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Resolution Number CRA 86-8-12-1RESOLUTION NO. CRA 86-8-12-1 ZING THE I W3.9 (SAN JUAN RESOLUTION OF THE SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY AUTHORIZING THE ISSUANCE OF TAX ALLOCATION NOTES OF SAID AGENCY IN A PRINCIPAL AMOUNT OF SIX MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($6,250,000) TO FINANCE A PORTION OF THE COST OF A REDEVELOPMENT PROJECT KNOWN AS THE SAN JUAN CAPISTRANO CENTRAL REDEVELOPMENT PROJECT 91 WHEREAS, the San Juan Capistrano Community Redevelopment Agency (the "Agency"), is a redevelopment agency (a public body, corporate and politic) duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law (Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State of California), and the powers of the Agency include the power to issue bonds or notes for any of its corporate purposes; and, WHEREAS, the Redevelopment Plan for a redevelopment project known and designated as the "San Juan Capistrano Central Redevelopment Project" has been adopted and approved by Ordinance No.488 of the City of San Juan Capistrano on July 12, 1983, and amended by Ordinance No. 509, adopted on May 15, 1984, and amended by Ordinance No. 547, adopted on July 17, 1985, and all requirements of law for and precedent to the adoption and approval of the Redevelopment Plan have been duly complied with; and, WHEREAS, for the corporate purposes of the Agency, the Agency deems it necessary to issue at this time tax allocation notes in a principal amount of Six Million Two Hundred Fifty Thousand Dollars ($6,250,000), and to use the proceeds of such Notes to finance a portion of the costs of the Redevelopment Project, to pay costs in connection with the issuance of the Notes and to make certain other deposits as required by this Resolution; and, WHEREAS, the purposes stated above will be accomplished by issuing at this time such tax allocation notes in a principal amount of Six Million Two Hundred Fifty Thousand Dollars ($6,250,000) pursuant to this Resolution providing for the issuance of "San Juan Capistrano Community Redevelopment Agency, San Juan Capistrano Central Redevelopment Project, Tax Allocation Notes, Issue of 1986," and in accordance with the provisions of which the proceeds will be set apart and irrevocably segregated in a special trust fund which will be used to finance a portion of the costs of implementing the Redevelopment Plan; -1- 9 2 NOW, REDEVELOPMENT FOLLOWS: THEREFORE, THE SAN JUAN CAPISTRANO COMMUNITY AGENCY DOES HEREBY RESOLVE, DETERMINE AND ORDER AS Section 1. Definitions. As used in this Resolution, the following terms shall have the following meanings, unless the context otherwise requires: "Agency" means the San Juan Capistrano Community Redevelopment Agency. "Annual Debt Service" means, for any Note Year, the sum of (1) the interest payable on the Outstanding Notes in such Note Year, assuming that the Outstanding Notes are retired as scheduled, plus (2) the principal amount of the Outstanding Notes coming due and payable in such Note Year. "Bank" means The Sumitomo Trust and Banking Company, Limited, its successors and assigns or any substitute. "Bank Representative" means the person or persons at the time designated by the Bank by written certificate furnished to the Fiscal Agent containing the specimen signatures of such person or persons and signed on behalf of the Bank by a vice president thereof. Such certificate may designate an alternate or alternates. "Business Day" means a day of the year on which banks in neither California or New York are required or authorized to remain closed. "Chairman" means the chairman of the Agency appointed pursuant to Section 33113 of the Health and Safety Code of the State of California, or other duly appointed officer of the Agency authorized by the Agency by resolution or bylaw to perform the functions of the chairman in the event of the chairman's absence or disqualification. "City" means the City of San Juan Capistrano, California. "Certificate" or "Certificate of the Agency" means a certificate signed by the Executive Director of the Agency or his deputy. "Eligible Moneys" means (1) amounts deposited in the Special Fund or any of the Accounts therein or the Redemption Fund which have been held by the Fiscal Agent for a period of not less than ninety-five (95) days during which period no Event of Default under Subsection A(3) of Section 23 has occurred; (2) amounts derived from the investment of amounts described in clause (1) above; (3) proceeds of the sale of the Notes deposited in the Debt Service Reserve Account together with earnings -2- derived from the investment of such amount; (4) drawings under the Letter of Credit; and (5) the proceeds of refunding bonds or other obligations of the Agency issued to provide for the payment in full of all Outstanding Notes at or before maturity; provided that (i) such proceeds have been held by the Fiscal Agent for a period of not less than ninety-five (95) days during which no Event of Default under Subsection A(3) of Section 23 has occurred or (ii) the Fiscal Agent has received an unqualified opinion of nationally recognized counsel experienced with bankruptcy matters to the effect that payment of the proceeds of such bonds or obligations to the Noteowners would not constitute voidable payments pursuant to the provisions of Section 547 of the United States Bankruptcy Code, in the event the Agency were to become a debtor under the United States Bankruptcy Code. "Event of Default" means any of the events described in any of the subsections of Section 23. "Fiscal Agent" means the fiscal agent appointed by the Agency pursuant to Section 19 hereof, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in this Resolution. "Fiscal Year" means any twelve (12) month period beginning on July lst and ending on the next following June 30th. "Government Obligations" means direct general obligations (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America). "Independent Financial Consultant," "Independent Engineer," "Independent Certified Public Accountant," or "Independent Redevelopment Consultant" means any individual or firm engaged in the profession involved, appointed by the Agency, and who, or each of whom, has a favorable reputation in the field in which his/her opinion or certificate will be given, and: (1) is in fact independent and not under domination of the Agency; (2) does not have any substantial interest, direct or indirect, with the Agency; and (3) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency. "Interest Payment Date" means each of the dates specified in Section 5 on which interest is due and payable on the Notes. "Law" means the Community Redevelopment Law of the State of California as cited in the recitals hereof. -3- 93 g "Letter of Credit" means (1) the irrevocable standby letter of credit issued by the Bank pursuant to the Reimbursement Agreement for the account of the Agency and held by the Fiscal Agent for the benefit of the Noteowners, and (2) any Substitute Letter of Credit. "Note" or "Notes" means the "San Juan Capistrano Community Redevelopment Agency, San Juan Capistrano Central Redevelopment Project, Tax Allocation Notes, Issue of 1986," authorized by this Resolution. "Note Year" means the twelve (12) month period commencing on August 1 of each year and each anniversary date thereafter. "Noteowner" or "Owner of Notes," or any similar term, means any person who shall be the registered owner or his duly authorized attorney, trustee, representative or assign of any Outstanding Note. For the purpose of Noteowners voting rights or consents, Notes owned by or held for the account of the Agency, or the City, directly or indirectly, shall not be counted. "Opinion of Counsel" means a written opinion of an attorney or firm of attorneys of favorable reputation in the field of municipal bond law. Any opinion of such counsel may be based upon, insofar as it is related to factual matters, information which is in the possession of the Agency as shown by a certificate or opinion of, or representation by, an officer or officers of the Agency, unless such counsel knows, or in the exercise of reasonable care should have known, that the certificate, opinion or representation with respect to the matters upon which his or her opinion may be based, as aforesaid, is erroneous. "Outstanding", when used as of any particular time with reference to Notes, means, subject to the provisions of Section 22(D). all Notes except: (a) Notes theretofore cancelled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (b) Notes paid or deemed to have been paid; and (c) Notes in lieu of or in substitution for which other Notes shall have been authorized, executed, issued and delivered by the Agency pursuant to the Resolution or any Supplemental Resolution. "Parity Notes" means any additional tax allocation notes (including, without limitation, bonds, notes, interim certificates, debentures or other obligations) issued by the Agency as permitted by Section 17 of this Resolution. MM "Paying Agent" means any paying agent provided by the Agency pursuant to this Resolution. 95 "Permitted Investments" means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein (a) Government obligations; (b) Federal Home Loan Mortgage Corporation participation certificates or senior debt obligations; (c) Federal National Mortgage Association mortgage- backed securities or senior debt obligations; (d) certificates of deposit, time deposits or bankers' acceptances with a maturity of one (1) year or less of any bank (including the Fiscal Agent) the debt obligations of which or the debt obligations of the holding company of which have been rated A-1+ by Standard & Poor's; (e) obligations rated at least AA by Standard & Poor's; (f) taxable government money market portfolios restricted to obligations with maturities of one year or less issued or guaranteed as to payment of principal and interest by the full faith and credit of the United States; or (g) deposits which are fully insured by Federal Savings and Loan insurance Corporation or the Federal Deposit Insurance Corporation. "Project Area" means the project area described and defined in the Redevelopment Plan. "Redevelopment Plan" means the Redevelopment Plan for the San Juan Capistrano Central Redevelopment Project, approved and adopted by the City by Ordinance No. 488 adopted on July 12, 1983, and amended by Ordinance No. 509, adopted on May 15, 1984, and amended by Ordinance No. 547, adopted on July 17, 1985, and includes any amendment thereof hereafter made pursuant to the Law. "Redevelopment Project" means the San Juan Capistrano Central Redevelopment Project. "Regular Record Date" means the fifteenth (15th) day of the month next preceding an Interest Payment Date. xeimoursement Agreement" means the RelmDursement Agreement dated as of August 1, 1986, by and between the Agency and the Bank, together with any duly authorized and executed amendment thereto. "Report" means a document in writing signed by an Independent Financial Consultant or an Independent Real Estate Consultant and including: (a) A statement that the person or firm making or giving such Report has read the pertinent provisions of this Resolution to which such Report relates; -5- 9(b) A brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and (c) A statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the Report. "Resolution" means this Resolution, adopted by the Agency under the Law, as originally adopted or as it may be amended or supplemented by any Supplemental Resolution adopted pursuant to the provisions hereof. "Reserve Requirement" means, as of the date of issue of the Notes, an amount equal to 180 days' interest on the Notes. "Special Fund" means the fund by that name established and held by the Fiscal Agent pursuant to Section 12. "Standard & Poor's" means Standard & Poor's Corporation, of New York, New York, its successors and assigns. "State" means the State of California. "Substitute Bank" means the bank providing a Substitute Letter of Credit. "Substitute Letter of Credit" means an irrevocable standby letter of credit which is delivered by or on behalf of the Agency to the Fiscal Agent in substitution for the Letter of Credit issued by the Bank pursuant to the Reimbursement Agreement and in accordance with the provisions of Section 26. "Supplemental Resolution" or "supplemental resolution" means any resolution then in full force and effect which has been duly adopted by the Agency under the Law, or any act supplementary thereto or amendatory thereof, at a meeting of the Agency duly convened and held, at which a quorum was present and acted thereon, amendatory of or supplemental to this Resolution; but only if and to the extent that such Supplemental Resolution is specifically authorized hereunder. "Tax Revenues" means that portion of taxes levied upon taxable property in the Project Area and received by the Agency for the Project Area of the Agency pursuant to Article 6 of Chapter 6 of the Law and Section 16 of Article XVI of the _ Constitution of the State of California, less any amount required to be paid to the other taxing agencies pursuant to existing agreements entered into with such taxing agencies under Section 33401 of the Health & Safety Code, plus State reimbursed amounts for certain property tax exemptions, including but not limited to business inventory, to the extent actually received all as more particularly set forth hereafter in this Resolution. "Treasurer" or "Treasurer of the Agency" means