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Home My WebLink AboutResolution - 3507 STATE OF CALIFORNIA ) RESOLUTION NO. 3507 COUNTY OF RIVERSIDE ) ss CITY OF SAN JACINTO ) RESOLUTION OF THE CITY OF SAN JACINTO, CALIFORNIA, AUTHORIZING THE ISSUANCE OF ITS 2014 TAXABLE PENSION OBLIGATION REFUNDING BOND WHEREAS, the City of San Jacinto (the "City") has previously elected to become a contracting member of the California Public Employees' Retirement System ("PERS"), and under its contract with PERS and the Retirement Law (hereinafter defined), the City is obligated to make certain payments to PERS in respect of retired public safety employees in connection with its safety plan, i.e. the side fund, which amortizes such obligations over a fixed period of time; and WHEREAS, the City is a municipal corporation and charter city duly organized and existing under the Constitution and laws of the State of California and is desirous of refunding its public safety employee side fund owing to PERS (the "PERS Side Fund Obligation"), thereby effectuating substantial savings in the form of lower interest costs related thereto; and WHEREAS, the City is authorized under the provisions of Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53580 of said Code (the "Bond Law"), to issue its bond for the purpose of refunding certain outstanding indebtedness of the City, including the PERS Side Fund Obligation; and WHEREAS, the City Council now desire to authorize the issuance of its 2014 Taxable Pension Obligation Refunding Bond; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SAN JACINTO RESOLVES AS FOLLOWS: ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION Section 1.01. Interpretation. (a) Unless the context otherwise indicates, words expressed in the singular include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for convenience only and include the neuter, masculine or feminine gender, as appropriate. (b) Headings of articles and sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and do not affect the meaning, construction or effect hereof. (c) All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Resolution; the words "herein," "hereof," "hereby," "hereunder' and other words of similar import refer to this Resolution as 09960.00000\8780696.4 (c) All references herein to "Articles," "Sections" and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Resolution; the words "herein," "hereof," "hereby," "hereunder' and other words of similar import refer to this Resolution as a whole and not to any particular Article, Section or subdivision hereof, unless otherwise expressly set forth. Section 1.02. Definitions. Unless the context clearly otherwise requires or unless otherwise defined herein, the capitalized terms used herein shall have the meanings ascribed to them below: "Bond" means the City of San Jacinto 2014 Taxable Pension Obligation Bond issued by the City in the aggregate principal amount of $1,800,000 under the Bond Law and this Resolution. "Bond Counsel" means (a) Best Best & Krieger LLP, or (b) any other attorney or firm of attorneys appointed by or acceptable to the City of nationally-recognized experience in the issuance of obligations issued by public agencies. "Bond Law" means the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53570 of said Code, as in effect on the Closing Date or as thereafter amended. "Bond Purchase Agreement" means the Bond Purchase Agreement executed by and between the City and the Purchaser, dated as of June 4, 2014, and relating to the purchase of the Bond. "Business Day" means a day of the year (other than a Saturday or Sunday) on which banks in California and in the City of San Jacinto are not required or permitted to be closed, and on which the New York Stock Exchange is open. "Certificate of the City" means a certificate in writing signed by the Mayor of the City or the City Manager, or any other officer of the City duly authorized by the City for that purpose. "City" means the City of San Jacinto, a municipal corporation and charter city duly organized and existing under the Constitution and laws of the State of California. "City Manager" means the City Manager of the City. "City Representative" means the City Manager, the City Finance Director, or any other person authorized by resolution of the City. Council to act on behalf of the City with respect to this Resolution and the Bond. "Closing Date" means June 12, 2014, being the date on which the Bond is delivered by the City to the Original Purchaser in exchange for the purchase price of the Bond. 24438.02014\8780696.6 2 "Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bond or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Bond, together with applicable temporary and final regulations promulgated, and applicable official public guidance published, under the Code. "Costs of Issuance" means all items of expense directly or indirectly reimbursable to the City relating to the issuance, execution and delivery of the Bond including, but not limited to, filing and recording costs, settlement costs, printing costs, reproduction and binding costs, bond counsel fees and charges, and any other legal fees and charges (including fees of counsel to the Purchaser and the fees of Purchaser in making the loan to City in the form of the Bond), fees and expenses of financial and other professional consultants (including placement agent fees and expenses), and any other fees and expenses in connection with the execution and delivery of the Bond (including legal costs and fees and court costs associated with judicial validation of the Bond). "Debt Service Fund" means the fund by that name established and held by the City under Section 4.02. "Event of Default" means any of the events described in Section 8.01. "Federal Securities" means United States Treasury notes, bonds, bills or certificates of indebtedness or those for which the faith and credit of the United States are pledged for the payment of principal and interest. "Finance Director" means the Finance Director of the City of San Jacinto. "Fiscal Year" means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30, both dates inclusive, or any other twelve-month period selected and designated by the City as its official fiscal year period. "Independent Accountant" means any accountant or firm of such accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State of California, appointed by or acceptable to the City, and who, or each of whom: (a) is in fact independent and not under domination of the City; (b) does not have any substantial interest, direct or indirect, with the City; and (c) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make reports to the City. "Interest Account" means the account by that name established and held by the City under Section 4.02(a). "Interest Payment Date" means January 1, April 1, July 1 and October 1, each an Interest Payment Date, commencing July 1, 2014, so long as the Bond remains unpaid. "Outstanding", when used as of any particular time with reference to the Bond, means the Bond unless (a) the Bond has been paid or deemed to have been paid within the meaning of Section 9.03; or (b) another Bond has been authorized, executed, 24438.02014\8780696.6 3 issued and delivered by the City hereunder in lieu of or in substitution for the Bond originally authorized, executed, issued and delivered by the City. "Owner" or "Bondowner" means the person in whose name the ownership of such Outstanding Bond is registered on the Registration Books. "Permitted Investments" means any investments permitted by law to be made with moneys belonging to, or in the custody of, the City. "PERS" means the California State Public Employees' Retirement System. "PERS Contracts" means the contracts, as amended from time to time, entered into by the City and PERS pursuant to the Retirement Law obligating the City to make contributions to PERS in exchange for PERS providing retirement benefits to certain City employees. "PERS Side Fund Obligation" means the obligation of the City under the Retirement Law and the PERS Contracts to make payments to PERS with respect to benefits accruing to retired public safety employees of the City in connection with its safety plan — side fund. "Principal Account" means the account by that name established and held by the Trustee under Section 4.02(b). "Purchaser" means Rabobank, N.A., a national banking association. "Record Date" means, with respect to any Interest Payment Date, the close of business on the 15th calendar day of the month preceding such Interest Payment Date, whether or not such 15th calendar day is a Business Day. "Registration Books" means the records maintained by the City under Section 2.07 for the registration and transfer of ownership of the Bond. "Regulations" means temporary and permanent regulations promulgated under the Code. "Request of the City" means a request in writing signed by the City Representative, or by any other officer of the City duly authorized by the City for that purpose. "Resolution" means this Resolution, being Resolution No. 3507 adopted by the City Council of the City on June 3, 2014 and relating to the issuance of the Bond. "Retirement Law" means California Government Code Section 20000 et. seq. "Supplemental Resolution" means any resolution supplemental to or amendatory of this Resolution, adopted by the City in accordance with the provisions of Article VII hereof. 