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HomeMy WebLinkAbout6206_CCv0001.pdf RESOLUTION NO, 6206 RESOLUTION CSP THE CITY COUNCIL OF THE CITY OF REDLANDS AUTHORIZING THE ISSUANCE AND SALE OF 2003 GENERAL OBLIGATION REFUNDING BONDS, PRESCRIBING THE. TERMS OF SALE OF SAID 200 REFUNDING GENERAL OBLIGATION BONDS INCLUDING THE PROVISION OF MUNICIPAL BOND INSURANCE, CE, APPROVING FORM OF BOND PURCHASE CONTRACT, APPROVING TATE PREPARATION AND DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT AND AUTHORIZING E ECUT1ON OF NECESSARY CERTIFICATES. WHEREAS, the City of`Redlands (th "City"), has heretofore issued its bonds designated the "City of Redlands 1994 General Obligation Refunding Bonds (the "1994 Bonds") the principal amount of 7,570,000 and WHEREAS, pursuant to Article 9 (commencing with Section 3550) and Article 1 i (commencing with Section 53550 of Chapter 3 of Fart: I of Division 2 of Title 5 of the California Government Code (collectively, the "Refunding' Law"), the City may authorize the ;issuance of bonds for the purpose of refunding the 1994 Bonds upon complying with and satisfying the requirements thereof, and WHEREAS, the City has determined that prudent nrahagernent of its fiscal affairs requires that refunding bonds be issued under the provisions of the Refunding Lai and that such refunding bonds be issued only if the t€�tal net interest cast to maturity on such refunding bonds plus the principal amount thereof is not in excess of the net interest cost to maturity, ort the Series D Bonds plus the principal amount thereof and that pursuant, to the Refunding Law and subjJect to the limitations stated above, the principal amount of the refunding bonds may be more than the principal amount of the 1994 Bonds; and WHERi.AS, this City Council would now like to authorize the salt' of refunding general obligation bands which aro to be issued to refund the 1994 Bonds upon the terms and 'I conditions set forth in this Resolution, such bonds are to be denominated City of Redlands 2003 Refunding General Obligation Bonds (the "Refunding Bonds"), with such Refunding Bonds to be delivered at a date mutually agreed upon by the City and the Underwriter named herein, and WHEREAS, in order to accomplish the refunding of the 1994 Bonds, a portion of the proceeds of the Refunding Bonds will be used to purchase a portfolio of direct general obligations of the United States of America, or obligations oil which the payment of principal of and interest are guaranteed by the United States of America, and such securities will be deposited under the terms of an Escrow Agreement (the "Escrow Agreement") dated as of November 1, 2003, between the City and U.S. Bank National Association, as Escrow Agent, and WHEREAS, the City has received a proposal from the investment banking firm of O'Connor Southwest Securities, Southwest Securities, Inc. (the "Underwriter"), to enter into a Bond Purchase Contract (the "Bond Purchase Contract") pursuant to which the Underwriter will purchase the Refunding Bonds from the City; and WHEREAS, all acts, conditions and things required by law to be done or performed have been done and performed in strict conformity with the laws authorizing the issuance by the City of this proposed issue of Refunding Bonds, which is within all limits prescribed by law, WHEREAS, this City Council has determined, and does hereby declare, that it is necessary and desirable that the Refunding Bonds of said authorized bonds be issued and sold for the purpose for which authorized and on the terms and conditions set forth in said resolution of file City; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF REDLANDS, AS FOLLOWS RVPUBJ kR-654693 2 Section 1. Recitals True and Correct. All of the recitals hereto are true and correct. Section 2. Findings Pursuant to R.efundin Law. This City Council finds the prudent management of the City's fiscal affairs requires that Refunding Bonds be issued under the Refunding Law. This City Council further finds that the net interest cost to maturity on the Refunding Bonds plus the principal amount thereof is not in excess of the net interest cost to maturity on the 1994 Bonds plus the principal amount thereof and that pursuant to the Refunding Law and subject to the limitations stated above, the principal amount of the Refunding Bonds may be more than the principal amount of the 1994 Bonds. Section 3. Purpose, of Bonds. That for the purpose of raising money for refinancing the costs of acquisition or improvements to real property, namely- (a) refunding and defeasing the 1994 Bonds which were issued for the purpose of refunding the City of Redlands General Obligation Bonds, Series 1988A which were issued for the purpose acquiring and improving real property to provide public parks and open space within the City (the "Project") and (b) to pay all necessary legal, financial and contingent costs in connection therewith, the City Council hereby authorizes the issuance of the Refunding Bonds. The Bonds shall be designated "City of Redlands 2003 Refunding General Obligation Bonds." RVII(li%l RX-65469 3 3 Section 4. Execution of Bond_Purchase Contract. The City Manager or Finance Director or the Mayor or any member of this City Council is hereby authorized to execute and deliver the Bond Purchase Contract (the "Bond Purchase Contract") by and between the City and the Underwriter, substantially in the form attached hereto as Exhibit B; provided, however, that the Refunding Bonds shall, mature no later than 2014, the maximum interest rate on the Bonds shall not exceed 6.00% per annum, The City Manager or Finance Director of the City shall determine the issue arnount of the Bonds to be specified in the Bond Purchase Contract up to $6,500,000. Section 5. Permitted_b-ivestnients. (a) The following obligations may be used as Permitted Investments for all purposes, including (i) as defeasance investments in refunding escrow accounts and (ii) for the purpose of investing (and receiving premium credit for) accrued and capitalized interest: (1) Cash (insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized with obligations described in paragraph (2)below), or (2) Direct obligations of(including obligations issued or held in book entry form on the books of)the Department of the Treasury of the United States of America. (b) The following Obligations may be used as Permitted Investments 'for all purposes other than defeasance investments in refunding escrow accounts: 1-. Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America. 