the 97 officer who is then performing the functions of Treasurer of the Agency. Section 2. Amount, Issuance and Purpose of Notes. Under and pursuant to the Law and under and pursuant to this Resolution, Notes of the Agency in a principal amount of Six Million Two Hundred Fifty Thousand Dollars ($6,250,000) shall be issued by the Agency for the corporate purposes of the Agency by providing funds for the financing of a portion of the cost of implementing the Redevelopment Plan which constitutes a "redevelopment activity" as such term is defined in Health and Safety Code Section 33678; and such issue of Notes is hereby created. Section 3. Nature of Notes. The Notes shall be and are special obesligati n of the Agency and are secured by an irrevocable pledge of, and are payable as to principal, interest and premium, if any, from Tax Revenues and other funds as hereinafter provided. The Notes are also secured by the proceeds of a draw upon the Letter of Credit in accordance with the terms thereof. The Notes, interest thereon and premium, if any, are not a debt of the City, the State of California or any of its political subdivisions, and neither the City, the State nor any of its political subdivisions is liable on them. In no event shall the Notes, interest thereon and premium, if any, be payable out of any funds or properties other than those of the Agency as set forth in this Resolution. The Notes do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Neither the members of the Agency nor any persons executing the Notes are liable personally on the Notes by reason of their issuance. The Notes shall be and are equally secured by an irrevocable pledge of the Tax Revenues and other funds as hereinafter provided, without priority for number, date of sale, date of execution, or date of delivery, except as expressly provided herein. The validity of the Notes is not and shall not be dependent upon: (a) the completion of the Project Area or any part thereof, (b) the performance by anyone of his/her obligations relative to the Project Area, or (c) the proper expenditures of the proceeds of the Notes. Nothing in this Resolution shall preclude (a) the payment of the Notes from the proceeds of refunding bonds issued pursuant to the Law, or (b) the payment of the Notes from any legally available funds; provided, however, such payments shall be made with Eligible Moneys. Nothing in this Resolution shall prevent the Agency from making advances of its own funds, however derived, to any of the uses and purposes mentioned in this Resolution. -7- 9In the event of a defeasance of the Notes in accordance with Section 31, the Fiscal Agent shall return the Letter of Credit to the Bank and cause an accounting for such period or periods as shall be requested by the Agency to be prepared and filed with the Agency, and the Fiscal Agent, upon the request of the Agency, shall release the rights of the Noteowners under this Resolution and execute and deliver to the Agency all such instruments as may be desirable to evidence such release, discharge and satisfaction, and the Fiscal Agent shall pay over or deliver to the Agency all moneys or securities held by it pursuant to this Resolution which are not required for the payment or redemption of Notes not theretofore surrendered for such payment or redemption. Provision shall be made by the Agency, satisfactory to the Fiscal Agent, for mailed notice, postage prepaid to the Owners of such Notes that such moneys are so available for such payment. Section 4. Description of Notes. The Notes shall be in an aggregate p 'principal amount of Six Million Two Hundred Fifty Thousand Dollars ($6,250,000) and shall be designated "SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, SAN JUAN CAPISTRANO CENTRAL REDEVELOPMENT PROJECT, TAX ALLOCATION NOTES, ISSUE OF 1986". The Notes shall be issued in the form of fully registered notes in denominations of $5,000 each or any whole multiple thereof. The Notes shall be dated as of August 1, 1986 and shall be lettered "A" and numbered consecutively from 1 upwards in the order of their authentication. The Notes shall mature on August 1, 1991. The Agency covenants and agrees to issue its refunding bonds or other refunding obligations in a timely manner at such time and in such amounts which, together with other Eligible Moneys in the Special Fund, will be sufficient to refund all of the Outstanding Notes, and any Parity Notes maturing on August 1, 1991. Section 5. Interest. The Notes shall bear interest at a rate to be hereafter f— i d by resolution, but not to exceed twelve percent (12%) per annum payable semiannually on August 1 and February 1 of each year, commencing February 1, 1987. Each Note shall bear interest until its principal sum has been paid; provided, however, that if funds are available for the payment thereof in full accordance with the terms of this Resolution, the Note shall then cease to bear interest. Interest on the Notes shall be calculated on the basis of a 360 -day year of twelve (12) 30 -day months. The Notes issued upon exchanges and transfers of other Notes shall be dated so that no gain or loss of interest shall result from the exchange or transfer. Each Note shall bear interest from the Interest Payment Date next preceding the date thereof unless (i) it is dated as of an Interest Payment Date, in which event it shall bear interest from that Interest Payment aL Date, (ii) it is dated after a Regular Record Date and before the n n l9following Interest Payment Date, and if the Agency shall not lam./ default in the payment of interest due on such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is dated prior to January 15, 1987, in which event it shall bear interest from August 1, 1986. Interest on the Notes shall be paid by the Fiscal Agent (out of the appropriate funds) by check or draft mailed on the Interest Payment Date to the registered owner as his/her name and address appear on the register kept by the Fiscal Agent at the close of business on the Regular Record Date preceding the Interest Payment Date or upon the request of a Noteowner of $1,000,000 or more in principal amount of Notes, payment shall be made by wire transfer in immediately available funds to an account designated by such Noteowner. Section 6. Place of Payment. The Notes, the interest thereon, and any premiums upon the redemption thereof prior to maturity shall be payable in lawful money of the United States of America and shall be payable at the corporate trust office of the Fiscal Agent in Los Angeles, California (except interest which shall be payable by check or draft as provided in Section 5). Section 7. Form of Notes. The Notes shall be substantiall— yi n the form attached hereto and by this reference incorporated herein as Exhibit "A". This form is hereby approved and adopted as the form of the Note, and of the redemption, exchange, registration and assignment provisions pertaining thereto, with necessary or appropriate variations, omissions and insertions as permitted or required by this Resolution. Any Notes issued pursuant to this Resolution may be initially issued in temporary form exchangeable for definitive Notes when the same are ready for delivery. The temporary Notes may be printed, lithographed, or typewritten, shall be of such denominations as may be determined by the Agency, shall be without coupons and may contain references to any of the provisions of this Resolution as may be appropriate. Every temporary Note shall be executed by the Agency and authenticated and delivered by the Fiscal Agent upon the same conditions and in substantially the same form and manner as the definitive Notes. If the Agency issues temporary Notes, it will execute and furnish definitive Notes without delay, and, thereupon, the temporary Notes shall be surrendered for cancellation at the principal corporate trust office of the Fiscal Agent in Los Angeles, California, or at such other place as the Agency may approve. The Fiscal Agent shall deliver in exchange for the surrendered temporary Notes an equal aggregate principal amount of definitive Notes of authorized denominations of this same issue. Until exchanged, the temporary Notes shall be entitled to the same benefits under this Resolution as definitive Notes of this same issue. ME 1 O O Section 8. Execution of Notes. The Notes shall be signed on behalf of the Agency by its Chairman and by its Executive Director, by facsimile signature, and the seal of the Agency shall be impressed, imprinted or reproduced thereon. The foregoing officers are hereby authorized and directed to sign the Notes in accordance with this Section. If any Agency member or officer whose manual or facsimile signature appears on the Notes ceases to be a member or officer before delivery of the Notes, his/her signature is as effective as if he or she had remained in office. The Fiscal Agent shall authenticate the Notes on registration and/or exchange to effectuate the registration and exchange provisions set forth in Section 9, and only those Notes that have endorsed on them a certificate of authentication, substantially in the form set forth in Exhibit B, duly executed by the Fiscal Agent, shall be entitled to any rights, benefits or security under this Resolution. No Notes shall be valid or obligatory for any purpose unless and until the certificate of authentication has been duly executed be the Fiscal Agent. The certificate of the Fiscal Agent upon any Note shall be conclusive and the only evidence that the Note has been duly authenticated and delivered under this Resolution. The Fiscal Agent's certificate of authentication on any Note shall be deemed to have been duly executed if signed by an authorized officer of the Fiscal Agent, but it shall not be necessary that the same officer sign the certificate of authentication on all of the Notes that may be issued hereunder. Section 9. Registration and Exchange. The Notes shall be issued only in fully registered form. The Notes may be exchanged for other Notes of equal aggregate denominations. Transfer of ownership of a Note or Notes shall be made by exchanging the same for a new Note or Notes. All exchanges shall be made in such a manner and upon such reasonable terms and conditions as may be determined and prescribed by the Agency; provided, however, no such exchange shall be made on or after the fifteenth (15th) day preceding any selection of Notes to be redeemed. The person, firm, or corporation requesting the exchange shall pay costs or charges, if any, in connection with the exchange as set forth in Section 20, in addition to paying any tax or governmental charge that may be imposed in connection with the exchange. The Agency shall pay all other registration and exchange costs and charges. Each fully registered Note issued pursuant to this Resolution shall be of a denomination which is $5,000 or a whole multiple thereof and shall be of the same issue. Section 10. Note Register. The Fiscal Agent will keep at its principal corporate trust office in Los Angeles, California, or at such other place as the Agency may approve, sufficient books for the registration and transfer of the Notes. The books shall at all times be open to inspection by the Agency; and, upon presentation for such purpose, the Fiscal Agent -10- shall under such reasonable regulations as it may prescribe, register or transfer, or cause to be registered or transferred, on the register, the Notes as hereinbefore provided. Section 11. Call and Redemption and Purchase of Notes Prior to Matur ty. A. Optional Redemption. The Outstanding Notes, or any of them, may be called before maturity and redeemed at the option of the Agency, in whole or in part from any Eligible Moneys (except drawings under the Letter of Credit) on August 1, 1989, or on any Interest Paymemt Date thereafter, prior to maturity, by lot. The Interest Payment Date on which Notes are to be presented for redemption is sometimes referred to as the "redemption date." Notes called for redemption shall be redeemed at a redemption price (expressed as a percentage of the principal amount of Notes to be redeemed) plus accrued interest to the redemption date. Redemption Date Redemption Price August 1, 1989 and February 1, 1990 100 1/2% August 1, 1990 and thereafter 100% All Notes, or parts thereof, as the case may be redeemed pursuant to the provisions of this Section shall be cancelled upon surrender thereof and delivered to, or destroyed upon the order of, the Agency. Redemption by lot shall be in such manner as the Fiscal Agent shall determine; provided, however, that the portion of any Note to be redeemed shall be in the principal amount of $5,000 or any multiple thereof and that, in selecting portions of the Note for redemption, the Fiscal Agent shall treat each Note as representing that number of Notes which is obtained by dividing the principal amount of such Note by $5,000. B. Call and Redemption; Notice of Redemption. The Agency may by resolution direct the call and redempt of prior to maturity of Notes by the Fiscal Agent in such amounts as there are funds available for use in redemption and shall give notice to the Fiscal Agent of the redemption at least twenty (20) days prior to the redemption date. Notice of redemption prior to maturity (except as provided below) shall be mailed not less than ten (10) nor more than sixty (60) days prior to the redemption date, (i) to Miller & Schroeder Financial, lnc. and (ii) to the registered owner of each such Note at the address shown on the registration books of the Fiscal Agent. The notice