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Resolution 2536 L, \..., \..-- 29072 - 20 JHHW:DJO:ce 7/25/90 RESOLUTION NO. 2536 A RESOLUTION OF THE BOARD OF DIRECTORS SOUTH TAHOE PUBLIC UTILITY DISTRICT AUTHORIZING ISSUANCE OF BONDS WITH RESPECT TO FALLEN LEAF LAKE ASSESSMENT DISTRICT 1990-1 Adopted July 16, 1990 _.r~ - '-- TABLE OF CONTENTS Page ARTICLE I DEFINITIONS, GENERAL Section l.Ol. DEFINITIONS................................. 2 Section l.02. RULES OF CONSTRUCTION..................... .ll Section l.03. EQUAL SECURITy............................ .12 \.., ARTICLE II ISSUANCE OF BONDS Section 2.0l. BONDS AUTHORIZED.......................... .13 Section 2.02. UNPAID ASSESSMENTS........................ .13 Section 2.03. ISSUANCE OF BONDS............... .......... .13 Section 2.04. MATURITIES OF BONDS............. .......... .14 Section 2.05. INTEREST ON BONDS................ ......... .14 Section 2.06. DESIGNATION OF AGENT.. ................... ..l5 Section 2.07. FORM OF BONDS.... ............... .......... .15 Section 2.08. PREPARATION AND DELIVERY OF BONDS......... .15 Section 2.09. EXECUTION OF BONDS..... ................... .16 Section 2.10. TRANSFER AND EXCHANGE OF BONDS............ .17 Section 2.11. TEMPORARY BONDS.......................... ..l7 Section 2.12. BOND REGISTRATION BOOKS.......... ......... .18 Section 2.13. BONDS MUTILATED, LOST, DESTROYED OR STOLEN.18 Section 2.14. REDEMPTION PRIOR TO MATURITy............. ..19 Section 2.15. REFUNDING OF BONDS........ .............. ...20 ARTICLE III SALE AND DELIVERY OF BONDS Section 3.0l. SALE OF BONDS... ............. .......... ... .21 Section 3.02. FURTHER AUTHORITy..... ....... ............. .21 ARTICLE IV APPLICATION OF PROCEEDS OF BONDS, ESTABLISHMENT OF FUNDS Section 4.01. APPLICATION OF PROCEEDS OF SALE OF BONDS.. .22 Section 4. 02. IMPROVEMENT FUND.... . . . . . . . . . . . . . . . . . . . . . . . 22 Section 4. 03. RESERVE FUND........ . . . . . . . . . . . . . . . . . . . . . . . 22 Section 4.04. REDEMPTION FUND. ................. ...... ... .23 Section 4.05. COST OF ISSUANCE ACCOUNT.................. .24 Section 4.06. INVESTMENT OF FUNDS.... ......... .......... .24 \.. ARTICLE V COVENANTS OF THE DISTRICT, TAX COVENANTS Section 5.01. COLLECTION OF UNPAID ASSESSMENTS.......... .25 Section 5.02. FORECLOSURE. ... ........ .................. ..25 Section 5.03. NO ADVANCES FROM AVAILABLE SURPLUS FUNDS. ..26 Section 5.04. PUNCTUAL PAYMENT, COMPLIANCE WITH DOCUMENTS26 Section 5.05. NO PRIORITY FOR ADDITIONAL OBLIGATIONS.... .26 -i- ~ Section 5.06. Section 5.07. Section 5.08. Section 5.09. Section 5.10. Section 5.11. Section 5.12. Section 5.13. NO ARBITRAGE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 REBATE OF EXCESS INVESTMENT EARNINGS TO UNITED STATES . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 INFORMATION REPORT........................ .27 PRIVATE BUSINESS USE LIMITATION........... .28 PRIVATE LOAN LIMITATION................... .28 FEDERAL GUARANTEE PROHIBITION............. .28 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . . . 28 AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 ARTICLE VI MISCELLANEOUS Section 6.01. FUNDS AND ACCOUNTS......... ............... .30 Section 6.02. PARTIAL INVALIDITy........................ .30 Section 6.03. DEFEASANCE................................. 31 Section 6.04. REPEAL OF INCONSISTENT RESOLUTIONS........ .31 Section 6.05. AUTHORITY OF TREASURER...... .............. .31 Section 6.06. CERTIFIED COPIES........... ....... ........ .32 Section 6.07. EFFECTIVE DATE OF THE RESOLUTION.. ........ .32 * * * * * * * * * * * * ~ EXHIBIT A - Form Of Bond \.,. -ii- ~ ~ RESOLUTION NO. 2536 A RESOLUTION OF THE BOARD OF DIRECTORS SOUTH TAHOE PUBLIC UTILITY DISTRICT AUTHORIZING ISSUANCE OF BONDS WITH RESPECT TO FALLEN LEAF LAKE ASSESSMENT DISTRICT 1990-1 BE IT RESOLVED by the Board of Directors (the HBoard") of the South Tahoe Public Utility District (the HDistrict"), County of El Dorado, State of California, that: WHEREAS, on April 19, 1990, this Board passed and adopted Resolution of Intention No. 2517 (the HResolution of Intention") relating to the acquisition and/or construction of public improvements under and pursuant to the provisions of the Municipal Improvement Act of 1913 Division 12 of the Streets and Highways Code of California for the Fallen Leaf Lake Assessment District 1990-1. By the Resolution of Intention, the Board provided that serial bonds would be issued thereunder pursuant to the provisions of the Improvement Bond Act of 1915, Division 10 of the Streets and Highways Code of California and reference to the Resolution of Intention is hereby expressly made for further particulars; and WHEREAS, notice of recordation of the assessment and the opportunity to pay all or a portion thereof was published and mailed in the manner required by law, and the time so provided for receiving payments of assessments in cash has expired and there is on file with the Finance Officer of the District a list of all assessments which remain unpaid; NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of ~ the South Tahoe Public utility District that: Resolution No. 2536 Page 1 ~ ARTICLE I DEFINITIONS, GENERAL Section 1.01. DEFINITIONS. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Resolution and of any Supplemental Resolution and of the Bonds and of any certificate, opinion, request or other document herein mentioned, have the meanings herein specified. "Act" means the Municipal Improvement Act of 1913, Division 12 of the Streets and Highways Code of California. "Agent" means Bank of America National Trust and Savings Association, appointed hereby to perform the duties of ~ authentication, registration, transfer and payment of the Bonds and the Agent's assigns or any other corporation or association which may at any time be substituted in its place. "Assessment" means the special assessments levied against all taxable real property within the boundaries of the Assessment District pursuant to the Bond Law which are subject to assessment pursuant to the Resolution of Intention, for the purpose of paying principal of and/or interest on the Bonds. "Assessment District" means that portion of the District designated "Fallen Leaf Lake Assessment District 1990-1" established in proceedings under the Resolution of Intention. "Authorized Investments" means any securities (other than those identified in paragraphs (a) and (d) of Section 53601 of the \., Government Code of the State) in which the District may legally invest funds subject to its control, pursuant to Article 1, Resolution No. 2536 Page 2 ~ ~ ~ commencing with Section 53600, of Chapter 4 of Part 1 of Division 2 of Title 5 of the Government Code of the State, as now or hereafter amended. hAvailable Surplus Funds" means any surplus moneys held by the District at the end of each Fiscal Year in excess of the amounts required to pay lawful municipal obligations incurred in that Fiscal Year. hBoard" means the Board of Directors of the District. hBond" or hBonds" mean the Limited