2. Bonds, debentures, notes or other evidence of indebtedna's issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full RVI't 4 faith and credit of the United States of America (stripped securities are only pernuttcd if they have been stripped by the agency itself): a. Farmers Home Administration (Fml­lA) Certificates of beneficial ownership b. Federal HoukiZ, .Administration Debentures (FHA) C. General Services Administration Participation certificates d. Government National MgAgage Association (GNMA or "Ginnie Mae") GNMA - guaranteed mortgage-backed bonds GHMA- guaranteed pass-through obligations (participation certificates) (not acceptable for certain cash-flow sensitive issues.) e. U.S. Maritime Administration Guaranteed Title XI financing f U.S. Departmentof Housing and LJrbanDevelopment (HUD) Project Notes Local Authority Bonds I Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S, government, agencies (stripped securities are only permitted if they have been stripped by the agency itself): a. Federal Homeloan Bank Sstem Senior debt obligations (Consolidated debt obligations) b. Federal Horne Loan Mortgage C r oration (FHLMC or"Freddie Mae") Participation Certificates (Mortgage-backed securities) Senior debt obligations 0. Federal,National Mortgage Association (FINWA or"Faimic Mae") RVPUBJRk'654693 5 Mortgage-backed securities and senior debt obligations (excluded are stripped mortgage securities which are valued greater than par on the portion of unpaid principal) d: Student Loan Marketing Association (SLMA or"Sallie Mae") Senior debt obligations e: Resolution. Funding Co (REFCG ) Only the interest component of REFCGRP strips which have been stripped by request to the Federal Resen e Bank of New York in book entry forth are acceptable.: f. Farm Credit System Consolidated system wide bonds and notes 4; Meaney market funds registered under the Federal Investment Company of 1940, whose shares are registered under the Federal Securities Act of 1.933, and having a:rating;by S&P of AAAm-G; AAAm, or AA-m and if rated by Moody's rated Aaa, Aal or Aa2: 5. Certificates of deposit secured at all times by collateral described in (1) and/or(2) above. CIA's trust have a one year or less maturity. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks whose term obligations are, rated "A-I" or better by S&P and"Prime-I" by Moo y's. The collateral must be held by a third party and the Bond fawners must have perfected first security interest in the collateral:; 6: Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDNC, including BIFand SAIF-; 7. Investment agreements with a domestic or foreign bank or corporation, the long- term debt or financial strength ofwhich, or, in the case of a guaranteed corporation the bang-term debt, or, in the case of a monoline f aanciat guarantee insurance company, financial strength, of 6 the guarantor is rated in at least the "double A" category by Moody's and S&P; provided, that, the Bond Insurer has given its written consent, and by the testis of the investment agreement: a, interest payments are to be made to the Paying Agent at all times and ill the amounts as necessary to pay debt service (or, if the investment agreement is for the construction fluid, construction draws) on the Refunding Bonds; b. the invested funds are available for withdrawal without penalty or premium, at any time upon not more than seven days' prior notice; the City and the Paying Agent hereby agree to give or cause to be given notice in accordance with the terms of the investment agreement so as to receive funds thereunder with no penalty or premium paid; c. the investment agreement shall state that it is the unconditional and general obligation of; and is not subordinated to any other obligation of, the provider thereof or, if the provider is a batik, the agreement or the opinion of counsel shall state that the obligation of the provider to make payments thereunder ranks pari passu with the obligations of the provider to its other depositors and its other unsecured and unsubordinated creditors; d. the City or the Paying Agent receives the opinion of domestic counsel (which opinion shall be addressed to the City and Paying Agent) that such investment agreement is legal, valid, binding and unenforceable upon the provider in accordance with its tenets and of foreign counsel (if applicable) in a form and substance acceptable by the City; C. the investment agreement shall provide that if drin ng its term 1) the provider's rating by either S&P or Moody's falls below "AA-" or -Aa-31", respectively, the provider shall, at its option, within. 10 days of receipt of publication of such downgrade, either (a) collateralize the investment R VP!jVjM654f,,93 7 agreement by delivering or transferring in accordance with the applicable state and federal laws (other than by means of entries on the provider's books) to the City, the Paying Agent or a third party acting solely as agent therefor (the"Holder of the Collateral") collateral free and clear of any third party liens or claims the inarket value of which collateral is maintained at levels and upon such conditions as would be acceptable to S&P and Moody's to maintain an "A" rating in,an "A" rated structured financing (with a market value approach); or (b) repay the principal of and accrued but unpaid interest on the investment (including such other amounts as are required to permit the Paying Agent to receive the initially contemplated yield through the term of the Agreement), or (c) assign its obligations thereunder to a financial counter-party, acceptable to the City, and rated in the double A category by both Moody's and S&P; and (i) the provider's rating by either S&P or Moody's is withdrawn or suspended or falls below ",A,-" or "AY, respectively, the provider must, at the direction of the City or the Paying Agent (who shall give such direction if so directed by the City), within 10 days of receipt of such direction, repay the principal of and accrued but unpaid interest on the investment, in either case with no penalty or premium to the City or Paying Agent; f. the investment agreement shall state and an opinion of counsel shall be rendered, in the event collateral is required to be pledged by the provider under the teims of the investment ag p-cement, at the time such collateral is delivered, that the Flolder of the Collateral has a perfected first priority security interest in the collateral, any substituted collateral and all proceeds thereof fin the case of bearer securities, this means the Holder of the Collateral is in possession); and 9. the investment agreement Must provide that if during its term 11 VP U RJ RK,654693 8 i) the provider shall default in its payment obligations, the provider's obligation under the investment agreement shall, at the direction of the City or the Paying Agent (who shall give such direction if so directed by the City), be accelerated and amounts invested and accrued but unpaid interest thereon shall be repaid to the City or Paying Agent, as appropriate; and ii) the provider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. ("event of insolvency"), the provider's obligations shall automatically be accelerated and the amounts invested and accrued but unpaid interest thereon shall be repaid to the City or Trustee, as appropriate; or h. Any other investment agreement approved in writing by the Bond Insurer. S. Commercial paper rated "Prime-I" by Moody's and "A-1"or better by S&P. 9. Bonds or notes issued by any state or municipality which are rated by Moody's aiid S&P in the highest long-term rating categories assigned by such agencies unless such obligations are issued by the State, in which case such obligations are rated in one of the two highest long-term rating categories of S&P and Moody's. 10Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating, of "Prime-l" or -A3)" or better by Moody's and "A-1", "A2' or better by S&R 11. Repurchase agreements, consented to in writing