of redemption shall (a) state the redemption date; (b) state the redemption price; (c) state the numbers of the Notes to be redeemed; provided, however, that whenever any call for redemption includes all of the Outstanding -11- 1 02 Notes, the numbers of the Notes need not be stated; (d) state, as to any Notes redeemed in part only, the registered Note numbers and the principal portion thereof to be redeemed; and (e) state that interest on the principal portion of the Notes designated for redemption shall cease to accrue from and after the redemption date and that on the redemption date there shall become due and payable on each of such Notes the redemption price for each Note. No notice shall be mailed pursuant to this section until such time as there is on deposit Eligible Moneys sufficient to redeem that portion of the Notes as set forth in the notice. Following the mailing of the notice of redemption, the Eligible Moneys to be used for such redemption shall be invested only in Government Obligations. The actual receipt by the Owner of any Note of notice of redemption shall not be a condition precedent to redemption, and failure to receive notice shall not affect the validity of the proceedings for the redemption of the Notes or the cessation of interest on the redemption date. Notice of redemption of Notes shall be given by the Fiscal Agent and on behalf of the Agency at the expense of the Agency. A certificate by the Fiscal Agent that notice of redemption has been given in accordance with this Resolution shall be conclusive as against all parties, and no Noteowner whose Note is called for redemption may object to the redemption or the cessation of interest on the redemption date by claiming or showing that he failed to receive actual notice of call and redemption. C. Redemption Fund. Prior to the mailing of notice of redemption as required above, the Fiscal Agent shall establish, maintain and hold in trust a separate fund which is hereby created for the purpose of this Resolution entitled "San Juan Capistrano Community Redevelopment Agency, San Juan Capistrano Central Redevelopment Project, Tax Allocation Notes, issue of 1986, Redemption Fund" (hereinafter referred to as the "Redemption Fund"). There shall be set aside in the Redemption Fund or another special trust fund as provided in Section 31 prior to publication of notice of redemption, Eligible Moneys (or Government Obligations as provided in Section 31(c)) for the purpose of and sufficient to redeem, at the premiums, if any, payable as provided in this Resolution, the Notes designated in the notice of redemption. The moneys must be set aside in the Redemption Fund (or other special trust fund pursuant to Section 31) and pledged solely for that purpose and shall be applied on or after the redemption date to the payment (principal and premium, if any) of the Notes to be redeemed upon presentation _ and surrender of the Notes. D. Partial Redemption of Notes. Upon surrender of any Note redeemed— part only, the Agency shall execute and the Fiscal Agent shall authenticate and deliver to the registered owner, at the expense of the Agency, a new Note or Notes of -12- authorized denominations equal in aggregate principal amount to 1 O the unredeemed portion of the Note surrendered. A partial redemption shall be valid upon payment of the amount required to be paid to the registered owner, and the Agency and the Fiscal Agent shall be released and discharged from all liability to the extent of such payment. E. Effect of Redemption. Notice of redemption having been duly given as provided above, and Eligible Moneys for payment of the principal of, premium, if any, and interest payable upon redemption of the Notes being set aside as provided above, the Notes, or parts thereof, called for redemption shall, on the redemption date, become due and payable at the redemption price specified in the notice. Interest on the Notes, or parts thereof, as the case may be, called for redemption shall cease to accrue. The Notes, or parts thereof redeemed, shall cease to be entitled to any lien, benefit or security under this Resolution, and the Owners of the Notes shall have no rights except to receive payment of the redemption price, and, in the case of partial redemption of Notes, to receive a new Note or Notes for the unredeemed balance as provided above. F. Purchase of Notes. The Fiscal Agent, on behalf of and at the direction of the Agency, is hereby authorized to purchase Notes on the open market at any time at a price not to exceed the principal amount of the Notes plus the applicable premium and accrued interest, if any, to the date of purchase plus brokerage fees, if any; provided that only Eligible Moneys (except proceeds from drawings under the Letter of Credit) shall be used for the purchase of the Notes. Section 12. Funds and Accounts. There is hereby created witt'� the Treasurer a special trust fund called the "San Juan Capistrano Central Redevelopment Project, Redevelopment Fund" (hereinafter sometimes called the "Redevelopment Fund"). There is hereby created with the Fiscal Agent a special trust fund called the "San Juan Capistrano Central Redevelopment Project, Special Fund" with special trust accounts contained therein known as the "Interest Account," the "Principal Account," the "Debt Service Reserve Account," and the "Letter of Credit Reimbursement Account" and a special trust fund called the "Costs of Issuance Fund." So long as any of the Notes, or any payments due the Bank under the Reimbursement Agreement, or any interest on them, remain unpaid, the moneys in the foregoing Funds and Accounts shall be used for no purposes other than those required or permitted by this Resolution and the Law. Section 13. Sale of Notes; Disposition of Note Proceeds;Re�elopment Fun . The Agency may provide -15y' resolution for the sale of the Notes in the manner provided by the Law. -13- 1 O A. Upon the delivery of the Notes to the purchasers thereof, the Fiscal Agent, on behalf of the Agency, shall receive the proceeds from the sale of the Notes (except for that portion of the purchase price represented by the good faith check delivered by the purchaser at the time of submittal of bids for the Notes, which shall be retained by the Agency and deposited in the Redevelopment Fund), deposit such proceeds in the Special Fund and the Costs of Issuance Fund and dispose of the proceeds and moneys so deposited as follows: (1) Deposit in the Interest Account an amount which when added to the accrued interest and premium, if any, paid by the purchasers of the Notes will be equal to one hundred eighty (180) days interest on the Notes; (2) Deposit in the Debt Service Reserve Account a sum equal to the Reserve Requirement; (3) Deposit in the Costs of Issuance Fund an amount set forth in a certificate of the Agency to pay the necessary expenses in connection with the issuance and sale of the Notes including the fee for the Letter of Credit and fees of the Fiscal Agent, original issuance and out-of-pocket expenses, all as set forth in a certificate of the Executive Director of the Agency; and (4) After making the above deposits, the balance of the proceeds from the sale of the Notes shall be transferred to the Agency who shall place the same in the Redevelopment Fund. B. Except as hereinafter provided, the moneys set aside in the Redevelopment Fund shall remain there until from time to time expended for the purpose of financing a portion of the costs of the Project Area and other related costs, and also including in such costs: (1) The payment of an amount of money in lieu of taxes as authorized by Section 33401 of the Law in any year during which the Agency owns property in the Project Area, to any city, county, city and county, district, or other public corporation which would have levied a tax upon such property had it not been exempt; (2) The cost of any lawful activities in connection with the implementation of the Project Area, including, without limitation, those activities authorized by Section 33445 of the Law; and (3) The necessary expenses in connection with the issuance and sale of the Notes and fees and -14- expenses of the Fiscal Agent and Paying Agents andO the Bank not otherwise paid under paragraph A VVV above. A portion of the proceeds deposited in the Redevelopment Fund in an amount as set forth on a certificate of the Executive Director of the Agency shall be transferred to and deposited in a separate fund maintained by the Agency and known as the Low and Moderate Income Housing Fund. The moneys in such fund shall be expended from time to time for the purposes set forth in Section 33334.2 of the Health and Safety Code. If any sum remains in the Redevelopment Fund after the full accomplishment of the objects and purposes for which the Notes were issued, that sum shall be transferred to the Special Fund. Moreover, all interest and income earned from the Redevelopment Fund on or prior to the date established by resolution of the Agency shall be retained therein. All of the above uses constitute a "redevelopment activity" as that term is defined in Health and Safety Code Section 33678. C. Any moneys remaining in the Costs of Issuance Fund on October 1, 1986, shall be transferred by the Fiscal Agent to the Agency for deposit in the Redevelopment Fund. Section 14. Tax Revenues. As provided in the Redevelopment Plan, pursuant to Article 6 of the Law and Section 16 of Article XVI of the Constitution of the State of California, taxes levied upon taxable property in the Project Area each year by or for the benefit of the State of California, any city, county, city and county, district, or other public corporation (herein sometimes collectively called "taxing agencies") after the effective date of the Ordinance approving the Redevelopment Plan (being Ordinance No. 488 of the City of San Juan Capistrano, adopted on July 12, 1983) for the Project Area shall be divided as follows: (a) That portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of the taxing agencies upon the total sum of the assessed value of the taxable property in the Project Area as shown upon the assessment roll used in connection with the taxation of such property by such taxing agency last equalized prior to July 12, 1983, (being the effective date of Ordinance No. 488, referred to above) with respect to the Project Area shall be allocated to and when collected shall be paid into the funds of the respective taxing agencies as taxes by or for the taxing agencies on all other property are paid; and -15- 1 © (b) That portion of the levied taxes each year in excess of such amount, less any amount required to be paid to the other taxing agencies pursuant to existing agreements entered into with such taxing agencies under Section 33401 of the Health & Safety Code, shall be allocated to and when collected shall be paid into the Special Fund of the Agency. This portion of the levied taxes (plus State reimbursed amounts for certain property tax exemptions, including but not limited to business — inventory, to the extent received), are herein referred to as "Tax Revenues." The foregoing provisions of this Section are a portion of the provisions of Article 6 of the Law as applied to the Notes and shall be interpreted in accordance with Article 6, and the further provisions and definitions contained in Article 6 are incorporated by reference herein and shall apply. The Tax Revenues are hereby irrevocably pledged equally and ratably to the payment of the principal of, premium, if any, and interest on the Notes and to the Bank pursuant to the Reimbursement Agreement, and until all of the Notes and amounts due under the Reimbursement Agreement and all interest thereon, have been paid (or, with respect to the Notes, until moneys for that purpose have been irrevocably set aside), the Tax Revenues (subject to the exception set forth in Section 15(e)) shall be applied solely to (i) the payment of the Notes plus premium if any, and the interest thereon as provided in this Resolution and (ii) amounts due under the Reimbursement Agreement. This allocation and pledge is for the exclusive benefit of the Owners of the Notes and the Bank and shall be irrevocable Section 33645 of the Health and Safety Code provides, in applicable part as follows "The resolution, trust indenture, or mortgage shall provide that tax increment funds allocated to an agency pursuant to Section 33670 shall not be payable to a trustee on account of any issued bonds when sufficient funds have been placed with the trustee to redeem all outstanding bonds of the issue." This Resolution is presently in compliance with the above quoted provision and shall be so construed. Section 15. Special Fund. The Agency shall pay or cause to be paid to the Fiscal Agent for deposit in the Special Fund in accordance with this Section all Tax Revenues and other moneys identified herein. Each deposit of Tax Revenues and other moneys into the Special Fund shall be held in a separate, segregated subaccount thereof until such time as they become Eligible Moneys. The interest on the Notes until maturity shall be paid by the Fiscal Agent from the Interest Account of the Special Fund. At the maturity of the Notes, and, after all interest then due on the Notes then Outstanding has been paid or provided for. moneys remaining in the Special Fund shall be applied to the payment of the principal of any of such Notes and amounts due the Bank under the Reimbursement Agreement. -16- Notwithstanding anything herein to the contrary, the 1 U principal of, interest and