Obligation Improvement Bonds, South Tahoe Public utility District, Fallen Leaf Lake Assessment District 1990-1, issued pursuant to the Act and this Resolution of Issuance and at any time Outstanding. hBond Date" means the date upon which the Bonds are issued as provided in the Bond Purchase Contract. hBond Denomination" means the amount of $5,000 or any integral multiple thereof, which is the minimum amount in which the Bonds may be issued, except that one Bond may contain any odd amount. hBond Law" means the Improvement Bond Act of 1915, Division 10 of the Streets and Highways Code of California. hBond Purchase Contract" means the agreement or contract applicable to the portion of the Bonds being sold between the District and the Original Purchaser whereby the District agrees to sell and the Original Purchaser agrees to buy all or a designated portion of the Bonds. Resolution No. 2536 Page 3 ~ HBond Registration BooksH means the books maintained by the Agent pursuant to Section 2.12 for the registration and transfer of ownership of the Bonds. HBond Year" means the twelve-month period beginning on the anniversary of the Closing Date in each year and ending on the day prior to the anniversary date of the Closing Date in the following year except that (i) the first Bond Year shall begin on the Closing Date, and (ii) the last Bond Year may end on a prior redemption date. HCertificate of the District" means a written certificate, statement, request, order or requisition signed by the Finance Officer or by any other officer of the District duly authorized by ~ the Board for that purpose. HClerk" means the Clerk of the Board of Directors of the District. HClosing Date" means the date upon which there is an exchange of any of the Bonds for the proceeds representing the purchase price of such Bonds by the Original Purchaser thereof. HCosts of Issuance" means all expenses incurred in connection with the authorization, issuance, sale and delivery of the Bonds, including but not limited to compensation, fees and expenses of the District and the Agent and their respective counsel, compensation to any financial consultants and underwriters (other than those taken as discount on the Closing Date), legal fees and expenses, filing and recording costs, costs of preparation and ~ reproduction of documents, costs of compliance with Tax Regulations relating to rebate to the united States under Section Resolution No. 2536 Page 4 ~ ~ ~ 5.07 and costs of printing, mailing and publication of notices with respect to the District and the Project. hCost of Issuance Account" means the account of that name established and held by the Treasurer pursuant of Section 4.05 hereof. hDebt Service" means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. hDistrict" means the South Tahoe Public utility District, County of El Dorado, a public utility district duly formed and validly existing under and by virtue of the Constitution and the laws of the State of California. hExcess Investment Earnings" means and includes the following amounts with respect to the Bonds: (a) the excess of (i) the aggregate amount earned from the Closing Date on all Nonpurpose Investments in which Gross Proceeds are invested (other than amounts attributable to an excess described in this paragraph (a)), over (ii) the amount which would have been earned if the Yield on such Nonpurpose Investments (other than amounts attributable to an excess described in this paragraph (a)) had been equal to the Yield on the Bonds, plus (b) any income attributable to the excess described in the preceding paragraph (a). Resolution No. 2536 Page 5 ~ HFederal Securities" means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein: (a) direct general 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 of the United States of America); and (b) obligations of any department, agency or instrumentality of the united States of America the timely payment of principal of and interest on which are unconditionally and fully guaranteed by the United States of America. HFinance OfficerH means the Finance Officer of the District. ~ HFiscal Year" means the period commencing on July 1 of each year and terminating on the next succeeding June 30. HGross ProceedsH means and includes, with respect to any Bonds, all of the following amounts: (a) original proceeds, namely, the net amounts remaining from the sale of the Bonds after payment of all Costs of Issuance, including accrued interest but excluding underwriter's and original issue discount, and excluding any such proceeds which become transferred proceeds (determined in accordance with applicable Tax Regulations) of obligations issued to refund the Bonds in whole or in part; (b) investment proceeds, namely, amounts received at any time from the investment of any proceeds described in the ~ preqeding clause (a), or from the investment of amounts described in this clause (b), in Nonpurpose Investments, increased by the Resolution No. 2536 Page 6 ~ amount of any profits and decreased (if necessary, below zero) by the amount of any losses on such investments, excluding such amounts which become transferred proceeds (determined in accordance with applicable Tax Regulations) of obligations issued to refund the Bonds in whole or in part; (c) sinking fund proceeds, namely, amounts, other than amounts described in the preceding clauses (a) and (b), which are held in the Redemption Fund and any other Fund or Account which is reasonably expected to be used to pay Debt Service; (d) Investment Property pledged as security for payment of Debt Service by the District; (e) any amounts, other than amounts described elsewhere in ~ this definition, used to pay Debt Service; and (f) amounts received as a result of the investment of amounts described in this definition. fiImprovement Fund" means the fund of that name established and held by the Treasurer pursuant to Section 4.02 hereof. fiInterest Payment Date" means each date upon which interest on the Bonds is payable, beginning March 2, 1991, and semiannually on each September 2 and March 2 thereafter until maturity. fiInvestment Property" means any security (as said term is defined in section 165(g)(2)(A) or (B) of the Tax Code), obligation, annuity or investment-type property, excluding, however, obligations (other than specified private activity bonds defined in section 57(e)(5) and (6) of the Tax Code) the interest ~ on which is exempt from income tax under section 103 of the Tax Code. Resolution No. 2536 Page 7 ~ HNonpurpose Investment" means any Investment Property which is acquired with the Gross Proceeds and is not acquired in order to carry out the governmental purpose of the Bonds. HOriginal Purchaser" means the first purchaser of the Bonds from the District under the Bond Purchase Contract. HOutstanding", when used as of any particular time with reference to Bonds, means all Bonds therefore executed, issued and delivered by the District under this Resolution except: (a) Bonds theretofore cancelled by the Agent or surrendered to the Agent for cancellation; (b) Bonds