by the Bond Insurer, with tinancial institutions insured by the FDIC or FSLIC; or any broker-dealer with "retail customers" which falls under the jurisdiction of the Securities Investors Protection Corporation (SII C); or a bank or other financial institution rated in the top two rating categories by two or more rating agencies; provided that: (a) the over-co Ilaterali zation is at one hundred and two percent (102%) computed weekly, consisting ot'such securities as described in this section, item (1) through (4); R VNJR-JR R,,654693 9 (b) a third party custodian, the Paying Agent or the Federal Reserve Bank shall have possession of such obligations; (c) the Paying Agent shall have perfected a first priority security interest in such obligations; and (d) failure to maintain the requisite collateral percentage will require the Paying Agent to liquidate the collateral, 12, Pre-refunded municipal bonds rated "Aaa" by Moody's and "AAA" by S&P, If, however, the issue is only rated by S&P (Le., there is no Moody's rating), then the pre-refunded bonds must have been pre-refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre-refunded municipals to satisfy this condition. 13. State of California Local Agency Investment Fund (LAIF). Section-6. Terms of Refunding Bonds. The Refunding Bonds shall be dated as of their date of delivery. The Refunding Bonds shall bear interest at a rate of not to exceed six per cent (6.00%) per annum (the exact rate or rates to be determined upon sale of the Refunding Bonds), payable each February I and August I commencing February 1, 2004. Interest on the Bonds shall be computed at the rates set forth in the Bond Purchase Contract. The Refunding Bonds shall be in fully registered form without coupons of the denomination of$5,000 or any integral multiple thereof, provided that no Refunding Bond shall have principal maturing (or payable from sinking fund installments) on more than one principal maturity date, and shall mature on March I of each of the years from and including 2004 to and including 2014, both inclusive, in amounts to be deterinined by the Finance Director and as set forth in the Bond Purchase Contract. The Refunding Bonds shall be issued in book-entry form, as described in Section 9 hereof The principal of the Refunding Bonds shall be payable in lawful money of the United States of America to the owner thereof, upon the surrender thereof at the principal corporate trust office of U.S. Bank National Association (herein called the "Paying Agent"), in Los Angeles, California. The interest on the Refunding Bonds shall be payable in like lawful R%TUB,JR,R%o34093 10 money to the person whose name appears on the bond registration books of the Paying Agent, as the owner thereof as of the close of business on the 15th day immediately preceding an interest payment date, whether or not such day is a business day. Each Refunding Bondshall bear interest from the interest payment date next preceding the date of authentication thereof unless it is authenticated as of a day during the period from the close of business on the IS"' day next preceding any interest payment date to the interest payment date, inclusive, in which event it shall bear interest from such interest payment date, or unless it is authenticated on or before February 1, 2004, in which event it shall bear interest from its date of delivery; provided, however, that if, at the time of authentication of any Refunding Bond, interest is in default on outstanding Refunding Bonds, such. Refunding Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the outstanding Refunding Bonds. Payment of the interest on any Refunding Bond shall be made to the person appearing on the bond registration books of the Paying Agent as the owner thereof, such interest to be paid by check or draft mailed to such owner at such owner's address as it appears on such registration books or at such address as the owner may have filed with the Paying Agent for that purpose. Only such of the Refunding Bonds as shall bear thereon a certificate of authentication and registration in the form hereinafter recited, executed by the Paying Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Resolution, and such certificate of the Paying Agent shall be conclusive evidence that the Refunding Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Resolution. The Paying Agent shall assign each Refunding Bond authenticated and registered by it a distinctive letter, or number, or letter and number, mid shall maintain a record thereof which shall be available to the City for inspection, RNTU§RJRR',6.54693 Section 7. Insurance. In the event the City purchases bond insurance for the Refunding Bonds, and to the extent that any insurance company which issues a municipal bond insurance policy insuring the payment of principal of and interest on the Refunding Bonds (the "Bond. Insurer") makes payment of the principal of, or interest on the Refunding Bonds, it shall become the owner of such Refunding Bonds with the right to payment of principal of, or interest on the Refunding Bonds, and shall be fully subrogated to all of the Bond owners' rights, including the Bond owners' rights to payment thereof. To evidence such subrogation (i) in the case of subrogation as to claims that were past due interest components, the Paying Agent shall note the Bond Insurer's rights as subrogee on the registration books for the Refunding Bonds maintained by the Paying Agent upon receipt of a copy of the cancelled check issued by the Bond Insurer for the payment of such interest to the owners of the Refunding Bonds, and (ii) in the case of subrogation as to claims for past due principal, the Paying Agent shall note the Bond Insurer as subrogee on the registration books for the Refunding Bonds maintained by the Paying Agent upon surrender of the Refunding Bonds by the owners thereof to the Bond Insurer or the insurance trustee for the Bond Insurer. Section 8. Redemption of Refunding Bonds, Refunding Bonds are not subject to redemption prior to their respective stated maturity dates. Section 9. Book-Enta Only-,-Systern, The Refunding Bonds shall, be registered in the name of CEDE & CO., as nominee for The Depository Trust Company ("DTC"). The Refunding Bonds shall be initially executed and delivered in the form of a single fully registered Refunding Bond for each maturity date of the Refunding Bonds in the full aggregate principal amount of the Refunding Bonds maturing on such date. The City may treat DTC (or its nominee) as the sole and exclusive owner of the Refunding Bonds registered in its name for all purposes of this Resolution, and the City shall not be affected by any notice R V?U WiRR;tS 469 3 12 to the contrary. The City shall not have any responsibility or obligation to any participant of DTC (a "Participant"), any person claiming a beneficial ownership interest in the Refunding Bonds under or through DTC or a Participant, or any other person which is not shown on the bond register of the Paying Agent as being a bond owner, with respect to the accuracy of any records maintained by DTC or any Participant, the payment by DTC or any Participant of any amount in respect of the principal or interest, or any notice, communication or other