24438.02014\8780696.6 4 "Written Request of the City" means an instrument in writing, signed by a City Representative, or by any other officer of the City duly authorized by the City. ARTICLE II AUTHORIZATION AND TERMS OF THE BOND Section 2.01.Authorization and Purpose of Bond. The City has reviewed all proceedings heretofore taken and has found, as a result of such review, and hereby finds and determines that all things, conditions and acts required by law to exist, happen or be performed precedent to and in connection with the issuance of the Bond do exist, have happened and have been performed in due time, form and manner as required by law, and the City is now duly empowered, under each and every requirement of law, to issue the Bond in the manner and form provided in this Resolution. The City hereby authorizes the issuance of the Bond in the aggregate principal amount of not to exceed $1,800,000 under this Resolution and the Bond Law for the purposes of providing funds to refinance the PERS Side Fund Obligation of the City with respect to the City's public safety employees as provided herein and to pay Costs of Issuance. The Bond is designated the "City of San Jacinto 2014 Taxable Pension Obligation Bond". Section 2.02.Terms of the Bond. One Term Bond shall be issued in fully registered form without coupon in the denomination of not to exceed $1,800,000. The Bond shall be dated as of the Closing Date and mature on July 1, 2021 in the principal amount and bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the interest rate of 5.00% per annum. Interest on the Bond is payable from the Interest Payment Date immediately preceding the date of authentication thereof unless: (a) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it will bear interest from such Interest Payment Date, (b) a Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date, or (c) interest on a Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. Interest is payable on each Interest Payment Date to the person in whose name the ownership of the Bond is registered on the Registration Books at the close of business on the immediately preceding Record Date, except as provided below. Interest on the Bond which is not punctually paid or duly provided for on any Interest Payment Date is payable to the person in whose name the ownership of the Bond is registered on the Registration Books at the close of business on a special record date 24438.02014\8780696.6 5 for the payment of such defaulted interest to be fixed by the City, notice of which is given to such Owner by first-class mail not less than ten days prior to such special record date. The City will pay interest on the Bond by check of the City mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owner of the Bond at his respective address shown on the Registration Books as of the close of business on the preceding Record Date. At the written request of the Owner of the Bond (since the Bond is in an aggregate principal amount of at least $1,000,000), which written request is on file with the City as of any Record Date, the City will pay interest on such Bond on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account of a financial institution within the United States of America as specified in such written request, which written request will remain in effect until rescinded in writing by the Owner. The City will pay principal of the Bond in lawful money of the United States of America by check of the City upon presentation and surrender thereof to the City at City Hall, 595 S. San Jacinto Avenue, San Jacinto, California 92583. Section 2.03. Redemption of Bond. (a) Optional Redemption. The Bond is subject to redemption prior to its stated maturity, at the option of the City, in whole or in part, on any Business Day from any moneys on deposit in the Debt Service Fund for such purpose, at a prepayment price equal to one hundred percent (100%) of the principal amount thereof to be redeemed, plus accrued interest to the redemption date. 24438.0201418780696.6 6 (b) Mandatory Redemption. The Term Bond matures on July 1, 2021 and is subject to mandatory redemption in part, by lot, without premium, on July 1, 2014 and on each January 1, April 1, July 1 and October 1 thereafter, from the sinking fund payments that have been deposited into the Debt Service Fund, according to the following schedule: PRINCIPAL PAYMENT DATE AMOUNT 07/01/2014 $68,905.70 10/01/2014 52,017.02 01/01/2015 52,667.23 04/01/2015 53,325.57 07/01/2015 53,992.14 10/01/2015 54,667.05 01/01/2016 55,350.38 04/01/2016 56,042.26 07/01/2016 56,742.79 10/01/2016 57,452.08 01/01/2017 58,170.23 04/01/2017 58,897.36 07/01/2017 59,633.57 10/01/2017 60,378.99 01/01/2018 61,133.73 04/01/2018 61,897.90 07/01/2018 62,671.62 10101/2018 63,455.02 01/01/2019 64,248.21 04/01/2019 65,051.31 07/01/2019 65,864.45 10/01/2019 66,687.76 01/01/2020 67,521.35 04/01/2020 68,365.37 07/01/2020 69,219.94 10/01/2020 70,085.19 01/01/2021 70,961.25 04/01/2021 71,848.27 07/01/2021 (maturity) 72,746.26 (c) Notice of Redemption. The City will mail (by first class mail), at its expense, notice of any redemption to the Owner of the Bond at his address appearing on the Registration Books, at least 30 but not more than 60 days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Bond or the cessation of the accrual of interest thereon. Such notice shall specify: (a) that the Bond or a designated portion thereof is to be redeemed, (b) the number of the Bond to be redeemed, (c) the date of notice and the 24438.02014\8780696.6 7 date of redemption, (d) the place or places where the redemption will be made, and (e) descriptive information regarding the Bond including the dated date, interest rate and stated maturity date. Such notice shall further state that on the specified date there shall become due and payable upon such Bond to be redeemed, the portion of the principal amount of such Bond to be redeemed, together with interest accrued to said date, and that from and after such date interest with respect thereto shall cease to accrue and be payable. (d) Manner of Redemption. Whenever provision is made in this Section 2.03 for the redemption of less than all of the Bond, the City shall treat such Bond as consisting of separate $5,000 portions and each such portion shall be subject to redemption as if such portion were a separate Bond. If only a portion of a Bond is called for redemption, then upon surrender of such Bond the City will execute and authenticate and deliver to the Owner thereof, at the expense of the City, a new Bond of the same series and maturity date, of a denomination in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. (e) Partial Redemption of Bond. If only a portion of a Bond is called for redemption, then upon surrender of such Bond the City will execute, authenticate and deliver to the Owner thereof, at the expense of the City, a new Bond of the same series and maturity date, of an authorized denomination in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. (f) Effect of Redemption. From and after the date fixed for redemption, if notice of redemption has been duly mailed and funds available for the payment of the principal of and interest (and premium, if any) on the Bond so called for redemption have been duly provided, such Bond so called shall cease to be entitled to any benefit under this Resolution other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date specified in such notice. Unless otherwise determined by the City, the City shall cancel and destroy the Bond redeemed under this Section 2.03. Section 2.04. Form and Execution of Bond. The form of the Bond, the form of the certificate of authentication, and the form of assignment to appear thereon, are set forth in Appendix B attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Resolution. The Mayor of the City shall execute, and the City Clerk of the City shall attest the Bond. Any or all of such signatures may be made manually or may be affixed by facsimile thereof. If any officer whose signature appears on the Bond ceases to be such officer before the Closing Date, such signature will nevertheless be as effective as if the officer had remained in office until the Closing Date. The Bond may be signed and attested on behalf of the City by such persons as at the actual date of the execution of that Bond are the proper officers of the City, duly authorized to execute debt instruments on behalf of the City, although on the date of the Bond any such person was not an officer of the City. 24438.02014\8780696.6 8 Only a Bond bearing a certificate of authentication in the form set forth in Appendix B, manually executed and dated by the City, is valid or obligatory for any purpose or entitled to the benefits of this Resolution, and such certificate of the City is conclusive evidence that such Bond has been duly authenticated and delivered hereunder and is entitled to the benefits of this Resolution. Section 2.05.Transfer of Bond. (a) Transfer. The Bond may, in accordance with its terms, be transferred, in whole, but not in part, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of the Bond to the City at City Hall, 595 S. San Jacinto Avenue, San Jacinto, California 92583, or such other place as may be designated in writing by the City for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the City, duly executed and by delivery of a duly written instrument of transfer and accompanied with a Letter of Representations, in the form set forth in Appendix C hereto, and such Letter of Representations shall be conclusive evidence that such Letter has been duly executed and the City may rely upon the representations set forth therein. The City shall collect any tax or other governmental charge on the transfer of the