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<br />preliminary official statement). Purchasers will not receive physical delivery of Bonds purchased <br />by them. <br /> <br />Purpose of Issue: As further described in the preliminary official statement. the proceeds of the <br />Bonds will be used to prepay and refund the remaining outstanding $2.840.000 1989 Certificate of <br />Participation. <br /> <br />Securil)': The Bonds will be secured under an indenture to be entered into by the City and U.S. <br />Bank N.A.. as Trustee. As fUrther described in the preliminary official statement. the Bonds are <br />special obligations ofthe City payable solely from net revenues of the City's sewer enterprise. on a <br />parity with the City's obligations under the 1994 bonds. <br /> <br />Trustee: U.S. Bank N.A.. San Francisco. California. as Trustee. <br /> <br />Continuing Disclosure: In order to assist bidders in complying with Rule l5c2-l2(b)(5) <br />promulgated under the Securities Exchange Act of 1934. the City will undertake in a Continuing <br />Disclosure Certificate to provide certain annual financial infonnation and notices of the <br />occurrence of certain events. if material. A description of this undertaking and a fonn of the <br />Continuing Disclosure Certificate is included in the preliminary official statement. <br /> <br />Tax-Exempt Status: The legal opinion of Nossaman.Guthner. Knox & Elliott. LLP. Irvine. <br />California. with respect to the validity of the Bonds and that iillerest on the Bonds is excludable <br />from gross income for federal income tax purposes and from present State of California personal <br />income taxes. will be furnished to the successful bidder. A copy of the legal opinion will be <br />printed on or attached to each Bond. <br /> <br />TERMS OF SALE <br /> <br />Interest Rate: Bidders must specify the rate or rates of interest per annum. and the same rate or <br />rates may be repeated as often as desired: provided. however: <br /> <br />(i) Interest rate on any maturity may not exceed 6% per annum. <br /> <br />(ii) The maximum rate bid for any maturity may not exceed the minimum rate bid for <br />any maturity by more than three percentage points (3%). <br /> <br />(iii) Each interest rate specified must be in a multiple of 1/20 or 1/8 of I percent. <br /> <br />(iv) No bond shall bear more than one rate of interest. <br /> <br />(v) Each bond shall bear interest from its date to its stated maturity date at the interest <br />rate specified in the bid. <br /> <br />(vi) All bonds of the same maturity shall bear the same rate of interest. <br /> <br />(vii) The interest rate on any maturity shall not be less than the interest rate on any prior <br />maturity. <br /> <br />Basis of Award: The Bonds will be awarded on the basis of the lowest true interest cost <br />including premium or discount offered on the bids. No bid for less than 99 % of par will be <br />accepted. The true interest cost specified in any bid will be that rate which. when used in <br /> <br />, <br />J <br />