dealings with respect to the Refunding Bonds. The City shall pay all principal and interest with respect to the Refunding Bonds only to DTC, and all such payments shall be valid and effective to fully satisfy and discharge the City's obligations with respect to the principal and interest with respect to the Refunding Bonds to the extent of the sum or sums so paid. Except under the conditions noted below, no person other than DTC shall receive a Refunding Bond. Upon- delivery pondelivery by DTC to the City of written notice to the effect that DTC has determined to substitute a new nominee in place of CEDE & CO., the term "CEDE & CO." in this Resolution, shall refer to such new nominee of DTC. If the City determines that it is in the best interest of any beneficial owners that they be able to obtain physical certificates evidencing Refunding Bonds and delivers a written certificate to DTC to that effect, DTC shall notify the Participants of the availability through DTC of Refunding Bonds. In such event, the City shall issue, transfer and exchange such Refunding Bond certificates as requested by DTC and any other owners in appropriate amounts. DTC may determine to discontinue providing its services with respect to the Refunding Bonds at any time by giving notice to the City and discharging its responsibilities with respect thereto under applicable law. Under such circumstances (if there is no successor securities depository), the City shall be obligated to deliver Refunding Bonds as described in this Resolution. Whenever DTC requests the City to do so, the City will cooperate with DTC R MMUR R,654693 13 in taking appropriate action after reasonable notice to (a) make available one or more separate Refunding Bonds evidencing the Refunding Bonds to any DTC Participant having Refunding Bonds credited to its DTC account or (b) arrange for another securities depository to maintain custody of certificates evidencing the Refunding Bonds. Notwithstanding any other provision of this Resolution to the contrary, so long as any Refunding Bond is registered in the name of CEDE & CO., as nominee of DTC, all payments with respect to the principal and interest with respect to such Refunding Bond and all notices with respect to such Refunding Bond shall be made and given, respectively, to DTC as provided in the representation letter delivered on the date of issuance of the Refunding Bonds. lection l0. Deposit of Proceeds-of Refunding Bonds. The proceeds from the sale of the Refunding Bonds, shall be paid to the Paying Agent which shall deposit the funds as follows: 1) To the payment of costs of issuance as directed by the Finance Director of the City; and 2) Transfer to the Escrow Agent for deposit in the Escrow Fund in the manner and amount as directed by the Finance Director, Section I I. Debt Service Fund. There is hereby created a fund established and to be designated as the "City of Redlands 2003 Refunding General Obligation Bonds Interest and Principal Fund" (the "Debt Service Fund") for the Refunding Bonds and used only for payments of principal and interest on the Refunding Bonds. On or before each Interest Payment Date the Finance Director shall transfer to the Paying Agent an amount sufficient to pay principal and interest on the Refunding Bonds. Notwithstanding any provision of this Resolution to the contrary, on July 25 of each year, beginning on July 25, 2004, the amount on deposit in the Debt Service Fund shall not RVPUBJRR,654W 14 exceed the greater of{1) one year's earnings on such account, or tii) one-twelfth of annual Debt Service for the then current bond year. If on such July 25 the amount on deposit in the Debt Service Fund exceeds such allowable arnount, the Fiscal Agent shall, transfer the excess amount to the Administrative Expense Fund. Interest earned on the investment of monies held in the funds and accounts established hereunder shall be transferred to the Debt Service Fund and applied to the payment of principal and interest on the Refunding Bonds, If, after payment in full of the Refunding Bonds, there remain excess proceeds, any such excess amounts shall be transferred to the general fund of the City, Any money held in any fund created pursuant to this Resolution, or by the Paying Agent in trust, for the payment of the principal of or interest on the Refunding Bonds and remaining unclaimed for two years after the principal of all of the Refunding Bonds has become due and payable whether by maturity or upon call for maturity) shall be returned to the City for deposit in the City's general fund, Notwithstanding anything herein to the contrary, in the event that the principal and/or interest due on the Refunding Bonds shall be paid by the Bond Insurer pursuant to any municipal bond insurance policy, the Refunding Bonds shall remain Outstanding for all purposes, not be deteased or otherwise satisfied and not be considered paid by the City, and the assignment and pledge of the Trust Estate and all covenants, agreements and other obligations of the City to the Bond owners shall, continue to exist and shall run to the benefit of the Bond Insurer, and the Bond Insurer shall be subrogated to the rights of such registered owners. Section 12. Adi-ninistrative Exner se Fund, On July 25 of each year, commencing July 25, 2004, the Controller shall withdraw from the moneys remaining in the Debt Service Fund and place in the fund named the "City of Redlands 2003 Refunding General Obligation Bonds, Administrative Expense Fund" (the "Administrative Expense Fund"), an amount R VN!B,JRW1654693 15 necessary to pay or reimburse all administrative expenses pertaining to the Refunding Bonds for the then Current fiscal year as detenruned by the Treasurer. Section 13. Execution and Authentication of Refunding Bonds. The ;Refunding Bonds shall be signed by the facsimile signatures of the Mayor of the City and countersigned by the facsimile signature of the City Clerk of the City, which City Clerk shall cause the official sea] of the City to be printed upon each of the Refunding Bonds. The Refunding Bonds shall be authenticated by the Paying Agent. Section 14. Transfer of Refunding Bonds. Any Refunding Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 16 hereof, by the person in whose name it is registered, in person or by the duly authorized attorney of such person, upon surrender of such Refunding Bond to the Paying Agent for cancellation, accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Paying Agent. Whenever any Refunding Bond shall be surrendered for transfer, the designated City officials shall execute (as provided in Section 13) and the Paying Agent shall authenticate and deliver a new Refunding Bond of the same maturity, for a like aggregate principal amount. The Paying Agent shall require the payment by any Bond Owner requesting any such transfer of any tax or other governmental charge required to be paid with respect to such transfer. No transfer of Refunding Bonds shall be required to be made by the Paying Agent during the period from the sixteenth day preceding each interest payment date to and including; such interest payment date. Section 15. Exchange of Refunding Bonds. Refunding Bonds may be exchanged at the office of the Paying Agent in Los