Bond under this Section 2.06. Whenever the Bond is surrendered for transfer, the City will execute, authenticate and deliver to the transferee a new Bond of like series, interest rate, maturity and aggregate principal amount. The City will pay the cost of printing the Bond and any services rendered or expenses incurred in connection with any transfer of the Bond. (b) Limitations. The City may refuse to transfer, under the provisions of this Section 2.06, the Bond if it has determined that a portion thereof has been selected by the City for redemption under Section 2.03, or during the period established by the City for the selection of Bond or portion thereof for redemption. Section 2.06. Registration Books. The City will keep or cause to be kept, at City Hall, 595 S. San Jacinto Avenue, San Jacinto, California 92583, sufficient records for the registration and registration of transfer of the Bond. The City will register the ownership and transfer of the Bond on the Registration Books under such reasonable regulations as it may prescribe. Section 2.07. Bond Mutilated Lost, Destroyed or Stolen. If the Bond is mutilated, the City, at the expense of the Owner of the Bond, shall execute, authenticate and deliver, a new Bond of like tenor in exchange and substitution for the Bond so mutilated, upon surrender to the City of the Bond so mutilated. The City shall cancel every mutilated Bond surrendered to him. If a Bond is lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the City and, if such evidence is satisfactory to the City and if indemnity satisfactory to the City is given, the City, at the expense of the Owner, will execute, authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City may require payment of a sum not exceeding the actual cost of preparing the new Bond issued under this Section and of the expenses which may be incurred by the City in 24438.0201418780696.6 9 connection therewith. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen will constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Resolution with any other Bond issued under this Resolution. ARTICLE III DEPOSIT AND APPLICATION OF PROCEEDS OF BOND Section 3.01. Issuance of Bond. Upon the execution and delivery of this Resolution, the City shall execute, authenticate and deliver the Bond in the aggregate principal amount of $1,800,000 to the Purchaser upon the simultaneous issuance and execution of a receipt thereof and payment of the purchase price by the Purchaser, as per the Bond Purchase Agreement. Section 3.02. Deposit and Application of Proceeds. On the Closing Date the Purchaser of the Bond upon its receipt thereof, shall simultaneously pay a portion of the proceeds of the Bond in the principal amount of the PERS Side Fund Obligation of the City, including any interest due thereon, to the City in the aggregate amount of $1,754,500 by wire transfer to PERS. Further, the Purchaser shall also pay a portion of the proceeds in the amount of $12,500 to its counsel, and shall retain a portion of the proceeds in the amount of $4,500 as and for its fee in making the loan to the City represented by the Bond. In addition, the Purchaser shall also pay a portion of the proceeds to the City's Bond Counsel in the amount of $25,500, in each case by wire transfer upon receipt by the Purchaser of a Written Request of the City (in a form approved by the Purchaser) relating thereto. The balance of the proceeds in the amount of $3,000 shall be wire transferred to the City and utilized for payment on the Closing Date of the City's remaining costs of issuing the Bond and costs of the California Debt Investment and Advisory Commission. (The above referenced amounts constitute the Costs of Issuance. These amounts are not fully determined at this time and will be filled-in upon execution of the Bond Purchase Agreement. Provided, however, that the total Costs of Issuance shall not exceed $45,500.) Section 3.03.Validity of Bond. The validity of the authorization and issuance of the Bond is not dependent upon the expenditure of the proceeds thereof to pay the PERS Side Fund Obligation of the City with respect to its public safety employees, or upon the performance by any person of its obligation with respect to such PERS Side Fund Obligation. ARTICLE IV SECURITY OF BOND; FLOW OF FUNDS; INVESTMENTS Section 4.01. Security of Bond; Equal Security. The obligations of the City under the Bond, including the obligation to make all payments of principal of and interest on the Bond when due and the obligation of the City to make the deposits required 24438.02014\8780696.6 10 hereunder for the security of the Bond, are obligations of the City imposed by law and are absolute and unconditional, without any right of set-off or counterclaim. The Bond does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation. Neither the Bond nor the obligations of the City to make payments on the Bond constitute an indebtedness of the City, the State of California, or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction. In consideration of the acceptance of the Bond by those who hold the same from time to time, this Resolution constitutes a contract between the City and any Owner from time to time of the Bond, and the covenants and agreements herein set forth to be performed on behalf of the City are for the equal and proportionate benefit, security and protection of any Owner of the Bond. Section 4.02. Debt Service Fund. There is hereby established a separate fund to be known as the "Debt Service Fund" which shall be held by the City in trust for the benefit of the Bond Owner. The Debt Service Fund shall be maintained by the City at Rabobank, N.A.. The City will hold the Debt Service Fund for the uses and purposes set forth herein, so long as the Bond remains Outstanding. The City will transfer an amount of legally available funds in the following amounts at the following times, for deposit by the City in the following respective special accounts within the Debt Service Fund, which accounts are hereby established with the City with respect to the Bond, in the following order of priority: (a) Interest Account. On or before the 5th Business Day preceding each date on which interest on the Bond is due and payable, the City will transfer for deposit in the Interest Account an amount which, when added to the amount then on deposit in the Interest Account, equals the aggregate amount of the interest coming due and payable on the Outstanding Bond on that date. The City will apply amounts in the Interest Account solely for the purpose of paying the interest on the Bond when due and payable. (b) Principal Account. On or before the 5th Business Day preceding each date on which principal of the Bond is due and payable at maturity or upon mandatory sinking fund redemption, the City will transfer for deposit in the Principal Account an amount which, when added to the amount then on deposit in the Principal Account, equals the principal amount of the Term Bond (which is subject to mandatory sinking fund redemption on that date under Section 2.03[b]). The City will apply amounts in the Principal Account solely for the purpose of paying the principal of the Term Bond upon the mandatory sinking fund redemption thereof. Section 4.03. Investment of Moneys in Funds. The City may invest moneys in the funds and accounts established and held hereunder in Permitted Investments. The City shall ensure that all Permitted Investments mature not later than the date on which the funds invested therein are required to be expended. 24438.02014\8780696.6 11 Obligations purchased as an investment of moneys in any fund or account will be deemed to be part of such fund or account. Whenever in this Resolution the City is required to transfer any moneys to the various funds and accounts maintained by it hereunder, such transfer may be accomplished by transferring a like amount of Permitted Investments. All interest or gain derived from the investment of amounts in any of the funds or accounts held by the City hereunder will be retained in the respective fund or account from which such investment was made. For purposes of acquiring any investments hereunder, the City may commingle funds held by it hereunder. ARTICLE V OTHER COVENANTS OF THE CITY Section 5.01. Punctual Payment. The City shall punctually pay or cause to be paid the principal, premium (if any) and interest to become due in respect of the Bond in strict conformity with the terms of this Resolution. The City shall faithfully observe and perform all of the conditions, covenants and requirements of this Resolution and all Supplemental Resolutions. Section 5.02.Budget and Appropriation of Debt Service: Certification to Owner. The City covenants to take such action as may be necessary to include in each of its annual budgets the payments required to be made by the City under Section 4.02, and to make the necessary annual appropriations for all such payments. If any payment of Debt Service requires the adoption by the City of a supplemental budget or appropriation, the City will promptly adopt the same. The covenants on the part of the City herein contained constitute duties imposed by law and it is the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the provisions of this Resolution that reed to be carried out and performed by the City. Promptly following the adoption of an annual budget which includes the appropriations required by this Section, but in any event not later than September 1 in each Fiscal Year, the City shall execute and deliver to the Purchaser a Certificate of the City in substantially the form attached hereto as Appendix B, which shall evidence the compliance by the City with the covenants set forth in this Section 5.02 with respect to such Fiscal Year. Section 5.03. Books and Accounts: Financial Statements; Additional Information. The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City. Such books of record and accounts shall at all times during business hours be subject, upon prior written request, to the reasonable inspection of the Owner the Bond Outstanding, or his representatives authorized in writing. 