redemption premium (if any) on the Notes shall be payable solely from Eligible Moneys. Under no circumstances shall the Fiscal Agent apply amounts from any source whatsoever other than Eligible Moneys to the payment of the Notes. The Fiscal Agent shall not treat as Eligible Moneys any amounts described in clause (1) or (5)(i) of the definition of Eligible Moneys as of any date unless the Fiscal Agent shall have received a Certificate of the Agency, dated as of such date which shall not be less than seven (7) days prior to the date such moneys are required to be applied, stating that during the preceding 95 -day period no Event of Default described under subsection A(3) of Section 23 has occurred or clause (5)(ii) of the definition of Eligible Moneys as of any date unless the Fiscal Agent shall have received an unqualified opinion of nationally recognized counsel experienced with bankruptcy matters, dated as of such date which shall be not less than seven (7) days prior to the date such moneys are required to be applied, to the effect that payment of the proceeds of such bonds or obligations to the Noteowners would not constitute voidable payments pursuant to the provisions of Section 547 of the United States Bankruptcy Code, in the event the Agency were to become a debtor under the United States Bankruptcy Code. In the event the Fiscal Agent shall not have received any Certificate of the Agency or opinion of counsel required pursuant to this Section on the date which is seven (7) days prior to the date upon which Eligible Moneys are required to pay the principal of, interest or redemption premium (if any) on the Notes, the Fiscal Agent shall promptly notify the Agency of such fact by telephonic communication. Without limiting the generality of the foregoing and for the purpose of assuring that the payments referred to above will be made as scheduled, the Tax Revenues accumulated in the Special Fund shall be used in the following priority; provided, however, to the extent that deposits have been made in any of the Accounts referred to below from the proceeds of the sale of the Notes or otherwise, the deposits below need not be made (a) Interest Account. Deposits shall be made into the Interest Account from Eligible Moneys so that the balance in the Interest Account five Business Days prior to the next Interest Payment Date shall be equal to 180 days' interest on the then Outstanding Notes. Moneys in the Interest Account shall be used for the payment of interest on the Notes as interest becomes due. (b) Debt Service Reserve Account. After deposits have been made pursuant to subparagraph (a) above, deposits shall be made to the Debt Service Reserve Account from Eligible Moneys if necessary, in order to cause the amount on deposit therein to equal the -17- 1 0 Reserve Requirement. Moneys in the Debt Service Reserve Account shall be transferred to the Interest Account to pay interest on the Notes as it becomes due to the extent Tax Revenues are insufficient therefor. Upon the payment or redemption in full of the principal of and interest and redemption premium (if any) on all of the Outstanding Notes or upon provision therefor pursuant to Section 31, other than as a result of a draw upon the Letter of Credit pursuant to Section 25, any or all of the amounts in the Debt Service Reserve Account shall at the option of the Agency be applied towards such payment or withdrawn by the Fiscal Agent and applied as hereinafter provided. Any portion of the Debt Service Reserve Account which is in excess of the Reserve Requirement shall be transferred to the Interest Account six Business Days prior to each Interest Payment Date. (c) Principal Account. On or before four Business Days before August 1, 1991, the Fiscal Agent shall withdraw from the Special Fund and deposit in the Principal Account from Eligible Moneys an amount which, when added to the amount contained in the Principal Account on that date, will be equal to the principal becoming due and payable on the Outstanding Notes on August 1, 1991. No deposit need be made into the Principal Account if the amount contained therein is at least equal to the principal to become due on August 1, 1991, upon all of the Notes issued hereunder and then Outstanding. All moneys deposited in the Principal Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of paying the principal on the Notes as it shall become due and payable. (d) Letter of Credit Reimbursement Account. After deposits have been made pursuant to subparagraphs (a), (b) and, if then required, (c) above, deposits shall be made to the Letter of Credit Reimbursement Account to the extent required to reimburse the Bank for any drawings or fees due under the Letter of Credit. Moneys in the Letter of Credit Reimbursement Account shall be paid to the Bank in accordance with the provisions of the Reimbursement Agreement. (e) Surplus. Provided the Fiscal Agent has paid all amounts due and payable to the Bank pursuant to the Reimbursement Agreement and provided no Event of Default shall have occurred and be continuing at such time as the Fiscal Agent has on deposit in the Special Fund Tax Revenues or other moneys which are OHM or, by the applicable Interest Payment Date, will 0 9 be Eligible Moneys in an amount sufficient (together with funds already on deposit in the Special Fund) to pay the interest coming due on the next two Interest Payment Dates, and to maintain the Debt Service Reserve Account in an amount equal to the Reserve Requirement, the Fiscal Agent shall so certify to the Agency. Following a receipt by the Agency of such certificate, additional Tax Revenues received and other excess amounts on deposit in the Special Fund shall be deemed "Surplus" and shall be applied by the Fiscal Agent, at the direction of the Agency, or remitted to or retained by the Agency, as the case may be, for use by the Agency for any lawful purpose. No funds shall be released pursuant to this subsection after August 2, 1990, except in connection with the issuance of refunding obligations. Section 16. Investment of Moneys in Funds and Accounts. Moneys in the Special Fun and the Accounts therein shall be invested and reinvested by the Fiscal Agent in Permitted Investments and any other investments which are legal investments for Agency funds, provided that such investments mature by their terms prior to the date on which such moneys are required to be paid out hereunder. Such investments shall be made in specific investments meeting the requirements of this Section as directed in writing by the Treasurer or Executive Director (such written request to be received by 12:00 noon on the day prior to such investment) or, in the absence of such written direction, by the Fiscal Agent in its sole discretion. Moneys in the Redevelopment Fund shall be invested by the Treasurer in any legal investments for Agency funds. Moneys in the Debt Service Reserve Account shall be invested by the Fiscal Agent solely in Government Obligations having a maturity not greater than one hundred eighty (180) days or beyond the date it is anticipated that such moneys will be needed, whichever comes first. Eligible Moneys held by the Fiscal Agent three (3) days prior to the use of such moneys shall be invested in Government Obligations maturing not later than the date such moneys are to be used to pay principal of or interest on the Notes. Obligations purchased as an investment of moneys in any Fund or Account held by the Fiscal Agent hereunder shall be deemed to be part of such Fund or Account. Any or all interest or gain received from such investments or moneys in the Special Fund and the Accounts therein shall be deposited by the Fiscal Agent in the Special Fund and respective Accounts therein. Section 17. Issuance of Parity Notes. If at any time the Agency determines it needs to do so, the Agency may provide for the issuance of, and sell, Parity Notes of a different series in such principal amounts as it estimates will be needed. The issuance and sale of any Parity Notes shall be subject to the following conditions precedent -19- 1 1 0 (a) The Agency shall be in compliance with all covenants in this Resolution; (b) The Parity Notes shall be on such terms and conditions as may be set forth in a supplemental resolution, which shall provide for (i) notes substantially in accordance with the Resolution, and (ii) the deposit of moneys into the Debt Service Reserve Account in an amount sufficient, together with the balance of the Debt Service Reserve Account, to equal the Reserve Requirement on all Notes expected to be Outstanding including the Outstanding Notes and Parity Notes; (c) The Parity Notes shall bear interest payable on February 1 and August 1 and shall mature on August 1, 1991; (d) Receipt of a certificate of the Executive Director of the Agency showing: (i) For the current and each future Note Year the debt service for each such Note Year with respect to all Notes and Parity Notes reasonably expected to be Outstanding following the issuance of the Parity Notes; and (ii) For the then current Note Year, the Tax Revenues to be received by the Agency based upon the most recent assessed valuation of taxable property in the Project Area certified by the appropriate officer of the County of Orange (including any property tax exemptions) are at least equal to 120% of the Annual Debt Service on all Notes and Parity Notes which will be outstanding following the issuance of said Parity Notes; (e) Receipt of written approval from the Bank. Notwithstanding the foregoing, if the Agency is in compliance with all covenants set forth in this Resolution, the Agency may issue and sell obligations pursuant to the Law, having a lien on the Tax Revenues which is junior to the Notes herein authorized or the obligations to the Bank under the Reimbursement Agreement and which shall be payable solely from "Surplus" as then declared or which may thereafter be declared pursuant to Section 15 hereof (as used herein "obligations" shall, include, without limitation, bonds, notes, interim certificates, debenture or other obligations, loans, advances or other forms of indebtedness incurred by the Agency). Section 18. Covenants of the Agency. As long as the Notes are Outstanding and unpaid, the Agency shall (through its -20- proper members, officers, agents or employees) faithfully perform'" 11 and abide by all of the covenants, undertakings and provisions 1 contained in this Resolution or in any Note issued hereunder, including the following covenants and agreements for the benefit of the Noteowners which are necessary, convenient and desirable to secure the Notes and will tend to make them more marketable; provided, however, that the Covenants do not require the Agency to expend any funds other than the Tax Revenues Covenant 1. Complete Redevelopment Project; Amendment to Redevelopment Plan. The Agency covenants and agrees that it will diligently carry out and continue to completion in a sound and economical manner, with all practicable dispatch, the Redevelopment Project in accordance with its duty to do so under and in accordance with the Law and the Redevelopment Plan. The Redevelopment Plan may be amended as provided in the Law but no amendment shall be made unless it will not substantially impair the security of the Notes or the rights of the Noteowners, as shown by an Opinion of Counsel, based upon a certificate or opinion of an Independent Financial Consultant appointed by the Agency. Covenant 2. Use of Proceeds, Management and Operation of Proper Agency covenants and agrees that the proceeds of the sale of the Notes will be deposited and used as provided in this Resolution and that it will manage and operate all properties owned by it comprising any part of the Project Area in a sound and businesslike manner consistent with the implementation of the Redevelopment Plan. Covenant 3. No priority. The Agency covenants and agrees that int—`will not iss— ue any obligations payable, either as to principal or interest, from the Tax Revenues which have any lien upon the Tax Revenues prior or superior to the lien of the Notes herein authorized or the obligations to the Bank under the Reimbursement Agreement. Except as permitted by Section 17 hereof, it will not issue any obligations, payable as to principal or interest, from the Tax Revenues, which have any lien upon the Tax Revenues on a parity with the Notes authorized herein. Notwithstanding the foregoing, nothing in this Resolution shall prevent the Agency (i) from issuing and selling pursuant to law, refunding obligations payable from and having any lawful lien upon the Tax Revenues, if such refunding obligations are issued for the purpose of, and are sufficient for the purpose of, refunding all of the Outstanding Notes or Parity Notes in accordance with the provisions of Section 31 hereof, (ii) from issuing and selling obligations which have, or purport to have, any lien upon the Tax Revenues which is junior to the Notes and the obligation to the Bank under the Reimbursement Agreement, or (iii) from issuing and selling bonds or other obligations which are payable in whole or in part from sources other than the Tax Revenues. As used herein "obligations" shall include, without limitation, bonds, notes, interim certificates, debentures or other obligations, loans, advances, or other forms of indebtedness incurred by the Agency. -21- 1 Covenant 4. Punctual Payment. The Agency covenants and agrees that i --`t w 1 duly and punctually pay or cause to be paid the principal of and interest on each of the Notes on the