Angeles., California,, for a like aggregate principal amount of Refunding Bonds of other authorized denominations of the same maturity. The RVP U 13',_1 R R',654693 16 Paying Agent shall require the payment by the Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. No exchange of Refunding Bonds shall be required to be made by the Paying Agent during the period from the fifteenth day preceding each interest payment date to and including such interest payment date. Section 16. Books of Pqyirig Agent. The Paying Agent will keep or cause to be kept, at its principal corporate trust office in Los Angeles, California, sufficient books for the registration and transfer of the Refunding Bonds, which shall at all times be open to inspection by the City, and, upon presentation for such purpose, the Paying Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, Refunding Bonds as hereinbefore provided, Section 17. Substitution of Paying Ate. The Paying Agent may be removed at any time, at the request of the Bond Insurer, for any breach of its duties set forth herein. The Bond Insurer shall receive 30 days prior written notice of the Paying Agent's resignation. Any successor Paying Agent shall not be appointed unless the Bond Insurer approves such successor in writing. Notwithstanding any other provision of this Resolution, in determining whether the rights of the Bond Owners will be adversely affected by any action taken pursuant to the ternis and provisions of this Resolution, the Paying Agent shall consider the effect on the Bond Owners as if there were no municipal bond insurance policy. Notwithstanding any other provision of this Resolution, no removal, resignation or ten-nination of the Paying Agent shall take effect until a successor, acceptable to the Bond Insurer, shall be appointed. The Paying Agent may at any time resign and be discharged of the duties and obligations created by this Resolution by giving at least 60 days' written notice to the City. The Paying Agent may be removed at any time by an instrument filed with such Paying Agent RVIlUIVIRRV554693 17 and signed by the City. A successor Paying Agent shall be appointed by the City and shall be a bank or trust company organized under the laws of any state of the United States, a national banking association or any other financial institution, having capital stock and surplus aggregating at least $100,000,000 and willing and able to accept the office on reasonable and customary terms and authorized by law to perform all the duties imposed upon it by this Resolution. Such Paying Agent shall signify the acceptance of its duties and obligations hereunder by executing and delivering to the City, a written acceptance thereof, Resignation or removal of the Paying Agent shall be effective upon appointment and acceptance of a successor Paying Agent. In the event of the resignation or removal of the Paying Agent, such Paying Agent shall pay over, assign and deliver any moneys held by it as Paying Agent to its successor, or, if there is no successor, to the Treasurer-Tax Collector of the County of San Bernardino. The City shall promptly publish in The Bond Bever or any financial newspaper of general circulation published at least five days (other than legal holidays) in each calendar• week in the State of California, the name and principal corporate trust office address of the Paying Agent appointed to replace any resigned or removed Paying Agent. Section 1.8. Paying Agent's Authentication. The Refunding Bonds and the Paying Agent's certificate of authentication and registration and the form of assignment to appear thereon shall be in substantially the forms, respectively, attached hereto as Exhibit A, with necessary or appropriate variations, omissions and insertions as pen-nitted or required by this Resolution. Section 19. Notice to be Given the Bond Insurer. While the municipal bond insurance policy is in effect, the City shall furnish to the Bond Insurer: (a) as soonas practicable after the filing thereof, a copy of any financial statement of the City, and a copy of any audit and annual report of the City; R NT L 134 RX65 4693 18 (b) a copy of any notice to be given to the registered owners of the Refunding Bonds, including, without limitation, notice of any redemption of or defeasance of Refunding Bonds, and any certificate rendered pursuant to this Resolution relating to the security for the Refunding Bonds; and (c) such additional information as the Bond Insurer may reasonably request, The City will permit the Bond Insurer to discuss the affairs, finances and accounts of the City of any infornlation the Bond Insurer may reasonably request regarding the security for the Refunding Bonds with appropriate officers of the City. The City will permit the Bond Insurer to have access to and to make copies of all books and records relating to the Refunding Bonds at any reasonable time. The Bond Insurer shall have the right to direct an accounting at the Bond Insurer's expense, and the City's failure to comply with such direction within thirty (30) days after receipt of written notice of the direction from the Bond Insurer shall be deemed a default under the municipal bond insurance policy; provided, however, that if compliance cannot occur within such period, then such period will be extended so long as compliance is begun within such period and diligently pursued, but only if such extension would not materially adversely affect the interests of any registered owner of the Bonds. Notwithstanding any other provision of this Resolution, the City shall immediately notify the Bond Insurer if at any time there are insufficient moneys to make any payments of principal and/or interest as required. Section 20. Amendments to Resolution, any provision of this Resolution expressly recognizing or granting rights in, or to the Bond Insurer may not be amended in ally manner which affects the rights of the Bond Insurer hereunder without the prior written consent of the Bond Insurer. RVPU13'JRR--65-4613 19 Unless otherwise provided in this Section, the Bond Insurer's consent shall be required in addition to Bond Owner consent, when required, for the following purposes: (1) execution and delivery of any supplemental Resolution; (ii) removal of the Paying Agent and selectionand appointment of any successor paying agent; and (iii) initiation or approval of any action not described in (1) or(11) above which alters the terms and conditions of the Resolution. Anything in this Resolution to the contrary notwithstanding, upon the occurrence and continuance of an event of default, the Bond Insurer shall be entitled to controland direct the enforcement of all rights and remedies granted to the Bond Owners for the benefit of the Bond Owners under this Resolution. Section 21. Levy and..