonpurpose Investments (other than investments attributable to an excess described in this subparagraph (i)) had been equal to the Yield on the Bonds, (ii) any income attributable to the excess described in paragraph (i). -15- X52 (iii) In determining the amount described in this subsection (a), 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. The City intends that the Debt Service Fund (as hereinafter defined) will be the type of fund described in the preceding sentence. (b) At or prior to 30 days following the last day of the first Bond Year, the City shall calculate the Excess Investment Earnings and shall deposit an amount equal to the Excess Investment Earnings into the Excess Investment Earnings Fund to the extent funds are available from any legally available funds; provided, however, that the Treasurer need not make such deposit if it has determined that such amount will be available from tax proceeds or other funds of the City on or prior to the next Rebate Installment Date. Thereafter, within 30 days following the last day of each Bond Year and not later than 45 days prior to any optional redemption and on the date of the retirement of the Bonds, the City shall calculate the amount of Excess Investment Earnings and the Treasurer shall -16- 350,3 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 Regulations. (c) The Treasurer shall pay Excess Investment Earnings to the United States government in installments with the first payment to be made not later than sixty (60) days after the first Rebate Installment Date and every Rebate Installment Date thereafter. The City 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 each Rebate Installment Date prior to the discharge of the last Bond. Not later than sixty (60) days after the final Rebate Installment Date, the Treasurer shall pay from the Excess Investment Earnings Fund, or the City shall pay directly from funds legally available for such purpose, 100 percent of the theretofore unpaid Excess Investment Earnings of the Bonds plus earnings on such Excess Investment Earnings received or accrued after the final Rebate Installment Date as required by the Regulations. The City shall remit such payments to the United States government at the address and in the manner prescribed by the Regulations, together with such reports and statements prepared by City as may be prescribed by such Regulations. (d) The City shall keep and retain for a period of six (6) years following the retirement of the last Bond records of the determinations made pursuant to this Section. The -17- Treasurer shall keep a record of all investments made with moneys on deposit in any fund or account established hereunder. 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. (e) 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 moneys in the Debt Service Fund. In the event of any remaining deficiency in available moneys for the purposes of such transfer, such deficiency shall be paid by the City from any legally available funds. (f) 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, upon receipt by the City 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 theretofore issued. SECTION 12. Security/Debt Service Fund. The City Council, so far as practicable, shall fix such rate or rates -. for a tax to be levied in the City as will result in revenues which will pay the interest on the Bonds and Parity Bonds, and -Is- 355 provide a sinking or other fund for the payment of the principal of the Bonds and Parity Bonds as such principal may become due. If the revenues of the City are, or in the judgment of the City Council will probably be, inadequate for any cause to pay the principal of or interest on the Bonds and Parity Bonds as said principal and interest become due, and the amounts above set forth, the City Council must cause a tax to be levied, as provided in the provisions of Chapter 4 of Division 4 of Title 4 of the California Government Code (Sections 43600 et seg.), sufficient to provide for such deficit and to pay the amount of such principal and interest as will become due before the proceeds of a tax levied at the next general tax levy will be available. The City Council shall determine the fiscal year for all of the amounts above set forth, and shall fix the rate or rates of tax to be levied which will raise the amounts of money required by the City for such purposes, and as required by the provisions of Chapter 4 of Division 4 of Title 4 of the California Government Code (Sections 43600 et seq.), the City Council shall certify to the County Auditor of the County of Orange (the "Auditor") the rate or rates so fixed and shall furnish to the Auditor a statement in writing containing the following: (a) an estimate of the minimum amount of money required to be raised by taxation during the fiscal year for the payment of the principal of and interest on the Bonds and Parity Bonds, as will become due -19- 356 before the proceeds of a tax levied at the next general tax levy will be available; (b) an estimate of the minimum amount of money required to be raised by taxation during the fiscal year for all other purposes of the City; and (c) any other items required by the provisions of Chapter 4 of Division 4 of Title 4 of the California Government Code (Sections 43600 et seq.). The Auditor shall compute and enter in the county assessment roll the respective sums to be paid as a City tax on the property within the City using the rate or rates of levy as fixed by the City Council and the assessed value as found on the assessment roll for the property subject to the tax. It shall be the duty of all county officers charged with the duty of collecting taxes to collect such tax in time, form and manner as county taxes are collected and when collected to pay the same to the City. All such taxes for the payment of principal and interest on the Bonds and Parity Bonds shall be established, levied and collected as provided in the provisions of Chapter 4 of Division 4 of Title 4 of the California Government Code (Sections 43600 et sec.). All moneys derived from such taxes and all other moneys allocated and designated for payment of said Bonds and Parity Bonds and the interest thereon, together with the proceeds of the sale of the Bonds and Parity Bonds