date, at the place and in the manner provided in the Notes. Covenant 5. Payment of Taxes and Other Charges. The Agency covenants and agrees that it will from time A to time pay and discharge, or cause to be paid and discharged, all payments in lieu of taxes, service charges, assessments or other — governmental charges which may lawfully be imposed upon the Agency or any of the properties then owned by it in the Project Area, or upon the revenues and income therefrom, and will pay all lawful claims for labor, materials and supplies which if unpaid might become a lien or charge upon any of the properties, revenues or income or which might impair the security of the Notes or the use of Tax Revenues or other legally available funds to pay the principal of and interest on the Notes, all to the end that the priority and security of the Notes shall be preserved; provided, however, that nothing in this Covenant shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of the payment. Covenant 6. Books and Accounts; Financial Statements. The Agency covenants and agrees that it will at all times keep, or cause to be kept, proper and current books and accounts (separate from all other records and accounts) in which complete and accurate entries shall be made of all transactions relating to the Redevelopment Project and the Tax Revenues and other funds relating to the Redevelopment Project. The Agency will prepare within one hundred eighty (180) days after the close of each of its Fiscal Years a complete financial statement or statements for the year, in reasonable detail covering the Tax Revenues and other funds, accompanied by an opinion of an Independent Certified Public Accountant appointed by the Agency, and will furnish a copy of the statement or statements to the Fiscal Agent, the Bank, and any rating agency which maintains a rating on the Notes, and, upon written request, to any Noteowner. Covenant 7. Eminent Domain Proceedings. The Agency covenants and agrees that if all or any part of the Project Area should be taken from it without its consent, by eminent domain proceedings or other proceedings authorized by law, for any public or other use under which the property will be tax exempt, it shall take all steps necessary to adjust accordingly the base year valuation of the Project Area. Covenant B. Disposition of Property. The Agency — covenants and agrees that it will not dispose of more than ten percent (10%) of the land area in the Project Area (except property shown in the Redevelopment Plan in effect on the date this Resolution is adopted as planned for public use, or property to be used for public streets, public offstreet parking, sewage facilities, parks, easements or right-of-way for public -22- utilities, or other similar uses) to public bodies or other persons or entities whose property is tax exempt, unless such disposition will not result in the security of the Notes or the rights of Noteowners being substantially impaired, as shown by an Opinion of Counsel, based upon the certificate or opinion of an Independent Financial Consultant appointed by the Agency. Covenant 9. Protection of Security and Rights of Noteowners; No Arbitrate; No Consumer Loan Bonds. The Agency covenants and agrees to preserve and protect the security of the Notes and the rights of the Noteowners or the Bank and to contest by court action or otherwise (a) the assertion by any officer of any government unit or any other person whatsoever against the Agency that (i) the Law is unconstitutional or (ii) that the tax Revenues pledged hereunder cannot be paid to the Agency for the debt service on the Notes (b) any other action affecting the validity of the Notes or diluting the security therefor or for the Bank, or (c) any assertion by the United States of America or any department or agency thereof or any other person that the interest received by the Noteowners or the Bank is taxable under federal income tax laws by reason of any action of the Agency. The Agency covenants and agrees to take no action which, in the Opinion of Counsel would result in (a) the Tax Revenues being withheld unless the withholding is being contested in good faith, and (b) the interest received by the Noteowners or the Bank becoming taxable under federal income tax laws. The Agency covenants that it will not apply the proceeds of the Notes, or any investment proceeds of the Notes, in any manner that would cause interest on the Notes to become subject to federal income taxation. The connection therewith, the Agency hereby covenants more particularly as follows: (x) the Agency will make no use of such proceeds at any time during the term of the Notes which would cause the Notes to be "arbitrage bonds" within the meaning of Section 103(c) of the Internal Revenue Code of 1954, as amended, and the applicable regulations of the United States Department of the Treasury promulgated thereunder (collectively, the "Code"), or "consumer loan bonds" within the meaning of Section 103(c) of the Code, or "mortgage subsidy bonds" within the meaning of Section 103A of the Code, and (y) the Agency will not expend 25% or more of such proceeds for property which is, or is expected to be, used in the trade or business of any person other than a "governmental unit" within the meaning of Section 103 of the Code without first obtaining an opinion of Bond Counsel that such expenditures for such purpose will not cause the interest on the Notes to become subject to federal income taxes under (i) the Code, as currently in effect, (ii) the provisions of H.R. 3838, as passed by the -23- 1 United States House of Representatives on December L� 17, 1985, as modified by the Joint Statement issued by the Chairman of the Committee on Ways and Means of the United States House of Representatives, the Chairman of the Committee on Finance of the United States Senate, the ranking members of both such Committees and the Secretary of the Treasury on March 14, 1986, or (iii) the provisions of H.R. 3838, as passed by the United States Senate on June 14, 1986. Covenant 10. Refunding. The Agency covenants and agrees to issuT e i s refunding bonds or other refunding obligations at such time and in such amounts which, together with other Eligible Moneys in the Special Fund and the Accounts thereof other than proceeds from a draw upon the Letter of Credit, will be sufficient to refund all of the Outstanding Notes maturing on August 1, 1991, or to otherwise pay the Notes at maturity. The Agency covenants and agrees to commence proceedings as soon as legally feasible (in the Opinion of Counsel) and financially feasible (in the opinion of an Independent Financial Consultant appointed by the Agency) to refund the Notes maturing on August 1, 1991, and to continue such refunding process through to completion. Continuing such refunding process through to completion as covenanted herein shall include but shall not be limited to: (i) adoption of a resolution of issuance for such refunding obligations and a resolution of sale thereof, (ii) publication of a notice or notices, as the case may be, inviting bids for a public sale in the manner provided by law and distribution of said notice or notices, as the case may be, inviting bids and an official statement or offering circular to potential purchasers of such refunding obligations, (iii) holding meetings for the receipt of offers from purchasers, and, if no bids are received and such action is then authorized by law, negotiating for the sale of the refunding obligations at private sale, and (iv) if such refunding obligations are sold, delivering the same to the purchasers thereof. Covenant 11. Taxation of Leased Property. Whenever any property in th' a Project Area has been redeveloped and thereafter is leased by the Agency to any person or persons (other than a public agency), or whenever the Agency leases real property in the Project Area to any person or persons (other than a public agency) for redevelopment, the property shall be assessed and taxed in the same manner as privately owned property, as required by Section 33673 of the Law, and the lease or contract shall provide (a) that the lessee shall pay taxes upon the assessed value of the entire property and not merely upon the assessed value of his or its leasehold interest, and (b) that if for any reason the taxes levied on the property in any year during the term of the lease or contract are less than the taxes which would have been levied if the entire property had been assessed and taxed in the same manner as privately owned property, the lessee -24- shall pay such difference to the Agency within thirty (30) days '✓ after the taxes for the year become payable to the taxing �V1 agencies and in no event later than the delinquency date of such taxes established by law. All such payments shall be treated as Tax Revenues, and when received by the Agency shall be used as provided herein. Covenant 12. Single Sum Payments in Lieu of Taxes. As an alternaestiva to payment to the Agency pursuant to subsection (b) of Covenant 11, the new owner or owners of property becoming exempt from taxation may elect to make payment to the Agency in a single sum equal to the amount estimated by an Independent Financial Consultant to be receivable by the Agency from taxes on said property from the date of said payment to the maturity date of the Notes, less a reasonable discount value. All such single sum payments in lieu of taxes shall be treated as Tax Revenues and shall be transferred to the Fiscal Agent for deposit in the Special Fund. Covenant 13. Tax Revenues. The Agency shall comply with allrequired of the Law to insure the allocation and payment to it of the Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of Orange County, and shall forward information copies of each such filing to the Fiscal Agent. Covenant 14. Compliance with Reimbursement Agreement. The Agency convenants and agrees with the Owners of the Notes to perform all obligations and duties imposed on it under the Reimbursement Agreement. Covenant 15. No Federal Guarantee. The Agency, the Fiscal Agent and the Noteowners covenant and agree that, notwithstanding any other provision in this Resolution, neither the Agency, the Fiscal Agent nor any Noteowner shall claim or accept the benefits of any federal guarantee which would cause any Note to become subject to federal income tax under the provisions of Section 103(h) of the Internal Revenue Code, including, without limitation, insurance of the Federal Deposit Insurance Corporation, if any, applicable to the Letter of Credit. Section 19. Fiscal Agent. The Agency hereby appoints Security Paci— fT National Bank as Fiscal Agent hereunder, to act as the agent, trustee and depositary of the Agency for the purpose of receiving Tax Revenues and other funds in trust as provided in this Resolution, to hold, allocate, use and apply the Tax Revenues and other funds in trust for the benefit of the Owners of the Notes and the Bank and as provided in this Resolution, and to perform the other duties and powers of the Fiscal Agent as are prescribed in this Resolution. The Agency may remove the Fiscal Agent initially appointed, or any successor, and shall forthwith appoint a -25- successor thereto, but any successor shall be a bank or trust company within or without the State, having a combined capital 1 and surplus of at least $50,000,000. The Fiscal Agent or any substituted Fiscal Agent may at any time resign in writing, filed with the Agency. Upon a resignation in writing, the Agency shall forthwith appoint a substitute Fiscal Agent and the resignation shall become effective upon appointment. In no event shall any removal or resignation of the Fiscal Agent be effective unless and until a successor Fiscal Agent shall have been appointed and shall be acting hereunder. In the event that the Fiscal Agent or any successor becomes incapable of acting as such, the Agency shall forthwith appoint a substitute Fiscal Agent. Any bank or trust company into which the Fiscal Agent may be merged or with which it may be consolidated shall become the Fiscal Agent without action of the Agency. The Fiscal Agent may become the owner of any of the Notes authorized by this Resolution with the same rights it would have had if it were not the Fiscal Agent. Unless an Event of Default shall have occurred and be continuing, the Fiscal Agent shall have no duty or obligation to enforce the collection of or to exercise diligence in the enforcement of the collection of funds assigned to it hereunder. or as to the correctness of any amounts received, but its liability shall be limited to the proper accounting for the funds that it actually receives. The recitals of fact and all promises, covenants and agreements herein and in the Notes shall be taken as statements, promises, covenants and agreements of the Agency, and the Fiscal Agent assumes no responsibility for the correctness of them, and makes no representations as to the validity or sufficiency of this Resolution or of the Notes, and shall incur no responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Notes assigned to or imposed upon the Fiscal Agent. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or default. Section 20. Lost, Stolen, Destroyed or Mutilated Notes. Shoup any Note become mutilated or be lost or destroyed, the Agency shall cause to be executed, and the Fiscal Agent shall authenticate and deliver, a new Note of like date and tenor in exchange and substitution for, and upon cancellation of, such mutilated Note or in lieu of and in substitution for such lost or destroyed Note; provided, however, that the Agency and the Fiscal Agent shall so execute, authenticate and deliver only if the owner has paid the reasonable expenses and charges of the Fiscal Agent in connection therewith and, in the case of a lost or destroyed Note, has furnished to the Fiscal Agent indemnity satisfactory to it. If any such Note shall have matured, instead of issuing a new Note the Fiscal Agent may pay the same without surrender thereof. -26- Section 21. Cancellation of Notes. All Notes surrendered to the Fiscal Agent for payment at maturity or, in 1 1 the case of call and redemption prior to maturity, at the redemption date, shall upon payment therefor be cancelled immediately and destroyed by the Fiscal Agent. A certificate of destruction shall forthwith be transmitted to the Treasurer. Any Notes purchased by the Fiscal Agent shall be cancelled immediately and destroyed. All of the cancelled Notes not destroyed shall remain in the custody of the Treasurer until destroyed pursuant to due authorization. Section 22. Amendments. This Resolution, and the rights and 'obligations— lig ns o— the Agency and of the Owners of the Notes issued hereunder, may be modified or amended at any time by Supplemental Resolution adopted by the Agency with the consent of the Bank (a) without the consent of Noteowners, if the modification or amendment is for the purpose of adding covenants and agreements further to secure Note payment, to prescribe further limitations and restrictions on Note issuance, to surrender rights or privileges of the Agency, to make modifications not affecting any Outstanding series of Notes only with the consent of the Fiscal Agent, for the purpose of curing any ambiguities, defects or inconsistent provisions in this Resolution or to insert such provisions clarifying matters or questions arising under this Resolution as are necessary and desirable to accomplish the same, provided that the modifications or amendments do not adversely affect the rights of the Owners of any Outstanding Notes; or (b) for any purpose with the consent of the Noteowners holding sixty percent (60%) in aggregate principal amount of the Outstanding Notes, exclusive of Notes, if any, owned by the Agency or the City, and obtained as hereinafter set forth; provided, however, that no modification or amendment shall, without the express consent of the Owner or registered owner of the Note affected, reduce the principal amount of any Note, reduce the interest rate payable on it, extend its maturity or the times for paying interest, change the monetary medium in which principal and interest is payable, or create a mortgage pledge or lien upon the revenues superior to or on a parity with the pledge and lien created for the Notes and any Parity Notes or reduce the percentage of consent required for amendment or modification. Any act done pursuant to a modification or amendment permitted by this Section 22 shall be binding upon the Owners of all of the Notes, and shall not be deemed an infringement of any of the provisions of this Resolution or of the Law, whatever the character of the act may be, and may be done and performed as fully and freely as if expressly permitted by the original terms of this Resolution, no Noteowner shall have any right or interest to object to the action, to question its propriety or to enjoin or restrain the Agency or its officers from taking any action pursuant to such modification or amendment. _27_ 1 A. Calling Noteowners' Meeting. If the Agency shall desire to obtain the resolution calling a Noteowners' meeting of consent, the Noteowners it shall duly adopt a for the purpose of considering the action for which consent is desired. B. Notice of Meeting. Notice specifying the purpose, place, date, and hour of a Noteowners meeting shall be mailed, postage prepaid, to the respective registered owners at their addresses appearing on the note register as maintained by the Fiscal Agent. The notice shall set forth the nature of the proposed action for which consent is desired. The place, date and hour of the meeting and the date or dates of mailing the notice shall be determined by the Agency in its discretion; provided that such notice shall be mailed at least 15 days prior to the date of the Noteowners' meeting. The actual receipt by any Noteowner of notice of any Noteowners meeting shall not be a condition precedent to the holding of the meeting, and failure to receive notice shall not affect the validity of the proceedings at the meeting. A certificate by the Secretary of the Agency approved by resolution of the Agency, that the meeting has been called and that notice has been given as provided herein, shall be conclusive as against all parties and no Noteowner shall have the right to show that he failed to receive actual notice of the meeting. C. Voting Qualifications. The Fiscal Agent shall prepare and deliver to the chairman of the meeting a statement of the names and addresses of the registered owners of Notes. This statement shall show maturities, serial numbers, and principal amounts so that voting qualifications can be determined. No Noteowners shall be entitled to vote at the meeting unless their names appear upon the statement. No Noteowners shall be permitted to vote with respect to a larger aggregate principal amount of Notes than is set against their names on the statement. D. Issuer -Owned Notes. The Agency covenants that it will present at the meeting a certificate, signed and verified by one of its member and by the Treasurer, stating the Note numbers and principal amounts of all Notes owned by, or held for account of, the Agency or the City, directly or indirectly. No person shall be permitted at the meeting to vote or consent with respect to any Note appearing upon the certificate, or any Note which is established at or prior to the meeting to be owned by the Agency or the City, directly or indirectly, and no such Note (in this Resolution referred to as "issuer -owned Notes") shall be counted in determining whether a quorum is present at the meeting. E. Quorum and Procedure. A representation of at least sixty percent 0$ in aggregate principal amount of the Notes then outstanding (exclusive of issuer -owned Notes, if any) shall be necessary to constitute a quorum at any meeting of Noteowners, but less than a quorum may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice, 6d:E whether such adjournment shall have been held by a quorum or by 1 1 !/ less than a quorum. The Agency shall, by an instrument in writing, appoint a temporary chairman of the meeting, and the meeting shall be organized by the election of a permanent chairman and secretary. At any meeting each Noteowner shall be entitled to one vote for every $5,000 principal amount of Notes with respect to which he shall be qualified to vote as set forth above, and the vote may be given in person or by proxy duly appointed by an instrument in writing presented at the meeting. The Agency and/or the Fiscal Agent by their duly authorized representatives and counsel, may attend any meeting of the Noteowners, but shall not be required to do so. F. Vote Required. At any Noteowners' meeting there shall be submitted for the consideration and action of the Noteowners a statement of the proposed action for which consent is desired. If the action is consented to and approved by Noteowners holding at least sixty percent (608) in aggregate principal amount of the Notes then Outstanding (exclusive of issuer -owned Notes), the chairman and secretary of the meeting shall so certify in writing to the Agency. The certificate shall constitute complete evidence of consent of the Noteowners under the provisions of this Resolution. A certificate signed and verified by the chairman and the secretary of any Noteowners' meeting shall be conclusive evidence and the only competent evidence of matters stated in the certificate relating to proceedings taken at the meeting. Section 23. Proceedings Constitute Contract; Events of Default and Remedies of Noteowners. The provisions of this Resolution, of the resolutions providing for the sale of the Notes and awarding the Notes and fixing the interest rate or rates thereon, and of any other resolution supplementing or amending this Resolution, shall constitute a contract between the Agency and the Noteowners. The provisions of any amendment shall be enforceable by any Noteowner for the equal benefit and protection of all Noteowners similarly situated by mandamus, accounting, mandatory injunction or any other suit, action or proceeding at law or in equity that is now or may hereafter be authorized under the laws of the State of California in any court of competent jurisdiction. The contract is made under and is to be construed in accordance with the laws of the State of California. The following provisions shall not limit the generality of the foregoing. A. Events of Default. Each of the following shall constitute an event of default (1) If, on the date which is three (3) Business Days prior to any Interest Payment Date, the amount of Eligible Moneys on deposit in the Special Fund and the Accounts therein are insufficient to pay in full the principal of, interest or redemption premium (if any) on the Notes coming due and -29- 120 payable on such Interest Payment Date, whether at maturity as therein expressed, by declaration or otherwise; (2) Default made by the Agency in the observance of any of the covenants, agreements, or conditions contained in this Resolution or in the Notes, where the default continues for a period of ninety (90) days following written notice to the Agency; (3) The Agency shall file a petition seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America or the State, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the Agency, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or the State, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Agency or of the whole or any substantial part of its property; or (4) An event of default shall have occurred and be continuing under the Reimbursement Agreement, and written notice of such Event of Default shall have been given by the Bank to the Fiscal Agent. If an Event of Default has occurred as defined under subsection (1), (3) or (4) of this Section and is continuing, then and in each and every such case during the continuance of such Event of Default, unless the principal of the Notes shall have already become due and payable, the Fiscal Agent shall declare the principal of the Notes, together with the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Resolution or in the Notes to the contrary notwithstanding. On the date of declaration of acceleration, the draw on the Letter of Credit, amounts in the Debt Service Reserve Account and all other Eligible Moneys in the Special Fund and Accounts therein shall be applied by the Fiscal Agent pursuant to Section 25. Immediately upon becoming aware of the occurrence of an Event of Default, the Fiscal Agent shall give notice of such Event of Default to the Agency and the Bank by telephone confirmed in writing. Such notice shall also state whether the principal of the Notes shall have been declared to be or have immediately become due and payable. The Fiscal Agent shall also give such notice to the Owners of the Notes in the same manner as provided herein for notices of redemption of the Notes, which shall include the statement that interest on the Notes shall -30- cease to accrue from and after the date of acceleration specified 2 1 in such notice. These provisions, however, are subject to the condition that if, at any time after the principal of the Notes shall have been so declared due and payable because of an Event of Default under subsection (4) of this Section, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, and before any drawing has been made under the Letter of Credit, the Agency shall deposit with the Fiscal Agent a sum sufficient to pay all principal on the Notes matured prior to such declaration and all matured installments of interest (if any) upon all the Notes, with interest at the rate of twelve percent (128) per annum on such overdue installments of principal and the reasonable expenses of the Fiscal Agent, and any and all other defaults known to the Fiscal Agent (other than in the payment of principal of and interest on the Notes due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Fiscal Agent or provision deemed by the Fiscal Agent to be adequate shall have been made therefor, then, and in every such case, the Owners of at least a majority in aggregate principal amount of the Notes then Outstanding, with the written consent of the Bank, and with written notice to the Agency and the Fiscal Agent, may, on behalf of the Owners of all of the Notes, rescind and annul such declaration and its consequences. However, no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. B. Certain Remedies of Noteowners. In each Event of Default described in A(2) above the Fiscal Agent, the Bank or any Noteowner shall have the right, for the equal benefit and protection of all Noteowners similarly situated (1) By mandamus, suit, action or proceeding, to compel the Agency and its members, officers, agents or employees to perform each and every term, provision and covenant contained in this Resolution and in the Notes, and to require the carrying out of any or all covenants and agreements of the Agency and the fulfillment of all duties imposed upon it by the Law; (2) By suit, action or proceeding in equity, to enjoin any acts or things which are