24438.0201418780696.6 12 The City will cause to be prepared annually by not later than March 1 after the close of each Fiscal Year so long as the Bond is Outstanding, complete audited financial statements with respect to such Fiscal Year, as of the end of such Fiscal Year. The City will furnish a copy of such statements, upon reasonable request, to the Bond Owner. Section 5.04. Protection of Security and Rights of Owner. The City shall preserve and protect the security of the Bond and the rights of the Owner, and will warrant and defend his rights against all claims and demands of all persons. From and after the date of the sale and delivery of the Bond, the City shall not contest the validity or enforceability of the Bond or this Resolution. Section 5.05. Further Assurances. The City shall adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Resolution, and for the better assuring and confirming unto the Bond Owner the rights and benefits provided in this Resolution. ARTICLE VI PAYING AGENT Section 6.01.Appointment of Paying Agent. In the event the City at any time determines that it no longer desires to act as its own paying agent hereunder, the City may, with the consent of the Bondowner, hire the services of a Paying Agent ("Paying Agent") to act in the place and stead of the City, to perform all of the duties herein assigned to the City in acting as its own paying agent. In such event, the City may enter into a Paying Agent Services Agreement for such purpose that is consistent with standards in the industry relating to Paying Agent Services in connection with the issuance of bonds. The City shall bear the costs of such services as may be provided by the Paying Agent. The Paying Agent shall be responsible for performing such services as have herein been assigned to the City in acting as its own paying agent, and as may otherwise be determined by the City. Any such agreement shall provide for the immunities and indemnification of the Paying Agent as are standard for such agreements. Provided, however, that the provisions of any such agreement shall be consistent with the provisions of this Resolution. ARTICLE VII MODIFICATION OR AMENDMENT OF THIS RESOLUTION Section 7.01.Amendments Permitted. (a) Amendment With Bond Owner Consent. This Resolution and the rights and obligations of the City and of the Owner of the Bond may be modified or amended by the City at any time by the execution of a Supplemental Resolution, with the written 24438.020141B780696.6 13 consent of the Owner of the Bond then Outstanding. Any such Supplemental Resolution becomes effective upon the execution and delivery thereof by the City and upon consent of the Bond Owner. No such modification or amendment may extend the maturity of the Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal thereof, or interest thereon, or any premium payable on the redemption thereof, at the time and place and at the rate and in the currency provided therein without the consent of the Owner, or shall change any of the provisions of Article VIII hereof relating to Events of Default. (b) Amendment Without Bond Owner Consent. This Resolution and the rights and obligations of the City and of the Owner of the Bond may also be modified or amended at any time by a Supplemental Resolution, without the consent of the Owner of the Bond, for any one or more of the following purposes: (i) to add to the covenants and agreements of the City contained in this Resolution, other covenants and agreements thereafter to be observed which are not contrary to or inconsistent with this Resolution as theretofore in effect, or to limit or surrender any rights or power herein reserved to or conferred upon the City; (ii) to add to the limitations and restrictions in this Resolution, other limitations and restrictions to be observed by the City which are not contrary to or inconsistent with this Resolution as theretofore in effect; (iii) to confirm, as further assurance, any pledge under, and the subjection to any lien or pledge created or to be created by, this Resolution, of any moneys, securities or funds, or to establish any additional funds or accounts to be held under this Resolution; (iv) to cure any ambiguity, supply any omission, or to cure, correct or supplement any defective provision contained in this Resolution, or in any other respect whatsoever as the City deems necessary or desirable, provided under any circumstances that such modifications or amendments do not materially adversely affect the interests of the Owner in the opinion of Bond Counsel filed with the City. Section 7.02. Effect of Supplemental Resolution. From and after the time any Supplemental Resolution becomes effective under this Article VII, this Resolution shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and the Owner, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any Supplemental Resolution shall be deemed to be part of the terms and conditions of this Resolution for any and all purposes. Section 7.03. Endorsement or Replacement of Bond After Amendment. After the effective date of any amendment or modification hereof under this Article VII, the City 24438.0201418780696.6 14 may determine that Bond shall bear a notation, by endorsement in form approved by the City, as to such amendment or modification and in that case upon demand of the City the Owner of the Bond shall present such Bond for that purpose to the City at City Hall, 595 S. San Jacinto Avenue, San Jacinto, California 92583, and thereupon a suitable notation as to such action shall be made on such Bond. In lieu of such notation, the City may determine that a new Bond shall be prepared and executed in exchange for the Bond and in that case upon demand of the City the Owner of the Bond shall present such Bond for exchange to the City at City Hall, 595 S. San Jacinto Avenue, San Jacinto, California 92583, without cost to such Owner. Section 7.04.Amendment by Mutual Consent. The provisions of this Article VII do not prevent any Owner from accepting any amendment relating to the Bond. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.01. Events of Default. Each of the following events constitutes an Event of Default hereunder: (a) Failure to pay any installment of the principal of the Bond when due, whether at maturity as therein expressed, by proceedings for redemption, by acceleration, or otherwise. (b) Failure to pay any installment of interest on the Bond when due. (c) Failure by the City to observe and perform any of the other covenants, agreements or conditions on its part contained in this Resolution, the Bond, or in the Bond Purchase Agreement, if such failure has continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, has been given to the City by the Bondowner(s); provided, however, if in the reasonable opinion of the City the failure stated in the notice can be corrected, but not within such 30-day period, such failure will not constitute an Event of Default if corrective action is instituted by the City within such 30-day period and it thereafter diligently and in good faith cures the failure in a reasonable period of time. (d) The City shall file a petition seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United State of America, or if a court of competent jurisdiction shall approve a petition seeking reorganization of the City under the federal bankruptcy laws or any other applicable law of the United States of America, 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 City or of the whole or any substantial part of its property. (e) Any representation or warranty made by or on behalf of the City under the Bond Purchase Agreement or in any certificate or statement delivered 24438.02014%8780696.6 15 thereunder shall be incorrect or untrue in any material respect when made or deemed to have been made. Section 8.02. Remedies of Bondowner. The Bondowner shall have the right: (a) by mandamus, suit, action or proceeding, to compel the City and its officers, agents or employees to perform each and every term, provision and covenant contained in this Resolution, the Bond, and in the Bond Purchase Agreement and to require the carrying out of any or all such covenants and agreements of the City and the fulfillment of all duties imposed upon it; (b) by suit, action or proceeding in equity, to enjoin any acts or things which are unlawful, or the violation of any of the Bondowner's rights; or (c) upon the happening of any Event of Default, by suit, action or proceeding in any court of competent jurisdiction, to require the City and its officers and employees to account as if it and they were the trustees of an express trust. (d) exercise any other remedies available to the Bondholder in law or at equity to enforce the rights of the Bondholder under this Resolution, the Bond, and the Bond Purchase Agreement. In addition, if an Event of Default occurs pursuant to Section 8.01 above and is continuing, the Owner the Bond then Outstanding may declare the principal of the Bond, together with the accrued interest thereon, to be due and payable immediately. Any such declaration may be rescinded or annulled at any time by the Owner the Bond. Section 8.03. Non-Waiver. Nothing in this Article VII or in any other provision of this Resolution, or in the Bond, shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the principal of and interest on the Bond to the respective Owner of the Bond at the respective dates of maturity, as herein provided, or affect or impair the right of action, which is also absolute and unconditional, of such Owner to institute suit to enforce such payment by virtue of the contract embodied in the Bond. A waiver of any default by the Bondowner shall not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of the Owner of the Bond to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owner of the Bond by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owner of the Bond. If a suit, action or proceeding to enforce any right or exercise any remedy be abandoned or determined adversely to the Owner of the Bond, the City and the Bond Owner shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. 