paid or deemed to have been paid within the meaning of Section 2.14; and ~ (c) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered by the District pursuant to this Resolution or any Supplemental Resolution. HOwner" or HRegistered Owner", when used with respect to any Outstanding Bond, means the person in whose name the ownership of such Bond shall be registered on the Bond Registration Books. Hprincipal Office" means the main or principal office of the Agent in San Francisco, California handling its corporate trust business. ~Private Business Use" means use directly or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, ~ excluding use by a governmental unit and use by any person as a member of the general public. Resolution No. 2536 Page 8 ~ ~ ~ HproceedsH, when used with reference to the Bonds, means the face amount of the Bonds, plus accrued interest and premium, if any, less original issue discount, if any. Hproject" means the acquisitions and improvements described in the Resolution of Intention and of changes and modification approved thereto by the Board. HPurchase Price", for the purpose of computation of the Yield of the Bonds, has the same meaning as the term Hissue price" in sections 1273(b) and 1274 of the Tax Code, and, in general, means the initial offering price to the public (not including bond houses and brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which price a substantial amount of the Bonds are sold or, if the Bonds are privately placed, the price paid by the Original Purchaser of the Bonds or the acquisition cost of such original purchaser. The term HPurchase Price", for the purpose of computation of the Yield of Nonpurpose Investments, means the fair market value of the Nonpurpose Investments on the date of use of Gross Proceeds for acquisition thereof, or if later, on the date that Investment Property constituting a Nonpurpose Investment becomes a Nonpurpose Investment of the Bonds. HRebate Fund" means the fund by that name established, held and administered by the Treasurer pursuant to Section 5.07 hereof. HRecord Date" means, with respect to the Bonds, the fifteenth (15th) day immediately preceding an Interest Payment Date. HRedemption Fund" means the fund of that name established and held by the Treasurer pursuant to Section 4.04 hereof. Resolution No. 2536 Page 9 ~ ~ ~ fiRedemption Price" means, with respect to any Bond, the principal amount thereof, plus the applicable premium, if any, payable upon redemption thereof pursuant to the Resolution. fiRedemption premium" means three percent (3%) of the principal amount of the Bonds. fiReserve Fund" means the fund of that name established and held by the Treasurer pursuant to Section 4.03 hereof. fiReserve Requirement" means the lesser of ten percent (10%) of the initial offering price of the Bonds to the public or the maximum annual debt service on the Bonds or one hundred twenty- five percent (125%) of the average annual debt service on the Bonds. For purposes of Reserve Requirement, Hinitial offering price to the public" means the principal amount of the Bonds plus any accrued interest and any original issue premium and less any original issue discounts. fiResolution" or fiResolution of Issuance" means this Resolution, as originally adopted or as it may from time to time be supplemented, modified or amended by any Supplemental Resolution pursuant to the provisions hereof. fiResolution of Intention" means Resolution No. 2517, entitled A Resolution of Intention to Make Acquisitions and Improvements, adopted by the Board on April 19, 1990, as modified or amended and in effect on the Closing Date. fiState" means the State of California. fiSupplemental Resolution" means any resolution, agreement, resolution or other instrument hereafter duly adopted or executed Resolution No. 2536 Page 10 ~ ~ ~ by the District in accordance with the provisions of this Resolution. HTax Code" means the Internal Revenue Code of 1986, as amended. Any reference to a provision of the Tax Code shall include the applicable Tax Regulations with respect to such provision. HTax Regulations" means temporary and permanent regulations promulgated under the Tax Code. HTreasurer" means, for all purposes hereof, including the execution of the Bonds pursuant to Section 2.09 hereof, the Finance Officer or designee thereof of the District. HYield" means that yield which, when used in computing the present worth of all payments of principal and interest (or other payments in the case of Nonpurpose Investments which require payments in a form not characterized as principal and interest) on a Nonpurpose Investment or on the Bonds produces an amount equal to the Purchase Price of such Nonpurpose Investment or the Bonds, as the case may be, all computed as prescribed in the applicable Tax Regulations. Section 1.02. RULES OF CONSTRUCTION. All references in this Resolution to HArticles", HSections", and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Resolution; and the words Hherein", Hhereof", Hhereunder" and other words of similar import refer to this Resolution as a whole and not to any particular Article, Section or subdivision hereof. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Resolution No. 2536 Page 11 c ~ ~ Unless the context shall otherwise indicate, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including public bodies, as well as natural persons. Section 1.03. EQUAL SECURITY. In consideration of the acceptance of the Bonds by the Owners thereof, this Resolution shall be deemed to be and shall constitute a contract between the District and the Owners from time to time of the Bonds; and the covenants and agreements herein set forth to be performed on behalf of the District shall be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution or delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein. Resolution No. 2536 Page 12 ~ ARTICLE II ISSUANCE OF BONDS Section 2.01. BONDS AUTHORIZED. All acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of the Bonds have existed, happened and been performed in due time, form and manner as required by law, and the Board is now authorized pursuant to each and every requirement of law to issue the Bonds in the manner and form as in this Resolution provided. Section 2.02. UNPAID ASSESSMENTS. The assessments now remaining unpaid are as shown on said list of unpaid assessments ~ on file with the Treasurer which is incorporated herein by this reference made a part hereof. The aggregate amount thereof is not to exceed $821,728. For a particular description of the lots or parcels of land bearing the respective assessment numbers set forth in said list, reference is hereby made to the assessment and to the diagram, and any amendments thereto recorded in the office of the District Engineer as the Superintendent of Streets of the District after confirmation thereof by the Board. Section 2.03. ISSUANCE OF BONDS. The Bonds, in the aggregate principal amount of $809,766, shall be issued as hereinafter provided upon the security of said unpaid