-CgIlection. The money for the redemption of the Refunding Bonds and payment of principal and interest on the Refunding Bonds shall be raised by taxation upon all taxable property in the City and provision shall be made for the levy and collection of such taxes in the manner provided by law and for such redemption and payment out of the Debt Service Fund of the City. Section 22. Defeasance. If all outstanding Refunding Bonds shall be paid and discharged in any one or more of the following ways: (a) by well and truly paying or causing to be paid the principal and interest on all Refunding Bonds outstanding, and when the same become due and payable; (b) by depositing with the Paying Agent or any designated escrow agent, in trust, at or before maturity, cash which together with amounts then on deposit in the Debt Service Fund together with the interest to accrue thereon and on any such moneys, obligations or securities as may be permitted by the laws of the State of California to be deposited for the purpose of refunding the Refunding Bonds, without the need for further investment, is fully sufficient to pay all Refunding Bonds outstanding at maturity thereof, including any and all RVPUB JM054693 20 interest thereon, notwithstanding that any Refunding Bonds shall not have been surrendered for payment; or (c) by depositing with an institution that meets the requirements for serving as a Paying Agent pursuant to Section 17 hereof, in trust, lawful moneys, or securities as may be permitted by the laws of the State of California to be deposited for the purpose of refunding bonds which, in the opinion of nationally recognized bond counsel, will not impair the exclusion of gross income for federal income tax purposes of interest on the Refunding Bonds, in such amount as will, together with the interest to accrue thereon without the need for further investment, be fully sufficient to pay and discharge all Refunding Bonds outstanding at maturity thereof, or on any redemption date prior thereto, including any premium and all interest thereon, notwithstanding that any Refunding Bonds shall not have been surrendered for payment; then all obligations of the City under this Resolution with respect to all outstanding Refunding Bonds shall cease and terminate, except only the obligation of the Paying Agent to pay or cause to be paid from funds to the owners of the Refunding Bonds all sums due thereon, Section 23. AWroval of Pqying A gent Agreement and Escrow Agreement. The form of agreement entitled "Paying Agent Agreement" presented to this meeting and entered into between the City and the Paying Agent is hereby approved and the City Manager or the Finance Director or their designee are each hereby authorized and directed to execute the Paying Agent Agreement for and in the name and on behalf of the City to execute and deliver said agreement in substantially the form hereby approved, with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof, The form of the agreement entitled "Escrow Agreement" presented to this meeting and to be entered into by and between the City and U.S. Bank National Association, the Escrow Agent as of November 1, 2003, for the 1994 Bonds, which RVP I°'B`JKW,,654ra93 21 provides generally for the purchase and deposit of federal securities to secure the payment of principal of, interest and redemption premium, if any, on the 1994 Bonds, is hereby approved, and <the City Manager or Finance Director or their designee are each hereby authorized and directed for and in the name and on behalf of the City to execute and deliver said agreement in substantially the form hereby approved, with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof. Section 24. Legislative Determinations. This City Council determines that all acts andconditions necessary to be performedby the City Council or to have been met precedent to and in the issuing of the Refunding Bonds in order to make them legal, valid and binding general obligations of the City have been performed and have been met, or will at the time of delivery of the Refunding Bonds have been performed and have been met, in regular and due form as required by law; that the full faith, credit and revenues of the City are hereby pledged for the timely payment of the principal of and interest on the Refunding Bonds; and that no statutory or constitutional limitation on indebtedness of taxation will have been exceeded in the issuance of the Refunding Bonds. Section 25. Official Statement: rig. The City Continuing Disclosure Undertaki , Council authorizes the preparation of an Official Statement relating to the Refunding Bonds. The Official Statement shall be in the form (preliminary and final) to be approved by the City Manager or Finance Director of the City, which approval shall be conclusively evidenced by execution and delivery thereof, shall hereinafter be referred to as the "Official Statement," Each of the above-described officers or any such officer's designee are hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver to the Underwriter said Official Statement, The Underwriter is hereby authorized to distribute copies of the Official Statement to persons who may be interested in the purchase of the Refunding RV?L3B`,JRWb54693 22 Bonds and is directed to deliver copies of any final Official Statement to the purchasers of the Refunding Bonds. The City further authorizes the City Manager or Finance Director of the City to enter into any continuing disclosure undertaking in connection with the sale of the .Refunding Bonds. Section 26. Tax Covenants. The City hereby covenants that the City will not make any use of the proceeds of the Refunding Bonds or any other funds of the City which would cause the Refunding Bonds to be "arbitrage bonds," the interest on which would be subject to inclusion in gross income for purposes of federal income taxation by reason of See- tion 148 of the Internal Revenue Code of 1986, as amended (the "Code"), "private activity bonds," the interest on which would be subject to inclusion in gross income for purposes of federal income taxation by reason of Section 141(a) of the Code, or obligations the interest on which would be subject to inclusion in gross income for purposes of federal income taxation because they are "federally guaranteed" as provided in Section 149(b) of the Code; and to that end the City, with respect to the proceeds of the Refunding Bonds, will comply with all requirements of such sections of the Code and all regulations of the United States Department of the Treasury issued thereunder to the extent that such requirements are, at the time, applicable and in effect. R VPUT3'JRR,654693 23 Section 27. Rebate Fund. (a) There shall be created and established a special fund designated the "City of Redlands 2003 Refunding General Obligation Bonds Rebate Fund" (the "Rebate Fund") which shall be held by the Paying Agent for the benefit of the City. All amounts at any time on deposit in the Rebate Fund shall be held in trust, to the extent required to satisfy the requirement to make rebate payments to the United States (the "Rebate Requirement") pursuant to Section 148 of the Internal Revenue Code of 1986, as amended (the "Code") and the regulations promulgated and proposed thereunder (the "Rebate Regulations"). Such artiounts shall be free and clear of any lien hereunder and shall be governed by this Section and by the Guidelines for Compliance with Section 148(f) of the Code. The Paying Agent shall be deemed conclusively to have complied with the Rebate Requirement if it follows the Written Requests of the City, and shall have no independent responsibility to, or liability resulting from its failure to, enforce compliance by the City