24438.02014\8780696.6 16 Section 8.04. Remedies Not Exclusive. No remedy herein conferred upon the Owner of the Bond shall be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder or hereafter conferred on the Owner of the Bond. Section 8.05. Default Interest Rate. Upon the occurrence of an Event of Default, the principal balance of the Bond shall, from the date of an Event of Default until the date the Purchaser notifies the City that such Event of Default is waived or cured, bear interest at the Default Rate. The "Default Rate" means the rate per annum which is equal to the fixed rate in effect with respect to the Bond plus 5.00% per annum. The provisions of this section will not constitute a waiver of any Event of Default. ARTICLE IX MISCELLANEOUS Section 9.01. Benefits Limited to City and Bondowner. Nothing in this Resolution, expressed or implied, gives any person other than the City and the Owner, any right, remedy, or claim under or by reason of this Resolution. Any covenants, stipulations, promises or agreements in this Resolution contained by and on behalf of the City are for the sole and exclusive benefit of the Owner. Section 9.02.Successor is Deemed Included in All References to Predecessor. Whenever in this Resolution or any Supplemental Resolution the City 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 City binds and inures to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 9.03. Defeasance of Bond. If the City pays and discharges the entire indebtedness on the Bond in any one or more of the following ways: (a) by paying or causing to be paid the principal of, any redemption premium that may be due and interest on such Bond, as and when the same become due and payable; (b) by irrevocably depositing with an escrow bank, in trust, at or before maturity, an amount of cash or Federal Securities which, together with the available amounts then on deposit in the funds and accounts established under this Resolution, in the opinion or report of an Independent Accountant is fully sufficient to pay the Bond, including all principal, interest and redemption premium, if any, at or before maturity of the Bond; or (c) by purchasing such Bond prior to maturity and canceling it; and if the Bond is to be redeemed prior to the maturity thereof notice of such redemption has been duly given by the City, then, at the election of the City, and notwithstanding that the Bond has not been surrendered for payment, all obligations of 24438.02014\8780696.6 17 the City under this Resolution with respect to such Bond shall cease and terminate, except only the obligation of the City to pay or cause to be paid to the Owner of the Bond, all sums due thereon, and 1 I Any funds held by the City in any of the funds or accounts established in this Resolution which are not required for the aforesaid purpose shall be retained by the City free and clear of any trust herein, and may be utilized by the City for such purposes as it determines. . To accomplish defeasance, the City shall obtain (i) an escrow deposit agreement, and (ii) an opinion of Bond Counsel to the effect that the Bond is no longer Outstanding. Each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the City. Section 9.04. Execution of Documents and Proof of Ownership by Owner. Any request, consent, declaration or other instrument which this Resolution may require or permit to be executed by the Owner may be in one or more instruments of similar tenor, and shall be executed by such Owner in person or by such Owner's attorneys appointed in writing. Except as otherwise herein expressly provided, the fact and date of the execution by the Owner or his attorney of such request, consent, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he 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. The ownership of Bond and the amount, maturity, number and date of ownership thereof are conclusively proved by the Registration Books. Any request, declaration or other instrument or writing of the Owner of the Bond binds all future Owners of such Bond in respect of anything done or suffered to be done by the City in good faith and in accordance therewith. Section 9.05.Waiver of Personal Liability. No member, officer, agent or employee of the City is individually or personally liable for the payment of the principal of or interest or any premium on the Bond. However, nothing contained herein relieves any such member, officer, agent or employee from the performance of any official duty provided by law. Section 9.06. Notices. All written notices under this Resolution shall be given by first class mail or personal delivery to the City or the Owner entitled thereto at its address set forth below, or at such other address as the City or the Owner may provide to each other in writing from time to time. Notice is effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) upon actual receipt after deposit in the United States mail, postage prepaid, or (c) in any other 24438.02014\8780696.6 18 case, upon actual receipt. The City may, by written notice to the Owner, from time to time modify the address or number to which communications are given hereunder. If to the City: City of San Jacinto 595 S. San Jacinto Avenue San Jacinto, California 92583 Attention: City Manager Telephone: (951) 487-7339 Fax: (951) 487-7382 If to the Bondowner: Rabobank, N.A. 915 Highland Pointe Drive, Suite 350 Roseville, CA 95678 Attention: Commercial Loan Administration Services Telephone: (866) 842-2265 Fax: (559) 447-7843 Section 9.07. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Resolution is for any reason held illegal, invalid or unenforceable, such holding will not affect the validity of the remaining portions of this Resolution. The City hereby declares that it would have executed this Resolution and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bond 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 9.08. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any money held by the City in trust for the payment and discharge of the interest or premium (if any) on or principal of the Bond which remains unclaimed for two years after the date when the payment of such interest, premium and principal has become payable, (whether at maturity or upon call for redemption as provided in this Resolution), if such money was held by the City at such date, or two years after the date of deposit of such moneys in the Debt Service Fund if deposited after said date when the Bond became due and payable, shall be retained by the City as its absolute property free from the trust created by this Resolution, and all liability of the City with respect to such moneys shall thereupon cease; provided, however, that before such retention of such moneys by the City as aforesaid, the City, at its cost, shall mail to the Owner of the Bond at his address as shown on the Registration Books, by first class mail, postage prepaid, return receipt requested, a notice in such form as may be deemed appropriate by the City, with respect to the Bond so payable and not presented and with respect to the provisions relating to the retention by the City of the moneys held for the payment thereof . Section 9.09. Governing Law. This Resolution shall be construed and governed in accordance with the laws of the State of California. Section 9.10. Execution in Counterparts. The Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed 24438.02014\8780696.6 19 to be an original; and all such counterparts, or as many of them as the Trustee and the City shall preserve undestroyed, shall together constitute but one and the same instrument. Section 9.11.Article and Section Headings, Singular and Plural Forms, Gender and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof, and the singular and plural forms of words shall be deemed interchangeable, and words of any gender shall be deemed and construed to include all genders, and all references herein to "Articles," "Sections" and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof; and the words "hereby," "herein," "hereof," "hereto," "herewith," "hereunder" and other words of similar import refer to the Resolution as a whole and not to any particular article, section, subsection, paragraph, subparagraph or clause in which such word appears. Section 9.12.Approval of Form of Agreements and Execution Thereof. The Mayor or the City Manager, each an authorized officer ("Authorized Officer") is hereby authorized and directed to execute the Bond Purchase Agreement by and between the City and Rabobank, N.A., in substantially the form on file with the City Clerk, with such changes therein, deletions therefrom and additions thereto as the Authorized Officer shall approve, such approval to be conclusively evidenced by the execution and delivery of such documents. Section 9.13.Official Action. The Mayor of the City, the City Manager, the City Clerk and any and all other officers of the City are hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things and take any and all actions, including execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance and other documents, which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance, sale and delivery of the Bond and the consummation of the transactions approved herein. Whenever in this Resolution any officer of the City is directed to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in case such officer is absent or unavailable. Any and all actions and proceedings heretofore undertaken by the City with respect to the issuance of the Bond are hereby ratified and confirmed. Section 9.14. Effective Date of Resolution. This Resolution shall become effective on the date on which it is adopted. 