designated as premium and accrued interest, if any, shall be placed in a -20- fund of the City designated "City of San Juan Capistrano (Open Space Program) Debt Service Fund" (the "Debt Service Fund"), and until all of said Bonds and Parity Bonds and all interest thereon have been fully paid the moneys in said fund shall be used for no other purpose than the payment of said Bonds and Parity Bonds and the interest thereon. SECTION 13. Investments. (a) Moneys in the Acquisition and 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 City estimates the moneys represented by the particular investment will be needed for withdrawal from the Acquisition and Construction Fund. Notwithstanding anything herein to the contrary, the proceeds of any Bonds or Parity Bonds remaining on deposit in the Acquisition and 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 date of issuance of the Parity Bonds, in the case of Parity Bond proceeds, shall be invested by the City 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 Yield -21- on the Bonds or any Parity Bonds, as the case may be, 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 Debt Service 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. The Treasurer and the Paying Agent, at the direction of the Treasurer, 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 Paying Agent shall not be responsible for any loss from investments, sales or transfers undertaken in accordance with the provisions of this Resolution. SECTION 14. Tax Covenants. City hereby covenants and agrees with the owners of the Bonds to take no action which, in the opinion of Bond Counsel, would result in the interest received by the Owners being includable in gross _22_ 359 income for federal income tax purposes. In order to preserve the exclusion from gross income of interest on the Bonds and any Parity Bonds for federal income tax purposes, the City covenants to comply with all applicable requirements of the Code, and any Regulations which are necessary to preserve such exclusion from gross income and specifically covenants, without limiting the generality of the foregoing, that: (a) it will make no use of the proceeds of the Bonds at any time which will cause the Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code and applicable Regulations; (b) it will not use in excess of 5% of the proceeds of the 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); (c) it will not both (i) use or permit the use of more than 10% of the proceeds of the Bonds for any private business use, and (ii) enter into an arrangement such that more than 10% of the proceeds of the Bonds is, directly or indirectly, secured by any interest in (A) property used or to be used for a -23- r. 1 private business use or (B) 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, and, in the event that both (A) an amount in excess of five percent (5%) of the Net Proceeds is used for a private business use, and (B) an amount in excess of five percent (5%) of the principal or five percent (5%) of the interest due on the Bonds during the term thereof is, under the terms of the Bonds or any underlying arrangement, directly or indirectly secured by any interest in property used or to be used for said private business use or in payments in respect of property used or to be used for said private business use or is to be derived from payments, whether or not to the City, in respect of property or borrowed money used for to be used for said private business use, then such excess over five percent (5%) of Net Proceeds used for a private business use shall be used for a private business use related to the governmental use for which bonded indebtedness was authorized pursuant to the Election, all as set forth in Section 141(b) of the Code, nor will the City take any other action which would cause the Bonds to be "private activity bonds" within the meaning of Section 141(a) of the Code; -24- 361 (d) it will ensure that the payment of principal of and interest on the Bonds shall not be directly or indirectly guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof) and no portion of the moneys contained in any of the funds or accounts created herein shall be (i) used in making loans guaranteed by the United States (or any agency or instrumentality thereof); (ii) invested directly or indirectly in deposits or accounts insured by the Federal Deposit Insurance Corporation, Federal Savings and Loan 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 and ending on the final expenditure of the Bond proceeds; (2) for amounts held in the Debt Service Fund and other bona fide debt service funds; (3) for investments in obligations issued by the United States Treasury; (4) for investments in obligations guaranteed by the Federal National Mortgage Association, Government National Mortgage Association or Federal Home Loan -25- X62 Mortgage Corporation, or (6) for investments permitted under Regulations issued pursuant to Section 149(b)(3)(B) of the Code; and (e) (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 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 City disburses the last of the Gross Proceeds of the Bonds and will calculate Excess Investment Earnings in accordance with the Regulations; (ii) except for the investment of moneys in tax-exempt bonds or Gross Proceeds invested during an applicable temporary period permitted under the Regulations, it will not allow Gross Proceeds of the Bonds to be invested at any time in Nonpurpose Investments with a Yield in excess of the Yield on the 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 for federal income tax purposes; (iii) it will neither invest Gross Proceeds nor cause Gross Proceeds to be invested in Nonpurpose Investments if the Yield on -26- 363 such Nonpurpose Investments 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 Investments, 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. ADOPTED, SIGNED AND APPROVED this 15th day of January 1991. a Mayor of the City of San Juan Capistrano (SEAL) ATT S�'�'c'`�`—' City Clelrk cff the City of San Juan Capistrano 01/07/91 2534u/2658/001 EXHIBIT A UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE SERIES A OF 1991 GENERAL OBLIGATION BOND OF CITY OF SAN JUAN CAPISTRANO (OPEN SPACE