with the Rebate Requirement. (b) If and to the extent necessary, within 45 days of the end of each year ending February Keach, a "Bond Year"), (1) the City shall calculate or cause to be calculated with respect to the Refunding Bonds the amount that would be considered "rebatable arbitrage" within the meaning of the Rebate Regulations, using as the "computation date" for this purpose the end of such Bond Year, and (2) upon the City's written direction, the Paying Agent shall deposit to the Rebate Fund from deposits from the City or from amounts on deposit in the other funds established hereunder, if and to the extent required, amounts sufficient to cause the balance in the Rebate Fund to be equal to the amount of "rebatable arbitrage" so calculated. The Paying Agent shall not be required to deposit any amount to the Rebate Fund in accordance with the preceding sentence, if (i) the Refunding Bonds are not subject to arbitrage or (ii) the amount on deposit in the Rebate Fund prior to the deposit required to be made under this subsection (b) exceeds the amount of "rebatable arbitrage" RMJVJRR� 6x4693 24 calculated in accordance with the preceding sentence. Such excess may be withdrawn from the Rebate Fund to the extent permitted under subsection (g) of this Section 27. The City shall not be required to calculate the amount of "rebatable, arbitrage" within the meaning of the Rebate Regulations, and the Paying Agent shall not be required to deposit any amount to the Rebate Fund in accordance with this subsection (b), with respect to all or a portion of the proceeds of the Bonds (1) to the extent such proceeds satisfy the expenditure requirements of Section 148(1)(4)(13) or Section 148(1 (4)(C) of the Code, and/or regulations proinulgated thereunder, and otherwise qualify for an exception from the Rebate Requirement pursuant to said section and/or said regulation, or (2) to the extent such proceeds are subject to an election by the City under Section 148(f)(4)(C)(vii) of the Code to pay a 1-1/2% penalty in lieu of arbitrage rebate in the event any of the percentage expenditure requirements of Section 148(f)(4)(C) are not satisfied. (c) Any funds remaining in the Rebate Fund after prepayment of all the Refunding Bonds and any amounts described in paragraph (2) of subsection (d) of this Section, or provision made therefor satisfactory to the Paying Agent, including accrued interest and payment of any applicable fees to the Paying Agent, shall be withdrawn by the Paying Agent and remitted to the City. (d) Upon the written request of the City, but subject to the exceptions contained in subsection (b) of this Section to the requirement to calculate "r hatable arbitrage" and make deposits to the Rebate Fund, the County shall pay to the United States, from amounts on deposit in the Rebate Fund, (1) not later than 60 days after the end of (i) the fifth Bond Year, and (ii) each fifth Bond Year thereafter, an amount that, together with all previous payments of "rebatable arbitrage" calculated in accordance with the Rebate Regulations, is equal to at least 90% of the sum of(A) the "rebatable arbitrage" calculated as of the end of such Bond Year in RVPU9VRIZ,654693 25 accordance with the Rebate Regulations, and (B) all previous payments of "rebatable arbitrage" calculated in accordance with the Rebate Regulations-, and (2) not later than 60 days after the payment of all Refunding Bonds, an amount equal to 100% of the "rebatable arbitrage" calculated as of the end of such Bond Year (and any income attributable to the rebatable arbitrage determined to be due and payable) in accordance with the Rebate Regulations. (e) Inthe event that, prior to the time of any payment required to be made from the Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such payment is due, the City shall calculate the amount of such deficiency and direct the Paying Agent in a written request of the City to deposit an amount received from the City equal to such deficiency into the Rebate Fund prior to the time such payment is due. (f) Each payment required to be made pursuant to subsection (d) of this Section 27 shall be made to the Internal Revenue Service Center, Ogden, Utah 84201, on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T prepared by the City. (g) In the event that immediately following the calculation required by subsection (b) of this Section 27, but prior to any deposit made under said subsection, the amount on deposit in the Rebate Fund exceeds the amount of "rebatable arbitrage" calculated in accordance with said subsection, upon written instructions from the City, the Paying Agent shall withdraw the excess from the Rebate Fund and credit such excess to the Debt Service Fund. (h) The City shall retain records of all determinations made hereunder until six years after the retirement of the last obligations of the Refunding Bonds. (i) Notwithstanding anything in this Resolution to the contrary, the Rebate Requirement shall survive the defeasance, of the Refunding Bonds. RVPU8',JRR654693 26 Section 28. Beneficiaries of Resolution. Nothing in this Resolution expressed or implied is intended or shall, be construed to confer upon, or to give to, any person or entity'. other than the City, the Bond Insurer, the Paying Agent and the registered owners of the Refunding Bonds, ariv ri-ht, remedv or claiin under or by reason of this Resolution or any covenant, condition or stipulation hereof, and all covenants, stipulations, promises and agreements in this ResolUti011 contained by and on behalf of the City shall be for the sole and exclusive benefit of the City, the Bond Insurer, the Paying Agent and the registered owners of the Refunding Bonds. Section -19. Other Acts of City. The Mayor, the City Clerk-, the City Manager or his assistant and the Finance Director or her assistant be and they are hereby authorized and directed to execute and deliver any and all certificates and representations, including signature certificates, no-litigation certificates, arbitrage bond certificates and certificates concerning, the contents of the official statement proposed to be distributed in connection with the sale of the Refunding Bonds, necessary and desirable to accomplish the transactions set forth above. Section 31. Effective Date. This Resolution shall take effect from and after its adoption.. ADOPTED, SIGNED AND APPROVED this 21"day October, 2003. Mayor of the City of Redlands Attest: Deputy City Clerk PWPUB'JI P R654693 27 STATE OF CALIFORNIA ) ss. CO(J'NTY OF SAN BERNARDINO ) 1-, Beatrice Sanchez. I eptitti City Clerk ofth City of Redlands hercby certify that the lorewffl�- is � Ifzll true and original c:op%, of Resolution tion No, 6-2-06 adopted b the City CoLincil of the City ofARedlands at a reLlUlar rneetino of said City Council held October 11, 2003 by the f-ollowing vote: YES- ("oun ilmernbers Peppler, Gilbreath, George. Harrison; Nlavor Haws NCSF: None ABSENT: `one ABSTAIN': None -.e-- Beatrice Sanchez, Deputy City Clerk of`the City of Redlands y RVII, EXHIBIT A FORM OF BOND UNITED STATES OF AMERICA STATE OF CALIFORNIA; COUNTY OF SALT BERNAR I It CITY OF REDLAI° DS 2003 REFUNDING GENERAL OBLIGATION BONDS INTEREST RATE: MATURITY DAT ISSUE TE: CUSIP: REGISTEREDOWNER: PRINCIPAL SUFI': The