24438.02014\8780696.6 20 PASSED, APPROVED AND ADOPTED, at a regular meeting of the City Council on the 3rd day of June, 2014, by the following vote: Ayes: Kotyuk, Miller, Ruiz, Ledezma Nays: None Absent: Bartel Abstain: None City of San Jacinto AVIS-0 _L /p—j!exnd('- Alonso Ledezma, Mayor ATTEST: Richard Miller, City Clerk APPROVED AS TO FORM: Best Best Best & Krieger LLP Jeffrey S. Ballinger, City Attorngy 09960.00 0 0018 78 0 69 6.4 21 APPENDIX A FORM OF BOND No. ***$1,800,000*** UNITED STATES OF AMERICA STATE OF CALIFORNIA CITY OF SAN JACINTO 2014 TAXABLE PENSION OBLIGATION BOND ORIGINAL INTEREST RATE MATURITY DATE ISSUE DATE CUSIP 5.00% July 1, 2021 June 12, 2014 REGISTERED OWNER: CEDE & CO. PRINCIPAL AMOUNT: ONE MILLION EIGHT HUNDRED THOUSAND DOLLARS The CITY OF SAN JACINTO, a charter city and municipal corporation duly organized and existing under the Constitution and laws of the State of California (the "City"), for value received, hereby promises to pay to the Registered Owner identified above or registered assigns (the "Registered Owner"), on the Maturity Date identified above, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Rate of Interest identified above in like lawful money from the date hereof, which date shall be the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the close of business on the 15th calendar day of the month preceding such Interest Payment Date (a "Record Date"), in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or before June 15, 2014, in which event it shall bear interest from the Original Issue Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest Payment Date to which interest hereon has previously been paid or made available for payment), payable semiannually on January 1, April 1, July 1 and October 1 in each year, commencing July 1, 2014 (the "Interest Payment Dates") until payment of such Principal Amount in full. The Principal Amount hereof is payable upon presentation hereof to the City at City Hall, 595 S. San Jacinto Avenue, San Jacinto, California 92583 or such other place as designated by the City. Interest hereon is payable by check of the City mailed by first class mail on each Interest Payment Date to the Registered Owner hereof at the address of such Registered Owner as it appears on the registration books of the City as 24438.02014W80696.6 A-1 of the preceding Record Date; provided that at the written request of the owner of (since the aggregate principal amount of the Bond is greater than $1,000,000) which written request is on file with the City prior to the Record Date immediately preceding any Interest Payment Date, interest on the Bond shall be paid on such Interest Payment Date by wire transfer to such account within the United States of America as shall be specified in such written request. This Bond is duly authorized and issued by the City and is designated as the "City of San Jacinto 2014 Taxable Pension Obligation Bond" (the "Bond") of an aggregate principal amount of $1,800,000, and is issued under the provisions of Article 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, commencing with Section 53580 of said Code (the `Bond Law") and under the provisions of Resolution No. 3507, adopted by the City on June 3, 2014 (the "Resolution"). Reference is hereby made to the Resolution (copies of which are on file at the office of the City Clerk) and all supplements thereto and to the Bond Law for a description of the terms on which the Bond is issued, and the rights thereunder of the owner of the Bond and the rights and obligations of the City thereunder, to all of the provisions of which the Registered Owner of this Bond, by acceptance hereof, assents and agrees. The Bond has been issued by the City to refinance the obligation of the City owing to the Public Employees Retirement System of the State of California in connection with the PERS Side Fund Obligation (as defined in the Resolution) related to its public safety employees. This Bond and the interest hereon and all other parity obligations and the interest thereon (to the extent set forth in the Resolution) are payable from any source of legally available funds of the City. The rights and obligations of the City and the owner of the Bond may be modified or amended at any time in the manner, to the extent and upon the terms provided in the Resolution, but no such modification or amendment shall permit a change in the terms of maturity of the principal of the outstanding Bond or of any installment of interest thereon or a reduction in the rate of interest thereon without the consent of the owner of such Bond. The Bond is subject to redemption prior to its stated maturity, at the option of the City, in whole or in part, on any Business Day from any moneys deposited in the Debt Service Fund for such purpose, at a prepayment price equal to one hundred percent (100%) of the principal amount thereof to be redeemed, plus accrued interest to the redemption date. The Bond is issued as a Term Bond maturing on July 1, 2021 and is subject to mandatory redemption in part, by lot, without premium, on July 1, 2014 and on each January 1, April 1, July 1 and October 1 thereafter, from the sinking fund payments that have been deposited into the Debt Service Fund, according to the following schedule: 24438.0201418780696.6 A-2 PRINCIPAL PAYMENT DATE AMOUNT 07/01/2014 $68,905.70 10/01/2014 52,017.02 01/01/2015 52,667.23 04/01/2015 53,325.57 07/01/2015 53,992.14 10/01/2015 54,667.05 01/01/2016 55,350.38 04/01/2016 56,042.26 07/01/2016 56,742.79 10/01/2016 57,452.08 01/01/2017 58,170.23 04/01/2017 58,897.36 07/01/2017 59,633.57 10/01/2017 60,378.99 01/01/2018 61,133.73 04/01/2018 61,897.90 07/01/2018 62,671.62 10/01/2018 63,455.02 01/01/2019 64,248.21 04/01/2019 65,051.31 07/01/2019 65,864.45 10/01/2019 66,687.76 01/01/2020 67,521.35 04/01/2020 68,365.37 07/01/2020 69,219.94 10/01/2020 70,085.19 01/01/2021 70,961.25 04/01/2021 71,848.27 07/01/2021 (maturity) 72,746.26 As provided in the Resolution, the City is required to mail notice of redemption of the Bond by first class mail, postage prepaid, not less than 30 nor more than 60 days before the redemption date, to the registered owner of the thereof, but neither failure to receive such notice nor any defect in the notice so mailed affects the sufficiency of the proceedings for prepayment or the cessation of accrual of interest thereon. If this Bond is called for redemption and payment is duly provided therefor as specified in the Resolution, interest hereon will cease to accrue from and after the date fixed for redemption. Whenever provision is made in the Resolution for the redemption of less than all of the Bond the City shall treat such Bond as consisting of separate $5,000 portions and each such portion shall be subject to redemption as if such portion were a separate Bond. 24438.02014\8780696.6 A-3 If an Event of Default occurs under and as defined in the Resolution, the principal of the Bond may be declared due and payable upon the conditions, in the manner and with the effect provided in the Resolution, but such declaration and its consequences may be rescinded and annulled as further provided in the Resolution. This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at City Hall, 595 S. San Jacinto Avenue, San Jacinto, California 92583, or such other place as designated by the City, but only in the manner, subject to the limitations and upon payment of the charges provided in the Resolution, and upon surrender and cancellation of this Bond. Upon registration of such transfer a new Bond, of authorized denomination, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor. The City may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the City shall not be affected by any notice to the contrary. 