assessments in accordance with, under and pursuant to the provisions of said Resolution of Intention and the proceedings thereunder duly had ~ and taken. The Bonds shall be known as HImprovement Bonds, South Tahoe Public Utility District, Fallen Leaf Lake Assessment Resolution No. 2536 Page 13 ~. ~ \. \., District 1990-1". Jurisdiction is hereby expressly retained to issue bonds, from time to time, as determined by the Board, upon the security of any remaining balance of unpaid assessments upon which any bonds remain unissued. Section 2.04. MATURITIES OF BONDS. The Bonds shall be issued in only fully registered form, without coupons, in the Bond Denomination or any integral multiple thereof, so long as no Bond shall have more than one maturity date. The Bonds shall be dated and mature on September 2 in each of the years and in the amounts set forth in the Bond Purchase Contract. The Bonds shall be numbered or otherwise identified as determined by the Agent. Section 2.05. INTEREST ON BONDS. The Bonds shall bear interest at the rate or rates set forth in the Bond Purchase Contract. Interest on the Bonds shall be payable on each Interest Payment Date to the person whose name appears on the Bond Regis~ration Books as the Owner thereof as of the Record Date immediately preceding each such Interest Payment Date, such interest to be paid by check of the Agent mailed to the Owner on the Interest Payment Date, at the address of such Owner as it appears on the Bond Registration Books. Principal of and premium (if any) on any Bond shall be paid upon presentation and surrender thereof at the Principal Office of the Agent. Both the principal of and interest and premium (if any) on the Bonds shall be payable in lawful money of the United States of America. The Bonds shall bear interest from the Interest Payment Date next preceding the date of authentication of the Bonds (except for Resolution No. 2536 Page 14 ~ any Bond which is authenticated on an Interest Payment Date, in which event such Bond shall bear interest from such date of authentication, and except for any Bond which is authenticated prior to the first Interest Payment Date, in which event such Bond shall bear interest from 'the Bond Date); provided, however, that if, as of the date of authentication of any Bond, interest thereon is in default, such Bond shall bear interest from the date to which interest has previously been paid or made available for payment in full. Section 2.06. DESIGNATION OF AGENT. Bank of America National Trust & Savings Association, is hereby designated as the Agent to perform the actions and duties required under this ~ Resolution for the authentication, transfer, registration, and payment of the Bonds. The Treasurer is hereby authorized and directed to enter into agreements with the Agent in furtherance of the actions and duties of the Agent under this Resolution. Section 2.07. FORM OF BONDS. The Bonds, the form of Agent's certificate of authentication, and the form of assignment to appear thereon, shall be substantially in the respective form set forth in Exhibit hA" attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Resolution. Section 2.08. PREPARATION AND DELIVERY OF BONDS. Upon execution of the Bond Purchase Contract by the Finance Officer, ~ the Finance Officer is hereby directed to cause the Bonds to be prepared in accordance with this Resolution and to cause their Resolution No. 2536 Page 15 ~ ~ ~ delivery upon their completion and execution to the Agent who shall authenticate and deliver the Bonds to the Original Purchaser, upon receipt of the purchase price therefor, and upon receipt of the request of the District. Section 2.09. EXECUTION OF BONDS. The Bonds shall be signed in the name and on behalf of the District with the manual or facsimile signatures of the Treasurer and attested by the manual or facsimile signature of the Clerk. The Bonds shall then be delivered to the Agent for authentication by it. In case any officer who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall have been authenticated or delivered by the Agent or issued by the District, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the District as though the individual who signed the same had continued to be such officer of the District. Also, any Bond may be signed on behalf of the District by any individual who on the actual date of the execution of such Bond shall be the proper officer although on the nominal date of such Bond such individual shall not have been such officer. Only such of the Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit NAn, manually executed by the Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Resolution, and such certificate of the Agent shall be conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Resolution No. 2536 Page 16 ~, \.,. Resolution. The Agent's certificate of authentication on any Bonds shall be deemed to be executed by it if signed by an authorized officer or signatory of the Agent, but it shall not be necessary that the same officer or signatory sign the certificate of authentication on all of the Bonds issued hereunder. Section 2.10. TRANSFER AND EXCHANGE OF BONDS. Any Bond may, in accordance with its terms, be transferred upon the Bond Registration Books by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Agent, duly executed. Whenever any Bond shall be surrendered for transfer, \. the Agent shall thereupon authenticate and deliver to the transferee a new Bond or Bonds of like tenor, maturity and aggregate principal amount. Bonds may be exchanged at the Principal Office of the Agent, for Bonds of the same tenor and maturity and of other authorized denominations. No Bonds the notice of redemption of which has been given pursuant to Section 2.14 shall be subject to transfer or exchange pursuant to this Section. Neither the District nor the Agent shall be required to make such exchange or registration or transfer of Bonds during the fifteen (15) days immediately preceding any Interest Payment Date. Section 2.11. TEMPORARY BONDS. The Bonds may be issued initially in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, ~ lithographed or typewritten, shall be of such denominations as may be determined by the Board and may contain such reference to any Resolution No. 2536 Page 17 ~ ~ ~ of the provisions of this Resolution as may be appropriate. Every temporary Bond shall be executed by the officers designated and in the manner provided in Section 2.09 hereof and be registered and authenticated by the Agent upon the same conditions and in substantially the same manner as the definitive Bonds. If the Board issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Principal Office of the Agent, and the Agent shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Resolution as definitive Bonds authenticated and delivered hereunder. Section 2.12. BOND REGISTRATION BOOKS. The Agent will keep or cause to be kept at its Principal Office sufficient Bond Registration Books for the registration and transfer of the Bonds, which shall at all times during