unlawful, or the violation of any of the Noteowners' rights; or (3) Upon the happening of any event of default (as defined in this Section), by suit, action or proceeding in any court of competent jurisdiction, to require the Agency and its members and employees to account as if it and they were the trustees of an express trust. -31- 1 'j C. Non -Waiver. Nothing in this Section or in any other 2 NNN provisions of this Resolution, or in the Notes, shall affect or impair the obligation of the Agency, which is absolute and unconditional, to pay the principal of and interest on the Notes to the respective Owners of the Notes at the date of maturity, as herein provided, or affect or impair the right, which is also absolute and unconditional, of the Owners to institute suit to enforce the payment by virtue of the contract embodied in the Notes. _ No remedy conferred upon any Noteowner, Fiscal Agent, or the Bank by the Resolution is intended to be exclusive of any other remedy, but each remedy is cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred by the Law or any other law of the State of California. No waiver of any default or breach of any duty or contract by any Noteowner, Fiscal Agent, or the Bank shall affect any subsequent default or breach of any duty or contract or shall impair any rights or remedies on the subsequent default or breach. No delay or omission of any Noteowner, Fiscal Agent, or the Bank to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed as a waiver of any default or acquiescence therein. Every substantive right and every remedy conferred upon the Noteowners, Fiscal Agent, or the Bank may be enforced and exercised as often as may be deemed expedient. In case any suit, action or proceeding to enforce any right, or exercise any remedy, shall be brought and should said suit, action or proceeding be abandoned, or be determined adversely to the Noteowners, Fiscal Agent, or the Bank, then, and in every such case, the Agency, Fiscal Agent, or the Bank and the Noteowners shall be restored to their former positions, rights and remedies as if the suit, action or proceeding had not been brought or taken. D. Actions by Fiscal Agent as Attorney -in -Fact. Any suit, action or proceeding which any owner of Notes shall have the right to bring to enforce any right or remedy hereunder may be brought by the Fiscal Agent for the equal benefit and protection of all Owners of Notes similarly situated and the Fiscal Agent is hereby appointed (and the successive respective registered owners of the Notes issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective registered owners of the Notes for the purpose of bringing any suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective registered owners of the Notes as a class or classes, as may be necessary or advisable in the opinion of the Fiscal Agent as attorney-in-fact. E. General. After the issuance and delivery of the Notes, this Resolut n, and any supplemental resolutions hereto, -32- shall be irrepealable, but shall be subject to modification or (1 (� amendment to the extent and in the manner provided in this 1 �%I3 Resolution, but to no greater extent and in no other manner. Section 24. Application of FundsUpon Acceleration. The Fiscal Agent shall deposit in the Principal Account and the Interest Account within the Special Fund all of the amounts drawn under the Letter of Credit pursuant to Section 25 as a result of the occurrence of an Event of Default. All of the amounts drawn under the Letter of Credit and all sums in the Special Fund and the Accounts therein upon the date of the declaration of acceleration as provided in Section 23, and all sums thereafter received by the Fiscal Agent hereunder, shall be applied by the Fiscal Agent in the following order upon presentation of the Notes, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid First, the amounts in the Principal Account within the Special Fund which are Eligible Moneys shall be applied to the payment in full of the principal of the Outstanding Notes; Second, the amounts in the Debt Service Reserve Account' plus the portion of the Letter of Credit equal to 185 days interest on the Notes shall be transferred to the Interest Account and shall be applied to the payment of interest coming due and payable on the Notes on the date on which amounts drawn on the Letter of Credit are applied to pay principal of the Outstanding Notes, together with interest on the overdue principal and overdue installments of interest at the rate of twelve percent (12%) per annum (to the extent permitted by law and to the extent that such interest on overdue installments of principal and interest shall have been collected); and Third, any Eligible Moneys remaining in the Special Fund and Accounts therein shall be applied in the following order: (a) To the payment of any interest unpaid from the Debt Service Reserve Account; (b) To the payment of the costs and expenses of the Fiscal Agent and of the Noteowners in declaring such Event of Default, including reasonable compensation to its or their agents., attorneys and counsel; and (c) To the payment of any amounts identified in written certificate executed by the Bank Representative and filed with the Fiscal Agent to be due and owing by the Agency to the Bank under the Reimbursement Agreement. Section 25. Drawing on Letter of Credit. Upon the occurrence and continuance of an Event of Default under subsections (1), (3) or (4) of Section 23, the Fiscal Agent -33- 1 [� shall, whether or not any other proceedings have been instituted, j forthwith draw upon the Letter of Credit in accordance with the (i terms thereof, in an amount equal to 100% of the principal amount of the Notes Outstanding on the date of such draw plus 185 days' interest on the Notes minus the amount of Eligible Moneys then held by the Fiscal Agent. In accordance with Section 24, the Fiscal Agent shall deposit all amounts drawn under the Letter of Credit in the Principal Account and Interest Account. Section 26. Substitute Letter of Credit. The Agency may at any 'time me deliver to the Fiscal Agent, in substitution for the Letter of Credit, an irrevocable Substitute Letter of Credit issued by a bank (the "Substitute Bank") substantially identical in form and substance to the Letter of Credit and reasonably acceptable to the Fiscal Agent. Prior to or contemporaneously with the issuance of the Substitute Letter of Credit (a) The Fiscal Agent shall receive an Opinion of Counsel in form and substance satisfactory to the Fiscal Agent to the effect that (1) the Substitute Letter of Credit is the valid and binding obligation of the Substitute Bank, enforceable against the Substitute Bank in accordance with its terms except insofar as its enforceability may be limited by any insolvency or similar proceedings applicable to the Substitute Bank or by proceedings affecting generally the rights of the Substitute Bank's creditors, and that (2) payments with respect to the Notes from the proceeds of a drawing on the Substitute Letter of Credit will not constitute voidable preferences under the United States Bankruptcy Code or under other applicable laws and regulations in the event of a bankruptcy or insolvency of any entity other than the Substitute Bank; (b) The Substitute Bank shall agree in writing to be bound by the same terms and provisions as the Bank under the Reimbursement Agreement; (c) The Fiscal Agent shall receive written confirmation from Standard & Poor's that the Substitute Letter of Credit will not result in any reduction or withdrawal of the current rating on the Notes; and (d) The Substitute Letter of Credit will be for a term extending one Business Day beyond the maturity of the Notes. Upon the receipt of any Substitute Letter of Credit conforming to these requirements, the Fiscal Agent shall promptly return the Letter of Credit to the Bank. -34- Section 27. CUSIP Numbers. CUSIP identification 1 n numbers wills b�printed on the Notes, but numbers shall not I%V constitute a part of the contract evidenced by the Notes and no liability shall attach to the Agency or any of the officers or agents because of or on account of said numbers. Any error or omission with respect to the numbers shall not constitute cause for refusal by the successful bidder to accept delivery of and pay for the Notes. Section 28. Severability. If any covenant, agreement or provisions or any portion thereof, contained in this Resolution, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable,, the remainder of this Resolution and the application of any covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected, and this Resolution and the Notes issued pursuant hereto shall remain valid and the Noteowners shall retain all valid rights and benefits accorded to them under this Resolution and the Constitution and the laws of the State of California. If the provisions relating to the appointment and duties of a Fiscal Agent are held to be unconstitutional, invalid, or unenforceable, the duties shall be performed by the Treasurer. Section 29. Benefits of Resolution Limited to Parties. Notes n this Resolution, expressed or implied, is intended to give to any person other than the Agency, the Fiscal Agent, the Owners of the Notes, and the Bank, any right, remedy, claim under or by reason of this Resolution. Any covenants, stipulations, promises or agreements in this Resolution contained by and on behalf of the Agency shall be for the sole and exclusive benefit of the Owners of the Notes, and the Fiscal Agent. Section 30. Successor is Deemed Included in All References to Predecessor. Whenever in this Resolution or any Supplemental Resolution either the Agency or the Fiscal Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Resolution contained by or on behalf of the Agency or the Fiscal Agent shall being and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 31. Discharge of Resolution. The lien of the Resolution shall be discharged, if the Agency shall pay and discharge the entire indebtedness on all Notes Outstanding in any one or more of the following ways: (a) By well and truly paying or causing to be paid the principal of and interest on all Notes Outstanding, together with all amounts due the Bank under the Reimbursement Agreement or the Fiscal Agent as and when the same become due and payable; -35- 1(b) By depositing with the Fiscal Agent, in a special v trust fund created for such purpose, at or before maturity, Eligible Moneys which, together with the Eligible Moneys then on deposit in the Special Fund and Accounts therein, is fully sufficient to pay all Notes Outstanding, including all principal, interest and redemption premiums, together with all amounts due the Bank under the Reimbursement Agreement or the Fiscal Agent; or — (c) By depositing with the Fiscal Agent, in a special trust created for such purpose, Eligible Moneys invested in Government Obligations in such amount as the Fiscal Agent shall determine will, together with the interest to accrue thereon without reinvestment and moneys then on deposit in Special Fund and Accounts therein, be fully sufficient to pay and discharge any indebtedness on all Notes (including all principal, interest and redemption premiums, together with all amounts due the Bank under the Reimbursement Agreement or the Fiscal Agent) at or before maturity; then, at the option of the Agency, and notwithstanding that all Notes shall not have been surrendered for payment, the pledge of the Tax Revenues and other funds provided for in this Resolution and all other obligations of the Agency under this Resolution with respect to all Notes Outstanding shall cease and terminate, except only the obligation of the Agency to pay or cause to be paid to the Owners of the Notes not so surrendered and paid all sums due thereon, and the Letter of Credit shall be returned to the Bank. Notice of the exercise of such option shall be filed with the Fiscal Agent. Any funds thereafter held by the Fiscal Agent including any funds which have not been claimed by the person entitled thereto within (4) years of the date upon which such funds were scheduled to be paid, or which are not required for said purpose, shall be paid over to the Bank for any amounts due under the Reimbursement Agreement and then shall be paid over to the Agency. Section 32. Execution of Documents and Proof of Ownership by Noteowners. Any request, declaration or other instrument which this Resolution may require or permit to be executed by Noteowners may be in one or more instruments of similar tenor, and shall be executed by the Noteowners in person or by their attorneys appointed in writing. Except as otherwise herein expressly provided, the fact and date of the execution by any Noteowner or his attorney of such request, declaration or other instrument, or of such writing -36- appointing such attorney, may be provided by the certificate of �l any notary public or other officer authorized to take ` 1 d tf deeds to be recorded in the state in which he acknow a gmen s o purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer. Except as otherwise herein expressly provided, the amount of Notes transferable by delivery held by any such person executing such request,. declaration or other instrument or writing as a Noteowner, and the numbers thereof, and the date of his owning such Notes, may be proved by the registration books to be maintained pursuant to Section 10. The Fiscal Agent may nevertheless in its discretion require further or other proof in cases where it deems the same desirable. The ownership of registered Notes and the amount, maturity, number and date of holding the same shall be proved by the registry books. Any request, declaration or other instrument or writing of the Owner of any Note shall bind all future Owners of such Note in respect of anything done or suffered to be done by the Agency or the Fiscal Agent in good faith and in accordance therewith. Section 33. Waiver of Personal Liability. No member, officer, agent or employee of the Agency shall be individually or personally liable for the payment of the principal of or interest on the Notes; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law. Section 34. Notices. All written notices to be given under this Resol on shall be given by mail or personal delivery to the party entitled thereto at its address set forth below, or at such other address as the party may provide to the other parties in writing from time to time. Notice shall be effective upon receipt or, in the case of personal delivery, upon delivery to the address set forth below If to the Agency: San Juan Capistrano Community Redevelopment Agency 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attention Executive Director If to the Fiscal Agent: Security Pacific National Bank 333 South Beaudry Avenue Los Angeles, CA 90017 Attention: Corporate Services W24-30 If to the Bank: The Sumitomo Trust and Banking -37- 1 A(•�) If to the Bank: The Sumitomo Trust and Banking Company, Limited 40 Wall Street, 21st Floor New York, New York 10005 Attention If to Standard & Poor's Standard & Poor's Corporation 25 Broadway New York, New York 10004 Attention Financial Institutions Group Section 35. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Resolution shall for any reason be held illegal, invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this Resolution. The Agency hereby declares that it would have adopted this Resolution and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Notes pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Resolution may be held illegal, invalid or unenforceable. Section 36. Effective Date. This Resolution shall take effect upon adopt n. PASSED, APPROVED, AND ADOPTED THIS 12th day of August 1986• GA L. HAUSDORFER, C/HAIRMAN ATTEST: ac7M STATE OF CALIFORNIA ) COUNTY OF ORANGE CITY OF SAN JUAN CAPISTRANO ) 129 I, MARY ANN HANOVER, Secretary of the San Juan Capistrano Community Redevelopment Agency, DO HEREBY CERTIFY that the foregoing is a true and correct copy of Resolution No. CRA 86-8-12-1, adopted by the Board of Directors of the City of San Juan Capistrano Redevelopment Agency at a regular meeting thereof held on the 12th, day of August, 1986, by the following vote: AYES: Directors Bland, Friess, Buchheim, and Chairman Hausdorfer NOES: None ABSENT: Director Schwartze (SEAL) DIARY ANN HF T VER, ' AGENCY SECRETARY -39- 1STATE OF CALIFORNIA ) J COUNTY OF ORANGE ) ss CITY OF SAN JUAN CAPISTRANO ) says: AFFIDAVIT OF POSTING MARY ANN HANOVER, being first duly sworn, deposes and That she is the duly appointed and qualified City Clerk of the City of San Juan Capistrano; That in compliance with State laws of the State of California and in further compliance with City Resolution No. 83-12-20-3 and on the 14th day of August, 1986, she caused to be posted: RESOLUTION NO. CRA 86-8-12-1, being: AUTHORIZING THE ISSUANCE OF TAX ALLOCATION NOTES (SAN JUAN RESOLUTION OF THE SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY AUTHORIZING THE ISSUANCE OF TAX ALLOCATION NOTES OF SAID AGENCY IN A PRINCIPAL AMOUNT OF SIX MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($6,250,000) TO FINANCE A PORTION OF THE COST OF A REDEVELOPMENT PROJECT KNOWN AS THE SAN JUAN CAPISTRANO CENTRAL REDEVELOPMENT PROJECT in three (3) public places in the City of San Juan Capistrano, to wit: City Hall; Old Fire Station Recreation Complex; Orange County Public Library. CHECK LIST RES. No. CRA - e' ? - - ✓Chairman has signed Secretary has signed CA1ency Seal stamped 1 blanks typed in "Absent" cJ 'Noes• Typed in Official Record 4009 Posted to Classified a _copies sent to ok Legal Publication ordered to be p is e (date) No. Af av is No. Printed copies require Remarks MARY ANN N VER, AGENCY SLVCRETARY EXHIBIT A (FORM OF NOTE) STATE OF CALIFORNIA SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, SAN JUAN CAPISTRANO CENTRAL REDEVELOPMENT PROJECT, TAX ALLOCATION NOTES, ISSUE OF 1986 Interest Rate Maturity Date Date of Issuance ^/, August 1, 1991 August 1, 1986 131 CUSIP The SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY (hereinafter sometimes called the "Agency"), a public body, corporate and politic, duly organized and existing under the laws of the State of California, for value received, hereby promises to pay (but solely out of the funds hereinafter mentioned) to or registered assigns (herein sometimes referred to as "registered owner"), subject to the right of prior redemption hereinafter mentioned, the principal sum of Dollars ($ ), on August 1, 1991, and to pay the registered owner on each Interest Payment Date by check or draft mailed to him as his name and address appear on the register kept by the Fiscal Agent at the close of business on the fifteenth (15th) day of the month next preceding each Interest Payment Date (the "regular record date"), interest on the principal sum from the Interest Payment Date next preceding the date hereof (unless (i) the date hereof is an Interest Payment Date, in which event from that Interest Payment Date, (ii) the data=hereof is after the Regular Record Date next preceding the Interest Payment Date, and if the Agency shall not default in the-13.ayment of Interest due on said Interest Payment Date, from. -said Interest Payment Date, or (iii) the date hereof is prior to January 15, 1987, in which event from August 1, 1986) until the principal hereof shall have been paid or provided for in accordance with the Resolution hereinafter referred to, at the rate per annum set forth above payable semiannually on February 1 and August 1 in each year commencing on February 1, 1987. Both principal and interest and any premium upon the redemption prior to maturity of all or part of this Note are payable in lawful money of the United States of America, and (except for interest which is payable by check or draft as stated above) are payable at the corporate trust office of Security Pacific National Bank, Fiscal Agent for the Agency, in Los Angeles, California. 08-06-86 2561k/2299/19 A-1 1 2 This Note, the interest hereon and any premium due upon the redemption of this Note prior to maturity are not a debt of the City of San Juan Capistrano, the State of California or any of its political subdivisions, and neither the City, the State nor any of its political subdivisions is liable for the payment of any principal, interest or premium. In no event shall this Note, the interest hereon or any premium be payable out of any funds or properties other than the funds of the Agency as set forth in the Resolution hereinafter mentioned. This Note does not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Neither the members of the Agency nor any persons executing this Note are liable personally on this Note by reason of its issuance. This Note is one of a duly authorized issue of Notes of the Agency designated "San Juan Capistrano Community Redevelopment Agency, San Juan Capistrano Central Redevelopment Project, Tax Allocation Notes, Issue of 1986" (herein called the "Notes"), in an aggregate principal amount of Six Million Two Hundred Fifty Thousand Dollars ($6,250,000), all of like tenor (except for note numbers and amounts) and all of which have been issued pursuant to and in full conformity with the Constitution and laws of the State of California and particularly the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State of California) for the purpose of aiding in the financing of the Project Area referred to above and are authorized by and issued pursuant to Resolution No. , adopted by the Agency on , 19_ (the Resolution being herein referred to as the "Resolution"). Copies of the Resolution are on file with the Secretary of the Agency and the Fiscal Agent. All of the Notes are secured in accordance with the terms of the Resolution, reference to which is hereby made for a specific description of the security provided for the Notes, for the nature, extent and manner of enforcement of such security, for the covenants and agreements made for the benefit of the Noteowners, and for a statement of the rights of the Noteowners. By the acceptance of this Note the registered owner hereof consents to all of the terms, conditions and provisions of the Resolution. In the manner provided in the Resolution, the Resolution and the rights and obligations of the Agency and of the Noteowners may (with certain exceptions as stated in the Resolution) be modified or amended with the consent of the Owners of sixty percent (60%) in aggregate principal amount of Outstanding Notes, exclusive of issuer -owned Notes, unless the modification _ or amendment is for the purpose of curing ambiguities, defects, or accomplishing the other purposes set forth in Section 22(a) of the Resolution in which case no Noteowners' consent is required. 08-06-86 2561k/2299/19 A-2 133 The principal of, premium, if any, and interest on this Note are secured by an irrevocable pledge of, and are payable solely out of, the Tax Revenues (as that term is defined in the Resolution) and certain other Eligible Moneys, all as more particularly set forth in the Resolution, including, as to principal and 185 days of interest, in the case of certain events of default, the draw upon a certain letter of credit initially issued by The Sumitomo Trust and Banking Company, Limited, as further described in the Resolution (the "Letter of Credit"). The Resolution is adopted under and this Note is issued under and is to be construed in accordance with the laws of the State of California. The Outstanding Notes, or any of them may be called before maturity and redeemed at the option of the Agency, in whole from the proceeds of refunding bonds and other Eligible Moneys, or in whole or in part from any other source of funds on August 1, 1989 or on any Interest Payment Date thereafter prior to maturity by lot. Notes called for redemption shall be redeemed at a redemption price as set forth below (expressed as a percentage of the principal amount of Notes to be redeemed) plus accrued interest to the redemption date. Redemption Redemption Date Price August 1, 1989 and February 1, 1990 100-1/2% August 1, 1990 and thereafter 100% The Interest Payment Date on which Notes are to be presented for redemption is herein sometimes called the "redemption date". Notice of call and redemption prior to maturity shall be given as provided in the Resolution. Redemption by lot shall be in such manner as the Fiscal Agent shall determine; provided, however, that the portion of any Note to be redeemed shall be in the principal amount of $5,000 or any multiple thereof and that, in selecting portions of the Note for redemption, the Fiscal Agent shall treat each Note as representing that number of Notes which is obtained by dividing the principal amount of such Note by $5,000. This Note is issued in fully registered form and is negotiable upon proper transfer of registration. This Note may be exchanged for a like aggregate principal amount of Notes of other authorized denominations. This Note is transferable by the registered owner, in person or by his attorney duly authorized in writing, at the corporate trust office of the Fiscal Agent in Los Angeles, California, upon surrender and cancellation of this Note but only in the manner, subject to the limitations and upon payment of the charges provided in the 08-06-86 2561k/2299/19 A-3 134 Resolution. Upon transfer, a new Note of any authorized denomination or denominations for the same aggregate principal amount of the same issue will be issued to the transferee in exchange therefor. No exchange or transfer shall be made between the fifteenth (15th) day preceding any selection of notes for redemption. The Agency and the Fiscal Agent may treat the _ registered owner of this Note as its absolute owner for all purposes, and the Agency and the Fiscal Agent shall not be affected by any notice to the contrary. This Note 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 Fiscal Agent. 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 Note 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 San Juan Capistrano Community Redevelopment Agency has caused this Note to be signed on its behalf by its Chairman and Executive Director by facsimile signature, and the seal of the Agency to be reproduced hereon. Chairman of the San Juan Capistrano Community Redevelopment Agency (SEAL) Executive Director of the San Juan Capistrano Community Redevelopment Agency 08-06-86 2561k/2299/19 A-4 135 EXHIBIT B (FORM OF CERTIFICATE OF AUTHENTICATION OF NOTE) This is one of the Fully Registered Notes described in the within -mentioned Resolution. Dated: Fiscal Agent By Authorized Officer (FORM OF ASSIGNMENT OF NOTE) For value received hereby sells, assigns and transfers unto the within -mentioned Note and hereby irrevocably constitutes and appoints attorney, to transfer the Note on the books of the Fiscal Agent with full power of substitution in the premises. Dated: NOTE: The signature to this assignment must correspond with the name as written on the face of the within Note in every particular, without alterations or enlargement or any change whatsoever. 08-07-86 2561k/2299/19