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, form 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 the Bond permitted to be issued under the Resolution. This Bond is not entitled to any benefit under the Resolution and is not valid or obligatory for any purpose until the certificate of authentication hereon endorsed has been signed by the City Clerk. IN WITNESS WHEREOF, the CITY OF SAN JACINTO has caused this Bond to be executed in its name and on its behalf with the manual signature of the Mayor of the City and to be attested to by the manual signature of the City Clerk of the City, all as of the Original Issue Date specified above. CITY OF SAN JACINTO By: Mayor ATTEST: City Clerk 24438.02014\8780696.6 A-4 LEGAL OPINION I hereby certify that the following is a correct copy of the signed legal opinion of Best Best & Krieger LLP, Bond Counsel, Riverside, California, addressed to the City Council of the City of San Jacinto and on file in my office, dated the date of delivery of and payment for the Bond herein described. CITY OF SAN JACINTO By: City Clerk 24438.02014\8780696.6 A-5 Best Best & Krieger LLP 3390 University Avenue, 5th Floor Riverside, California 92501 June 12, 2014 City Council City of San Jacinto 595 S. San Jacinto Avenue San Jacinto, California 92583 OPINION: $1 ,800,000 City of San Jacinto 2014 Taxable Pension Obligation Bond Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance and delivery by the City of San Jacinto (the "City") of a bond in the aggregate principal amount of $1,800,000 and designated the "City of San Jacinto 2014 Taxable Pension Obligation Bond" (the "Bond"), issued under the provisions of Articles 10 and 11 (commencing with Section 53570) of Chapter 3 of Division 2 of Title 5 of the California Government Code (the "Bond Law") and Resolution No. 3507 adopted by the City Council of the City on June 3, 2014 (the "Resolution"). In such connection, we have reviewed the Resolution, certificates of the City and such other documents, matters and opinions to the extent we deemed necessary in order to render the opinions set forth herein. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Our engagement with respect to the Bond has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the City. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents. Furthermore, we have assumed compliance with all covenants and agreements contained in the Resolution. We call attention to the fact that the rights and obligations under the Bond and the Resolution and their enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against cities in the State of 24438.02014\8780696.6 A-6 California. We express no opinion with respect to any indemnification, contribution, choice of law, choice of forum or waiver provisions contained in the foregoing documents nor do we express any opinion with respect to the state or quality of title to or interest in any of the assets described in or as subject to the lien of the Resolution or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. The California Constitution limits the ability of the City to incur debts without the express approval of a two-thirds' majority of the qualified electors. (Cal. Const. art. XVI, § 18.) However, the California Supreme Court has carved an exception to this general rule in instances where a debt or obligation is imposed upon the governmental entity by law. In Lewis v. Widber, 99 Cal. 412, 33 P. 1128 (1893), the California Supreme Court held that where the City of San Francisco had depleted its revenues for the current fiscal year, payment of a public officer's final month's salary out of the next year's revenues would not violate the constitutional debt limitation. The Court concluded that the debt limitation did not apply to payments of debts when both the existence of the obligation and statutory guidance as to its payment are provided by state law since the constitutional debt limitation was intended to apply to volitional incurrence of obligations and not an obligation which is imposed by a legislative body other than the one incurring the indebtedness. (Lewis v. Widber, 99 Cal. at 413.) The City is obligated by Sections 20000 et seq. of the California Government Code to make payments to the California Public Employees' Retirement System, or any successor system established by the State ("PERS") relating to pension benefits accruing to City employees who are PERS members. The City has entered into a contract with PERS effective December 31, 1970, as amended on September 28, 1973, October 7, 1976, January 13, 1983, January 21, 1988, May 2, 1999, October 21, 2001, June 24, 2002, June 23, 2003 and September 8, 2008 (the "PERS Contract"), evidencing the City's obligation to pay PERS the City's unfunded accrued actuarial liability and its normal annual contribution to PERS. The City's obligation to PERS as evidenced by the PERS Contract is a debt obligation of the City imposed by law. Pursuant to Articles 10 and 11 (commencing with Section 53570) of Chapter 3 of Division 2 of Title 5 of the Government Code of the State of California (the "Act"), the City has the ability to issue refunding bonds for the purpose of refunding any evidence of indebtedness of the City. The Bond has been issued to refund the City's obligations under the PERS Contract under the Act. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof we believe that: 1. The City is a general law city organized and existing under the Constitution and laws of the State of California, with power to adopt the Resolution and perform the agreements on its part contained therein and issue the Bond. 2. The Bond constitutes a legal, valid and binding obligation of the City enforceable in accordance with its terms and payable solely from the sources provided therefor in the Resolution. 3. The Resolution has been duly authorized, executed and delivered by the City and constitutes a legal, valid and binding obligation of the City enforceable against the City in accordance with its terms. 24438.02014\8780696.6 A-7 4. Interest on the Bond is exempt from personal income taxation imposed by the State of California. Except as stated in the preceding sentence, we express no opinion as to any federal or state tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bond. The rights of the owner of the Bond and the enforceability of the Bond and the Resolution may be subject to bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance, and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in accordance with principles of equity or otherwise in appropriate cases. To ensure compliance with requirements imposed by the Internal Revenue Service, I inform you that any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. Respectfully submitted, 2443B.02014\8780696.6 A-8 CITY CLERK'S CERTIFICATE OF AUTHENTICATION This is the Bond described in the within-mentioned Resolution. Dated: June 12, 2014 FOR AND ON BEHALF OF THE CITY OF SAN JACINTO By: City Clerk 24438.020M8780696.6 A-9 FORM OF ASSIGNMENT For value received the undersigned do(es) hereby sell, assign and transfer unto (Name, Address and Tax Identification or Social Security Number of Assignee) the within Bond and do(es) hereby irrevocably constitute and appoint attorney, to transfer the same on the books of the Trustee, with full power of substitution in the premises. Dated: Signature Guaranteed: Note: Signature guarantee shall be made Note: The signature(s) on this by a guarantor institution Assignment must correspond with participating in the Securities the name(s) as written on the face Transfer Agents Medallion Program of the within Bond in every or in such other guarantee program particular, without alteration or acceptable to the Trustee. enlargement or any change whatsoever. 24438.02014\8780696.6 A-10 APPENDIX B FORM OF ANNUAL CITY CERTIFICATION REGARDING BUDGET AND APPROPRIATION OF DEBT SERVICE The undersigned hereby states and certifies that: (i) I am the duly appointed, qualified and acting of the City of San Jacinto, a general law city duly organized and existing under the Constitution and laws of the State of California (the "City"), and as such, I am familiar with the facts herein certified and am authorized and qualified to certify the same; (ii) the City has previously issued its City of San Jacinto 2014 Taxable Pension Obligation Bond in the aggregate principal amount of $1,800,000 (the "Bond") under Resolution No. 3507, adopted by the City Council on June 3, 2014 (the "Resolution"); (iii) during the fiscal year commencing July 1, 20_ (the "Ensuing Fiscal Year'), the aggregate amount of principal and interest coming due on the Bond is (iv) on , 20_, the City Council of the City duly adopted Resolution No. _ at a meeting which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting at the time of adoption, adopting a budget for the City (the "Adopted Budget") with respect to the Ensuing Fiscal Year; (v) pursuant to the Adopted Budget, the City has budgeted the payment of Debt Service coming due during the Ensuing Fiscal Year on the Bond; and (vi) attached hereto is an extract from the Adopted Budget showing a line item for payment of Debt Service coming due during the Ensuing Fiscal Year on the Bond. Capitalized terms used herein and not otherwise defined have the meanings given them in the Resolution. Dated: CITY OF SAN JACINTO By: 24438.02014\8780696.6 B-1 APPENDIX C FORM OF LETTER OF REPRESENTATIONS City of San Jacinto 595 S. San Jacinto Avenue San Jacinto, California 92583 Re: $1,800,000 City of San Jacinto 2014 Taxable Pension Obligation Refunding Bond The undersigned, a duly authorized representative of Rabobank, N.A., a national banking association (the "Purchaser"), hereby certifies to the City of San Jacinto (the "City") as follows: (i) The Purchaser has purchased on the date hereof the above- referenced bond (the "Bond"), the outstanding principal amount of which is $1,800,000, issued pursuant to Resolution No. 3507 adopted by the City Council of the City on June 3, 2014 (the "Resolution"), and acknowledged and agreed to by the Purchaser, as the original purchaser of the Bond. (ii) The Bond is being acquired by the Purchaser for its own account and not with a present intent for any resale or distribution thereof, in whole or in part, to