regular business hours be open to inspection by the District; and, upon presentation for such purpose, the Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, Bonds as hereinbefore provided. Section 2.13. BONDS MUTILATED, LOST, DESTROYED OR STOLEN. If any Bond shall become mutilated, the Agent shall thereupon authenticate and deliver, a new Bond of like maturity and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Agent of the Bond so Resolution No. 2536 Page 18 ~ mutilated. Every mutilated Bond so surrendered to the Agent shall be cancelled by it and delivered to, or upon the order of, the District. If any Bond issued hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the District and the Agent and, if such evidence be satisfactory to them and indemnity satisfactory to them shall be given, the Agent shall thereupon authenticate and deliver, a new Bond of like maturity and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been called for redemption, instead of issuing a substitute Bond the Agent may pay the same without surrender thereof upon receipt of indemnity ~ satisfactory to the Agent). The District may require payment of a reasonable fee for each new Bond issued under this Section and of the expenses which may be incurred by the District and the Agent. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original contractual obligation on the part of the District whether or not the Bond alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Resolution with all other Bonds secured by this Resolution. Section 2.14. REDEMPTION PRIOR TO MATURITY. Each Bond, or any portion thereof in the amount of the Bond Denomination or any integral multiple thereof, outstanding may be redeemed and paid in ~ advance of maturity upon any Interest Payment Date in any year by giving 30-day's notice by first class mail or personal service to Resolution No. 2536 Page 19 ~ ~ ~ the Registered Owner as required by applicable provisions of the Bond Law and by paying the principal amount thereof together with the Redemption Premium plus interest to the date of advanced maturity, unless sooner surrendered, in which event said interest will be paid to the date of payment, all in the manner and as provided in the Bond Law. The Treasurer shall cause to be called for redemption and retire Bonds upon prepayment of assessments in amounts sufficient therefor, or whenever sufficient surplus funds are available therefor in the Redemption Fund. The provisions of Part 11.1 of the Bond Law are applicable to the advance payment of assessments and to the calling of the Bonds. Section 2.15. REFUNDING OF BONDS. The Bonds may be refunded by the District pursuant to Divisions 11 or 11.5 of the Streets and Highways Code of California upon the conditions as set forth in appropriate proceedings therefor, all as determined by the Board. Resolution No. 2536 Page 20 , ~ ~ ~ ARTICLE III SALE AND DELIVERY OF BONDS Section 3.01. SALE OF BONDS. The Bonds shall be sold to the Original Purchaser pursuant to a Bond Purchase Contract or Agreements between the District and Original Purchaser. The Board is hereby authorized to sell the Bonds and to negotiate and execute a Bond Purchase Contract with the Original Purchaser thereof, subject to such conditions as shall be provided by separate resolution of the Board. Section 3.02. FURTHER AUTHORITY. The officers of the District are hereby authorized and directed to execute all documents and take such actions as they may deem necessary or advisable in order to carry out and perform the purposes of this Resolution, and the execution or taking of such action shall be conclusive evidence of such necessity or advisability. The Treasurer and the Clerk are authorized to complete and to approve changes in any provisions of this Resolution in order to accomplish the delivery of any of the Bonds on schedule; such changes may be accomplished by attachment of a certificate executed by both such officers to this Resolution on file in the office of the Clerk. Resolution No. 2536 Page 21 ~ ~ ~ ARTICLE IV APPLICATION OF PROCEEDS OF BONDS, ESTABLISHMENT OF FUNDS Section 4.01. APPLICATION OF PROCEEDS OF SALE OF BONDS. Upon receipt of the proceeds of sale of the Bonds on the Closing Date, the proceeds thereof shall be forthwith set aside, paid over and deposited by the Treasurer, as set forth in the Bond Purchase Contract and Certificate of the District and this Article IV. Section 4.02. IMPROVEMENT FUND. There is hereby created a separate fund to be known as the HSouth Tahoe Public utility District, Fallen Leaf Lake Assessment District 1990-l Improvement Fund" (the HImprovement Fund"), which shall be held in trust by the Treasurer. The Treasurer shall disburse moneys in the Improvement Fund for the purpose of paying or reimbursing the costs of acquiring and constructing the Project, including but not limited to all costs incidental to or connected with such acquisition and construction: Disbursements from the Improvement Fund shall be subject to the provisions of Sections 5.09 and 5.l0 hereof. Any surplus remaining after payment of all said costs and expenses shall be used as set forth in the proceedings pursuant to the Resolution of Intention and applicable provisions of the Act and the Improvement Fund shall be closed. Section 4.03. RESERVE FUND. There is hereby created a special fund known as the HSouth Tahoe Public Utility District, Fallen Leaf Lake Assessment District 1990-l Reserve Fund" (the HReserve Fund"). The Reserve Fund shall be initially established in the amount specified in the Bond Purchase Contract and Resolution No. 2536 Page 22 ~ ~ ~ thereafter. The amount of the Reserve Fund shall not exceed the Reserve Requirement. The moneys in the Reserve Fund shall constitute a trust fund for the benefit of the Registered Owners of the Bonds and shall be administered by the Treasurer of the District in accordance with and pursuant to the provisions of Part 16 of the Bond Law; provided that proceeds from redemption or sale of the properties with respect to which payment of delinquent assessments and interest thereon was paid from the Reserve Fund, shall be credited to the Reserve Fund; and provided further that for the purposes of maintaining the Reserve Requirement and providing for any required reduction of the amount of money in the Reserve Fund during the term of the Bonds pursuant to section 8887 of the Act, and applicable provisions of the Tax Code, all proceeds from investment of moneys in the Reserve Fund in excess of the Reserve Requirement shall be credited upon the assessments, except as otherwise provided in Section 5.07 hereof. Section 4.04. REDEMPTION FUND. There is hereby created a special fund known as the HSouth Tahoe Public Utility District, Fallen Leaf Lake Assessment District 1990-1 Improvement Bonds Redemption Fund" (the HRedemption Fund"). The Treasurer shall place in the Redemption Fund any amounts of accrued interest upon the Bonds from the Bond Date to the Closing Date and premium (if any) received upon the sale of the Bonds, together with