PROGRAM) INTEREST MATURITY RATE DATE DATED DATE CUSIP NO. March 15, 1991 REGISTERED OWNER: PRINCIPAL AMOUNT: CITY OF SAN JUAN CAPISTRANO, a municipal corporation situated in the County of Orange, State of California, (herein called the "City"), duly organized and existing under and by virtue of the Constitution and laws of the State of California, hereby acknowledges its indebtedness and promises to pay to the registered owner named above or registered assigns, herein sometimes referred to as "registered owner", the principal sum stated above on the maturity date indicated above, and to pay such registered owner by check or draft mailed by first class mail, postage prepaid, thereto at his/her address as it appears on the register kept by the Paying Agent at the close of business on the fifteenth day of the month preceding the Interest Payment Date, as hereinafter defined (the "Regular Record Date"), or, at the request of an owner of in excess of $1,000,000 aggregate principal amount of bonds, by wire transfer, interest on such principal sum on each July 15 and January 15, commencing January 15, 1992 (each an "Interest Payment Date") next preceding the date of authentication (unless (i) the date of authentication is prior to the first Regular Record Date in which event from March 15, 1991 (ii) the date of authentication is after a Regular Record Date and before the following Interest Payment Date in which event it shall bear interest from such Interest Payment Date or (iii) it is authenticated as of an Interest Payment Date, in which event it shall bear interest from such date) until the principal hereof shall have been paid or provided for in accordance with the Resolution hereinafter referred to, at the rate above indicated, payable on each Interest Payment Date. Principal and any premium upon the redemption prior to the maturity of A-1 2534u/2658/001 all or part hereof are payable at the principal corporate trust office of Bankers Trust Company of California, Paying Agent for the Bonds, in San Francisco, California. All such amounts are payable in lawful money of the United States of America. The principal and the interest on the Bonds may be paid from taxes levied for the payment thereof, which taxes shall be levied exclusively upon the taxable property in the City. This bond is issued in fully registered form. It may be exchanged for a like aggregate principal amount of bonds of other authorized denominations of the same series and maturity, all as more fully set forth in the Resolution of Issuance of the City adopted on June 19, 1990, Resolution No. 90-6-19-7 (the "Resolution"). This bond is transferable by the registered owner hereof, in person or by his attorney duly authorized in writing, at the principal corporate trust office of the Paying Agent in San Francisco, 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 series and maturity will be issued to the transferee in exchange therefor. The bonds maturing before January 15, 2001 are not subject to call and redemption prior to maturity. The bonds maturing on or after January 15, 2001 may be redeemed, at the option of the City on January 15, 2000, or on any Interest Payment Date thereafter prior to maturity, in whole or in part, and if in part as nearly as practicable on a pro rata basis among maturities 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 January 15, 2000 or July 15, 2001 102.0% January 15, 2001 or July 15, 2002 101.5 January 15, 2002 or July 15, 2003 101.0 January 15, 2003 or July 15, 2004 100.5 January 15, 2004 and thereafter 100.0 The City and the Paying Agent may treat the registered owner hereof as the absolute owner hereof for all purposes, and the City and the Paying Agent shall not be affected by any notice to the contrary. This bond shall not be entitled to any benefit under the Resolution, or become valid or obligatory for any purpose, until the certificate of authentication hereon endorsed shall have been signed by the Paying Agent. A-2 2534u/2658/001 it is hereby recited, certified and declared that any and all acts, conditions and things required to exist, to happen and to be performed precedent to and in the issuance of this bond exist, have happened and have been performed in due time, form and manner as required by the Constitution and laws of the State of California. IN WITNESS WHEREOF, THE CITY OF SAN JUAN CAPISTRANO has caused this bond to be signed by the Mayor of said City and by the Treasurer, and countersigned by the City Clerk of said City, by their printed, lithographed or engraved facsimile signatures, and sealed with the official seal of said City. Mayor of the City of San Juan Capistrano (SEAL) Treasurer of the City of San Juan Capistrano COUNTERSIGNED: City Clerk of the City of San Juan Capistrano A-3 2534u/2658/001 [FORM OF CERTIFICATE OF AUTHENTICATION] This is one of the Fully Registered bonds described in the within -mentioned Resolution. [PAYING AGENT TO COME] Registration Date: By: Authorized Officer [FORM OF ASSIGNMENT OF BONDS] For value received hereby sells, assigns and transfers unto (Social Security or Identification No. ) the within -mentioned bond and hereby irrevocably constitutes and appoints attorney, to transfer the same on the books of the Paying Agent with full power of substitution in the premises. Dated: Signature Guarantee 01/07/91 2534u/2658/001 STATE OF CALIFORNIA COUNTY OF ORANGE I, Cheryl Johnson , City Clerk of the City of San Juan Capistrano, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the City Council of said City at a regular meeting of said City Council held on the 15th day of January 1991, and that it was so adopted by the following vote: AYES: Councilmembers: Jones, Hausdorfer, Buchheim, Vasquez and Mayor Friess NOES: Councilmembers: None ABSENT: Councilmembers: None ABSTAIN: Councilmembers: None 2 c ti aQ3 � - City Clerdi oe the City of San Juan Capistrano (SEAL) STATE OF CALIFORNIA SS. COUNTY OF ORANGE I,1 Johnson City Clerk of the City of San Juan Capistrano, DO HEREBY CERTIFY that the above and foregoing is a full, true and correct copy of RESOLUTION NO.91-1-15-2Df said City Council, and that the same has not been amended or repealed. Dated: January 16 , 1991 City C1 k the City of San Juan Capistrano (SEAL) 01/07/91 2534u/2658/001