others; provided, however, that the Purchaser shall not be precluded from transferring or assigning its interest in the Bond in accordance with the terms and conditions set forth in the Resolution. The Purchaser is not participating, directly or indirectly, in a distribution of the Bond and will not take, or cause to be taken, any action that would cause the Purchaser to be deemed an "underwriter" of such Bond as defined in Section 2(11) of the Securities Act of 1933, as amended (the "Securities Act"). The Purchaser understands that the City has no obligation to register the Bond for resale under the Securities Act, The Purchaser further understands that the Bond is being sold in a transaction that is exempt from the registration requirements of the Securities Act. The Purchaser acknowledges that the City will not be entering into a continuing disclosure agreement pursuant to Section 15c2-12 of the Securities Exchange Act of 1934, as amended. (iii) The Purchaser has received and carefully read all information and other items of disclosure relating to the City and the Bond that the Purchaser has deemed material (the "Disclosure Items") and, in connection therewith, has had access to all other materials, books, records, documents, and information relating to the City and the Bond, and has been able to verify the accuracy of, and supplement, the information contained therein. (iv) The Purchaser has had an opportunity to ask questions of, and receive satisfactory answers from, duly designated representatives of the City concerning the terms and conditions pursuant to which the offer to purchase the Bond is being made, and any request for such information has been fully 24438.02014\8780696.6 C-1 complied with to the extent the City possesses such information or can acquire it without unreasonable effort or expense. (v) The Purchaser is a bank that has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of a loan of bond proceeds (i) the information (including the information set forth in the Disclosure Items) furnished to it by the City; (ii) it's or such representative's personal knowledge of the business and affairs of the City; (iii) the records, files, and plans of the City and/or the District, to all of which it or such representative has had full access; (iv) such additional information as it or such representative may have requested and have received from the City; and (v) the independent inquiries and investigations undertaken by it or such representative. (vi) The Purchaser represents that it can bear the economic risk of loss of a loan of bond proceeds; it has adequate means for providing for its current needs and personal contingencies; and it has no need for liquidity with respect to its acquisition of the Bond. (vii) The Purchaser certifies that it is an "accredited investor" within the meaning of Regulation D under the Securities Act and applicable state securities laws. (viii) No person has given any information or made any representation not contained in any Disclosure Items referred to above or otherwise provided to the Purchaser in writing by a person employed or authorized in writing by the City and/or the District. The Purchaser understands and agrees that any information or representation not contained therein must not, and will not, be relied upon and that nothing contained therein should be City as legal or tax advice to the Purchaser. (ix) No person has made any direct or indirect representation or warranty of any kind to the Purchaser with respect to the economic return which may accrue to the Purchaser. The Purchaser has consulted with its own tax counsel and other advisors with respect to an investment in the Bond. (x) The signatory of this letter is a duly authorized officer of the Purchaser with the authority to sign this letter on behalf of the Purchaser, and this letter has been duly authorized, executed, and delivered by the Purchaser. Dated: June 12, 2014 By: 24438.02014\8780696.6 C-2 TABLE OF CONTENTS Page ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION Section 1.01. Interpretation.........................................................................................1 Section1.02. Definitions .............................................................................................2 ARTICLE II AUTHORIZATION AND TERMS OF THE BOND Section 2.01. Authorization and Purpose of Bond.......................................................5 Section 2.02. Terms of the Bond.................................................................................5 Section 2.03. Redemption of Bond .............................................................................6 Section 2.04. Form and Execution of Bond.................................................................8 Section 2.05. Transfer of Bond ...................................................................................9 Section 2.06. Registration Books................................................................................9 Section 2.07. Bond Mutilated, Lost, Destroyed or Stolen............................................9 ARTICLE III DEPOSIT AND APPLICATION OF PROCEEDS OF BOND Section 3.01. Issuance of Bond ................................................................................10 Section 3.02. Deposit and Application of Proceeds ..................................................10 Section 3.03. Validity of Bond ...................................................................................10 ARTICLE IV SECURITY OF BOND; FLOW OF FUNDS; INVESTMENTS Section 4.01. Security of Bond; Equal Security.........................................................10 Section 4.02. Debt Service Fund ..............................................................................11 Section 4.03. Investment of Moneys in Funds ..........................................................11 ARTICLE V OTHER COVENANTS OF THE CITY Section 5.01. Punctual Payment...............................................................................12 Section 5.02. Budget and Appropriation of Debt Service; Certification to Owner......12 Section 5.03. Books and Accounts; Financial Statements; Additional Information ..........................................................................................12 Section 5.04. Protection of Security and Rights of Owner ........................................13 Section 5.05. Further Assurances.............................................................................13 ARTICLE VI PAYING AGENT Section 6.01. Appointment of Paying Agent..............................................................13 24438.02014\8780696.6 _i_ TABLE OF CONTENTS (continued) Page ARTICLE VI MODIFICATION OR AMENDMENT OF THIS RESOLUTION Section 7.01. Amendments Permitted.......................................................................13 Section 7.02. Effect of Supplemental Resolution ......................................................14 Section 7.03. Endorsement or Replacement of Bond After Amendment ..................14 Section 7.04. Amendment by Mutual Consent..........................................................15 ARTICLE Vill EVENTS OF DEFAULT AND REMEDIES Section 8.01. Events of Default.................................................................................15 Section 8.02. Remedies of Bondowner.....................................................................16 Section8.03. Non-Waiver.........................................................................................16 Section 8.04. Remedies Not Exclusive .....................................................................17 Section 8.05. Default Interest Rate...........................................................................17 ARTICLE IX MISCELLANEOUS Section 9.01. Benefits Limited to City and Bondowner .............................................17 Section 9.02. Successor is Deemed Included in All References to Predecessor......17 Section 9.03. Defeasance of Bond............................................................................17 Section 9.04. Execution of Documents and Proof of Ownership by Owner ..............18 Section 9.05. Waiver of Personal Liability.................................................................18 Section9.06. Notices................................................................................................18 Section 9.07. Partial Invalidity...................................................................................19 Section 9.08. Unclaimed Moneys..............................................................................19 Section 9.09. Governing Law....................................................................................19 Section 9.10. Execution in Counterparts...................................................................19 Section 9.11. Article and Section Headings, Singular and Plural Forms, Gender and References......................................................................20 Section 9.12. Approval of Form of Agreements and Execution Thereof ...................20 Section 9.13. Official Action ......................................................................................20 Section 9.14. Effective Date of Resolution................................................................20 APPENDIX A— FORM OF BOND ..............................................................................A-1 APPENDIX B — FORM OF ANNUAL CITY CERTIFICATION REGARDING BUDGET AND APPROPRIATION OF DEB SERVICE .....................B-1 APPENDIX C — FORM OF LETTER OF REPRESENTATIONS.................................C-1 24438.02014\8780696.6 -ji_