any capitalized interest funded as a part of the purchase price of the Bonds and all sums received from the collection of unpaid assessments provided in Section 5.01 hereof, and of the interest and penalties thereon. Resolution No. 2536 Page 23 ~ ~ ~ Section 4.05. COST OF ISSUANCE ACCOUNT. There is hereby created within the Improvement Fund, a special account to be known as the HSouth Tahoe Public Utility District, Fallen Leaf Lake Assessment District 1990-1 Cost of Issuance Account" (the HCost of Issuance Account"), which the District hereby covenants and agrees to cause to be maintained and which shall be held in trust by the Treasurer. The moneys in the Cost of Issuance Account shall be used in the manner provided by law solely for the purpose of the payment of Costs of Issuance, on or after the Closing Date. Any funds remaining in the Cost of Issuance Fund on the date that is six months after the Closing Date, shall be transferred to the Improvement Fund. Section 4.06. INVESTMENT OF FUNDS. Moneys in the Improvement Fund, Redemption Fund, and the Reserve Fund shall, whenever practicable, be invested in Authorized Investments, maturing on a date prior to which such moneys are expected to be required. Any income therefrom or interest thereon shall accrue to and be deposited in the fund from which said moneys were invested, subject to the provisions of Section 5.07 hereof. Resolution No. 2536 Page 24 ~ ~ ARTICLE V COVENANTS OF THE DISTRICT, TAX COVENANTS Section 5.01. COLLECTION OF UNPAID ASSESSMENTS. The unpaid assessments as set forth on the list thereof on file with the Treasurer together with the interest thereto, shall be payable in annual series corresponding in number to the number of serial maturities of the Bonds issued. An annual proportion of each unpaid assessment shall be payable in each year preceding the date of maturity of each of the several series of Bonds issued, sufficient to pay the Bonds when due and such proportion of each unpaid assessment coming due in any year, together with the annual interest thereon, shall be payable in the same manner and at the same time and in the same installments as the general taxes on real property are payable, and become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interests after delinquency as do the general taxes on real property. All sums received from the collection of said unpaid assessments and of the interest and penalties thereon shall be placed in the Redemption Fund. Section 5.02. FORECLOSURE. The District hereby covenants with and for the benefit of the Owners of the Bonds that it will order, and cause to be commenced within 150 days following the date of delinquency, and thereafter diligently prosecuted, an action in the superior court to foreclose the lien of any ~ assessment or installment thereof not paid when due, pursuant to Resolution No. 2536 Page 25 ~ ~ ~ and as provided in sections 8830 through 8835, inclusive, of the Bond Law. Section 5.03. NO ADVANCES FROM AVAILABLE SURPLUS FUNDS. The District shall not be obligated to advance available surplus funds of the District to cure any deficiency which may occur in the Redemption Fund, and the Resolution of Intention to make Acquisitions and Improvements No. 2517 is hereby amended to correct a statement of intention of the Board to the contrary. However, the foregoing determination shall not prevent the District, in its sole discretion, from so-advancing funds. Section 5.04. PUNCTUAL PAYMENT, COMPLIANCE WITH DOCUMENTS. The District shall punctually payor cause to be paid the interest and principal to become due with respect to all of the Bonds in strict conformity with the terms of the Bonds and of this Resolution, and will faithfully observe and perform all of the conditions, covenants and requirements of this Resolution and all Supplemental Resolutions. Section 5.05. NO PRIORITY FOR ADDITIONAL OBLIGATIONS. The District covenants that no additional bonds or other obligations shall be issued or incurred having any priority over the Bonds in payment of principal or interest out of the Assessments. Nothing in this Resolution shall prohibit or impair the authority of the District to issue bonds or other obligations secured by and payable from Assessments which are on a parity with the Bonds, upon such terms and in such principal amounts as the District may determine. Resolution No. 2536 Page 26 ~ ~ Section 5.06. NO ARBITRAGE. The District shall not take, nor permit nor suffer to be taken, any action with respect to the proceeds of any of the Bonds which would cause any of the Bonds to be Narbitrage bonds" within the meaning of the Tax Code. Section 5.07. REBATE OF EXCESS INVESTMENT EARNINGS TO UNITED STATES. (A) Compliance with Rebate Requirements. The District shall assure compliance with applicable requirements contained in the Tax Code and Tax Regulations for rebate of excess investment earnings, if any, to the federal government. (B) Maintenance of Records. The District shall keep or cause to be kept, and retain or cause to be retained for a period of six (6) years following the retirement of the Bonds, records of the determinations made pursuant to this Section 5.07. (C) Engagement of Professional Services. In order to provide for the administration of this Section 5.07, the District may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the District may deem appropriate. (D) Modification of this Section. Any of the provisions of this Section 5.07 may be amended, modified or deleted in any manner whatsoever by resolution of the Board, provided that such resolution is accompanied by an opinion of bond counsel stating that such amendment, modification or deletion will not cause interest on the Bonds to be includable in gross income of the ~ Owners for federal income tax purposes. Resolution No. 2536 Page 27 ~ ~ ~ Section 5.08. INFORMATION REPORT. The Treasurer is hereby directed to assure the filing of an information report for the Bonds in compliance with section 149(e) of the Tax Code. Section 5.09. PRIVATE BUSINESS USE LIMITATION. Not more than ten percent (10%) of the Proceeds of the Bonds shall be used in a manner which would cause the Bonds to become Hprivate activity bonds" under and within the meaning of section 141(a) of the Tax Code. Section 5.10. PRIVATE LOAN LIMITATION. Not more than five percent (5%) of the Proceeds of the Bonds shall be used, directly or indirectly, to make or finance a loan (other than loans constituting Nonpurpose Obligations or assessments) to persons other than state or local government units. Section 5.11. FEDERAL GUARANTEE PROHIBITION. The District shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Bonds to be Hfederally guaranteed" within the meaning of section 149(b) of the Tax Code. Section 5.12. FURTHER ASSURANCES. The District will 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 Owners of the Bonds the rights and benefits provided in this Resolution. Section 5.13. AMENDMENT. without the consent of the Owners of the Bonds, the District hereafter may amend this Resolution to Resolution