City of Redlands, a municipal corporation duly organized and existing under and by virtue of the laws of the State of California (the "City"), for value received hereby promises to pay to the Registered Owner stated above; or registered assigns (the "Owner"), of the Maturity Date stated above the Principal Sum stated alcove, in lawful money of the United States of America, and to pay interest thereon in like lawful money from the interest payment date next preceding the date of execution of this Bond (unless (i) this Bond is authenticated oil an interest payment date, in which event it shall bear interest from such date of authentication, or (ii) this Bond is authenticated prior to an interest payment date and after the chase of business on the fifteenth clay preceding such interest payment date, in which. event it shall bear interest from such interest payment date, or (iii) this Bond is authenticated prior to January 15, 2004, in which, event it shall bear interest from the Issue Date stated above; provided however, that if at the time of execution of this Bond, interest is in default on this Bond; this .Band shall bear interest froth the interest payment date to which interest has previously been paid or made available for payment on this Bond) until payment of such Principal Sura in f"iill, at the rate per annum stated above, payable on February I and August I in each year, commencing February 1, 2004, calculated on.the Basis of 160-day year composed of twelve 30-day months. Principal hereof and premium, ifany, upon early redemption hereof arpayable at the principal corporate trust office of U.S. Batik National Association (the "Paying Agent"'), in Los Angeles.:, California. Interest `PUB JRR:,65469 a hereon (including the final interest payment upon maturity or earlier redemption) is payable by check or draft of the Paying Agent mailed by first class mail to the Owner at the Owner's address as it appears on the registration books maintained by the Paying Agent at the close of business on the fifteenth day next preceding such interest payment date. This Bond is one of a duly authorized issue of Bonds of the City designated as "City of Redlands 2003 Refunding General Obligation Bonds" (the "Bonds"), in an aggregate principal amount of— Dollars ($ ) all of like tenor and date (except for such variation, if any, as may be required to designate varying numbers, maturities, interest rates, or redemption and other provisions) and allissued pursuant to the provisions of Articles 9 and I I of Chapter. 3 of Part I of Division 2 of Title 5 of the California Government Code (collectively, the "Refunding Bond Law") and pursuant to Resolution No. of the City Council of the City adopted _, 2003 (the "Resolution"), authorizing the issuance of the Bonds. Reference is hereby made to the Resolution (copies of which are on file at the office of the City) and to the Refunding Bond Law for a description of the terms on which the Bonds are issued and the rights thereunder of the registered owners of the Bonds and the rights and obligations of the City Treasurer and the rights and, obligations of the City thereunder, to all of the provisions of which Resolution the Owner of this Bond, by acceptance hereof, assents and agrees, The Bonds have been 'Issued by the City to refinance the acquisition and construction of certain real property and improvements thereto used on public parks and open spaces in the City. This Bond and the interest hereon and on all other Bonds and the interest thereon (to the extent set forth in the Resolution) are general obligations of the City has the power and is obligated to levy taxes for the payment of the Bonds and the interest thereon upon all property within City subject to taxation by the City. The Bonds are not subject to redemption before their stated maturities. The Bonds are issuable as fully registered Bonds without coupons in denominations of$5,000 and any integral multiple thereof(except for one bond which may be delivered in a denominallOn other than $5,000). Subject to the limitations and conditions and upon payment of the charges, if any, as provided in the Resolution, Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations and of the same maturity. This Bond is transferable by the Owner hereof, in person or by his/her attorney duly authorized in writing, at said office of the Paying Agent, but only in the manner and subject to the limitations provided in the Resolution, and upon surrender and cancellation of this Bond. Upon registration of such transfer a new fully registered Bond or Bonds, of authonized denomination or denominations, for the same aggregate principal amount and of the, same maturity will be issued to the transferee in exchange herefor. RVPUT3JIM,654693 2 The City and the Paying Agent may treat the Owner hereof as the absolute owner hereof for all purposes, and the City and the Paying Agent shall not he affected by any notice to the contrarv. It is hereby certified that all of the things, conditions and acts required to exist, to have happened or to have been performed precedent to and in the issuance of this Bond do exist, have happened or have been performed in due and regular time and manner as required by the laws of the State of California, and that the amount of this Bond, together with, all other indebtedness of the City, does not exceed any limit prescribed by any laws of the State of California, and is not in excess of the amount of Bonds permitted to be issued under the Resolution. This Bond shall not be entitled to any benefit under the Resolution or become valid or obligatory for any purpose until the Certificate of Authentication hereon shall have been manually signed by the Paying Agent. IN WITNESS WHEREOF, the City of Redlands has caused this Bond to be executed in its name and on its behalf with the facsimile signature of its Mayor and counter- signed with the facsimile signature of its City Clerk and its seal to be reproduced hereon, all as of the Issue Date stated above. CITY OF REDLANDS (S E-A L) By: Mayor ATTEST: Deputy City Clerk R VPUAIJ R R",654(0 3 3 [FORM OF PAYING AGENT'S CERTIFICATE OF AUTHENTICATION] AUTHENTICATION DATE- CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within-juentioned Resolution. U.S. BANK NATIONAL ASSOCIATION, as Paying Agent Authorized Signatory ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common TEN ENT -- as tenants by the entireties JT TEN -- as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT Custodian (Gust) (Minor) under Uniforn'i Gifts to Minors Act (State) ADDIT10NAL ABBREVIATIONS MAY ALSO BE USED THOUGH NOT IN THE LIST ABOVE M K11,JRR',654(,93 4 (FORM OF ASS I GI ME T) For value received the undersigned hereby sells; assigns and transfers urate (Name, ,Address and Tax Identification or Social Security Number ofAssignee) the within-registered Bond and hereby irrevocably constitute(s) and appoints(s) attorney, to transfer the same can the bond register of the Paying Agent with full Power of substitution in the Premises; bated`. Note: The signature(s) on this within Bond in every Particular without alteration or enlargement or any change SignatureGuaranteed: Note: Si, natures) roust be guaranteed by an eligible guarantor RVP _F aRK.65•69