No. 2536 Page 28 ~ ~ ~ add, modify or delete provisions if the same is necessary or desirable to assure compliance with section 148(f) of the Tax Code relating to rebate of Excess Investment Earnings or as otherwise required, to assure the exemption from federal income taxation of interest on the Bonds. Resolution No. 2536 Page 29 ~ ARTICLE VI MISCELLANEOUS Section 6.01. FUNDS AND ACCOUNTS. Any fund or account required by this Resolution to be established by the Treasurer and held and maintained by the Treasurer or the Agent may be established and maintained in the accounting records of the Treasurer or the Agent either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or an account; but all such records with respect to all such funds and accounts shall at all times be maintained in accordance ~ with sound accounting practices and with due regard for the protection of the security of the Bonds and the rights of every Owner thereof. Section 6.02. PARTIAL INVALIDITY. If anyone or more of the covenants or agreements, or portions thereof, provided in this Resolution to be performed on the part of the District, the Board or the Agent should be contrary to law, then such covenant or covenants, such agreement or agreements, or such portions thereof, shall be null and void and shall be deemed separable from the remaining covenants and agreements or portions thereof and shall in no way affect the validity of this Resolution or of the Bonds; but the Owner shall retain all the rights and benefits accorded to them under applicable provisions of law. The Board hereby ~ declares that it would have adopted this Resolution and each and every other section, paragraph, subdivision, sentence, clause and Resolution No. 2536 Page 30 ~ phrase hereof, and would have authorized the issuance of the Bonds pursuant hereto, irrespective of the fact that anyone or more sections, paragraphs, subdivisions, sentences, clauses or phrases of this Resolution or the application thereof, to any person or circumstances may he held to be unconstitutional, unenforceable or invalid. Section 6.03. DEFEASANCE. The Bonds shall no longer be deemed to be outstanding and unpaid if the District shall have made adequate provision for the payment, in accordance with the Bonds and this Resolution, of the principal, interest and premiums, if any, to become due thereon at maturity or upon call and redemption prior to maturity. Such provision shall be deemed ~ to be adequate if the Board shall, on behalf of the Assessment District, have irrevocably set aside, in a special trust fund or account, cash or Federal Securities which when added to the interest earned or to be earned thereon shall be sufficient to make said payments as they become due and to redeem any Bonds Outstanding on the earliest possible redemption date. Section 6.04. REPEAL OF INCONSISTENT RESOLUTIONS. Any resolution of the Board, and any part of such resolution, inconsistent with this Resolution, is hereby repealed to the extent of such inconsistency. Section 6.05. AUTHORITY OF TREASURER. All actions mandated by this Resolution to be performed by the Treasurer may be performed by the designee thereof or such other official of the ~ District or independent contractor, consultant or trustee duly authorized by the District to perform such action or actions in Resolution No. 2536 Page 31 \. -. \. furtherance of all or a specific portion of the requirements hereof. Section 6.06. CERTIFIED COPIES. The Clerk shall furnish a certified copy of this resolution to the Treasurer, to the Agent and to the Auditor of the County of El Dorado. Section 6.07. EFFECTIVE DATE OF THE RESOLUTION. This Resolution shall become effective upon the date of its adoption. * * * * * * * * * * * * PASSED AND ADOPTED by the Board of Directors of the South Tahoe Public Utility District at a duly held regular meeting on the 16th day of July, 1990, by the following vote: AYES: 5 NOES: 0 ABSTAIN: 0 ABSENT: 0 ~d-~ ROBERT MASON, CHAIRMAN OF BOARD SOUTH TAHOE PUBLIC UTILITY DISTRICT ATTEST: fJc.ra ~ PAT A. MAMATH, ERK OF BOARD SOUTH TAHOE PUBLIC UTILITY DISTRICT Resolution No. 2536 Page 32 ~ ~ ~ [FORM OF BOND] united States of America State of California County of El Dorado Registered Number A- Registered $ Limited Obligation Improvement Bond South Tahoe Public utility District Fallen Leaf Lake Assessment District 1990-1 Interest Rate Maturity Date CUSIP Bond Date July 31, 1990 REGISTERED OWNER: PRINCIPAL AMOUNT: DOLLARS Under and by virtue of the Improvement Bond Act of 1915, Division 10 (commencing with Section 8500) of the Streets and Highways Code of the State of California (the hAct"), the South Tahoe Public utility District (the hDistrict"), County of El Dorado, State of California, will, out of the redemption fund for the payment of the bonds issued upon the unpaid portion of assessments made for the acquisition, work and improvements more fully described in proceedings taken pursuant to Resolution of Intention No. 2517 adopted by the Board of Directors of the District on April 19, 1990, pay to the registered owner named above or registered assigns, on the maturity date stated above, the principal amount stated above, in lawful money of the United States of America and in like manner will pay interest from the interest payment date next preceding the date on which this bond is authenticated, unless this bond is authenticated and registered as of an interest payment date, in which event it shall bear interest from such interest payment date, or unless this bond is authenticated and registered prior to March 2, 1991, in which event it shall bear interest from its date until payment of the principal amount shall have been discharged, at the rate per annum stated above, payable semiannually on March 2 and September 2 in each year commencing on March 2, 1991. Both the principal hereof and redemption premium hereon are payable at the Corporate Trust Division of Bank of America National Trust and Savings Association, as Authentication Agent, Transfer Agent, Registrar and Paying Agent (the hAgent"), in San Francisco, California, and the interest hereon is payable by check mailed on the interest payment date to the registered owner hereof at the owner's address EXHIBIT A Resolution No. 2536 Page 33 ~ ~ ~ as it appears on the records of the Agent, or at such address as may have been filed with the Agent, for that purpose, as of the 15th day immediately preceding each interest payment date. This bond will continue to bear interest after maturity at the rate above stated; provided, it is presented at maturity and payment hereof is refused upon the sole ground that there are not sufficient moneys in said redemption fund with which to pay same. If it is not presented at maturity, interest hereon will run until maturity. This bond shall not be entitled to any benefit under the Act or the Resolution Authorizing Issuance Of Bonds (the "Resolution of Issuance"), or become valid or obligatory for any purpose, until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Agent. IN WITNESS WHEREOF, said South Tahoe Public utility District has caused this bond to be signed by manual or facsimile signature by the Finance Officer of the District and by the manual or facsimile signature of the Clerk of the Board of Directors, and has caused its corporate seal to be reproduced in facsimile hereon all as of the 31st day of July, 1990. SOUTH TAHOE PUBLIC UTILITY DISTRICT (facsimile) Tresurer (facsimile) Clerk, Board of Directors [ SEA L ] EXHIBIT A Resolution No. 2536 Page 34 ~ \." '-' CERTIFICATE OF AUTHENTICATION AND REGISTRATION This is one of the bonds described in the within mentioned Resolution of Issuance, which has been authenticated and registered on Bank of America National Trust & Savings Association, Agent By Authorized Officer EXHIBIT A Resolution No. 2536 Page 35 ~ [FORM OF REVERSE OF BOND] This bond is one of several annual series of bonds of like date, tenor, and effect, but differing in amounts, maturities and interest rates, issued by the South Tahoe Public utility District under the Act and the Resolution of Issuance, for the purpose of providing means for paying for the improvements described in the proceedings, and is secured by the moneys in said redemption fund and by the unpaid portion of said assessments made for the payment of said improvements, and, including principal and interest, is payable exclusively out of said fund. This bond is transferable by the registered owner hereof, in person or by the owner's attorney duly authorized in writing, at the office of the Agent, subject to the terms and conditions provided in the Resolution of Issuance, including the payment of certain charges, if any, upon surrender and cancellation of this bond. Upon such transfer, a new registered bond or bonds, of any authorized denomination or denominations, of the same maturity, and for the same aggregate principal amount, will be issued to the transferee in exchange herefor. ~ Bonds shall be registered only in the name of an individual (including joint owners), a corporation, a partnership, or a trust. Neither the District nor the Agent shall be required to make such exchange or registration of transfer of bonds during the 15 days immediately preceding any interest payment date. The District and the Agent may treat the registered owner hereof as the absolute owner for all purposes, and the District and the Agent shall not be affected by any notice to the contrary. This bond or any portion of it in the amount of five thousand dollars ($5,000), or any integral multiple thereof, may be redeemed and paid in advance of maturity upon the second day of September or March in any year by giving at least 30 days' notice by registered or certified mail or by personal service to the registered owner hereof at the registered owner's address as it appears on the registration books of the Agent and by paying principal and accrued interest together with a premium equal to three percent (3%) of the principal. This bond is a limited improvement bond because, under the Resolution of Issuance, the District is not obligated to advance funds of the District to cover any deficiency which may occur in the redemption fund for the Bonds; however, the District is not prevented, in its sole discretion, from so advancing funds. ~ EXHIBIT A Resolution No. 2536 Page 36 ~ I hereby certify that the following is a correct copy of the signed legal opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, addressed to the South Tahoe Public Utility District and on file in my office, dated the date of delivery of and payment for the bonds therein described. (facsimile) Clerk, Board of Directors South Tahoe Public utility District OPINION: $809,766 Limited Obligation Improvement Bonds, South Tahoe Public utility District, Fallen Leaf Lake Assessment District 1990-1 ~ We have acted as bond counsel in connection with the issuance by the South Tahoe Public Utility District (the UDistrict") of $809,766 Limited Obligation Improvement Bonds, Fallen Leaf Lake Assessment District 1990-1, dated July 31, 1990 (the UBonds"), pursuant to Division 10 of the streets and Highways Code of the State of California (the UAct") and a resolution (the uResolution") of the District adopted July 16, 1990. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the District contained in the Resolution and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify such facts by independent investigation. Based upon our examination, we are of the opinion, under existing law, that: 1. The District is a public utility district duly organized and validly existing under and by virtue of the Constitution and the laws of the State of California with power to adopt the Resolution, perform the agreements on its part contained therein, and issue the Bonds. 2. The Resolution has been duly adopted by the District and constitutes a valid and binding obligation of the District enforceable upon the District. 3. Pursuant to the Act, the Resolution creates a valid lien on the funds pledged by the Resolution for the security of the Bonds on a parity with other bonds (if any) issued or to be issued under the Resolution, subject to no prior lien granted under the Act. ~ 4. The Bonds have been duly authorized, executed and delivered by the District and are valid and binding special EXHIBIT A Resolution No. 2536 Page 37 ~ obligations of the District, payable solely from the sources provided therefor in the Resolution. 5. The interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that, for the purpose of computing the alternative minimum tax imposed on such corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the District comply with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The District has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California. ~ The rights of the owners of the Bonds and the enforceability of the Bonds and the Resolution may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases. Respectfully submitted, A Professional Law Corporation ~ EXHIBIT A Resolution No. 2536 Page 38 \. \., ~ 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 - TEN ENT - JT TEN as tenants in common as tenants by the entireties as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT Custodian (Cust) (Minor) under Uniform Gifts to Minors Act (State) Additional abbreviations may also be used though not in the above list. EXHIBIT A Resolution No. 2536 Page 39 --'- ~ ~ ASSIGNMENT For value received the undersigned do(es) hereby sell, assign and transfer unto (Name and address and Tax Identification or Social Security Number of Assignee) the within Bond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the registration books of the Agent with full power of substitution in the premises. Dated: Signature Guaranteed: NOTE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company. NOTE: Signature(s) on this Assignment must correspond with the name(s) as written on the face of the within registered Bond in every particular, without alteration or enlargement or any change whatsoever. EXHIBIT A Resolution No. 2536 Page 40